May 1913, No. 183 Canadian Railway and Marine World (Toronto) Page 229, col. 2

Lake Erie and Northern Ry. Co.'s bond issue, etc.

When this line was first projected it was an electric railway and was, therefore, dealt with in Canadian Railway and Marine World's Electric Railway Department. Some months ago we were officially advised that it would be built, at least at first, as a steam railway. Now, as will be seen below, it is stated that it is to be an electric line.

A prospectus has been issued of $1,000,000 1st mortgage 5% bonds of the L.E. & N.R. Co. which are offered at 92 1/2 and accrued interest, with a bonus of 25% in common stock. The capitalization authorized and issued is as follows:—1st mortgage 5% bond, $1,100,000; 2nd mortgage 5% bonds, $500,000; common stock, $1,500,000. The directors are J. Muir, H. Cockshutt, L. Harris, J. Sanderson, W. P. Kellett, Brantford, Ont.; R. Thomson, Paris, Ont.; F. H. Deacon, Toronto; M. N. Todd, Galt, Ont.; G. W. Farrell, Montréal.

The following are extracts from the prospectus:—The L.E. & N.R. Co. was incorporated by the Dominion Parliament, in 1911. The company is authorized to construct a line of railway from Port Dover on Lake Erie, through Simcoe, Waterford, Brantford and Paris to Galt, on the C.P.R. main line, a total distance of 53 miles. The Dominion Government has granted a subsidy of $6,400 a mile, or a total grant of approximately $340,000.

The chief object of the road is to provide a direct route between Brantford and various other municipalities in that district to connect with the C.P.R. at Galt, in addition to providing an outlet on Lake Erie to enable the manufacturers of this district to ship their goods by water, during the open season, to the northwest. It will also greatly facilitate direct importations of raw materials from the Untied States, such as coal, coke, pig iron, sheet metal,etc., of which these municipalities consume very large quantities. For this purpose it is proposed to put in operation a car ferry service between Port Dover and some port on the U.S. side of Lake Erie. As an example of the strong strategic position this road will occupy, we would instance the northern division from Brantford to Galt, which will give Brantfort shippers direct connections with the C.P.R., with a haul of only 20 miles. At present Brantford and Paris freight consigned to the C.P.R. must first go over the Toronto, Buffalo and Hamilton Ry. to Hamilton, and from Hamilton over the G.T.R. lines to Toronto, a distance of 62 miles before it reaches the C.P.R. This road will further permit of the T.H. & B.Ry. accepting freight from Hamilton, Buffalo and other points for Paris, Preston, and Berlin, and all points along the C.P.R. main lines east and west of Galt.

Contracts have been given out for the building of the road, and an engineering force is at work completing all necessary details to permit of an early start being made in actual construction. The character of the country through which the road passes will permit of easy curves and grades without excessive excavation. There is practically no rock cutting, and the bridges are comparatively few in number and present no engineering difficulties. It is the intention to electrify the entire system from Galt to Port Dover, and throughout a high standard of construction will be maintained, including 85 lb. rails. It is expected that the road will be in operation by the latter part 1913.

Of the bonds the total 1st mortgage issue was sold to G. W. Farrell & Co., while the 2nd mortgage issue was purchased by the various municipalities through which the road will run in the following proportions:—Brantford $125,000 and Port Dover, Simcoe, Paris and Galt, $25,000 each; and the remaining $275,000 by the directors and other interests closely identified with the road. The proceeds of the above 1st and 2nd mortgage bonds, together with the subsidy of approximately $340,000, is all available for the construction of the road, and is sufficient to provide for the building of a line costing considerably over $30,000 a mile. In view of the favorable character of the country through which this road will pass it will be evident that more than ample allowances have been made for all requirements.

It is difficult to estimate the revenue of a new road, but the earnings of roads in adjacent territory will serve as a fair basis for comparison. The net earnings per mile of main line of the Toronto, Hamilton and Buffalo Ry. are over $6,500. The net earnings per mile of main line of the Galt, Preston and Hespeler St. Ry. running north of Galt and connecting with the C.P.R. are over $3,700. To pay interest on the 1st and 2nd mortgage bonds of the L.E. & N.R., including sinking fund, and to pay 4% dividends on the common stock would require net earnings per mile of approximately $2,800. It is unreasonable to expect that the L.E. & N.R. will equal the earnings of the T.H. & B.R. for some years at least, but there is every reasons to believe in view of its strategic position and the many favorable features surrounding it, that the L.E. & N.R. should, within a very few years, show a substantial rate of earnings on its common stock.

The directors include a number of the most prominent manufacturers in Brantford and Paris, all of whom are in a position to influence a very substantial proportion of the freight originating in that territory. A traffic agreement with the C.P.R., on completion of the road, will ensure the L.E. & N.R. the handling of all freight consigned C.P.R., inbound and outbound, along the whole district between Galt and Port Dover. As the L.E. & N.R. will serve as a very valuable feeder to the C.P.R. and will give it direct access to Brantford, the support and good will of the latter corporation is assured.

G. W. Farrell & Co., Montréal, advise us that the bonds were all sold before the prospectus was issued.

Railways: C.P.Ry., G.P. & H.St.Ry., G.T.Ry., L.E. & N.Ry., T.H. & B.Ry.