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VOL. 3, No. 31. GAY ON THE RACK City Fathers Discuss Mr. Gay's Informal Proposition and Propound to Him Many Knotty Problems. ALDERMAN JEFFERSON REMINDS MAYOR TRUELSEN OF HIS MUNICIPAL REFORM LEAGUE PLATFORM AND ITS BROKEN PROMISES. A special meeting of the citj council was held Friday evening of last week devoted almost exclusively to the water works purchase, Preliminary to the proceedings an official stenographer was appointed and his report of the ioterro gations put to Mr. Gay and his answers are hereto appended. During the proceedings a statement was read from County Auditor Huldnn informing the council that if the pay ment of the personal property tax-s due from the company to the county, amounting to @54,848.72, was not pro vided for in the agreement to purchase, no part it of can ever be collected. Later when a motion in committee of the whole «vas made requiring the com pany to pay these taxes as a condition precedent to the submission of a propo sition to the people, it was defeated, only Aldermen Jefferson, Simpson, Harker, Trevillion, Burg aud Tischer voting aye. Another amendment pro The Great A Great Preparation Sale in our Cloak and Suit Dept. In order to make more room for Christ mas Goods we will pur, on sale 500 Ladies' .Tuckets and Capes at less than what it costs the manufacturers to make them. These are genuine bargains. Come and inspect for yourself. 300 Ladies' heavy Beaver Jackets, $8.00 kind, all well made with large storm collar, fly front, double breasted, bound seams, jiict. the thing for cold weather JJ/1 A Preparation Price 200 Ladles' line imported Kersey Cloth Jackets, half lined with silk, larue de -v storm collar, new st.vie front, 26 inches long, seams all double stitched, regular $12.00 CA, Jacket Preparation Sale price $ ,wU 100 Women's Cloth and PInsh Capes, jet and braid trimmed, edged all around with Thibet fur fall sweep Prep- Wrt QQ (fO QQ a ration Stile price $4 wOi 100 Ladies' good quality French Coney Fur Capes, silk lined, full sweep, 30 inches long, a g'-eac bargain at $10.00 (p/] Preparation Sale price $ it. «W 500 Children's and Misses' Jackets at al most half p'iee, All fancy trimmed, large sailor collar in tan, green, red and navy blur l'r paration sale price $2.50, $2.08, $3.50, $4.08 Men's Furnishings. TCA To moke room for new goods w° JL will close ont broken lines of Men's $1.25 and $1.09 Undershirts and Drawers in plain ribbed and fleece-lined undergarments. The first to come have the best choice. (£1 Art Men's Flannel Shirts worth up to $1.75 each, for this clearance sale $1.(K) each. 25c, 05c, 75c, 50c. Men's Woolen Mitts and Gloves, wortl: :19c per pair, now 25c per pair. Men's Buck, Calf and Sheepskin Gloves, $1.50 »nd $1.25 quali ties for 95c. $1.00 quality for 75c and 75c and 02Vic grades for 50c per pair. Cft, Men's tine Neckwear in Teeks and v/UC four-in-hands, usually sold at from 75c to $1.00 each on sule at 50c each. Men's tine CaBhmere half Hose, with spliced heels apd toes, valued at 37Mc per pair, for this sale 25c per pair. 25C Ladies' Leggings. PA. An invoice of fine leggings just re OvU ceived and to be put on sale at 50c per pair. PANTON viding that the bonds to be issued bear only 4 {)er cent interest, met with even less favor, Burg and Tischer voting" with the majority. Following are the questions and answers as prepared by R. Murchison, the sten ographer: Moved by Alderman Jefferson seconded by Alderman Simpson that the council hear from Mr. Gay in reference to the personal property taxes of the Duluth Gas and Water company. Carried. Mr. Gay: Gentlemen of the Council— The matter of taxes is a subject that does not concern me or my constituents one way or the other. I am a bondholder o£ the company and I am standing between the other bondholders and the city. When the times comes that the property shall be sold under a master the question of taxes shall not enter one way or the, other. A clear title will be given which I shall be prepared to turn over to the city of Du luth, but as for taxes or any other bills that the company may have I know noth ing and care nothing about them. Taxes do not affect the bondholders one way or the other. The utmost you can ask me to do is to give you a clear title to the prop erty wHich will be satisfactory to City Attorney Richards. That I am prepared to do. Alderman Rowley: I should like to hear from the city attorney in regard to this matter, of the city's making any arrange ments with the bondholders in regard to Room Making Sale Attracts the Attention of Everybody. Our Customers appreciate and know Bargains when they see them. You make no mistake when you do your trading at THE BIG STORE. Children's Underwear. i, Cr* A ttOC case of Children's wJ WW C- fleece-lined Underwear from 20c aach to 50c. Each according to size. A IT-, (hi ft Children's all-wool TVC 10 3)1.lU. Camel Hair Vests, Pants and Drawers, usually good value here, offered at from 45c to $1 (0 each. Shoe Department. Great Clearauce Sale to make room for our Christinas Goods. Men's Stortn Alaskas, best quality nd style toe, worth $1.40, while they ....