The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-11-10

NEW YORK. November 1, 1897.
TO N OF
CONSOLIDATED MORTGAGE
FIVE PER CENT GOLD BONDS
OF THE
Baltimore & Ohio
Railroad Company.
DUE 1891

since the appointment OF Receivers Tor the baif
more and Ohio Railroad Company in February, 1894
vo have ondeavo-cd to watch carefully, ana 70 s-ba
all steps necessary to protect the rights. OF the i've
Per Cent. Consolidated Dondholders.
Almost Immediately after their appointment tho
Receiycrs expressed the opinion that. II allowed 20
issue eb, 600, 900 Receivers Certificates, TO DO useo
for d,,charging accumulated supply bills ana for
making some needed additions TO the property, they
could thereafter regularly meet the interest on the
several issues of bonds for which the p. q o. r. r. o.
was directly responsible, and which constituted liens
on the principal railroads of the system.
Recognising the advantages likely TO accrue from
holding together all the properties, and also under
standing that the greater part OF the eb.ooo.ooo Ger
tincates were to DO used 20 discharge supply bile
which would probably be held by the Court to b
preferential liens, we, with Others interested in the
Consoiid ated bonds, favored the issue OF such certin'
Gates.
or late tho Receivers have been unable TO fuinl
their expectation. and defaults have taken place on
several OF the lineu Important to the integrity OF the
systom. Since theso defaults we have felt that. the
object OF the original iasue having faiied, no furtnoH
issue of certificates for any purpose should DO made
by tho Receivers, and therefore wo have opposed al
such further Issues.
In the Spring of 1897 the Johns Hopkins Univer
sity filed in court an application asking thas tho
e5. 900. 900 first preferred stock OF the b. o. R.R
Co. should be declared n lien on tho income OF the
property ahead OF the Consolidated Mortgage Bonds.
The Trustee Of the Consolidated Mortgage hied
an answer which was deemed adequate to set forth
the rights OF the bondholders. A few days before
this application was to be heard by the Court. We
learned that this answer had been withdrawn by the
Trustee. and that In its stead there had been nled an
other answer. merely formal in character, stating
that the Trustee had no views in the matter. and
leaving the determination Of the question to the
Court. The reason for this sudden change can pofs
haps be given best by the Trustee. who. on inquiry.
Informed ono OF us that lit differed decidedly with NJ
.in regard to the d. & o. preferred stock. and that this
twas no new idea with 1t; that it had held this
"opinion for many year,. long before It accepted the
trust of the Consolidated Mortgage" and that "the
"purpose OF the Company in amending Ito answer
was to remain in n neutral position"
Immediately upon hearing Of the changed and
neutral" attitude OF the Trustee. on whom We had
been relying for the projection OF the rights OF the
bondholdes. we communicated with some of the
large bondholders. and took steps for an independent
Intervention in their behalf, and in behalf OF all
other bondholders. Although subjected to great
pressure in the preparation OF papers, tho case was
fully presented by our counsel. and we are happy to
say that Notwithstanding the views OF the Trustoo)
the Court has decided in favor Of tho Consolidated
Mortgage. and has denied the application Of the UNI
yersity. We do not know whether the Universfty
will take an appeal from this decision, but II so. we
shall continue our opposition.
More recently tho Trustee OF the Pittsburgh and
Connellsville Five Per Cent. Consolidated Mortgage
has hled a petition. OF which the granting would
in erect be a declaration that its mortgage has .
lien equal with yours on the main line OF the b.
and o. R. r. We are now vigorously opposing the ap.
plication.
We mention these matters simply to give tho hold
ers OF the Five Per Cent. Consolidated Bonds some
idea of the unusual phases which matters are taking.
On questions other than that OF the First Preferred
Stock. the Trustee has communicated with US. and,
under an indemnity from us. has allowed Its counsel
1 to cO-ODeratew with ours. We do not believe that the
Receivers will default In the payment of interest OF.
cept under most dire necessity; and SO long as there
is no default in the payment of interest on your bonds.
or In the performance OF the other undertakings OF
the mortgage. there would not. under ordinary con-
ditions. be any cause for anxiety. But the very UNI
usual attacks on the integrity OF your mortgage apart
from any default. and the complications of tho pres.
ent receivership. as well as the novel suggestion Of Q
''neutrnl" TrusteeshIp. indicate necessity for CON
slant watchfulness and vigorous action.
1t seems to us most important. therefore. that the
bondholders unite with US to protect their interestst
and. accordingly. wo have prepared q Bondholden'
Agreement. which. among other things. provides for
the deposit Of bonds with Messrs. J. p. Morgan q Co.,
and gives US all necessary power to see that bond
holders arc represented in all matters in court. a.
well as power to press foreclosure proceedings in case
of default.
II these purposes commend themselves to you, win
you be good enough to deposit your bonds with
Messrs. J. p. Morgan & Co. on or before January q.
1895. receiving in exchange therefor certificates Of
deposit. for which n quotation in due time will be
asked from the New York stock Exchange. These
certificates are for $1,000 each, and boar interest
warrants corresponding to the coupons maturing on
the bonds for the next i've years. As fast as coupons
arc collected. ]. P. Morgan & Co. Will pay the amount
thereof on surrender OF tho corresponding warrants.
We cannot undertake to represent any bonds which
shall not have been deposited on or before the data
above indicated.
There may be obtained ~ our Offices q statement
furnished by the Receivers Is showing tho earnings
and fixed charges Of the property covered by tia
Consolidated Mortgage. We believe this statement
will be reassuring to bondholders. but also that u
will show them tho necessity OF not allowing add.
tional liens to be imposed on the property covered by
their mortgage. in priority thereto or on an equality
Herewith.
j. p. MORGAN & co.
BROWN BROTHERS d 90.