THE NEW YORK CENTRAL AND HUDSON RIVER
RAILROAD COMPANY

GRAND CENTRAL TERMINAL

NEW YORK, December 15, 1911.

To the Holders of The New York Central and Hudson River Railroad Company's Three and One-half Per Cent. Gold Bonds, Lake Shore Collateral:

Under the indenture, dated February 4, 1898, executed by The New York Central and Hudson River Railroad Company and the Guaranty Trust Company of New York, as Trustee, pursuant to which the above-mentioned bonds were issued, the Lake Shore & Michigan Southern Railway Company may be consolidated with the New York Central, or any other company may be consolidated with the Lake Shore, upon such terms as may be approved by the holders of threequarters of said bonds; but in case of any such consolidation, these bonds and certain other bonds of the New York Central of a similar issue not exceeding in amount $21,550,000 (the latter being the three and one-half per cent. gold bonds of this company for which stock of the Michigan Central Railroad Company is pledged as collateral) shall be secured by a mortgage upon the railroad of the New York Central, as provided in Section 5 of Article Two of the indenture, next in rank and second only to its existing general mortgage, dated June 1, 1897, securing an authorized issue of $100,000,000 of bonds, and in connection with any such consolidation of the Lake Shore and the New York Central, no lien or charge shall be created or incurred except in subordination and subjection to the prior claim, lien and charge of the Lake Shore collateral bonds.

The New York Central owns more than 90 per cent. of the stock of the Lake Shore, and it is thought that it may be desirable to consolidate the two companies, and to include in such consolidation certain others of the New York Central Lines.

As a preliminary step, your consent is requested pursuant to the provisions of the indenture securing your bonds.

Such consent being given, before making use of it, the New York Central will secure these bonds and also the Michigan Central collateral bonds above referred to by executing a mortgage upon the railroad now owned by it, second only to its existing general mortgage, and in that connection will pay the mortgage tax, which will entitle your bonds to the exemption provided for in the existing mortgage tax laws of the State of New York.

The indenture by which your bonds are secured provides that the amount and numbers of coupon bonds held by any person executing any request or other instrument as a bondholder and the date of holding the same may be proved by the certificate of any trust company, bank, bankers or other depositary, if such certificate shall be deemed by the Trustee to be satisfactory, showing therein that at the date therein mentioned such person had on deposit with such depositary the bonds described in such certificate. The holding of registered bonds of course is shown by the registry. The holders of coupon bonds are, therefore, requested to furnish the certificate of a depositary, as provided in the indenture, a form of which certificate is herewith enclosed. The deposit of bonds required for the purpose of procuring such certificate need be only a temporary one.

Herewith you will find a form of consent, which we should be pleased to have you execute and return at your convenience, first having acknowledged its execution before a notary public.

By order of the Board of Directors.

THE NEW YORK CENTRAL AND HUDSON RIVER RAILROAD COMPANY, W. C. BROWN,

DWIGHT W. PARDEE,

Secretary.

President.

Extra copies of the form of consent will be sent to you on application.

FORM ACCOMPANYING PRECEDING NOTICES.

191 .

The undersigned, being the owner and holder of THE NEW YORK CENTRAL AND HUDSON RIVER RAILROAD COMPANY'S THREE AND ONE-HALF PER CENT. REGISTERED (COUPON) GOLD BONDS, MICHIGAN CENTRAL COLLATERAL, under an indenture dated April 13, 1898, to Guaranty Trust Company of New York as Trustee, of the aggregate par value of $ numbered as follows:

*

on his (her, its) own behalf and on behalf of his (her, its) successors in the ownership of such bonds, hereby consents to and approves of the consolidation of The Michigan Central Railroad Company with The New York Central and Hudson River Railroad Company, or its successors, together with any other railroad companies, now or here

after of the New York Central System, which the Board of Directors of The New York Central and Hudson River Railroad Company, or its successors, may determine to include in such consolidation with it, and also hereby consents to and approves of the consolidation of The Michigan Central Railroad Company with any other railroad company or companies now or hereafter of the New York Central System, such consolidation or consolidations being made upon such terms and conditions as the Boards of Directors and the stockholders of said companies, acting pursuant to law, may fix, and the particular terms and conditions hereinafter mentioned; this consent being applicable either to a single consolidation or to successive consolidations which may be effected by consolidation proceedings or by merger under present or future laws, or by purchase or otherwise.

