The Memphis appeal. [volume] (Memphis, Tenn.) 1886-1890, 1886-12-21
HR. c. Z. HUsrINGTOA
TALKS ABOUT THE CHESAPEAKE
AND OHIO,
Whose BORdhOlders Are In Great
Stew and Threaten Injunctions
What He Proposes.

hbAtu Nhah Wnb AhO VI WV
litigation thTes ened by srtain people
in Troy, N. Y, Mr.. Huntington re
piled:
"The Offer Of the Newport News and
Mississippi Valley Company, as set
forth in my letter OF July act, proposed
to put the Chesapeake and Ohio Oom-
pany upon better basis Of credit, by
reducing It's aDnuA fixed charges. The
original Chesapeake and Ohio railroad
bon0s, for which these present issues
were exchanged under the plan OF re-
organization, were sold by POPULAR adj
yertisement and subscription, aud
were widely sea tered. AcceplsnCes
are coming in every day, and on the
whole ~ fsst as could be expected.
No herefit is TO be gained that can
discover by non asseut (whiie the ad
vantage OF compliance are many and
importantly nor by stopping the inter-
est on The other bond'."
"Whst has revented the company
from paving full interest ?"
"Let us look at the present position
OF the Chesapeake and Ohio railway
property and funded debt. The COM
pletion OF It's line from the ocean ter
minus TO the Big Sandy river, through
mountain ranges Involving more ex-
penfe for embankments and tunnels
than any line OF equal length in Amer
ica), and the bringing Of its roadbed to
It's present state OF perfection, have
exhausted it's pledgable credit. The ex-
tensions and feeders itnow has tituated
beyond Is western terminus are In
part owned and controlled by those
who are also holders OF Chesap AXE
and Ohio railway securities, hut in part
by those who have no such interest.
Their Is no assurance that even the
present degree OF community OF own
ership and control will be permanent,
nor that the vs. liable connections in
Kentucky and Tennessee and on the
north bank Of the Ohio may not be
transferred 30 other trunk lines. This
more complete uuion OF interests
i had hoped 10 secure during
my lifetime, upon terms that
would be fair alike TO those OF
my associates Of the Chesapeake
and Ohio railway and to those in the
tributary companies. / have given
many years OF arduous labor to the
building mp OF this enterprise, in the
hope that II could be made more than
self sustaining. l have not lost faith
in lis ultimate outcome; but we must
Is . the fact that its burden OF fixed
q ses 10 greater than its earning
power now OF in the near future. /
may freely disclaim responsibility for
this state OF things, as the present
large indebtedness WIS entered upon
under the reorganization plan in defe-
renee to the views OF the bondholders,
and against my convictions, II not
positive protest. The present Is q
necessary and proper time to remedy
the errors Of the past. The road, In
my Judgment, cannot earn at present
quite per osnt. on the b. bonds; 10
certainly cannot earn O. II is useless
to expect any more out OF 1t than IL
can earn net"
"Hsye You any confidence that this
plan would succeed 2"
ITO conduct the business betwsan
the seaboard and the Ohio aud Mis-
sissippi valleys the road needs further
expenditures for extension OF second
track, additional motive power and
rolling stock, the alliance OF ocean
steamship lines, docks, elevators and
other accessories, which it cannot
obtain by fresh borrowing, but only
by cash payments, TO DO derived
either fr0m current net earnings, or
by advances from others who NAV
have Joint interest In It's prosperity"
"Will the minority Of the bond
boldew he able TO ioreclose and take
the road p
"The holders OF B. bonds would
hardly like to forego their entire iu-
tere ct Tor the accomplishment Of these
purposes. while IL would Danish the
hope Of interest upon the currency
bonds for series Of yegrs. BY the
terms Of the mortgage securing the B
bonds the right OF foreclosure does
not accrue unit some part of six sue
oeeeive coupons remain unpaid. No
adequate relief is to b. found in that
direction. Besides, one experience Of
litigation and foreclosure should aui.
Ace for this generation Of bon dholders.
No other course, il teems to me,
would be 80 " o for the bondholdera
as the one proposed. The traffic Of the
road is aud must consist chiefly OF coal,
coke, iron, lumber, grain and other
produc Z, which can only be moved al
pIotil by an immense tonnage, for
which preparation must be made"
why does not the new company
offer to guarantee The old bondsH
"YCu ask II the Newport News and
Missietippi Valley Company, the les
sac, will guarantee the lower rats OF
interest on the new bonds. In answer
will cav that the bondholdem are
offered ~ per cent. Of the stock Of the
lee' ee's company in lieu OF such guar
antee, which l think will b. OF more
value TO them, rs the investment OF
more money by the lessee for other
purposes behind the security Of the
3 bonds will have all the effect in
market, at er q few years, of uostlvs
guarantee, which may in fact be also
obtained upou The surrender OF tho
prohe ed 20 per cent. Of shares; but
this alternative OF qua aniee netd not
be con ide cd At present, The lemee
company sumeS the burden Of pay
ing the interest," 30 far as the nC earn-
ings vii suffice for the pu pose. The
presen security Tor payment out Of
the earnings remains uoimpaiIed, and
the bono no der will be entitled by his
sharts to a percentage OF the excess
over aIt above bis interest stipula-
tiOD."
"Wha ghts have the complaining
bondhlides over the oher clssses9''
"The lien OF the A. and b. bonds il
subc rdnate o hat Of the purohnse
money funding bonds N2 $4,000 au.
ttoriBad), sued TO retire an ecu al
amount ~ Virginia Central railroad
honda The 100000 s-Ties A. have
the 6aue position 10 the BIS west OF
Ricbmof d, sud are, ia addition, a frst
lien co currently with S2,C00,000 Bs
of 1911 on the stem end Of the road
between Richmond and Newport
News, which Includes the expen i've
docks snd plant already rected. The
credit aud preference shown to the A. a
were exp ssly Intended and reserved
in the plan Of recognition, and the
cash proc eds OF thabe bonds at par
we're inv 3 ed for the protection Of the
remsi der Of the debt, srd they are