It was a stupendous scheme…Mad Men & their Big Ideas. pII.

Joan & Peggy

WHAT WILL HAPPEN? Mad Men season 6 closes. What a designee show! Turns out Don Draper is a preservationist?  Mathew Weiner certainly is.  Our last entry mentioned Herbert Matter‘s swanky style so much part of the Mad Men details. All over the NYC Metro was Matter.  All over the place, from the New Haven Line’s trains and stations, to the magazine and catalog press so influential to the time.

Matter EP-5 Seeing Matter’s ideas of the brave new world recalls season 3 episode 2, ‘Love among the ruins. “The creator and stars of Mad Men talk about the juxtaposition of personal stories with the historical story of the demolition of Penn Station in episode 302.”  A client is looking to scrap Penn Station for the new Madison Square Garden. Draper- “Change can be greeted with terror or joy, a tantrum that says ‘I want it the way it was,’ or a dance that says, Look, something new!

All along ole J.P. Morgan’s ole New Haven Line, new was all over the place.  Through a collaboration with the design gods at Knoll, the New Haven boasted Herbert Matter’s graphics over everything from shiny new locomotives to barges, baggage wagons to spent oil drums. Marcel Brauer was designing New Haven trains, Eero Saarinen, New Haven stations. Stations from J.P.’s era were receiving bold new paint jobs.

Greenwich Saarinen

 

 

 

 

 

 

 

 

 

 

While the main lines, the Metropolitan Corridor, pulsed with energy and sophistication- design, cosmopolitanism touched the sleepier hamlets of New England. Things were new.

For people like Jessica Helfand, the Metropolitan Corridor inspires. Her Falls Village, Ct home is today “unfazed by progress and untethered to any visible signs of commerce. (The closest Starbucks is nearly an hour away.) … but the impact of industry, of communication and  technology is no less felt by its inhabitants, many of whom remember a time when a train came through here, carrying freight and passengers up and down the Eastern seaboard. ”

Our last entry ended with an earlier New Haven, earlier Mad Men touching on sleepy hamlets of New England. Assuredly, in northern Connecticut, in the early 1890′s, the countryside buzzed with metropolitan excitements. Back then, the New Haven line “was compelled to enter Boston, or to recieve passengers at Springfield fromBoston, by means of a traffic agreement with the (Vanderbilt controlled) Boston and Albany Railway system.”  Mr. Morgan was a New Haven director and desired an independent entrance into Beantown.

On every VIADUCTgreene tour we make a point that the P&R’s great Terminal, it’s headhouse and trainshed (the one Philadelphia Planning wanted torn down once) (thank goodness that DIDN’T happen) weren’t built for the Chestnut Hill Local. Or trains to Shamokin. Or even to New York.

His scheme startled New England.”  “The modern Napoleon of railroad combinations.”  “He entered their territory with a sort of brass band and torchlight accompaniment and seized property to the right and to the left with the sang froid and assurance of a Roman commander. Fogyish bankers and holders of railroad securities rubbed their eyes in astonishment and pinched their flesh to make sure that the sensational achievements of Mr Corbin’s former clerk and factotum were not figments of the presiding genius of dreamland.”  Meet a Madman – Archibald Angus Mcleod…

Archibald Angus McLeod

X6didMAY. 1902.

“Archibald Angus McLeod, who was one time a conspicuous figure in railway and financial circles, died in New York last month. Mr McLeod was for many years associated with the late Austin Corbin and was advanced by that astute financier to be president of the Philadelphia & Reading Railroad system. While holding that position, Mr McLeod conceived the idea of combining all the anthracite carrying railroads into a “community of interest” arrangement for offensive and defensive purposes. It was a stupendous scheme and he succeeded in securing control of the Central Railroad of New Jersey and of the Lehigh Valley Railroad. When he tried to obtain control of Delaware Lackawanna & Western he against financial interests that resented enterprise of this comparatively new comer in the financial field and their influence was sufficient to wreck Mr McLeod’s plans. That interrupted what was previously a career of conquest and Mr McLeod’s railroad career, but greatly extended “community of interest” schemes were subsequently carried out, although it was never admitted that Mr McLeod was the originator of the idea.”

“I would rather run a peanut-stand than be dictated to by J.P. Morgan.” -Archibald Angus McLeod

“Many newspapers and a large portion of the public enthusiastically welcomed the combination. It was to break the galling yoke of the Pennsylvania, to benefit the old town of Penn in countless ways, and to lead the Reading from the barren sands of previous receiverships to the Mecca of dividends …”The only reason President McLeod did not carry the war into Africa was that the Pennsylvania railroad has no lines in Africa.”  Switchman’s Journal. March,1893

A retrospective piece:

from Moody’s Magazine. Janurary, 1907

THE READING CRASH IN 1893  by Wolcott Drew

IN the years 1892 and 1893 an attempt was made to found a mighty and far-reaching Eastern railroad system to employ its power at once to extend its prestige and destroy its financial enemies.  Probably this effort to control the anthracite coal field, its markets and its prices and to form and weld together a system touching Philadelphia, New York, Buffalo, Boston and the boundaries of Canada has, for boldness and energy in the face of odds never been equalled.

