The Worcester spy. [volume] (Worcester, Mass.) 1898-1904, 1899-08-15
ULNEY ANSWERED.
Samuel Hoar's Opin-
ion Of the Boston
& Albany Lease.
PROVISIONS OF THE CONTRACT.
Wherein 1t Furnishes Pro-
lection and Security
to Stockholders.
PROVISIONS OF THE CONTRACT.

Samuel Hoar, counsel for the Boston
and Albany road, has submitted an
opinion to President William Bliss, in
answer to the criticisms of Hon. Rich
ard olney, upon the proposed lease of
the read to the New York Central,
which is interesting in the light of
what has already appeared. 1t is as
follows:
Bostcr and Albany Railroad Company.
Office Of the General Counsel
August II, 1899.
Mr.. William Bliss, President, Boston,
Mass:
Dear Sir-A criticism of certain Of the
provisions Of the proposed lease of the
railroad and property of the B. & A. r.
r. Co., to the N. Y. G. & H. r. r. Co,
contained in an open letter from the
Hon Richard Olney to the so-called
protective committee of our stock
holders, has been shown to me, and
1 think it proper that 1 should explain
with some detail the clauses upon
which the criticism is made
Let me premise by saying that 1
think we should welcome any honest
criticism, made with view of
strengthening the lease, which calls
attention to particulars in which, in
the opinion of competent authority, il
can be made more perfectly to fulfil
its purpose.
But hostile criticism made TO distract
attention from the real beneficial pur-
pose of the lease and with a view of
prevailing on stockholders to reject the
whole because of defects which might
easily be remedied, is not entitled to
the same consideration.
AS Mr.. Olney has omitted to criti-
else the amount of the rental reserved
in the lease, or to suggest any practi-
cal way by which an increase of it
could have been or can be obtained, or
to define the position in which our
shareholders may find their property
II they reject the alliance which is now
offered them, I also forbear to discuss
these subjects.
Three things in Mr.. Olney's letter
show that he has seriously miSappre-
hended the situation.
First: He goes out of his way to
quote from the direetors, eiRealas
I (WHICH was prepared and issued sew
eral weeks after the lease was agreed
TOP statement that Tthe N. Y. Gen.
trail and Hudson River r. r. Co. is
among the best of guarantors, and the
shareholders will have security which
is one Of the safest in the land, a Sc
curity which will be relieved of all
risk Of loss from physical disasters and
from commercial depression, and they
are assured their regular dividends as
long as the lease endures." and he then
construes this statement to mean that
the directors as trustees have taken
for granted, and made it basis of a
business bargain, that the New York
Central must continue to have stabil-
ity and prosperity for thousand
years.
1 believe the N. Y. Central to be one
of the best guarantors. What railroad
connecting with the Boston and Albany
is better? The property of the share
holders, SO long as the lease endures, is
not subject to loss to them from rail-
road accidents or disasters, nor from
commercial depression, because all such
risks and losses must fail on the New
York Central and be borne by it. If
that company fails to bear its burdens,
the lease ceases. Until it 50 fails, The
lease endures, and our shareholders re-
ceive their regular dividends without
risk of loss. 1t is inexplicable to me
that so clear headed a man as Mr..
Olney should have so misconstrued
simple and plain statement, and have
been led to impute practically,
breach of trust to reputable men on
the faith of such a construction.
Second: Mr.. Olney states that the
lease puts the lessor, as possible cred
itor, in an unusually disadvantageous
relation to the lessee's assets, because
by article 10 the lessons possible claims
are made subject to the prior charge
and due payment of the bonds issued
by the New York Central and Hartford
Railroad Company in payment for and
secured by the deposit of the whole
stock OF the Lake Shore and Michigan
Southern Railroad Company, and of
the Michigan Central Railroad Com
pany and he adds, There is no expla-
nation-so far as know-of this dis
elimination against the lessor in the
proposed lease"
Yet had, at their request, personally
explained this to two of Mr.. Olney's
committee as much as week before
his letter came out, and an inquiry
of any of the railroad officers with
whom he is associated or at the office
of dealers in railroad securities, could
have furnished Mr. Olney the expla-
nation, namely, that the New York
Central contracted when it issued the
Lake Shore and the Michigan
Central collateral trust bonds,
that it would make all it's
subsequent obligations subordinate
thereto and therefore that any lessor
to the New York Central since the date
of that contract must make it's lease
on tnaL OASIS.
desire distinctly to say that it is not
so unusual t. find lessee some of
whose creditors are secured by mort
gage or by collateral or otherwise, so
that in the event of his failure. the less
or can only resort. in common with
other unsecured creditors, to such prop
erty as is not pledged or mortgaged, as
it is to find gentleman Of Mr. Olneys
experience and distinction willing
without inquiry, to charge the directors
of an important property, some Of
whom have been his personal friends
with placing their stockholders in an
unusually disadvantageous position by
discrimination against them for
which there is no explanation.
Third: Mr. Olney says that the COW
enant OF the lessee not to assign this
lease nor under-let the demised prem
ises as railroad system without the
consent in writing of the lessor" to-
gether with the provision that the
lessons existing leases Of railroad are
to be renewed only Il do not know
where be found this world IL the lessee
so request, and at the termination of
the lease that the lessee is to return
the demised road and property with all
improvements and additions thereon to
the lessor as a railroad between BOSTON