PHILADELPHIA & READING RAILROAD. 
 
 VERBATIM REPORT 
 
 PROCEEDINGS 
 
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 CANNON STREET HOTEL, 
 
 DECEMBER 23rd, 1880. 
 
 SIR HENRYIV. TYLER, M. P., Chairman, 
 
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 The Chairman (Sir Henry W. Tyler, M. P.) said : Gentlemen, I 
 have been asked to take the chair at this important meeting to-day, 
 and I have had great pleasure in acceding to that request for various 
 reasons. It has been my lot to appear too frequently in this room 
 pleading for companies or undertakings in temporary distress—(hear, 
 hear)—and it has been also my lot at successive meetings to see those 
 companies improving and advancing towards prosperity. (Hear, 
 hear.) Now, gentlemen, I sympathise with a brother president who 
 is in distress, and I therefore have great pleasure in coming here to 
 introduce him to you to-day. I also appreciate the manly feeling 
 with which he comes across the Atlantic to meet face to face all those 
 who are willing to discuss with him the condition of the property over 
 which he presides, and who are willing to assist and co-operate with 
 him in placing it in a better position, and also to meet those gentle¬ 
 men who are of a different way of thinking, who would not meet him 
 quite with friendly feeling, and who would find fault with him and 
 criticise what he has been doing. I believe that he has a ready ans¬ 
 wer to all criticism which may be made upon his conduct in the past, 
 and in regard to that of the people with whom he has been associated. 
 (Hear, hear.) Another reason why I am happy to appear on the 
 present occasion to support Mr. Gowen is, that this is a vast property, 
 largely held by English proprietors, and I feel it a duty to assist in 
 ^any way in my power in promoting the interests of those English 
 proprietors. (Hear, Hear.) Now, this property, the Philadelphia 
 ; and Reading Railway and Coal and Iron Company, is connected, in 
 the first place, with Philadelphia, a city of enormous magnitude and 
 importance—a city of which those who have not visited it will hardly 
 Sbe able to realise the greatness. It contains, I believe, something like 
 ^one million of inhabitants, it has no less than 9,000 large manufac¬ 
 tories, employing something like 200,000 people, and turning out in 
 the year <£60,000,000 of products. (Hear, hear.) Now, this vast 
 city is connected by the Reading Railway with the great anthracite 
 O 
 
 J>56484 
 
4 
 
 coal field of Pennsylvania, and that coal field has been largely pur¬ 
 chased by Mr. Gowen and those interested in the railway, and it is, 
 no doubt, to that purchase all the misfortunes of the Reading Railway 
 are mainly due—I may say entirely due—for, in order to acquire 
 vast amounts of acreage of that coal field they have got so heavily in 
 debt that at length they have been obliged to succumb and ask for a 
 measure of relief in order to put their affairs on a better footing. 
 This is not like a property that is worthless, a property that is hope¬ 
 less, or a property to which you will despair doing any good; but it 
 is a vast and valuable property. (Hear, hear.) It is an undertaking in 
 regard to which only certain conditions are required in order to re¬ 
 store it to a position of prosperity. Now, in all undertakings there 
 are certain things necessary when they get into distress. It is not 
 great genius that is required, but it is care and industry, and judicious 
 management and pluck and perseverance. Those are the qualities 
 that are required to restore this property, and I believe Mr. Gowen 
 pre-eminently possesses those qualities. (Cheers.) Now, gentlemen, 
 I am not going to advocate any persons, or any scheme, or anything 
 at all in this matter; but all I want to do is to hear myself what Mr. 
 Gowen has to say, and to ask you to kindly hear him and to bear with 
 him, or hear anybody else who has anything to say on the opposite 
 side, and then we will all consider together what is the best scheme to 
 be adopted and what is best to be done in the matter. (Hear, hear.) And, 
 gentlemen, we should hear both sides of the question, calmly discus¬ 
 sing it without any angry controversies, because in all matters of 
 business personal feeling and personal controversies are the ruin of 
 all profit; therefore I would ask you to-day to discuss this matter in 
 a fair, quiet, and friendly spirit, and then w r e shall be able to come 
 to a right judgment upon what is best to be done. With these few 
 words I beg to introduce Mr. Gowen to you, who will now make his 
 statement to the meeting. (Applause.) 
 
 Mr. Franklin B. Gowen, who was received with cheers, said:—Mr. 
 Chairman and Gentlemen, for the second time within a few years I am 
 obliged to appear before a London audience of our own holders and 
 tell them very frankly that I have not been able to do what I prom¬ 
 ised ; but the causes to which I will refer before I am done will, 
 perhaps, sufficiently exonerate me in your judgment from blame for 
 what I am sure has been but a temporary failure. I want here, in the 
 first place, to admit at once two mistakes of which I have been guilty. 
 One of them was this—That when we undertook the purchase of this 
 vast estate of coal lands, at a time when both the share capital and 
 
 
the debt capital of the company were commanding a very high price 
 in the market, and when our credit was practically unlimited, after 
 mature reflection and consideration, we determined to raise the money 
 by debt instead of open share capital. That was the first mistake, as 
 events have developed themselves up to to-day. Whether that will be 
 considered a mistake in the future or not I very seriously doubt, but 
 certainly during the times that have passed since we made these 
 purchases the increase of an interest-bearing debt instead of an open 
 capital account may fairly be treated as an error. I admit that. (Hear, 
 hear). The second mistake, for which I believe I am myself more 
 responsible than any body else, is that when we had our first reverse 
 three years ago we did not stop and do what we are now doing, and I 
 believe no one is responsible for that but myself. I was advised by a 
 great many people much older than myself that the task was a hope¬ 
 less one, but I thought I could carry it through, and I did carry it 
 through during many years of depression, and at last I stopped for 
 want of <£100,000, which I could have got the day I stopped; but as 
 I could not see my way to pay it I would not take the money. I 
 admit no one is responsible but myself for that mistake ; but I thought 
 I could carry the load, and, if it had not been for the very sudden and 
 alarming depression in the iron trade in the early part of the present 
 year, it would have been carried through. (Hear, hear.) I am here, 
 therefore, to admit that I have been unable to perform my promise 
 to you, but I am glad to bring with me to-day, and to lay before you 
 some little evidence of returning prosperity to show that the tide 
 is changing. 1 can say that during the past year when for nine out 
 of the twelve months we worked but half-time we have earned fully 
 millions of dollars more than we did last year. (Applause.) And 
 I have great satisfaction, as justifying the predictions I have made in 
 the past as to the earning power of this company, in reporting to you 
 that in the only three months of the year when we were able to work 
 full time we increased our profits more than a million and a-half over 
 the same period of last year. It is enough for me to say that j£ 
 such an increase of profit had been carried over six months—cer¬ 
 tainly if it had been carried over eight months—every prediction I 
 made in this room three years ago would have been abundantly real¬ 
 ized. I know that there are a great many people, and I have been 
 subjected to my full share of personal abuse from some of them, who 
 consider that the first duty of to-day is to give up all attempts to 
 rescue this property from danger and to sit down and criticise and find 
 fault with the management. I differ entirely from them. (Loud 
 
 J 
 
 
6 
 
 applause.) In saying this I do not desire to shirk the full extent of 
 the responsibility that attaches to me. I may not be very well known 
 here, but those who know me at home will tell you that I am willing 
 to stand up like a man and take what I have to bear in the way of 
 criticism. I know perfectly well that if I had succeeded I should 
 have received no little share of glory, and I am perfectly willing, as 
 every leader must be, to bear all the responsibility of disaster. I 
 will come here at any time after I have got the vessel safely into 
 port, and submit to your decision as to whether my commission shall 
 be suspended or revoked; but so long as we are among the breakers 
 and the storm, I propose to hold on as captain of the ship, and get 
 her into safe waters. (Loud applause.) Now, gentlemen, as to the 
 difficulty of the present, and as to the fair and honorable way of 
 meeting that difficulty. We have two difficulties in the finances of 
 the company, one of which is, that we have a large floating 
 debt, for which great and valuable securities are pledged, and 
 the other is, that we have fixed annual charges greater than 
 the earning power of the company during periods of depression. 
 About the propriety of having incurred this floating debt I simply 
 want to say this: that until the period at which we stopped in 
 1876, it was never increased beyond the then current market value 
 of the unissued bonds that we had laid aside to meet it—never. 
 When we met with reverse and the securities of the company went 
 down to fifty cents on the dollar, and it was impossible to relieve the 
 company by selling them without the danger of having to pay 10 or 
 12 per cent, for the money, I declined to sell any securities, or to issue 
 any bonds. I could look into the future, and knowing what I knew 
 about the value of this property, I could not during my term of office 
 saddle the company with the liability of paying for thirty or forty 
 years 12 per cent, for money for relief from merely temporary diffi¬ 
 culties. (Applause.) We had, moreover, in the treasury of the com¬ 
 pany, a vast amount of valuable collaterals. We had 5,000,000 of 
 the general mortgage bonds; we had other bonds; we had 5,000,000 
 or 6,000,000 of the best securities of the leased lines, paying over 6 
 per cent, rates of interest, that from time to time, as we could afford 
 it, we had bought, and we had other valuable securities, all of which, 
 added together, were worth from $17,000,000 to $18,000,000. With 
 these securities we have borrowed all the money we wanted. I be¬ 
 lieve I can say that, with trifling exceptions, we did not pay more than 
 6 per cent., which was the legal interest in the State of Pennsylvania, 
 and 7 per cent, in New York, and upon less than one-tenth certainly 
 
