New-York tribune., 1919-02-10
Roads Must Sell
Stock, Not Bonds,
Banker Asserts
Sisson Says Debt Accumula-
ton Must Stop and Cap
itaI Attracted to Shares.
in Reply to McChord

If there is to be properly balanced
financial structure for American rail-
roads they must have sufficient credit
TO sell stock and not to be forced to
continue the endless accumulation of
debt, in the opinion of f. H. Sisson.
vice president of the Guaranty Trust
Company, who has written Letter to
c. c. McChord, of the Interstate Com
merce Commission, discussing i'm
portant phases of railway credit and
railway earnings. The correspondence
had its origin in a letter from Con-
missioner McChord insisting that crit
icism made by Mr.. Sisson, in an ad
dress before the American Bankers
Association, of the Interstate Com
merce Commission for its failure
properly to protect railway credit was
unwarranted.
"The fact would seem to be self-evi
dent" declares Mr.. Sisson in his reply
to Commissioner McChord, "and vet
apparently is not considered, that in
vestment in stock is not attracted ex-
cept by an assured return above that
normally received from loans or bv
speculative possibilities. If the policy
OF the commission is to restrict earn
lngs to the point where stock dividends
are less than the return available from
good loans in many quarters, without
speculative possibilities beyond, there
is nothing to win the dollars of the
American investor in the railroad sit
uatlon, as he has very clearly shown"
Criticises Commission
Reiteration is made by Mr.. Sisson
of an opinion expressed in 1910, when
the Interstate Commerce Commission
had its powers increased, that ait has
not followed a policy which would in
dicate that it is cognizant of it's great
responsibility in the solution of this
pressing economic problem, which
touches all phases Of our economic life
and exerts a potent influence upon the
credit of our railroads.
And to-day" he continues, eve have
no assurance that on the return of the
railroads to private management the
commission will take a point of view
which will assure investors that their
interests will be safeguarded and that
railway credit will be maintained on q
sound basis
Your statement that the railroad
executives have been responsible in
some measure for the waning credit of
the railroads from 1911 to the spring
OF 1917. owing to the discouraging
statements they made concerning their
business. is undoubtedly true. The
further fact is true, however, that the
only manner in which these executives
could get consideration for their tinan
cial problems at the hands of either
the commission or the public was to
lay emphasis on these facts, and some
OF my serious complaints against the
commission is that it placed the rail
road executives in such a position that
TINS was necessary.
AS to Charges of Mishandling
Your suggestion that the bad fnan-
cial handling of certain railroads was
largely instrumental in destroying rail
road credit is worthy of consideration
only in connection with the plain fact
that all Of such instances together
amount to but a small fraction Uess
than 10 per cent? of the railroad miIe-
age of the country, and yet the com
mission and, to some extent, the public.
following its leadership, have con-
demned 30 per cent of the railroads to
punishment and disfavor for the mis-
takes OF the small minority. | know
OF no class of business, public or pri
vate, which is willing to have it's af
iairs Judged on the basis of it's mis-
takes. nor do | know Of any class Of
business which has been free from
mistakes. 1t seems to me that the vital