Salt Lake Telegram | 1926-11-28 | Page 13 | Too Many Bonds

S- S Si t Too Many Bonds Bond 1 I OALE eALE ALE of the Chicago Milwaukee St. St Paul p railroad under the auctioneers auctioneer's rs r's hammer S the other day in Butte ont was a closing chapter to one of the greatest rail failures in n this country In many respects it shows the fallacy of S 'S hy y enterprise At the time of the failure of iJ his is great railroad system it was generally conceded that its directors had Ithe t te e system u for a new extension that never profitable In the earlier days of rail- rail ad building it was yas done doie by selling of common com com- mon stock on which stockholders were forced W q wait until earnings were sufficient to pay y 5 dividends On bonds the interest must be 5 met or the business goes into bankruptcy S This great railroad system was vas va purchased Si y iY two New York banks and will be bt reorganized sized refinanced and back put again on aund a arf rund rf und financial footing under the name of the theS S Chicago Milwaukee Pacific railroad The rad tailed failed in 1925 but it was in 1917 that it H ifs real financial troubles began The road began to suffer when the Panama canal h as opened and it was not long after that the World war caused Japan and Russia f i id Jq organize their industry for war and the exports to the Orient that ordinarily were I carried c over the road began to fall faIt II I 1 Had the extensions of the system been financed by the sale of common stock the theS S stockholders would have suffered a temporary f l loss ss of dividends until conditions i themselves but the failure to pay interest on bonds put the company in such a th b bad d way financially with interest debts piling up rUP that it ivas was vas necessary to put the corpora- corpora t n into 11 the hands o of a court Heavy financial finan- finan cial losses m must st necessarily be be Buffered uffer d by the stockholders and and- some bondholders J S-j. S S.- S. i. i