Stuart Daggett examines the structural financial failures of major American railroads during the late nineteenth and early twentieth centuries, focusing primarily on the periods between eighteen ninety-three and nineteen hundred and eight. The volume provides detailed case studies of the Baltimore and Ohio, the Erie, the Philadelphia and Reading, the Southern, the Atchison, Topeka and Santa Fe, the Union Pacific, the Northern Pacific, and the Rock Island railways. Daggett analyzes the primary causes of financial collapse, highlighting the dangers of unrestricted competition, excessive capitalization, and bloated floating debts. He demonstrates how companies assumed annual obligations far exceeding their earning capacity, leading to receiverships and comprehensive security exchanges.
The narrative details the mechanics of voluntary and involuntary reorganizations, exploring how creditors were forced to surrender legal rights and how fixed charges were restructured. Special attention is given to the role of syndicates, voting trusts, and assessments on stockholders in raising necessary cash. The concluding chapters synthesize these experiences into principles of corporate finance, evaluating the effectiveness of different reorganization methods, the distribution of losses among securityholders, and the provisions required for future capital needs.