$1 CO Men's low cut Alaskas, best quality, any style toe, worth $1.25, while they Wf?• last I OC Men's red lined low cut. Alaskas, worth 75c Www Men's Felt Shoes, felt sole, worth $.00 Men's Felt. Shoes, leather heel, felt sole, congress or lace, worth $3.00, choice £,W Women's low cut Alaskas, regular QC/% toe, worth 75c WWW Men's 3-buckle Arctics, best grade, sold everywhere at $2.50, our 42.00 Women's Felt Shoes, Leather foxert, worth $1.60 Clearing Price $1.00 Men's and Women's Felt Slippers. A rt. felt sole "XOC Women's Kelt Slippers, leather sole, coin toe, regular price $1.25, on sale QQ— Tuesday QQ Ladies' Dongola Kid, pointed toe, felt lined, fur trimmed slipper, worth QQ. $1.50. size 2 2-5 «a price wOC Lambs' wool soles, all sizes. Men's, Women's and Children's. Blankets and Comforters. 5 cases white or giay Blanket*, yj Q, regular 85c value, at—per pair ^tOw 5 lia'es large Comforters, Sateen cov- r ered, worth 75c, at—each 0 25 all-wool White Blankets, large & O size, worth $4.50, at—per pair iPj 50 extra heavy rra.v wool Blan- Mj O kets, really worth$1.75,at,—per pair.#* 1 if-O The Labor World. taxes. Mr. Richards, city attorney: Mr. .Presi dent and Gentlemen of the council: As understand it these personal property taxes are a charge against the gas and water company itself. They do not become a lien against the real estate, consequent ly if the property and franchises of the Duluth Gas and Water company are fore closed upon under mortgage of the bond holders and pending foreclosure a sale takes place by a master in chancery tne title will pass to all of the property of the Duluth Gas and Water company in cluding the personal property and real estate and free and clear of any claim for the personal taxes, in other words the bondholders through their sale will claim all the property and they will not have to pay the personal debts of the Duluth Gas and Water company, so that they would in that case be able to give a clear title to the property of the Duluth Gas and Water company to any buyer so far as the personal taxes are concerned. It would be otheriw'se if the taxes were a lien on the property. understand in re gard to personal taxes that the county can sue and get judgment and the judg ment against the company would be a lien upon its real estate out it would oe a lien that would be subject to the mort gage. Alderman Stevens: Ts it not a fact that the hydrant rentals have been turned over to the bondholders? Mr. Richards: The Central Trust com pany of New York claims the hydrant rentals prior to February, 1897. Alderman Hale: Mr. Richards, if we should buy this plant would that neces sarily end that suit for hydrant rentals? Mr. Richards: No, it would not. Alderman Hale: Our buying the water plant would not injure our chances that suit? Mr. Richards: I cannot see how it would, as a matter of law. Alderman Sang Would it in any other iight? Mr. Richards: It is difficult to see how it could. This is the way It would appear: The city would be resisting a claim and it would be known that the city had bought the plant, and this would relate to a past transaction. Probably a jury would not be as much inclined to tavwr the city's contention as they might under the existing situation. That, however, is a matter of speculation. Alderman Sang: Your idea is that we could not collect from the stockholders? Mr. Richards: That would have to be done in the name of the county through the county judges. Alderman Crass weller: Do you know anything about the Minnesota stockhold ers of the company? Mr. _Richards: I know nothing what ever about them. Alderman Sang: Is there not a list of the stockholders among the records of the city? Alderman Crassweller: I should think a copy could be found. Alderman Jefferson: Mr. Gay, have not the bondholders you represent agreed to turn over all their interests as to these back hydrant rentals to the stock holders? Mr. Gay: I have not heard any expres sion of opinion one way or the other about that. Q.—You don't, know anything about that? A.—No, sir. I will put it in another way. Have they not agreed to turn over all the back hydrant rentals to the stockholders in consideration or part consideration that they will not enter into any litigation to delay turning this plant over to the bondr holders? A.—I know of no arrangements of that kind between the two. My own conversa tion with the bondholders has been as to. the price I could purchase the bonds from them for in case I succeeded in negotiating the sale to the city. Q.—Do you not know that the company only realized on the sale of the 295,000 6s 50 cents on the dollar? A.—That is news to me. ft.—You djoru't know anything- about that? A.—No, those were issued ten years ago, long before I had any connection with the company at all. Q.