Judgment Day

In two important railroad decisions last week the Supreme Court in effect laid down a basic principle: It is more important for bankrupt roads to drastically revise their capital structures and get in tiptop working condition than it is to protect their junior bondholders and stockholders.

The decisions came in the cases of Western Pacific Railroad and the Chicago, Milwaukee, St. Paul & Pacific. In both instances the Court approved thoroughgoing reorganizations, ignored present war-boomed earnings as the basis for capitalization, and upheld the hard hand of the Interstate Commerce Commission.

The Profits and the Losses. The court decisions raised hob....

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