Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: v. 48, no. 1233: October 31, 1891

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October 81,1891 Record and Guide. 541 1. ^/ ^^^^ ESTABUSHED^ De/oTED to f^l ESTME . BulLDIffc Af(,CrflTE(noi^E ,HoiJSE«OLD Deqqf(^tioi1. Basl^/ESS Alto Themes of GeHeivL I^tei\est PRICE, PER VEAR I!V ADVAIVCE, SIX DOLLARS. Publislied every Saturday, Tklbbhonb . - - . Cortlandt 1370. Communications should be addressed to C. W. SWEET, 14 & i6 Vesey St. J. I. LINDSEY, Business Manager. Vol. XLVIII OCTOBER 31, 1891. No. 1,233 Have you read the second number of The Architectural Record vet f Nobody interested in good building should be without it. Articles appear in this issue from the pens of such well-known writers on architecture as Prof. A. D. F. Hamlin, Barr Ferree and Montgomery Schuyler; the first of whom points out the '• Difficul¬ ties of Modem Architecture;" the second discusses " What is Architecture f " and the third continues his critical account of the " Romanesque Revival in America." A paper by William J. Fryer, Jr., on "Skeleton Construction," others by Harry W. Desmond and Herbert D. Croly; a second part of Prof. Atchison's lecture on " Byzantine Architecture," and the regular departments complete a very interesting number. The magazine is, as -usual, profu.sely illustrated, und in matter and appearance is fully equal to the first number. The publisher takes pleasure in announcing that the issue immediately following this one will be of unusual interest to archi¬ tects and of great value to the general reader. Among the con¬ tributors will be Prof. E. A. Freeman, the English historian, O. Lindenthal, L. De Coppet Berg, Prof. Kerr and other authorities equally high. THB current numoer of the North American Review contains an article on the business prospects and business conditions of the United States] that deserves the careful attention of everyone interested in their development. Mr. Charles S. Smith is a gentle¬ man holding such intimate relations with several of our most important manufacturing industries, and his position keeps him so closely in touch with the business pulse that his opinions have a peculiar value. It is consequently more than usually interesting to note that he considers the trade of the country at the present time to be upon a sound conservative basis, without a trace of sptculation. Some of the illustrations which he gives of the progress of our manufacturing industries are striking enough to take many of our readers by surprise. It seems that there is a larger aggregation of capital engaged in the production of textile fabrics than in any other man¬ ufacturing industry in the United States. The fifteen millions and a-balf of cotton spindles represent a capital of $232,500,000, while the invested capital of the woolen, silk, and other mixed textile industries amount to $225,O00,0ijO in addition. Of caipets we are the largest producers in the world, and in design, colors i^nd quality our goods are quite equal to anything made in Europe of competing grades. In the manufacture of silk we are ahead both of England and Germany, and are second only to France. Lately we have been extending our foreign markets in many directions. For instance, American standard sheetings and drills have the preference in the Chinese market, being sold in competition with English and German-made goods, and always at better prices, because of their superior quality. Still more interesting is the fact that even in Great Britain's own dependencies American goods are finding favor, a prominent mill having 10,000 packages of standard sheetings and drills engaged for the African market. Furthermore it has been proved that America can successfully compete with Europe in the Oriental markets in the manufacture and sale of plain cotton goods, when the cost of labor of a piece of goods does not exceed 25 per cent of the total cost. The otber facts mentioned by Mr. Smith respecting progress in the iron trade aud allied industries have been more widely circulated, and it is unnecessary to repeat them here. The point, then, of Mr. Smith's illustration of the growing stability and diversity of our industries is that a country which is increasing its product and markets in the way that Amerit^ is, and is doing 80 without ranning into feverish and inflated speculation will rapidly be possessed of so many and such varied resources that its commerce will stand on the amplest and surest basis possible. This fact of growth will tell on Wall Street in time, and while bonds and stocks ^^Qay be dull for some months to come, the market will eventually be broadened and strengthened. With the business of the country prosperous, investment securities cannot long sell for cheap prices. The only possible source of trouble which Mr. Smith thinks that the future may bring forth is a depreciation of the standard of value due to the continued crea¬ tion of silver nfoney under the present law. On