Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-02
RAIL MERGER PLAN
AFFECTS TAX SUM
ReadiuStments Under |. C. C.
Proposal Would Total Mil
lions of Dollars.

Taxation establishments affecting
every State in the Union will be neces-
STATED If the Interstate Commerce
Commission plans for railroad CONSOLE
dations go into effect. REIMBURSEMENT of
the final valuations of every class l
railroad in the country will be neces-
sary both as a result of the O'Fallon
road decision OF the United States SUI
preme Court and as a part of the
merging Of the various units into the
Fl systems, as proposed by the Commits
sion. These valuations must be taken
into consideration in the levyin9 of
State and Federal taxes, and, in addi-
ton, the new line-ups of the various
roads Will mean q readjustment of tax
payments as between the different
| States.
Reorganization expenses incident to
the mergers will total hundreds of mil
lions OF dollars. They will necessarily
include an extraordinary amount of ac-
counting, the taking of stocks and in
Ventortes, inspection of equipment, com
pllcated transfers and retransfers Of
STOCK certificates, large legal expenses,
incorporation fees, auditing Of books
and scores Of other expenses. The In
terstate Commerce Commission is al
ready making preparations to meet the
railroads on basis providing the giving
OF due weight" to cost of reproduction
as OF the date of retaliation. Under
the previous system the valuation had
been fiXed through use of the 1914
prices for labor and materials.
The amount Of money involved and
the volume OF accounting necessary
that part of the commissions plan
which provides for the so-called new
Wabash system. In the first place. IL
was made plain at the commission
To-Day that the designation of the sys-
tenn as THE Wabash Is likely to be
misnomer. Under the I. C. C. VAL
uations the Wabash stands third in the
proposed group, being exceeded in value
by the Norfolk & Western and the Sea-
board Air Line. Since Seaboard has
only recently been reorganized anu
Wabash has complicated litigation af-
fecttng $16,000,0 900 in back dividends
on its preferred A stock the Norfolk az
| Western would seem the logical con-
trolling unit Of the system. In addi-
ton the problem is still further COM
plicated by the fact that at the END
OF 1928 the Pennsylvania Railroad, or
the Pennsylvania Co., all of the stock
OF which Is OWNED by the PENNSYLVANIA
Railroad, possessed about $25,000,00U
OF preferred and $4,000, 900 of COM
mon in Norfolk g. Western. At the
same time the Pennsylvania Co. owned
48.S per cent of the Wabash's OUT
standing stock.
Under the old valuations Of the
]. G. G. the aggregate value of the
roads OF the proposed Wabash system
today is 81 ,209, 191 ,344, exclusive OF
trackage rights over other roads, which
cannot be valued in dollars. It is
estimated that the new valuation UNI
der the O'Fallon decision will total APP
proximately $4,000, 900 900. Following
are the valuations of these roads as
signed to the Wabash, which have been
tentatively valued under the 1914 scale:
Western Maryland, ST. ,219,111; Wa
bash, $106,625 900; Wheeling & Lake
Erie, $40, 142, 800: Pittsburgh & West
Virginia, $22,846, 900; New Jersey, In
diana &c Illinois. $245,050; Seaboard
Air Line. $125, 1866 900; Macon, Dublin
& Savannah, $2,20o, 300; Atlantic a.
Yadkin Railway. $3,4o0, 900, and Tampa
Northern. $1,112,464.