Evening star. [volume] (Washington, D.C.) 1854-1972, 1898-01-31
FOR THE PURCHASE OF CARS
Baltimore and Ohio Receivers Make Applioa-
ton to Courts for Authority.
Proposition Opposed by BOndholders
.sfty Loss of Traffic.

The receivers Of the Baltimore and Ohio
Railroad Company today applied to the
United States court in Baltimore for au-
thority to purchase or otherwise secure
$3.50 new freight cars. which, 1t is claimed,
are necessary in order to properly con-
duct that part Of the transportation bust
ness of the company.
AS the cost Of these cars will be about
100000. it means a very considerable
addition to the already very large debt
OF the corporation, and in view of this
the request was, 1t is understood. vigorous
ly opposed by a number Of New York
bankers and other large holders of the
company's securities. In their petition,
the receivers state that they can make
an arrangement whereby certificates will
not have to be issued, the receivers mere
" paying the interest on the amount of
SOOO.OOO. The opposition, however, point
to the fact that this would be merely a
distinction without a difference. 1t is a
debt, let 1T be called by whatever name
the receivers choose to employ, and Is
lien above and beyond everything else and
on footing equal with the nearly fifteen
millions in receivers certificates now out
standing.
this petition" said one of the bondholders
yesterday, "it means another black eye
for the security holders; another step in
the direction of completely wiping out
the common stock and diminishing the
value of bonds. I think the court has gone
much too far already in its allowance of
latitude to the receivers in the matter
of piling up this priority debt and it is
high time halt was called"
The receivers were confident that the
court will give them the authority they
ask for.
What the Plan Provides.
The plan provides that certain portion
of the earnings Of the cars be applied to
paying the cost Of purchase, and when
paid for. the cars to become the property
of the Baltimore and Ohio Railroad Com
pany.
1t is roughly estimated that the cost of
the new cars will approximate 5000 600
lieved, will be more than sufficient to pay
the rentals for their use, which payments
are also part Of the purchase price.
The Baltimore and Ohio has been suffer-
ing loss Of business for some time be-
cause of the shortage of cars. Losses SO
far reported by the traffic officers Of the
road and verified by the receivers have
during the past four months. aggregated
100000 in gross With adequate car
equipment this additional traffic could have
been carried without increasing the ex-
penses of the receivers beyond the mere
expense of movement. This, 1t Is figured,
One-half the gross revenue Of the traffic.
Even though the present demands of
trafhc were not so urgent, yet the making
of these contracts for the acquisition of the
new cars would, it is felt, be no more than
what prudent foresight commands. At the
end Of two years from this time 5000 cars
now in service must be retired from use in
interstate commerce. This will be caused
by the enforcement of the act of Congress
requiring automatic couplers and the auto
matte brakes on all cars.
1t will be impracticable to so equip these
5000 cars, because their construction and
condition will be such that the expense
would be greater than the value of the cars
when so equipped. This number also in
cludes between 5000 and 1900 cars which
must be retired during the two years be-
cause of their age and generally WORKOUT
condition. Not less than l 500 and proba-
bly, 1900 must go out of service during
1898 on this account.
Prevention of Loss.
To prevent what IL estimated as enormous
loss to the interests Of the property, as
we'll as to the industries dependent on the
Baltimore and Ohio system for transporta-
ton facilities, 1t Is considered necessary
that contracts for new cars be placed now
Other railroads must meet the same condi-
tons In the equipment. Already the manu-
facturers have orders far ahead and prices
have risen.
The receivers. tits stated have gone no
ldrtner imam ID pIuuent. II Is claimed they
can clearly see their way to meet all the
obligations assumed without creating new
defaults in the payment of interest on the
bonded debt of the company, or otherwise
disturbing the holders of the company's
securities. 1t is said they have avoided any
issue of notes or other evidences of debt
by the company, lest it be heralded as an
issue of receivers certificates and alarm,
the mortgage bondholders.
In attempting to care for the business Of
fered the receivers have found it necessary
10 borrow cars from other lines whenever
obtainable, but under existing traffic con-
didons it is impossible TO obtain sufficient
number from other railroads, because no
road has surplus of equipment. The ex-
cess III the sums paid for the use of foreign
cars on the Baltimore and Ohio over the |
sums received from the cars Of the road
used on foreign lines aggregated $50 6IS |
for September. October and November of
1891. For the same three months the tons
moved on the Baltimore and Ohio show an
increase of nearly 100000 tons, or Fl per
cent.
: Contract With other Companies.
The arrangement to get the new cars in
Guides contract with the Pullman Palace |
Car Company to build 5000 thirty-ton box |
cars and let the Baltimore and Ohio have
them at a quarterly rental This rental Is
equivalent to "a per cent Of the purchase
price and interest on the purchase price