332 THE QUESTIONS OF THE DAY. 



is very unjust taxation, and when the law imposes it the vic- 

 tims soothe their consciences with the thought that if they do 

 employ perjury and bribery it is only to escape an injustice 

 not otherwise avoidable. For example, " stocks " and " bonds " 

 are considered by nearly all farmers as eminently proper sub- 

 jects of taxation. Now this can only be because they do not 

 realize what stocks and bonds really are. Let us suppose that 

 ten gentlemen in Boston decide to build a railroad in Cali- 

 fornia. They have not the money to complete the road, but 

 they have enough to make a good start, and rely upon 

 borrowing what is required to complete it. They organize a 

 company and put in $2,000,000. For the money they put in, 

 which is probably not in equal amounts, they must have 

 something to show, for which purpose "stock" is issued to 

 each one for the amount which he paid in.* This stock is 

 merely a written statement that the holder has paid in the 

 amount stated on its face towards building the railroad. The 

 actual property would be in California. Let us now suppose 

 that when the |2,000,000 is exhausted, the company— that is, 

 the stockholders — borrow of twenty gentlemen in New York 

 $8,000,000 to complete the road and do complete it and put it 

 in operation for that money. To secure the people who lend 

 the money the company gives its note, which, in the case of 

 railroads, is for some renson called a "bond" instead of a note, 

 and a mortgage upon the railroad. The bond is evidence that 

 the sum named in it has been expended on a railroad in Cali- 

 fornia, and the whole value of the bond depends upon the 

 ability of tlie property which it represents to pay interest. 

 Under these circumstances the Boston gentlemen who supplied 

 the original $2,000,000 would own one-fifth of the road, and 

 retain the right to manage and operate it so long as they paid 

 interest on the borrowed mon-ey and no longer. The New 

 York people would own the other four-fifths, and could take 



* It would probably be issued for an amount a good deal more than was 

 paid in, upon the plea that the " franchise "—that is, the right to build and 

 operate the road, and to condemn land for its use, was worth a great deal of 

 money, which might or might not be the case. For the purpose of the text I 

 prefer to consider that the stock issued represents actual cash and nothing else. 



