Savannah morning news. [volume] (Savannah) 1868-1887, 1883-07-18
RAILROAD WRECKING.
The Curious Story of the Wreck of the
Ohio Central and Richmond and Al
legheny Roads After Blaine and Nc
Cullough Withdrew from Their Man
agement.
'e1o York Star Correspondent pAiEadelDhiq
p1,e0s 18Th

agement.
Ne'o York Star Correspondent PAiladelDhia
Press, 18th.
In mont OF the Fifth Avenue Hotel. lean
ing against one of the pillars that sup
ports the main entrance to that famous
hostelry, l to-day met an old railroad man.
He has been for years engaged in railway
building and enterprises of like charac-
ter. He said
Railroad construction in this country
IS being pushed to a wonderful extent.
This would all be very well if the finan-
clal power 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 stockholders. Many legitimate
enterprises are rapidly getting into
trouble because Wall street is IN distress.
Any railroad that promises well is seized
upon by these speculatOrs, 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 into trouble, pur-
chase it and rob the stockholders and peo-
pie who own the floating debt. 1t seems
almost impossible to build a new railroad
on square basis and keep it out of the
hands of these stock manipulatOrs."
Give me an instanceY
1.-The most recent and notable case l
can recall is that of the Richmond and
Allegheny. 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 beauti-
ful and fertile sections of the Old
Dominion. 1t follows the valley, skirting
the James river nearly all the way up.
past Lexington, KY, and the Natural
Bridge, where it has connection with
the Shenandoah Valley Railroad, North
and South. Except railroads built on the
prairie, it cost less to construct than any
line in this country, and yet it now goes
into the hands of receiver because of
the mismanagementO of its finances"
GLOW was it built?'
''The James River and Kanawha Canaf.
which was built by the State of Virginia
at cost of $11 900, had been of little
use to it since the war. About 1874 or
1919, do not recall which, the Legisla-
ture of that State passed a law author
izing the sale of this canal. III. G. Par
sons was, | think, made the commissioner
to dispose OF it to any one who would pay
its debts. He organized a syndicate to
purchase it. EX-Secretary Blaine, of
Maine, was one of the first to ioin him in
the project of purchasing this canal for
the purpose Ofbuilding railroad along its
banks. Hugh Mccullough, ex-Secretary
of the Treasury; Cyrus Mccormick, the
reaper man, and several other gentlemen
of character and means also iolned him,
They organized their company and pur-
chased the debts of the canal for $4,000
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 Rich
mond and Allegheny Railroad Company
and began constructing an iron road
along its course, the tOW-path furnish
already constructed, it was only neces-
sary to put the ties down, lay the iron,
ballast il and go to running.
"There were only two bridges to build
in l40 miles, and in an incredibly short
space of time they had a railroad built,
having easy grades, and ought to have
had no debt to speak of. The line only
cost $3,OOO,O00, or about $4,000 a mile,
and started with the brightest prOspects.''
''How, then, could it be wrecked?'
every easily. 1t is the same old story.
About the time of its completion an in
vestigatiOn of its financial affairs showed
that the company had already put out
S5,OO0,OOO in first mortgage bonds, and
So, 100000 of stock. In other words, the
financial manipulators had created debt
OF over $lO,OOO,OOO upon road that only
cost $3,0OO,O0O. About this time, these
people proposed compact of consolida-
tiOn with the Ohio Central, road that
runs from Toledo, Ohio, to point near
the Ohio river. This was the Seney syndi-
cate plan of operations
''Were Blaine, Mccullough, ETC., a party
to this arrangement 20
No, 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
1t was legitimate transaction. He was
in at the beginning and as long as every
thing was square, but when he found how
the road was being watered he refused to
be party to it and quit, so did McCul- |
Tough and others. The stockholders of !
the two companies, the Richmond and Al |
legheny and the Ohio Central, then put |
up $5,OOO,O0 more with which to connect |
the two lines. Extensive works were |
started at Richmond and Toledo, and the |
most reckless financial management in |
dulged in.
'EFinally it became convenient for the |
syndicate to squeeze the Richmond and |
The Ohio Central, which |
meant Seney, and the New York Metro
politan Bank crowd had induced the Vir-
ginia road to give its note for s., 200, 900. |
with S2,OOOOOO of second mortgage bonds |
rs collateral, on account of these expen-
ditures in Richmond and Toledo. The |
Ohio Central then broke its contract of |
the note fell due. and the |
Ohio road of course gObbled s., 2,00O, ,0OO."
Ibid this end the manipulation
"Oh, no. Under the boom for which |
the contract of consolidation was the |
pretence, Ohio Central stock was carried /
to 36, Richmond and Allegheny to p, and |
at these figures loaded off upon unsus- |
pecting parties"
"How could this be done?v
s'The success of the Seney syndicate |
with the Nickel-plate road. where thew |
made a great deal of money for them |
selves and all who were connected with /
them, gave the people great faith in what |
they called the lucky star of the Metro |
polltan Bank 1t has been mighty bad |
luck for those who put confidence in these |
agents. Their voice in these en-
terprises has lasted just eighteen months, |
and Ohio Central has gone from sc to 9. |
and Richmond and Allegheny from 70 to |
so, the Richmond and AIIegbeny's first /
mortgage bonds to II, and the road is |
bankrupt and in the hands of |
a receiver. 1t has out $4,000. 900 of first |
mortgage bonds, $4,000,00 of second |
mortgage bonds and $4,000, 900 in stock. or |
S14, 100000 of stock and bonded indebted |
ness on a railroad that only cost $1,000 |
600. People who put up the original So |
100000 cannon to-day realize over sixty |
cents on dollar and the whole line from
Richmond to Toledo is virtually wreck"
Chow is the Ohio Central? ?''
81 think it is really in a worse condi-
ton than the Virginia road. Its issue of |
bonds, incomes and stock is nearly $50
100000 on $50 miles of road, 1t must GER
talnly find itself in the hands of a receiver
at an early day.
"The history Of this Virginia railroad is
certainly remarkable oneY'
Eyes, it is out of the usual order. lie. /
cause it started with such promise, was
built at such trifling cost and was in the
hands of such strong men. When Mr..
Blame and his friends conceived the idea
Of utilizing the tow-path for a railroad /
and started their line. every /
1ne predicted that it would be one of |
rnf1