New-York tribune., 1922-08-06
Weeds improvements

During the years when it has been
bone OF contention the Denver g.
pio Grande system has suffered from
nndue limitation of expenditures on
maintenance and improvements and is,
therefore. not in first-class condition
eome money must be expended to put
b into its former shape, but the
,uount needed is estimated at widely
divergent figures. In appointing a re-
,sEver, Federal Judge Robert E. Lewis,
s Denver, declared that the protection
Of the public interest through the re-
hsbilitstion of the road would be the
first consideration under the proceed
ings. A start, therefore, is to be made
Ii rectifying this phase Of the situa-
ten.
The way to a reorganization is
tlssrer, perhaps, than since the conflict
epsned, but a chief requirement to
fna solution of the difficulties pre-
pnted, the co-o operation of all interests
eoncerned, is lacking. There is no gain
nying that the situation has been con-
fused and agreement hampered by the
tsarges and recriminations that have
aarked the conflict, the parties to
| shich have at times not hesitated to
ssscend to personalities. The fact that
! Ill three committees interested Joined
b the application for the receivership
Gd that the Western Pacific, apparent
/ b is moderately satisfied with the re-
Hlt, can only be regarded, however, as
reflection of progress along right
(5rsa
The receivership undoubtedly places
| he bondholders for the moment in the
|iseendancy. They are now enabled,
IHita the assurance that the receiver
yill protect their interests temporarily,
to proceed with a plan of reorganiza-
on in which their rights will be fully
recognized. They have the right Of
tOreclosure under the mortgage. but
snother forced sale of the property ap-
psars improbable. The alternatives ex-
st Of reorganization as an independent
system or in connection with some
other railroad, and the present outlook
favors the latter course.
The crux of the tight has centered
about the action of the Western Pacific
Railroad Corporation. Some of the
bonds of the old Western Pacific Rail-
way Company were guaranteed by the
Denver & Rio Grande Railroad Com
pany, and in 1914 interest on these
bonds was defaulted. This provided the
eccasion for series of legal proceed
Hgs, so that in November, 1920, the
pfoperties Of the Denver & Rio Grande
Company were sold under court order
70 satisfy judgment obtained by the
Western Pacific interests. The prop
eitles were sold at the upset price of
lepoQ,OO0, subject to approximately
ll90oO0,o00 in outstanding funded in
aeutedness, to the Denver & Rio
1rande Western Railroad Company, a
s0'poratlon formed in the same month
ey the Western Pacific Railroad Cor
foration, which holds all It's stock, con-
ssting Of 100000 shares of no par
7slue.
Meanwhile, in 1917, a committee had
zen organized under the chairmanship
o. John Henry Hammond, of Brown
ssys nsOs. q Goa to protect the interests of
a0lders Of the old Denver & Rio Grande
Ssst and refunding mortgage per cent
ponos. Many Of those participating in
me nght over the property feel now
ass tnen was the time that action to
ABOUT receivership should have
,noertaken. But that is water
D mas run over the dam, and again
ls doubtful whether effective action
sOuio nave been taken. The bondhoId-
sFs were apathetic to possible enrroach-
ment on their interest and Il ia oniv
recently that they have begun 10
a"aAen si"a TO the meaning Of the situa-
s' s,un' !. e. that their securities will
nav dsse 70 be replaced, the mortgage un-
eea eei winch they are issued disappear
sIu sSs new securities be accepted in ex-
s.s. saen n came the Pueblo food. What
~. e this occupies in the DEVELOPMENT
sa me u. q r. G.'s affairs is coniec-
,ssi' certainly it sxerted an influence
- a. cannot be neglected. Earnings
ss sas property declined and about a
..as ago 1t became apparent that the
@,esest on the adjustment mortgage
p;aa aer cent bonds of the old Denver &
10 Grande system was NOT 70 he Maid
.rts,asa a'ement has been made that the
,,nassE ssssE could have been met if the
S.ss utsures .sures entailed by the flood had
i, - ssoreaa out more thinly in charg-
eiss. .aem against earnings, and that
ss.s FUNDS might have been allo-
,ssss 70 this purpose. But all this
ssrss sSseaes dangerors ground and only
0S,asss 20 becloud The situation. ON
n ser p l, 1921, the default occurred
On ths th'faary / of this year interest
q we nrst and refunding mortgages
aas also defaulted, and on August
solute. '"' mace the default ab-