The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1893-07-26
ERIH'S THIRD DOWNFALL
A Bondholder's Application
for the Appointment of
Receivers Granted.
BOTH FRIENDLY TO THE COMPANY
This Step Made Necessary ON Ac.
count of the Pressure Of Its
Floating Debt.

For the third time in its history, the
Erie Railway is in the hands of receivers.
The receivership proceedings were
brought before Judge Lacombe in the
United States Circuit Court for the
Southern District of New York by Trenor
Luther PARK. son of the late Trener w.
Park. who is a holder Of the first ard
second mortgage bonds.
The application was made late yester-
day afternoon. and the receivers were
Immediately appointed. but the whole
matter was kept quiet by the officials of
the road until late in the evening, when q
very brief statement was issued 1t ap-
pears from this that receivership was
decided upon at meeting of the Board
OF Directors on July 20, and the Ex-
ecutive Committee was clothed with the
requisite powers to act in case the fnan-
cial situation did not impr owe and the
pressing claims against the COMPANY
could not be stayed.
The application was made for the pur-
pose OF avoidfn G possible attachments
by creditors and the sacrifice of collat-
erals deposited to sec ure loans, some of
which have matured and others are ma.
turing.
Owing to the stringency of the money
market the comp nv has bee n unable to
pay these of or TO secure their extension,
and ut meeting of the Exec utlve Com
mittee yesterday afternoon it was deter
mined to place the company under the
protection of the Court so as conserve
the Interests OF all parties.
From points rehearsed in the complaint
it is clear that the management feared
hostile measures from certain creditors
and half a dozen warning receivers in diff
ferent States might make endless
trouble. Hence the haste.
THE FORMAL ALLEGATIONS.
Mr.. Park saws in his complaint:
1.-The unsecured debts of the company
now due and unpaid and shortly TO be-
come due amount to several millions of
dollars. and of these unsecured debts
large amount is due for wages, supplies.
traffic balances and other similar expen-
ses of operating the said railroad.
THAT large amount is due to various
individuals aud corporations for loans
made. the proceeds of which have been
used in conducting the business of said
company, and that certain Of said llans,
as complainant is informed and believes
are wholly unsecured, and certain others
of said loans are secured. by deposit of
certain stocks and bonds owned by said
company as collateral security for the
payment of said loans.
THAT in the present depressed condi.
| tion of business and the stringent condi-
| ton of the money market the securities
which have been deposited as collateral
| for the said loans are soeing uudulY de-
pressed below their real value aud calls
| are being made upon the company to
| furnish further collateral security, to
which calls it is unable to respond.
"That Ehs said loans are falling due
| from time to time and that the said COM
pany is and will be unable to arrange or
| extend the same aud that there Is great
| danger that the securities held as c1l-
| lateral for said loans will be thrown
! upon the market and sold at prices far
below their real value, to the serious in-
| jury OF the said company and of the
com plainant.
''That there is likewise great danger
that suits will be instituted against the
| said company and Judgments obtained
| against Its property upon its failure to
| pay the amounts of said loaus which
| may be called from time 10 time, aud it
| is essential to the interests of the said
company aud of the public and of this
| complainant that the said securities
| should not be forfeited and sacrificed in
consequence of the non-payment of the
| respective debts to secure which the same
! are pledged"
OFFICERS STATEMENT.
The officers issued this brief statement
| late last evening"
| Under the resolutions Of the
Board of Directors adopted at the
last meeting, held July 90, the
Executive COMMITTEES OF TIE Erie R ill
| road Company after full consideration to-
day adopted resolutions placing the road
| in the hands of receivers. The receivers
| appointed by the Court are John King
| and J. G. Mccullough. The measure
was taken purely in the interests OF the
road and its creditors. Within the last
few weeks, during the severe money
stringency, the floating debt of the Erie
| (Which every on has known has existed
| for the past few years. became impossible
of renewal, and in order not TO sacrifice
the best interest of the company it was
| decided TO place the road In receivers
| hands aud preserve the system intact aud
preserve and develop the transportation
business OF the company. Tue owners
of it's securities should not sacrifice their
holdings because of this step. The names
of the directorate of the Erie are a suf-
hcient guaranty of the honest aud intel
ligent management of the interests COM
mitted TO their hands"