Consolidation of properties was found advisable for several reasons. “While some of the companies show a surplus of earnings,” said the committee, “in many instances it has been impossible to apply such surplus earnings to make up deficiencies arising from the operations of other companies. The committee finds that the various systems have not been operated throughout for the common benefit of the controlling interest, but that they have competed among themselves for business, each system maintaining separate organizations for obtaining business.... In the judgment of the committee the only adequate remedy which can be adopted is to unite the several corporations, as far as practicable, in one system under one management, and to consolidate their obligations.” In order to unify the system the committee proposed three great issues of new securities as follows: $170,000,000 four per cent first mortgage 35-year gold bonds, to be issued by a new corporation representing the consolidation of the Richmond & Danville Railroad Company and the Richmond & West Point Terminal Railway & Warehouse Company. $70,000,000 five per cent non-cumulative preferred stock. $110,000,000 common stock. In general, the new bonds were to exchange for old bonds and the new common stock for old common and preferred, while the new preferred stock was to be joined in varying proportions with each of the other issues to make the exchanges look attractive. Thus, for the Richmond & Danville consolidated 6s were offered 120 per cent in new bonds and 45 per cent in new preferred; for the East Tennessee first mortgage 7s 120 per cent in new bonds and 45 per cent in new preferred stock; for the Richmond Terminal common stock 100 per cent in new common and 50 per cent in new preferred. This arrangement was not rigidly adhered to. Some of the poorer of the outstanding stocks received new common only, and the Richmond Terminal preferred was given par in new bonds besides a bonus in preferred. These were, however, exceptions. The principle which determined the various ratios of exchange is more difficult to discover. It was not that of equivalence of return. The plan did not attempt to allow to each holder a chance at the same receipts which he had formerly enjoyed while reducing the amount which he could demand, but gave sometimes more than this and sometimes less. And the variations from what might be called a normal ratio did not always correspond with the relative security of different issues as indicated by their market quotations. For instance, the East Tennessee first 7s sold in December, 1891, at 113½ and the Richmond Terminal collateral 6s at 83; yet the former received 120 per cent and 35 per cent and the latter 120 per cent and 40 per cent in new bonds and preferred stock respectively. Again, the Atlanta & Charlotte first 7s sold in October, 1891, at 118½ and received under the plan 120 per cent in bonds and 40