property for railroad purposes was $9,500,000, and for nonrailroad purposes its value was $6,500,000. This witness had been familiar with the property located adjacent to and in the vicinity of the debtor since the date of the terminal's construction. He arrived at his estimate after considering, among other things, the sales and rentals of adjacent property from 1920 to the date of his testimony. His studies show that in 1920, the year in which the station handled its maximum number of passengers, real estate in Boston, and particularly in the vicinity of the station, was worth about the assessed valuations. His studies show further that there was somewhat of a parallel between the subsequent decrease in passenger business and falling rents and real estate prices. He stated that while his appraisal was largely influenced by these studies, it does not fully reflect the percentage of decrease in rentals and selling prices of adjacent real estate from those prevailing in 1920. This witness further testified that the station building was huge and outmoded, and that, if taxed at the rate then prevailing, it might be considered worthless for anything other than railroad use. However, on the assumption of reasonable assessments, the witness was of the opinion that the property could be valued at $6,500,000 if railroad use were abandoned.

3. Traffic, revenues, and expenses.-During the years 1940 to 1949, inclusive, total revenues and expenses of the debtor were as follows:

Including real estate taxes, total net costs or charges of the debtor for the years 1940 to 1949, inclusive, were, in order, $1,673,689.17, $1,719,567.95, $1,921,576.17, $2,349,373.63, $2,520,109.89, $2,797,121.71, $2,915,941.07, $3,124,792.14, $3,170,129.45, and $2,897,989.40.

For the years 1918 to 1949, inclusive, the total number of passengers in and out of Boston via the New Haven operated system and the Boston & Albany were as follows:

275 L. C. C.

NOTE. Checks made indicate that slightly less than 25 percent of passengers via the New Haven and Boston & Albany Back Bay routes board or leave the trains at Back Bay, Trinity Place, or Huntington Avenue Stations. On this basis total South Station passengers are approximately 14 percent less than the totals shown above.

According to fall timetables the total number of regularly scheduled trains of the New Haven system and Boston & Albany entering and leaving South Station for the month of September (October in 1920) in each of the years 1918 to 1949, inclusive, were as follows:

4. Income available for fixed charges.-As shown, the act incorporating the Terminal Company provides that the railroad companies required to use the terminal station should pay to the Terminal Company only such amounts as might be necessary to pay the expenses of its corporate administration and of the maintenance and operation of the station and the facilities connected therewith and owned by the Terminal Company, including insurance and all repairs, taxes, and assessments, the interest upon its bonds, and a dividend not to exceed 4 percent per annum upon its capital stock. Practically the only other

revenue of the Terminal Company has been that received from rentals and various concessions, and this revenue has been used by the railroad companies to offset operating costs. Under the mortgage trustee's amended plan the reorganized Terminal Company would be a wholly owned subsidiary of the New Haven and the New York Central and its operations would be controlled by those railroads. Should that plan not be approved, the only income that would be available for fixed charges of the reorganized debtor would be that obtained from the railroads using its property. As seen, the plan for reorganization of the New Haven provided that the using railroads should pay the Terminal Company, aside from costs such as maintenance, expenses of operation and taxes, $275,000 per annum for the use of its property. The offer of the New Haven and the New York Central upon which the mortgage trustee's plan is based provides that these two railroads, upon the consummation of the plan, will pay to the mortgage trustee an amount as rental for the terminal property equal to $21,000 per month from January 1, 1950, to the date of consummation of the plan.

III PLAN APPROVED

A. NEW HAVEN AND NEW YORK CENTRAL OFFER

As pointed out above the mortgage trustee's plan, as amended, is predicated upon an offer of the New Haven and the New York Central, which hereinbefore has been described. The offer is over-all and the record is silent with respect to any apportionment of the proposed total compensation which would be paid, between the terminal property itself and the claims or as between various types of claims. On the basis of market prices prevailing at the time of the offer the shares of New Haven stock and the certificates of beneficial interest would have a value of approximately $1,250,000 which, together with the $9,925,168 of cash, would produce a total of $11,175,168. This latter amount, together with the sums of $299,938.09 held by the mortgage trustee and $1,533,817.70 held subject to the order of the court (and any additions resulting from payment for the use of the terminal property from January 1, 1950), would enable the bondholders to realize approximately $859 per $1,000, principal amount of the bonds.12

12 The compensation of the debtor's trustee has been paid currently in monthly installments; the compensation and expenses of the debtor's counsel have been paid up to December 31, 1947; and the compensation of the trustee's counsel has been paid up to December 10, 1947. The trustee's counsel will have a claim for his compensation from December 7, 1947, to the completion of the reorganization proceedings, and the debtor's counsel may have a claim for compensation and expenses subsequent to December 31, 1947. It is expected that claims for reorganization expenses, including attorney's fees, will be made not only by the mortgage trustee but also by the various groups representing bondholders.

