There was an impish nineteenth century genius who cost the New York Central and its children a pot of money, most of which they didn't want to spend, most of which was a dead loss, but some of which has proven a good investment, even to this day. Calvin S. Brice (1845‑98), Ohio-born, served in the Civil War in his latter teens, took a brush-up course in law at Ann Arbor at the age of 20, and in 1866 at 21 began practicing in his home town of Lima, Ohio. He felt that he was not getting anywhere to speak of five years later, when he had an idea.
There was a struggling, half-budded railroad, the Lake Erie & Louisville — planned to run from Sandusky to the Ohio River — which just couldn't blossom. Promoted by small-town enthusiasts in Ohio, it had sold a bond issue to ever-ready New York capitalists, but had succeeded in building only •35 miles of track between Findlay and Fremont. It was surveyed through Lima, and Brice, seething with ambition and vexed with his slow progress in the law, decided to take a hand in rail promotion.
He first grew a short red beard to ameliorate somewhat his too-youthful appearance. He knew the very man to take on as collaborator — Charles S. Foster, politician and promoter, later to be Congressman and governor of Ohio. The state had just passed the Basil Law, which permitted municipalities to bond themselves for the benefit of railroads, and Brice saw that under this law they might do some effective work on the L. E. & L. They talked to the discouraged directors and obtained ready permission to go ahead. Foster was not yet too big to get out and hustle with young Brice, selling stock and persuading the yeomanry to vote county bonds in aid of the project. Beginning at Findlay, they were progressing nicely when, just as they reached St. Marys, the State Supreme Court declared the Basil Law unconstitutional.
p308 Brice then told Foster that a receiver would have to be appointed; if they didn't ask for it, the bondholders would. They beat the latter to the punch by two days, and bondholders then sued stockholders for liability on their stock. Through Brice's adroitness, hearings were delayed for two years. Meanwhile, the rails had been pushed on to St. Marys by 1872. So, with much pulling and hauling, matters rocked on until 1876, when Hodgskin, the bondholders' attorney, agreed to deal, and a new company was formed with a capital of $1,500,000, one-tenth of which went to Brice and Foster, they becoming directors.1 Brice now had his foot in the door, and there was no denying him thereafter. Hodgskin wanted the road extended, and went among the German farmers in the western Ohio counties, trying to sell stock, but failed, so Brice and Foster combed the same territory and sold $100,000 worth, on condition that they get half the money. Brice then persuaded a contractor against his will to build track to Celina.
When the annual directors' meeting came, on April 10, 1879, Hodgskin had died two weeks before, and there was no one to represent the two or three principal stockholders, who were then in Europe, nor were there even proxies. As Foster said, "Mr. Brice and myself appeared at the meeting. We held but one-tenth of the stock, but we did the voting. I was elected president of the road and Brice vice-president."
To westward a congeries of little railroads had been strung together, extending as far as Bloomington, Illinois, owned principally by a group of Easterners known as "the Seney crowd," honoring their leader, George I. Seney, a Methodist preacher's son in a Brooklyn suburb, who, beginning as a bank clerk in New York, rose rapidly to the bank's presidency in 1865, after which he began dabbling in railroads.
With this gentleman Brice now acquired high standing, and proceeded to consolidate their two holdings into the Lake Erie & Western Railroad (its critics interpreted its initials as meaning Leave Early and Walk), chartered in 1879, with the city of Sandusky issuing $60,000 of its bonds in aid. In these deals Foster believed that Brice acquired fully $200,000, mostly by stock trading, though Foster says he charged "enormous fees" for his services. Small wonder that Seney, who had had poignant experience p309 with Brice's acquisitive talent, said to Foster with a sort of awe, "He is the most remarkable man I have ever met." It were better to absorb such a man into the group than combat him. And so Brice came into his kingdom. He presently became president of the Lake Erie & Western, whose railheads entered Sandusky in 1881 and Peoria in 1888.
