Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-22
EMERGENCY RAIL
| RELIEF DEMANDED
Rate Increase Asked Pend
J Ing Full Probe of All Forms
of Transportation.
~ the Associated Press.

~ the Associated Press.
The Interstate Commerce Commits
sion was asked today to grant the rail-
roads an emergency rate increase
pending q comprehensive investigation
Of every form of transportation.
Grenville Clark Of New York, ap-
pearing in the Is per cent rate in
crease case In behalf Of holders of rail-
road securities who are favoring the
boost, proposed the emergency action
and the study.
Clark proposed that the railroads
trucks, buses, airplanes, coastwise
steamers and other steamship lines be
inquired into.
He suggested that the investigating
commission be composed OF members
Of the Interstate Commerce Commits
sion, the Secretary OF the Treasury,
the governor of the Federal Reserve
BNE@d, members of the Interstate Com
naerce Committees of the House ana
Senate and representatives of shippers
and of the railroad arrangements.
Credit Collapse Reported.
Clark and Charles e. Hughes, jr., rep
reSenting holders Of railroad bonds, told
the commission in their arguments for
the increase that railroad credit had
collapsed as a result Of declining earn
Sngs.
They argued the situation warranted
emergency action and the undertaking
of an effort to work permanent plan
Of Stabilizing railroad credit.
Hughes and Clark arguing foB the
security holders, said only a rate in
crease could prevent the situation from
becoming worse. They contended the
interstate commerce act made some
action by the commission mandatory.
Hughes asserted that over three
fourths Of the railroad bonds now legal
investments for trustees, savings banks
and insurance companies would be
taken of legal lists at the end Of this
year unless the railroads secure RELIEF.
Equity Declared Affected.
GLASS AAA railroad bonds have drop
ped 3z per cent under the situation "
Hughes said. .tCIass AA bonds are on
44k per cent, and Glass A bonds 50
per cent, while other issues OF the rail-
roads are similarly weak.
"The sI1rinkage In stock values also
has affected the equity behind the
Hughes said there were more than
$1,000 ,Oo0, 900 worth of railroad bonds
now on legal lists. or this amount,
he said, III per cent viii come OF the
lists at the end Of the year because
the railroads issuing them viii not earn
~ times their fixed charges as re-
Quired
Hughes said savings banks placed
their first reserves In real estate mort
cages, but that secondary reserve OF
80 TO 90 per cent of their assets were
invested In bond which could be con-
yerted quickly into cash.
"A bond may pay its coupon regu-
iarly every six months without failure
and yet be q complete failure" said
Hughes. mo bank can afford to In
vest its secondary reserve IN bonds, no
matter how safe they might be, that
could be sold only at loss II they had
20 be disposed OF quickly to meet an
emergency"
'Fair weather" Securities.
Commercial banks, he added, need TO
keep their reserves in even more huid
assets than savings banks.
1T has become apparent" Hughes
continued, that railroad bonds are
sfair weather securities. Banks and
investors Of that type do not buy such
securities"
i CLARK contended that under the law
the commission had no alternative but
70 grant the increase.
He expressed belief the commission
had no right 10 question whether the
proposed rates would produce the rev.
enue predicted by the railroads.