Word: loans
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Dates: during 1930-1939
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When rising costs and falling revenues snipped the net operating income of Erie Railroad from $1,200,000 in December 1936 to $45,000 in December 1937, it could no longer meet its debt charges. When RFC refused Erie's request for a $6,006,000 loan because Erie's wealthy parent company, the Chesapeake & Ohio, would not guarantee the loan (TIME, Jan. 17). the jig was up. Last week, therefore, Erie wearily filed a petition to reorganize under section 77 of the Bankruptcy Act, its fourth reorganization in 100 years...
Harassed by the same swelling costs and shrinking revenues which face most U. S. roads, the Erie last month petitioned RFC for a loan of $6,006,000. Last week- though RFC was on record as willing to lend money on any "reasonable" railroad request and though it agreed to lend $8.000,000 to the Baltimore & Ohio after only a week's thought (TIME, Jan. 10)- it refused to aid the Erie. While some Erie bonds broke as much as 16 points and its common stock fell from $6.25 to $3.25, the Erie thereupon defaulted on $1,849.000 interest...
Chairman Jesse Jones explained RFC's hardheartedness as simply that "a matter of principle is involved." The ICC approved an RFC loan to the Erie on the I condition that C. & 0. guarantee it or put j up part collateral. C. & O. flatly refused, explaining that its first duty was to protect its own stockholders. Snapped Jesse Jones, after new C. & 0. President George D. Brooke refused to discuss the matter: "If C. & 0. is unwilling to nurture its own child. I do not see why the Government should. It seems a funny thing to me that a railroad...
...past has lent the B. & O. a total of $82,110,000. Last week, $79,842,823 of this debt was still outstanding and the RFC held as collateral securities worth $89,279,610 at the present market. In petitioning for an additional $8,233,000 loan-on this same collateral-to be due in 1942, the B. & O. announced that it had been unable to borrow from any other source and that "with these funds the company will be in a position to maintain its property to the present standard of efficiency, avoid the reduction in maintenance forces which...
Since RFC Chairman Jesse Jones recently said that his commission stood ready to make reasonable railroad loans, it seemed likely last week that the B. & O. would get its loan. Without the loan it seemed equally likely that the line would have to join the 37 other U. S. Class I rail-oad lines now in the courts...