The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1895-08-22
A Big SCHEME
In Railroad Consolidation
The Erie
Road
INTO ONE BIG SYSTEM.

J. p. Morgan, the Great New York
Banker is Back of the Scheme to Re-
organize the Three Roads Into Ore
Perfect and Harmonious System Ex-
tending From New York to Chicago.
SPECIAL TO THE NEws-DEMoCRAT.
Cleveland, August 16. If the Erie Rail.
way plan of reorganization, as undertak-
en- by that prince of financiers, J. p. Nor
gan, succeeds, new company will arise
from the ashes of the old Erie property,
spread its wings, and compass the entire
line from New York to Chicago. The
Erie system at present consists of three
disjointed members. There is first the
Erie railway proper, extending from the
Atlantic seaboard to Buffalo and Sala-
manca, N. Y. Then there is the New
York, Pennsylvania 81 Ohio Railway, or
Nypano extending from Salamanca to
Dayton, o., with the highly profitable
leased branch extending from Cleveland
to Youngstown. The Nypano is owned by
English people, and while ever since its
construction, thirty years ago, it has had
close traffic relations with the Erie, most
of the time by lease, yet there has been
frequent friction and financial difficulties
between the two companies The third
81 Erie railway, extending from Marion,
o., on the main line of the Nypano rail-
way, to Chicago. Its stock is owned by
the Erie company, which guarantees GER
tain returns for
THE HEAVY MORTGAGES.
The difficulties in the way of welding
into one harmonious system these ele-
ments would seem to the ordinary indi.
vidual almost unsurmountable. The
Nypano railway has ever since its con.
struction floundered under burdensome
capitalization, which now amounts to
S175, 600, 600. The property is tied up in
voting trust, representing the senior
securities. Small hope here apparently,
for any welding of interests into practic-
able scheme. Yet the genius or the po-
tency, of J. p Morgan has conceived
the plan, and the rumors are coming
from New York that the undertaking will
probably prove success.
The stories that have leaked out are
that one company will control the entire
line from New York to Chicago, and that
the operation Of the Npyano will be by ties
stronger than lease. The details by
which this will be accomplished are not
yet quite ready to be announced to the
public.
Never in it's history has the Nypano
property been in better shape to thus DROP
like ripe plum into a scheme of this
sort. The Nypano stock of $50 900, 900 is
practically buried beyond hope of resur.
rection, for way back in the eighties the
stockholders surrendered to the first mort
gage bondholders the voting power until
such time as the property should earn
per cent on its mortgage Indebtedness OF
S125, 900, 900, which means in perpetu
ity The second and third mortgages are
incomes ana of no value save as waste
paper. By the terms of the
NYPANo REORGANIZATION,
which became effective July l., 1895, the
Nypano first mortgages, including de
ferred warrants, amounting in the aggre
gate to $71, 900, 900, surrendered for forty
years their per cent. interest and theil
right to foreclose becoming first income
bonds. The only imperative obligation
upon the Nypano is $4,000, 900, Az pei
cent. prior lien bonds. The Nypano frs
bonds are quoted at about IS, the entire
issue thus having q value of less thar
$14, 900, 900. Adding the piror lien mort
cages, about S22, 000,000 represents tn,
amount of capital necessary to secure
complete control of the Nypano, and it i
surmised new Erie securities will be is
sued in exchange for these.
The Morgan syndicate is also fixing III
deal with the Chicago & Erie rallwa.
bondholders. The obligations of tina
company consists of sig, 1000, 600 8 pc
cent first bonds and 10000, 900 pc
cent non-cumulative second bonds. B1
the Erie company guarantees that 20 to 2
per cent. of the gross earnings of the Chi
cago & Erie shall be applied to meet tn
set charges, and the guarantee last yea
. cost the Erie about S400, 900. Under tn
proosed reorganization the old Erie com
pany, with all its guarantees, liabilities
, and resources, will be wiped out Of exist
ence, so that, the guarantee being gone
the bonds will lose greatly in value. An
it is imagined that Mr.. Morgan will NEE
with no serious trouble in coming
terms with the Chicago s. Erie bond
, holders
The plan of the Erie railway reorganiz
alton contemplates the issue of $175, 900
600 of bonds on the entire property bC
: tween New York and Chicago, of whic
: $35, 900, 000 will be prior lien bono
| After providing for all obligations theI
4 will be IA sum left for improvements, an
, that portion of the system, which is no.
known as the Nypano, will, IL is said, n
l ceive it's proportionate share of the funo
for these improvements
..1WUE... Cuoo.hx, ~ NJo