by this board, request has been made by the issuing corporation that a specific sum shall be named by the board, to be set aside annually for this purpose. It may be taken, therefore, as the rule that the board's approval of bond issues will be contingent upon the petitioner's acceptance of a proper amortization provision where necessary. But the provision may vary in different cases, according to the life of the bond, the desire of the company to expedite the process and the varying of different utilities to provide expeditiously for proper amortization.

5. Where a petition for the board's approval of a bond issue contains a clause providing for calling the bonds at a premium before maturity, the board has commonly insisted that such clause be eliminated. This has been insisted upon to avoid the possibility of an indirect evasion of Chapter 331 of the Laws of 1906. If, for example, a bond has been isued at 80 per cent. of its face value, and thereafter a petition is made to authorize a new issue of bonds (also at 80) to refund the first issued bonds, dollar for dollar, the following might result. For the original bond issue of the face value of $100,000, the company secured real assets worth $80,000. If the bonds are redeemable at 110 before maturity, and a new issue is made also at 80, $137,500 in bonds of the refunding issue would be required to take up the earlier issue. But as against the issue of $137,500 there would be real assets of only $80,000 as against $110,000 in real assets required if $137,500 of bonds were originally issued.

On the other hand, it is realized that in certain instances, refunding of bonds at a premium before maturity might effect such a reduction of fixed charges as to be advantageous both to the company and the consumers. Accordingly, the board in approving bond issues will not sanction bond redemption before maturity at a premium at the company's sole option; should the issuing company, however, reserve such right of redemption at a fixed premium before maturity subject to future approval by this board after due hearing, the board will consider in any case the inclusion of such provision in its formal certificate of approval.

6. In acting upon petitions for the approval of proposed issues of bonds or notes, the board will insist on adequate evidence of the probability that the fixed charges can be regularly met, and that the principal sum can be repaid at maturity. Where such securities are to be issued by a public utility now operating, the past and current earnings of the public utility will be a relevant consideration. Also worthy of consideration will be such probable changes in earnings as properly may be expected to result from the property to be acquired by the proposed issue.

Where the company is newly projected, and where past experience is not available to indicate the probable return in revenue to the company, bond issues or note issues, if they are to be approved, must carry a reasonable probability that, with average good management, fixed charges may be regularly met, and ultimate payment of the principal sum may be provided.

Where approval of proposed stock issues is requested, the board will endeavor to be assured that the stock issues will secure for the public utility additional property commensurate with the par value of the stock issue proposed. The investor in stock knowingly takes a chance of return, however, which the investor in bonds commutes for a specified return of fixed amount. For this reason the board does not feel obliged to be assured of the probability of returns upon stock as it does in the case of proposed bond issues.

7. Certain special cases of proposed security issues may arise under certain circumstances, some of which are set forth hereafter. In these special cases the general principles outlined above will be applied so far as seems equitable, and exceptions made only where the general principles enunciated supra would work inequitably. Among the special cases may be mentioned the following: First, where a bond issue has previously been sanctioned, under a mortgage or deed of trust providing that all bonds issued thereunder shall be identical in tenor, and where some part of the authorized bonds has not been actually issued, in such cases the board does not feel that it can impose as a condition of authorizing a remaining and unissued part of the total issue authorized, requirements against redemption at a premium prior to maturity. Second, where petitions are made for authority to make security issues for refunding outstanding securities, the new securities to issue must conform to such requirements as would be imposed, if the refunding securities were an original issue. The refunding bonds and stock must be backed respectively by such proportionate amounts of cash or property of actual cash value as is required under Chapter 331 of the Laws of 1906. The refunding bonds must afford the same likelihood of meeting their fixed charges and payment of the principal sum at maturity as is indicated in the sixth paragraph supra. Nor will agreements or contracts providing for refunding of security issues where such agreements or contracts were made prior to the enactment of Chapter 195 of the Laws of 1911 be regarded by this board as invalidating or overriding the authority over security issues vested in this board by said Act. The power conferred upon this board to disapprove security issues not in accordance with law or whose purpose is not approved by the board is expressly conferred by the Act of April

21, 1911 (Chapter 195, Laws of 1911), and this power is not restricted by any other provision of the law governing public utilities, or corporations generally. All such agreements or contracts, however binding upon the individual parties thereto they might have been, in default of the Legislature's subsequently vesting power over proposed security issues in this board, are not controlling so as to delimit the board's action upon proposed security issues. For such outstanding securities as may legally have come into existence prior to the passage of the Act of April 21, 1911, this board has no responsibility. But its authority is not delimited by expectations or contracts between private parties made prior to the enactment of the statute in question. Where the provisions of such agreements can be carried out comformably to the general principles regulating the approval of proposed security issues by this board, no obstacle will be interposed by the board to such authorization. But the carrying out of such provisions of agreements or contracts as involve issue of new securities must be submitted to the board.

