Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-05-16


ready market for their securitieA II
the investing public becomes con-
WINGED that the railroads are to be
given more consideration In the max
ing Of rates than they have been
given in the past, then 1t will he
more ready to invest in securities
representing the values inherent In
good management net worth and
earnings. Under the transport alton
act. the commission il directed ny
Congress to fix rates so that the
roads shall earn So per cent.
Recent Sales Of Securities
It is OF interest to note that in the
drst two months after the return Of
the roads to their owners about
$125. 100000 of railroad securities
have been sold to the public. half Of
which represented refunding opera
tions. Some of the recent sales have
been as follows: Pennsylvania. $50.
100000; New York Central $4,000
900; Delaware and Hudson. 10000
geo: Chicago Union Station. $4,000
900, and the Virginia railway. $4,000.
900. Market conditions. 1t is believed,
will be favorable to still further
sales of securities by the railroads
during the next few months. But IL
is not believed by the bankers or the
railroad executives that 1t Will be
possible for the roads to float securi-
ties to the amount Of $610.ooo.ooo. esti-
mated as the cost Of the rolling
stock, which can be turned out this
year.
A dark side of the picture 10 what
may happen to the crops OF the coun-
try to be harvested this coming
summer and fall il the necessary rail
road equipment is not forthcoming. l.
has been predicted that much OF the
produce Of the farms will rot before
it can be marketed.
Members of the Senate interstate
commerce committee have faith in the
provisions OF the transportation act
They believe that it will go far to-
ward the establishment Of the credit
of the roads, that 1t will make posi-
BILE a better ALLEGATION Of the freight
cars, which in the past has never met
the needs Of the country In times OF
congestion. and that it will make for
more ready settlement of disputes be-
tween the roads and their employees.
Arguments lmpress Committee.
The committee. however, has been
impressed with the facts and argu-
ments presented. 1t has authorised.
| therefore, the favorable report Of =
| bill to amend the transportation act
which, with other things, permits the
use of1oa6s made from the revolving
fund OF $3oo, 600. 900 to be used to meet
maturing obligations. It also extends
the period in which the payments are
to be made to the government to If
teen years. instead OF i've years. The
Interstate Commerce Commission is
given authority to determine what
shall be the character OF security
given instead of the Secretary Of the
Treasury, and in various other ad-
|ministrative ways. it makes it easier
for the roads to avail themselves of
the revolving fund. In this way. the
committee holds. it will be easier for
the weaker roads to obtain the gov
eminent fund than under the exist
ing law. Not only has the committee
reported a separate bill for these pur-
poses. but it has offered the same leg
islation as an amendment to the pend
ing sundry civil appropriation bill
and will seek to attach it as a rider
to that bill. IL time is too brief to OBJ
Situation Confronting Railroads.
The situation which confronts the
railroads. and tho country which IN
fed and clothed through the operation
OF the roads. Ii an excellent example
of the so-oalled vicious circle. in
which the entire economic fabric OF
the country seems at present to be in
yolved. Unless the roads are able
to function efficiently the people will
not get their food and clothing, and
the food and clothing they do get Will
be higher in cost. II the roads are
allowed to charge freight rates ade-
quate to maintain them efficiently
and to pay the dividends upon their
obligations, then the prices Of the
commodities carried are likely to be
increased and the burden again will
fall on the people. And IL the rail-
road employees are to receive the wage
increases they are demanding.
amounting to about $1,000, 100000.
then the roads instead of asking for a
% per cent increase in rates. must
obtain, they say. an increase of about
As per cent in rates, which will send
prices soaring higher and higher.
Where the break will come remains
to be seen. But 1t does not appear
that the circle Of increased costs and
prices can continue indefinitely. There
is q limit to the pocket books and to
the patience. even of the American
people.
Not Solved by Federal Operation.
Government operation has not
proved a solution. The government.
after two years of control, was hun
dreds Of millions OF dollars behind in
the operation. Government ownership
seems an impossibility. The roads are
worth today between $4,000, 100000
and $4,000, 100000. probably one
twelfth of the entire national wealth.
The Plumb plan for taking ownership
of the roads proposes that securities
shall be issued and guaranteed by the
paying per cent. II the
railroads cannot sell to the public to-
day securities paying to per cent.
it does not appear that the country
would readily absorb the billions OF
dollars of per cent securities pro-
posed under that plan.
SHIPS PUT ON u. S, REGISTRY.