The Washington herald., 1907-03-31
Railroads Are the Big Stakes
Ups and Downs of Corporations Disaster Follows Success

membered about him IN detail outside
the Lehigh Valley. while no volume has
been devoted TO the things he accom-
plished. The university which he
founded-with rare modesty he did not
ask that its title should perpetuate his
name-and the railroad which he built
are still Institutions of vitality. al
though both have passed through plenty
of adversely since his death. but his
great fortune melted away long ago.
Asa Packer died in 1879. at seventy
four. The Lehigh then extended from
Waverly n. Y. on the north. whence its
coal was taken west to Buffalo. for the
lake trade over the Erie, and to Perth
Amboy. n J.. opposite the southern
point OF Staten Island, where it WAS
transhipped by water 10 New York City
and New England. The road was a
marvel as a dividend payer for more
than dozen years after he had passed
away.
But times were changing and COM
petition In coal transportation was in
creasing An outlet to the sea had
been opened during bis lifetime; the
need for an outlet 10 the Lakes became
apparent in the SOS. and the line
to Buffalo, built under the title Of the
Lehigh Valley Railway, was opened in
1892. This made the Packer railroad
one of the FIVE which directly connect
New York with Buffalo thus adding II
to the factors ia the country's trunk
line business.
Packers total gifts to the university
in addition to buildings and grounds
were about 50 00j, 600, all in Lehigh
Valley stock He left two sons. but
neither was able to take his fathers
place in the railroad world. Robert A.
Packer was a division superintendent
for years, but not an especially bril-
liant one Harry Packer located in
New York. but his personal achieve
ments were not worth mentioning
1t was fourteen years after Asa
Packers death ana a year after the
opening of the Buffalo extension. before
the Lehigh Valley was generally known
to be in serious trouble. The heavy
expense attendant upon the building Of
the Buffalo line proved a great bur-
den. other big expenditures necessary
to save the very life OF the line had
been incurred, and the 10 per cent divi-
dends. which. with occasional extras.
had made the Lehigh famous. began to
dwindle Dividends were stopped in
1898, a year after the new line was
opened. and the first year Of the depres-
sion.
II was then that the Lehigh's fortunes
became temporarily linked with those Of
the Philadelphia and Reading The Read
ing. under the presidency Of Angus Arch
ibald Mcleod. whose sun was rising at
that time, needed the Lehigh TO round out
the great system he was planning. The
Lehigh was in trouble; its stockholders
were angry and discouraged, and all
hands agreed that Il would be we'll to ac-
cept McLeod's proposition for a cOmbina-
tiOn, which was to take the form Of a
lease. Undoubtedly there were elements
of sanity and promise in the plan, which
was entered upon with great enthusiasm
| by everybody concerned but Il brought
| disaster all around.
Readings Many Vfcissitudes.
The Philadelphia and Reading is one Of
the oldest railroads in the country. It has
brought three remarkable men 20 the
front. in this order: Franklin B. Gowen.
A A Mcleod. and George F. BaeT It
was in partial operation by 1888. four
years after its charter was issued. It's
main line from Philadelphia to Reading
is less than 100 miles long, but in its six
ty-nine years OF life It has added other
lines, both by lease and purchase, until its
total track mileagge is now more than
3,00o
Until 1873 the road was managed con-
/ servatively. From 1913 to 1876 it paid divi-
dends on its preferred stock. and from
1863 TO 1876 on its common. without a
break Ten per cent was the usual rate.
/ 10 was not uncommon The stock was at
the top of the list. Men invested in Read
/ ing feeling that the income from il would
I be assured TO their families forever. and
/ Reading dividends furnished the chief
support of many widows and fatherless
children. Savings banks held huge blocks
of Reading and felt secure. 1t was a
! glorious property then. After that for
the greater part Of a generation. its vi
eissitudes were constantly disturbing
factor.
Franklin B. Gowen became president in
1869. He adopted a policy Of expansion.
Great tracts OF undeveloped and partially
developed coal lands were bought up Al
though the provision of the Pennsylvania
State constitution prohibiting railroad
companies from mining coal was not yet
in existence. it wes not thought desirable
/ for the road to buy openly, and the Lau-
/ rel Run improvement Company was Sc
cretly organized IN 1871 to DO Z. under
cover. This company gathered coal prop
critics in right and left
Apparently price was no object When
nearly $34,OO0.OO0 had been invested the
company came out into the open as the
Reading Coal and Iron Company, with
the railroad company its acknowledged
owner. The interest charges on the new
lcompany's bonds soon ate up all the rail-
roads earnings. and in five short years
/ the glorious property" which il had
/ taken nearly forty years to build up was
wrecked. In July. $780, the road passed
/ into the hands of friendly receivers.
| President GOwen himself being one OF
them. Despite their ''friendliness," their
/ investigation showed that whereas the
company had reported profits Of nearly
900 from 1871 20 1870. inclusive. there
really had been no profits and that SIS
/ 200 which had never been earned had
/ been paid out in dividends
! This reeeivership lasted until 1883. It
was conservatively managed, and the road
got on its feet Then. under the presi-
/ dency OF George De B. Keim. il was de-
cided again TO branch out" The first
expansive move was the leasing OF the
Central Of New Jersey. This was followed
| by so many others that in fifteen months
the company was again in receivers
hands. The first DreXel, Morgan & Co.
organization committee WAS appointed
TO assist the receivers. By 1887 the road
had a heavier bonded debt than ever and
the famous Morgan voting trust, to last
/ flve years, was established.
/ Austin CoTbin was the first Reading
! president elected under the trust. He
managed the property more conserva-
lively than had Gowen. and more TO the
liking Of the security holders, but Gowen
and his friends fought to get him out.
After Gowen's death a syndicate, formed
by Isaac I. Rice and consisting of John
/ Wanamaker, Henry Gibson. ". w Gibbs
and Thomas Dolan. ali fairly well known