The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1868-03-10
THE ERIE RAILROAD.
Report OF the Executive Cousniiftee or the
Board or Directors OF the Stockholders Of
the Erie Railway Company,


Report Of the Executive Committee or the
Board or Directors OF the Stockholders Of
the Eric Railway Company.
The directors OF the Erie Railway COMPANY here.
with submit to the stockholders the report OF the
Executive Committee made to the Board March o.
1885, The Executive Committee beg to submit to the
Board Of Directors separate report OF their doings
under the powers conferred upon them by the Board
on the 10th day OF February last by the following
votes
IL being necessary for the finishing, completing
and operating the road OF the company TO borrow
Resolved, That under the provisions OF the
statute authorizing the loan OF money for such
purposes, the Executive Committee be au.
necessary and 10 issue therefor such security as Is
provided for in such cases By the laws OF THIS State
ana that the President and Secretary be authorized
under the seal OF the company, TO execute all need
ful and proper agreements and undertakings Tor
such purpose.
Early in The winter the President called the atten.
tion OF the committee to the condition Of the road
and to the probable wants OF the company during
the coming summer. At several sessions OF
the committee the subject was Informally consid.
ered and it was discussed, well between the men,
bers the committee as with Mr. Riddle and the Vice
President and 1t substantially agreed TO by, all
that the best interests Of the company called upon
us, so far as might be able to do so, to replace
iron with steel rails whenever renewals were made,
and to double track the Delaware Division also with
steel rails 1t was also supposed that the new store
houses now being constructed for the Central and
Hudson River Railroads in st. Johns Park would
give them such an advantage over us in the trans
portation from sorchouses Of heavy freight destined
for competing points in the West, that we should
be forced to construct equally good accommo-
datlons at Long Dock. Several private parties
were In negotiation with us for the privilege Of
erecting such storehouses as well as Of erect
ing grain store houses and elevators, but thought
1t the best policy for the company to own the build
ings II possible. The Superintendent had also In
formed us that new equipment was needed for the
increasing business OF the company, and had
informally determined that when these things should
so take shape that we could made definite report
thereon to the Board would advise that the neces-
sary capital be raised by the sale Of the convertible
bonds Of the company, under the powers conferred
upon the company by the General Railroad law or
the power to issue such bonds, aud OF the right to
comply with the terms OF such contract by author
izing the conversion OF such bond into stock we did
not entertain doubt. Our predecessors had claimed
and exercised the right OF increasing the capital
stock OF the company by conversion OF bonds
early as 1853, and had reported the same to the
Legislature and had continued TO exercise the right
and to report their actions to the Legislature with
out criticism The New YORK Central Railroad Com
pany had exercised the same right also to the
amount OF over S3ooO,Ooo, and had from time to
time reported their doings to the Legislature
created by such conversions in each company had
exercised their right Of voting, AZ stockholders,
without challenge. The same may be said OF the
hudson River Railroad Company an Of most OF the
railroad companies III this State. The construction
OF the law was universal In favor OF the right to
issue convertible BOMBS and to convert those bonds
into soc. If called upon, even though the amount of
capital stock should be Increased thereby beyond the
amount named in the charter, aud 1t never entered
into our heads tQ doubt right so universally claimed
While we were maturing these schemes for in
nf road and ~.
ment we were also, under The authority conferred
upon us by you negotiating for the extension OF its
business connections so as 10 reap the full advantage
OF the new capital TO be put In the property.
We contracted with the Michigan Southern and
Northern Indiana Railroad Company to have them
put down third rail Oh their road SO soon as other
parties should take the broad gauge to Toledo IL IL
needless for US to point out TO you the immense
value OF this connection TO The Erie Railway Com
pany. We also consented to the deposit Of the bonds
Of the Boston, Hartford and Erie Railroad Company,
issued under the agreement between that company
and this company, collateral with several parties
who loaned their property to aid in the construc-
ton OF that valuable connection. And lust as we
had so far completed these several important
matters AZ TO be ready TO report them TO you,
we received reliable information that an attack
Erie Railway Company in the interest Of the New
York Central Railway Company, to restrain us from
extending our connections and TO localize our road
In fact to destroy its value competitor with that
powerful company. The first blow struck was a suit
Board as having been In colluson with Mr.. Drew In
certain alleged frauds In his contracts with the
company ana the present Board guilty
hitting the conversion OF the stock OF the ISuIio,
bradford and Pittsburg Railroad Company.
The second blow followed soon after In the
summary removal OF Mr. Drew from his office as Ill.
rector and prayer for his r,moval from his Office
as treasurer one vi these suits In the name OF
MIR. Frank Work, then "a director In this board and
the other was instgated by him, Notwithstanding
the fact that he voted to make Mr.. Drew director
ana the treasurer OF this company with fun knowI.
edge VI all the facts which he charges to be fraudu
lent, and the further fact that he voted for the con-
version Of all the leases OF the company, including
and -l.br.r
tive for this otherwise unacc0utabe change Of front
ON Mr. Works part Is to be found in The we'll
IN the "f INTEREST s. s Ss onto r s board
Central Railroads; and that when we refused 10 be-
come parties to the schemes Of Mr. Vanderbilt aud
benefit OF the Central line Mr.. Works Interests were
exposed.
II was under these circumstances that you gave
us authority to issue and sell convertible bonds for
the purpose Of completing, finishing and operating
encc OF Mr.. Work. we could not discuss this matter
freely as we would have wished, vet you reposed
generous confidence In US, and, we believe antci-
pated In advance what our course would be.
There was but one course open 10 us as prudent
men charged with the protection OF the interests Of
those OF rival lines-namcy, to secure before IL was
too late the means 10 meet the necessary expendi-
lures we have alluded 70; and after fun discussion Of
the matter we authorized the creation, issue and
sale OF $l0000,o00 OF convertible bonds the entire
proceeds Of which would not be more than enough
Tor the contemplated improvements
Notwithstanding the unwarrancd attacks upon
us we took no steps to defend ourselves. We
continued our negotiations with the New York |
Central, Hudson River and Harlem Compa- |
MES for the consolidation OF rates. Some Of |
were slow TO believe that they could be implicated
in such proceedings aud all OF us thought that
ought TO continue 10 maintain amicatle relations
with them long we could do so without sacri- |
ice OF sclf.respect. The next OF these suits,
however, made II our imperative duty to take steps
To protect the Erie Railway Company for we were
now enjoined-and still at the suit Of Mr.. Work
from carrying out our agreement 10 convert
vertble bonds into stock. When you remember that
independently OF the ten millions OF bonds which |
we authorized as above TO be Issued aud sold, |
there are outstanding some nine millions more !
OF bonds which are convertible into the com. |
mon stock OF the company, you VIII see how dis
astrous IL may be 10 our credit 10 have court az
sumo TO compel us 10 repudate our contracts. We
were further eDjoncd from making certain transfers
Of stockholm carrying out our contracts with the
Michigan Southern Company, and with the Boston,
Hartford and Erie Company: and the injunction fur
Their contained the usual shots against Mr. Drew