7 
 
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 / 
 
 we paid commissions, and they were the usual broker’s commission, 
 when we had to resort to them to raise money. It was, therefore, 
 better for the future of the company to raise money by pledging its 
 securities at 6 or 7 per cent, than to incur a perpetual, or long time, 
 obligation of 10 or 12 per cent.—and we did it. (Hear, hear.) This / 
 floating debt to-day amounts to some $10,464,000 ; there are also 
 out-standing receivers’ certificates amounting to $2,279,000, and we ) 
 are in default on our own obligations to the extent of some $730,000. ) 
 That constitutes all the liabilities that are at all pressing upon us, and 
 for the protection of which any collateral securities are pledged. It 
 is necessary, therefore, in the first place, to raise the money to pay 
 this debt. Now, the natural way to raise money when a concern is 
 in difficulty is to ask the shareholders for an assessment. It is, I ad¬ 
 mit, the duty of the shareholders to provide the means for paying this 
 debt. Unfortunately, however, the company has no legal power 
 whatever to compel any of its shareholders to pay a single cent of 
 money. Whatever may have been said or printed about the personal 
 liability of the shareholders of the Philadelphia and Reading Rail¬ 
 road Company, I can assure the gentlemen here present, upon my 
 reputation as a lawyer—which I think during the present time 
 is possibly a little better than that as a railway man—(applause)—that 
 there is no personal liability whatever. There was, indeed, some 
 twenty or thirty years ago an attempt made by the Legislature of 
 Pennsylvania to impose a personal liability upon the shareholders of 
 the Reading Railroad Company, and that imposition was made in set 
 terms and phrases. It would, however, have been necessary to com¬ 
 pel all shareholders to be joined in one suit to enforce the payment, 
 and no such suit could have been brought until after the exhaustion of 
 all the assets of the company, and so even if there had been any 
 power in the Legislature to impose the liability, the terms in which it 
 was couched would practically have relieved the shareholders from 
 any but a sentimental danger. There is, however, in America a 
 written constitution in every State, and there is a written constitution 
 of the United States which defines the extent to which the Legisla¬ 
 tures of the different States have power to go. Every Legislature in 
 America acts, therefore, under a written constitution defining its 
 powers, and, unlike the British Parliament, which it is said can do 
 everything which is not naturally impossible, an American Legislature 
 can do nothing in violation of a constitution which says that when a 
 
 contract is once made, the Legislature has no power whatever to alter, 
 vary, or change its terms in any respect, and it follows that when the 
 charter between the State of Pennsylvania and the Reading Railroad 
 
8 
 
 Company defined the liability of its shareholders, and when the con¬ 
 tract between the shareholders and the company limited the liability 
 of the shareholders to the sura of $50 per share, the Legislature had 
 no more power to alter or vary that contract, or to impose additional 
 liability upon the shareholders, than any gentleman here present may 
 have. It is perhaps somewhat unfortunate for the credit of the Com¬ 
 pany that there is no present liability, because if it existed, you can 
 very well see that all that was necessary to do to rescue the company 
 from its difficulties w r as to impose an assessment of $15 per share 
 upon each shareholder, and the shares would immediately have had an 
 additional market value greater than that assessment, and there would 
 have been no loss or danger to any one resulting from its payment. 
 But it would be hopeless to attempt to impose an assessment which we 
 had no legal power to enforce, or to ask those who were willing to pay 
 to do something for the benefit of those who were not. After great 
 consideration the plan of issuing a deferred security was adopted. I 
 am here now to explain that plan, to say what it is, why it should be 
 adopted, and to show the benefit that will result to the company from 
 its adoption, and the advantages that I think will accrue to the share¬ 
 holders who may join in it. I want $15 a share from the shareholders, 
 and I propose to ask them for a voluntary assessment of that amount, 
 which no one need pay unless he desires to do so. To every one who 
 will pay $15 we propose to give an obligation of the nominal value of 
 $50, which is never to mature—with no liability on our part to pay 
 the principal of the debt, and which shall entitle the holder, after the 
 common shares have had 6 per cent, dividend, to all that is earned up 
 to 6 per cent., and thereafter to rank for any further dividend pari 
 passu with the common shares. Now, let us look first at the effect 
 which the security—and the success of it—will have upon the trea¬ 
 sury of the company, and the subsequent ability of the company to 
 succeed in its undertakings. It will instantly release and turn over 
 into the treasury of the company securities which have a market value 
 to-day of over $20,000,000, which it would be a great loss and injury 
 to the company to part with, even at $30,000,000. We will reduce 
 our fixed charges by this $000,000, and will convert our present float¬ 
 ing debt, upon which we are obliged to pay at least 6 per cent., 
 whether earned or not, into an obligation upon which we need pay 
 nothing until it is earned. But what will be the effect to the share¬ 
 holder who will take it as compared with the shareholder who will not ? 
 The shareholder who will take it in times of prosperity will get 6 per 
 cent, upon his original investment of $50, and will get an additional 
 
9 
 
 6 per cent, upon the nominal value of $50, for which he will have 
 paid but $15, or equal to 20 per cent. I saw an article in the Daily 
 News this morning referring to this scheme, and saying that it im¬ 
 posed a liability on the company of 20 per cent.; but that is to be 
 paid to its own shareholders, the owners of the company. Now, if 
 every shareholder took his exact quota of deferred stock it would make 
 no difference whether it was issued at 1 per cent, or 10 per cent., or 
 15 per cent. Each shareholder who pays $15 has an investment of 
 $65, and upon that investment his dividends will be paid, For many 
 years the company, before its late reverses, was paying 10 per cent, 
 and earning often 12 or 18 per cent. Now, it took to pay 10 per 
 cent, in olden times upon the share capital of the company $8,400,000. 
 It only takes a little over $4,000,000 now to pay 6 per cent, upon the 
 common shares, and 6 per cent, upon the par of the deferred bonds. 
 That is only £186,000 additional per annum required to pay 6 per 
 cent, on the common shares, and the 6 per cent, upon the deferred 
 bonds. That is not a very serious increased liability, and when I tell 
 you that the traffic'of this company is to-day of such magnitude that 
 sixpence per ton upon its tonnage of this year is equal to 5 per cent, 
 upon the share capital, you must see that there is a great future re¬ 
 served for it. (Hear, hear.) If anybody tells me that the reversion 
 of the earnings of this company, after paying 6 per cent, on its share 
 capital, is not worth $10,000,000, he knows little about the extent of 
 the property; and any shareholder, or association of shareholders, 
 that will subscribe and buy the reversion of this company for ten or 
 twenty years for <£2,000,000, will make a good investment. But this 
 scheme, which has met with such abuse and adverse criticism, is not a 
 new one. Other companies in England have adopted this plan before. 
 Within the last five or six years, according to a statement furnished 
 to me, the London, Brighton, and South Coast Railway issued 
 £1,500,000 of ordinary stock at 45 per cent, upon its par value. The 
 Grand Trunk Railway of Canada issued £7,500,000 of ordinary 
 stock at £22 10s. You know at what it has been selling. I am told 
 that the Manchester, Sheffield, and Lincolnshire Company has issued 
 £1,100,000 of ordinary stock at 50 per cent., and, therefore, we are 
 not the first company to adopt a new scheme, which has been heralded 
 by a good many people with a vast amount of ridicule. Gentlemen, 
 it is folly to ridicule this plan. If I choose to accept an offer made 
 to me by American houses of the most undoubted wealth and ability, 
 
 I can secure a guarantee of the success of this scheme by paying 2 
 per cent, for it. 
 
 A bondholder : Two per cent, you say ? 
 
10 
 
 Mr. Gowen : Yes, 2 per cent. If I choose to accept an offer to 
 paj 2 per cent, for the guarantee of the success of this issue, I have 
 parties to-day who will take all that the'shareholders do not take; but 
 I should then be obliged to confine the shareholders to their strict 
 quota—that is, to give to each a $50 bond for a $50 share and let the 
 guarantors take the balance. (Hear, hear.) I believe, however, we 
 may succeed without paying this guarantee, which is a very consider¬ 
 able sum of money. (Applause.) I do not propose to have any pros¬ 
 pectus issued to the shareholders, giving them the opportunity of 
 subscribing to this, unless the prospectus contains either of the fol¬ 
 lowing statements :—First, that we have paid a commission to guaran¬ 
 tee the success of the issue, and that every shareholder will be confined 
 to his strict quota; or, secondly, that without a guarantee we have a 
 firm offer to take all that the shareholders do not take; and in that 
 event the prospectus will probably authorize the shareholders to sub¬ 
 scribe for more than their quota, subject to an allotment. We believe 
 this security to be a good one; we believe it is greatly to the interest 
 of the shareholders to take it, and I do know that no board of man¬ 
 agement would be justified in selling any to the public without first 
 offering the shareholders the option to take it. So much, then, for 
 the floating debt, and for the measures which are proposed to secure 
 its extinguishment. And now as for the more important plan—to 
 reduce the fixed charges of the Company to such a sum as will be 
 entirely within its earnings in all future time. We have, as many of 
 you gentlemen probably know, a vast number of leased lines. Nearly 
 one-half of the railway system of the Company is held under perpetual 
 leases. The present interest upon those leases is some three million 
 two or three hundred thousand dollars. We have charged that an¬ 
 nually in the working expenses of the Company. It represents, there¬ 
 fore, a portion of the fixed charges of the Company which have to be 
 met in order to retain the property just as much as any charges result¬ 
 ing from the payment of interest or providing money for the sinking 
 funds, which are very large—unfortunately so in our Company. The 
 total aggregate of all the bonded indebtedness of the Company and 
 of the leased line obligations runs up nearly to $150,000,000 at par, 
 but it could probably be acquired for $140,000,000. It is proposed 
 to create a new obligation, either a very long time or a perpetual 5 
 per cent, debenture security, divided into two classes—“A” and 
 “B”—the “A” class having priority of lien and interest charge over 
 the “B” class, and with the proceeds of these obligations it is pro¬ 
 posed, by purchase, wherever it can be done, by payment wherever 
 the obligation is at or near maturity, and by exchange, which shall be 
 
