Arizona republican., 1903-12-23
PHOENIX. ARIZONA, DEC. %, 49,
The Beet Sugar Tangle.

Tor many reasons IL Is reSrellADLe tiiAe
such financial difficulties have over
taken the Eastern Sugar company as
will postpone for at least one crop sea-
con a beginning of the sugar industry IN
III, salt River valley. 1t appears howeN-
or that the situation is not nearly SO pao
az II might be. 1t is reasonable 10 eN-
meet in fact, that within few months
the company will be reorganized on a
sound financial basis-a basis whlch
will assure the completion and success
full operation of the factory.
The situation is very simple, II
seems. The Eastern Sugar company
undertook a great and expensive enter
nrise with a limited cash capital. The
promoters OF the scheme expected 10
raise most of the necessary FUNDS pF
the sale of bonds. the bonds to be Sc
cured by a first mortgage covering all
the properties of the compeny-the US
nal procedure in most new Industrial
enterprises. The promoters did invest
somewhat more than 100000 in cash,
II ia claimed. 1t was confidently eX-
pected that this investment, with the
local bonus to ti'- concern. would put
the company on such a footing that :,
would be easy 20 sell tire bonds. Re-
living upon finding a market for the
bonds. the company went ahead with
its construction programme. Indebted
ness here and elsewhere was incurred
and machinery. buildings, material and
labor were obtained to an aggregate
value-it is alleged.-of some 100000.
But just at the juncture when it was
expected that investors woald take the
bonds of the company, the bottom d'cp-
ned out of the market for new securl-
ties. The agitation of the Cuban leci-
procity question made made capitalists
timid about taking on beet sugar Sc
curities for one thing, and It was
found impossible 10 raise thu required
cash.
The people who furnished the ma
chinery and material began insisting
upon the payment of their claims. Pay
ment was impossible. and there being
no immediate prospect that the COM
pany would be in funds. some CT the
principal creditors brorSht suit and 3
receiver was appointed.
1t is scarcely necessary to say that
the people here have been misled i'll
the past as TO the financial standing
of the company 1t was always repre-
scented that the concern had abundant
capital, and was merely waiting for
a bonus and assurances that the ranch
ers would grew the required acreage Of
beets. before embarking upon one Of
the most extensive beet sugar enter
prises in the west. Certainly, the, com
pany did not deal frankly with the To-
cal public in this particular. 1t was
entirely legitimate to undertake The
enterprise on lines which called for a
heavy bonded Indebtedness, bus 1t
should have been explained that the
promoters and stockholders were de-
pending upon this method for making
the thing a success.
This phase of the subject is less i'm
portant, now however, than the fact
that the situation now demands very
careful action Of all the interests in
volved if the sugar factory is to b,
made a successful reality hereafter
But the facts already referred tojustify
the conclusion that it is practicable
10 effect a successful reorganization
Speaking with brutal frankness, it APP
pears that the parties who trusted tn
company and furnished expensive ma
chinery and material will find their fin
gers badly plnched in the door if the!
do not cooperate with the promoter
and smaller creditors in putting tn
project OH a safe footing. That is Il
say. the material and machinery nov
on the ground at Glendale represcn
such a. large amount of money that tn
parties who furnished the same canno
afford to lose it. 1t will be simply bus
mess for them to make still heavier in
vestments in order OF assure the safet
of the whole.
1t is expected, therefore. that at a
early day, the principal creditors vii
get together with the stockholders an
arrange a plan for mutually carryin
the scheme to success. More tina
one industry, now successful, has pass
ed through just the stage here indicat
ed.
Under these circumstances,
would seem a wise course for loce
creditors to do nothing 10 harass tn
company unnecessarily, or to hampe
its reorganization. Inconsiderate actio
might not only prolong the receiver
ship indefinitely. but might prevent a
together any resumption of bushes
hereafter. But local creditors shoult
unquestionabiy, take all necessaI