road Company the road had been put in operation for more than twenty miles, and that this was followed, in a few weeks (September 23, 1841), by the opening of it to traffic between New York and Goshen; and in spite of the enthusiasm shown by the distinguished and influential men from all walks in life who witnessed and participated in the celebration of that opening, and of the sanguine eloquence and cheerful tone of confidence that marked the sentiments expressed when the future prospects of the Company and the railroad were discussed on that eventful day, the Company was even then on the threshold of disaster, and none knew it better than its President, who still had the heart to face the unwelcome fact with glowing and assuring words. The unfortunate situation had been brought about, according to the protestations of the management, by delay in getting iron rails for laying the track on the Eastern Division, thus postponing the opening of that section weeks beyond the announced time; the failure of contractors on other parts of the work to keep their terms with the Company, and the rumors that parties interested in the road were taking advantage of their places to serve individual ends at the expense of the enterprise itself—all these things and more, the Company declared, were made use of by the increasing enemies of the road, who, by skillful methods of keeping them continually before the public in an unfavorable light, destroyed confidence in the management. Moreover, the New York Legislature of 1841 had been dominated by influences that were set with determination against the giving of any further State aid to public improvements, and private capital became more reluctant and cautious than ever. There were evidences, too, of an impending revulsion in commercial and financial affairs. So suspicious, in fact, were investors that, in June, 1841, an offering at public sale at $100,000 of Erie certificates, with the State's guarantee, and under direction of the Comptroller of the State, had been withdrawn without a sale, the bids, owing to the weakness of the money market, being far below the value of the security. Time dragged on ominously. The contractors kept at work on the road, but the most of them in a half-hearted fashion; for the Company was much in arrears to them for labor and materials furnished. Finally, at a meeting of the Directors, held at the Company's office, 35 Wall Street, November 15, 1841, the fact was brought forward by the President that the State loan was nearly exhausted and that, in consequence of that emergency, it would be well to notify contractors, through the Commissioners of the Divisions, that the Company could pay no further drafts on their own responsibility until the requisite assistance was secured. The suggestion was accepted by the Board, and notification to that effect was sent to the contractors, who were engaged chiefly on the Susquehanna Division. The circular announcing this to the contractors stated that the balance of the State loan, after paying the drafts then accepted, was about $200,000, but that liabilities for cars, engines, etc., for the Eastern Division, and the interest soon to be due on the State stock, would absorb all that amount. Some of the contractors on the Eastern Division decided to continue work, on condition that a portion of the money for work done in November be paid them in cash or acceptances of the Company. The exact financial condition of the Company was ascertained from the Treasurer, and it showed that, after paying its outstanding liabilities, the Company would have a surplus of $163,549. It was resolved, therefore, to accept six months' drafts of the contractors to the amount of $100,000. This left enough money in the treasury to pay the interest on the State stock that would fall due the following April, and other contingent expenses; but, in the latter part of November, the State 6 per cent. stock declined on the market from ninety-three to seventy-eight, and money was scarce. The Company was forced to hypothecate for temporary loans, at the depreciated price, the stock it had been reckoning on, and the embarrassment that prevailed compelled it, as we shall see, to announce to the Legislature that default would be made on the interest due April 1, 1842. Contractors continued to work and advance money to their help, relying on the expected State aid to relieve them in good time. As early as 1836, E. F. Johnson, who was engi neer in charge of the new survey of the route between the Hudson River and Painted Post, in Steuben County, N. Y., discovered the difficulties of the original route through the interior of Sullivan County as compared with a route up the Delaware Valley from the Neversink Valley, and so reported. This change continued to be agitated until the people of central Sullivan became alarmed, and in 1839 agreed to pay for the services of a surveyor to resurvey for a route through the interior of the county, the payment to be made good to them by a transfer of $20,ooo in the stock of the Company to the contributors, provided the report of the engineer on such a route was not accepted. The report was not accepted, and the $20,000 in stock was transferred according to agreement. The people