The New York herald., 1920-01-09
MAKES $lOO,OOO,OOO
CONCESSION TO THE RAILROADS;
CHANGES EQUIPMENT TRUST PLAN

| Following a series OF conferences be-
tween railroad bankers. railroad execu-
tives and the Federal Railroad Admins
tration the government, 1t developed yes
te.day, has made an Important concession
to the transportation systems under Its
control Because OF that concession the
roads are enabled to solve the problem of
financing their purchases OF equipment
without waiting for the formation of a
national equipment trust corporation, such
as railroad bankers had devised for that
purpose.
Under the new arrangement the roads
arc permitted to execute agreements for
Scme of the agreements already have
been signed.
The concession means that the railroads
are relieved of the necessity OF paying
something like sl0OO 100000 in cash i'm
mediately.
The Railroad Administration originally
demanded 20 per cent cash payment
upon signing of the agreements. In the
case of railroads without available funds
the government would have taken cash
from the depreciation funds Of the rail-
roads. AS very few of the railroad COM
panies have surplus funds. the inroads
which the government would have made
into the depreciation funds would have
been very heavy.
In railroad and railroad banking circles
the change of policy on the part of the
Railroad Administration is regarded as
distinctly favorable to the carrier compa-
MES In effect the latter are permitted to
enjoy the benefits which originally would
have accrued to them only if it had been
possible to carry out the original idea or
organizing a national car trust company.
The formation of such company has
been postponed because Of unfavorable
investment market conditions.
The equipment trust scheme provides for
S2S0, 100000 equipment trust certificates TO
be issued by the Equipment Corporation
These certificates are to be sold to the
public. Investment market conditions,
however have been such that bankers
agreed it would be impossible to sell such
a quantity of car trust certificates at this
time.
A vital feature of the plan in the execu-
ton OF agreements between the several
railroads participating and the Equipment
Corporation whereby the roads pledge
themselves TO pay for their equipment in
fifteen equal annual instalments, with IN
terest at six per cent on unpaid balances
These agreements are to be part or the
security behind the trust certificates,
which the Equipment Corporation VIII
offer to the public.
The Railroad Administration. however.
to aid the roads is itself executing those
agreements with the railroads. When the
time is opportune for creating an equip
ment trust corporation the government
will turn the agreements over to that COM
pany. which. in turn, will place them be-
hind it's securities
The agreement of the Railroad Admins
traton to execute agreements without eN-
acting twenty-five rer cent cash payment
is regarded as very favorable to the rail-
roads. as it enables them to preserve intact
their depreciation fund This fund, now in
the hands of the Railroad Administration,
amounts to about $3.50, 900 900.
Advices from Washington yesterday
said that the conferrees on the railroad
bill had reached a compromise agree
ment in the amount OF the revolving
fund" which the railroad bill will create
The amount agreed upon is $500, 100000.
That compares with S250.000,OOO pro-
vided by the Esch bill and S500.000, 900
provided by the Cummins bill. The
roads asked for s750,000,0o0. While that
amount is larger than normal the needs
of the roads for extensions and i'm
are abnormally large be-
cause extension plans were abandoned
during the war period. An appropria-
tion of $500 900 900 will be insufficient
in the opinion of the railroad authori-
ties. a much larger sum, they say, is
required.
In view OF the evident intention or
Congress to place an arbitrarily low
limit on the revolving fund" it is be-