The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1885-10-08
THE PoRTLANDA AND oCDENSBURc
REORGANIZATION

THE PORTLAND AND oCDENsBuRc
REORGANIZATION.
Two plans for reorganizing the Portland
& Ogdensburg railroad will soon be before the
city council. We assume, and we believe
that it is an assumption in accordance with
the fact, that the members of that body, each
and all, in choosing between them, will be
influenced solely by adesire to do the best
thing for the city The council is elected by
the citizens generally, and when matters af-
fecting the public interest come before it for
action, the question every member should ask,
and if he is honest will ask, is, What line of
action will best promote the interests of the
people taken as whole? This is the ques-
ton which every member should ask him
self in this matter of the Ogdensburg rail-
road, and by its answer his conduct shouldbe
guided.
The city years ago invested a very large
amount of money in the Portland & Ogdens-
burg railroad. That money came out of the
pockets of the tax payers. A large part
of that money is irretrievably lost. The
road has failed to fulfil the glowing predic-
lions of its projectors and today is bankrupt.
The city has foreelosed its mortgage, and
under the statutes of the State, applying not
to this particular road alone, but to all roads
similarly situated, the road will soon pass in
to the possession Of the second mortgage
bondholders, encumbered by two debts-one
the first mortgage of 100000 and the other
the receivers certificates of $250,000. All
other claims against the road will be wiped
out by the foreclosure process. In the reor-
ganization which will follow foreclosure, and
which is controlled and directed not by any
special act, but by the general railroad laws
of this State, every second mortgage bond
holder will get for every hundred dollars Of
second mortgage bonds or coupons which he
owns one share of stock in the new com
pany. Inasmuch as the city owns the ma
jority of the bonds and coupons it will OF
course own majority of the new stock.
The new company will start strong and sol
ventand with good credit. The total incum-
brance on It's road will be but 81 05O 0O0,a sum
which its earnings can easily take care Of
The-city will control the corporation and in
no way can it be deprived of that control ex-
cept by its own voluntary act. Whatever
earnings remain after the fixed charges and
operating expenses are paid. the city will
have control of to divide if it sees fit among
the stockholders, or to apply to the reduction
of the existing debt upon the road. Its pos
session of the road will he as secure, and its
control of its destinies as complete as it is
possible to make it.
The process is simple and easily understood
by every citizen, and the result certain and
definite. We know exactly the condition in
which foreclosure and reorganization under
it will leave the ownership of the road One
lawyer does not say that the result will be
one thing, and another lawyer that the re-
suit will be another and very different thing.
There is agreement among all lawyers that
its result will be to put the city in complete
control of the road, subject to two incum-
brances only, and that the city cannot be dis
possessed except by its own voluntary act.
But now come a number of gentlemen who
own minority of the second mortgage
bonds and say to the city: ''You had better
not proceed under foreclosure, you had better
adopt plan we have fixed up. To be sure,
foreclosure puts you in complete possession
of the road and there is no doubt but you are
equitably as we'll as legally entitled to such
possession, but if you get the property you
may squander it. Wehave evolved plan that
will guard you against any such danger. And
we have arranged also that you shall get an
income out of the road. 1t will be nee
essary under our plan to pay something
to the third mortgage bondholders and the
holders of the floating debt, who would be
entitled to nothing under the foreclosure
plan, but then you are to get interest on
certain amount of bonds under our plan,
and for that boon you can, of course, afford
to pay something to men who have no legal
claim against you" Were the situation re-
yersed and the individual bondholders in the
majority, and this proposition had been
made to them, we imagine their answer
would be substantially that which the noun
tain goat in the fable made to the wolf
who coaxed him TO come down into the val
ley where the heritage was more abundant,
1--WE prefer certainties to uncertainties.
That ought to be the answer of the city.
If the principal object to be secured was
the getting Of an income for few years to
come for the city out of the road, and the
permanent retention of the control of the
road was secondary matter then the choice
between the foreclosure and the mutual
agreement plans might be difficult one to
make But as long as the chief object sought
is the security of the city's control there
ought to be no hesitation in choosing be-
tween plan under which the eity's control
cannot be lost except by its own voluntary |
act, as every lawyer admits is the case with |
the foreclosure plan, and one under which |
the control of the road may be lost to the |
city in spite of ITSELF as some lawyers GER |
tainly maintain is the case with the mutual |
agreement plan.
There is one point in the report of the |
committee of the second mortgage bond |
holders to which we desire to call attention |
In enumerating the advantages which they |
think will accrue from the mutual agree /
ment plan they say "A valuable charter /
under which the road may be saved from /
taxation to the amount of many thousands |
of dollars" will be preserved. The COM
mittee probably know that the State does |
not admit that the Ogdensburg road is /
exempt from taxation even now. They prob
ably know also that the Legislature has the
right to alter or amend that charter in any |
particular, so that if the courts should de-
eide that the Ogdensburg road is exempt
from taxation new the Legislature could and
would at its next session strike
out the exenlpting clause The claim that
the committee makes therefore amounts to