to secure which various of the new Company's predecessors had called up many troubles to sorely plague them. The capital The plan of readjusting and reorganizing the Company was in the hands of Charles H. Coster, Louis Fitzgerald, and Anthony J. Thomas. They had wide discretionary powers. The certificate of incorporation of the Erie Railroad Company was filed in the office of Secretary of State John Palmer, at Albany, N. Y., November 14, 1895. The incorporators or temporary directors named were Temple Bowdoin, Charles H. Coster, J. H. Emanuel, Jr., A. H. Gilland, A. B. Hopper, Thomas W. Joyce, Walter S. Kermeys, J. P. Morgan, Jr., Francis Lynde Stetson, Mortimer F. Smith, W. T. Townsend, J. H. Tierney, and E. B. Thomas. stock of the Company, as fixed by the plan of reorganization, was $146,000,000, divided into 300,000 shares of non-cumulative 4 per cent. first preferred stock; 16,000 shares of non-cumulative 4 per cent. second preferred stock; and 1,000,000 shares of common stock, each class being of a par value of $100 per share. The first preferred stock had the prior call for dividends (non-cumulative) at the rate of 4 per cent. per annum, beginning with June 30, 1896, out of the individual net profits of the Company, whenever, in the opinion of the Board of Directors, a dividend might be declared. The second preferred stock was entitled to no dividend, except when there should remain a surplus undivided net profit after a dividend on the first preferred stock had been paid. Dividends on the common stock were payable out of the surplus only that might remain after both the preferred stocks had been paid full dividends from the profits of any fiscal year. Under the plan of reorganization a mortgage or trust deed was given to secure two series of bonds, known respectively as prior lien bonds and general lien bonds. The authorized issue of the former series was $35,000,000, bearing interest at 4 per cent., and of the latter issue $140,000,000, with interest at 3 per cent. until July 1, 1896, and 4 per cent. thereafter, interest and principal of both series to be paid in gold, the life of the mortgage being one hundred years, or until January, 1996. The prior lien bonds, as their name indicates, had priority over the general lien bonds in regard to payment of principal and interest, and the rights of their holders could not be affected by foreclosure of the lien of the general lien bonds. Out of the $35,000,000 of prior lien bonds, $15,000,000 were issued at once, and the proceeds, together with the cash received from assessments of stock, used for reorganization purposes and for taking up outstanding obligations of the New York, Lake Erie and Western Railroad Company, as follows: 3,344,000 2,000,000 Reorganization First Lien Bonds, issued under 11,500,000 The balance of the issue of prior lien bonds was reserved for use as follows: $14,400,000 for the purchase of the railroad and property of the New York, Pennsylvania and Ohio Railroad Company, subject to a mortgage of $8,000,000; $5,000,000 for the enlargement and improvement of terminal facilities. at Jersey City, Buffalo, and elsewhere; reducing grades; constructing double track, and purchasing additional equipment. The cost of the Nypano (which has come to be the official designation of the New York, Pennsylvania and Ohio Railroad) involved an annual fixed charge of $1,741,386, which, in the light of the average net earnings of that road since 1885 ($1,811,758), was not an unwise responsibility to assume. From the total of the general lien bonds, $30,927,000 were issued at once for reorganization purposes. Of the remainder, $79,918,000 were reserved to take up at or before maturity outstanding bonds of the New York, Lake Erie and Western Railroad Company, the Chicago and Erie Railroad Company, and the New York, Pennsylvania and Ohio Railroad Company, and of other lines, lands, and properties in which the Company was interested, as lessee or stockholder; $8,636,000 to acquire the stock of companies subsidiary to the Erie system; $4,092,000 to take up equipment bonds and trust certificates, notes, or obligations; $17,000,000 for new construction, betterments, equipment, and acquisition of new property along lines leased or controlled by the Company, or in which it was interested as a holder of a majority of stock, not over $1,000,000 of the reserved bonds to be thus used in any one year after January 1, 1898. This new mortgage specifically provides that all outstanding divisional liens (except the New York and Erie first mortgage bonds of 1845, which might be extended at maturity, and which were extended, May 1, 1897, for forty years), must be paid at maturity and cancelled, or acquired and pledged, or cancelled and renewal bonds pledged, under the mortgage, thus in time making the prior lien bonds an absolute first mortgage, either by direct lien or through collateral trust, on the entire consolidated properties, except on the Buffalo and Southwestern Railroad, on which there is a lien not intended to be retired by the general lien bonds, and on which those bonds will be a mortgage subject to the prior lien bonds. The mortgage (or more properly, the mortgage deed) is substantially a first lien, either by mortgage or by collateral trust, upon the Company's principal coal properties, upon its water transportation lines (including valuable terminal properties appurtenant thereto), and upon its valuable local railroads in New Jersey and near Buffalo; a second lien (subject only to some of the divisional mortgages) upon the remaining coal properties; upon the terminals at Jersey City; upon the Buffalo, New York and Erie Railroad; upon the Buffalo terminal properties, other than those upon which it is a first lien; and upon the entire line from Salamanca, N. Y., to Chicago; and a second consolidated mortgage upon the lines of the original New York and Erie Railroad Company, between Piermont and Dunkirk. The denomination of the bonds issued under this mortgage is $1,000 each. The Company is obligated to the payment of all taxes, present or future, on the bonds. Following is a list of bonds and stocks pledged under the mortgage: Buffalo, Bradford & Pittsburg RR. 1865| 7 Jan. 1896 $580,000 $185,000 9,776,000 57,200 250,000 604,000 1871 1883 