The consent and approval hereby given are, however, on the particular terms and conditions that, prior to any such consolidation, The New York Central and Hudson River Railroad Company's Three and One-Half Per cent. Gold Bonds, Michigan Central Collateral, and The New York Central and Hudson River Railroad Company's Three and One-Half Per Cent. Gold Bonds, Lake Shore Collateral, shall have been secured by a mortgage to be executed by The New York Central and Hudson River Railroad Company upon the railroad owned by it at the date hereof, which mortgage shall be next in rank and second only to the existing general mortgage of The New York Central and Hudson River Railroad Company, dated June 1, 1897. securing an authorized issue of $100,000,000 of bonds; and that the Railroad Company shall have paid the tax on the Michigan Central collateral bonds under the present mortgage tax law of the State of New York; and that in connection with any consolidation with the New York Central no lien or charge upon the property of The Michigan Central Railroad Company shall be created or incurred except in subordination and subjection to the prior claim, lien and charge of the Michigan Central collateral bonds.

and known to me to be the same person described in and who executed the foregoing instrument, and he duly acknowledged to me that he executed the same.

Notary Public,

duly sworn, did depose and say: that he resided

that he was

of

the corporation

which executed the foregoing instrument; that he knew the seal of said corporation; that the seal affixed to said instrument was such corporate seal; that it was so affixed by order of the Board of

as such

of said corporation, and that he signed his name thereto

by like order.

Notary Public,

The undersigned hereby certifies that, at the date hereof,

had on deposit with it

191

of THE

NEW YORK CENTRAL AND HUDSON RIVER RAILROAD COMPANY'S THREE AND ONE-HALF PER CENT. COUPON GOLD BONDS, MICHIGAN CENTRAL COLLATERAL, dated April 13, 1898, each of the par value of $1,000, numbered

PURPOSE AND METHOD OF CONSOLIDATION1

REPORT OF THE COMMISSION TO THE SENATE OF THE UNITED STATES. BY THE COMMISSION:

The Interstate Commerce Commission has the honor to report the result of its investigation, conducted pursuant to the resolution of the Senate of July 10, 1913, reading as follows:

Resolved, That the Interstate Commerce Commission be instructed to investigate, if it has not the information now in hand, and report to the Senate, all the facts and circumstances connected with the proposed issue by the New York Central & Hudson River Railway, of 4 per cent. mortgage bonds for $167,102,400, for the purpose of taking up outstanding 32 per cent. bonds now existing against said railroad and the stock of the Lake Shore and Michigan Central Railways.

That the Commission be instructed to furnish the Senate with the date and amount of all said 32 per cent. mortgage bonds, the reason for their issue, when they mature, whether the issuing of the said 4 per cent. bonds for the said 31⁄2 per cent. bonds will not be an unwarranted and illegal capitalization of said railroads, whether the proposed consolidation of said railroads involved in the said proposed issue of 4 per cent. bonds would not be unwarranted and unlawful, and whether the increase of the rate of interest thus proposed by the issuing of said 4 per cent. bonds is necessary, even though the consolidation of said railroads is unobjectionable.

The New York Central & Hudson River Railroad Company will be referred to in this report as the New York Central, the Lake Shore & Michigan Southern Railway Company as the Lake Shore, and the Michigan Central Railway Company as the Michigan Central.

The $167,102,400 of bonds referred to in the Senate resolution constitute the total of the New York Central's Lake Shore collateral bonds for $90,578,400, issued in 1898, to mature in 100 years, in payment for about 90 per cent. of the stock of the Lake Shore at $200 a share; its Michigan Central collateral bonds for $19,336,000, issued in 1898, to mature in 100 years, in payment for about 90 per cent. of the stock of the Michigan Central at $114 a share; its debenture bonds for $48,000,000, issued in 1904, to mature in 30 years; and its debenture bonds for $9,188,000, issued in 1912, to mature in 30 years.

1 Interstate Commerce Commission. No. 5960. In the matter of a proposed Bond Issue by the New York Central & Hudson River Railroad Company. April 13, 1914. By direction of Senate resolution the Commission reports to the Senate the facts, and its opinions on certain questions raised thereby, in connection with the New York Central & Hudson River Railroad Company's proposal to consolidate with that company the Lake Shore & Michigan Southern Railway Company and certain of its owned or controlled lines, and to refund $90,578,400 of the New York Central Company's Lake Shore collateral 3% per cent bonds with the consolidated company's 4 per cent mortgage bonds in consideration for the consent of these bondholders to the consolidation.