The Portland daily press., 1883-08-08
THE BARLOW FAILURE.
The Causes Which Led to the
Collapse.
Fears that the st. Albans Trust
Company is Heavily Involved.

Fears that the st. Albans Trust
Company is Heavily Involved.
ST. ALBANs, Vt, Aug. THE effects of the
Barlow failure is to depress business affairs
here. Investigation OF the affairs of the bank
by the examiner will not be known until to-
night or tomorrow. President Brainard of
the Trust Company says depositors will not
lose much but the latter are not SO hopeful.
The Trust Company's last statement showed
2100 depositors with deposits of 100000.
Several railroad men including Gov. Fair
banks held conference to-day at Barlow's
residence. The statement that the comptroller
approved of the banks loan to the Southeastern
railroad is incorrect. The comptroller said it
was too large and suggested its reduction. The
first national bank expected and prepared for
a run this morning, but none took place.
The immediate cause of the failure is said to
be the breaking OF negotiations by the Cana
dian Pacific Railway officials for the purchase
of the Southeastern Railway of Canada, ex-
tending from ST. Lambert, Sorel and st.
Guiliaume on the north to Sheldon, STAN
bridge and Newport on the SOUTH in four divi-
sons. Mr.. Barlow, who was formerly prom
inent as mail contractor, and was subsequent
ly member of Congress from this district, has
been considered very wealthy man, and has
virtually been sole owner both OF the railroad,
which is really an aggregation OF several roads
into system of 500 miles, and of the bank
here, The failure was not swholly unexpected
to those who knew the circumstances of Mr..
Barlow's enterprises. His outlays on account
of rebuilding and equipping the road have
been very heavy, and as be has held virtually
all the bonds, as well as large majority of the
stock, he has had to borrow money extensively
to meet these heavy expenses, putting up his
stock and bonds as collateral. In this way his
bank here became involved. having loaned
about $500 eco to the account of the railroad.
Another creditor, and one through which,
principally, the failure has come about. is the
Canadian Pacific Railroad, or, at least, its man
ayers in Montreal, who have besn for some
year or more eoquettiEg with Mr.. Barlow, with
proposit ons to buy his roads or controlling
interest 10 their securities. Theys have been
holding an option on one-third or two-thirds of
the stock and bonds for several months, but of
late proposed to buy Mr.. Barlow's whole inter-
est and made tour Of inspection OF the lines,
which gave rise, few weeks ago. to state
ment, since ps owed premature, that the sale
had been effected At any rate Mr.. Barlow
considered it moral certainty, for he had an
inventory OF the property made and continued
his negotiations till within few days, with
hopes of success. In pursuance OF these ne
ROLldLlOUe, ana ID CClslQBI2tlUu Ol lE6 OpIOu
held by ii EN-, the Canadian Pacific people
have been advancing money TO Mr.. Barlow
for some months and taking his notes therefor,
secured by the bonds OF his roads as collateral.
The sale not being effected, and the notes COM
ing due, Mr.. Barlow was unable to meet them
or to raise.money on new loans, aud mad to sue
cumb. Mir. Barlow was the owner OF more
than three-quarters of the stock and all the
81, 100000 frst-mortgsge bonds OF the South
eastern proper and the Sorel division; more
<xf Grcf
gage bonds and all the second-mortgage bonds
OF the Montreal, Portland & Boston division,
and more than thTee-quarters Of the capital
stock of the Champlain division His policy
has been not to market the bonds but to keep
them in his ogn name and to borrow money
on them as required, thus being himself viz
tually the only creditor Of the roads
Mr.. Barlow's connection with the Southeast
ern Railway began in 1878 OF 1879, when the
Hon, A. b. Foster, who mad owned a controll-
ing interest, died. owing Mr.. Barlow consider
able money which he had advanced on securi-
ties of the road. In the settlement of the Fos-
ter estate, Mr.. Barlow purchased the rest Of
the Foster interest in the road, and thus came
into its control and management. The line,
only partially completed, was then in a deplo-
rsble condition, jGstifying the description of
"two streaks OF rust and right OF way" con-
Meeting the Passumsic at Newport, with the
Grand Trunk at the Victoria bridge. Mr.. Bar
low set about securing all the outstanding
stock and bonds of the road, and having done
80, he wiped out the various mortgages, secur-
ing authority from the Dominion governmental to
place blanket mortgage for $l,75O,0O0 on the
entire line. He completed the Sorei division
from Sutton to the st. Lawrence river, re-
built, steelrailed and excellently equipped
the main line, so that it is now trst-class
road for both passenger and freight business;
extended the Boston, Portland and Montreal
division to Sheldon, VT, bought the Lake
Champlain and St. Lawrence junction Rail-
way, which he consolidated with. the system,
and built extensive shops and other buildings
at West Farnham, p. O., which he made the
headquarters of the system. Meanwhile, the
business of the roads, though large and in
creasing, has paid little more than operating
ex penses and fixed charges, and these exten-
sive improvements have had to be met by Mr..
Barlow personally. He has probably put in
over million dollars of his own money,
besides borrowing extensively and hy-
pothecatipg his holdings OF stocks and
bonds. His boundless energy, keen en-
terprise and business sagaclty have
been fully enlisted in the work, and he has
made standup fight against odds that would
have appalled, most younger men. The result
might have been different had business gener-
ally been in more promising condition; but
it became at length impossible for Mr.. Barlow
to raise more money for the development OF his
plans, and the Canadian Pacific people, hevipg
failed to secure the Southeastern system Oh
terms satisfactory to themselves, have appar-
emily decided TO let Mr.. Barlow go to the wall
and take their chances of picking up the prop
erty after the failure on still more favorable
terms. Unless some powerful combination of
capital should come to Mr. Barlows rescue, it
is hard to see how the result can be otherwise
than foreclosure by holders of the collateral,
the sale of the roads and their franchises and
equipment at auction, either to the Grand
Trunk or the Canadian Pacific, and the loss by
Mr.. Barlow of the capital which be has invest
ed in them, as well as his ownershp in the
properties
ST. ALBANs, Vt, Aug. 7.--News from Mon-
treal indicates no great excitement over the
Barlow failure, and the event seenas tot unex-
pected there. The increased uneasiness here
concerning the St. Albans Trust Company IS
due to the great uncertainty as 70 now lar
President Brainard is involved with Barlow.
Brainard seems disposed to encourage the de-
postors, but refuses TO make deiLlte state
ment about his company till the National
Bank and Barlow matters are fully investlgat-
ed. All classes of people are numbered
among the Trust Company depositois aud ma.
ny had entrusted to the company their all. Ii
the worst comes the loss here will be very
heavy.
AS far as known Barlows failure viii create
no embarrassment here. Two!local banks are
said to have some of the insolvent paper, but
are amply secured. The Canadian Pacific
railroad has claim against the Southeastern
Company for 81 ,250 600 for money lately lent,
but is fully secured by $1,750,000 first mort
gage bonds 1t is reported that the Invest
ment Association has suspended ON account of
lasses caused by the failure but the report bas
not been confirmed.