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fore a resort was had to the credit of the company, and if
found inadequate, then an issue of bonds might be re-
sorted to; this is the obvious intent of the 11th section
of the charter. It reads as follows: "That if the subscrip-
tions obtained be insufficient, the president and directors,
or a majority of them, may issue the bonds of said com-
pany to an amount not exceeding the capital stock au-
thorized by this act, and may secure the same by mort-
gage upon the property, franchises and revenues of the
company."
The policy and practice of the State has been to require
that all stock companies shall have a real and substantial
capital value, and it has never encouraged corporate en-
terprises predicated simply upon debt. In the case of the
Union Railroad Company, now under consideration, a real
stock basis of $600,000 was doubtless contemplated. The
capital thus authorized was intended to be first applied
to the construction of a railroad as far as might answer
that purpose; some real and tangible value would thus be
created upon which to predicate a loan. But in the ab-
sence of such a basis of values it is difficult to see what
the company could have to mortgage as a security for an
issue of $500,000 of bonds, and yet this is just what has
been done. The entire enterprise (saving the meagre
stock subscriptions obtained) and upon which there has
been but one dollar paid in, is predicated upon nothing
but bonded debt.
The committee close this portion of their report with
some comprehensive reflections on the general policy of
the State and city aid to railroads, referring to the legis-
lative cautions and restraints, particularly in the matter
of granting power to one corporation to participate in the
affairs of another, or become responsible for its debts,
which had been deemed necessary, and the tendency of
municipal and other corporations to pervert and abuse
their legitimate authority in doing by indirect means
that which they could not obtain authority to accomplish
by an open and direct appeal to the Legislature. No
citizen, it is declared, can lend himself to this and claim
an immunity from rebuke and a just public censure, even
though he may escape punishment by the State.
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516
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