concerned were not content to abide by the decision, however. They had contributed largely toward the construction fund of the Company, and John P. Jones, one of their number, had been of invaluable service to the undertaking in the Legislature. The talk in favor of the proposed change of route to the Delaware Valley led to an emphatic protest against it by the people of the interior of the county, which protest was voiced by John P. Jones, William E. Cady, and Daniel B. St. John, who, as a committee, met President Eleazar Lord at Goshen in the summer of 1840, and he assured them then, and by subsequent correspondence, that the change should never be made in Sullivan County with his consent, and that all his influence should be used against it. A change of route between Deposit and Binghamton was also suggested by Engineer Johnson in 1836, and it, too, began to be talked about, with such result that those in favor of a different course for the railroad between the Delaware and the Susquehanna valleys secured the passage of an act by the Pennsylvania Legislature in 1841, authorizing the Company to enter that State with the railroad and pass through Susquehanna County. At the time the resurvey was made in central Sullivan, the engineers of the Company made surveys for the proposed route up the Delaware and for the change between Deposit and Binghamton, completing them in 1841; and in 1842, under President Bowen, the Company's attitude became so favorable to the new routes that, at the session of the New York Legislature for that year, citizens of Sullivan, Ulster, and Orange counties presented petitions protesting against the movement, and the Committee on Railroads of the Senate made a report adversely to it, and asked leave to bring in a bill to prevent it. The bill was reported, but rejected. It was seen early in the session that both branches of the Legislature of 1842 were opposed to the further loaning of the credit of the State to the New York and Erie Railroad Company, and that no hope of direct pecuniary aid from that source could be entertained. It was therefore necessary to rely ont individual subscriptions to the capital stock of the Company. As an inducement to capitalists to make large investments, it was important to obtain the passage of a law tending to secure the completion of the railroad and relieve the Company from the large annual payments of interest on the State loan. A bill of that character was introduced in the Senate by Mr. Faulkner. This bill provided that the Company should be authorized to borrow money to the amount of $3,000,000, and pledge the road for the payment of the same, and that the debt thus created would be a prior claim to that of the State for the $3,000,000 already lent to the Company. In expectation that the bill would become a law, the Company obtained subscriptions in the city of New York amounting to nearly $400,000, the subscriptions to be valid only on the condition that $1,000,000 in all should be subscribed. The Company's management of that day has put it on record that "there is abundant evidence to believe that, from the interest manifested by every class of citizens in the construction of the road, a much larger sum than $1,000,000 would have been obtained if Mr. Faulkner's bill had passed. On the line of the road, assurances were given by leading citizens that large additional subscriptions would be made. Contracts on highly favorable terms could have been concluded, and the road from Binghamton to Lake Erie would have been put in use during the present year" (1842). The advocates of the measure for further State aid for the Company were content to assume that the refusal of the Legislature to grant that aid was due to the critical condition of the financial and commercial interests of the country, but that there was some deeper cause than this was broadly charged by the press and by public speakers, not only at large, but by those in towns directly interested in the completion of the railroad. "It is the misfortune of this great project," wrote a leading Southern Tier editor of that day, “that it fell into the hands of men who had neither the means nor the will to carry it steadily and economically to its termination, but of those thinking to speculate and enrich themselves upon the bounty of the State and the few thousands of the hard earnings of the farmers and others residing along the line, who were interested in its completion. The $2,000,000, honestly applied, would have done all that the $3,000,000 loaned by the State and all that has been paid by stockholders have done. It is downright effrontery for them to ask for more, with the threat that unless they got it, the State would lose its three millions." The situation was put still more pointedly by a communication read in the Legislature during the discussion on the Faulkner Bill, in 1842, as follows: In In 1836 an act was passed for loaning three millions of dollars to the New York and Erie Railroad Company, coupled with conditions that the Company should construct a track from the Delaware and Hudson Canal to the Chenango Canal, a distance of about 145 miles, before any stock should be issued by the State, and when so much of the road was completed out of the funds raised from the stockholders, the State was to advance $600,000, and to continue its loan from time to time as the work progressed, until the sum amounted to $2,000,000, and the last million was to be paid not until the road was completed from the Hudson River to Lake Erie. If the restrictions of the law had not been relaxed the people would have saved the $3,000,000 loaned to the said Company by subsequent laws, and not thrown upon the treasury. 