History of the city of Columbus, capital of Ohio, Volume II, Part 38

Author: Lee, Alfred Emory, 1838-; W. W. Munsell & Co
Publication date: 1892
Publisher: New York and Chicago : Munsell & Co.
Number of Pages: 1196

USA > Ohio > Franklin County > Columbus > History of the city of Columbus, capital of Ohio, Volume II > Part 38

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At a meeting on September 28 the directors of the consolidated company adopted a resolution increasing the capital stock to 820,000,000 and the bonded indebtedness to $14,500,000 ; 86,500,000 of the bonds to be set apart for redemp- tion of the outstanding bonds of the constituent companies and the remaining $8,000,000 to be used for equipment, doubletracking and other improvements of the road. At the same meeting it was directed that the 88,000,000 of bonds just mentioned should be placed in the hands of Messrs. Greene and Burke, by whom they were banded over to Winslow, Lanier & Co., their proceeds being applied to payment of the notes of Burke and associates in accordance with the contract of July 1. At a subsequent meeting held November 2 a resolution was adopted at the suggestion of Winslow, Lanier & Co., directing President Greene to hand over to Stevenson Burke, chairman of the executive committee, $6,400,000 (evidently a mistake for $6,411,000) of the consolidated mortgage bonds of the company, while at the same time Winslow, Lanier & Co. had reported on July 18 that they had purchased and turned over to Drexel, Morgan & Co., $6,000,030 of the stock of the companies with the proceeds of these same bonds turned over to them in pursu- ance of the contract of July 1. On November 16, Messrs. Burke and Greene reported that Mr. Burke had " sold " to Winslow, Lanier & Co., $6,411,000 of the bonds at par, less commission, and that the bonds had been delivered and " paid for in full," but they omitted to report that the proceeds had been used to pay the individual notes of Burke and associates. The directors approved the sale and ordered the president to deliver to the executive committee the remainder of the 88,000,000 ($1,589,000) and take a receipt from the executive committee for the whole amount.

On September 19, 1881, Stevenson Burke, Charles Hickox and associates filed a certificate of incorporation of the Hocking Coal & Railroad Company, and ten days thereafter, on September 29, the Snowfork & Cleveland Coal Company sold to it 5,619.86 acres of coal land at $150 per acre; Burke and Hickox sold to it 1,380.14 acres; and the Continential Coal Company sold to it 3,000 acres at the same price, making 10,000 acres in all, just the amount involved in and required by the contract of July 1. No money was paid, the company giving its notes for the land. On August 14, 1882, the directors of the Columbus, Hocking Valley & Toledo Railway Company adopted the following resolution : " That the Presi- dent be and is hereby directed to purchase the whole of the stock of the Hocking

