The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-11-19
CREDIT POOL
IS PROPOSED
BY RAILROADS
Rate Increase Funds Would
Be Advanced as Loans
to Weak Lines.
BOARD OF IL PROVIDED
Substitute for Commission
Plan Changes Form
of indebtedness.
BIZ United Press

By DHttcd Press
WASHINGTON, Nov. 19.-Crea-
ton of a railroad credit corpora
ton to help the weaker roads
through their present financial diff
ficulties was proposed today by
the Association of Railway Execu-
tives in petition filed with the in
terstate commerce commission.
The petition was the answer of
the nations railroads to suggestions
made by the commission last month
in denying the request for a flat
Is per cent increase in freight rates
The commission at that time
granted certain increases in freight
rates which it estimated would pro-
vide additional revenues of from
$100,000,000 to $125, 000,0 900, provided
extra earnings were segregated for
the relief of carriers failing to earn
their interest charges.
The railroads now ask that the
funds derived from the rate in
creases be distributed as loans and
propose the machinery of credit
corporation for administering them.
Remove Legal Obstacles
The railroads petition argued
that TO treat advances from the
fund as loans would remove serious
legal obstacles which rail execu-
tiyes feel are put in their way by
the commissions plan.
TT cir11V11vy nIoo fI1o fo~,1a &c -.
Indebtedness from an obligation
which, unless satisfied, will result
in default of a fixed obligation,
with the consequent menace of a
receivership and foreclosure, into
an obligation free from these I'M
desirable consequences"
The larger railroads opposed the
commissions plan, in conferences
leading up to today's petition, on
the contention it would make the
strong roads collection agents" for
the weaker lines. Under the loan
plan, it is commended that all classes
of railroads will obtain benefits,
either Immediately or through the
extended period, of readjustment.
Renewable Two Years
'The obligation of the recipient
carrier will be to repay the amount
borrowed at such time as may be
agreed upon between the applicant
and the corporation, not exceeding
two years, fixed with due regard to
the purposes of the plan, and shall
be renewable for an additional
period of not exceeding two years,
at the discretion of the corporation,
before declaring any dividend to
its own stockholders except in case
where, by contract or otherwise,
payment of a specific dividend as a
fixed charge Is involved" the rail-
roads petition stated.
The proposed plan asks modif1ca-
ton of the 'per-car" increases
authorized, such as SO a car increase
in the rate on coal, coke and lum-
Der, to equivalent per ton" increase.
This detail would avoid the confu-
sion and inequality occasioned by
cars of different capacities used by
the various railroads.
Elimination Sought
The railroads plan expressed the
realization that some reductions
might have to be made from the
maximum rates for competitive pur-
poses, and asked that the commits
sion's provision that reductions must
be made from the present, or basic,
rates, be eliminated The petition
also asked that the switching charge
increases granted by the commission
be extended to include increases in
charges.
The plan for administering the
Railroad Credit Corporation pro-
vides for a board of twelve direc-
torS-five from the eastern district,
two from the southern district and
one named by the American Short
line Railroad Association. The
twelfth director would be a direc-
or-at-large and be president of the
corporation. No salaries would be
Maid these officials