The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1899-06-08
STREET RAILWAY BONDS AND STOCK

dition OF the outstanding bonds OF the Market Street
Railway Company and OF six other railway corpora
tons that were absorbed by that consolidation &c
tober - 1893 From that statement it appeared tha
out OF authorized issue the amount OF $780,
600, the Market Street Railway Company had &C
tually issued bonds representing $4,8Izooo, all OF
which had been used for additional acquisitions and
for new construction and that the bonds OF the SIX
defunct companies taken by themselves remained
acy on their original footing while the securities on
which each issue depended, subject to the reestng
liens, had been transferred
The fluctuations in Wall street and in other financial
centers including San Francisco, where there are
frequent and large transactions in bonds and stocks,
prove the necessity of extremely conservative treat
ment of their values But the investing public is
tany entitled to accurate knowledge of the facts upon
which these transactions depend that innocent per
sons may be saved from risks that if fully informed,
they would be unwilling to assume.
The Market Street Railway Company is consoli-
dston OF eleven corporations that existed before
was formed. The financial standing OF the principal
owners OF its stock is beyond dispute. They
amply able to respond to their personal liability under
NE constitution and laws Of this State or to any
equitable responsibility that may ultimately fall upon
them. But the consolidation itself has other
property than street railways and franchises mostly de-
rived from its eleven predecessors and six of them
charged with Indebtedness exclusive of interest to
the amount OF S7o35,ooo. These franchises will
pire different periods during the first third there
abouts OF the twentieth century and, under the
charter, where genuine competition is assured upon
terms much more favorable to the municipality than
under the existing law and where also the policy OF
the acquisition OF public utilities IS enforced there
no certainty that they will be renewed at all that
any renewals that may be secured will leave them
the hands OF their present holders
In its trust mortgage OF June II, 1894 the Market
Street Railway Company agreed, as rapidly as prac-
tcabe to restore the outstanding bonds Of the com
panes it had succeeded with its own bonds The fact
that the original bonds are now on the market shows
that this has not been done, although than five
years has elapsed. The situation, therefore, is un-
questionably dangerous The value OF the securities
originally given for the protection OF these bonds
necessarily deprecates day by day. And, in addition
to this fact, they are in the hands of the Market
street combination and subject its control and its
manipulation. One method OF manipulation now
being pursued upon its face is simply runous. The
identical property which stands apart from the guar
anty OF the Market street consolidation if its trust
mortgage be so construed as the diminishing secur-
ty for $7,o35.ooo has also been put up to protect
100000 OF Indebtedness, OF which $Io465 900
may represent purchases and construction
provide for the redemption OF these bonds sinking
fund to be originated in 1913 which, at the rate OF
$4,000 per annun, cannot produce more than 5000,
600 by the time the new bonds are due Yet out OF
the receipts OF the property and franchises which in
Guide the total mortgage security for S7o35ooo and
also the security for the present issue OF bonds
already mentioned and OF any further OF these
bonds to the extent that they are still unssued the
Market Street Railway Company is distributing
among the holders OF 1870 shares Of its capital
stock, in the form OF dividends $446,8o8 per annum,
which by 1924 would aggregate $II,I7o,2oo In ad-
dton, therefore, to all the other elements OF depre-
citation to which have advcrted as the franchises
which communicate actual market value to street rail
way assets are approaching extinction, the money
that would provide for bond redemption, if turned
into sinking fund, is being steadily diverted to the
maintenance OF stock values.
The Huntington monopoly has boldly assumed the
position that it is governed by rule but its own
will In this instance 1t appears to have gone too
far If any reliance can be placed upon facts and
figures, unless there are concealed or unknown ar
rangements by which they controlled, there is
substantial basis whatever for the outstanding street
railway bonds now under consideration, and the in
dcatons suggest deliberate purpose to leave bond
investors ultimately in the lurch and dependent upon
other protection than that supposed to have been &C
COTQ6Q Dy the securities upon WHICH lIey nave legal
right to rely When the securities have been Invested
Of all value except the property that
the existing franchises the bulk of the Indebtedness
will have behind it only the personal liability of stock
holders and such equitable relief the peculiar
agement OF, the monopoly may justify,
When the Market Street Railway Company lately
supposed itself to have anticipated the new charter
and have corruptly secured network OF new
franchises and privileges that would cover the prin-
cipa unoccupied parts OF San Francisco it had evil
IDENTIFY discovered a method of extrication from its
bond dilemma by stealing enough property to enable
ii to pursue its present methods OF appropriatng its
and at the time provide for the out
standing Indebtedness with an enormous additional
accumulation. more transparency infamous scheme
was never devised. An analysis of the facts demon
strates the for the desperate attempt to con
centrae influence and to seduce property owners by
false pretenses into an apparent Endorsement OF the
robbery The corrupted Supervisors understood per