Evening star., 1932-12-11
Executives and Bankers Join
in Urging Change in
Restrictions.
PROGRAM Is PREPARED
FOR INCOMING CONGRESS
Action for Carriers With Top
Heavy Capital Structures Sug-
gested to Avoid Receiverships.
BY the Associated Press.

BY the Associated PreSS.
NEW YORK, December 10.-From
the mass of data and confusion of rec
concentrations submitted to the Ma
tional Transportation Committee this
week, the item which stands out as
most likely to be brought first to the
attention Of Congress is the sugges-
ton that the basis on which the Re-
construction Finance Corporation may
make loans to the railroads be broad
ened.
1t Is reliably reported that some Of
the more vitality interested parties are
planning to bring this matter before
the present Congress, as a measure OF
insuring the solvency of the carriers,
pending a more permanent solution of
their problems. A comprehensive pro-
gram designed to bring more lasting
benefits, it is understood, is now eX-
pected to await the new Congress. A
transportation act Of 1888, replacing
the act of 1920, is being discussed il
this connection.
Another suggestion which some quar-
ters hope to submit for legislative con-
sideration, in advance of general over
hauling of the transportation act, is
the proposed revision of the Federal
bankruptcy laws to permit voluntary
readjustments of capital structures
without the unanimous consent OF Sc
curity holders Such action, it is hoped,
might enable roads with top-heavy cap
ital structures to readjust them with
out the costly and protracted process
of receivership. Proponents of the plan,
however, acknowledge that 1t has many
delicate legal aspects.
A1rao nm RroadaufpO
Both the recommendations of the
Association of Railway Executives, and
of the Investment Bankers Association,
as filed with the committee headed by
former President Coolidge this week,
urged the broadening of the basis upon
which the r. F. c. may make loans to
the carriers. At present, loans may be
made only on the basis Of adequate Sc
curity. Some roads have been well
provided with unissued bonds in their
treasures, or with investments in other
roads, which could be pledged, while
others find themselves running short
of securities.
The Executives Associations report
urged that the r. F. G. also be permit
ted to make loans on certiflcation by
the Interstate Commerce Commission
that a roads past record of earnings
and its prospects give reasonable assur-
ance of the applicants ability to pay"
The Investment Bankers ASsocia-
tons report quoted the recommended
ton adopted at its recent annual con-
vention, saying that many important
carriers face 1888 with a considerable
portion of their free assets pledged un-
der existing loans, and it IS therefore
suggested that perhaps the test of eligi-
bility for assistance should be, not the
adequacy of the security, but consid-
Grafton of whether, under minimum
normal conditions, the railroad request
ing the loan is a solvent working enter
prise This is not a new test, but one
which was successfully used IN previous
emergencies"
Measures to Expire.
Two temporary measures now In ef-
feet which are coming up for reconsld-
Grafton, are the voluntary wage reduc-
ton of 10 per cent, and the increase of
approximately 3 per cent in freight
rates, which expire early next year.
Railroad chiefs are in agreement that
the 10 per cent wage reduction should
be continued, but Daniel Willard, pres
ident OF the Baltimore & Ohio, clashed
with some other executives as to
whether a further reduction should be
sought. Willard thought mere contin-
uation of the present scale might suf-
fee. The higher freight rates have
been opposed by some, on the ground
that they have diverted traffic to COM
peting forms of transportation, but in
the main, rail executive favor contin-
uance of the higher tariffs.
The investment bankers expressed the
view that if the present temporary
measures are continued, the railroads
can. in a large part, be carried through
the present emergency, while more
permanent remedy is being devised and
applied. Their report predicted that
"such advances as are made Will, IN
large part, be repaid, as were the ad-
yances made in 1920"