11 
 
 entirely voluntary on the part of the bondholder, to retire all the 
 present obligations of the Company. Now there are at the least 
 50,000,000 dollars which could not be acquired for many years. It 
 is hopeless to ask a man with good security to give up a 6 per cent, 
 bond and take a 5 per cent, one, unless, indeed, the 6 per cent, bond 
 is so near maturity that the length of the 5 per cent, one, with equal 
 security, will make it worth more in the market. There are, there¬ 
 fore, fully 50,000,000 dollars which at present cannot be acquired, 
 but 100,000,000 dollars are easily secured. We should propose to pur¬ 
 chase to the extent which the market rates would justify as many as 
 we could. There are very large sinking funds upon some of our mort¬ 
 gages which have been in abeyance for three or four years, but which 
 we have a right to draw for at par at any time. We can draw nearly 
 3,000,000 dollars next year for the improvement and general mort¬ 
 gages. The scrip for the general mortgages and deferred coupons 
 mature within eighteen months. The divisional coal land mortgages? 
 which have been selling at 60 or TO per cent, have but ten or eteven 
 years to run, and are liens upon particular pieces of land with large 
 sinking funds. Fully one-half of those would he glad to exchange into 
 a perpetual or long time obligation of 5 per cent, which will command 
 a higher market price, and will insure them regular payment of inter¬ 
 est. We have 10,000,000 dollars of open bonds that have no lien 
 whatever, but are entitled to be converted into share capital, and 
 some three millions of open debentures, with no lien which have no 
 security except the name of the Company, and they have been selling 
 at from fifty to sixty cents on the dollar. The holders will be glad 
 to take at par a perpetual 5 per cent, obligation, and the success 
 of this scheme is abundantly secured if you can simply exchange at 
 par. I do not hope even to accomplish that much. If we exchange 
 a 7 per cent, obligation at par we save 2 per cent, annually. The 
 limit which I may have set myself to accomplish is to save 1J per 
 cent, upon $100,000,000. We save the interest upon the floating 
 debt; we save the large sinking funds which annually recur with 
 augmented force, for they are all cumulative. We save all that, and 
 by this issue we shall be able to reduce the annual charges of the 
 Company to a sum entirely 'within our means. I have had several 
 letters since I came to London, complaining bitterly on behalf of the 
 bondholders about their being asked to surrender 1 per cent, of their 
 annual interest in order to secure a dividend of 6 per cent, to the share¬ 
 holders. If that were a fair statement of the case it would be utterly 
 preposterous, I admit, but we do not ask a single bondholder to do any¬ 
 thing unless he does it voluntarily. This scheme can be guaranteed, 
 
 
12 
 
 and the immediate result of its being put into effect is to pay the bond¬ 
 holder his full interest, and to continue paying his full interest until 
 he voluntarily and of his own motion surrenders his obligation. I 
 have been criticised by a great many people, who tell me I may be a 
 very fair lawyer, but that I am no business man, for, as they say, it 
 is the most ridiculous thing in the world to give publicity to such a 
 scheme, as, if it is to be put into practical effect, the proper way 
 would be to buy up all the securities before letting the owners know 
 anything about the plan; but my answer is that neither I nor any 
 one connected with the Company desires to cheat or deceive anybody. 
 We do not propose to buy a man’s bond without first letting him know 
 that we have the ability and the intention to do so. In my opinion, 
 the best way of getting out of trouble, irrespective entirely of the 
 question of morality, is to tell all we know and to rely upon the 
 future of the Company to satisfy every one of our ability to carry out 
 our undertakings. We propose to pay full interest on everything 
 the moment this scheme is put into practical effect. I do not pro¬ 
 pose during my present visit to London to offer any of these new 5 
 per cent, bonds at all. Probably it will be sixty or ninety days before 
 any of them are issued. I simply tell you that we have had offers from 
 a syndicate of several large houses in America, who have agreed to 
 furnish us with all the necessary capital to make this a complete 
 success. (Hear, hear.) They have offered to keep us supplied with 
 capital to the extent of $5,000,000 to'be disbursed by a committee, 
 of which we shall supply three members, and the parties furnishing 
 the money two. This will furnish money to pay the script and to 
 buy up all the obligations, which must be retired before the new 
 issue can be made. This syndicate has asked a commission of 2 per 
 cent, for doing this, and it will in turn be guaranteed for another 
 commission of \ per cent. I hesitate about accepting such terms, 
 although it is proposed to give us all the benefit of the purchase of 
 the old obligations, and to give us the benefit of the whole of the 
 market value of the new issue ; the syndicate or its guarantors make 
 nothing but their commission. We may accept such an offer if we 
 do not get a better one; but, at all events, they are ready to carry 
 it out. 
 
 Mr. Branch: What is the 2 per cent, to be paid upon ? 
 
 Mr. Gowen: It is 2 per cent, on the par of the new issue. 
 
 Mr. Branch: And 6 per cent on the money. 
 
 Mr. Gowen: It was suggested that a very moderate rate of interest 
 would be charged upon the advance, but I hesitate to pay any interest 
 at all, as the commission of 2 per cent, allows a handsome margin for 
 
13 
 
 
 interest on the advance of capital. Such is the plan presented by the 
 Company. It has been approved by a committee of ten American 
 gentlemen of very great ability and large holdings in the Company, 
 and by all the Receivers of the Company. The United States Court,"] 
 which has charge of the property of the Company, and without whose 
 orders the Receivers themselves could not act, has authorized and 
 empowered the Receivers of the Company to make the issue of the 
 deferred bonds. (Applause.) We have, therefore, in the first place 
 aUThe legal power and authority necessary to make the issue; and, in 
 the second place, if we choose to pay for it we can have all the money 
 necessary to make it a complete success. I did not call this meeting, 
 nor come across the Atlantic, with the view of soliciting money aid 
 from any of the shareholders of the Company. (Hear, hear.) 
 
 It is the duty of the Company to offer to the shareholders the 
 option of taking this new issue, but such option could have been 
 offered and exercised without the necessity of my presence. If we had 
 accepted the proposition to guarantee the success of the issue, 
 there would have been no occasion to say or do anything but to 
 issue a prospectus, giving to each shareholder, with proper notice, 
 the right to subscribe to his particular portion of the deferred 
 bonds. I came across the Atlantic, however, for an object w T hich 
 would have carried me here, irrespective of any financial con¬ 
 dition of the company. You know very well that for many years we ( 
 have been very much harassed. The company has not been prosper¬ 
 ous. We, and I may say myself personally, have been subjected to a 
 great deal of adverse criticism; but, I believe, with the exception of 
 a few rather obscure newspapers, until the arrival of Mr. Powell in 
 America, there had been no one who had dared to question the per¬ 
 sonal integrity of the management of the Philadelphia and Reading 
 Railroad Company. (Hear, hear.) I desire to speak kindly of Mr. 
 Powell and of every one. I am here as a business man, before busi¬ 
 ness men, and I have no desire to waste time in obtruding personal 
 controversies into any statement I may make. (Hear, hear.) There 
 is one duty, however, which a man owes to himself, that transcends in 
 importance, the duty which he owes to the whole world, and that is the 
 duty of defending his own reputation. (Loud applause.) With what 
 Mr. Powell may have said in America, so far as it effects on myself 
 with the American public were concerned, I should probably have 
 found no fault. There I wasw^ell known—here I am not known, and 
 therefore when Mr. Powell wrote me a letter to ask whether three 
 years ago I did not tell him a falsehood, and to say that if he did not 
 get an answer by Saturday morning, he would assume that I did, I 
 
