Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-20
WISDOM OF BOOST
IN RATES DOUBTED
Eastman Questions Policy of
Rail Raise While Commod-
tiles Are Lower.
Continued From First Page)

rate increase would help this situa-
tion?" Eastman inquired.
Eyes I do" Dick answered. I THINK
that a lack o! confidence has lot TO
do with this entire situation. have
never seen banks so full OF money.
Nor have I ever seen such a demand
for sound investments. think the
rate increase would be psychological
factor In bringing q return OF much
needed confidence"
Eastman Ssked If spokesman for the
railroads and railroad investors were
not raising the feeling that the only
way to help the links was by Govern
ment action either through a rate in
crease or through some legislation regu-
lating railroad competitors.
do you attach any Importance 10
the efforts of some railroads to change
and meet these new forms OF competl-
tion?" Eastman inquired.
Dick said he did, but insisted he felt
the revelation of the state Of the rail-
roads made during their request Tor
the increase would encourage some in
vestorS who felt that since the situa :
ton was In the open some steps would
be taken to meet II.
Dividend Rates Cited.
Eastman asked Dick If he knew that
dividend rates paid by railroads on al
stock in 1880 was the highest in history
Dick answered that he did not have
the figures, and then Eastman read .
list of railroads and the rates they paic
last year. He mentioned specifically
some lines in New England.
Were any other industries in New
England able to pay similar rates or
dividendS?" Eastman asked.
Dick answered that he did not know
and Eastman commented that the high
dividend rate was paid in many In
stances at the expense Of surplus.
Eastman questioned the investment
banker as to when he grew apprehen-
sive about the railroad situation anC
Dick answered that he began to be un.
easy in 1880, although he knew before.
hand that a sharp decline in gross traf-
nc on the part of the railroads NIGH
bring crisis.
Asked About His Advice.
Eastman asked Dick about his advice
to customers in December, 1929, after
the stock market panic"
Dick named several security issues OF
railroads which, he said. he felt were
good investments. among them being
the Chicago IL Northwestern.
Hadn't you already testified in q
SAos'o-l dbC IJoStlldh dShcO
that you were apprehensive about the
condition Of some Western trunk lines
Wasn't your testimony made in 1922
Dick answered that his feeling and
that Of many others. even after the
stock market decline in October, 1929
was the depression would be short lived
He reiterated that he knew any heavy
decrease in gross traffic might bring a
crisis in the affairs of many railroads
but that he did not foresee the decline
until after 1929.
Dick said the chief effect of addi-
tional revenues would be putting more
men to work.
This brought a question from East
man as to railroad expenditures in 1880
Didn't the railroads spend large
sums in 1880 for work." Eastman
asked.
Some railroads did" Dick replied
but on others the work slowed down
materially"
Questioning the economic feasibility
Of increasing rates, Eastman asked If
Dick new Of any case where railroads
or utilities have attempted to meet q
temporary depression by an increase of
rates.
Dick said he could not think of one
offhand
Eastman then asked Dick If bankers
and persons interested in railroad In
vestments got together and discussed
the railroad situation prior to May 8
when railroad executives first announced
they were contemplating a rate-increase
request.
Dick said he did not know Of any
such discussion.
r. C. Fulbright. representing thu
Southern Pine Association. then tool
h.
exchange prices for a list of railroad
securities included IN q report by Dicl
and said that in virtually all instance.
these securities had advanced since Jun,
l, which ended the period for Dick!
comparison.
Questioned About Securities.
Does this advance show the rail.
roads are in such a predicament a,
you picture them?" Fulbright asked.
Dick said the railroads plea for {
rate increase was one factor in causing
the advance.
Fulbright questioned the banker at
length about various securities, amons
them those Of the Pennsylvania Rail
road. The attorney said the Pennsyl.
vania earned over per cent last veal
on its entire capitalization.
DO you think the Pennsylvania 4.
included in this dire situation?" Full.
bright inquired.
"Yes," Dick answered, adding thai
figures he had included in his report
for the first four months Of 1881 ex.
planned the alarm on the part of Penn
sylvania investors.
j. F. Finnerty, Washington attorney
asked Dick If he felt that the COM
mission should refuse to exempt a COM
modify where its investigation showed
an increase in rates would drive traffic
in this commodity of the railroads
Dick did not reply.
NnnlHA HAlH