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When the Morrows began angling for McCrory Stores they did not bother with the common stock. Working through their United Stores Corp. they bought up a fistful of McCrory debentures and preferred stock and paid $2,700,000 for $7,000,000 worth of claims from landlords who had leased store space to McCrory. This put the Brothers Morrow in a position to negotiate a reorganization as one of McCrory's principal creditors. They offered a recapitalization scheme which last week filled the Special Master for McCrory with violent and vociferous rage.
Prime point of the Morrow plan was that United Stores Corp. would receive 444,840 shares, or 37%, of the new common stock at a special price which would give it a profit of $437,000 in return for money spent in acquiring landlord's claims. That, said the Special Master, was an "unconscionable profit" which Congress never intended when it passed the new bankruptcy amendment. Equally displeased were the common stockholders who had a p!an of their own. They wanted the Morrows to get only what they had spent for landlord claims, plus a small profit and no common stock. Last week the Special Master, declaring that the Morrow scheme "discriminated unfairly" in favor of United Stores Corp., summarily threw it back into the Federal Court for further study.
Baldwin. "I don't believe," said President George Houston of Baldwin Locomotive Works last week, "that the railroads can live on less than 40,000 locomotives. ... In January 1927 there were 61,995 locomotives on line. In July there were 45,888. Many railroads need locomotives but it is impossible to say when they will buy."
So few locomotives have U. S. railroads bought since 1929 that Baldwin Locomotive, its working capital down, its cash low, went into reorganization under 77th last February (TIME, March 4). This was no surprise to the Securities & Exchange Commission which later accused Baldwin of "misleading the investing public," or to a Baldwin stockholder named George Stephenson who accused the company's officers of unloading Baldwin stock on the public in 1929—a charge which President Houston hotly denied. What was surprising about the Baldwin reorganization was that a plan to revamp the company was approved almost at once by all the protective committees. It provides for conversion into new securities of all outstanding issues except first mortgage bonds which would remain in the hands of the public. Maximum outlay for fixed charges would be $133,800 a year instead of $1,281,000. Despite this drastic reduction, President Houston announced last week that Baldwin must do a gross business of $30,000,000 a year in order to break even after charges and depreciation under the reorganization plan. Baldwin has not grossed $30,000,000 since 1930.
Coal. A small corporation with an excellent pre-Depression earnings record is New Rochelle Coal & Lumber Co. of New Rochelle, N. Y. It sought permission to reorganize under Section 77b when a creditor, Shanferoke Coal & Supply Corp. of Delaware, sued to collect a bill of $26,051. A reorganization plan was approved by the court and by a majority of security holders and creditors, except Shanferoke Coal. That company tiled a petition in the U. S. Circuit Court of Appeals which resulted in a noteworthy decision.