The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-01-30
SPEYER & co. REPLY
TO FEDERAL CRITICS
Resent Condemnation of Inter-
state Board Over Frisco
Financing.
NEVER MADE BIG PROFITS
Deny knowing That Road Was
Insolvent When They
Sold Bonds.
NEVER MADE BIG PROFITS

Spe!sr Co. declare in Z letter to
Chairman l.. T.. Clark OF the Interstate
Commerce Commission that the commits
sion's condemnation OF the firm as the
Frisco railroads bankers in the recent
report II no, Justified.
The bankers say that when they sold
the 100000 bonds, for which they were
scored in the report II was not true that
every appearance indicated insolvency."
The bankers also say tina, their commits
sions were never extravagant. amounting
to only N.342.aes on slO4,sss, 900 OF Sc
curities sold between 1905 and 1918. The
letter follows.
You state in your report of ipvestiga-
ZION of the Frisco railroad that the sale
Of securities 10 the investing public
through the bankers ~ a time when every
appearance Indicated the Insolvency OF the
. issuing company invites and warrants con-
domination of all those who assisted or
participated IN such sale We did assist
and participate in tn. sale by the COM
pany. blu, We deny that our action In this
respect invites or warrants condeinna-
ton
You fall 10 state correctly the circum-
stances connected with the sale In ques-
! ton. and especially you are in error IA to
the dates when 1t was made. The fact IL
| that the negotiations were commenced In
December, 1912, but were not concluded
until March 10, 1913, when the contract OF
sale was signed.
Your report states the dates Of sales
as from April ~ to May IA. While
deliveries and payments were made on
those dates, the fact is that our obligation
/ 10 take the bonds had been fixed two
months before, and IL Is not true that at
4 that lime every aDueAIAnce ipdica al IN
! solvency.'
! THE report goes on TO say the bankers
should have been aware OF the poverty OF
the Frisco and its difficulties in obtaining
funds This sentence amounts 10 an inti-
nation that We Were. not aware OF the
general financial condition of the Frisco.
&c, while the fact IL that we were aware
| Of It, and 80 was everybody who paid any
| attention to such matters.
| with such knowledge as we had. how
ever, We Were Of the opinion then, and
are OF the opinion now. that We were
not only justified but in honor bound
toward the company and its security
holders not to leave 1t without assistance,
| but to try to see IL through it's financial
difficulties. which, in March, were supposed
to be only temporary.
THE company's officials expressed con.
! fidencs that the proceeds Of the sale con.
sumnated in March and the successful
conclusion Of other negotiations then pend
ing would enable the company to avoid
/ serious embarrassment.
I'VE believed then. and we believe now,
that II these negotiations had not been
affected by the abnormal condition OF
the money markets and the impairment OF
confidence generally which prevailed in
| the spring OF 1918. the company would
have beeh able TO meet its obligations.
! There are many cases where railroad
companies In much more desperate cir
| lN.I.--
| In March, 1919 have been assisted and
pulled through by bankers, who received
not condemnation but general commen,la-
| ton for their efforts
/ III it had been supposed in 1907. or
! in 1878. that any aid furnished to
weakened railroads or other corporations
| was. in the event That 1t proved inef-
fectual, to be made the occasion for CEN
surfing the bankers extending such aid
there would have been many more re-
ceiverships.
"Your report also refers In general
terms to 'extravagant arrangements with
bankers, to whom large profits accrued
in the purchase OF bonds and subsequent
sale of the same to the public Our
| total profit on the $4,000, 900 bonds trans
action in March, 1913, amounted to Y
OF per cent. and on our loans We re-
ceived interest at the rate of per
cent. per annuM.
"Thnt we have not made unreasonable
profits will appear from the fact that
during the nine years from March. 1905,
to March. 1913. we bought from the com
pany and resold. either directly or in
directly. All aggregate Of slO4.ssS. 900
bonds and notes OF the Frisco system, and
our total profit in interest, commissions
and otherwise amounted to $l.34a,366, or
about IA per cent. From this amount
might Justly be deducted the losses which
we suffered on our holdings of Frisco
shares ard bonds. ~ the time ,oe the re-
ceivership."