of the year. The main difficulties of the applicant are due to loss of traffic occasioned by the closing of certain industries on its line and the competition of trucks in the movement of cotton and other commodities. As additional security for the loan the applicant offers to pledge 615 shares of the capital stock of the Braithwaite Lands Liquidation Company, Inc. The capital stock of that company consists of 620 shares, all of which were issued, fully paid, and acquired by the applicant on payment of $49,500 in cash and $12,500 of its first-mortgage bonds. On February 24, 1932, a liquidation dividend of $8 per share was paid, thereby reducing the par value to $92 per share or a total of $57,040. This land company was incorporated under the laws of the State of Louisiana on December 17, 1926, for the purpose of acquiring certain lands and buildings along the applicant's line and fronting on the Mississippi River at Braithwaite, La., which were considered valuable for the location of industries. The total area acquired is 609.8 acres having a water frontage of 5,630 lineal feet. The assessed valuation of the lands and buildings thereon for tax purposes in 1932 was $29,320 and the State and parish taxes accrued and unpaid $800. The houses on the lands are insured for $19,100. The applicant states that the average price at which lands are held in that section is from $40 to $60 per acre. The property of the land company is said to be free from all liens and incumbrances other than the overdue State and parish tax of $800. As of the date the application was filed the 615 shares of stock of this land company were held by the applicant unpledged. In order to meet its pay rolls of February 15, 1933, the applicant received an advance of $1,000 from the Gulf, Mobile & Northern Railroad Company. A second advance of $2,000 by the same railroad company was made to meet pay rolls as of March 1, 1933. Notes were given by the applicant for these advances, secured by the 615 shares above referred to. The applicant seeks funds for the repayment of these advances, so that the 615 shares of stock may be released for pledging with the Finance Corporation as additional security for the loan requested. Through arrangement with the Gulf, Mobile & Northern Railroad Company the applicant expects to eliminate one switching charge, thus enabling 2,000 cars of cotton per year to move by car instead of by truck. It also states that arrangements have been made for the delivery of gasoline to Menefee Air Field, amounting to 500 cars per year. In addition it expects to increase its line-haul traffic by 650 cars per year through the movement of vegetables, gasoline, and materials for road work, oil exploration work, and proposed sea-wall and revetment work on Shell Beach. It is estimated that the materialization of the above traffic would increase gross revenues $37,150 per year. As previously stated, the Gulf, Mobile & Northern Railroad Company is willing to assist the applicant through a joint operating arrangement whereby it will supervise for five years the operation of a portion of the applicant's line, and assume obligation on the note of the applicant for the amount of the loan herein applied for. The Gulf, Mobile & Northern Railroad Company received a loan of $260,000 from the Railroad Credit Corporation to meet interest due April 1, 1932, evidenced by a 2-year secured note dated September 29, 1932. It also borrowed $260,000 from the Finance Corporation for three years from September 30, 1932, to meet interest due October 1, 1932. Under date of February 20, 1933, finance docket no. 9858, it filed application for an additional loan of $500,000 from the Finance Corporation to pay interest due April 1, 1933, taxes, jointfacility bills, miscellaneous vouchers, and to purchase crossties. As of February 16, 1933, the Railroad Credit Corporation approved a loan of $260,000 to this company to meet its interest requirements of April 1, 1933, which loan reduces the amount applied for from the Finance Corporation to $240,000. It also is indorser of a 2-year note, dated March 21, 1932, of its affiliated line, the New Orleans Great Northern Railroad Company, to the Railroad Credit Corporation for $200,000. It has pledged and assigned to the Railroad Credit Corporation its distributive share under the "marshaling and distributing plan, 1931." The Gulf, Mobile & Northern Railroad Company's property consists of a main line between Mobile, Ala., and Jackson, Tenn., and various branch lines, totaling 586.38 miles of road and 722.89 miles of all tracks. It also operates 147.54 miles of main track under trackage rights. As of December 31, 1932, the comparative general balance sheet of this company showed an investment in road and equipment of $34,475,947; current assets of $1,941,873, including $1,211,686 of cash; and current liabilities of $818,926. The par value of its outstanding capital stock was $24,955,000, of which $13,539,400 was common and $11,415,600 preferred. The total long-term debt consists of $260,000 of notes and $12,040,000 of mortgage bonds, of which latter $456,000 is held in treasury and $1,584,000 is pledged as collateral. For the 11-year period 1921 to 1931, income available for the payment of interest averaged $1,044,600 and net income. $768,797. Operations resulted in a net income of $261,500 in 1930, and deficits of $227,070 and $542,694 in net income in 1931 and 1932, respectively. For 