The New York herald., 1921-07-08
LOAN TO ROADS WILL
HELP ALL BUSINESS
Decision to Distribute $780,
100000 Means Big Revival,
Say Cabinet Members. !.
Special Despatch to THE New YORK HEKALp.
New York Herald Bureau,
Washington, ID. C., July ..

Special Despatch to THE New YORK HEEALp.
New York Herald Bureau,
Washington, ID. c., July Z.
The Governments decision to rehabili-
tate the railroads of the country through
funding arrangement on pending
claims, under which the carriers will re-
ceive upward Of s5oO.0oo.o0o in Federal
loans, will greatly stimulate business
and aid general industrial recovery
leading members of the Cabinet said to-
night
Secretary of the. Treasury Mellon and
Secretary of Commerce Hoover declared
it to be forward step In revivng busi-
ness upon an extensive scale. The
funding negotiations. which involve
claim and counter claims between the
Individual roads and the Government
for maintenance costs during the period
OF Federal control. are progressing rapid
ly. and should be satisfactorily concluded
within a short period Secretary Mellon
announced.
Congress will be asked to provide
probably S30O,0O0,00O to supplement
about 5000. 900 which the Treasury
has under authorization in existing
statutes for rail operations. This de-
mand upon Congress probably will fol-
low the approaching agreement between
the Governments representatives and the
railroad executives headed by T. Dewitt
Cuyler Of New York. head of the Asso-
citation of Railway Executives.
In the opinion Of both Secretaries Mel
ion and Hoover the advances to the
railroads to be made after the roads
have turned over to the Treasury bonds
which the Treasury may hold or sell
will produce a pronounced improvement
in the general financial situation and help
business and industry, especially In lines
which now are tagging because of lack
of demand from the carriers and af-
filiated interests. One of the immediate
effects Of the Government advances
would he the settlement by railroads Of
outstanding accounts with industrial
companies for supplies. The largest
railroads are said to be indebted on
this account in sums running into hum
Dire ds of millions.
The Treasury funding operation with
the railroads applies solely to capital
expenditure claims. The funding does
not apply to a lengthy list OF other
claims, among which are those for al
eyed losses due TO inefficiency OF labor
during the war and postwar period.
until Federal control ended.
the method to be followed, as ex-
planned by Secretary Mellon. will merely
be to give the railroads cash and take
over railroad bonds as security. In
effect it is loan to the carriers to en-
able them to make betterments. repair
rolling stock and put them on more
efficient basis to handle fall crops and
other business as 1t increases in volume
Secretary Hoover was optimistic over
the probable stimulating effect Of the
Treasury's proposed operations.
THE loans will help to rehabilitate
the carriers and get them started" Mr..
Hoover said. Between $500, 100000 and
600.000.000 is necessary to put the
roads on their feet. The roads are badly
crippled because Improvements have been
so long deferred. AS matters now stand
they are badly handicapped on the eve
of the new crop season and without
Government help will not be able to
handle the crop traffic demands