lested,
the history of the Baltimore and Ohio in the next decade might have
been very different. But the original controlling interests, the Garrett
family, still held the balance of power. As the bad bookkeeping and
other irregularities of the past naturally reflected on the Garretts, it
was their interest to suppress further investigation as far as possible;
and their antagonistic attitude toward the policy adopted by the new
Spencer management was seen in the annual election of directors in
November, 1888. Only five of the members of the board were reelected,
President Spencer was ousted, and Charles J. Mayer was elected in his
place.

This second change in management sidetracked the plans for radical
reform, and little improvement resulted either in earning power or in
financial condition. The company had fallen upon evil days. The net
profits did not increase, and eight years after 1888 they were smaller
than in that year, while the debt and interest charges constantly
grew. Despite these ominous facts, dividends were paid regularly on the
preferred stock and in 1891 they were resumed on the common stock. In
the latter year a twenty per cent dividend was declared "to compensate
shareholders for expenditures in betterments and improvements in
the physical condition of the property," while at the same time the
directors decided to raise five million dollars of new capital for
expenditures which would be necessary to handle the increased traffic
created by the World's Fair at Chicago.

The traffic problem continued to be a thorn in the flesh and until 1893
freight rates were constantly being cut. The opening of the Baltimore
and Ohio connection to New York had brought keener competition from the
Pennsylvania Railroad and had made deep inroads into the Baltimore and
Ohio revenues. Such conditions made even the Garrett interests feel that
something should be done, and in 1890 a "community of interest" scheme
was proposed. To control the stock of the Baltimore and Ohio Railroad,
Edward R. Bacon in New York, acting harmoniously with the Garrett
family, formed a syndicate of capitalists representing the Richmond
Terminal system, the Philadelphia and Reading Railroad, the Northern
Pacific Railroad, and other properties. The ultimate plan, which proved
too visionary, was to consolidate under one control a vast network of
lines extending all over the continent.

The syndicate had made little progress toward rehabilitation