The Portland daily press., 1876-02-04
THE EASTERN RAILROAD.
Annual Report of the Directors.

BOSTON, Feb 3.-The Journal publishes the
annual report of the Eastern Railroad Direct
ors to-day. The report is very exhaustive and
candidly acknowledges the errors of manage.
unfortunate condition. The first of these errors
was in originally locating the terminus in East
Boston, as it became necessary subsequently to
remove it to Boston and Charlestown, and the
change was made only at very heavy expense.
The Marbehead, Gloucester and Salisbury
branches proved judicious investments. The
branch from Salem to Peabody has been
heavy burden and has occasioned an actual loss
to the company of not less than $350,0OO. The
Rockport branch was on the whole iudicous
Investment. In the year 1873 branch was
built from Swampscott to Marbehead at cost
of $175, 900, which the directors say in their
present light was wholly II advised. They
consider its maintenance a useless and unpro-
ductive outlay. The South Reading branch
was purchased, and the Eastern Company lost
the whole of its original cost, the only advan.
tage which 1t proved to them being to stop
the diversion of business from their road; but
in.1854 it lost that advantage and ever since
has been maintained at loss of S15. 600 wear.
The Saugus branch has proved juaicious in
yestment and is now self sustaining The
Essex branch and the Newburyport City Rail-
road have both proved Improbable. TIE ex.
pense of the removal of the passenger terminus
to Boston in 1854 was 81 ,300,0 600 including land
purchased at the time, and the station house
built in 1862 cost $8S,50O. In 1874 the road
took tract of land on Causeway street and
were compelled to pay $118,000 for it. while iIs
actual value did not exceed $50 600.
The Eastern Railroad in New Hampshire
was leased in 1850 and has always been virtual
ly part of the road. In the year 1847 the
leased by the Eastern and Boston & Maine
Railroads jointly, at rental of three dollars a
share semi annually-that is, six per cent per
annum on 81, 100000, the capital stock of that
company; and the receipts of the road we're d.
vi1ed between the two roads, lessees, in the
same proportion that the business was carried
by them.
In the year 1869 conferences were held be-
tween the Eastern Railroad Company and the
Maine Central Railroad Co., with a view to the
control of all the business of the latter by or IN
the Interest of the Eastern Railroad. Thew re-
suited in nothing definite. In consequence OF
them, however, the Maine Central, as The Di-
rectors believe, provoked the annullng of the
joint lease of the p. s. & 2. road, and the lat
ter road put itself into the market to excite
competition of the three roads-the Maine
Central, the Boston and Maine and the Eas-
tern roads. At last the Eastern offered 10 per
cent. and made contract with the p. s. & p
This would amount to $150,000 per annum,
and the directors say that the business of the
road will now warrant greater rental.
In the year 1871 contract was effected with
the Maine Central, by which the whole of it's
business was tranferred to the Eastern Rail-
road Co., that road to furnish suitable facilities
to receive and transact the same in Boston.
Large antcipations were apparently enter
tanned by the management of both roads, a nd
the immense aggregates of business we re
spoken of in language we now think somewhat
exaggerated. By this first contract, freight was
to be transported from Portland to Boston for
$1.75 per ton, and passengers at $3.50 each,
with car demurrage of ST 80 day upon each
car of the Maine Central, while remaining up-
on the Eastern road Practically undar tbis
contract, our cars (entitled to the same demur
rage upon the Maine Central road), seldom
passed beyond Portland; while the cars of the
Central, by the usual course of business, seemed
to find very free and ready access to our road
1t was soon discovered that this, supposed
trifing matter, was fast becoming one of great
moment; amounting to a tax of about $40 900
each year, to be paid by this road for Car de-
murrage alone. Thus arose one of the first
difficulties under this new railway consolida-
ton. Negotiations were instituted to abrogate
the demurrage clause in the contract; but they
proved wholly abortive, and it became appar-
ent that matter involving so important an
interest could not be settled by the ordinary
means of mutual compromise and agreement;
and yet it was evident that the continuance of
the contract imposing this heavy burden was
incompatible with the prosperity and perhaps
safety of our road. The relief that seemed
most feasible was to get control of a majority
of the stock of that road and then by means Of
that control to amend the contract.
