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 Report of the Special Committee appointed , March 13 , 
 1878 , to investigate the alleged false returns of 
 Railroad Companies. 
 
 House op Representatives, 
 
 January Session of the General Assembly, 
 
 A. D. 1878. 
 
 The Special Committee of the House of Representatives, 
 appointed under a resolution authorizing the Speaker to 
 appoint a committee to investigate railroad returns, and “ to 
 ascertain and report, at as early a day as is practicable, 
 whether or not it is true that the railroad companies, or any 
 of them, have been and now are in the practice of making 
 false returns to the Railroad Commissioners, as alleged in 
 repeated representations made to the General Assembly ; and 
 if it be true, how far and to what extent the Railroad Com- 
 missioners are responsible for not having the returns cor- 
 rected ; also, whether any of the railroad companies (and if 
 any, which of them) have 4 issued capital stock unwarranted 
 by bond jide investments of actual values,’ or have issued 
 capital stock in exchange for fictitious or watered capital 
 stock previously issued by other companies, and are compel- 
 ling the public to pay dividends on the same by charging high 
 rates for the transportation of passengers and freights ; also, 
 the amount of fictitious or watered capital stock issued or 
 exchanged by said companies respectively, and the manner 
 and the means by which the issue or exchange of said capital 
 stock has been concealed or covered up. That said committee 
 also report, by virtue of what authority and under what law 
 this fictitious or watered caj^^k stock has been issued or 
 
* 
 
 2 
 
 exchanged, and whether any legislation, and if any, what, is 
 necessary to prevent a repetition of such ‘ evil practices,’ ” 
 respectfully 
 
 REPORT . 
 
 That charges of incompleteness and inaccuracy in the 
 returns made by several of the railroad companies to the 
 Railroad Commissioners have been preferred to the General 
 Assembly in different forms since the year 1871, by Mr. H. 
 L. Goodwin, who that year was a member of the House of 
 Representatives from East Hartford. 
 
 Before your committee, the said H. L. Goodwin made and 
 submitted to their consideration the following charges and 
 specifications against the Hartford & New Haven ; the 
 New York & New Haven ; the New York, New Haven & 
 Hartford ; the Danbury & Norwalk ; the Shore Line ; the 
 Naugatuck, and the New Haven & Northampton Railroad 
 Companies, and the Railroad Commissioners, to wit : 
 
 Allegations against the Hartford & New Haven Rail- 
 road Company. 
 
 1. That said Hartford & New Haven Railroad Company 
 reported to the Railroad Commissioners in 1865, that the capital of 
 the company paid in since the last report (made in 1864) was, 
 $650,000 ; whereas $470,000 of the $650,000 was not paid in, 
 but was issued as a stock dividend of twenty per cent. 
 
 2. That said company in 1868 reported its “capital paid in 
 since last report,” (made in 1867), was $300,000, whereas a large 
 portion of this $300,000 was not paid in. 
 
 3. That in 1871, the said company reported $1,500,000 as paid 
 in since the last annual report, whereas only $750,000 was paid in 
 during that year. 
 
 4. That in 1871 said company reported its “ capital paid in,” at 
 $5,000,000, whereas not exceeding $3,600,000 had been paid in at 
 that time. 
 
 5. That in 1869, said company reported the cost of its equip- 
 ment at $254,000, and that in 1870, the company reported the cost 
 of its equipment at $800,000.j^That during the year within which 
 these two reports were madj^^^^mpany, added to its equipment 
 

 B 
 
 E 
 
 only four passenger cars, and eighty-four baggage or freight cars, 
 the cost of which could not have exceeded $80,000. That, con- 
 sequently, either one or the other of the statements of the com- 
 pany as to the cost of its equipment must have been untrue. 
 
 6. That said company, in reporting to the Railroad Commis- 
 sioners, did for several years, suppress its “ surplus earnings for the 
 year,” and also its “total surplus,” or undivided earnings, notwith- 
 
 ~ standing the law required a report of both to be made annually, 
 and that this surplus was reported to the railroad commissioners 
 - in 1872, to be $706,751. 
 
