The Portland daily press., 1877-02-08


and the Connecticut was completed, and a
connection of the two divisions formed in De-
cember of that year. Since, regular trains have
been running from Portland as far as johnson,
forty miles from Swanton,-the intended ter
minus of the line. Latterly there has been an
attempt made to build those forty miles by the
issue of preferential bonds to the amount of
$5OO,0OO and If any faith can be placed IN
promises of railroad construction, and pro-
vided success is met with in the negotiation of
these preferential bonds it seems now this last
link will be completed during the course OF
this year. The business from Vermont to this
road, for want of cooperation between the two
divisions and OTHER causes, has been thus far
What the effect will be it &C.
compished, of the finishing up of the whole
line must be left to time to determine.
The problem that remains to be solved is
what measures shall the city take under the
circumstances to protect its interests. The
situation is peculiar one. Of the issue of
So 800, 600 bonds the city holds, not absolutely,
but as collateral security, ST., 100000; other
parties hold 1913 600 as collateral; only 1921 900
are owned absolutely. The mortgage runs to
trustees for the benefit of all bondholders, and
any action in the direction of enforcing their
rights under the mortgage, By taking posses
sion of the road or otherwise, must be through
these trustees. This mortgage is a first lien on
the mountain section only, which so far has
not paid its running expenses, and from which
the city cannot expect any income for payment
of interest for some time to come. The earn
ings of the Portland section, it appears, are
sufficient to pay the interest on the first mort
gage on that portion of the road and some
thing over, but not more than enough at
present to pay the interest on the floating debt,
but all the earnings for some two years to come
must be expended on the road The city holds
q majority of stock in the corporation, and is
the majority bondholder under the mortgage OF
Nov. 1. 1871. In view of these facts, what
cbo1l no nv ituC
1. The first conclusion to which the Com
missioners came unanimously in the outset was
that they must advise the city not to make any
further advances whatever to the road, even If
the city's finances permitted, which they do
not
2. That, although the city, holding major
part of the bonds Of Nov. 1, 1871, might, at
meeting of bondholders properly called, have
the power to determine that the trustees should
take possession of the road, and, in the la n
guage of the statute, manage and run it in
their (the bondholders) behalf" yet serious
question arises whether by such action the
bondholders including the city, or at least all
voting in favor of such action, might not there
by constitute the trustees their agents in rum
ming the road, and they, as principals. might
not be liable Tot only tor the ordinary operat-
ing expenses, but also incur the risks and liza
bilities of accidents that might happen. In
such case there might be danger that the city
would both be involved in further expenditures,
aud also compelled to bear the chief burden of
them. For these reasons the Commissioners
think it unadvisable for the city to become a
party to proceedings for putting the road into
the possession of the trustees.
3. 1t is very evident that sooner or later
there must be reorganization of the company
upon basis of a reduction of the nominal
value of the road to its real value, and embrac
ing total change in the relations of all the
parties. After full and mature elaboration
the Commissioners are Of opinion that the city
is already involved in the affairs of the road
quite enough, and should avoid all further COM
plications; and their recommendation is, as in
the case Of the Portland & Rochester, "that
at the proper time, whether Immediately or at
some more favorable time hereafter is to be
considered, and at such valuation after careful
elaboration and fair negotiation as the city
government may fix, the city sell and dispose OF
its interest in the road, and the proceeds put
into sinking fund for the redemption of its
bonds so far as said proceeds will go. Nothing
should be done precipitately or prematurey
and the criticism of hasty action and Want OF
deliberatlon in so important a matter
should be avoided, so that whatever con cIu-
sion shall be arrived at, it may command the
respect and confidence OF our citizens generally
As elements for forming a correct estimate o.
