New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-06-07
ERIE PROSPECTS,
MR. McHEYRY TO HOLDERS OF PREFER ENCE
SHARES.


SHARES.
THEIR SHARES STATUTORY LIENS FOLLOWING THE
FIFTH MoRTGAGE-sTEPs NECESSARY TO PROTECT
THEIR PROPERTY
TO the EdttOr OF The TrtbHne'
SIR: It is now too late to send to America
any Erie shares transfer az the books close on June
IL ia not too late however TO forward proxies Tor the
purpose OF uniting with tho American shareholder'
should they be organized with the Wow OF impeding the
designs Of Messrs Bschoffsheim and Goldschmldt ana
their fellow-conspfators In America
The holders Of the preference shares most OF whom
reside in America should take immediate steps to pro
tect their rights Their shares, by the special act OF
April a. 1900 statutory liens, entitled TO seven per
cent interest or much Of IL is earned following the
fifth mortgage bonds and they should see that no debts
arc contracted that Will leopard those rights. The
preference shares are in reality bonds secured by stat
ute as are the sO-caed first mortgage bonds, though
no mortgage for them exists. Yet tho prospectuses for
the 81 600 900 sterling unsecured" bonds Issued IN 1868
and 1853 stated that those bonds took precedence OF the
nreference shares 80 did the prospectus for the con
soldated bonds issued June o. 1874 which included the
stsrDg bonds and the prospectus for the sOOOOo I'M
secured convertible bonds issued Feb. TO- lsS says;
The bonds now offered for subscription in success
siOn 10 the consolidated bonds, comprising me Wole vi
the COmpanys mortgages. The total OOhueu ueot vi
the Company, including the present lssne is s5OOV'Vv
reonfinG for annual interest SlS0OOO (4j0OO AIter
providing tins interest, the surplus revenue Wl DO
available for dividends t9,53690 seven per cenu
preference shares, and on io,VV0WV ordinary snaie
capital.
The holders Of the preference shares who by the act
Of Apr a. 1860 were in succession TO the five classes
OF mortgage debts aggregatnR only S83676Oo are as
Messrs Bschofshem and GOldschmdt would nave IL,
Gin succession to bonds amounting to OOOOOOO ana,
on the same principle il they are to continue 10 nave
their own way the preference shareholders will be Gin
successon to s6OOOOOOO The preference shares we're
originally unsecured debts bearing seven per cent IN
terest; but as a compromise with the Shareholders
when the Company 1860 defaulted in the payment OF
is mortgage interest, the holders Of the unsecured
agreed to fund back interest forego their m
erest accrung after jan l. 1852 unless 1t was earned
and the act OF April H. 1860 passed to give validity
TO the compromise and close the debt and share cap
tai accounts 1t rather strange that at this late
day the preference shareholders should be pushed to the
one side in order TO mako way for other unsecured
creditors whose bonds TO be included in new mort
Cages when created The preference shareholders have
rights which they maintain, and their position Is
strengthened as each holder OF any Of the original five
classes of mortgage bonds is silly enough to exchange
bs securities for consolidated bonds though induced to
do 80 by getting his interest gold instead Of currency
Il is puzzng to know why tho directors prefer paying
gold interest 10 paper interest Is It to give commission
of q per cent TO Messrs Bschosbem and GOdschmldt
on the old mortgage bonds exchanged for consol
idated bonds With board composed OF such large
proportion OF bankers" more nnancal WlsuOm shoulu
have been exhibited.
The conversion clause in the General Railroad act Of
April 2 1850 under which the Erie irregularities Origi
mated and have been Osered does not apply to tho Erie
Company, because it conflicts with the terms OF the
special act Of April H. 1860 Even If the general act did
so apply bonds under its provisions can only be Issued
for the amount OF money borrowed" that H. by the
laws of NewYork bonds, like shares, cannot be sold at
discount. and commissions can be allowed for sell
ing them Every Company. IL Is supposed in law, Will
attend to its own business, but modern finance has
ayered the law Besides the preference shares, nearly
the whole Of the old mortgage bonds aud OnefOurh OF
the ordinary shares OF the Erie Company well as the
bonds and shares or the companies owning It's leased
lines are held in America These represent at least
three ourhs the value Of the property under the control
of the directors. from the fact that majority Of
the Erie shares are hold in Europe changing hands
every day, Mcssrs BschOfshem and Goldschmidt, who
arc not bona dde shareholders themselves but morey
Spectators in the shares, have possession OF the
franchises OF the Company. 1t would be bet
ter for the interests OF nonresident share
holders to DO legally, as they virtually,
disfranchscd, and then the American minority would
be able to take some interest Erie affairs No Ameri
can railroad company except the Atlantic and Great
Western attempted to dispose Of its shares In Eu
rope IL only railroad bonds without voting power,
that have been here for sale by all the other
panes the Ere included II Europeans choose to buy
shares In America and bring them here they should be
content TO lose the voting power them, for they
not exercise any advantage either to themselves or
to the American shareholders While the shareholders
have certain rights they the time certain
duties and liabilities ana majority OF them should
therefore reside within the jurisdiction Of the courts
The Erie and Atlantic and Great Western Railway Com
panes are controlled by Europeans. and in these
exceptional cases they are controlled by one person
Mr. Henry LOUIS BIschofsheim. Your obt servant