Evening star., 1932-06-01

earnings would not justify the ad-
vances, and that the collateral offered
was inadequate.
Few Got Amount Asked.
The roads whose applications have
been passed Upon in only few IN
stances received the entire amount
asked, $1S1 ,893,302 remaining to be
acted upon by the commission. In
some cases the commission had de-
ferred decision, pending further investi-
CATION, and in others, the money sought
was for disbursements not to be made
until later in the year, and for which,
consequently. it was not necessary to
| give immediate authorization.
In general, the commission appears to
have sought to enable the carriers to
meet pressing obligations without de-
lay. at the same time exercising strict
vigilance over the Treasury purse
strings.
Nowhere has this attitude been more
in evidence than in giving approval to
advances to discharge bank loans. and
had it not been that the r. F. c. ia
vored the principle of allowing loans
up to so per cent in these cases and
requiring the banks to carry the re-
mainder, the commission might have
ruled out this class of borrowing en-
tirely.
This was demonstrated at the outset
when the Wabash in reveiverShip. asked
for s18,500 900, of which $9,750,000 was
for such loans.
In allowing a part of the total. the
commission delayed approval of an ad-
vance to discharge this debt, saying.
consideration of the application for
loan for meeting bank loans should
be deferred pending early understand
ing or agreement with the banks as to
the extent to which they can or will
| forbear in the matter of extending these
loans" Final action still is to be taken
$3.50 Principle Adopted.
Then the Missouri Pacific made a
similar request. seeking $11. 700 900 to
repay J. p Morgan, Kuhn-Loeb and the
Guaranty Trust Co., and it was this
that brought the issue to a head and
resulted in the formulation of the $3.50
principle. now generally followed.
The directors of the R. F. c. adopted
resolution setting forth that the
banks were willing to carry. until Oc-
tober l, half of the loan due April
and that it was the view of the direc-
tors that the other half should be au-
thOrized to come from the Treasury
because all existing uncertainty as to
the disposition of the April maturities
of the Missouri Pacific Railroad Co. is
detrimental to the general credit situa-
/ ton Of the railroads.
. This resolution was adopted March
Is. the day Chairman Meyer of the
finance division of the commission
which handles the loan applications
was called to the White House with
/ Gen. Dawes, president of the r. F. C..
and other Government financial experts
ard group of executives from the lead
ing railroads
/ In sanctioning the proposal, the COM
mission said:
we are taking this action here
with some reluctance. We are not con-
vinced that the Reconstruction Finance
Corporation should be expected to take
up loans of this character. We yield
our own views to those of that body
which. as We construe the law, j.
charged by Congress with determining
that question"
1t added: The bankers who hold
| the loans are bankers for the carrier
AS such. they have profited largely in
handling its financing in the past. II
Is often represented to us that the re-
lation OF a banker to railroad is very
valuable to it because of the banking