 7. That within a few months after the payment to the company 
 by the stockholders of $1,500,000 of capital in 1872, there was 
 paid back to the stockholders, not as a dividend of earnings, but 
 in addition to the dividends of 12 per cent for the year the sum 
 of $671,450, so that of the $1,500,000 paid in that year, only 
 $828,550 remains invested in the company, and that consequently, 
 of this $3,000,000 of increased capital issued in 1870 and 1872, 
 only $1,578,550 was actually invested by the stockholders. 
 
 8. That in reporting its dividends to the Railroad Commis- 
 sioners it suppressed and omitted the stock-dividends of 20 per 
 cent, which dividend was 4,700 shares, the market value of which 
 was $1,077,500, or 45 per cent, on the outstanding capital of 
 $2,350,000. 
 
 Allegations against the New York & New Haven 
 
 Railroad Company. 
 
 1. That in 1867 the New York & New Haven Railroad Com- 
 pany reported “Capital paid in since last report (made up to 
 September 30, 1866), was $2,017,385,” which report was untrue; 
 
 The report of the directors made to the stockholders showing that 
 
 between April 1866, and April 1868, a period of two years, only 
 $996,000 of capital stock has been paid in.* 
 
 * At least $616,700 of this discrepancy can be accounted for by the issue of 
 that amount of capital stock in the year ending September 30, 1864, which 
 amount the then president of the company (Mr. Carhart) reported as “ Increase 
 of capital since last report,” but which he did not report as having been paid in, 
 he having reported that year, 
 
 Capital stock [issued], $3,616,700 
 
 Increase of capital since last report, 616,700 
 
 Capital paid in per last report, 2,980,839 
 
 Total amount of capital paid in, 2,980,839 
 
 After Mr. Bishop became president in 1867, and not till then, the total amount 
 of capital issued was reported as all paid in. The year previous Mr. Carhart 
 reported capital issued $5,000,000. Total amount of capital paid in $3,982,614. 
 
4 
 
 2. That in 1867, (Mr. Bishop being then the president), the 
 company reported to the Railroad Commissioners the cost of its 
 road and equipment on September 30, 1867, at $7,720,846, while 
 in April 1868 (seven months later) he reported to the stockholders 
 the cost of the road and equipment at only $5,270,611; and that 
 in this report to the stockholders he included as part of this 
 $5,270,611, the “Railroad, franchise, right of way, grading, ma- 
 sonry, bridging, fencing, superstructure, iron, station-houses, shops, 
 fixtures, machinery, engineering, interest, discount on bonds, etc.” 
 
 3. That said company did, during the following year, (and 
 without informing the stockholders of the fact,) include as part of 
 the cost of the road, the sum of $1,772,868, it being the amount 
 of the “Loss by the Schuyler fraud,” and that that year the mar- 
 ket value of the stock of the company, as reported to the Comp- 
 troller for taxation, was increased from $120 to $138 per share. 
 
 4. That said company reported to the Railroad Commissioners 
 that it had a surplus of $722,851 on the 30th September, 1868, 
 whereas, instead of a surplus, its capital was impaired at that time 
 to the extent of $1,050,017, it being the amount of the previously 
 admitted loss by the Schuyler fraud ($1,772,868), less the amount 
 of undivided earnings ($722,851). 
 
 5. That in violation of the law of 1867, which makes it a mis- 
 demeanor for the officers of any corporation to declare a dividend 
 when its capital is impaired (see p. 280 General Statutes, Sec- 
 tion 16), the company declared dividends from 1867 to 1872, 
 although its capital was during all that time impaired. 
 
 6. That said company untruthfully reported in 1871 its paid- 
 in capital at $7,500,000, whereas its paid-in capital did not exceed 
 $6,500,000. 
 
 Allegations against the New York, New Haven & Hart- 
 ford Railroad Company. 
 
 1. That from 1872 to 1876 inclusive, the New York, New 
 Haven & Hartford Company reported its “ capital actually paid 
 in ” at $15,500,000, whereas not exceeding $12,360,000 had been 
 paid in. 
 
