This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1893 edition. Excerpt: ...revenue and capital charges are, in the great majority of cases, wholly abandoned; and surpluses sufficient to provide a more than fractional dividend are constantly devoted to capital outlay. The larger and more prosperous roads, such 102 OF THE QUESTION. as the Pennsylvania and the New York Central, have erred in this respect equally with those companies which are in such poor credit that it is a matter of great difficulty for them to raise fresh capital, and who are, therefore, practically compelled to trench upon their earnings in order to make imperative improvements. If the capital stock of these companies is divided into mortgage bonds with foreclosure rights and common stock only, no serious injustice is done to the latter by depriving them of dividends in order to make additions to their property; for, if such additions were not made, increasing competition might render the line incapable of keeping its head above water, and the common stockholders have, at least, as great an interest in avoiding a receivership as the mortgage bondholders, whilst the reversionary interest in the yield on capital so derived from revenue belongs altogether to the common shares. Such a method of finance results practically in taxing the present for the sake of prospective advantages; but although the common shareholder may cavil at such enforced thrift, and grumble that "while the grass is growing the steed is starving," no grave wrong is inflicted, because even if fresh capital could be raised by the company, it could only be in a form having priority over the common stock. But where the capital stock of the company comprises income bonds or preference shares in addition to mortgage bonds and common stock, this method of making productive...