European Capital, British Iron, and an American Dream: The Story of the Atlantic and Great Western Railroad

6. Pressing On, 1863

6. PressingOn, 1863 The Civil War created distrust of American investments, thus making it difficult for McHenry to raise capital. Nonetheless, he continued to demand more securities. Reynolds remained puzzled by McHenry’s position and maintained that the Pennsylvania company, for example, had forwarded securities far in excess of the work performed to date. The ongoing arguments between the two men did not stall expansion plans that raised new questions of management. While Reynolds insisted upon tighter control, McHenry and Kennard sought to increase their authority. And while he charged McHenry with mismanagement, Reynolds accused Kennard of incompetence in dealing with railroad leaders. Unless his colleagues changed their manner of conducting business, Reynolds threatened to resign. This internal strife did not prevent company officials from celebrating the running of the line to Meadville and Cleveland. TighteningControlofManagement Jan. 1. The line was opened to Warren. Jan. 5. The contract with McHenry for the Eastern Coal- fields Branch (Franklin Branch) was approved, and the president was authorized to deliver (by consent of Kennard, acting for McHenry) $65,000 of bonds of same as settlement be175
tween Thallon and McHenry, to Thallon, the trustees being instructed to retain a like amount in London. Jan. 6. The president reported execution of the above contract with McHenry, and the delivery of the $65,000 of bonds to Thallon. On same date the contract with the OC RR Co. for joint depot and track at Corry was approved. Jan 12. The capital stock of the Penna. company was increased 18,000 shares making an aggregate of 20,000 shares, $1,000,000. McHenry became very impertinent for additional securities for negotiation . The war necessarily created great distrust of American investments , and great difficulty was experienced in obtaining money. The enormous rise in the value of gold and our bond coupons being payable in New York in legal currency, caused the European holders to urge the payment in sterling.McHenry urged such payment. I opposed on the ground that the companies had no legal authority to make such change. It was shown that Ward had in the early negotiation made such promise, but in doing so exceeded his authority. About the middle of the month Kent sent forward $200,000 Ohio bonds to the trustees, being much in excess of what was due McHenry on work. Negotiations were opened for extension of the broad gauge to Toledo via Sandusky, which for a time promised successful result. Jan. 29. Kennard had for some time been sick at New York, and I this date left for that city, where I remained until February 8 in efforts to perfect the bonus contract with the Erie RR Co. and also negotiation with Struthers and Streator of the OC RR. The question of the construction of the machine shops at Meadville was at this time important. The executive committee met a committee of the citizens and proposed that the citizens should make subscription towards their erection. It was agreed that the citizens should subscribe $14,000 towards the same. (It may here be stated that very little was ever paid.) Extracts from letter to Kennard. January 21: “I am much perplexed with McHenry being now short of securities. The Ohio company, from Kent’s statements which I sent you, are in ad176 pressing on, 1863 vance of the stipulations of their contract $480,000, and but a comparatively small portion of their road finished.l.l.l.lAs a plain, straightforward business transaction between a company and their contractor, it is certainly asking of the company a very bold step, to make an increased advance of their securities.l.l.l.lHere (in Pennsylvania) the track is laid the entire distance.l.l.l.lYet even here the company has forwarded securities to the trustees far in excess of the work performed under the contract . “McHenry with his contract completed would be entitled for 91 miles main track at $33,000 $3,003,000 say 5 miles side track at $28,000 140,000 Total completed $3,143,000 The company has paid 1st mortgage $2,450,000 1st mortgage paid to Streator for transfer of PA contract 50,000 2nd mortgage sent forward 900,000 2nd mortgage to Streator as agreed 50,000 $3,450,000 “This, at 75 is $2,587,500 Stock sent forward (trustees) 500,000 Stock sent McHenry 65,000 $3,152...