 2. That said company from 1872 to 1876, in answer to ques- 
 tion 4 : “ Capital stock issued for undivided earnings ? ” reported 
 “none” to the Railroad Commissioners, and that in answer to 
 question 5 : “ Capital stock upon which no payment had been made 
 either in cash or its equivalent? ” also answered “ none; ” whereas 
 
 I 
 
5 
 
 it should have reported in answer to one or both of said questions 
 at least $3,700,000; or else its answer to both of said questions 
 should have amounted in the aggregate to $3,700,000, in round 
 numbers. 
 
 3. That from 1872 to 1877 inclusive, said company has over- 
 stated the cost of its road and equipment not less than $1,772,868, 
 and probably overstated it nearly $2,000,000. 
 
 4. That from 1872 to 1877 inclusive, said company has over- 
 stated its surplus annually some $1,772,868. 
 
 Allegation against the Danbury & Norwalk Railroad 
 
 Company. 
 
 1. That said company from 1871 to the present time has over- 
 stated the cost of its road. 
 
 2. That acting under instructions from the Railroad Commis- 
 sioners, said company in 1876 and 1877 reported its total capital 
 of $600,000 as all actually paid in ; whereas, only $332,100 had 
 been paid in. 
 
 Allegation against the Shore Line Railroad Company . 
 
 1. That in 1871 and 1872 said Shore Line Company reported 
 its total capital of $1,000,000 was paid in, and that from 1872 
 to 1877 inclusive it reported its total capital as “actually paid in;” 
 whereas, only $740,971 had been paid in. 
 
 2. That said Shore Line Railroad has untruthfully reported the 
 cost of its road, overstating its cost some $250,000. 
 
 Allegation against the Naugatuck Railroad Company. 
 
 1. That said Naugatuck Company from 1865 to 1872 reported 
 its paid-in capital stock some $600,000 above the amount paid in. 
 
 2. That from 1872 to 1877 said company overstated the amount 
 of its “capital stock actually paid in,” by some $600,000. 
 
 3. That said company has from 1865 to 1877 overstated the 
 cost of its road, and that it is now overstated some $450,000. 
 
 4. That said company in 1872 to 1875 reported its watered 
 capital at only $142,700 ; whereas, it was over $600,000. 
 
6 
 
 Allegation against the New Haven & Northampton 
 Company. 
 
 1. That in 1872 to 1877 said company over-stated the amount 
 of its capital stock actually paid in, some $570,000. 
 
 2. That said company reported its watered capital in 1872 to 
 1874 as “none,” whereas it had issued watered capital amounting 
 in 1874 or 1875 to $570,000. 
 
 3. That said company in 1873 untruthfully reported its surplus 
 last year (Sept. 30, 1872) at $71,526, whereas it was $187,263; a 
 discrepancy of $115,736. 
 
 Allegation against the Railroad Commissioners. 
 
 That from 1867 to 1872 inclusive, they permitted the railroad com- 
 panies to make incomplete returns, omitting in several instances 
 answers to forty or fifty questions. 
 
 2. That in 1874 they untruthfully informed the General Assem- 
 bly that “ no charges of incomplete or inaccurate returns had been 
 made to them.” 
 
 3. That in 1875 they neglected and refused to comply with the 
 law (Sec. 95, page 339, General Statutes), although requested so 
 to do, by having the Naugatuck, the New Haven & Northampton 
 Company, and the New York, New Haven & Hartford Company 
 correct their returns. 
 
 4. That in 1876 they issued such instructions to the railroad 
 companies as made it incumbent upon them to report as “ actually 
 paid in,” capital stock which was not paid in. 
 
 5. That in the text of their report to the General Assembly in 
 1875, they said that the paid-in capital of the companies of the 
 State amount to be $36,733,244, and suppressed and concealed the 
 fact that some $4,000,000 to $5,000,000 of this stock had not been 
 paid in but was watered capital. 
 
 6. That during the same year (and in the same report) they 
 compiled a table of paid-in capital which included this $5,000,000 
 of watered capital, and omitted to compile any table of watered 
 capital. 
 
 In accordance with the authority conferred by the before- 
 mentioned resolution, and with the aforesaid charges and 
 specifications before them, your committee entered upon such 
 investigation as their exceedingly limited time permitted them 
 to make. 
 
