with bankers.-Chicago, M. & St. P. Ry. Co. Investigation, 131 I. C. C. 615. Terms of sale must be considered on applications for authority to issue bonds. New York Central R. Co. Bonds, 65 I. C. C. 172.

Proposed sale of bonds at not less than 80 per cent of par without cost of the issue and sale found to result in excessive cost to applicant.—Alabama, F. & G. R. Co. Bonds, 70 I. C. C. 238.

Authority to issue bonds deferred, when terms of sale of proposed issue had not been determined.-New York, C. & St. L. R. Co. Bonds, 90 I. C. C. 200.

If evidence furnished by an applicant seeking authority to issue and sell stock at less than par is not convincing that such sale is lawful under the statutes of the State in which it is organized, the issue and sale will not be authorized at less than par.Castleman Valley R. Co. Stock, 90 I. C. C. 521.

The terms of sale of a proposed issue of securities must be reasonable.Erie R. Co. and Pere Marquette Ry. Co. Control, 138 I. C. C. 517.

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54. Conformity to antitrust laws. Regardless of whether the commission has the sole and exclusive jurisdiction with regard to the issuance and disposition of all commoncarrier securities to the exclusion of the provisions of the Clayton AntiTrust Act, sec. 10 (U. S. Code, title 15, sec. 20), their sale should comply with the provisions of that section so far as applicable.-Western Pac. R. Co. Securities, 145 I. C. C. 750.

55. Conditional sales in advance of authorization.-While conditional sale of securities, subject to the commission's authorization, in advance of approval of the issue is not prohibited, the commission is not controlled in its action by representations that failure to approve issues conditionally sold will result in disturbance or disarrangement of plans based on antici

pated approval.-New York Central R. Co. Bonds, 65 I. C. C. 172.

56. Manner of sale.-Sales of equipment-trust certificates, see note 141, under this paragraph.

Arguments advanced in favor of the practice of dealing with a single financial house in marketing new securities in opposition to any requirement of competitive bidding have force as applied to carriers of more or less uncertain financial status, but have little weight in the case of carriers of assured earning power and favorable financial structure.-Chicago Union Station Co. Bonds, 86 I. C. C. 529.

It is not the commission's purpose nor function to require particular methods in railway financing. Financing or refunding operations involving large amounts may require methods different from those involving small amounts. The latter might be handled in open market and by independent bidding when such method would be inappropriate for large issues or securities of a different class.-Union Pac. R. Co. Equipment Trust, 86 I. C. C. 612.

57. Comparison of underlying values and capitalization.-Valuation of common-carrier property, see sec. 19a, this title.

When the final valuation of a carrier's properties has not yet been established, it is impracticable to compare the carrier's capitalization with the underlying value.-St. Louis-S. F. Ry. Co. Securities, 79 I. C. C. 92.

Authority to issue the full amount of capital stock for which authority was sought was denied when it would result in an excess of stock over total investment in road and equipment.Interstate R. Co. Stock, 82 I. C. C. 359.

Compatibility with public interest is not shown by the fact that the physical value of applicant's property equals or exceeds a proposed capitalization, particularly when it appears certain that a receivership would quickly re

sult.-Louisiana Ry. & Nav. Co. of Texas Securities, 99 I. C. C. 357.

That an applicant has capitalizable assets sufficient to support an increase in securities does not in itself justify an increase.-Erie R. Co. and Pere Marquette Ry. Co. Control, 138 I. C. C. 517.

That a proposed increase of stock is adequately supported by assets does not make the conditions of issue and sale matters entirely unaffected by the question of how the proceeds shall be used. The commission may in such a case exercise its judgment as the circumstances seem to require.-Erie R. Co. and Pere Marquette Ry. Co. Control, 150 I. C. C. 751.

58. Comparison of stock and funded debt.-Increasing the amount of capital stock in relation to funded debt increases safety.-Chesapeake & O. Ry. Co. Stock, 72 I. C. C. 658.

The ratio of stock to the funded debt is not a controlling consideration on an application for authority to issue securities.-Erie R. Co. and Pere Marquette Ry. Co. Control, 138 I. C. C. 517. Compare Texas Short Line Ry. Co. Bond, 67 I. C. C. 400.