But before following it further, let us glance at the auburn promoter's (his hair and beard were darkening with the years) most speculator achievement. One story from the Brice school of thought has it that refusal of the Lake Shore to make satisfactory traffic arrangements with the L. E. & W. caused Brice and Seney in pique to launch the Nickel Plate project. But the opinion of cold-blooded and more objective outsiders is entirely different. The Railway Age, on July 21, 1916, when the New York Central was relinquishing control of the Nickel Plate, said bluntly that
It was built parallel to the Lake Shore, not because there was any economic need for an additional road between Buffalo and Chicago, but to force the Vanderbilts to buy it through the practice of cutthroat competition.
In other words, it was a nuisance job, one of the two biggest railroad holdups in railroad history. We shall discuss the other one in the chapter following this. Brice carried Seney and his group — also interested in his other promotions, Lake Erie & Western, Ohio Central, Peoria, Decatur & Evansville, etc. — into the scheme with him. One hears other names in connection with these affairs, too — Adrian Iselin, New York banker, Dan P. Eels, Cleveland banker, who was involved in all the Brice-Seney promotions, and others.
The New York, Chicago & St. Louis Railroad was incorporated in Indiana in February, 1881. Brice's name did not appear on the application for the charter, but when the company organized, he was elected president. The eastern end had been briefly organized as the Buffalo, Cleveland & Chicago, but this was soon absorbed into the N. Y., C. & St. L.2 The capital stock issue was p310 $22,000,000 preferred and $28,000,000 common. On top of this it piled $15,000,000 in first mortgage and $4,000,000 in income bonds. Henry Clews says categorically of the Seney railroads:
His system of handling them was entirely novel in the history of Wall Street. Instead of starting with moderate issues in amount, as has usually been the custom . . . and doing the watering process by degrees, Mr. Seney began the watering at the very inception of the enterprise, pouring it on lavishly and without stint. . . . The stocks were so thoroughly diluted, their owners could afford to let them get a start at a very low figure. The future prospects of the prospectus were set forth in the most glowing colors, the public took the bait, and the stocks became at once conspicuous among the leading active fancies of the market.
Clews remarks further of Seney, that although he throve, most of those involved in his schemes "seemed to fall into a decline." But not Brice, we hasten to interject; he was too much for Seney. Like some other noted freebooters, Seney gave generously to religious and philanthropic causes. The advantages of his business system are seen in the fact that his bargain sales of stocks and bonds and Brice's borrowing proclivity ("He was the most successful borrower I ever saw," said Foster) enabled them to raise the money with which to put the cheaply-built force through with amazing speed. Construction began in 1881, and in October, 1882, the •500‑mile line was ready for business. From Buffalo to Cleveland, it paralleled the Lake Shore like a twin brother, close alongside it all the way. It swung in a long, gentle arc from Cleveland to Chicago, sagging far enough south of the Lake Shore to pass through Fort Wayne (where it bought •56 miles of the old Wabash and Erie Canal for a right of way), and thus became a competitor of the Pennsylvania from there to Chicago. It had no terminal in either Buffalo or Chicago, and west of the Illinois boundary it had only trackage rights.
The effects of the Brice-Seney financing may readily be guessed. On April 26, 1882, says Stedman, the line having been completed from the Illinois border to Black River, Ohio, the New York Stock Exchange listed its stock and half of the mortgage bonds. The common sold at 16, the preferred at 35 and the bonds at 89, but even these prices did not hold long. By June, common was down to 10½ and preferred to 27½, while Lake Shore, which had sold at 120 in April, was driven down by the menace of the new line to p311 98 in June. Its directors sought to restore confidence by declaring a two percent quarterly dividend which it had taken six months to earn. But by September its price was going up again, boosted by quite another factor — the rumor that Vanderbilt was taking over the Nickel Plate.
Clews says that Brice and Seney were indifferent whether they unloaded their nuisance on Vanderbilt or Gould, and that they adroitly played one off against the other. They had to land one fish or the other quickly because their concern was so asthenic that it was already tottering. As Clews relates it, the slick partners coquetted with Gould, and finding that he was going west on business, they offered him the courtesy of their road for the return journey, giving it the air of an inspection trip, and taking care that rumors to this effect should reach the ears of Vanderbilt. That was probably what turned the scale. The Central magnate began buying stock, but he is said to have remarked testily to Brice, "Your road is bankrupt."