the value of that interest," the past and present
condition of the road and its affairs have been
hereinfore set forth, as well as the Commission
ers have been able, and to judge of its future
sense and sagacity which cool, level-hea ed
men use in estimating the chances of the flu
ture success of their own business undertakings
necessarily more or less uncertain. Consider
ing the limited amount of net earnings, thu
shrinkage in value during the last few years Of
all property, especially railroad property, the
amount of interest and incidentals that has
gone into the construction account, and the
fact of the decrease in the price of labor anG
materials since the road was uilt,-that OIL
iron alone being full one-half,- 1T must be ap
parent that its cash value at the present timt
is much less than its original cost, and that the
city at best must sustain a serious loss. At
tention, too. may be called to the general fac
that since the panic of 1873 the construction o.
railroads, at least for number of years, has
partially ceased, especially in New England. A
few miles of additional track or connecting
prise of importance has been undertaken. II
the wonderful history of the railroad system il
the United States,-not much more than {
generatIon oId,-to the construction stage ha
now succeeded what may be called the adjust
ment stage. in which those roads which the
public needs require and which can be profta
bly, run, by law of natural selection, will sur
vive; all others sooner or later must perish o.
lead but lingering, m0ribund existence. The
Darwinian theory of "SurUiUdL Of the JftteSt' ap
plies to railroads with full force. Whether the
Portland and Ogdensburg belongs to one elias;
or the other is of Importance in fixing the value
of the citys interest therein, and must be de
termined by the exercise Of sound judment ant
good common sense.
4. Meanwhile, until the time comes whel
the city s interest in the road can be disposed
of, if all parties in interest could agree upon
receivership and unite upon a suitable maj
for appointment thereto, the Commissioner
recommend that application for such appoint
ment be made: but it is understood that NJ
agreem ent on their part can be arrived at. II
which case, as there is no prospect in an,
event that the city will receive any payment
of interest from earnings of the road for yea
or two to come, and as in the present state O
the law, if opposition thereto was made, il
would be doubtful whether receiver could BIZ
appOinted,-at any rate the proceedings would
be attended by delay and expense, the Com
missioners do not think it would be advisable
for the city to initiate proceedings in that di
rectou, but remain passive and in a waiting
posture at present, protecting its interests by
such power as it now has, and awaiting the &C
ton of other interested parties, and ready tt
cooperate with them in any measures which
may be for the good of all concerned. Once in
receivers hands, with interests conflicting, il
might be difficult to extricate therefrom. The
power of control which the city now holds. al
majority stakeholder and majority bondholder,
ought not to be resigned until it clearly il
made to appear that it will be for its advantage
so to do.
Lastly, the Commissioners proceed to cousd
OF tue COuulGlOu OF Jno finances OF Lne Guy IL
connection with these two railroads.
According to Information furnished by the
city treasurer. the total debt of the City at the
end of the financial year, March 81, 1877, will
be S. 200, as follows:
Bonds issued in laid Portland g.
Rochester Railroad. .......;;.. 81, 10000
Bonds issued for interest on ditto 2O7 900
Bonds issued Ia aid of Portland& g.
Ogdensburg Railroad. ......... 81 $50 900
Bonds issued for interest on ditto 121, 500
--S1, All ,50(
Bonds issued for payment OF Port
land 81 Ogdensburg Railroad
Stock, City Bonds S271, 100. and
$443,000 State Bonds substitute
ed by other City Bonds ....... 71f00
Bonds issued Marginal way. $500
Bonds issued Cats wharf. $50. 10000
Bonds issued Municipal and 9TH
er purposes. ................ $751;
Bonds issued in aid of At. g. st.
L.. Railroad, ...:;:..: ........ $4,000
Bonds issued Building loan, bal
ance outstanding ....... ..... $1,000,
From which deduct liabilities
practically provided for,
Building loan bonds. ............S $4,000
AT. 90 St. l.. Railroad loan. $4,000
Portland 81 Rochester Railroad
sinking fund. .............. $4,000
City sinking fund, estimated
March 81, iS77,to be- ........... 5O5,OOO
I,100 shares gas stock .....-... $4,000
Notes receivable secured by mort
gage. Recommendations. $500
---S2. OPP 50(