The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1931-02-05
new YORK CENTRAL
AND BALTIMORE TO
BLAZE new TRAILS
New Financing Systems Will
Enable More Investors to
Share Earnings
ECONOMY CHANGES NEEDED
Competition Through Air and
Under Ground Grows by
Leaps and Bounds
ECONOMY CHANGES NEEDED
Nv FREDERIC J. HASKIN

current or the bOurSeS OF the country
10 the effect that important new fl
nancing soon will be announced by
the New York Central Railroad and
the Baltimore and Ohio railroad
bring UP the whole question OF what
changes are to take place in the
railroad world in the next year or
two. In all probability, new financ-
ing will not be confined to these two
major trunk lines but will be required
by n larger number of systems.
This will mean that the investors
of the nation will have a fresh OPP
portunity to participate in the earn
ingS of the rail carriers and, from
that public point of view, a glance at
the general position of the railroads
should prove beneficial.
1t will be noted that both the rail-
roads mentioned specifically are
among the four systems which have
agreed upon consolidation plans re-
ceiving the sanction of the Interstate
Commerce commission. The other
two are the Pennsylvania System and
the Nickel Plate system.
For years these railroads have been
working on plans for consolidation
with or absorption of other lines. The
task has been a major one as not
only did it require the acquiescence
of stockholders but of the govern
ment. The plan provides that each
of these four great trunk lines alb
sorb other lines which heretofore
have operated independently. The
result is that instead Of cores of
separate lines operating in the ter
ritory which may be roughly de-
scribed as east Of the Missis-
sippi and north OF the Ohio and
Potomac rivers, there will be but four
great systems. All will be in compe-
tition and at the same time will fur
nish the almost numberless stations
they touch better carrier service.
Large economies in operation are
expected from the new lineup but,
nevertheless. the railroad situation in
the United States is such that fresh
funds are almost certain to be re-
uuired. After the new financing has
been accomplished and improvement
and betterments made, it is antic-
ipated that the lines will return rev.
enues adequate to pay a fair return
on the total investment.
Remaking Railroad Map
Not only will these new systems
likely require some refinancing but
those in the south and west would
appear to be in line for replenish-
ment of funds. Roads in those terri
tories. too. have been at work on con-
solidation plans and, now that the
eastern systems have been success
full in reaching a solution of their
problem, it is anticipated that o
rapid progress will be made in other
territories. 1t will mean a complete
remaking of the American railway
map.
The reasons which impel a new
alignment and suggest a general re-
vamping of security issues through
new issues and refundings, freeing
capital of fresh uses, are profound.
The railroads of the nation -.ave
been receiving an increasing amount
of competition from two sources, the
one visible and the other invisible.
The diversion of much business to
bus and truck lines and to the gov
ernment-built barge lines is obvious.
Anyone may see the crowded buses
and the laden trucks on every high
way. The use of this type of trans
portation constantly Is being ex-
tended.
But there is another and invisible
form of competition which is OF equal
Importance.
Through the air and beneath the
surface of the earth are means OF
transportation which have diverted
an immense tonnage from the rail-
roads and, thereby, deprived them of
enormous revenues.
Through the air, strung on poles,
extend electric power transmission
lines. The growth of developed water
power and fuel-generated power into
electrical energy has increased with
amazing celebrity during the last few
wears. There are thousands OF miles
of these power transmission lines,
bearing that invisible force which is
capable of turning any wheel.
Here is where the competition with
the railroads comes in. The power,
now furnished by these transmission
lines, c had to be generated by
coal. This coal required shipment by
railroad often over long distances.
Relatively low rates on this heavy
commodity prevailed yet in the ag-
gregate a large revenue was derived.
Each year sees a greater substitution
OF electrical energy. transmitted over
taa wires. Tor coal in the factories OF
the nation.
Oil Pumped, Not Hauled
Now Ter the subterranean compe-
tition. Beneath the surface Of the
earth there now extend thousands of
miles Of pipe lines. Every year the
oil companies add to their systems.
Pipe lines run beneath the ground
all the way from the Kansas and Ok
lahoma fields to terminals on the
eastern seaboard. They extend from
the Texa. fields hundreds Of miles to
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