1838 a law was passed providing that one dollar of State stock should be issued for each dollar expended by the Company, the expenditure to be proved by the affidavits of the Treasurer and two of the Directors of the Company. By the aid of this law the Company obtained $100,000 of stock in December, 1838, and $200,000 in June and August, 1839. In 1840 an act was passed authorizing two dollars of stock to be issued for each one dollar raised and expended by the Company, and also authorizing stock to be issued equal to the amount loaned to the Company in 1838 and 1839, so as to give the Company two dollars for every dollar it had expended since the commencement of the work. Under this law $500,000 were issued to the Company in 1840; $2,000,000 in 1841; $200,000 in January, 1842. From November, 1841, to the 29th of January, 1842, less than ninety days, the officers of the Company received from the Comptroller $800,000 of 6 per cent. stock; within sixty days after the last $100,000 was received, the President of the Company announced its insolvency and in ability to pay the interest on the first of April on the three millions of stock loaned to the Company. A generation or so later the affairs of Erie came to be largely talked about in connection with managements that, with apparent ease, raised millions of dollars on account of this same Company, the expenditure of which was then a deep mystery, and is a deep mystery still, so far as it showed results in the betterment or extension of the road and its property; but here, perhaps, those later managements found a precedent. The condition of the Company's affairs had been made officially known January 20, 1842, by a petition presented to the Legislature praying for aid. According to this, the railroad was in operation. between Piermont and Goshen, forty-six miles, with necessary depots and cars and engine houses; substantial edge rail, fifty-six pounds to the yard, laid on longitudinal timbers framed together and covered. by cross-ties at short intervals; a pier 4,120 feet long; steam and tow boats to carry passengers and freight; five locomotives; numerous passenger and freight cars, and four trains conveying daily 250 passengers and 200 tons of merchandise, “withdrawing from Philadelphia the trade of West New Jersey, and the border Pennsylvania counties." The work, besides that between Piermont and Goshen, was under contract as follows: Goshen to Middletown, seven miles; Middletown to the Shawangunk ridge, nine miles; Shawangunk ridge to Callicoon Creek, fifty-nine miles; Callicoon Creek to Deposit, forty miles; Deposit to Binghamton, thirty-nine miles; Binghamton to Hornellsville, 1171⁄2 miles; Hornellsville to Dunkirk, 1321⁄2 miles-total 229 miles, of which 117 miles were graded in 1841. Iron rails were laid six miles east of Dunkirk to stone quarries, where stone was obtained for the breakwaters in Dunkirk Harbor. Three cargoes of iron had been purchased, one sent to Dunkirk, to be laid during the winter of 1842, to extend the road to the westerly line of Cattaraugus County. Locomotives were to be placed on that part of the road at an early day. The work between Binghamton and Dunkirk was so far advanced that it would be completed and in operation by October 1, 1842, if adequate pecu niary aid was forthcoming. The petition laid stress on the fact that the railroad would be a military road, capable of transporting an army of 25,000 men with munition and camp equipments from New York to the shores of Lake Erie in forty-eight hours, and express in sixteen hours. From the present disturbed relations with Great Britain," the petition argued, "it is conceived that these considerations are deserving of the serious attention of your honorable bodies." Here are further arguments used by the petitioners, which are interesting as showing the peculiar commercial relations of the metropolis with the country at large in those days, and the lack of means of transportation it possessed to collect the internal commerce of even a nearby tributary region to itself: "The New York and Erie Railroad traverses eleven counties, containing a population of 341,296 inhabitants; and adjacent to it and to be benefited by it there are, in this State and the States of New Jersey and Pennsylvania, twenty-four counties, containing 496,000 inhabitants, making the aggregate number of 837,296. The number of taxable acres of land in this area is 10,600,000, and the taxed value of real estate is $80,000,000. "The population on the line and in the vicinity of the Erie Canal is 680,000, and the number of acres taxed is 9,500,000. It will thus be seen that the section of country to be benefited by the completion of this road is greater in extent than that which enjoys the advantages of the Erie Canal, while the population on the line of the road exceeds that on the canal by 150,000. 