The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1895-08-30
WHY THEY LEASED IT
DIR. McADEN STATES THE REA-
SONS THAT INFLUENCED
THE DIRECTORS.
PLANS OF THE SOUTHERN RAILWAY

PLANS OF THE SOUTHERN RAILWAY
They Demanded that the Directors Let
the Company Know What TO Expect
..Dr. McAden Claims that the New
Bargain is Better Than the Old One
and a Long Term Lease Better Than
a Short One--The Rental Nearly Hali
the Tax for General Purposes.
The Charlotte Observer of Wednesday
published the following letter from DR..
J. H. McAden, of this city, one of the
Directors of the North Carolina Rail
road, in reference to the new 99-year
lease of that road to the Southern Rail
wav. and asked those who were aware
of the Observers views and in sympathy
with them to give the statement a care
full reading
To the Editor of the Observer.
Your uniform courtesy and fairness in
the discussion of questions of public in
terest is so we'll known, / feel that am
at liberty to ask the favor of the publ
cation of this article in the defence of
the board of directors of the North Car
DINA Railroad Company, in leasing the
North Carolina Railroad to the Southern
Railway Company.
The writer has delayed saying any
thing through the press thus far, in or
der that he might have an opportunity
to examine the lease and to speak from
the record In order to do this with
any degree of satisfaction it is necessary
to set forth the salient points in the new
lease, and to show the advantages over
the old lease.
The new lease provides first, that for
six years the Southern Railway Company
shall pay in equal semi annual payments
$266, 900, which is 81 per cent on its
capital stock, 100000 The $4,000
over and above the 81 per cent. is to
cover organization expenses of the North
Carolina Railway Company. Second,
that they shall pay all taxes, State,
county, town, township or United States,
levied upon the property, income or
franchise of the road, and agreed that
the North Carolina Railroad Company
should surrender its exemption from
taxation; this means an increase of tax
receipts to the State of about $25, 900.
Under the old lease the lessee
was required to pay only $4,000.
Third, the new lease requires that the
road shall be kept in as good condition
as it was on the 10th day of August,
1895, thus relinquishing all improve
ments that have been put on the road,
amounting to nearly $500, 900, and that
the improvements and betterments put
upon the property by the Southern
Railway Company shall be the property
of the North Carolina Railroad Com
pany without claim against or liability
from the North Carolina Railroad Com
pany. The old lease required the road
to be kept only in as good condition as
it was on September 18th, 1871, and al
lowed the lessee to remove the improve
ments or betterments. Fourth, the
new lease requires the Southern Rail-
way Company to comply with all the
demands of the railroad commission in
regard to depots, ETC., while under the
old lease there was no such provision,
and the new depots had to be
built by the North Carolina Rail
road Company. Fifth, the new
lease requires that after the 1st
day of January, 1902, the lessee shall
pay 1886, 900 per year in equal semi
annual payments for the remainder Of the
term, to wit: SO years, being z per cent.
on the capital stock and 1000 for or
ganization expenses. Sixth, the new
lease requires the lessee to deposit and
keep at all times on deposit in the First
National Bank of Charlotte, or in any
bank in this State designated by the
directors, $175,0 900 in cash or United
States bonds or other marketable securi
ties, having a marketable value at all
times of $175,0 The deposit is re-
auired to meet any default in the pay
ment of the semi-annual rental or taxes
or any Judgment that may be recovered
against the North Carolina Railroad
Company for any injury to person or
property or any breach of contract on
the part of the Southern Railway Com
pany. The lease otherwise provides that
in the event the sum of $175, 900 is re-
duced from any cause, then the lease
shall Immediately replace it to that
amount, while under the old
lease the lessee was only requir-
ed to deposit $4,000, which
amount could be subjected only to the
payment of the semi rental, and
not for taxes or other claims. The
change in this provision is especially i'm
portant in view of the recent decision of
the Supreme Court of this State.
The fact that the North Carolina Rail
road Company secured under the new
lease, all improvements and betterments
to the property without claim or liabil
ity upon it for them, will give the stock
a permanently increased value, while
the corresponding provision in the old
lease has had the effect of depreciating
the stock, as we'll as the doubt and I'M
certainty existing IN the minds of the
stockholders as to whether an adyant-
ageous lease could be made. The result
of improving the value of the securities,
in my opinion, could be accomplished
only by q lease for term of years. The
longer the better.
1t could not be expected or reasonably
be required that the lessee of a short
&c