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k*****A«^hM«iMM«**MI^MMMMMM*M 
 
 MM*MMi*| 
 
 LETTER 
 
 TO TBB 
 
 BONDHOLDERS 
 
 OF THB 
 
 DETROIT MD MILWAUKEE 
 
 RAILROAD COMPANY. 
 
 DECEMBER 11, 1863 
 
 DETROIT: 
 
 TBI SITBOIT rSSB PI19S8 BTBAK BOOK AND lOB FRINTINa BOIXBB, OBIBWOLD BT. 
 
 1862. 
 
 *V««WWVW«>»^V^i««^M^^VW*^F^FM^V«^^Mi*<i'VW^^^WP^^^^<IF^^^WW 
 
 J 
 
§eiM mA W^WmnUet ^^ilvj^U ^«mpn||. 
 
 The Company being unable to meet the interest upon the 
 v«hole of its funded debt, and also to pay the balance remaining 
 due of the liabilities recognized as obligatory in the Funded Coupon 
 Mortgage of the X5th November 1860, the undersigned have been 
 appointed a Committee by the Board, to confer with the Bondholders 
 with respect to the funding of additional coupons;. They think the 
 following brief history and accompanying statements will secure the 
 acquiescence of all in the plan submitted. 
 
 Anterior to I860, when the former coupons were funded, there 
 existed upon the property of the Company eight mortgages, amount- 
 ing, in the aggregate, to about 85,500,000. At the periods of their 
 respective dates, the Road was in different stages of completion ; 
 some were executed before, and some after the amalgamation of the 
 lines forming the Detroit and Milwaukee Railway ; part of them 
 covered the then existing property, while others attempted to extend 
 their liens oyer future acquisitions. When the last loans were 
 made, in 1857 and 1858, for which the mortgages now represented 
 by Preference shares, were given, little more than two-thirds of the 
 line was completed, viz.: from Detroit to Lowell, 124 miles out of 
 180. Such was the very low value of its bonds, and so large a sum 
 was Qeceesary to complete the line and enable it to earn anything 
 beyoA4 its expenses, that it was impossible to procure, upon the 
 credit of the Company, the requisite equipment to run it. The 
 only mode in which this could be effected was to procure third 
 parties to purchase it, who, retaining the title, suffered the Company 
 t9PA{!Qr(urily to use it, 
 
 * 
 
. #*■ 
 
 In the summer of 1860 it was found that large sums were due 
 which were liens upon the iron rails. Other sums were due for 
 arrears of wages, and for taxes to the State, and these, when added 
 to the value of the rolling stock and property owned by others, and 
 necessary to conduct the traffic of the Company, amounted to 
 $500,371.75, exclusive of interest in arrears. 
 
 This sum it became the common interest of all those holding 
 the last four mortgages to pay at once. From it there was no 
 escape. Consultations were accordingly held between them. After 
 much deliberation, the funding arrangement of 1860 was concluded. 
 By this salutary compromise, it was substantially agi-eed that the 
 last two mortgages should be foreclosed, and the bonds turned into 
 Preference shares in a new organization. The entire net income of 
 the road was to be applied to the payment of this debt, which was 
 a lien on the Road, and to the purchase of the property used, but 
 not owned by the coi-poration. To admit of this application of the 
 income, the first and second bondholders of the Detroit and Mil- 
 waukee Railway funded five coupons, and the third and fourth, by 
 accepting shares for bonds, resigned all claim for interest until this 
 debt should be discharged. This, it was expected, would enable 
 the Company to pay the debt in full. 
 
 Notwithstanding the most strenuous efforts to pay out of the 
 net income the whole of this prior claim, there remains undis- 
 charged, as will appear by the accompanying statement, the sum of 
 $186,449.60, besides the interest which has accrued. 
 
 But it will be recollected by the bondholders, that when this 
 arrangement was entered into, one coupon had been overdue nearly 
 six months, one more was about to fall due, and the time covered 
 by the three coupons only, entered into the estimate of trafiSc 
 necessary to pay the debt. The net traffic in the period between 
 1st October 1860, and 31st October 1862, and its application and 
 results are set forth in the subjoined statement, marked A. Had 
 , it been equal to the estimate, the debt would now have been paid 
 and the payment of the coupons would have been resumed. The 
 causes of the failure to realize the estimated traffic are fully set 
 forth in the report w^hich accompanied th? statement of accounts to 
 the 31st December 1861. 
 
 la 
 
^w- 
 
 8 
 
 To secure the important advantages contemplated by the ad- 
 justment of 1860, it became indispensable to suffer this indebtedness 
 to retain its priority, and it still remains in a condition which 
 enables its holders to enforce its collection in advance of all other 
 securities. 
 
 In order to remove this incumbrance upon our common prop- 
 erty, it is necessary for the bondholders, under the first and second 
 mortgages, again to consent to a temporary postponement of interest, 
 by funding four half-yearly coupons, viz.: that which fell due 15th 
 November 1862, and those payable in May and November 1863, 
 and May 1864. 
 
