"When it was desired to obtain additional funds, bonds were always issued instead of the capital stock being increased. Interest on bonds has always to be met, whereas dividends on stocks can be passed. It was announced, however, that the retention of the stock capitalization at less than fifteen millions of dollars was an evidence of conservatism, as the continuance of semi-annual dividends of five per cent was thereby permitted."
John W. Garrett died in 1884, and was succeeded in the presidency by his son Robert Garrett, who announced himself ready to continue a policy of expansion. The younger Garrett sought to regain an entrance for his traffic to New York. To that end he built a line into Philadelphia and prepared to strike across the State of New Jersey. He failed in that end by the failure of one of his confidential aides; the line that he had counted on for entrance into the American metropolis was snapped up by his greatest rival just as his own fingers were almost upon it. Later the B. & O. was permitted a trackage entrance into Jersey City, but the terms of that entrance were so stringent as to mean a practical surrender upon its part.
If Baltimore & Ohio had won that battle, a different story might have been chronicled. As it was, it stood a loser in a fearfully expensive fight; the English investors in the property became investigators--of a sudden the bottom dropped out of things. The stock went slipping down as only a mob-chased stock in Wall Street can drop; the road that had been the pride of Baltimore became, for the moment, her shame. It was shown, upon investigation, that the road had long gone upon a slender standing: millions of dollars that should actually have been charged to loss had been charged against its capital and included in the surplus. Ten years after Mr. Garrett's death the road found itself in even more bitter straits. It was a laughing stock and a reproach among railroad men. Its profitable side-properties--the sleeping-car company, the express company, the telegraph company,--the first two of which should never be permitted to go outside of the control of any really great railroad company--had been sold, one after another, in attempts to save the day of reckoning. Just before the Chicago Fair the road reached low-water mark. Its passenger cars were weather-beaten and ravaged almost beyond hope of paint-shops; it was sometimes necessary to hold outgoing trains in the famous old Camden station at Baltimore, until the lamps and drinking glasses could be secured from some incoming train. In that day of low-water mark it was actually and seriously proposed to abandon the passenger service of the road!