8. The declaration of stock dividends by public utilities is permissible only in such cases as this board after hearing may authorize. To declare such a stock dividend without first obtaining the approval of the board is a misdemeanor, and all such securities issued without the board's approval are illegal.

In general, the board will approve of the issue of stock dividends by public untilities only after hearing and investigation and after being satisfied that as the outcome of such issues the net assets and property of the company over and above other liabilities resting thereon shall be equal to the par value of the total stock outstanding after such stock dividends have been made. Adequate depreciation reserves and surplus must also be provided by a public utility petitioning to issue a stock dividend, and a careful inquiry will be made by the board into the methods by which the additional stock dividend is to be justified. Full publicity of approval of all petitions for stock dividends will be deemed essential.

9. For the information of all public utilities intending to petition this board for the approval of proposed security issues, reference should be made to Conference Order No. 7 and Conference Ruling No. 13 of the board. The requirements of this order and ruling as to the form and content of petitions should be carefully observed. Petitions should be filed sufficiently in advance of the time at which approval of securities is desired to insure the board reasonable time to make the inquiries relevant. The larger the proposed issue, and the more complex the conditions surrounding it, the earlier should the application be filed with the secretary of the board.

The petitions will be acted upon hereafter in order of their filing as indicated by the dating stamp of the secretary's office. Applications essentially defective in form or content will not be listed for consideration until properly amended. Where such applications involve the necessity of inventoring property or checking accounts, the public utility applying for such authorization is requested to give such assistance as is within its power by putting its engineers, managers and accountants in touch with the board's inspector.

Where the annual reports required of public utilities have not been promptly filed as required by the rules of this board, or 'where such accounts when filed, disclose failure upon the part of the public utility to comply with the requirements of law or with the terms upon which previous security issue of said utilities has been approved by this board, any subsequent petition for the approval of securities by a public utility shown to be in default may be postponed until the requisite and legal compliance with the law and the lawful rules of this board has been made by said public utility.

Adopted July 8, 1912.

STOCKHOLDERS' RIGHTS

THE NEW YORK, NEW HAVEN AND HARTFORD RAILROAD COMPANY 1 NEW HAVEN, CONN., October 15, 1913.

To the stockholders of The New York, New Haven and Hartford Railroad Company, and to holders of its 32% Convertible Debenture Certificates convertible between January 1, 1911, and January 1, 1916, and to holders of its 6% Convertible Debentures convertible between January 15, 1923, and January 15, 1948: Pursuant to resolutions of this Company's stockholders and directors, this Company hereby offers for subscription its Convertible Debentures of 1913, of the aggregate principal amount of Sixty-seven Million Five Hundred and Fifty-two Thousand Dollars ($67,552,000), all to be dated October 1, 1913, to be payable October 1, 1933, to bear interest at the rate of six per cent. per annum, to be convertible after October 1, 1918, and not later than October 1, 1928, into shares of the Company's capital stock, par for par, with an adjustment of interest and dividend, and to be issued under and in pursuance of an indenture between this Company and a trustee, to all the provisions of which said debentures and the rights of the holders thereof will be subject.

These debentures will in substance provide, so far as lawfully may be, that the holders thereof shall enjoy, until October 1, 1928, a right of subscription to any future issue of capital stock of the Railroad Company to the same extent as if holders at the time of such issue of the shares of the capital stock of the Company to the future delivery of which they are entitled.

These debentures will also provide, so far as lawfully may be, that if this Company shall hereafter create any mortgage upon its now existing main line of railroad between Woodlawn in the City and State of New York and Springfield in the Commonwealth of Massachusetts, or its now existing main line of railroad between New Haven in the State of Connecticut and Providence in the State of Rhode Island, such debentures shall without further act be entitled to share in the security of such mortgage pro rata with any other obligations that may be secured thereby, and that any such mortgage shall expressly so provide.

The right to subscribe for these Convertible Debentures of 1913, on or before November 15, 1913, but not thereafter, is offered as follows:

1 Notice advertised in New York Times, November 1, 1913.