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That it is intended that the $300,000 mortgage made by the Peoples' Railroad Company shall be cancelled upon the increase of its capital stock to $1,000,000.

A recapitulation of the amounts expended and to be expended by the company on account of which it asks for the increase of its capital stock, is as follows: Mortgage to be cancelled...

$300,000 00 Additional money expended on the road and equipment, of the Peoples' railroad....

36,869 18 Paving assessment to be paid.

3,791 17 Cost of extension of Court street branch.

5,125 00 Extension south to Onondaga Valley...

5, 125 00 Additional equipment required by the Peoples' railroad.

18, 400 00 Cost of stock of Central City railroad.

147,772 84 Additional equipment required by Central City railroad

2,000 (N) Additional track laid by the Central City railway.

5,632 11 Additional equipment already purchased by the Central City railway

2,571 28 Cost of stock of Syracuse and Onondaga railroad

125,175 00 Cost of new tracks of Syracuse and Onondaga railroad

55,000 00 Cost of new equipment of Syracuse and Onondaga railroad.. 10,000 00

$718,461 58

Amount of stock proposed to be issued
Amount of stock now issued.....

$1,000,000 00

300,000 00

Proposed increase

$700,000 00

It appears from the above figures that the amount of increase asked, viz.: $700,000 will be more than absorbed by actual cash expenditures for debts now incurred or to be incurred, including the taking up of the $300,000 mortgage on the Peoples' railroad.

On this showing the Board would not hesitate to approve of the proposed issue were it not for the fact that the original cost of construction and equipment is entirely in the dark.

As is well known, the Board heretofore has declined to approve of an increase of capital stock where the outstanding obligations, whether stock or bonds, are substantially in excess of the actual cost of construction and equipment.

In the original construction of the Peoples' railroad, comprising about ten miles of double track, the large sums of $300,000 in stock and $300,000 in bonds, and $28,000 in cash were turned over to the contractors for a fully built and equipped road. This was undoubtedly largely in excess of the actual cost of construction and equipment in cash.

The Board would be justified in declining to approve of the issue of additional stock under these circumstances, unless the company could affirmatively show that the cost of construction and equipment had been equal to the outstanding obligations. Were the Board to do so, however, what would be the alternative? The company would be obliged either to issue bonds to provide means to carry on these needed improvements, ipuring to the benefit of the public, or it could form another organization with a largely increased capital stock

(there is no limit provided by law) and lease the various corporations which are now controlled by the Peoples' Company.

The evils of corporate obligations in excess of actual cost of construction are notorious and have been dilated upon by this Board and need not be repeated here. The law is in an incongruous state permitting such inflation.

Inasmuch, however, as the law does permit such inflation, it appears futile for this Board to disapprove of a bona fide issue of stock, for which eash is to be paid at par, because heretofore in this corporation an undue inflation has been permitted by the law over which the Board has no control, particularly in view of the fact that if the Board does not approve the issue, either bonds will be issued or a new corporation formed with the capital inflated to any figure the projectors may desire.

It may be further remarked that the railroad systems are to be operated as one; that the public will obtain transportation at a less price by reason of one fare being paid over the routes where two have been exacted, and that if a question should ever arise as to the reduction of fare under section 33 of the General Railroad Act, the percentage of earnings would be reckoned upon the capital actually. expended and not upon the face value of the outstanding obligations.

For the above reasons, the Board deems that it is justified in approving, and does hereby approve, of the increase of the capital stock of the Peoples' Railroad Company of Syracuse from $300,000 to $1,000,000, with the following conditions, which are made part of this approval, to wit:

That the $700,000 additional stock shall not be issued for less than par, and that the proceeds thereof shall be expended in the manner explained by the company and herein before set forth.

By the Board.

III.

IN THE MATTER OF THE APPLICATION OF THE AMSTERDAM STREET RAILROAD

COMPANY FOR THE APPROVAL OF THE BOARD OF AN INCREASE OF CAPITAL STOCK FROM $15,000 TO $250,000.

