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Papers relating to the state loan to the Boston, Hartford and Erie Railroad Company, 1868 online

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PAPERS

to

I:KI-ATIX; TO THK



STATE LOAN



TO THK



BOSTON, HARTFORD AND ERIE
RAILROAD COMPANY.



1868.



BOSTON:

WRIGHT & POTTER, STATE PHINTKHS.
No. 4 SPRING LANK.

1868.



UCSB LIBRARY







RELATING TO THE



STATE LOAN



BOSTON, HARTFORD AND ERIE



(H



prog.



6



BOSTON:

WRIGHT & POTTER, STATE PRINTERS,
No. 4 SPRING LANE.
1868.



COMMUNICATION

OF

HIS EXCELLENCY GOVERNOR BULLOCK,

TO THE

HONORA.BLE C O TIIST C I L .



COMMONWEALTH OP MASSACHUSETTS.

EXECUTIVE DEPARTMENT, BOSTON,
October 14, 1868.

To the Honorable Council :

The various matters which, by the act to aid the construction
of the Boston, Hartford and Erie Kailroad, chapter 284 of the
acts of 1867, must be made to appear to the satisfaction of the
Governor and Council before the issue of any scrip, are recapit-
ulated in the report of the Committee of the Council.

Certain of these matters are required by the act to be made
to appear to the satisfaction of the Governor and Council and
the Attorney General ; and certain others to the satisfaction of
the Governor and Council and the Commissioners appointed
under the sixth section of the act.

On the 31st of July, the Commissioners made an extended
report upon the whole subject, and in conclusion expressed the
opinion that, if the means and resources of the company should
be honestly and judiciously used, and with a reasonable degree
of energy, enterprise and economy, the road might be thereby
constructed and moderately equipped, and they accordingly
recommended the allowance, by the Governor and Council, of
a loan of scrip for the work already done and equipment



purchased. This report has been before the committee of the
Council, and, with the documents which accompany it, is here-
with submitted, marked A.

These documents were transmitted to the Attorney General,
with the request that he would report upon the various matters
in which his concurrent action was required. His reply has
been before the Committee of the Council, and is herewith
submitted, marked B.

It was quite obvious to my mind that it was the design of the
legislature to secure the separate and responsible judgment of
the Governor and Council upon each of the particulars named
in the act as necessary to be shown. It also became early
apparent that the principal questions concerning which doubts
would exist, were, whether the requirements of the statute
concerning the payment and cancellation of the mortgage
debts secured by the underlying mortgages 'on that part of the
road situate this side of Southbridge and "Willimantic were
complied with, and whether the company has satisfactorily
shown that they would be able, without further aid from this
Commonwealth, to complete their line from Boston to Fishkill
before May 27, 1872.

Deeply impressed with the responsibility imposed upon me
in respect to these questions, I have given my careful and per-
sonal attention to the examination of the details which could
throw light upon them.

The attention of the Committee of the Council was called to
the considerable discrepancy which was found to exist in the
various statements of the bonds now outstanding, which are
secured by the underlying mortgages above referred to. This
discrepancy has been largely relieved by subsequent explana-
tions ; and the recommendation of the Committee of the
Council, that a bond with personal sureties should be required,
in the penal sum of one million of dollars, to protect the fran-
chise and property described in the Berdell mortgage from the
uncancelled bonds, obviates the objections intimated in this
report of the Attorney General, and dispenses with the neces-
sity of a precise ascertainment of the number of bonds now
outstanding, which indeed appears impracticable.

The Committee of the Council also became satisfied that the
company will be able to complete their line of road to Fishkill



within the time specified by the act, without further aid from
this Commonwealth, as appears by their report, which is here-
with submitted, marked C.

Wishing, however, rigidly to test the conclusion to which the
Committee of the Council had come upon this latter subject, I
addressed to the Commissioners a supplementary communica-
tion, which expressed the doubts that still remained in my
mind, and the want of full information, which, as it seemed. to
me, still existed upon certain facts bearing upon the question ;
and this communication, with the reply of the Commissioners,
is also submitted herewith, marked D.

