The Birmingham age-herald., 1913-05-22

Probably the most difficult piece of
financing scrutiny whereby the various
threads representing interwoven and In
termingled railroad obligations could be
so unraveled that at last a basis could
be formed upon which new securities
could be placed was that employed In the
tangle identified by The condition of the
bankrupted Richmond Terminal company
None but a very great railroad expert
and a very high grade railroad actuary
could have accomplished this. The un-
dertaking had been abandoned by even
SO able an organizer the late Frederic
p. Olcott, for years president of the Cen
trail Trust company.
One of Mr. Morgan's partners. the late
Mr. Coster, undertook lnis task. 1t was
like deciphering Egyptian hieroglyphies
1t entailed intense mental concentration
and prolonged labor But in the end thsire
came triumph so that at last 1t was DOS
sibe to organize what is now one of the
powerful railroad systems of the United
States, the Southern Railroad company
Mr.. Coster has passed away. Some have
thought that he paid with his life tile
price exacted by the great work that he
did.
Presumably some IF Mr.. Morgan's re-
cent partners have heen occupied witt
the difficult work OF perfecting a plan
by which the New YoiK Central Railroad
company may be able through an issue
of its own securities, fortified by com
prehensive mortgage, to take over these
railroad properties and absorb their cspi-
tal stock and bonds in new capital issued
by the Central.
To accomplish this however, 1t was
necessary to have a keen sense of pro
portionate values. his was not the
work of reorganizing bankrupted or de-
nl1f
of the railroads Which the New Yort
Central purposes absorbing into its o~r
corporate family Is In healthy condition
What proportionate values have the car~
ital of these various railroads to the pro-
posed issue of new capital by the New
York Central? What proposition coulc
be made tempting enough to induce Tht
contented holders of some Of the securi
ties to exchange them for the obligations
of the New York Central?
At present the proposition affects only
the Lake Shore and Michigan Contra
railroad. Much the greater part of ths
capital stock of this railroad. nearly l0'
per cent, is now owned by the New Ycrl
Central.
What kind of securities shall be Offered
by the New York Central for the apita
obligations which 1t will issue in ex
change for the obligations of the LAX,
Shore?
Difficult Questions
These questions must have require
much patient Investigation and study Il
answer. The announcement that has jus
been made shows that they have at Jas
been answered.
Another feature of the financing whicf
is of especial Importance to he genera
public is the fact that the plan has beer
so developed as to make 1t possible to pre-
pare for approaches to the money mar
ket for funds with which to make the ex
pensive improvements which are vital i
the company is to maintain its earnings
and is to give to the public the facilities
which will be needed in the near future
for the operation Of its lines These are
facilities which all of the great truns
lines must prepare for or else within the
next ten years there will be congestion
of traffic on account of the inability Of
the railroads to handle all that is of
fered.
Very likely before the necessary financ.
ing is completed It will be discovered that
the obligations OF the New York Centra
approximate $1,000, 100000. There is, "
fact. intima ton that the company Looks
to financing involving $500, 900 900 imme.
diately.
The Economic Features
All of the railroad systems In New
York state which were owned or con-