Railroad Week

MOP. Through J. P. Morgan & Co. and Guaranty Trust Co. last week Alleghany Corp.. holding company controlled by the Van Sweringen brothers of Cleveland, offered a $25,000,000 bond and a $12,500,000 preferred stock issue. Securing the issue were $7,000,000 Missouri Pacific convertible bonds, 60,000 shares of Missouri Pacific convertible preferred stock, 100,000 shares of Missouri Pacific common stock (MOP).

Inquisitive people, wondering why Alleghany Corp. has so large an interest in MOP, were told that the Van Sweringen:, are estimated to have one-third control of the road. Suddenly the realization dawned that the Van Sweringens possess the nucleus of the never-achieved ambition of all of the many U. S. railroad builders; a transcontinental system.

In the I. C. C. consolidation plan, MOP will unite with Denver & Rio Grande and Western Pacific. This will afford a complete road from St. Louis to the West Coast. In the East, the Van Sweringens could easily make any of several connections through the various roads they control.

Although it is doubtful whether the I. C. C. would permit the actual consolidation of such a system, railroad men last week pointed out that it could easily be operated as an entity, with the president of the western system directing his division from San Francisco while an eastern president ran the other end, probably making the road more efficient than if it had one head.

To be part of the first transcontinental road would be a fitting destiny for MOP. Started in 1851, the first railroad west of the Mississippi, it was acquired in 1879 by Jay Gould as a hub for his proposed transcontinental system. But the road became dilapidated, has only been built up since 1923 when Lewis Warrington Baldwin became its president. Now MOP operates 1,.500 miles of track, claims to be the longest system in the U. S. Long considered MOP's bankers are Kuhn. Loeb & Co. and it is believed they will remain so although J. P. Morgan & Co. are bankers for the Alleghany Corp.*

Northerns. Another important event of the railroad week transpired at J. P. Morgan & Co. when President Ralph Budd of Great Northern, President Charles Donnelly of Northern Pacific, President Frederick Ely Williamson of Burlington, and Arthur Curtiss James, largest Great Northern stockholder, met to discuss means to merge Great Northern and Northern Pacific as proposed by the I. C. C. Awaited for many years, this merger is now held up by the difficulties, financial and legal, attendant upon the two roads divesting themselves of Burlington stock, against which they have issued bonds.

Rock Island-'Frisco. The first major move by Dillon, Read & Co. in the railroad field was their obtaining control of the Seaboard Air Line. Last week it was revealed that the firm controls about 11% of the outstanding stock of Rock Island and a large block of St. Louis & San Francisco, which controls Rock Island. Foreseen: a Rock Island-'Frisco merger.

*Except where a house has definite control of a railroad, it is often misleading to connect the two. Last week the New York Sun summarized the standing of Kuhn, Loeb and J. P. Morgan in the railroad field as follows: J. P. Morgan & Co. are now leading railroad bankers, being bankers for 25 railroads with approximate mileage of 92,000 miles or 38% of the class 1 roads, having a total capital of $7,275,00,000; Kuhn. Loeb are bankers for 16 roads with a mileage of 79.000 miles or 32.6% of the class 1 roads, with a total capital of $6,373,000,000.

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