The citizen. (Honesdale, Pa.) 1908-1914, 1910-12-07
RAILROAD NEWS.
THE REGENERATION OF THE
ERIE RAILROAD ONE OF THE
MARVELS OF PRESENT-DAY
FINANCE.

In the history of the Erie-and
more than any other American line
| the Erie has a history-the reor-
ganization of 1895 stands as a divid-
ing line between the new and the old.
The "old" was the time of Jay Gould
and Jim Fiske ct al, who used to
carry the Offices of the road around
in their pockets, and of old Dan
Drew, whose printing-presses used
to be run overtime turning out IN
counted reams of stock. The new
is the time of the sober operation OF
the company by group of highly
efficient traffic men, handicapped. it
is true, by their legacy of misman-
agement and overcapitalization, but
striving with all the power that is in
them to make their great property
what it ought to be.
When the present management
came in, few years after the reor-
ganization, it was a tremendous task
with which they found themselves
faced. On its record, people had no
faith in the Erie. It's credit was
gone. Its equipment and its road
bed were in lamentable condition.
Worse than that the new manage
ment soon enough came to find how
difficult was economical operation of
a line whose rails had been laid along
the route offering the largest sub
scriptions instead of the least grade
resistance. To build the necessary
| cut-offs, and to eliminate the killing
grades on this uphill and down
dale route was possible enough, but
required money-lots of il. That the
company did not have and could not
borrow. capitalization and capital
are two mighty different things.
The company had plenty of the form
er, but lack of the latter on more
than one occasion during those early
years of the reorganization came per-
ilously near sending the whole prop
erty back into bankruptcy
AS lately as only three years ago,
indeed, lack of working capital came
near bringing to naught all that the
new management has done for the
property and throwing it into receiv-
er's hands. The panic hit the Erie
particularly hard. Gross earnings
fell off tremendously while expenses
increased. Between that upper and
neither milestone, net revenues, which
had been $l5,171, 900 in 1907, fell
off to S10,277, 200 in 1908. With a
big issue of short-term notes coming
due, it looked very squally for time
But at the very moment of danger.
strong financial interests stepped in
and provided the necessary cash.
How we'll justified they were in
their judgment that the road ought
to be pulled through is seen in the
remarkable earnings shown since
that time. Probably there is not
another road in the country that can
show so complete a right-about-fac
in condition and outlook during the
past couple of years as can the Erie
For the year ending June, 1908,
there had been a deficit of $4,000
600. During the next twelve months
gross earnings were so increased and
expenses were so cut down that in
stead of deficit the road had a sur
plus of $2,566,00O. And during the
next fiscal year, ending June, 1910,
the recovery was carried still furth-
er. Gross earnings reached the sur
prising total of S54,S66,00O, while
operating expenses were only very
slightly increased. The result was
that total net income exceeded twen-
ty million dollars as against less than
twelve million in 1908, and that the
years operations ended in the addi-
tion to surplus of the tidy sum of
S5,069,457.
By such a demonstration of earn
ing power during a time when all
was by no means sunshine for the
other roads, the question is squarely
raised as to whether the Erie has
not turned a corner and entered a
new phase in its existence. Handi-
~ il,
ayers by the lack of working capital,
but by stripping clean every bone
and making every dollar do one hun
dred cents worth of work, that diff
Guilty has been largely overcome and
| improvements effected which, under
the circumstances, are little short of
marvellous. Judging from the way
earnings have been running during
the past few years, the back of the
difficulty has been broken, and what
has been done for the property is
about to bear fruit.
In deciding whether or not that is
so, there must be continually kept in
mind the fact that there are, so to
speak, two Eries-the physical Erie,
whose strides forward during the
past couple of years are recognized
throughout the railroad world; and
the financial Erie, which still re-
mains a serious handicap to every
member of the operating staff from
the top to the bottom.
Considering first the physical Erie,
| a glance at what has been done dur
ing the past few years, in the way
OF building cut-offs and bringing
about grade reductions, is all that is
necessary to see how alive the man
agement is to the necessity of strik-
ing at the very root of the difficulty
by which they have been all along
| beset. Competition on even terms
with such roads as New York Central
and Lehigh Valley, it was realized
was impossible as long as such
grades as existed at several places on
the main line remained to block
traffic and increase expenses. On the
direct line from New York to Buff
falo some of these grades ran as
| high as one and one-half per cent.
The most powerful Mallet engines
ever built were necessary to haul
coal-trains over the hills at Port
Jervis and Susquehanna, and at that
less than fifty cars per train could
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