—Do you not know that the 1,113,000 5 per cents only realized 35 cents on the dollar? A.—That is out of the question for the reason that those bonds were bought and placed by the Municipal Investment company of Chicago who sold them all at par sterling y.—yon have examined the books of the company? A.—No, I have not, but I know that di rect from both the principals of the com pany. Q.—Don't you know that in the neigh borhood of 400,000 of the 5s is not account ed for on the books? A.—I was not aware of that. Q.—Ever hear of it? A.—No. Q.—You are familiar with the affairs oi, the company, you had a large interest in it and certainly familiarized yourself with their affairs in every way. shape and manner, examined their books, etc? Q.—1 don't know that it is necessary for me to reply to that question. 1 am a holder of the company and I became a bondholder upon what I supposed was sufficient information of the merits of the comoany itself. I have never seen the books of the company. Q.—Then you don't of course know that a large amount of the proceeds of the sale of the gas and water company's bonris was not used in the construction of tne plant? vn it li'es not devolve upon the purchasers of the bonds to know all that. I paid 98 and accrued interest for my bonus and that is all I know anci care to know or need to know. Q.—Can you state positively what tne r. Hois of the company for the year ending Nov. 1, or any other' year, were? A—The last official statement that 1 have seen of the company is for the year ended Dec. 31, 1896. wherein the net earn ings are shown to be upwards of $115,000. Q.—You have not seen any statement since? A.—No, I have not. I do not know of any having been drawn op. Q.—Can you state what their expendi tures were during that time? A.—I expect they were the same as last year, that the figures would not vary much one way or the other-as against last year. Q.—Does not the company state in their foreclosure proceedings that the plant has depreciated in value to a great extent and the revenue has fallen off largely? A.—I have not seen a copy of the fore closure proceedings I do not know. Q.—And that it will not pay sufficient to pay the interest on the bonds and that the company was in default for interest for some time. Is not that a fact? A.—It was a fact owing to the city's not paying the hydrant rentals. Q.—Does the complaint not state that the plant has so depreciated that it would not sell for one-half the face value of the bonds? A.—No, it says nothing of the kind. Q.—How do you know? You have read it have you? A.—I am simply informed. Q.—Have you any access to the books whatever? A.—No. sir. none at all. Q.—You could not state with any degree of certainty? Couldn't you state on some of these questions from hearsay? Doesn't the books, or you were furnished this in formation from other sources, show large expenditures of money for other purposes? For the purpose of carrying elections, for the purchase of these bonds, for the elec tion of city officers who favored the com pany? A.—-Nothing of the kind. Q.—Have you heard of a company called the Commercial company in Duluth? A.—Commercial Light and Power •,com pany? Q-—No, just Commercial company. It was organized for the express purpose of dealing in stocks and bonds of the gas and water company, of which I under stand. George Elder was president, some DULUTH AND SUPERIOR, SATURDAY, DEC. 1897. body of the name of Christie, of the firm of Christie & Collier, was secretary, and aisr. members, so far as I can find out, were uJdge Lewis of Washburn & Lewis, ano a man by the name of Macdonald. a Dond broker of Chicago know anything about that company? A—I know Mr. Macdonald, he has be«n an employe of mine in the past. Q.—Has this company any connection with this sale? A.—None to my knowledge. —Were you at the Chicago conference with the mayor? A.—I was not. I arranged that with Mr. TTntemeyer in order that he might himself meet the mayor and your chief, I think, who went with him. so that both sides di rectly interested in the controversy might come together and carry their interview entirely apart from any negotiations that 1 had done and I purposely avoided, al though my interest justified my presence there, I purposely avoided making such re quest in order that they might cunie to gether as they did. Q.—Was any representative of the Eng lish bondholders at tnat conference' A.—Mr. Untemeyer and their attor ney, Mr. Fleming his honor, the mayor Mr. Washburn was there. Q.—Mr. Gay, did you not, some time last season get an option from the bondhold ers, the bondholders agreeing to give you all you could get from the city over 11,114,000? _A.—No, I did not. I never had an op tion on these bonds. The foreign bond holders never would give an option. They won't today. Q.—Have not the bondholders entered into an agreement with you to take 4 per cent in exchange for their bonds, but if you can get 5 per cent bonds, they, the bondholders, will pay you 10 per cent for doing the business? A.