Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-11
RAILROAD MERGER
TERMS DISCUSSED
Wall Street Anxious to De-
termine Basis of Exchanges
in Combine.
Dispatch to The Star.

Special Dispatch TO The Star.
NEW YORK, January 10.-While It
Is conceded that 1t may be a year or
more before the Eastern railroads are
given permission to consolidate on the
basis recently outlined, Wall Street Is
already specializing on the terms of
exchange and the guarantees that may
be arranged between the four major
systems and the independent lines
which are to be absorbed under the
existing agreement.
This Is the second phase of the
merger development, which has all
ready influenced heavy buying Of rail-
road shares and advanced their average
to level considerably above that on
December 90 and above the low average
for last year, reached on December IT.
Question of Financing.
Bankers for the Eastern carriers
have so far given only academic con-
sideration to the question of financing
involved in the consolidation. They
believe there will be plenty of time to
think this matter over, for they see
ahead months of delay before authority
to merge is granted by the Interstate
Commerce Commission and Congress
gives its consent. IF and when" the
merger goes into effect, control of In
dependent lines will be arranged
through exchanges Of stocks rather
than by the issuance Of bonds.
The statistical picture of the four
systems, as they will appear under the
new plan as prepared by Representative
Parker, chairman Of the Interstate
Commerce Committee of the House, in
dicates the relatively small mileage in
volved in the reallocation of roads in
the Eastern territory. Consequently,
the element of financing in connection
with proposition that concerns $4,000
miles Of line and property investment
of nearly $4,000, 900 900 Is not as i'm
portant as at first appears. In the
"set-up" that has been made by Mr..
Parker, the roads to be acquired by
the Pennsylvania, New York Central,
Baltimore & Ohio and Chesapeake g.
Ohio-Nickel Plate systems aggregate
less than 80 per cent of the total
mileage represented in the completed
systems.
New Mileage.
A high proportion, however, of the
roads to be acquired is already in the
possession of the four systems through
stock ownership. For instance, the
new mileage of the Baltimore & Ohio
is given as S, 1855 miles. It includes that
of the Buffalo Rochester & Pittsburgh
and the Buffalo & Susquehanna, both
roads now owned by the Baltimore g.
Ohio; of the Western Maryland, In
which the Baltimore g. Ohio has
controlling interest; of the Chicago &
Alton, which it has recently purchased
and whose authority to hold was again
sustained by the court Thursday; and
the Readin, in which the Baltimore g.
Ohio has 40 per cent stock interest.
Out of the total miles to be acquired,
only about 10 per cent represent mile
age of properties in which the Balti-
more & Ohio has at present no fnan-
cial concern.
In the Chesapeake & Ohio-Nickel
Plate system as proposed, 3,047 addi-
tional miles are to be acquired. In this
case high percentage will be subject
to negotiations between the Van Swer-
1ngen interests and those who now hold
control OF the BeSsemer & Lake Erie,
the Wheeling & Lake Erie and the
Lehigh Valley. 1t is understood the
Nickel Plate management sometime
ago completed arrangements for pos
session Of the Chicago & Eastern Illi-
nois.
Addition to PennsyIvania.
To the present Pennsylvania system
of 1,285 miles are to be added 1888
miles of lines claSsed as those Ito be
acquired" and represented by the De-
troit, Toledo & Ironton, the Wabash
and the Norfolk & Western. In these
three roads the Pennsylvania, either
directly or through subsidiaries, now
holds the major interest The only
addition to the New York Central sys-
tenn of any Importance Is that of the
Delaware, Lackawanna & Western,
about 1000 miles of line, In which the
New York Central has q minority in
terest directly through purchases by a
subsidiary company and where the ma
Jortty holdings of the stock are in hands
entirely friendly to the Vanderbilt road.
In brief, the major financing in con-
nection with the merger when 1t is
finally approved will only involve the
purchase of the New York Central
holdings in the Reading by the Balti-
more & Ohio, such agreement as the
Pennsylvania and the Chesapeake &
Ohio-Nickel Plate interests may make
over the Lehigh Valley, and the neces-
sary increase by the New York Central
In the percentage Of its stock owner
ship in the Lackawanna. Obviously.
most OF these arrangements will be
made through private negotiations.
The nature of them, however, may from
time to time be suggested in the move
mentS OF the shares of carriers to be
acquired.
Copyright, 1917
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