Of the five sources mentioned, the files of contemporary papers are the

most useful. The _Commercial and Financial Chronicle_, the _Railroad

Gazette_, the _Railway Age_, the _Railway and Engineering Review_,

the _Railway Times_ of London, the New York _Tribune_, the New York

_Journal of Commerce_, the _Wall Street Journal_, and many others are

generally accurate and trustworthy, though it should be noted as a

limitation that they seldom have inside information, and that their

comment is not always independent. These papers are supplemented by

pamphlets and circulars. Many reorganization plans are published in

pamphlet form. Opposition to them is not infrequently thrown into the

same shape. Reports of experts are printed in pamphlets. In general,

the live literature of reorganization must be put out on short notice,

and so is issued in this informal way. The official statistics of

railroads are to be found in the reports of the railroad companies

themselves, made to stockholders or to supervisory government bodies.

These statistics, like the news items in the financial and railroad

papers, must be used with care. They are sometimes incomplete, and

they are sometimes purposely misleading. Nevertheless, they are

useful, and serious inaccuracies in any of them are usually exposed

within a few years after their original publication. The material

to be found in legislative records is not abundant. Railroads

almost invariably, however, appear before the courts in the course

of their reorganizations, and in the decisions of these tribunals

some facts of interest may be found. The records of the receivership

of the Union Pacific have been published in fourteen volumes. The

decision of the United States Supreme Court in Pearsall _vs._ Great

Northern[729] blocked the first of the reorganization plans proposed

for the Northern Pacific in 1895. An earlier decision[730] enabled

the Union Pacific to postpone the payment of interest upon the public

debt until the principal should have fallen due. The Erie has been

at times almost continuously before the courts, and the same is true

of the Reading during its reorganizations, of the Northern Pacific,

and of other roads. The student is most fortunate when he can uncover

testimony before government committees, of men who have taken part

in reorganization proceedings, or who are personally acquainted with

developments which have led up to railroad failures. Mr. Blanchard,

before the Hepburn Committee,[731] and Mr. Fink, before the Hepburn

and the Cullom Committees,[732] helped their hearers to understand the

policy which finally resulted in the failure of the Baltimore & Ohio.

The report of the Poland Committee disclosed the scandal of the Crédit

Mobilier.[733] The testimony of Gould, Adams, Ames, Holmes, and others

before the United States Pacific Railroad Commission of 1887–88[734]

made clear the iniquity of the Union Pacific reorganization of 1880.

The statements of Mr. Pierce before the Senate Committee on Pacific

Railroads in 1896[735] explained the attitude of the Union Pacific

towards the repayment of that company’s debt to the Government. The

testimony of Messrs. McLeod, Rice, Harris, and others before the

Industrial Commission of 1900 threw much light upon the Reading

bankruptcy of 1893. The arguments of counsel in the matter of export

differentials, reprinted in the fifth volume of the Elkins Committee

report,[736] gave valuable information on the subject of trunk-line

competition. Many of the witnesses before these committees are frank

in criticism of the railroads with which they have been connected.

Others are forced to admissions by the keen questioning to which they

are exposed. The only similar material to be found elsewhere lies in

memoirs, such as those of Henry Villard,[737] or in biographies like

Oberholtzer’s Life of Jay Cooke[738] and Pearson’s An American Railroad

Builder[739] which make use of private papers of men prominent in

railroad finance. Perhaps White’s Book of Daniel Drew,[740] Depew’s

Retrospect of Twenty-Five Years,[741] and the Life of Isaac Ingalls

Stevens by his son,[742] should be included in this class.

This enumeration, while in no way exhaustive, indicates the principal

sources from which material may be obtained. Secondary works do not

exist which treat solely of railroad reorganization. There is an

article by E. S. Meade in the _Annals_ of the American Academy,[743]

articles by Simon Sterne in the _Forum_,[744] and an article by

A. Lansburgh in _Die Bank_,[745] but no books of which the author

is aware. Mention may be made of an intelligent discussion of an

industrial reorganization by A. S. Dewing in the _Quarterly Journal of

Economics_.[746] _Poor’s Manual_ for 1900 contains the most convenient

set of general statistics. On railroad receiverships, besides legal

works, there is a monograph by H. H. Swain,[747] which has a brief

bibliography, and articles in the _Forum_, _North American Review_, and

other periodicals.

On the history of the great American railroad systems the literature

is also quite inadequate. The Union Pacific has been written up

frequently, because of its relations with the United States

Government. Works by Davis,[748] von der Leyen,[749] Bromley,[750]

Dillon,[751] Crawford,[752] Hazard,[753] and White[754] treat various

phases of the company’s development up to its final reorganization, an

article by Meyer[755] describes the settlements between the Pacific

railroads and the Government, and another article by Mitchell in the

_Quarterly Journal of Economics_[756] deals with Union Pacific finance

since that time. There may also be mentioned an account by Bailey,[757]

which covers the whole of the road’s history, but in a superficial

way, and a vicious attack by Robinson upon all the government-aided

lines.[758] The student of the Erie has at his disposal the elaborate

narrative by E. H. Mott,[759] the chapters by Charles Francis Adams,

Jr.,[760] and the sketch by Crouch.[761] Milton Reizenstein has

dealt with the progress of the Baltimore and Ohio up to 1853,[762]

and for this road there is material to be found in Smith’s Book of

the Great Railway Celebrations of 1857,[763] and in a compilation

of the Laws, Ordinances, and Documents Relating to the Baltimore and

Ohio Railroad, published in 1840.[764] For the Northern Pacific the

history by Smalley covers in popular style the period from 1864 to

1883,[765] the careful History of the Northern Securities Case, by

B. H. Meyer, treats of an interesting later development,[766] chapters

in von der Leyen’s book contain acute and independent discussions

of Northern Pacific as well as of Union Pacific finance,[767] and

there is a fifteen-page pamphlet by Chapman entitled The Northern

Pacific Railroad.[768] Schlagintweit in 1884 described his travels

on the Santa Fe and Southern Pacific.[769] Wilson has written two

volumes upon the Pennsylvania Railroad,[770] while Worthington[771]

and Bishop[772] have described the internal improvements undertaken

by the state of Pennsylvania. Ackerman is the author of a Historical

Sketch of the Illinois Central Railroad,[773] and Hollander[774]

and Ferguson[775] of works on the Cincinnati Southern. Potts[776]

and Briscoe[777] have written on railroads in Texas. The Chicago &

Northwestern has published a volume called Yesterday and To-day,[778]

which contains some information. Hinsdale has worked up the History

of the Long Island Railroad.[779] Bishop has sketched the history

of the St. Paul & Sioux City Railroad.[780] Bliss is the author

of a Historical Memoir of the Western Railroad.[781] Cary in 1893

described the Organization and History of the Chicago, Milwaukee

& St. Paul Railroad Company.[782] Phillips discusses in excellent

fashion the early history of a number of Southern carriers.[783] The

autobiography of George Francis Train[784] and Smyth’s biography of

Henry Bradley Plant[785] are serviceable. Works like those of Van

Oss,[786] Snyder,[787] Carter,[788] and Spearman,[789] and brief

descriptions which have appeared in the columns of the _Railway

World_ and in _Moody’s Magazine_, treat of a number of railroads, but

make no attempt at a scholarly examination of any one. Some general

works like Ringwalt’s Development of Transportation Systems,[790]

Adams’ Railroads: Their Origin and Problems,[791] Hadley’s Railroad

Transportation,[792] Kupka’s Die Verkehrsmittel in den Vereinigten

Staaten von Nordamerika,[793] Singer’s Die Amerikanischen Bahnen,[794]

Myers’ History of the Great American Fortunes,[795] Bancroft’s History

of the Pacific States,[796] and Chronicles of the Builders,[797]

Davidson and Stuvé’s Complete History of Illinois,[798] Hollander’s

Financial History of Baltimore,[799] Sanborn’s Congressional Grants

of Land in Aid of Railways,[800] Haney’s Congressional History of

Railways,[801] and Million’s State Aid to Railways in Missouri,[802]

contain incidental information about individual railroads.

These books are of service. Their number is, however, small and their

scope limited. It is surprising that a field so rich as that of the

history of American railroad systems should have attracted so little

attention from competent students. It is not too much to say that the

history of the Erie by Mott is the only comprehensive work of the kind

which our literature possesses, and that is already thirteen years

old.

FOOTNOTES

[1] Milton Reizenstein, The Economic History of the Baltimore & Ohio

Railroad, Johns Hopkins University Studies, July-August, 1897.

[2] Reizenstein estimates the original cost of the first 379 miles to

have been $37,612 per mile, and, adding the cost of reconstruction and

extension to 1853, he gets a figure of $41,237 per mile. Vide infra, p.

75.

[3] 6th Annual Report, 1832, p. 4.

[4] 35th Annual Report, 1861.

[5] Testimony of Mr. Blanchard, Hepburn Committee Report, p. 3171. See

also Chron. 20:547, 1875.

[6] The Baltimore & Ohio had no line to New York. The Pennsylvania had

had one since 1873, and over it Mr. Garrett was forced to send all

his New York business. Disputes arose over the proper pro-rating of

charges. President Garrett alleged that the terminal charge of four

cents per 100 pounds which the Pennsylvania Company imposed on freight

coming to or going from New York was exorbitant, and that he was paying

for 100 miles of transportation when the real distance was only 90.

President Scott replied that the rates for terminal services in New

York were not sufficient to cover the cost of doing the business, and

that the Pennsylvania’s New York and Philadelphia line was open to the

Baltimore & Ohio on the same terms as to all others. R. R. Gaz. 7:71–2,

1875.

[7] R. R. Gaz. 6:8, 1874. The outcome was an agreement whereby the

Baltimore & Ohio restored rates and fares, and the Pennsylvania

agreed to haul two of the former’s trains daily each way between West

Philadelphia and Jersey City, to sell through tickets West over the

Baltimore & Ohio, and to give that road all necessary facilities for

the handling of through freight.

[8] Sugar, coffee, salt, etc.

[9] The traffic between Cumberland and Baltimore was mostly coal.

