ABSTRACT
There seem to be two opposite notions abroad as to the overcapitalization of railroads. One is that it does not matter what the capitalization is—that it is “merely a matter of bookkeeping“; the other is that over-capitalization is responsible for all abuses of railway administration, including the regulation of freight charges. It is true that the capitalization of a railroad company, or of any other company, is “merely a matter of bookkeeping; but honesty requires that bookkeeping should record fact and not fiction. There can be no object in a false capitalization except the object behind any false statement, namely, deceit. Of course, if everyone knows that a railroad is over-capitalized, and knows in what particulars the assets and liabilities are stretched in order to admit of such bookkeeping, no harm is done, for there is no deceit.
