ne for the purpose of making the capital appear adequate to
its earnings. Nearly all railroads became in time the foot-balls of
shrewd manipulators. They were bonded before they were constructed, and
often for more than the value of the completed road. Stocks at the best
only represented nominal values and were given as premiums to the
bondholders or promoters of the road.

But the science of stock-watering did not reach its fullest development
until during the period of railroad consolidation. Fictitious values
were now created as often as a new consolidation took place. Watered
stocks and bonds were watered again and again, until they represented
little more than a purely imaginary capital upon the basis of which
dividends might be declared. Take the case of the New York Central and
Hudson River Railroad companies, which consolidated in 1869 with a
capital of $103,110,137.31. The former of these roads was organized in
1853 by the consolidation of ten smaller roads connecting the cities of
Albany and Buffalo. The capital stock of these companies amounted to
$20,799,800, of which $16,852,870 was claimed to have been paid in.
Their funded debt was $2,497,526. It is impossible at this day to
ascertain the original cost of all these roads, but it is certain that
the above sums represent about three times the amount actually expended
for their construction.

One of the roads entering into the consolidation was the Utica and
Schenectady. It was 78 miles long and formed about one-fourth of the
consolidated line. It had the heaviest grading and rock-cutting, was the
best-equipped and undoubtedly the most expensive, in proportion to its
extent, of the ten roads out of which the New York Central was created.
The original cost of this line was $2,000,000. Bonds were never issued
by the company. The line was profitable from the very beginning, paid
regularly ten per cent. dividends,--the limit to which railroad
companies were then restricted,--and had a large surplus, which it
expended mainly for improvements. No assessment was ever made on the
stock beyond the $1,500,000 which was originally paid in by the
shareholders and upon which they had drawn regular and liberal
dividends. Taking the original cost of this line as a basis, it is but
fair to presume that the entire line from Albany to Buffalo, covering a
distance of 297 miles, did not cost to exceed $6,000,000. These roads,
however, entered into the consolidation with a capi