Seattle daily post-intelligencer. [volume] (Seattle, W.T. [Wash.]) 1881-1888, 1884-05-03

fornia, and Others By way o: the port o.
San Francisco. over the rolling billovs
Of the Pacific. came 10 join them. Thers
they have founded their homes and
their towns Anxiously have they wait
I'd 10 garner in the resard justly due 20
them. aud long have they looked for the
completion of this enterprise as the
dawn OF a more prosperous day. Bat,
when Il comes, 1t comes not 70 build up,
but &c strike down.
VII! the facts bear out the assertion
| think they will. Says Nr. Snaliey on
pages l65 and i6S of his history. IN
speaking of the contract made With jay
Cooke d Co. on Nay ~. 1853: The
banking firm Jay Cooke & co. credit
| ed the railroad with lightweight cents
| on the dollar for thu bonds IT sold, and
as It disposed Of them a: par its mar
gin was very liberal one. Bot the
contract gave Il 500 of The stock of
the company for every 5000 of boad,
| sold, which would have amounted for
the completed road 70 about go, oOJ 900.
and one half of the remainder of the
| 100000 Of stock authorized by the
charter. The twelve original proprie-
tary interests which owned the stock
| We're increased TO twenty four. and
twelve OF them assigned To Jay Cooke
| x Go. A considerable amount of the
stock was given by the banking houses
| To subscribers to the bonds. but in all
| Gases An lrrevocable power OF attorney
was taken. so that the firm, having pur-
| chased thirteenth interest. controlled
/ the management of the compAny's at
fairs. Other specifications IN the con
tract made the firm the Sole financial
| aQsn Of the road, and the sole deposi-
| tory of it- fumes; provided for the cen-
version of the $4,000 of the old s'ock
outstanding iuto bonds OF fifty cents
on the dollar. created land company
| 10 manage town sites Lake Superior
| ana Puget sound and bound the firm
to raise f5,oOo,O 900 within thirty days
from January ?. 1870, with which the
company was Immediately to Commence
the building Of the road"
On page ISIS Mr.. Snalley says: Jay
Cooke * Co. raised the $5.oOi.0O0 re-
quir.d to be ready within thirty days.
by forming pool In Philadeis hla.
the members of which took ths bonds
at par and were given the twelve pro-
prletary interests IN the stock at $50
coo.
The profit of the firm in this great
transaction WAS $4,000 on the bonds
for which it i'd -. and $780, 900 on the
stock for which 1t paid nothing. Total,
81 10000.
rne $5,OOO.OOO of bonds carried with
them a total of x4l 100000 of stock to
be Issued ratably As fast as sections Of
twenty i've miles of the road were com
pleted. Each OF these twelve proprie-
tary shares were entitled to $33, 400 nom
NAL of the preliminary issue of stock,
and III addition to $S3.a3 nominal in
stock for the - per cent stock commits
sion on the sale of bonds, provided for
IN the contract between tue bankers and
the company.
By the time the road reached Red
river. the stock issued to zach of these
shares amounted to $J4l ia. Que haJ
interest ia Il company formed 10 speculate
!. torn sites on the Northern Paeyic line
also rent ruth these ttret0e shares"
Now, Mr.. Chairman, the minority of
the committee, on page Is of their re-
port, says: The old company utterly
failed in 1875 and new one had to be
organized before the work could be re-
sumed. The new or reOrganized ooal-
papy have constructed their road to
Wallula Junction, etc. This 'reOrgan-
led company. town site spectators
and all, Is the same in effect rs the orig
inai company. Says Mr.. Siualley in
speaking of the bankruptcy of the com
PAW on page HE'. after the failure of
Jay Cooke Il Co, and Its reorganlz alton:
The company seemed about to
plunge into the mlre OF hopeless Insol-
vency. The great enterprise of natu-
raj highway To the Pacific 10y the north
ern route, marked out by nature for the
purpose, appeared To bs fast nearing a
disastrous end. From this desperate
strait, the company was rescued by a
financial scheme of great sagacity and
soundness. for which credit WAS due
chiefly to Frederick Billings, then and
now "a director, and for Il tInle the Pres
ident of the company. He conceived
what WAS known AS the plan Of reor-
gaulZatIon."
What that plan was, and how it was
carried into effect. can he we'll told in
the language used by Mr.. Billings. in
su bse qnentlv explaining II to com
mittee of Congr. SIS: when the crash
came there we're three parties IN inter
est, those who had bought the bonds,
the holders of the stock, and the owners
of what Is called the proprietary inter
est The boudhOlGers We're scattered
from Nj line to Texas. and at that time
numbered about ll,OOO. Ibis large
Mount Of bonds WAS outstanding, and
there was a considerable floating debt,
and the road was bat little more than
paving its expenses. The enterprise had
reached no objective poiLt; 1t was neces-
sarv to carry 1t farther to make what
had been invested in 1t valuable. But
IN its then condition no additional
funds could be raised. and 30, early IN,
the spring of 1879, 1t Was thought best
10 foreclose the mortgage. to md the
road of Its debt, and to place 1t III con
dition for further development. All
parties in interest were brought to-
ee;hcr. and in order that there might be
no prolonged litig ition, all interests
were harmonized. and In few months
the property was sold under plan of
reorganization, which was made part of
the decree of foreclosure, and thus
speedily taken on. of court.
The agreement which harmonized all
parties WAS this: the capital stock, which
by the charter was authorized to be
300 OOO. 600. was divided into $5l Co.,
600 of the preferred stock, ard $3.50
QUO of common stock. The bondholders
were to have S3O,OOO,0O0 Of prefer
red stock for their $3o,OOO,OOO of
bonds, and as their tonds drew
! ) 10 per cent in gold. the interest was
called per cent currency two years
interest had already accrued. and 1t was
decided to give to tse preferred stock
holders the two years interest that had
accrued and three years in advance
five wears of interest at per cent, max
ING 40 per cent SO that each holder of a
bond of $1,000 received $l40O of pre-
ferred stock. This absorbed. say. So
90 900 of the preferred stock. and the
, remaining 100000 vas to be IN the
treasury for the general purposes of
the company. The stockholders were
to receive common stock, share for
share. were not to be allowed to vote
for several years, and were never TO
have dividends until. III each year, the
preferred stock had received per cent,
| and the remainder OF the capital stock,
after deducting S5l ,0oO.OoO of preferred.
and the common stock, issued to the
stockholders, was to be distributed to
the owners Of the proprietary interests
| Under this plan, on the 10th OF April
1875. a decree Of foreclosure for the IN
deb,edness of $330OO.OO was signed,
aud by sale under that decree pur-