Virginian Lease

Last week's events went to prove that, in the highly competitive clash of Eastern railroad mergers, the

Pennsylvania R. R. is by no means to be forgotten, even if the Van Sweringens' Nickel Plate has enjoyed most of the limelight. The Nickel Plate was quite anxious to acquire the Virginian R. R., and neither the New York Central nor the Baltimore & Ohio would have wept bitter tears at being asked to take it over.

The Virginian consist of a single line running from Norfolk back into the coal territory in the hills. It slopes so steadily seaward that cars loaded with coal (about 90% of its traffic) can coast downhill without need of much fuel.

But while other rail groups "claimed" the Virginian, the Pennsylvania went out and took it. This was done by the leasing of the Virginian to the Norfolk & Western, which is in turn controlled and largely owned by the Pennsylvania.

Under the lease, the N. & W. will secure all revenues from the Virginian, in return for paying its operating expenses, taxes and a 6% dividend on its preferred and common stocks, or about $3,500,000 a year. Recent net earnings of the Virginian should about make up this total amount whose payment is undertaken by the N. & W.