and Susquehanna in November, 1870. (Copies of these leases are transmitted with the testimony and proofs, and are referred to and described in said Appendix in No. 31 of Exhibit H, and in No. 34 of Exhibit L.)

The whole amount of capital stock of this company is the sum of $2,096,050 at par value. At the time of the execution of the said mortgage the Erie Company was in the use and occupation of said railroad under said leases, and had acquired of the capital stock of said Jefferson Railroad Company the amount of $2,044,800.

The bonds of this company, amounting to $2,000,000, were guaranteed by the Erie Company when issued; but the Erie Company had acquired, before the execution of the mortgage, $714,000 of these bonds. The esti mated value of these bonds is from 75 to 80 per cent. of their par value.

This road is essentially a coal road, and has for a long time supplied a large amount of coal traffic to the main line at Lackawaxen and Susquehanna from the coal mines of Northern Pennsylvania, and is and has been for a long time a valuable auxiliary to the Erie Company, and was considered, at the time of the execution of said mortgage, as an integral portion thereof.

At the time of the appointment of the Receiver $489,000 of these bonds were pledged by the Erie Company as collateral for its indebtedness, and the same were afterwards redeemed by the said Receiver.

This road was actually and practically built by the Erie Company, and all of its capital stock should have been issued, in the first instance, to the said company; but it was issued and distributed among, and held by, many persons who were not entitled to it. But the same was finally surrendered to the Erie Company.

It was at the time of the execution of the mortgage, and is now, one of the most important branches, in every sense, of the Erie Railway.

These coal roads, as also the Buffalo, Bradford and Pittsburgh Railroad, were acquired by the Erie Company for the purpose of supplying it with

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fuel for its locomotives, &c., and also to bring traffic or freight from the oil and coal fields of Pennsylvania to the main line and to market.

9. The capital stock and bonds of the Buffalo, New York and Erie Railroad Company, and the capital stock of the Rochester and Genesee Valley Railroad Company, and the Avon, Geneseo and Mount Morris Railroad Company.

In 1863 the Erie Company became possessed of the railroads and property and franchises of the Buffalo, New York and Erie Railroad Company, and of the Rochester and Genesee Valley Railroad Company, under and by virtue of several contracts and leases, executed by and between the Buffalo, New York and Erie Company and the Erie Company in February, 1863, and in April, 1874. (Copies of which are herewith transmitted with the testimony and proofs, and reference made thereto in said Appendix under Nos. 32 and 34 of Exhibit H, page 57, and No. 34 of Exhibit L, page 229); and the Erie Company became possessed of the Avon, Geneseo and Mount Morris Railroad, under and by virtue of a written lease bearing date of December 27, 1873 (a copy of which is hereby transmitted and referred to in said Appendix, page 229, under No. 34 of Exhibit H).

Under the conditions of the contracts first above named, 1,494 shares of the capital stock of the Rochester and Genesee Valley Railroad Company, of $100 each, were transferred to the President and Vice-President of the Erie Railway Company, and the President of the Buffalo, New York and Erie Company, to hold as trustees. The same capital stock is now held in trust by the Erie Railway Company, and is the same set forth and described in said schedule (Exhibit M), under letter "D" of the IIId division thereof. Under the conditions of the lease from the Avon, Geneseo and Mt. Morris Railroad Company above referred to, $30,750 of the capital stock of the last named company was transferred and delivered to the President of the Erie Railway Company to hold as trustee for the last named company, as prescribed in said contract by the Erie Railway

Company, and is the same capital stock described in said schedule (Exhibit M), under letter "D" of the IIId division thereof.

From the time of the execution of the said contracts and leases, these several railroads made and composed an integral part of the railroads and system of railroads of the Erie Railway Company, and at the time of the execution of said mortgage the estate, rights, and franchises of the Erie Railway Company therein, excepting the said Avon, Geneseo and Mount Morris Railroad Co., were included in said mortgage. The railroad property and franchises of the Buffalo, New York and Erie Company were and afterwards became so important and necessary to the Erie Company, that the acquirement of its capital stock was clearly a matter of good policy, if not of necessity, for the present and future welfare and prosperity of the Erie Company; for this road is the most important part of the Erie Railway, as by and through the same, alone, access is obtained to the lakes at Buffalo, and to Canada, by the International and Suspension Bridges. After the execution of the above described leases, and while Mr. Watson was President of the Erie Company, he and the directors were advised and induced to believe that these leases might prove to be invalid; and they deemed it necessary for the interests of the Erie Company that it should purchase and own the capital stock of this company, and in accordance with this belief, purpose, and policy, the Erie Company entered upon and continued in the acquirement and purchase of said capital stock.