"No one knows that better than I do," retorted Brice, blandly, "but do you want to compete with a receiver?" W. H. didn't. He and some allies bought $14,050,000 worth (face value) of Nickel Plate common, mostly at $17 a share, and $2,480,000 of preferred at around $37. We have an interesting picture of a Lake Shore directors' meeting in December, 1882, when Mr. Vanderbilt frankly reported that he was one of the syndicate who had bought a large block of Nickel Plate stock, which they were willing to turn over to the Lake Shore at just what it had cost them. He had done it to protect the Lake Shore. His group had consulted the best attorneys, and all approved the purchase as legal. He did not wish any of the board, however, to be influenced by the fact that he was a party in the syndicate, and he desired them not to hesitate to say so if they thought the purchase an injudicious one. If the board thought he had erred, he was perfectly willing to retain the stock and assume the whole responsibility himself.
There was some dissension in the board over the offer, but the majority voted to buy the stock, though two members resigned in protest. The Railroad Gazette remarked that the purchase had laid a tax of $1.14 a share on all L. S. & M. S. stockholders' dividends. Vanderbilt has been sharply criticized by Wall Street for his "bad judgment" — "a lapse from judgment" was one phrase used — for taking the Brice-Seney bait, the argument being that if he had waited a month or so, he could have picked up the Nickel p312 Plate for a song at foreclosure sale. Yes — if it had not fallen into Gould's clutches, instead; and as matters stood then, if that had happened, it would have been a considerable menace to the Lake Shore. The authorities are of opinion, however, that the minor panic of 1884 would have come to pass a year or two earlier than it did, had not Vanderbilt's purchase staved it off.
Seney, despite his getting out from under the Nickel Plate, had other irons in the fire, now much overheated, and was practically a bankrupt, though managing to stave off the final disaster a little longer. But there had been thunder below the horizon all through the spring of 1884. On May 6 the failure of the Marine Bank and of the publishing house of Grant & Ward brought ruin to not a few and revealed Ferdinand Ward, another minister's son, as one of the worst of swindlers. He had sent his naive, unsuspecting partner, General Grant, to William H. Vanderbilt a few days before to borrow $150,000, the General believing that it was only to tide over a temporary emergency. A few days more and there came another shock when it was discovered that John C. Eno, president of the Second National Bank, had looted it and fled to Canada. On the following day Seney's bank, the Metropolitan, collapsed, and with it the last of the Seney fortune. He dropped from sight and eventually died comparatively poor.
But never forget that nothing that happened to Seney meant any trouble for Brice. Gossip had it that he had netted a clear half million in his brief Nickel Plate experience, a tidy sum for a man who had started with nothing only a few years before.
Nickel Plate trains began running into Chicago over the Lake Shore tracks on May 2, 1883. William K. Vanderbilt had been elected president when the new owners took over, and in the Cleveland vault there is a cancelled note which has a humorous look now. The company was still infirm, and this slip of paper, dated December 1, 1884, shows that the New York, Chicago & St. Louis Railroad Company, by William K. Vanderbilt, president, borrowed $2,000,000 spending money from Citizen William K. Vanderbilt, who signed this note, promising to pay himself the cash. But even that loan could not save it, and in March, '85 it went into receivership. By this time the Lake Shore was wondering whether it could not upset the whole deal. But a letter3 to President John Newell of the Lake Shore from an eminent attorney, Judge George Hoadly of Cincinnati, throws an interesting p313 light on the current situation, as well as on the Brice-Seney ethic. In part, it reads:
I am persuaded first, that the transaction between Brice and his associates which resulted in the organization of and the issue of securities by the Nickel Plate Railroad Co., was illegal, according to the laws of Ohio, Pennsylvania and Illinois at least, and probably so under the laws of Indiana. The law of New York I have not had opportunity to examine. It is clearly not competent for a railway company in Ohio to issue $65,000,000 of securities in payment of 17 or 18 million dollars advanced for it by a syndicate partly composed of its own directors. The transaction is null and void on several counts, so far as the original parties are concerned, and if they were before the Court, I should not have any doubt, large as the amount is and reluctant as the courts may be, to inflict so great a disaster, of carrying this case against them. The doubt comes in when we are presented with the proof that the bonds have passed into the hands of innocent third persons. . . .
