The Allegheny bonds were seven per
cents, but they were payable, not in gold, but in currency, in
America. They were therefore wholly unsuited for the foreign market.
But I knew that the Pennsylvania Railroad Company had a large amount
of Philadelphia and Erie Railroad six per cent gold bonds in its
treasury. It would be a most desirable exchange on its part, I
thought, to give these bonds for the seven per cent Allegheny bonds
which bore its guarantee.
I telegraphed Mr. Thomson, asking if the Pennsylvania Railroad Company
would take two hundred and fifty thousand dollars at interest and lend
it to the Allegheny Railway Company. Mr. Thomson replied, "Certainly."
Colonel Phillips was happy. He agreed, in consideration of my
services, to give me a sixty-days option to take his five millions of
bonds at the desired ninety cents on the dollar. I laid the matter
before Mr. Thomson and suggested an exchange, which that company was
only too glad to make, as it saved one per cent interest on the bonds.
I sailed at once for London with the control of five millions of first
mortgage Philadelphia and Erie Bonds, guaranteed by the Pennsylvania
Railroad Company--a magnificent security for which I wanted a high
price. And here comes in one of the greatest of the hits and misses of
my financial life.
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