PAPERS to I:KI-ATIX; TO THK STATE LOAN TO THK BOSTON, HARTFORD AND ERIE RAILROAD COMPANY. 1868. BOSTON: WRIGHT & POTTER, STATE PHINTKHS. No. 4 SPRING LANK. 1868. UCSB LIBRARY RELATING TO THE STATE LOAN BOSTON, HARTFORD AND ERIE (H prog. 6 BOSTON: WRIGHT & POTTER, STATE PRINTERS, No. 4 SPRING LANE. 1868. COMMUNICATION OF HIS EXCELLENCY GOVERNOR BULLOCK, TO THE HONORA.BLE C O TIIST C I L . COMMONWEALTH OP MASSACHUSETTS. EXECUTIVE DEPARTMENT, BOSTON, October 14, 1868. To the Honorable Council : The various matters which, by the act to aid the construction of the Boston, Hartford and Erie Kailroad, chapter 284 of the acts of 1867, must be made to appear to the satisfaction of the Governor and Council before the issue of any scrip, are recapit- ulated in the report of the Committee of the Council. Certain of these matters are required by the act to be made to appear to the satisfaction of the Governor and Council and the Attorney General ; and certain others to the satisfaction of the Governor and Council and the Commissioners appointed under the sixth section of the act. On the 31st of July, the Commissioners made an extended report upon the whole subject, and in conclusion expressed the opinion that, if the means and resources of the company should be honestly and judiciously used, and with a reasonable degree of energy, enterprise and economy, the road might be thereby constructed and moderately equipped, and they accordingly recommended the allowance, by the Governor and Council, of a loan of scrip for the work already done and equipment purchased. This report has been before the committee of the Council, and, with the documents which accompany it, is here- with submitted, marked A. These documents were transmitted to the Attorney General, with the request that he would report upon the various matters in which his concurrent action was required. His reply has been before the Committee of the Council, and is herewith submitted, marked B. It was quite obvious to my mind that it was the design of the legislature to secure the separate and responsible judgment of the Governor and Council upon each of the particulars named in the act as necessary to be shown. It also became early apparent that the principal questions concerning which doubts would exist, were, whether the requirements of the statute concerning the payment and cancellation of the mortgage debts secured by the underlying mortgages 'on that part of the road situate this side of Southbridge and "Willimantic were complied with, and whether the company has satisfactorily shown that they would be able, without further aid from this Commonwealth, to complete their line from Boston to Fishkill before May 27, 1872. Deeply impressed with the responsibility imposed upon me in respect to these questions, I have given my careful and per- sonal attention to the examination of the details which could throw light upon them. The attention of the Committee of the Council was called to the considerable discrepancy which was found to exist in the various statements of the bonds now outstanding, which are secured by the underlying mortgages above referred to. This discrepancy has been largely relieved by subsequent explana- tions ; and the recommendation of the Committee of the Council, that a bond with personal sureties should be required, in the penal sum of one million of dollars, to protect the fran- chise and property described in the Berdell mortgage from the uncancelled bonds, obviates the objections intimated in this report of the Attorney General, and dispenses with the neces- sity of a precise ascertainment of the number of bonds now outstanding, which indeed appears impracticable. The Committee of the Council also became satisfied that the company will be able to complete their line of road to Fishkill within the time specified by the act, without further aid from this Commonwealth, as appears by their report, which is here- with submitted, marked C. Wishing, however, rigidly to test the conclusion to which the Committee of the Council had come upon this latter subject, I addressed to the Commissioners a supplementary communica- tion, which expressed the doubts that still remained in my mind, and the want of full information, which, as it seemed. to me, still existed upon certain facts bearing upon the question ; and this communication, with the reply of the Commissioners, is also submitted herewith, marked D. By this reply, the validity of the acceptances of the Erie Railroad did not appear to be established, and I was not able quite to concur with the opinion of the Commissioners that it would seem a fair estimate to offset the accruing interest money, which the' company would apparently be obliged to pay, against the earnings of the road. Up to this time it had been assumed that the full time allowed by the Act for the completion of the road to Fishkill might be occupied in doing the work. It was obvious that an amount of about $3,000,000 would become due for interest before that time. By the last exhibit of the Commissioners, the sums to be paid by the com- pany exceeded their pecuniary resources, now within their control. There were also certain other matters of detail con- cerning which I desired further information. I therefore pre- sented certain inquiries to the officers of the company, which, with their replies thereto, and an accompanying opinion of Mr. Evarts, are herewith submitted to you, marked E. By these replies, it appeared that it is the purpose of the company to complete their line of road to Fishkill during the next year ; and, upon personal conference with Mr. Ashburner, one of the Commissioners, and himself a civil engineer of large experience in this kind of work, I am satisfied that this maybe done. This early completion of the road will greatly diminish the amount of interest to be paid. This opinion of Mr. Evarts was submitted to the Attorney General, and he deems it satisfactory to establish the liability of the Erie Railroad Company for the bonds which they have received, as appears by his letter hereto appended, and marked F. To this is added another communication, from the Attor- ney General, marked G. Upon the whole case, as thus presented, the question then remains, what rule is to be adopted as a guide by which to determine whether the company will be able to complete their line of road to Fishkill, without further aid from the Common- wealth ? Are they to be required to demonstrate mathemati- cally an actual present ability, from means now within their control, to meet the necessary disbursements ? Or, do they meet the requirement of the statute by making it appear to the satisfaction of the reason and conscience that in all human probability they will be able to accomplish the work ? Accept- ing the latter as the true rule, bearing in mind the valuation which the public have now for several months continuously put upon the shares of the company, and believing that this indicates the existence of a borrowing capacity on the part of the company yet remaining, which is equal to the difference between the required disbursements and their present actual means, I am