New-York tribune., 1900-01-27
TECTING THEIR STOCKHOLDERS

TECTiNfI THEIR STOCKHOLDERS.
Il is now an admitted fact that John B. Nc
Donald, the successful bidder for the under
ground railway. is in a sense being held up
by the guarantee companies from whom he hopes
70 get his S6O0OO00 of bonds. but whether the
companies are endeavoring to squeeze Mr. Nc
Donald because they think they have him in a
tight place. where he cannot resist or whether
they are only animated by a desire to protect
their stockholders interests thoroughly is not
50 easily decided, because of the mass of con-
hicting testimony on this point The guarantee
officials declare positively that the risk IS great
in Itself on account Of the large amount IN
volved and on account Of the length Of time the
bonds must run. and therefore they are justified
In protecting themselves as well as they can by
exacting ample security from Mr. Mcdonald
The hitch. they say. has arisen not over the size
OF their commissions, but over the kind Of secur-
tiles they demand from the contractor
Mr.. Mcdonald, on the other hand. thinks that
the companies ought 10 give him a special and
reduced rate because Of the large commission
they viii make out of him anyway. Commis-
sions on construction bonds usually from
= per cent to 3 per cent a year. according to
the nature Of the work. The companies, It is said
want 10 charge Mcdonald 1 per cent yearly on
his s5.O00O00 bond, which runs for four and
half years and per cent yearly on his 81. 100000
bond, which for fifty years This would
amount TO a grand total Of S725.000. That is q
nice sum in itself But Mr. Mcdonald must
in turn exact bonds from his sub-contractors as
the work goes along. Say that their contracts
in the aggregate reach S25.0O0000, and their
bonds VIII be the same. A commission Of per
cent on that sum is S25O.0OO. and Mr. Mcdonald
can throw that much in the way OF any COM
pany or companies whose bonds he chooses to
demand from his sub-coutractors. He natu-
rally thinks the companies ought at least TO pay
him handsome commission that and deduct
Il from what they charge him for his own bonds
The companies. It IS said, think differently
TO FORM A CONSTRUCTION COMPANY.
Anyway, IN order TO expedite matters Mr.
Mcdonald has decided TO form a construction
company 10 build the road. because bond on
a practically deathless corporation is more safe
than bond an individual, who may die any
day. and he has asked ana ~eceived from Presi-
dent Orr. Of the Rapid Tg3s-Dit Board. an extern
sion OF ten days from to-day IN which to per
feet his bonds. A meeting was held late yester-
day afternoon between MI Mcdonald, his coun-
SCI, De Lancey Nicoll, and representatives of
the PIatt, the Freedman and the American
surety companies. at which the bond question
discussed At its close the announcement
made that Mr. Mcdonald and the COM
panies had got pretty close together and the
prospects were bright for the completion OF the
bonds before the time allowance expired.
T2umors are persistent that surface and elevated
railroad interests are bringing their influence
strongly 10 bear upon the guarantee companies
in effort TO prevent Mr.. Mcdonald from
getting his bonds. The connection between the
Metropolitan Street Railway Company and the
American Surety Company is easily traced,
through the State Trust Company. Nine trus-
tees Of the State Trust are also trustees Of the
american Surety. and the State Trust is the
creature of the Whitney interests The Freed
man and the PIatt company thrive on political
influences which are easily arranged any
side; but no actual confirmation Of a conspiracy
10 block rapid transit is yet forthcoming. When
President Lyman, of the American Surety Com
pany. was seen yesterday, he said:
There Is no understanding between the com
fact We have not come 70 the consideration Of com
Taissio9s yet at a az This c9mpqny S r, is st uni
OF not The whole difaculty arises over the nature
end the amount OF the securities. which must in
Justice to our stockholders. demand from him.
Andrew Freedman would not tell how near to-
gether his company-the United States Fidelity
and Guaranty-and the contractor were on fig
ures. but he said they were not very far
apart. Asked If there was any agreement be-
tween the different companies mentioned by
Mr.. Mcdonald as his proposed securities. Mr..
Freedman said:
There is no agreement at all. Each company will
for itself Independently. We cannot OF course,
bond him fer the whole amount. We viii make the
price reasonable as possible We realize that
this is large transaction, and are willing to
make special terms.
We feel very kindly toward Mr.. Mcdonald. ani
viii 90 al We can 10 assist hinl- This company is
heartily in favor OF rapid transit. and Will not put
anything in the way Of The success OF the measure
Us and Mr. Mcdonald are OF a business nature, Of
course and cannot tel you What wa tI they are ar hF nor
nlrF n mus Gp u 4
Yice-President Henry B. Platt of the Fidelity
and Deposit Company Of Maryland said:
Our company does not care TO write any part Of
Mr. McDonalds bond. except under conditions that
saerested @ 10 Mf McponaId have not proTe9 atE
factory him. II seems. We have not entered into
mater and We are not opposed to rapid transit or
Influenced by political considerations. but are
not phllanthroplsts We are business men, ana
want 70 90 safe business only.
WOULD TAKE PERSONAL SECURITY.
Edward n. Shepard Of counsel for the Rapid
Transit Board. was asked If the contract
tained any clauses which might work to the dis
advantage Of surety companies and thus make
them ehary OF taking the risk. He replied:
think they see only advantages IN It for them
selves AID want good thing when they see II. The
board Goes not insist upon the security OF guaran-
would satisfy US equally well
President Orr said he had granted an exten-
sion OF ten days 10 Mr. Mcdonald because the
contractor had told him that he wanted time
70 form a construction company. Mr.. Orr
added:
We are very anxious TO assist Mr. McDonald IN
81 ieI % Iaciltate ths completion OF the tunnel
Inat nat ne may be In with the surety eor1panies
leve bovre q II. 9se business OF the Board be-
niS Time has expired and win qualify in good oTaa-