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The Green Bag

there meeting with the Erie R. R. at its eastem terminus in Newburgh on the opposite shore. To carry out this project large sums were borrowed in addition to the outstanding debts of the smaller

transfer. 1‘ It is stated that the indebted ness on the Burdell Bonds amounted to

lines which the new corporation had to

the trustees was greater than their market value. From an economic point of view the

assume. The Commonwealth lent its aid in 1867 and 1869.8 It had also been arranged that all underlying mortgages

having been disposed of, bonds to the amount of $20,000,000 should be issued.

These were known as Burdell Bonds.0 With the money thus raised the Boston, Hartford & Erie went on to ﬁnish, if possible, its through line—really a rival

three times the value of the railroad prop erty, and that the interest alone which

had accrued since the appointment of

failure of this corporation appears as but one result of those ﬁnancial disturb ances which, spreading throughout the country, ended in the panic of 1873." The country had passed through the Civil War, but it had never known such

a ﬁnancial breakdown.

In this particu

of the Boston & Albany which was a similar consolidation of smaller lines.

lar instance, whatever was saved for the bondholders was due to the care of the

The Boston & Albany proved successful, but the Boston, Hartford & Erie, unable

trustees and the skill of the attorneys.

to secure further aid either from the

of bonds brought to Mr. Bishop and his

Commonwealth or from private sources, failed, and, acting upon the advice of their counsel, the bondholders ﬁled a petition in bankruptcy to protect their interests as against the railroad." It ﬁnally became necessary for the mort gagees to take over the property and continue the maintenance of the road, and in this way the interests of the holders became secure, though not until a tedious and complicated suit had been

associates a very considerable reputa tion and led to his being frequently

disposed of.

The dubious condition in

which the bondholders at ﬁrst found

The protection of the 820,000,000 worth

employed by railroad interests. Besides railroad litigation his time was largely occupied in the varied con cerns of a general practice. The stock

holders of the Newton National Bank employed him to recover if possible a large sum lost through defalcation of the

bank officials. These ofﬁcers had secretly agreed with certain men in the United States sub-treasury in Boston to cover up a deﬁcit by bringing securities

themselves may be realized by refer

from the bank to the sub-treasury dur

ring to the petition for the decree of

ing an investigation by treasury oﬂicials

sent on suddenly from Washington. a Massachusetts was the only New England state to aid such enterprises. This and Hoosac Tunnel, 1862, 1863, 1875, are instances of note. Rhodes’ History of United States, vol. 7, p. 77, s eaks of railroad mania and loan of $5,000,000 by assa chusetts to Boston, Hartford & Erie, 1867 and 1869. Acts and Resolves, years 1867. ch. 234, 1869, ch. 450. ‘This mortgage was made to R. H. Burdell, president of the Erie R. R., and D. S. Gregory and T. C. Bancroft Davis of the Eric R. R., indorsed $4,000,000 worth. Date of mortgage March 19, 1866, recorded Mass. Suffolk Registry. libro 884, folio 273. The Boston and Alban line was secured by the commercial interests of oston against the strenuous op osition of western Massachusetts, which regarde the railroad as a dangerous monopoly. 10 Boston, Hartford and Erie declared bankrupt in Massachusetts, March 2, 1871.

The movement was hurriedly planned; some one let the secret out and the United States government at once seized the securities and refused to refund. '1 Filed by the assignees June 4, 1875. l’ The war tariﬂ and consequent high prices caused expansion in all lines with the cessation of hostilities; unwise borrowing and speculation fol lowed. Rates of interest ran high. Five thousand failures occurred during the panic year and during six years forty-seven thousand failures took place. Coman's Industrial History, p. 286 and. 288. Railroads built from 1867 to 1873 exc ed in mileage the total existing in 1859; cost of additions i n 1871 doubled that spent in 1857.