In an interview the last of May or first of June, 1875, President

Garrett said that as soon as the right was conceded to his road to

enter New York over the Pennsylvania Railroad as he had been doing

for thirty years, and to make such rates from Baltimore and Chicago

as he chose, he was ready for peace and not sooner.... The Saratoga

combination, which had been gotten up to ruin the Baltimore & Ohio

Railroad, had only served to establish the road and give it a standing

in the West.... It had been and was now his firm object to maintain

the freight rate on fourth class, the principal freight shipped from

the West, at 35 cents per 100. This was a reasonable rate and gave his

company a fair profit. The other lines had to submit to this rate or

there could be no peace. R. R. Gaz. 7:237, 1875.

[10] R. R. Gaz. 7:261, 1875; Ibid. 7:270, 1875; Ibid. 7:289, 1875;

Chron. 20:593, 1875. The compact was to last for ten years, the

companies to agree upon and to maintain moderate rates between all

competing points. Each board of directors was to appoint a special

committee to which was to be referred all differences which might

arise. The Pennsylvania opened its lines to the Baltimore & Ohio

between Philadelphia and New York on the same terms that it gave other

connecting roads at Philadelphia.

[11] See Interstate Commerce Commission, Railways in the United States

in 1902, part 2, entitled, “A Forty-year Review of Changes in Freight

Tariff,” p. 79.

[12] For an account of the differentials at different times see

the argument of counsel and the opinion of the Interstate Commerce

Commission, “In the Matter of Differential Rates to and from North

Atlantic Ports,” April 27, 1905, in Elkins Committee Report, vol. 5,

Appendix E. See also 7 I. C. C. Rep. 612.

[13] Albert Fink, Report on Adjustment of Railway Rates; also Testimony

of Mr. Blanchard, Hepburn Committee Report, pp. 3171 ff.

[14] “Additional Arguments on the Division of [Dead] Freight from

Cincinnati of the Atlantic & Great Western,” etc., N. Y. 1879, p.

5. Speaking from the standpoint of an impartial observer, Mr. Fink

declared that $1,840,494 had been lost between December 19, 1878, and

May 1, 1879, through the failure of the Michigan Central, Lake Shore,

Pennsylvania, and Baltimore & Ohio and their connections to observe

their published tariffs. Chron. 28:578, 1879.

[15] By agreement of March 11, 1881, the chairman of the Joint

Executive Committee, Mr. Fink, was given authority to proclaim a

general reduction in published rates when it should be shown that any

pool line had been accepting traffic at less than the regular rate.

This authority he exercised in April. Rates were restored almost

immediately by special action of the Joint Executive Committee, only to

be reduced again in June for similar reasons.

[16] The actual outbreak of the war was due to the conviction of the

New York Central that traffic was being diverted to other roads by

secret departures from the published tariff. R. R. Gaz. 13:347, 1881.

[17] Hepburn Committee Report, vol. 3, p. 558.

[18] Cullom Committee Report, vol. 2, p. 98.

[19] In January the Pennsylvania announced that it would take

provisions from Chicago to New York for ten cents per hundred pounds.

R. R. Gaz. 14:28, 1882.

[20] See Albert Fink, Report upon the Adjustment of Railroad

Transportation Rates to the Seaboard, 1882; also, Letter to a New York

Merchant, by the same, Hepburn Committee Report, vol. 2, Exhibits, pp.

106–119.

[21] For agreement see Chron. 34:116, 1882. The Commissioners’

functions were purely advisory. They reported in July that “no evidence

has been offered before us that the existing differentials are unjust,

or that they operate to the prejudice of either of the Atlantic

seaboard cities.” Senate Committee on Interstate Commerce Report

(Elkins Committee), 1905, vol. 2, pp. 1243 ff.

[22] The question was passed upon by C. F. Adams as arbitrator in

November, 1882 (Chron. 35:603, 1882), and by the Trunk-Line Board of

Arbitration in January, 1884 (Chron. 38:31, 1884).

[23] The attempt of the Pennsylvania to cut off the New York connection

of the Baltimore & Ohio caused especial bitterness between those roads.

See Chron. 39:420, 1884.

[24] Chron. 41:393, 1885.

[25] Cullom Committee Report, vol. 1, Appendix, pp. 237, and 240 ff.

[26] Chron. 45:692, 1887.

[27] The amount of issue was £2,400,000 ($11,678,400) at 4½ per cent,

maturing April 1, 1933, and placed through Brown, Shipley & Co. of

London. Chron. 36:426, 1883.

[28] Chron. 40:453, 1885.

[29] Chron. 41:555, 1885.

[30] Chron. 43:190, 1886.

[31] The Staten Island Rapid Transit possessed an extensive water front

on Staten Island, besides franchises for two ferries from Staten Island

to the Battery, New York City. Some trouble was experienced in securing

permission to bridge the Kill von Kull between Staten Island and the

New Jersey mainland. Congress passed an act permitting construction,

New Jersey protested, and the courts upheld the authority of Congress.

Stockton _v._ Baltimore & New York Railroad Co., 32 Fed. Rep. 9.

[32] R. R. Gaz. 19:170, 1887; Ibid. 19:490, 1887. For an account of

the Richmond & West Point Terminal Railway & Warehouse Company see the

chapter on the Southern Railway.

[33] R. R. Gaz. 18:49, 1886. Interview with Mr. Albert Fink. A

passenger rate war between the Pennsylvania and the Baltimore & Ohio

took place early in 1886, and resulted in the indirect cutting by the

former of the pool rate which it had agreed to maintain. Chron. 42:73,

1886.

[34] From $34,713,696 in 1884 to $56,868,201 in 1887.

[35] Such as connecting lines, iron bridges over the Ohio River,

elevators, wharves, terminal facilities, etc.

[36] The lowest average price of the common stock before announcement

of the measures taken for relief was 160, from which point the

quotations rapidly dropped to 125, and on January 5, 1889, to 85.

[37] Chron. 45:304, 1887; Ibid. 45:824, 1887.

[38] About $5,000,000 of the floating debt in March, 1888, consisted of

advances by the syndicate, for which they held 50,000 shares of Western

Union Telegraph Company stock, and 15,000 shares of United States

Express Company stock, which at current prices about covered their

loan. Statement of President Spencer, Chron. 46:344, 1888.

[39] Ry. Age, 12:640, 1887.

[40] “If it [the stock] is sold,” said a statement in the New York

_Tribune_, purporting to represent the views of Senator Gorman, a large

stockholder, “it will place the control of the road practically in

the hands of the syndicate.... It is clearly preferable to keep the

control of the stock here [Baltimore], as the road is a city and state

institution of the first importance to our business interests.” Ry.

Age, 13:44, 1888. Another objection was that an issue of additional

preferred stock would postpone indefinitely dividends upon the common.

[41] Mr. Spencer had succeeded Robert Garrett in December, 1887.

[42] Chron. 46:319, 1888. In connection with this proposition President

Spencer made the following statement: Of the $11,148,007 floating

debt, December, 1887, $7,769,314 consisted of loans and bills payable.

This is now reduced to $6,446,173. There will probably be added to

this $1,400,000 for equipment, already either under contract or to be

constructed in the company’s shops. In addition there should be, in

the near future, not less than $2,000,000 additional put into this

property for the purpose of improvement. The total requirements are

thus $10,000,000. Of this $5,000,000 will be disposed of by assets

in the hands of the syndicate as collateral, or in the hands of the

company. Of the remaining $5,000,000, $1,500,000 is floating debt. This

will be more than provided for by the $2,500,000 of consolidated bonds

remaining in the hands of the company for its future use after the sale

of the $5,000,000 to the syndicate. The remaining $3,500,000 needed for

equipment and improvements it is the desire of the company to provide

for by that portion of the $2,500,000 not required for the floating

debt, and by the $2,500,000 in the sinking-fund loan of 1890. Chron.

46:344.

[43] Ry. Rev. 28:192, 1888.

[44] Ry. Age, 12:728, 1887.

[45] R. R. Gaz. 20:417, 1888.

[46] Ry. Rev. 28:192, 1888. The amiability of the syndicate was

profitable to it. On May 21 the subscription books of the $7,500,000

mortgage were opened in London and New York, and the whole issue was

subscribed in London before the inhabitants of the American city, in

spite of their proverbial alertness, were out of bed. In September,

1888, the Baltimore & Ohio was reported as “having all the funds needed

for the present.” R. R. Gaz. 20:343, 1888.

[47] Ry. Rev. 28:163, 1888.

[48] Ibid. 28:236, 1888.

[49] Ry. Rev. 28:678, 1888; Ibid. 28:689, 1888. The coincidence was so

suggestive that it was thought necessary to “credibly inform” certain

bankers that the investigating committee was expected to continue its

investigation and to make a full report. In December the committee

was instructed by a directors’ resolution not to report till its full

statement was ready, and further notice does not appear.

[50] Ry. Age, 16:882, 1891. At the same time the directors decided to

sell $5,096,600 additional common stock to meet expenditures which

would be necessary in connection with the World’s Fair at Chicago.

[51] Chron. 47:575, 1888. It is impossible to give an adequate account

of these wars without straying too far from our subject. Some of the

methods by which rebates were granted are revealed in the case of Jacob

Shamberg _v._ Del., Lack. & W. R. R. Co. _et al._, 4 I. C. C. Rep.

630. The differential question took on a new phase in 1888 through the

demand of weaker roads for protection against stronger. This had long

been a demand of the Grand Trunk, and had been conceded to it in the

last part of 1887. In January, 1888, the Pennsylvania and the New York

Central agreed to allow besides a differential rate to the Erie, the

Lackawanna, the West Shore, and the Baltimore & Ohio, which should vary

from five cents per hundred pounds from Chicago to New York on first

class to one cent on fifth and sixth classes. R. R. Gaz. 20:26, 1888;

Chron. 46:57, 1888. This did not prevent active warfare throughout the

year.

[52] Known as the Presidents’ and Bankers’ Agreement.

[53] There was, however, a shortage in the wheat crop in 1888.

[54] The comparative peace of 1889 was due as much to the abundance

of traffic offering as to the efficacy of the agreement concluded in

February of that year. According to the Chronicle the apportionment

of traffic then contemplated proved difficult to carry out, and

considerable discontent arose. Chron. 50:892, 1890.