A Supreme Court decision, plus the reluctance of courts to inflict disaster on great numbers of innocent bond buyers made Mr. Hoadly dubious as to the success of the desired action. An Illinois court had actually decided adversely in a similar case which he cited, "in my opinion against better judgment and notwithstanding the dissent of one of the judges." He failed to find "any satisfaction or intellectual persuasion" in this court's action, "but it is suggestive of what may occur in like cases elsewhere."
The amount in controversy is very great. This doubtless swept the Supreme Court of Illinois from its bearings. It is an old proverb among lawyers that "Hard cases make shipwreck of the law," and I am by no means sure that the Supreme Court of Ohio may not follow the lead of Illinois . . . and that even the Common Pleas or Cincinnati Court may not. These reasons make me doubt our ultimate success. . . .
So no action was taken, and the Nickel Plate was reorganized in September, 1887. We shall revert to its later history on another page, meanwhile noticing a third bit of manipulation by Brice which has brought much more happiness to the New York Central than the other two.
The southeastern Ohio coal field had been opened up, and prominent citizens of New Lexington, midway between Columbus and Marietta, believed that a great coal seam centered under p314 the Sunday Creek Valley. They accordingly launched a promotion through several counties in 1868 for a railroad to tap the coal and carry it to outlets on Lake Erie and the Ohio River. The Atlantic & Lake Erie Railroad was chartered in June, 1869, with a proposed capital of $5,000,000, to build from Toledo to Pomeroy, passing east of Columbus. But not enough stock could be sold in the rural districts to be of much assistance, and the enterprise dragged along, heavy-footed, until the panic of 1873 struck it a sickening blow. It had completed •7.3 miles of track between New Lexington and Moxahala — on which a second-hand engine ambled to and fro — and had begun a costly tunnel at the latter place. The building of the parallel line which later became the Columbus, Hocking Valley & Toledo did it no good, of course. Bucyrus had contributed most of the financial support so far, but had not even seen the company's only locomotive. Impassioned meetings were held in that town in 1875, in which it was declared that if something wasn't done within thirty days, the enterprise would have to be abandoned. There was talk of selling portions of the line, but the directors voted this down, and the commodity managed to sustain life, though feebly. A Hocking Valley historian remarks acridly that "It has received no aid from the county and but little from the citizens." They tried changing the name to Ohio Central in '76, but that did not seem to help. The one old locomotive finally wandered off the track near Moxahala and settled down with a sigh to rest and rust through the succeeding years.
There was a receivership in 1877 — and how it was delayed so long we cannot imagine — and in November, 1878, the property was sold to a trustee representing the principal creditors. He in turn sold a small central portion in the mining region, including the 7.3 miles of completed track, to a new corporation, the Columbus & Sunday Creek Valley, the Ohio Central retaining the remainder of the survey. And here the names of Brice and Foster appear again. These twain — together with Allen G. Thurman, the politician, General Thomas Ewing and others — had decided that something might be made of that central coal portion if it were extended •26 miles into Columbus, and this they proceeded to do. Foster remarked that if they had had any idea as to how much the completion of that Moxahala tunnel was going to cost, they wouldn't have touched the thing. However, a reaction from the panic of '73 had now set in, and took on the aspect of a boom.
Railroad stocks became more valuable, and Brice, Foster, et al. p315 took over the Ohio Central, merged the Columbus & Sunday Creek Valley with it, and completed the line from Toledo to Middleport, near Pomeroy, in 1882. There they encountered a project known as the Atlantic & Great Western, designed to cross the Ohio and run down to Charleston, West Virginia, and a typical Brice master-stroke was essayed. He sought to amalgamate the Ohio Central, the Atlantic & Northwestern and the Richmond & Allegheny — which meandered up the old James River Canal towpath from Richmond to Clifton Forge — in a corporation to be known as the Richmond, Allegheny & Ohio Central, which, with a little piecing-out here and there, would have its feet on Atlantic tidewater and Lake Erie, with great reservoirs of business in the rich coal fields of West Virginia and Ohio. He had impulsively incorporated and capitalized the new company at $35,000,000 when the Virginia Legislature, not liking the look of the affair, refused to let the Richmond & Allegheny go into it.
