Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1883-11-10
one OF eOuLDs mErHOps.
The Texas and Pacific Railway
BOBdholdeFs Dissatisfied
With 10.

Mr.. Jay Gould's latest attempt at
playing q sharp game with his bond.
holders is worthy Of bis past record
He is President Of the Texas and Pa
eifie Railway Company, and, as such,
primarily charged with the duty Of
promptly paying its honest obligations.
However, It conhieted with his plans
to keep his contract, and, in Wall
street parlance be sat on it, The
Texas and Pacific Railway Company
in 1875 issued eight millions and up
wards Of income and land grant bonds,
secured BY a mortgage on ell Of its
lands in Texas. By the express terms
OF these bonds, the Company promised
to pay TO the holders the principal
sum in 1915, with interest "at the
rate Of seven per cent per annum, pay
able annually on the FIRST day Of July
in each year. but by a subsequent
clause it reserved to itself the option
to pay such interest 10 scrip, converts
ible into stock or lands, II the earnings
Of what is known as its Eastern divis>
ion were not sufficient TO pay such in
terest Interest, however, either in
cash or scrip, was beyond peradven>
ture.
The bond being an interest. bearing
security, II became the plain duty Of
the company to exercise its option to
pay scrip on the LIST Of each July, and
indeed such was the practice Of the
company until Gould found it conye-
nient to depress the bonds by wholly
defaulting in the payment of interest.
Accordingly, when the bondholders
demanded their interest in July, 1882,
they were politely informed that they
we're not entitled to either cash or
scrip unless the company-or Gould
rather-ehose to pay it, And the
same response awaited them in July,
1884. As it was, Mr.. Jay Gould with
whom they were dealing, the owners
Of the securities probably felt that a
contest in the courts would result in
the usual way, and they quietly smoth-
cred their indignation and surprise. !
Recently, however, number Of
these outraged bondholders picked up
courage enough TO consult counsel |
concerning their rights, and they
we're instructed that a failure upon
the company's part to exercise the ops
ton to pay scrip on thu first OF each |
July entitled them to cash. The ops
tion being created for the benefit Of |
the railway they were told that il was
its plain duty to avail itself OF 1t BY |
issuing scrip. otherwise the interest |
became due in cash. This was more |
than Gould bargained for, and de-
termined demand on him to pay this
interest brought him to his senses:
and hastily calling his board Of putty |
men together last month he passed a |
resolution to pay interest due on LIST
Of July, 1928, in scrip; that is, he
undertook to head of the bOndholders |
right to cash interest by exercising an |
option fifteen months after it had OK
PRED. The nature Of the transaction
becomes apparent when it is known
that il July, 1862, the Texas and Pa
cifc stock, into which this scrip is
convertible, was selling at "a per
share, and to. day it can be bought for
$22 per share. Gould first denied the
right of the stockholders to any inter,
est; but, being driven to the wall, con-
siderately tenders to them scrip
which thsy claim he will pick up at
low figures and use to further his ulN
innate plans.