Railroads -- United States; Railroads -- United States -- Finance
This verdict was only reinforced by the characterization in detail of
a number of the subsidiary lines. Thus the Columbia & Greenville was
termed “a collection of weak lines of constantly decreasing value”;
the Mobile & Birmingham “of no value whatever to the East Tennessee”;
and the Memphis & Charleston “valuable, but in a condition totally
unsuited to modern requirements.” How the capitalization of the system
was tainted with fraud has already been pointed out. The legality
of the recent combinations had not been tested in the courts. In
January, 1889, counsel for certain unnamed parties had a plea for a
_quo warranto_ presented to the Attorney-General of Virginia.[348]
The petition alleged that the purchase of the control of the East
Tennessee, Virginia & Georgia Railway and of the Virginia Midland was
an abuse of the powers of the Richmond & West Point Terminal ... a
violation of public policy, and an usurpation to the great damage and
prejudice of the constitution and laws of Virginia. This petition the
Attorney-General dismissed on technical grounds. The legality of the
various mergers was soon, however, to be attacked again, and in 1889
the question was decidedly unsettled.[349]
The storm broke in August, 1891. On the eighth of that month the New
York _Herald_ published a vigorous onslaught upon the company. It
maintained that the Richmond & Danville system had failed to earn its
fixed charges by $526,560 in the year ending 1890; that this fact had
been concealed by deceptive or false entries on the books which made a
fictitious profit emerge by covering up the losses on auxiliary lines;
that the 8 per cent dividends which had been paid on the Central of
Georgia had not of late years been earned, and that the price paid for
the Georgia Central stock had been grossly excessive; that the East
Tennessee was just about paying its way; and, finally, that the other
recent acquisitions were either just paying their way or were showing
annual deficits.[350] Color was given to the charges by the trouble
caused by the floating debt. Though denied by the officials of the
company, the sale of 2000 shares of Baltimore & Ohio stock held in the
Terminal treasury;[351] the negotiation of a short time loan at 6 per
cent and 2½ per cent commission for the Central of Georgia and the
extension of another loan;[352] the placing of $500,000 at 6 per cent
for the Richmond & Danville; and the active financial support which
General Thomas felt obliged to render the East Tennessee showed the
anxiety which it occasioned.
Public-domain text, read in full here on John Shaqi.
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