Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-23
PAYMENT Of RAIL
/. LOANS IS DEBATED
Executives Wish to Know
Ultimate Obligation Of Bor-
rowing Carriers.
Special Dispatch to The star.

Special Dispatch to The Star.
NEW YORK, october 23.-Railroad
executives have bitter pill to swallow
in the proposed Interstate Commerce
Commission pooling plan. That they
will get it down, even though 1t may
gag some of them, Is expected. Public
sentiment demands It, The precarious
condition of a number of roads whose
distress would affect the credit of all
roads compels 1t.
II poll could be taken of the great
body OF railroad shareholders in the
country 1t would undoubtedly be found
that they would be agreeable to any ar
rangement on the part of individual
roads to participate in a program al
leviating the pressure on those trans
portation companies having trouble In
covering their fixed charges and whose
approaching maturitieS are nightmare
to their arrangements. 1t is taking
much for granted to say, as has been
argued in some railroad quarters, that
shareholders would object to the use OF
q portion Of the earnings of their prop
critics to help mitigate situation which
bears down, not only on the securities
OF roads that are even now able to pay
whose solvency depends upon the appI-
cation to thru Of emergency measures.
Ultimate Obligation.
One feature OF the pooling arrange
ment that was not made clear in the
Interstate Commerce Commissions opin-
ion is the ultimate obligation of the
carrier to which relief is granted out of
the proceeds Of the pool Therefore, an
attempt will be made by railroad execu-
tives to come to an understanding on
this point before approval Of the scheme
Is given. 1t is reasonable for them to
ask that the benefciaries of the fund
pay back to the subscribers TO it their
proportion of the allotment when they
have again been restored to q salts
factory earning basis.
There Is in this situation, as there
has been in many others where the
question Of giving aid to a general stu
alton at some expense or abandonment
Of the prerogatives OF an individual
carrier is necessary, a lack of co-oper-
alive spirit among railroad executives.
Already they are divided into two
camps, the one which is more sensitive
to public opinion and which believes
that the roads should Immediately ac-
cept in a friendly spirit the suggestion
OF the Interstate Commerce Commission
toward pooling; the other which is dis
posed to stand on technical and legal
grounds and resist it. It is from this
latter faction that the argument comes
that to agree to pooling plan would
pc illegal and subject them to attack
from their stockholders
1t Is not reasonable to expect. how
ever, that the owners Of railroad stocks
who have been most patient while their
arrangements have used large sums of
money in the purchase of securities,
which today show an enormous de-
probation and from which little income
Is now derived, will invoke the aid of
the courts in protecting them from the
operation of plan that gives help to
the railroads as whole, and indirectly.
should aid in the stimulation Of gen.
eral business.
The philosophy Of the times is one
In which the strong and the fortunately
situated must come to the aid of those
who are weak in resources. There is
little difference between the suggestion
and the obligation Of the railroads In
the Interstate Commerce Commissions
proposal and that which is clearly init
mated in the formation of the National
Credit Corporation. This draws out
from the banks that are strong a pro-
portion of their deposits TO be used in
supporting the banks that are weak
1rasnuch as large proportion of the
total deposits of the entire country are
located in New York and Chicago, it is
the institutions Of these two cities that
are compelled to carry the heaviest
part Of the burden of relief to interior
banks, in addition to the assistance
which had been given these banks by
New York and Chicago prior to the
formation of the National Credit Cor
poration as well as in the two-week
period before the corporation began to
function. The obligation of the strong
roads to their own situation Is, in a
large sense, similar to that of these New
York and Chicago banks.
Plan Is Commended.
1t Is significant that two former mem
bers Of the Interstate Commerce Com
mission. now in private life-namely
Mark w. Potter, at one time railroad
president, and Thomas F. Woodlock,
now editor of the Wall Street Journal
commend the plan of the commission.
Editorially Mr.. Woodlock writes as fol-
lows:
Should the executives after full ex-
ploration of the matter conclude that
The indicated method of pooling revenue
from the increased rates is incompatible
either with the law or with the rights
OF security holders in those railroads
upon whom the burden of sacrifice will
fall, they will have to make that in
compatibility very plain. Short of that
incompatibility the public will expect
hem to meet the commissions proposals
In spirit of prompt, willing and eff
fective cooperation"
(Copyrisht. 1870