14 
 
 felt that I had something more to do than simply write him an answer. 
 (Loud applause.) I thought it was my duty (at some personal incon¬ 
 venience to myself, for I believe for thirty-one years this is the only 
 Christmas I have not spent at home, and on that occasion I was ill at 
 school), to come over to England to give the English shareholders an 
 opportunity to ask whether I was such a man, and to tell them that I was 
 not. Mr. Powell charges, or gives currency to a charge, affecting the 
 integrity of the management; and as he is connected with, and re¬ 
 presents a very influential, very intelligent, and very honorable com¬ 
 mittee, the charge comes with very much more force than if he simply 
 acted in an individual capacity. He gives credence to a charge that 
 two of the directors in this company practically made use of their po¬ 
 sition as directors to foist some of their own coal lands at considerably 
 more than their value upon the company. Now, there can be no more 
 serious charge than that. (Applause.) He asks me to say whether 
 that was true or was not true, and he tells me that if he does not get an 
 answer the day after he will assume that I told a falsehood. Now, 
 I propose to tell you very frankly the whole story, and let you see 
 whether the slightest possible fault could be found with it. The coal 
 lands which we purchased occupied an area of about 100,000 acres, 
 and were 100 miles from Philadelphia. Investments in coal lands, 
 until the time of the great labor disturbance, were favorite ones with 
 the people of Philadelphia, and it was almost impossible to find any 
 board of directors of any company without some having interests in 
 coal lands, and it happened that two directors in the Philadelphia and 
 Reading Railway had interests in three out of the eighty tracts of 
 coal lands which we purchased. One of those tracts was held by a 
 stock company, and we bought the shares of that company. I have 
 taken the pains to examine critically and carefully everything con¬ 
 nected with these transactions, and the result is simply this—We 
 bought 1,700 acres of a tract of land belonging to the Fulton Coal 
 Company, of which these two directors had one^-seventh; we paid for 
 their shares at the rate of a little under $300 per acre, and I would 
 not take to-day $1,000 an acre for that land. (Applause.) There is 
 a rival road running through it, and it would sell in the open market 
 for $1,000 an acre to-morrow if it were offered. (Loud applause.) 
 We bought about 1,700 acres known as the Philadelphia and Maha- 
 noy lands: it has been producing a large revenue, and we paid for it 
 at the rate of $700 an acre, and it is paying interest to-day at the rate 
 of $2,000 an acre. (Loud applause.) If that had been all the direc¬ 
 tors had owned there would have been no question, because nobody 
 blames a company for buying from its directors property which turns 
 
15 
 
 out so profitable; but if you happen to buy a tract of land which for 
 some reason turns out to be a little less valuable, then you may ex¬ 
 pect to be subjected to very harsh criticism; and we were subjected to 
 criticism about the purchase of the Tamaqua tract. When I wrote to 
 Mr. Powell I said the directors owned one-sixth ; they each owned 
 exactly ll-70ths. We paid for the land at the rate of $500 
 an acre within six months of the time that a rival company 
 bought the adjoiuing land at $1,200 an acre. The tract had 
 four collieries upon it, but they were provided with bad machinery, 
 and it was a question with us whether to expend more money or to 
 dismantle them. Now, you can understand that having bought far 
 more coal land and far more collieries than were necessary to produce 
 the tonnage that the market was then taking, it became the duty of 
 the Company to close any collieries which required a great expendi¬ 
 ture of money, and to work those which could be worked most cheaply. 
 And the moment the coal field was owned and consolidated by one 
 great company, the life of many a colliery, which may have been only 
 one or two years, was prolonged to twenty years by reason of the 
 right of extension into an adjoining tract which the previous owner 
 had no control over, and quite a number of collieries became again pro¬ 
 ductive to us, because we could enlarge the territorial area under 
 which their workings extended. We dismantled every colliery upon 
 the Tamaqua tract, but that was entirely for our own convenience. 
 We bought it for $500 an acre, and I would not take $1,000 an acre 
 for it unless I was forced to do it in order to save the company from 
 some great disaster. (Applause.) That is the whole story—the 
 length and breadth of it, and upon that I was asked whether I had 
 not told a lie, and that if Mr. Powell did not get an answer by a cer¬ 
 tain hour he should presume that I had. (Cheers.) I want to say 
 one word, however, about one of these directors, Mr. Borie. If any 
 man ever lived in Philadelphia who had the respect, the confidence, 
 and I may say the love of its inhabitants, it was Mr. Borie. He was 
 a member of General Grant’s Cabinet, and he was a man whose integ¬ 
 rity was as unsullied as the chastity of a woman should be. He had 
 every confidence in the future of this Company. He left a will, in 
 which he requested his executors not to sell any of his interest in it 
 until it came up to par. Through four years of disaster that man 
 stood by me and gave me his name on the obligations of the Company 
 to the extent of three millions of dollars at a time, and all the time he 
 never got one cent of commission, (Loud applause.) His own for¬ 
 tune was probably a million and a half of dollars depending upon the 
 future of the Philadelphia and Reading Railroad, and yet he gave me 
 
16 
 
 the use of his name to the extent of three millions of dollars at a time, 
 for three years, and if it had not been for that we could not have gone 
 through our troubles. And this man, who is dead, is to be charged 
 with jobbery : who put double his fortune at stake for no other pur¬ 
 pose than to maintain that strict sense of mercantile integrity which 
 leads a man to pledge his fortune to sustain the honor of the Company 
 with which his name is connected. (Loud applause.) Let me repeat 
 this again. There was no fee ; there was no reward ; there was nothing 
 but that strict seij.se of mercantile honor and pride which makes a man 
 pledge his fortune to sustain the credit of any company of which he 
 is a director; and I tell you to-day that if he had not died the Com¬ 
 pany would not have failed. (Applause.) Now I come here to tell * 
 you this, and this only. I came from a sense that it was due 
 to you and due to mysplf that I should say it; but still more that 
 it was an almost sacred duty to the memory of a very dear friend 
 who is no longer living to answer for himself. (Cheers.) And now 
 I have said my say. I have pointed out the financial scheme by which 
 we hope to put the Company upon a safe basis. I tell you that the 
 success of the scheme can be guaranteed ; that you need have no fear 
 on that score—none whatever. I tell you further, that the people 
 who have offered to guarantee it are beyond doubt, both as to their 
 means and as to their character. I have also made my answer to Mr. 
 Powell; I desire to say nothing unfriendly towards him, but I have 
 said that which I thought it my duty as a man to say. (Hear, hear.) 
 And now let me say one word—or a few words, probably—about the 
 future of this Company. You see the map, and I think probably 
 most of you understand it. You see the dark shading which repre¬ 
 sents the coal lands. These are the two coal fields; this is the middle 
 or Mahanoy field, and this is the Schuylkill coal field, and the red 
 lines are the Company’s roads. The Reading Railway Company 
 owns, in area, about 33 per cent, of all the anthracite lands there are 
 in Pennsylvania, and that is practically all of that kind of an¬ 
 thracite there is in the world; that is hard anthracite, capable of 
 making iron, and which is also equally good for domestic purposes. It 
 owns them in fee simple. In this 33 per cent, of area, there are 40 to 
 45 per cent, of all the coal in tons that exist in Pennsylvania; the Read¬ 
 ing Railway has the best entrance to and the most numerous outlets 
 from the city of Philadelphia. The Reading Company is in this posi¬ 
 tion—it owns nearly all the coal in these two fields, and it owns 40 
 per cent, of all that exists in Pennsylvania. It is well established 
 in Philadelphia, and by its connection Avith the Central New Jersey 
 Railway it has equally good entrance into NeAV York, and by the 
 
IT 
 
 Philadelphia, Wilmington & Baltimore Railroad, which runs from 
 Philadelphia to Baltimore, and which is represented by this black line, 
 it has an entrance equally as good to the city of Baltimore. For two 
 years the‘Pennsylvania Railway Company, which controlled a mile 
 of the line through the city, has prevented us making use of the 
 outlet, but within the last three or four weeks the Circuit Court of 
 the United States made a decision in our favor, and gave to us the right 
 to pass over the disputed mile. (Hear, hear.) We have now, of all 
 the companies in America, probably the best entrance into the three 
 greatest Atlantic cities in America, and before I left home we had 
 effected an arrangement with the Baltimore & Ohio Company by 
 which their traffic to New York passes over our line instead of over 
 the Pennsylvania line. The total output of coal last year was 
 26,000,000 tons, and there were 2,000,000 tons too much produced. 
 Everybody knows of the crash which came upon the iron trade in the 
 Spring, and had not that occurred the 26,000,000 tons could have 
 been duplicated this year; but when the crash occurred everybody 
 stopped buying, and, instead of sending 26,000,000 tons this year, 
 we will send less than 24,000,000 tons. We confidently look to 
 25,000,000 tons next year, possibly 26,000,000 tons or more. 
 These coal fields were developed during the war, when every industry 
 in America was stimulated to its fullest extent. And when the 
 demand for coal existing during the war ceased, we had to contend 
 with an overproduction that for several years has prevented us from 
 making much money, but I think we are now arrived at that period 
 when the demand will be equal to the output, and when that time 
 arrives we may safely look forward to the large revenues which will 
 result from producing an article of prime necessity for which the 
 demand is greater than the supply. And now I want to call your 
 attention to the time when these lands were bought. There was, of 
 course, one motive which influenced the Company, and that was that 
 unless they bought the lands other rival lines would do so and divert 
 the tonnage. But apart from this there was a reason which called 
 for their purchase. All the principal railroads in America were then 
 struggling to build or control Western lines in order to secure the 
 tonnage of the west for eastern ports. I said then that the Reading 
 Railroad Company should have nothing to do with Western lines until 
 it had purchased the coal lands and secured its outlets in the Atlantic 
 cities, and when that time arrived the Western lines would themselves 
 connect with the Reading system in order to secure back-loading of 
 anthracite for their empty cars going west. The statistics of the four 
 •American trunk lines—I do not include the Grand Trunk Railroad 
 
