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When the promised inpour of millers and miners, manufacturers and operatives, so nearly failed that the Land Company could not pay, nor half pay, the interest on its first-mortgage bonds and they "tumbled," these second-mortgage bonds were, of course, unsalable at any figure. The smallest child will understand this and worse to follow at a glance; but if he doesn't he needn't.
They went on a still hunt after the first-mortgage bonds, "bought," said Proudfit, "the whole bilin' faw a song," foreclosed the mortgage, and at the sale of the Land Company's assets were the only bidders, except Senator Halliday and Captain Shotwell, whom they easily outbid. "Right smart of us suspicioned those two gentlemen were bidding faw you, John."
The bid at the sale covered the first-mortgage lien and the entire mortgage claim of the Government, principal and interest. This left the Kansas Pacific case unconcluded. By a decree of the court in that case an upset price for the property was fixed at a sum which would yield to the Government only $2,500,000 upon its lien.
Of course, whoever placed the bonds would be asked to guarantee the interest for two or three years; hence, with two thousand more for that and good measure, we made up our proposed issue of twenty thousand dollars per mile of first-mortgage bonds, to dispose of which "the former member of the firm of Lusch, Carskaddan & Mayer" was revisiting the glimpses of Wall Street, and testing the strength of that mighty influence which the Herald had attributed to him.
There has been paid thereon $11,762,543.12, which has been covered into the Treasury, and the remainder, payable within ten years, with interest at the rate Of 3 per cent per annum, payable semiannually, is secured by the deposit of an equal amount of first-mortgage bonds of the Pacific Railway companies.
The bid at the sale covered the first-mortgage lien and the entire mortgage claim of the Government, principal and interest. This left the Kansas Pacific case unconcluded. By a decree of the court in that case an upset price for the property was fixed at a sum which would yield to the Government only $2,500,000 upon its lien.
The things to be carefully guarded are the completion of the work within the limits of the guaranty, the subrogation of the United States to the rights of the first-mortgage bondholders for any amounts it may have to pay, and in the meantime a control of the stock of the company as a security against mismanagement and loss.
"I'm mortgaged to the last penny," he confessed, "and Pennington has been buying Cardigan Redwood Lumber Company first-mortgage bonds until he is in control of the issue. He'll buy in the San Hedrin timber at the foreclosure sale, and in order to get it back and save something for you out of the wreckage, I'll have to make an unprofitable trade with him.
The things to be carefully guarded are the completion of the work within the limits of the guaranty, the subrogation of the United States to the rights of the first-mortgage bondholders for any amounts it may have to pay, and in the meantime a control of the stock of the company as a security against mismanagement and loss.
We hold far more than we need of solid railroad bonds that net us four per cent on our investment. With very little extra risk I am sure we can secure a good deal larger return." It was a rather daring speech to make, for four per cent first-mortgage railroad bonds had been Mr. Wintermuth's idea of finance for almost a generation.
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