Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1889-11-07
ESPECIAL. rELEeRAM TO THE p1sPArcH.l


at the bottom of the sensational rumors
that have disturbed the holders of American
Cotton Oil Trust certificates were made
public at the adjourned meeting of the
certificate holders to-day. Before stating
those facts it should be remarked
that they were known to only a
very few people until last Friday,
when suspicious as to their existence were
aroused by the figures of the annual report,
and by the explanation of those
figures offered by certain of the
trustees who had not at that
time been able to probe the matter. They
found upon investigation that the dis
appointing character OF the report was due
to losses and shrinkage in values in handling
the products of the trust and those of its
competitors.
EXTENT OF THE DAMAGE.
Further investigation conducted in con-
nection with the Committee on Reorganiza-
ton, appointed by the certificate holders at
their meeting on Friday, revealed
the fact that the funds of the trust
had been drawn upon to the extent
of over $500, 900 in connection with opera
tions in the certificates in the stock market.
The official statement regarding those opera
tions that was submitted to to-day's meeting
by the Committee on Reorganization in
connection with its report, is as follows:
To r. p. olcOtt, ESQ.,:
DEAR SIR-As counsel for the American
Cotton Oil Trust we have been instructed by
the trustees to make the following report to
your committee:
They have examined the affairs of the or
ganization, and find that the annual report
contains correct statement of its affairs up to
August 81, 1882 the close of the fiscal year.
In the conduct Of the business it has
been the custom of its executive officers
York. as a finance company, through the
medium of which they have been able to facili-
tate their financial arrangements. The presi-
dent and treasurer of the trust, for the purpose
and with the intent, as they state, of maintain
ing and
STRENGTHENING ITS CREDIT,
have deemed it necessary or desirable to sup
port the price of the certificates in the market
by conducting certain trust certificates ac-
counts in the name and for the account
of the American Oil Company, and with
out the knowledge of the trustees of
the trust or the company these accounts are
now entirely closed, with a loss to the company
of S527, ,51l S. Messrs. Flagler and Moss, vino
alone, as officers, inaugurated and managed
these accounts have appeared before the
trustees with their respective counsel, and while
disclaimipg legal responsibility in the matter
nave frankly expressed q QeSlr6 TO make q
substantial contribution toward the same. ag-
gregating the sum of $780, 900, of which amount
Mr.. Flagler will contribute $l5O,OO0 and Mr..
Moss, 100000. This leaves the net loss s277,5 ,5l1
and the trustees recommend that the matter be
adjusted on that basis.
Respectfully you're,
SULLIVAN & CROMWELL, Counsel
Mr.. Olcott, who presided at the meeting,
said after reading this letter that the
amounts to be contributed by Messrs. Flag
Iar nd m ho in
and virtually represented the bal
ance of their respective estates.
It may be added that both are known
to have been so sanguine regarding the
property they were managing that they
bought largely of the certificates, on margin,
and have recently sustained heavy losses in
consequence.
THE PLAN ADOPTED.
The committees report contained the
substance of the letter, with the state
ment that the net loss of $277,-
511 had been charged off. The plan
of reorganization proposed was to issue
to the present certificate holders common
stock of the American Cotton Oil Company,
of New Jersey, to the extent OF so per cent
of their holdings. and per cent non-cumu-
lative, preferred stock, to the extent of
25 per cent of their holdings These opera
tions will require an issue of
$21, O92, 900 of common stock, and SIC, ,546, 900
of preferred stock, being total of S31, $685.
600, against 81, 184, 900 at present. 1t is pro-
posed to make the issue of preferred stock
$15, ,O0O, 900. which would leave balance in
the treasury OF the company OF 81, ,444, COO.
The report was unanimously adopted, and
the reorganization committee was continued,
with full powers to complete the reorganiz-
alton. 1t is understood that both President
j. H. Flagler and Treasurer j. o. Moss
have rendered their designations, but no ac-
tion has been taken upon them.