Not the least important part of the plan was that designed to gain the preferred stockholders’ approval. It will be remembered that by the terms of the reorganization of 1875 the consent of three-quarters of these stockholders was necessary to validate any mortgage after the first mortgage then proposed. The increase in indebtedness now suggested threatened to postpone indefinitely dividends on the preferred, and could not be expected to be welcome. In consequence, the directors offered three distinct inducements: first, a promise of a distribution to the preferred stockholders of sums which had been taken from earnings and spent on the property to date; second, a promise of early and regular dividends in the future; third, a preferential right of subscription to the new bonds. By resolution of August 21, 1889, they therefore definitely declared in favor of the distribution of a sum equal to the earnings which should be found to have been applied in earlier years to the capital requirements of the property. An investigation was made, the amount was officially declared to be $2,844,430, and an equivalent amount of new bonds at 85 was set aside to cover it. For the future Mr. Villard and his associates announced a determination to begin dividends at the rate of 4 per cent, the first to be paid January 1, 1890; and declared that thereafter dividends would be paid out of the current net earnings, or, if these should be insufficient, out of a reserve fund until the net earnings should justify a larger distribution. Finally, it was provided that the common and preferred stockholders should be given the privilege of subscribing to the new bonds at 85 to the extent of 15 per cent of their holdings. That these concessions attracted attention was shown by the action of the preferred stockholders in calling for an actual distribution as soon as possible of the amounts deducted from earnings in past years. On October 17, 1889, they passed a resolution recommending to the incoming board of directors “to take into consideration the distribution of the whole amount due to the Preferred Stock, under the plan of reorganization, as soon as the Company shall be financially in a proper position to do so;”[577] and again the following year they resolved “that the incoming Board of Directors be ... requested to set apart the additional earnings in ... consolidated bonds ... and to (consider) the question of either increasing the ... dividend above 4 per cent or of declaring an extra dividend to the preferred stock.”[578]