Virginian Could Have Controlled N&W in 1906

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I've worked through the 1906 editions of the Manufacturers' Record and am
still working to convert scans of articles and info into text. But I did
run across two interesting articles that show how volatile the railroad
business was at the beginning of the last century and how rampant
speculation was about the goings-on in that world. The Norfolk & Western
was busy expanding into the West Virginia coal fields, which were going
through boom times*. The Virginian (at the time, Deepwater Railway and
Tidewater Railway) was under massive construction, with workers cutting a
grade and laying down tracks from Deepwater, W.Va. to Norfolk. At that
time, it still wasn't exactly clear who was behind the construction,
although those interested had pretty much fingered H. H. Rogers (and
Standard Oil) as the key player.

I need to (try) to re-read "From Mine to Market" (not the most riveting
book) to get acquainted with all that was going on at that time, but near
as I remember there were car shortages to move coal and coke and favorites
were played between the railroads and mines when it came to car
distribution. The two articles from late 1906 relate to the aftermath of
this situation after order was established. The Pennsylvania Railroad was a
player and had a large holding of stock in the N&W (which it didn't totally
relinquish for a long time). But according to the first article, it did
unload a lot of stock in the N&W and the Baltimore & Ohio. The follow-up
article (which seems to be more speculation) indicates that the N&W stock
could have been snapped up by Rogers via his friends and connections. While
only 20 percent of the outstanding stock, it would have been enough to get
noticed when making statements or "requests" that would be favorable to the
railroad that Rogers had under construction. It could be interesting to
play "what if" had this transaction had gone through at that time.

* I am grateful that Tom Salmon put me onto the Manufacturers' Record as a
historical source. It would be nice if Google would make digitizing of this
publication part of its ongoing project, since there is a wealth of
information there. I'm skimming things off the top, since the interlibrary
loan period is only 30 days, but I may need to revisit some of these
volumes again. Each week, there are lists of construction projects in
cities and towns across the south, from factories to public works to
individual homes. This alone would be a great resource for anyone
researching the growth of, say, Roanoke or Richmond. In 1906, the Jamestown
Exhibition was going from idea to major event in 1907. Each week, there are
reports of contracts awarded for the construction of this pavilion and that
pavilion -- good info for anyone who wants details about that project (and
I have two stories from 1907 that I need to post on my website about some
of the exhibits).

Bruce in Blacksburg

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Manufacturers's Record, Vol. L, No. 8, September 6, 1906, Pg. 259

"WITHIN ITS LEGAL RIGHTS."

In disposing of over 500,000 shares of the stock of the Baltimore & Ohio
and the Norfolk & Western railroads, the Pennsylvania Railroad has issued a
statement as follows:

The Pennsylvania Railroad Co. announces that it has sold a part of its
holdings of Baltimore & Ohio and Norfolk & Western shares. These stocks
were purchased some six years ago for the purpose of establishing such
relations with the managements of those properties as would incline them to
join the Pennsylvania Railroad Co. in an effort to do away with secret
rebates and preferences, all of which was set forth in the annual report of
the directors of the Pennsylvania Company to the shareholders in March,
1900.
The desired result having been fully realized, and the management
entertaining no fears that the railroads of the country will ever fall back
in to the old practices, the directors of the company have thought it wise
to reduce its ownership in these companies, which bas been done by selling
approximately one-half of its holdings in each to Messrs. Kuhn, Loeh & Co.
On account of the allegation, repeatedly made, that the company was seeking
to control the tidewater bituminous coal traffic, the directors have taken
this action in deference to the present state of public opinion upon such
matters, although there was no foundation for the charge and although it is
confidently believed that the company was entirely within its legal rights
in purchasing and holding these stocks.

In the last paragraph of this statement the Pennsylvania says:


It is confidently believed that the company was entirely within its legal
rights in purchaslng and holding these stocks.