By this reply, the validity of the acceptances of the Erie
Railroad did not appear to be established, and I was not able
quite to concur with the opinion of the Commissioners that it
would seem a fair estimate to offset the accruing interest
money, which the' company would apparently be obliged to
pay, against the earnings of the road. Up to this time it had
been assumed that the full time allowed by the Act for the
completion of the road to Fishkill might be occupied in doing
the work. It was obvious that an amount of about $3,000,000
would become due for interest before that time. By the last
exhibit of the Commissioners, the sums to be paid by the com-
pany exceeded their pecuniary resources, now within their
control. There were also certain other matters of detail con-
cerning which I desired further information. I therefore pre-
sented certain inquiries to the officers of the company, which,
with their replies thereto, and an accompanying opinion of Mr.
Evarts, are herewith submitted to you, marked E.

By these replies, it appeared that it is the purpose of the
company to complete their line of road to Fishkill during the
next year ; and, upon personal conference with Mr. Ashburner,
one of the Commissioners, and himself a civil engineer of large
experience in this kind of work, I am satisfied that this maybe
done. This early completion of the road will greatly diminish
the amount of interest to be paid.

This opinion of Mr. Evarts was submitted to the Attorney
General, and he deems it satisfactory to establish the liability
of the Erie Railroad Company for the bonds which they have
received, as appears by his letter hereto appended, and marked



F. To this is added another communication, from the Attor-
ney General, marked G.

Upon the whole case, as thus presented, the question then
remains, what rule is to be adopted as a guide by which to
determine whether the company will be able to complete their
line of road to Fishkill, without further aid from the Common-
wealth ? Are they to be required to demonstrate mathemati-
cally an actual present ability, from means now within their
control, to meet the necessary disbursements ? Or, do they
meet the requirement of the statute by making it appear to
the satisfaction of the reason and conscience that in all human
probability they will be able to accomplish the work ? Accept-
ing the latter as the true rule, bearing in mind the valuation
which the public have now for several months continuously
put upon the shares of the company, and believing that this
indicates the existence of a borrowing capacity on the part of
the company yet remaining, which is equal to the difference
between the required disbursements and their present actual
means, I am prepared to submit for you decision the subjoined
order.

I have given to the subject long and patient investigation, an
amount of time, care and thought by no means represented
by the brief terms in which I have here stated my conclusion.
I believe the documents hereto appended will sustain the result
I have reached ; and I have confidence that the progress and
completion of this road, and its future working operations, will
confirm my opinion of its importance in the commercial rela-
tions of the Commonwealth.

ALEXANDER H. BULLOCK.

Ordered, That upon the due cancellation of the bonds taken
up by the Boston, Hartford and Erie Railroad Company, which
were secured by the underlying mortgages referred to in
chapter 284, section 2, of the acts of 1867, or the stamping of
them in a form and manner to be approved by the Governor, so
as effectually to prevent their being negotiated hereafter, such
cancellation or stamping to be done under the direction of the
commissioners, and upon the execution of a bond with per-
sonal sureties to the satisfaction of the Governor and Council



in the penal sum of $1,000,000, with condition as provided in
the same section above referred to, and upon the execution of
the agreement mentioned in section 3 of the same statute,
and the delivery of the Berdell mortgage bonds therein pro-
vided for, scrip of the Commonwealth shall be issued and
delivered to the treasurer of that company to the amount of
$100,000, to be expressed in the currency of Great Britain.



[A.]

To His Excellency GOVERNOR BULLOCK and the Honorable

Council :

The undersigned, having been appointed in pursuance of the
Act of the General Court of May 27, 1867, among other things,
" to advise and inform the Governor and Council in reference
to all matters and things they are called upon to ascertain and
verify under the terms and provisions of this Act," respectfully
report that they have endeavored to ascertain the history and
present condition of the various railroad corporations or roads
which form constituent parts of the present corporation and
road of the Boston, Hartford and Erie Railroad Company.

They have had in view, also, the ulterior consideration, how
far the Governor and Council and Commissioners should be
satisfied that said railroad company will be able to complete a
line of railway from Boston to Fishkill, and that the same will
be completed within five (5) years from the passage of said Act.

In making their investigations, the Commissioners have been
aided in all things by the officers of the company, who have
answered all inquiries and exhibited all documents and papers
which the Commissioners have called for, without hesitation or
apparent reserve.

The various steps and measures which the Commissioners
have taken to arrive at their results, they are induced to state,
somewhat in detail, that the Governor and Council may be able
the more readily to judge how far the conclusions to which the
Commissioners have come are well founded.

