The Portland daily press., 1885-10-14

,aroad made default in its payment of interest on
he second mortgage In September, 1876. Since
hen II has never paid one dollar of interest upon
.he second mortgage bonds Until recently a year
Interest upon, nothing but the 100000 mort |
gage Now call 1t ten years. The interest upon |
or ten years it would have paid $3.50 900 of inter-
ast on the first mortgage, We all know with what |
iifiiculty that amount has been paid; we all know
been in regard to the payment of it. By the very
report of the committee which recommends the |
voluntary plan S48 900 must be provided this wear
W VI naw ihe interest on the first mortGage |
Forty-eight thousand dollars of the 100000 |
which they propose is to pay the interest upon
the committee shows an Indebtedness of the re-
ceiver of $350,000, and they have paid S490,000 |
interest That is for the last ten years they have
paid S4S0,000 interest less $350,00o of debt, so
that for the last ten years they have paid $130000
interest, which is an average OF $4,000 year.
That is the record Of the past, and that is what we
the railroad that for ten years has paid annually
only $4,000 interest on its bonds, let us see if it
scheme proposes. First it has got to pay the in
terest on the mortgage of 100000, which is
s4s, 900 year Then it has got to pay the inter
Then it was proposed that the road should pay
two per cent a year for the next two years and
then four per cent and then five per cent upon the
mortgage of nine hundred and seventy thousand
dollars, which at the lowest rite of two per cent
would be twenty thousand dollars year. Now is
road can do 1t? do not see upon what basis that
plan can be supported. 1t must be borne in mind
that when you issue bonds and coupons the day OF
payment Is sure to come round. You must pay
them OF you must go into default. You may esti-
mate your net earnings at hundred thousand
dollars and it may come true and it may not. l do
not know what basis there is for arguing that it
will come true in this case. 1t is mere expecta-
ton Now as this scheme was originally propos-
ed it seemed TO me to involve the danger of losing
the control by the city of the Portland aud Ogdens
burg railroad because tlis sstgage Of nine hun
dred and seventy Thousand dollars was to be made
large enough according to the original plans to
pay the first mortgage of eight hundred thousand
dollars, to pay the Receivers certificates with
perhaps something for possible extension of the
road. 1t was perfectly evident that ii that scheme
was carried out the city would cease to be a ma
orty bondhq hded The city could not
limitation is upon us, and if this new mortgage
was made large enough to take up the first mort
more to extend the road, it was evident that the
new bonds were going into the hands of some 9th
Ell holders than the city, and the majority Of the
bondholders would be against the city, so that in
case there should happen to be foreclosure of the
second mortgage in the future, and the bondhold-
ers take possession, the city would be in the mi
corporation that would be formed by the foreclos-
ure of the mortgage: ] do not know whether
that objection is entirely done away with in the
report now presented, or not. do not find It
clearly stated in the report whether the S35OOOO
OF bonds is to be secured by the same mortgage
deed as the $780, O0 or by a separate deed II
it is tobe by the same deed then 1t has the same
effect to reduce the eitys interest to minority as
the first scheme, and iii the event of foreclosure
ii city would cease to have any voice in the con-
troll or management OF the road.
But If that Is not the intention of the report of
the committee, if the intention is to make the
$35O000 prior mortgage to the $780,
900, under which the city holds, then | oppose it
most decidedly and firmly on the ground that i
is not right to make that $35O,o00 a permanent
and prior lien as against the cityS mortgage. 1t
is not paying as you go. AS have already said
and it seems to me as plain demonstration as
he. this railroad cannot the interest
which it is proposed for it to pay under this new
scheme and 1t must go into default. ANY bond
holder can start proceedings for the foreclosure
of his mortgage and then there is the same course
to go over again to reach the position in which we
stand at present.