18 
 
 of my friend, Sir Henry Tyler, and you will see how little we have 
 been together to coach ourselves for this meeting, when I say that I 
 have not even had the opportunity of asking him about it. But I 
 refer to the Pennsylvania, the Erie, the New York Central, and the 
 Baltimore & Ohio, and upon these the east-bound western traffic is TO 
 per cent, of their entire tonnage, and the western-bound traffic is 
 only 30 per cent., and, therefore, you see that those great trunk lines 
 have to carry 40 per cent, of their cars from 500 to 1,500 miles back 
 empty. I care not how I may be criticised as a railway manager, or 
 as a financier, but I do say this, that a railway company in America 
 that can offer to the western trunk lines to take their east-bound 
 traffic and load their cars with anthracite coal, will secure all the 
 business it can do. (Cheers.) All this I know, and its correctness is 
 assured by the actual occurrences of the past one or two years. 
 We are to-day the Philadelphia terminus of the vast system of roads 
 known as the New York Central, and a new line about being built 
 will connect us still more closely with that system. We also get from 
 Allentown the business from the New York, Lake Erie and 
 Western Railroad destined for Philadelphia.. We carried, the first 
 six months of this year, to Philadelphia nearly, if not quite, as 
 much grain as the Pennsylvania Road did, and it was brought to us 
 exclusively from the trunk lines. Then we have made an alliance 
 with the Baltimore & Ohio Company by which we get its large traffic 
 from Baltimore to New York, and there is a connection being made 
 west from Harrisburg so as to make easy access to the coal fields, which 
 will put us in connection for the supply of coal to the whole 
 system of the Baltimore & Ohio Railroad, and by these means we will 
 have access for our mineral product over three of the principal trunk 
 lines of the United States. And no one can tell the extent to which 
 this traffic in anthracite coal may be increased. When a man has 
 once used it for fuel he will never again use bituminous coal. It has 
 no offensive odor, it is most valuable for household uses, every servant 
 in the household becomes a missionary for its introduction—(“ Hear, 
 hear,” and laughter)—and I have often wished since I have been 
 here that I had some of it in my hotel, so that the servants would not 
 be constantly coming into my room to make up the fire. (Laughter.) 
 You make up your fire in the fall, when the cold weather commences, 
 and it never goes out till the next spring; and I tell you that if you will 
 only go down to Carmarthenshire and Pembrokeshire and bring up 
 some of the anthracite found there and introduce it to London you 
 will make your fortune, for though it is not the same as ours, yet for do¬ 
 mestic purposes it is equally good. Not too indulge too much in po- 
 
19 
 
 litical economy, there was a time when we used to get so much iron 
 from England, that it supplied a great deal of the western-bound traffic. 
 But this condition exists no longer, and, except anthracite coal, there 
 is no great quantity of heavy tonnage to supply the deficiency in west¬ 
 ern-bound freights. Indeed, so eagerly is this product sought for in 
 the west, that in cities like Cincinnati and Cleveland, organizations 
 have been recently formed for the purpose of securing, as it were, 
 some social pressure upon the inhabitants to induce them to burn an¬ 
 thracite and desist from the use of bituminous, for no other purpose 
 than to preserve the beauty and cleanliness of the cities. There can 
 be no question, then, of what is in store for the Reading Railroad 
 Company in the future, and if it may be asked why we have not suc¬ 
 ceeded in the last few years, the answer is simply because we have but 
 thirty-five million of dollars of open share capital, and one hundred 
 and ten million dollars of actual indebtedness, with fifty million of 
 dollars in addition of leased line obligations upon which we have been 
 obliged to pay fixed charges that it was impossible to meet out of the 
 current earnings of the company during the recent periods of depres¬ 
 sion. With reference to our inability to pay dividends we are little 
 if any worse off than any of the other companies which are engaged 
 in the same line of business. I ask you to remember that we are 
 pre-eminently a coal and iron company, and, with reference to our ina¬ 
 bility to pay dividends, we are no worse off than the other companies 
 engaged in the same line of business in America. The Delaware, 
 Lackawanna, and Western Railway Company, which is not encum¬ 
 bered by recent purchases of coal lands, has been making no dividends 
 for some years, although its open share capital is very large in propor¬ 
 tion to the indebtedness upon which it is obliged to pay interest. The 
 Delaware and Hudson Canal Company which has made no purchase 
 of coal lands in recent years is exactly in the same boat with our¬ 
 selves. The Central Railway of New Jersey, which is more nearly in 
 our own position than any of the other companies, has not only been 
 unable to make dividends, but preceded us in going into the hands of a 
 receiver to protect its property from the effects of insolvency. The 
 Lehigh Coal and Navigation Company, which is probably the oldest 
 coal company in America, and which commenced to ship coal as early • 
 as the year 1820, has made no dividends for some years. The Lehigh 
 Valley Railway Company, which is but very moderately involved in the 
 purchase of coal lands, and which has been looked upon as a certain 10 
 per cent, earning company, has been obliged for several years to con¬ 
 fine its dividends to but 4 per cent, instead of 10 per cent. We are, 
 therefore, exactly in the same boat with all the other companies en- 
 
20 
 
 gaged in the same business as ourselves, and yet we have been selected 
 as the victims of the most excoriating denunciations because we have 
 been unable to pay dividends to the shareholders ; if our finances had 
 been in the same condition as those of some of the other companies 
 which I have named, and especially if all the capital invested in our 
 undertaking had been in open shares, we would have been enabled 
 through the worst times through which we have passed to have paid 
 from 3 and 3J to 4 per cent, upon all the capital invested in the un¬ 
 dertaking. I fear I have already trespassed too long upon your time— 
 [“ Go on, go on ”]—but I really feel that I should explain to you the mo¬ 
 tives for the attacks which have been made upon the company, or 
 rather I may say upon myself personally, and the reasons that ex¬ 
 isted for their having been made. I trust you will relieve me from 
 any charge of egotism in speaking of myself in this connection, for 
 if you look over all these attacks you will find they are princi¬ 
 pally against me, and not against the company. I have had person¬ 
 ally a great deal of difficulty in America, as you can well under¬ 
 stand. We are the only company that took hold of and effectually put 
 down trades-unionism with all its terrors, and you know how powerful 
 an element that is in a country where universal suffrage prevails. We 
 extirpated all that element from our line, and incurred thereby a great 
 deal of animosity from those who represented it, and we were subjected 
 to a great deal of criticism from those in political life who wanted to 
 get the votes of those with whom we were in antagonism. There is 
 also great rivalry between the Pennsylvania Railroad and ourselves, 
 which was intensified during the past year by an act which I com¬ 
 mitted, but which I think I was justified in doing, and which the calm 
 sentiment of an honest community must ever approve. You remem¬ 
 ber the labor riots which occurred three years ago in America, during 
 which there was such a frightful destruction of property. They took 
 place in the month of July of the same year that I was here, and had 
 the pleasure of addressing a meeting in this hall. In the month of 
 March of that year we ascertained, from information which was en¬ 
 tirely trustworthy, that the strike was to occur. The time named for 
 it was August 15. The chief of the brotherhood of locomotive engi- 
 • neers was organizing throughout the country an association called the 
 Train Men’s Union, which embraced within it not only the drivers, 
 but the brakesmen and the firemen, who have not the education or 
 training of the drivers. The moment I ascertained what was to take 
 place we issued an order discharging every member of the association 
 on our line, and we had for a week or two in the early part of April a 
 vast amount of trouble and difficulty, but we got over it all. I sent to 
 
the executive of the Pennsylvania Railroad Company, and laid before 
 him the evidence of the existence of the conspiracy, so that he might 
 relieve his Company from all danger, and if he thought proper to take 
 part with us in the struggle. He, however, did nothing; and when 
 the strike, which was to occur on August 15, was precipitated in the 
 month of July by the action of some men upon the Baltimore and 
 Ohio Railroad, you know the Pennsylvania Railroad suffered very 
 seriously, and property to the extent of a million and a half to two 
 million dollars was destroyed in the city of Pittsburg by the rioters. 
 A year or two after that an application was made to the Legislature 
 of Pennsylvania to pass a bill appropriating $4,000,000 for the pay¬ 
 ment of the loss. Now, as to the duty of the State to pay for it or 
 not, that was a question upon which I should not have interfered, but 
 as it was attempted to make the. State pay $4,000,000 for a loss 'that 
 at the utmost was measured byj$2,000,000, I thought it was incum¬ 
 bent upon me to interfere, not only as a citizen, but as the President 
 of a Company which would have had to pay one-third of the taxes 
 incurred under the bill. (Applause.) You probably know that in 
 Pennsylvania we have no State taxes upon land, but that the revenues 
 are raised from taxation upon the corporations of the Commonwealth. 
 Of course it is the people who travel and send goods who have to pay 
 in the end, and there is no objection to that system. We do not ob¬ 
 ject to it, if it is fair all round. Next to the Pennsylvania Railway 
 we are the largest tax-payers in the State, and when it was proposed \ 
 to take $4,000,000 out of the pockets of the tax-payers to pay a loss 
 of $2,000,000, I certainly did object on behalf of one of the principal 
 tax-payeis, and I objected more especially as there w T ere some very 
 questionable practices which were being indulged in for the purpose 
 of securing the appropriation. A committee of investigation was ap¬ 
 pointed, and succeeded in fastening those practices upon some ei^ht 
 or nine people. Among them were several men of wealth, and occu¬ 
 pying prominent political positions. I was asked, as a, lawyer, to 
 prosecute them for bribery. I did so. I appeared in the’ first case, 
 and we secured a conviction, and the others pleaded guilty. (Ap¬ 
 plause.) They all ran away for a week or ten days, but the most 
 prominent one came back, and, after a long interview with the princi¬ 
 pal officers of the Pennsylvania Railroad Company, surrendered him¬ 
 self into prison, and was pardoned by the Governor (as were all the 
 others) within a week or ten days afterwards. Now from that time 
 forward I have had no peace; I do not mean to say peace of mind, 
 because it has not disturbed my equanimity in the least—indeed, I 
 rather consider it a feather in my cap. But there are three news- 
 
