The New York herald., 1921-12-15
Fears No Political Evils in
Board of Control or City
Operation.
JOHN c. COBB APPROVES
Disputes Hylan's Charge That
Lines Carrying Millions
Are Junk

otto II. Kahn Of the banking firm
tant witness heard yesterday in the
transit examination, found much to
praise and nothing to condemn in the
commissions tentative plan for the
reorganization of the city's rail facili-
ties under unified control. Concern
ing the financing of the huge enter
prise he made suggestions which
Chairman McAneny and his associates
welcomed.
Mr.. Kahn appeared as representing
the interests of the protective commit
tee holding $4,000, 900 of the s60,000,-
900 outstanding 5 per cent. bonds and
notes Of the Brooklyn Rapid Transit
Company which Kuhn. Loeb & Co.
acquired in 1912. The committee con-
sists Of that firm and Kidder, Peabody
& Co. The remaining s17,00o,000 Of
the issue is in the hands Of the War
Finance Corporation.
"Plan Exceedingly sound"
Replying to Clarence ]. Shearn, spe-
cial counsel to the commission. Mr..
Kahn said he had given much thought
to the plan proposed and had discussed
i. informally with other men holding
authoritative positions In the financial
world. lie continued:
when ] first became acquainted with
the plan my Impression was it was the
S.. 4. y ....t~
gent constructive and workable plan
that ever has been brought to bear on
the traction situation. That Is my i'm
preston still. ! think II is an exceed
ingly sound plan IN Its fundamental out
lines.
"Of course. there are points of detail
--some OF them Of vital character to
the success of the pian--concerning
which I hold views that somewhat mod
ify the general expressi ,ns have made
But | take II that the plan to the extent
that II has come to my attention Is
merely an outline subject to discussion
There are three what you might call
fundamental details.
The first one is--and II is, of course,
of the essence of the plan and It's prac-
tlcability-what principles and spirit of
valuation are going to be observed?
can offer to the security holders In tan
gible, realizable value for that which
they are asked to give up. Any approval
of the plan must rest in allegiance until
one knows on what principles you will
proceed, and what will be the final out
come in dollars and cents available to
the security holders.
The second and rather more compli-
Gated thing is this: Security holders
naturally are divided into two classes
the investment class that sought and be-
lieved IL had a safe investment, and the
speculative class that knew It was taking
n chance and cannot expect anything In
tse ultimate outcome except the deterrni-
nation whether 1t chose wisely or stu
pidly."
"New Issues Must he Tested"
DEPRESSING by way of illustration. Mr..
Kahn said his Arm. In conjunction with
others. sold TO the public the p. r. T. 8
per cent. notes. having every reason TO
believe them q wholly sound security.
"Now." said the banker. these ss0,-
900, 900 Of notes are outstanding. There
is nothing ahead Of them except $751;
0o0,0 900 of receivers certificates anu a
certain amount Of various bonds. not a
very large amount. There Is behind
them 800. 100000 Of city money. Now
II is perfectly natural that the holder OF
these bonds will feel he has security
that is in itself good. and that. while he
may be a public spirited man, etill he
win consider his pocket.
He will not accept a new bond until
It shall have become seasoned by the
test OF a number of years. until all con-
stitutional questions have been solved,
until the spirit Of the city administra-
Continued ou Pare Fifteen.