So the Ohio Central had to be content with a union with the Atlantic & Northwestern, which for some time seemed to do neither of them any good. In a few months the part of the O. C. south of Corning, Ohio, went into receivership, and five days later the West Virginia portion also sank into the arms of a receiver. From here on the story is a sad maze of receiverships, defaulted bonds, foreclosures, forced sales, trusteeships and changes of name. That extension to Charleston and beyond, however, up the Kanawha and the Gauley Rivers, known in its several portions and at various times as the Kanawha & Ohio, Kanawha & Michigan, Kanawha & West Virginia, etc., turned out to be the prize acquisition of the Ohio Central, which reorganized itself in 1885 as the Toledo & Ohio Central, and entered into a new better era of its existence.
It even accumulated more mileage. In 1881 the Toledo & Indianapolis Railway was incorporated and construction begun, but just after it had gotten past Findlay in 1883, the first of a series of foreclosures and sales took place. At Findlay there had been a coup worthy of Brice himself. The engineers wanted to go through a portion of the town at •two to three feet above the prevailing ground level. This would have necessitated raising the grade of every street it crossed by that much, and quite naturally, Findlay had a poor opinion of the idea. The company had bought and cleared its right of way through the blocks, and was preparing to build its low fill right across all the intervening streets. The contractor had a tip that an injunction was in the p316 offing; so all the men obtainable were rushed to the scene one evening, and during the night the fills across each street were built and the track laid over them and down to the natural ground level in between, so that when the sun rose, there was the fait accompli, but what a track it was! — looking as if it had been knocked together by a gaggle of boys, up and down, up and down, hanging between the streets like a series of hammocks.
After that first foreclosure, the road was sold in 1885 to a new company, the Toledo, Columbus & Southern, the name indicating that it had changed its goal. Four years later, it had not succeeded in completing another •20 miles when there was another foreclosure and sale, this time through a purchasing trustee to another new company, the Toledo, Columbus & Cincinnati; and this company in 1892 finally dragged the railhead into Kenton, setting a record of •78 miles' construction in eleven years. It was there that the Toledo & Ohio Central took it over, pushed the rails into Columbus, a year later, and then on to a junction with the old Ohio Central.
The T. & O. C. has suffered heavily at times from the mad rages of central Ohio streams, especially the Scioto, as our illustrations will prove. Veterans tell of trains running through water that came up to the car floors, when locomotives with low-slung fire-boxes were out of luck. On such adventures the crew carried wood and kindling, including old, oil-soaked ties on the tender, and if the fire was almost or quite extinguished, but they still had steam or momentum enough to carry them through to the opposite side of the water, they would start another fire and make more steam. Occasionally, freight trains were hopelessly stalled in the water, the crews wading along the tracks to dry land. There were times, too, when flood-bound folk were supplied with food by trainmen. And again, there were cataclysmic disasters like that of 1913, which simply tore not only the Toledo & Ohio Central but most of the railroads of Ohio to tatters, and piled them and their equipment in great, costly heaps of wreckage.
A Toledo & Ohio Central freight train braving the flood of 1889.
What the great flood of 1913 did at West Columbus.
The Lake Erie & Western remained Brice's favorite child, and he was always looking for opportunities to increase its mileage. A letter from M. E. Ingalls, president of the new, greater Big Four, to President Newell on April 16, 1890,4 said in part:
Brice is working to force more westbound business on the Lake p317 Erie & Western. He has been negotiating for and has pretty near bought of Elijah Smith the Fort Wayne, Muncie & Louisville Road for $1,900,000 cash. If he gets that, I am told he plans to build to Cincinnati, into Indianapolis and then to a connection with the Erie. He is a bad egg, anyway. Smith will sell you or me, or both of us, his Fort Wayne road for $2,000,000 — 4% bonds. I think this would stop Brice's folly. The road, from all I can learn, is worth the money. It is in the natural gas belt and its business is increasing. Anyway, I wish you would see Smith and talk it over; it is worth considering. I am very much troubled over what Brice may do if we should happen to have an easy money market.
