or approximately one carload per round trip. The average for all traffic, inbound and outbound, for the same period was approximately 423 carloads a year, or 2.71 carloads a round trip of at least 120 miles. The record holds out no prospect of any substantial increase in livestock traffic in the future and the possibility of developing a considerable traffic in agricultural products is too speculative to justify serious consideration. It is obvious, therefore, that the continued operation of the branch lines would impose an undue burden upon interstate commerce. We find that the present and future public convenience and necessity permit abandonment by the Arizona Eastern Railroad Company and the El Paso & Southwestern Railroad Company, and abandonment of operation by the Southern Pacific Company, lessee, of the lines of railroad in Cochise County, Ariz., described in the application. An appropriate certificate will be issued. Such certificate will become effective 30 days from its date and will contain suitable provision for the cancellation of tariffs. 193 I.C.C. FINANCE DOCKET No. 9145 WABASH RAILWAY COMPANY RECEIVERS Submitted April 12, 1933. Decided April 25, 1933 Upon supplemental application of the receivers of the Wabash Railway Company for a loan from the Reconstruction Finance Corporation, a further loan of $3,000,000 for specified purposes approved without prejudice to consideration for further loans upon the original application. Terms prescribed. Previous reports, 180 I.C.C. 467, 184 I.C.C. 453, 187 I.C.C. 195, 189 I.C.C. 124. Walter S. Franklin, Frank C. Nicodemus, Jr., and A. K. Atkinson for applicants. FOURTH SUPPLEMENTAL REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS MEYER, EASTMAN, BRAINERD, AND MAHAFFIE BY DIVISION 4: The original application in this proceeding was filed by Walter S. Franklin and Frank C. Nicodemus, Jr., receivers of the Wabash Railway Company, on January 23, 1932, requesting a loan of $18,500,000 from the Reconstruction Finance Corporation, hereinafter called the Finance Corporation. Amendments to the original application were filed on various dates, as described in our previous reports. We have approved the following loans: $7,173,800 on February 10, 1932, 180 I.C.C. 467; $1,567,200 on May 17, 1932, 184 I.C.C. 453; $4,575,000 on August 1, 1932, 187 I.C.C. 195; and $1,500,000 on November 23, 1932, 189 I.C.C. 124; a total of $14,825,000. Our approval in each case was without prejudice to consideration of further loans upon the original application. The applicants, on March 29, 1933, filed an amending supplement to the original application, requesting a further loan. Fourth supplemental request of applicants.-The applicants seek a further loan of not exceeding $3,000,000 for three years for the purpose of paying the interest on underlying mortgage bonds and the installments of principal and interest on equipment obligations due between April 1 and October 1, and part of the interest due during October and November, 1933. These requirements are as follows: On or about April 1, 1933: To pay interest due Apr. 1, 1933: Omaha Division 31⁄2 percent bonds. To pay principal and interest due Apr. 1, 1933 Equipment-trust 42 percent certificates, series G: Interest, $39,375, Detroit & Chicago Extension 5 percent bonds $50, 250. First-lien Terminal 4 percent gold bonds $71,100... 153, 350 To pay principal and interest due July 1, 1933 Equipment-trust 5% percent certificates, series C: Interest $22,110, principal $134,000... To pay interest due July 15, 1933: 156, 110 Equipment-trust 6 percent certificates of 1920 $45,324.... On or about Aug. 1, 1933: To pay interest due Aug. 1, 1933 Second-mortgage 5 percent bonds, $349, 825. 349,825 To pay principal and interest due Aug. 1, 1933 Equipment-trust 5 percent certificates of 1922: Interest $35, 375, princi- Equipment-trust 41⁄2 percent certificates, series H: Interest, $55,687-- Regarding the interest due April 1, the receivers petitioned the court for instructions, and by order dated March 31, 1933, the court ruled that the receivers defer payment upon the first-mortgage bonds, Omaha division, and the series G equipment-trust certificates pending action upon this loan application. The fourth loan, $1,500,000, approved for the applicants on November 23, 1932, provided $735,747 for equipment-trust obligations due on or before December 1, 1932, and $764,253 for similar requirements in January, 1933. According to the statement then made by the applicants, the loan of $1,500,000 would enable them to pay all expenses and fixed charges for a period of some seven months. However, the forecast of cash position then filed indicated that the applicants' cash would be entirely exhausted by June 30, 1933. The applicants state that no part of the further loan applied for can be obtained through banking channels or from the general public. It is further stated that no agreement has been made or will be made to pay any person, association, firm, or corporation, either directly or indirectly, any commission or fee for the further loan applied for, and that no such payments have been or will be made. Necessities of applicants.