Evening star., 1932-03-30
COUzENS ASSA|LS
RAILROAD LOANS.
$4,000, 900 Advance to Mis-
souri-Pacific Denounced
in Senate Address,.
BY the Associated Press.

By the Associated Press.
Railroad loans by the Reconstruction
Finance Corporation were condemned
in the Senate today by Chairman
Couzens of the Interstate Commerce
Committee.
Pointing specifically to the recent
loan of $12,800,000 to the Missouri
Pacific Railroad, Couzens said the mar
ket value of the securities produced by
this railroad was only $12, 100000.
He also called attention to the fact
that the Reconstruction Corporation
adopted a resolution approving the
loan and submitted it to the Interstate
Commerce Commission before asking
the formal approval Of the latter.
The commission then approved the
loan with reluctance"
Il have no knowledge" said Couzens,
"of Congress having declared a policy Of
Government ownership Of the railroads,
and yet the loan to the Missouri Pacific
and others that have been approved,
and others still pending, clearly indicate
to me that If loans are continued in the
same maner as they have been in the
past, many of these properties will
eventually revert to the Government or
the Government will lose its invest
ment.
THE Government will at least find
itself in possession of the least de-
sirable and least profitable railroads"
Calls Conclusion False.
Couzens said the Interstate Commerce
Commission had approved many fees
charged by money merchants" for
financing the railroads on the ground
they stood back of the carriers and were
of great value to them.
This has proven a false conclusion
because they are not standing back of
them." Couzens said. This is partic-
ularly true of the New York Central,
considered one of the strongest of the
roads, because it has had to borrow
s4,399,000 in spite of the fact that
Morgan & Co has always proflted to a
large extent from financing it."
The Pennsylvania, CouzenS said, had
also asked for a loan of $4,000, 900,
which he called further proof that the
theory had not worked out.
Many of the railroads which have
applied for loans, Couzens said have not
earned as much as 80 per cent of their
operating expenses during 1881.
He said If the present economic sit
uation lasted two and half or three
years, all the roads would be applying
for loans, ont only the weaker lines.
Referring to the loans to the Mis-
souri, Pacific by Morgan & Co., Kuhn,
Loeb g. Co. and the Guaranty Trust
Co. of New York, which mature April
l and for which part of the Govern
ment loan to the railroad was to take
up, Couzens said these New York firms
were money merchants, rather than
bankers"
Charges Carelessness.
The Senator complained that some of
the $12,800,000 loan to the Missouri
Pacific was to pay operating expenses of
the railroad. He did not regard this as
the intent of Congress.
CouZenS also passed some condemna-
ton on to Congress, declaring he be-
lieved the National Legislature very
careless and negligent in passing the
railroad provision of the law creating
the Reconstruction Finance Corpora
ton because it is much broader than
contemplated"
He said that applications for more
than 1854, 100000 in loans to the rail-
roads impend before the ReconStruc-
tion Corporation.
OF the aggregate, he said, $4,000. 900
was for lines controlled by the Van
Sweringen brothers, asserting there
were also listed applications Of num-
Der of lines already in default to the
Government and from those in the
hands of receivership."
Outside the Wabash" he added,
only $7,000,000 Is for lines In receiver
ship"