SAN FRANCISCO.

Evening Star, Issue 4190, 1 August 1876, Page 3

SAN FRANCISCO.

(From our orn Correspondent. )

June 21, 1876. A great deal of comment and some little excitement has been created among the Australian Colony here, by the threatened discontinuance of the Australian Mail Service. Like everything American, the Pacific Mail Company is g wernedby the almighty dollar, and it has been the report and plaything of rival operators on Wall street, where the head office is, although San Francisco is the centre o fits trade and the place where its head quarters should be, it was announced shortly after the arrival of the Colima, from New Zealand, that the company had changed hands, and that the Australian line, which had been started as a feeder to the overland route and had never paid, would be discontinued. Inquiries at the Pacific Mail Company’s office only confirmed the rumor. The general manager said great changes were to be made, but what he did not know. What he did know was that the directors kept them short of funds, and that the U.S. Marshal had been in possession of the company’s ships for some time past, releasing one on the arrival of the other. The murder was out soon. It appeared that although the company, prudently managed, was solvent, it had been managed for stock jobbing purposes. Jay Gould, who is a great Wall street operator, obtained control of the P. M. Company in 1874, after the notorious Fisk and himself had ban!; rupted the Erie railroad. “He suddenly appeared at Boston as the owner of 167,500 stock—a controlling interest.” I quote from the record of facts in the ‘ San Francisco Chronicle’The brilliant combination by which he secured control of almost the entire carrying trade of the Pacific dwindled his former achievements into insignificance. While the Pacific Mail Company refused to meet his wishes on the subject of freights, the Union Pacific [railway] could not be made a paying investment. In conjunction with the Central Pacific he organised a rival company—the Oriental and Occidental—which depreciated the stock of the Pacific Mail considerably. By attacks through the papers he succeeded m defeating its subsidy, and this effectually broke it do An. [The Oriental and Occidental now quietly divides the spoil with the Pacific Mail Company, whose dock its ships use.] The stock fell from 52 to about 31, or nearly en a par with Union Pacific, which wavered between 30 and 35. He had been ‘ going short ’ of the stock for some time, and now began to haul his net. He bought largely, and by manipulating some of the directors, among them George S. Scott, James D, Smith, and Charles J. Osborn, he secured control of more. The directors who had honestly sought to maintain the li m felt that it was hopeless to strive further to escape from the grasp of the octopus of Wall street. A correspondence was opened in which he proposed that if Talcott, Alexandre, and Guyon would retire, and thus give him control, he would protect the company’s stock. They did so, and the stock advanced once more to 45 in a few weeks. His next step was to double the tariffs between San Francisco and New York on both lines, and to operate the Pacific Mail in the interest of the overland route, and against t.iat of the Panama Railroad, which had been its objective point. Under the impetus of its connection with the Pacific Mail, Union Pacific went up from 35 to 84. If Jay Gould’s ambition had been satisfied with the control of these two great routes of travel, all wou'd have been well with him; but his insatiate spirit thirsted to add to his flo. ks and herds that pet lamb of Trenor W. Park, the Panama Railroad. To this end he now schemed and plotted. He discriminated against it in every way, and used all the arts that had succeeded s> well in breaking down the Pacific Mail, the better to build it up again in his own possession. He withheld the payment of nearly half a million owing by the Pacific Mail to the Panama Railroad ; but just when he tloagLt he had the Panama Railroad so nearly bankrupted that it must speedily fall before him, as the Pacific Mail had fallen, he found that Trenor W. Park and his associates were engaged in a movement that, unless defeated, must swamp the Pacific Mail, namely, the organisation of an opposition line of steamers to connect with the Panama Railroad. How he fought against this movement in the courts by injunction and otherwise, and how the organis.ition of the ■ anama Transit Company was successfully accomplished under cover of outside parties, is history too recent to require repetition. Pacific Mail stock fell away below the figure at which Jay Gould loaded up with it. It was remarked, as strange on the street that ho made no effort to sustain it, but, on the contrary, seemed to do everything in his power to aid its