February, 1886, the Philadelphia and Reading Railroad, which had before been in financial difficulties, was again reorganized by a syndicate headed A.J. Drexel and J.P. Morgan. Under the plan of reorganization there were three series of preference income bonds,  the interest on which was payable out net earnings immediately after the satisfication of the fixt charges.

In January 1888 the road left hands of the receivers and in June, 1890, came under the presidency of Arthur (sic. it’s Archibald)  A. McLeod.  The stock was then held in voting trust expiring August 1, 1892. The actual ownership of about 300,000 shares was held in a pool composed chiefly of Mr McLeod, Thomas Dolan, John W. Gibson, Joseph F. Sinnott and John Wanamaker, all well known Philadelphia citizens.

Mr McLeod’s early career had involved a long experience of railway matters and, as a manager of the Reading, he had acquired the reputation of one of America’s foremost railway men. McLeod saw clearly the vast possibilities involved in making the Reading road the arbiter of the anthracite field. The Reading Railroad then handled and owned its coal by means of the Philadelphia and Reading Coal and Iron Company which it owned; but, tho the gross earnings of this latter company were enormous, they were always nearly or wholly used up by the operating expenses. McLeod put his ideas before Mr Drexel, of the A.J. Drexel & Co., for financial backing and his first plans, including the building of the present Reading Terminal in Philadelphia, were approved by the banking house.

To obtain the wisht-for control of the anthracite field, Mr McLeod’s first step was in the Schuylkill region whence comes the Reading coal. Negotiations were instituted which gave the Reading control, by lease, of the Lehigh Valley Railroad and of the Central Railroad of New Jersey, early in 1892.  About the same time it was announced that the Reading had a large interest in the Lackawanna and that the Erie, the Ontario and Western and the Pennsylvania – the three other coal roads – would work in perfect harmony with the Reading management.

Arrangements were now made for advances in coal prices on a scale which, to obtain complete control of the situation, the Reading made agreements with the principal coal operators to buy their coal at a satisfactory percentage of its tide-water price. The announcement of this agreement caused a great boom in the stocks of the coal roads and Reading stock, of which there was $40,000,000, touched 65 on the New York Stock Exchange $32  per share).

There seems to have been some “gentlemen’s agreement” between McLeod and his associates and the Pennsylvania Railroad and Erie interests, by which the production of coal in the Schuylkill region should not be stimulated during the proposed advance in prices, but that the latter roads, drawing their tonnage from the Wyoming region, should be allowed to encourage production as they saw fit.  Certain it is that the total produst of coal, during 1892, from the Schuylkill region was not augmented, while that from the Wyoming region was very sensibly so. In other words, the coal combination did not increase the tonnage of the Philadelphia and Reading. But secondly, the combination did very greatly increase the amount of coal owned by the Reading road and, by the middle of the year, the necessity of finding a ready market for their coal caused the Reading management to take the steps which ultimately lead to the crisis in the history of the road.

At this time it appeared that, if proper railroad connections could be made, the Reading would be able to obtain a ready and lucrative coal market in New England.  That this step would arouse the hostility of the New York New Haven and Hartford Railroad interests, including the firm of J.P. Morgan & Company, must have been a foregone conclusion.  It was also evident that Mr A.J. Drexel, the Philadelphia partner of Mr. Morgan, could scarcely, under these circumstances, continue to back Mr McLeod’s plans.  The latter, however, went ahead being supported by the members of the Reading pool, already referred to.  In February, 1892, the Reading purchased control of the Philadelphia, Reading, and New England Railroad, better known as the Poughkeepsie bridge system.  The acquirement of this system gave the Reading an entrance into New England as far as Hartford and Springfield.  At that time control of the Boston and Maine Railroad was held by Frank Jones and his associates.  The Reading pool, in October, bought these holdings, consisting of 50,000 shares at $150 a share.

An interest, which afterwards proved to be a controlling one, was also acquired in the New York and New England Railroad.  All three blocks of stocks were carried on margin and, as it later on developed, this was done largely by use not only of the syndicate’s, but also of the Reading’s own money.  The Philadelphia Reading & New England, now connecting at Campbell Hall, west of the Hudson, with the Lehigh & Hudson River Railroad (controlled indirectly by the Reading), went to Hartford and Springfield, where it joined the New York and New England, which likewise, starting from Poughkeepsie, ran to Boston.  At Springfield the Philadelphia, Reading, & New England joined the Boston & Maine. At that time the New York, New Haven & Hartford Railroad had no entry into Boston and a glance at the map of New England will show that its supremacy was seriously challenged.

