New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-12-05
4 S4NPLE RITLRO4D CASE.

The trouble in Illinois over the affairs OF
the Gilman, Clinton, and Springfield Railroad,
for which a Receiver has been appointed by
the Circuit Court of Mclean County, Illus
trates in a most remarkable manner the sys-
tenn of railway management which has been
such curse to the West. The road is a new
one, about 100 miles long, and was built at a
cost of S1,5O0,0O0, to connect Gilman, on the
Chicago branch of the Illinois Central Rail
road, with Springfield, crossing the main line
of the Illinois Central at Clinton. 1t has paid
running expenses ever since its construction.
and had large surplus for interest ON Its
obligations, and there seems to be no reason
why it should not have been a money
making concern. Now, let us see
how il was built. The incOrDorators
subscribe dsS3O,0OO toward the capital stock,
and paid in ten per cent of that amount.
Then they induced the towns and counties
along the line of road to subscribe for stock,
paving for it with the proceeds of S598,OOO in
town and county bonds. This accomplished,
the Directors proceeded to issue mortgage
bonds to the amount Of $3,0000O0, or about
double the value of the road, the effect of
which operation was of course virtually to
wipe out tho stock, and leave them with a
handsome sum for future operations. The
problem now was to cOniscate as much as
possible of the money. The Directors, or some
of them, went to Philadelphia and organized
themselves and Others into a Credit Mobilier
concern known as the Morgan Improvement
Company, for the purpose of building
the road. The actual cost OF the work,
as we have said, was 81, 100000: the price paid
to the Morgan Improvement Company was
81, 100000 in first mortgage bonds (the other
million being reserved for equlpmenD, ST.
100000 in stock certificates, and the whole of
the S59S,OOO in town and county bOnds,-and
then the Directors proceeded to lease the
road in perpetuity to the Pennsylvania Rail
road, giving the stockholders nothing what
ever. But this was not all. The President
and two of the Ring Directors-we suppose
we may fairly qualify them by that epthet--
own three-quarters of the stock of the Barclay
Coal Company, and they made q contract
with themselves by which the road was
bound to purchase all its coal of that Com
pany at specified price, aud to carry the
coal of the Company at a specified rate.
The Circuit Court has decided that these
transactions constitute a breach of trust and
has consequently ordered a Receiver to take
charge of the affairs of the Company until the
road can be committed to the management of
its bona fde owners. Whatever may be the issue
of the case, the public will agree with the State
Court that the managers of the road entered
into virtual contract with the public whose
money was represented in the town and
county stock to run it in the interests of the
community; that they have been grossly UNI
faithful to their trust and that they ought to
be summarily removed, if not prosecuted
If their plans had not been nterfered with,
we should soon have heard complaints that
the Gilman, Clinton, and Springfield Railroad
was charging excessive tolls, and the answer
of the Company would have been that the
tariff was not high enough to enable il to
declare dividend on its stock. And we see
why it il that on 40 many Western roads-for
the Gilman, Clinton. aud Springfield is only
one OF ciasS-.tilis plea GU ~ plAJsib'y put