The Worcester spy. [volume] (Worcester, Mass.) 1898-1904, 1899-08-11

Boston Albany thousand years
hence. But the amount of such in
debtsdness 10, Is or Is years hence
should the lease be broken and the les
sor be compelled to take its property
back-is matter OF the most serious
concern
Yet, under this lease. first all i'm
provements upon TIE leased property
are TO be made with Boston & Albany
ponds TO be given to the lessee upon is
request, and, securd what shall be such
improvements to be thus paid for is
discretionary wholly with the lessee.
Both these features are decidedly OBJ
jectionable
The lessee should not be the sole
judge of what are and what are not
Suc5 improvements. 1t will always be
under temptation to declare things I'M
provsments which are not such in any
View. 1t will certainly Declare things
TO be improvements which are such
from the lessee's point Of view-as th4
ownee Of the whole system of which the
less or's road is a palt-but which may
not be such from the lessons point of
view, and would not be such if the les
sor were forced to resume control of its
property. Hence this lease should have
conformed to what l believe to be the
practice in the like cases-should have
defined Improvements as far as practi-
cable-should have given the lessor a
voice upon the question of what are to
be regarded as mprovenents-and in
case of difference between the parties
in any instance, should have provided a
satisfactory mode fer settling the Gif-
ference Further it Is not perceived
why ell improvements upon the lessor S
road should be paid for by bonds, even
if the lessor could bring about a de-
pa~ture from the general policy of the
commonwealth, and should procure spe-
cial authority to issue bonds to excess
of its capital stock Funded debt and
liked charges, as compared issues and
dividends, weaken a corporation and
impair its standing and credit The
lessor, instead of being bound to issue
Improvement bonds, should at least he
given the election to Issue stock in their
stead, the shares to be sold at auction
and the quarterly rent to be so in
creased es to enable the new shares to
receive the same dividend as that paid
on the old.
In this connection, it should be noted
that the lessee pays a cash rental Of
$2000,0C0 a year or S per cent on the
lessons existing capital stock, and
agrees to pay interest on the lessor s
Indebtedness only as existing at the in
ception of the lease or as increased
with the lessee's consent. But the COM
Albany to make betterments upon its
road and property which will make an
increase of its capital or of its funded
debt absolutely necessary Such might
be the result to ts Ike one example OUT
of many that might be named, il the
commonwealth should change its policy
as to the abolition of grade crossings
of railroads with each other or will.
highways and should compel all or most
90 e. |. 4. md 81
the sole expense of the railroad COM
panies. 1t is certain, l think. that snch
a contingency should be provided for,
and If not provided for, that the lessons
stockholders might not receive the ben
efts and advantages under the lease
which both the parties to it intend. If
permanent additions to the improve
ments upon the leased premises are le
gally exacted of the lessor by the COM
monwealth, the lessee should assume the
interest on any bonds of the lessor is
sued therefor or, if paid for by its
stock, should Increase the cash rental
so as to enable 5 per cent to be paid on
the additional stock.
In the same connection-though the
matter is comparatively a small une-it
is proper to note thaf>the lease does not
clearly provide which party, the lessor
or tbs lessee, is to bear the expense of
new issues of the lessons bonds
whether fer refun6ing or improvement
purposes. 1t is, of course, to be paid by
the lesjee.
take 1t the lessons 4eased or oper-
ated roads have no indebtedness-oth
arwise the interest thereon should be
expressly assumed by the lessee.
1t is suggested, in answer to the criti-
cism that the lease does not adequate
ly protect the lessor against the contin-
gency Of it's being compelled to take
its road back loaded with an enormous
debt incurred for improvements which,
if such at ALL may be such only as the
lessons road is part Of the lessee's sys-
TENT is suggested. in answer to this
criticism, that the lessor can only make
such bond issues as are approved by
the board of railroad commissioners.
But the board may not last forever, nor
even for any considerable period; if it
does. 1t may be shorn of its functions
as respects railroad bond issues, or If
it retains them and the lease is ratified
by the Legislature as it stands, the
board may consider it's action limited
to seeing that the contract is carried
out in good faith while if the ratifica-
ton is subject to any conditions, the
lessee might we'll claim that no con-
tract had been made. Further, the
stockholders have a right to expect of
their directors a contract which in it
self and by its own terms adequately
safeguards their interests and does not
arbitrament of any tribunal however
expert or disinterested.
3. The obligation of the lessee to keep
the demised property 'in good order
and condition" and to restore the same
in good condition" at the end of the
lease, cannot be regarded as satisfac-
tory. The present condition is gener-
ally, believe, rlghtfully supposed to
be unusually fine, and to show at once
the roads great and steady prosperity
and the skillful and conservative char
acter OF the management. Is the pres
ent high standard Of excellence to be
lowered? Neither party to the lease.
am satisfied. would make any such ad-
mission. But, II the present standard
is to be maintained. then the provisions
usually made in the like cases should
be embodied In the present lease. AS
showing what those are quote the
following clauses from recent leases be-
tween railroad companies:
The said lessee shall, at its own ex-
pense, maintain and keep the demised
premises, and all the property and Ak
lures of every description which it
shall receive or operate under this
lease, In as good order and condition as
the same now are or shall be when re-
ceived by the lessee, so that there shall
pe no uepreclatlon In the same or any
part thereof"
AT the expiration or earlier termina-
ton of this lease. the lessee will return
said demised railroad and property to
the lessor as a railroad between the
points between which II now exists.
with its existing branches and leased
roads suitably equipped and provided
with depots, stations. shops and other
structures. Of at least equal value with