New-York tribune., 1921-05-08

ization COMMITTEES was at last forced
to accept.
The engineers report on the aban-
donment of the Evansville g. Indian
apolis and Chicago e. Indiana is also
| conclusive 20 cur mind.
Next comes the question Of the treat
ment of different classes of security
holders. Besides receivers certifi-
| Gates, equipment trust certificates and
loans from the government, which were
prior to everything else, there were
| two first mortgages; The Chicago &
Eastern Illinois flrst consolidated Q per
cent mortgage and the Eyansville g.
Terre Haute first consolidated per
cent mortgage, besides some small is-
sues. The Chicago Eastern Illinois
first consolidated mortgage had $2.-
10000 bonds outstanding under it, and
these were undisturbed. The Evans
vile g. Terre Haute first consolidated
had s3,0o0,0o0 bonds outstanding,
| which are due July !, 1921, and will be
paid off.
On the Chicago & Eastern Illinois
frat mortgage coming next to the first
consolidated mortgage, and on the
Evansville G. Terre Haute there was q
first general mortgage coming next to
the consolidated mortgage, The hold
ers of these two issues--the G. *. E. |.
general consolidated and tho e. e. T.
II. first general--were offered Sl,162
new general mortgage 5s and $500 new
preferred and about S164 cash. This,
in our opinion, was not more than the
mortgage security Of the bonds and the
unpaid interest deserved,
Junior to these two issues were 6
a. i
mortgage, and E. q T. ri. refunding
these classes of bonds were given par
for par new preferred stock. This is
rather drastic, but not more SO than
the case required, in cur opinion,
Holders of preferred and common
stock were treated alike, Each was
required to pay an assessment Of $50
for each 800 share of stock held, On
payment of this $50 the stockholder re-
ceived $40 face value of new general
mortgage bonds, and $100 par value of
new stock,
eiAcaliy about the payment of the as
sessment, we presume that to the hold
ers of common and preferred stock of
the old company the most important
question in regard to the reorganiza-
tion is as TO whether they should pay
their assessments. This is, in the first
place, personal question. We do
not ordinarily advise the purchase for
investment of common stock in a rail-
road company. The present case in
wolves, however, something more than
the purchase of common stock. 1t is
the purchase at face value of general
mortgage bonds of the new company,
with the added inducer'ent of what
amounts to bonus of common stock.
1t is not an investment that we would
advise for woman. On the other
hand, 1T is semi-specuiative invest
ment which we consider good The
Chicago g. Eastern Illinois, freed of its
two coal lines, ought to earn its inter
est charges twice over. The property
has been greatly improved by the re-
eeiver and, SO far as can be judged by
careful study of the report of the
engineers, it is in good condition, and
1t has sufficient equipment to operate
economically.
The property is one capable of eco
nomical operation. 1t gets a fairly
long haul on it's coal, which can be
moved in solid trainloads, and its
grades and the locomotives which the
receiver acquired permit it to move
heavy trainIoads.
In 1920 the gross weight of the
merchandise, averaged 1,476 tons, and
the average number of tons OF revenue
freight train was I'll tons. Prior
TO the last rate increase it was possible
to haul coal profitably if a rate Of be-
tween three and four mills ton a mile
could be obtained, and with the last rate
increase and q rate increase on coal al
lowed in 1917 the Chicago & Eastern
Illinois can, it is thought, get more
| \. -
ton mile for all freight, including
merchandise, was something less than
one cent 1t is higher than that now,
With net earnings of $4,000 900 the
| company would have apprcxim ately
8 per cent on its new preferred stock,
and between 8 and 4 per cent on it's
new common stock. With a larger
! coal business these percentages would
considerably increase.