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- Colonel Carter of Cartersville - 5/23 -
TO THE SEA.
CAPITAL ONE MILLION OF DOLLARS, DIVIDED INTO
50,000 Founders' shares at .... $1000. each 5,000 Ordinary " " .... 100.00 "
BONDED DEBT FOR PURPOSES OF CONSTRUCTION ONLY.
ONE MILLION OF DOLLARS IN 1,000 FIRST MORTGAGE BONDS OF $1000.00 EACH.
FULL PROTECTION GUARANTEED.
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%.
Subscription books close. . . . . Promoters reserve the right to advance prices without further notice.
"There, Major, is a prospectus that caarries conviction on its vehy face," said the colonel, reaching for the document.
I complimented the eminent financier on his skill, and was about to ask him what it all meant, when the colonel, who had been studying it carefully, broke in with:--
"Fitz, there is one thing you left out."
"Yes, I know, the name of the banker; I haven't found him yet."
"No, Fitz; but the words, '_Subscriptions opened Simultaneously in New York, London, Richmond_,' and"--
"Cartersville?" suggested Fitz.
"Any money in Cartersville?"
"No, suh, not much; but we can _subscribe_, can't we? The name and influence of our leadin' citizens would give tone and dignity to any subscription list. Think of this, suh!" and the colonel traced imaginary inscriptions on the back of Fitz's prospectus with his forefinger, voicing them as he went on:--
The Hon. JOHN PAGE LOWNES, Member of the State Legislature.. 1,000 shares The Hon. I.B. KERFOOT, Jedge of the District Court of Fairfax County....... 1,000 shares Major THOMAS C. YANCEY, Late of the Confederate Army... 500 shares
"These gentlemen are my friends, suh, and would do anythin' to oblige me."
Fitz sharpened a lead pencil and without a word inserted the desired amendment.
The colonel studied the document for another brief moment and struck another snag.
"And, Fitz, what do you mean, by 'full protection guaranteed'?"
"To the bondholder, of course,--the man who pays the money."
"What kind of protection?"
"Why, the right to foreclose the mortgage when the interest is not paid, of course," said Fitz, with a surprised look.
"Put yo' pencil through that line, quick--none of that for me. This fo'closure business has ruined haalf the gentlemen in our county, suh. But for that foolishness two thirds of our fust families would still be livin' in their homes. No, suh, strike it out!"
"But, my dear Colonel, without that protecting clause you couldn't get a banker to touch your bonds with a pair of tongs. What recourse have they?"
"What reco'se? Reorganization, suh! A boilin'-down process which will make the stock--which we practically give away at fifty cents on the dollar--twice as valuable. I appreciate, my dear Fitz, the effo'ts which you are makin' to dispose of these secu'ities, but you must remember that this plan is _mine_.
"Now Major," locking his arm in mine, "listen; for I want you both to understand exactly the way in which I propose to forward this enterprise. Chad, bring me three wine-glasses and put that Madeira on the table--don't disturb that railroad!--so.
"My idea, gentlemen," continued the colonel, filling the glasses himself, "is to start this scheme honestly in the beginnin', and avoid all dissatisfaction on the part of these vehy bondholders thereafter.
"Now, suh, in my experience I have always discovered that a vehy general dissatisfaction is sure to manifest itself if the coupons on secu'ities of this class are not paid when they become due. As a gen'ral rule this interest money is never earned for the fust two years, and the money to pay it with is inva'ably stolen from the principal. All this dishonesty I avoid, suh, by the issue of my Deferred Debenture Bonds."
"How?" I asked, seeing the colonel pause for a reply.
"By cuttin' off the fust fo' coupons. Then everybody knows exactly where they stand. They don't expect anythin' and they never get it."
Fitz gave one of his characteristic roars and asked if the fifth would ever be paid.
"I can't at this moment answer, but we hope it will."
"It is immaterial," said Fitz, wiping his eyes. "This class of purchasers are all speculators, and like excitement. The very uncertainty as to this fifth coupon gives interest to the investment, if not to the investor."
"None of yo' Irish impudence, suh. No, gentlemen, the plan is not only fair, but reasonable. Two years is not a long period of time in which to foster a great enterprise like the C.& W.A.L.R.R., and it is for this purpose that I issue the Deferred Debentures. Deferred--put off; Debenture--owed. What we owe we put off. Simple, easily understood, and honest.
"Now, suh," turning to Fitz, "if after this frank statement any graspin' banker seeks to trammel this enterprise by any fo'closure clauses, he sha'n't have a bond, suh. I'll take them all myself fust."
Fitz agreed to the striking out of all such harassing clauses, and the colonel continued his inspection.
"One mo' and I am done, Fitz. What do you mean by Founders' shares?" "Shares for the promoters and the first subscribers. They cost one tenth of the ordinary shares and draw five times as much dividend. It is quite a popular form of investment. They, of course, are not sold until all the bonds are disposed of."
"How many of these Founders' shares are there?"
"Fifty thousand at ten dollars each."
The colonel paused a moment and communed inwardly with himself.
"Put me down for twenty-five thousand, Fitz. Part cash, and the balance in such po'tion of my estate as will be required for the purposes of the road."
The colonel did not specify the proportions, but Fitz made a pencil memorandum on the margin of the prospectus with the same sort of respectful silence he would have shown the Rothschilds in a similar transaction, while the colonel refilled his glass and held it between his nose and the candle.
"And now, Major, what shall we reserve for you?" said he, laying his hand on my shoulder. Before I could reply Fitz raised his finger, looked at me significantly over the rims of his spectacles, and said:--
"With your permission, Colonel, the Major and I will divide the remaining twenty-five thousand between ourselves."
Then seeing my startled look, "I will give you ample notice, Major, before the first partial payment is called in."
"You overwhelm me, gentlemen," said the colonel, rising from his seat and seizing us by the hands. "It has been the dream of my life to have you both with me in this enterprise, but I had no idea it would be realized so soon. Fill yo' glasses and join me in a sentiment that is dear to me as my life,--'The Garden Spot of Virginia in search of an Outlet to the Sea.'"
Nothing could have been more exhilarating than the colonel's manner after this. His enthusiasm became so contagious that I began to feel something like a millionaire myself, and to wonder whether this were not the opportunity of my life. Fitz was so far affected that he recanted to a certain extent his disbelief in the omission of the foreclosure clause, and even expressed himself as being hopeful of getting around it in some way.
As for the colonel, the railroad was to him already a fixed fact. He could really shut his eyes at any time and hear the whistle of the down train nearing the bridge over the Tench. Such trifling details as the finding of a banker who would attempt to negotiate the loan, the subsequent selling of the securities, and the minor items of right of way, construction, etc., were matters so light and trivial as not to cause him a moment's uneasiness. Cartersville was to him the centre of the earth, hampered and held back by lack of proper connections with the outlying portions of the universe. What mattered the rest?
"Make a memorandum, Fitz, to have me send for a bridge engineer fust thing after I get to my office in the mornin'. There will be some difficulty in gettin' a proper foundation for the centre-pier of that bridge, and some one should be sent at once to make a survey. We can't be delayed at this point a day. And, Fitz, while I think of it, there should be a wagon bridge at or near this iron structure, and the timber might as well be gotten out now. It will facilitate haulin' supplies
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