[55] In 1890 difficulties occurred through the competition of the

Canadian Pacific, and more particularly through the attempt of the Lake

Shore to reduce the differential formerly granted to the Grand Trunk.

Chron. 50:850, 1890. The matter was left to arbitration, Chron. 51:625,

with the result that the lines north of Lake Ontario were allowed to

charge two and one-half cents less per hundred pounds on dressed beef

to the seaboard than the lines further south. R. R. Gaz. 23:64, 1891.

This had the effect of putting the Canadian Pacific on an equality with

the Grand Trunk. Late in 1892 still another agreement between the trunk

lines was found necessary to maintain rates. Chron. 55:857, 1892.

[56] Ry. Rev. 30:382, 1890.

[57] Chron. 50:800, 1890; Ibid. 50:833, 1890; Ry. Rev. 30:348, 1890;

R. R. Gaz. 22:448, 1890.

[58] Application for listing of Trustee certificates, Chron. 54:369,

1892.

[59] Certain extensions had been made, which it is not necessary to

describe at length. The most important had been those of the Pittsburgh

& Western in 1891, Chron. 52:238, 1891, the Akron & Chicago Junction,

Chron. 53:756, 1891, and the West Virginia & Pittsburgh, Chron.

54:725, 1892. In 1893 the Baltimore & Ohio Southwestern and the Ohio

& Mississippi Railway companies consolidated, and the Baltimore &

Ohio guaranteed the principal and interest of the first consolidated

mortgage gold bonds of the consolidated company for $25,000,000. Chron.

56:332, 1893.

[60] Chron. 59:696, 1894. In October, 1893, the Baltimore & Ohio was

borrowing in London on one year 5 per cent promissory notes, and 2

per cent commission, paying, therefore, an equivalent of 7 per cent

interest. Ry. Times, 64:499, 1893.

[61] Chron. 60:42, 1895.

[62] In 1895 the directors speak of the unremunerative rates

prevailing. Chron. 60:711, 1895. At the end of the year Mr. Alexander

Shaw, chairman of the board of directors, felt called upon to say,

“The two subjects which are giving the new board of directors the most

to think about are the floating debt and the future management of the

property. We have to fund the former, and as to the latter there is

a difference of opinion among the directors.... I deny specifically

that the January interest on the bonds of the company will be passed;

that a receivership, either friendly or otherwise, is contemplated;

that the Baltimore & Ohio and the Southern Railway systems are to be

consolidated; and the statements that there has been an irregularity in

the manner of keeping the books of the company.” Chron. 61:1153, 1895.

[63] Ry. Rev. 36:138, 1896. The receivers were appointed February 29.

[64] Chron. 62:777, 1896.

[65] The period covered was from September 30, 1888, to November

30, 1895. Report of Mr. Stephen Little to General Louis Fitzgerald,

chairman of the reorganization committee.

[66] Chron. 64:999, 1897.

[67] President J. K. Cowen, Vice-President Oscar G. Murray.

[68] Chron. 62:907, 1896.

[69] Ibid. 69:128, 1899.

[70] R. R. Gaz. 28:781, 1896; Ibid. 29:563, 1897; Chron. 65:110, 1897;

Ry. Rev. 38:628, 1898. The status of the Baltimore & Ohio stock was

somewhat peculiar, in that when first issued to the state of Maryland

it had been accompanied by a guarantee, or conditional guarantee, of

dividend payments; and Johns Hopkins University, to which the stock

had been transferred, maintained that this contract, added to the

continuous payment of dividends for over fifty years, gave them rights

even against the bondholders.

[71] Chron. 66:1235, 1898.

[72] The prior lien bonds were “to be secured by a mortgage upon the

main line and branches, Parkersburg Branch and Pittsburg Division when

acquired by the new company, covering about 1017 miles of first track,

and about 964 miles of second, third, and fourth track and sidings, and

also all the equipment now owned by the company of the value of upward

of $20,000,000, or hereafter acquired in any manner by the use of the

$34,000,000 reserved first mortgage bonds, as hereinafter stated.”

[73] The first mortgage 4s were to be a first lien “upon the

Philadelphia, Chicago, and Akron divisions and branches and the

Fairmount, Morgantown & Pittsburg Railroad, covering about 570 miles

of first track, and about 332 miles of second, third, and fourth track

and sidings, and also on the properties now included in the present

Baltimore & Ohio Terminal mortgages of 1894, when said lines and

properties are acquired by the new company; also on the Baltimore Belt

Railroad, if and when the same shall be acquired by the new company.

They will also be a lien subject to the prior lien mortgage upon the

lines, properties, and equipment covered by the latter.”

[74] Annual Yield of Old and New Securities:

_Annual return

_Previous _Annual return from new

annual from new bonds and

_Loan_ return_ bonds given_ stock given_

B. & O. Loan, 1853 $40 $40.87 $46.47

Consol. Mtg. 5s, 1887 50 41.75 44.35

Loan of 1872 60 40.41 42.01

Loan of 1874 60 40.41 46.81

Parkersburg Br. 6s 60 41.75 41.75

P. & C. 1st Ex. 4s 40 40.87 42.70

P. & C. 1st 7s 70 40.00 40.00

B. & O. 5s, Loan of 1885 50 40.00 44.00

P. & C. Consol. 6s 60 40.67 48.67

Chicago Div. 5s 50 46.30 50.30

Phila. Div. 4½s 45 40.00 50.60

B. & O. 4½ Term. Bs 45 40.00 40.00

Akron & Chicago Junc. 5s 50 40.00 42.00

[75] Headed by Messrs. Speyer & Co. and Kuhn, Loeb & Co. of New York,

and Messrs. Speyer Bros. of London. R. R. Gaz. 30:733, 1898.

[76] The Western Union stock was sold to the same syndicate which took

the Baltimore & Ohio’s securities, at a price said to be about 90. At

this price the yield would have been $3,420,000; so evidently very

little other stock was sold.

[77] In fact they were never quite so low as this.

[78] Chron. 69:128, 1899.

[79] Chron. 67:27, 1898.

[80] Ry. Rev. 38:656, 1898.

[81] R. R. Gaz. 31:500, 1899.

[82] Ry. Age 28:570, 1899.

[83] The chief addition has been that of the Cleveland, Lorraine &

Wheeling.

[84] Chron. 72:1079, 1901. In February, 1906, the Pennsylvania Railroad

and three other companies which it controlled owned $28,480,000 of

Baltimore & Ohio preferred and $42,900,000 of Baltimore & Ohio common

stock out of an authorized capital of $60,000,000 preferred and

$125,000,000 common. Report of the Interstate Commerce Commission on

the Pennsylvania community of interest, February 6, 1906.

[85] See Chron. 76:102, 1903; and Interstate Commerce Commission,

Report on Discriminations and Monopolies in Coal and Oil, January

25, 1907. The interest of the Baltimore & Ohio in the Reading dated

from 1902, and was influenced in turn by the ability of the Reading

to control the Central of New Jersey, over which the Baltimore & Ohio

reached New York. The latter’s holdings of Reading stock were shared

with the Vanderbilts. Both the Baltimore & Ohio and the Lake Shore sold

a block of their Reading stock in 1904.

[86] See statement by the Pennsylvania management in Chron. 83:563,

1906.

[87] It is not necessary to do more than to mention the recent contest

between the Baltimore & Ohio and the Hill-Morgan people over the

Chicago Terminal Transfer Railway. By arrangement with this company

the Baltimore & Ohio had enjoyed terminal facilities at Chicago on

favorable terms. When the Terminal Railway went bankrupt the Baltimore

& Ohio paid off the first mortgage bonds in order to prevent the loss

of its privileges. Litigation followed, to end finally in an agreement

between the Hill and Baltimore & Ohio interests for joint ownership

of the Chicago Terminal by the Burlington and the latter, and for the

use of its facilities in accordance with an equitable division of its

trackage. The Pere Marquette and the Chicago Great Western, which had

shared in the use of the property to that time, were left to shift for

themselves. Ry. World, August 23, 1907.

[88] E. H. Mott, Between the Ocean and the Lakes—the Story of Erie.

N. Y. 1899.

[89] Ibid. pp. 79–80.

[90] Mott, p. 129. Default was also made on the first, second, third,

and fifth mortgages.

[91] See Adams’s Chapters of Erie, Boston, 1871.

[92] The capital per mile rose from $81,068 in 1864 to $117,760 in 1872.

[93] Chron. 12:203, 1871; Ibid. 16:489, 1873.

[94] R. R. Gaz. 6:100, 1874. See affidavit of S. H. Dunan in the

suit of John C. Angell against the Erie Railway Company and others,

reprinted in Hepburn Committee Report, vol. 2, Exhibits, pp. 591–610.

[95] Hepburn Committee Report, vol. 2, Exhibits, pp. 623–643.

[96] Angell suit, R. R. Gaz. 6:269, 1874.

[97] R. R. Gaz. 7:224, 1875.

[98] Chron. 20:520, 1875.

[99] From a loan of £3,000,000 placed in London, the company had

received but £1,232,029 in cash; £508,431 being retained by the London

Banking Association and by James McHenry for claims and commissions on

which the critical condition of the company enabled them to insist.

Chron. 20:500, 1875. For statement of the physical condition of the

property, May 26, 1875, see Extracts from joint letter to Hon. H. J.

Jewett, Hepburn Committee Report, vol. 2, pp. 517–518, Exhibits.

[100] See R. R. Gaz. 7:423, 1875.

[101] R. R. Gaz. 7:423, 1875.

[102] R. R. Gaz. 7:479–80, 1875.

[103] Chron. 21:277, 1875.

[104] R. R. Gaz. 7:511, 1875.

[105] R. R. Gaz. 7:533, 1875; Chron. 21:612, 1875.

[106] R. R. Gaz. 8:818, 1876.

[107] Chron. 22:233, 1876.

[108] R. R. Gaz. 8:178, 1876.

[109] Chron. 22:423, 1876.

[110] Amounts received from assessments to January 18, 1878, were:

$3 per share on 23,372 Preferred, $70,116

$2 58,095 116,190

$6 72,982 Common, 437,892

$4 698,095 2,792,380

----------

Total, $3,416,578

Shares forfeited for non-payment,—Preferred, 3902

Shares forfeited for non-payment,—Common, 8923

R. R. Gaz. 11:30, 1879. Report of Pres. Jewett, Chron. 28:67–8, 1879.

Shares with assessment paid sold in October, 1878, at $15 for common

and $30 for preferred. R. R. Gaz. 10:516, 1878.