59. Corporate relationships.-On an application for authority to issue bonds to reimburse a proprietary company for advances made in the acquisition of land from an investment company controlled by the proprietary company, the commission looks beyond their separate corporation entities in considering the transaction and treats the land as though purchased in the first place by the applicant and held until used for railroad purposes.-Tampa & G. C. R. Co. Bonds, 150 I. C. C. 151.

60. Relationship between carriers.Consideration of the relationships existing between applicants and other carriers may militate in favor of a financing project, where tests otherwise applicable may appropriately be disregarded.-New Jersey, I. & I. R. Co. Stock, 94 I. C. C. 727.

61. System financing.—“ System' construed, see note 23, under this paragraph.

Public interest in railroad financing requires that system carriers be considered as a unit. It is not in the public interest that parts of a system be permitted to increase their capitalization piecemeal when consideration of the system as a whole might, and probably would, warrant no such increase. In such a case benefits which accrue to one carrier through control of another are already realized and would not be increased by an unwarranted addition to the volume of securities.-New Jersey, I. & I. R. Co. Stock, 86 I. C. C. 718.

62. Situs of corporate organization. The situs of corporate organization is immaterial when the applicant seeking authority to issue securities has been lawfully organized in the State of its creation, and the proposed issue is for a lawful purpose within its corporate powers.-Denver & R. G. W. R. Co. Stock, 70 I. C. C. 102.

63. Safety for investors and probable yield. It is of the utmost importance that railway securities should be safe and conservative investments for the public, and should yield good and ample return for the money invested. In re Consolidations and Combinations of Carriers, 12 I. C. C. 277. (Decided prior to enactment of this section.)

V. BONDS

70. In general.-Terms and conditions of approval, see par. (3) of this section and the notes thereto.

Stockholders should control a corporation, and the commission ought not to interpose objections to a proposed readjustment of securities when stockholders, who are most vitally interested, have authorized it by more than a two-thirds vote, unless shown that the proposed action would be incompatible with the public interest.—Boston

& M. R. Readjustment, 111 I. C. C. 457.

That a company has no bonds outstanding is not a valid reason, in itself, why it should issue bonds.-Pittsburgh & W. V. Ry. Co. Stock, 105 I. C. C. 552. Carrier authorized to place in its treasury, to be used for corporate purposes, that part of the proceeds realized from a sale of bonds previously approved in excess of the amount required to pay certain notes, the bonds being sold above par.-Portland Term. Co. Bonds, 76 I. C. C. 9.

A change authorized in the places where and the currency in which bonds of a European loan which have been repurchased and pledged should be payable. Cleveland, C., C. & St. L. Ry. Co. Security, 67 I. C. C. 355.

A subsidiary carrier authorized to assume for a consideration an additional liability with respect to its bonds owned by its proprietary company, by a modification of the tax covenant therein.-Oregon-W. R. & Nav. Co. Bonds, 70 I. C. C. 99.

The issuance of bonds has been authorized in the following instances:

First mortgage gold bonds, the proceeds thereof to be deposited subject to the order and control of the trustees under applicant's first mortgage and to be used only for capital expenditures.-Western Pac. R. Co. Bonds, 67 I. C. C. 655.

First-mortgage bonds to be in part deposited with a trust company to create a sinking fund required by State laws.-Leavenworth & T. R. Co. Bonds, 70 I. C. C. 288, 94 I. C. C. 440.

When the proceeds were to be used in the purchase of securities of other companies.-New Orleans, T. & M. Ry. Co. Bonds, 94 I. C. C. 83.

Terminal company bonds to reimburse applicant's treasury for capital expenditures and to provide cash for current requirements.-Toledo Term. R. Co. Bonds, 145 I. C. C. 308.

Authority to issue bonds denied in the following instances:

Authority to pledge or sell bonds solely to restore income denied when at time of the applicant's reorganization its book value of road and equipment was substantially marked up to offset securities issued and subsequently increased for purpose of setting up accrued depreciation on equipment.-St. Louis-S. F. Ry. Co. Securities, 79 I. C. C. 323.

Authority to issue first-mortgage bonds denied as incompatible with public interest by reason of the fact that applicant had failed to comply with provisions of its mortgage which required establishment and maintenance of a sinking fund, such failure constituting a basis for a declaration by the trustee that the principal of bonds outstanding under the mortgage should immediately become due and payable.-Wildwood & D. B. S. L. R. Co. Bonds, 94 I. C. C. 682.