In 1872, therefore, steps were taken to that
end, and in February of 1873 about 1919 sh ares
were purchased, lat an average cost of about
seventy dollars share, amounting to $533, $50
"a number sufficient to give this corporation
or its interests control in the election of the
Maine Central Directors in March, 1873. A
contract to complete the purchase of a majority
of shares was then made by which the perma-
nent control of the road was to be made effect
i've to us; accordingly 1896 shares more were
secured during the years 1873 and 1874, at prices
steadily advancing; and 10 the former year
116O shares were purchased at the par value of
$4,000, making the whole number of shares
then in our control $4,000; and costing about
$925,000.
The cardemurrage contract which had con-
tinued from 1870, was annulled in 1873 and a
new one substituted. which practically united
the Maine Central Eastern and Portland, Sacu
& Portsmouth roads, In 1874 it gave place to a
third contract which is now in force. Under
this contract it was discovered that demurrage
was being paid at the rate of $4,000 per month,
but this has ceased.
Meanwhile the efforts under the contract to
secure the control of the Maine Central corpo--
alton by owning controlling an actual maJj,s
ity OF is shares were continued. Two thOus-
and other shares having been employed stated
ly in cOnsOnance with the interests of this road
it remained necessary to secure only three
thousand shares to effect the object in view,
and these having been previously purchased
were paid for III 1876, making the whole actual
purchase of control, namely, Is 274 shares, cost
including interest to September 80, 1874, ST.,
900, 538. 81.
In accordance with the agreement with the
Maine Central to provide suitable terminal
facilities purchases of land were made in 1871
and 1873 in Charlestown to the amount of So,
$4,000. Without this purchase the directors
think the business coming over the Maine Cen
trail would be about evenly divided betwee n
the Eastern and Boston s. Maine Now the
net income from freight received per year in
consequence of this outlay has not exceede d
100000. one-half of which, viz: $4,000, there
fore, is all that be justly credited to these
new freight terminal accommodations.
Another of the unhappy results of this Maine
Central enterprise has been the ruinous compe-
titon for Eastern business that has prevailed
between the Boston & Maine and this compa
ny, during the whole period from 1870 to the
first of November last at which time the pres
ent administration effected an amicable ar
rangement with the rival road. Competition
has now ceased, securing it is believed, say.
ing to each road of from $4,000 to $4,000 per
month
The Portsmouth, Great Falls & Conway.
the directors say, is not worth what it cost as
feeder. The Portsmouth & Dover road has
accomplished all that was expected OF it.
Speaking of the debt of the company the di.
rectors say:
From as thorough an examination Of the
been possible to make during the three months
since the organization OF the present board of
government, two singular and surprising facts
must be noticed respecting the manner 10
which the debt of the company has been ma
nipulated. Speaking in general terms, as fast
as money has been received from capitalizIng
stock, which has increased from 81 300, 600,
the original capital accepted, to 81 1897 600 ii
has been appld toward the payment of current
expenses, dividends, interest and new extern
sions of the road
Dividends have been paid to make this stock
capitalization facile and seductive. Small and
ineffective amounts have doubtless been an
piled from time to time toward the liquidation
of the debt but beyond these no real interest
bearing debt of the company seems ever to
have been paid. Extensions, engagements.
large, OUTLAWS, and subsisting bonded debts
have been met by long notes, or with new is
sues of bonds; when any of what We may call
the floating debt has become due, its payment
has been rolled over to the future, the debt be-
ing converted into notes having long periods to
run, or funded into bonds maturing in still
more distant years. And so without actual
payment, the real debt seems to have been ag-
gregated by ever new accretions, till its sewing
bulk has at last reached such colossal propor.
tions that it has been only after the greatest
exertions, and submission to the extortionata
rates, that the road has been able to meet ito
regular accruing interest, amounting now to al.
most one million dollars annually
LETTER FROM GEN. SHERMAN