—Nothing of the sort. On the con trary, they decline to receive a city of Duluth bond bearing 10 per cent interest. Q.—Have you any kind of an agreement with the bondholders, they agreeing to pay you If you succeed in getting the cityto pay more than 4 per cent? A. Nothing at all. I have no commission in finy way, directly or indirectly. Q.—Haven't you some agreement of this sort,? You will please pardon me, I am an old fogy sort of fellow and can't get these things down in scientific terms as the attorneys do? Alderman Sang: Do you want that taken down? Al-flerman Jefferson: Oh, no. Have you .flntf red into some kind of agreement with ine' principal bondholders of the company thereby they leave this Duluth matter as yotfir exclusive territory andi will not come into competition with you for buying of bonds, and also that if you happen to be $he only buyer, and of course if you know you are you are going to be a great deal less than par, that the company give yoji'.the difference between par and what yov:{ bought them in for? A —No, there is no arrangement of that kind the only understanding that exists Is »:s. I have described to your council hero. Q»—Does your offer of $1,250,000 include the Lakeside plant? A.—Yes, sir, that's apart of it. Q.-^-It is, eh? A.—Yes, sir: —Will your offer be that you will give an absolutely perfect title to the plant for'$1,250,000? A.-—A perfect title, satisfactory to your citv- attorney. Q.—If, after an examination of your ti tle by the city attorney, there appears to. be claims that you have not included, sortie claims turn up, you know, in your off'.jr will you agree to allow the city to hoist back a percentage of the bonds sufli ,pijd&: 'to cover, those claims, and after those' claims are tried in the courts and decided that the city is held by them, will you agree to forfeit the bonds to the city so held back? A.—I should not agree to that, because foreclosure proceedings would shut out any possible claims and when I turn over title from sale under master it. would preclude the possibility of such claims. Alderman Simpson: Mr. Gay, what, if any, contracts for water or gas have the company made with corporations or in dividuals? A.—I do not know of any contract except the one with the West Duluth company which was referred to at our last meet ing. y.—Don't you think the city is entitled to know before they express themselves what they want to do? Mr. Washburn: I don't know what the question means. Q.—I mean for rates in the future—do you know? A.—No, I do not. Q.—How can you expect the city to act not knowing but that the rates are practically hypothecated for two or three years? A.—That would not be possible. Q.—Would it not be possible for the gas and water company to make a con tract with an elevator company, say, for two or five years? A.—I presume it would be. Q.—Might it not be so low that they would give a bonus to get it A.—I never heard yet of a water com pany making a contract more than one year in length except with a city 1 never heard of one for several years. Q.—I think in Chicago they have made contracts with some of the packing houses, or do you know? A.—I do not know. I supposed they were held to their rates by their charter. Q.—I suppose they could make a low rate? A Presumably. Q.—How could the city be sure there was no such thing? A.—I think it would be very simple thing for the managers to give a state ment. That is quite a minute detail that I as a bondholder WQUld not be expected to know. I never heard of the existence of any contract of that kind, although I could not say that such a contract does not exist. Mr. Washburn: In order to avoid the ex pense of a receiver pending this foreclos ure proceeding, all of the expenditures of the company have been limited to paying the current expenses such as a receiver would pay and every payment that has been made has been first passed upon by me as attorney for the Central Trust company, the mortgagee. In the course of that work I have become advised that there are with a few people where large quantities of water have been used a con tract rate made instead of the ordinary rate—I do not know how to express that— franchise rate, and I think that there are a few persons who have such rates. I am not guaranteeing anything here in that line, but I am morally certain that the only way any of those contracts have been made was by the year, and I inquired some into it and was advised by the managers that the reason they made those contracts was that if they didn't make the contract that the parties would not use the water. They were, for in stance, for running elevators—they used some other method and so they made con tracts in that way, but I am morally cer tain that the contracts are all from year to year and made by the year. I do not think (here is such a thing as a contract made for a term of years. Q.