PREFACE

It sometimes happens that experiences long since past seem to be repeated, and that knowledge apparently¹ forgotten proves again of service. This is illustrated² by the subject of railroad reorganization. In the years between 1893 and 1899 an imposing³ group of American railroads passed into receivers’ hands. In 1893 alone more than 27,000 miles, with an aggregate⁴ capitalization of almost $2,000,000,000, were taken over by the courts, and in the following years the amount was largely increased. Foreclosure sales aggregated⁵ 10,446 miles in 1895, 12,355 in 1896, and 40,503 between 1894 and 1898. Among the more important failures were those of the Richmond & West Point Terminal, the Reading, the Erie, the Northern Pacific, the Atchison, and the Baltimore & Ohio;—to say nothing of the Norfolk & Western, the Louisville, New Albany & Chicago, the Ann Arbor⁶, the Seattle, Lake Shore & Eastern, the Pecos Valley, and many other smaller lines.

The railroads which failed between 1893 and 1898 were subsequently reorganized. In order to restore the equilibrium⁷ between income and outgo the companies turned to their creditors⁸, and demanded the surrender of a part of the rights of which bondholders were then possessed⁹. This demand the creditors were forced to concede. Some of them yielded without legal compulsion, assenting¹⁰ to “voluntary reorganizations”; some insisted upon the sale of the property securing their loans, but without escaping the loss which fell upon their more pliant¹¹ associates. Much injustice¹² to individuals came to light at this time. Men who had invested in good faith were obliged to sacrifice their holdings through no fault of their own. The savings¹³ of years were swept away. The demand of the railroads was one, nevertheless, which the courts supported, and rightly. The companies could not be operated unless the creditors were deprived of part of their legal rights. At the same time, these rights no longer had a material basis on which to rest, and their surrender meant but the recognition of a loss which had already taken place.

Most of the reorganizations were completed by the year 1899. Since that date the improvement in railroad earnings¹⁴ has been marvellous.vi Gross earnings from operation were $1,300,000,000 in 1899, they were $2,300,000,000 in 1906, the last year for which the figures of the Interstate Commerce Commission are at present available. Total income, after the deduction¹⁵ of operating expenses, was $605,000,000 in 1899, and $1,046,000,000 in 1906. It is not to be wondered at that the distress¹⁶ of the years 1893–9 has not been duplicated during the years 1900–7. On the contrary, weak roads have had opportunity to strengthen their positions, and strong ones have spent enormous sums for improvements, and have declared liberal dividends¹⁷ besides. In no year save 1905 has the new mileage¹⁸ put into receivers’ hands been greater than 800 miles, and in but one has the mileage sold at foreclosure equalled that figure. Operating expenses have increased because the amount of business has exceeded the ability of the railroads to handle it. Equipment has been so inadequate¹⁹ as to provoke drastic legislation by the legislatures of many states; yards and terminals have been crowded until a prominent railroad officer has declared the expenditure²⁰ of over five billion dollars to be necessary to restore the equilibrium between facilities and traffic.

These conditions have caused the earlier problems of failure and reorganization to be lost to view. Nevertheless, the financial panic of October, 1907, and the recession in activity which has become more and more apparent since that time, have again brought these problems forward. The Seaboard Air Line, one of the important railroad systems of the South, failed on January 5, 1908. The Chicago Great Western followed three days later. The Detroit, Toledo & Ironton, the Chicago, Cincinnati & Louisville, the International & Great Northern, the Western Maryland, and the Macon & Birmingham have since been put in receivers’ hands. In all, the operation of 5938 miles of railroad, with a capitalization of nearly $415,000,000, and total liabilities of $462,000,000, has been taken over by the courts during the first ten weeks of 1908. Whether this is but the beginning of still more extended trouble it is of course impossible to say. There are a number of weak lines in the American railroad system, and the difficulty in obtaining credit is bound to reveal weaknesses where they exist. At present new loans have for some months been difficult to obtain, and even strong railroads have resorted to the issue of short time notes. The Erie, indeed, escapedvii bankruptcy²¹ on April 8, 1908, only through the timely aid of important bankers who took up its maturing notes. This points to serious consequences for the weaker lines. It is true, on the other hand, that American railroads are generally in better financial and physical condition than they were in 1893. It is not probable that any railroad collapse²² will be so widespread now as it was then. Whether this be so or not, the failure of nearly 6000 miles of railroad in ten weeks invests reorganization problems at present with an importance which they have not had for ten years. How, it will be asked, shall the financial operations necessary to reorganization be performed? What methods shall be adopted, what dangers avoided, and what results expected?