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Coal & Railroad Company, which covers and represents 10,000 acres of coal lands in Hocking, Perry and Athens counties, amounting to 15,000 shares at and for the price of $5,000,000, payable in the consolidated bonds of this company, dated Sep- tember 1, 1881, at their par value; that the title be taken in the name of the president as trustee of this company." Thereupon the president reported that he had purchased "said 15,000 shares of the capital stock of said Hocking Coal & Railroad Company at and for the price of 88,000,000 and paid therefor in the bonds of this company at the price abovementioned." The board immediately adopted a resolution approving and ratifying the transaction, and on the same day the stockholders, all present, did " unanimously resolve" that the proceeding " is hereby approved, ratified and confirmed " and " that said $8,000,000 men- tioned in said resolution of said directors and stockholders included and was intended to include as part and parcel thereof said $6,411,000 sold by said Burke for himself and associates to said Winslow, Lanier & Co. ; " that is, they did not intend that Burke and associates should understand that it was agreed to pay them, 88,000,000 in addition to the $6,411,000 already paid in New York. Let the reader now remember that the coal lands sold by Burke and associates were pur- chased by them at about seventyfive to one hundred dollars per acre, some of the very best of them, as the writer personally knows, at the lesser price; and that in the organization of the Hocking Coal & Railroad Company they were valued at $150 per acre. Besides this it should be stated that the Hocking Coal & Railroad Com- pany was a paper road with no treasury, no treasurer, nothing but 10,000 acres of eval land for which it had received $8,000,000. Nevertheless, at a meeting of this company held at Cleveland October 18, 1886, they adopted a resolution to offer to its creditors the joint six per cent. bonds at par for its indebtedness ($764,000) dollar for dollar. William M. Greene, son of President Greene, and secretary and vice president of both companies, thought there was something wrong in that pro- position, and on the next day, October 19, wrote from Columbus to Charles Hickox enclosing copies of the resolutions directing purchase of the coal company's stock by the railroad company, and adding : " In view to the contents of the above reso- lution I am unable to reconcile the action of our meeting of the Hocking Coal & Railroad Company yesterday at which time they passed a resolution to divide among themselves the joint six per cent. bonds of the railroad company to the amount of $764,000; specially so when the resolution which I have quoted shows that the coal lands were fully paid for by the eight millions five per cent. bonds of this company. Because of the fact that this does not seem right I have thought best to call your attention to it and ask you to explain to me how it can be done." To this Mr Hickox answered : "I know nothing about it. All I know or ever knew is that Burke planned the whole thing. . . We followed his lead in every- thing and I fear in some things to our misfortune."

On the same day Mr. Greene wrote to Mr. Burke the same letter which he had written to Mr. Hickox, and two days later Burke replied : "There is nothing wrong in the record about the coal stock and lands." It was not the record, how- ever, of which Mr. Greene complained, but the fact stated in the record.

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In the suit subsequently commenced the plaintiff, the Columbus, locking Valley & Toledo Company, asserted that the stock of the Hocking Coal & Rail- road Company was entirely unpaid and amounted to a stock subscription, and that said coal company still owed the sum of $754,000 for a portion of the 10,000 acres of land ; that is to say, neither the land owned by the company nor the stock of the company had been paid for. To this the astonishing reply was made : "These defendants expressly deny that they have ever asserted that the stock of said Hocking Coal & Railroad Company . . . is entirely unpaid for, or that they have not been paid for said stock, but upon the contrary they aver and charge the fact to be that said stoek was paid for in full by the sale and delivery to the owl.ers of said stoek of said $8,000,000 of bonds."

The contract of July 1 was fulfilled. Reduced to its simplest terms, it stip- ulated, that Burke and his associates would purchase the stock of the three rail- road companies provided the companies would advance them the necessary funds; 814,500,000 of bonds were issued and disposed of as follows: $6,500,000 were reserved to meet a like amount of the bonds of the three companies outstanding ; $6,411,000 were used to pay the individual notes of Burke and associates; the remainder, $1,589,000, was handed over to the executive committee and disposed of as follows: $100,000 to Mr. Greene; $515,000 to Burke and Hiekox; 8221,000 to Andrews, Hitchcock & Co .; $548,000 to the Cleveland syndicate, and $205,000 were sold as the bonds of the company for Burke and associates. The $10,000,000 of stock was divided as follows : To Burke and Hickox, fiftysix per cent. ; to Mc- Kinnie and associates, twentyfour per cent. ; to M. M. Greene, twenty per cent.

On July 7, 1882, just one year after the purchase of the three roads, Mr. Greene wrote to Mr. Burke: " It will require $100,000 to carry us through this month and provide for interest, and at least $150,000 for August. . .. The strain on me of so much to pay and not knowing where it is to come from is too much. . . I come to my office in the morning not knowing how I am to meet the obliga- tions of the day."

