Many of the swindles and abuses in railroad management owe their conception to the scandalous example of Fisk and Gould in the Erie Railroad. One or two of the little tricks played by Gould and his partner in that road, will give an idea of the possibilities of profit in dishonest railway management. When Gould became president and treasurer of the road twenty years ago, the Erie had a very favorable and longstanding lease of the Chemung and Canandaigua roads. The rental was exceedingly low, having been made at a time when the leased lines were in financial trouble. By the terms of the contract, if the Erie should at any time fail to pay the rental, the lease was to be thereby abrogated. Under the circumstances, the securities of these roads were naturally selling for a mere song. Gould, through his agents, quietly bought up these securities for about their weight in waste paper, thus becoming the sole owner of the roads. Then, in his capacity as president and treasurer of the Erie, he deliberately failed
[Illustration: FISHERIES AND AGRICULTURAL.]
to pay the rental, thus cutting off the road from its lease and leaving him free to dispose of it as he pleased. He thereupon sold the roads to the Northern Central Railroad of Pennsylvania for three million dollars.
Again, the Northern Railroad of New Jersey had a stock capital of $159,000 and $300,000 of bonds. It had never been able to earn dividends on this small amount of stock. It was leased to the Erie on favorable terms. Here was another example of Gould’s genius. Four million dollars in bonds were issued on the property, and a million dollars of stock, which was divided among the conspirators; and then, to give these securities a market value, a new lease was made to the Erie by which the latter guaranteed thirty-five per cent. of the road’s net earnings--enough to pay interest on the enormous creation of new bonds and four or five per cent. on the stock.
One more instance: The National Stock Yard Company was organized by the conspirators. The Erie Company advanced a million dollars, taking bonds to that amount. A million dollars of stock was then issued, representing not one cent of money paid, and was divided among the gang.