The experience of earlier years will provide answers to many of the questions asked in 1908. In the hope, therefore, that a study of railroad reorganization, on which the author has been intermittently²³ engaged during the last six years, will prove of service, the following pages have been published. They discuss in some detail the financial history of the seven most important railroads which failed from 1892–6, and that of one railroad, the Rock Island, which was reorganized in 1902; and summarize in a final chapter the characteristics of the various reorganizations in which these roads have become involved. In some respects the history of each road considered is peculiar²⁴ unto itself. The Reading had coal to sell, the Atchison did not. The Southern ran through a sparsely²⁵ settled country, the Baltimore & Ohio through a thickly settled one. The Erie has never recovered from the campaigns of Gould, Drew, and Fisk from 1864–72, the Northern Pacific was not opened until 1883. In other respects, however, the roads have had much in common. Excepting only the Rock Island, each of them has found itself at one time or another unable to pay its debts, and has had to seek measures of relief. The problems of the different companies at these times have been strikingly alike. However caused, their financial difficulties have been expressed in high fixed²⁶ charges, and, usually, in excessive floating debts. Greater annual obligations have been assumed than the roads could meet, and current liabilities have accumulated while pressing demands have been satisfied. To this state of affairs the remedy has been sought in comprehensive exchanges of old securities for new. The exchanges, it is true, haveviii been carried out in different ways, and the collateral²⁷ expedients²⁸ employed have not been the same. To similar problems different solutions have been applied²⁹. It is possible, for this very reason, for a careful study of the alternative reorganization methods which have been developed to point out some policies which have been dangerous, and to make clear others which are both just, and likely to be successful. Such a study also throws light upon the history of the companies upon which it is based.

For the way in which the different roads have been handled, the reader is referred to the text. The order of treatment is very roughly determined³⁰ by geographical³¹ location; that is, the Eastern roads are first considered, then the Southern, and then the Western. Each chapter, except the last, should be examined as a “case” in reorganization experience, and as part, therefore, of a united whole. No one has been so continuously with his work as the author himself, and no one can more keenly realize its defects. It is offered as a contribution in a field in which very little has as yet been done, and it is hoped that it will prove of value to those concerned with reorganization plans, as well as to those interested in the development of corporation finance during the last generation.

Without the unselfish and intelligent assistance of the writer’s Mother, the preparation of this book would have been long delayed. To her, first of all, thanks are due. To Professor William Z. Ripley, of Harvard University, should be made warm acknowledgment of his constant interest and helpful suggestions. To the Carnegie Institution the author is indebted for grants in aid of research in this special field. Grateful acknowledgment should also be made of gifts by friends of the University to cover the expenses of publication.

1 apparently   

adv.显然地；表面上，似乎

参考例句：

• An apparently blind alley leads suddenly into an open space.山穷水尽，豁然开朗。
• He was apparently much surprised at the news.他对那个消息显然感到十分惊异。

2 illustrated   

adj. 有插图的，列举的 动词illustrate的过去式和过去分词

参考例句：

• His lecture was illustrated with slides taken during the expedition. 他在讲演中使用了探险时拍摄到的幻灯片。
• The manufacturing Methods: Will be illustrated in the next chapter. 制作方法将在下一章说明。

3 imposing   

adj.使人难忘的，壮丽的，堂皇的，雄伟的

参考例句：

• The fortress is an imposing building.这座城堡是一座宏伟的建筑。
• He has lost his imposing appearance.他已失去堂堂仪表。

4 aggregate   

adj.总计的，集合的；n.总数；v.合计；集合

参考例句：

• The football team had a low goal aggregate last season.这支足球队上个赛季的进球总数很少。
• The money collected will aggregate a thousand dollars.进帐总额将达一千美元。

5 aggregated   

a.聚合的，合计的

参考例句：

• He aggregated her to a political party. 他吸收她参加一政党。
• The audiences aggregated a million people. 观众总数达100万人。

6 arbor   

n.凉亭；树木

参考例句：

• They sat in the arbor and chatted over tea.他们坐在凉亭里，边喝茶边聊天。
• You may have heard of Arbor Day at school.你可能在学校里听过植树节。

7 equilibrium   

n.平衡，均衡，相称，均势，平静

参考例句：

• Change in the world around us disturbs our inner equilibrium.我们周围世界的变化扰乱了我们内心的平静。
• This is best expressed in the form of an equilibrium constant.这最好用平衡常数的形式来表示。

8 creditors   

n.债权人，债主( creditor的名词复数 )

参考例句：

• They agreed to repay their creditors over a period of three years. 他们同意3年内向债主还清欠款。 来自《简明英汉词典》
• Creditors could obtain a writ for the arrest of their debtors. 债权人可以获得逮捕债务人的令状。 来自《简明英汉词典》

9 possessed   

adj.疯狂的；拥有的，占有的

参考例句：

• He flew out of the room like a man possessed.他像着了魔似地猛然冲出房门。
• He behaved like someone possessed.他行为举止像是魔怔了。

10 assenting   

同意，赞成( assent的现在分词 )

参考例句：

• In an assembly, every thing must be done by speaking and assenting. 在一个群集中，任何事情都必须通过发言和同意来进行。
• Assenting to this demands. 对这个要求让步。

11 pliant   

adj.顺从的；可弯曲的

参考例句：

• She's proud and stubborn,you know,under that pliant exterior.你要知道，在温顺的外表下，她既自傲又固执。
• They weave a basket out of osiers with pliant young willows.他们用易弯的柳枝编制篮子。

12 injustice   

n.非正义，不公正，不公平，侵犯（别人的）权利

参考例句：

• They complained of injustice in the way they had been treated.他们抱怨受到不公平的对待。
• All his life he has been struggling against injustice.他一生都在与不公正现象作斗争。

