The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1877-02-08

debt of considerable amount outstanding.
Here occurred pause of about year in the
construction of the road. Its promoters wer g
not idle, meanwhile, but were busy devising
ways and means for its extension tfty-two
miles to the western bank of the Connec lieut.
rlVer which We shall call the Mountain Section.
just year after the execution of the first mort
gage, to wit, on the 1st day of November, 1871,
another mortgage of the whole road from Port
land to the Connecticut was executed, to secure
thirty year six per cent gold bonds of the COM
pany, to the amount of $33O0000 of which
SoOO,OO was to be reserved to take up the first
mortgage bonds, and have never been issued
leaving this last named mortgage, being a Sec
ond lien on the Portland section, AMI first
lien on the mountain section, practically to Sc
cure the compauy's bonds to the amount of
~, 100000 for the completion of the road and
the latter amount with the exception of S400,
have been actually issued as will hereafter ap.
pear.
Again, the five per cent limit of the general
statutes having been exceeded by the city in
granting aid to railroads the managers of the
road procured the special act of the Legislature
on February, 1872, already spoken of, authoriz-
ing the city to grant further aid to the extent
of 81, 100000, on the usual condition of accept
ance, BY the two-thirds popular vote. There
was decided opposition to its acceptance, and
at the first trial, the same was not carried
by the requisite vote, but at the second
trial, provided for by the act, the di-
IoCtOIS plcuSluS GutubelV6S W Gall upon ble
city fol only 81, $50, 600 of the $780, 900, the
vote of acceptance was obtained July 1872
Before this date, however, viz, on the second
day OF May previous, the directors had entered
into contract with Fuller & Harding, in SUBJ
stance, for the construction and equipment in
running order of the Mountain Section of the
road for the rou0d sum of So, 800, 900, payable
one-half in cash, the other half in bonds of the
company Of the issue of November l, 1871, the
work to be completed on or before August 4,
nY,1k L., cAl..-
vious contract, whereby $1,550,000 of bonds
could be used IN payment for the extension,
that the directors made the foregoing pledge to
require of the city only $1,350,00O, being the
balance of the 81, 100000.
The company subsequently, from time to
time, received of the city the whole of this sum
of 81, 900 in thirty-five year six per cent.
city bonds in instalments of $4,000, as the work
progressed, receiving the first lnstalment July
"a, 1872, and the last Aug. 5, 1875, and deliver
ing in exchange the company's bonds Of the
issue of November 1, 1871, to the same amount,
as collateral security to the performance of the
condition of the company's bond to pay the
interest and principal of said city bonds aud
save the city harmless. 1t will be seen that
the exchange of bonds was dollar for dollar,
and that the city's security rested entirely upon
estimate of the value of these latter bonds is
now may be judged of by the fact that $918, 600
of them, as will hereafter appear stand pledged,
on an average. at the rate of three dollars for
one; and what that estimate was in 1872 may
be seen from a supplemental contract executed
between Fuller and Harding at the same time
with the other contract and as part of the
same transaction, although by aseparate instru-
ment and not so we'll known to the public as
the other. whereby Fuller and Harding agree
to receive of the company for building and
equipring the road as aforesaid, the sum of
$2000,0 600, if all paid in cash, instead of $2300-
600 If paid one.half in cash and one-half in
bonds; thus in effect agreeing to take $85O,O0O
in cash for 81, ,15O 900 in bonds, and Practically
putting the valuation of "a per cent. on the
same kind of bonds, which were pledged to the
city dollar for dollar 1t need only be added
chat the commissioners are of opinion that the
security given the city was entirely inadequate,
and in the transaction its interests were not
sufficiently protected, and that the care and
watchfulness with which public funds ought to
be managed and guarded were wanting.