71. Nominal issues.-Funded - debt securities are considered to be nominally issued when certified by the trustee and placed with the proper officer of the carrier for sale and delivery.-Atlantic Coast Line R. Co. Bonds, 138 I. C. C. 411.

Issuance or authentication and delivery to applicant of bonds to be held in applicant's treasury subject to further order of the commission authorized.-Baltimore & O. R. Co. Bonds, 65 I. C. C. 588, 720; Southern Ry. Co. Bonds, 70 I. C. C. 771; and other cases too numerous to cite.

Authority to nominally issue general unified mortgage bonds in lieu of general unified mortgage bonds presently held, denied, inasmuch as such bonds were nominally issued prior to effective date of this section, and applicant did not propose to have other bonds certified and delivered in lieu thereof. -Atlantic Coast Line R. Co. Bonds, 138 I. C. C. 411.

Purpose of Issuance

72. Retirement, refunding, or exchange for other bonds.-Performance of conversion agreement as an issue of securities, see note 16, under this paragraph.

Other securities for similar purposes, see notes 102, 103, 110, 123, 124, and 143, under this paragraph.

The commission will not substitute its judgment for that of the directors of an applicant seeking authority to issue bonds retiring prior bonds, even though retirement at a future time might be effected on more favorable terms.-Northern Pac. Ry. Co. Bonds, 71 I. C. C. 583.

Authority to issue bonds to refund prior bonds of like amount denied, as not in the public interest, when the ratio of bonds to stock was approximately 16 to 1, and the record showed no facts indicating that applicant's prospective earnings, previously insufficient to pay operating expenses and fixed charges, would improve.— Texas Short Line Ry. Co. Bond, 67 I. C. C. 400.

Bonds have been authorized as follows:

Bonds to retire, refund, or in exchange for other bonds.-Baltimore & O. R. Co. Bonds, 65 I. C. C. 704, 90 I. C. C. 647; Chicago, R. I. & P. Ry. Co. Bonds, 67 I. C. C. 647, 79 I. C. C. 371, 111 I. C. C. 248; and many others too numerous to cite.

Bonds in exchange for bonds issued without prior authority of the commission. Muskegon Ry. & Nav. Co. Bonds, 124 I. C. C. 541; Elkin & A. R. Co. Securities, 138 I. C. C. 341; Jacksonville & H. R. Co. Securities, 150 I. C. C. 181; Jacksonville & H. R. Co. Acquisition, 150 I. C. C. 551.

Refunding bonds to retire a like amount of first mortgage gold bonds in accordance with a trust indenture.-Central Vermont Ry. Co. Bonds, 65 I. C. C. 126.

Bonds to be exchanged for prior bonds of predecessor companies, in

plan.-New Orleans, T. & M. Ry. Co. Securities, 65 I. C. C. 682.

Joint convertible bonds of two applicants to pay or refund prior bonds given in payment for stock of a third carrier.-Northern Pac. Ry. Co. and Great Northern Ry. Co. Securities, 67 I. C. C. 458.

Bonds to be delivered to a lessee for indorsement of a guaranty as to payment of interest and for sale, t! proceeds to be used in payment of maturing bonds of the lessor, guaranteed by the lessee.-Rensselaer & S. R. Co. Bonds, 67 I. C. C. 494.

Bonds to be delivered to applicant's proprietary tenants, the proceeds to be used to redeeming outstanding general mortgage bonds.-Chicago & W. I. R. Co. Bonds, 67 I. C. C. 609.

Improvement and extension 6 per cent bonds to be exchanged or substituted for 5 per cent bonds of a prior issue pledged or in applicant's treasury.-Ann Arbor R. Co. Bonds, 70 I. C. C. 36.

Issuance of 4 per cent consolidation mortgage bonds in exchange, par for par, for a like amount of 31⁄2 per cent bonds of a former subsidiary since consolidated with applicant. - New York Central R. Co. Bonds, 70 I. C. C. 282.

First mortgage 5 per cent bonds to be exchanged, par for par, for a like aggregate amount of outstanding first mortgage 6 per cent bonds and second mortgage income bonds.-Bullfrog Goldfield R. Co. Bonds, 70 I. C. C. 354.

