That's the scheme
they're working with the street railroads over in Brooklyn, for
instance; the more irregular the dividends are, the more violently
the stock fluctuates, and the better they like it."
"But this is the case of a railroad that is being built," said
Montague; "and they are putting up the money to build it."
"Yes," said the Major, "of course; and then they are paying it back
to themselves by this dodge; and they'll still have the stock, and
whatever they can get for it will be profit. And if the State
Legislature comes along and asks any impertinent questions, they can
open their books and say: 'See, we have spent this much for
improvements. This is the cost of the road; and if you reduce our
freight-rates, you will cut off our dividends and confiscate our
property.'"
And the Major gazed at Montague with a mischievous twinkle in his
eye. "Besides," he said, "another thing. You say they are putting up
the money. Are you sure it's their own money? Commonly the greater
part of the cost of railroad building is paid by bonds, and they
work those bonds off on banks and insurance companies and trust
companies.
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