—But you have never looked it up espe cially? Mr. Washburn, continuing: And in any event there can be no contract at this time that was not made long subsequent to this mortgage. I would be willing to bet my hat—and it it a pretty rold night to go home without it—that there is not a contract that would not be sawed off bv this proceeding unless the parties wished to confirm it. Alderman Rowley: Would not this fore closure cut off all such contracts? A.—I entertain no doubt of it. Alderman Simpson: Do you think it is the best thing to have the city attorney's opinion? A.—I should not want to advise the council of that. Q-—As a citisen of Duluth and as an at torney of good sense? A.—I simply came down tonight by re quest in case something should be asked i:? in these proceedings of matters under my control. I do not represent Mr. Gay, but am willing to give any information that 1 have at my command. I should say I should answer that question in this way, that I have always had great faith in the opinion of City Attorney Richards. I Q.—Mr. Gny. why do you not furnish us a schedule of what you offer to sell us? A.—My proposition covers everything that I think any reasonable person could I ask or that your attorney would ask. Q-— Don't you think we are entitled to know what we are getting- before we bid a dollar? A.—Certainly. Q-—How do you expect us to assure you so you can cable over to England until you give us a schedule? A.—The proposition covers all rights, franchises, privileges and real estate of the company and all material on hand. Alderman Jefferson: You have not given us an abstract of title to the real es tate? Mr. Harrison: That is not done until the city agrees to buy everything will come. Mr. Simpson: Do you think there is a member of this council knows what real estate the gas and water company owns? A. (Mr. Gay)—I do not know. Q—How do you think we are prepared to act upon it until we do know? A.—You don't want more than all tne gas and water company own do you? Q-—I would like to know what we are paying $1,250,000 for? A.—All the property of the company. Q-—Will you make any written represen tations as to the condition avid qualltv oi the gas and water plants? A.—No. Q.—Will you? A.—No, I will not. Q.—Will the bondholders? A.—I don't think the bondholders know, or are in a position to state. Q.—Will you warrant that the water mains lying along the street car lines are not partially or completely destroyed by electrolysis? A.—No, I am not. I do not pretend to be an expert in those matters. Q.—Is it not a fact that the machinery at the gas works is worthless or practi cally so? A.—I do not see how that can be: it is supplying the necessary gas to the city of Duluth. Q.—You are pretty well posted on gas, are you not? A.—Yes, fairly so. Q.—Will it not take $150,000 to $200,000 to put the plant in position to manufacture gas economically? A.—I could not answer that question. 1 looked over the gas plant a few years ago and that is the last I have known of its actual condition. Q-—How can the city be informed on that point? A—They are open to make any inves tigations tl:ey choose. Q.—You would not care to make anv representations? A.—No, I should not. Q.—When you purchased the bonds of the 1.106,000 issue was part of the consid eration for so doing a part of the Prindle gas franchise? A.—I had nothing to do with the Prindle franchise one way or the other. I bought the bonds on their merits. Q.—You never heard of the Prindle fran chise? A.—I have heard of it since. Q.—Can you secure the return to the city of the Prindle franchise in part con sideration of this purchase? A.—I know nothing about this franchise. Q.—Do you still hold the $1,106,000 of the city's bonds? A.—I hold a portion of them. Q.—What portion? A.—I hold a round block of them myself, in addition to which there are. held one half of the issue, five or six hundred thou sand, by others. Q.—If this purchase is consummated at this price, will it.not tend to enhance the value of the bonds you already hold? A.—I hope so. Q.—Will it not? A.—That remains to be proved it is impossible to say. Q.—You have no opinion that you care to express. A.—No. Q.—After the consummation of the deal can you not sell the bonds on a 4 per cent basis? A—No, it is impossible. Q-—If the city sold the bonds on this purchase at 4? A.—It is out of the question. That has alread-y been corroborated by independent authority. Q.—If we sold a lower rate bond, what then? A.—It would not be possible. Q.— But if we did you would make a profit, would you not? A.—No, I should make a loss. Q.—On those you hold? A.—Oh, I hope I should make a profit, certainly. Q.—You hold about half of them, you say? A.—With others who have more than half. Q.—One per cent for thirty years would make about $30,000 profit you would make? A.—They couldn't be sold at that price at all. Q.—Would not this contemplated issue of bonds be more valuable in your hands to combine with the former issue than if held by other parties? A.