St. Paul's Conversion

The conversion of the Chicago, Milwaukee & St. Paul Railway into the Chicago, Milwaukee, St. Paul & Pacific Railroad became a fact last week upon the grudging consent of the Interstate Commerce Commission. Eleven thousand miles of track between Lake Michigan and the Pacific Coast, rolling stock, terminals and other property representing total investments of three quarters of a billion dollars changed hands.

Most of the old road's capitalization was in bonds. All classes of security holders (except the U. S. Government which had loaned the road $55,000,000 and the owners of $182,130,960 especially safe-guarded bonds) lost. But they did not lose everything. Among the debris of the St. Paul's crash lay many a valuable share, which the re-organization managers, whom Jerome J. Hanauer's/- gloved hand directed, fitted together a new pot for gold.

Re-organization benefits: The old St. Paul was obliged to pay, as fixed charges, $21,800,000 each year. The new St. Paul need pay only $13,600,000.

Present earnings are approximately $18,000,000 a year, ample to pay the new fixed charges.

However, after 1930 the new interest payments will total at least $22,807,174. To make up the nearly $5,000,000 difference in charges is not an impossible task for a railroad in a growing country, if properly managed.

/- Partner in Kuhn, Loeb & Company, who with the National City Comapny were the old St. Paul's bankers and hwo remain the new St. Paul's bankers.