B. TERMINAL COMPANY ASSETS

The principal assets of the debtor are its land with structure thereon; the cash held by the mortgage trustee representing the balance of the amount received by the Terminal Company for part of its original real estate which was taken by the Federal Government for postal purposes; the cash in the special bond interest account; the claim resulting from the provision in the New Haven plan abrograting the use obligation imposed by section 9 of chapter 516 of the Massachusetts Acts of 1896; an existing claim against the railroads arising out of past use of the terminal by them; a claim against the railroads which would arise out of such use of the property as may be made by them in the future; and a claim against the Commonwealth of Massachusetts for franchise taxes paid under protest during the period antedating the reorganization proceedings.13

1. Terminal Company real estate. The only evidence of record as to the value of the terminal property consists of the balance sheet data, the statements of the results of operations, the Commission's Bureau of Valuation report on elements of value for rate-making purposes, and the testimony of witness Kiley, previously described in the section of this report dealing with valuation data. As compared with Kiley's valuation for the terminal property of $9,500,000 for railroad purposes and $6,500,000 for nonrailroad purposes, the city of Boston for recent years ending with December 31, 1949, has compromised the real estate taxes on the property on the basis of a valuation of $6,000,000. While there is little evidence of record with respect to the salvage value of the terminal facilities, it is doubtful that any substantial amount would be obtained if they were scrapped. By far the greatest investment of the terminal is in its station building and land. The station building has little or no utility other than as a passenger station and the evidence shows that it is obsolete for present day purposes. According to witness Kiley, if the station building were demolished, the unimproved land could be utilized for parking purposes, or for combined purposes of outdoor parking and a small railroad terminal.

The Terminal Company, as such, is not engaged in a self-supporting enterprise, but is dependent upon continued use by the railroads for terminal purposes. The New Haven and Old Colony have been relieved of their obligation to use the terminal under chapter 761 of the Massachusetts Acts of 1896 and to make the payments provided for

None of these claims has been liquidated. They have been fully described and analyzed in the joint brief of the trustees of the debtor and its mortgage filed in this proceeding. These analyses hereinafter will be summarized.

therein. If and when a plan for the Boston & Providence is confirmed, it is logical to assume that it will contain provisions similar to those of the New Haven. There is no basis to expect that an agree ment can be reached under which those railroads would voluntarily continue the statutory payments, or that compensation for the use of the terminal facilities would be fixed at a sum adequate to service the present bonded indebtedness of the debtor.

The number of passengers in and out of Boston via the railroads using the terminal declined from over 45,000,000 in 1920 to approximately 16,700,000 in 1949, and even in 1943 at the height of the war, the total number of passengers was only 28,293,793. The evidence further shows that the total number of regularly scheduled trains of the New Haven and the Boston & Albany entering and leaving South Station in the month of October 1920 amounted to 660, whereas in the month of October 1949, the number of trains declined to 231. Revenues from rentals and concessions ranged from a low of $498,533 in 1940 to a high of $956,772 in 1945, and amounted to $732,385 in 1949. These revenues, however, are used to offset partially operating and other expenditures. Total net costs or charges, including real estate taxes, of operation increased from $1,673,689 in 1940 to $3,170,129 in 1948 and were $2,897,989 in 1949. In 1941 the average cost per passenger was 11.52 cents and in 1949 it was 21.22 cents.

These increased costs of operation, the large decrease in passenger business, and the decline in value of the terminal property as measured by the value of adjacent real estate, convincingly show that the interest payments by the using railroads as fixed by chapter 516 of the Massachusetts Acts of 1896 are excessive. It was on the basis of similar evidence that the Commission in the plan approved by it for the New Haven and the Old Colony relieved those railroads from the statutory obligation to use the terminal property, and from the payments for such use as fixed in the act, and limited the payment of those railroads for bond interest to a proportion of $275,000 per year. Capitalization of this amount at 4 percent would produce a figure of $6,875,000. As shown hereinbefore, the recent proposal of the New Haven and the New York Central contemplates the payment of rental for the terminal property of $21,000 per month from January 1, 1950, to the date of consummation of the plan. Capitalization of such payments at 4 percent would produce $6,300,000.

2. Claim resulting from abrogation of use obligation.-On brief the debtor's and the mortgage trustees, hereinafter called the trustees, in stating their analyses of the various claims, point out that where an ordinary lease is rejected in a reorganization proceeding under