22 
 
 papers in Philadelphia, the owner of one of them, I believe, was bail 
 for the principal culprit, and another was his creditor; and they have 
 since given me no rest; not a day passes without some attack being made 
 upon me by them. But I can only say that it is like pouring water on a 
 duck’s back; I am sure they make money by it, and so it does them good 
 and does me no harm. (Laughter.) It is only necessary for me to explain 
 this to show why the President of our Company—which is exactly in 
 the same boat with five or six other companies—is held up to scorn in 
 the newspapers as being an obstacle in the way of dividends. Again, 
 it is wrong to judge of us and of what our prospects are by the past five 
 years of the greatest depression that trade has ever experienced in 
 America. Why let me come here into your midst and talk to you of 
 the five years you have just passed through. You know very well 
 that the agricultural interest of England has been greatly injured by 
 competition with America. Everybody knows that. Everybody 
 knows, also, that there is some danger of the manufacture of textile 
 fabrics here—especially those having cotton for their base—being in¬ 
 terfered with by American competition. But if there are two things 
 which will for ever insure the prosperity of England they are her 
 coal and iron deposits, which are practically inexhaustible. But let 
 anybody judge of the future position of England by the results of 
 the last five years, and what is it all worth ? Why, nothing. And I 
 say to you here to-day that any man who comes forward with a finan¬ 
 cial scheme to get the Philadelphia and Reading Railroad out of its 
 difficulties, and gauges its future prosperity by what has been done 
 by it in the last few years, makes as great a mistake as he would do 
 who should judge the future prosperity of great Britain by the returns 
 of profit made in the iron and coal trades during the last five or six 
 years. (Bravo, and loud applause.) Our company is not held in 
 England by any means, in fact, there is but a very small proportion 
 of its securities held here. If you take the obligations and share 
 capital of -this company, and those of its leased lines, they amount to 
 nearly $200,000,000, and of that amount $140,000,000 are held in 
 America, and $60,000,000 only in this country. I know that the 
 people interested in it in America have not lost confidence in the com¬ 
 pany, either on account of its management or the character of its 
 property. I tell you they are imbued with the fullest confidence in 
 it as far as the value of its property is concerned, chiefly from the 
 fact that it is the 'greatest owner of anthracite coal lands in the 
 United States. There has been no want of confidence in America; 
 the great question with people there was, could we hold our breath 
 during the period of distress ? But they never felt any doubt that if 
 
we could hold our breath for a year or two we should be all right. We 
 have been able to do that, and I believe now that we shall have great 
 prosperity during the next five or ten years. So far as my own personal 
 connection with this company is concerned, I will say a few words if 
 you will permit me. When I was a very young man I abandoned a 
 very lucrative practice as a lawyer and took this, I feel almost tempted 
 to call it, infernal position which I occupy to-day. I can assure you 
 I have had more kicks than half-pence since I began it, and I say that 
 it is not my intention to remain in office as president of this company 
 after I have got it out of its trouble, but until it is out of its trouble, 
 I do intend to remain where I am. (Great applause.) I have been 
 placed in the position of receiver of the company by the court, the 
 judge of which, with whom I have no acquaintance, and whom I be¬ 
 lieve I never saw in my life, was kind enough to say that if I had not 
 asked for it he would have appointed no other but myself. I propose, 
 therefore, to remain in my present position until every one who holds 
 on to his property is satisfied, and admits that I can leave it with 
 honor. (Loud cheers.) When that time comes, and it may come 
 within a very few months, or it may be a year—but, whether it be a 
 few months or a year, I shall remain until it does come—when that 
 time comes I shall ask to be relieved from my position, and I shall in¬ 
 sist upon being relieved except upon such terms and conditions as 
 would speak very badly for the judgment of the company if they 
 would consent to entertain them. I have borne the brunt of this time 
 of difficulty through the past years of depression, and I simply 
 want some of the glory in getting the company out of trouble, because 
 as I have had but little money from it, the glory is all the pay¬ 
 ment I can take. I want you and everybody who knows me in 
 America to be able to say, “ Well, if you got us into a mess you did 
 not run away;” and, with your kind forbearance and that of the 
 American holders in the company, I shall remain where I am, and I 
 believe I shall get it out of its trouble. (Loud cheers.) There is one 
 thing more I have been asked to announce to this meeting, which it 
 is proper that all the shareholders should know, and that is a change 
 we are making in our London agency. You probably know that 
 Messrs. M’Calmont Bros. & Co., who have acted as agents of the 
 company, have for months past been anxious to retire from active busi¬ 
 ness, and with their entire approval and consent we have determined to 
 open an office of our own in London, and to place in it some one en¬ 
 tirely competent to furnish information and answer all inquiries about 
 the property of the Company and the details of its business and traffic. 
 This office will have nothing to do with any financial business for the 
 
24 
 
 Company, for Messrs. Glyn, Mills, Currie & Co., will hereafter act as 
 the bankers of the Company, to receive any money due to it, and to 
 pay its coupons to the bondholders. And now I have fulfilled my 
 mission, and I stand here to answer any questions which may be 
 a’sked of me. If any gentleman has any to propound, or has any 
 fault to find, I trust he will fire away and not be deterred by any 
 feeling of hospitality which he may think due to me. I am here to 
 face every charge which may be brought forward, and to respond as 
 best I may to every inquiry which may be made of me. (Loud and 
 continued applause.) 
 
 A Bondholder: What is the present price of coal at Philadelphia? 
 
 Mr. Gowen: It would run from 3J- dollars to 4 dollars 50 cents, 
 depending upon the character and quality of the coal. It may be a 
 fair thing, to say 3 dollars 80 cents to 4 dollars is the price; it hardly 
 averages 4 dollars. 
 
 Mr. Govan: I wish it to be understood, before any further ques¬ 
 tion is asked, that I speak as a large investor in the Company, and as 
 a member of a firm that has held its common stock for years, and has 
 never bought or sold. I was in America this summer ; I happened to 
 be there at the time the crisis occurred, and I was there before it oc¬ 
 curred. Having been interested in the Company so long, I thought 
 it my duty to make every inquiry I could as regards the management 
 of the Company. When I went to the State I called on Mr. Gowen, 
 and I got some information from him. I went to the bankers in 
 Philadelphia, New York, and I may say Chicago, and got information 
 as to the standing and ability of Mr. Gowen ; and my own opinion 
 then, and which I have retained during the last six or eight months 
 of anxiety, is, that Mr. Gowen -is the right man in the right place for 
 the management of this Company. (Hear, hear.) I shall mention 
 one thing Mr. Gowen told us, that a deceased friend, who was at one 
 time on the Board of the Company, staked his own personal affairs for 
 the Company’s sake. I may tell you, gentlemen, that Mr. Gowen 
 has done the same thing. He spoke to us of a captain seeing his 
 vessel out of danger. Now, I read in a paper the other day of an 
 event on the East Coast, where the captain stood at the helm while 
 the crew were up the rigging, and he brought the vessel safely to 
 port, and I beg to say that Mr. Gowen has chained himself to the 
 wheel of this vessel, and that if we do anything in any way to hurt his 
 feelings we shall do an unwise thing. Having examined into the 
 affairs of the Company and its concerns, one thing which struck me is 
 this—viz., the loyalty of the employes to Mr. Gowen. Those who 
 have been connected with the Company for some time will remember 
 
25 
 
 how Mr. Gowen acted in putting down the Molly Maguires. Mr. 
 Gowen has managed the Company’s affairs not only at financial but 
 personal risk. On all sides I found that Mr. Gowen was appreciated, 
 and understood as the man who had managed this line. (Hear, hear.) 
 I shall mention one little thing, but it will interest you. At Reading, 
 upon going into the machine shop, at the locomotive works, the fur¬ 
 naces were burning without any coal. Now, what is this? Mr. 
 Gowen, himself, I was told, had invented a process by which what was 
 formerly cast aside as rubbish is now used for the driving of the ma¬ 
 chinery, and this part of the Company’s works is driven without the 
 expenditure of a pound of coal. 
 
 Mr. Gowen : The credit for that is entirely due to the general 
 manager of the Company. 
 
 Mr. Govan : Under your guidance. 
 
 Mr. Gowen : I took a great interest in it, but the general manager 
 deserves the credit. 
 
