Evening star., 1933-02-10
RAILROAD LOANS
EXCEED SECURITY
Chairman Couzens Presents
Figures on Sums Advanced
by R. F. C.
need Of money.
By the Associated Press.

BY the Associated Press.
A report showing that loans by the
Reconstruction Finance Corporation to
some railroads exceed the present value
of the collateral held by the Govern
ment was placed before Senate COM
mittee today.
Half a dozen railroads now owe the
corporation more than the market value
of the collateral they advanced for the
loans, the report said. Part Of the doc
ument was read into the record by
Chairman Couzens of the committee
that is investigating carrier loans.
Testimony also was presented that
applications are pending for further ad-
vances of about $70,000,000.
The R. F. c. report showed that the
Central of Georgia owes S2,903,000, but
that its collateral has a market value
of only S898,000 Miles C. Kennedy,
chief of the railroad division of the
relief corporation, testified, however.
that 1t was adequate security" in his
opinion.
The market value of collateral held
by the r. F.. c. on loans Of $4,000. 900
to the st. Louis and San Frencisco is
only 1929, 900, the report also disclosed.
cations pending for about $4,000, 900
from the corporation was also pre-
sented to the committee.
Charles D. Mahaffie of the Interstate
Commerce Commission testified that
applications totaling about $55, 900, 900
were pending before it.
Kennedy said applications for more
than $15,000,000 are awaiting action
by that organization.
Already Advanced SCI, ,000, 900.
Kennedy said these applications in
cluded S11 ,127 900 from the Chicago &
Northwestern and $5,000,000 from the
Baltimore & Ohio.
Chairman Couzens pointed out that
the B. & o. already has been advanced
S67 100000 on collateral valued at
S76,000,0 900 on January %.
"Is this additional $5000,000 to be
loaned on the same collateral?" he
asked.
Yes" Kennedy replied.
$50 if the SIS 900 900 is granted, they
will have $72, ,000, 900 with an estimated
collateral at only $4,000, ,oo0," Couzens
remarked.
Couzens is author of a resolution to
suspend corporation loans to railroads
The Chicago & Northwestern, Couzens
read further, has borrowed $18,l93, 900
on collateral now valued at $16,356, 900.
The Chicago, North Shore & Will
waukee, he added, citing 1t as an insult
company, has borrowed Sl,150,000 and
the Reconstruction Finance Corporation
Is unable to "even estimate the present
value" of the collateral
You can probably count that off as
profit and loss" he commented.
Kennedy said the collateral had
some value"
Couzens said the report showed the
Gulf, Mobile & Northern had loan of
$3.50, 900 which was not covered by the
market value OF the collateral.
The Missouri Pacific, which recently
received an additional loan of $4,000
600, CouZens said, already had bor-
rowed Sl7,100,000 on collateral with a
present estimated value of only ST.
$4,000.
Kennedy said the Missouri Pacific
put up additional collateral for the S.
100000 loan, but did not estimate its
value. This included, he said $10.O00.-
600 in bonds now selling at "a or 25;
$12,000,000 in obligations owed the line
BY subsidiaries and some stock which
he cid not name.
Oppose Reducing Loans.
Arthur A. Ballantine, Undersecretary
OF the treasury, yesterday told the
committee 1t would be tragic mistake
to withdraw Federal aid now from the
railroads, "a key structure in the Ma
tons financial system"
Similar evidence was presented by
Alfred P. Thorn, general counsel for the
Association of Railway Executives, in
opposition to the Couzens plan. Thorn
said the Government should liberalize
its loans to the roads, instead of stop
ping them.
Widespread receiverships for the rail-
roads would mean wreck and ruin
fer the country's financial structure,
Thorn said, and further Government
leans should be given to carry them
until reorganization could be effected.
Ballantine said preservation of the
railroads and upholding them is an in
dispensable part of any program for re-
covery."
Couzens said he had come to the
conclusion the Government should get
back of all the debt structure" or else