Bisbee daily review., 1907-01-16
RAILROAD LAW IF MEXICO
 PUzzLING
Americans at a Loss to Under stand Their Application. Majority of Directors Must Be Mexican Residents.

MEXICO CITY, Jan. i5--It does not seem that the national government Of Mexico. although it has taken steps looking to the consolidation and coa. trol of all the lines of railroal witaia the limits of the territory of tho re- public, has any idea of linliting She activity of citizens of the United States so far as participation ID tue af- fairs of the railroads of Mexico are concerned.
 By the terms of the bill passed by the Mexican government for the pur- chase of control of the Mexican Cen tral and the consolidation of that line with the Mexican National, no qualifi- cations are imposed upon directors. a though the understanding Is that a majority of these must be citizens of Mexico.
 The bill as passed Is general to the point ot yagueness. It Is in full as follows:
 Article l. The federal executive is authorized to organize by one or more decrees a Mexican company or cor poration. represented by shares of lim- ited liability. with headquarters in the capital of the republic, and of which the object will be to take over the properties of the Mexican National and the Mexican Central railways, and with power to acquire, construct and operate any other railway lines within the national territory, and to execute all acts. operations and contracts con. nected with the object of the present authorization Tn crees to be issued. the executive will lay down the. constituent bases which seem to 1t most adequate, and the sue- ctal requisite both as to the substance and form in order that the corporation may have the legal capacity and may accomplish the ends of the establish. ment. .t ;sg~EMiW
 Article 2. The executive is also em- powered to enter into such arrange ments as he may see fit in order to effect the above consolidation, sub ject to the following provisions:
 Section 1. The federal government will hold in its own name a sufficient number of shares of the company 10 have a voting majority at the general meetings.
 Section ?. The compensation by which the majority of shares is to be obtained may not involve any cash outlay. nor any issuance of public debt securities. It will be obtained by ex- changing the governments present shares in the Mexican National and by a subsidiary guarantee in favor of one class of the mortgage bonds to be is- sued by the new company. provided that said bonds do not carry more than per cent interest.
 Section 3. The bond issues to be guaranteed by the government will be confined to the sum necessary to con vert only part of the outstanding bonds of the companies that enter into the consolidation and to provide the new company with funds that it needs for the expenses of it's corporation of other railway lines or their securi- ties, and finally for the equipment and 0etterment of said lines and of exist ing lines.
 Section 4. The shares giving federal government a controlling inter- est cannot be disposed of or encum- oeTed except by the authorization of congress.
 Section ,. In the arrangements to be entered into the concessions of the companies concerned shall in nowise be modified. ...
 According to this bill the plan does not contemplate any cash outlay, nor an issue of public debt securities. However, as the stockholders of the Mexican National are to get certain amount in cash. together with prefer red stock of the new company, in ex- chance for their first preferred stock, it seems to be clear that the plan pro- vides for the issue of a certain amount of bonds of the new company for cash to bankers.
 The bill indicates pretty definitely that only one bond issue of the com pany will be guaranteed by the gov ernment. While the measure does not reveal just what security the bonds or the new corporation will be ex- changed for, it is known that the plan involves the exchange of the new com pany's common stock for both first and second incomes of the Mexican Central. These first incomes are to get substantially more in the new com mon than the present stock.
 It is thought this feature of the terms probably is responsible for the fact that the stock and the first in- comes have come practically to the same level in the market.
 The chief burden of applying the provisions of the bill to actual condi- tions will fall upon Senor Limantour, minister of finance. but as he has the confidence of both President Diaz and congress, whatever he does will be ac- ceptabie to the national administra- tion.