prepared to submit for you decision the subjoined order. I have given to the subject long and patient investigation, an amount of time, care and thought by no means represented by the brief terms in which I have here stated my conclusion. I believe the documents hereto appended will sustain the result I have reached ; and I have confidence that the progress and completion of this road, and its future working operations, will confirm my opinion of its importance in the commercial rela- tions of the Commonwealth. ALEXANDER H. BULLOCK. Ordered, That upon the due cancellation of the bonds taken up by the Boston, Hartford and Erie Railroad Company, which were secured by the underlying mortgages referred to in chapter 284, section 2, of the acts of 1867, or the stamping of them in a form and manner to be approved by the Governor, so as effectually to prevent their being negotiated hereafter, such cancellation or stamping to be done under the direction of the commissioners, and upon the execution of a bond with per- sonal sureties to the satisfaction of the Governor and Council in the penal sum of $1,000,000, with condition as provided in the same section above referred to, and upon the execution of the agreement mentioned in section 3 of the same statute, and the delivery of the Berdell mortgage bonds therein pro- vided for, scrip of the Commonwealth shall be issued and delivered to the treasurer of that company to the amount of $100,000, to be expressed in the currency of Great Britain. [A.] To His Excellency GOVERNOR BULLOCK and the Honorable Council : The undersigned, having been appointed in pursuance of the Act of the General Court of May 27, 1867, among other things, " to advise and inform the Governor and Council in reference to all matters and things they are called upon to ascertain and verify under the terms and provisions of this Act," respectfully report that they have endeavored to ascertain the history and present condition of the various railroad corporations or roads which form constituent parts of the present corporation and road of the Boston, Hartford and Erie Railroad Company. They have had in view, also, the ulterior consideration, how far the Governor and Council and Commissioners should be satisfied that said railroad company will be able to complete a line of railway from Boston to Fishkill, and that the same will be completed within five (5) years from the passage of said Act. In making their investigations, the Commissioners have been aided in all things by the officers of the company, who have answered all inquiries and exhibited all documents and papers which the Commissioners have called for, without hesitation or apparent reserve. The various steps and measures which the Commissioners have taken to arrive at their results, they are induced to state, somewhat in detail, that the Governor and Council may be able the more readily to judge how far the conclusions to which the Commissioners have come are well founded. The Boston, Hartford and Erie Railroad, if completed as contemplated in said Act, will extend from tide-water in Boston by Blackstone, Willimantic, Hartford and Waterbury to Fish- kill, and from Providence by Plainfield to Willimantic, with a branch from Blackstone to Southbridge. A plan, which accom- panies this Report, will furnish an outline of these united lines between Providence and Fishkill. and Boston and Fishkill, with the branch to Southbridge. The plan will also show a line of chartered road, not yet begun, from Willimantic to New Haven, and one from Woonsocket to Putnam, upon which considerable work has been done, charters for which are held by the Boston, Hartford and Erie Company. A reference to this plan will also serve to explain the various Acts of incorporation, which it becomes necessary to refer to in this connection, in order to trace the history of the present corporation. Beginning with the part of the road which lies in Massachu- setts, the first Act seems to have been, incorporating Walpole Railroad from the Dedham Branch to Walpole, in 1846, (c. 231.) In 1847; (c. 252,) Norfolk County Railroad was incorporated from Walpole to Blackstone, and the Walpole Railroad authorized to unite with it, and, as the papers show, this was done. In 1849, (c. 194,) Southbridge and Blackstone Railroad, from Blackstone to Southbridge, was incorporated. In 1850, (c. 268,) the Midland Railroad was incorporated from the terminus of the Norfolk County Road to Boston, and this was authorized to unite with the Norfolk County and Southbridge Roads, which union appears to have been accom- plished in 1853 under the name of the " Boston and New York Central Railroad." In 1858,. (c. 60,) this united road took a new name under a new incorporation, viz. : " Midland Railroad Company." In 1861, (c. 155,) the "Midland Land Damage Company" was incorporated to assume the property, &c., of the Midland Railroad Company, which appears to have been done. And in 1863, (c. 116,) this corporation was changed to that of " South Midland Railroad Company," and this corporation was united with the Boston, Hartford and Erie road in 1863, as appears by their deed on record, which is referred to in the Act of 1865, (c. 275.) One other line of railroad in this State, which forms a part of what is embraced under the charter of the Boston, Hartford and Erie road, consists of the " Charles River Branch Rail- road," incorporated in 1849, (c. 170,) from Boston and Wor- cester Railroad in Brookline to Dover, and this was authorized to unite with the Charles River Railroad by an Act of 1851, (c. 297,) extending to Bellingham, under the name of the " Charles River Railroad." In 1855, this road was authorized (c. 105,) to extend its line to the line of Rhode Island, and to unite with a road incorporated in Rhode Island, called the New 2 York and Boston Railroad, and the union of these was con * firmed by Act of 1856, (c. 238.) Passing now to the parts of said road situate in Rhode Island, and chartered under the Acts of that State, the legislature, in 1846, incorporated a railroad called the " Providence and Plain- field Railroad," extending from Providence to Connecticut line, and in 1852 confirmed the union between that and the Hart- ford, Providence and Fishkill Railroad, chartered in Connecti- cut. The Hartford, Providence and Fishkill road was subse- quently united with the Boston, Hartford and Erie road in Connecticut, and this union was confirmed by Act of Rhode Island in 1865. In 1866, the legislature of Rhode Island authorized the Bos- ton, Hartford and Erie Railroad to locate and construct the railroad which had been granted to the Woonsocket Railroad Company to Pascoag and the line of Connecticut. In 1858, the legislature of Rhode Island confirmed what is called a union and merger of the Woonsocket Union Railroad with the New York and Boston Railroad in Connecticut, and recognized the union of these with the Charles River Railroad in Massachusetts, forming thereby one company, under the name of the " New York and Boston Railroad Company." The history of the parts of this railroad which are within the State of Connecticut appears to be as