New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-08-23
B. & vi. RAILROAD
GIVES UP AND
GOESBANKRUPT
Receivership Is Asked for
After Directors Despair
of Meeting Debts.

Boston. Aug. 22.-Receivership for
the Boston & Maine Railroad. which
operates in the four northern New Eng
land states and Canada, was asked for
in a bill in equity fled in the United
States District Court here to-day. This
action, in which the Intercontinsntai
Rubber Company, Of New Jersey, which
holds n note Of the road for SOL ,OoO'
appears as the petitioner, was taken
with the consent Of the directors. The
board. which for two years has been
trying TO effect reorganization OF the
system. was in session to-day TO con-
slider its procedure in connection with
siS.5OO.OOO of Indebtedness falling due
on August 81. Most of these obhga-
tions had been extended from time to
time while awaiting the outcome OF
plans for reorganization. After long
meeting the directors decided they had
reached the end Of their rope" in the
words of one of their number, and
issued the following statement through
President J.sH. Hustis:
'In ;he opinion Of the directors oil
the Boston & Maine Railroad it is in
expedient to attempt q further renewal
Of the notes falling due August 81. A
creditors petition for q receiver has
been filed in the United States District
Court, and in due time the Boston &
Maine will file its answer thereto"
Insolvent at High Tide.
The Boston & Names financial
troubles have reached a climax at
time when the road is enjoying the
greatest prosperity in its history.
Earning were never so great, yet the
company, according to its officials, is
without credit sufficient TO discharge
its floating Indebtedness Of s13.5OO,OOO'
This amount has been accommodating
several years, due to inability of tho
road TO pay off its short term notes,
which have been extended as often as
they became due Payment on some Of
these notes has been deferred seven
times.
As there is approximately 100000
cash in the roads treasury and as
further large earnings are immedi-
ately in prospect, the road might care
for its obligations under present con
ditions. in the opinion Of some railroad
experts. But President Hustis and the
Boston & Maine directors, who assert
that present profits are abnormal and
cannot be maintained, have decided
that there is no hope Of permanent SOL
vency save by a readjustment of the
finances. They are supported in this
view by the Public Service Commits
sion, which stated recently that che
present financial structure Of the Bos-
ton & Maine Railroad, with its leased
lines and its disproportionate load cf
fixed charges, has shown its weakness"
Insupportable Fixed Charges.
II was TO obviate these fixed charges
in the form Of rentals of leased lines
at 6. s and 10 per cent on their capital
stock that reorganization was decided
upon some months ago. The plan of
reorganization involved consolidation
with the Boston & Maine of its several
leased roads, with conversion of the
stock of the subsidiary, and into a con-
tingent liability, with preferred rating
in lieu of fixed rentals. The Boston
& Lowell and the Ftchburg railroads
among the leased lines entered actively
into this plan, but the Concord and Mon
treal and Connecticut River roads re-
fused to surrender their present status
as lessees, although offering to accept
scaledown Of rentals. President Hus-
us has stated it was this refusal which
caused the Boston & Names extreme
plight.
The necessity Of Kidding the road Of
some Of its fixed charges was asserted
by Boston & Maine directors in re-
cent statement, which was that the
S$43 ,000,0 900 of capital stock of the Bos-
ton e. Maine was carrying obligations
Of S158,500,00O in various forms, one
third Of the amount being capital stock
Of leased lines on which dividends are
fixed charge on the Boston & Maine.
A Dissenting Voice.
The directors of the road have been
unanimous in their plans for reorgani-
zation, except for the dissenting voice
Of Judge Marcus P. Knowlton, of
Springfield, who is chairman Of the
Federal board Of trustees administer
ing the Boston & Maine stock twned
by the New York, New Haven & Hart
ford Railroad. The legislatures Of
Massachusetts and Maine have author
lied reorganization, but that of New
Hampshire, where the interests of the
Concord & Montreal and Connecticut
River roads are principally located,
failed to pass enabling legislation.
The Boston & Maine Railroad and
its twenty-six leased or controlled sub
salaries operate $500 miles of road
and 1890 miles of track in Maine, Mas
sachusetts. New Hampshire, Vermont,
New York and Canada