ne cost perhaps $2,500,000 to construct, yet the syndicate turned this
over to the Metropolitan for $10,000,000 of Metropolitan securities.
They similarly acquired a franchise for a line on Columbus Avenue,
spending perhaps $500,000 in construction, and handing the completed
property over to the Metropolitan for $6,000,000. In exchange for these
two properties, representing a real investment, it has been maintained,
of $3,000,000, the inside syndicates received securities which had a
face value of $16,000,000 and which, as will appear subsequently, had
a market cash value of not far from $25,000,000. They purchased an
old horse-car line on Fulton Street, a line whose assets consisted of
one-third of a mile of tracks, ten little box cars, thirty horses, and
an operating deficit of $40,000 a year. At auction, its visible assets
might have brought $15,000; yet the syndicate turned this over to the
Metropolitan for $1,000,000. They spent $50,000 in constructing and
equipping a horse railroad on Twenty-eighth and Twenty-ninth Streets and
turned this over to the Metropolitan for $3,000,000. For two and a half
miles of railroad on Thirty-fourth Street, which represented a
cash expenditure of perhaps $100,000, they received $2,000,000 of
Metropolitan stock. But it is hardly necessary to catalogue more
instances; the plan of operations must now be fairly evident. It was
for the members of the syndicate, as individuals, to collect all the
properties and new franchises that were available and to transfer them
to the Metropolitan at enormously inflated values. So far, all these
deals were purely stock transactions--no cash had yet changed hands.
When the amalgamation was complete, the insiders found themselves in
possession of large amounts of Metropolitan stock. Their scheme for
transforming this paper into more tangible property forms the concluding
chapter of this Metropolitan story. *

* In 1897 the Traction Company dissolved, after distributing
$6,000,000 as "a voluntary dividend" among its stockholders.

Nearly all the properties actually purchased and transferred in the
manner described above, had little earning capacity, and therefore
little value; they were decrepit horse-car lines in unprofitable
territory. The really valuable roads were those that traversed the great
north and south thoroughfares--Lenox, Third, Fourth, Sixth, Eighth, and
Ninth Avenues. Many old New York families and estates had held these
pr