But it was neither the Lake Shore nor the Big Four that bought Elijah Smith's road. Brice added it, as well as the •161‑mile Indianapolis and Michigan City division of the Wabash to his Lake Erie & Western. As an ally of the Erie, he had also aided in the creation of that road's extension to Chicago. But in 1890 he treated himself to a little diversion. It was a favorite ambition of self-made plutocrats of those days to crown a youth of money-grubbing with a middle age in Prince Albert coat and Ascot tie as a United States senator. Hurst, Stanford, Stewart, Sharon, Clark — one can recall a number of examples, mostly western. It had become a common subject of derision with the newspaper wits, the implication being that the seat had been bought. Now when Brice assumed the toga, the satirists saw a golden find in his middle initial, and at time casually printed his name as Calvin $. Brice.
He did not give up business, however. He leased the Northern Ohio Railroad for his L. E. & W., increasing its mileage to •848, and in the 1890's was variously vice-president and director in several other lines and of the United States Express Company. But his restless brain had driven the body too strenuously; he died in December, 1898, at the age of fifty-three.
There was immediate wild speculation as to what would become of his properties. It was reported that J. P. Morgan had bought heavily into the L. E. & W., and the Cleveland Leader saw that road, as well as the Erie and the Cincinnati, Hamilton & Dayton going into the bag of "the Vanderbilts," whom many still regarded as the all-powerful motive force of the New York Central. A part of this prediction was fulfilled. The New York Central & Hudson River directors' minutes for December 20, 1899, show that that company had bought for the benefit of itself and the p318 Lake Shore & Michigan Southern 59,300 shares of preferred and 59,300 shares of common stock of the Lake Erie & Western for approximately $5,760,000, and 100,540 shares of Cleveland, Cincinnati, Chicago & St. Louis common for approximately $6,425,000, turning one-third of the Big Four stock and one-half of the L. E. & W. to the Lake Shore. The capital stock of the Central was increased about the same time from $100,000,000 to $115,000,000.
But times were changing. In the second decade of the present century, the Interstate Commerce Commission was looking down its nose at the control of the Nickel Plate by the New York Central, and the latter was quite willing to relinquish its hold on that road, which for many years it had operated largely as a freight line. Those meteoric Cleveland capitalists, O. P. and M. J. Van Sweringen, had conceived a liking for the railroad business, and in July, 1916, they bought the New York Central's stock in the Nickel Plate for $8,500,000, it having a par value of $15,018,000, or a slight majority of the total $30,000,000 capitalization. It was thus that the Nickel Plate became a foundation stone of what the newspapers soon began calling the Van Sweringens' "rail empire." They added to it in 1922 when they bought the New York Central's stock in the Lake Erie & Western.
But in the same year when it rid itself of the second of Brice's promotions, the NYC acquired by lease the one which has served it best, the Toledo & Ohio Central, together with its Kanawha lines. In 1938 the T. & O. C. absorbed the Kanawha & Michigan, Kanawha & West Virginia, the Zanesville & Western, by which it entered the city of Zanesville, and two other, smaller railroads. In the same year, the whole system was merged with the New York Central.
As a further aid to its coal supply, the Central in 1926 joined with the Chesapeake & Ohio in incorporation and joint ownership of the Nicholas, Fayette & Greenbrier Railroad, which, from the Kanawha end of the T. & O. C. has built •more than 100 miles of tortuous track up the mountain gulches of the Gauley and Meadow Rivers and their tributaries, down which thunder long trains of bituminous coal from those vast new fields for the stoking of the domains of their two great proprietors, the New York Central and the companies which have inherited the Van Sweringen empire.
1 These details of Brice's early transactions were related in an interview by Foster, appearing in the Lima Republican-Gazette, December 20, 1898, just after Brice's death.
2 There are a dozen theories for the origin of its nickname, Nickel Plate. One credits a Norwalk, Ohio, editor with calling it just a nickel-plated road. Another has it that W. H. Vanderbilt once said he wouldn't have it if it was nickel-plated. Another, a reasonable one, is just that the initials N. Y., C. & St. L. suggested nickel; the New York, Pennsylvania & Ohio had recently had its initials telescoped into "Nypano," and the Nickel Plate quirk may have been somewhat imitative. Incidentally, the last spike, driven with ceremony at Bellevue, Ohio, in 1882, was nickel-plated.
3 Dated September 21, 1886. In Cleveland archives.
4 In Cleveland archives.
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