[111] Chron. 23:233, 1876; Ibid. 26:419; Ibid. 29:358, 1879; Hepburn

Committee Report, vol. 2, pp. 252–7, Exhibits.

[112] Chron. 26:419, 1878.

[113] Ibid. 26:469, 1878. For indenture executed by the new corporation

and for text of the first and second consolidated mortgage and of the

second consolidated funded coupon mortgage, see Hepburn Committee

Report, vol. 2, Exhibits, pp. 315–50.

[114] Mott, p. 268.

[115] Mott, p. 269.

[116] Annual Report, 1882.

[117] Chron. 36:427, 1883. For the necessity of Erie’s extension

westward see testimony of First Vice-President Felton before the Senate

Committee on Transportation Interests of the United States and Canada,

51st Congress, 1st Session, Report no. 847, pp. 130–1.

[118] For some account of the trunk-line rate wars see the chapter on

the Baltimore & Ohio.

[119] Chron. 39:234, 1884.

[120] Annual Report, 1884, p. 12.

[121] R. R. Gaz. 16:421, 1884.

[122] Chron. 39:349, 1884.

[123] R. R. Gaz. 17:446, 1885.

[124] For terms of reorganization see Annual Report, 1890; also R. R.

Gaz. 19:188, 1887.

[125] Annual Report, 1886.

[126] Upon such redemption a corresponding amount of the original

coupons were to be cancelled.

[127] Annual Report, 1886.

[128] From .662 in 1887 to .610 in 1892.

[129] Testimony of Messrs. King and Felton, Senate Committee on

Transportation Interests of the United States and Canada, pp. 44 and

121–2.

[130] Annual Report, 1887.

[131] Mott, p. 272.

[132] In 1890 a traffic agreement was made with the Cincinnati,

Hamilton & Dayton, to take the place of that with the Big Four. R. R.

Gaz. 22:314, 1890.

[133] Figures for 1891 were, fixed charges, $4298 per mile; net

revenue, $4897 per mile.

[134] Chron. 57:179, 1893.

[135] Mott, p. 273.

[136] Chron. 57:938, 1893; Ibid. 57:1083, 1893.

[137] Ry. Times, 65:3, 1894.

[138] R. R. Gaz. 26:18, 1894.

[139] Ry. Times, 65:120, 1894.

[140] Ibid. 65:152, 1894.

[141] Chron. 58:264, 1894.

[142] Ibid. 58:383, 1894.

[143] Ibid. 58:430, 1894.

[144] According to the law of 1892 the bonded indebtedness, including

mortgages given as consideration for the purchase of real estate and

mortgages authorized by contract prior to May, 1891, could not exceed

the amount of the paid up capital stock.

[145] Ry. Rev. 34:181, 1894.

[146] R. R. Gaz. 26:472, 1894.

[147] Ibid. 27:554, 1895.

[148] New York, Pennsylvania & Ohio voting trustees agreed to foreclose

and deliver the New York, Pennsylvania & Ohio property, subject only

to the prior lien, equipment, and leased-line securities for which

reservation was made.

[149] Chron. 61:368, 1895; R. R. Gaz. 27:583–4, 1895.

[150] The following was the rate of exchange of Erie securities for New

York, Pennsylvania & Ohio securities on payment by the latter of $12

per new share:

_Old securities _To be exchanged for_

in amounts of_ _Prior Lien _1st _2d _Com.

Bonds_ Pref._ Pref._ Stock_

1st mortgage, $5,000 $1000 $500 $100 $750

2d mortgage, 500 100

3d mortgage, 1,000 100

Pref. Stock, 6,000 100

Com. Stock, 10,000 100

[151]

Capital Stock—

_Common_ _Preferred_

_Before reorganization_

Erie, $77,837,000 $8,536,600

N. Y., P. & O., 34,999,350 10,000,000

------------ -----------

$112,836,350 $18,536,600

_After reorganization_

Erie, $100,000,000 $46,000,000

Nypano, 20,000,000

------------ -----------

$120,000,000 $46,000,000

[152] This real rental was increased somewhat by the assumption of New

York, Pennsylvania & Ohio prior liens.

[153] Chron. 61:831, 1895.

[154]

Capital— _Stock_ _Bonds_

1896 $146,000,000 $137,704,100

1907 176,271,300 209,633,900

[155] Calculated. Poor gives the figure of 340.3 miles of _track_. In

1867 the miles of track were reported as 418.1, and the miles of line

as 147, the latter being 35.1 per cent of the former. Supposing the

proportion to have been the same in 1862, to 340.3 miles of track there

would have been 119.4 miles of line, which, divided into a capital of

$23,094,829, gives $193,417.

[156] Annual Report, 1881, p. 63.

[157] Industrial Commission, vol. 19, p. 445. Area of fields as given

in Annual Report for 1881 was: Schuylkill, 146 sq. miles; Western

Middle, 91 sq. miles; Lehigh, 37 sq. miles; Wyoming, 198 sq. miles.

[158] An analysis of the Coal & Iron Company’s operations in 1881

(Annual Report, 1881) showed that there had been expended:

For coal and timber lands and leasehold collieries, and

for dead work, colliery equipments and improvements,

real estate and miners’ houses, etc., $39,385,080

For stocks and bonds and loans to secure the control

of tributary properties, 5,672,394

For iron ore lands, iron furnaces, mills, and other

properties, 1,720,566

For profit and loss account in working properties,

including interest payments, etc., 22,454,500

For supplies and miscellaneous accounts, 1,485,426

For bills and accounts receivable, cash, etc., 2,608,702

-----------

$73,326,668

Of which amount there was furnished by the Railroad

Company, 54,886,647

And the Coal & Iron Company’s obligations held by the

public, for which the Railroad Company became

responsible as guarantor, amounted to 14,929,557

Other direct liabilities of the Coal & Iron Company

amounted to 3,510,464

-----------

$73,326,668

[159] Annual Report, 1881.

[160] Part of the difference was due to the inflation of the currency

before 1879.

[161] R. R. Gaz. 9:225, 1877; Ibid. 9:146, 1877.

[162] Ibid. 9:284, 1877.

[163] Annual Report, 1881, p. 28.

[164] Chron. 31:46, 1880, Report of the English Bondholders’ Committee,

June 18, 1880. This committee was in the interests of the Messrs.

McCalmont.

[165] Ry. Age, 5:365, 1880.

[166] R. R. Gaz. 12:363, 1880.

[167] Ry. Age, 5:351, 1880; R. R. Gaz. 12:350, 1880.

[168] R. R. Gaz. 12:542, 1880.

[169] R. R. Gaz. 12:564, 1880.

[170] Chron. 31:536, 1880.

[171] Chron. 31:607, 1880.

[172] R. R. Gaz. 12:609, 1880.

[173] Ibid.

[174] Ibid. 13:11, 1881.

[175] Ibid. 12:704, 1880.

[176] R. R. Gaz. 12:652, 1880.

[177] Ibid. 12:704, 1880.

[178] Ibid. 13:11, 1881.

[179] R. R. Gaz. 13:25, 1881.

[180] Chron. 32:206, 1881.

[181] R. R. Gaz. 13:43, 1881.

[182] R. R. Gaz. 13:132, 1881.

[183] Chron. 32:313, 1881.

[184] Chron. 32:445, 1881.

[185] Chron. 32:469, 1881.

[186] R. R. Gaz. 13:446, 1881.

[187] Ry. Age, 6:528, 1881.

[188] Annual Report, 1881, p. 52.

[189] Annual Report, 1881, pp. 50 ff.

[190] Annual Report, 1881, pp. 50 ff.; see also Chron. 33:177, 1881.

[191] Ry. Age, 6:486, 1881.

[192] Chron. 33:256, 1881.

[193] Ry. Age, 6:628, 1881.

[194] R. R. Gaz. 13:624, 1881.

[195] R. R. Gaz. 13:672, 1881.

[196] Chron. 34:265, 1882; R. R. Gaz. 26:156, 1882.

[197] Chron. 34:409, 1882.

[198] R. R. Gaz. 14:354, 1882.

[199] Industrial Commission, vol. 9, p. 607.

[200] Ry. Age, 10:218, 1885.

[201] Annual Report, 1883, pp. 111 ff.

[202] Annual Report, 1883, pp. 139 ff.

[203] Chron. 37:563, 1883.

[204] Annual Report, 1883, pp. 25–7.

[205] Annual Report, 1883. The proposition was made by Mr. Gowen.

[206] From November 30, 1883, to January 2, 1884, reliable figures

subsequently showed a deficit of $2,000,000.

[207] Chron. 38:679, 1884.

[208] Ibid. 39:461, 1884.

[209] Annual Report, 1884, pp. 21–8.

[210] R. R. Gaz. 17:80, 1885.

[211] R. R. Gaz. 17:144, 1885.

[212] Ibid. 17:160, 1885.

[213] Ibid. 17:224, 1885.

[214] Collateral bonds were to be given for the assessment.

[215] Chron. 40:569, 1885. The trustees were to be appointed as

follows: One by foreign creditors, two by the general mortgage

bondholders, one by the income mortgage bondholders, one by holders of

securities junior to the income mortgage, and two by the shareholders.

[216] Ry. Age, 10:314, 1885.

[217] R. R. Gaz. 17:607, 1885.

[218] Chron. 41:307, 1885.

[219] Chron. 41:654, 1885.

[220] Preferred from $846,950 to $36,381,820; common from $36,822,975

to $60,134,462.

[221] R. R. Gaz. 18:138, 1886.

[222] Chron. 42:216, 1886.

[223] Chron. 42:365, 1896. Assessments ranged from 2½ per cent on the

deferred income bonds to 15 per cent on certain junior securities and

$10 on both classes of stock.

[224] R. R. Gaz. 18:271, 1886.

[225] Ibid. 18:138, 1886.

[226] Ry. Age, 11:376, 1886.

[227] R. R. Gaz. 18:502, 1886.

[228] Chron. 43:368, 1886; Ibid. 43:747, 1886; Annual Report, 1887.

