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THE YAQUINA RAILROAD 233

Vice-President ; Isaac W. Smith, chief engineer; H. Yates, Superintendent.

III.

The prospectus of the new company, inviting buyers of bonds, was a highly-colored sample of rainbow finance. When one reads it at this distance of thirty-five years, he wonders that the promoters should have so badly misrepresented or mis- judged the poor security of the loan which they set about to "float." In these later days of awakened public conscience one doubts that such rainbow promises would be tolerated. (Reprint of Prospectus, Oregonian, Nov. 8, 1880.)

The bonds were to mature in twenty years and draw inter- est at six per cent. They were to be secured by first mortgage on franchises and property of the two companies, the trustee being Farmers' Loan and Trust Company of New York. The issue was "$25,000 per mile of such railroad." There was no requirement that the issue be limited to $25,000 per mile of "completed" railroad. Nor was there any requirement, before issuance of the bonds, of engineer's or president's certificate, showing that certain mileage was finished or that anything material had been done at all. The only need was a declara- tion from the executive committee that the money was to be used "for the purposes of the corporation" (New York Even- ing Post article in Oregonian, Oct. 27, 1891). The trustee issued the whole amount of the bonds, but only 143 of the 600 miles of road were built.

The prospectus continued to state that the bond issue was for construction of the Coast division from Yaquina Bay to the "lumber districts of the Cascade Mountains"; that the mortgage was secured by a "land grant which covers the ocean front for over forty miles and also covers many miles of deep water front on both shores of Yaquina and Alsea Bay." This referred to the State land grant of tide and marsh lands in Benton County, of doubtful value. Other lands alluded to as se- curity were those of the wagon road company between Corval-