The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1936-02-29
STREET QUERIES
REVISION MOTIVE
BY COTTON BELT
Rise in Earnings at Time of
Bankruptcy Held
Strange.
BY CHARLES III. HUFF
Times Special Writer

Times Special writer
NEW YORK, Feb. 29.-In a wave
of post-mortem analysis, which has
in it flavor of wonderment, some
bond market circles which identify
themselves especially with the rail-
road group have developed large
question mark concerning the st.
Louis Southwestern Railway Co.
The question, which is being specif-
ically phrased, and with some
vehemence in some quarters, asks
why the road was permitted to fall
under the 77B reorganization ban
ner as late as last December when,
as revealed in reports now at hand,
the carrier was on the high road
to recovery.
The point most greatly empna-
sized in this aftermath of critical
surprise is that the Cotton Belt"
apparently was abandoned at a
time when it had turned the corner
and was making the best showing
in earnings since 1881.
No one disputes that the road
was confronted with financial obi
cations it could not at the moment
discharge, in which category as of
last December the Cotton Belt" did
not exactly stand alone among the
country's carriers. But it is men
toned that the major portion of
such obligations was represented by
debt to the RFC and the Railroad
Credit Corp, which agencies have
not particularly pressed roads which
were developing recuperative pow
ers. Immediate obligations to those
agencies amounted to $19,874, $50,
alongside $4,5OO,o0O of bank debt
and only 1884, 632 in funded debt in
tereSt.
Fixed Charges Covered.
From reports now available it is
discovered that the Cotton Belt"
more than covered fixed charge re-
quirements in October, November
and December.
With the aid of those three
healthy months, after unfavorable
results from April to September,
the road was able to bring the years
total income up to Sc per cent of
fixed charges. 1t is necessary to go
back to 1881 to find a better record,
when the year produced 81 per cent
coverage. In 1882 there was an
operating loss, and coverage
amounted to 81 per cent in 1888
and sc per cent in 1884.
The stride toward full recovery
achieved during the latter part of
1885 is Illustrated by an increase
in carloadings of 249 per cent in
November and a 29.1 per cent jump
in December. 1t was while those
results were being accomplished
that the reorganization petition was
filed on Dec. II and procedure au-
thorized by the Federal Court at
the beginning of this year. The
court has ordered that the reorgan-
ization plan be filed by next July /.
Bonds Display Firmness
The principal bond issues of the
Cotton Belt" have been notably
firm since the reorganization pro-
ceedings were begun. The roads
first as of 1889 are around the
1885 high, above SO, on the New
York Stock Exchange, having reg
istered recent advances. The Sec
ond As of 1889 also are near the
two years high mark in the middle
sixties.
The road is virtually Southern
Pacific accessory through 81 per
cent stock ownership. On earlier
occasions the South Pacific guaran-
teed RFC loans to the Cotton
Belt" Aside from RFC loans and
bank debt, the road has maintained
fairly favorable current position.
Advised tradings observers report
that this weeks setback in railroad
bonds reflects the result of over
extension in street speculation,
without attendant disturbance in
the undertone and generally con-
structive outlook for the earlier