Evening star. [volume] (Washington, D.C.) 1854-1972, 1901-03-09
AN ALLEGED DEAL
Pennsylvania Railway to Absorb the
G. and 0. System.
THE LEASE SAID 10 RUN 999 YEARS
Becomes Integral Part of the
Pennsylvania.
VANDERBILT CORPORATION

report is given credence in high finan-
CiaI circles that the Pennsylvania Railroad
Company has determined upon the annexa-
ton of the Chesapeake and Ohio railroad,
and that the negotiation is practically COM
plete- This report follows closely on the
sem-official announcement that the Penn
syIvania Company had determined upon
the acquisition of a dominant interest in
che Baltimore aud Ohio railroad. A year
ago. it is said, the controlling financiers of
the Pennsylvania system joined William K
Vanderbilt and J. p. Morgan in the pur-
chase Of majority interest in the capital
stock of the Chesapeake and Ohio 1t was
one of the first steps in the direction of
community of interest among the impor-
taut railroads of the United States. Since
the purchase mentioned the Pennsylvania
has directly and Indirectly enlarged its
holdings of Chesapeake and Ohio stock.
The present proposition, it is said, is that
the Chesa peake and Ohio shall be made an
integral part of the Pennsylvania system
by the execution of a 999-year lease. The
report i that the Pennsylvania will guar
antee ) per cent dividend on Chesapeake
and Ohio stock, with extra dividends
earned
The report of the proposed lease has, it
Is said. caused surprise in the stock mar
E@t. - was believed on Wall street that
the Pennsylvania did not acquire its heavy
interest in Chesapeake apd Ohio without
Yell-dehned plans. but it was also quite
generally believed that the Chesapeake and
Ohio would have to pass through the same
waiting process which has long troubled
holders of Panhandle securities.
The Vanderbilt Stipulation
1t is said on what is considered in the
stock market as high authority that in the
original agreement by which the PennsyI-
wanna and New York Central interests ac-
quired a controlling interest in the Chesa-
peake and Ohio William K. Vanderbilt
caused STIPULATION 20 be inserted Ihaf the
minority interests in the Chesapeake and
Ohio should have immediate and actual re-
turns from the traffic of the road Among
the minority stockholders in the smaller
line are two members of the Vanderbilt
family. The time when the lease will be-
come operative has not been given out. but
1t is currently understood that it is not far
in the future.
The earnings of the Chesapeake and Ohio
have shown remarkable increases. During
the first two months of this year gross
earnings have risen over $3.50. OO0-approxi-
mately S20oooGo for the year-and net
earnings show a gain approaching 80 per
cent 1t is in its coal traffic that the
growth is greatest. In January, 1900 coal
freishtS yielded S2}0.Ooo; this year the jan
uary figures are 100000. In February.
1900, S1s6,0tO was earned from coal. and
in February this year the showing is $780,
OOo- These are increases of 10 per cent in
January and 50 per cent last month.
Its Capital stock.
Chesapeake and Ohio has $50 100000 capt.
tai stock. and 10 provide for 3 per cent an
nual dividends requires only 81. 800. 900, while
its surplus earnings during the current fis-
cal year have been at the rate of over So
C,p.o1o per year.
In paying 3 per cen: upon the capital
stock Of the Chesapeake and Ohio the
Pennsylvania would actually have 10 dis
IN he viii lie
now in its own treasury, or practically there
This would, at the current rate of earnings
leave IN Pennsylvania hands &, 10000 per
year. or over.
Earnings of 100000 per year in SUR
plus, applicable to stock If need be- equals
. Per cent dividends upon the total capital
OF the Chesapeake and Ohio Company. This
fact = considered, in the lease plan which
has now been submitted to ATTORNEYS in
New York The , per cent guarantee is for
relatively short period, at the expiration
OF which there is to be larger disbursement
as earned though a detail of the lease
may provide that the actual responsibility
of the Pennsylvania as guarantee will
continue limited to 8 per cent per year
during the entire 500 years of the lease.
The B. and o. Interest.
In the matter of relations between the
Pennsylvania and Baltimore and Ohio, 1t
is said that at the close of last year the
holdings of the former in the securities of
the Baltimore and Ohio was conferred in the
preferred stock and to the amount of SIS :
11"o. par value of the outstanding 49,
100000 OF stock. The understanding is that
during this year Pennsylvania has bought
heavily OF Baltimore and Ohio common,
and has absorbed considerable amount of
the new convertible bond issue.
President CaIIaway's Statement,
NEW YORK, March 9-The Evening Post
says: President Galloway of the New York
Central railroad. who is director of the
Chesapeake and Ohio railroad denied posi-
lively today that any lease of the Chesa-
peake and Ohio railroad to the Pennsyl-
wanna railroad was contemplated. For some
days rumors have been circulated in Wall
street, accompanying the rise in the shares
on the stock market, that the road was
likely 10 be turned over 20 the PennsyI-
vania railroad. These rumors were pub
lished in morning newspapers, with circum-
stantial details OF a 999-year lease with 3
per cent guarantee. but Mr.. Galloway said
the whole story was news to him; he had
never heard OF It before.
on Wednesday of this week there was an
important meeting of the Chesapeake and
Ohio directors in this CITY, at which all
three Pennsylvania directors We're present,
with Mr.. Galloway, the other two Wander
bilt representatives, Mr.. Depew and Mr.
Twombly, being out of the city, the latter
IN the south This meeting was mostly
taken up with plans for developing the
SIiS tdpdtlly OF the chesapeake
and Ohio. particularly terminal enlarge
ments at Newport News. A lease of the
ROAD or any change IN its present status
was not discussed While. therefore, If any
plan for leasing the Chesapeake and Ohio
Is carried out, 1t would seem as IL 1t must
De later development, there Is good reason
10 beleve that Pennsylvania has been in
creasing its stock holdings in the seaboard
scu-coal carrying lines, and II NAV be
holding nearer majority of the Chesa-
peake and ONO stock than embraced In its
earlier purchases.