[229] R. R. Gaz. 18:897, 1886.

[230] Ry. Age, 12:692, 1887. These bondholders even proposed a plan of

reorganization of their own, which it is not worth while going into.

[231] Ry. Age, 12:746, 1887; Chron. 45:539, 1887.

[232] R. R. Gaz. 22:370, 1890.

[233] Chron. 50:37, 1890.

[234] Chron. 53:408, 1891.

[235] Chron. 54:288, 1892; Industrial Commission, vol. 19, pp. 455–7.

[236] R. R. Gaz. 24:138, 1892.

[237] Industrial Commission, vol. 9, p. 738.

[238] Annual Report, 1892.

[239] R. R. Gaz. 24:420, 1892.

[240] Chron. 55:680, 1892.

[241] Chron. 56:82, 1893.

[242] R. R. Gaz. 25:102, 1893.

[243] Industrial Commission, vol. 9, p. 567, testimony of A. A. McLeod.

[244] Ibid. vol. 9, p. 574.

[245] Ry. Age, 17:109, 1892.

[246] Ry. Rev. 32:507, 1892.

[247] Chron. 55:723, 1892.

[248] R. R. Gaz. 25:386, 1893.

[249] Ry. Age, 18:314, 1893.

[250] Ibid. 18:164, 1893.

[251] Industrial Commission, vol. 9, p. 573.

[252] Ibid.

[253] Ry. Times, 63:265, 1893.

[254] Ry. Age, 18:314, 1893.

[255] Industrial Commission, vol. 9, p. 739, testimony of I. L. Rice.

[256] Chron. 57:105, 1893; Ibid. 57:423, 1893.

[257] New York _Herald_, May 29, 1893.

[258] Ry. Times, 63:783, 1893.

[259] Ry. Age, 18:501, 1893.

[260] Chron. 56:905, 1893.

[261] Ry. Times, 63:751, 1893.

[262] Ry. Times, 63:783, 1893.

[263] R. R. Gaz. 25:496, 1893. The deposits required were: general

mortgage, $41,828,000; stock, 480,424 shares.

[264] Industrial Commission, vol. 9, p. 737, testimony of I. L. Rice.

[265] Ry. Times, 64:369, 1893.

[266] Ry. Age, 18:897, 1893.

[267] Ry. Age, 18:735, 1893.

[268] Ry. Rev. 34:55, 1894; Ry. Times, 65:87, 1894.

[269] Chron. 58:774, 1894.

[270] Ry. Times, 65:623, 1894. See also the report of the company’s

comptroller to the receivers in Annual Report, 1893.

[271] Ry. Rev. 34:307, 1894.

[272] Chron. 59:515, 1894; Ry. Age, 19:557, 1894; Ry. Rev. 34:561,

1894; Ry. Times, 66:571, 1894.

[273] Deposits of bonds were up to the last of January (R. R. Gaz.

27:78, 1895):

_Total Issue_ _Deposits_

General Mortgage $44,663,000 $33,099,000

1st preferred 23,948,133 12,182,300

2d preferred 16,176,326 6,261,600

3d preferred 18,591,099 8,631,400

[274] Chron. 60:43, 1895.

[275] Ry. Times, 68:802, 1895; Chron. 61:1109, 1895.

[276] Ry. Age, 20:625, 1895.

[277] Chron. 63:560, 1896.

[278] Chron. 64:84, 1897.

[279] Chron. 63:923, 1896.

[280] See testimony of Mr. Baer before the Interstate Commerce

Commission, 1904, “Synopsis of Stenographers’ Minutes, etc., in the

case of W. R. Hearst against the Philadelphia & Reading Railway

Company,” p. 55. The managers wished to take no chances.

[281] Organization and scope of the three Reading Companies. The

Reading Company owns practically the whole of the capital stock of

the Philadelphia & Reading Railway Company and the Philadelphia &

Reading Coal & Iron Company, and all of the other stocks and securities

which were acquired by the purchases under the sale made by the

Trustees and the Receivers. It also owns the $20,000,000 purchase

money mortgage bonds issued by the Philadelphia & Reading Railway

Company, the locomotives, cars, steam collieries, tugs, and barges

constituting the railway and marine equipment, and all the real estate

of the old Philadelphia & Reading Railroad Company which was not

appurtenant to the railroad itself. This, of course, does not include

the depots, rights of way, etc., which belong to the Railway Company.

The Philadelphia & Reading Railway Company owns all the roads formerly

belonging to the Philadelphia & Reading Railroad Company, and it

controls the roads hitherto leased to that company, either by transfer

of the old leases or by new leases made since November 30, 1896. It

leases from the Reading Company the railway and marine equipment which

it uses in the conduct of its business and a number of wharves and

warehouses on the Delaware River. Annual Report, 1898.

[282] Chron. 64:84, 1897.

[283] There are certain duplications in both of these figures, but the

same duplications appear in each.

[284] Chron. 79:2087, 1904.

[285] See the nineteenth volume of the Industrial Commission’s report

for a brief description of the renewed attempt at consolidation in the

anthracite coal fields; also testimony in the case of W. R. Hearst

against the Philadelphia & Reading Railway Company.

[286] The Virginia state bonds were redeemable in 34 years from April

8, 1853, to September 30, 1854, by the payment of an annuity of 7 per

cent. Of this rate 6 per cent covered the interest and 1 per cent,

by continuous reinvestment at 6 per cent, was expected to yield the

principal sum in the 34 years agreed upon. Annual Report, 1867. Like

most new companies, the Richmond & Danville found difficulty at first

in meeting its obligations, and was obliged to issue bonds to provide

for overdue interest to the state and to keep its floating debt within

bounds. R. R. Gaz. 5:499, 1873, and Ibid. 5:507, 1873.

[287] R. R. Gaz. 3:279, 1871. This road stretched from Goldsboro in

the eastern part of North Carolina to Charlotte in the southwestern

part, via Greensboro. It was principally owned by the state of North

Carolina. By the terms of the lease the Richmond & Danville agreed to

pay $260,000 per annum for thirty years.

[288] The whole road was opened for traffic in September, 1873. It

went into the hands of a receiver in 1874, and was sold in foreclosure

in 1876; but the Pennsylvania Railroad relieved the Richmond &

Danville from all collateral liabilities incurred on its account. The

reorganized line was leased by the Richmond & Danville in 1881. Chron.

32:367, 1881.

[289] Annual Report, 1878.

[290] Ibid. 1874.

[291] Ulrich B. Phillips, A History of Transportation in the Eastern

Cotton Belt to 1860. New York: The Columbia University Press, 1908, pp.

372 ff.

[292] Including 37 miles of running rights over the N., C. & St. L.

[293] R. R. Gaz. 5:475, 1873.

[294] Ibid. 6:178, 1874.

[295] Ibid. 8:540, 1876.

[296] The Memphis & Charleston stockholders agreed to the lease in

order to avoid bankruptcy. At a meeting in May, 1877, it was pointed

out to them that the net earnings of the road had not been enough to

pay the interest on its bonds, and that a large amount was due to the

state of Tennessee which the company had no present means of paying.

Either an assessment on the stock or a lease to the East Tennessee

was declared to be necessary. Accordingly, a lease was concluded. The

East Tennessee agreed so to discharge the principal of the company’s

indebtedness to the state as to reduce the annual interest account from

$360,000 to $310,000 as a maximum, and upon the fulfilment of this and

of certain other minor conditions took over the operation of the road.

Two years later the lease was extended for twenty years at a definite

rental amounting to 7 per cent on $4,225,000 or a yearly payment of

$295,750. See R. R. Gaz. 9:421, 1877, and Ibid. 11:672, 1879.

[297] The Selma, Rome & Dalton was bought from the purchasers at

foreclosure sale for $2,600,000. The Georgia Southern cost $367,369.

Outstanding debts were assumed. To provide for these and other outlays

$10,000,000 new 5 per cent bonds were authorized. R. R. Gaz. 12:622,

1880.

[298] This line was completed in 1882. Chron. 35:430, 1882; R. R. Gaz.

13:420, 1881.

[299] Chron. 33:357, 1881.

[300] R. R. Gaz. 13:420, 1881.

[301] Prominent among them were Messrs. Clyde, of the Coast Line

railroads, Wilson and McGhee of the East Tennessee, Stewart, Plant,

Logan, and others.

[302] This had been the Atlanta & Richmond Air Line.

[303] Chron. 37:128, 1883.

[304] Chron. 39:733, 1884.

[305] Chron. 40:29, 1885.

[306] The committee overestimated the net earnings of the next few

years. Instead of $1,400,000 each year these proved to be $1,288,343 in

1885 and $1,382,749 in 1886.

[307] Chron. 40:60, 1885. There was some dispute as to the jurisdiction

of the different courts in this connection. The Circuit Court appointed

Mr. Fink receiver for the whole line on January 7. The next day a state

court appointed R. T. Dorsey and E. P. Alexander receivers for the

lines in Georgia under another mortgage. This suit was removed to the

Federal Court and Dorsey, who had meantime been appointed sole receiver

in Georgia, was displaced. Subsequently the Georgia Supreme Court held

that the transfer was illegal, and Dorsey vainly endeavored to regain

his position. The dispute was ended by the withdrawal of the suit upon

which the Georgia application was based.

[308] Son-in-law of George Seney.

[309] This committee was chosen by the consolidated bondholders. Its

membership consisted of Robert Fleming, a representative of the foreign

holders; Charles McGhee, president of the Memphis & Charleston; G. W.

Smith, of Kountze Bros.; Frederic D. Tappan, president of the Gallatin

National Bank; E. W. Corlies, vice-president of the Bank of America;

and Frederick P. Olcott, president of the Central Trust Company, which

was trustee of the mortgages of the company. Chron. 42:155, 1886.

[310] As might have been expected, this estimate was too optimistic.

The actual reduction was to $1,167,000. Even this constituted a cut of

about one-third.

[311] Chron. 42:186–7, 1886. See also Poor’s Manual for 1886.

[312] The reader will remember that that same year the general manager

had estimated the sum required for steel rails, iron bridges, and other

improvements at $1,000,000.