follows : In 1883, the " Manchester Railroad " was incorporated. la 1847, its charter was renewed under the name of " Hartford and Providence Railroad," and to extend its road to Williman- tic, and in 1848 it was authorized to extend its road to the eastern line of the State of Connecticut. In 1845, the New York and Hartford Railroad, from Hartford to the west line of the State, was incorporated, and in 1849 was united with the Hartford and Providence Railroad, under the name of " Hartford, Providence and Fishkill Railroad ; " this union was confirmed by Act of 1852. In 1846, the " New York and Boston Railroad " was incorpo- rated from New Haven through Middletown to the east line of the State, and in 1849 it was authorized to connect and unite with other roads. Upon the accompanying map, this road is laid down from New Haven to Willirnantic, but a part only of it has yet been wrought. In 1864, the legislature of Connecti- 11 cut extended the time of completing it, and renewed its char- ter. In 1857, " Thompson and Willimantic Railroad " was incorporated, uniting the lines or tracks of the Boston and New York Central with the New York and Boston Railroad. This is indicated upon the accompanying map as beginning at "Willi- mantic and extending through Putnam to meet the extended line of road from Boston to Blackstone. In 1863, the Boston, Hartford and Erie Railroad was incor- porated by the legislature of Connecticut, and was organized July, 1863. In July, 1863, the corporation purchased and acquired the property, franchise, i '..' 414,350 00 The Hartford, Providence and Fishkill Railroad issued upon mortgage, bonds to the amount of 2,055,000 00 To this is to be added arrears of interest, . . 170,000 00 And the Boston, Hartford and Erie Railroad, upon a mortgage made to the Treasurer of Connecticut, issued bonds to the amount of . 4,500,000 00 These make an aggregate of .... $9,904,650 00 This is independent of bonds issued by the Boston, Hartford and Erie Railroad Company, upon a mortgage of their entire 15 road and franchise to Berdell and others. This forms so im- portant a part of the means and resources of the road, that its character and condition should be more fully explained. The mortgage bears date of March 19th, 1866, and is conditioned to pay $20,000,000 in bonds, payable in the year 1900, with semi-annual interest at seven per cent, in New York or London, as the directors should authorize, and in the recital of the mortgage, these bonds are said to be issued for the purpose of providing for and retiring all existing mortgage debts and prior liens upon the line of the road, and for the purpose of com- pleting and equipping their road, and of laying down a third rail, so as to form an additional track corresponding with the gauge of the Erie Railway of New York. A copy of this mortgage forms a part of this Report. The legislature of Connecticut ratified and confirmed the making of this mortgage to Berdell and others in May, 1866. Rhode Island ratified the making of this mortgage, January, 1866, and New York, in April, 1866. The legislature of Massachusetts, in 1865, (c. 275) author- ized the Boston, Hartford and Erie Railroad Company to secure any bonds it had or might issue, by a mortgage upon its rail- way, franchise, &c., situated in Massachusetts, and in 1866, (c. 142) confirmed the doings of the company in the making of the mortgage to Berdell and others, with a view, as said Act will show, of these bonds being substituted, as far as necessary, for the bonds then outstanding against the prior companies which had held the parts of the road within the State of Massachusetts. The Act of 1867, (c. 284) under which these Commissioners were appointed, required that before any scrip should be loaned to the company, all underlying mortgages upon that part of the Boston, Hartford and Erie Railroad lying between the foot of Summer Street, in the city of Boston, and the town of Southbridge, in Massachusetts, and Willimantic, in Connecti- cut, should be cancelled and discharged to less than one million of dollars, and a bond given conditioned that the parts of said railway above mentioned should be protected from all such uncancelled bonds. The attention of the Commissioners was consequently called to the question how far this requirement had been complied 16 with by the company, and also what amount of indebtedness of said company, in bonds or otherwise, was now outstanding. By the affidavit of the Hon. J. C. Bancroft Davis, one of the trustees in the Berdell mortgage, it appears that there had been, on June 4th, 1868, thirteen thousand bonds, of one thou- sand dollars each, signed by said trustees, nine thousand three hundred and thirty-seven of which had been delivered to the Boston, Hartford and Erie Railroad Company.. The depositions of more than one of the trustees in the earlier bonds tended to show that a very considerable part of those had been surrendered to the Boston, Hartford and Erie Com- pany. Thus, J. W. Clark states that only $45,000 of those issued by the Boston and New York Central are outstanding, the balance being now in the possession of the Boston, Hartford and Erie Railroad Company, and ihat the entire amount issued by the South Midland Railroad Company are in the possession of the Boston, Hartford and Erie Company. Mr. J. W. Converse, a trustee of the Norfolk County Rail- road mortgage, states that nearly all the bonds issued upon that mortgage, and all of which he had obtained any informa- tion, are in the hands of the trustees, ready to be delivered to the Boston, Hartford and Erie road, under a satisfactory arrangement. Mr. H. N. Farwell states that all the bonds issued by the New York and Boston Railroad, and by the Charles River Railroad, except $65,200, are in the possession of the Boston, Hartford and Erie road ; and by a statement of the treasurer of the Boston, Hartford and Erie road, which is hereto annexed, it appears that the amount of said bonds which had been taken up before the date of the Berdell mortgage was $1,150,800, and since that, $5,963,000, leaving, of the above sum of $9,904,650 outstanding, $2,790,800, which includes also an item of interest outstanding of $170,000. Of this amount, the bonds of the Providence, Hartford and Fishkill Railroad con- stitute $2,055,000, on which the above item of interest is due. So that a sum clearly less than $1,000,000 remains outstanding upon any part of the road between Boston and Willirnantic or Southbridge. To ascertain what amount of said bonds had been taken up, and were in possession of the Boston, Hartford and Erie road, William Dehoi$l? .aSWjlrfSB^to- count and examine them, and his report ?Qjyj3j$h examination is herewith returned, showing that the aggregate, as counted by him, was $6,672,650, including an item of interest notes of $277,000, viz. : " To the Hon. GEORGE T. BIGELOW : "I hereby certify that I have personally examined and counted sundry bonds and mortgage notes exhibited to me by the treas- urer of the Boston, Hartford and Erie Railroad Company, as follows, viz. : " South Midland Railroad Company bonds amounting to three hundred and one thou- sand dollars, $301,000 00 "Norfolk County Railroad Company bonds amounting to four hundred and ten thou- sand seven hundred and fifty dollars, . . 