The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-05
BURLINGTON WILL
SPLIT S2OO,OOO,OOO
Equal Distribution TO North
ern Pacific and Great North
ern Proposed.
FILES PLAN WITH L. G. G.
Merger of Hill Railroads I'M
der Transportation Act of
1920 Is RumOr.
FILES PLAN WITH /. G. G.

The Chicago Burlington and Quincy
than $200,000,000 is to be capitalized
and the stock distributed equally to the
Northern> Pacific and the Great northern
Railway companies, according to infer
nation obtained yesterday in Wall
Street The capitalization Of that huge
surplus requires the consent OF the Inter-
state Commerce Commission, and it is
understood that the application was filed
in Washington yesterday or will be fled
to-day.
The purpose of the application, which
/ in some respects is similar to that OF the
| Delaware, Laclxawanna and Western
Railroad Company. is TO bring the cap
/ itaIization more closely in line with the
company's invested capital. Burlington
has been engaged for twenty years or
more in ploughing earnings back into It's
property. Consequently the Burlington
is undercapitalized. It's road and equip
! ment. less depreciation reserve and IN
vestments in affiliated companies, aggre-
eating $4S6,000, 000,. while It's total STOCK
and funded debt aggregate only S2IS,-
| 600, 600.
Another purpose for the proposed IN
crease in capitalization is to satisfy the
I need Of more collateral in connection
with the refunding Of S215.227,o0V OF
Burlington joint As. which mature on,
July /, 1921 The Northern Pacific ana
the Great Northern, each receiving
I s1OO. 100000 OF new Burlington fstock'
I would be able to put 500 of stock De
hind each new 500 bond, and the finan-
cial obligation in connection with the re-
| funding of the maturity would De easy
to solve -
| Although the issue of new stock by
the Burlington, provided the consent OIL
the Interstate Commerce Commission De
! obtained undoubtedly would be pledged
| at least so far as the Northern Paclllc
and Great Northern's share in the au-
! ditional stock would DO concerhe" 10
| secure the new joint bonds of those COM
nanies which would be put out to refund
| tho issue that natures in next July, II
was pointed out yesterday in wall
/ street that Burlington could pay
! easily 8 per cent in dividends on the old
and new stocks combined. thus increas-
| ing the earnings of Northern PACING ana
Great Northern, provided that the new
| issue could be put out OH basis DeloW
! 8 per cent.
Investment accumulation OF Great
Northern and of Northern Pacific was
noted in Wall Street yesterday In con-
nection with the advance in both issues,
n,t the actual benefit to Great Northern
and Northern Pacific cannot be deter
mined until the commission shall have
approved the application and the re-
| funding operation shall have been COM
pleted. The company's lawyers believe
that the Interstate Commerce Commits
sion will be able to find no just ground
for refusing to approve the application
for Capitalization Of moneys expended
| In the development Of the property. ana
it's records will show how much OF
earnings undistrfbuted to stockholders
has been expended annually on the de-
velopment of. the road and property.
The reports OF the company since 1911
show more than S60.000,000 expended
and uncapitalized. and THE NEW York
| HERALD is informed that the total
amount so expended much exceeds $780,
900. 900.
Based on the standard return the
Burlington had surplus after divi-
dends of s14,675,34 IN 1919. and S1S,-
925. 372 in 1913. The following table
shows appropriations for betterments
from surplus income and uncapitalized
since 1911 as follows: