Evening star. [volume] (Washington, D.C.) 1854-1972, 1896-05-11

OWED THE B. AND 0.
An Analysis Of the Debit and Credit
Columns.
NOT an ENCOURAGING SHOWING
Reorganization Committee Holds a
Meeting in Baltimore.
SHOWING
OTHER RAILROAD MATTERS

ihS tEe Willingness OF the receivers to al
low the committee to employ expert to
examine the books of the Baltimore and
Ohio company.
After the adjournment one of the men,
bers of the committee said to Star re-
lorter, in response to questions that no
business was transacted at the meeting, but
that the committee had been able to get
down to the facts in reference to many of
the deals made by those acting for the b.
and .. during the years lSSS-9J, and that,
while the transactions so far touched upon
DO not disclose anything criminal, they re-
veal state of acknowledgement which is
appalling"
Continuing, the banker said: Up to this
time the Baltimore anC Ohio Railroad Com
pany has defaulted on all bonds whose cou-
pons have matured except the extended As
and the equipment bonds.
The following roads in the system paid
the maturing coupons: West Virginia and
PlttsburS. paid coupon due April /; Pitts
burg. Cleveland and Toledo paid coupon
maturing April on Pittsburg, Cleveland
ana Toledo first mortgage is; Cleveland
terminal and Valley railroad paid coupon
cue May l on Cleveland Terminal and
Valley railroad first mortgage Is.
The following bonds have defaulted and
the coupons remain unpaid unpurchase
PlttSburS and Western second mortgage Js,
coupon due May |, and Newark. Somerset
and Straitsvle first mortgage extended rs,
coupon due May l. In the case of the Pitts
burg and Western second mortgage IS it is
provided that. on default for six months
the trustee. the Mercantile Trust Company
OF New York, shall, upon request of the
holders OF majority of the bonds, take
possession. operate and sell the property as
requested.
The matured coupons upon which de-
fault has been made and which have been
purchased by bankers are as follows: By
Barring Bros, London, coupons due March
l, nd GS
of 1902; by j. S. Morgan & Co., London,
and j. p. Morgan & Co., New York. cou-
pons due April l. 1896, on Parkersburg
branch Us. and coupons due May l. 1896. on
Baltimore and Ohio sterling Us of 1919 by
Brown Bros. & Co. New York and Brown
Shipley 4 Co, London. coupons due April
l. lS!A. on Philadelphia branch 41-s. ami
coupons due May on Baltimore Belt IS: bv
Speyer q Co, New York and London cou-
pons due March /. 1S96 on Central Ohio
first mortgage iRs. Messrs. Spe yer & Co
also give notice that they will purchase the
coupons due August J. 1896 on Baltimore
and Ohio IS of 1928. if not paid by the COM
rany: by Vermilye & Co. coupons due
May l. 1896, on Akron and Chicago junction
1rst mortgage 5s.
Confidence Shown.
when the Baltimore ard Ohio Railroad
Company We mt into the hands of receivers
l remarked thar there would he 70 develop
ments Of bitterness, as in the case of the
Reading, Atchison and such ether recent
bankruptcies, and still Think that | am
right in this opinion | do not remem Der
that ever before have bankers VINO have
brought out loans beer generally will
ilg in the event of the property being
placed in tEe hands OF receivers to come
forward end buy the coupons. rot only of
prior lien bonds, but also of junior issues
which may POSSIBLY under reorganization
be compelled to make COZ cessicns. l think
this shows great faith in the Baltimore and
the company will be able to pull through
its difficulties without any very great sac
ritices on the part of the security holders.
"Of coul the purchase of coupons on
defaulted bonds by some half dozen differ
ent banking houses has other significance
than faith in the solvency Of the Baltimore
and Ohio &C mpary. These bankers are not
united in an effor. to preserve the property
as a whole, but rather for the protection
of separate interests, and for the enforcing
of rights which such Individual securities
may possess or which they are supposed
to possess.
"In looking over the details and proyis-
ions CT the several mortgages. it is seen
that there are some conflicting issues. For
instance. the mortgage securing the Balti-
more and Ohio 5s Of 1925 (Pittsburg and
COnnellsvilIe) declares that these bonds are
entitled to the same security given by any
subsequent mCrtg: ge. THIS was in 1850
In 1889 the consolidated mortgage 5s were
issued, but in this mortgage the pari passu
lien Of the bonds issued under the mort
gage Of 1885 is ignored. Again. in the con-
solidatcd II ortgage Of 1887 among other
security mentioned are all lands. etc,
along sal railroads corrected with the
business II ereof. except those for the gem
eral offices in Baltimore; all appurtenances
rolling stock, franchises, etc. And yet. in
1894. the Terminal mortgage. covering
lands. etc. along the line Of the road, was
issued, ard there may be contest be-
tween these interests.
'These difficulties are, however, small in
comparison with the threatening aspect of
the complication with roads which have
been acquired and underwritten by the
Baltimore and Ohio company in recent
years, and which. according to railroad ex-
perts, have Slapped the life out of the pa
rent stem.
Owe the II. and O.
"The West Virginia and Pittsburg. for in
stance. whose 100000 bonds the Balti-
more and Ohio company was persuaded to
indorse, is ostensbly being worked al 40
per cent of gross earnings. and thereby
made to show that the road is earning it's
paid charges and is self-supportng. The
facts that the Baltimore and Ohio has
been compelled to assist the West Virginia
and Pittsburg company, and that road
owed the Baltimore and Ohio when 1t was
placed in the hands of a receiver more
than $4,000. I presume this debt is still
owing. notwithstanding the West Virginia
and Pittsburg company paid the coupon
due April 1.
THE Pittsburg and Western system also
owes the Baltimore and Ohio over
s2,OO0000. The notes of these and other
companies held by the Baltimore and Ohio
were indorsed by the Baltimore and Ohio
securities held in the treasury of the COM
pany were used to secure the same, and
the notes thus protected We're discounted
by various banks and bankers, and now
,rm a portion of the Baltimore and Ohio's
floating debt These transactions were en-
tirely legitimate. and l only mention them
to show that the Pittsburg and Western,
the West Virginia and Pittsburg and
other such schemes were improbable and
ill-advsed.
1.-THE position of the Pittsburg and West
ern division is very interesting. and there
are some fnancers who declare that the
Baltimore and Ohio was most thoroughly
taken in when it purchased the majority of
the capital stock Of that company and tried
to carry it, Mr.. King, the late president
of that company, is now receiver of it, and
is still expressing himself very favorably
about its prospects, etc, but great disap-
pointment is bound to follow, as that little
system, extending from Pittsburg to Chi
cage Junction. cannot carry its load of
debt, Notwithstanding the fact that they
own seven miles of water front at Allie
gheny City, opposite Pittsburg.
There are $1O,O00OOO first mortgage as