152 THE POPULAR SCIENCE MONTHLY. 



your capitalization " fictitious." Let us see about this. Many a 

 good cause and many a good man have been 6lain by an epigram. It 

 was a coup d'esprit of Wall Street to call the increased capitalization 

 by a corporation a "watering" of its stock ; and the phrase has doubt- 

 less often done yeoman service in the transactions by which Wall 

 Street lives and thrives. But the old syllogism must be accepted 

 very peremptorily here if we are to admit because corporations some- 

 times do increase their capital on paper that all railway companies 

 are public enemies. Nobody can defend, and nobody ought to attempt 

 to defend, the pouring of pure water into the capital stock of a corpo- 

 ration. But there are some four hundred railroad companies in these 

 United States ; and Mr. Hudson, to sustain the charge of universal 

 watering against railway companies, instances two capital cases. One 

 of these was one of the most flagrant cases on record (it would be diffi- 

 cult, indeed, to find one more flagrant). It dates back some twelve 

 years ; was first held up to public criticism by a gentleman who, more 

 than any other one man, is in receipt of Mr. Hudson's constant and 

 most unqualified strictures everywhere else in Mr. Hudson's pages for 

 his own career as a railroad president ; moreover, this very case be- 

 came the moving cause of legislation which forever prevented a repe- 

 tition of the particular process by which this particular stock was 

 "watered." As to the other case cited by Mr. Hudson, the "water- 

 ing," according to his own figures, amounted to one third of its in- 

 creased capital. But I doubt if any shipper of the line of that partic- 

 ular railroad, or any patron of the line who remembers its previous 

 condition, will agree with Mr. Hudson that a betterment of one third 

 at least did not accrue at about the time of the "watering." Suppose 

 a zigzag line of railways operated by half a dozen petty corporations, 

 requiring endless delays, a change of cars for passengers and a break- 

 ing of freight bulks between two of the most important terminals in 

 the country metamorphosed into a system of four through tracks to 

 conserve the safety of life and property by separating freight and pas- 

 senger service. Suppose the improvement marked by increased pros- 

 perity, not only of the line but of the territory it traversed would 

 there have been no betterment to capitalize, or would the capitalizing 

 of this. betterment be "water"? Would stockholders, in such a case, 

 be apt to object to the company borrowing money to make their own 

 stock more valuable? And which is Mr. Hudson's public just now, 

 the public along the line of this improved railway, and who pay its 

 tariffs ; or the entire continent from Sandy Hook to the Golden Gate, 

 from Canada to the Gulf of Mexico, for whom Mr. Hudson assumes 

 to take up his parable ? Another curious fact which Mr. Hudson may 

 not be aware of (or if aware of, which he has inadvertently omitted to 

 clip and paste in just here) is the fact that at present, in 1887, these 

 two selected corporations are members of the same pool, serving re- 

 spective but almost parallel territory at rates at least thirty-three per 



