Albuquerque morning journal., 1922-10-27
SECURITIES OF
RAILROADS ARE
TOPIC At MEET
|. C. C. Throws Its Methods
of Supervising Their Issue
Open for Discussion Be-
fore Experts.

Washington, Oct, 26.-The Inter
state Commerce Commission today
threw its methods Of supervising
issue of railroad securities open
for discussion before representative
railroad officials and investment
bankers, who it summoned to
Washington, seeking advice partic-
ularly whether it should hereafter
require Of such issues to the high
est bidder after open competitive
bidding. The latter proposal was
met with emphatic objections by
both railroad men and bankers,
while Judge Robert S. Lovett,
chairman of special committee of
railroad executives appointed TO
formulate views challenged the
legal power Of the commission to
institute such practice.
Otto Kahn of Kuhn. Loeb & Co.,
expressed the opinion that such a
system might prove ruinous to
railroads. while Jackson Z. Rey-
nolds, president of the First Ma
tional bank of New York. said the
commission in the matter could
do its worst and not hurt us (the
bankers), but hurt the railroads.
Dwight r. Morrow OF ]. p. Morgan
& Co; A. Fl. Harris. vice president
of the New York Central. and
Forney Johnston. counsel for the
Association of Railroad Security
Holders were among the speakers
called.
Private Underwriting.
Mr. IA said that tbo paIafinp :
ship of great banking houses to the
railroad corporations had brought
into existence the practice of pri-
vate underwriting of railroad
loans. 1t had assisted the carriers
he contended, in getting success
fully floated, making .up securities
OF a form and type to fit markets
and. above all. had maintained a
stable broad investment market on
which railroad securities could al.
ways he bought and sold.
For many years to come rail-
roads will annually need large
amounts of new capital" Mr.. Kahn
declared, "and it will be a primary
consideration with the Interstate
Commerce Commission to main
N''''i nc oAdDle DIOdu SECURITIES
market, from which this capital
can be drawn"
Judge Lovett spoke OF tho
genius which bankers have for
protecting the securities market,
as an important necessity in the
flotation OF large security issues
These issues, he said, sometimes
constitute an invitation for specu
lators to try bear raids" that
would make it impossible to main
tain prices.
Mr.. Morrow supplemented Mr.,
kahn's argument as to the neces-
slty of keeping the banking ma
chinery UP to the task of distribut
ing railroad securities. Does the
banking house which makes loans
regularly to a particular railroad
seek in any way to influence the
management of the railroad in its
transportation policy?" Commis-
sioner Esch asked.
Outside the Banking Tic!d.
Il nave never known bankers to
DO So Mr.. Morrow replied, "since
IN the matter of operations and
policy a bankers advice would not
be of value. They fall quite out
side the banking field. Perhaps in
the matter of paying dividends and
correct financial matters such ad-
vice might be offered"
When you feel that you can
better size up money market condi-
tions than the railroad officials and
the bankers, assuming they are
acting in good faith" John E. Old
ham, Boston, told the commission
in concluding the session, 'then
you had better take over the finan-
cial management of the railroads
within your oard."