Assets CONDENSED BALANCE SHEET, JUNE 30, 1892. Cost of road and equipment, including branches Cost of sundry securities in treasury Special cash deposit to pay construction vouchers Materials and supplies on hand. Cash in hands of treasurer. Due from agents, construction and current accounts Kinniconnick & Freestone RR. Co.. 338,796.56 231,671.95 848 692 50 429,314-06 118,920,020 51 405,493 56 48,847.70 194,158.18 229,529 51 1,848,475.07 3,449 27 At the date of issue of the last report the capital of the company consisted of $3,987,100 preferred stock, $58,407,000 common stock and $55,333,714 bonds, enumerated in the statement below. The preferred stock is now in course of conversion. Formerly there were $13,000,000 first preferred and $12,000,000 second preferred, but these shares have for the greater part been converted. The firsts receive two-thirds of their par value in new 4% p.c. bonds created for the purpose, and one-third in common shares; the seconds are exchanged in the reverse ratio. Some four million dollars of preferred shares have not yet been converted, and in consequence the capitalisation as enumerated here will undergo some changes in the course of the next few months. Moreover, the company is still issuing bonds for improvements, as will be seen in the extract given below. Subjoined statement relates to the funded debt: Bonds Outstanding, June 30th, 1892. NOTE. The management states that apart from the above interest $30.000 will be required for rentals. Hence first charges for the current year aggregate $2,880,066. The subjoined extract from the last annual report deserves attention: "The actual and prospective development of business on the system is very promising. This is especially true of the coal traffic, in which the various branches under construction in the coal region should bring a very large revenue. The control of the lines into the Blue Grass country should also throw a heavy traffic upon the main line. Most satisfactory of all, however, is the increase in passenger traffic and local freight business, which is all the more remarkable in view of the entire cessation of land and industrial speculation, so prevalent two years ago. Nearly all the enterprises on your line are on a sound footing. Notwithstanding the dulness in the iron trade the company has handled a much larger tonnage in that staple than it handled last year, and all the furnaces local to your line are to-day in operation. "In view of the important transactions of the past year, through the conversion of the preferred stocks into a fixed charge, and in the acquisition of the Elizabethtown, Lexington & Big Sandy and the other lines in Kentucky, your Board deem it proper to submit to you an outline of the situation as it has appeared to them in carrying out these matters. "The Chesapeake and Ohio proper (Fortress Monroe and Washington to Cincinnati) earned last year a little over $9,000,000 gross aud $2,275 000 net. As may be seen from the earlier pages of this report, there has been included in operating expenses a very large sum for absolutely new work, which, in view of the high standard of efficiency now reached, and the provisions now made for additions to equipment, etc., will cease to a large extent from this time forward. It is believed that after allowing liberally for maintenance of the property and such additions and improvements as are incidental to its development, and which should properly be charged to operating expenses, there has been expended in this account during the past year a sum of over $500,000, which may be added to net earnings in ascertaining the earning capacity of the Ohio and Big Sandy; and the Kentucky and South Atlantic may, it is thought, be safely put down as earning a minimum of $250,000. This would make a total of over $3,000,000 net earnings for the year just closed against an interest charge for the ensuing year estimated at $2,880,000. "There is now being expended upon the system some four millions of new money for double track, branches, wharves, piers, yards and equipment, in the expectation that it will lead to a further development of the property, and all the interest upon the bonds sold for paying for these extensions and developments (about $200,000 per annum) has been included in the fixed charges for the ensuing year, while no allowance has been made in the statement of net earnings, although, of course, these improvements should largely increase them. "Your Board offer these figures as a statement of the present situation as iewed by them. FINANCIAL. "The company is in a strong financial condition, as may be seen from reference to the balance sheet. "To provide for outlays made and to be made for new construction and equipment, your directors, prior to the creation of the new 41⁄2 per cent. mortgage, arranged (as already stated) to sell $4,000,000 of the bonds accrued thereby; but as, up to the present time, only a portion of the proceeds has been wanted, it has obtained temporary advances of about $2,000,000 (to be finally adjusted later) instead of delivering the entire $400,000 bonds, thus effecting a considerable saving of interest, as if the bonds had been delivered their surplus proceeds would (in the present stagnant money market) have remained idle in bank or have yielded only a trifling rate of interest. It is believed that the proceeds of these bonds will fully provide for all work in progress (except the Buckingham and Loup Creek extensions, which will be otherwise arranged for) and all equipment yet to be delivered under contracts made." CHAPTER LV. THE RICHMOND TERMINAL SYSTEM. The Richmond and West Point Terminal Railway and Warehouse Company has a more perfect control of the transportation business of the region it serves than any other railroad system in the United States; a glance at Map 5 will show that the numerous roads united by this remarkable corporation have no rival of any consequence in the Southeastern part of the Republic. Intersecting Alabama, Georgia, the two Carolinas and Tennessee, they connect these States with the Mississippi, the Ohio and the North; tapping the cotton and mineral belts they form a strong local system with a large movement of staples; and crossing and recrossing the Southern States in the principal directions they constitute some of the most important through routes of the country. The Richmond Terminal came into being in 1880. About that time Mr. Jason Gould, who controlled the Richmond and Danville, was desirous of creating and controlling a strong system in the South, a region just then commencing to show the first signs of its economic resurrection. The charter of the R. and D., however, debarred it from leasing roads it did not directly connect with, and it was therefore necessary to devise a means of evading the law. Mr. Gould has never been known to permit any enactment to interfere with his objects, and in this case he outwitted the statute book by founding a company in the interest of the R. & D., this new corporation the Richmond Terminal - having for its object the acquisition of Southern roads which to all intents and purposes would become auxiliaries of the Richmond and Danville system. During the first six years of its existence the R. T. attained no great prominence, but in 1886 the purchase of a majority of stock of the Richmond and Danville elevated it to the level of one of the most important companies of the South. In 1887 it increased its significance by the purchase of $6,500,000 first preferred stock of the East Tennessee, Virginia and Georgia system, these shares having voting control over the company until 1891, and in 1888 the Terminal bought all the stock of the Georgia Company, a corporation controlling the Central RR. and Banking Company of Georgia, and expressly formed to evade a law which would have prevented the Central Georgia system from passing into the control of the R. T. Thus the latter obtained influence over three great corporations which embrace most lines in the South. The Richmond and Danville is controlled through ownership of 49,762 common shares out of 500,000; the East Tennessee, Virginia and Georgia through ownership of $6,500,000 first preferred shares out of a total of $11,000,000 in which voting control was vested until 1891; the Central RR. and Banking Company of Georgia through ownership of all the stock ($12,000,000) of the Georgia Company,' which again controls the Central RR. and Banking Company of Georgia. To further secure the ties between the latter and the Terminal it has been leased to the Georgia Pacific RR., which in turn is part of the R. and D. system. The three principal companies control their respective systems in the following manner : |