An illustration of the freedom with which Burke and associates dealt with the stock and bonds of the railroad company is furnished by the history of the Toledo & Ohio Central. This company was bankrupt before its completion. It was constructed as a competitor to the Columbus & Hocking Valley and proved to be a very troublesome one, as bankrupt roads always are, since the managers of such roads have no stockholders or bonds to take care of and eare little for a sur- plus. In 1885, a plan was brought forward by which the competition of the Toledo & Ohio Central could be avoided. Mr. Greene, as president of the Colum- bus & Toledo Road, had purchased early in the history of the company, about eighty acres of land at Toledo for terminal and dock purposes, which the com- pany had never been able to utilize. The president and vice president of the Col- umbus, Hocking Valley & Toledo, Messrs. Greene and Burke, were authorized to " lease or sell any of the lands of the consolidated company at Toledo not needed by it for its own use " to the Toledo & Ohio Central Company, and as part of the agreement they were authorized to endorse $3,000,000 of the bonds of the Toledo & Ohio Central. The endorsement was to be done on condition that the man-

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agement of the two roads would be under practically the same parties, and a " com- petition between the parties be done away with." Two points would have been gained by this arrangement ; an annoying competitor and an unprofitable invest- ment would both have been disposed of But the scheme was finally completed by an arrangement to exchange one share of Columbus, Hocking Valley & Toledo stock for two shares of that of the Toledo & Ohio Central to an amount equal to threequarters of the whole stock of the Toledo & Ohio Central Company, thus giv- ing control of both roads to the same party, in evasion of the statute prohibiting the consolidation of competing lines. On January 12, preceding this transaction, the directors of the C. H. V. & T. company declared a dividend of thirteen and threeeights per cent., which produced about the sum needed to carry out the trade, and when Burke and associates sold their interest in the C. H. V. & T. they reserved the Toledo & Ohio Central and now control it without the payment of a dollar.

The party that had come into possession of the Columbus, Hocking Valley & Toledo Railway, John W. Shaw being president, seeing $8,000,000 of bonds included in the statement, made a effort to trace the amount into the treasury of the company, and in so doing found the letters of Messrs Burke and Greene. Suit was begun February 9, 1887, against Burke and associates to secure an accounting for the $8,000,000, but before the case was tried on its merits an arbitration was agreed to, and the arbitrators decided the case against the company. The reasons given for this conclusion form an interesting chapter in the history of this road but are too voluminous for repetition here.

On April 1, 1882, after the road had changed ownership, the following direc- tors were elected : M. M. Greene, Columbus; S. Burke, Charles Hickox, W. J. McKinnie and Charles G. Hickox, Cleveland ; C. H. Andrews, Youngstown, and J. W. Ellis, New York. M. M. Greene was retained as president, S. Burke as vice president and William M. Greene as secretary. F. H. Medary was elected treasurer. John J. Janney, who had served as secretary and treasurer of the company since its organization, retired. George R. Carr was elected general superintendent and J. D. Lott as auditor, the latter in place of T. J. Janney, who had served since the organization. W. A. Mills was appointed general freight agent and W. H. Harrison general ticket agent. Both the ownership and the control of the road passed into the hands of nonresidents. At the annual meet- ing in 1887, W. P. Shaw appears as a director in place of M. M. Greene. The annual report for 1888 shows further changes. Charles Foster, P. W. Hunting- ton, James Kilbourne, C. C. Waite, Charles B. Alexander, George W. McCook, Samuel D. Davis, Thomas F. Ryan and Charles B. VanNostrand appear as direc- tors. C. C. Waite was president, Samuel D. Davis first vice president, Charles B. Alexander second vice president, William M. Cott secretary and treasurer, James T. Boothroyd assistant secretary, John J. McCook of New York, General Counsel, Charles H. Rockwell general superintendent, T. B. Everett auditor, W. A. Mills general freight agent, H. J. Falkenbach general passenger and ticket agent, and F. B. Sheldon chief engineer. The report for the year 1888, states that, " as com- pared with the previous year there was a decrease of $379,314.48 in the gross

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earnings, and of $166,177.38 in the operating expenses, notwithstanding the abnor- mal charge of $42,856 to legal expenses on account of litigation incurred in previ- ous years." The report for 1889, shows a profit on business of 8599.82, but there were " additional extraordinary charges of $366,214.24."