Because of financial and political conditions, the beginning of 1893 was a poor time for the development of a new railroad system.

The control of the Reading system was a precarious one. Part of this system was carried in stock brokers’ offices, part by a great extension of its credit, hampered by the necessity of paying interest on its preference bonds, and above all, attacked by the New York New Haven & Hartford and Morgan-Vanderbilt interest.  On Dec. 31, 1902 Philadelphia & Reading closed at 52 on the New York Stock Exchange.  On January 5 the road secured ,from Speyer & Co. funds to pay the full interest on the third preference bonds – a sum which, tho earned the preceding fiscal year ending Nov 30, was locked up in conducting increased business of handling coal purchasing the output of individual miners who were dependent on the Philadelphia and Reading for the transportation of the product to market, Mr McLeod’s aim, as already stated, being to control all anthracite mined on the Reading, or on neighboring lines, and the facilities for marketing it.

For the fiscal year ending November 30, 1892, the Reading Railroad earned, it claimed, enough to pay the 5% interest on all the preference bonds.  On January 9, a payment was made, tho as appeared later, not every holder was paid.  The exact number of the third bonds was about $25,000,000, there being $24,000,000 first and $16,000,000 second incomes. Under the terms of its mortgage, payment on the third incomes could probably have been avoided, but the company was anxious to maintain its credit which might have been impaired, as the interest on these bonds was announced at the annual meeting to have been earned.

On January 24, 1893 the stock closed at 53¼  and, on February, 2 on fears of legislation hostile to the coal combination, declined to 49⅝ .  The Morgan-Vanderbilt interest, by raising rumors hostile to the credit of the corporation, made it almost impossible for the managers to borrow on its collateral.  The mortgage allowed the issue of more third-preference bonds ; but no market could be found for them.  As far as can be ascertained, it appears that the Reading Syndicate was called upon, by the Mercantile Trust Company of New York, to take up a loan on 50,000 shares of Reading.  On the refusal of the pool to do so, the stock was sold on the New York Exchange by Grant Brothers. Rumors detrimental to the company now began to fly apace.  The crisis was precipitated by the cowardice of the Philadelphia members of the Reading pool.  On Friday, the seventeenth 401,000 shares were sold on the New York Exchange at a net decline of   points.  John Wanamaker and George M Pullman, of the Pullman Palace Car Company, were believed to have been the first members of the pool to throw over their holdings.  Mr Dolan’s shares seem to have been sold the next day when 513,910 shares were sold in New York, the price touching 36   .  Needless to say, on both Friday and Saturday the dealings in Reading on the Philadelphia Exchange were also tremendous.  These declines destroyed the last vestige of the Reading’s credit.

Sunday, however, McLeod conferred with Mr Drexel.  But the financier would do nothing acceptable to Mr McLeod.  Monday was spent in fruitless endeavors to raise money,  but all in vain.  On the same date the last large holders liquidated the sales on the New York Exchange, aggregating 958,000, while the price fell to 28.  The next day, on the friendly application of Thomas C. Platt, who alleged non-payment of the interest due on his third preference bonds, the road was placed in the hands of receivers, all friendly to the management,  McLeod himself being one them. There was just $29,241 cash in the treasury.

Such was the real end of the first coal combination; for, tho McLeod struggled the rest of the year, his efforts against firm, relentless pressure of the Morgan-Vanderbilt interests were futile.  With the stock of the old pool in their hands, McLeod ousted from the Reading, the New York and New England forced to seek the protection of the courts, the enemies of the Philadelphia and Reading management got full control.  The Boston and Maine became again independent, the New York, New Haven & Hartford got the New York and New England, J.P. Morgan & Co., the reconstruction of what is at present the Reading Company.

In the 1950′s Herbert Matter’s scheme meets McLeod’s at North Canaan, Ct. where McLeod’s Central New England ‘crosses’ Morgan’s New Haven (former Housatonic Railroad).

Matter. McLeod. Howard Cavanaugh photo.

 

 

 

 

 

 

 

 

 

Like Franklin Gowen, Archibald Angus McLeod could have pulled it off.  Next up- Austin Corbin.  One of those great places where Philadelphia meets New York.  Mad!

While we plan and scheme the ‘greene, we remember, we honor…& we’ll be revisiting … Mad Men and their Big Ideas.  ONWARD!

 

About Paul vanMeter

"I don't object to cutting away of certain bramble patches if brambles are to take their place--or anything that will appear spontaneous & not need watering or care. More moving or dug ground I object to. Less wildness and disorder I object to." Frederick Law Olmsted
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