The morning news. [volume] (Savannah, Ga.) 1887-1900, 1895-05-28
BROKER HERRMANN'S KICK.
CHAIRMAN SMART SAYS HE Is IN
TERESTED II RUNNING DOWN
THE BONDS.

lie says Mr. HERMANN. as "a Member
/ of the Committee of Georgia south
ern and Florida BondhoIders. First
Wanted a Five Per Cent. Bond.
The Roads Earnings Thoroughly
Investigated by a Competent COM
mittee Before the Five Per Cent.
bond Was Decided On.
Chairman II. p Smart Of the bond hold
F ers' committee Of the Georgia Southern
and Florida railroad. and other members
/ Of the committee do not seem much wor-
ried about the criticism Of Mr. d. L.
/ Herman Of New York upon the plan of
reorganization for that property which
/ has been formulated and carried out with
the exception Of the final distribution Of
the new securities.
His statement is to the effect that with
A0o0.od0 OF bonds on the property at 5
per cent. the road could not pay its fixed
charges. which would be $4,000 year
Besides this it is proposed to issue. he
states, a certain amount of first and sec
ond preferred and common stock
on which, 1t is stated. per
net earnings Of the road for
the last three years" he says, have been
about $4,000 year. and while it is pro-
posed to retain 100000 of the bonds in the
treasury the fixed charges would stin be
$4,000 a year, an amount nearly $4,000
in excess of the net earnings of any one
year Of the road"
MIR. Herman, is a member of the bond
holders committee" Mr.. Smart said, when
asked about the matter. and he is also
a broker and has been buying those
bonds. He is interested, therefore in run
ming down the price Of them so that be
can get them cheaper. He always advo-
Gated a per cent. bond until he began to
buy them.
I'm deciding to issue a per cent. instead
of a per cent bond" Mr. Smart said,
'the committee went into the matter very
carefully. Mr.. Charles d. Fisher, a di-
rector of the Seaboard, and Mr. Skipwth
Wilmer, a director in the Southern and
the Philadelphia, Wilmington and Balti-
more, both members of the committee,
were appointed a committee TO investigate
the earnings of the road and report what
It was doing. Mr.. Fisher himself previous
ly recommended AZ per cent. bond, but
on investigation both he and Mr.. Wilmer
found that the property was able to pay a
5 per cent. dividend and so reported to the
committee. That report was adopted, and
Mr.. Herman was the only member of the
committee at that time who favored 4
per cent. bond.
''Mr. Herman is not specific in his state
ments with regard to the earning capae-
ity of the property. He says the road
made $4,000 out of the orange crop. That
was from vegetables and produce as well
as from oranges.
The basis on which we justify ourselves
in issuing a per cent bond is on our
own ideas Of the earning capacity of the
property, confirmed by the report of the
committee appointed to investigate it,
AS that committee reported we acted,
and the action was unanimous, with the
| exception of the vote of Mr. Herman,
who as a broker wanted per cent
bond, but formerly as a member of the
committee wanted 8 per cent bond. He
is buying them now, and is of course in
| terested in getting them at as low a fig
ure as Is possible. The Georgia Southern
4 is one of the few southern roads that
| shows an increase in it's earnings every
year. and II is my opinion that in a short
time it will be paying per cent Mr..
! Herman failed altogether in his state
ment of the earnings to take into ac-
count the amounts expended for better
ments, which became an asset of the
company.
THE new bonds are being prepared and
will all be issued about July /" Mr. Smart
said. The organization of the new COM
pany has been fully completed"