The Morristown gazette. [volume] (Morristown, Tenn.) 1867-1920, 1879-04-16
The Morristown Gazette
THE BONDH0LDERS KICKING
A DISC0URAGLNG CIRCULAR
FROM CHAIRMAN KELLY.
CHARLES O'C0NOR'S LEGAL OPP
LNION THE ca USE
So York Herald, April 81

opinion regarding the DOIius AS9uO0
railroad companies by the Tennessee
Legislature, published in the Herald Oh
Friday, has produced marked effect Il
financial circles. The bondholders fee
reinforced in their resentment OF th
proposal to give them meagre pittanc
for their due, and it is probable tina
very few, If any, of them will accept
member of the Tennessee Bondhold
ers' Committee said yesterday that not
single intimation of willingness to sn6
NIT to anything but the Coe award hae
be heard. "After reading Charle
O'ConOr's opinion" he remarked, mt
one can doubt that the bondholder'
have the first lien upon the railroads
The committee on Friday adopted the
following report, which is addressed e
each of the bondholders:
New York, April 4, 1S79.-SiE YOU
committee respectfully report that, pur
suant to the resolutions adopted at 8
meeting of bondholdeTs, held IN New
York, on the Sd day of November,
1878, they published in the Tennessee
newspapers, for some time before the
Legislature met in January last, a re-
newal of your offer to compromise with
the State on the terms and conditions OF
the Coe award, viz. to accept new six
per cent. bonds from her for sixty per
cent of the principal and interest OF her
outstanding bonds, the coupons for in
terest on the new bonds to be payable
scmf-annually and to be made receiva-
BILE for all taxes and dues to the State at
their face value after maturity.
In addition to publishing this offer in
the Tennessee newspapers your commit
tee employed and cent Gen. Roger A.
Pryor to Nashville to present the same
to the Legislature. The chairman of
your committee also went to Nashville to
advocate its acceptance. Both gentle
men were well received by the Governor
and by members of both houses Of the
Legislature, but your proposition was
rejected. Your committee have, since
the return home of Mr.. Kelly, their
chairman, been in correspondence by
mail and telegraph with members Of the
Legislature on the subject of a reduc-
tion of the terms of compromise sub
mitted through Gen. Pryor.
Hearing that bill was before the
Legislature to compromise the debt at
fifty cents on the dollar in four per cent.
bonds, your committee telegraphed to
that body protesting against the assump-
ton that a compromise could be effect
ed at fifty cents on the dollar, but ex-
pressing the opinion that the bondhold-
ers would modify the Coe award so that
the compromise bonds therein named
should fer the first four years draw but
four per cent. Such concession would
have given the State time to adjust her
taxation, which is now and for the past
two years has been but Une-tenth of one
per cent.
Without needing this suggested con-
cession, or the protest of your commit
tee against the assumption that a settle
ment could be effected by Tennessee
with her creditors at fifty cents on the
dollar, the Legislature passed and the
Governor has approved bill to COM
promise the debt at fifty cents on the
dollar in bonds bearing four per cenr.
interest, payable annually in Nashville.
This bill or proposition is first to be &C
cepted by the bondholders and after
ward ratified by the voters of Tennes-
see before the Legislature will pass a
law to make it effectual.
Your committee recognize how i'm
portant it is that bonds issued in COM
promise by their State should be sought
for by Tennessee investors. For the ex-
press purpose of making such bonds de-
sirable for Tennessee investors, who, it
is well known, will not now buy the
bonds of their State, and to the end that
they may be largely held at home as
safe and remuuerative security and for
tax-paying purposes and as some equiv
alent to the bondholders fer Telinquish-
ing so large a part of their claim as for
ty per cent. your committee have urged
and Insisted that the coupons of COM
promise bonds shall be made receivable
at their face value for all taxes and dues
to the State, as stipulated in the Coe
award, and also that Tennessee is amply
able to pay much more than you offer
TO accept.
Your committee therefore recommend
that the proposition of the Legislature
to compromise at fifty cents on the dol
lar in four per cent. bonds be not &C
cepted by the bondh0lders. If offered
to the committee it will be respectfully
declined.
In conclusion the committee beg leaYe
to remind you that it is the opinion of
some of the most eminent lawyers in
the country, among them Charles
O'COnor, of this city (whose opinion
to that effect is published in the New
York Herald Of this mornipg), that the
bonds Of Tennessee issued in aid of the
completion and equipment of the rail-
roads under the internal improvement
act of 1852 and acts amendatory thereto,
are first lien ON the roads to which
they are issued, the internal improve
ment act of 1852 being statutory mort
gage on the roads which received bonds
Hereunder to secure their payment and
the payment of interest upon them as
the same becomes due.
But, in regard to this statutory lien,
your committee are considering the
best means Cor its enforcement.
EUGENE KELLY,
Chairman Of Committee.