All things considered it is improbable that the refunding plan could have been put through without the promise of dividends to the preferred stock, but it remains unfortunate that such promises had to be made. The money which had been put into the road had been of necessity so invested to preserve the solvency of the company. In a sense it had increased earning power, but not all expenditures which affect earnings may be charged to capital. In the first place, if earnings are below fixed charges, or are constantly tending to fall below, sums put into the property merely assist the company to keep its head above water, and are not a sound basis for an increase in indebtedness; and in the second place expenditures which serve to _preserve_ earnings may not be charged to capital account, even when the method of preservation is the construction of branch lines, and still less when the method is the improvement of the existing plant. If, then, as was the case, the earnings claimed by the preferred stockholders had gone to preserve the solvency of the company, and to defend it against competition, the arguments of these stockholders in 1889 did not hold good. As for the plan itself, it was simply a method for providing new capital, and should be judged as such. Its refunding provisions were mainly misleading. It proposed to secure a reduction in fixed charges by the exchange of bonds bearing 5 per cent or less for bonds bearing 6 per cent, but how the reduction was to be accomplished was not clear. The maturity of the bonds to be retired was remote, and the assured reduction was therefore also remote. The first mortgage had been issued in 1881, and ran for forty years; the second dated from 1882 and was to mature after fifty years; and the third, which had been issued only the year before, was not redeemable until 1937. The Missouri division and Pend d’Oreille mortgages matured somewhat earlier,[579] but had nevertheless a considerable time to run. The mortgage issues would therefore not soon fall in of themselves. Secondly, bondholders would evidently not consent voluntarily to surrender old unexpired bonds without such a premium in new bonds as would make their annual return approximately the same. Something they might concede in view of the more remote maturity of the new issue and the somewhat more inclusive character of its mortgage lien, but not enough to create any considerable saving.[580] The new issues for improvement of the road, moreover, involved an _increase_ in the annual interest payments; which we must not, perhaps, condemn offhand, for the raising of capital was in some measure forced upon the company, but which is important in considering the railroad’s financial condition and prospects. The fact was that the Northern Pacific was not self-supporting; it had been obliged to issue $20,867,000 bonds of its own and to guarantee $20,981,000 besides, between 1884 and 1889, in order to secure an