The morning call., 1891-01-23
RESULT OF AN ERROR,
Dissatisfaction Of the Stockholders in The
Los Angeles Cable System.

CHICAGO, Jan. 22.-The Tribune saws
there IS much dissatisfaction among the
stockholders In this city of the Pacific Rail-
road Company, which is owner of the cable
system at Los Angeles, Cal, and which was
put into the hands Of receiver Yesterday
They alege that c. B. Holmes, the cable
road magnate, induced them to 90 into the
enterprise, buying out the street-car system
of that city and cabling it in an extensive
way at cost of $4,000, 900; that the bonds
were put on the market as frst-mortpaqe
bonds, when In fact the first mortgage. made
by the former owners, covered the entire
property, and that the road, in fact. never
paid expenses. though a statement was made
when the new bonds were placed in the
market showing profit CT $4,000. Holmes
when questioned about the matter said the
Misrepresentation was the result of cleri-
cal error.
The story further goes on to say that
Vermlge u Co., of New York, were induced
to undertake to market some of the bonds
both in New York and London that they
did not meet with success abroai, but
placed S1S0,000 worth in New York that
when they heard of the actual status of af-
fairs, they took the remainder off sale and
sent man here TO investigate. 1t appears
now that most of the bonds were placed
with banks in this city and ST. Louis, where
| the Chicago Syndicate controlling the Los
Angeles road, and known as the National
| Railway Company, also owns the street
| railroads.
1t is charged that Holmes caused tie sub
company at ST. Louis to turn over $50, 900
| of ITS securities to the Los Angeles COM
| rany, which were practically worthless, and
the dissatisfaction i'll the St Louis company
resulting therefrOm caused Holmes retire
ment from its Presidency last October. The
| Los Angeles deal is also at the bottom of
| tie recent retirement of HOLMES from the
| Presidency of the South Side Cable Railway
| of this city.
HOLMES STATEMENT.
c. B. Holmes, speaking of the story in a
| morning paper about alleged irregular prac-
| tees in connection with the building OF the
! Los Angeles cable-railway system and the
| floating securities said that tile New York
| bond dealers may have sent an agent here
TO investigate the affairs Of the company,
| but that there is any ground whatever in the
| transactions for criminal prosecution is
| absolutely untrue. The bonds were issued
with the approval of the stockholders, who
| also decided that the road should be built
| by temporary loans and when finished the
| bonds should lie divided among the stock
| holders pro rata. Tie road was so built,
| but in tile meantime money became scarce,
and he stockholders, with few exceptions,
| refused to take the bonds, and the notes
| We're left in the banks. Efforts to sell the
| bonds TO outside parties were unsuccessful
! because Of the general financial srngency.
In regard to the alleged misrepresentation of
| the value OF the Los Angeles road, Holmes
said the books were kept in Los Angeles,
! and in one of the reports sent here there
was an accidental clerical error in the Il. 600
column that made great difference IN the
showing. 1t deceived him as well as the
| stockholders. During the first year of the
! operation of the road Los Angeles was Wis
! tied By disastrous foods which made opera
ton financially disastrous; still, he says,
the city is rapidly growing and the fran
chise runs for fifty years. Witlsa little wait
ing there is no reason why any stakeholder
| should lose a dollar