St. Paul daily globe., 1896-04-21

said preferred stock lands. 1t may be said
further that the advantages of retaining the
lands east OF the Missouri river have been and
are likely to be small. Furthermore, If you
Will stop to consider. you will see how ex-
tremely difficult it would be to apportion
these lands among the stockholders. This
matter received careful attention during the
discussion of the plan. and it was unanimous
ly agreed by those interested that the reduc-
ton OF the assessment of the preferred stock
from $15, as originally proposed, to $10 would
quite offset the net value of these lands but
1T would be utterly impossible to set them
apart In plan of reorganization without the
unanimous consent of the first mortgage
Dondholders who have the prior claim thereto.
mistaken idea prevails that the preferred
stock is lien on them.
AS to the $S,347, 600 of bonds referred to- it
is proper to say that three we'll known ex-
perts have reported, after investigation, that
IN their opinion, the dividends represented by
the bonds had not been earned and that the
bonds therefore had been improperly and
illegally set aside. There is no doubt that
II an effort were to Sbe made to secure a
division Of the bonds, an Injunction would
be issued which would result in legal pro-
ceedings, the termination of which would be
at least doubtful. 1t proposed originally
in the plan that no new preferred stock
ferred, and the protective committee felt
that they were securing a sufficient offset to
the value of the bonds, when it was agreed
that the present holders of the preferred
should receive so per cent in the new pre-
ferred stock.
Third-As to the benefits likely to accrue
to the holders of preferred stock, can only
say that, owing to the great reduction of
fixed charges, it Is expected the new preferred
stock will receive dividends from the COM
plet1on OF reorganization. The earnings of the
road at present justify such calculation and
there is every reason to believe that they
will increase rather than diminish. My own
belief is that within two years after reor-
ganization is effected, the preferred stock
Will pay per cent dividends.
No definite decision has been reached as
yet, as to the disposition of any assets of the
company which may not be covered by its
mortgages.
F1fth-It is proper to say that the suit in
situated by the Farmers Loan & Trust COM
pany against the Northern Pacific company
on March "a, 1896, for the re-convey of a
money judgment for interest on the bonds
of the branch roads, was not permitted by
the company itself in aid of the reorganiza-
tion, but that it was brought without the
knowledge of any Of it's officers.
Sixth-Stockholders should bear in mind
that the reduction of fixed charges to the ex-
tent of $4,OOO,0O0 is very great advantage to
them. Under the present plan there is every
reason to believe that both classes of stock
Will receive regular dividends within the next
five or six years.
This reply Of the president to Messrs. Bid
die & Ward, in letter dated April Is, is pro-
nounced mot entirely satisfactory" In con-
cludlng their correspondence with President
Brayton Ives, Biddle C Ward say:
you do not say whether the company will
make the defenses in the interests of the
stockholders indicated in the circular of
Sept. IA, 1894, but refer only to the possibil-
1ty OF obtaining from congress a renewal of
the present charter. 1t seems to us extra
ordinary to suggest this as an advantage to
the stockholders. Such a step would be en-
tirely in the interests of the bondholders.
and would deprive the stockholders of the
best weapon they possess for their own pro-
lection. We are obliged to interpret your
letter as an admission that the company will
not set up the invalidity Of the. MORTGAGES
or any Of the other defenses for the protec-
tion of the stockholders, but, on the con-
trary, will, as far as possible, aid the bond
holders in asserting and securing by legisla-
ton, II necessary, the validity of the mort
cages
'The other considerations mentioned in
your letter are of minor Importance. Still,
we are obliged to say that we cannot regard
the present slowness Of the sales of land, or
their prospective taxation, or the difficulty
OF distributing them among stockholders if
such course has ever been suggested. as
good reasons why the preferred stockholders
should surrender their rights and interests
in the unsold lands east Of the Missouri
river and in the $S,S4 900 Of consolidated
mortgage bonds deposited with the Farmers
Loan and Trust company, and also in the
cash proceeds of said lands. Why cannot the
status quo that has been satisfactorily main
tained for more than twenty years be con-
tinued IN reference to these preferred stock