 It should not be overlooked that the funding proposed is tem- 
 porary only, and that the principal of the coupons to be funded is 
 to be discharged before any application of income is made to the 
 payment of dividends upon the Preference shares. The amount of 
 interest too, upon all such funded coupons, is fully covered by the 
 very moderate and careful estimate which is submitted herewith, 
 marked B. By this estimate it seems clear, that at the close of 
 May 1864, the whole of the remaining debt provided for in October 
 1860, will be entirely paid, and thenceforward, if no unforeseen cir- 
 cumstances occur, the Company will be able to meet the interest on 
 the whole of its funded debt with regularity and promptitude. 
 
 It may increase the cheerfulness and confidence with which 
 bondholders will acquiesce in the present necessity, to call their 
 attention to the familiar fact, that since 1857, when the present 
 management became interested in this Road, the security ■;■ their 
 claims has been fully doubled, and that without the large exj mdi- 
 tures subsequently made, and which, by the arrangements of 1860, 
 were all devoted to the additional security of these bonds, they could 
 by no possibility ever be worth their par value. 
 
 It will be satisfactory to know that the Company has regularly 
 paid the interest on the prior mortgages, on the bonds issued for 
 the surrendered coupons, and on the river front mortgages, except- 
 ing one of the latter, heretofore held in abeyance. 
 
 The Company's representatives have just closed a series of inter- 
 views with the Trustees of the funded coupon mortgage of the 15th 
 November 1860, with the principal bondholders in the United 
 
 :fe- 
 
States and Canada, and trith the agents of large bondholders in 
 England, representing in the aggregate a very large portion of the 
 bonds. At these interviews, the foregoing facts and estimates 
 have passed in review, and all parties are fully agreed as to the 
 necessity of at once adopting the course herein indicated. 
 
 Ample guarantees for the faithful application of the entire net 
 income of the Boad to the pui-poses proposed, will be given in the 
 mortgage to be settled by Counsel for the Company and the 
 Trustees. 
 
 Holders of the first and second Detroit and Milwaukee bonds 
 are requested to give their consent to the proposed arrangement in 
 the fonn inclosed, and to forward their coupons either to the 
 Secretary in Detroit, Mr. W. C. Stephens, or to Mr. Brackstone 
 Baker, the Secretaiy in London, at Gresham House, Old Broad 
 Street. Receipts will be given in exchange for the coupons, and on 
 the delivery of those receipts at the offices, in Detroit or London, 
 proper bonds, bearing seven per cent, per annum, with interest 
 coupons attached, which are in course of preparation, will be issued. 
 
 It is intended, as on the former occasion, that the coupons shall 
 not be cancelled, but be held in trust for the owners thereof, by the 
 Trustees to the mortgage, and that said mortgage and coupon bonds 
 shall be made payable, as in the former case, on the first day of 
 
 January, 1866, and the interest thereon half-yearly. 
 
 # 
 
 Thomas Swintard, 
 
 . Viee-Prmdent. 
 
 ■*"'* 
 ^**.. 
 
 G. G. Trowbridge, 
 
 Bemdent Direetor. 
 
 Offices of the Company, ) 
 
 Detroit, December 11th, 1862. ) 
 
STATEMENT A. 
 
 Statement of Beceipts and Expenditures of the Detroit and Milwau- 
 kee Railroad Company, from Ist October 1860, to Slst 
 October 1862, referred to in the foregoing circular. 
 
 i^i 
 
 J 
 
 Orofls Traffic, including Rents collected from 1st October 1860, 
 
 to 81st December 1861, as per printed report, $957,421.27 
 
 Gross Traffic, including Rents collected from 1st January 1862, 
 
 to 81st October 1862, as per books, 675,0a9.29 
 
 $1,632,460.56 
 Working expenses, including Maintenance of Way, Repairs 
 
 of Cars and Locomotives, General Charges, Taxes and 
 
 Insurance: 
 1st October 1860, to Slst December 1861, as per 
 
 printed report, $529,490.63 
 
 Ist January 1862, to 31st Oct. 1862, as per books,. 894,699.62 
 
 Total 1st Oct. 1860, to 3l8t Oct. 1862, being 5Q}4 per cent., $924,190.25 
 
 Net Revenue, $708,370.31 
 
 Cash on hand, 1st October 1860, 2,585.47 
 
 Accounts due the Company, 1st October 1860, since collected,. . 10,507.81 
 
 Total, $721,368.59 
 
 Thus accounted for: 
 Paid fyt Lands, Works, Bridges, Permanent Way, 
 
 Stations, Warehouses, Wharves, Worlcshops 
 
 and Machinery, as per report, ^Ut Dec. 1861,. $105,944.52 
 Do. do. 1st January 1862, to 81st October 1862, 
 
 as per books, 61,178.30 
 
 Paid for Interest, viz. : 
 
