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246 BETWEEN THE OCEAN AND THE LAKES
prepare a scheme of reorganization. On December ferred stock, and six in the hundred on t
3, 1875, Judge Donahue granted an order authorizing stock, shareholders to receive for the amounts thus
Receiver Jewett to remit $10,000 to John Morriss, in paid third mortgage bonds to bear 5 per cent. inter-
London, for the purpose of prosecuting the claim of est, payable only from the net earnings, and also
the Erie Railway Company against James McHenry shares in the reconstructed Company.
and the London Banking Association for $1,000,000 This scheme was adopted in principle by the bondeach,
holders in London at a meeting held January 4, 1876,
The proceedings in equity to foreclose on the fifth subject to modifications to be made after consultamortgage
against the Erie Railway were begun in tion with the Receiver and the American bond and
the court of Pike County at Milford, Pa., December stockholders. A committee was appointed and em-
24, 1S75. If. J. Jewett was appointed Receiver, powered to execute the scheme. O. G. Miller and
with bonds at $50,000, similar proceedings having Robert Fleming, of Dundee, Scotland, were made
been begun in New Jersey and New York City in this committee. They undertook the task, and sailed
November. These were amicable suits brought by for New York on January 30, 1876. Thomas Dickthe
Farmers' Loan and Trust Company and the son, Samuel Sloan, and E. D. Morgan were ap-
Trustees of Erie mortgages.
pointed a special committee to confer with Messrs.
Sir Edward Watkin submitted to the English pro- Fleming and Miller during their stay in this country,
prietors of Erie, on December 16th, a scheme to be and negotiate the terms of the reorganization scheme.
carried out under foreclosure by a committee of The representatives of the London Committee
which Governor Samuel J. Tilden was to be invited arrived at New York the first week in February, and
to take the Chairmanship. The plan proposed to about the middle of March the scheme, with modigive
the bondholders the voting power until the fications and additions, was agreed upon and forposition
of the undertaking was retrieved, and the warded by Messrs. Fleming and Miller to London to
fixed liabilites reduced to a level with the net rev- be submitted to the foreign bond and shareholders.
enue, by reducing onerous rent charges and the The plan seems not to have been yet in form to
engagements of interest on the first and second meet the approbation of all parties, for it wasstill in
mortgage bonds, as follows:
abeyance in Jul}-, 1876, when Receiver Jewett was
Holders of the former and of the sterling 6 per in London, having gone abroad both on account of
cent, bonds to receive mortgage bonds of the same impaired health and in connection with the affairs of
class for interest at the existing rates to March 1, the Erie Railway Company. He addressed a mcet-
1876; thereafter until 1880 the interest to be pay- ing of stock and bondholders in London July 13th,
able in gold at 6 per cent., and after that time at and made suggestions as to further modification of
7 per cent., the Company being entitled to redeem the reorganization plan. Soon afterward the plan
prior to 1880 at 105 for Erie second mortgage, in- was perfected to the satisfaction of the foreign concluding
the convertible gold bonds. Two classes of tin gent, in interest, for it received the necessary
gold sterling mortgage bonds, running ninety years, signatures there August 28, 1876. The signatures
were to be substituted, the firstfor 60 per cent, of necessary in this country to make the contract valid
the principal, carrying interest at 6 per cent, and were not attached until January 15, 1877. With the
payable in bonds of the same class from the date of exception of its legal verbiage, terms, and repetidefault,
until March, 1877, and thereafter in gold ; the tions, the plan upon which the amicable reconstrucsecond
for 40 per cent, of the principal, carrying tion of the Erie Railway Company, and the winding
4 per cent, interest, and payable only out of net up of its memorable and by no means savory career,
earnings until 1881, and thereafter 5 per cent. were effected, was as follows:
The dividend on the preferred stock was to be There was to be no reduction of interest on the
reduced to 6 per cent. Assessments were to be car- first consolidated mortgage bonds; the sterling 6 per
ried at the rate of three in the hundred on the pre- cent, bonds to bear that interest up to September 1,