The Boston, Hartford and Erie Railroad, if completed as
contemplated in said Act, will extend from tide-water in Boston
by Blackstone, Willimantic, Hartford and Waterbury to Fish-
kill, and from Providence by Plainfield to Willimantic, with a
branch from Blackstone to Southbridge. A plan, which accom-
panies this Report, will furnish an outline of these united lines
between Providence and Fishkill. and Boston and Fishkill, with
the branch to Southbridge. The plan will also show a line of
chartered road, not yet begun, from Willimantic to New Haven,
and one from Woonsocket to Putnam, upon which considerable



work has been done, charters for which are held by the Boston,
Hartford and Erie Company.

A reference to this plan will also serve to explain the various
Acts of incorporation, which it becomes necessary to refer to in
this connection, in order to trace the history of the present
corporation.

Beginning with the part of the road which lies in Massachu-
setts, the first Act seems to have been, incorporating Walpole
Railroad from the Dedham Branch to Walpole, in 1846,
(c. 231.) In 1847; (c. 252,) Norfolk County Railroad was
incorporated from Walpole to Blackstone, and the Walpole
Railroad authorized to unite with it, and, as the papers show,
this was done. In 1849, (c. 194,) Southbridge and Blackstone
Railroad, from Blackstone to Southbridge, was incorporated.

In 1850, (c. 268,) the Midland Railroad was incorporated
from the terminus of the Norfolk County Road to Boston, and
this was authorized to unite with the Norfolk County and
Southbridge Roads, which union appears to have been accom-
plished in 1853 under the name of the " Boston and New York
Central Railroad."

In 1858,. (c. 60,) this united road took a new name under a
new incorporation, viz. : " Midland Railroad Company."

In 1861, (c. 155,) the "Midland Land Damage Company"
was incorporated to assume the property, &c., of the Midland
Railroad Company, which appears to have been done. And in
1863, (c. 116,) this corporation was changed to that of " South
Midland Railroad Company," and this corporation was united
with the Boston, Hartford and Erie road in 1863, as appears
by their deed on record, which is referred to in the Act of 1865,
(c. 275.)

One other line of railroad in this State, which forms a part
of what is embraced under the charter of the Boston, Hartford
and Erie road, consists of the " Charles River Branch Rail-
road," incorporated in 1849, (c. 170,) from Boston and Wor-
cester Railroad in Brookline to Dover, and this was authorized
to unite with the Charles River Railroad by an Act of 1851,
(c. 297,) extending to Bellingham, under the name of the
" Charles River Railroad." In 1855, this road was authorized
(c. 105,) to extend its line to the line of Rhode Island, and to
unite with a road incorporated in Rhode Island, called the New

2



York and Boston Railroad, and the union of these was con
* firmed by Act of 1856, (c. 238.)

Passing now to the parts of said road situate in Rhode Island,
and chartered under the Acts of that State, the legislature, in

1846, incorporated a railroad called the " Providence and Plain-
field Railroad," extending from Providence to Connecticut line,
and in 1852 confirmed the union between that and the Hart-
ford, Providence and Fishkill Railroad, chartered in Connecti-
cut. The Hartford, Providence and Fishkill road was subse-
quently united with the Boston, Hartford and Erie road in
Connecticut, and this union was confirmed by Act of Rhode
Island in 1865.

In 1866, the legislature of Rhode Island authorized the Bos-
ton, Hartford and Erie Railroad to locate and construct the
railroad which had been granted to the Woonsocket Railroad
Company to Pascoag and the line of Connecticut.

In 1858, the legislature of Rhode Island confirmed what is
called a union and merger of the Woonsocket Union Railroad
with the New York and Boston Railroad in Connecticut, and
recognized the union of these with the Charles River Railroad
in Massachusetts, forming thereby one company, under the
name of the " New York and Boston Railroad Company."

The history of the parts of this railroad which are within the
State of Connecticut appears to be as follows :

In 1883, the " Manchester Railroad " was incorporated. la

1847, its charter was renewed under the name of " Hartford
and Providence Railroad," and to extend its road to Williman-
tic, and in 1848 it was authorized to extend its road to the
eastern line of the State of Connecticut.

