Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-04-09

net income. His sponsors believe that
he will soon cut down maintenance OF
equipment expenses.
Fast Freight Service.
The Bernet theory of railroading is
to institute fast freight service. To
do this necessitates substitution OF
new and modern locomotives for some
Of those In use on the line.
The total operated first-line track
age Of the Erie system is $500 miles,
with principal termini at the ports of
New York and Buffalo, Cleveland, Day
ton and Chicago.
The Chesapeake & Ohio Railway,
which the Van Sweringens dominate,
has asked the Interstate Commerce
Commission for permission to add 10
its holdings of Erie stocks enough
to assure control. In this connection
the Chesapeake & Ohio received an
option to acquire from the Van Swer-
lngens ,239 shares of Erie COM
mon at S34.5O a share. 22,305 shares
of the second preferred at $43.75 a
share and 23.695 shares of the first
preferred at S45.S75. These prices are
far below the high prices for the week
quoted in the open market.
Moreover, apart from these optioned
holdings, the Chesapeake & Ohio had
bought directly in the open market
huge blocks of the three classes of
Erie stocks. Moreover, at special
meeting of the directors on November
%, 1926, the Chesapeake & Ohio board
authorized o. p. Van Sweringen.
chairman, 'to make such additional
purchases as in his Judgment may be
necessary TO effectuate the plan pro-
posed"
Accordingly, there is reason to
assume that the Chesapeake & Ohio
has further reduced the floating sup
ply Of Erie.
No Dividend In 20 Years.
No class of Erie stock has paid a
dividend in 90 years. There was a
time when Wall Street believed that
Erie common would never pay a
dividend until doomsday. If the
Nickel Plate unification plan, which
the Interstate Commerce Commission
rejected, had gone through. Erie com
mon would have been convertible into
new stock yielding S2.40 a year. Under
the revised Van Sweringen plan.
which has not yet had a formal hear
ing before the Interstate Commerce
Commission, the Erie will not be
leased to a consolidated system, but
will be controlled by another road
the Chesapeake g. Ohio-through stock
control. If the new plan goes through,
the future dividend policy Of the road
will be left open.
Earlier In the week, Erie common
sold for nearly eight times as much
as it commanded at the market place
as late as 1922.
AS of old, Erie is still essentially
speculative. unsuited TO the needs of
the conservative investor in quest of
safety OF principal and assured regu.
larity of Income. But, instead of being
currently run by financial buccaneers.
who ara more interested in the stock
ticker than in transportation perform
aneea, the Erie Is now in the hands Of
the brilliant Van Sweringens and their
ableat lieutenant,
The rise of Erie was a phase of
general strength In railroad stocks, In.
cludinR numerous non-dividend paying
issue of the weaker road. The lure of
merger possibilities has directed specu.
lative attention To the former Cinder.
elias OF the transportation world.
Purchases made on conjectural merger
ifs" rather than on the basis of de.
monstrated earning power. however,
must he regarded as fraught with n
high degree OF risk.