Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1881-04-09
la,lraster fi,telhgencer.
SATURDAY EVENING. APRIL o, 1881.
Those Northern Pacific Proprietors

AsVSO &NVA kk0CAu 0C1uC AAVpAACSVAS %
A short time ago the directors Of the
Northern Pacific railroad company is
sued eighteen millions of stock to a few
persons, themselves among the number,
claiming it it to he . balance Of stock
belonging to the 'prOprietary interests. !"
No money was alleged to have been paid
for this stock, and the company derived
no benefit from tie issue. 1t was issued
1T this juncture, in order to thwart the
attempt made by the proprietors of a
rival railroad in Oregon to purchase
controlling interest in the stock of the
Northern Pacific. These people, thus
cuchered, have caused an Injunction to
be sued out restraining the eighteen mil
lion issue as unlawful. The develop
ments made in this litigation show sim
liar condition of rottenness in the organ
izatiOn Of this road TO that which notO-
riously existed in the inception of the
other Pacific roads. None OF the
hundred millions OF stock that re-
presented the first capital of the com
pany appears TO have gone into its
construction, il being built ell
tircly out of the proceeds Of the bonds
and the sales of the government land
grant. The road was chartered in 1864,
a prOyiso being made that ten per cent.
must he paid in on twenty thousand
shares before the company could organ
ize. The needed amount was reported
in the same year to have been subscribed
and paid and the organization was
made. The land grant amounted to
fifty million acres. A hundred and TWEEN
ty-fye millions Of mortgage bonds were
authorized by the charter to be issued.
Nothing was done towards building the
road prior to 1870, authority for the de-
lay being obtained by acts of Congress.
In 1867 an agreement was entered into
between twelve persons to build the
road, dividing the "enterprise into
twelve shares, to be valued at the rate of
$500 per SHARE" which each member of
the syndicate was to pay ami to become
entitled to twelfth of the profits and
one director of the company. 1t was
afterwards agreed that assessments not
exceeding $4,000 per share might be
made towards the expense OF obtaining
legislation. In May, 1863, the
executive committee made an agree
ment with Jay Cooke Il Company
by which six additional shares, after
wards increased to twelve, were created
and given to that firm, and also 200
shares of stock, afterwards raised to 400
shares, for each 81 600 of the bonds of
the company sold by them at SIS. Sl",-
999, 900 of the hundred millions of stock
were in the aggregate thus appropriated
ID Jay Cooke Il Co., the remaining $780,
O9l 900 being retained for the benefit of
the "proprietOrs,' who were also to he
repaid for all the sums they had expend-
cd by the issue to them Of bonds at
s. cents on the dollar. They therefore
had their eighty millions Of stock as I,
profit. A further agreement was that
that the twenty Thousand shares of stock :,
originally subscribed for and reported to
have been paid for, and which alone en-
abled the company to bc organized,
should he declared forfeited for non
payment OF the ten per cent. assessment.
AS is Known. the road was sold upon
its mortgage in 1875, and was bought in
by the bondholders under an agreement
by which preferred stock was issued for
the bonds and new common stock for the
old. The fifty one millions of preferred
Stock representing bonds sold at IS,
therefore stands for ail the money put
into the road. The amount of the COM
mon stock is forty-nine millions, and the
eighteen millions just issued represents
the balance of the prcpretOrs" grab
to which they became entitled under the
plan of reorganization rcscrving their
rights rs original shareholders. This
stock under the original agreement was
to be issued us the road was built, ''S4O,-
500 to each of said twenty-four shares,
whenever and so often rs twenty-five
miles of sail road are completed, so rs to
he run over by cars" The company hay
ing now completed six hundred and fifty
miles, these prOprietnrs would he entitled
under their agreement to less than
third of the full amount of the stock for
which they have paid nothing and which
they have yet taken in full.
The original parties to this interesting
agreement besides Jay Cooke & Co.,
were J. Gregory Smith, w. Il. Ogden,
r.. II. Burdell, ID. n. Barney, II. II.
Barney, b. z. Cheney, W. G. Fargo, G.
w. Cass, j. Edgar Thompson and Ed
ward Reilley. The last name has en-
cited great deal of interest and COM
ment in this community. in which Mr..
Reilley was well-known as Thaddeus
Stevens's law student and ,fdns Ictatcs.
1t is recalled that Mr.. Stevens was al
legged at the time this Northern Pacific
legislation was obtained in Congress, at
a period when he was very influential if
not omnipotent, that he had received a
share of the spoils for his influence and
when he died shortly afterward, the long
delayed inventory Of his estate was
awaited with great anxiety to
know whether Northern Pacific |
stock would not figure among
his assets. We alluded at the time to |
shese rumors and called repeatedly for
IN exhibition of his estate. When it
came it was found that it lent no aid to /