The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-03-06
G. & 0. BETTERMENTS
TO COST $17,O00,O0O
Will Spend Amount in Five
Years Regardless Of
Dividends.
STOCK sLUMPs on NEWS
Management Hopes That New
Coal Traffic Will Repay
Entire Outlay.

Conservation Of its resources through
Dloushins back earnings into improve
nsnts . process that may mean reduction
- elimination Of its 4 per cent dividend.
u the feature Of the 333.o0o.oo0 short
term note financing announced yesterday
By the Chesapeake and Ohio.
The railroad management and its bank
ers have placed the Importance OF conserv-
ing and strengthening the property ahead
Of dividends in an agreement that the
company shall spend out Of earnings
during the nve year life Of the notes the
sum Of Sl7,O00.000. This amount Ii to BE-
taken out Of income earned after April
!, 1914. at the rate Of 100000 for the
year ended Juno 80, 1915. 100000 the
next year and 100000 for each OF the
following three years. These payments
arc to be used for capital expenditure, In
Guiding payments and discounts on equip
0ent trusts.
Kuhn. Loeb 4 Co. and the National
City Bank have purchased the FIVE year
8 per cent notes, dated June 4, 1914. and
viii offer them at 81. to yield $50 per
cent. The road received 90 for the notes.
loso Q commission to the bankers
The guarantee Of the expenditure out OF
earnings OF 3l7.0o0.o00 In the next dvs
ysass. In view Of the financial community.
y Q commendable move Of careful nnanc-
lng calculated to secure the strength OF
the new notea ~ well a. the other bonds
of the company.
Il 10 admitted that the plan seriously
andangers the dividend. The road sailed
very close to the wind during the last
6ocal year. II earned only 5.25 per cent.
on Its stock. on which II ID paying I per
cent. 1t will need to earn 7.1s per cent.
IN the year ended June, 1915. s.75 the
next year and 1913 In each of the fol-
lowing three years in order to continue the
& per cent. dividends.
Frank Trumbull. chairman OF the board.
takes hopeful view of the dividend sit
uation on the ground that the road In the
last fiscal year would have earned Z per
cent II 1t had not been for the heavy
mood losses at the last OF March, 1913.
which cost the road over 100000.
There Is no requirement for changing
the dividend policy Of the Chesapeake and
Ohio" said Mr.. Trumbull, ''if stipulated
amounts are earned. and under tho note
agreement the first determination Of this
can be made after the fiscal year ending
year for 4 per cent. on stock and $1,000
900 to be devoted to capital expenditure.
aggregating only about $4.500.000. Is equal
TO little over per cent. On stock, which
the company now expects to earn. The
company earned In the first seven months
Of the current fiscal year nearly the full
per cent. now, being paid per snnum."
On the belief that the dividend on the
stock would have to be cut sooner or later
the stock was heavily sold. with result
ing break Of ~ points from the previous
Close. The price declined to 5sA, closing
y higher on transactions OF 74.400
shares. q very large day for tho issue.
Iotv al hal
1916, II 10 discretionary with the directors
whether they reduce the dividend or not
After that time, II the dividend has been
continued and deficit has been incurred
dividends automatically stop until the
defcit Is made up. A resumption Of dlvi.
dends can thereafter be voted quarterly
The setting aside Of a fund for capital ex.
penditure must always be provided fol
frst.
The notes are secured by first lien and
Improvement mortgage per cent bonds
taken At s71s per cent. Of their face value