The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-03-27
RAILROADS WILL BE-
FINANCED FOR APRIL
War Corporation to Advance
to Lines on Certificates
Of Indebtedness.
MAY NEED 100000, 900
New Plan Will Provide for All
Necessities Of Roads in
Federal Control.
spccid. DespateA TO THE sus.

Special Despatch to THE sur.
WAsHuNGToN, March 2e.-Plans for
financing requirements of the railroads
to April 1 and beyond were completed to-
day with the announcement OF the War
Finance Corporation that 1t would make
advances to the roads and accept GER
tihcates OF indebtedness from the Rail-
road Administration as security.
This ID the last link in q chain Of
financing that has required all the in
genuity OF officials and railroad execu-
tives to forge. 1t will provide for meet
Ing practically all Of the remaining no
cessities Of the roads under Government
control and OF the Administration.
1t Is expected that the total demands
on the War Finance Corporation may
run as high as $500. 200, 900. inclusive
OF the s50,o00.oo0 advanced directly
to the Administration. and which was
subsequently distributed to Federal
treasurers Of the roads to meet current
needs Two weeks ago arrangements
for financing the amounts due locomo-
tive. car and equipment companies by
the use OF trade acceptances were made.
Ehe acceptances are to be redscounted
through the Federal reserve banks to the
extent Of s1l0.0o0,000. Direct to tho Ad-
ministration $60.000.0o0 was advanced.
leaving upward Of 1000. 900 as the
minimum requirement for immediate
needs The railroads are to use their
own credit to a limited extent. and drafts
on the War Finance Cooperation will
have TO make up the balance.
The method of financing the individual
do sUIS a nVot' np gv,as
only the issuance Of certificates Of In
debtedness by Director-General Hines to
the roads for amounts due on the annual
rental. With them as collateral the War
Finance Corporation will advance money
on the railroad companies notes.
May Extend Plan.
1t is poss BILE that the corporation may
take the notes and other securities and
issue limited amount OF Ave year bonds
on them for necessary funds to meet all
railroad requirements with those being
made by export associations and indi-
v dual exporters. Tho bonds would be
offered only to large investors and to
banks and not to the public. as such an
Issue might interfere seriously with the
Victory Loan.
Eugene Meyer. Jr.. managing director
Of the War Finance Corporation. issued
the following statement to-day covering
the agreement for railroad financing and
setting out the procedure that was to be
followed:
Applications for advances are being
filed with the War Finance Corporation
by a number of the railroads under Fed
eral control for the purpose OF obtaining
funds to meet their April / needs. The
railroads are offering as collateral to
their notes certificates issued to them
by the Director-General Of Railroads for
amounts due them under the terms Of
the Federal control act. The matter OF
preparing applications. resolutions to be
passed by the directors of the various
railroad companies and information as
to obtaining certificates from the Direc-
tor-General Of Railroads Is in charge Of
Alfred p. Thorn. secretary Of the rail-
road executive comm 'ttee. in the Munsey
Building, Washington.
"As each appl cation Is presented to
the War Finance Corporation II will be
considered by the directors OF that cor
poration upon It's merits and in strict
compliance with the provisions OF the
War Finance corporation act as to ade-
quacy of security. margin OF security
and in all other respects
Policy Is Not New.
'-The policy of lending money to rail-
roads is by no means a new one for the
War Finance Corporation. AS early as
March. 1918, when the bill to create
the corporation was pending In Congress.
the Secretary OF the Treasury. Mr.. Nc
Adoo, expressly pointed out that loans
to p 'lroads would be. among the func-
lions Of the corporation, In fact, Sec
ton 8 of the act passed on April is,
1918, expressly contemplated that ad-
vances will be made by the corporation
to railroads while In the possession and
under the control of the President In
vances will be made by the corporation
ton beginning with the autumn Of 1918
began to lend money on a large scale
to railroads on their Offering OF adequate
security and In this way a material part
Of the resources OF the corporation was
engaged in railroad loans even before
January /. 1919.
THE policy. therefore. which Is be-
ing pursued in loaning funds for the
operation OF railroads Is entirely In line
with the original intention OF Congress
as expressed by the statute and also In
line with the settled procedure OF the
corporation throughout the course of
It's brief history. The number OF appli-
cations from railroads for advances has
been greatly augmented by the failure
OF Congress to provide the appropriation
asked by the Director-Generai Just be-
fore the adjournment OF Congress-"