Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1886-02-11
THE GRANT FUND.

1
A Friendly Suit to be Instituted to Ascer.
tain the Present Status of tho Wabash
Bonds Forming the Bulk Of the Invested
Fund--Governor Morgan's Guarantee Still
Has Five Years to Run.
NEW YORK, Feb. 5.-The resolution
passed at the meeting Of the Grant fund
contributors on October %, taking the
management of the fund out of the
hands of George Jones and appointing
the United States Trust Company trus.
tee of the fund, produced the immediate
impression on the public mind that
thereafter all would be smooth sailing.
Nevertheless, a snag has been struck
which promises to prove an awkward
one. 1t will be remembered that that
meeting was not at first "harmonious,"
Jay Gould and George Jones becomingsin-
volved in fiat contradictions, but George
Jones managed to explain that he had
invested $4,000 of the fund in Wabash
consolidated mortgage DO nds, worth at
par only $l8S,000, the purchase having
been made from Governor Morgan who,
in consideration of an additional premium
of two and one-half per cent, guaranteed
principal and interest at seven per cent
for ten years. George Jones did not
prove good hand at explaining finan-
cial transaction, and Henry Day kindly
came to his relief by telling all about the
guarantee, informing the contributors
that it was perfectly good and that
the excess of interest over that of an or
binary investment would soon work down
the premium of $4,000 and so on. Oh
liver Hoyt expressed his regret that by his
advice, $32, 900 of the fund had been in.
vested in Nickel-Plate first mortgage
bonds, but said that he would at any time
give cash for the investment. The up
shot of the meeting was that Judge Noah
Davis and Henry Day were appointed a
committee to draw up deed of trust anG
appoint the United States Trust Company
the trustee of the fund. When the deed
of trust had been prepared, John A.
Stewart, President of the United States
the company to assume the re.
sponsible position of trustee
with such securities, and suggested
"clean cash. in lieu thereof. Oliver
Hoyt replied promptly that he would
substitute So, 200 in cash for the Nickel
Plate bonds. But the harassing question
was what to do with the $1SS,OO0 of
Wabash bonds. They had defaulted in
the payment of their interest for several
months. Recourse was then had to the
guarantee of Governor Morgan to ascer.
tain if through that the principal, the
$188, 1000, could be recovered. The guar
antee provides that if within the speci
fed period of ten years the bonds should
become due, the bonds should be repur-
chased for the principal. with interest
up to the time of the demand. By
the terms of the mortgage under
which these Wabash bonds are issued
they become due six months after de-
fault in the payment of interest on any of
the bonds, provided that majority of the
owners of the outstanding bonds declare
in writing that it is their desire that the
bonds shall become due. But a majority
of the bondholders have not, in writing,
expressed their desire that the bonds
shall become due. The executors of the
Morgan trust, therefore, contend that the
bonds are not legally due and that they
can not, in the proper discharge of their
trust, reclaim the 1888, 1000 of bonds sold
by Governor Morgan to the Grant fund,
unless the courts decide that the bonds
are legally due, at least to the extent of re-
quiring the enforcement of the guarantee.
They have suggested that friendly suit be
brought to test the question, and that
course is at present under discussion.
Mr.. Jones was aware of this technical OBJ
lection to retaining the bonds under the
guarantee as far back as August, but for
reasons best known to himself said moth
ing of it at the meeting of the contribu-
tors in October. Mr.. Hoyt was in
dignant when he heard of the objection
and cited letter written by Henry Day,
one of the executors of the Morgan es-
tate, published in the Tribune some time
before General Grants death, in which
Mr.. Day said: "Even if any flaw could
be found in the guarantee from legal
point of view, under no circumstances
would the executors repudiate Governor
Morgan's written promise which he HIM
self regarded as sacred obligation"
Mr.. Hoyt thought this statement rather
inconsistent with the present attitude of
the executors of the Morgan estate. If
the friendly suit is brought and the deci-
the bonds under the Morgan guarantee,
then another meeting of the contributors
will be called to arrange for the appoint
ment of other trustees. Messrs. Jones
and Hoyt are still custodians of the fund.
It is conceded by Mr.. Hoyt that there is
no likelihood that a Majority of the bond
holders will ask that the bonds be de-
clared due before the expiration of the
Morgan guarantee, on March 1, 1891.
Then the bonds will have no more than
there market value. The bonds mature
in 1892. The effort that Messrs. Jones
and Hoyt are now making to get $l8S, 900
in cash, notwithstanding that the guaran-
tee insures payment of seven per cent.
for five years longer, seems an admission
that the investment was badly planned.