 (hi prior Mortgages, 1860, $14,821.64 
 
 1861, 59,444.84 
 
 1862 54,600.24 
 
 $167,133.82 
 
 
 
 On Funded Coupon Bonds, 1861, $18,704.89 
 
 " " " 1862, 81,608.08 
 
 $138,866.72 
 
 46,312.97 
 

 
 I 
 
 On debt paid, and discount on uncurrent 
 
 Wefltera Bank Notes, and Exchange 
 
 on New York and London, I860,.. | 3,110.18 
 
 " " " 1861,.. 19,885.28 
 
 ♦♦ " " " 1863,.. 21,240.24 
 
 $48,286.66 
 
 217,415.84 
 
 Payment on Account of Funded Coupon Trust, not written off, 1,000.00 
 
 Contribution to State Military Bounty Fund, do. 1,000.00 
 
 Amount of debt due Ist October 1860, as per 
 
 books, besides interest $500,871.76 
 
 Do. 81st October 1862, do 250,162.89 
 
 Reduction of debt $250,208.86 250,208.86 
 
 Stores, Wood, and Materials on hand 20,908.28 
 
 Cash on hand, and Traffic balances equal to Cash, applicable to 
 
 reduction of debt 68,718.29 
 
 Total $721,363.69 
 
 * 
 
 A 
 
 ESTIMATE B. 
 
 ESTIMATE REFERRED TO IN THE fOREOOIKG CIRCULAB. 
 
 k 
 
 On the 81st October 1862, the Floating Debt of the Company, 
 including the balance of the debts recognized as obligatory 
 in the Funded Coupon Mortgage of 15th November 1860, 
 to be paid in cash, had been reduced to $260,162.89 
 
 Against which the Company possessed, at the same date, cash 
 
 and other available assets amounting to 63,713.29 
 
 Reducing the amount to $186,449.60 
 
 To this must be added the amount of interest accrued on the 
 
 debt to 3l8t October 1863 27,420.48 
 
 $213,870.08 
 Add also the following interest to accrue up to 81st May 1864, viz. : 
 
 1st. Interest on the Detroit and Pontiac Mortgages $60,000.00 
 
 2nd. Interest on the Oakland and Ottawa Mortgage 26,244.00 
 
 8rd. Interest on Mortgages, and on a Decree on a Mortgage on 
 the Company's Depot Ground and Workshops, on the 
 river front at Detroit 88,891.88 
 
 % 
 
^ 
 
 'it 
 
 T 
 
 4th. Interest on the Funded Coupon Bonds, created under the 
 mortgage of 15th Nov. 1860, say the three Coupons thereon 
 due, Ist January and Ist July 1863, and Ist January 1864,. 71,641.00 
 
 5th. Interest on the Bonds to be issued in exchange for the four 
 D. & M, Coupons now proposed to be funded, up to the Slst 
 May 1864 26,772.00 
 
 8th. Interest on the Debt, fi-om Slst October 1862, to date of 
 
 payment, estimated at 16,006.48 
 
 Total amount to be provided out of Revenue, up to Slst 
 
 May 1864 $452,425.39 
 
 The income of the Line, from Slst October 1862, to Slst May 
 1864, is estimated, for the purposes of this Statement, at 
 the same rate as tliat of the year 1862, without any addi- 
 tion for the natural increase which usually occurs, and at 
 that rate it will produce. Gross, $1,809,337.59 
 
 Less working expenses, at 57 per cent 746,822.43 
 
 And there will remain out of the income for one year and seven 
 
 months, to Slst May 1864, a net balance of |563,015.17 
 
 From which deduct the above estimated debit of 452,425.89 
 
 Leaving a surplus of. $110,589.78 
 
 The above surplus is expected to be sufficient to provide for the 
 completion of the Ballasting of the Line, Renewals, and other con- 
 agencies. 
 
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 SKOUKTAnV, 
 
 Detroit and Milwaukee Railroad Company, 
 
 1* Detroit. 
 
 Sir: ' 
 
 I liave read the ('irculai' issued by the Detroit and Milwaukee Raih'oad Company, dated 
 11th December, 1862, and I consent to the Funding aiTangement there proposed, as far as my interest 
 iis concerned. 
 
 I hold the following Bonds in the Company, namely : 
 
 First Mortgage Bonds, 
 
 Nos._ 
 
 M 
 
 W' 
 
 Amount, ^ 
 
 j'> 
 
 i -»' 
 
 Sec(>nd Mortgage Bonds, 
 
 Xos. 
 
 mr 
 
 
 Amount, $. 
 
 w<^-^ 
 
 For the! amotmt of the Coupons (inclosed herewith) frotn the 15th Novetnber, 1862, to the 15th 
 May, 1864; inclusive, I consent to receive 7 per cent. Bonds, as proposed in your Circular. 
 
 I am, 
 
 Sir, 
 
 Your obedient Servaut, 
 
 Signaime, 
 
 Address, 
 
 tkUe, __ 
 
 ^•t v» • ..