John Blair's Judgment

When close, old John Insley Blair died in 1899, aged 97, he left behind him some $70,000,000. He was one of the first of the picturesque gentlemen who crosshatched the U. S. with railroads and in the process made huge fortunes. He helped organize Delaware, Lackawanna & Western. He was in with Oakes Ames on the Union Pacific. At one time he was president of 16 separate railroads. He was said to control more trackage than any man in the world.

Thirteen years before the Civil War he started Blair Presbyterian Academy in Blairstown, the obscure, out-of-the-way New Jersey village from which he ran his railroads. Before he died he gave the Academy an endowment fund of $151,000 in railroad securities. In so doing he set up a definite standard for occasions when there was money to be reinvested: in John Blair's opinion there was no investment like a first-mortgage railroad bond.

Last week Blair Academy petitioned Chancery Court in Trenton, N. J. to let it relax John Blair's standard. "It is no longer safe," said Blair Academy plaintively, "to reinvest the endowment fund in . . . railroad securities. . . .''

Confirming the opinion that John Blair's investment judgment is slightly outmoded, last week young William R. White, New York State superintendent of banks, struck no less than 230 railroad bond issues (face value $3,134,547,000) from the list of legal investments for savings banks.

Before 1932 these New York banks were allowed to buy railroad bonds only if the roads had made their fixed charges 1 1/2 times over in five out of the six preceding years. Then as railroad income fell away in Depression the requirements were suspended; and the suspension was renewed annually until Governor Herbert Lehman three months ago signed a bill allowing on the legal list only bonds of roads which for five of the past six years had broken even on their fixed charges. In the present slough of U. S. railroading this meant an extensive blacklist. The banks could keep any bonds they held at the moment : the list was to guide their future purchases. Examples of mighty roads affected: Atchison, Topeka & Santa Fe; New York Central; Baltimore & Ohio; Great Northern; Southern Pacific.

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