7 
 
 In consequence of admissions made by the Railroad Com- 
 missioners, and by Mr. William D. Bishop, president of the New 
 York, New Haven & Hartford Railroad Company, and one 
 of the directors of the Naugatuck Railroad Company, and in 
 consequence, also, of the evidence afforded by an examination 
 and comparison of the annual returns made by the railroad 
 companies to the Railroad Commissioners, your committee 
 did not deem it advisable to occupy the limited time which it 
 had (and which was wholly insufficient for the perfect accom 
 plisliment of the objects for which your committee was 
 appointed) in taking the testimony of witnesses or in exam- 
 ining the books of the several railroad companies complained 
 of. 
 
 Upon as full investigation of the subject referred to them, 
 as it was possible to make under the circumstances above 
 stated, your committee find the following facts, namely: 
 
 THE FINDING OF THE COMMITTEE. 
 
 Hartford & Hew Haven Railroad Company . 
 
 In regard to the 5th and 6th allegations against the Hart- 
 ford & New Haven Railroad Company, the committee finds 
 them to be true. 
 
 In regard to the 1st, 2d, 3d, 4th, and 7tli allegations against 
 said company, your committee find them supported by the 
 reports referred to, in the said allegations, and by the state- 
 ment made and submitted to your committee, by Mr. William 
 D. Bishop, president of the company into which the said 
 Hartford & New Haven Railroad Company was merged 
 and consolidated. 
 
 From Mr. Bishop’s statement it appears, that at the time of 
 the consolidation of the Hartford & New Haven Railroad 
 Company with the New York & New Haven Railroad Com- 
 pany, the amount of the capital stock of the Hartford & New 
 Haven Railroad Company actually issued was $6,500,000, of 
 which amount $4,982,900, was for capital “ actually paid in,” 
 the remaining $1,517,100 being “ watered capital,” issued as 
 dividends to its stockholders, as follows, to wit : In 1864 a 
 
8 
 
 stock dividend was made to the stockholders amounting to 
 4,671 shares. In 1868, a further stock dividend was made 
 amounting to 3,000 shares. In 1870 or ’71, the stockholders 
 were allowed to subscribe, pro rata, to 13,000,000 of capital 
 stock, at the rate of 75 per cent, on its par value; which was 
 equivalent to a further stock dividend of 7,500 shares. 
 
 The above comprises all the stock dividends made by the 
 Hartford & New Haven Railroad Company, and amounts in 
 the aggregate at par, to $1,517,100, as follows : 
 
 In 1864 — 4,671 shares, or 
 « 1868—3,000 44 44 
 44 1870—7,500 44 44 
 
 $468,100 
 
 300.000 
 
 750.000 
 
 Total, 15,171 
 
 $1,517,100 
 
 A full statement of every distribution of stock to the stock- 
 holders, was made in the day and time of it, in the printed 
 annual reports of the directors to the stockholders, and your 
 committee do not find that any efforts were made to keep the 
 facts from the public. 
 
 New York & New Haven Railroad Company. 
 
 As to the first allegation made against the New York & 
 New Haven Railroad Company, your committee find : 
 
 That in 1867, this company reported 44 capital paid in since 
 last report,” (made up to 30th September, 1866,) was 
 $2,017,385, but in relation thereto, the committee further find* 
 that in this sum so reported to be paid in, was included 
 6,192 shares of stock issue by said company in 1864, under 
 express authority of the Legislature, in exchange for double 
 that number of the fraudulent shares issued by Schuyler, 
 which were surrendered and canceled, and also 13,369 shares 
 sold by the company in 1865 and 1866 to its stockholders, 
 pro rata, at $75 per share, the avails of which were used in 
 paying judgments obtained against the company, upon claims 
 growing out of said Schuyler frauds, and that said stock 
 was for the first time reported as paid in, in the report oi 
 the year 1867. 
 
9 
 
 Your committee find that the second allegation made 
 against the said railroad company is true. 
 
 In reference to the third charge against said railroad com- 
 pany, your committee find that the records sustain all except 
 the allegation that the amount of the loss by the “ Schuyler 
 fraud,” was included as part of the cost of the road, without 
 informing the stockholders of the fact. 
 
