New-York tribune., 1921-05-08

AHuAa1ApoilS Rallfoad.
Prior to 1913 the Chicago & Eastern
illinois was leased TO the ST. Louis &
San francisco for rental which was
equal approximately to 10 par cent on
the company's common stock. When
the st. Louis Il San Francisco went
into reeeivership the Chicago 4 East
ern Illinois followed. The Sc. Louis &
San Francisco owned all of the c. Il Il.
!. common stock. and from 1904 to 1918
ll,aO0,0o0 was paid out by the C. g.
4. !, In dividends,
When the receiver took charge of tbs
property he found that there was ap-
proximateiy S1o,0o0,o0o of deferred
allowed to wear out, ties had not been
! renewed, and Of the AL locomotives
owned 100 were in bad condition and
eighteen were condemned. Of the e,543
freight cars owned 2a.4 per cent were
in had order.
The Frisco had acquired control of
the G. g. f. I. through the exchange Of
trust certificates for c. G. e. l. common
and preferred stock. n the frisco re-
organization this c. s L. l. stock was
given back to the holders of the trust
certificates.
Besides the C. q I. and the E. q l..
railroads the c. & e. I. owned about
twenty coal mines. A question that is
frequently asked about the Chicago
Il Eastern Illinois is, why a road
which for years has paid dividends and
which had been considered rich coal
road. should suddenly fnd itself unable
TO meet even it's interest charge.
The reorganization is based on a re-
port made by Coverdale & Colpitts, con-
sulting engineers. The facts brought
out by the report are that during the
years 1904 60 1913 the road had not
earned it's dividend, but had been liv-
ing on itself
The first problem that faced the re-
ceiver was to raise enough cash to
make up nearly s10,000,00o of the de-
layed maintenance and to cut off un-
that the Chicago & Indiana Coal and
the Evansville g. Indianapolis cost
more to operate and to carry-that is,
to pay the interest charges on-than
they brought in in revenue to the Chi
cago & Eastern Illinois.
The cash required for reorganization
was s16.l10,a7o. OF this $s,oo0,ooo
was to pay off receivers certificates
and s4,000,0o0 was for interest not
paid during receivership. The CON
sulting engineers we're asked to pass
on the question of whether the Chicago
& Eastern Illinois should hold onto
it's Chicago & Indiana coal road, it's
Evansville & Indianapolis and its
that the two railroads be abandoned,
but that the twenty coal mines be re-
tanned. At that time, however, there
was strong public opinion against
railroad companies owning coal lands,
and it was decided that the receiver
should sell the twenty coal properties,
not even retaining a coal property for
fuel.
There is some difference of opinion
as to the wisdom of this move. The
coal properties proved very valuable
to their new owners during the war,
but are not now so prosperous. On
the other hand, it has been found that
there are considerable advantages in
buying fuel coal for the railroads
from mines located along the line.
Probably the Chicago e. Eastern Ilh-
nois's relations with the coal shippers
on it's lines are better now than they
were when it owned the twenty coal
mines. IL has some reserve coal lands
not now being worked.
The reorganization reduced fixed
CHARGES iTpih Eo,foSspCos iHG IHISFSSL
en- the old company's funded debt, to
s2,327 051, the interest on the securi-
ties of the new company, This, we
think, was sound and not too drastic.
The financial structure Of the Chi
cage & Eastern Illinois was not par
tisularly complicated.
The first and most important point
of discussion in undertaking the reor-
ganization was the amount of cash
that had to be raised and the extent
| to which interest charges had to be
reduced. 1t was difficfault for the
bankers and representatives of the Sc.
curity holders to believe that it was
necessary for the receiver to spend as
much as he did spend. In cur opinion
however, the engineers report on this
point is conclusive. Without a com,
! plete physical rehabilitation of the
property, financial reorganization
could have been but stop-gap. This
was the conclusion that the reorgan