The Montgomery advertiser., 1907-03-31
MILEER's STATEMENT.
Southern Paeiae Has Never Bee

Southern Pacific Has Never Been
 Bound to Pay Interest
 New York, March 30.--The Southern Pacific Railroad Company never guar anteed nor in any way become bound to pay the interest ca the income bonds of the Galveston, Harrisburg and San Antonio Railway Company, according to a statement issued today by Alexander Miller. secretary of the Southern Pacific, with reference to the suit which has been begun against the company by Austin. Texas.
 The suit was brought by the Crock CT heirs of California the Mark Hopkins estate and Thomas H. Hub- hard of New York to enjoIn the pay ment of Southern Pacific dividends un- til such time as the company sees fit to pay the interest on the s second mortEaae honda of sthes falvextou,a Har- risbnrg and San Antonio Railway.
 Mir. Miller says in his statement:
 The Galveston, Harrisburg and San Antonla Railway Company is a Texas corporation which owns and operates the railroad from Houston to Fl Paso. The Southern Pacific Cmpany owns its stock and does not possess or operate its railroad as 1t does the roads west of. Fl Paso and ogden. The laws of Texas prohibit foreign corporations from operating railroads in that State but not from owning their stock. These bonds in questin are second mortgage bonds covering that portion of the road be- tween San Antonio and Fl Paso. They were issued in 1881 to a construction company building that portion of the line, and through the construction company found their way into the hands of the Huntington, Crocker, standfoRd and Hopkins interests, then fin control of both companies. The interest originally was obligatory, but 1t was never earned, and the semi annual dafauIts and the great aceuS mutation of unpaid coupons were inc terfering with the marketing of the
 five per cent. bonds upon the same lines which were held by the owners of these bonds. so that in 1891 they deemed 1t to their interest to waive the obligatory features and tse un- paid interests and convert them inc to common bonds.
 saThere had absolutely been no changes in the methods Of accounting since the owners of these bonds parted with their control of the road. More over the accounts are kept in strict accordance with the requirements and under the careful scrutiny of the Rail road Commission of Texas.
 Much of the territory traversed by the line Is unproductive and has never earned the interest on these bonds. There has been an annual deficit which, however, has been lessening and tho Southern Pacific Company, to protect it's interests In the stock, has ad- advanced from time to time the money necessary to make up interests on the first mortgage bonds, which is obliga- tory and make the Improvements nec- essary upon the road for properly handling the trans-continental bust ness.
 "The road has never contributed a dollar to the dividends on the stock of the Southern Pacific The Southern Pacific Company has never guaranteed nor in any way become bound to pay interest on these income bonds Of the Texas Company. and just what obli- Eation, legal or moral, it is under with respect to them, particularly in the hands of those who issued them, or what connection the Southern Pacinc Company dividends has with them, we the unable to say"