Evening journal., 1923-01-02
Shore LINES
Will BE SOLD
Pennsylvania R. R. Expect
ed 10 Purchase white
Elephant" Subsidiaries
SHOW DEFICITS
LAST FEW YEARS

Two Of the Pennsylvania Railroad
company's ''whfte-eiephsnt' subsidi.
sries-the Maryland, Delaware and
Virginia and the Baltimore, ehesa-
pssks and Atlantic railroads--srs "a
be sold under foreclosure proceeding.
some time soon. according 10 infor-
nation received in Baltimore hank
ing circles. As there seems 10 be no
other likely bidder and as the Penn
sylvania could not afford TO have
either OF these roads pass into other
hands, It IS generally expected that
the Pennsylvania itself will be the
/ purchaser. This despite the fact that
/ President Samuel Rea has long been
| complaining that they are white
elephants" Both subsidiaries have
/ steadily been going from bad 70
worse under the Pennsylvania's
guardia nship and have no future in
their present status, II IL said. As
parts OF the Pennsylvania system
they are regarded as good feeders"
/ but the cream Of their profits go to
the controlling road. according 10
railroad men.
Directors OF the subsidiaries al
nit that the controlling company Is
working on plans for forsolosing the
mortgages on the two roads, but as
most OF these directors are merely
representatives OF the Pennsylvania'
they refer Inquiries 10 Pennsylvania
officials. II Is known that Pennsyl-
vanla officials have been holding con-
fsrences with the subsidiary direc-
tors on plans for the readjustment OF
the affairs of the two Eastern Shore
roads. i
These conferences have indicated
that there was no likely way out OF
the financial tangle in which the
roads are involved except through
foreclosure Of the mortgage on theI
roads, both OF which are in default
Both the Eastern shore roads have
been getting deeper and deeper IN
the financial mire for the past SIX
wears. The net deficit Of the Mary
land Delaware and Virginia, which
was sara 600 at the end OF 1912 was
Sa,2zs 900 at the end Of 1921 and
the wear just ended will add about
ss0o' 600 more. Its operation deficit
after taxes for IL months OF last year
was s10o.sss. while In the previous
wear il was only ss5,s4S. It's total
denclt after charges IN 1921 was
sa45. 600. 40 the estimate OF a $500
Geo deficit last year Is conservative. /
The Baltimore, Chesapeake and !
Atlantic makes no better showing
relatively. Its dehcit at the end |
az 1915 was ssss,o00, which had |
grown TO Sits, 600 AZ the end OF
isa1. For II months Of last year
n rsported a dshoit after taxes Of
$4,000. as compared with net In |
come the previous year OF Sfo'loe.
Its defcit after fixed charges IN ]
s21 was about $4,000 and this /
wear will probably be nearly twice |
that sum. with such a showing for
Z. period OF six years It has become
that the roads cannot be
maintained much longer as inde-
pendent organizations.
The Maryland. Delaware and Vir-
xinla has a funded debt OF si,eOo'-
GOO in per cent bonds secured by
FIRST mortgage and guaranteed by
the Baltim ore, Chesapeake and At
lantic. Interest on these has been
in default since the February, 1891,
fell due. The Pennsyiva- \
MIA bought $4,000 Of these eou-
pons. when the following August
coupons fell due they also were de-
taulted, and demand was made
upon the Baltimore. Chesapeake
and Atlantic for payment, as guar
antor, but It failed 10 meet IT'S guar
antee and the Pennsylvania refused
10 buy more coupons. No Interest
has been paid since.
The Baltimore, Chesapeake and
Atlantic has a funded debt Of ST.
ESQ. 900 first mortgage per cent
bonds. but when the September
1921. coupons fell due II was I'M
able TO pay them and the Pennsyl-
vania took them up. The March
Of last year were paid by
The company, but the default on
he previous interest payment has
not been made good, and seems un-
likely to be made good. Holding the
unpaid coupons OF both companies,
he Rsnnsylvania thus IS in position
o ask foreclosure.
with complete ownership OF both
he stocks and bonds Of the two
so nearly IN the hands OF
he Pennsylvania or in its control,
could be avoided were It
Tot for the heavy deficits OF both
'oads. To get rid Of the outstand= !
ng debts and at the same time get
,ut OF the way the scattering stock