—They probably would be worth more in my hands than in competing houses hands. Q.—Did you not on June 17 last make a statement that $1,695,000 wafc the lowest figure that the bondholders would accept for both the gas and water plants? A.—I did. Q.—Have you changed your mind? A.—Not at all. That was corroborated by my taking into my own hands the risk of offering the plant at £250,000 less, and by Mr. Truelsen, at Chicago, that that was not with the consent of the bondholders, and Mr. Washburn will also corroborate that. That was the lowest price and is the lowest price. Q.—Are they going to get that now? A.—No. Q—You were mistaken at that time? A.—No, not at all. They do not offer it at any less price now. Q.—You do? .A—Begging your pardon, I have not offered it. Q.—What are you here for? A.—I have made no offer to you yet. We have been very fair with you, Mr. Simpson, you undertand what we intend to do. (The last remark by Mr. Harrison.) Q.—I am informed that the gas and water company sell meters at $17.10 each which can be had at about $8.60 each. Is it on such profit as this that you base your figures on the earning- capacity of the plant? A.—I know nothing about the rates. Q.—You are acquainted with the remain der of the bondholders, are you, any of them? A.—Some of them, with some of them, only those in this country and my friends from the other side whom I have met in connection with these negotiations. Q.—Do you or any of tht bondholder! feel any remorse for neglect in allowing the careless management of the water plant so that hundreds of our people have become poisoned by the impure water and have had the fever and died? Alderman Sang: Do you toant that printed? Alderman Simpson: Yes. sir. Alderman Sang: I object to this kind of work altogether. We are here to discuss the purchase of the plant and not what this gentleman's opinion is. Mr. Chairman (Crassweller): I think this is taking a pretty wide latitude. Alderman Simpson: If it is not material to this council to know the quality of the water we had, etc., I withdraw the ques tion. Alderman Hale: I would like to ask if your mortgage covers the Lakeside plant? Mr. Washburn: Tha mortgage covers everything. The mortgage, the decree of court, specifically covers the real estate in the Lakeside plant. My understanding is that originally there was a separate company out there and that this company FIVE CENTS. acquired originally all the stock of that company, and whether they deeded it over in form I do not know, but the mortgage covers all the property of this company under this mortgage, and I give notice that I claim everything, hide and hair, that the Duluth Gas and Water company has got so far as that goes, and whether they hold it by deed or by transfer over of all of the stock makes no difference to me. I claim everything the Lakeside company has got, and my present opinion is that they formally conveyed it over, but whether they did or not they conveyed the stock. The mortgage was a blanket mortgage covering everything. Alderman Harker: Do you know wheth er Lakeside real estate is included in this transfer? Mr. Washburn: Yes. This decree was entered in circuit court upon bill and an swer instead of evidence being introduced, and because it was so entered the bill as originally drawn in New York City by the solicitor of the trust company would not fill the bill because he did not describe specifically the real estate and that would have made it necessary to introduce evi dence to prove real estate, and I amended the bill, and their adorney admitted it and it so shows on the record of the federal court. Alderman Jefferson: Does that mortgage now being foreclosed cover all credits now due the company and all money now in the treasury of the company? Mr. Washburn: Undoubtedly the fore closure will cover everything since the foreclosure began. Alderman Jefferson: Does It include up to date? Mr. Washburn: Yes, it takes up to date and up till tomorrow and all the rest of the dates until the work of the master Is finally completed, and undoubtedly takes on to the time when the bill was filed. Alderman Jefferson: Why do you not offer to turn them over to us? Mr. Washburn: I do not propose to turn the cash over to anybody, so far as I am concerned. I am not built that way. I propose to sell under. this proceeding all the property of the Duluth Gas and Water company. It will be bid In by somebody. I represent in this proceed ing the trustees of the Central Trust com pany of New York. Mr. Gay proposes to come in and pay the bonds that are held by the English people. He won't get any thing but -bonds when he buys them. He has a right to come in and bid if he wants to. He proposes to buy the bonds provided he can make a deal with the city, but there won't be much cash to get hold of when I am done. Alderman Richardson: Mr. Gay. If I understood you correctly in the caucus Monday afternoon you held out the in ducement that you