JO THE POPULAR SCIENCE MONTHLY. 



time in availing themselves of the confidence which that species of de- 

 benture inspired, and States, cities, counties, etc., were soon flooding the 

 country with obligations carrying long coupon attachments. Except 

 for government and municipal uses, there never was a more disastrous 

 invention. It has been the means of numberless deceptions, and has 

 inflicted heavier losses upon the investing public than all other devices 

 combined. Being supplemental to stock certificates, it has duplicated 

 representatives of the same values and led to excessive issues of paper ; 

 it has separated capitalists from the management of properties into 

 which their moneys have gone ; and, being based upon mortgages 

 promising absolute security, it has too often accomplished the grossest 

 deception. Many a man has purchased and paid a good price for a 

 mortgage coupon bond, giving him no control over his security, who 

 would have rejected a share-certificate standing for an equal interest 

 in the property pledged, and giving him the right to participate in its 

 management, with the possibility of a greater return for his money. 



Under the careless legislation of many of the States, which has 

 permitted corporations to decide for themselves the amounts of obli- 

 gations they might put out, it is no wonder that the privilege has been 

 abused, and the making of shares and bonds, the latter represented to 

 be amply secured by mortgage liens, has been carried to criminal ex- 

 cess. One illustration will suffice. The Arkansas Central Railroad 

 Company (the name indicates the locality) built only forty-eight miles 

 of its projected line. The road was of narrow gauge, with very 

 light iron, and in every way cheaply constructed. It cost less than 

 ten thousand dollars per mile, including equipment. As with most 

 companies building railways in new countries, help in its behalf was 

 asked from the communities to be benefited, and bonds amounting 

 to nearly half a million dollars were given it by counties, cities, etc. 

 Under a statute providing for aid to railroads when their beds could 

 be utilized for levee purposes, the company got $160,000 of State 

 bonds. Under another statute, it got, as a loan from the State, its 

 bonds to the amount of 81,350,000, which were to be a first lien upon 

 the property. After such abundant assistance, it would have seemed 

 hardly necessary for the company to put out obligations of its own. 

 However, it proceeded to issue and market its own bonds to the 

 amount of $2,500,000, of which $1,200,000 purported to be secured 

 by first mortgage, which was not the case. In addition, a considerable 

 amount of stock certificates was issued. Altogether, nearly $5,000,000 

 of paper were put out and negotiated on the basis of forty-eight miles 

 of narrow-gauge road. But this proved to be insufficient. The road, 

 for non-payment of interest, soon passed into the hands of a receiver, 

 who found it in such an unfinished state that, with the court's permis- 

 sion, he issued a considerable amount of his own certificates to provide 

 for necessary repairs and betterments. Then the road — the product of 

 so much outlay — was sold at public auction, and brought the mag- 



