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The revenue was estimated at nearly £1,500,000 a year, which, with working expenses at forty per cent of revenue, and debenture interest and £60,000 for lease of the Atlantic and St Lawrence Railway deducted, would leave £550,000 or 11 1/2 per cent on the share capital. On the advice of Baring and Glyn only half the capital was issued at first. This decision proved a serious mistake.
To their great astonishment, the Reading owners woke up one morning to find that Vanderbilt and his associates had completely betrayed them by disposing of a majority of the stock of the partly built South Pennsylvania line to the Pennsylvania Railroad system for $5,600,000 in three per cent. railroad debenture bonds.
Pass through the door into a veritable trackless wilderness of narrow black halls, with rooms that open in the most unexpected corners, and come after a while to the Debenture Room of old, and to the window near which Richard Henry Stoddard had his desk for close upon twenty years.
The money required was secured by the issue of bonds and debenture loans guaranteed by the government or the Grand Trunk. Up to 1914, in connection with the western section, the government had guaranteed the company's bonds to the amount of over eighty millions, had lent twenty-five millions for ten years at four per cent, and had made or promised a cash gift of twenty-three millions.
She glanced from question to question, feeling despair deepen at the sight of such phrases as "Simplify the expression"; "debenture stock at 140 1/8"; "at what rate per cent.?" etcetera, etcetera. In the present condition of mind and body it was an effort to recall the multiplication table, not to speak of difficult and elaborate calculations. Poor Rhoda!
If these were shortened to 6, 9, and 12 months, and ware-houses provided by Government sufficient to receive the goods offered in deposit for security and for debenture, and if the right of the United States to a priority of payment out of the estates of its insolvent debtors were more effectually secured, this evil would in a great measure be obviated.
The Company received £70 for each £100 debenture. Comment is superfluous. A second issue of a million was made, nominally at £93 10s., but the Company only received £86 a commission to the brokers or agents of 8-3/4 per cent., at a time when the Company's previous issue of 4 per cents. were standing at £97 in the market.
All along the line there will be claims for higher payments for services rendered or goods supplied. On the other hand, industrial undertakings will have to pay more for the capital they must borrow to carry on and develop their work, and 6 per cent. instead of 4 per cent. will have to be paid for debenture capital now raised by the best industrial companies.
As she came back into the room she heard the word "debentures," and that single word changed her mood instantly from bland feminine toleration to porcupinish defensiveness. She did not, as a fact, know what debentures were. She could not for a fortune have defined the difference between a debenture and a share.
Then turning to me: "This of course is only a preliminary announcement." 50,000 Founders' shares at .... $1000. each 5,000 Ordinary " " .... 100.00 " The undersigned, Messrs. . . . . offer for sale $500,000.00 of the 6% Deferred Debenture Bonds of the C.& W. Air Line Railroad at par and accrued interest, together with a limited amount of the ordinary shares at 50%.
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