410,750 00 " Boston and New York Central Railroad Com- pany bonds amounting to seven hundred and sixty thousand dollars, .... 760,000 00 " New York and Boston Railroad Company bonds amounting to eight hundred and eighty-five thousand nine hundred dollars, . 885,900 00 " Charles River Railroad Company bonds amounting to sixteen thousand dollars, . * 16,000 00 " Boston, Hartford and Erie Railroad Company bonds amounting to four millions and twenty-two thousand dollars, . . . 4,022,000 00 "New York and Boston Railroad Company mortgage notes amounting to two hundred and seventy-seven thousand dollars, . . 277,000 00 " Making in the aggregate, in bonds and notes, the sum of six millions six hundred and seventy-two thousand six hundred and fifty dollars, $6,672,650 00 " BOSTON, July 25, 1868." In either mode of computation, therefore, there appears to be considerably less than $1,000,000 outstanding upon that B 18 part of the road mentioned in the Act under which this Com- mission was created ; so that, in that respect, the Boston, Hart- ford and Erie Railroad appear to have complied with the pre- liminary conditions upon which a loan of scrip was to be made by the Commonwealth. In respect to the other subjects upon which the Commis- sioners were, by said Act, expected to report, one of them was, how far. in their judgment, the Boston, Hartford and Erie Railroad had within their command the means of completing a line of railway from Boston to the North River at Fishkill ? The treasurer states the present floating debt of the com- pany to be $1,022,988.31, and the interest notes given upon exchange of the mortgage bonds, $1,127,744.14. The old issue of bonds outstanding, including interest in arrears, $2,790,800. And to these are to be added the amount of the Berdell mortgage bonds, sold or exchanged, and therefore outstanding against the company, of $10,963,000, making an aggregate, independent of anything due upon the first class of claims mentioned in this Report, of $15,904,532.45. Of the assets or means at the command of the company, they hold, as stated by the treasurer, of the Berdell bonds not yet negotiated, the sum of $9,037,000, fifty thousand shares of capital stock not yet disposed of, cash on hand on deposit in bank, as certified by the cashier, $2,000,000, and acceptances of the Erie Railroad for $1,574,000. The above may be regarded as convertible means at the market prices of the bonds and stock of the company. The company has its road and its rolling stock, including the Hartford, Providence and Fishkill Railroad, above its mortgages, which, in the judgment of the Commissioners, may be fairly estimated at the sum of at least twelve million dollars, having reference to the present cost of such a road and equipment. But as these are not a present means of raising money, they are not taken into account in judging of the capacity of the company to complete the road. The company having reduced the mortgage upon the part of the road mentioned in the Act to less than $1,000,000, pro- pose to deposit with the Commonwealth, at once, the full amount in the Berdell mortgage bonds of $4,000,000, to which 19 the State by the Act would be ultimately entitled upon loan- ing its scrip to the contemplated amount of $3,000,000. Of the importance of the road, if completed, to the business of Boston and the State, it is no part of the duty of the Com- missioners to speak, except as it bears upon the probability of its being ultimately constructed and put in use. This undoubt- edly entered into the consideration of the legislature in pro- Tiding for a contingent loan of scrip. A glance at the map of New England and New York must satisfy any one that a road extending from Boston, through the region traversed by this road, and connecting directly with one of the great lines from the "West, could not, when once built, fail to be the avenue of an immense and constantly increasing trade and business. The Commissioners have no better means of forming a judgment upon this point, however, than the Governor 'and Council, nor can it be a present convertible means out of which the road can be constructed, though it may be an element of credit upon which the road may hereafter raise an additional loan, if it becomes necessary. In forming a judgment of the degree of confidence with which the Governor and Council may count upon the comple- tion of the road by the present company within the time pre- scribed by the Act, reference must be had, in no small measure, to the character of its management, in judgment, fidelity and energy, and skill on the part of its officers and managers. While the Commissioners have not gone into detail in respect to its present management, they have become satisfied that the enterprise is being carried forward with energy and a confident determination on the part of the president and directors, and that, if these are not suffered to be relaxed, the road may be completed within the time prescribed by the Act ; and should there be cause hereafter to apprehend a failure to comply with the requirement of the Act, it will be competent for the Gov- ernor and Council, by the terms of the Act, at any time to withhold further advances of the loan. The treasurer states that the present gross earnings of the road amount to the annual sum of $388,639.07, and that the value of the bonds and stock of the road is rising in the market as the work progresses. 20 The Commissioners have made the best estimate in their power of the probable cost of the road, as it has been projected, located and contracted for, including a moderate outlay for first equipment, which, for obvious reasons, it might not be policy to disclose in a public report, as they have meant to estimate it sufficiently high to meet the contingencies, and if published it might embarrass the company in making their contracts. They, however, have compared this estimate with the means and resources of the company, as exhibited above, and . they have come to the conclusion that, if honestly and judiciously used, and with a reasonable degree of energy, enterprise and economy, the road may be thereby constructed and moderably equipped. In conclusion, the Commissioners respectfully report that they are satisfied ? First, That the Boston, Hartford and Erie Kailroad Company have a good title to the franchise and rail- road as described above, between Boston and Fishkfil and Providence and Fishkill. Second, That the company have removed all underlying mortgage debt prior to the Berdell mortgage, upon that part of the road lying between Boston and Williamantic and Southbridge, except a sum less than $1,000,- 000, now outstanding thereon. Third, That the company have the means, if aided by a loan of the scrip of the State, as proposed, and if prudently and properly used and managed, by which to complete the road to Fishkill and provide a moderate equipment therefor ; and Fourth, That if prosecuted with reasonable energy and good faith, the company may complete said road within the time prescribed in the Act providing for said Commission. The Commissioners herewith make a recommendation for an allowance by the Governor and Council of a loan of scrip to the Boston, Hartford and Erie, for work already done and equipment purchased. All which is respectfully submitted. G. T. BIGELOW, EMORY WASHBURN, S. ASHBURNER, Commissioners.' BOSTON, July 31, 1868. 