The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-11-12
finanriaI.
Baltimore & Ohio
Railroad Company.
DUE IoeeJ

Since the appointment Of Receivers for the Baitt-
more and Ohio Railroad Company in February. 1899.
We have endeavored to watch carefully. and TO take
all steps necessary TO protect the rights, OF the Five
Per Cent. Consolidated Bondholders.
Almost Immediately after their appointment the
Receivers expressed tho opinion that. IL allowed to
issue e5,0 600 Receiver Certificates. to DO used
for discharBing accumulated supply bills and for
making some needed additions to the property, they
could thereafter regularly meet the interest on the
several issues Of bonds for which the h. & o. r. r. 90.
was directly responsible. and which constituted liens
on the principal railroads OF the system.
Recognizing the advantages likely 10 accrue from
holding together all tho properties. and also under
standing that the greater part Of the 5000. 900 Ger.
tincates wero to DO used to discharge supply bills
which would probably be held by the Court to DO
preferential liens. We. with others interested in the
Consolidated bonds. favored tho issue OF such certin.
Gates.
OF late the Receivers have been unable to fulnl
their expectation. and defaults have taken place on
several Of the lines important TO the integrity of the
system. Since these defaults we have felt that, the
object of the original issue having failed. no further
issue Of certificates for any purpose should be made
by the Receivers. and therefore We have opposed all
such further Issues.
In the Spring OF 1897 the Johns Hopkins Univer
atty filed in court an application asking that tho
o6. 900. 900 nrst preferred stock of the D. q o. r. r.
Co. should DO declared q lion on tho income OF the
property ahead Of tho Consolidated Mortgage Bonds.
Tho Trustee OF tho Consolidated Mortgage nled
an answer which was doomed adequate to set forth
the rights Of the bondhoiders. A few days before
this application was to DO heard by the Court, we
learned that this answer had been withdrawn by tho
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 tho question to tho
Court. The reason for this sudden change can per.
hA~.A (. -lx1, h.-k - A. ..
informed one Of us that at differed decidedly with us
in regard to the B. o. preferred stock. and that this
twas no new idea with It; that Il had held this
"opinion for many years. long before It accepted the
"trust OF the Consolidated Mortgage" and that the
"purpose Of the Company in amending its answer
was to remain In q neutral position"
Immediately upon hearing Of the changed and
"neutral' attitude OF the Trustee. on whom we had
been relying for the protection of the rights OF tho
bondholders. 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. the case was
fully presented by our counsel. and We are happy to
say that Notwithstanding the Views OF the Trustee)
Mortgage. and has denied the application of the Uni
yersity. We do not know whether the University
will take an appeal from this decision. but II 80, We
shall continue our opposition.
Moro recently the Trustee OF the Pittsburgh and
Connellsville Five Per Cent. Consolidated MORTGAGE
has nled q petition. OF which the granting would
in effect be . declaration that its mortgage has q
lien equal with yours on the main line Of the B.
and o. r. r. We are now vigorously opposing tho ap-
~plication.
We mention these matters simply to give the hold.
ers OF tho 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 TrustAa haa communicated Nth ra IA
under an indemnity from US, has allowed its counsel
to cooperate with ours. We do not believe that tho
Receivers will default in the payment Of interest OK.
Dept under most dire necessity; and so long az thero
10 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 un.
usual attacks on the integrity OF your mortgage apart
from any default, and the complications OF the pres.
emit receivership. As well as the novel suggestion Of Q
''neutral" TrusteeshIp. indicate necessity for con-
slant watchfulness and vigorous action.
1t seems to uB most important, therefore. that the
bondholders unite with us TO protect their interests;
and accordingly. We have prepared . Bondholder'
Agreement. which, among other things, provides for
the deposit of bonds with Messrs. ]. p. Morgan q 90,
and giVes u all necessary power TO sec that bond.
holders are represented in all matters In court a.
well ~ power TO press foreclosure proceedings In case
ofdefault.
a. purposes commend themselves TO you, Will
you be good enough to deposit your bonds with
hessrs. J. p. Morgan & Co. on or before January Q,
1893, receiving in exchange therefor certificates OF
deposit, for which . quotation in due time will be
asked from tho New York Stock Exchange. These
certificates are for $1,000 each, and bear interest
warrants corresponding to the coupons maturing on
the bonds for the next nve years. AS fast as coupons
arc collected. J. p. Morgan q Co. will pay the amount
thereof on surrender of the corresponding warrants.
70 cannot undertake to represent any bonds which
shall not have been deposited on or before the date
above indicated.
There may DO obtained at our ofices a statement
furnished by the Receivers as showing the earnings
and fixed charges OF the property covered by the
Consolidated Mortgage. We believe this tatement
will DO reasauring to bondholders. but also that it
will show them tho necessity OF not Allowing add.
tonai liens to DO imposed on the property covered by
their mortgage. In priority thereto or on an equality
Herewith.
j. p. MORGAN & co.
BROWN BROTHERS q co.
Barring. MAGOUN 81 90.