Evening star., 1933-01-28
|R. F. c. RAIL LOAN
PRoBERS NAMED
Couzens Heads Subcommit. t.
tee Appointed by Senate
Banking Chairman.
By the Associated Press.


Chairman Norbeck Of the Senate
Banking Committee today named q sub
committee to investigate Reconstruction
Finance Corporation loans to railroads
In considering the Couzens resolution
to suspend such advances.
Five were named, headed by Senator
Couzens. Republican, Of Michigan, who
introduced the resolution yesterday.
Couzens opens hearings Tuesday, and
indicated q broad inquiry would be
made.
Other members Of the subcommittee
are Senators Goldsborough, Republican,
Of Maryland; Blaine, Republican, Of
Wisconsin; Fletcher, Democrat, Of Flor
ida, and Wagner, Democrat. Of New
Couzens yesterday explained his reso-
luton to delay railroad loans with the
statement that 1t is perfectly appar-
ent that large number Of roads are
In distress"
ut is also perfectly apparent" he
said, that the Federal Government
cannot maintain that capital structure.
Couzens asserted that unless some
provision Is made for their recapitaliza-
ton, many of them have got to 60
through receivership."
Applications Pending.
Couzens said there was pending an
application from the Missouri Pacific
for a $500, 900 loan which they want
by February l." He added there was
another application for 100000 de-
sired by March l, and said there will
be maturities May l Of $4,000, 900.
The credit OF the taxpayers cannot
be used indefinitely to support this cap
1tal structure" Couzens asserted, land
yet we have the house of Morgan and
Kuhn. Loeb & Co. coming to the Re-
construction Corporation and begging
for these loans"
sure the corporation that the security
Is AL right" and yet are unwilling to
accept it themselves.
They not only urge that the loans
be made, but assure the Government
the security Is adequate" Couzens add
ed. IT such Is the case, 1t Is time for
the Federal Government to stop making
the loans and leave 1t UP to the bank
ers."
CouzenS said much Of the $4,000, 900
loan to the Missouri-P had gone
to the relief of Kuhn-Loeb and the
Morgan interests"
Would Delay Action.
The Reconstruction Corporation, he
said. has loaned an aggregate of $780,
GOO, 900 to $500, ,000, 600 to the railroads,
adding there would be greater rush
than ever for loans between now and
July l. when the bonds mature. Couzens
said he proposed suspension of the
loans until Congress acts on the bank
ruptcy bill now pending In the House,
which he said might act "as q buffer
to this situation" through some of the
railroads availing themselves Of its
provisions
1T wo0ld be wise to support any
policy that would prevent the Govern
ment from owning q lot of bankrupt
railroads." commented Senator King,
Democrat, Of Utah.
Couzens also told the Senate yester-
day there was divergence" In the cor
porations reports to his committee and
to the House on the now famous loan
to the Dawes Bank Of Chicago.
short time before Couzens intro
duced . resolution to block further
loans by the corporation to railroads
without the consent of Congress.
CouzenS said the corporations report
to his committee rs Of July Is showed
a loan Of $90,000,000 had been author
lied to the Central Republic Bank of
Chicago. but that only $4,000, 900 had
been advanced.