1st Mortgage Debentures

by J. A. McCulloch

As part of the reorganization of the Tonopah & Tidewater Railroad and the Bullfrog Goldfield Railroad, after the closure of the Las Vegas & Tonopah, a series of 1st Mortgage Debentures were issued. Almost immediately a problem arose regarding the accounting of the interest payments. This, as most of the certificates were held and paid in the United Kingdom. UK residents were subject to very heavy taxation on interest payments. The additional withholding of the United States 2% Income Tax was strongly objected to, and the UK trustees filed an objection. On December 19th, 1919 they mailed a notice that they had 'won', but that some of the withheld funds might not be recoverable for the UK payees.


 
 

This is exemplified in the April 1920 payment with the addition of One Pound, Sixteen Shillings additional payment on a debenture of One Thousand Pounds. I believe that the number of the warrant of payment would conform with each debenture, thus this is for Debenture Number 60. Note that at this time, just post WW I, the UK Tax rate was 6 Shillings in the Pound.


 
 

Borax Consolidated Limited continued to pay the interest on the T&T Debentures throughout the remaining life of the holding company, even after the railroad ceased operation and the track and most of the rolling stock were appropriated by the US Government for the war effort. The last interest payment on these debentures, and their final retirement apparently sent separately, came in 1944. With the heavy needs of WW II raging, the tax rate had increased to 10 Shillings in the Pound, a full half of the interest earned.


 

 

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12/10/2013