The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1901-01-19
mot DESIRABLE
To HAVE It IN THE
NEWSPAPERS"
ss%I
Deal to Purchase the North
Carolina Railroad.
PROPERTY OF THE STATE
The Deal Would Involve Three Mil
lions, Par Value.
NEWS AND OBSERVER WAS ON THE SCENT
A Letter Giving the Preliminary Steps in the
Plan TO Buy ihs States Equity of
Redemption" in The North
Hnnnl.nn q ,.l.o.d
Carolina Railroad.

Redemption" in The North
Carolina Railroad.
When the Southern Railway and its or
gan the Morr'i:g rost published ~ the
Southern Railway at Raleigh, were NOV
ing heaven and earth 20 fost Daniel T..
Russell on the people as Chief Justice of
the Supreme Court. the News and Obser-
yer said that behind this was a scheme
or schemes that would develop later in
which the Southern Railroad had big in
ierest. II was intimated that it had a
zeal on hand h. which it wished to pur
ase the North Carolina Railroad. Some
the railroad lobbyists denied that there
existed any such plan except in the mag
nation of the editor of the News and OBJ
server. But-as usual-there is evidence
that the News and Observer was on the
scent of the scheme that was being hatch
ed c.:t
ran across the copy of a letter yester-
day that was bc.ng sent out to certain
PAL as the preliminary step by those
who wish to buy the States equity
OF redemption in the North Carolina
Railroad. Though it is not intended to
get in the newspapers" that is really
the place where it ought to appear be-
cause the property belongs to the State
OF North Carolina and every citizen ought
to be made acquaintd with any plan
that is brought forward for the sale of the
States most valuable property.
Here is the letter in full, emitting
only the place from which it was sent
the date and the name of the party who
signed 1t. That information is withheld
for the present OF course the real par
= ties in interest keep themselves under
cover. The letter reads thus
Dear s.r: l would be pleased to have
your views with regard to proposed
purchase from the State of it's stock in the
North Carolina Railroad Con 2anv. In
forming an opinion for myself l would
like to have the advantage of your judg-
ment. financial ability and experience.
desire also for vcu to regard this as con-
10 have ii in the newspapers. Indeed
nothing may come of it any way las the
S&trties who have done some talking about
Afering to buy may back out and never
make any bona fde offer at ALL
The capital stock of the n. C. r. R. Co.
is four million par, three millions of
which belongs to the State and one mil
lion to private individuals. The railroad
speak Of It is leased to the Southern
Railway Company from now until 1884,
say ninety-four years-at 7 per cent on
the stock-that is $2SO.OOO year. paya-
Bile semi annually. This makes the stock
but its security depends upon
the sOlvency, perhaps upon the
management, of the Southern Railway
The thirty thousand shares-three mil
lions par-belonging to the State is mort
gagged to secure what is known as the
Construction bonds, more frequently call
ed the Swazey bonds. These bonds call for
per cent annually, and amount to 81
100000. They are not due until 1919 They
are not railroad bonds in any sense, but
they are bonds of the State. issued be-
tween 1850 and 1859 to raise money with
which to construct the railroad. They
fell due in the years Just after 1880
hut were extended to 1919 by a contract
between the bond holders and the State.
The dividends coming to the State at
ner cent on it's three millions par are
$4,000 a year. The coupons on the
Swazeys are 1853 200 year. This leaves
a surplus to the State of $4,000 year
BY the contract of 1880 the State agreed
that the surplus should be set apart as
sinking furd to meet the bonds at their
maturity and that. for this purpose, such
surplus should regularly be invested in
North Carolina ner cent bonds. Here
tofore this surplus has been less than
$4,000, because the rent of the road
has been less than per cent on the
stock. This contract has not been kept
by the State, but on the contrary, the
surplus he's been used by the State for
general expenses. An account, however,
has been kept by the State Treasurer
showing the amount of this surplus as
borrowed by the State from the sinking
fund
You Will observe that the State is not
in position to sell this stock and trans
fer gu out and-out title to the purchas-
err. The State owns nothing but an equity
OF redemption in the stock. BY a sale,
the purchaser would take. subject to the
mortgage OF the SwaZeys. For manifest
reasons, the State could only sell by
transferring to trustee This trustee
or course, should be some responsible
trust company of the. highest standing.
NOW suppose the proposal of the pur-
chaser TO be as follows: The State to
transfer the stock to trustee upon trust
that the trustee should hold the stock
for the nineteen years, should collect the
dividends of 100000 year, out of this
100000 he should pay the coupons of the
Swayzeys amounting to $1eS, 200 year and
should invest the surplus, SAC, 500 in N. C.