At the time of the payment of the first dividend on August 1, 1872, there were exactly four hundred stockholders. Those resident in Columbus owned 8842,650, or 74.26 per cent. of the whole amount, and the stockholders living immediately on the line owned $183,400, or 16.16 per cent., making $1,026,050, or over 90.42 per cent. of the whole amount of stock owned by those immediately interested in the management and prosperity of the road. At the time of payment of the last dividend, July 11, 1881, the number of stockholders had increased to 495; the stock had increased from $1,134,600 to $2,387,950. Of this sum citizens of Colum- bus owned $1,700,350, or 71.23 per cent. of the whole amount, and those living on the line owned $161,800, or 6.79 per cent., making $1,862,150, or over seventyeight per cent. still in possession of the original owners. In the meantime the company had paid seventeen semiannual eash dividends, the first four of five and the rest of four per cent. It had also paid four stoek dividends, two of four, one of ten and one of twenty per cent. In 1890 there were but thirteen stockholders resident in Ohio, and these held but a nominal amount of stock. The bonds and stock instead of being at a liberal premium as forn. crly are now quoted at eightysix for the one and twentyseven to twentyeight per cent. for the other. At the time of the sale of the property to Burke and his associates the stock and funded debts of the three constituent roads outstanding amounted to $11,269,500, and the construction account, "road and fixtures," to $9,182,451. The sale was made in July, 1881. According to the report for the year ended June 30, 1882, being the first full year under the management of Burke and associates, these items were: Funded debt outstanding, including stock, $24,974,500; road and equipment, $15,105,042. At the time of the sale by Burke and associates, these items, according to their report, were: Funded debt, including stock, $27,112,300; road and equip- ments, $20,327,164.

Ohio & West Virgina .- On March 3, 1870, the Gallipolis, McArthur & Colum- bus Railroad Company was incorporated. Under the presidency of Mr. Langley, considerable money was expended in grading the track between Gallipolis and the intersection with the Marietta and Cincinnati line at or near Vinton Station, but the panie of 1873 brought the enterprise into great embarrassment and the work was entirely suspended. On June 27, 1876, the Columbus & Gallipolis Rail- road Company was organized and became owner of all the property and franchises of the company just mentioned. The new company resumed the work of construct- ing the line, but in May, 1878, it also beeame embarrassed, and in July the prop- erty was sold to the Ohio & West Virginia Railway Company which had by that time been incorporated. On June 12, 1879, a contraet was made with Miller, Thomas & Co. to build and equip the road. The members of this company were Henry Miller, Samuel Thomas, Orland Smith, Charles Parrott, D. S. Gray, C. C. Walentt, James A. Wilcox, G. C. Hoover of Columbus; Henry Stearns of

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Cincinnati, George C. Benham of Louisiana, E. Delatomb of Gallipolis, Royall Hill of Chicago and George W. Norris of Boston. On June 27, 1879, the stock of the company was increased from $250,000 to $2,500,000 and an issue of bonds to the amount of $1,584,000 was anthorized. The road was completed from Logan to Gallipolis October 15, 1880. It was constructed in the cheapest manner, cuts and fills being as steep and ties as far apart as cireumstanees would allow and bridges and trestles very light. On July 19, 1881, the company was consolidated with the Columbus & Hocking and Columbus & Toledo, as heretofore stated. By the terms of consolidation the holder of stock in the Ohio & West Virginia received one and a half shares in the new company for each share held in the old one, while the stockholders in the other two companies exchanged stock at par.

