time in availing themselves of the confidence which that species of debenture inspired, and States, cities, counties, etc., were soon flooding the country with obligations carrying long coupon attachments. Except for government and municipal uses, there never was a more disastrous invention. It has been the means of numberless deceptions, and has inflicted heavier losses upon the investing public than all other devices combined. Being supplemental to stock certificates, it has duplicated representatives of the same values and led to excessive issues of paper; it has separated capitalists from the management of properties into which their moneys have gone; and, being based upon mortgages promising absolute security, it has too often accomplished the grossest deception. Many a man has purchased and paid a good price for a mortgage coupon bond, giving him no control over his security, who would have rejected a share-certificate standing for an equal interest in the property pledged, and giving him the right to participate in its management, with the possibility of a greater return for his money.
Under the careless legislation of many of the States, which has permitted corporations to decide for themselves the amounts of obligations they might put out, it is no wonder that the privilege has been abused, and the making of shares and bonds, the latter represented to be amply secured by mortgage liens, has been carried to criminal excess. One illustration will suffice. The Arkansas Central Railroad Company (the name indicates the locality) built only forty-eight miles of its projected line. The road was of narrow gauge, with very light iron, and in every way cheaply constructed. It cost less than ten thousand dollars per mile, including equipment. As with most companies building railways in new countries, help in its behalf was asked from the communities to be benefited, and bonds amounting to nearly half a million dollars were given it by counties, cities, etc. Under a statute providing for aid to railroads when their beds could be utilized for levee purposes, the company got $160,000 of State bonds. Under another statute, it got, as a loan from the State, its bonds to the amount of $1,350,000, which were to be a first lien upon the property. After such abundant assistance, it would have seemed hardly necessary for the company to put out obligations of its own. However, it proceeded to issue and market its own bonds to the amount of $2,500,000, of which $1,200,000 purported to be secured by first mortgage, which was not the case. In addition, a considerable amount of stock certificates was issued. Altogether, nearly $5,000,000 of paper were put out and negotiated on the basis of forty-eight miles of narrow-gauge road. But this proved to be insufficient. The road, for non-payment of interest, soon passed into the hands of a receiver, who found it in such an unfinished state that, with the court's permission, he issued a considerable amount of his own certificates to provide for necessary repairs and betterments. Then the road—the product of so much outlay—was sold at public auction, and brought the mag-
