Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-02-20
THREE YEARS AT S PER CENT
Entire Issue of Securities Taken by
One New York Firm.
MEETS ALL PRESENT NEEDS
New Notes Secured by Car Trust Ger.
tificates, Water Bonds and
Other Collateral.

NEW YORK, February 20.-Perfection
of the Pennsylvania new financial plan
progressed so rapidly and successfully yes
terday that, before the market closed, the
company formally announced q sale OF
$50, 900 600 three-year 5 per cent notes. AT
the close Of business on the previous day
1t had been decided to make the issue NO
larger than $4,000, 600, but President James
McCrea, who for the first time exerted his
influence on a financial plan for the rail-
road insisted that if it was made $50, OO0, 0OO
that would be sufficient borrowing for
the current year. And since 1t was found
by feeling the money market here and
abroad that there was sufficient demand to
absorb the entire seO,OOO0OO. it was decided
to complete the years financing in one
issue.
The issue was taken by Kuhn, Loeb &
Company and is being sold at 99h with the
customary deductions of one-fourth of
per cent for $780, lots and one-half of
per cent for lots of 100000 or more. The
low price Is thus 80, about the same as the
offering of the notes of the Vanderbilt lines.
large part of the notes have already
been placed in this country. The remainder,
it is expected, will be sold abroad today.
The notes are secured by car trust certifi-
Gates, of which the company had $780,
OOO, 900 in the treasury, by water bonds and
by other satisfactory collateral.
The companys official announcement of
the sale conveyed the important fnforma-
requirements of the company this year for
construction, expenditures and otherwise.
including the New York terminal and also
the $50,O00,OOO Pennsylvania Company notes
maturing November 1 next" 1t will not
be necessary" it was added, Ito use this
year any of the stock of the company or
any of it's bonds which the stockholders
have, as a wise precaution, been asked to
authorize at the annual meeting to be held
on March II next
Reduce Cassatt's Estimate.
In other words. the company has decided
to raise less money this year than had
everywhere been expected or had indeed,
been predicted by the late President Cas-
satt His estimate was that it would be
necessary to raise $50, coo, OOO for the retire
ment of the notes due in November and
in 1907 and 1908, s4o,OO0,OOO for the New
York terminals. In addition there were
reports that $4,000, 900 would be needed
for equipment; so that altogether there
was an expectation that the company
would come into the money market for at
least, $90,0O0,O00.
The reduction in the estimate may be
attributed to the Influence of President
McCrea. The proposition approved by the
directors for the authorization of $780,
Goo, 900 bonds and $1OO OCO 900 stock il was
salts death. and subsequently was put out
as continuation of Mr.. Cassatt's policy
But since that time there has been a radical
change in the plans of most of the great
railroad systems.
The new policy was inaugurated by the
| New York Central early in the year. 1t
was policy of retrenchment. In view of
the record prices for labor, materials and
equipment 1t was considered the part of
wisdom to limit extraordinary expenditure
very nearly to work already under con-
tract Many other railroads and indus
trial companies have sence taken the same
course and only this week the St Paul
announced decided change Of front in
that direction.
Redemption of Bonds.
Generally, Mr.. McCrea's policy, it was
said on high authority, is practically iden-
tical with that adopted by the Central.
He believes in completing as rapidly as pos
sible the work already begun, but he is
decidedly averse to expansion on lines that
had been planned. Approving most heart
lily, 1t was said, everything Mr. Cassatt
conceived, he still realizes that there has
been a change in conditions which makes it
the part OF prudence and conservatism to
curtail appropriations to a point absolutely
commensurate with the necessities of the
system.
The loan appears singular In that 1t pro-
Vides for the redemption of $50OOO,OOO
bonds that do not mature until next Novem-
ber One explanation of this oddly yester-
day had it that the present good market
for notes makes 1t advisable for companies
to secure their money before the supply is
exhausted. There may be- it was said some
force in that contention, but the company
has a much better reason
1t became known that this better reason
was the fact that when the company sold
part of its holdings of Baltimore and Ohio
and Norfolk and Western and all its hold
ings of Chesapeake and Ohio last fall it
sold them on plan of partial payments.
There were 10000 shares of Baltimore and
Ohio sold to the Union Pacific at a price
between $4S,O0O,000 and $4,000, COO and
everywhere it had been taken for granted
that these had been paid for in cash. The
contrary is the case, and it is SO also with
the sales of the other securities
Just how long the time of payment ex-
tends is not known, but it was pointed out
that the payments on the notes would prob
ably be applied in part to current expendi-
lures and that the payments maturing later
In the year on the stock sales would go far
toward redeeming the notes due on Novem-
Der l. It was primarily on account Of these
deferred payments on the notes that 1t was
decided to put out new financing at this
time.