Evening star., 1931-12-06
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

few days.
Rail Problem Deepens.
1t does not make for. confidence In
the efficacy Of governmental emergency
measures to remember that since the
moratorium decree of last June condi-
tions in Germany have steadily grown
worse until this week reports of a more
sinister character than ever have been
circulated concerning German bank
ing conditions.
Last June the railroads petitioned for
an increase in freight rates. Very prop
erIy the Interstate Commerce Commits
SION denied the application in the form
presented to 1t and made a counter
proposal. The railroads asked for a
modification Of this and filed their ar
gument weeks ago The commission Is
still holding up the relief.
Several months ago the necessity of
revolving fund for the railroads and
for corporation similar to that which
tunctioned successfully during the war
IN behalf of industries was quite ap-
parent. ReCeivership for the Wabash
road could have been avoided and the
depreciation in its own securities and
those OF other carriers checked had
there been an agency to which it could
have resorted when its own cash ac-
count was low. 1t is significant that
the Pennsylvania Railroad manage
ment, which had a stake of over $50 -
oOo, ,OOO IN Wabash stock, most of which
1t is likely to lose, apparently saw SO
little in the outlook for a weak line
under the present conditions of low
average freight rates, motor competi-
tion and a high scale of wages that it
was unwilling to make a further small
investment in it in the hope of pro-
tectmg its equity.
With the rece1Vership for tie Wabash
and It's subsidiary, the Ann Arbor, four
rallroaoS nave gone into bankruptcy
TINS year, involving over 5000 miles OF
main line and branches. The fate of
other carriers rests with the Govern
ment and its regulating body and with
railroad employees. Due to the extreme
and rapid decline in operating income.
all but the strongest roads are in an
untavorable position with respect to
liquid assets. Some of them have bor-
roWed quite heavily from the banks,
New York Central being a case in point.
Others Will be compelled to obtain loans
to meet further maturities.
The attitude of the lending firms and
institutions is that they will be willing
to extend existing loans and provide
additional accommodations to their
railroad clients if there is a satisfac-
tory outcome of the rate and wage
controversies. On the other hand if
the Interstate Commerce Commission
insists on blocking every attempt of
the railroads to improve their credit
status and the employees make no con-
cession to the present emergency, there
Will be difficult times ahead for rail-
road arrangements.
Germany's Creditors Meet.
The meeting of German creditors in
Berlin is also scheduled for next week.
Since this was arranged a few weeks
ago, Germany has met all of her
maturing dollar bond interest and has
cut down the total Of other foreign
obligations. The position OF the
Reichsbank has steadily been growing
weaker. There are constant rumOrS to
the effect that Germany will go of
the gold basis. These have been per-
Sistently denied by the heads OF the
German finance administration. How
ever, confidence in German securities
has steadily decreased. The govern
ment loans are now selling on a Is to
20 per cent basis. Some Of the Ger
man state issues are quoted to yield
80 per cent. This very nearly dis
counts repudiation Of external debts.
The decline in sterling exchange
this week to a level approximatng
that of 10 years ago has been less OF
disturbing influence than might have
been supposed. 1t is worth noting that
while markets for securities in this
country. with all of its resources and
its high Government credit, have been
deeply disturbed, those in Europe,
where conditions outside Of France are
infinitely worse than in the Unltea
States, have been remarkably passive.
These are the Somber outlines OF the
picture of domestic and European al
fairs. While bond marketWise the Sit
uation Is less satisfactory than II was
two months ago, when the acute stage
of the banking situation was reacheo
and liquidation was overWheLmlng,
there are manifold signs that urgent
selling of stocks has been completed.
The lack of public buying power pius
the activity of a small section OF tne
public on the short side, Is reSpohSlnle
for the drifting and dragging char-
acter OF the market for equities.
Sentiment More Cheerful
Throughout the country sentiment is
decidedly more cheerful than it was IN
October. There is not the dreao III
financial circles of impending events
as when Europe suddenly took tne
notion that this countrp would follow
Great Britain off the gold basis. Last