Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-10-13
the leadership of President Mcleod Of the
Philadelphia and Reading railway. This


attempt is of peculiar interest inasmuch as
1t aimed to substitute d definite consolida-
ton by lease of one railroad to another for
the more loose combination which had hith-
erto prevailed by means Of pooling or an al
lotment of tonnage. The experience OF
1S92-'93 is also highly significant as serving
to explain the recent developments OF con-
solidation of 1890 to 1901, not as then, by
means Of lease, but now by outright pur-
chase or stockholding control. The con-
solidation of 1929 was made the subject
of report by Congress and also by the
New York state senate. The principle OBJ
Gle at that time to a consolidation of the
hard coal roads by lease was clause IN the
New Jersey state constitution prohibiting
the lease of the property of domestic cor
porations to foreign corporations until ap-
proved by law Under the plan proposed
by President Mcleod the Reading road was
to be the parent company. But as its char
ter was derived from Pennsylvania 1t was
impossible to lease the Central of New Jer-
sey and the Lehigh Valley road.
To meet this difficulty the Port Reading
railroad was projected. This line was to
connect with the terminus Of the Reading
at Bound Brook and extend for about TWEEN
ty miles to Port Reading, on tidewater,
the whole of the line being In the state OF
a cost of 81. 800, 600 In January. 1892, this
road was still incomplete, but few miles
of single track had been laid and the road
was without terminals or rolling stock. the
whole property being in the hands of the
Port Reading Construction Company. To
this incoherent corporation the Centrar
Railroad of New Jersey was leased for 800
years, together with its, forty subsidiary
companies, including all its ferries and its
properties of other kinds. The Port Read
ing road agreed in turn to pay all fixed
charges and per cent In dividends, as we'll
so per cent OF any excess earnings above
this limit.
On the same day the Lehlgh Valley rail-
road was leased to the combination both to
secure its valuable coal properties and to
secure an outlet to the lakes. The prest-
dent of the Central of New Jersey stimuli
taneously acquired large blocks Of the
stock of the I-ackawanna. while the presi-
dent of that road in turn became a director
in the Central The attempted monopoly
was still further strengthened by prope-
sition to independent operators to increase
their percentage of tidewater price from
80 to GO, tieing them up by longtime con-
tracts on this basis.
Aroused Public Indignation.
This carefully arranged and stupendous
project was, however brought to naught by
combination of circumstances. Public
opinion became aroused against sudden
rise In the price of coal, both Congress and
the New York legislature began to investi-
gate, and the validity of the various leases
which had been signed was attacked in the
New Jersey chancery court, and the con-
tracts were all declared illegal by the SUI
preme court of that state ; The business alb
surdity of leasing railroad valued at $70,-
600 600 to a tiny and but half-constructed
road, worth practically nothing, was OBJ
vous to all investors, and this served to
arouse distrust in new quarter. Then
too the events leading to the panic of 1898
made it difficult to secure funds to finance
the deal so that insolvency was threatened
1t Is noted also that the Morgan banking
house was opposed to this attempted comb.'
nation. "a
The congressional commit4ee which took
I'D the matter found that aha railroad COM
panies were practfcaIl.sI parties to a combi
nation to control the oaafpuf and nix prices
for hard coal. and that this combination
embraced not only the.railrDads named, but
embraced all the eompanieSsco connecting the
coal fields with tidewatef ra,-f
The years 1894-'95 wefe Bnest unfortunate
for all the anthracite coal roads The bank
ruptcy of the attempted Reading comoia-
ton and the continued insolvency OF the
parent company pushed competition to
ruinous extent. An attempt at a renewal of
the old allotment was Hlzsae IN 1896. but
the experience at this time as well as In all
the preceding years wis that such pool,
which was in the nature on things secret.
could not prevent the recurrence OF the Old
abuses u - il
Then came the community, Of interest con-
soiidation, which was Engineered through
the banking house of Morgan & Co., and
which was consummated In fIs present form
last year. and this Is the combination which
the President of the United States has ap-
pealed to In vain, and which the miners
have emutated in their efforts at combining
and which latter combination Is at war with
the former with such. dire results for the
Oulbtfe