Columbus d. Toledo .- This company was incorporated May 28, 1872, by M. M. Greene, P. W. Huntington, B. E. Smith, W. G. Deshler, J. A. Wilcox and John L. Gill, with a capital stock of 82,500,000. Its subscription books were opened July 1, 1872, and on November 13, same year, William Dennison, B. E. Smith, W. G. Deshler, H. J. Jewett and D. S. Gray of Columbus ; Abner I .. Backus, Samuel M. Young and II. S. Walbridge of Toledo, were elected directors. M. M. Greene was chosen president, J. A. Wilcox secretary and treasurer, and Philip D. Fisher chief engineer. At the annual meeting on April 15, 1874, H. C. Noble of Columbus, J. D. Vandeman of Delaware, J. J. Hane of Marion, and McD. M. Carey of Carey, were added to the board. On May 22, 1874, an issue of 82,500,000 of thirtyyear seven per cent. bonds was authorized, S. M. Young and W. G. Deshler being named as trustees. The line as proposed extended from Columbus to Toledo via Delaware, Marion, Upper Sandusky, Carey and Fostoria. Its alignment was remarkable, one hundred fourteen and seventy- three onehundredth miles being straight and only six" and ninetytwo hun- dredths curved. The estimated cost of construction and equipments was 83,300,000. On May 3, 1873, an election was held in Columbus on a proposition for the city to subscribe $300,000 to the Columbus & Toledo Railway Company, west line, and resulted in 2,393 yeas to 1,053 nays, but the Boesel Law under which the vote was taken, was set aside by the Supreme Court. Two lines were surveyed by Philip D. Fisher, engineer, one via Delaware, Marion, Upper San- dusky, Carey and Fostoria ; the other via Marysville, Kenton, Findlay and Bowling Green. The necessary action was taken to secure aid for building the road by the issue of bonds by the townships along each line under the provisions of the Boesel Railroad Law, and a tract of about seventyfive acres of land in Toledo was purchased for dock and other purposes at a cost of $80,700, but on May 13, 1873, the Supreme Court pronounced the Boesel Law unconstitu- tional, and on October 8 the board ordered all proceedings suspended on account of the commercial derangement then existing. About eighty miles of the right of way had been seenred at a cost of 8808.30 per mile. In 1876 the directors were M. M. Greene, W. G. Deshler, D. S. Gray, E. L. Hinman, John Greenleaf, P. W. Huntington and Isaac Eberly of Columbus; J. G. Vandeman of Delaware; A. II. Kling of Marion; McD. M. Carey, of Carey ; S. M. Young, A. L. Backus and H. S. Walbridge of Toledo. At a meeting of the directors and stockholders held

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May 31, 1876, it was found that valid and collectable subscriptions to the amount of $1,023,000 had been made; accordingly, on July 14, the president was authorized to advertise for bids for the construction of the road and to prepare for issne $2,500,000 of the company's bonds. On August 14, a contract for the construction was made with Miller, Smith & Co., the members of which company were Henry Miller, B. E. Smith, Theodore Comstock, Samuel Thomas, Orland Smith, Henry Stearns, G. W. Norris, G. T. Gould, W. G. Case and others, the consideration being $1,900,000, of which $825,000 was to be paid in cash, and $1,075,000 in the bonds of the company at par. The work was commenced August 17. B. E. Smith being one of the contractors, he resigned his member- ship of the board. On October 13, 1875, P. D. Fisher, engineer, reported that the right of way had been settled "except seven and ninetysixth hundredths miles," and added : " While the oldest companies in the State are still contesting unsettled claims for right of way, you are to be congratulated on the nearly com- plete adjustment of the entire line." On April 29, 1876, the first rail was laid and the first spike driven at Delaware, in the presence of a large number of citizens of that city and of Columbus.

At a meeting of the directors in May, 1877, Orland Smith was appointed gen- eral superintendent ; M. T. Seymour trainmaster, T. J. Janney auditor, W. A. Mills general freight agent and D. H. Gard superintendent of telegraph. In Jan- uary, 1877, the road was sufficiently complete to commence business, and trains from Columbus to Toledo were put on it under an arrangement with the contrae- tors allowing the company to use the road before formal acceptance thereof; a contract having been made with the Toledo & Woodville Railroad Company for the use of its track from Walbridge to Toledo, and a like contract with the Colum- bus & Hocking Valley for terminal facilities at Columbus. The road was opened for traffie from Columbus to Marion in November, 1876 An account of an excur- sion over the road on November 2, 1876, appeared in the contemporary newspap- ers. The cost of the road was reported as $3,338,507.74, being $28,244 per mile ; but from this the president deducted the cost of "certain real estate in Toledo and elsewhere on the line " not necessary for present use of the road, amounting to $328,397.65, making the actual cost of the road more than $200,000 less than the estimate. At the annual meeting in 1878 the president reported the earnings suf- fieient to pay all interest, rentals, taxes and running expenses, and to carry $28,051.69 to the credit of the contingent account.