January 12, 1891. The preliminary steps required by section 9 of the General Railroad Act have been duly taken in this matter. It appears from the papers on file with the Board that at a meeting of the stockholders, held in the city of Amsterdam on the 29th day of August, 1890, 150 shares were voted in favor of the increase, none against.

It appears from an affidavit of Frank A. Mason that the cost of the road to the present company at its purchase was $15,000; that a floating debt has to be retired of $3,750; that the cost of equipping the road with electric power will be $285,200; making the entire estimated cost of construction and equipment, when finished, $253,950.

It may be proper to say that a resolution was passed authorizing the issue of $250,000 of bonds in addition to the proposed issue of

stock. The Board is informed, however, by the president of the road in a written communication, that the resolution to bond the road was rescinded by the directors at a meeting held on the 5th day of December, 1890.

In view of the above facts the Board deems that it is justified in approving, and does hereby approve, of the increase of capital stock of the Amsterdam Street Railroad Company from $15,000 to $250,000.

By the Board.

IV.

IN THE MATTER OF THE APPLICATION OF THE Houston, WEST STREET AND

Pavonia FERRY RAILROAD COMPANY FOR THE APPROVAL OF THE BOARD OF AN INCREASE OF STOCK FROM $250,000 To $1,050,000.

January 19, 1891. The preliminary steps required by section 9 of the General Railroad Act appear to have been duly taken in this matter, and at a meeting of the stockholders on the 11th day of December, 1890, all the stockholders of the company voted in favor of such increase.

It appears that the Houston, West Street and Pavonia Ferry Railroad Company is the lessee of the Chambers Street and Grand Street Ferry railroad, in accordance with the terms of a lease dated January 16, 1890, and filed January 20, 1890; that ever since the 20th day of January, 1890, the Houston street company has been in possession of the road and property of the Chambers street company; that on the 11th of November, 1890, a resolution was passed by the directors of the Houston street company that that company should take a surrender or transfer of the capital stock of the stockholders, or any of them, in the Chambers street company, and issue in exchange therefor the like additional amount of its own stock at par; that all of the stockholders of both companies have consented to such exchange.

Chapter 254 of the Laws of 1867, as amended by chapter 503 of the Laws of 1879, provides that "Any railroad corporation created by the laws of this State, or its successors, being the lessee of the road of any other railroad corporation, may take a surrender or transfer of the capital stock of the stockholders, or any of them, in the corporation whose road is held under lease and issue in exchange therefor the like additional amount of its own capital stock at par, or on such other terms and conditions as may be agreed upon between the two eorporations."

At a public hearing held in the Chamber of Commerce, New York eity, after due notice, it was contended, in effect, by Mr. Charles A. Clark, and by the Hon. William C. Whitney, counsel of the road, that inasmuch as the law provided that the stockholders of the respective companies could thus exchange their stock, the duty of the Board of Railroad Commissioners to approve of the increase was perfunctory and that it assumed no responsibility whatever. The Board does not take this view of the matter, however. It is quite possible that the spirit of the statute prohibiting the inflation or watering of capital

.

stock might be violated by a transaction of this nature. The statute permitting the exchange of stock provides that such exchange may take place share for share at par, “or on such other terms and conditions as may be agreed upon." If the Board of Railroad Commissioners has no discretion in the approval of an increase, the roads might agree to exchange at the rate of one share of the lessor road for three of the lessee, and the claim be made that this is in accordance with the provisions of the statute.

Inasmuch, however, as section 9 of the General Railroad Act, as amended, provides that “in no case and under no circumstances shall any railroad company

of this State increase its stock except upon the notice and with the approval" of the Board of Railroad Commissioners, the Board deems that the right of contract between the stockholders of the lessee and lessor companies, is modified by the provisions herein last mentioned.