21 Condition of Bonded Indebtedness under the Mortgage to Robert If. Berdell and Others, of date of March 16, 1866, for $20,000,000. Amount of bonds exchanged for bonds issued by Boston and New York Central Railroad Company ; Norfolk County ; Southern Mid- land ; Charles River Branch ; New York and Boston ; Boston, Hartford and Erie, March 1, 1864 ; New York and Boston mortgage notes, $5,963,000 00 Sold in New York, 5,000,000 00 $10,963,000 00 Owned by corporation, and held to take up all underlying bonds, and for general uses of Company, $9,037,000 00 Floating debt, July 20, 1868, .... 1,022,988 31 Amount of notes given for overdue interest on exchanged bonds, and due Sept. 1, 1872, with interest after Jan. 1, 1870, .... 1,127,744 14 H. S. BARRY, Asst. Treas. I hereby certify that this covers the whole outstanding debts and liabilities on account of existing contracts. H. S. BARRY, Asst. Treas. SUFFOLK, ss. July 30, 1868. Subscribed and sworn to as true before me, G. T. BIGELOW, Commissioner, $<;., fyc. 22 Statement concerning Bonded Indebtedness on Franchise and Estate of Boston, Hartford fy Erie Railroad Company. Amount of bonds exchanged since mortgage to Berdell and others, $5,963,000 00 Amount taken up before then, . . . 1,150,800 00 $7,113,800 00 Present bonded debt outside of Berdell mort- gage, Hartford, Providence and Fishkill, . $2,055,000 Boston and New York Central, . 34,000 Boston, Hartford and Erie, mortgage of 1864, 477,000 New York and Boston, . . . 54,800 Amount of int'st on Hartford, Prov- idence and Fishkill bonds, . , 170,000 2,790,800 00 $9,904,600 00 Amount of indebtedness at issue of Berdell and other mortgages before then, . . ' . $9,904,600 00 Amount of bonded indebtedness resting on the franchise and property between foot of Sum- mer Street, Boston, and Southbridge in Mass. and Willimantic in Conn., . . . " : . 511,000 00 H. S. BARRY, Asst. Treas. BOSTON, July 25, 1868. SUFFOLK, ss. July 30, 1868. Subscribed and sworn to as true before me, G. T. BIGELOW, Commissioner. 23 To His Excellency the Governor and the Honorable Council of the Commonwealth of Massachusetts: The undersigned, Commissioners appointed under an Act of the legislature of said Commonwealth, passed on the 27th day of May, 1867, hereby certify that the " Boston, Hartford and Erie Railroad Company" have in their judgment expended, since the passage of said Act, in work upon new road and equipment belonging to them, the sum of two hundred thou- sand dollars ; and that this sum has been properly expended in the construction of new road and in the purchase of equipment. Dated at Boston, this 31st day of July, A. D. 1868. G. T. BIGELOW, EMORY WASHBURN, S. ASHBURNER, Commissioners. [B.] COMMONWEALTH OF MASSACHUSETTS. ATTOENEY GENERAL'S OFFICE, ) BOSTON, 30 COURT STREET, August 21, 1868. J To His Excellency the Governor : SIR : I have your letter asking me to report fully in writing to you, and as early as may well be, upon the various matters which, by the act of 1867, are to be made to appear to the satis- faction of the governor and council and attorney general, before granting the first instalment of the state loan to the Boston, Hartford and Erie Railroad Company ; and in reference thereto I beg leave respectfully to submit the following suggestions : No evidence as to these matters has been laid before me from any source, except the report of the commissioners. 1. The Berdell mortgage appears to have been duly exe- cuted ; but it does not appear that it has been duly recorded. 2. The official return of this company to the Common- wealth, published in January, 1866, shows that there were then nine existing mortgages covering some portions of their roads. The commissioners' report, if I understand it correctly, includes but eight. It does not appear whether or not any of the mort- gages have been cancelled or discharged of record. Certainly some of them have not been ; and it therefore remains to be shown that the mortgage debts secured by these underlying mortgages (and others, if there are others,) have been reduced to less than 81,000,000. The mode most satisfactory to me of showing this would be as follows : First, to ascertain in detail all the mortgages that have ever been made, covering any part of the roads ; the amount of bonds issued under each mortgage and secured thereby ; whether any other debt or obligation or duty involv- ing an expenditure of money is secured thereby ; what amount 25 of bonds secured by each mortgage has been taken up ; what amount now remains outstanding ; and what amount of interest is due on such as remain outstanding. Then, if the -bonds or other debts or duties secured by any mortgage have all been taken up, to have a discharge of every such mortgage duly entered of record. Finally, if the bonds or other debts secured by any mortgage have been only partially taken iip, to have a discharge pro tanto of every such mortgage duly entered of record ; that is, a discharge as to all such bonds or debts as have been taken up ; so that the security will only stand upon record as applicable to the outstanding bonds, debts or other duties. It may be that this course is impracticable, as to entering a a discharge pro tanto of record. In that case, it seems to me that the evidence should be precise, to show the number of bonds or other debts that have been taken up or satisfied, and that the same have been cancelled. At present, I am unable, from any facts within my knowl- edge, to make up such a statement in detail as to the number of mortgages that have been made, or the bonds or other debts or duties secured thereby, or the amount of bonds taken up, or the precise amount still outstanding and secured by each mort- gage, or the interest remaining due thereon. It does not appear that any of the bonds have been cancelled which have been taken up. 3. The commissioners certify that they are satisfied that the railroad company have properly expended $200,000 in the con- struction of new road and purchase of equipment, since the act of 1867 was passed. This certificate would be entirely satisfac- tory to me if by the true construction of the statute I deemed myself at liberty to accept their judgment, without knowing the facts upon which it is founded. But in my opinion it was the intention of the legislature that there should be an inde- pendent judgment of the governor and council and attorney general, founded upon a knowledge of the facts. I have the honor to be, Very respectfully, your obedient servant, CHARLES ALLEN. 