Mr. McLeod now began a vigorous policy of consolidation and expansion with the lease for the second time of the Central of New Jersey. He evaded a New Jersey law which forbade the lease of a domestic to a foreign corporation by incorporating the Port Reading Railroad Company and then executing a lease of the Central to this minor corporation.[235] The Port Reading promised 7 per cent on the Central stock for 999 years, plus one-half the surplus earnings above the dividend up to 10 per cent, and secured a guarantee of the fulfilment of these promises from the Reading Railroad proper. Finally, Mr. McLeod leased the Lehigh Valley to the Reading direct, on a guarantee of 5 per cent on the stock until May 31, 1892; 6 per cent from that time until November 30, and 7 per cent thereafter for the rest of the 999 years. So far as control over the coal supply was concerned this put the Reading in a very favorable position. The Lehigh Valley tapped the northern Wyoming field, and the Central of New Jersey the Mahanoy and Shamokin deposits, and both had access to New York through New Jersey. The Lehigh, moreover, extended to Buffalo; and with a line of steamers to Duluth, Milwaukee, and Chicago, promised to command a large proportion of east-bound traffic in other things than coal. Figures for the coal industry show that the Reading, Central, and Lehigh shipped in 1891 53.3 per cent of the total production of 40,448,000 tons; in 1890 55.5 per cent; and in 1889 57.75 per cent. In addition, control of the Delaware, Lackawanna & Western was said to have been acquired by the purchase of a majority of its stock, which added 15.1 percent more;[236] making a total of 68.4 percent for the year 1891, or sufficient to give a considerable measure of control over prices. But the terms were severe; quite as severe as in the case of the leases earlier put through; and though the Reading was in better shape than it had been five years before, full interest on its preference bonds was not being paid, and so long as this continued no outside payments could properly be made. The subsidiary companies, on the other hand, were not earning the dividends promised on their stock by nearly one-third of a million dollars; and it seemed unlikely that sufficient economies could be secured to cover permanently the deficit. The question could fairly have been asked whether the Reading had not bought a chance to contribute an annual sum to the Lehigh Valley and Jersey Central stockholders; and whether these roads had not deliberately entered into a contract which was little likely to be carried out. The justification of the arrangement lay in the control of coal prices which it made possible, and in the advantages of close traffic arrangements and connection with both Philadelphia and New York. “The main reason why the combination failed,” said Mr. I. L. Rice before the Industrial Commission, “was that there was not an understanding of the first