tumble. It waa at this juncture that the bogus two million bond and mortgage business came in. It is probable, however, that this transaction has a simpler explanation than that which attributed to it the purpose of seizing the company's steamers. With a competing line to Panama, the value of steamship property to Jay Gould had materially lessened. He had sagacity enough to see the folly of attempting to keep the Pacific Mail stock up, when Panama was entirely independent of it and in the hands of adverse holders. He had determined to unload. It is probable that he was really scheming to provide security before the final crash came for payment of his large outlays on Pacific Mail; and this view is confirmed by the only obstacle he interposed to the transfer of the company to the control of its rivals, as will presently appear. He must have seen that as soon as the Panama Transit Company was organised this transfer was inevitable. The control of the Pacific Mail Company was got away from Jay Gould by using against him the very tactics by which he obtained it. After thus destroying its value as a stock Trenor W. Park and his associates set to work buying in. Frederick E. Lane, one of the keenest blades on the street, was their chief whipper-in. In the meantime they coquetted with the dissatisfied directors. Rufus Hatch, whom Jay Gould had once bitten in a stock operation to the tune of 80,000d015., was eager to assist the combination, and a large amount of proxies were thus obtained, but still a considerable amount of additional stock waa necessary to control it. In the meantime Gould made, or pretended to make, a desperate effort to retain control of the stock. His brokers, Charley Osborne and others, offered as high as seven-six-teenths for the rise of proxies at the election, which is about 45d0l for each hundred shares. Pacific Mail, which has been driven down to 17 by the successful establishment of the Panama Tiansit Company, rose to 24f. Then he unloaded 25,000 shares on the market in one day, breaking it down to 20. He thus made the Panama people pay for their luxury ; but they were content so long as they obtained the control of Pacific Mail which it gave them. Then ensued the formal correspondence between the directors and Trenor W. Park, in which it was agreed on the part of the Panama Railroad Company that no cliscriminnatiou should be made against the interests of Pacific Mail—as a condition, the old directors following Jay Gould overboard. On Saturday last Jay Geuld and Sydney Dillon met Trenor W. Park, Wm. P. Clyde, and - amuel Barlow, counsel of the Panama Railroad Company at the office of the latter, Gould and Dillon, agreed to submit quietly on condition that the payment of the indebtedness of the Pacific Mail to the Panama Railroad should not have the precedence of their claim for advances made to the Pacific Mail. Whether any other condition was imposed is open to question. The belief that Gouid had also secured an agreement that the present freight rates shall be maintained materially strengthened Union Pacific to-day. On the other hand, some of the old directors who were in the pool, insist that no such agreement was made; that there will be an immediate reduction of rates to one-half, which will still be profitable, and which will be ruinous to Union Pacific, and that the new combination will force the pace by putting on a steamer every ten days in June and one every week in July or August, as soon as arrangements are completed, vessels of the Pacific Mail alternating with those of the Panama Transit Company. So far as the Union Pacific is concerned the breaking of the brilliant combination by which Gould doubled the value of both lines, remands it to the position it occupied before he took it. The increase of value was due to that combination, and falls with it. It is now in the power of the new combination by largely reducing rates to cripple the Union Pacific, and probably ruin Jay Gould. In the meantime what is to become of poor Jay Gould? He is loaded up with, about two-thirds of the Union Pacific stock, which is nearly thirty-seven millions, and which has fallen from 84 to 60 through his loss of the control of the great ocean route that he used as an adjunct to it. It is certain that he is a bold and brilliant operator, but it is questionable whether those qualities can save him. He must operate the Union Pacific at a profit or go under; and in this, as we have seen, he is at the mercy of men who will save or ruin him, as best suits their own interests. He no longer has the executive energy and practical business faculty of Jim Fisk to back him. In these qualities he is lacking, and without them it is questionable whether he can cany a weight which it is impossible for him to unload without immense loss. Said an old Wall street man today, “Jay Gould is ended. He loaded with Union Pacific at 40 ; it went to 84, when he gotcontrol of Pacific Mail. It has fallen back to 60. There is nobody dealing in it, and he keeps it up himself. He must lose from five to six millions. It is the opinion of every body in the street that he is ended.” Whitehouse, the broker of tbe successful poo 1 , said to-day that Gould was short fifty thousand shares of Pacific Mail. It was about 17 when he shorted; now it is 28, and steadily rising on its brighter prospects and consequent increased demand. He has been short on 15,000 shares of New York Central for two years, borrowing the stock from Vanderbilt at high rates. He cannot buy, as Vanderbilt’s brokers stand in the market and purchase every share—the old Commodore being determined to prevent him filling his shorts. His loss on New York Central already foots up over half a million. He is also heavily short on Western Union, which recently has been steadily rising. His loss on Union Pacific has been carefully estimated to be 5,000,000 dollars. The Australian branch of the Pacific Mail Steamship line will be discont:naed. It was started as a feeder of the overland routes, and has been a losing investment. It is said there will be a clean out of the officers of the Pacific Mail, not only in New York, but in California, China, and Japan, who were appointed in the Gould interest.”

(Tohe continued.)