26 [C.] COMMONWEALTH OF MASSACHUSETTS. COUNCIL CHAMBER, BOSTON, September, 1868. The Committee of the Council, to whom was referred the report of the commissioners appointed with reference to the loan to the Boston, Hartford and Erie Railroad Company, together with the report of the attorney general thereon, have considered the same, and herewith submit their Report : The requirements of the Act of the year 1867, chapter 284, to be complied with on the part of said company, to entitle them to the first instalment of scrip or certificates of indebted- ness, which compliance must be made to appear to the satisfac- tion of the governor and council and the attorney general, as also, in some particulars, to the commissioners, are as follows : 1. The due execution of the mortgage to Berdell and others, trustees. 2. The proper registry of said mortgage. 3. The discharge of all underlying mortgages upon the fran- chise and property of said company, lying between the foot of Summer Street, in Boston, and the towns of Southbridge, in Massachusetts, and Willimantic, in Connecticut ; or, that the mortgage debt secured by the underlying mortgages on said railroad between the points aforesaid has been reduced to less than one million of dollars ; and that a bond of said company, satisfactory to the governor and council, shall be deposited with the treasurer of the Commonwealth, conditioned that the franchise and property of the company between the points aforesaid shall be protected from all uncancelled bonds secured by the underlying mortgages aforesaid. 4. That the company has properly expended two hundred thousand dollars in construction of new road and in the pur- chase of equipment. 27 5. An agreement of the company, in form approved by the attorney general, and delivered to the treasurer of the Com- monwealth, conditioned that said company shall comply with the provisions of said Act, and indemnify and save harmless the Commonwealth, from all expenses incurred, or loss or dam- age on account of said scrip, and that said company shall and will well and truly pay the principal and interest of said scrip when the same shall become due and payable, and deliver as security for the performance of the conditions of said agree- ment $133,333.33^, in the bonds secured by the said Berdell mortgage, to and for every one hundred thousand dollars in scrip to be issued to the company. 6. No scrip to be issued unless it shall be made to appear, to the satisfaction of the governor and council and commissioners, that the company will be able, either alone or with the aid of other parties than this Commonwealth, to complete a line of railway from Boston to Fishkill, within five years from the passage of the Act. The Committee proceed to consider said requirements, in the order named, and to inquire as to the performance of these conditions on the part of the company, and their probable ability to complete the work. 1. It appears by the reports, both of the commissioners and the attorney general, that the Berdell mortgage has been duly executed. 2. We find, by a certificate made to us by the chairman of the commissioners, that said Berdell mortgage has been duly recorded. 3. We find it impracticable to require the cancellation and discharge of record of the underlying mortgages, inasmuch as there appears on all of them, with a single exception, to wit, that made by the South Midland Railroad Company, to be more or less outstanding bonds, as will more fully appear herein- after. We therefore proceed to consider the alternative pro- vision of the statute. And, first, as to the outstanding bonds secured by the under* lying mortgages ; and here the Committee seem to be compelled, in a great measure, to rely upon the report of the commis- sioners, who appear to have proceeded in the only practicable 28 mode to ascertain the facts, viz. : by obtaining certificates or depositions from the proper officers in the several registries of deeds and other places, in the several States where the property of the company is situated, stating the number and terms of all mortgages made by the respective corporations which have been united with and merged into the Boston, Hartford and Erie Railroad Company, and by the sworn statements of one or more of the trustees named in the respective mortgages, and also the sworn statements of the treasurer of said company. From these sources it appears that the mortgages and the bonds issued under the same upon the security of the road from Boston to Fishkill, and exclusive of those issued by the Hart- ford, Providence and Fishkill Company, are as follows : Boston and New York Central Railroad Co., . 8794,000 00 South Midland Railroad Co., .... 301,000 00 New York and Boston Railroad Co., upon one mortgage, 345,600 00 New York and Boston Railroad Co., upon another mortgage, . .' . . 1,287,70000 Charles River Railroad Co., . ( % j f . . 37,000 00 Norfolk County Railroad Company, . . . 414,350 00 Boston, Hartford and Erie Railroad Co., 1864, 4,500.000 00 Total, . . . . " ; ." . . $7,679,650 00 This is the amount of bonds issued upon what are called the underlying mortgages, and is exclusive of the indebtedness of the Providence, Hartford and Fishkill Railroad Company, which is not included in the direct line from Boston to Fishkill. The attorney general, in his report, calls attention to the report of the company made to the State in 1866, in which the number of mortgages is stated to be nine, and that the com- missioners speak only of eight. This is explained by the fact that there were two mortgages made by the Hartford, Provi- dence and Fishkill Company, both together amounting to $2,055,000, as stated by the commissioners, though treated by them as one mortgage. There is a discrepancy of a few thousand dollars between the amount of issued bonds, as stated by the commissioners, and the statement of the treasurer of the company. This difference 29 is explained by the commissioners thus : "When they found variations in the testimony of the witnesses as to the amount of bonds issued, which did occur in a single instance, they, by way of precaution, adopted the larger sum or amount. Of these bonds, it appears by the statement of William Dehon, Esq., who was employed by the commissioners to count the same, that the following bonds have been taken up by the Boston, Hartford and Erie Railroad Company, and are now held by them ready to be cancelled, viz. : South Midland Railroad Co., bonds, . . $301,000 00 Norfolk County Railroad bonds, . . . 410,750 00 Boston and New York Central bonds, . . 760,000 00 New York and Boston Railroad Co. bonds, . 885,900 00 do. do. notes, . 277,000 00 Charles River Railroad Co. bonds, . . . 16,000 00 Boston, Hartford and Erie Railroad Co. notes, 4,022,000 00 Total, $6,672,650 00 In addition to the bonds and notes counted by Mr. Dehon, it appears, by the sworn statement of Mr. Barry, assistant treas- urer, furnished to the Committee, and also by the evidence of Mr. Farwcll, one of the directors of the company, that $426,- 100 of the bonds of the New York and Boston Railroad Com- pany were never actually disposed of by the company, and are now in the custody of its treasurer, but were not counted by Mr. Dehon, though they were included by the commissioners as a part of the mortgaged indebtedness of the company. It appears, therefore, that these bonds should have been counted by Mr. Dehon. It further appears that since the count by Mr. Dehon the company has retired the additional amount of $47,900 of the outstanding bonds. Add these amounts to the bonds counted by Mr. Dehon and we have an aggregate of $7,146,650, thus leaving outstanding at this date bonds to the amount of only $538,000. The company believe the amount to be considerably less. The committee are satisfied from the evidence that the company has reduced the said indebtedness to less than $1,000,000. 