Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-12-27
DECISION COMING
IN NEW c. & 0. PLAN
Van Sweringens Stand to
Win Either Way the
Cat Jumps.
IN j. c. ROYAL.
Special Dispatch to The Star.

BN j. c. ROYAL.
Special Dispatch to The Star.
NEW YORK, December e7.-Mem,
hers of the Interstate Commerce Com
mission are expected to reach a de-
cision early in the New Year on the
Van Sweringen proposal to have the
Chesapeake & Ohio Railroad acquire
stock control of the Erie and the
Pere Marquette systems.
This decision will have widespread
effect on shippers. railroads. travel
ers, business me and investors from
one end of the United States to the
other. since it will determine ques-
tinns Of vital Importance in the rail
road world. 1t Will indicate. for eN.
ample. whether the commission in,
tends to so ahead and act on rali.
road consolidation plans or whether
ii intends TO delay until Congress
has amended the transportation law.
1t also will determine whether the
commission will approve the forma-
ton Of a fourth great railroad system
in the East which Will come into
competition with the New York Cen
tral. the Pennsylvania and the Balll-
more & Ohio The decision alos Will
vors a four-party plan involving those
roads with the Van Sweringen system
such as now il under discussion by
the railroad managers themselves. or
whether il will favor fiEe-partE
plan which Will include the mergers
proposed by President l.. +. Loree OF
the Delaware & Hudson.
Dozen Plans in Contemplation.
There now are A dozen merger plans
In contemplation which await mercy
the Qualification of the stand of the
commission before they are announced
formally 1t became known TO-DAY
that Director Mahaffie of the Inter.
state Commerce Commissions bureau
of finance has completed his report
and recommendation on the Van
Sweringen proposal. The Commission
ers already have had one conference
on tire report. and u decision IS antlci-
patei before the first week OF the
New Year has passed.
The most amazing thing about the
Van Swerirgen proposal, accordlng 10
railroad men. is that the interests
urging the plan would make AT least
Sin.0A0. 600 more money If the COM
mission rejected il than if il were
approved. In fact. proponents Of the
plan say that the only parties inter-
ton is the minority group which has
been opposing its adoption. II the
commission rejects the proposal, the
Van Sweringen interests themselves
will come into profit of more than
SIC. 600 600.
Worth Nearly Twice as Much.
The Van Sweringen holdings of
Erie 4 Pere Marquette stock were OPP.
toned 10 the Chesapeake & Ohio be-
fore the rising market OF the last u
months. and, although the options ran
for short terms, they have been re-
newed 10 await the decision of the
commission Should the commission
reject the proposal. the Van Swerin-
gems will have handed back TO them
railroad shares worth nearly twice as
much as when they optioned them OF
10 the Chesa peake q Ohio. Al the
same time, if the commission should
pproye the plan and permit the Ches-
apeake & Ohio 10 buy the stocks. all
the stockholders Of the Chesapeake &
Ohio ma 5ority and minority alike will
find themselves in possession of stocks
worth, at the present market, almost
twice as much as they were when the
negotiations began.
As majority holders Of Chesapeake
It Ohio. the Van Sweringens would
find some profit in that event. but not
as great a one as IL the plan were
rejected altogether. Thus they stand
to benefit as stockholders If the plan
is approved, but they stand to profit
more as individuals IL it is rejected.
Close students of the merger s!tua.
ton in general do not consider that
the terms on which ii in proposed 70
have the Chesapeake IL Ohio buy the
Mf@1 u.
in swaying the decision Of the commits
sion. The decision, il is felt, hinges
more on whether the transportation
system proposed is in the public in
J feresf from transportation view
point. The terms by which the Chesa-
peake e. Ohio would acquire the Erie
and the Pere Marquette stocks are so
much below the current market prices
for those securities that little opposi-
ton il anticipated In that respect.
Win Either Way.
The railroad world lis Specializing
extensively as 10 what might be done
with the large blocks Of Erie and Pere
Marquette stock which The Cnesa pea Ike
d. Ohio bought In the open market If
the commission indicated thai Il did
not wish the Chesa peake II Ohio 70
hold IL. Minority stockholders. inciu6.
ing the opposition party, doubtless
would object 70 giving Up profits al.
ready IN hand on those stocks. Possibly
the Erie stocks might be taken over
by the chegs peske Corporation, which
could In turn reimburse The stock.
holders ~ the Che8a peskc A. Ohio. or
the stocks might he distributed to
Chess peske * Ohio stockholders
directly.
However, no plan with regard 10
these holdings would affect the abxo
lutte control of the Erie by The Van
Ewer7ngen Interests. These Interests
own In person the control u the rail-
roads involved and they are not De
pendent on profits of OTTER share.
holders. Consequently. even II the
present plan !s rejected By The corn.
mission, the Van EHeringen grosgo
still In In possession ~ the three ros6 If
The group then viii be- faced with The
problem ~ finding some other WAY
~ bringing is system foge' her which
will meet the approval of ire roy1.