Los Angeles herald., 1910-07-14
PROGRESS
OF BIG AQUEDUCT
Eastern Capitalists Fail to Garry
Out Terms Of Contract
to Buy Bonds
INVESTIGATION IS COMPLETE
HeraId's Inquiry Into Situation
Enables People to Become Ac-
quainted with the Facts
tcontinued from rage One,

NCOntinueu from EaRe Onel
might be completed a year sooner.
AS a result the city was compelled TO
discharge a large part of the aqueduct
force which it had assembled upon the
faith of the promise of the bond buyers
to increase their taking of bonds above
the amounts named in the contract.
When the bond buyers have taken
the $510,0 900 of the bonds remaining of
the 1910 batch they can, If their con-
tention Is true, refuse to exercise their
option any further and put the city IN
the attitude of having to secure new
market for its bonds.
The Herald is informed of another mat
ter which appears TO throw additional iish!
on the attitude of the bond buyers. These
buyers are interested in handling the Sc
curities issued by more of the cleo
trio lighting companies now serving the
city, and they would naturally be opposed
to anything which would inJure these Sc
curities and would therefore be interested
in preventing or minimizing such injury as
much as possible.
It is also a very significatnt fact that
| every effort to induce the bond buyers
| to live up to their promise to take the
| bonds of the city so that the work on
| the aqueduct could be expedited and
| finished by May /, 1912, according to
plans, has been met with the demand
that they be given a three-year option
upon the $3500,000 of bonds recently
voted by the city for constructing the
clty's electric plants along the aque-
duct. This indicates most conclusively
that the action of the bond buyers is
dictated not so much on account of
any difficulty which they experience
| in disposing of the bonds, as on ac-
count of a desire to interfere with and
cripple the development of the clty's
| electric power plants. Considering the
statement that the bond buyers had an
arrangement made and a price agreed
upon to sell half million dollars of
| the bonds Just before the city cut the
price of electricity furnished by the cleo
| trio companies to our citizens and that
| the buyers Immediately upon the hap
pening of that event refused to COM
plete the sale which would have en-
abled them to deliver to the city the
| half million dollars of much needed
money; the anxiety of the bond buyers
to secure an option on the electric
power bonds on terms which would de-
| Law the construction of the electric
power works by the city for at least
| three years, and the further fact that
the bond buyers are interested in some
| of the securities put out by the cleo
trio companies now doing business in
the action of the bond buyers is the re-
suit of a desire on their part to prevent
the carrying out by the city of certain
work which will bring it into competi-
ton with the electric companies now
doing business within its boundaries.
This conclusion is emphasized by the
fact that few days ago the head OF
one of the electric companies now serV-
ing the people of the city in discussing
the delay OF the work on the aqueduct
caused by the attitude recently as
sumed by the bond buyers was heard
to state: This will put the matter in
good shape, unless some id insurance
company should come along now and
take the bonds from the city"
Upon the facts of the case there ap-
pears to be no doubt that the bond
buyers have violated their agreement
with the city in refusing to take the
bonds as their proceeds were required
for the aqueduct work, and in insisting
that the extra amount taken In the
summer of 1909 should be credited upon
their 1910 obligations. 1t also appears
beyond a question of doubt that the
whole trouble is the result of an effort
to embarrass the city in the develop
ment of the electric power on the aque-
duct. and in that way to protect the
securities of one or more of the cor
norations now furnishing electric light
to the city.
Under the circumstances, The Herald
feels that the city has the right tu
seek and accept any available relief
to protect itself against the damage
which the bond buyers are endeaVoring
to inflict upon it. The Herald believes
that such relief can be had, and ths
course necessary to pursue in order to
obtain it will be suggested in ouI
issue of tomorrow.