The Hickman courier. [volume] (Hickman, Ky.) 1859-current, 1874-08-21
Defaulting Railways.


There is a busy time Just now among
lawyers, courts, and iuries in the way
of foreclosing railway mortgages.
Something over three hundred millions
of American railway bonds have gone
to protest on their interest coupons,
and the holders, at first shivering with
alarm at not receiving their expected
income, and then wrathful at what they
deemed the dishonesty of the borrow
ers, have began now, for the first time,
to examine their legal remedies, and to
inquire into the nature and value of
the assets which constitute their secu-
rity. In some cases they find curious
provisions in the mortgages, preventing
them from taking any steps to realize
until the expiration OF one, two, or
three years after defauit--also provid-
ina that NO fereelosurs shall take place
except on petition OF q n1aJorIty OF al
the bondhOlders-and other cunning
devices which really put the lenders in
worse plight than they would be at
common law. In still other cases they
find that the trustees under the mort
cages are loath to perform their duty,
thus raising the presumption that they
are acting in the interest of the mort
gaeors rather than of the mcrtgagees.
1t is fouud in a few instances that the
money borrowed to prosecute or com
plete a certain road was diverted TO
some other road with the connivance of
the trustees, and that bonds said to be
payable in gold are really payable only
in currency. Various other forms of
swindling have been developed, but for
the most part the non-interest-paying
railroads have resorted to no tricks,
either before or after the default. Most
of them, it is true, were built on the
Credit Mobilier plan, but that was well
known to the lenders.
The holders of these three hundred
and odd millions OF defaulted bonds
are mainly inhabitants of the United
States, Germany, and England, and the
ratio of&heir several holdings is prob
ably in the order IN which they are
here set down. All the Northern Pa
cifc bonds were taken in Canada and
England. Nearly all the new railways
in Michigan were built by New England
capital. NB JstOn and its suburbs are
carrying ON thirty to fifty millions of
protested -boCds. Several eastern brok-
en- down railways, like the New Haven,
Middletown and Willimantic, the Os-
wego Midland, the Canada Southern,
and the Chesapeake and Ohio, were
LudlUtN tOuHlIuCAC1 Will iAAOLNf DO-
mined in this country, and great shoal
of second mortgage bonds we're sold at
home after the first mortgages had been
taken in Germany and England.
The effect upon American credit of
this enormous failure to meet obliga-
tions is disastrous. The good and the
bad suffer alike In foreign markets.
Even those securities which have regu-
larly met their interest have suffered a
heavy decline. Germany is full of
American railway bonds bought at 80
to 95 cents (gold) which can be bought
back at % to 40, with the hearty thanks
of the present holders to anybody who
will take them at those prices. As for
negotiating new loans there, you might
as well attempt to sell lava on the sum-
NIT of Vesuvius. Not only is the mar
ket fer Eailaa az sec9rities destroyed, bnt
highest form Of security next TO govern-
ment bonds, finds no takers. The bot
tom has tumbled out of everything ex-
cept governments. Can anything be
done to re-establish our credit?-Chi-
cdgO tribune.