New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-10-30


GEDDEs. h. FULTON CUTTING. WILLIAM A.
READ, COMMITTEE OF THE PER CENT. BOND.
HOLDERS OF THE MISSOURI. KANSAS AND
TEXAS RAILWAY.
DEAR sIRs:
We have examined your communication Of Oct. 20.
1882 In which advise the holders Of the Consolidated
Mortgage per bonds OF Missouri. Kansas and
Texas Railway Company against accepting the PROPOSE
tion made TO them by the Railway Company and aD'
proved by this Committee.
Your object doubtless secure the best possible
result for the interests represent Our object Is to
the best possible all classes OF securities
perfect understanding OF the OF the property
and OF the relative rights of the parties ought harmonic
these two objects. We beg leave to call your attention
20 some statements contained In your communication
which manfestly Incorrect
You state that the holders OF the "sevens' are called
upon 10 give up per interest per onnum upon
their bonds This is hardly just statement OF the fact
The alternative offered TO the "sevens" is not choice
between receiving per cent on their bonds and the
acceptance OF the plan but IL is choice between taxing
what they get at the point Of tho sword as the result
OF hostile foreclosure the acceptance Of the plan
The foreclosure will give them only that portion oil the
property TO which their mortgage applies but 1t VIII
not give them their interest at per cent per annum
IL will give them only what they get out OF its
operation under the conditions existing after the dis
memberment Of the system.
You say that the .'sevens'' are offered nothing In
exchange they may consent to make
beyond priority interest all other bonds for 1--WE
years and that is stated how this priority Is to be
secured. You will find in the plan that as to all other
bonds proposed To be issued condition Is to be affixed
by which foreclosure cannot DO enforced for any deau
on such other bonds which may during the five
years This condition leaves the entire net earnings Of
the road applicable the payment OF the interest on
the proposed "Ayes7 The amount required for this In
terest hundred thousand dollars $500 OOO); the
estimate OF the earnings Is two millions while
tho system IS retained in its integrity; apd they would
under conceivable circumstances, be insufficient to
1,fa fort tV q
.seyensr are offered nfty-year gold bond at per
cent while the defaulted bonds which they hold had
but sixteen years before foreclosure proceedings
were Instituted for The sale OF the road and the payment
81 the principal.
You say that for overdue interest the holders Of the
"sevens7 receive In cash 81 per cent. In per
cent bonds 81 per cent ard the balance in preferred
stock This is quite accurate. The balance Of In
terest arrears June l. 1890. referred 10 would be
1-3 per cent The Offer is pay Ia per cent in pre-
ferred stock staed in dollars give s140 in pre-
ferred stock for 1913 33 Of arrears OF interest
You state the major part OF the earnings OF THIS
railroad derived from the operation Of that part OF the
property upon which the cent bonds are first Hen
The mileage covered By the seyens' is 7o5 miles; The
mileage covered by the general consolidated mortgage south
Denson, is $50 miles The existing earnings are the
result Of the system in its integrity operated The
result dismembement only be determined by
those entirely familiar with the territory served by inc
respective portions OF the railroad with the nature OF s
and with the conditions Of inerdependence existing
between such portions OF railroad.
prefer rely for decision Of this question on the
reports Of the Receivers and the superintendent and
Manager Of the road The opinion of all OF these gentle
is that the ACKNOWLEDGMENT Of the system Will result
dsastrousy all It's parts. and that full proportion Of
such loss will fall upon that portion Of the railroad which
is covered BY your mortsape.
Mr.. J. j. Frey1is the General Superintendent OF The
and many been connected with the
operation the railroad. The following IS an extract
from statement Under oath made by him within year
in Of the pending htigations.
Il familiar with the country through which the lines
Of the Missouri Kansas and Texas Railway pass ana the
railway systems which 1t and inersccts. ana II IS
my deliberate judgment that to separate the Missouri Kan
and Texas Railway Denisoa would be destructive to
Of the railway aud especially 10 that part Of it
north OF DenlsOn. The Texas lines virtually Important
the lines north Of Denlson. II the Texas lines dill not
belong to the Missouri. kansas and Texas Railway II would
receive anything like the north and uthbOund business
which IL now receives The Texas lines pass through
rich populous and fertile counties I'm the Texas
and there is large and rapidly growing business passing
from the lines Of the Missouri. Kansas and Texas Railway
north VI Deni-0n into Texas. and large and profitable
business from the lines in Texas to the lines north Of Dem
son"
The General Traffic Manager, Mr.. ]. Waldo in a letter
dated juno ), 1889. says:
1.-THE conviction grows upon daily that Southern
Division has been neglected particularly not getting
advantage OF its long haul This tlyng T. remedy
as far possible the present time Ere long por
ton Of the road will be able show to Interested parties
that II Is equal in earning capacity that portion north Of
Denison. think it is also manifest fair I'D usment
Of revenue earned Will give 1t equal per mile now"
In the face Of these statements, L. safely assumed
that the property which the per bonds are nrst
lien will earn aftor dsmembermeu per cent on these
bonds and pay up the the OF Interest in
arcarsl Can it be safely ASSUMED that even earn
per cent?
You again refer in this portion Of your communication
10 the receipt Of per cent per your bonds
an assured fact but the estimate earnings upon which
you base this assurance Is estimate which rests entirely
on the retention Of the system in integrity and has 10
Application to the result OF hostile ACKNOWLEDGMENT.
But If the facts you claim tho portion Of the
railroad you threaten to take able earn as much
as you claim the utmost limit your recovery through
foreclosure sale would be par interest for your bonds
The terms OF your mortgage prescribed on decree 4
foreclosure the property shall be sod the pocees ap
piled TO the payment Of your bonds offer which has
been Hnade to Tie "scvens IS in our Judgment subsan.
italy the equivalent Of par ard interest for your bonds
You refer TO the fact that the bonded Indebtedness
under the per cent consolidated mortgage amounts
ABOUT thryhVe thousand dollars mile. amount
is somewhat above the actual figure which IS under
$4,000, but you omit to stat, that nearly ten million dol
iIs OF THIS indebtedness has been caused by funding
obligations given to arrears OF uncarned interest
Whch accrued on the consolidated that por.
ton Of the road operated separately and which have
been converted into bonds issued under he general con-
solidatel mortgage
you conclude by recommending strongly to your
stuent TO strengthen your hand, % 10 enable vou TO
take possession OF the properly which secures your mort
gage This result can only be reached by
decree OF foreclosure. and by OF which you VIII be
the highest bidder The suit foreclosure wa, commenced
IN August 1855 The iii Of complaint in is proposed
amch'ed form ha- not yet been ed The questions involved
wi" nave n run the usual The taking OF the t,-
mony In the litigation VIII De - necessity proaccI Dr..
ceeding by ra'on Of the claims by the trustee Of
your mortgage TO lien nincty-fo Of railroad
lying south Of Dcnison and forming part OF %. property
coNefel by The general consolidated mortgage Of December
- lo'" DuNhg this litigation the extremely valuable
Interest Of the Company in the International and Great
Noi'hem may be sacrificed by the foreclosure Of the
mortgages Of that Company which Is pending. The
outcome OF 1t all Will be that you viii br ak up the system
una shuae us remaining portions into active and hostile
competition with Yourselves and The construction
Of h'al line along the most important part Of rail-
paa covered by the per bonds Is this outcome