[313] It is true that the severity of the treatment of the junior

securities caused sharp protest. A number of the stockholders met in

New York February 23, and appointed a committee to prepare a plan

of assessment and to oppose foreclosure. Under the auspices of this

committee, Messrs. William H. Sistare and Harold Clemens filed a suit

against the reorganization committee of the East Tennessee Company.

The capitalization of the company, said they, had been fraudulently

inflated by the members of the Thompson-Seney-Brice syndicate. By false

reports these financiers had unloaded upon the public securities which

they had previously distributed among themselves, and then had entered

upon a scheme for wrecking the property. The suits made specific

charges of irregularity, and prayed for relief. Ry. Age, 11:192, 1886.

[314] Chron. 42:364, 1886.

[315] Ibid. 42:575, 1886.

[316] Ibid. 42:663, 1886. In a circular to their constituents this

committee said: “That after a full and satisfactory presentation of

the case by very able counsel it appeared that the committee had

been misinformed as to the material facts upon which their case was

predicated. It especially appeared to the Court that there was no

ground for the charge of fraud against the directors of the Company

or the Central Trust Company. It further appeared that the litigation

must be a protracted one, without substantial benefit to either party.

Your committee were not willing to assume the responsibility of such a

contest, in view of the expressed willingness of the majority to give

to the minority the same terms which they had accepted for themselves.

It was deemed wise to harmonize all interests, and join hands to

promote the future of the property.”

[317] Annual Report, East Tennessee, Virginia & Georgia, 1887.

[318] Chron. 37:344, 1883. The debentures were cumulative income bonds

entitled to 6 per cent out of earnings after payment of interest,

rentals, and operating expenses, including expenditures made for the

repair, renewal, and improvement of existing property and equipment

necessary for the proper conduct of the business of the railroad.

Certain provisions of the mortgage protected them against the insertion

of new mortgage bonds before them. Chron. 37:373, 1883.

[319] Curiously enough the chief saving seems to have been in

maintenance of cars, an expenditure which one would expect to be least

affected by the syndicate control.

[320] Chron. 36:56, 1883.

[321] R. R. Gaz. 18:138, 1886.

[322] Chron. 42:575, 1886.

[323] The Richmond & Danville guaranteed interest on some $12,500,000

of Virginia Midland bonds.

[324] Cf. Poor’s Manual for 1887.

[325] The very high average price of $200 per share was reported to

have been paid. R. R. Gaz. 18:825, 1886; cf. R. R. Gaz. 19:162–3, 1887.

The Terminal Company issued $5,000,000 new preferred and $9,000,000

common stock. Of this it sold the preferred and $7,500,000 of the

common, giving to every holder of 100 of its shares the right to

subscribe to the extent of one-third of the par value of his stock, and

to receive for his subscription 33⅓ shares of the new preferred and 50

shares of common. Then to the $5,000,000 cash thus secured the Terminal

Company added the $1,500,000 common stock left from its $9,000,000

issue, and turned the whole over to the Richmond & Danville in payment

for the securities which it had purchased. R. R. Gaz. 18:825, 1886.

[326] The floating debt amounted to $3,161,325 when Mr. Sully assumed

the presidency, and $1,708,700 of it matured January 1. Chron. 44:401,

1887. To provide for it, and for the Richmond & Danville shares,

$5,500,000 6 per cent collateral trust bonds were issued, secured by

East Tennessee first preferred, Richmond & Danville stock, Columbia &

Greenville stock, Virginia Midland stock, and Western North Carolina

bonds; and also $16,000,000 common stock. The bonds were sold for cash

and the returns applied to the East Tennessee purchase and to the

floating debt; $5,000,000 of the stock went for East Tennessee first

preferred, and the rest for Richmond & Danville common, Washington,

Ohio & Western stock and income bonds, and for other purposes. Chron.

44:149, 1887. Also Poor’s Manual, 1890.

[327] It was reported that the East Tennessee first preferred stock

had been offered to the Norfolk & Western before the Richmond Terminal

acquired it.

[328] Chron. 47:410, 1888.

[329] Chron. 47:532, 1888.

[330] Chron. 47:532, 1888; Ry. Rev. 28:663, 1888; R. R. Gaz. 20:778,

1888.

[331] Chron. 47:625, 1888.

[332] Chron. 47:663, 1888.

[333] Ry. Rev. 28:679, 1888.

[334] Ry. Age, 13:788, 1888.

[335] Cf. Central Railroad Company _vs._ Georgia, 2 Otto, 665. The

Central Railroad was granted certain exemptions from taxation, and the

question came up in 1874 whether the right to these exemptions was

surrendered by consolidation with the Macon & Western, and whether, if

not, they extended to the Macon & Western as well as to the original

company.

[336] Including 67 per cent paid in Confederate notes during the war.

[337] See Ulrich B. Phillips, _op. cit._, chap, vi, for the early

history of the Central of Georgia Railroad System.

[338] The following is representative from a pamphlet issued by the

Rice Committee:

“The matter of the purchase of sixty-five thousand shares of the

first preferred stock of the East Tennessee Railroad Company and the

circumstances attendant thereon.

“1st. Why did the directors of the Terminal Company purchase sixty-five

thousand shares of that stock at par, when fifty-five thousand and one

shares would have been sufficient to have given the Terminal Company

a majority of that stock, the minority stock at that time selling at

about eighty?

“2d. Why was the minority stock of the Danville Railroad Company

purchased at the same time at a price which then amounted to about two

hundred dollars per share, being a premium of one hundred per cent?

“3d. Is it true that the majority of the committee appointed for the

purpose of negotiating the purchase of the stock of the East Tennessee

Company consisted of directors of the Terminal Company largely

interested in the minority stock of the Danville Company?” Chron.

46:579, 1888.

[339] Chron. 46:449, 1888. The opposition pamphlet is reprinted in

Chron. 46:579, 1888. It contained thirteen heads, each of which charged

or insinuated fraud on the part of the existing board of directors.

[340] Chron. 46:699, 1888. The vote was 298,006 to 94,645. For

resolutions condemning the action of the minority see Ry. Rev. 28:332,

1888.

[341] Chron. 47:499, 1888.

[342] The Erlanger or Queen & Crescent system comprised the following

roads: Cincinnati Southern (336 miles); Vicksburg & Meridian (142

miles); Vicksburg, Shreveport & Pacific (189 miles); New Orleans &

Northwestern (195 miles); Alabama Great Southern (295 miles). Total

mileage, 1157. The road actually acquired was that of the Cincinnati

Southern and Alabama Great Southern between Cincinnati and Meridian

(about 631 miles); a close working contract being concluded with

the rest. Ry. Age, 15:230, 1890. The East Tennessee made payment by

the issue of $6,000,000 5 per cent collateral trust bonds, put out

jointly by the East Tennessee and Richmond & Danville Companies and

secured by deposit of the shares purchased. Chron. 50:560, 1890. For a

monograph on the Cincinnati Southern Railway the reader is referred to

a study by J. H. Hollander in the Johns Hopkins University Studies for

January-February, 1894.

[343] Chron. 46:828, 1888.

[344] Ry. Rev. 28:386, 1888; Ibid. 397, 1888.

[345] Ry. Age, 16:76, 1891.

[346] Chron. 52:862, 1891.

[347] From the reorganization plan prepared by Drexel, Morgan & Co.,

dated May 1, 1893. Chron. 56:874 ff., 1893.

[348] Ry. Age, 14:78, 1889.

[349] The failure of this initial suit encouraged the Richmond Terminal

to take steps to make its position more secure. In February, 1889,

a collateral trust mortgage of $24,300,000 was announced, intended

not only to pay off the floating debt and several classes of bonds,

but also to purchase the balance of common stock of the Central of

Georgia and Richmond & Danville and of the first preferred stock of

East Tennessee outstanding. See Poor’s Manual for 1890; also Chron.

48:764, 1889. Subsequently the company issued common shares of its own

instead of bonds in exchange for the East Tennessee first preferred,

and succeeded in securing nearly $2,000,000 of the outstanding issue.

Chron. 49:374, 1889. The rate of exchange was 3¼ to 1. The Richmond

& Danville shares were retired by new collateral bonds at 85, plus

$26 per share in cash, and in connection with the operation more

stock and $5,700,000 collateral bonds were sold on favorable terms to

stockholders to provide for the floating debt.

[350] For replies by Alexander and Inman, see New York _Herald_, August

10, 1891, and Chron. 53:224, 1891.

[351] At 97½. See R. R. Gaz. 23:718, 1891.

[352] Chron. 53:674, 1891.

[353] R. R. Gaz. 23:870, 1891. The composition of this committee was

severely criticised, partly on the ground of the relations of Norton

and Schiff to the Louisville & Nashville and to the Norfolk & Western

respectively, and partly on the ground that the other members were

creditors only and had no interest other than the repayment of their

loans. It would seem, however, that the property was likely to have

fared better in the hands of reputable New York bankers than in the

hands in which it had formerly reposed.

[354] Chron. 53:922, 1891.

[355] Chron. 53:969, 1891. The members were: F. P. Olcott; Col. Oliver

H. Payne; F. D. Tappan, president of the Gallatin National Bank;

W. H. Perkins, president of the Bank of America; and Henry Budge, of

Hallgarten & Co. These gentlemen appointed Messrs. Olcott, Budge, and

Perkins a sub-committee to prepare a plan. Ry. Rev. 32:14, 1892.

[356] This excluded the Central of Georgia and the Alabama Great

Southern. The figure was based on existing bonded debt, floating debt,

and rentals. It included car trust payments, but excluded taxes, which

were included in operating expenses, and excluded also the interest on

securities owned by the system or the various corporations composing

the system.

[357] The plan in full is reprinted in Chron. 54:487, 1892.

[358] Consider for instance the treatment of the Richmond Terminal

preferred stock. This was quoted in December, 1891, as low as 45. The

plan accorded it 100 per cent in new bonds and 20 per cent in new

preferred stock. _Per contra_, the Richmond & Danville consolidated

5s were quoted the same months at 75 and received 100 per cent in new

bonds and 40 per cent in new preferred. Was it any wonder that the

holders of prior liens refused to come in?

[359] Chron. 54:846, 1892.

[360] These notes were to be secured by the same securities that were

then pledged to secure the floating debt and were to be exchanged for

$170 in new preferred stock if the plan should prove successful.

