Fourth Proposal

Twelve years ago, bewhiskered old Leonor F. Loree wanted to merge his Kansas City Southern Ry. with the Missouri-Kansas-Texas and the St. Louis Southwestern railroads. ICC said No. A few years later the Van Sweringens wanted to merge it with their sprawling Missouri Pacific. Hard times quashed that idea. In 1931 Chicago Great Western got control of K.C.S. But litigation, instituted by Railroader Loree, kept the pair apart. Last week, Kansas City Southern once more was on the verge of matrimony--this time proposed by its Board Chairman Harvey Crowley Couch.

A onetime (1932-34) RFC director who organized Arkansas's first telephone sys tem, strapping, 61-year-old Harvey Couch is Arkansas's wealthiest private citizen, and the Southwest's No. 1 private utilitarian (Arkansas, Louisiana and Mississippi Power and Light Companies). In 1926 he bought Louisiana and Arkansas Ry. for $10,000,000, In February 1937, for a rumored $2,250,000 he picked up working control of K.C.S. from Paine, Webber & Co., which got control after a bitter fight with Leonor Loree. Since then Wall Street has been expecting a merger and last week Harvey Couch produced it. He announced that K.C.S. would issue 210,000 shares of common stock to exchange for stock of the L.& A.

Kansas City Southern owns 788 miles of main-line track between Kansas City and the Gulf of Mexico, carries coal, oil and farm products mainly originating in other territories. L.& A. owns 573 miles of trackage, 371 of which lie between New Orleans and Hope, Ark., with an affiliate branch running to Dallas, Texas. Most of its freight--quarry products, refined oil and sugar--originates in its own territory. The two roads, pee-wee but prosperous, meet at Shreveport, La. K.C.S. sets its total assets at $138,738,553; L.& A., at $35,514,566. In 1937 K.C.S. had a net of $842,128; L.& A., $409,825.

The merger, subject to ICC and stockholders' approval, will give K.C.S. complete possession of the shortest route between Kansas City and New Orleans (it now shares it with L.& A.), will also link Louisiana Gulf ports with eastern Texas. Said Harvey Couch: "A substantial increase in payrolls may be expected to result from increased business of the unified roads."

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