38

INDUSTRIAL REVOLUTION AND WAGES

securities which have been issued without actual investment
 or additions to the earning value of the properties.
(d) As a result of the methods of financing or selling
securities developed under this banking control of Western
 Railroads, large discounts and commissions have
been paid which have been without jurisdiction. By
way of illustration, the recent investigation of the St.
Louis and San Francisco Railroad by the Interstate
Commerce Commission disclosed the fact that discounts
and securities were paid to banks and syndicates which
aggregated the enormous total of $32,152,602 during the
period 1896-1913. Enormous bonuses to stockholders
have also been granted during this same period of years.
More than $250,000,000 was distributed in this way
during the period 1900-1910 by eight representative
Western Railroads alone. By the sale of securities at
much less than their prevailing market prices, these companies
 were obviously deprived of cash resources which
they should have had, and at the same time issued excess
capitalization which became a drain upon operating
revenue. If it had not been for these practises, the
financial status of the Railroads which are parties to
the present proceedings would be much more satisfactory,
and much greater amounts of surplus revenues would
he available.

(e) Recent Railroad reorganizations have also been
made the basis for the flotation of immense amounts of
fictitious securities which have actually absorbed existing
revenue, through unwarranted dividend and interest
requirements, or will be made the basis for the absorption
of future revenue gains.
(f) An indication of the extent to which the financial
condition of Western Railroads has been adversely
affected by financial mismanagement, and a startling
illustration of the absorption of revenue gains produced
by operating efficiency and increased work and output