 During the year ending March 31, 1869, there was added 
 to the cost of the road, the sum of $1,772,868, the loss sus- 
 tained by the said railroad company, by the Schuyler fraud. 
 As this loss was no part of the legitimate cost of the road, and 
 represented a total loss to the company, the propriety of includ- 
 ing it in the assets of the company, is submitted, by your 
 committee, to the consideration of the House without com- 
 ment ; but we are of the- opinion that the fact, that it was so 
 added to the cost of the road, appears from the report made 
 to the stockholders after the said addition had been made. 
 
 And as to the 4th and 5th allegations, the committee find 
 that said company did report that it had a surplus, as alleged, 
 and that in computing that surplus, the company considered 
 said sum of $1,772,868, the loss so sustained by said com- 
 pany in consequence of said Schuyler frauds, an asset ; and 
 if said sum was improperly considered an asset, or improperly 
 charged to the cost of the company’s road, then the report of 
 said company would show that, instead of said surplus, the 
 capital of said company was impaired to the amount alleged ; 
 but whether the capital of said company was, in fact, impaired, 
 or whether said company declared dividends in violation of 
 said law, your committee are not informed. 
 
 And as to the 6th allegation, your committee find that it 
 has, substantially, the same foundation as the first allegation. 
 
 New York , New Haven & Hartford Railroad Company. 
 
 As to the several allegations against this company, the 
 committee find : That said company lias reported to the Rail- 
 road Commissioners as alleged, but in relation thereto, they 
 further find: That this " -poration was created by a consol- 
 idation of the Hartford & New Haven Railroad Company 
 2 
 
10 
 
 with the New York & New Haven Railroad Company, under 
 an act of the legislature of this state, passed in 1871, and 
 was authorized by said act to make its capital stock equal to 
 the aggregate of the capital stock of the companies out of 
 which it was formed. The capital stock of the Hartford & 
 New Haven Railroad Company actually paid in by the stock- 
 holders, together with that issued as dividends, as hereinbefore 
 found in relation to said company, amounted to $6,500,000 ; 
 and the capital stock of the New York & New Haven Railroad 
 Company actually paid in by the stockholders, together with 
 that issued for the adjustment of the claims growing out of 
 the Schuyler fraud, amounted to $9,000,000, making the total 
 amount of the two companies $15,500,000. The amount 
 of capital stock created by the consolidated company was 
 $15,500,000, which was exchanged, -share for share, with the 
 holders of the stock of the separate companies, and was 
 within the limits authorized by the consolidation act. At 
 the time that said exchange was made, the consolidated com- 
 pany paid to the several holders of the stock of the Hartford 
 & New Haven Railroad Company, the sum of $10.33 on each 
 share held by them, in order to fairly adjust the difference in 
 value of the stocks of the said two companies, which payment 
 amounted, in the whole, to the sum of $671,450, and was 
 equivalent to a dividend of that amount to the stockholders 
 of the Hartford & New Haven Railroad Company, which was 
 not reported to the Railroad Commissioners, but an account 
 of it was given by the said Commissioners in the body of 
 their report for the year 1872. 
 
 Danbury & Norwalk Railroad Company. 
 
 In regard to the charges made against the Danbury & 
 Norwalk Railroad Company, your committee find them to be 
 true. 
 
 Shore Line , Naugatuck , and New Haven & Northampton 
 Railroad Companies. 
 
 No one appeared before your committee in behalf of the 
 Shore Line, Naugatuck, and New Haven & Northampton 
 
11 
 
 Railroad Companies. After as thorough and complete an 
 examination as it was possible to make under the circum- 
 stances attending the investigation, and from an examination 
 of the report of the said companies, and from the testimony 
 of Mr. Goodwin, your committee are of the opinion that the 
 charges against said railroad companies are well grounded and 
 substantially true. 
 
 Railroad Commissioners. 
 
 In support of the first charge against the Railroad Com- 
 missioners, your committee were referred to the published 
 reports of the commissioners for the years named. A large 
 number of questions were found unanswered in those reports 
 as alleged. Such omissions, in the opinion of your committee, 
 deprive those reports of much of their value, as sources of 
 exact and complete information in regard to the railroad 
 companies of this State. No explanation of said omissions 
 was made to your committee. 
 
