The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-04-11
ADVISES SPENDING
FOR M. X. & T. NOW
Theodore Prince Thinks Vow
Financing Should Include
rpbuilding.
AGAINST CLOSE POLICY

Theodore Prince. In an ar,lcl. :,
hoody's ndgd;,nc. has made r.v,.y
OF the situation confronting the Me.
souri,, Kansas and Texas Railway. I'll,
officials and bankers Of the linz AZ.
now bending their energies TO dsy.s
some plan FOR the financing OF tho sis..
100000 notes which fall due on NAV p,
Developments seem to Indicate TIM, N.
holders of these notes will he asked =,
agree to their extension or to sor.
form Of new financing which will bind
tho management OF the road 10 90,
aside so much each year for cap'ts
expenditures. an arrangement sirnilsr IN
that made by the Chesapeake and Oh.t
in 1914
MIR. Prince. In discussing IN. eo,a,
tons leading up To the issuing NJ N.
S19.oo0.000 per cent notes, ro,r-.
out that the note isSle was aiso.,
doubled in i've years with practicallv
no additional security other than N.
consolidated mortgage per cent
bonds. representing the entire equity
OF tho road This financing, no holds
was clearly done in the hope % cor.
structing and coordinat!ng r. system
which In time would become 40 p-oA,a.
BILE that the 1l25,OuU 600 consolidate
fves would have sufficient sarnlrn
power TO make them marketable mo-.
gage. That this hope was not rca',z.&
he holds. was not due to any fault Z
the management. but 10 the fact IA
tho period over which tho notes v.rS
renewed was tho acute stage OF m,
Interstate Commerce COMMISSIONS a..
tivlttee
Ways 20 Create vsise.
After taking M practically ava.
phass OF the finances OF the N.sro,!r.
Kansas and Texas. tho condition %. -.
property. its upkeep. rolling stock. .arn.
ings and expenses. Mr. Prince arrt.s
al the conclusion that PRACTICAL al. ~
the resources which IN gh' furnish
basis FOR financing have been eNbaUe'sd
with tho exception Of the cnu.ol d4'.l
mortgage fves. -" which a $4,000 U.p
issue Is authorized He holds h,,,yete,.
that in view 81 the trend I'm earr.rre .
does not appear that II represents 4
morteageable equity which can be mar
keted at any kinG OF a reasonable fig.
ure. He then points out that ther. e
two ways 10 arrive at n condition " -.
tho road would have the cred. .- e..-
plus 20 make value for This NOR.
gage. One - for the storNgn'3e.e -
pay VT the notes TN exchange 20
some sort OF an income bond. and -,
other 10 for the noteholders 70 .NcApies
their obligation for an income bort
The road has too much debt and 90
little earning power. and before IN. la
ter may he increased the former must
be decreased" says Mr.. Prince
Mr.. Prince believes however. that ''
does not spell receivership ror 80. pro.
ery and seems confident 'hl' SOM.
means wifi he arrived az 20 avoid wig
would be n permanent e'rimer' 'n .'.
the interests concerned. He then GUNS
IN his conclusions:
That the Missouri. Kansas and Ten
system ne~ds the mapping out ~ a 'or-
-truction and hettermeut programs"
order that earnings may Justly H.
present extended pos ton Of the 'pf1
That the present fixed charge ou- =
to he reduced considerably and rI'"'
ketable. mortCageable equity crea'~d
Need Of Available Cash.
THAT the railroad svs'~'n has len
and is In need Of available cash for a'.r-
rent and hettermer' purposes, Wh.'N
would greatly increase the efficiency 80
operating results.
That T. would ha - the hest l'f"-.
ests Of the property and part!oul H.N
noteholders - create IN the very no..
future a substantial m"-'ct crth." '.t'
I'm the property and ais" -tu.'.' ..
surplus IN earnings without wr'.'f
the road 10 work out his 'hros-'
atoms over "A series OF wears
That the ellie. ut management ~
railroad system would 'gs'fN q 'r"'"
sacrifice on the part ~ tho -" s'''.'h