But you will perceive that If the new mortgages
are issued undoubtedly the railroad will make an
effort to pay the interest on them for certain
time, and what will be the result to the railroad
property? Today it is in fairly good condition,
but if they use the income of that road for the
next ten years to pay the interest on the new
the road when we have to start over again and be-
gin another proceeding for foreclosure? Isn't the
another mortgage Of $3.50, 600, You fund and ex-
tend it and pay interest upon it, you let them
drain the resources of the road to absolute exhaus-
ton for the purpose of paying interest upon the
bonds, and then you have to repeat precisely the
same process that you have gone through now, ex-
cept that then you will have a third mortgage
railroad in good, fair condition, you have road
exhausted by the attempt to pay interest upon
Now say there is broad line of distinction be-
tween the ctys interest in the matter and the in
terest Of the individual 8 cond mortgage hond-
holders. attack none of these gentlemen, say
nothing against their motives or actions. They
are looking out for their own interests as they
have perfect right to do, and as we should all do
IN their places; but then the argument is made
that they stand in precisely the same condition as
the city o. Portland stands and that therefore the
city should follow the same course that they pur-
sue. not prepal ed TO concede the position be-
cause do not believe it is true In the first place
many or some at least of these second mortgage
bondholderS are largely interested in the first
mortgage. The city of Portland is not interested
in the first mortgage. Now If you were second
the three hundred and fifty thousand dollars
Receivers certificates sent below your mortgage
than to have it above it? To-day the Receivers
certificates are ahead of the first mortgage. The
city does not own the first mortgage and it is no
matter OF Observation-Disclosures the first mortgage is
strengthened or not; SO far as the city is con-
cerned, it has got to be paid and that is all there
is of it.
Then there is another ground upon which there
Is radical distinction between the position oc-
cupied by the city Of Portland and that occupied
by the second mortgage bondholders who appear
as individuals in favor of the voluntary scheme of
reorganization. The city owns large amount
in the railroad and a temporary and apparent val
ue in the market of the bonds will not help the
to get out of the absolute value of it and it has got
to protect the value of 1t and that the net earn
ings go to increase the value of the road. Now the
individual second mortgage bondholders do not
stand in that position. ii they can have the in
terest paid for one, two OF three years upon the
few second mortgage bonds which they hold, CIV
ing them an apparent temporary value in the mar
ket, they can dispose of their second mortgage
bonds if they want to-. An apparent and temper
airy market value which gives them a purchaser
of the comparatively few bonds is a thing of i'm
portance to the individual second mortgage bond
holders and they have right to consider it in de-
termining what is best and wise for them to do to
protect their own interest make no complaint
of it, but when the argument is made that be-
cause they are in favor of the voluntary scheme
fhn nffN ynfp anA
do not concede the position. l say the city of
Portland stands in an entirely different position
with reference to these two. schemes. l believe
that the course which | have pointed out is the
course of safety for the city and can see why
It is more. in the interest of the city than
Second mortgage If this voSStars
scheme is to prevail, if you put in $350,o0o ahead
OF the city's mortgage. ten years from now there
will be nothing under heaven to do but to repeat
the process; the road will be exhausted in its eff
forts to pay the interest which 1t cannot pay, it
will become impoverished, new Receiver must
be put in who must incur new debts, the city must
take one step farther back and the new receivers
Indebtedness must go in just as the Receivers in
debtedhess is to come in now. In other words it
is process which, if begun could be repeated,
and having been done once it diminishes and i'm
pairs the city's security, and having been done a
this scheme proposed here as the voluntary plan
is the beginning of the end of the citys property
rights in this railroad. / say as gradually, as i'm
perceptiby but as surely as the color goes out of
the clouds at sunset will the value go out of this
city mortgage. (Applause.)
On motion of Hon. Charles Mclaughlin the fol-
lowing were appointed committee to aid in car
rying out the original plan of foreclosure under
the second mortgage:
Willard H. Woodbury., sylvester Mari. George
S; Hunt, Charles j. Chapman, Sidney w. Thaxter,
Thomas Shaw George w. True. VIM. X. Hilton,
John @. Twitchell, Henry H. Burgess, Theodore
A. Josslyn, Charles Mclaughlin.
The following resolutions, offered by s. w.
Thaxter, were adopted:
Resolred, That the commercial prosperity of the
city of Portland imperativcy demands that the
control of the Portland & 0gdensburg Railroad
should remain in the hands of the City until such
time as its interest in the road be safely en-
trusted to a new corporation by sale or lease.
ResolUed, That it is the judgment of this meet
ing that the cys int rest in and its control of the
road will be best protected and secured by the re-
organization of the road under the Legislative
acts of last winter by the foreclosure proceedings
now pending.
BASE BALL.