-Reference was made in our third supplemental report, of November 23, 1932, to the applicants' earnings as indicated for 1932, compared with the forecasts originally made. Below is shown a summary of the actual results of operations for the year, together with a forecast dated April 29, 1932, which reflects the diminished revenues resulting from the miners' strike in the Illinois coal fields. Railway operating revenues. Railway operating expenses.. Railway operating ratio. Net railway operating income. Total deductions . Net income '. 1 Deficit. per cent.. 1 Excluding interest on refunding and general mortgage bonds, in default. The loss during 1932 was less than that indicated by any of the forecasts filed since the granting of the first loan. It closely approximates the forecast accompanying the original application in January, 1932. The loss due to greatly diminished revenues was substantially offset by economies in operation. The applicants contend that the decline in their revenues from 1931 to 1932 was greater in percentage than the decline on the class I railroads as a whole, while the receivers' operating expenses were reduced in larger ratio than was the case with those roads. Reviewing the past operations of the Wabash, the applicants show that the railroad earnings for the years 1915 to 1930, inclusive, represented 2.61 times interest on underlying and divisional mortgage bonds, leaving a sum equivalent to 7.54 times the interest on equipment-trust obligations. During the two years of the receivership, 1931 and 1932, there was a deficit of $4,789,906 in the amount required to pay the interest on the underlying bonds, while the equipment-trust interest amounted to $1,524,003. The following statements appear in the present supplement to the application: Emergency financial aid to prevent defaults under underlying mortgage bonds and equipment trust obligations of the character here involved is vital in a number of public aspects. Such defaults contract income in quarters where stability of income is a matter of public concern, and occasion insidious and contagious liquidation of intrinsically sound securities which are closely related to the integrity of our banking and currency system. Without repeating all that was said in the original application, it should be reiterated here that the underlying bonds sought to be protected through the financial aid now asked have not been in default in a period of over thirty years and all were protected through a receivership from 1911 to 1915 and finally survived the drastic 1915 reorganization, since which time the earning power of the property has been immeasurably increased by heavy capital contributions represented by junior securities. At least $15,000,000.00 was contributed to the property on capital account in the 1915 reorganization. $60,000,000.00 more was contributed between 1925 and 1931 by the refunding and general mortgage bondholders. This new money contributed since 1915 and largely expended by the Railway Company under Commission authority actually exceeds the total aggregate amount of the underlying bonds and equipment trust obligations which the applicants are now seeking to protect. It would therefore, seem that these underlying bonds and equipment trust obligations ought to be sound and conservative from an investment standpoint wholly apart from the earning power of the property prior to the 1911-1915 receivership and reorganization. The two records of sustained earning power, one in the pre-war period, the other in the post-war period, show that a capital structure based upon the underlying bonds and equipment trust obligations and such additional interestbearing obligations as shall be issued to refund or retire receivers' certificates issued within the limits of the original applicaton for emergency financial aid will not be a top-heavy capital structure, but, on the contrary, will be a sound and conservative capital structure such as has stood in a most convincing fashion the actual test of time. The applicants express conviction that the further loan, if granted, will enable them to operate during 1933 under a program as complete as that followed in 1932, with maintenance at the present standard and the payment of all fixed charges on underlying bonds, equipment-trust obligations, and outstanding receivers' certificates, without recourse to further borrowing. A cash forecast submitted shows that, without the $3,000,000 herein requested, the cash deficit at the close of 1933 will be $2,640,163. The amount of cash reported on hand January 1, 1933, was $1,996,858. Including certain interest and sinking-fund payments accrued and unpaid January 1, 1933, the applicants' fixed obligations during 1933 consist principally of $4,842,120.62 of interest on underlying bonds, equipment trusts, and receivers' certificates, and $2,271,840 of sinking-fund and equipment maturity payments. As of the close of the year, the accrued interest on the refunding and general mortgage bonds, in default and aggregating $60,867,000, principal, will be $6,037,493.75, and the accrued sinking-fund payments in connection with the same bonds will amount to $1,642,276.47. In our original report in this proceeding, 180 I.C.C. 467, we stated that the tentative rate-making value of the Wabash properties, if increased by the net additions and betterments between valu |