. Elements of transportation, a discussion of steam railroad electric railway, and ocean and inland water transportation . dividends can be declaredupon stock until the interest on the mortgages has been metand the principal of the bonds that have become due, hasbeen paid. Capitalization of American Railways.—The stocks andbonds, or total capital of American railroads, amount toabout sixteen billion dollars, somewhat over one half ofthe total consisting of bonds or funded debt. The capital-ization per mile of line is very much lower than the aver-age in European countries, the cax)italization
. Elements of transportation, a discussion of steam railroad electric railway, and ocean and inland water transportation . dividends can be declaredupon stock until the interest on the mortgages has been metand the principal of the bonds that have become due, hasbeen paid. Capitalization of American Railways.—The stocks andbonds, or total capital of American railroads, amount toabout sixteen billion dollars, somewhat over one half ofthe total consisting of bonds or funded debt. The capital-ization per mile of line is very much lower than the aver-age in European countries, the cax)italization per mile inGreat Britain being more than four times the average forAmerican railways. This difference is due mainly to twocauses: it cost very much more to build the British rail-ways than it did those in the United States, because of theheavy expense of right of way and terminals, and also be-cause the public re(juired the Britisli railways to be con-structed as safe and strong as it was ])()ssible to makethem. Moreover, Britisli railway capitalization has in-creased more rapidly than American for the reason that. 60 ELEMENTS OF TRANSPORTATION it is customary in Great Britain to charge all improvementsto capital instead of paying for a large part of them out ofcurrent revenue, as is the general and wise practice in theUnited States. The Watering of Stocks and Bonds.—In many parts ofthe United States the railroads were built mainly with bor-rowed money, i. e., from the proceeds of the sale of stocks of these early companies were sold cheaply,and in some instances were given as a bonus to the buyersof bonds. This policy enabled the companies to borrowmoney more easily because those who received the stockfor nothing, or at a very low price, w^ere in a position tomake large gains in case the railroad company proved suc-cessful and its stocks became valuable. Watered stock isthat sold or issued for less than its par or face value, andthe amount of water in the stock a
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Keywords: ., bookcentury1900, bookdecade1920, booksubjecttranspo, bookyear1920
