The news & observer., 1897-02-19
THE STATES ONLY SECURITY
FoR LEASE MONEY. ..g T,


The News and Observer has but one
object in view inaits fight on the lease
1t is to make the road bring the highest b
nossible rental to the State In has arr
o,rnant before the committee, Capt. Al
exa1ider stated that the SeaboaTd fAir-
Line wouid do q good thing fcrH it
selfsff it coufd lease the road. lie
is right. 1t could pay. a reqtaat OF
100000 d year, and make money. The
Southern cam do the same thing. i.f
tnder the terms OF the lease TO the
Southern, the rental for ninety -ndne years
would be in the neighborhood of twenty
million dollars, snd yet the only geasr-
antee for THE spaynienh OF this sum Is
a deposit of bonds of the market value
Of S175,0oo, or only aslittle more than
the rental for half year. We do not
write TO criticize the directors for TAX
ing this small Security for We are not
discussing that phase of the matter. We
call attention TO tins small deposit to
show chat wlife Inc State is solemhly
bound, If the lease is yalid, for ninety
nine years, there is no guarantee that
the Southern Railway. will keep it's con
tract except IN the event that he North
Carolina Railroad pays handsomely. If,
by someo terrible catastrophe, the North
Carol3na railroad should BE- unproductiyc,
the Southern could forfeit the lease by
loss of only. So, 900, as the. sepi-annual
rental, is not payable in advance. De
duct the senli-snnual rental of $4,000
which need not be- paid If the Southern
| contemplated abandonment, from the
Sits, 900 ldebosited and We. have. $50, 900
as the only loss the. Southern. would sus-i
tain by giving up thel lease We thus
see that practically the State and stock
holders have no security except the pro
fits that are assured from the business
along the line of the road. If they should
fail from any cause, the Southern Rail
way could forfeit its $500 at the end
of six months term, and leave the
people the bag to hold. sNx Z fFF
What does this fact prove? Simply that
the allegations that the ten per cent Of
FER of 100000 rental by the Seaboard
is not a good offeFfate misleading. The
Southern's contract is worthless if the
road should IproFe Improbable. If the,
Seaboard's offer is no better than the
Southern's contract, the State can have
no guarantee except in the earning capac-
| ity of the road. In other words, if the
road pays, the State is paid; if it does
not pay, the State loses. Judging by
| the contract made with the Southern,
there. is no way to compel the Southern
| or any other road that should lease the
property to pay the rental unless the prop
erty itself pays,
Capt. Alexander truly SAID before the
committee that these Big railroads were
liable at any time to go irto the hands of.
receiver, and no protection could be
perfect in leasing to any of them. The.
Southern, or the old r. and D., has twice
gone into the hands Of areeeiver in the
past ten years. Both times the rental
to the North Carolina road was paid
because it afforded big profit to the
system, while there was default in the
payment of rent on Improbable roads
The North Carolina road pays better
than any portion of the Southern system:
that is why rent comes promptly. 1t
would pay quite as well if leased to the
Seaboard, Coast Line, or any other sys-
tenn: and rent would come in promptly
from any of them. YR4t
IHhe following extract, from that pro
vision of the lease showing the only
security the Southern gives for rental
amounting to twenty million dollars in
80 years. is given here as evidence that
the State has no security except the
fact that the road pays handsomely:
"To secure the prompt and faithful pay
ment Of the said rent as above stipulated
to be paid, aud all taxes payable on the
leased railroad and property as herein
provided, the said party of the second
part doth covenant with and oblige itself
unto the said party Of the first part, to-
deposit and keep on deposit in the First
National Bank of Charlotte, North Caro-
lima, or such other bank or banks as
may be approved by the Directors of the
North Carolina Railroad Company, from
year to year, and all the time pending
said term, the sum of one hundred and
segentytfye thousand ($175,000) dollars
in cash or its equivalent, at all times
In United States bonds, or other market
able securities, acceptable to the direc
tors Of said Lessor Company, and having
a market value of not less than said
sum; which said sum OF. money, or its
Esuch equivalent, may be applied by the
eaid nartv of thp first mart to the salts