That this scheme was much more radical as well as more limited than the Olcott plan appears upon its face. No serious attempt was made to carry it into effect. On suggestion of General Thomas the stockholders’ meeting voted that a consulting committee of fifteen be appointed by the chair to confer with the committee of three, and then adjourned subject to call.[362] The enlarged committee found that application had been already made to Messrs. Drexel, Morgan & Co. by a number of prominent banking firms, asking that they enter upon the work of reorganization. It therefore dropped the Thomas plan and joined in the petition. Drexel, Morgan & Co. on their part agreed to undertake an examination of the Terminal property,[363] but four weeks later replied that while in their opinion a reorganization was feasible, the lack of assurance of support from Mr. Clyde made them unwilling to undertake the task.[364]
At this point efforts at reorganization were checked. One plan had failed, one had been formulated but not pushed forward, and the task of creating a third had been refused by the banking firm which was apparently best able to carry a plan to a successful conclusion. For a time now the field was left to the disputes between members of the Richmond Terminal family, which made up in bitterness for what they lacked in the matter of valuable result. Mention will be made only of the wrangles between the Central of Georgia and the other parts of the system.
The Central of Georgia had been placed under a receiver of its own some two weeks before the publication of the Olcott plan. Some months later this receivership was made permanent, and the Richmond Terminal was enjoined from voting the 42,200 shares of Central stock which it held. It can scarcely be said that the withdrawal of the Central of Georgia from the Terminal system was unwelcome to the latter. Already the Richmond & Danville had refused to carry out its guarantee on the Central’s stock unless that company should deposit bonds to cover an alleged sum due from it,[365] and President Oakman had hastened to inform General Alexander, the temporary Central receiver, that the Richmond & Danville would not operate the Central of Georgia after the end of the temporary receivership.[366] When, however, the Central not only insisted on withdrawal, but asked Judge Speer, of the District Court of Macon, Georgia, to appoint a receiver for the Richmond & Danville Railroad on the ground that that company was insolvent and was indebted to the Central in the sum of $2,459,670,[367] prompt action was made necessary. Application was made to Judge Bond of the Circuit Court for the Eastern District of Virginia, and on June 16 this magistrate appointed Messrs. F. W. Huidekoper and Reuben Foster receivers of the Danville road.[368]
“This appointment of receivers by Judge Bond,” explained the parties responsible,[369] “is not only not inimical to nor in opposition to any plan for the financial reorganization and rehabilitation of the Danville system, but will be found to greatly facilitate and aid any plan of reorganization, while if the Georgia court had obtained possession of and jurisdiction over the Danville system this would have been rendered practically impossible.... The necessity for such action,” they continued, with a touch of pathos, “will be further appreciated when it is known that for some weeks past the Richmond & Danville Company has not been able to keep either a dollar in bank or in its safes within the state of Georgia, because every such dollar has been attached or garnished by parties alleging claims against the company, and even the money sent by express for the liquidation of pay-rolls has been attached in the hands of the express company, and in every instance enormous bonds have been required to release such moneys....”[370]
The temporary securing of their position by the receivership allowed the Danville people to hit back at the Central in its weakest point—the details of the sale to the Terminal of the Georgia Central Company. On August 19 the Advisory Committee of Seventeen of the Terminal securityholders declared that the investigations of their sub-committee showed that certain trustees of the company, with their friends, had profited to the extent of between three and four million dollars in this operation.[371] Toward the end of the year tender of the Georgia Company stock and bonds was made back to the original vendors and was refused.[372] In December suit was begun to set aside the purchase on the ground that there had been no ratification sufficient in law or equity to bar the stockholders from cancelling the transaction. The plaintiff charged that “the said combination and plan so formed by and between its president and divers of its directors [referring to the purchase of the Georgia stock], confederating with the other syndicate defendants for the purpose of selling their unsalable and discredited securities to the plaintiff at such prices as yielded them an enormous profit and necessarily imposed on plaintiff a heavy yearly loss, was contrary to equity and good conscience, and that the pretended contract dated October 26, 1888, ... and all the acts done in pretended purchase of the stocks and bonds of said Georgia Company ... and the taking from the assets and money of the plaintiff of over $7,000,000 cash ... to put into the pockets of the said faithless directors, the syndicate defendants, and their confederates, were all acts planned ... and performed by said Inman, or under his direction, in the execution of such original fraudulent scheme, combination, purpose, and confederacy....” And so the plaintiff prayed the court to decree the contract of purchase void.[373]
These accusations and counter-accusations, justified though many of them were, had little direct bearing on reorganization. In this progress had completely ceased. At the same time some progress was urgently required. The Richmond Terminal, the Richmond & Danville, and the Central of Georgia were in the hands each of a different set of receivers, unpaid interest was piling up, and the year 1893 was to show a marked decline in earnings. Necessity and mutual distrust dictated a second appeal to Drexel, Morgan & Co. to undertake the rehabilitation of the property. On February 2, 1893, the following letter was addressed to the firm in question:
Messrs. Drexel, Morgan & Co.,
Gentlemen: Since the time you were previously requested to take up the reorganization of the Richmond Terminal system much time and thought have been devoted to its affairs, and we realize that adverse financial conditions and also the present general distrust of all plans for the restoration of this system require that, to be successful, its reorganization must be undertaken by parties possessing the confidence of both the securityholders and the public, and also the financial strength sufficient for its accomplishment. We therefore ask you to take up this reorganization of the Richmond Terminal and its allied properties, each pledging you our personal support and aid in full confidence that the securityholders will support us in this request.
We appreciate the labor and responsibility connected with this undertaking, and are therefore willing to do all in our power to give you full control of the reorganization, as suggested in your letter of June 28,[374] and to advise our friends and the securityholders generally to deposit their securities, without requiring the assurances customary in such cases.
Very respectfully,
Wm. P. Clyde,
Geo. F. Stone,
Wm. E. Strong,
J. C. Maben,
Thomas F. Ryan.
This letter was accompanied by a letter from F. P. Olcott, president of the Central Trust Company, pledging his support. Inasmuch as lack of the assurances contained in this correspondence had alone prevented Drexel, Morgan & Co. from undertaking the task proposed the previous year, their prompt though conditional acceptance was not surprising. A definitive engagement to attempt the work followed on April 12.[375] The enlistment of Drexel, Morgan & Co. in the reorganization provoked general satisfaction. Mr. Hollins, of the Central of Georgia reorganization committee, expressed his pleasure in having responsible parties to deal with not connected with any past differences.[376] The directors of the Richmond Terminal urged all classes of securityholders to deposit, and the Clyde Committee was emphatic in its recommendation. It was recognized that the situation was the most favorable which could be hoped for. No group of Southern railroad financiers seemed capable of producing a fair reorganization plan, and it was also probable that no plan from such a source, however fair, would have received a sympathetic welcome. Drexel, Morgan & Co., on the other hand, were both capable and sure of a hearing.
There was remarkably little delay in making public the Drexel-Morgan plan. Less than three weeks after their final acceptance of responsibility, though about three months after the correspondence of February 2, the firm published a comprehensive plan, to the examination of which the next few pages may be devoted. The principles of this plan of May 1, 1893, were simple, and were clearly and convincingly set forth. The property to be considered was to be that of the Richmond Terminal, the Richmond & Danville, and the East Tennessee. The Central of Georgia was to be omitted. The imperative needs of these properties the plan declared to be two:
First, the provision of a large sum for the physical improvement of the system;