Jersey City, and to give the tonnage destined for these terminals to other lines, which got the lion's share of the profits. When the Port Reading Railroad is completed the Philadelphia and Reading Railroad Company will do all its own business and take all the profits. In addition to furnishing it with facilities for doing its anthracite coal trade, this line will enable the company to carry to New York all the bituminous coal which it secured by the contract made years ago with the Beech Creek Railroad Company, but which, owing to its lack of terminals, it was obliged to hand over for transportation to the Lackawanna RR. In the third place the new president succeeded in entering into a contract for the transportation over his company's lines of some 1,500,000 tons of coal produced by the mines of Coxe Brothers and Company, mainly because when he found that this firm wanted to have their own lateral railroads, he showed them that he could give them connections for their laterals superior to those of any other company, and provide tidewater terminals not only in Philadelphia, but also at New York Bay over the Port Reading Railroad at Port Reading. The advantages to Coxe Brothers of having laterals of their own is that they thereby save the usually high charges made when such laterals are owned by others. These moves, however, were of but trifling importance compared with the scheme the completion of which was announced in February, 1892, when practically the consolidation of all coal lines was. effected. The Jersey Central and Lehigh Valley railroads were leased, and the Delaware & Lackawanna was obtained control of through it being in the hands of people interested in the Lehigh Valley. Further, the Delaware & Hudson RR., although remaining independent, gave assurances of its friendly disposition towards the combination, and thus the latter controls the production and transportation of anthracite coals. In an interview President McLeod is reported to have said: "The primary object in view has been to secure more * * * * economical management in the coal trade by avoiding expensive selling agencies and heavy commissions, so that while coal will not cost any more to the consumer, the producer and carrier can get better results and secure profits by saving expenses. * The great benefits of the new arrangement are obvious. In addition to the splendid terminus being constructed in Philadelphia, the Reading will acquire the magnificent terminals of the Lehigh Valley and New Jersey Central in New York Harbour. Through the Lehigh Valley's new western extension there will be provided a direct route to the Lakes and Buffalo, with a spacious terminal there. * In the carrying on of the coal trade, the saving in commission agency expenses, and the economies of the traffic under the new arrangements are expected to reach several millions of dollars annually, divided among the various railroads interested." The advantages bound to accrue from this consolidation. are evident. The suspension of keen competition has already led to a rise in the price of coals, and in addition the great savings to be effected must cause all companies to do well under the new arrangement. It is not necessary to enter into any calculations in regard to the financial advantages that must result, but it may be mentioned that the annual economies to the Reading alone have been variously estimated to amount from one to two million dollars. Moreover, these advantages have not been purchased dearly. The Reading pays both leased companies their net earnings, guaranteeing these to be sufficient for a 7 p. c. dividend, and is entitled to any surplus remaining after dividends of 10 p.c. have been paid. A reference to the preceding chapter will show that this guarantee is not very burdensome. In 1891 the Jersey Central earned enough for a 7 p.c. dividend. In the case of the Lehigh Valley the guarantee apparently means a sacrifice of about $550,000 per annum, that company paying only 5 p.c. on $40,000,000 of stock, with (1891) a surplus of a little over $250,000; but there is no doubt that this sacrifice can be made up for by economies alone, not by speak of the higher prices of coal resulting from the combination. The lease of the two properties has been opposed on legal grounds, and litigation is still pending; but it is not difficult to foresee the result of this obstruction. The Reading has cleverly evaded the law, and taken care to provide beforehand against an opposition which, on account of the general prejudice against combinations, was to be expected; and there can be little doubt that the Legislatures of Pennsylvania and New Jersey will find it impossible to interfere in any way. In all probability the old hostility of the Pennsylvania RR., which exercises a powerful influence over the Pennsylvania Legislature, will assert itself, because the combination. is against the interest of that company; but the Reading has seen its hands strengthened considerably, and to-day is so powerful that it need hardly fear its great opponent. Although the combination is undoubtedly to the advantage of the Reading it has, however, this drawback, that it may revive the old agitation against monopolies and consolidation of rival interests; and for this reason I believe that the real danger threatening its success lies less in the hostility of State Legislatures, which is more or less mixed with jingoism, than in the prospect that the combination, being absolute master of the market, may raise the price of fuel in a manner detrimental to trade, and calculated to excite the indignation of the population. No doubt there is a certain amount of guarantee in the recognised foresight of Mr. McLeod, who must be aware of the danger that exists in the temptation to raise prices. On the other hand, the heads of the combination must be desirous of turning it to full account in order to make the largest possible profits; and if no restraint be put upon this desire it is to be feared that the result will be mischievous. There have been several reports of advances in the price of anthracite, which were presumably viewed with satisfaction by shareholders; they should lead rather to apprehension. The coal combination must derive its benefit from economies, and from economies alone; if it begins to impose a tax and a tyranny upon the people there can be little question that the Federal authorities will interfere at an early date. Although the regular traffic statements enable us to see that the Reading is reaping great benefits from its bold and successful move, it is too early to discuss its full bearing. Prospects are bright, and possibilities great, but there is as yet no certainty justifying definite conclusions. All we can do, therefore, is to point to probabilities. I believe I have shown how the affairs of the company have changed within a few years. From a system which was weak in almost every respect it rose to the level of one of the strongest and most promising in the country. From the victim of an overwhelming competition it became the master of a vast market; it overcame the obstruction of the Philadelphia authorities, and got powers to construct a terminal of which it had stood in need for many years. It is building that line to New York Harbour which it has wanted so long. It leased (1891) the newly constructed Philadelphia, Harrisburg and Pittsburg railway which, connecting with the B. & O., gives it that entrance into Pittsburg which the Pennsylvania. RR. withheld from it for so many years. It acquired (1892) control of that which is now the Philadelphia, Reading & New England Railway, commanding and controlling the only all-rail route between the coalfields and New England, leading across Poughkeepsie Bridge. All these amazing changes are of recent date, some even not quite carried out; hence, to formulate the benefits that must accrue from them would be impossible, and to speculate upon their consequences idle; but it is certain that, although a few years must elapse before we shall be in a position to accurately gauge their full bearing, we are justified in expecting wondrous results. CHAPTER XX. THE NEW YORK, ONTARIO AND WESTERN RR. CY. The Ontario & Western is a reorganisation of the New York and Oswego Midland Railway, which was chartered in 1866 and opened for traffic in July, 1871. For various reasons, the majority of which were of a discreditable nature, this company was overburdened with a very excessive capitalisation, which was bound to lead to financial troubles at an early date; consequently little surprise was felt when the young corporation defaulted in 1873, two years after its railway had been opened. It remained in the hands of a receiver for five years, a period which sufficed to prove that the company never would be able to meet its heavy fixed charges, and its road was sold in foreclosure and reorganised in 1879, when a change of name was effected. The main purpose of the reorganisation was to convert the bonds into stock; the receivers' certificates, which, of course, had first rights upon the property, were exchanged for preferred stock, of which $2,000,000, funded in 1885, was issued. The first mortgage bonds were converted into common stock, and so were the second mortgage and other bonds and shares, the latter paying, however, assessments to the amount of 30 per cent. After the reorganisation there were $2,000,000 preferred and $58,100,000 common shares, and the assessments paid amounted to $9,429,430, with which it was intended to extend the road to Buffalo and Jersey City, thus making it a trunk line. For reasons referred to below this project was not carried out. In 1884 the preferred stock, with the |