Page:Memoirs of Henry Villard, volume 2.djvu/298

 bankers that took the Oregon & California bonds an advance of a million dollars against Oregon Central bonds, with which money the unproductive mileage had been built, and also a large loan of $800,000 against the properties of the Steamship Company, not worth a quarter of the amount loaned. As in the Oregon & California case, Holladay accomplished all this through the dishonest collusion of the San Francisco agent of the German syndicate.

Holladay came East for the winter, as was his wont, and agreed to the proposition, holding out for a time for better terms than offered. As not only the consent of the Oregon & California, but of the two sets of creditors mentioned, was necessary for the new compromise, Mr. Villard went to Europe once more, in the spring of 1875, to procure it. He had to labor strenuously all summer and most of the fall, and journeyed repeatedly between Frankfort and London before the approval of all parties in interest could be secured. According to the agreement as finally formulated, Holladay was to retire entirely from the management of the three corporations, and surrender all his interest in their share capital to the bondholders and the two classes of creditors respectively. There was to be friendly cooperation in the management of the companies between the former and the latter. Though the Steamship Company showed fine earnings, its wooden vessels were old, small, slow, expensive to run, and fast wearing out, and it was evident that, in order to preserve its business, the line would have to be re-stocked with modern steamers. To this end, the plan provided that the bondholders should furnish the necessary new steamers, in consideration of which they were to become the owners of the entire steamship stock upon the extinction of the creditors claim, out of the earnings with which a considerable part of the debt had already been paid off. The bondholders also obtained an option to acquire the creditors claim against the Oregon Central for one-quarter of the amount of their loan.