Year: 1872

GENTLEMEN in submitting their report
the Trustees and Managers do not feel called
upon to reply to the wanton attack made
upon their personal character, nor to at
tempt any specific refutation of the charges
of corrupt practices preferred against them
in the public press, further than simple
statement of facts and truthful history OF
the administration of their trust may, in
themselves, afford a denial Of the truth OF
these charges.


The duties Of the trustees and managers
are Of a higher character than a simple vim
dication of themselves. The charges which
have been made so publicly Of maladminis-
tration strike fearful blow at parties and
interests beyond and Of higher Importance
than the personal status Of the individuals
who compose the board of mana cement
They affect the values Of all the securities of
the road held by innocent parties. They
strike at the vital energies of a great public
enterprise, valuable to the State and COM
munity through which it runs, and Of i'm
mense Importance to all the commercial re-
lations and interests of a great city. Wan
ton assaults upon it, therefore, and in such
public manner, even if the grounds for
such charges were true, cannot be justified
upon any principle Of sound policy, and
when, as in this case, these sweeping char
ges of corruption and personal aggrandize-
ment are without real foundation it becomes
only the more reprehensible and inexcusable
If wrong existed in the management it was
easy to reach and correct it without running
the enterprise it was easy to reach and
punish the wrong-doers without utterly
prostrating all the securities held by innO-
cent parties. 1t is a source of regret, there
fore, to the managers that any public jour
nal claiming a position of respectability
should lend its columns and its influence to
assail in so violent manner the standing
and credit Of a road like this, until at least
it was well assured from proper examina
tion of all the facts that its charges could be
sustained and were, in fact, true.


A brief reference to the history Of the road
from the date of the first connection of a
portion of the present managers with it is
necessary to Il proper understanding Of the
true position of the road and its relations to
its security holders.


At the date of their entering upon the
management of the property the road was
deeply involved in litigation. The rent of
the Vermont and Canada road was largely
in arrears, and bill in Chancery was pend
ing to establish the right of that company,
under the lease, to the possession of its own
and of the Vermont Central railroad


The first and second mortgage bondhOld-
ers, parties defendant to this bill, denied the
validity of the Vermont and Canada lease
and their right to the possession of the Yer
mont Central for the recovery of their over
due rents.


The first mortgage bondholders also had a
bill in Chancery pending to foreclose their
mortgage and various other suits growing
out Of and incidental to these were pending,
In addition to this the Legislature Of the
State OF Vermont had at its previous session
passed an act imposing upon the Vermont
and Canada Company, as a condition to the
preservation of its charter, the necessity OF
constructing a branch into Burlington to
connect with the Rutland and Burlington
road by cireuitOus and expensive route,
which, according to the estimate made,
would involve the the Vermont and Canada
Company in the expenditure Of over a mil
lion Of dollars. In this condition of the
affairs of the company the road had become
greatly impoverished; its road bed and track
were in sadly deprecated condition, the
iron hardly safe to run over, nearly two
thirds of the Vermont Central between
Windsor and Burlington at sub-grade, and
nearly all the Vermont and Canada without
ballast and portion Of it on trestles, the
equipment largely deprecated, the bridges
badly decayed and many of them requiring
immediate reconstruction. The attention Of
the managers was absorbed and distracted
in attending to the lawsuits which We're
prosecuted with great bitterness, and no
time left them to look after the business of
the road nor to develop its resources and
traffic.


At this jpncture Of its affairs an effort was
made to compromise and settle on a satisfac-
tory basis ali the then pending litigation
After protracted negotiation a settlement
was effected establishing the validity of the
Vermont K Canada lease and providing for
the payment of it's accruing rents and also
fo- the rents overdue which had accumulat t.
ed during the period of litigation. Provi--
sion was also made for the construction of
the branch into Burlington on an improved
line and at reduced cost. The change on
the route reduced the cost to less than $780,
600. To accomplish this change in the
route however, the sanction of the legiSla-
ture was necessary and the consent of the
Rutland & Burlington road was required.
These were obtained in the fall of 1859, but
on condition that the branch should be COM
pleted within a brief period.


Subsequently a new compromise between
the bondholders of the first and second mort
cages and the Vermont & Canada was made
BY which the overdue rents of the Vermont
\ Canada railroad were capitalized i'll part
and the capital of that company increased
from one million three hundred and forty
eight thousand five hundred dollars to two
millions Of dollars, and the overdue coupons
Of the first mortgage bonds, amounting tC
over a million Of dollars, were funded anc
the UfSt mortgage 1nCTedStu IIOu lNO III
lions to three millions of dollars and extend
ed for twenty years The trustees and man
ayers were also required pay to the Vernon
& Canada stockholders the sum of 1897 900
balance of overdue rent, in three years atte
date, with interest. The second mortgage
was to surrender its coupons, all OF which
together with the principal of the mortgage
were overdue, and the same was to be ex
tended for twenty-five years.


The stock of the Vermont & Canada wa
also further increased to the extent of $3.50,
600, to be distributed among the holders 0
the first mortgage bonds in payment of thei
coupons.


This compromise, effected by negotiation
of leading representatives Of the variOu
classes of securities, was subsequently EN-
bodied in decree of the Court Of Chancer.
Of the State The decree of the court, how
ever, being only professedly an aid to th
parties in carrying out the compromise
could not, of course, become binding upo
all 50 as to permanently establish the right
Of the parties except in one of two ways
LIST, by the individual assent of all the hold
ers of the securitie! embraced within th
scope of the decree, or. 2d, by the acquieS
ence of the parties


In order, therefore, to give validity
this decree and 50 render it obligatory upo
all, the several stockholders and bondholC
ers as they received the new shares allotte
to them in the Vermont 4 Canada stoc
under the decree, and the new coupons VI