In the immediate case petitioned for, however, there is no actual increase of capital stock. It is to be borne in mind that the stock of the lessor corporation is absorbed by the lessee and cancelled.

In approving of the increase of the stock of the lessee road for this purpose it must be remembered that the State expresses no opinion as to the validity of the stock of the Chambers Street and Grand Street Ferry Railroad Company, or its true relation to the cost of construction and equipment. It approves of the increase simply for the purpose of exchanging the stock of one company for that of the other to promote the convenience of the lessee cor ny.

In view of the above facts the Board hereby approves of the increase of stock of the Houston, West Street and Pavonia Ferry Railroad Company from $250,000 to $1,050,000 with the condition, however, that such increased stock is to be issued for the purpose of exchanging such stock, share for share, for that of the Chambers Street and Grand Street Ferry Railroad Company in accordance with the statutes hereinbefore quoted.

By the Board.

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IN THE MATTER OF THE APPLICATION OF THE TROY AND ALBIA HORSE RAILROAD

COMPANY FOR THE APPROVAL OF THE BOARD OF AN INCREASE OF ITS CAPITAL STOCK FROM $50,000 to $400,000.

January 26, 1891.

The preliminary steps required by section 9 of the General Railroad Act, i. e. chapter 140 of the Laws of 1850, appear to have been duly taken. At a meeting of the stockholders more than two-thirds of all the stockholders in amount of stock voted in favor of such increase and none in opposition thereto.

It appears from the sworn report of the railroad company that the cost of construction and equipment to date is $83,795; that the amount of capital stock outstanding is $44,700; amount of bonds outstanding

$34,000. The cost of construction and equipment to date then is apparently $5,095 in excess of the outstanding obligations: A sworn estimate by Joseph J. Hagen, secretary and treasurer

of the road is submitted to the Board in which the estimated cost of construction and equipment for the electric operation as proposed is put at...

$241, 000 00 Proposed new road through the Fifth ward and Hoosic street, etc., two and one-third miles

175,400 00

Making in all..

$416,400 00

Mr. Hagen informs the Board that the stock is to be issued at par and with the proceeds thereof these estimated expenses defrayed.

In view of the above representations the Board deems that it is justified in approving and does hereby approve of an increase of the capital stock of the Troy and Albia Horse Railroad Company from $50,000 to $100,000.

By the Board.

VI.

IN THE MATTER OF THE APPLICATION OF THE JAMESTOWN STREET RAILROAD

COMPANY FOR THE APPROVAL OF THE BOARD OF AN INCREASE OF CAPITAL STOCK FROM $100,000 TO $250,000.

February 16, 1891. The preliminary steps required by section 9 of the General Railroad Act appear to have been duly taken, and the stockholders at a meeting at the office of the company in Jamestown on the 5th of February, 1891, at which 1,997 shares of stock were represented, unanimously resolved to increase the stock to the proposed figures.

It appears from an affidavit of A. N. Broadhead, president of the company, filed with the Board, that the cost of construction and equipment to date is $51,605.29; that the outstanding obligations are, first mortgage bonds $25,000, stock paid in $24,950. It further appears that $75,050 of stock has been subscribed for and is subject to call, the proceeds of which will be used in the construction of new lines and the equipment of the old.

The affidavit of Mr. Broadhead further states that the cost of contemplated improvements, including the extension of the road and change of motive power from horses to electricity, the estimates being submitted in detail, will be $214,821.86; that funds for this expenditure will be obtained by the disposal of the increased stock, that is, $150,000, and by assessing the stock now subject to call, as hereinbefore mentioned, $75,050, making $225,000 in all.

Mr. Broadhead further states that it is the intention of the company to retire the first mortgage bonds of $25,000 from the proceeds of stock. This would apparently leave a deficiency of $14,821 of funds necessary to meet the estimated expenses of construction and equipment, but Mr. Broadhead informs the Board that it is the inten

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