[361] Ry. Age, 17:414, 1892. It was not proposed to retain control

of the Central of Georgia, but instead certificates of aliquot parts

in the holdings of the Georgia stocks were to be issued to each

stockholder, making him the actual owner of his proportionate share.

[362] This committee was subsequently enlarged and became known as the

“Independent Committee of Seventeen.”

[363] Chron. 54:888, 1892.

[364] Ibid. 55:23, 1892. On July 6, Chairman Strong, of the Advisory

Committee of Seventeen, appointed Messrs. George F. Stone, J. C. Maben,

and W. E. Strong a sub-committee to further consider reorganization.

Chron. 55:59, 1892. Subsequently Mr. Strong appointed Messrs. Coppell,

Manson, and Plant a committee to look after the Terminal 5s, and

Messrs. Bull, Goadby, and Cyrus J. Lawrence a committee to look

after the 6s. Mr. Strong, as chairman of the Advisory Committee,

was ex-officio member of each. The first of August Messrs. Thompson

Dean, Albert B. Boardman, and Charles P. Huntington were appointed a

committee by the holders of between 50,000 and 60,000 shares of stock

and other securities of the Richmond Terminal system, “for the purpose

of removing the obstacles which now stand in the way of a fair and

equitable reorganization of the Richmond & West Point Terminal Railway

& Warehouse Company and its constituent corporations, and to this end

to employ attorneys and to take all necessary steps to secure the

appointment of permanent receivers, who will be in the interest of no

clique or faction in said companies.” Chron. 55:216, 1892. See in this

connection Ry. Rev. 32:521, 1892.

[365] R. R. Gaz. 24:33, 1892. The deposit was made and the dividend

paid.

[366] Ibid. 24:237, 1892.

[367] Chron. 54:965, 1892.

[368] It will be observed that although the minority stockholders of

the Central of Georgia objected to the Terminal’s stock control they

were not averse to having the precise terms of the lease to the Georgia

Pacific carried out: that is, to being guaranteed 7 per cent upon their

stock.

[369] W. P. Clyde, etc.

[370] Chron. 54:1010, 1892. Messrs. Huidekoper and Foster were also

appointed receivers by courts in Virginia, North Carolina, and South

Carolina. For reply by President and Receiver Comer, of the Central, to

Clyde’s statement, see Chron. 55:22, 1892.

[371] Ry. Rev. 32:549, 1892. The committee also stated that the

Terminal Company had been made to purchase $1,800,000 Georgia state

bonds at par and interest, which paid only 3½ per cent a year, although

the company was unable to borrow money at less than 6 per cent; that

the drafts of the directors to a large amount were paid by the company,

and that no vouchers were on file to show how this money was expended.

[372] Chron. 55:938, 1892.

[373] Chron. 55:1078, 1892. For replies of defendants see Chron.

56:414, 1893, and Ibid. 972, 1893.

[374] This was the letter finally declining to undertake the

reorganization in 1892 because of lack of assurances of support.

[375] The correspondence appears in full in Chron. 56:207, 1893, and

Ibid. 56:622, 1893.

[376] Ry. Rev. 33:95, 1893.

[377] These needs had already been emphasized by the Olcott plan.

[378] Lack of space forbids a full statement of the criticisms which

the Drexel plan had to make upon the physical condition and financial

practice of the Richmond Terminal properties. The following is from

the plan, section 9: “As an example of the manner in which accounts

have been kept, it may be mentioned that in the operating expenses of

the entire Richmond & Danville system only $20,000 were charged for

renewal of rails in the fiscal year ending June 30, 1890, and not a

dollar in the fiscal years ending June 30, 1891 and 1892, respectively.

In seven months under the receivership (July, 1892, to January, 1893,

inclusive) about $600 were charged. Since that date, it is understood,

about $18,000 have been charged. With these exceptions all renewals of

rails were charged to construction accounts. Renewals, properly to be

included in operating expenses, would be at least $100,000 to $150,000

per annum.” Other instances, almost as bad, could be stated.

[379]

Total cash requirements, as estimated, were:

Floating debt, including equipment notes $12,900,000

New construction and equipment during two years 8,000,000

Expenses of reorganization and contingencies 2,350,000

-----------

$23,250,000

To be provided from:

Assessments on Terminal stock $8,750,000

Assessments on East Tennessee stocks 2,700,000

Sale of $33,333,000 new common stock 5,000,000

Sale of $8,000,000 new bonds 6,800,000

-----------

$23,250,000

[380] The new company reserved the right at any time to redeem its

preferred stock in cash at par.

[381] Of which $104,303,894 for stock and the rest for bonds

outstanding.

[382] The reorganization plan estimated the capitalization under its

provisions at about $20,000 per mile of road owned and controlled;

about $10,000 preferred stock per mile owned and controlled; about

$25,000 common stock per mile owned and controlled.

[383] The plan is published in full in Chron. 56:874, 1893.

[384] Ry. Rev. 33:388, 1893.

[385] Modified reorganization plan. Chron. 58:385, 1894. Some

information concerning traffic conditions in the South in 1894 is

to be found in the Eighth Annual Report of the Interstate Commerce

Commission, pp. 20–24.

[386] From $140,000,000 5 per cent bonds, $75,000,000 preferred and

$160,000,000 common stock to $120,000,000 bonds, $60,000,000 preferred

and $125,000,000 common stock. Since, however, some of the poorer

properties were cut off and the terms granted to others were made more

liberal, the smaller absolute amount of new securities represented a

greater relative increase than before.

[387] The actual charges in 1895 were $4,195,000.

[388] “The increase in car trusts is due to the existence of about

$1,200,000 of such obligations on the Richmond & Danville system,

_which, up to the date of the plan of reorganization, had not

been entered on the ledger of either the Railway Company or its

Receivers, although, as it appears, they were well known_.” Modified

reorganization plan.

[389] R. R. Gaz. 26:613, 1894.

[390] Statement compiled by the reorganization committee. Chron.

59:515, 1894. The mileage controlled by the Richmond Terminal system on

November 30, 1892, had been 9053.3.

[391] J. P. Morgan, Charles Lanier, and George F. Baker. See Chron.

59:836, 1894, and Ibid. 880, 1894.

[392] See statement by Receiver Comer. Chron. 55:805, 1892.

[393] Chron. 60:1008, 1895.

[394] With a charter from the state of Georgia.

[395] The capital stock of the Central of Georgia Railway was held

by the Richmond Terminal Reorganization Committee until the spring

of 1907. It was then sold to Oakleigh Thorne, president of the Trust

Company of America, and Marsden J. Perry. Later the same year these

gentlemen resold this stock to E. H. Harriman and his associates.

[396] The original estimate was $19,000,000. The amount available seems

to have been finally $20,000,000.

[397] The voting trust was extended in 1902, in respect to a majority

of the stock, for a period of five years. See Chron. 75:442, 1902, and

R. R. Gaz. 34:826, 1902.

[398] Annual Report, 1906.

[399] The narrow-gauge equipment included in these figures is as

follows:

1895 1907

Locomotives 9 4

Locomotives 9 4

Freight cars 86 106

[400] “It will hardly be claimed,” said the Interstate Commerce

Commission, of the Southern Railway in 1900 (8 I. C. C. Rep. 583),

“that the cost of reproducing that property in its present state would

equal $40,000 a mile.”

[401] This route followed roughly the old Santa Fe Trail.

[402] Chron. 29:583, 1879.

[403] Ibid. 33:23, 1881.

[404] Chron. 34:315, 1882, Circular of Sonora Railroad Company to

stockholders.

[405] Chron. 29:630, 1879. Statement by Vice-President Baker.

[406] Ibid. 29:630, 1879.

[407] Chron. 34:243, 1882.

[408] Chron. 41:444, 1885.

[409] Annual Report, 1885, contains a discussion of the Atlantic &

Pacific and of the California Southern projects.

[410] Chron. 42:462, 1886; Annual Report, 1887.

[411] Ibid. 42:518, 1886.

[412] Annual Reports, 1886 and 1887.

[413] Annual Report, 1888.

[414] Ry. Rev. 29:511, 1889.

[415] Ry. Age, 12:107, 1887.

[416] Ibid. 12:325, 1887.

[417] This increase in dividend gave rise to sharp and well-merited

criticism. The directors defended their action as follows:

“In forming a just opinion of this matter,” said they, “it is necessary

to recall to the stockholders the statement made in the circular of

July 30, 1887.... It was stated in the circular referred to that for

the six months ending July 1, 1887, the net earnings exceeded by more

than $1,200,000 the net earnings for the first six months of the year

1886, that the earnings were still increasing, and what has always

been true in the past may be expected this year also; namely, that the

revenue of the second six months of the year will be considerably in

excess of that of the first six months.... It will ... be seen that

... the year 1887 formed a remarkable exception to what had hitherto

been the regular course of Atchison’s earnings; the second half of that

year showing an increase over the first half of only $278,096 gross,

and $204,144 net.... Drouths, failure of crops, excessive competition,

continually decreasing rates, unwise legislation, strikes, and other

calamities have befallen us as they have other Western roads; but your

directors could not know in advance that any of these unfavorable

conditions would have to be met, much less that they would all have to

be met at one and the same time.” Annual Report, 1888.

This defence was altogether unsatisfactory. An increase in the dividend

rate is too important to be justified by anything but earnings actually

in hand. Moreover, the conditions which the directors held responsible

for the decline in Atchison earnings were either well known at the time

when the dividend was declared, or could easily have been anticipated.

It was even alleged that the decrease in business which the annual

report for 1888 disclosed was due to lessened carriage of company

material to the West for construction of new track, and not to crop

failure or other decline in general business. See R. R. Gaz. 21:327,

1889.

[418] Chron. 47:472, 1888. The use of $3,000,000 of the notes was

specifically deferred.

[419] Ry. Age, 14:644, 1889.

[420] Cash requirements were (Circular No. 63, Oct. 15, 1889):

To retire outstanding lease warrants $1,445,660

To expend on incomplete construction of existing lines,

and for new equipment as required 5,000,000

To pay floating debt 3,554,340

-----------

$10,000,000

And the provision for cash subscription was

General mortgage 4s $12,500,000

Income 5s 1,250,000

-----------

$13,750,000

[421] The income bond certificate is printed in full in W. A. Wood,

Modern Business Corporations, pp. 237–9.

