COMMERCE AND FINANCE, AMERICAN, IN 1882. 



119 



Michigan. The arbitrators, after listening to 

 the different representations regarding relative 

 distance, net cost of transportation, port and 

 elevator charges, etc., decided that the former 

 pool was as good a working arrangement as 

 they could suggest ; the war, therefore, ended 

 where it began. 



The New York, Chicago, and St. Louis, nick- 

 named the "Nickel-Plate " line, one of the new 

 companies formed in 1881, with a capital stock 

 of $50,000,000 and a bonded debt of $15,000,- 

 000, after completing the 521 miles of line from 

 Buffalo to Chicago, changed ownership in Oc- 

 tober, passing into the control of the Vander- 

 bilt interest. The original subscribers had in- 

 vested some $20,000,000 in the road, for which 

 they held $15,000,000 of bonds in addition to 

 the stock, with $4,000,000 additional outlay, 

 for which short equipment bonds were issued. 

 The syndicate to obtain a controlling interest 

 in the property, subject to these two liens, so 

 as to stop the competition of the new road, paid 

 $7,290,000 for a majority of the stock. 



In November the railroad corporations of the 

 Northwest, notwithstanding the pressure of 

 traffic which was equal to all their facilities, 

 entered into a desperate war of rates. The 

 quarrel was about disputed territory, though a 

 stock-jobbing intrigue was also alleged. The 

 cutting of rates continued one month, when 

 the war ended in the absorption of the St. 

 Paul and Omaha by the Chicago and Northwest- 

 ern road, making it subsidiary to the Vander- 

 bilt combination. The Hannibal and St. Joseph 

 Railroad passed in September into the control 

 of Messrs. Gould, Sage, and Dillon, who pur- 

 pose making Chicago, instead of Omaha, the 

 eastern terminus of the Union Pacific. The 

 stock was purchased of the speculators, who by 

 a " corner " forced the price up to 350 in Sep- 

 tember, 1881. The Union Pacific syndicate 

 took from them nearly the whole of the com- 

 mon stock of the road at a price which entailed 

 heavy losses upon the manipulators of the cor- 

 ner. 



The Western Union Telegraph Company, 

 upon its amalgamation with the Atlantic and 

 Pacific and the American Union Companies in 

 the early part of 1881, issued $15,000,000 of new 

 shares in exchange for the stock and bonds of the 

 American Union, $8,400,000 to the holders of 

 Atlantic and Pacific shares, and distributed 

 something over $15,500,000 as a stock dividend 

 among its own shareholders, issuing altogether 

 $80,000,000 of new stock. Prior to the con- 

 solidation the outstanding capital stock of the 

 Western Union Company was somewhat less 

 than $39,000,000. Some of the stockholders 

 contested the emission of the shares which 

 were given as a bonus to the Western Union 

 shareholders. The points raised in equity were 

 decided in favor of the company ; but on re- 

 view of the question the General Term in No- 

 vember, 1882, declared the stock dividend ille- 

 gal. Jay Gould and his associates, who control 

 the Western Union, obtained a majority of the 



stock of a new opposition line, the Mutual Un- 

 ion, in March ; but the managers succeeded in 

 escaping control. A suit was brought in the 

 name of Jay Gould to annul the charter of the 

 Mutual Union, on the ground of the unauthor- 

 ized increase of its capital stock. The conten- 

 tion was not upheld by the court. The West- 

 ern Union company leased the American Cable, 

 guaranteeing 6 per cent upon its $10,000,000 

 of stock raised to $14,000,000. By a combina- 

 tion with the Anglo-American Cable Company 

 it controls the telegraphic intercourse with 

 Europe. One of the projects started in 1882 

 was a new transatlantic cable line, of which 

 James Gordon Bennett, of the "New York 

 Herald," is the chief promoter. The mileage 

 of the Western Union Telegraph, as reported 

 June 30th, is 131,060 miles of line and 374,368 

 miles of wire. 



The gross earnings of the railroads in opera- 

 tion in 1881 amounted to $725,325,119, about 

 $110,000,000 more than the preceding year; and 

 the net earnings to $276,654,119, some $21,500,- 

 000 more. The operating expenses were about 

 62 per cent of the gross receipts. During the 

 year $128,887,002 were paid in interest on the 

 funded debts and $93,344,200 in dividends on 

 the stock, against $77,115,411 in 1880. In the 

 ten years from 1872 to 1881 the mileage of 

 American railroads in operation increased from 

 57,323 to 94,486 miles; their aggregate capital 

 and funded debt from $3,159,423,057 to $5,010,- 

 389,579; their gross earnings from $465,241,- 

 055 to $725,325,119; their net earnings from 

 $165,754,373 to $276,654,119; the freight re- 

 ceipts from $340,931,785 to $551,968,477; the 

 passenger receipts from $132,309,270 to $173,- 

 356,642; the dividends paid from $64,418.157 

 to $93,344,200. 



The dividends declared in 1882 showed that 

 the railroads had not suffered as much as was 

 anticipated. The New York Central lost most 

 by the freight- war, and was obliged to antici- 

 pate future profits and pay its regular 8 per 

 ceut dividend with borrowed money. During 

 the closing months of the crop year 1881-'82 

 the traffic on this line fell off largely, owing to 

 the grain operations in Chicago known as the 

 Keene corner. The average rate obtained per 

 ton per mile for all kinds of freight was reported 

 for the year ending September 30th, as 73 hun- 

 dredths of a cent, which is exactly one half 

 the price obtained for carriage in 1873-'74. 

 The Erie and the Baltimore and Ohio roads were 

 helped by the improved coal-traffic, and paid, 

 the first 6 per cent, with another 6 per cent 

 announced for 1883, the first dividends de- 

 clared by this company since its reorganization ; 

 and the other the 10 per cent dividend to 

 which it had returned the year before. The 

 Pennsylvania Railroad also paid a dividend of 

 8 per cent, 2 per cent of it in stock, but rep- 

 resented by recent financial operations. The 

 railroads of the growing Northwest reported 

 an exceedingly profitable business. Roads 

 which were formerly bankrupt paid in 1881 



