Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1876-08-22
Correspondence of New York Times.
INDIANAPOLIS, Tuesday, July rs, 1876.

Correspondence of New York Times.
INDIANAPOLIS, Tuesday, July rs, 1876.
Tiden's success and extraordinary industry in
absorbing" railroads have made bis operations IN
Indiana and Illinois so remarkable that they can
only properly be brought to public notice by
grouping them altogether SO far as possible, and
in the briefest possible terms. Taking MINOR
but eminently characteristic case that OF the Con-
tnental Improvement Company should be men
toned. 1t was chartered by the Pennsylvania
Legislature in 1868, and soon got contract to
build the Grand Rapids Railroad, which turned
out to be very profitable job. The company got
a large amount of stock and bonds per mile, but
then great reliance was the lands. The company
that is, Tiden and Scot-got hold of 90,i43
acres of the land belonging to the railroad. which
they managed TO sell at an average of $l4 .36 per
acre. Their net profit on this little side specula-
ton was ST., 2S9,365. The profits of the railroad
have not been discovered.
The frauds of TiIden in connection with the
Indiana Southern Railroad should next be given
Chartered in 1910 as the Fort Wayne and South
ern Railway, it had large quantities of land coded
to it as stock subscriptions by the farmers along
its line in the counties of Allen Wells, Blackboard,
ferson, Scott and Clark. The enterprise dragged
with varying fortunes until 1850, when John c.
Parker, who had been shoulderiDg the road for
long time, was elected its President. He at once
went to New York and made an arrangement
with Herman Livingston by which the latter went
to Europe with St, 900 of the company bonds
to negotiate in foreign markets. In England an
arrangement was made with William Racester
Wagstaf, London banker, who was then sup
posed to be immensely wealthy, by which he
agreed to finish the road, provided, upon per-
sona inspection, he came to the conclusion it
would be profitable Wagstatf arrived at New
York, was greatly feted there by Tilden and 9TH
ers, and, with the Civil Engineer, then went to
Indiana with the result, after examining the road
of concluding to take it in hand. At this poin.
the crookedness began, for by scraping along the
edge of the law an order of sale was obtained from
a Louisville court, and the road under that order
was bid in by Wagstaffs attorney. but really
passed into the hands of Parker and Wagstaff
That Tilden had hand in this transaction is sp-
parent from the fact that in the same month all
the property of the company which had now be-
come the Indiana Southern was mortgaged to
Samuel J. Tilden and William ii. Swift as Trus
tees the matter soon eliminated, and the steal
ing became lively. Tildens first steal was that of
$1,000 for the use of his name and influence as
Trustee, but that was nothing compared with what
followed. As Trustees, Tilden and Swift were
ntrusted with 10000 900 of the bonds of the
company which were issued to complete the road
and although even at this time there was reason
to believe that Wagstatf was not the man Of large
means he was supposed 10 be. Tilden allowed
him to box up SIS. SOC, 600 Of these bonds and take
them to Europe with him. Another 81 5000 900
were handed over to the London, Liverpool and
Globe Insurance Company security for a loan
of Sl20, 900 to Wagstaf that really this person
got all the bonds except 100000.
The denouement came as Wag.taH
reached London, for that trusted friend and CON
fident of Iilden at once hypothetical 81 900 600
of these bonds to raise funds for his personal ex
penses Soon afterward s., 900 900 more went in
the same way in Paris. Then Wsgstaf went to
Russia to avoid executions, it was said, and was
then found to be that man of straw which any man
of ordinary intelligence aud honesty would have
known him to be from the first These transac-
tons of Wagstatf made necessary another change
in the status of the road, and Tiden and Parker,
with the help of an Inscriptions attorney and by
bribing an Indiana Judge with Sc, 900, succeeded
in getting the order of sale annuled. The Ohio
and Mississippi Railroad, by reason of lease of
q portion of the line, had an interest in the prop
erty, and by the act of their attorney change of
venue was had with the view of having the action
of the purchased Judge reviewed in another court.
Various other suits were brought by other parties
and notably the Liverpool, London, and Globe,
- that the Indiana Southern, by the course of
Tilden as Trustee, became hopelessly involved in
litigation. The farmers who gave their land for
its stock have been swnded out Of their property.
and so far as can be seen nobody but Tilden and
Wagstaff have made anything out of it. At least,
it can be said with entire safety that in all his
proceedings in connection with the Indiana
Southern Railroad, Samuel j. Tilden, as Trustee
of the company, was either a fool or knave. He
was either the dupe of Wagstaf or he was his
"pal"-I beg pardon, his partner. Those who
wish to make Tllden President can put him in
either category they please, fo- 1t does not make
the slightest difference.
Tllden seems to have had three separate and
favorte ways of "absorbing' railroads. namely:
BY permitting speculative gentlemen to run away
with the bonds, in the case of the Indiana
Southern; by voting bogus proxies as in the case
of the st. Louis, Alton and Terre Haute, and by
watering stock as in the case of the Chicago and
North. western. Each one seems to have been
equally etficacious as an administrative reform"
measure, for it got the real owners out and put
Tilden and "pals"--partners-in possession. The
second story, which is that of the St. Louis Alton
and Terre Haute, is long one, but it must be
abbreviated. Tilden very probably had his finger
in the rich pie of this corporation from very
early period, but he does not appear prominently
on the record until 1862. BY revelations made as
late as May, 1873, it was shown that in 1861 and
1862 the road was reOrsanzed under laws which
permitted the creditors and stockholders of rail-
roads to enter into agreement for reorganizc ton
capitalization providing for the purchase OF the
property by Trustees for them, and the forming
of new corporation, in which the old stock and
old debts should be represented by new stock and
new bonded Indebtedness, which new stock and
new bonded Indebtedness should be distributed
according to the terms Of the agreement for re-
organization by the Trustees, i.e., the Purchasing
Committee. The agreement was made, the road
was purchased under the agreement, and new
securities were distributed
The laws provided that within six months alter
the organization of the new company all claims
which, under the laws of the agreement, were to
be satisfied by the mortgage bonds of the new
company, must be put in, and at that time-name-
ly, upon the expiration of the six months-if such
claims were not properly made upon the new
company-if the old bonds and coupons were not
surrendered at that time-they ceased to be claims
thereafter upon the company.
Although under these provisions of law no new
liabilities could be created, they were illegally
created to the amount Of S28l,7l3, and of this
sum Samuel j. Tilden was modestly content with
1921 900 for services as Trustee and counsel.
When, where, or how he had earned this sum does
not appear upon the record. There were many
supcious circumstances connected with this re-
organization, by which the stockholders lost large
sums, and when their committee went to New
York to ask Tilden for an explanation they found
that administrative reform" had chosen that pre-
else time for convenient trip to Europe, and they
had gone. After this re organization Tildens as
sociates engaged in other nefarous transactions,
among which was the sale of $4,000 of equip
ment bonds at 81, when the charter expressly Or
dained that no bonds should be sold at less than
par. Next came an outrage upon the preferred
bondholders, for the coupons upon these equipment
bonds thus issued and sold in defiance of law were
illegally paid, because the mortgage on the road
provided
"Nor shall any deed oftrust or mortgage creating
lien upon the property hereinbefore described in