30 The question of the bond to be given by the company next claims our attention. The second section of the statute pro- vides that in the event that the underlying mortgages are not cancelled and discharged, a bond of the company, satisfactory to the governor and council, conditioned that the franchise and property of the company, named and described in the Berdell mortgage, lying between certain points named in the Act, shall be protected from all such uncancelled bonds. What bond ought the governor and council to require ? The Committee are of opinion that a bond with sufficient sureties, satisfactory to the governor and council, in form such as the attorney general shall approve, in the penal sum of one million dollars, should be made and executed by the company and deposited with the treasurer of the Commonwealth. Before the issue of any scrip by the Commonwealth the bonds and notes aforesaid should be counted and cancelled, or other- wise stamped in such manner, satisfactory to the attorney general, as shall clearly indicate that they, are not further ne- gotiable, and certificates thereof made by the commissioners or under their direction, furnished to and deposited with the treas- urer of the Commonwealth. 4. We are abundantly satisfied by the evidence produced before us that the company has properly expended two hundred thousand dollars in the construction of new road and in the purchase of equipment, since the date of the passage of the Act. 5. It is unnecessary for the Committee to repeat the require- ments under the fifth head, as they relate solely to acts here- after to be performed to entitle the company to receive the scrip. 6. Will the company be able, either alone or with the aid of other parties than this Commonwealth, to complete a line of railway from Boston to Fishkill within five years from the pas- sage of the Act ? Of the 226 miles from Boston to Fishkill, there are now in operation 123.43 miles. The parts not in operation consist, first, of the line from Mechanicsville to Willi- mantic, 26.28 miles. This portion is under contract with a responsible party, and the work, we understand, is progressing satisfactorily, and will probably be completed in October, 1869. Second, the line from Waterbury to Fishkill, 7.6.39 miles. This 31 line is also under contract, and work thereon has been com- menced. Mr. Ashburuer expresses to the Committee his confi- dent opinion that the time allowed by law for the completion of the road to Fishkill is ample. From the careful estimate made up in detail by Mr. Ashburner, and furnished to the Committee, we find that the unfinished sections of the road can be com- pleted, with a moderate equipment, at a cost not to exceed 18,850,000. Of this sum, something more than $500,000 has already been paid by the company ; so that the sum required for the completion of the line may be stated, as an outside esti- mate, at the sum of $8,350,000. The floating debt of the company is stated to be, exclusive of certain disputed claims, mentioned in the commissioners' report, $1,022,988.31, and interest notes given in exchange of mortgage bonds, $1,127,744.14, which are payable in 1872 without interest. The available means of the company, upon which they rely to enable them to complete their road, may be stated briefly thus : Cash in bank, .... . $2,000,000 00 Acceptances of Erie Eailroad Company,. . 1,574,000 00 Berdell mortgage bonds, after deducting $4,000,000 for deposit with the State, and $533,000 for the redemption of outstanding bonds, estimated at 80 per cent, . . 3,632,000 00 50,0000 shares of capital stock, at $20, . . 1,000,000 00 If, to these amounts, we add the State loan, which, if granted; will be available from time to time as the work progresses, . . 3,000,000 00 We have, $11,206,000 00 In addition to this, the company has its road and rolling- stock, including the Hartford, Providence and Fishkill Railroad, above its mortgages, the value of which the commissioners estimate at not less than twelve millions of dollars. With these means, present and prospective, at the disposal of the company, without further statement of details, the Com- mittee cannot reasonably doubt their ability and determination 32 to complete a line of railway from Boston to Fishkill within the time limited by the Act of the legislature. The apparent interest of the company, also, to secure a speedy completion of the road, to enable their stock and bond- holders to reap the benefit of their investments, must form a powerful inducement to its officers to bend all their energies to the successful completion of the work. The Committee, therefore, recommend the issue of the first instalment of one hundred thousand dollars to the Boston, Hartford and Erie Railroad Company, upon the performance of the further conditions required by the aforesaid Act, in the manner herein before indicated. THOS. TALBOT. CHAS. ENDICOTT. PETER HARVEY. H. G. KNIGHT. R. G. USHER. 33 [D.] COMMONWEALTH OF MASSACHUSETTS. EXECUTIVE DEPART? BOSTON^ September 12 EXECUTIVE DEPARTMENT, ) , 1868. } To the Honorable Messrs. GEORGE T. BIGELOW and EMORY WASHBURN, and SAMUEL ASHBURNER, Esquire, Commission- ers, &{c., Sf-c. : GENTLEMEN : Your report upon the matters involved in the question of granting the loan of three million dollars to the Boston, Hartford and Erie Railroad Company was referred by me on its receipt to a committee of the Council. This com- mittee has prosecuted further inquiries upon the whole subject, and has now submitted its report. Their original report is herewith forwarded to you for your perusal, and as I do not wish to delay this question by making a copy I will thank you to return the same to me, together with the communication of the Attorney General which is also herewith transmitted to you. In endeavoring to satisfy myself whether the Boston, Hart- ford and Erie Railroad Company will be able, either alone, or with the aid of other parties than the Commonwealth of Massa- chusetts, to complete a line of railway from Boston to Fishkill within five years from the date of the passage of the Act of the legislature (May 27, 1867,) I desire to avail myself of the pro- vision of the sixth section of the Act, and ask from you advice and information somewhat more in detail than heretofore given, in respect to the disbursements necessary to be made by the company, and their resources. From the statement of Mr. Ashburner to the committee of the council, it appears that his estimate of the sum to be allowed for the completion of the line of railway, with a moderate equip- ment, is . ;. '." ;: '^'" V" . . 