The Providence news. (Providence [R.I.]) 1891-1906, 1894-11-12

| was fund OF $4,000 lying idle
| In the treasury and useless for any other
purpose, the city autAorities refused TO
| transfer Tito the fund available for
water rentals because they claimed that
byso doing they would be putting in the
company's hands money which, though
lastly due to IL for services rem
dered, might be used by the company
to pay for further litigation against the
city. Such are Western ideas OF financial
honor and honestly Kansas City first
tries to connscate private property aud
then refuses to Fay money justly owed 10
the owners OF the property because tho
latter may use the money to prevent such
con fiscatien.
1t will be noted of course that In order
that the company might give valid title
to the property mentioned the holders of
the $3.50 900 bonds and the 81 800 900
stock must come to some agreement re-
garding the distribution OF the proceeds
of the sales, net only because the interest
on the bonds 10 In default owing TO the
refusal OF Kansas City 70 pay rentals, but
because there will be only $3,000,000 with
which to pay all the security holders.
Committees OF the bondholders have now,
however, arranged for and the security
holders have practically unanimously
agreed to accept the following plan: The
Sl,6Oo,0O0 first mortgage bonds on the
Kansas City, Mo-, plant to be paid in full
with arrears Of interest. The 5000 first
mortgage bonds on the Kansas City, Kan,
plant likewise to be paid In full with in
terest. This will leave e60o, 900, or 40 per
cent. cash, to be paid to the
holders OF the second mortgage
bonds on the Kansas City, Mo-,
plant, the remaining 60 per cent.
is to be paid by 100000 first mortgage
bon3 on the plant In Kansas City, Kan,
which Is not included In the purchase by
Kansas City, NO., and to which the Ma
tional Waterworks Company hss snothcr
source of supply than the one to be sold
to Kansas City, Mo. The stockholders,
while getting nothing from the proceeds
of the sale, and losing all the value of
their stock in the Kansas City, Mo, Water
Works Company, win still own the fee to
the Water Works in Kansas City, Kan.
There the National Company stands to-
day, united and ready to comply with the
courts order. On the othef hand Kansas
City, Mo-, is still unprepared 20 act, be-
cause It has not the money with which to
pay for the water works ara probably
cannot get 1t. The reason is as follows:
tAc SOustltutlOu Oh INC ototo
OF Missouri, adopted in 1875, the
Indebtedness OF monicipal corporation
Is limited. The Indebtedness of Rhode
Island city or town is limited by lesisla-
tive enactment which is very different
from the constitutional limitation OF Mu-
souri,. Kansas City, Mo-, has so nearly
reached the constitutional limit OF in
debtedncss that the issne OF y3,-
0Oo,ooo of bonds to pay Tor
the water works will exceed is
limitation by a considerable sum q am
told by tl.50o,0ool. The city, however,
claims to have sold the entire issue of
100000 at AZ per cent. bonds at u per
cent. premium, to Blair & Co. of New
York. But am informed on reliable au-
tnority that Blair & Co. have agreed to
take the entire issue, subject to the estab-
lishment of rs legality by a decree of the
court.
1t is not believedIby those in position to
judge, that the court viii venture TO ac-
knowledge the legality Of an issue that Is
unconstitutional because the court has
only the constitution as its guide. n II
therefore believed that the attempt of the
city 10 purchase wNl fail and that that
failure will force the renewal OF the ex-
isting contract and franShise. The bonds
are per cent. and until within two
years the dividends on tSe stock have
been ut the same rate.
The courts will at once be asked to de-
eide upon the legality Of the points at
issue. In any event the security holders
will escape from this swindlins attempt
with remarkable success, bat In View of
the facts, need scarcely advise investors
to be cautious OF Western investments.
The IrsIDRR.