The Republican journal., 1876-03-23
A Question Of Finance.

WITH MS financial VISION INTO the far future, and
makes suggestions when will attract the atten-
ton of our citizens. The address itself will be
| found in another column. 1t will be remember
ed that the loan of the credit Of the city to the
| railroad corporation, under the special provis-
| ions of the charter, as well rs the indv dua
subscriptions and avail, Of the first mortgage
bonds. did not suffice for the completion of the
| work. Resort was had to the general law l..
| which allows all cities and towns 10 be benefit
ted ~ a road 70 loan live per cent of their val
uation in it, aid. This was voted, the city is
| sued bonds to raise SOL 900, aud received As
security a note Of the railroad corporation. Sc
cured by the pledge of an equal amount Of pre-
! ferred stock. This note will become due in 1885,
! or nine Years hence. II is found that the rent
al Of the road. $4,000 per year, will pay the
corporations annual obligations and all its ma
| tured indebtedness by July. ISIS. After that
date there will be about $50 600 of the rental,
| heretofore used for reducing the debt, that will
! be no longer needed for that purpose, in conse-
! quence of the eXtinguishment OF all the lnnturetl
| indebtedness. What shall be done with that
! 100000 Of annual income: That j. the question
to which a portion OF the Mayors inaugural is
| directed, and from the conclusions of which on
| that head we decidedly dissent
| Ii will be recollected that two classes Of rail-
| road stock were issued under the charter, the
preferred and -preferred-the first being
al held by elite, and towns, and the latter both
| by towns and indy iduals. 1t is provided in the
| company's bylaws that dividends on the pre-
| Ierred stock shall first he made Scmi-.nnually
| from the net earnings Of said road, not exceed
| ing tx per cent. per annuln, the non-preter-
! red 10 take lis chances on what remains. The
obvious meaning is that preferred stock shall
| have its siN Pen cent from the hfSt net earnings
OF the road. Certainly Il debt not mat lring I'M
til niue Years thereafter cannot be held 10 mort
| gage The earnings to the exclusion II a claim
| that il 10y law maie Il preferred one,
But just here there comes in another require
ment. The statute allowing ctie- and towns
to pledge i've per cent. OF their valuation for
| railroad purposes, has This provision
\ city town raising MONEY by loan Is afolesaid
shall raise and pay besides the interest each year
after the third not les than three per cent. of the
principal, unless it i satisfactorily prov ided Tor iii
some other way.
our Mayor View - that the whole of the
$4,000 Of the unappropritted rental should,
under this provision, he by Tile Railroad mana
| gers applied to the city note-to the exclusion
Of the preferred stockholders from their clear
rights. A sinking fund that cuts oil twenty per
cent Of the dcbt'- principal every year. and eH-
tingu-he- the whole two wears before maturity
is unprecedented in the h-tor, Of finance, and
in this case would operate tnjustly ana opprc--
| sivelN. The Trainer, Of the law. in their wis
dom. were content with 4 yearly eXtinguisI-
ment Of three per cent, OF the principal of the
debt. They thought it would be sufficient 10
answer the ends ot prudence and sound finance.
| And they We're right
The plan TINT Ia, been contemplated, and the
one that meets the approHa OF The present Iii
rector> OF the company, i fair and INST one.
| 1t PROV ileS for The expenditure of the roads
income, after The maturcl ,itbt Shall be paid.
| as follows
| Interest on LIST mortgage, about $4,000
| Interest on $500 600 preferred stock. l5,600
| Interest on SlUl 900. city loan. 5000
e;31 $50
| The rental j. annually so 900
| The above obligations are 81 $50
| Leaving mcApended S4.340
I Apply this balance NJ Il sinking fund toward
the city loan note, and ii will give about four
and Il half per cent. annually for the purpose.
The city will draw per cent, by this plan,
| on $40 000 OF preferred stock which it owns,
besides securing the surplus Of the rental Il, a
sinking fund. We will, 10 he within bounds.
call the time six wears between the date ut
which interest can be paid on preferred stock,