[422] Ry. Age, 14:682, 1889.

[423] Annual Report, 1890. Economies were secured at this time through

consolidation of branch lines with the main stem and in other ways.

[424] Annual Report, 1891.

[425] Chron. 51:171, 1890.

[426] Ibid. 53:474, 1891.

[427] Annual Report, 1892.

[428] Ry. Age, 17:413, 1892.

[429] Annual Report, 1892.

[430] Chron. 56:1014, 1893; Ibid. 57:1038, 1893.

[431] Ry. Rev. 34:68, 1894.

[432] Ry. Times, 64:533, 1893.

[433] See Chron. 58:42, 1894, for an official statement of the reasons

for the application to the courts.

[434] Ibid. 57:1121, 1893. Some information concerning subsequent

railroad competition during the Atchison receivership is to be found in

7 I. C. C. Rep. 61.

[435] R. R. Gaz. 26:465, 1894.

[436] Ry. Rev. 34:358, 1894.

[437] Ry. Times, 65:817, 1894.

[438] Ry. Rev. 34:379, 1894.

[439] Report of Mr. Stephen Little to the New York, London, and

Amsterdam Committees of Reorganization, 1894.

[440] Chron. 59:233, 1894.

[441] Ry. Times, 66:543, 1894.

[442] Chron. 59:878, 1894; Ibid. 59:919, 1894.

[443] In addition, prior lien bonds were authorized to a maximum of

$17,000,000, of which $12,000,000 might be used if desirable in place

of general mortgage bonds in the retirement of guarantee fund notes,

equipment bonds, etc., and $5,000,000 for necessary improvements within

five years.

[444] Second mortgage A bonds received 113 per cent in new preferred

stock. Second mortgage B bonds received 118 per cent. “After careful

consideration,” said the plan, “it was decided to be best for the

interest of those [the second mortgage] securities that they should now

be converted into 5 per cent preferred stock, possessing full voting

powers and preferential rights as to principal as well as interest,

rather than revert to their original form of ‘Income Bonds.’ It was not

thought that a greater assessment than $10 could be raised from the

stock, and the remainder had to come from the junior bonds.”

[445] The plan of reorganization was published separately, but was

reprinted in Chron. 60:658, 1895.

[446] Ry. Rev. 35:208–9, 1895.

[447] Ry. Age, 20:199, 1895.

[448] Ry. Times, 67:482, 1895.

[449] R. R. Gaz. 26:675, 1894.

[450] Ry. Times, 66:506, 1894.

[451] Ry. Rev. 34:589, 1894.

[452] Chron. 61:1064, 1895.

[453] Chron. 64:609, 1897.

[454] Ibid. 67:841, 1898.

[455] This was not all the Atchison stock which Union Pacific interests

acquired. President Ripley testified before the Interstate Commerce

Commission on January 8, 1907, that two years before E. H. Harriman

and his associates had secured $30,000,000 of Atchison stock, and had

caused the election of Messrs. H. C. Frick and H. H. Rogers to the

Atchison directorate to represent them.

[456] Statutes at Large, 37th Congress, 2d Session, chap. 120.

[457] Statutes at Large, 38th Congress, 1st Session, chap. 216.

[458] Aldrich Committee Report. The value of gold used is that given in

the American Almanac for 1878, and varied from year to year as follows:

1864 155.5

1865 216.2

1866 140.1

1867 134.6

1868 138.5

1869 135.6

[459] John P. Davis, History of the Union Pacific Railroad, p. 151.

[460] Useful accounts of the Crédit Mobilier may be found in Davis,

Union Pacific Railroad; Crawford, Crédit Mobilier of America; Hazard,

The Crédit Mobilier of America; White, History of the Union Pacific

Railroad; Poland Committee, Report and Testimony, 42d Congress, 3d

Session, House Reports, No. 77.

[461] Davis, pp. 163–70.

[462] Union Pacific Railway Commission Report, 1887, p. 52. The

Government endeavored to force the cancellation of the above mentioned

construction contracts and the restoration of unlawful profits, but

was held by the Supreme Court to have no standing in the case which

would entitle it to demand relief. U. S. _vs._ Union Pacific Railroad

Company, 98 U. S. 569.

[463] Statutes at Large, 39th Congress, 1st Session, chap. 159.

[464] United States Pacific Railway Commission Report, 1887, p. 55.

[465] Ibid. vol. 8, p. 4975.

[466] Records in Union Pacific Railway Foreclosure Cases, 55th

Congress, 1st Session, Senate Document 10, Part 3.

[467] Parties to agreement were: Sidney Dillon, Fred L. Ames, Jay

Gould, C. S. Greeley, John D. Perry, Robert E. Carr, Adolphus Meier,

B. W. Lewis, Jr., Henry Villard, John P. Usher, D. M. Edgerton, Artemas

H. Holmes.

[468] United States Pacific Railway Commission Report, 1887, testimony

of A. H. Holmes, p. 165.

[469] Ibid. Testimony of Jay Gould, pp. 454–6. The change to a mortgage

was made between April, 1878, and May, 1879.

[470] Records in Union Pacific Railway Foreclosure Cases, 55th

Congress, 1st Session, Senate Document 10, part 3 (contains text of

mortgage).

[471] United States Pacific Railway Commission Report, 1887, testimony

of A. H. Holmes, pp. 130 and 133.

[472] Ibid. vol. 8, p. 4987, Report of William Calhoun, Accountant.

[473] United States Pacific Railway Commission Report, 1887, testimony

of Jay Gould, p. 463.

[474] United States Pacific Railway Commission Report, 1887, p. 58.

[475] Ibid. pp. 59 to 65.

[476] Ibid. Testimony of F. L. Ames, p. 668. The combined capital

is given in the agreements as $51,762,300, but this is apparently a

mistake.

[477] Quotations of Kansas Pacific common during 1879 (Chron. 1880):

January February March April

Low High Low High Low High Low High

9⅛ 13 11½ 22¼ 17 22½ 20½ 60

May June July August

Low High Low High Low High Low High

50 59¾ 54 59 56 60 53⅝ 59½

September October November December

Low High Low High Low High Low High

55 73½ 70 85¼ 83½ 92 85 92½

[478] United States Pacific Railway Commission Report, testimony of Jay

Gould.

[479] United States Pacific Railway Commission Report, 1887, p. 100.

[480] Except the Missouri Pacific, which Gould retained.

[481] United States Pacific Railway Commission Report, 1887, testimony

of Jay Gould, pp. 467–9, 523, 524.

[482] United States Pacific Railway Commission Report, 1887, testimony

of Charles Wheeler, pp. 1735–6. Amount, $571,000.

[483] Ibid. Testimony of John Evans, pp. 1853–4.

[484] Ibid. Testimony of C. F. Adams, p. 47.

[485] United States Pacific Railway Commission Report, 1887, pp. 91 ff.

[486] Thirty Years of American Finance, pp. 86 to 98.

[487] Chron. 35:578, 1882.

[488] United States Pacific Railway Commission Report, 1887, p. 67.

[489] Annual Report, 1884, p. 5.

[490] United States Pacific Railway Commission Report, 1887, testimony

of C. F. Adams, pp. 45–6.

[491] Chron. 53:436, 1891.

[492] Annual Report, 1884, p. 165.

[493] 91 U. S. 72.

[494] Statutes at Large, 45th Congress, 2d Session, chap. 96.

[495] The Court held that while up to the passage of the Thurman Act

expenditures for improvements could be deducted from gross earnings

in calculating net, the language of that Act seemed to preclude the

deduction of any charges for improvements or betterments, or increase

of permanent value of the works in any manner whatever. See 99 U. S.

402; 99 U. S. 455; 138 U. S. 84.

[496] Report of the Government Directors for 1893.

[497] Chron. 57:684, 1893.

[498] Ibid. 57:639, 1893.

[499] Sen. Com. 1896, 54th Congress, 1st Session, Doc. No. 314, p. 42,

testimony of E. E. Anderson. For bill of complaint see Report of the

Commissioner of Railroads, 1894, pp. 99–120.

[500] Ibid. pp. 391–2, testimony of O. W. Mink. This gave to the

Government three out of the five receivers. For petition of the

Attorney-General see Report of the Commissioner of Railroads for 1894.

[501] Chron. 16:292, 1873.

[502] Report of the Commissioner of Railroads, 1895, p. 14.

[503] Ry. Rev. 34:335, 1894.

[504] Chron. 58:775, 1894.

[505] Ibid. 60:132, 1895.

[506] Report of the Commissioner of Railroads, 1895, pp. 9–10.

[507] Senate Commission, 54th Congress, 1st Session, Document 314,

testimony of W. S. Pierce. See generally the report of this committee

for a discussion of alternatives from the government point of view.

[508] Ibid. Testimony, pp. 451–2.

[509] Chron. 60:303, 1895.

[510] Ry. Times, 64:732, 1893. Mr. Brice was also a member of the

Senate Committee on Pacific Railroads.

[511] Ry. Age, 18:883, 1893.

[512] Ry. Times, 65:336, 1894.

[513] Ry. Times, 65:750, 1894. The reorganization committee stated that

this plan was not final. They concurred, however, with Mr. Boissevain

in his recommendation of the above scheme.

[514] Chron. 60:132, 1895.

[515] Ibid. 60:303, 1895.

[516] For a summary of the foreclosure suit pending in 1895 see the

Report of the Government Directors for that year.

[517] Chron. 60:303, 1895.

[518] Chron. 60:132, 1895.

[519] Ry. Rev. 35:153, 1895.

[520] Chron. 61:663, 1895.

[521] Chron. 61:705, 1895. (Reorganization plan in full.)

[522] See testimony of W. S. Pierce, Senate Commission, 1896, 54th

Congress, 1st Session, Document 314.

[523] Testimony, Senate Commission, 1896, p. 23.

[524] Ibid.

[525] Chron. 62:187, 1896.

[526] Report of Commissioner of Railroads, 1897, p. 8. The Government’s

dealings with the reorganization committee followed upon the defeat in

the House of a renewed proposition for refunding the Government’s loan.