Evening star., 1933-02-09
ASK LOANS TO BAR
RAIL RECE:]|vERSH|PS
Lines Appeal for Liberal
Credit, Declaring Financial
Structure Threatened.
BY the Associated Press.

BY the Associated Press.
The railroads asked Congress TODAY
for more liberal Government credit to
prevent receiverships which their
spokesmen suggested would bring
wreck and ruin" to the financial struc-
ture of the Nation.
Alfred p. Thorn. general counsel for
the Association Of Railway Executives,
testified before Senate banking sub
committee that suspension of loans 10
railroads would mean abandoning"
them.
He acknowledged that a "topheayy"
financial structure Of the roads might
force reorganization of some. but urped
that credit be extended until that could
be achieved.
A. A. Ballantine, Undersee4seary of
the Treasury. testified that "preserya-
ton of the railroads and unfolding
them Is an indispensable part Of any
program for recovery"
Couxens Questions Thorn.
Questioned by Chairman Couzens.
Thom said It was generally regarded
that proper railroad financing was based
on a ratio of so per cent bonds and 40
per cent stock.
Couzens replied that some of the
roads In most difficulty now are those
that exceeded this ratio.
de said the Baltimore &c Ohio had
% per cent bonds and the Missouri
Pacific "a per cent.
1t seems that some Of the Missouri
Paclnc'S troubles may be due to bad
financing" Couzens remarked.
Il don't know" Thorn commented
Ballantine was then called to the
stand and asserted the necessity Of con-
ttnuing aid to the railroads.
II have come to- the conclusion"
Couzens said, that the Government has
got to get back of all the debt struc-
ture or stop doing It for any part Of
the structure. I think we can't help
one group of citizens without another.
Il want your opinion as to whether
we should discontinue support of any
debts or get back Of all of them"
Favors Continuing Aid.
'It would be a tragic mistake to dis
continue support Of these debts, par
ticularly to the railroads." Ballantine
replied.
THE bad effect Of withdrawing sup
port would be felt by every one.
"As to how far we should extend 1t
can't give you an answer. It involves
what our resources are"
How much further can we 20 In
borrowings? Couzens asked.
."I don't know" Ballantine answered
abruptly.
'I think we should 20 ahead. This
Is like war. I don't know whether we
can lick the enemy or, not. But we
must expend our last resource"
Couzens said he was sorry to hear
Ballantine express doubt about win-
ming.
"f'm confident we can defeat the
enemy" the undersecretary then replied.
He added the railroads were "key
structure" in the financial system, ad-
vtsing that I'VE should shoot our am
munition there"
$40, 300, ,0oo, 900 Outstanding.
Questioned by Couzens, Ballantine
said the Government has $40 800, ,0oo,-
900 In outstanding obligations.
IT wouldn't surprise me II the bank
holdings of those Obligations ran up
to $40 0,e00 600 0o0;. he said, -
oouzens ccntended there was much
"misinformation and Misrepresentation
about balancing the budget" because
the Governments deficit had been
swelled by advances to the Reconstruc-
ton tic a. Corporation and the Home Loan
Ballantine agreed these were emer-
geney expenditures In contrast with
ordinary running expenses, but con-
tended the Government should be con-
quoted on q pay as you go" basis a.
far q Y,0rc{h1a
Couzens, reading from q report from
the Reconstruction Finance Corporation,
said the Alton Railroad had been loaned
$780, 900 on collateral valued as Of
January 28, at $2,486,200.
Pointing out that over half this Sc
curtty was In common stock of the
Monongahela, Couzens asked IL Ballan-
tine felt the Government could recover
that loan with such collateral The wit
ness said he could not pass on the ques-
tion.
More Concerned With Present.
Couzens asked Ballantine for his view
on the issuance by railroads of bonds
maturing In 1895 or 2020, as testimony
has revealed some have done.
Ballantine said it would depend ON
the circumstances and the prospects Of
the road.
Can you visualize the prospects of
a road 100 years from now," Couzens
asked.
Ballantine said he was more con-
cerned with prospects during the next
few months
Couzens said the bonds might be
backed by "streak Of rust" 100 years
from now, II some other form of trans
portation replaced railroads.
Commissioner Mahafne of the Inter-
state Commerce Commission testified
his group had approved loan to the
Seaboard Air Line Of about $500, 900
a month ago that has not been ap-
proved by the Reconstruction Finance