The Birmingham age-herald., 1917-07-21

fresh capital, because it saw railway credit more and more impaired.
 The presumption is that it was this reluctance of capital due entirely to cer- tain legislative restrictions upon the rail- roads to which MT. Vanderlip referred when he intimated that the railroad crisis Is even greater today than the great mass of people believe to be the fact.
 There is another point of view of which only partial disclosure has been made within day or two. The presumption is strong that the interstate commerce commission not at a public hearing but i, at an informal or private hearing, of which the public had no Knowledge, were instructed about the relation of the savings banks of the United States to this grave railroad situation Those who had some part in framing the new and admirable savings bank law of New York state (so good that 1t was speed fly initiated by Connecticut, Massachu- scetts and Vermont, and some of its fea- lures by other states) brought to the attention of the interstate commerce commission the vital interest which the savings banks have in the maintenance of the credit of the. railroads of the United States.
 that the many thousands who had in- vested their savings by depositing them in the savings banks had vital inter est in the maintenance of the credit of the railroads. The New York law per- mitted savings banks to invest in bonds of railroad companies provided these bonds represented certain well deter mined principles.
 Three or four years ago the savings banks of New York, Massachusetts and Connecticut carried nearly 600O, 900 open accounts, representing deposits in round numbers of a little under s, O0A, 0O0, ,000, al- most exactly the amount of the liberty loan. These savings banks held as in vestment for their depositors approxi- mately s54o, 100000 of railroad securities.
 IT, therefore, the railroad companies of the United States continue to slip down hlll as far as credit is concerned, the time inevitably approaches when these securities will. lose more and more of their value. It is as important that those Who work for wages, or small salaries, who are for the most part the depositors in the savings banks, should have good reason to feel the investment made of their deposits will yield such income as will enable the banks to pay fair interest as the stockholders of the railroads have for desiring sufficient net earnings to justify the payment of req sonahle dividends,
 The interstate commerce commission was informed that the margin of safety Tor investments of this kind, now inn paired, can be restored in but one or two ways. Either by reducing the percen- tage of operating expenses and taxes or else by increasing the amount received for performing the same amount of service An increase in service with no increase in the price will not restore the margin of. safety. The New York au- thorities who endeavored to enlighten the interstate commerce commission spoke most earnestly, saying that the increasing tendency to decrease the mar gin of safety of railroad securities will. unless checked, become serious by en- dangering the safety of this class of se- curities for savings bank investments.
 If those who spoke for the savings banks of the United States made any inn pression upon the interstate commerce commission, it was the impression of monetary interest and not, of immediate necessity. It may be that unless the railroads of the United States are able so to increase their credit by securing such larger margin of profit from their operations as to tempt capital to furnish the billions needed, then the savings banks will be compelled to discard these securities from their investments. If they do discard them the situation will become more aclIt0 than if now is