During the thirty-two years of rapid transit discussion between 1868, when the New York City Central Underground Company was incorporated, up to 1900, when the invitations for bids were issued by the city, every scheme for rapid transit had failed because responsible capitalists could not be found willing to undertake the task of building a road.  Each year had increased the difficulties attending such an enterprise and the scheme finally evolved had put all of the risk upon the capitalists who might attempt to finance the work, and left none upon the city.  Without detracting from the credit due the public-spirited citizens who had evolved the plan of municipal ownership, it may be safely asserted that the success of the undertaking depended almost entirely upon the financial backing of the contractor.  When the bid was accepted by the city no arrangements had been made for the capital necessary to carry out the contract.  After its acceptance, Mr. McDonald not only found little encouragement in his efforts to secure the capital, but discovered that the surety companies were unwilling to furnish the security required of him, except on terms impossible for him to fulfill.

The crucial point in the whole problem of rapid transit with which the citizens of New York had struggled for so many years had been reached, and failure seemed inevitable.  The requirements of the Rapid Transit Act were rigid and forbade any solution of the problem which committed the city to share in the risks of the undertaking.  Engineers might make routes and plans, lawyers might draw legislative acts, the city might prepare contracts, the question was and always had been, Can anybody build the road who will agree to do it and hold the city safe from loss?

It was obvious when the surety companies declined the issue that the whole rapid transit problem was thrown open, or rather that it always had been open.  The final analysis had not been made.  After all, the attitude of the surety companies was only a reflection of the general feeling of practical business and railroad men towards the whole venture.  To the companies the proposition had come as a concrete business proffer and they had rejected it.

At this critical point, Mr. McDonald sought the assistance of Mr. August Belmont.  It was left to Mr. Belmont to make the final analysis, and avert the failure which impended.  There was no time for indecision or delay.  Whatever was to be done must be done immediately.  The necessary capital must be procured, the required security must be given, and an organization for building and operating the road must be anticipated.  Mr. Belmont looking through and beyond the intricacies of the Rapid Transit Act, and the complications of the contract, saw that he who undertook to surmount the difficulties presented by the attitude of the surety companies must solve the whole problem.  It was not the ordinary question of financing a railroad contract.  He saw that the responsibility for the entire rapid transit undertaking must be centered, and that a compact and effective organization must be planned which could deal with every phase of the situation.