The Valley Virginian. [volume] (Staunton, Va.) 1865-1895, 1883-07-26
STAUNTON, VIRGINIA. JULY 26. 1883.
Railroad Wrecking.
HOW PROMISING ROADS ARE BANkRUPTEL
By FINANCIAL SHARKS.

| IFrom a STAFF Correspondent of Phila. PRESS ]
New YORK, July BIN front OF the
Fifth Avenue Hotel, leaning against one of
the pillars that supports the main entrance
to that famous hostelry, | to-day met an
old railroad man. He has beenfor years
engaged in railway building and enterprises
of like character. He said:
Railroad construction in this country is
being pushed to a wonderful extent. This
would all be very well if the financialpower
behind all of them would deal honestly and
squarely with the public, for many Of our
railroads are in the hands OF spectators
whose only desire is to fleece the stock
holders. Many legitimate enterprises are
rapidly getting into trouble because Wall
Street is in distress. Any railroad that
promises well is seized upon by these spec
ulators because they must have securities
to sell. So they water the stock as long as
:: it, can be sold, and then buy up the first
mortgage bonds, and when the road gets
i into trouble. purchase it and rob the stack
holders and people who own the floating
debt. 1t seems almost impossible to build
a new railroad on 4 square basis and keep
it out of the hands of these stock specula-
tors.''
GIVE me an instance.n
1.-The most recent and notable case / can
recall is that Of the Richmond and Allie
ghany. 1t runs from Richmond, Va, and
connects with the Chesapeake and Ohio at
Clifton Forge. 1t is $50 miles long and
traverses one of the most beautiful and
fertile sections of the Old Dominion. 1t
follows the valley, skirting the James river
nearly all the way up, past Lexington, Va,
ana the Natural Bridge, where it has a
connection with the Shenandoah Valley
Railroad, North and South. Except rail
roads built on the prairie, it cost less to
construct than any line in this country,
and yet it now goes into the hands of a re-
ceiver because Of the mismanagement of
| it's finances -
ALONG THE JAMES RIVER.
How was it built ?''
1.-The James River and Kanawha Canal,
which was built by the State of Virginia
at a cost of $l1 ,000,0 900, had been of little
use to it since the war. About 1874 or 1875,
| do not recall which, the Legislature Of
that State passed q bill authorizing the sale
Of this canal. H. G. Parsons was, 1 think,
made the commissioner to dispose Of it to
any one who would pay it's debts. He Or
gained q syndicate to purchase it. Elk
Secretary Blaine of Maine, was one of the
first to join him in the project of purchas-
ing this canal for the purpose of building
railroad along it's banks Hugh McCul-
Tough, eX-secretary of the Treasury Cyrus
(! Mccormick, the reaper man, and several
other gentlemen OF character and means
also joined him. They organized heir,:com-
pany and purchased the debts of the canal
for 5000 900. The revenue from the docks
at Richmond, which were part of their
purchase. paid the interest on this sum, so
that the canal virtually cost them nothing.
| When it was handed over to them by the
State they abandoned it, organized the
Richmond and Allegheny Railroad Com
pany and begun constructing an iron road
|
the road bed. Having the road bed already
constructed, it was only necessary TO put
the ties down, lay the iron, ballast it and go
to running.
There were only two bridges to build in
140 miles, and in an incredibly short space
Of time they had railroad built, having
easy grades, and ought to have had nodebt
to speak of. The line only cost IS 900 900,
OF about $12, 900 mile, and started with
the brightest prospects. y
WATERING ITS STOCK.
elbow, then, could it be wrecked ~
every easily. 1t is the same old story.
About the time of it's completion an in
vestigation Of its financial affairs showed
that the company had already put out $5,-
0o0,000 in first mortgage bonds, and $5, 000,-
600 of stock. In other words, the financial
manipulators had created q debt Of over
: $40 600, 900 upon a road that only cost $3,
100000. About this time these people pro
posed a compact of consolidation with the
| Ohio Central, q road that runs from To
' ledo, Ohio, to q point near the Ohio River
: This was the Seney syndicate plan of oper
ations."
''Were Blaine Mccullough, etc.. party
+ to this arrangement? 7"
: 'sNo, sir; when they saw the drift Of
things they left the directory and got out
of the road. l think Mr.. Blaine made
about 100000 out of the speculation, but
it was a legitimate transaction. He wa:
in at the beginning and as long as every
$ thing was square, but when he found hov
the road was being Watered he refused tt
t be party to it and quit, so did McCul
. Tough and others. The stockholders of tn,
two companies. the Richmond and Ale
gheny and the Ohio Central, then put u
: $4,000, 600 more with which to connect tn
two lines. Extensive works were started
at Richmond and Toledo and the mos
reckless financial management INDUCED in
: IN THE TOLLS.
.'Finally it became convenient for tn
syndicate to squeeze the Richmond an,
!, Allegheny. The Ohio Central, which mean
Seney, and the New York metropolitan
Bank crowd had induced the Virginiaro
to give its note for amillion Of dollars witt
.. $4,000, 900 of second mortgage bonds a
collateral, on account of these expenditure
in Richmond and Toledo. The Ohio Gen
trail then broke it's contract of consolida
ton, the note fell due. and the Ohio road
/. of course. gobbled $1,000 000.''
''Did this end the manipulation %
ooh, no. Under the boom for whic
the contract Of consolidation was the pre-
tence, Ohio Central stock was carried t
36, Richmond and Allegheny to y, and a
these figures loaded off upon unsuspectin
PARTIES
"How could this be done p
1.-THE success of the Seney syndicat
with the Nickel-plate road, where the
made q great deal of money for themselve
and all who were connected with then
gave the people great faith in what the
called the lucky star of the Metropolita
Bank. 1t has been mighty bad luck f