Evening star., 1933-01-31
R.F. C. Chairman Says Finan-
cial Houses Treat Money as
if 1t Were in Storage.
FAV0RS FURTHER LOANS
TO AVOID RECEIVERSHIPS
Hearings Are Begun on Couzens
Resolution to Suspend Addi-
tional Aid to Carriers,
By the Associated Press.

By the Associated Press
Charging larger banks with not doing
their part in financing railroads, Chair.
man Atlee Pomercne of the Reconstruc.
ton Finance Corporation told a Senate
Banking Subcommittee today that
these banks after getting all the money
In the community treat it as If it were
in cold storage"
Pomerene was the first witness before
the subcommittee studying the Couzens
resolution to suspend all Reconstruction
Corporation loans to railroads.
The r. F. c. chairman said he thought
the loans should be continued If there
Is no other possible way of financing
the roads and avoiding receiverships."
Committee Reviews Loans.
With Pomerene's appearance the
committee opened a thorough review of
all railroad loans made by the Recon-
struction Finance Corporation. to date,
There was before the committee eyi.
dence that the Reconstruction CORPORA
ton has authorized loans of s337,455,.
093 to the carriers
Chairman CouZens began by reading
report giving the extent of the loans
which he proposes to suspend. 1t showed
the Reconstruction Finance Corpora
ton has actually advanced s2so,s55,-
5s3. OF which s11,000,o00 has been
repaid.
My position" Pomerene told the
committee, "and think it reflects the
views of all members Of the board. Is
{ NJ
OF financing the roads and avoiding
receiverships, We ought to continue
these loans.
But, on the other hand, have the
feeling that some Of our larger banks
that are from IS to 100 per cent LIQUID
ought to play larger part In financdue
the roads and meeting the loans q t1ney
mature"
Refused "A ~ Dana4
Pomerene san SONS daNbs Soads had
gone to the banks for 6Htp and vere
refused. Questioned W 6usDsns, the
witness said he was not dBtinguishtnS
between commercial and investment
banks in his criticism.
Pomerene also informed TIE commit.
tee that 11.3 per cent Of the banks
which have borrowed from the r. r. G.
since have been closed. In response
to question by Senator Couzens. he
said the loans authorized to banks which
have closed totaled sSs, 1862 ,27s. and add
ed that s66 ,957 900 Of such loans was
now outstanding However. he told the
committee, he was certain ''the loss will
be lnconsequential' because of good Sc
curity.
Myles Kennedy, chief examiner OF the
railroad division Of the Reconstruction
Corporation, was then called to the
stand TO give the committee details
about the collateral back of rail loans.
He said s39,126,000 had been loaned
to the Baltimore & Ohio. which was
backed by collateral valued in part at
the time OF the loan at $40 900 900.
Additional collateral. he said, had no
market value because it was not listed.
The valued collateral, Kennedy said.
nad nae shrunk by December 10 to s64,oo0,-
600. Since then value change, he said,
has been relatively small"
Collateral Depreciation.
Loans have been made altogether to
81 roads. Kennedy testified. He esti-
mated that s131 ,231. 900 in railroad
bonds would mature this year.
He testified that the collateral back
OF one loan to the Erie had deprecated
from S4.458,O00 to 81, 2,674, 900 in market
value up to December II, which he
conceded was material.
Couzens said many of the loans, in
Guiding those to the Missouri Pacific
and the Maine Central had been largely
used to pay off banks
The R. F. c. has fallen down badly"
he added, when it made loans to pay
of banks without a record of the con.
dition of the banks. I have been un.
able to find any information as to what
benefit commerce and industry got by
paying these bank loans"
Pomerene replied that the banks
we're refusing further credit and de-
manding payment which would have
deprecated the value of the securities
and forced liquidation, and said the
banks were not doing their duty"
And you have not compelled them
to, though you had the power" Couzens
replied.
He then asked Pomerene what pro-
portion OF banks which had received
loans had since closed.
Sl2,542.870 GIVEN STATES