Tail Wags Dog?

Tucked away in the hills of eastern Pennsylvania is a 4.36-mile stretch of track that may become one of the biggest little railroads in the world. Its name: the Central Railroad Co. of Pennsylvania.

To its parent company, the Central Railroad Co. of New Jersey, C.R.P. last week offered the legal prospect of a haven from the franchise tax levied by the New Jersey tax collector. New Jersey uses the percentage of mileage of a railroad system within the state as a basis for its taxes on the railroad's earnings. Unfortunately, contends C.N.J., two-thirds of its mileage is in New Jersey, while most of its revenue comes from coal loadings that originate in Pennsylvania.

Last week William Wyer, 49, the alert, calculating chief executive officer of C.N.J., decided to resort to some fancy bookkeeping, thereby transferring the operations and a fleet of C.N.J.'s engines and cars to C.R.P. He would also lend C.R.P. $750,000 for working capital. Then little C.R.P. would collect the $16-odd million of freight earnings on Pennsylvania coal, pay its earnings to C.N.J. either as dividends or as rent for the use of its tracks and leased lines, thus avoid the Jersey tax. All that stood between Boss Wyer and this relatively ideal situation was court approval, for which he applied last week.

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