The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1875-10-04
THE ERIE RAILWAY.
Sir Edward Watkins Report to the
British Bondholders.
MEMORANDUM OF THE UNDERSTANDING
What Is Needed to Make the Road
Successful.


The London Newspapers arriving by yesterdays
steamer contain the full text Of the report to the
British Committee Of Bond and Stock Holders OF tho
Erie Railway Company from Sir Edward Watkin,
H. p. 1t IL as follows
LONDON Sept Is, 1875
l. returned from New York to. day having had the
opportunity ofexamning the spot the facts necessary
Tor an understanding OF the position OF the Erie under
taking
below the fourth series of the original mortgages are IN
arrear, and the Board not only JAILED to pay the half
yearly interest accrung due the LIST June last on the
Second Consolidated Bonds, which interest was an
nounced as TO be paid by Messrs M'Cuech Co, on
the 18th May last but without previous notice or warn
ing receiver was appointed by the courts In the States
Of New York, New Jersey and Pennsylvania on the
10Th May, and that receiver in the person of the Hon.
Hugh j. Jewett President of the company has been
armed under the orders and direction OF the courts
with all necessary powers and authorities.
The current debt OF the company, reduced by
amounted the 3lst July last according tue
count rendered to mel TO $4, 2lS075 10 from that
sum must be added deducted current debit and
credit balances due to or from other railway companies
on Interchange Of traffic account Probably this
count may be at debit occasionally the extent Of
500, 900 The present amount as rendered TO me 10
Slt9 09l To debit The estimated balance or met
earnings on the year ended Both June, 1875
dered me- So IT'S 500 that ~ saw the total in
come from ali sources for the year ended Goth June
1875, is stated S17971 sos, the total outgongs az
sl4,256 2Ss, and the net remainder is therefore
- tSSNNs
to be incapable OF reform and Improvement, IL would
require, # that form Of recourse be adopted nearly
fourteen months OF the whole earnings in
order to discharge the above debt There
are portions, however, Of such debt which may not
have priority bond interest," and that question
being Investigated by MIR Morris and for the pur-
poses Of his report At the time must be OBJ.
served FIRST that there also claims both sides of
the account capital and general TO be
sidered and, second that there many items not
strictly attributable 70 the ordinary operations OF the
year in question
A tori IA
TENDER, 1873 will be audited and ISSUED late IN Novem
Der early in December next and that account,
peed and cleared the deceptive and irregular entries
ana credlts OF past years. VIII give more exact niorma-
ton than these estimates can possibly furnish. This
annual account should be accompanied by carefully
prepared balance sheet, with some reliable estimate
of the outcome OF disputed transactions where
possible and prudent La the meantime, | may
call attention to the estimate showing that the total
receipts and credit items in the years opera
lions amount TO nearly $4,000, 600, yet the net
result yields but So 900 only twenty per cent
II is only fair however, to point out that the net profits
OF the general undertaking taxed by the losses upon
the rentals and working OF the fourteen branch lines
Three only of these branches leave direct profit and
the loss on the other eleven III the twelve months ended
June 80 1873, amounted TO $4S0, ia, while the net
loss, taking the balance good and bad together
$780, sos such figures seriously affect the general
suit. Mr.. Jewett's report OF 18Th May last omitted
from the estimate OF net earnings OF the months
eudeu March 81 1875 these and other deductions OF
loss, and thus probably impression OF the
actual available net profit was unntentionay produced
Mr. Jewet S. los 54 the net earnings OF these
nine months.