 In support of the second charge was presented a copy of a 
 communication, dated June 1, 1874, from Andrew Northrop, 
 then chairman of the Board of Railroad Commissioners, 
 addressed to the General Assembly. In said communication 
 Mr. Northrop states that no information of any violation of 
 law by the railroad companies in making their reports, had 
 been furnished to the commissioners ; but admits that an 
 unsigned communication had been left with them, alleging 
 that there was an incorrect statement in certain reports. 
 
 In regard to the third charge, we find it true that the com- 
 missioners declined to require the companies named to change 
 their returns in the particulars requested by the complainant, 
 but do not consider that it was a violation of law, because we 
 think that under the law referred to it was a matter within 
 the discretion of the Commissioners. 
 
 As to the fourth charge, your committee find that a construc- 
 tion of the law lias been accepted by the Commissioners, and 
 which they claim was given by the Legislature of 1875, which 
 construction is : “ that the amount of ‘ capital stock actually 
 paid in,’ means the amount of stock for which full paid cer- 
 tificates have been issued, without reference to the amount of 
 
12 
 
 cash paid for such certificates by the stockholders, but upon 
 which no further payment of capital can be called for.” Act- 
 ing in accordance with this construction of the law, the Com- 
 missioners issued to the railroad companies the instructions 
 mentioned in the fourth charge. Such a construction of the 
 law appears to your committee to be a perversion of language. 
 It renders the returns, as to the capital stock, and the man- 
 ner in which it is made up, if not corrected in some other 
 way, not only worthless, but mischievous in their tendency to 
 mislead. This the commissioners have recognized ; for while 
 seeming to favor this construction of the law (having adopted 
 it from the Railroad Commissioners of Massachusetts, before 
 the so-called construction by the legislature in 1875), they 
 interpolated into the schedule then in use certain questions, 
 in addition to those required by law, in the returns of railroad 
 companies under the head of “ Capital Stock ; ” which were 
 designed to obviate the evils resulting from such a construc- 
 tion of the law. 
 
 As to the fifth charge it is true that the commissioners in 
 the text of their report, for 1875, speak simply of the paid-in 
 capital, using the expression as equivalent to “ the amount of 
 full-paid capital stock issued.” 
 
 As to the sixth and last charge, we find that while it is 
 true that in the tables referred to is a column under the title 
 of Capital Stock,” headed “Amount paid in,” yet we also 
 find, that it is expressly stated that these tables are compiled 
 from the annual returns for 1874 of the railroad companies, 
 in which the expression “ capital stock actually paid in ” was 
 the form at that time, fixed by law, so that the column could 
 not properly have been otherwise headed ; and as the tables 
 only contained the principal items from these returns, it could 
 not be expected that the few instances of watered stock, so 
 called, would be tabulated. The attention of the General As- 
 sembly and of the public was called to the subject of “ watered 
 capital ” very fully by the commissioners in their report for 
 that year, two full pages having been devoted to the matter. 
 
 We therefore find that the charge that the commissioners 
 have “ suppressed and concealed the facts,” in regard to 
 watered stock, is unsupported. 
 
13 
 
 Watered Stock. 
 
 Your committee find that the following named companies 
 have issued so-called watered capital stock, for which no 
 equivalent was paid in money by the stockholders, to the fol- 
 
 lowing amounts, to wit : 
 
 
 Paid in 
 
 Watered 
 
 Total Capital 
 
 
 
 Capital. 
 
 Capital. 
 
 Issued. 
 
 Danbury & Norwalk Company, 
 
 1870. 
 
 $338,417 
 
 $261,583 
 
 $600,000 
 
 Shore Line Railway Company, 
 
 1870. 
 
 740,971 
 
 259,029 
 
 •1,000,000 
 
 Naugatuck Railroad Company, 
 
 1868. 
 
 1,227,375 
 
 591,525 
 
 1,818,900 
 
 New Haven & Northampton Co., 
 
 1874. 
 
 1,912,000 
 
 548,000 
 
 2,460,000 
 
 New York & New Haven Co , 
 
 1870. 
 
