not exceeding $13,500,000 of new first-mortgage 5 per cent bonds, series B, to be exchanged at par for a like amount of income bonds. When the proposed financing has been completed, all the applicant's funded debt will be represented by the new first-mortgage bonds maturing April 1, 1954, $8,748,000 thereof bearing interest at 5 per cent per annum instead of 6 per cent, the rate now borne by the old first-mortgage bonds, and the remainder bearing the same rate of interest as the existing income bonds.

We find that the proposed issue of first-mortgage bonds by the applicant as aforesaid (a) is for lawful objects within its corporate purposes, and compatible with the public interest, which are necessary and appropriate for and consistent with the proper performance by it of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purposes.

An appropriate order will be entered.

COMMISSIONER MEYER did not participate in the disposition of this case.

ORDER

Entered May 23, 1924

Investigation of the matters and things involved in this proceed. ing having been had, and said division having, on the date hereof, made and filed a report containing its findings of fact and conclusions thereon, which report is hereby referred to and made a part hereof:

It is ordered, That the New Orleans, Texas & Mexico Railway Company be, and it is hereby, authorized to issue not exceeding $8,748,000 of first-mortgage 51 per cent bonds, series A, and not exceeding $13,500,000 of first-mortgage 5 per cent bonds, series B, under and pursuant to, and to be secured by, a first mortgage to be made by the applicant to the Irving Bank-Columbia Trust Company under date of April 1, 1924; said bonds to be dated April 1, 1924, and to mature April 1, 1954, the series-A bonds to bear interest at the rate of 5 per cent per annum, payable semiannually, and the series-B bonds to bear interest at the rate of 5 per cent per annum, payable semiannually, both series to be in the denominations and redeemable as set forth in the application and aforesaid report; $7,734,000 of said series-A bonds to be sold at not less than 94 per cent of par and accrued interest, and the proceeds used for the purposes stated in the application and aforesaid report, and $1,014,000 of said

series-A bonds to be exchanged for and pledged in lieu of part of the bonds authorized to be pledged by the commission's orders entered June 24, 1921,1 and August 2, 1922:2 Provided, however, and this authorization is granted on the express condition, that to the extent of $806,500 the applicant shall not hereafter have bonds authenticated in respect of, or otherwise capitalize, the expenditures for additions and betterments made by it prior to November 1, 1923, in the amount given in the aforesaid report and application; said seriesB bonds to be exchanged, from time to time, to and including June 30, 1925, par for par, to retire a like amount of the applicant's 5 per cent noncumulative income bonds now outstanding; said old first-mortgage bonds and income bonds to be canceled.

It is further ordered, That, except as herein authorized, said bonds shall not be sold, pledged, repledged, or otherwise disposed of by the applicant, unless and until so ordered by this commission. It is further ordered, That the applicant shall report concerning the matters herein involved in conformity with the commission's order dated May 25, 1922, respecting applications filed under section 20a of the interstate commerce act.

And it is further ordered, That nothing herein shall be construed to imply any guaranty or obligation as to said bonds, or interest thereon, on the part of the United States.

1 See 67 I. C.C. 797.

See 72 I. C.C. 344.

90 I. C. C.

FINANCE DOCKET NO. 4009

WISCONSIN CENTRAL SECURITIES

Submitted May 16, 1924. Decided May 24, 1924

1. Authority granted to the Wisconsin Central Railway Company (1) to issue and sell at not less than 97.75 per cent of par and accrued interest $6,000,000 of three-year 5 per cent secured gold notes, the proceeds to be used for the purposes set forth in the report; (2) to procure authentication and delivery to it of $2,594,000 of first and refunding mortgage 4 per cent bonds; and (3) to pledge $8,000,000 of its first and refunding mortgage bonds as collateral security for said notes.

2. Authority granted to the Wisconsin Central Railway Company and the Minneapolis, St. Paul & Sault Ste. Marie Railway Company to assume joint and several obligation and liability to pay interest at the rate of 5 per cent per annum on $4,242,000 of Wisconsin Central first and refunding mortgage 4 per cent bonds now held by the Wisconsin Central Railway Company, and on the said $2,594,000 of bonds above referred to. 3. Authority granted to the Minneapolis, St. Paul & Sault Ste. Marie Railway Company to assume obligation and liability in respect of the $6,000,000 of secured gold notes above referred to, and to sell them at not less than 97.75 per cent of par and accrued interest.