1933 deficit in net income of $137,587 is estimated. Conclusions. Upon consideration of the application and investigation thereof, we conclude that the prospective earning power of the applicant and the security offered as a pledge for the proposed loan are not such as to afford reasonable assurance of its ability to repay the loan. We are unable to find that the Finance Corporation would be adequately secured. Approval of the application is, accordingly, denied. An appropriate order will be issued. COMMISSIONER EASTMAN did not participate in the disposition of this case. 193 I.C.C. FINANCE DOCKET No. 9114 ARIZONA EASTERN RAILROAD COMPANY ET AL. Submitted April 13, 1933. Decided April 25, 1933 Certificate issued permitting (a) abandonment by the Arizona Eastern Railroad Company and the El Paso & Southwestern Railroad Company, and (b) abandonment of operation by the Southern Pacific Company, lessee, of branch lines of railroad in Cochise County, Ariz. E. J. Foulds and R. S. Myers for applicants. Amos A. Betts, Charles R. Howe, L. G. Reif, John F. Ross, Charles E. Blaine, George Jay, D. G. O'Neil, A. G. Crouch, James T. Gentry, and John E. Benton for protestants. REPORT OF THE COMMISSION DIVISION 4, COMMISSIONERS MEYER, EASTMAN, AND MAHAFFIE BY DIVISION 4: Exceptions were filed to the report proposed by the examiner and the case was argued orally. The Arizona Eastern Railroad Company, the El Paso & Southwestern Railroad Company, and the Southern Pacific Company, lessee, on January 13, 1932, applied jointly for permission to abandon a branch line of railroad extending from Douglas to Cochise, approximately 59.1 miles, and the following branch lines extending therefrom, i. e., from Kelton to Gleeson, approximately 6.4 miles, from Kelton to Courtland, approximately 4.6 miles, and from Pearce to the Commonwealth Mill, approximately 1.2 miles, an aggregate of 71.3 miles, all in Cochise County, Ariz. Protests against the granting of the application were presented by and on behalf of the Arizona Corporation Commission and others. The lines in question are located in Sulphur Springs Valley. Stations on the branch line between Douglas and Cochise other than the termini are McNeal, El Frida, Webb, Kelton, Pearce, and SerVoss. That portion of the line between Cochise and Kelton, approximately 28.9 miles, and the branch lines to Gleeson and to the Commonwealth Mill are owned by the Arizona Eastern. The portion of the line between Douglas and Kelton, approximately 30.2 miles, and the branch line to Courtland are owned by the El Paso & Southwestern. The Southern Pacific owns all of the stock of those companies and operates all of the lines mentioned, under lease. For the purposes of the record all of the branch lines are considered together, there being no separation of traffic, revenues, or expenses for the so-called secondary branches. The population of the area traversed is estimated by the applicants at approximately 2,480. This estimate is based upon the number of voters multiplied by four. The Southern Pacific has two main lines extending westerly from El Paso to Tucson, Ariz. The northern line, a part of the original Southern Pacific route, passes through Deming and Lordsburg, N.Mex., and Bowie, Cochise, and Mescal, Ariz. The southern line, a part of the El Paso & Southwestern, passes through Hachita, N.Mex., and Douglas. From the latter point it extends in a general northwesterly direction and meets the northern line at Mescal, from which point the lines follow the same general route to Tucson, about 38 miles. Between El Paso and Tucson the lines are generally from 15 to 50 miles apart. In addition to the Douglas-Cochise branch the northand-south main lines are connected by a branch extending from Hachita to a point near Lordsburg. Paralleling the main line between Douglas and Mescal, and to the east thereof, is a cut-off between Fairbank on the south line and Benson on the north line. The applicants allege that freight traffic on the branch lines here in question is not sufficient to justify their continued operation; that there is practically no passenger traffic handled; and that other lines of the Southern Pacific are adequate to meet the traffic needs of the general territory involved. The income statement for the branch lines for the 6-year period 1926-1931 shows operating revenues as follows: 1926, $12,645; 1927, $10,376; 1928, $12,714; 1929, $11,822; 1930, $8,575; and 1931, $4,632. Operating expenses and taxes for 1926 were $95,710; 1927, $84,542; 1928, $67,840; 1929, $92,631; 1930, $81,004; and 1931, $70,613. Gross system revenues from traffic originating at and destined to points on the branch lines were as follows: 1926, $13,019; 1927, $42,094; 1928, $39,639; 1929, $37,010; 1930, $38,028; and 1931, $28,934. The revenues allocated to the branch lines are based upon mileage prorate except traffic moving locally, which is credited entirely to the branch. Due to an error in one of the exhibits presented by the applicants it was necessary to file a correction which shows an addition of 11 cars with $1,002 of revenue in 1929 and 6 cars with $964 of revenue in 1930. As these amounts were not prorated to show the revenue apportioned to the branch, the entire revenue is included for both the system and the branch and the totals adjusted accordingly. Operating expenses are actual insofar as they have been possible of ascertainment, but nothing is included for superintend |