g. The annual interest as claimed upon the bond
debt stated at 81 073 1906 and the annual burden
for rents rent charges and leases claimed is stated
al 81 lOO9l or total OF So Ia OH OF estimated fixed
charge against the estimated net earnings of
S37l5,609, or showing deficiency in the year in
question OF 81, ass, 400. While the three principal
main lines OF road competition with the Erie-viz
tile New York Central the Baltimore and Ohio and the
Pennsylvania-give balances of profits varying from
"a TO 40 per of gross receipts the Erie would ap
pear only 70 have given u per cent above in pres
enco, too of not nconsderable charge to construc-
tom account The charge to construction account"
or capital, 1t would be designated in England In
tile year ended June So 1875 ST. 0o3 297 That in
cudes $l54 6l2 Tor steel or the differences between
the value OF iron taken up IN relaying and steel laid
down IN its place a charge which IL viii be pru-
dent TO debit in future TO revenue
q Should IT be found possible under the management
OF Mr. Jewett work the Erie undertak ing al the rate
Of even 10 per cent OF outlay an additional net profit
without any increase Of the quantity OF traac and
obtained of the rates OF charge equal to
81, 800 900 per annum would result, and shall all
watch with anxiety the changes OF man
traffic portion OF the general income should
equal surpass the published ngures OF 1873 then all
the fixed charges would be met aud surplus would
MAN. l would merely add that Mr.. Jewett speaks with
confidence OF the probable future progress OF the
earnings Of the undertaking. postpone the express
any opinion OF my own until have had OPP
portunty OF inspecting the annual account and balance
sheet In the interval some change Tor the better
the general trade Of the country may follow the recent
harvest
Z The exceptional gauge OF the railway is however
source OF exceptional cost IN working, and in
prosperous times IL must be gradually converted INTO
the national gauge of tie county, refrain, Tor OBJ
reasons, from giving particulars OF the outside
obligations claims made on behalf Of the company,
in many the subjects of hostile litigation These
are being and WILL trust, continue TO be, dealt with
by the receiver with an unbendng determination TO
modify get rid of burdens depicting the proper
income OF the bond and stock holders The report of
Mr. Morris will throw light upon these questions.
s. The ledger entries necessary for constructing
balance sheet taken out at my request will demand your
consideration and they will speak for themselves.
They cannot however include estimates Of the proba
bic results of pending proposed gations, such
those with Commodore Vanderbilt, the London Bank
ing Association, Mr.. McHenry and Mr.. Jay Gould
Complicated transactions and large amounts Of money
are involved IN many Of these suits and proceedings
3. Having inspected the main line, the principal
workshops ana some OF the branch lines have formed
the conclusion that the railway, together with the
plant upon the ground and running is In full average
state Of repair according to the standard Of the United
States Al the same time has been stated TO me that
about one tenth Of the nominal stock of engines and
one-sevenlh Of the nominal stock OF cars repre-
scented by useless or WORKOUT vehicles, or are
missing in number Still II Is satisfactory 10 be
assured that only one engine in ten of the effective
stock is in the shop for repairs or renewal AT the
principal workshop at susquehanna pay bill Of 200
names has, they Inform me, been reduced TO 500 with
any reduction in the quantity or work actually per-
formed But with the pay bills habitualy for months
1t would be difficult 10 imagine the possibility
oil either discipline or economy and the mismanagemcnt
OF years past cannot be all al once remeded or even IN
some modified.
10 In the present state Of the credit Of the Erie
certaking IL seems to impossible as t would be
unwise even II possible, to endeavor raise aud
remit more capital from England can recommend to
you no policy but that OF self redempton the railway
must pay debts by the OF that part of It's
net earnings which the courts may permit TO be APP
proprated. II the difficulty had been fairly looked
the face IN 1872 many unhappy persons would have
been saved from loss and be ore discipline and
economy would have been fully established. Let 1t be
hoped that the bond and stock holders will have the
courage now TO submit TO period of seidenial and
will consent TO pay their debts and complete essential
Obligations out OF available net profits the bondhoders
place of cash such equitable obligations
reaizabe Of surplus revenue in the future each
according to right and priority may justly claim.
Placed in fair and honest hands, hands undecided by
speculation the undertaking must, possible be made
sefsupportng by increased income and reduced work
ing expenditure
IL hip is the alternative OF the time;
foreclosure has been threatened II the latter - be
avoided there must be cooperation and control in the
working Of the former A receiyershp worked in
with all the honest interests the