 Mr. Govan: I desire before sitting down to say that I have 
 every confidence in Mr. Gowen’s management, and I think if you 
 rely upon him you will see this Company brought to a successful 
 issue, and put into a state of thorough soundness and prosperity. 
 (Hear, hear.) 
 
 Mr. William Abbott: Mr. Chairman and Gentlemen, I confess to 
 a certain degree of humiliation as an Englishman, that the gentlemen 
 who have been so busy in maligning the fair fame and honorable con¬ 
 duct of Mr. Gowen have not had the pluck, which generally character¬ 
 izes Englishmen, of presenting themselves here to-day to meet him. 
 (Hear, hear.) I think, Mr. Gowen, it is only due to you, sir<, that I, 
 as an exponent of this large and influential meeting, should say that 
 we heard your manly and outspoken statement to-day with an immense 
 amount of satisfaction. (Hear, hear.) It is, I believe, the inheri¬ 
 tance of greatness that you are certain to find opposition, and, as your 
 success advances, that opposition will become more and more bitter. 
 Personally I can speak from my own experience, and, therefore, sir, 
 I have a special reason for sympathising with you. (Laughter.) But, 
 sir, I commend you for the gentlemanly way in which you treated 
 your adversaries, but I do not see any reason why I should disguise 
 from this meeting the real reasons of the opposition to Mr. Gowen. 
 (Hear, hear.) These has been a personal and bitter contest going on 
 in America against Mr. Gowen’s position as president, and also his 
 position as receiver. It has been over and over again said that his 
 position in the former capacity was about to be upset. Any man who 
 has heard him to day will know that he is not the man to be upset. 
 
26 
 
 (Hear, hear.) Then, sir, when you see such a large and influential 
 meeting as this according you its warm support, I hope you will be 
 strengthened in your determination to stick by this great property. 
 (Hear, hear.) Now, gentlemen, as Mr. Powell’s name has been men¬ 
 tioned in this controversy by Mr. Gowen, I think it only right that I 
 should tell you what Mr. Powell’s object has been in America. There 
 are some people who, like the mole, prefer to work underground, but 
 when they—and I think this is an American expression—are asked 
 to face the music, they do not show the same amount of vitality 
 as they do when underground. Mr. Powell is the agent of the 
 Pennsylvania Railway Company; he is largely interested in it; and 
 our president has told us that he has had a bitter conflict with the 
 Pennsylvania Company with reference to a portion of the line in 
 Philadelphia. Does not this account for the milk in the cocoanut ? 
 Does not this account for what appears in the Daily News and the 
 Times , the two organs of Mr. Powell ? He has prostituted the intel¬ 
 ligence of these two City editors to his own level. (Cheers and inter¬ 
 ruption.) You be quiet, Mr. Branch, I will deal with you presently. 
 I like opposition ; I am going to tell the truth. Mr. Powell went 
 to America, but before he did so—and as I see a large number of the 
 members of the Stock Exchange here, they will know this—large 
 transactions were opened in shares for the fall upon the distinct state¬ 
 ment that Mr. Powell was going to succeed, and that the vitality of this 
 company, so far as the ordinary shareholders were concerned, would 
 be completely annihilated. Thanks, sir, to you, Mr. Powell has been 
 defeated. On Mr. Powell’s return the rumor was also circulated that 
 the respectable firm of M’Calmont Brothers had turned their back on 
 Mr. Gowen. The president has now told you that with the consent of 
 that highly respectable firm the agency has been transferred into very 
 able hands. But, gentlemen, I have a particular pleasure in following 
 out the machinations of these gentlemen, who, with their coadjutors, 
 are pretty generally understood to be what are called wreckers. It is 
 not very long ago—and every one in this meeting who knows my 
 name will remember the circumstance—that a very influential letter, 
 amounting to a requisition, which was still further strengthened by a 
 demand, was presented at the head of the respected chairman of 
 the London, Chatham and Dover Railway, insisting upon an amalga¬ 
 mation with the South Eastern Railway, which, if it had taken place, 
 would have done what Mr. Powell desired to do with the Philadelphia 
 and Reading Railway, crush out its vitality. (Hear, hear.) Fortu¬ 
 nately, somebody stepped in to stop that; and, instead of the London, 
 Chatham and Dover Railway shares being worth ,£10, I am proud to 
 
27 
 
 say they are worth c£32. Who were the requisitionists for that amal¬ 
 gamation ? Who held the blunderbuss at the head of Mr. Forbes ? 
 Messrs. Hazeltine and Powell, and their coadjutors, Messrs. Foster 
 and Braithwaite. I tell you plainly that the advice of these gentle¬ 
 men—respectable members, no doubt, and respectable firms—may be 
 the voice of Jacob, but the hand is the hand of Esau. I will con¬ 
 clude, gentlemen, by stating that I place implicit confidence in our 
 worthy President, Mr. Gowen, and all I can advise you to do with 
 sincerity and with full knowledge, is to support Mr. Gowen, and so 
 enable him to save you from your apparent friends. (Cheers.) 
 
 Mr. Ayrton: I wish to make one or two remarks, because I 
 was present at the meeting when Mr. Gowen had to consider the 
 affairs of this Company, and when he was good enough to at¬ 
 tend and give us all the information we desired. On that occa¬ 
 sion our meeting was brought to a successful conclusion, and a 
 scheme was adopted which we thought, at the time, would bring 
 about satisfactory results. We have, therefore, some reason to be 
 satisfied with Mr. Gowen, coming here himself to-day to give another 
 public explanation to the shareholders, of the grounds upon which he 
 failed to carry out the promises he then gave. I am very pleased to 
 find that he has taken this course instead of pursuing that policy which, 
 I think, would have seriously prejudiced the Company, namely, keeping 
 the bondholders and shareholders so much in the dark with reference 
 to their affairs. It is true we have been told that there is some body 
 existing in the City of London representing us; but we do not know 
 who authorized it or constituted it, or what their objects were, or what, 
 in fact, from that day to this, they have been doing. (Hear.) That 
 is not a satisfactory mode of treating such an intelligent body of 
 gentlemen as I see before me. I think the course taken by Mr. Gowen 
 is not only consistent with the feelings and habits of his own country¬ 
 men, but equally consistent with the feelings and habits of people 
 residing in this country. I am here in a very condoning spirit. We 
 are in some embarrassment because this is a meeting of both bond¬ 
 holders and shareholders, and although we all have one common object 
 in view', to maintain this Company and to carry it successfully through 
 its difficulties, still we are very much like buyers and sellers who have 
 one common object in view, though the particular interest in the 
 transaction is very different. I have been for many years and am so 
 still, only a bondholder, and I wish, therefore, to say that I speak 
 now only as a bondholder with reference to what has fallen from Mr. 
 Gowen, and the sooner we get to the business before us, and quit of 
 the personalities of which I think we have had enough, the better it 
 
28 
 
 will be for all. (Hear, bear.) Mr. Gowen has not put before us any 
 definite resolution, and if he intends to move any resolution it would 
 have been more consistent with the usual course of business if the 
 gentleman who was to propose it had been called upon in the first place 
 to address this meeting. If there is any gentleman so intending I shall 
 be very glad to hear what he has to say; but, if not, I should like to 
 call the attention of the meeting to the fact that we have no definite 
 purpose at present before us. Are we to express an opinion upon the 
 project that has been submitted to us by Mr. Gowen, or are we to go 
 away just as we came without having had the satisfaction of hearing 
 what he had to tell us ? 
 
 The Chairman:—As Mr. Ayrton has raised the question of a reso¬ 
 lution it would be only right that I should, at this stage of the pro¬ 
 ceedings, place a resolution before you so as to put ourselves in order. 
 It was impossible there should be any resolution at this meeting at first, 
 because the obj ect of the meeting was to hear a statement from Mr. Gowen. 
 Now, in the ordinary way some gentlemen in the body of the meeting 
 would have made arrangements for proposing a resolution. That is 
 the course generally adopted at meetings, but Mr. Gowen has only 
 very recently arrived in England. He has, I believe, very few 
 friends or acquaintances in this country, and he has not had the 
 means which gentlemen usually have before the meeting is held of 
 arranging the order of business, or of getting anybody to propose the 
 resolutions. Under these circumstances I have been, while the dis¬ 
 cussion has been going on, writing out some resolutions, which I beg 
 myself to move—(hear, hear)—and upon them we will found any dis¬ 
 cussion that may follow. I gather from the feeling of the meeting as 
 we have progressed that what I have said in these resolutions will be 
 perfectly satisfactory to the great body of the meeting. The first of 
 them I should propose to you would be this:—“ That this meeting, 
 having heard the statement of Mr. Gowen, hereby tenders to him its 
 thanks for that statement; and, having entire confidence in the integrity 
 and ability of the present management, earnestly recommends that it 
 be retained in charge of the affairs of the Company.” (Hear, hear.) 
 The second resolution is this: “That the share and bondholders 
 present at this meeting having heard Mr. Gowen’s explanation 
 of the financial scheme proposed by the Company, hereby give 
 it their warm approval and consent, and pledge their hearty co¬ 
 operation in carrying it into effect. (Hear, hear.) I have myself 
 only had the pleasure of seeing Mr. Gowen for about ten minutes 
 three days ago, and about five minutes before we came into this room 
 to-day, and therefore you must excuse me for not having better 
 
29 
 
 prepared the business of the meeting. But there was one point to which 
 Mr. Ayrton referred, and that was the question of the meeting being 
 composed of bond and shareholders. That question Mr. Gowen did 
 refer to me. His own idea was that the shareholders were those most 
 deeply interested in these proceedings to-day, and that possibly it 
 would be better to call a meeting of the shareholders only, but I ven¬ 
 tured to suggest to him that the bondholders also were much interested 
 in the affairs of the Company, and that it would be agreeable to them 
 to hear at the same time as the shareholders the explanations which 
 he had to furnish to them. (Hear, hear.) With those words I will 
 leave the resolutions in the hands of the meeting. 
 