The mistake that the Pennsylvania, as well as many other corporations, have
made is to take the ground that because it is "within its legal rights" it
is justlfied in any action, whatever it may be. To this unwise position is
due a very large part of the anti-corporation and anti-railroad agitation
of the day. The Pennsylvania Railroad believed that it was "within its
legal rights" when it made such a bitter fight to keep the Gould system out
of West Virginia, but in making that fight it antagonized the whole State
of West Virginia. When the Pennsylvania Railroad desired to build a belt
line around Baltimore its officers were told that they could not secure the
necessary franchises by the methods which were being employed. The
MANUFACTURERS' RECORD expressed its opinion very strongly that Baltimore
was making a great mistake in not meeting the Pennsylvania road on some
fair basis by which the desired ends could be obtained. This belt line is
practically a necessity to the city and to the railroad, and the fight
against the Pennsylvania which prevented its securing the necessary
franchises has resulted in great injury to the city by seriously delaying a
vitally important undertaking. But both the city and the railroad were at
fault. The railroad had acted "entirely within its legal rights" in the way
in which it had treated Baltimore, but this treatment had developed a
general sentiment here that the railroad had so long ignored the interests
of the city that it had necessarily developed here a spirit of latent
antagonism which was immediately aroused into open bitterness when the road
undertook to secure additional rights. The Pennsylvania was doubtless
"entirely within its legal rights" in its dealings with Baltimore and
within its legal limits in the way in which it sought the desired
franchises, but instead of having made friends here it had unnecessarily
made enemies of a large part of the community.

For the magnificent work of the Pennsylvania Railroad in creating such a
vast railroad system, for its daring enterprise in seeing and undertaking
in advance of others to provide facilities to meet the doubling and
quadrupling of the traffic of the country, the MANUFACTURERS' RECORD has
the most profound appreciation. It has never hesitated to commend the
Pennsylvania for being more farsighted in this respect than any other
railroad in the country, at least for doing on so broad a scale what no
other road had undertaken to do to the same extent. But the Pennsylvania
made a great mistake in supposing that because it was "within its legal
rights" in many things which it had done the public would look only on that
side of the case, and not resent the spirit which undertook to dominate the
great coal and iron regions of the country by a bitter fight against others
who had the temerity to invade its field. Acts of this kind and others
which created the impression of unfair dealing with the public by railroads
in matters of transportation have helped to bring about a condition of
irritation that has now developed into what may be called a mob spirit.
This is running to the extreme. Conservatism and sanity have been thrown to
the winds, and the best judgment of the best men of all parties and of all
business interests is needed to lead the country out of this dangerous
situation. But neither the Pennsylvania Railroad nor any other can escape
its share of responsibility for this condition of affairs by claiming that
it acted within the letter of the law.

----------
Manufacturers's Record, Vol. L, No. 11, September 27, 1906, Pg. 259

ROGERS MAY CONTROL IT.

Norfolk & Western Stock Sold by Pennsylvania Causes Interesting Report.

An interesting report comes from New York concerning the final disposition
of the Norfolk & Western Railway stock recently sold by the Pennsylvania
Railroad to Kuhn, Loeb & Co. This stock amounted to 160,000 shares, or
about 20 per cent. of the road's capital stock. According to the report, it
is believed that the stock will finally be owned by H. H. Rogers of the
Standard Oil Co. and those who are associated with him in the construction
of the Deepwater Railway and the Tidewater Railway, which are now being
built from the Kanawha river to the Chesapeake bay.

Whether Henry C. Frick, who is a director in the Norfolk & Western and one
of its largest stockholders, besides also being associated with the
Standard Oil interests, is also interested in the Deepwater and Tidewater
railways does not appear, but the fact that he is friendly to Mr. Rogers is
expected to give the latter an important say in Norfolk & Western affairs
to prevent the possibility of any action which might be detrimental to his
own particular road.

The story is interesting as coming at this particular time, when much work
has been accomplished on both the Deepwater and Tidewater lines, and when
their completion next year is in sight.

It is also noted in New York that Mr. Rogers and Mr. Frick are directors in
the Union Pacific Railroad, to which it is reported that Kuhn, Loeb & Co.
have sold the Baltimore & Ohio stock recently bought from the Pennsylvania
Railroad.
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