Evening star., 1931-12-03
CREDIT STRAIN ON RAILROADS
SHOWN IN WABASH HRECEIVERSFIIP
Heavy Shrinkage in Revenues Has Made 1t
Difficult for Carrier to Obtain
Banking Accommodations.

of the weak roads TO make applica-
tion for portion of the pooled funds
derived from the proposed freight rate
increase, which the Interstate Com
merce Commission is now considering.
Its status with reference to these funds
Is believed to have been changed by
the fact that it Is now in receivership.
During the past weeks, when rumors as
to Wabash credit were in circulation. it
was commonly stated that the Pennsyl-
vania Railroad would probably help its
subsidiary In its distress. The policy
OF the Pennsylvania management, how
ever, in the crisis was that, in view of
its existing investment in the Wabash,
it did not feel disposed to add to it.
Pennsylvania Co., which is controlled
! by the Pennsylvania Railroad. pur-
| chased an interest in the Wabash
| amounting to about 40 per cent of its
voting power. 1t Is understood that
the Pennsylvania paid about s71
share for Wabash common. selling yes
terday at 81 share, and above 800
a share for the preferred "a" stock,
now quoted at about 50 a share. The
depreciation on this investment amounts
to between $50000.o00 and s55, 600, 900.
A year ago the Interstate Commerce
Commission ordered the PENNSYLVANIA
Railroad and its subsidiary. Pennsyl-
Vania Co.. to divest themselves of all
direct or indirect control of both the
Wabash and OF the Lehigh Valley. 1t
might have been possible for the Penn
sylvania then to have done this and
preserved fair portion of the capital
Invested in the Wabash. 1t preferred.
however to dissent and to seek a court
decision.
i. c. G. Merger Plan.
In the Interstate Comm cree Commits
sion'S consolidation plan of a few years
ago the Wabash was to have been the
principal unit in a fifth Eastern sys-
tenn projected by that body. It's chief
associate was to be the Seaboard Air
Line. Connected with them was to be
the Norfolk & Western Of which the
PENNSYLVANIA Railroad holds a majority
of stock interest. This fifth system
never appealed to railroad men or to
the. investing public, and officially 1t
was abandoned. The receivership of
the Seaboard Air Line about year ago
destroyed some Of its original justifica-
ton. This week a group headed by
former Interstate Commerce Commits
sioner Frederick I. Cox announced that
1T proposed to reopen the case for the
nth system. Apparently they had no
knowledge at the time of the pending
IlhIuptCy Oh Tue WABASH.
The Lehigh Valley. which was linked
with tie Wabash financially and as
traffic ally, is to go to the Van Swerin-
gen system under the terms of the four
party merger plan agreed to a year ago
and now before the Interstate Com
merce Commission for Authorization.
One distressing phase of the Wabash
receivership Is the terrific shrinkage
that has taken place in the junior bonds
OF the railroad, which were made legal
for savings banks in New York State
two years ago. The refunding and gen.
eral SIS, brought out in March, 1890, at
10012, sold today at 1S, with the best
bid at one time $50 for $1,000 >ond.
The road has about S34, 900, 900 of first
mortgage SIS and $13,933, 900 of second
mortgage SIS. The refunding and gen.
eral mortgage. which is split I'D into
four series, with coupons ranging from
512 to Az per cent, amounts to ap-
proximately s50,o0o,o ,o00 The problem
OF reorganization will be in this group.
which represents the adjustments made
by bondholders of the company that
previously went into receivership.
tCopyright. 1917