6 July 1913 4,000,000 N. Y. L. E. & W. & N. Y. RR. Co. 1868 Suspension Bridge NAME OF COMPANY. STOCK. Arnot & Pine Creek RR.. Long Dock Co.. Middletown & Crawford RR.. Paterson, Newark & N. Y. RR. Tioga RR., preferred.. $17,294,340 $12,722,700 All of the companies named above whose stocks are not pledged as collateral under this mortgage, are secured to the Erie by long leases. All classes of stock in the new corporation are vested in Voting Trustees, who are to hold it, under a trust agreement with the Committee, for five years, and for such further period as may elapse before a 4 per cent. cash dividend is paid on the first preferred stock, the trust to be terminated, however, at the discretion of the Trustees, they to issue stock. trust certificates entitling registered holders to receive stock certificates for the number of shares stated in the trust certificates, and payments to the amount of dividends collected by the Voting Trustees upon those shares, which are, with all voting powers and other interest, to remain vested in the Voting Trustees until the shares shall become deliverable according to the provisions of the stock trust certificates. Registered owners of prior lien or general lien bonds without coupons, or registered coupon bonds, or persons in whose names coupon bonds stood registered within one year prior to the date of a meeting, have the right to vote after the termination of the Voting Trust, one bond of $1,000 entitling the holder to the same vote as ten shares of stock. The Voting Trustees named under the plan were J. Pierpont Morgan, Louis Fitzgerald, and Sir Charles Tennant, Bart., and they are still in office (1898). None of the $5,000,000 prior lien nor of the $17,000,000 general lien bonds reserved for construction requirements was used. Of the fund received from the Reorganization Committee for early construction requirements and improvements, amounting to $4,343,850.13, to which was added the proceeds of $383,000 of New York and Greenwood Lake prior lien 5 per cent. bonds received from the Committee ($363,850), making total cash received $4,707,700.13, there was expended for construction and equipment and old Car Trusts $3,467,036.39, leaving still available $1,210,663.74 in cash. The Reorganization Committee submitted their final account to the Board early in 1896, which, after examination, was approved and accepted. The balance turned over to the Company by the Committee far exceeded the expectation of the Board, and amounted to $8,469, 163.35, consisting as follows: CHAPTER XXI. ADMINISTRATION OF EBEN B. THOMAS-1895 TO 1899. I ERIE MADE EQUAL TO THE BURDEN: Strengthened by Consolidation End of the Atlantic and Great Western-New York, Pennsylvania and Ohio Corporation, the Long-Time Disturber of the Erie's Peace and Prosperity-A Policy of Actual Betterment of the Road, to the Full Limit of the Company's Resources for that Purpose, Proving Its Wisdom For the First Time in Its History, Erie Pays as It Goes - Development Beyond Wildest Dreams of the Fathers To What the Forty-six Miles of Railroad of 1841 Have Grown. II. BUT AT WHAT COST: What the Rehabilitated Erie Owes after All Its Years of Tribulation - $300,000,000 of Debt Represented by Its Stocks and Bonds - And Erie Became Bankrupt Once Because It Could Not Pay $40,000 It Owed for Interest. I. MADE EQUAL TO THE BURDEN. THE new Erie Railroad Company took possession of its property and assumed its operation December 1, 1895, with the following organization: Officers.-E. B. Thomas, President; W. F. Merrill, Second Vice-President; A. Donaldson, Third Vice-President; G. G. Cochran, Fourth Vice-President; J. A. Middleton, Secretary; Edward White, Treasurer; J. T. Wann, Auditor. Directors.-Charles H. Coster, James J. Goodwin, Abram S. Hewitt, Darius O. Mills, Alexander E. Orr, George W. Quintard, Samuel Spencer, Francis Lynde Stetson, E. B. Thomas, New York; John G. McCullough, Vermont; J. Lowber Welsh, Philadelphia; Samuel E. Williamson, Cleveland, O. One vacancy. President Thomas, being a man of action, not words, made no public proclamation of his intentions, his hopes, or his fears as to the future of Erie. As a matter of fact, the author, in his search through the newspapers of that time for some expression of opinion by the new President of Erie on the subject, found that the aid of the newspaper interviewer in shaping the policy of the Company, and formulating measures for its welfare and success, was not forthcoming, something almost without precedent in the later history of Erie. If President Thomas felt that he had undertaken a mighty task, and one whose grave portent bade him hesitate and ask for prayerful guidance, he kept the knowledge to himself and went to work. He has been quietly at work three years. Chronicles of the affairs of Erie have filled scarcely a column's space in any newspaper in all that time. In court corridors and chambers, where erstwhile in the one it had become a byword and in the other a monopolizer of the dockets, the name of Erie has gradually grown less and less familiar, until now it is but a memory. Legislative halls have not rung with indignant eloquence provoked by Erie's alleged transgressions, nor conscienceless lobbyists swarmed, like unclean birds of prey, to share, as of old, loot from Erie's helpless treasury. The long-fostered policy of temporizing with disaster was cast aside three years ago. The knife was thrust in to the root of the evil that held Erie prone under its spell. Behold the result. The work of consolidation was pushed steadily and so rapidly that at the submitting of the Company's first annual report, September 15, 1896, which report included only the first seven months of possession, from January 1 to June 30, 1896, the management was able to state that the following subsidiary lines had been merged into, or otherwise practically consolidated with, the Erie Railroad: "The Buffalo and Southwestern.-The unsatisfactory lease to the old Company of this line (based on a percentage of its gross earnings) was assumed by the new Company, the entire capital stock of the Buffalo and Southwestern Company having been previously purchased by the Reorganization Committee, and that company was duly merged into the Erie Company November 19, 1895. In exchange |