 5,047,375 
 
 952,625 
 
 6,000,000 
 
 Hartford & New Haven Co., 
 
 1870. 
 
 3,482,900 
 
 1,517,100 
 
 5,000,000 
 
 Total, - - - $12,749,038 $4,129,862 $16,878,900 
 
 The committee find that the issue of this watered capital 
 stock was concealed and covered up, by reporting it first as 
 “ paid in,” and afterwards as “ actually paid in,” and by a 
 re-valuation of the roads and other corporate property. 
 
 The committee do not find any law expressly authorizing 
 a railroad company to issue capital stock except for a u bond 
 fide investment of actual value,” but they are informed and 
 find that the Danbury & Norwalk Railroad Company issued its 
 watered capital stock under that clause of its charter which 
 permitted it to increase its capital stock $1,200,000, u the 
 same to be issued at such time and in such form and manner 
 as the stockholders * * * may direct.” 
 
 That the Naugatuck Railroad Company issued its $591,525 
 of watered capital under that provision of its charter that gave 
 to the directors of the company “ full power to make such 
 rules and regulations as they shall deem needful and proper 
 touching the disposition and management of the stock, prop- 
 erty, estate, and effects of said company, not contrary to the 
 laws of this State, or of the United States.” 
 
 That the New Haven & Northampton Company issued its 
 $548,000 of watered capital stock under that clause of its 
 amended charter passed in 1872, which authorizes it to in- 
 crease its capital stock $2,000,000, to be “ issued in such 
 manner as the directors of the company shall determine.” 
 
 (See Private Laws of 1872, p. 23.) 
 
14 
 
 New York & New Haven Railroad Company. 
 
 The original charter of this company passed in 1844, 
 authorized a capital stock of $3,000,000, and gave the direc- 
 tors full power to make such “ by-laws, rules and regulations, 
 touching the disposition and management of the stock as 
 they should deem needful and proper.’ 5 
 
 In 1855 an Act was passed authorizing the directors of the 
 New York & New Haven Railroad Company to settle and 
 compromise the claims growing out of controversies relating 
 to the fraudulent issues of stock by Schuyler. By the 
 terms of this law, the company was fully authorized and 
 empowered to issue $2,000,000 of additional capital stock, 
 “ in such way and manner, and upon such terms and condi- 
 tions as they may deem expedient, any law to the contrary 
 notwithstanding.” 
 
 In 1866 this company was authorized to increase its cap- 
 ital stock to an additional amount of $1,000,000, for the pur- 
 pose off paying of its bonds to the same amount. 
 
 In 1868 the company was further authorized to increase its 
 capital stock to an additional amount of $3,000,000. 
 
 The Hartford & New Haven Railroad Company. 
 
 The original charter of this company fixed the limit of its 
 capital at $1,000,000, and conferred upon the directors “ full 
 power to make such rules, by-laws and regulations as they 
 should deem needful and proper touching the disposition and 
 management of the stock of the company.” 
 
 In 1839 this company was authorized to add $200,000 to 
 the amount of its capital stock. 
 
 In 1842 a further increase of $500,000 was authorized. 
 
 In 1857 a further increase of $650,000 was authorized, not 
 to be sold at less than par. 
 
 In 1869 a further increase of $3,000,000 of capital stock 
 was authorized. 
 
 In 1845 the “ Branch Company ” was chartered with an 
 authorized capital stock of $100,000, for the purpose of con- 
 structing a branch road from the main line of the Hartford & 
 
15 
 
 New Haven Railroad in the city of Hartford to the Connecti- 
 cut River, with full power to make joint stock and consoli- 
 date with said Hartford & New Haven Railroad. 
 
 This consolidation was effected by the action of both com- 
 panies in 1850. 
 
 In 1844 the “ Middletown Railroad Company,” was 
 chartered with authority to construct a railroad from the 
 city of Middletown to the main line of the Hartford & New 
 Haven Railroad, with full power to consolidate and make 
 joint stocks with the latter company. The amount of the 
 capital stock was fixed in the original charter at 8100,000, 
 which in 1849, by act of the Legislature, was increased to 
 8250,000. 
 
 The Middletown Railroad Company was consolidated with 
 Hartford & New Haven Railroad Company by the action of 
 both companies in 1850. 
 