18,850,00000 5 34 To this sum it would appear that the following sums should be added, as existing debts of the company, irrespective of the Berdell bonds, and the other outstanding bonds : Floating debt, $1,022,988 00 Interest notes, i. irf^u .... 1,127,74400 Certain other debts, in round numbers, . . 75,000 00 $11,075,732 00 In order to ascertain whether the above sum of $11,075,732 correctly represents the approximate aggregate sum that the company will be called upon to meet, as liabilities, before the probable completion of their line of railway, will you inform me : 1. Whether for any reason now existing any deduction should be made from the above named sum ? 2. Whether the commissioners have so far investigated the other claims, referred to in their report, which have been pre- sented or are held against the company, described as " sundry indefinite claims for land " and " a claim made for certain alleged preferred stock in the Hartford, Providence and Fish- kill Railroad " as to be satisfied that they are in law invalid, and that the company will not have to pay out any considerable sum in contesting or compromising the same ; and the approx- imate amount of these claims, as made against the company ? 3. Whether the relations existing between the Boston, Hart- ford and Erie Railroad Company, and the Hartford, Provi- dence and Fishkill Company, will involve the payment of any sum by the former company, except the bonds secured by mort- gage upon the road of the latter company, amounting, for prin- cipal, to $2,055,000, and for interest to $170,000 ? 4. Whether under any existing contracts, or in order to carry out any other work or plan now projected, not em- braced in the completion of the direct line from Boston to Fishkill, the Boston, Hartford and Erie Railroad Company will be called on to pay out any sums of money ? as, for instance, in prosecuting work upon a railroad to New Haven, or upon any other branch road ? 5. Whether or not additions should be made to the other sums above referred to, for interest money, and if so, how 35 much ? Is it the case that upon the Berdell bonds already given out, interest is now running upon $5,000,000, and that interest will be due upon the remaining 85,963,000 in July, 1870, and semi-annually thereafter ; that interest will be due upon the interest notes given upon the exchange of bonds, to the amount of $1,127,744, on January 1st, 1870, and regularly thereafter ; and that interest is now running upon the floating debt of $1,022,988 ? Should not interest be added for the amount of bonds which may be issued by the State ? And are there any other items which ought to be taken into account in this connection, and what sum, in all, would it be proper to include, as probably necessary to be paid for interest, before the completion of the work ? Has any portion of the Berdell bonds been issued in sterling currency, and if so how much, and is the interest thereon payable in coin ? 6. Is it probable that the remaining original bonds now out- standing and secured by mortgage can be exchanged for Berdell bonds ? The resources of the company, which are relied upon to enable them to complete the railroad, so far as made known to me, appear to be the following : Cash, and acceptances of the Erie R. R., . $3,574,000 00 Amount expected from the State, . . . 3,000,000 00 Berdell bonds remaining after all necessary appropriations of them, .... 50,000 shares of stock of the company yet unissued, ....... Add amount already paid towards the construc- tion of the work, as appears by the report of Mr. Ashburner to the committee of the council, and which, therefore, should be deducted from his estimate of $8,850,000, . 500,000 00 In reference to the resources of the company, will you inform me I. Whether any items which can be reckoned in money, other than those above named, should, in your opinion, be taken into the account in estimating their ability to complete the work ; and, if so, what they are ? 36 2. Whether the cash, stated at $2,000,000, is now actually on hand, and at the present absolute disposal of the company ; and whether the acceptances, stated at $1,574,000, are absolute, or dependent upon any condition ; and whether there is any- thing to prevent the money from being realized on them at once ? I think it my duty to require the best evidence upon these points. I desire that the commissioners should have personal inspection of the acceptances, and give me their opinion whether payment of them can be enforced under the laws of New York. 3. What amount of the Berdell bonds will the company have available to be disposed of after making all necessary appropriations, of them ? At present, they appear to have sold or exchanged, V V' . . . .$10,963,00000 This leaves a balance of, . ' . . . $9,037,00000 There are required for the State, . . . 4,000,000 00 Balance, . ,, .. .... i( . $5,037,000 00 There appears to be a balance of other mortgage bonds now outstanding of $2,790,800, including those of the Providence, Hartford and Fishkill Railroad. Will not Berdell bonds to this amount be required under the terms of the mortgage, to be exchanged for all those other outstanding bonds ? Or, if not so exchanged, should not the amount of those outstanding bonds be added to the liabilities of the company ? 4. Whether, in your opinion, it is safe to assume that the balance of the bonds and the 50,000 shares of stock can and will be disposed of by the company at the present market rates ? 5. I will also thank you to mention any other consideration that may occur to you as bearing upon the question, whether or not the resources of the company are sufficient to enable them to meet the disbursements required for the completion of the railroad as contemplated by the statute. I remain, with great respect, Your obedient servant, ALEX. H. BULLOCK, Governor. 37 BOSTON, September 21, 1868. His Excellency A. H. BULLOCK, Governor, Sfc. : DEAR SIR : The undersigned, Commissioners, &c., have the honor to acknowledge the receipt of your Excellency's com- munication of the 12th instant, and hasten to reply to the several inquiries thereby propounded to them. In doing so, they return, as desired, your Excellency's com- munication, together with the report of a committee of the council, and the opinion of the attbrney general upon the sub- ject of a loan to the Boston, Hartford and Erie Railroad Company. To your Excellency's first and second inquiry, they answer, 1. That from the floating debt, $1,022,988, there should be deducted $418,553.46, the same having been paid since their former report, by applying a part of th $2,000,000 then on deposit for that purpose, as per annexed certificate of Mr. Barry. 2. That the item of interest notes, $1,127,744, has no con- nection with the present ability of the company to complete said road, because they do not, in the judgment of the commis- sioners, form any lien on the same. They do not carry inter- est until January 1, 1870, and are not due and payable until September 1, 1872, which is subsequent to the time when, by the Act, the road is to be completed to the Hudson River. 3. In respect to the item of $75,000 for " certain other debts,