The Mena weekly star., 1913-11-06
ARE THERAILROADS
 PLANNING A COUP?
Enormous Bond Issues Being Float cd to FOreStaIl Government Own erShip-COngreSS to In-
 VeStigate.

nous bond issues now being pro posed by the great trunk line rail- roads of the country are to be made the subject of congressional inquiry. The Interstate Commerce GOmmls- sion proposes congressional action that would limit railway financing.
 Within the last week members of the commission have started work on an investigation based on the be- lief that the recent announcements of great railway interests, detailing plans for floating securities for vast sums, Is part of a general scheme on the part of the railways to pre- pare for the possibility of govern ment ownership. The commission, it is understood, anticipates that the Wilson administration will be com pelled to seriously consider a situ- ation which, it is pointed out, en- ables the great financiers of the country to load down the railroads with unprecedented bond issues.
 One Billion Dollar Issue.
 Attention further is called to the fact that such mortgages as are now being floated have never be- fore been attempted in all the his tory of American railway financing.
 The particular thing which has attracted the attention of the gov ernment officials is the recent an- nOuncement that the Pennsylvania railroad has proposed one billion dollar bond issue. Public announce ment of the proposal to float this tremendous amount of securities followed on the heels of the appli- cation of J. p. Morgan X Co. to the public service commission of New York for authority to place a mort gage to run for nearly one hundred years on the New York Central lines. including the Lake Shore & Michigan Southern and other sub sidiaries.
 To Hold Up the Public.
 Members of the Interstate Com merce Commission believe that these proposed bond issues are con- templated for no other reason than that the railways are preparing for the day when the government will step in to take the properties and when that day comes they propose to be in a position where the public will have to pay an enormous sum for the privilege of ownership.
 While it may be many years be- fore government ownership legisla- tion can be put through Congress. the officials of the Interstate Com merce Commission believe that the railway owners are taking time by the forelock. It is their theory that the railways in the end will not fight the transfer of the properties to the government, providing their vast bond issues are placed secure ly in advance.
 Public Ownership Campaign On.
 It already has been disclosed pub licly that Postmaster General Burleson will urge the government ownership of telegraph and tele- phones in his annual report. An elaborate and exhaustive study is now being made under the direction of the postmaster general in prepa- ration for this recommendation which, it is conceded, will give i'm petus to the movement for public ownership of railways. The rail ways, on the other hand, in the be- lief of government officials who are making close study of the sub ject, are preparing to make the price exceedingly high whenever they are asked to turn over their properties.
 The significance in this connec- tion of the proposed enormous bond issue is that bonds are supposed to represent actual cash put in a prop erty and would, in the opinion of railway financiers, have to be fig ured as actual cash in any proposi- ton for the government ownership.
 Why Finance the Lake Shore?
 The proposed New York Central bond issue is now being inquired in- to by the Interstate Commerce Commission. In testifying before the commission some months before his death, J. P. Morgan said that the general mortgage was to be execut- ed so as to make it easier to finance the Lake Shore. The commission CTS believe this somewhat remark able, considering the fact that the Lake Shore is property that earns a 30 per cent dividend and has one branch with earnings of close to 60 per cent on the amount of money actually put into the property.
 It Is argued that the proposed blanket bond issue will hide the enormous dividend payers, such as the Lake Shore, Pittsburgh X Lake Erie and other subsidiaries, and make them appear like investments paying only ordinary earnings. It is said that the initial issue of bonds under the Morgan plan will be somewhat in excess of $50 mil lion dollars, with no limit to the additional amount that may later be placed upon the consolidated properties.