The Washington herald., 1917-10-09
MUST RESTORE
CREDIT TOR. R.
Holland Tells How the New
Haven Systems Stock
Decreased.

N0N~a~a R1L AnaALall4k hAdA R1tASa
OF great prosperity was about to
a bit Of the tieker-tape In his hand.
entered the lunch room. where his
partners were eating luncheon and
exultingly waving the tape said that
at last Reading was all right and that
he was especially glad for those stock
holders Of the company who had re-
mained loyal to II during its time Of
adversely. Mr.. Morgan seemed to care
more for the stockholders than he did
for the prestige which was to be his
because OF successful reorganization.
A similar experience. In its general
features at least. may await Howard
Elliott. For it Is IN great measure due
to the exhaustive labor which Mr..
Elliott has given with intent to solve
the very difficult problem whose
answer would show how to restore the
credit Of the New Haven Railroad
Company. that the proposition has
now been made to the stockholders
that they buy an issue Of forty-fve
million of preferred stock and thereby
furnish the company with the nspney
with which TO liauidate the floating
Indebtedness which for two or three
years has been financed by J. p.
Morgan and Co.. the First National
Bank OF New York. and the National
City Bank in association with Ridder,
! Peabody and Company and Lee Hig-
ginson and Company Of Boston.
Dates Back IS Years.
1t Is not of any consequence now to
explore the history of the gradual ac-
cumulation Of difficulties which at last
have reduced the credit and market
value OF the stock Of the New Haven
Railroad Company from a position
which some years ago matched that
of-any other railroad company to one
which. unless relief Is secured, may,
by and by. cause Il to be deemed the
part Of prudence to apply to the
courts for protection.
Nevertheless, there Is one feature
OF the New Haven present-day situa-
tion which should not be overlooked.
To Il may be traced much OF the pres
ent embarrassment of the New Ha-
ven Twenty-Five years ago the late
Archibald Mcleod. who was then ca
reering sensationaIly with the Read
ing Railroad. attempted to capture
the New Haven system. Mcleod $
purpose was to make New England
an annex of Pennsylvania and subor-
dinate to the Reading Railway Com
psny. In this purpose. or subsequent
TO the gradual development Of Nc
Leod's plan. he was associated with
the late JabeZ A Bostvick, one Of
the influential members Of the Stand
ard Oil party.
1t was to prevent Mcleod from fur
ther advancing his New England
project that the New Haven man
agement stepped in of a sudden and
over night bought the Old Colony
Railroad system, and later secured
controlling interest in the Boston and
Maine.
Mcleod looked to a further expan-
sion bf the Reading Southeriy and
Westerly. In that way he demon
strated his belief that the New Eng
land railroad situation was of national
rather than of local importance. Later,
the New Haven, having saved itself
in association with the Pennsylvania
Railroad Company. he greatly en-
larged the transportation facilities be-
tween New England on the one hand
and Pennsylvania as well as the
Southwest on the other.
Much OF the traff.c OF the New Ha-
ven line represents the movements Of
great industrial commodities from
other parts OF the United States to
the manufacturing centers of New
England. as well as the return Of
commodities manufactured in New
England to other parts of the country.
Today the New Haven and the Penn
sylvania are jointly operating through
passenger trains between Boston and
Washington and by and by this sery-
ice is likely to be increased.
Howard Elliott is one Of those who
have always had great confidence in
the latent strength of the New Ha-
ven railroad system. He devoted this
two and one-half years OF his presi-
deney of the company to the up
building Of the system and also to the
difficulty financing which was neces-
sary to keep the railroad on Its feet,
so to speak, financially. He believes
that all that is needed to restore this
system so that 1t will regain its form
er prestige and high credit will be
careful nursing and a response from
the stockholders to an offer to sell to
them 5000, 900 of preferred stock.
Others Sought Aid.
Other railroad systems in the United
States that have been in trouble have
appealed successfully to their stock
holders. There was a time when the
faith of the stockholders of the Bur-
Hnston system served that great but
than imperiled property so well that
it at last attained position among the
pre-eminently great railroad systems
OF the country.
Although Mr.. Elliott has been much
occupied with his services as a men,
Der Of the Railroad War Council in
he ana aISo
his duties as chairman Of the board OF
the Northern Pacific Railroad. yet he
has, very likely by over-working, per-
fected a proposition which. II accepted
by the stockholders, should serve to
put the New Haven system upon its
feet The company Is in the peculiar
position R possessing property that is
inherently very valuable, such, for in
stance, as stock of the Boston and
Maine Railway, trolley systems and
steamboat lines which have a book
value of nearly sl5l 10000.
These properties must be sold one
day. but II they were offered for sale
now a very large sacrifice would be
involved.
In the future they may be marketed
for approximately the book value. II
that could be done now II would not
be necessary to ask the stockholders
to subscribe to an issue of preferred
stock which. IL sold. will discharge
the floating debt. The problem is a
very interesting one and is being care
fully watched by railway managers
all over the country.
There are factors which differ from.
those which were discovered in other
proSsems that II was necessary to
work out. in order to restore the
credit and prestige of other railroads.
The New Haven railroad has never
before transported commodities in
zmount and in money value such as
has been its experience in the eight
months OF the present calendar year