Newark leader. ([Newark, Ohio]) 1917-1946, 1919-09-12
Liberty Bond Owners Threatened
Guarantee of R. R. Securities by Congress Would
Cut Value of Holdings
Transfer of Billions of Market Price of Stocks Would Most Surely
Sacrifice the Liberty Bonds

There are at present score of pro-
posals before Congress looking to
the perpetuation of financial control
of the railroads under private owner
ship. Every one Of them provides for
the protection of the owners by a
guarantee of returns on railroad Sc
curities.
Two methods Of assuring these re-
turns are advocated. One is for the
Government to make up any shortage
out of the nations treasury; the other
would give the railroad owners pow
er to raise rates sufficiently to as
sure the necessary dividends.
In point of fact, the owners of rail
road securities are asking the Gov
ernment to guarantee returns on fic-
titious values. The market value of
railroad securities is something over
thirteen billion dollars, on face value
of over eighteen billion. Valuations
of the Interstate, Commerce Commits
sion tend to show that the cost of du-
plicating the railroads would ret be
more than ten or eleven billions. Yet
the security owners ask the Govern
ment to guarantee them returns on
approximately $20,000,000,0 or the
property investment account"
] When Glenn E. Plumb appeared be-
fore the House Committee on Inter
state Commerce in support of the
Plumb Plan, he raised the question Of
what effect governmental guarantee
of dividends to private owners of rail-
road securities would have on the Lib
erty Bonds issued by the Government
| itself.
"Put yourself in the place of man
owning $4,000 worth of war bonds
which he purchased at par" said MIR.
Plumb. "He notes that there are
pending before Congress many prop
ositions whereby the public is asked
to guarantee either in rates or returns
an interest of not less than per cent
upon $2O,00O,000,0 of outstanding
railway securities, which now have d
market value not exceeding $13,000,-
| 100000. He hears it claimed by those
urging this guaranty that a return of
not less than per cent will place
these securities at par and provide
market where many seeking invest
ments can be induced to serve the
public in return for the further issu-
ance of such securities. Such guar
anty will mean an advance in value of
from $13,OO,0OO,OOO, their present
value, to $20,000,000,000 their par
value.
"Would you not ask yourself what
effect this would have upon the bonds
which you held on which the same
Government had guaranteed only 312
to Az per- cent? Would you not be-
/ lieve that such action merely trans
ferred from the market value of war
bonds to the market value of nail
road securities, six or seven billion
dollars? Would you not believe that
your Government bonds, if the desire
of the railroads and the fnanciers was
fulfilled, would be quoted at the av-
erage of present railway securities
while the railway securities would be
quoted at the present market value of
Government bonds 2"
The Government has floated ap-
proximately $2O,OOO,OOO, 1000 of Liberty
Bonds and Victory Bonds, depending
for security upon the good will of the
Government. They stand in exchange
value at nearly par. There are also
in existence about $20,OOO,O0O,OOO or