The Prince George's enquirer and southern Maryland advertiser. (Upper Marlborough, Md.) 1882-1925, 1896-03-06
B. 4 0. RECEIVERSHIP.

Those who have noted the warnings
given by the Herald during the past year
will not be surprised that the Baltimore
and Ohio has been placed i'll the hands of
the court-the only surprise is that this
event did not occur sooner, says the New
York Herald When the last batch of
bonds was issued, Il year ago, attention
was called to the large increase III the
capital account since Samuel Spencer re-
tired from the presidency, and to the rcck-
less guarantees of branch lines, which
could never prove otherwise than IA drain
upon the parent system.
The Baltimore and Ohio guarantees
principal and interest on $:sS, 000,0 600 OF
bonds, and it guarantees interest alone on
large amount of other obligations, the
annual interest charges thus guaranteed
being more than $2,311 900. When Mr..
Spencer retired eight year ago the floating
debt had been pretty well cleaned up by
the syndicate loan of Sl0,00O,0O0, and he
had rricked the protit-and-loss bubble of
SIS, O00, 900 which Robert Garrett proudly
pointed to as surplus.
Most of it consisted of the securities of
acquired lines, or advances to these roads
on which there was little hope of realizing
anything. 1t well represented the folly
Of extensions, but President Mayer did
not take this lesson personally. He went
on acquiring railroads right and left, which
proved burden to the company and
| rendered it necessary to turn out more
| securities in order to keep the company
atlOat. There seems to be no getting
around the fact that most of the present
| floating debt was incurred during MIR.
| Mayors regime, and it is believed by
! bankers to be largely the result OF these
| ill-advised acquisitions.
| Another thing that probably contributed
to the downfall of company was the
resumption of dividends soon after Mr.:
Mayer took charge. He was not satisfied
with paving a cash dividend, but in Novem-
Der, 1891, a stock dividend of 20 per cent,
was paid to represent money said to have
been put into the road. There was also
an issue of new stock for Improvements,
and bonds have been turned out since
| then. In addition to these items, the car
trusts have assumed some proportions
during the past eight years, and it was
| these obligations that were urged by the
company as being one of the grounds for
the receivership. Under the management
of the elder Garrett the property flourish
ed and paid 10 per cent. dividends. 1t
was not until the "milking" process began
that the company got into difficulties.
So far as can be learned, the eXamlna'
ton of the books made by Stephen Little
shows that the floating debt is larger than
was supposed, while the current assets are
less valuable, and it was impossible to get
together enough collateral to warrant the
syndicate in advancing the needed funds
to help the company out of the mlre. The
floating debt is supposed to be placed by
Mr.. Little at between $12,000,OO0 and
$4,000, 000 and he estimates that upwaro
of $5,000,00 is necessary to put the rolling
stock in proper condition. He estimates
the value of current assets at less thar
$4,000, 600 There is reason to believe
that the receivership has been pretty well
discounted in Wall street, although there
may be considerable liquidation this week
by stockholders who are anxious to gel
out rather than pay an assessment wher
the time for reorganization comes.