Although times were tough and disagreements were many the mines kept producing. The coal fields amounted to a complex consisting of two mines, Number On and Two, a bank-head 350 feet by 28 feet, a barter house, a forge and machine shop, workhouse, carpenter shop, a fan house, repair shop, three stables, a superintendent's home, ten single dwellings and eighty-four double houses. The miners were involved with working five levels underground and a new hoist was imported from England to raise the coal from these levels. The Inverness mines had the distinction of using the second largest hoist in the world by 1911. The presence of this massive piece of machinery was a topic of debate for many months. Many questioned the purchase since much smaller machine was capable of handling the coal being produced. The other argument on favour of the skeptics was the expense. To feed this hoist and the auxiliary machinery the mine was burning a great deal of its coal per day. Administrative decisions such as these were hardly advantageous to a profit making enterprise. In terms of production tonnage, the years 1911-1915 were certainly a success story, since the annual output was close to 250,000 tons. By 1913, there were 725 men were employed in the mines and the market improved. The mines were producing but the Company continued to lose money. Apparently, due to decreased demand and rising costs, the loss factor was too much for the Company to handle. This, combined with underground complications, forced the mines into receivership by 1915.
On July 1, 1915, the Company defaulted in the payment of interest on its bonds. At the insistence of the Trustee, acting on behalf of the Bondholders, John MacGillivray, General Manager of the Company, was appointed Receiver and Manager of the Company's properties by Order of the Supreme Court of Nova Scotia on July 61915. In a letter dated, October 7, 1915, the Bondholders Committee explained their position.
Inverness Railway and Coal Company
Toronto, 7th October, 1915
A meeting of the bondholders of Inverness Railway & Coal Company was held in accordance with the notice calling same, at the office of the Company, Toronto, Canada, on Wednesday, June 30, 1915. at which Mr. W.E. Rundle, General Manager of National Trust Company Limited, Trustee occupied the chair.
Substantially more than fifty per cent on the bonds outstanding were represented at the meeting. Representatives of the Company addressed the meeting and pointed out that the Company was and had been unable to meet its obligations in respect of its bonds for the following reasons:
1.There is insufficient market for coal of the quality produced by the Company.
2.There is much slack in the coal produced by the Company, only a portion of which could be marketed at the time.
3.High boat freights, resulting from war conditions, has restricted the present market for the Company's output to the Provinces of Nova Scotia and New Brunswick or to local consumption.
The Company has been investigating processes whereby its slack coal could be converted into saleable briquettes, but its efforts in that direction have so far been unsuccessful. A representative of the Company was, at the outbreak of the war, making investigations in Austria, where the briquetting of coal is carried on successfully, but such investigations were necessarily terminated at the commencement of hostilities, and similar investigations in Great Britain, where experiments were being conducted in the same direction, had also to be abandoned for the same reasons
In the absence of a definite plan (and) the disastrous effect the closing down of the mine would have....the Trustees were instructed to apply in Nova Scotia for the appointment of a Receiver and Manager....
Mr. J. MacGillivray, Inverness, N.S., was on the sixth of July appointed Receiver and Manager by the Court of Nova Scotia.
It is anticipated that the operations of the Company will meet expenses during the continuance of operations.
The Committee will issue further statements for the information of the bondholders as occasion may
require.BONDHOLDERS COMMITTEE:
J. H. PLUMMER, Z. A. LASH, D. B. HANNA
John MacGillivray continued in this capacity until mid-1919 when he asked to be relieved as the Eastern Trust Company of Halifax was appointed in his place. The properties of the Company consisted of the coal mines and Railway.
According to a National Trust Company letter, dated June 18,1932, a Mr. M.E.C. Henderson was negotiating with the Bondholders' Committee and the Trustee to take over the operation in 1920. Unfortunately, after paying close to $275,000 on principal and $22,155.54 on interest and adjustments, Mr, Henderson was unable to continue his payments. In February 1921 the Trustee was obliged to retake possession on behalf of the Bank-holders and the Eastern Trust Company was reinstated as Receiver and Manager. The money paid by Mr. Henderson plus the advances paid by the receiver were required to enable operations to be continued in the hope that a purchaser might be found. The National Trust Company and the Bondholders' Committee tried to dispose of the Company's properties but ail negotiations fell through. However, the railway assets were eventually leased to the Canadian National Railways.
Toward the end of 1924 ail the property include the reversion under the lease to the Canadian National Railways, were offered for sale by public auction at a sheriffs sale. The properties were bid in by the Eastern Trust Company in order to protect advances made by it as Receiver. On August 25,1925, an Order of the Supreme Court of Nova Scotia confirmed the sale.
The Eastern Trust Company in turn sold the railway to the Dominion Government for $275,000. However, this amount was insufficient to indemnify the Eastern Trust Company as Receiver. As a result the Bondholders were not given any of this money. The National Trust Company was not optimistic about providing a surplus of capital after the Receiver was paid and informed the Bondholders that they should not anticipate any further distribution.
Another significant item in the Inverness Railway and Coal Company Report shows a balance of $100,000 for Bondholders which dwindled from an aggregate principal amount of $3,000,000. It was not good news for the Bondholder by 1932. Prior to this report the bondholder was in a state of amazement and continually searched for an answer to his dilemma.