13 savings   

n.存款，储蓄

参考例句：

• I can't afford the vacation,for it would eat up my savings.我度不起假，那样会把我的积蓄用光的。
• By this time he had used up all his savings.到这时，他的存款已全部用完。

14 earnings   

n.工资收人；利润，利益，所得

参考例句：

• That old man lives on the earnings of his daughter.那个老人靠他女儿的收入维持生活。
• Last year there was a 20% decrease in his earnings.去年他的收入减少了20%。

15 deduction   

n.减除，扣除，减除额；推论，推理，演绎

参考例句：

• No deduction in pay is made for absence due to illness.因病请假不扣工资。
• His deduction led him to the correct conclusion.他的推断使他得出正确的结论。

16 distress   

n.苦恼，痛苦，不舒适；不幸；vt.使悲痛

参考例句：

• Nothing could alleviate his distress.什么都不能减轻他的痛苦。
• Please don't distress yourself.请你不要忧愁了。

17 dividends   

红利( dividend的名词复数 )； 股息； 被除数； （足球彩票的）彩金

参考例句：

• Nothing pays richer dividends than magnanimity. 没有什么比宽宏大量更能得到厚报。
• Their decision five years ago to computerise the company is now paying dividends. 五年前他们作出的使公司电脑化的决定现在正产生出效益。

18 mileage   

n.里程，英里数；好处，利润

参考例句：

• He doesn't think there's any mileage in that type of advertising.他认为做那种广告毫无效益。
• What mileage has your car done?你的汽车跑了多少英里？

19 inadequate   

adj.(for,to)不充足的，不适当的

参考例句：

• The supply is inadequate to meet the demand.供不应求。
• She was inadequate to the demands that were made on her.她还无力满足对她提出的各项要求。

20 expenditure   

n.(时间、劳力、金钱等)支出；使用，消耗

参考例句：

• The entry of all expenditure is necessary.有必要把一切开支入账。
• The monthly expenditure of our family is four hundred dollars altogether.我们一家的开销每月共计四百元。

21 bankruptcy   

n.破产；无偿付能力

参考例句：

• You will have to pull in if you want to escape bankruptcy.如果你想避免破产，就必须节省开支。
• His firm is just on thin ice of bankruptcy.他的商号正面临破产的危险。

22 collapse   

vi.累倒；昏倒；倒塌；塌陷

参考例句：

• The country's economy is on the verge of collapse.国家的经济已到了崩溃的边缘。
• The engineer made a complete diagnosis of the bridge's collapse.工程师对桥的倒塌做了一次彻底的调查分析。

23 intermittently   

adv.间歇地；断断续续

参考例句：

• Winston could not intermittently remember why the pain was happening. 温斯顿只能断断续续地记得为什么这么痛。 来自英汉文学
• The resin moves intermittently down and out of the bed. 树脂周期地向下移动和移出床层。 来自辞典例句

24 peculiar   

adj.古怪的，异常的；特殊的，特有的

参考例句：

• He walks in a peculiar fashion.他走路的样子很奇特。
• He looked at me with a very peculiar expression.他用一种很奇怪的表情看着我。

25 sparsely   

adv.稀疏地；稀少地；不足地；贫乏地

参考例句：

• Relative to the size, the city is sparsely populated. 与其面积相比，这个城市的人口是稀少的。 来自《简明英汉词典》
• The ground was sparsely covered with grass. 地面上稀疏地覆盖草丛。 来自《简明英汉词典》

26 fixed   

adj.固定的，不变的，准备好的；(计算机)固定的

参考例句：

• Have you two fixed on a date for the wedding yet?你们俩选定婚期了吗？
• Once the aim is fixed,we should not change it arbitrarily.目标一旦确定，我们就不应该随意改变。

27 collateral   

adj.平行的；旁系的；n.担保品

参考例句：

• Many people use personal assets as collateral for small business loans.很多人把个人财产用作小额商业贷款的抵押品。
• Most people here cannot borrow from banks because they lack collateral.由于拿不出东西作为抵押，这里大部分人无法从银行贷款。

28 expedients   

n.应急有效的，权宜之计的( expedient的名词复数 )

参考例句：

• He is full of [fruitful in] expedients. 他办法多。 来自《现代英汉综合大词典》
• Perhaps Calonne might return too, with fresh financial expedients. 或许卡洛纳也会回来，带有新的财政机谋。 来自辞典例句

29 applied   

adj.应用的；v.应用，适用

参考例句：

• She plans to take a course in applied linguistics.她打算学习应用语言学课程。
• This cream is best applied to the face at night.这种乳霜最好晚上擦脸用。

30 determined   

adj.坚定的；有决心的

参考例句：

• I have determined on going to Tibet after graduation.我已决定毕业后去西藏。
• He determined to view the rooms behind the office.他决定查看一下办公室后面的房间。

31 geographical   

adj.地理的；地区(性)的

参考例句：

• The current survey will have a wider geographical spread.当前的调查将在更广泛的地域范围內进行。
• These birds have a wide geographical distribution.这些鸟的地理分布很广。