The Anderson intelligencer. [volume] (Anderson Court House, S.C.) 1860-1914, 1883-07-26

The Fate oi the Augusta and Nno>,iilc
Line.
Eom tic .iy,,s,u C1nstit,;,aniiJ.

EOm tic .iny,,s,u CDnstt,r.ouriiu.
For some time past tie Augusta aud
Knoxville Railroad has been a variable
aud an interesting quantity in railroad
CIRCLES. Ihe failure 10 meet the interest
upon l'5 bonds in January and July last
la, brought the enterprise into public.
notice, and speculation ha. been INDUCED
IN q, to II, pT"iabe fate. At one time
1t WAS limited that private company
was iDrning To control the road. and
another that two railroad -yndicatc- were
cndcavOring 10 secure il AS a feeder.
Meanwhile, every cifus, has been made
To save this valuable property from
l"reci"-urr, absorption and sacrifice.
The city had Subscribed go 900 To- secure
lta completion, which The rniIuicipa.
aGihprtics we're in no t.urrv t. give up.
and many hundrcds Of dollar. had been
gwen By piivatc parties who were
anx'"n' /" realize something from the
Investment. The importance of ,ic
iine was admitted. business steadily in
creased, the management operated III.
roai with care, skill and economy, and
every pn>sibie dollar from It's earnings
Vas saved. Stiii 1t seems that 10 meet
the current expense, of the road aud to
of bonds were more than the line, ns AT
present buiii and bonded. could accom:
p!i>h, the difficulty being that the road
WAS 700 young to sustain itself under
these extraordinary expenses. Last
January, after the first deficit, the friends
oi the road, the lnrgest stock kho!ders i'm
The enterprise. hopeful OF its ultimate
success and confident of its value as a
lt,I
amount of the first deficit 10 save the
roads property from seizure and sale,
ana the enterprise tiued over till July.
al mat time, however, although the road
Continued to do well, the company found
themselves in the same predicament, and
that period passed with Il double set of
coupons outstanding rs debts against the
property. This time the stock holders
were unable to come to the rescue, and
speculation was rife rs to The next move
in this matter
Meanwhile, the bondhoiders seemed 10
'cel no alarm. Confident that the road
WAS over and over again good for the
amount OF lis deficit and bonded debt,
no evidence of foreclosure was detected
ana every one seemed inclined to give
the road Il chance to save the stock and
secure the control of the line for the
| city OF Augusta. On the first of Jul,
| however, ne" feature was presented.
Almost imperceptibly II movement in the
pond market began. Large lots were
| bought up at fair prices, and IA the de.
mand continued constant and steady.
much more since then has been put upon
tho market and from time to time heavy
purchases made. So general have these
transactions grown, that they have at
| tracted much attention in the bond and
money market and brokers have been
quite animated over the matter. In
quiry developed tho fact that Mr. John
Jay Cohen ha" 'een quietly aud effect,
ively, manag, @ the affair. lie had
purchased quite a quantity Of the bonds
nt 80, nut 1t wa" not rs yet understood
tor what purpose the purchases were
made
Mr.. NJ. j. Nerdery was asked what
the stir in 4 and X. bonds was about?
| The explanation Of this movement" ,"
said Mr.. Verlcry, ''must for the present
rest more upon reasonable suspicion than
upon absolute information"
W no are paying for the bonds >"
| Circumstances point to the formation
Of combination of capital gotten up
outside of the city. Who compose j,
and where the headquarters are must be
Tor The present matters of absolute spcru-
iation. The combination seemed to have
liked upon the price they are willing to
pay, and at present their position to.
wards the road seems to be strong and
impregnable. 1t is well known that the
last payment Of the January coupons
was not made from the roads surplus,
but was advanced by the friends of the
enterprise. Since that time the earnings
of the road have been devoted to the
cancellation of that debt. On the lst OF
July the road again found itself without
funds to pny this interest, and The friends
nf the company this time did not come
up to supply the deficit. Now, then,
these two sets of coupons stand out az
claims against the property of the road
and are of equal dignity with the bonds.
This accumulation of debt has probably
discouraged the holders OF the bonds,
and when this combination sent its agent
upon the market, who invited, although
he did not press them to sell, some OF
the largest owners readily unloaded."
"As u bondholder, Mr.. Verdery,
would you sell?"
81 have sold and have advised others
to do the same thing. AS | have just
remarked, SOME Of our largest holders
have closed out. The combination have
already large number of these bonds in
their possession. Now I reason this
way: Suppose the outsiders-those who
decline to dispose of their bonds-mau-
age to provide for the interest on the
bonds before October /, the expiration
Of :hei. grace, TIC combination or syn6i-
cate with this large amount of bonds in
their possession, will have on their
hands 7 per cent. security, which they
purchased considerably below par.
There they have the advantage. If, how.
ever, those who hold, cannot meet this
interest, the combination can foreclose
the mortgage and force tho sale. Then,
this syndicate can afford 70 put up more
at the sale than all competitors up to
that Ipoint where more is bid for the
road than the bonded debt amounts to,
when they still have an advantage,
reaping the benefit accruing to their
bonds. Now, say they purchased the
road at $400, 900, having already secured
100000 of bonds, they would simply
have to pay to the bondholders who had
not disposed of their interest pro rata
price, as 100000 is to the total issue OF
the bonds. (S630, ,000,) or c.. per cent.
They would thus pay for $1,000 of
outstanding bonds at 63l, Sl46,O0O.
Now these 100000 worth Of bonds at
S5, would cost them $4,000. The total
cost Of tho road would thus be only
S4S6,000 The smaller bondholders are
then scarcely able to protect themselves
against this combination. The moment