 In 1852 “ New Britain & Middletown Railroad Company ” 
 was chartered with an authorized capital stock of 8100,000, 
 which by act of the Legislature, passed in 1864, was increased 
 to 8150,000. 
 
 This company was consolidated with the Hartford & New 
 Haven Railroad Company, under the provisions of its charter 
 and by the action of both companies, in 1868. 
 
 In 1868 the “ Windsor Locks & Suffield Railroad Company ” 
 was chartered with an authorized capital stock of 8200,000, 
 with power and authority, under an amendment to its charter 
 passed in 1869, to consolidate and make joint stocks with the 
 Hartford & New Haven Railroad Company. This consolida- 
 tion was effected by action of both companies in 1871. 
 
 In 1885 the “ Hartford & Springfield Railroad Company ” 
 was chartered with an authorized capital stock of 81,000,000, 
 and under subsequent authority granted by the legislatures of 
 the States of Massachusetts and Connecticut, was authorized 
 to consolidate and make joint stocks with the Hartford & 
 New Haven Railroad Company. 
 
 This consolidation was effected by the action of both com- 
 panies in 1847. 
 
 The Hartford & New Haven Railroad Company therefore, 
 
16 
 
 prior to its consolidation with the New York & New Haven 
 in 1872, was a corporation made up from the following named 
 corporations, which had from time to time been merged into 
 and consolidated with it, viz. : 
 
 The Hartford & New Haven Railroad Company. 
 
 The Hartford & Springfield Railroad Company. 
 
 The Branch Railroad Company, Hartford. 
 
 The Middletown Railroad Company. 
 
 The New Britain & Middletown Railroad Company. 
 
 The Windsor Locks & Suflield Railroad Company. 
 
 The amount of capital stock which the Hartford & New 
 Haven Railroad Company up to the time of its consolidation 
 with the New York & New Haven Railroad Company, was 
 authorized to issue under its charter and amendments thereto, 
 and under the charters of the several corporations with which 
 it was consolidated under sanction of law, was as follows : 
 
 Capital stock authorized by original charter, - 
 “ “ amendment, 1839, 
 
 “ “ “ 1842, 
 
 “ “ “ 1857, 
 
 “ “ “ 1869, 
 
 Stock authorized by consolidation with — 
 
 The Branch Company, - 
 
 The Middletown Railroad Company, - 
 
 The New Britain & Middletown Railroad Company, 
 
 The Windsor Locks & Suflield Railroad Company, 
 
 The Hartford & Springfield Railroad Company, 
 
 $1,000,000 
 
 200,000 
 
 500.000 
 
 650.000 
 
 3.000. 000 
 
 100.000 
 
 250.000 
 
 150.000 
 
 200.000 
 
 1 . 000 . 000 
 
 Total stock authorized, .... $7,050,000 
 
 As to whether said companies are charging high rates 
 for the transportation of passengers and freight, the com- 
 mittee have been unable to ascertain, because they have not 
 time to go into that branch of the investigation. 
 
 Your committee find that the issuing of watered stock by 
 the said companies, enables them to conceal very effectually 
 from the public the amount of their earnings on the money 
 actually invested. 
 
 In conclusion your committee say that the investigation in 
 which they have been engaged, owing to the want of time, has 
 been in no respect as full and complete as they desired to make 
 
17 
 
 /■ 
 
 it. They have done what they could in the busy hours of a 
 closing session, towards accomplishing the work set before 
 them. They are sensible that the field is not exhausted. 
 
 No impediments were placed in the way of your committee. 
 Those to whom they applied for information responded witli 
 the utmost alacrity and cheerfulness. 
 
 Owing to the limited character of the investigations, your 
 committee are not prepared to recommend any legislation in 
 regard to the evils complained of. 
 
 All of which is respectfully submitted. 
 
 DWIGHT MARCY, 
 
 M. A. NICKERSON, 
 SAMUEL M. GARDNER, 
 EDWARD F. JONES, 
 CHARLES W. CLARK, 
 HORACE WHEELER, 
 GEORGE M. BLEVIN, 
 JOHN M. FORD. 
 
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