 Mr. Branch : Nobody came here with less intention of saying any¬ 
 thing at this meeting than I did myself; although perhaps I am as 
 much to blame as, at all events, some of you here, because I was one 
 of those who consulted with Mr. Gowen when he came here three 
 years ago about the affairs of this railway. I should not have risen 
 at all to-day but for the entirely gratuitous reference made by Mr. 
 Abbott. (Cries of “ Question,” and “ Sit down.”) I am entirely at 
 a loss to know why Mr. Abbott mentioned my name, but notwithstand¬ 
 ing his reference I have not the remotest intention of following Mr. 
 Abbott, especially here and at this time, into the affairs of the Chatham 
 and Hover Railway. On the right occasion for that matter to be dis¬ 
 cussed, I shall not be in the least afraid of standing up and answering 
 all he has to say in reference to that. (“ Time,” and great uproar.) 
 I will dismiss Mr. Abbott once for all, and I want to ask Mr. Gowen, 
 as I have been forced to rise, a question which arose to my mind 
 during the statement he has just made to this meeting. He said that 
 he had had opportunities during the last- three years of clearing off 
 the floating debt of this Company, or, at all events, of materially re¬ 
 ducing it, but he had not availed himself of those opportunities, because 
 it would have involved a permanent charge for interest of, I think he 
 said, of 12 per cent, per annum. The bulk of the reserve bonds being 
 generally mortgage bonds at 6 per cent., the necessary inference from 
 that statement was that he has not had a better offer for them than 
 fifty cents per dollar for those bonds. With your permission I will 
 pause for Mr. Gowen’s answer as to whether I am correct or not. 
 
 Mr. Gowen : Mr. Branch has entirely misunderstood me. I said 
 that there was a time at which I had been offered assistance for the 
 Company which would have been at the rate of 12 per cent. That 
 was before I came to London three years ago. We were offered to 
 take the bonds at fifty cents per dollar, and we were offered, if we 
 
30 
 
 would sell a great many other securities we had, a price that would 
 make up the deficiency. 
 
 Mr. Branch : It only seemed to me that Mr. Gowen must have had 
 many better opportunities of relieving the Company to the extent of 
 these mortgage bonds, from its floating obligations during the last two 
 years. (Interruption.) But, if the sale of those bonds had involved 
 an interest at 12 per cent., however good a reason it may have fur¬ 
 nished for not selling them at so reduced a price, I cannot see that it 
 is a good reason in the mouth of Mr. Gowen, who comes here and 
 proposes another scheme for the relief of the Company from these same 
 obligations which involve a charge—not a 12 per cent., but, as he 
 says, in the unlikely but still possible contingency of prosperous times 
 —(cries of “ Nonsense,” u Time,” and hisses)—not of 12 per cent., 
 but of 20 per cent. (A Voice: “ You are fogged,” and interrup¬ 
 tion.) I say that it is useless for him to discuss the items of this propo¬ 
 sition. (Uproar.) 
 
 Mr. Gowen : Gentlemen, I must ask* one favor of you, and that is, 
 to let Mr. Branch have his say, and I shall be ready to answer him. 
 (Cheers.) 
 
 Mr. Branch proceeded to address the meeting amid much interrup¬ 
 tion, and ultimately a motion was put to the meeting, and carried by 
 acclamation, that he be not heard. 
 
 Mr. John Taylor: In seconding the first resolution, proposed 
 by the chairman, I will only say a few words. The committee which 
 have co-operated with the managers of the Philadelphia and Reading 
 Railway have had their position called in question in the newspapers of 
 the last few days, and therefore I just wish to give you the evidence of 
 the opinion of the Public Ledger of Philadelphia. Any one acquainted 
 with the newspaper press of America knows that that journal occupies 
 the highest position amongst commercial papers in the country. In the 
 Philadelphia Ledger of November 6, there is the following :— u The 
 committee will consist of the following well known gentlemen, among 
 them being several of the largest holders of the securities of the Com¬ 
 pany in this country:—J. B. Lippincott, I. V. Williamson, Eckley 
 B. Coxe, and H. Pratt M’Kean, all of whom are managers of the 
 Companies; Moses Taylor, or a representative to be named by 
 him; Charles H. Rogers, President Tradesmen’s Bank; Isaac Hink- 
 ley, President Philadelphia, Wilmington, and Baltimore Railroad ; 
 Frederick Fraley, Daniel R. Bennett, and Thomas Cochran, Presi¬ 
 dent Guarantee Trust Company. In this city, where these gentlemen 
 are well known, no one can fail to have confidence in such a committee, 
 or doubt the propriety of any recommendation it may make.” One 
 
81 
 
 of the members of the committee whose acquaintance I have made is 
 Mr. Coxe. He and his brothers are the largest anthracite coal own- 
 ners in America, and he holds the position of President of the Ameri¬ 
 can Institute of Mining Engineers, and within a few weeks he has 
 been elected a member of the Senate of Pennsylvania. He sent me 
 a telegram that he entertained most favorable views of the prospects 
 of the Philadelphia and Reading Railway, and that he approved the 
 deferred scheme. Then, again, the Public Ledger says :—“At a full 
 meeting of the American Committee of the Philadelphia and Reading 
 Railroad, held in Philadelphia yesterday evening, all being present, a 
 plan for the relief of the company from its financial difficulties was 
 presented by Mr. Gowen, the 'president of the company, and, after 
 examination, was unanimously approved and recommended by the 
 committee for adoption by the company.” The members of this com¬ 
 mittee hold largely in the securities of the company, and are greatly 
 interested, and if we have the unanimous verdict of this committee 
 and of the managers of the company, and of the court, to which the 
 receiver is to appeal, I think it is a very good reason why we here, 
 who do not know quite so much about it, should also approve of it. 
 (Applause.) I do not think we can do better than to follow the course 
 which they have adopted. I have one word more to say. I was 
 lately waited upon by a gentleman whose father holds a position in the 
 First National Bank in Richmond, Indiana, and in speaking of Rail¬ 
 road prospects, quite apart from the Reading Railway, he told me 
 that the consumption of anthracite coal in the State of Indiana was 
 increasing at the rate of 30 per cent, per annum. I mention just that 
 one little fact, as pointing to the future of the anthracite coal trade. 
 Mr. Branch’s objection is that we are going to get 20 per cent, on the 
 deferred issue; but I think that is a good argument why we should go 
 in for the scheme. (Hear, hear.) 
 
 The Chairman: Does any gentleman second the second resolution ? 
 
 Mr. Clegg (whose remarks were most imperfectly heard at the re¬ 
 porters’ table), said: I will do so with pleasure, and I consider it is 
 our duty to hold on with the company. I believe the company will 
 yet pay dividends, like companies which have been similarly situated, 
 and that sooner or later we shall bring it through. 
 
 Mr. Campbell: I have heard with interest the remarks which Mr. 
 Gowen has made to-day with sanguine enthusiasm, but I should like 
 to ask him a question with regard to the annual report which was is¬ 
 sued with the accounts. The accounts it is impossible to understand, 
 but it is not Mr. Gowen’s fault, but the fault of the system of the 
 the company. We are there told that the ship has weathered the 
 
82 
 
 ( 
 
 storm, and we are congratulated upon it, and my question now is, can 
 Mr. Gowen justify the expressions used at the end of the annual re¬ 
 port when insolvency was staring them in the face ? 
 
 Mr. Gowen : I desire to say so absolutely and entirely. That state¬ 
 ment was based upon an announcement that it was believed a tonnage 
 of 9,000,000 would come on the railroad and an output of 5,000,000 
 of tons by the Coal and Iron Company would be obtained, and it was 
 stated that if such a result were obtained the dividend there men¬ 
 tioned would be earned. Instead of obtaining 9,000,000 tons upon 
 the railroad we had but 7,200,000, and instead of an output of 
 5,000,000, for the mines worked by the Coal and Iron Company we 
 had but little over, I think, 8,500,000 ; and I say here to-day that if 
 we had had the tonnage we had reason to expect until the breakdown 
 of the Iron trade in the spring of 1880, which prostrated all the in¬ 
 dustries of America, we would have earned fully what was there 
 stated. (Hear, hear.) 
 
 The Chairman then put the two resolutions separately, and each 
 was carried with but one dissentient. 
 
 Mr. Van Raalte : I think, before the meeting separates, Mr. Gowen 
 should have our thanks for having come all the way from America, to 
 lay before us the statement he has done to day. (Hear, hear.) 
 
 A vote of thanks to the chairman, Sir Henry Tyler, brought the 
 meeting to a close.