• U.S.

RAILROADS: Victory

2 minute read
TIME

In his three-year war against an Interstate Commerce Commission plan to reorganize the Missouri Pacific Railroad, Robert R. Young has lost every battle. Last week it looked as if he might yet win the war. Young has objected to the plan because it would give control of the 10,000-mile MoPac to the bondholders, wipe out the common stockholders, including Young. His Alleghany Corp. holds 49% of MoPac stock and, if stockholders got a voice, might control the road. Last spring, when the U.S. Supreme Court refused to review the case, it looked as if Young was finished.

But last week an ICC board of examiners, which has been studying the reorganization plan for three months, surprised everyone by recommending a review. It raised the question of whether MoPac’s common stock should, after all, be wiped out, agreed with Young that MoPac’s earnings had improved enough since the plan was first approved in 1949 to warrant a review by the full commission. Though ICC had not yet made up its mind, railroaders thought that it was sure to follow the board’s recommendation.

In short, it looked as if even ICC was beginning to agree with critics who have charged that the commission has badly underestimated the earning power of railroads, and needlessly wiped out common stockholders in reorganization plans. When the Supreme Court refused to review the MoPac case, Justice Felix Frankfurter charged ICC with a “uniformity of erroneous guessing.”

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