The contract with Fuller and Harding, if it
could have been carried out, was q favorable
one for the company,-but there was no outside
guaranty given by them to ensure its perform
auce. They were gentlemen of high respecta-
bilty, experienced railroad contractors, and re-
puted to be of considerable means, but they
had not the means to carry 81, 100000 of the
company's bonds which they were to receive
in part payment 1t is understood also, that
they were contractors on the unfortunate Mid
land railroad. just here IS found the prime
and fundamental cause of the subsequent
financial embarrassmeutS and difficulties of the
L. Is evident that the ability of
Fuller 81 Harding to carry on the work to COM
pletion and perform their contract hinged upon
the success of their efforts in negotiating these
81 10000 bonds of the company. They did not
succeed in so doing. The market at the time
was flooded with railroad bonds; this kind of
securities had fallen into disfavor; dstrust was
Harding tried in EnrnpA tn marInt tham hnt
returned home unsuccessful. The result was
that the work on the extension, begun by the
contractors on the 10th of August, 1872, lam
guished greatly for want of funds, and compar-
atively little was done the whole of the next
year. On the 5th of August, 1873. the road in
an unfinished condition had only reached Upper
Bartlett, III miles from North Conway. a dis
tance easy and cheap to build The workmen
on the road had become more or less demoral-
lied for lack of regular pay ment, and consider
able trouble was experienced from them.
In the following month of September, 1873,
consequent upon the collapse of the Northern
Pacific Railroad and the failure of Jay Cooke
& Co., the great financial storm burst over the
whole country, prostrating everything before it,
and succeeded by an unparalleled business
stagnation, lasting to this day. On the occur
renee of the paLic it must have become clear
beyond question, that there remained no hope
of negotiating the bonds. And then, and there,
at Upper Bartlett, the commissioners think,
that the construction of the road ought to have
stopped for. the time being at least, both in jus
tice to the city, and taking into view the inter
ests of the company ITSELF As it has turned
out the portion of the road between Upper
Bartlett and Portland is the only paying part
of 1t, and the earnings of that portion, as will
be seen hereafter, have been enough to pay the
interest on the first mortgage bonds, and that
portion Of the city oid yiz.: $3.50 000 Whacb had
been draaon out to that time. By this course the
company would have saved large amount of
interest, then-tbe balance of the city aid would
have been reserved for more propitious times,
when it could be made to appear that it was for
the advantage of all concerned to carry through
the road, and thus in great measure would
have been prevented the serious loss now CO.
tailed upon the city. AS it is now, under the
policy that prevailed the result is that the por-
ton of the city's 81, $4,000 not consumed in
the payment of interest, has gone into only
partially completed road,-the portion between
Fabyan ard Scott's Mills remaining unbuilt,-
and a large and unmanageable floating debt has
been contracted, so that practically 10 addition
to the 81, $500 the city is compelled to ad-
vance semi annually, in the nature of forced
contribution or loan, the interest on said sum,
to witt SS1 900, which the company is unable
to pay.
After the panic the contractors struggled on
with the undertaking until August /, 1874,
when they succumbed altogether, and the con-
tract was rescnded by agreement of parties, land
the company itself assumed the work on the
road through the Notch to Fabyan's; employ
paying them, on monthly estimates of the en-
gineer, in the proportion of eighty per cent.
cash to twenty per cent bonds of the road
The advantage of this change was, that the
directors were able to infuse more vigor into the
work, and were enabled to raise money with
greater facility on temporary loans,-but the
great difficulty in the company's financial af
fairs remained. 1t could not negotiate its
bonds. of the $1,150,000 unpledged by the
city, $231, 600 had been used and exchanged for
construction and materials, leaving $918,000 on
the eompany's hands undisposed of. Not
bond of that issue, so far as the Commissioners
are aware, was ever sold by it in the market
and in the usual course of business The float
ing debt which the company was then carrying
assumed formidable proportions. The earn-
lngs of the road were mo,e than eaten up by
interest. There remained of the city bonds
only $65O.000 when the contract was rescinded,
"a sum wholly inadequate to complete the
road; consequently the Directors were enabled
only to carry the road partially through and
that only in the cheapest manner, leaving
much work to be done in the future, and gap
of eighteen miles between Fabyan's and the
Connecticut river entirely unbuilt The road
reached Fabyan's Aug z, 1875. Subsequently,
the same year, by special loan, two miles of
road next the Connecticut and a bridge over
that river, were built, and connection with
the Vermont DiUiSi0n made Dec. 20, 1S75,-by
a somewhat indefinite arrangement with the
Boston, Concord & Montreal Railroad Co. to
an1 Lon L.