66 A large portion of the trade of this vast region now flows to the cities of Philadelphia, Baltimore, Pittsburgh, and Cincinnati, by the Delaware, Susquehanna, and Alleghany Rivers. The commerce of a portion of our State, less than three hundred miles from the commercial capital of the Union, is yet drawn from our borders to distant marts, and our own citizens are compelled to pay higher for their purchases and to submit to lower prices for their products than the citizens of Massachusetts and Connecticut. Were the Erie Railroad completed this valuable trade would center in the city of New York; the transportation of products would be rapid and inexpensive and higher prices would be obtained for them, and a general and certain prosperity diffused throughout the country, where now there is but a bare remuneration for labor at hazardous risks. 66 'The advantages of cheap transportation of freight to the Alleghany River will add largely to the commerce of the city of New York by diverting from its present channels the trade of the Southwest and Western States, now possessed almost exclusively by Philadelphia and Baltimore. "During the spring the whole of this important trade seeks the markets of our Southern neighbors, from the inability of New York to forward merchandise to those sections before the first of May, while the purchases are made in February and March. Were this road completed to the Alleghany River, always free from ice in March, this consideration alone, independent of the rapidity of transportation, would be sufficient to secure this lucrative and increasing trade. 'The alarming increase of business on the Canada canals, derived chiefly from the Western States, clearly shows the necessity of constructing new avenues between the lakes and the seaboard, and multiplying the facilities of communication with the West, if we would preserve the relations with that section of the Union and continue to reap the annual harvest of that rich and growing country. "It is estimated that 200,000 emigrants annually arrive in the ports of the United States. Were the New York and Erie Railroad completed it cannot be doubted that, from the facility it would afford for cheap and rapid traveling to the West, a large proportion of this class would prefer vessels bound to New York, and thus give a powerful impetus to the increase of our shipping; while, from the fact that the road could be traversed at all seasons of the year, this city would be relieved from a serious and increasing evil, caused by large bodies of emigrants arriving in the winter and spring, and sojourning here until the canal is navigable. Many of these people are thrown on our shores early in the year, with limited means of subsistence, ignorant of the language and friendless. The pittance they possess is soon expended, and long before the canal is open they become an onerous tax upon the charities of our citizens, or residing in the abodes of squalid poverty and of crime, they learn the ways of infamy while they are acquiring the language of their adopted country. "In another respect the completion of the road is of high importance to the city of New York. There are in the city of New York and its immediate vicinity near 400,000 inhabitants. A large portion of this vast population is dependent, from day to day, upon manual labor for the means of subsistence. Owing to the high prices of provisions nothing more than sufficient to sustain life is obtained under the most prosperous circumstances, and when, from commercial embarrassments, or from other causes, there is no demand for labor, they are reduced to extreme distress, and compelled to solicit the assistance of their more fortunate fellow-citizens or depend upon the public charities for relief. In either case the result is the same; the spirit of self-dependence is broken, their energies are destroyed and they are no longer valuable citizens. By the reduction of the prices of provisions this distress and its consequent evils would be greatly diminished. There is no mode that will so effectually accomplish this desirable object as the completion of this road. It is respectfully submitted that the welfare of so large a portion of the body politic as is embraced in the class referred to is well deserving of your consideration. "Your petitioners have expended, in the construction of the road, the proceeds of the loan of three millions granted by the Legislature in 1836; and, in adition, one and one-half millions derived from subscriptions to the capital stock of the Company, making an expenditure of four and a half millions of dollars. In the original estimate of the cost of the road it was supposed that six millions of dollars would be abundantly sufficient to complete it; but it was seen that to render the road effective as a means for the conveyance of the vast amount of freight that would be sent on it, a more substantial and expensive structure was necessary than was originally contemplated. The plan of construction was therefore changed, by substituting shorter bridges, more substantial masonry, widening the track, and laying a heavy edge rail instead of the flat bar in general use in this State. With |