In 1845, the New York and Hartford Railroad, from Hartford
to the west line of the State, was incorporated, and in 1849
was united with the Hartford and Providence Railroad, under
the name of " Hartford, Providence and Fishkill Railroad ; "
this union was confirmed by Act of 1852.

In 1846, the " New York and Boston Railroad " was incorpo-
rated from New Haven through Middletown to the east line of
the State, and in 1849 it was authorized to connect and unite
with other roads. Upon the accompanying map, this road is
laid down from New Haven to Willirnantic, but a part only of
it has yet been wrought. In 1864, the legislature of Connecti-



11

cut extended the time of completing it, and renewed its char-
ter. In 1857, " Thompson and Willimantic Railroad " was
incorporated, uniting the lines or tracks of the Boston and New
York Central with the New York and Boston Railroad. This
is indicated upon the accompanying map as beginning at "Willi-
mantic and extending through Putnam to meet the extended
line of road from Boston to Blackstone.

In 1863, the Boston, Hartford and Erie Railroad was incor-
porated by the legislature of Connecticut, and was organized
July, 1863. In July, 1863, the corporation purchased and
acquired the property, franchise, <fcc., of the Hartford, Provi-
dence and Fishkill Railroad. This was ratified by Rhode
Island in 1865.

In September, 1863, the Southern Midland Railroad Company
conveyed its franchise and property to the Boston, Hartford and
Erie Railroad ; in the same month, the same thing was done by
the Thompson and Willimantic Railroad.

In December, 1861, the Boston, Hartford and Erie Railroad
was united with the New York and Boston Railroad, and was
authorized by an Act of the legislature of Connecticut to
extend its road from Putnam to the line of Rhode Island.

In 1864, by an Act of the legislature of New York, the Bos-
ton, Hartford and Erie Railroad was authorized to unite with
and purchase the " Boston, Hartford and Erie Extension Rail-
road," and the " Boston, Hartford and Erie Ferry Extension "
franchises, these being corporations Created in the State of New
York, and a purchase was accordingly made by the Boston,
Hartford and Erie Railroad of the franchise, &c., of the Boston,
Hartford and Erie Extension Railroad in June, 1864.

By the action of the legislature of Massachusetts, during its
last session, the Boston, Hartford and Erie road was estab-
lished as a corporation in Massachusetts, as by reference to the
Acts of the general court will appear.

The legislative Acts, as well as the deeds and contracts, and
the corporate proceedings of those various corporations by
means of which they have become merged or united in tho
existing corporation of the Boston, Hartford and Erie Railroad
Company, have been found to be very numerous, not a little
complicated, and such as to require much patient research and
examination. But the result to which the Commissioners have



12

come, upon a review of all these is, that the Boston, Hartford
and Erie Railroad Corporation have a charter and franchise for
a railroad from Boston to the North River, as indicated upon
the map, by the way of. Blackstone, Putnam, Willimantic,
Hartford and Waterbury to Fishkill ; also from Boston to New
Haven by the way of Brookline, Woonsocket, Putnam, Willi-
mantic and Middletown, some portions of both which lines are
over and along the same route or location. And that the same
corporation have also by the4r charter or franchise a railroad
from Providence by the way of Plainfield to Hartford, and a rail-
road from Blackstone to Southbridge, all under one ownership,
management and control.

The following schedule will show the lengths and distances
of these various parts and portions of the railroad existing and
contemplated belonging to said corporation, and what parts and
portions of those are now in operation, and what are con-
structed or in process of construction, but not in use, and upon
what parts or portions no work has yet been done, which is here
furnished to enable the Governor and Council to judge some-
what of the condition and prospective capacities of the road,
should it be completed :

Memorandum of Distances, Boston, Hartford and Erie Railroad.

From Boston to Mechanicsville, built, . . 59.57 miles.

From Mechanicsville to Willimantic, building, . 26.28 "

From Willimantic to Waterbury, in operation, . 63.86 "
From Waterbury to Fishkill, under contract, with

some little work partially begun, . . . 76.39 "



Total, 226.1 "

The above constitutes the proposed through line from Boston
to Fishkill, and from this contemplated through line, there are
to be the following branches :

One from a point twelve miles from Boston, to Dedham,
(incomplete), two miles.

One from North Wrentham, twenty-three miles from Boston,
to Medway, (incomplete), four and five-tenths miles.

One from East Thompson, fifty-two miles from Boston, to
Southbridge, (in operation), seventeen and five-tenths miles.