Before the execution of said mortgage the Erie Company had acquired $574,900 of the capital stock of the Buffalo, New York and Erie Company, and $49,000 of its bonded indebtedness, and April 2, 1874, it acquired $1,000 more of its capital stock, making the total amount of capital stock $575,900, and of 1st consolidated bonds, $49,000. The whole capital stock of the Buffalo, New York and Erie Co. was and is $950,000, of which the Erie Co. owned a majority of shares as early as 1873.

The said Receiver, subsequent to his appointment, and in 1876, pur

chased $255,000 of the bonds of this company, but in March, 1877, disposed of the same, together with the $49,000 previously owned by the Erie Co.

At the time of the execution of said mortgage the said Erie Co., by virtue of said leases and contracts, and a holding of a majority of the capital stock of said Buffalo, New York and Erie Co., not only owned and controlled the said railroad as lessee, but it also owned and controlled the same by virtue of being the owner of a majority of the shares of its capitał stock.

At the time of the appointment of the Receiver, $75,900 of this stock had been pledged by the Erie Co. as collateral to the Pennsylvania Coal Co., and $300,000 of the same was in like manner pledged to E. D. Morgan, and $200,000 pledged in like manner to the National City Bank, all of which was afterwards redeemed by the said Receiver by the payment of the debts secured thereby.

10. Capital stock and bonds of the Buffalo, Bradford and Pittsburgh Railroad Company.

This road is familiarly known as the Bradford Brauch of Erie, and runs from the main line of the Erie Railway at Carrolton, N. Y., to Gilesville, Pa. It is a Pennsylvania corporation. The road was leased to the Erie Co. January 5, 1866, for the term of 499 years, at the annual rent of 7 per cent. on its outstanding bonds, amounting to $580,000. A copy of said lease is transmitted herewith, and referred to and described in No. 31 of Exhibit H and No. 34 of Exhibit L.

The road and the corporation has been always managed by the Erie Co. as an auxiliary, and a branch of its main line connecting the same with coal and oil fields of Pennsylvania.

The Erie Co. acquired $2,017,700 of its capital stock and $185,500 of its bonds before the execution of said mortgage. The estate and franchise of

the Erie Co. in this company and its railroad are included within the property described in said mortgage.

$50,000 of these bonds were outstanding as collateral security for the indebtedness of the Erie Co. to T. B. Wallace & Co. at the time the Receiver was appointed, and the same were afterwards redeemed by said Receiver.

It has become one of the most important branches of the Erie Railway, because of its furnishing a large freight traffic in coal and oil, and also because of its extension to the vicinity of what is known as the Erie Coal lands, heretofore described.

The estate and interest of the Erie Company in this railroad and its franchises are represented by the capital stock, bonds of said company, and the lease aforesaid.

11. Capital stock and bonds of the Suspension Bridge and Erie Junction Railway Company.

This company is a corporation of the State of New York, with a capital of $500,000, and a bonded debt of $1,000,000. All of its bonds were guaranteed by the Erie Company.

It connects the main line of the Erie Railway at East Buffalo with the Suspension Bridge, a distance of twenty-three and one-half miles. This company was organized and its road was built by the action of the stockholders, directors and officers of the Erie Company, and the whole expense of the same was paid from the treasury of the Erie Railway Company; and if the affairs of the Erie Company had been properly and justly managed at the time, the whole of the capital stock and bonded indebtedness would have been owned by the Erie Company, for it had paid all the moneys that said stock represented, and no other person or corporation had any legal or equitable right to the same: but the stock was distributed and given away without consideration to the officers and friends of the officers of the Erie Company. Afterwards, and during the