Lancaster daily intelligencer. [volume] (Lancaster, Pa.) 1864-1928, 1881-08-12

FRIDAY EVENING. AUGUST Il. 1851.
Nr. Bends Bends.
Mr.. Bond, being in possession OF the
Office of president of the Philadelphia
& Reading railroad company, proposes
Q scheme for the relief of that heavily
debt-burthened corporation. As none OF
the property of the corporation is in his
possession, and his title to the Office he
holds was not obtained from the
majority of the stockholders, there is
not much danger that his plan will be-
come operative, unless it is acceptable
to all the parties in interest. To make
one that will be so, evidently, is a difficult
undertaking. The embarrassment which
Mr.. Bond says was before him was to
make an income of a little over eight
million dollars do the work of over
eleven millions. He gives the total
amount of the fixed charges for interest
on all classes of Indebtedness as $11,'
265 ,668. OF and estimates the revenues OF
the road applicable to them at $s, ,41s,-
OOS.65. He believes that his scheme will
reduce the fixed charges within $780,
600; and thus bring them within the in
come, which is a result most devoutly to
be hoped for, and if Mr.. Bonds plan
will do it, Mr.. Bonds plan will be very
effective.
The plan which is to produce such
notable results is simple enough; it
proposes to give the creditors, who arc
now entitled to six and seven per cent.
interest, bonds bearing four and a-half
and three per cent. Thedifficulty in the
way as to one class of these creditors is
that their bonds are perfectly good pre-
ferred security, selling away above
par and not redeemable during
this century. These impediments
to an exchange Mr.. Bond recognizes as
insurmountable at present, and so he
proposes to lay by a portion of his new
bonds, with which to redeem the consol-
idated mortgage bonds when they be-
come due and meanwhile the other
creditors who are to take the Bond
bonds are to do SO with the knowledge
that there is a big prior mortgage ahead
of them as lien upon the company's
property, and that they are to trust to
luck that it don't fall down upon them
before it is due, and that when it is due
the company will be able to raise the
money to pay it upon the Bond bonds
reserved for the purpose.
This good luck may be theirs; but still
there is a risk about it; and one that nat
urally would be paid for by the offer of
large interest on the Bond bonds; espec-
tally when the creditors who are to take
them are entitled to receivesix per cent
on their present securities. But to reduce
the fixed charges the interest rate must
be reduced; so that the Bond bonds, in
stead of raising the interest rate from
six to ten per cent, drop it down to
three. That evidently would reduce the
amount to be annually provided for out
of the income. But then how are thu
creditors to be persuaded to accept it
For persuaded they need to be {; though
their present bonds are redeemable al
any time, the company has not tn
money with which to pay them.
If we understand Mr.. Bonds idea, II
is that the inducement to the exchange
ola six per cent. fora three or four ant
a half per cent. bond of no greater secu
rity, is to be offered in the shape of :
bonus in stock; and to that end he pro
poses to increase the stock about one
third, or say thirteen millions. JUS
how the allotment is to he made we ar
not advised, but this additional stool
ssems to tho be thing relied on tt
grease the ways in launching til
Reading ship into the quiet water
OF financial prosperity !; and if th'
stock will do it, maybe it is well aP
piled. The stockholders may object t.
having such a forcible levy made upor
them but they need not complain, al
they ought to pay their debts and il
they WON'T put their hands in their pock
cts and hand out their respective quota.
in liquidation, they must be content to
pay their creditors what they will &C
cept for their fOrbearance.
But the affairs of this Reading com
pany are a very curious study
Everybody says the road is bank
rupt. President Bond declares il
emphatically when he says that the
annual charges exceed the receipts
about one third and that the only way
to save the concern is to reduce the
charges, since the income cannot be ma.
terially increased.
But a corporation which is bound to
pay annually more than it can hope to
earn is apparently irretrievably smashed
and its stock worthless. Yet it is this
which Mr.. Bond proposes to give to the
creditors of the company to induce
them to lower the rate of interest on
their bonds. He proves to them that
the stock is worthless to show that their
interest cannot be paid, and then turns
about to persuade them that the worth.
less stock is a good consideration for the
exchange of a six per cent. bond for a
three per cent.
How is this ? are the creditors silly
or is Mr.. Bond or is he only lying Z
Certainly, if the Reading company has
no reasonable expectation of meeting its
fixed charges with its income, its stock is