13

The line from Boston to East Thompson, and the branch to
Southbridge, are at present in operation as a through line.

There is also a line in operation from Providence to Willi-
mantic, (fifty-eight and one-half miles,) forming, with the line
from Willimantic to Waterbury, the through line from Provi-
dence to Waterbury, called the Hartford, Providence and Fish-
kill Railroad, and not yet actually in possession of the Boston,
Hartford and Erie Railroad Company.

And finally, there is the line in operation from Brookline to
Woonsocket, thirty-three and three-fourths miles in length.

In going through with the investigations above referred to,
the Commissioners became advised that there was an indebted-
ness in various forms outstanding against some or all of these
various corporations, and they early took measures to ascertain
what claims were thus outstanding, not so much with a view of
passing upon the amount and justice of individual claims, as
of approximating somewhat the financial condition of the pres-
ent corporation. To this end, they caused advertisements to
be published in one or more newspapers in New York, New
Haven, Hartford, Providence and Boston, requesting such as
had claims against any of those roads, which were not secured
by mortgages upon their franchises, &c., to state their amounts
to the Commissioners. In compliance with this request, claims
of various kinds and amounts have been forwarded to the Com-
missioners, amounting in all to $69,380, besides sundry indefi-
nite claims for land, of which, however, the officers of the cor-
poration admit only a sum less in amount than $5,000 to be
due, and denying the liability of he company beyond that
sum r and will, as they say they believe, successfully contest the
same, if prosecuted. This does not include a claim made for
certain alleged preferred stock in the Hartford, Providence and
Fishkill Railroad, which is contested by the Boston, Hartford
and Erie Company, and their liability thereon is denied.

The measures adopted by the Commissioners to ascertain the
amount for which any part of the road or its franchise was
liable, which was secured by mortgage or mortgages upon the
same, were these : They obtained from a well known and
responsible counsellor at law in each of the States of New
York, Connecticut and Rhode Island, certificates of the forms



14

and places required by law for the recording of railroad mort-
gages in the respective States, and having done so, they
obtained from the respective officers in these States and in
Massachusetts, certified statements of what mortgages have
been issued by the said corporations, which had been recorded
therein. Having obtained these, the Commissioners, under the
authority given them by the Act of the general court of the
last winter, empowering them to take the testimony of wit-
nesses in the prosecution of their inquiries, issued formal inter-
rogatories, a form of which is hereunto annexed, addressed to
one or more of the trustees, who were supposed to hold and
have knowledge of any of the mortgages mentioned in any of
said certificates. By the sworn answers to these interrogatories,
they ascertained that the Boston and New York Central Rail-
road Company issued upon one mortgage bonds to the amount

of . . . $794,000 00

And the South Midland Railroad Company,

upon another mortgage, .... 301,000 00
That the New York and Boston Railroad Com-
pany had issued upon one mortgage, . . 345,600 00
And upon another mortgage, . . '"*; '' . 1,287,700 00
The witness stated that bonds of the Charles
River Branch Railroad Company should be
added, of the sum of .... '..-' 37,00000
One of the trustees of the Norfolk County
Railroad mortgage stated that in an investi-
gation made by the Supreme Judicial Court,
it was found that the amount of bonds then
outstanding was . .' . .; >i '..' 414,350 00
The Hartford, Providence and Fishkill Railroad

issued upon mortgage, bonds to the amount of 2,055,000 00
To this is to be added arrears of interest, . . 170,000 00
And the Boston, Hartford and Erie Railroad,
upon a mortgage made to the Treasurer of
Connecticut, issued bonds to the amount of . 4,500,000 00



These make an aggregate of .... $9,904,650 00

This is independent of bonds issued by the Boston, Hartford
and Erie Railroad Company, upon a mortgage of their entire



15

road and franchise to Berdell and others. This forms so im-
portant a part of the means and resources of the road, that its
character and condition should be more fully explained. The
mortgage bears date of March 19th, 1866, and is conditioned
to pay $20,000,000 in bonds, payable in the year 1900, with
semi-annual interest at seven per cent, in New York or London,
as the directors should authorize, and in the recital of the


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Online LibraryKarl GutzkowPapers relating to the state loan to the Boston, Hartford and Erie Railroad Company, 1868 → online text (page 1 of 4)