338 



FINANCIAL REVIEW OF 1883. 



a decision of the courts making the State bonds, 

 issued in aid of its construction, a first lien. 

 The Massachusetts Central, which has no ter- 

 mini or connections, could not pay working 

 expenses. The New York City and Northern 

 failed to obtain the expected share in the Bos- 

 ton through traffic, and did not get enough 

 business to meet the interest of the debt in- 

 curred to complete the road. The bonds of these 

 delinquent companies aggregate $45,095,500. 



Notable among the changes and operations 

 of the year were the lease of the Central 

 railroad of New Jersey, which had passed 

 through liquidation, to the Philadelphia and 

 Beading Company. The operations of great 

 capitalists have in recent years been directed 

 largely to the railroad system of the South. 

 In the summer it was announced that the 

 Richmond and Danville, with its connecting 

 line, had been acquired by a syndicate, sup- 

 posed to be working with the East Tennessee 

 Company. The two combinations control the 

 main portion of the Southern railway system. 



The completion of the Northern Pacific 

 railroad was the most important accession to 

 the railroad system of the United States made 

 in 1883, and the failure of Henry Villard, who 

 had financiered this great work, was the chief 

 financial collapse. By means of a "blind 

 pool" he succeeded in acquiring control of 

 the partly constructed Northern Pacific road, 

 with the intention of completing the line to 

 the Pacific before the expiration of the term 

 for completion prescribed in the Government 

 concession. The Oregon Railrway and Navi- 

 gation, managed by him, the prosperity of 

 which was endangered if the Northern Pacific 

 fell into other hands, partly pledged its credit 

 for the object. The Oregon Transcontinental 

 Company was established to manage the two 

 concerns for their mutual interest, and to con- 

 struct feeders to the line. By means of the 

 Oregon Railway and Navigation and the North- 

 ern Pacific securities, which were acquired 

 through the workings of the " blind pool," and 

 constituted the assets of the Oregon Transcon- 

 tinental Company, large sums were borrowed. 

 These were loaned in turn to the Northern 

 Pacific Railroad, which was thereby enabled 

 to go on with the work of construction with- 

 out appearing as a borrower in the open mar- 

 ket. The railroad was completed, but only by 

 incurring a mass of floating debt, and still lacked 

 much of 'being in a proper working condition. 

 The management were obliged to seek an addi- 

 tionalloan of $20,000,000 to fund these liabili- 

 ties and complete the enterprise. The bears 

 attacked the stocks on account of their vul- 

 nerable character ; and Mr. Villard was obliged 

 to retire from the control of the property 



Atlantic Cables. The American Company, 

 which laid a cable in connection with the West- 

 ern Union Telegraph Company, to receive its 

 European business, joined in the combination 

 of the cable companies, which divide their 

 receipts, according to the present pooling ar- 



rangement, in the following proportions : An- 

 glo-American, 48'825per cent. ; American Com- 

 pany, 22-500 per cent. ; Direct United States, 

 16-275 per cent. ; French Company, 12-400 per 

 cent. A competing company was organized 

 in 1883, by Messrs. Mackay and J. G-. Bennett, 

 who contracted with Messrs. Siemens to have 

 an Atlantic cable put down from Ireland to 

 Nova Scotia, and thence to the United States, 

 by June, 1884, and another cable of the same 

 length, with connecting wires between Ireland 

 and France, a few months later. By carrying 

 their line directly to Nova Scotia the Mackay- 

 Bennett company avoid the occasional acci- 

 dents from fishing-smacks, which happen to 

 some of the Anglo-American Company's cables 

 in the shallow waters between Newfoundland 

 and Nova Scotia. The monopoly possessed by 

 the original cable company was expected to 

 be broken by the Direct Cable Company, and 

 by the second French Company which recently 

 laid a cable. These cables, which are said to 

 be the only well-laid and durable ones, were 

 brought under the control of the original At- 

 lantic Company. The financial operations con- 

 nected with the launching of the various com- 

 panies, and with the acquisition of a control 

 over them by the Atlantic Company, have re- 

 sulted in extraordinary over-capitalization. 



Financial Events of the Year. The factors enter- 

 ing into the critical financial situation in 1883 

 began to manifest themselves two years before. 

 In consequence of the deficient harvest of 1881, 

 from which the troubles date, there was a crisis 

 in the grain and cotton markets in the begin- 

 ning of 1882. There was a bank failure in 

 Boston in March of that year, and a critical 

 stringency in the money market, which was re- 

 moved by the succor brought by the Secretary 

 of the Treasury through the redemption of large 

 amounts of bonds. The great strike in the 

 iron trade, lasting from June till September, 

 and the railroad war in the Northwest, toward 

 the close of 1882, were significant episodes of 

 the situation. In December occurred a break- 

 down in the petroleum market, and heavy 

 failures in the trade. 



In February, 1883, occurred heavy failures 

 in the iron trade. In March the employers 

 were victorious in a strike of iron-workers, 

 and reduced wages. In June, again, there were 

 suspensions in the iron industry. 



An attempt to "corner" the lard market by 

 Chicago speculators ended disastrously for the 

 manipulators in June. Speculations for a rise 

 in grain and provisions were more active than 

 usual in the early part of the season, owing to 

 the unfavorable weather of the preceding win- 

 ter and the poor outlook for the winter wheat 

 crop, the not encouraging opening of the spring, 

 and the still gloomier prospects in Europe, where 

 autumn rains prevented as much wheat being 

 sown as usual and injured what was sown, 

 while the spring opened cold and dry. As 

 summer advanced and the crop prospects great- 

 ly improved, the vast transactions for future 



