The morning call., 1893-07-27
THE MILLIONAlRES OF A BANK
RUPT RAILWAY.

The telegraphic announcement that the
Erie Railroad has once more gone into the
hands of a receiver recalls curious
chronicle of disaster. The sixty years life
of this great enterprise has been an un-
broken record of financial misfortune.
1t was begun sixty-nne years ago with
money advanced by the State of New York.
IL was completed nineteen years later. and
appeared at that time to have as fair
chance of doing well as any other New
York road. II ran through an excellent
country, and was the only railroad which
connected the seaport of New York with
the great lakes. But it had adopted the
English six-foot gauge. and was expensive
to operate; much of the country it trav-
ersed was thinly peopled; in the financial
stringency which preceded the election of
Lincoln, and which was aggravated by
the Democratic banks for political effect.
it def aulted on its coupons and went into
the hands of receiver. 1t was resusci-
tated just after the war began and changed
its name to the Erie Railway Company;
English capitalists furnished money to
pay off the most pressing liabilities, and
The control passed into the hands of
Englishmen. This did not last long; an-
other receiver was soon appointed. and the
concern floundered for several years
through the slough Of despond. AT one
time Gould and Fisk got control; of how
much money they bled the nsolvent cor
porati0n may be inferred from the fact
that, after they were Ousted, Gould repaid
to the company nine millions for his share.
General Sickles and his friends tried to
set the corporation on its feet but failed !;
in May, 1875. it went again into the hands
of receiver. Three years ago 1t was
reorganiZed under the name Of the New
York, Lake Erie and Western Railroad
Company; that is the concern for which
a receiver was appointed on Tuesday
There is something mysterious in the
official reports of the company. 1t is
operating 1897 miles of railroad and is
earning an average Of thirty millions gross
per year. its net earnings average
are about &c per cent of the gross, which
is not above the normal average Of our
railroads. It's interest charge Is S., 1913. sol,
which ought to leave something over five
millions for the stock. Its last report
showed that a million was. in fact. avail
able for dividends; but so far from being
able to pay dividends, it cannot meet its
floating Obliga tlonSand has to seek refuge
in a receiversbip to escape attachments.
The secret. of course, is that 1t mas an
enormous floating debt. in part legacy
from the Fisk and Gould regime. which 1t
has never been able to reduce materially.
Whenever a money pinch occurs banks
refuse to renew acceptanceS when they
mature. and the company goes to protest.
The Erie has not been able to earn any
thing for its owners Indeed, it used to be
said that 1t had no owners, the stock
being kicked around among the brokers Of
Wall street, where it served the purpose
of chips on a gambling-tabIe. But the corr
Germ made the fortune of every one who
has had anything to do with it. The late
Daniel Drew was its leading director for
| many years. he made out of it five mil
lions, which he afterward lost in puts
and calls. The late Nathaniel Marsh
and hugh J. Jewett died millionaires
after a few years administration of the
property. Every department Of the con-
Germ was the source of one or moro for
tunes. One set of men grew wealthy by
owning cattle-yards at the terminals.
Another piled up fortunes by starting
freight-express companies, which enjoyed
exclusive privileges. The palace cars were
the source Of another accumulation Of
riches. There has been no surer road to
wealth in The past quarter of a century
than to get control of some branch of the
Erie business. The nealest cottages along
the road are the property of conductors on
the line.
The chances are that these various leak
ages explain tie inability Of the com PAM
to pay off its floating debt. A,concern
which has TO make fortunes for swarm
of parasites can hardly earn much homes.
| money for its owners.