St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1871-04-28
10 the jOfeT> Of TIE state Oj' Ier-
mont.

hc following extract, taken from the
New \ orl Daily Time. OF March -
1871, is respectfully submitted to your
consideration
TIE MANAGEMENT Ut EAIL ROADS.
t. tie Filter "J' tie Ac~ York Times:
While the impression made by Mr..
Adams article in the January number of
the North American Review, "rhc Gov
rrnmrnt and the Railroad Corporations. -
is still fresh in the public mind, il Is an
noumcc,l that the trustees OF the Vermont
Central Railroad have leased for twenty
years the Burlington and Rutland Rail.
road, and that they will at once proceed
to build the proposed bridgc acro>s Lake
CIamplain II; 1icondcroga.
The position ofthcsc trustees of Il bank
rupt corporation is 50 peculiar and cx-
ccp.ional us to make it worth while per
haps to devote 4 little time to the study
OF their relations, Both to the road from
which they derive their title and TO the
State of Vermont
In an evil hour for the Stockholders OF
the Vermont Central Railroad, they lcas-
ed the then unbuilt Vermont and Canada
Railroad for the term of fifty years, agree
ing to pay eight per cent. per annum on
the capital stock Of the latter as rent.
Subsequently, being in want of funds,
they issued =, 900, 900 of bonds at seven
per cent. annual interest, known as the
Vermont Central first mortgage bonds,
and secured the bondholders by mort.
gagC of their road to three trustees.
by the terms of the mortgage these
trustees were empowered to take posses
sion of the Vermont Central Railroad
whenever six months default might he
made in the paymcnt of the interest agrte |
upon.
They were also authorized to fill va
cancics in their own body, thus making
them Il close corporation. No provision
however, was made for removing them
from their trust in case their manage
mcnt should prove unsatisfactory to the
bondholdcrs, nor was their tenure Of the
trust limited in time. A trustee was, in
decd, required to be a bondhoIdcr, but
the ownership of n $500 bond covered
the requirement.
In course of time the Vermont Central
Railroad male default not only in the
payment of the rent due the Vermont
and Canada Railroad, but also in the
payment of the interest on their first
mortgage bonds. Then by due process
of law the control of the Vermont Cen
trail, including the leased Vermont and
Canada Railroad, passed into the hand.
of the trustees
For number of years, however, the
stockholders of the Vermont and Canada
Railroad reaped no benefit from this
change of management. In vain did
they appeal to the Courts for protection.
The trustees of the Vermont Central
Railroad contested the validity of the
lease at the same fine that they contin,
ued to manage the road which they had
no claim save by the lease in question.
AT length when seven years back in.
tercst was due TO the stockholders of the
Vermont and Canada Railroad, and when
the stock of the road, par at 100, with
Sc per cent. accrued interest, was selling
at 20 cents on the dollar, the decision o
the Courts was rendered confirming the
validity of the lease, and the trustee:
commenced paying the back interest.
BY this time many of the original hold
ers OF the Vermont AMI Canada stock
had parted with their shares at low fig
ures. A short calculation will show wha
a good speculation purchasers of TN
stock at 20 per cent, made of it-an out
! lay of ten thousand dollars would pur