could take care of this $295,000 indebtedness and replace it with bonds. You wquldn't guarantee, but thought you could do it? Mr. Gay: You understood correctly, AI derman Richardson, but also you under stood that this is a,thing I could not ob ligate myself to do absolutely for the rea son that these bonds are held by other parties and while I know where the majority of them are held, I do not know where all of them are held. I would undertake for a nominal commission to replace those. Alderman Crassweller- Could you furnish to the council an inventory or schedule of the assets of the gas and water com pany, as to real estate, miles of main, etc? Mr. Gay: Yes, I could. I am not able at this moment, but' I could before Monday night. Alderman Sang: Could you also furnish a list of the stockholders? A.—I don't know that I could do that. I have never seen such a list myself. Alderman Jefferson: Do you propose'in turning over this outfit to turn over the books, records, etc., to the city? A.—They are not my property now, sure ly. Mr. Washburn: I will state to you that whether he proposes to do so or not he cannot do it. Alderman Jefferson: The reason I ask this is that there was a man iri Minne apolis discharged, and they had to pay him $10,000 to get his minutes on the water plant where it was absolutely necessary to have them. Mr. Harrison: I would say that If you want a list of all the patterns and every thing of that kind, that is sensible, but all past history relating to the company from the day B. C. to the present time, of course we would have no use for that. Alderman Harker: The company would not object to turn over the records in re gard to location of valves and stop boxes, and such as that? Mr. Gay: Certainly not. Alderman-Jefferson: How do you know? Mr. Gay: That would be a reasonable and proper request the other would not. Alderman Harker: A past record has been kept of the different connections which it would be well for the city to get? Mr. Harrison: Anything 6f that sort would be forthcoming. Mr. Washburn: But when it comes to selling corporate records to the city of Duluth, I do not think it either wants to pay for or will get them. Mr. Harrison: When a man buys a piece of real estate from an agent, he doesn't get the corporate records with the prop erty anything that pertains to the land he gets. Alderman Richardson: Was not the of fer here the very best that could be ob tained? The mayor: I will state as I stated at the time I made this very proposition to Mr. Gay, that I would agree to support a proposition for $1,250,000 provided he would take 4 per cent bonds and he tele graphed back that it would be utterly im possible, and gave his reasons. I then made him a proposition of 4% and he re fused to entertain that proposition. I do not know, Mr. Gay may have changed his mind lately. I would be very happy if the city could float 4% bonds. Alderman Jefferson: I would like to ask you, Mr. Gay, I understood you the other night to say that in case nine aldermen vote to accept your proposition that you have made tonight, that you might be come the owner of those bonds? Mr. Gay: Simply that I make a propo sition. Q.—And it is accepted? A.—And it is accepted, I then bind my-' self to purchase all the foreign bonds. Mr. Jefferson: I don't understand that this has any bearing on the case, but sup pose you got the bonds and this ques tion is submitted to the people, you would still be the owner of the bonds? A—I would still be the owner of the bonds. Alderman Hale: I would like to hear from Mr. Gay on 4 per cent bonds? Mr. Gay: In answer to Alderman Hale I would say it is utterly out of the ques tion to consider anything of the kind. The mayor was perfectly right in his statement and I have not changed one iota or shall not change one iota. You will pardon my firmness, but I am simply forced to it. I know what the credit of the city of Duluth is better than anyone else, having handled the bonds for the last year. I am in close touch with the best market for the city of Duluth bonds. The mayor has corroborated the fact himself outside by communicating with outside bankers who have maintained that while the 5 per cent exists on the markets it would be impossible for the city lo float any lower rate bond. There fore, I am obliged to stand absolutely on that point. Mr. Upham: I have not any good bonds cn hand at the present time, and am not directly in touch with the bond market, but I think that the city of Duluth should try at any rate to sell 4'A bonds before trying the 5. It might not be able to do it but it seems to ,-ne when this question is settled its credit will be in better con dition. On account of our valuation hav ing been cut down we are required to sell higher rate bonds. Q.—Is the city's credit better than wher you offered the last bonds? A.—T think it is a Utile. Q.—Do you hold the same views as Gay in regard to 30-year bonds? A.—-Yes, sir. [Continued on fourth page.] 1 'i 1