The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1889-10-17
Atchison REORGANIZATION.

The plan for the reorganization of the
Atchison, Topeka and Santa Fe Railroad
which has just been given out would, we
are inclined to think, have struck the public
more favorably il its authors had omitted
the last clause, in which they say that the
only alternative Of their plan Is foreclosure
and breaking up OF the Atchison system.
That may be their deliberate conviction, but
in this connection it looks something like
threat to scare the bondholders into accept
Ing their plan. Some years ago Maine
city which had got tired of paying the per
|. cent. on its bonds which it had agreed to
pay, addressed circular to the bondholders
asking them to consent to q reduction of in
terest, and limiting at the end that if they
did not they might lose their whole debt.
The claim in the Atchison circular is not an
unmistakable threat like that, tor the
Atchison is In real difficulty, while the city
referred to was perfectly solvent and no real
intention of Reputation existed among its
people. Nevertheless the clause alluded to
had better been left out.
Concerning the plan itself opinions differ.
Boston as a rule seems to favor it. From
one standpoint it is equitable enough. That
Is to say, IL it is fair, and the plan as
sumes that it is, that all the bondbold-
ers should be called upon to sacrifice some.
thing to haul the road out of the slough 1t
has got into, this plan apportions the sac
rlfce equtably enough. But that assumption
Is by no means impregnable. The Atchison
system is made up of great many practically
distinct lines Of railroads, and the different
MORTGAGE h0QdS A..
system, but on those different parts of IT,
some Oh those lines are earning more than
enough money to pay the fixed charges upon
them. The first mortgage on the Atchison,
Topeka and Santa Fe main line and the first
mortgage on the Kansas City and Topeka
are both perfectly good: that is to say, the
property which secures them is earning more
than enough to pay the interest on them.
But on some of the lines the earnings are not
sufficient to take care of the interest on the
mortgages based on them. Where then is the
equity In asking the holders of the good
ponds to sacrifice part Of their debt to HELM
out the holders of the doubtful security?
They had no voice when these non-paying
branches were taken into the system. II
may be that they were hitched on in good
faith under the belief that they would be
help and not an encumbrance to the system.
Or 1t may be that some of them were un-
loaded upon the system by powerful stock
holders or directors. The latter perform
ance is by no means unknown in railroad
history. But their attachment to the system
whether an error Of judgment or something
worse. the first mortgage bondholders had
nothing to do with and ought not to be asked
to sacrifice themselves on account Of The
demand upon the land grant bondholders is
still less defensible. Their bonds were based
upon lands owned by the company, which
constituted ample security. Those lands
nave not disappeared or become less
valuable. Yet the bondholders are
asked to come forward and surren-
der part of their just dues be-
cause the Atchison, Topeka and Santa Fe
stockholders saw fit to lease lot of lines of
railroads which proved improbable and
puiid other lines which were not needed, and
mus got themselves and their road into diff
cuty. The plan, so far as relates 70 the
holders Oh the good securities, contemplates
sacrlhce OF their rights-not only legal
rights but moral rights, for full value was
given for these bonds-for the benefit of
other bond and stockholders who have no
legal or moral claim upon them. The first
mortgage bonds Of the denomination of
$l'oOO now yield $40 per annum. The hold
ers OF them are urged to accept I'm their
stead HOO In bonds yielding S44 year, and |
$500 in funding bonds yielding perhaps moth. |
ing. Besides that they are asked 10 ac-
cept bond which is no better secured than
their present one, and very likely NOT as |
well. Perhaps fears of extended litigation
may induce some of them to comply, but we |
rather imagine that there will be no great |
rush on the part Of the holders of these
bonds who have no other interest in the road
to make the exchange proposed until they are
fully convinced that it is for their interest in
dollars and cents TO do so. Appeals to save
the system and help the road out of its diff
culties will be largely wasted on them and