Page:Vincent F. Seyfried - The Long Island Rail Road A Comprehensive History - Vol. 2 (1963).pdf/35

 The Flushing R.R.'s Early Years before that the road traversed a very thinly populated area, and served only one large village, Flushing. On top of this, the company had been saddled with the cost of operating two steamboats in order to deliver its passengers to New York. Thus for the price of one fare, the company had been operating two transportation lines, one rail and one water. The company had endeavoured to get out of this expensive predicament by selling off the Enoch Dean to College Point interests in September 1855, but the rental of the Island City climbed from five dollars in 1855 to ten dollars a day in 1856 in compensation, and there was the further cost of crew, insurance, repairs, etc. The crowning blow had been the heavy expense incident to the storms of 1856 and 1857; the company had spent hundreds of dollars for extra hands to dig out the road, and more to charter omnibuses to deliver its passengers. The Island City, immobilized in the winter ice, earned no revenue, but was a heavy fixed expense. Under the weight of all these burdens it was understandable that the company drifted deeper and deeper into debt.

On September 25, 1856 the bondholders met in New York to hear the treasurer read a statement of the affairs of the road and to appoint a committee to ascertain the owners of the bonds. No publicity was given to the affairs of the road. In February 1857 the management made its first economy moves by discharging many employees; the superintendent, faced with the responsibility of running the road with minimal help, resigned in protest. At the same time the company petitioned the Legislature to be allowed to issue preferred stock in payment of the bonds issued and of the floating debt. On March 5, 1857 notice of foreclosure was served upon the company and the appointment of a receiver and notice of sale of the road was to follow. It was hoped that the road could be sold at a figure that would reduce the interest more than half and so insure future stability.

On April 6, 1857 the court appointed as receiver William M. Smith, superintendent of the road for 1856–57; he had served for many years as village clerk of Flushing and then coroner, and had proved his ability in the winter crises of 1856–57. He immediately took the enfeebled railroad into his strong hands, and as his first act, rehired many of the experienced hands discharged two months before. The judgment creditors had attempted to seize the rolling stock of the road, but the receiver faced them