[D8941AAC], Letter from Charles Francis Stone to Alfred Ord Tate, January 19th, 1889


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[D8941AAC], Letter from Charles Francis Stone to Alfred Ord Tate, January 19th, 1889

Editor's Notes

Dear Sir:-- On consideration I think that the interests of Mr. Edison and the other Stockholders of the Edison Spanish Colonial Co. lie in favor of paying Mr. Navarro for his advances of, say $40,000, by an issue of that amount of increased Capital Stock, rather than by giving him a portion of the Stock of the Havana Co.##As I understand it, there is a chance of the Havana Co. proceeding to obtain concessions outside of Havana, in which case that Company gives us a corresponding compensation to that now promised when the Havana grant is signed. The value of those expectations it is difficult or impossible now to estimate. But unless that value is at least 1/7 of the present cash value of our Capital, we shall lose by not increasing our Stock. I get at this result in this way: We are entitled to about 1/5 of the Havana Co's. Stock of $1,500,000. The Gas Co., I am told, has offered to consolidate interests and to issue to the Havana Co a million of Gas Stock now said to be worth 40 to 50 cents cash. Our interest therein 1/5, or 200,000 Stock worth, say 50 c = $100,000, or par of our present Capital of $100,000. If this is correct it will follow;##1. If we add $40,000 to our present Capital each share of the new stock will be worth $70., plus 1/1400 of the chances under future contracts.##2. If we pay our indebtedness of $40,000 by transferring an equivalent in havana Stock, we reduce our holding of that from an assumed present cash value of $100,000 to $60,000. Then each share of our Stock is worth $60., plus 1/1000 of the value of the chances of an interest in future contracts.##If we take the latter course we give up now 1/7 of the assumed present cash vvalue of each of our Colonial shares and get in return what? Nothing bu the difference 1/1000 and 1/1400 of the value of those chances.##Suppose the value of the concessions for the balance of the territory outside of Haana is 1/4 of the value of the Havana concession. In that case, on the above basis the outside concessions are worth $125,000 and the interest therein of the Colonial Co. (1/5) = $25,000. If we increase our Capital Stock each share will then get 1/1400 of 100,000--$70##1/1400 of $25,000 - 17.50/ $87.50##If we don’t increase, each share will then get:##1/100 of $60,000 – 60##1/1000 25,000 – 25./$85##I will send Mr. Edison’s shares as soon as I get Mr. Lowrey Trustee’s signature Yours &c. C Francis Stone





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Thomas A. Edison Papers, School of Arts and Sciences, Rutgers University
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