H. S. Mitchell and John L. Erdall for applicant.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MEYER, EASTMAN, AND POTTER BY DIVISION 4:

The Wisconsin Central Railway Company, hereinafter termed the Central Company, a corporation organized for the purpose of engaging in transportation by railroad subject to the interstate commerce act, and the Minneapolis, St. Paul & Sault Ste. Marie Railway Company, hereinafter termed the Soo Company, a common carrier by railroad engaged in interstate commerce, have duly applied jointly under section 20a of the interstate commerce act for an order authorizing the authentication and delivery to the Central Company of $2,594,000 of Wisconsin Central first and refunding mortgage 4 per cent bonds; the issue and sale by the Central Company of $6,000,000 of three-year 5 per cent secured gold notes; the pledge by the Central Company of $8,000,000 of its first and refunding mortgage bonds as collateral security for the notes; the joint and several assumption of obligation by the applicants to pay interest at the rate of 5 per cent

per annum upon the $2,594,000 of bonds above referred to and $4,242,000 of Wisconsin Central first and refunding mortgage 4 per cent bonds now held by the Central Company, and the assumption of obligation and liability by the Soo Company in respect of the secured gold notes. No objection to the granting of the application has been presented to us.

It appears that the Central Company owns lines of railway in the States of Wisconsin, Michigan, Illinois, and Minnesota which are being operated by the Soo Company under a 99-year lease. The Soo Company owns substantially all of the capital stock of the Central Company. The applicants represent that to enable them adequately to serve the public, it is necessary to procure additional funds. It is stated that it is necessary, among other things, to enlarge the ore docks of the Central Company at Ashland, Wis., and to make other outlays for additions and betterments. In addition it is stated that the Central Company is indebted to the Soo Company for advances made in excess of $3,000,000, repayment of which is urgently needed by the latter company in order that it may care for expendi tures on its own lines.

The Central Company states that it has a first and refunding mortgage upon its property, under the terms of which it may issue a maximum amount of $60,000,000 of bonds, and that of this amount but $6,000,000 have been sold to the public, of which $184,000 hav been reacquired, and $7,273,000 of other bonds are now held by it Since the interest payable on bonds issued under this mortgage i limited to 4 per cent per annum, which, however, has been increased to 5 per cent per annum under a supplemental indenture, it is repre sented that at present money rates too great a discount would b suffered in selling any of them at this time. To provide the fund necessary for the purposes mentioned, it is proposed that the Wiscon sin Central Railway Company shall issue $6,000,000 of its three year 5 per cent secured gold notes. The notes will be sold by th Central Company to the Soo Company at 97.75 per cent of par an accrued interest, and that company in turn will sell them to Dillon Read & Company, of New York, at the same price, guaranteein them by indorsement and thereby assuming obligation and liabilit in respect of their payment. The proceeds of the notes will be use as follows:

Reconstruction of ore docks__

Repayment of advances made by the Soo Company---.

Additions and betterments to the Central Company's property.

Total -----

$1, 420, 0

3, 000, 0 1,580, 0

6, 000, 0

As collateral security for these notes the Central Company pr poses to pledge $8,000,000 of its first and refunding mortgage 4 p

annum.

cent bonds, upon which the Central and Soo Companies have jointly and severally agreed to pay interest at the rate of 5 per cent per Of these bonds $7,457,000 are now held by the Central Company, as stated above, and the balance will be made up of other bonds, for the issue of which authority is herein requested. The applicants have assumed joint and several liability to pay interest at the rate of 5 per cent per annum on $3,215,000 of these bonds, and $4,242,000 were issued without such obligation. It is therefore proposed that the applicants be permitted to assume joint and several obligation and liability in respect of the payment of interest on the latter amount of bonds, at the rate of 5 per cent per annum, in conformity with the terms of a supplemental indenture given by the Central Company and the Soo Company to the Empire Trust Company on April 1, 1917.

The Central Company further represents that under the terms of its first and refunding mortgage, it is entitled to issue bonds for the following purposes:

From January 1, 1918, to the date of the present application, it is stated that the Central Company has expended out of earnings the following sums for capital purposes:

Refunding Marshfield & Southeastern division purchase-money

It is further represented that none of these items have heretofore been capitalized, and, as may be seen, some of the items may not be capitalized in toto by the issue of bonds under the first and refunding mortgage. The Central Company now proposes to procure authentication and delivery of $2,594,000 of first and refunding mortgage bonds in order that it may be reimbursed pro tanto. Since the mortgage authorizes interest at the rate of only 4 per cent per annum on these bonds, the Central Company and the Soo Company seek authority to assume obligation and liability to pay interest at