One More Expedient

Carloadings fortnight ago rose to 620,511, some 20% under a year ago, yet a new high for 1938. But signs of increasing revenue--like hopes for lower wage costs (see above)--are only details in the sorry railroad picture; last week bonded indebtedness still cast its shadow. Prime example of a railroad staggering under top-heavy debts is 111-year-old Baltimore & Ohio, fifth largest U. S. railroad (in revenue). The line has some $685,000,000 in fixed indebtedness, on which it has had to pay over $31,000,000 in interest annually. B. & O. lost $720,695 last year, $11,741,308 in the first half of this year. In January. B. & O.'s shrewd old President Daniel Willard got an $8,233,000 loan through his good friend, RFC Chairman Jesse Jones. In June, to meet an interest payment, B. & O. sold its nearly forgotten Chesapeake & Ohio Canal, unused for shipping since 1923, to PWA for $2,000,000. Last week, resourceful B. & O. resorted to another expedient. It filed with ICC a plan to 1) postpone nearby bond maturities, 2) reduce interest for eight years by making $11,000,000 of its $31,000,000 in annual charges contingent upon earnings but cumulative. That B. & 0. hopes to benefit by all this was indicated by a provision in the plan for setting aside 2 1/2% of annual operating revenues for improvements and expansion.

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