Freak Finance

Last week, while engineers of the Pennsylvania Railroad proceeded with plans to electrify its trunk lines from New York to Philadelphia (TIME, Nov. 12), lawyers reviewed the intricate financial network across which the Pennsy spins its tracks. Every passenger, dining on a crack New York-Philadelphia train, knows he is eating Pennsy food, sitting on a Pennsy chair, riding in a Pennsy car on Pennsy wheels. But not every passenger knows he is riding over the lines of the United New Jersey Railroad & Canal Co.

Close are the ties which bind Pennsy to United N. J. R. R. In 1871, Pennsy leased the lines for 999 years. It agreed to pay 10% on United N. J. R. R.'s $20,876,800 outstanding capital stock. And dire would be the confusion should Pennsy break this Methuselean lease. Passengers from Philadelphia would climb out at the N. Y.-N. J. state line at Trenton, pray for motor lorries to carry them to Jersey City, whence they might proceed through Pennsy tunnels to Manhattan.

Pennsy officials last week anticipated no such alarming event. Many a railroad sends its passengers over leased lines.* Pennsy would not think of endangering its lease. And the benevolent I. C. C. at Washington would intervene to avert transportational disaster.

Also leased for 999 years to the Pennsy R. R. is the tiny Elmira & Williamsport R. R. Pennsy took the line, in 1914, from the owning Northern Central R. R. Co. Together with 73.49 miles of single track, 0.34 miles of double track, a 999-year lease dating from 1863, the Pennsy acquired one of the freak obligations of railroad finance. For on May 1, 1863, the Elmira & Williamsport R. R. issued $569,500 coupon bonds, in denominations of $500, not callable before date of maturity. That date was fixed at Oct. 1, 2862, just seven months less than 1,000 years distant. When the bonds mature, the E. & M. or owning roads will have paid interest charges of some $14,237,500.

Railroad securities specialists have pondered many another example of freak financing. Wisconsin's Green Bay & Western R. R. (G. B. & W., unjustly parodied: "Grab Bag & Walk") issued Debenture B bonds which rank after the company's common stock. Authorized common stock of the Canadian National R. R. Co. totals $180,424,327.70. It is represented by one certificate, made out in the name of His Majesty, George V of England.

* N. Y. Central's entry into Manhattan is over the N. Y. & Harlem R. R.