New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1874-06-07

Ond mortgage bonds to be guaranteed bJ
the State Of Louisiana, s. 100 aQa " Losisi
ana State subsidy bonds, 81 ,5g0,gev = Texaa
$3,sl9.OO0 in stock, together with the com
pany's material on hand-agreed to com
pletc first class railroad from Donaldson
| vile to Houston, Texas-about 270 miles.
In September, 1872, the above named Sc
| curities were offered at the North and il
New Orleans for fifty cents on the dollar
with equal amounts in the shape OF eight
per cent income bonds and full paid Il
stock thrown in as gift to , each subscriber
A subscription of 81 ,OO0, GOO was actually
made in New Orleans, but the whole
scheme failed, because, among other rea
SOILS, the company did not have the securi
| ties to dispose OF. according to agreement
Even had they been in possession of Mr.
Bushnell and the full amount at the rate
| they were offered had been realized the
proceeds, 5000, 500, would have been en-
tirely insufficient to complete the road
without equipment from DOnaldsonville to
Houston, Texas, 270 miles, and there would
have been S., sol, coo of first mortgage bonds
in the hands of other parties, who would
have the right at any time after six months
default in the payment Of interest on theiI
bonds to fOreclOse and sell the property
This. your committee believe, was contem.
plated as final result by the holders OF
said bonds. .t-.
Mr.. Bushnell, through his sub contractors,
to whom, on an average, he paid about ten
per cent on the work done by them respect
lively, laid ten miles of track beyond Don
aldsOnville, and partially constructed, 10 a
very cheap and inferior manner. however,
some few miles of roadway to and along
Upper Grand river. All work ceased in
March, 1873, and nothing has been done
since.
On or about the eleventh of March, 1873,
El25, 900 Of second mortgage bonds were
OF track laid beyond DoDaldsonville; but
as the final limit of time, January Is, 1873,
for the completion of the whole road to the
Sahne river had expired nearly two months
previously, and the law itself provided that
''nOae of said second mortgage bonds, for
or upon that portion Of said main line Of
railroad not constructed within the time
limited, shall be guaranteed by the State Of
Louisiana" it is manifest that said bonds
should not have been SO Endorsed.
To date, therefore, on the sixth seven
miles of track laid west of Westwego, or
with only SO much road built, the State had
contributed 81 PAS 600, with no security for
the amount except second mortgage for
SS75,OOO on seventy miles of road beyond
WestwegO, subject to first mortgage lien
for the same amount.
The road beyond Donaldsonville has not
been operated since the track was laid, and
the liens OF all the contractors-whoy yet re.
main unpaid, including the constructor of
the draw bridge across Bayou Lafourche-
have been recorded in the respective par
ishes within which their work was done,
and the drawbridge was turned off SO that
it could not be used.
On the sixth of June, 1873, all of the roads
and property belonging to this company
were sold by the trustees of the Mobile
division second mortgage bonds, which was
third mortgage on the road west, and it
was all bid in by them for their principals.
On the twenty-sixth of August, 1873, the
said Mobile division second mortgage bond
holders, who are believed to be also the
first mortgage bondholdere, organized them
selves in New York into an association of
bondhclders with the name Of the New Or.
leans, Mobile and Texas Railroad Company
(No. in effect, and trustees Gardner and
Butler transferred to them in consideration
of the sum of 81. but without guarantee as
to title, on the second day of October, 1873,
all of the property from Mobile to Houston,
and from Brashear to Vermilionville, pur-
chased by them at the sixth Of June sale.
Prior to the sale on the sixth Of June,
1873, the Legislature OF that year had
passed bill to allow the company one
year more time to complete the road to
the Sabine river. or to January IL, 1874, for
toe guarantee of bonds, and until May 90
1874 for the subsidy bonds. but said bill
was vetoed and returned in January, 1874,
to the Legislature, which sustained the
veto.
On the thirty-frst of October, 1873. an
agreement was concluded, in New York, to
form among the Western division first
mortgage bondholders another company,
for the purpose of acquiring valid and
perfect title to, with a view to complete
said railroad west to Houston, Texas.
Capital stock to consist of the western di-
vision bonded debt; s., $780, 900 first mort.
gage and $4,000 second mortgage. or
S., lbs, 900 in shares Of 500 each. This
company was to apply to the Legislature
of Louisiana for recognition of itself as
the successor of the New Orleans, Mobile
and Texas Railroad Company west of the
river, with a continuation in its
favor Of all the rights, franchises, aids,
benefits, cooperation, ETC.. granted to the
old company, including the guarantee of
bonds, subsidies, etc.
The scheme was worthy of the projectors
and managers of the old company, but the
situation had changed. In 1869, 20 and
II, before the State had been despoiled,
State securities were worth stealing; but
now they are fallen too low to be worthy of
the intrigues of those who planned aud so
managed the famous "Credit
enterprise, and there is not corn
enough left in the crib for home consump-
ton and the encouragement of local in
1ustry.
The last Legislature passed an act rec.
ognizing the new company, but without aids
and benefits, on condition that it should
complete the road to Grand river by July l,
O> i
10 the Sabine river and Shreveport by
March l, 1876; and this act was approved |
and promulgated.
Az the new company did not really have
\ "yalid and perfect title" to the road west,
and as such could not be acquired without |
= judicial sale after a foreclosure of the |
first oitgage, or proceedings in bank |
,uptcy, they did not attempt to proceed. |
The act therefore by its own limitation,
will become null and void on the first day |
If July, next.
1t is believed that the main object was to |
procure revival Of the acts guaranteeing |
second mortgage bonds, and granting a |
subsidy. As this faiied-a committee of |
citizens appoint ted to consider the question |
laying declined to recommend ia renewal |
If State aid-there was nothing left but |
foreclosure of the Western division first |
mortgage, according to proceedings initial.
I'd by Frank M. Ames, trustee for the |
Western division first mortgage bondhold- |
,rs, by bill of complaint fled in the United |
States Circuit Conrt, November 90, 1873.
The trustee averred that the 'association |
If bondholders," styled the New Orleans,
Mobile and Texas Railroad Company (No. |
} had "come under obligations" to new |
association of bondholders, styled the New !
Orleans and Texas Railroad Company. and |
lie prayed for the protection of the court in
he work of completing the road to Grand |
liver, twenty one miles west Of Donaldson.
lille, and for decree of sale of the roads |
vest. TWAS authoritatively stated also at |
he time and thenceforward until recently,
hat about $3.50. 900 in money had been