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his directors, met the Manager of the Pacific Steam Navigation Company and made an agreement covering the matters in which both corporations were interested. This provisional contract provided that the rates for passages and freight should be made by the company with whom the business originated, and the total charge should be divided equally between the Panama Railroad and the steamship companies on either side of the Isthmus.

Colonel Center had reason to believe that the officers of his company would be delighted with the result of his negotiation, for the agreement was equitable and quite advantageous to the railroad, while it involved the extremely desirable feature of an amicable alliance with the Pacific Şteam Navigation Company. That corporation was one of the most prosperous and best managed in the world. Its business was well-established and free from competition. It had twelve good vessels running between Panama and Valparaiso, and calling at twentyeight intermediate ports.

When the tentative agreement that had been arrived at between Colonel Center and Manager Petrie was laid before the directors of the Panama Railroad, they flatly declined to endorse it, declaring that their company would collect such charges as they might see fit to make, and would not submit to dictation in the matter from any source. This suicidal action can only be accounted for on the supposition that the officials of the Company were ignorant of the resources of the Pacific Steam Navigation Company and believed that the management of the latter would be obliged to concede the point insisted upon. In this they were utterly mistaken. As soon as the ultimatum of the railroad company was made known to the steamship company, it began preparations for conducting its business independently. In 1868 regular voyages were commenced by its vessels between Liverpool and Valparaiso, and later extended to Callao. By 1874 a fleet of fifty-four boats, with a gross tonnage of 120,000 tons, was operating on this line. The smaller vessels only were sent to Panama and they carried no more than was necessary.

The large repair shops and coaling station were removed from the Island of Toboga to Callao. Thus an opportunity was thrown away which the Panama Railroad never had a chance to recover. There is no doubt that had the agreement with the Pacific Steam Navigation Company been ef

fected the fortunes of the road would have been greatly influenced for the better.

The year 1868, that in which the Pacific Steam Navigation Company began running its ships round Cape Horn, saw the prosperity of the Panama Railroad reach high water mark. The following statement was made in the annual report for that year.

$4,337,668.48

Total receipts from all sources
Total expenses, including the

new Colombian subsidy
Four quarterly dividends of six

per cent each on $7,000,000 Surplus

$2,030,185.52

1,680,000.00

627,482.96

$4,337,668.48

It is questionable whether any railroad ever made such a showing as this. Upwards of four millions earned in a year by forty-seven miles of single track, netting more than one hundred per cent profit!

At the end of a few brief years a great change was indicated in the directors' report. The annual statement for 1871 showed:

Total Receipts.

$1,284,418.98 Total Disbursements, exclusive of dividends

997,875.44 Surplus

$286,543.54 This was a pitiful falling off, but there was worse to come.

In the following year, the Panama Railroad fell into the hands of an adventurer in the field of finance, who commenced his meteoric career by marrying an heiress while the steward of a Hudson River steamboat. Alden B. Stockwell saw the stock of the road declining, and conceived the idea that it would be a likely property to acquire and loot. Early in 1872 he secured a large number of the shares and a sufficient proportion of the voting proxies to elect himself president of the company. For several years thereafter the securities of the corporation were manipulated by Wall Street speculators without regard to the interests of the property, or the shareholders. In 1874, Russell Sage was the president, and, soon after, Trenor W. Park obtained control. · The last named held a majority of the shares at the time that the line was transferred to the Panama Canal Company.

The total receipts of the road from 1851 to 1898 were $94,958,890.36 and its total expenditures $57,036,234.46. On a capital of $7,000,000 it had paid dividends aggregating $37,922,655. Splendid as this showing is, it might have been very much better if the directors had exercised more foresight, and but for the gross mismanagement, during the seven years of French control.

When the French canal project was launched, the railroad company was in a position of extraordinary advantage. Its consent was necessary to the granting of the canal concession by New Granada. Its line parallelled the proposed channel and the French were obliged to transport their supplies over it at the regular rates. This was such an enormous tax on their treasury that they were forced to buy the road at the price asked for it by the shareholders. It was a providential opportunity to dispose of a fast deteriorating property at fancy figures. For 68,534 of the 70,000 shares the Canal Company was forced to pay $18,094,000, or at the rate of $250 a share. But this was not all, for a dividend of fifty-two per cent was paid shortly before the transfer, and a treasury fund of $1,700,000 was retained by the sellers.

In 1904, all the property of the French canal company passed to the United States by purchase. Of the amount paid, $6,800,000 was allotted as the pro rata value of the railroad. Omitting the fact that the line is a necessary adjunct to the construction of the Canal, the price paid for it was low. The assets, aside

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