Subsidiaries' bonds to reimburse proprietary carrier furnishing funds to retire outstanding bonds.-Burlington, C. R. & N. Ry. Co. and Chicago, R. I. & P. Ry. Co. Bonds, 70 I. C. C. 499.

Bonds to reimburse applicant's treasury for expenditures in paying other bands. Norfolk & W. Ry. Co. Bonds, 71 I. C. C. 254.

Bonds to be exchanged for a like amount of a navigation company's debentures when a State law dissolved the navigation company and a holder

of the debentures was unwilling to surrender them without receiving bonds in exchange.-New York, N. H. & H. R. Co. Bonds, 79 I. C. C. 640.

Lessor's bonds to reimburse lessee for expenditures in the retirement of lessor's prior bonds.-United New Jersey R. & Canal Co. Bonds, 82 I. C. C. 328.

Bonds or scrip certificates to be exchanged for bonds or scrip certificates previously issued by applicant and subsidiaries whose disassociation has been ordered by the Supreme Court.-Reading Co. Operation and Bond Issue, 86 I. C. C. 157..

Bonds to be exchanged for bonds of an abandoned road for which applicant was responsible.-Georgia S. & F. Ry. Co. Bonds, 86 I. C. C. 685.

Bonds to be exchanged for a like amount of bonds of another carrier in connection with the acquisition of that road by one of applicant's leased lines, and its lease to applicant.-St. Paul & K. C. S. L. R. Co. Acquisition, 94 L. C. C. 87.

Bonds to be exchanged for outstanding bonds pursuant to a proposed plan of readjustment of securities designed to reestablish applicant's financial position and restore its impaired credit.— Boston & M. R. Readjustment, 111 L. C. C. 457.

Bonds to be exchanged for bonds of a constituent company.-Pittsburgh, B. & L. E. R. Co. Bonds, 131 I. C. C. 283.

Bonds to reimburse applicant's treasiry for expenditures in acquiring bonds of its lessor.-Naples, S. & G. Ry. Co. Control, 131 I. C. C. 787.

Bonds in lieu of a like amount of bonds issued contrary to the provisions of an order of the commission in a prior case.-Arcade & A. R. Co. Bonds, 138 I. C. C. 13.

Bonds, the proceeds to be used in part to acquire and retire outstanding bonds of predecessor and leased companies. Cleveland, C., C. & St. L. Ry. Co. Bonds, 138 I. C. C. 37.

Mortgage bonds to be exchanged for a like amount of bonds of a proprietary colliery company.-Kelley's Creek & N. W. R. Co. Bonds, 138 I. C. C. 239.

Unsecured bonds, the proceeds to be used in retiring outstanding bonds.Southern Pac. Co. Bonds, 138 I. C. C. 242.

Mortgage bonds in exchange for temporary mortgage bonds and due bills previously certified and delivered to the applicant in respect of capital expenditures.-Atlantic Coast Line R. Co. Bonds, 138 I. C. C. 411.

Bonds, the proceeds to be used to take up maturing bonds of applicant's predecessor.-Wheeling & L. E. Ry. Co. Bonds, 145 I. C. C. 29.

Bonds to retire outstanding conditional-interest bonds.-Waco, B., T. & S. Ry. Co. Securities, 145 I. C. C. 543. Debenture in payment of overdue bonds.-Fresno Interurban Ry. Co. Debenture, 150 I. C. C. 208.

Bonds to reimburse applicant for expenditures in paying bonds of a constituent company.-Seaboard Air Line Ry. Co. Bonds, 150 I. C. C. 239.

73. Exchange for stock.-Other securities issues for similar purposes, see notes 103 and 124, under this paragraph.

Authority to issue bonds to be exchanged for a like amount of outstanding preferred stock denied, when the record did not disclose a justification for the conversion.-St. Louis & H. R. Co. Bonds, 99 I. C. C. 679.

74. Reimbursement of applicant's treasury.-Bonds to reimburse a carrier's treasury for expenditures of a particular nature, see particular notes under this paragraph.

When a small surplus of capitalizable assets over capitalization is shown in a carrier's accounts, and disparity would result if a proposed bond issue was accomplished, the commission will not approve an issue of bonds to be pledged or sold solely for purpose of restoring income.-St. Louis-S. F. Ry. Co. Securities, 79 I. C. C. 92.