The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-08-07
Trends
MOP Reorganization
No Job for the
UnambitiOuS.
by VINCENT LYONS
Time. Financial Editor

MO one viii envy the Interstate
~ Commerce Commission its
latest Job Of passing upon the pro-
posed reorganization Of the Mis-
souri, Pacific Railroad Directly
concerned with the ultimate solu-
ton OF the program are 80 issues
NJ miscellaneous types OF indebted
ness and 3a types Of stockholders.
Under A proposed plan, which the
ice Is now Studying. 1t is the aim
10 consolidate these 1l6 groups Of
creditors and partners into five di-
visions. Trying to reconcile all
these varied interests and make
them like 1t is a task that would
appeal 10 few
The whole situation will afford
an excellent chance TO see whether
any changes from the past record
Of railroad reorganizations will be
effected. Il has been disclosed
that in recent years reorganization
bankers have skinned al the
cream and left little milk FOR the
smaller fry.
J. P. Morgan & Co. are very
much concerned with any arrange
ments made for o. P. and NJ. J.
Van Sweringen, Cleveland's rail-
road magnates and nominal die
fatOrs Of the Missouri Pacific, are
IN hook 10 them The United
states government also has
a finger in the pie by virtue Of re-
suscitating loans which it has ex-
tended through the Reconstruction
Finance Corp In addition, A realm
of insurance companies and saw
ings institutions have investments
in the miscellaneous securities and
are eager to reap the most out Of
them.
-
THE House OF Morgan already
L has found itself in an en-
barrassing position in connection
with the controversy The revamp-
ing plan was submitted to the ICC
by o. P. Van Sweringen and it is
generally believed that its contents
were read thoroughly by the in
ternational banking house before
the document was sent on its way.
But. however. a partner in the firm
finds himself in the difficult role Of
being a member Of a committee of
bondhOlders which has gone on
record as being opposed to the re-
organization plan.
The House of MOrgsn's grip on
the Missouri Pacific as a. result of
loans is so tight that the firm
has several avenues of recourse.
In fact. the miscellaneous influ-
Cnces are so out of line with or
binary occurrences that j. P Nor
gan 81 Co. find themselves at one
and the same time controlling the
road and being a preferred creditor.
This unusual situation results
from the fact that the banking
firm holds stock control of the AL
leghany Corp. holding unit of the
Van SWeringenS. This stock was
acquired as collateral for a S48,-
100000 loan which is now in de-
fault. The Allegheny Corp. in
turn. controls the Missouri Pa
Cific Railroad. Thus. Morgan and
not the Van Sweringens now
dominate the MOP. The final
touch by which the banking group
finds itself a creditor of itself, in
effect. is tina. it has outstanding a
S5.S00,O00 loan TO the Missouri Pa
cihc.
FINDER the reorganization plan
- submitted by o. P. Van Swer-
ingen it will be noticed that the
Allegheny Corps. control Of the
Missouri Pacific Railroad is re-
duced from 90 to about 40 per cent.
Even at the reduced figure the
Morgan firm would have virtual
control of the carrier BondholderS.
OF course, have seen the point and
are opposing the plan on the
grounds that the control should be
pared all the way down to approx
mately Is per cent.
It can be seen that the House OF
Morgan undoubtedly will fight the
bondholders on this point as the
Allegheny Corp. stock is the only
thing in back of the s48.000.000
loan it has outstanding with the
Van Sweringens. Reduction of the
holding company'S equity in the
railroad would seriously disturb
the character Of the imposing loan.
J. p Morgan e. Co.'S individual
status as a creditor of the Mis-
souri, Pacific Railroad gives the firm
4 second talking point. Reorgani-
zation laws are such that the Nor
gan outfit as a creditor can pre-
vent any reorganization plan which
il feels IS not suitable. The entire
mix-up will be given a thorough
airing within a short time when
the ICC holds public hearings at
which time all parties TO the re-
organization will be allowed to
how, fhnf~ CIV