The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-06-12
CONTROLLING A NEW ROUTE.
MICHIGAN CENTRAL FALLING INTO mr.
TINDERBTLT-S HANDS.

TdNDERBTLTS HANDS.
How its stock was Dropped by Bo.son Men,
and Burned Fingers In wall street, and
how Mr.. Vanderbilt then Bought IL In.
Four years ago Michigan Central was
considered purely investment security. 1t
was held mostly in New England and for years
ruled above par. and paid ten per cent divi-
dends 1t was dealt in chiefly in the Boston
Stock board. It's President WIS james f. JOY.
who commanded the confidence of railroad
men. and his name at the head Of an enterprise
was sufficient guarantee for capitalists to sup
port it with their money. At that time people
paid great deal more attention to the names of
directors than TO tho condition Of the property
that they controlled; and M long MS they re-
ceived their dividends regularly they held on
to their stock. and did not closely inquire
whether they were paid out OF sales of bonds or
out of bona fdc net earnings. The panic OF
1873 tested the ability Of railroad corporations
to show clean balance sheets. and Michigan
Central was compelled like others to submit to
a searching ordeal.
Charles Barrett. the woll-known professional
railroad accountant. first brought ugly facts to
light in regard TO the bookkeeping of this cor
poration. circular which he had prepared
fell into tho hands Of Boston capitalists and
shortly afterward the stock began to DO active
in the Now York Stock Exchange. The Boston
parties managed the unloading process very
ndroltly. and Wall street became saddled with
the bulk OF New England stock Mt concession
OF about twenty per cent. from previous
quotations before It was discovered here
that anything out of the way existed in the ac-
counts of the railroad Then damaging fac,s
began to be discovered. and Wall street opera
tors who had loaded up with the Boston stock
made haste To saddle their aharen unon fresh
lIVprS AT rnUuppl utiotutipna Tho
10 unload carried prices lower steadily and ns
pools were formed to catch the short interest
or TO burst cliques long Of the stock, VI gan
Central became Il fayorite gamble in Wall street.
II trans pircd that from working us trunk
line between Detroit and Chicago. a distance
OF ~ niles, various railroads had been leased.
until the Michigan Central comprised over 500
miles of road. These leased lines wore opcr-
atcd ~ heavy loss. and had been saddled upon
the Michigan Central at enormous figures 10y
cllques anxious TO relieve themselves Of bad
In the early pnrt Of 1877 the stock fell below
40 IN the Now York stock Exchange and ms tho
seemed To be a fair prospect that the concern
would be foreclosed and the lenses with unpro-
ducuve lines broken. Capitalists who owned
at this Iuncture, and pools were made up 10 buy
thu stock md prevent hostile proceedings.
which had been reaching out ior Western
connection, in competition with New York Cen
TIL aind Erie appeared ms the first purchasers:
Nlr. Noses Taylor and Russel! sage bought
large blocks of stock. WIN. II. Vanderbilt took
alarm and also entered the market. Jay Gould.
who generally keeps II close watch upon tho
movements OF great took operators and tries to
turn a penny out Of their rivalry. was the third
heavy buyer. Under the steady purchases Of
these three great Interests. Michigan Central
became active and higher. As tna time for the
election approached ilufus Hatch appeared I'm
the field as an outside bidder for proxies and
the contest became decidedly warm. Proxies
commnnded high figures. and the stock was
just before the election It transpircd tina, Moses
Taylorhad received enough stock and proxies
70 control It. and Mcssrs. Gould and Nanurr-
bilt. gracefully accepting the stuation. Joined
IA elcNng the Delaware and Lackawanna
or course the price OF the stock fell on rs soon
rs the result Of the election WAS assured. The
Delaware and Lackawanna clique. surprising
could hc bought bnck again easy enough inside
81 a year. began 70 unload. William II. Van
terhllt. however had made up his mind to con-
troll the road. aud rs other parties sold out he
quietly took their shares Ii was not suspected
tnat he was n buyer. and. M natural conse-
quoncr. he found IL easy To- secure a very large
lin" of stock. Tho price went up and remained
strong. Various bear attacks only resulted in
sailed for Europe last spring the str-k which
he had bought began to be transferred into his
name. and II was then discovered that H. was
Y" owner 81 1900 shares out OF the capital OF
Isl 0nu shares
alarmed hciore this. and IL dividend Of two per
cont wis Occurred. II WIS stnfei In tho street
that tlis had been lone 20 satisfy -tockhold-r,
would the more readily give their proxies to
H., prawlre and Ll"kawnnna Interest.
IL is however. well settled that the russo aid
not succeed. as Mr. Vanderbilt holds sufficient
stock and proxies To Civ" him the election li
u" now board The election takes place on the
2ith of June.
Mr. Moses Taylor said yesterday that while
h" hud not entirely given up all hopes OF re-
tanning control of Michigan Central he felt hv
20 means So certain OF carrying the election as
he did list year. Then he held such large
block of stock that ne could fureshadOW the
event with ahs1Iut" certainty. Now. while he
was n large stp"kholder. he know that power
o. stock. H." believed in the properly. and
would not sell ont If Mr Vanderbilt obtained
control. He thought the price would 20 great
deni higher.
troll Michigan Central soon % have been die
tated 10y a sort OF general policy which he is
now carrying out 10 buy up all " the roads be
tween Chicago and Buffalo. The Michigan
central, under his management. Will leave the
Grand Trunk without an available western con-
terms 20 the latter corporation. Delaware and
Iackawanna VIII also b. prey ntrd from eN-
lending further westward. jay Gould will he
unahl" 10 utilize Michigan Central as u link OF
through line.
Whether the game is worth the powder Is
problemntcal. The road has been unable to
earn dividends. and IL Is said that tho rolling
stock Is in n frightiul condition. The leased
lines can only bs got rid Of hv foreclosure ana
that proceeding would cost Mr. Vanderbilt mill
H. the present figure. So long rs the lakes ana
the Erie canal exist. competition with the rail-
roads for n large portion of the year will be
cnrrlrd on vigorously and the only course for
MI Vanderbilt TO pursue. II he desires n COM
plete monopoly ~ the carrying trade between
the East and Chicago. is TO make his scheme still
more comprehensive. and buy the lakes.