On October 13, 1875, the directors adopted resolutions providing that interest should be charged at six per cent. on all stock subscriptions due and unpaid after a certain date, and interest at the rate of eight per cent. allowed on all subscrip- tions paid before that date. This arrangement was found to be so unsatisfactory that on January 16, 1879, the operation of the resolutions was limited to February 1, and at a meeting on September 8, 1880, the directors in order " to provide funds to pay said [interest] scrip " and for other purposes, determined to issue a second mortgage of $600,000. At another meeting held October 13, 1880, it was ordered that the outstanding scrip and all unadjusted claims for interest on payments of

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stock subscriptions should be declared due and payable on November 30, interest to cease from that date.

The highest point on the road, fortythree miles from Columbus and two and a half miles south of Marion, is 265 feet above the Columbus bridge over the Whet- stone and 410 feet above Lake Erie. The road has no grade over twentysix feet to the mile ; fortythree and a half miles of it are level. The track was laid with three thousand ties per mile and sixtypound steel rails, from Columbus to Upper Sandusky, sixtyfour miles; and with iron rails of the same weight thence to Walbridge, fiftyfour miles. The bridges were all of iron except one. In March, 1877, a permanent dock was build at Toledo to accommodate the coal and iron business of the road.

Scioto Talley .- On January 4, 1836, a convention of delegates and prominent citizens representing the Scioto Valley counties from Portsmouth to Columbus and thence to Sandusky, met in Columbus to take measures for securing continuons railway or canal communication on that route. Chandler Rogers was chairman and William Doherty secretary of this meeting. James Kilbourne, of Worthington, J. G. Camp, of Sandusky, and N. V. Peck, of Portsmouth, were appointed as a com- mittee to report at a future meeting. At an adjourned meeting of January 6, Joseph Ridgway chairman and Moses H. Kirby secretary of this committee, made a long report, accompanied by resolutions unanimously adopted, that application be made to the General Assembly for the construction of a railway or canal from Columbus to Sandusky City, and that a committee be appointed to prepare a mem- orial to that effect, which was accordingly done. At a special election beld March 5, 1849, Portsmouth voted a subscription of $75,000 to the stock of the Scioto & Hocking Valley Railroad Company, and in April, same year, Lancaster voted to subscribe to the stock of the same company the sum of $25,000. On May 9, 1849, the company was organized at Chillicothe with J. V. Robinson as president, and a survey of the route was ordered. Proposals for grading twenty miles from Ports- mouth to Bloomfield were invited on November 25, 1850, by the president and the chief engineer, J. W. Webb. On August 19, 1854, forty miles of the road were reported to be complete and yielding ten per cent. interest. At a meeting beld in Chillicothe April 19, 1869, a resolution was adopted that a committee of five from each of the counties there represented be appointed to take measures for organiz. ing a company to construct a railway on the most eligible route from Columbus to Portsmouth, either by procuring a new charter or by using that of the Columbus, Chillicothe & Portsmouth Railroad Company, which had been procured some years before. The committee was also authorized to raise means to execute the work.

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History of the city of Columbus, capital of Ohio, Volume II, Part 38

Author: Lee, Alfred Emory, 1838-; W. W. Munsell & Co Publication date: 1892 Publisher: New York and Chicago : Munsell & Co. Number of Pages: 1196

Author: Lee, Alfred Emory, 1838-; W. W. Munsell & Co
Publication date: 1892
Publisher: New York and Chicago : Munsell & Co.
Number of Pages: 1196