this complicated matter, however, Mr. Smith's opinion is no better than that of any other intelligent man. The law of last year provides for an increase of currency, just about sufficient to take the place of the national bank notes, which are being retired, and to meet the needs of our constantly increasing volume of business. While this is so the fear of any depreciation in the standard is an idle dream. .. MESSRS. VERMILYE & CO. have allowed themselves to be interviewed on the subject of the second mortgage bonds which the Lake Erie & Western Railroad managers are attempting to issue; and state "that all.the details in regard to the execution of the mortgage and the issue of the bonds have been examined and . approved by their counsel, Stephen P. Nash." Is the investing public to understand tbat they and their coimsel approve of the . clear misuse of a proxy, and that, notwithstanding the indignation of stockholders, they will proceed with this business and offer the bonds to their clients at the risk of a litigation f We do not believe it. A reputation for care and conservatism. must always be. th,e. indispensable capital of a. recognized house of issue, and here is a case in which Wall Street is unanimous in. condemnation of the directors, not only for their secret . action, but for their artful suppression of it during nearly a jear and a half. We append the. opinion of legal counsel, upon which some of the opposing stockholders are acting, and we do not see that there can be any other side to the case. .We give the opinion in full because we regard it as a lesson as to the legal duty of diretj- tors and their position before the law. as well as in morals, when soliciting proxies from their cestuis qui trust. Brokers and bank¬ ers who idly sign proxies for shares in their name, owned by clients, can read this opinion and take it to heart with great profit to them¬ selves. This opinion will be found in the next two paragraphs. ------—..------- ** rr^HE action at the stockholders' meeting at which a second -i- mortgage of $5,000 per mile on all the property of the company was in form authorized was and is voidable; and the directors in carrying into effect the execution and delivery of said mortgage and the issuing of bonds secured thereby as provided at the meeting will commit a breach of legal duty to the stockholders, whose trustees they are. The facts, as we understand them, are these: The requisite vote authorizing in form the issuing of the new mortgage and mortgage bonds was given only by the aid of proxies held by directors of the company and solicited for the directors by the secretary of the company upon a notice utating the purpose of a meeting to be held in Bloomington, III., June 25th, 1890, but not stating in any mode which could convey to the person whose proxy was sought the slightest intimation that it was intended to impose an additional mortgage on the entire property, or that this ' was one of the purposes of the meeting. If such proxies had been requested by some third person, not a director or officer of the company, and not holding fiduciary relations to the persons whose proxies were asked for, then the persons who gave the proxies would have done so at their own risk as to the use to which they would be put; but in the present case the persons who, by an artfully veiled request, obtained the proxies, intending at the time to use them for the purpose of reorganizing the financial plan of the corporation, were directors who stood as the trustees of the very persons from whom they sought the proxies. Their position was a position of vantage and of fiduciary relations. They were bound not merely to tell no falsehood as an inducement to the stockholders to give their proxies, but they were bound affirmatively to disclose to the stockholders every material fact within their knowledge which could reasonably be expected, according to the judgment of ordinary minds, to influence the stock¬ holders in determining whether they should send the proxies or not. '* rr^HERE can be no question that the proposition to create an in- -*- debtedness by way of a specific lien ahead of the interest of the stockholders amounting to an addition of 50 per cent to the exist¬ ing mortgage debt of the company was a subject quite material to be considered by every stockholder in determining whether he should or should not give bis proxy at a meeting where that question was to come up. Tbe directors took the proxies with the concealed intention of using them for this very purpose without in any way informing the stockholders that they were to be used for that pur¬ pose. The notice spoke only of issuing bonds. A bond is a mere evidence of debt, wholly different from a mortgage. Why did the notice make no mention of the proposed second mortgage ? Not ' only did the notice and proxy make no reference to any mort¬ gage, but even after tbe action had been taken at the meeting, the management suppressed the fact that it