The herald., 1894-08-30
THE ELECTRIC ROAD AT Tackled.
San Francisco BOndhOlders Con-
slider Matters.
President III. H. Sherman Makes a
Proposition.
An Extension or Time In Which
To Pay Interest Asksd-
Many Bsttermsnts
Proposed.

uay contains the following:
The Los Angeles Consolidated Elec-
trio Railroad company must pay interest
on its bonds, amounting to $4,000, by
the 10Th OF next month.
The Pacific rolling mills hold about
100000 OF the $3.000,0 900 bonded in
debtedness of the road the Pacific and
Peoples Home banks hold q block of
100000 more; the San Francisco Saw
ings Union about $3.50. 900: j. D. Fry.
$4,000; W. II. Piper, $4,000; other
large holders are Captain Thompson of
Oakland for $50, 1000, the National bank
OF California of Los Angeles for about
$4,000, the Illinois Trust and Savings
company Of Chicago, $l5o.000; Peabody
d Go. Of tho same city, $l50.000, and
the remainder in small amounts.
That the Los Angeles Consolidated
Electric Railroad company will be able
to avoid default is extremely problemst.
ical. Not only did it have floating
debt of S240, 900 on June 30th last, but it
has acknowledged its inability to pay.
This has been done by the company in
letter to the bondholders, signed by NJ.
ii. Sherman, president, in which this
paragraph occurs:
"On tho 10th day OF Septsmb Der, 1894
there will mature and come due coupon
number OF the company's bonds OF the
issue Of $3,000,000. made and executed
the 10th day OF March, 1892 To provide
for the pay ment of this coupon will re-
quire the sum OF 100000, an amount Of
money which it is believed the company
will not have at that time to be used for
that purpose"
This statement is made the basis for
request that the Loa Angeles CONSOLIDATE.
ed Electric Railway company "shall be
released and discharged from the pay
ment Of interest on its bonds of the issue
OF March 16. 1892, for the period OF one
and half years from the 10th day Of
March, 1894, and that the interest on
said bonds shall be thereafter reduced to
rate OF B per cent per annum."
In return the Sherman management
propose TO expend s28S 600 in the i'm
provement OF the system-on necess sary
repairs, changes and bstterments at the
power houses, stations and along the
lines OF track; to convert the horse and
cable car lines into electric lines, to op-
crate ell of the roads from one power
houae. all this to be done within Is
months, the company then to be free
from lien other than the 100000
bonds and for current expenses not
exceeding those Of one month. 1t is
claimed that the gross earnings of the
electric company are such as TO warrant
sn earning capacity of 100000 year,
and that if authorized to use its net earn
ings for q year and half from September
10th next for the purpose indicated it
will earn enough to positively insure the
payment OF at ieast 5 per cent interest
skn III L.
namely, $3,000,000. ae
This proposition was laid before a
hastily called meeting of bondholders
week ago. The gathering was presided
over by Albert Miller, president OF the
San Francisco Savings Union, and on
motion of President George A. Moore of
pointed committee of three to examine
into the application and report upon its
merits. This committee is composed OF
James E. Allen, George WitteIl and OK.
Mayor Workman. 1t has not yet re-
ported.
The bondkolders are divided on the
proposition. There are two trustees, D.
s. Dorm and K. B. Pond The first
named is not vet kno wn TO have declared
himself, but the ex-mayor is ranged on
the side of those favorable to the &C.
ceptarCe OF the Shermsn proposition.
Not 80 the Pacific rolling mills. ths
Bank Of California, the Illinois Trust
and Savings Company, and perhaps the
Pacific and Peoples Home Savings
banks and large number of the smaller
holders. Many Of these are out.spoken
in their opposition and declare that tha
reasons put forth by the Los Angeles
Consolidated Electric Railway company
in extenuation OF it's financial stress do
not appear to be founded on fact. All
who have spoken publicly on the sub
jet say that it has been almost impos.
eible to obtain Trustworthy information
as to the condition OF affairs, and they
have no confidence in the Sherman
management. Among these are ex-
Senator Fair and Cashier Brown of the
California bank.
In the address to the bondhoders al
ready cited the Los Angeles Consolidated
Electric Railway com pany gives four
causes for probable default on it's inter
est next month. The first of shese ia
that on the execution OF the agreement
OF January 20, 1892. in pursuance OF
which the bonds were iseued, it was
estimated that the company would have
two years' receipts from the combined
properties OF the Electric and Gable
Railway companies before intereet ould
commence to run. AS q fact, however,
the foreclosure proceedings under the
Gable Railway company's mortgage
were not contaminated. and the prop
erty was not delivered until October IA,
1893, SO that the companiea, instead of
having these earninge for two years,
only had them for five months before
the time when interest began to run
upon it's bonds; that is, the time be-
tween October IA, 1885, and March IL,
1894. The second npsdiment was the
financial crisis. The third was that
during the interim between the execu-
ton OF the agreement and the actual
exchange OF the bonds the com pany was
obliged to spsnd large sums OF money in
the protection OF Ito property, owing TO
the ipiuIcal position OF certain parties
interested in the cable property who
were not parties to the agreement
Among such expenses were the building
OF considerable track and bridge across
tho Los Angeles river. The last cause
was that owing to faulty construction,
due to inexperience. the greater part oi
the electric road had to be reraiIed, re-
tied, etc.
Cashier Brown Ia said to have ex-
pressed indignation whom informed OF
these statements, but when asked to
speak publicly he 'wss more guarded
He stated that he was not able to decide
IN tha truth or falpitv nj tha q 20 a p,ot,tr