The Washington times., 1911-03-07

System.
| 1t is evident that no extraordinary termi
nal development Of this character can c
itself be profitable II solely dependent on tn
passenger rates which can be charged 70
| the short mileage operated. and II naturall
fellows that your Company as owner Will pa
| any deficit arising from its operation. be
| cause ii was constructed primarily for tn
use and benefit Of the entire Pennsylvani
| Railroad System an entrance into an
through New York City and Long Island.
| II was deemed appropriate that the com
pletion Of such an important extension o
your system into the heart Of New Yor
city should be CommemOrated By a fittin
/ tribute to your former President. in who's
administration the work was undertaken.
statue OF Mr.. Cassatt. erected in the mai
| waiting room in the New York Station. wa
| unveiled August LIST, 1910 and bears the in
| scrIption. Alexander Johnston Cassatt, Pres
| ident. Pennsylvania Railroad Company. 1899
1906, whose foresight, courage and abilit
achieved the extension Of the Pennsylvania
Railroad System into New York city
Since the inauguration Of direct rail serv
| ice into New York City and Brooklyn vii
the tunnel extension. the ferries from Jerse
City TO Twenty-third Street. New York, an
| to Brooklyn have been discontinued
The New York Tunnel Extension is carrie,
on your books at S55, ,565. .4I552 OF whicl
SIS, OJO. 900 is represented by full paid capita
stock OF. the Pennsylvania Tunnel and Ter
minal Railroad Company and the remainde
| by advances. The total cost OF this exten
sion to December 3Ist 1910 including rea
estate not permanently required for its u.s.
and conseryatlvely estimated to be wortl
between seven and eight millions OF dollar
and not yet disposed Of. is SIP. 96J. .4l5.52 o
which si7. 400. OO0.OO has been charged agains
Net Income and Profit and Loss. and as ex
planned In previous reports, $40. coo 600. % ha!
been borne by the Pennsylvania Company
and charged against its Profit and Loss Ac
count.
SECURITIES OWNED
The securities held by your Company De.
c"mber 3lst 1910 at a valuation Of $50 O69.
Dol. iJ produced direct income
year Of Si.9 SIC. q.
During the year your Company increased
its holdings Of the stocks Of the New York
New Haven and Hartford Railroad Company
and the Norfolk and Western Railway Com
pany, with both Of which. the Company and
its affiliated lines have for many wears
interchanged a very large volume OF traffic.
CONTROLLED. AFFILIATED AND
LEASED COMPANIES
Many minority Stockholders Of the North
ern Central Railway Company representing
Dany 10 consider whether a more permanent
operating arrangement or lease OF its prop
erty to the Pennsylvania Railroad Company
could be made on basis e0uIta bJe IN all
interests. and a special committee OF the
Board OF the former Company. and also a
Minority Stockholders Committee, were ap-
pointed to consider the subject. After a
careful analysis and study OF the whole SIT
uation. these Committees united in a recon- :
mendation that the lease of the railroad.
franchises. equipment and all other property
be made to the Pennsylvania Railroad Com
pany for y99 wears from January lst. 1911,
Upon the following general basis: 'aJ A
rental. of per cent, payable the out
standing capital stock Of the Company after
II had been increased by a 20 per cent. stock
dividend: tb) the payment OF 10 per cent.
cash dividend on the present stock: CCl a
further sum sufficient to preserve and main
tain that COmpany's corporate existence and
organization: tdl the Lessee to also pay all
fixed charges and taxes. The proposed lea ase
stating in detail the full terms and con-
ditions was after due approval by the
Boards Of Directors Of the respective Com
Northern Central Railway Company, and ap-
proved by the and consent OF share
holders representing over % per cent. Of
the whole stock. which included over S. per
cent. Of shares owned by others than the
Pennsylvania Railroad Company. The lease
and consequent increase OF capital stock. are
now before the Public Service Commission
of Maryland for its approval as required
by law. Upon such approval, the lease couid
become effective. but by reason of two suits
instituted by dissatisfied minority stock
holders one in the United States Circuit
Court of the District of Maryland and the
other in the same court for the Eastern
District of Pennsylvania your Company, by
action of It's Board Of Directors, has deemed
II prudent to declare that II shall not be
required to execute and efectuate the said
lease IL approved by the Public Service Com
of the railway and property of the Northern
Central Railway Company, until each Of
the two SUITS against the IatteT company anu
the Pennsylvania Railroad Company shall be
or until your Company Is ad
vised by Counsel that 4 is proper 20 con-
summate the same prior to such adjudication.
The Northern Central Railway Company has
been affiliated with your Company~fOr almost
fifty years, and in that time has had the
benefit of the ripest experience in railroad
operation and management which your Com
pany could give 1t, and although several
previous attempts to lease that property to
the Pennsylvania Railroad Company were
Nf Q1rr
ity among the Northern Central Railway
ii was believed that the time
had come when ii was desirable and proper
for your Company to consider lease. Both
Companies. by reason of this long affiliatiOn.
their mutual trackage agreements, and ter
minaI grants, have become so essential In
Northern Central Railway Company being
dependent upon the traffic interchanged with
your system for about IS per cent. of Its
gross revenues, II is evident that a lease is
q natural result, and the closer operating
relationship which will be thereby effected
cannot fail to be beneficial to the Com
panies and to the territory served by the
Northern Central Lines. This opinion is
fully justified by the unanimous consent and
action of the holders Of substantial ma
jority of the minority shares OF that Com,
pany without which this Company declined
to even consider the lease. The purpose OF
your Company and the action of your Board In
with the foregoing lease, Is now
reported, with the other matters In this re-
port for the approval and confirmation or
the stockholders.
RELIEF, SAVING FUND AND PENSION
DEPARTMENTS.
The expenditures for pensions for the year
have been 1854 IS or $54, 710.25 in excess OF
the sum appropriated by the various COM
panies affiliated in this Department.
The various increases in employees wages
since the establishment of this Department,
the increasing length of service of those
retired, together with a continued growth IN
the number of retirements under the $3.50
Year Clause Of the Pension Regulations,
which the Management did not deem 1t
wise. in the best interest Of the service. TO
restrict all tend to cause heavier drain
upon the pension appropriation.
To cover this Companys portion OF the
additional expenditures for pensions, during
the year, your Board found II necessary to
pxnend an additional sum of $35,2I7.1o, which
you are asked to approve.
The stockholders will also be requested TO
authorize an increase in the annual sum
set apart for pension purposes from sjO0,O00
10 500. COO
the Board,
- JAMES McCREA.
President.