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THE STORY OF ERIE 279
to secure which various of the new Company's pre- prior lien bonds, as their name indicates, had priority
decessors had called up many troubles to sorely over the general lien bonds in regard to payment of
plague them:
The plan of readjusting and reorganizing the Com-
pany was in the hands of Charles H. Coster, Louis
principal and interest, and the rights of their holders
could not be affected by foreclosure of the lien of
the general lien bonds.
Fitzgerald, and Anthony J. Thomas. They had Out of the $35,000,000 of prior lien bonds,
wide discretionary powers. The certificate of incor- $15,000,000 were issued at once, and the proceeds,
poration of the Erie Railroad Company was filedin together with the cash received from assessments of
the office of Secretary of State John Palmer, at stock, used for reorganization purposes and for taking
Albany, N. Y., November 14, 1895. The incor- up outstanding obligations of the New York, Lake
porators or temporary directors named were Temple
Bowdoin, Charles H. Coster, J. H. Emanuel, Jr.,
Erie and Western Railroad Company, as follows:
A. H. Gilland, A. B. Hopper, Thomas W. Joyce, Reorganization First Lien Bonds, issued under
WalterS. Kermeys, J. P. Morgan, Jr., Francis Lynde the Mortsaee of October 5, 1878 (Principal) $2,500,000
Collateral Trust Bonds, secured by Trust Deed of
Stetson, Mortimer F. Smith, W. T. Townsend, November 1, 1882 (Principal) 3.344.000
J. H. Tierney, and E. B. Thomas. The capital Equipment Trust Obligations to mature within
, r , r- / - i , i , three years, estimated at (Principal) 2,000,000
stock of the Company, as fixed by the plan of reor- a m *• r j u j c .1 . 1- o
" }' - " *" IV-^' Any bloating Indebtedness of that Company or the
ganization, was $146,000,000, divided into 300,000 Chicago and Erie Railroad Company, or any
1 r , , i„4.: , *. c f , Company in its System, and any Certificates and
shares of non-cumulative 4 per cent, first preferred , T , , , ' . ,
other Indebtedness of the Receivers of the New
Stock; l6,000 shares of non-cumulative 4 percent. York, Lake Erie, and Western Railroad Comsecond
preferred stock; and 1,000,000 shares of com- Pany, estimated at n.500,000
mon stock, each class being of a par value of $100
per share. The first preferred stock had the prior The balance of the issue of prior lien bonds was
call for dividends (non-cumulative) at the rate of reserved for use as follows: $14,400,000 for the pur-
4 per cent. • per annum, beginning with June 30, chase of the railroad and property of the New York,
1896, out of the individual net profits of the Com- Pennsylvania and Ohio Railroad Company, subject
pany, whenever, in the opinion of the Board of
to a mortgage of $8,000,000; $5,000,000 for the
Directors, a dividend might be declared. The sec- enlargement and improvement of terminal facilities
ond preferred stock was entitled to no dividend, at Jersey City, Buffalo, and elsewhere; reducing
except when there should remain a surplus undi-
grades; constructing double track, and purchasing
vided net profit after a dividend on the first pre- additional equipment. The cost of the Nypano
ferred stock had been paid. Dividends on the com- (which has come to be the official designation of the
mon stock were payable out of the surplus only that
might remain after both the preferred stocks had
New York, Pennsylvania and Ohio Railroad) involved
an annual fixed charge of $1,741,386, which, in the
been paid full dividends from the profits of any light of the average net earnings of that road since
fiscal year.
Under the plan of reorganization a mortgage or
1885 ($1,811,758), was not an unwise responsibility
to assume.
trust deed was given to secure two series of bonds, From the total of the general lien bonds, $30,927,-
known respectively as prior lien bonds and general
000 were issued at once for reorganization purposes.
lien bonds. The authorized issue of the former Of the remainder, $79,918,000 were reserved to take
series was $35,000,000, bearing interest at 4 per
cent., and of the latter issue $140,000,000, with in-
New York, Lake Erie and Western Railroad Comterest
at 3 per cent, until July 1, 1896, and 4 per
up at or before maturity outstanding bonds of the
pany, the Chicago and Eiie Railroad Company, and
cent, thereafter, interest and principal of both series the New York, Pennsylvania and Ohio Railroad
to be paid in gold, the life of the mortgage being
Company, and of other lines, lands, and properties
one hundred years, or until January, 1996. The in which the Company was interested, as lessee or