The Washington herald., 1918-01-28
LOAN DEPENDS
ON RAILROADS
Holland Says Credit Of the
: Country Is Affected
by Carriers.

head of the American Red Cross in
Russia. and who has brought back to
the United States a new and important
statement respecting the Bolsheviki. Is
also much interested. even concerned.
about the railroad situation in the
United States. not so much the opera
tion side. but with respect to the finan-
cial arrangements which. In his opin-
ion. are. necessary to be made II there
is to be real stabiliation Of securities.
Col. Thompson's relation as banker
to financial questions-he having
served as a member OF the board OF
the Federal Reserve Bank Of this
district-and his remarkable experience
as a leader in the copper industry OF
the United States, as well as his pro-
found understanding of security mar
kets. qualify him to speak authorita-
lively upon this subject. In part at
least. IL not entirely. Col. Thompson
agrees with the Secretary Of the
Treasury. Mr.. McAdoo. respecting the
imperative need of such action by Con-
gress as will serve speedily to sta
bilize railroad securities. Mr.. McAdoo
has recently testified, both in his ca
pacity as Secretary of the Treasury
and also as Director General of the
Federalized American Railroad Sys-
tenn. setting forth in this testimony his
conviction that Congress should speed
lily act so as to give to those who
possess railroad securities perfect con-
fidence that these will be protected,
during the war. at least, by the gov
eTnment. Confidence of that kind Is
needed to prevent the Generalization
in the market which records the prices.
and to some extent the values OF these
securities.
Railroads Affect Loan.
A special and timely reason is given
for the appeal which Mr.. McAdoo has
made. although it is not the only rea-
son upon which he bases his judgment.
Congress is to be asked to authorize
the offering of the new loan, probably
much larger in amount than was the
Second Liberty Loan. There will be
need of making this offering and OF
its absorption by the American people
before the close of the fiscal year,
June 80 next. Should railroad securi-
ties be demoralized, 1t might be that
an unsuccessful appeal would be made
TO the people for subscriptions to this
Third Liberty Loan. On the other
hand. if railroad securities have that
perfect protection which the govern
rnent can alone now give. then those
who possess these securities, which in
the aggregate amount to billions OF
dollars, will be all the better prepared
to accept the offering of the govern
ment for the third loan as readily as
was the case when the first and sec
Ond loans were offered.
1t is to be fairly inferred from some
things Col. Thompson has said since
ago. that he shares the view of Mr..
McAdOo. Col. Thompson, however,
goes much farther than Mr.. McAdoo.
This morning he spoke with earnest
ness of the relation OF the American
people, or that part of the people which
have made investments in railroad Sc
curities to the financial situation. An
erroneous view, according to Col
Thompscn, prevails respecting tho
ownership Of these securities for
many persons are persuaded that
bsakers and other men of finance. are
chiefly Tire owners of these securities.
and for that reason the railroads of
-1he United States are absolutely con-
trollef b. a comparatively small group
whose members are made up of bank
cIS and men of capital
This view is far from a correct one.
Colonel Thompson says. The vast ma
Jority Of owners of railroad securities
are not bankers nor men of finance,
but the great middle class, so to call
Il. of the American people. 1t is true
that perhaps a majority of these hold
ings represent indirect ownership. For
the insurance companies and the saw
il gs banks have invested no small
part of their surplus in railroad Sc
curities. But the surplus of the in
s'uranCe companies and the savings
banks reflects premiums paid by poll
~ holders and deposits made by those
who are able to save some part OF
their wages or small incomes. 1t is
therefore vital that these securities be
protected.
An Unexpected Proof.
A day or two ago there came from
the office of the Pennsylvania Rail-
road company a statement which
tends to confirm much of what Colonel
Thompson said. According to that
statement Europe has parted with al
most all of The securities issued by
the Pennsylvania Railroad company
which Europe he'd at the beginning of
the war. A trifle over two per cent
Of this investment in Europe in Penn
sylvania securities now remains some
"HtISr tilneT IN EnSlanQ or upon the
Continent of Europe. The United
States has absorbed these European
holdings This is true not only of the
Pennsylvania. but also of the New.
York Central and presumably Of other
American railroad securities hereto
fore held abroad. For instance. all but
about five percent of the securities
issued by the New York Central which
were held abroad at the beginning
of the war have been returned.
There is an extraordinary additional
statement made by the PENNSYLVANIA
people for 1t asserts that the number
CT stock holders mas now increased SO
that the total is a little over 100, 900,
nearly one-half of whom are women.
\ large number of the stock holders
of the New York Central and the New
Haven Railroad companies are
women And the number seems to
be increasing. This is spoken of as a
somewhat strange phenomenon in
view OF the general Generalization in
the railway securities market. But
II tends to prove the accuracy of Col
Onel Thompson's statement that a
great majority of those who possess
American railway securities are of the
class sometimes called the plain
people. or those who are in moderate
or comfortable circumstances.
HOLLAND"