The Providence news. (Providence [R.I.]) 1891-1906, 1906-01-08

The secretary takes up the report of
the president OF the railroad company and
discusses two transactions referred TO in
the report-the bonds and their rcpurchase
ny the company, and tAe- -HaaEkeLcnntract
for feeding employees on the isthmus. or
these the'secretary says:
There are two transactions referred TO
IN, the report Of the president OF the rail-
road company OF which special mention
should be made. In December. az n
time when the creditors OF the railroad
company were urgent I'm demanding tho
payment OF their bills. and when the rail-
road company was not able 10 meet its
obligations because the canal commission.
were unable 20 pay the railway company
what was due it; the president and dlrec-
tors sold CPS one thousand dollar Az per
cent. bonds which had been In the treas-
ury OF the corporation ever since the
United States acquired a controlling in
terest in it's shares
''The bonds had been placed there by the
former management FOR the purpose 20
use them in order TO improve the equip
ment OF the road On Nov s. last the di-
rectQrs authorized the executive, officers
90 issue the bonds and after written in
vitation TO several probable purchasers.
they were sold on the llth day OF Novem-
ber TO Mackay and company. bankers.
as the highest bidders one hundred and
Eeventy-nve thousand dollars OF tho pur-
chase price paid on New. IL. though the
bonds were not delivered until the 24th
OF November
THE purchasers paid par and a premium
OF i've per cent. for the bonds.
POLICY WAS DOUBTFUL.
1T has been suggested that as the gov
rrnruenr owned All TIE shares or INC TTtt=
road company. and was in fact the owner
OF the road, the sale ~ the Company's
bonds was In effect 90 increase the In
debtedness TO which the government prop-
erty might be subjected. and in this way
Indirectly to increase the indebtedness Of
the government and that. such power
ought not 20 be exercised without special
authority from congress
"On the other hand a. may be pointed
that the company still preserves It's
character as corporation by the ac-
auiesence OF congress and that under the
charter the directors had the power 10
issue the bonds and bind the company.
no matter who owns the shares
THE question OF issuing the bonds was
not submitted 70 YOU OF 10 me before
final action was taken by the board OF
olrectors- The policy ot selling the bonds
was a doubtful one and should not have
been adopted until after a conference with
higher governmental authority ! have
not the slightest doubt that the president
and directors OF the company acted I'm on
tire good faith In what they did and as
they thought for tho best interests of the
government. but considering the anon, a.
Gus ana peculiar felhUonS between the dI-
rectors and the company and the govern
ment. the bonds should not have been IS
sued without your approval or mine
I'm view OF the fact. by your authority.
] instructed the president of the railroad
company 10 proceed az once 20 repurchase
the bonds. The bonds themselves con-
tained n stimulation. providing that thev
might be redeemed either on the first ~
October or the hrst Of April bv tho pay
ment Of the previous sin months interest.
The principal and a premium of per
cent.
BOUGHT BACK BONDS.
Arrangements were made with the pur-
ctasers by which the bonds were bouEh.
hack az the premium paid. los. and ac-
crued interest 70 date ~ ropurchase from
the FIRST OF October. To make the repur-
chase II was az first thought necessary
for the railway company 10 borrow 500. D11
from the canal commission
''The acting attorney general held that
the commission had tho authority - lend
The money 20 the railroad company for
that purpose but Il was found that the
irdt btedness of the canal commission to
the railroad company. was quite large
enough 10 supply the railroad COMPANY
with the needed funds FOR taking up tho
bombs withcat borrowing from the come
mission
'The execufivo officer of Tho railroad
Enve been advised of their error" says
the secretary In his letter tn the presi-
dcrt and hereafter questions NJ this
character will rot be acted upon finally
by the commission or By TIRE directors of