Both these contingencies occurred. The early termination of the Jersey Central lease weakened the control of the Reading over prices, while the severity of the winter of 1893, though assisting to maintain prices, so increased the expense of operating the mines that earnings fell below fixed charges for the three months ending February 28, 1893, by the amounts of $933,443 for the Railroad Company and $468,362 for the Coal & Iron Company. Moreover, losses of $616,351 accrued during the same time under the Lehigh Valley lease, and were met by the Reading, contrary to expectation, and contrary to the express provisions of the mortgage by which its income bonds were secured. In order to accomplish the New England extensions shares were bought on margin by President McLeod personally with collateral in part supplied by himself, in part taken from the treasury of the company, and consisting of general mortgage, collateral trust, and income bonds. “On or about September 22,” said Mr. I. L. Rice, a representative of the bondholders, who had been examining the books, “Mr. McLeod entered into certain individual stock transactions which resulted in the purchase of 24,036 shares of the stock of the Boston & Maine Railroad Company and 32,000 shares of the stock of the New York & New England Railroad Company. On October 15, 1892, he withdrew from the control of the company, without having previously obtained the authority of the board of managers therefor, and without expressing the purpose for which he intended to use the securities, 30,000 general mortgage bonds of the company, which as afterwards appeared were used at that time as margins in the transaction. He subsequently withdrew from the control of the company in the same manner and for the same purpose, between October 28 and December 1, 1892, $713,000 of collateral trust bonds, and $99,000 third preference bonds. No reference whatever is made to these stock transactions on the books of the company except the mention of the withdrawal of securities against the personal receipt of the president, nor are they referred to on the minutes of the board of managers prior to December 24, 1892. On the latter date the board of managers in a resolution approved the transaction, calling for the use of $613,000 of the company’s collateral, and indemnifying Mr. McLeod for advances made for the same purpose to the extent of $400,000. On January 17, 1893, Mr. McLeod deposited $250,000 additional collateral trust bonds as margin, making a total of $963,000. On February 15 Mr. McLeod directed that the account be transferred from his individual name to that of the company’s.”[248]