The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1934-10-30
C. & {. |. Groups Attorney
Tells of Fears of
War.
BY BARROW LYONS
Times Special Writer

NEW YORK, Oct. 30-Internecine
war among the railway systems of
the country that would destroy the
value of hundreds of millions Of dol
lars in railway securities and might
force many roads into bankruptcy, is
threatened today unless the strong
hand Of Joseph B. Eastnlsn, federal
railroad co-ordinator, is upheld in
the Chicago & Eastern Illinois Rail-
way Company case, Louis B. Wehle,
attorney for the c. & E. I. bond
holders protective committee, de-
clared today.
In this instance the New York
Central railway, a road for which
J. P. Morgan g. Co. long has been
the fiscal agent, has declared its in
tention of taking from the c. & E. I.
its crack passenger service from
Chicago to Florida and the south
east and transferring it to the
Cleveland, Cincinnati, Chicago & .
st. Louis Railway Company, a SUBJ
sidiary.
Two Sides Lined Up
The principal reason given for
the change by the New York Central
is the fact that the Big -Four" is
in a much better position to adver-
tise the route and obtain traffic.
On one side of this fight are the
great institutional inveStors-insur-
ance companies and savings banks
whose position is threatened by |
any serious depreciation in railway
securities. Transfer of the pas
senger traffic of the c. & E. I. to the
New York Central Big Four" would
be a serious blow to. the earning
power of the smaller line.
On the other side Of the fight are
the banking houses that long have
the railroads, and to a
extent controlled them,
which seek by every means in their
power to strengthen the position of
their clients, seriously weakened by
prolonged depression and continued
dearth Of traffic.
Worried Over Loans
Those who have estimated the
power of number of the
large railroads for the next zen
months declare that, in view of their
present cash positions, their Dor
rowing power is endangered, even if
here we're to be a serious revival
If the capital market.
In discussing the situation Mr.
Wehle, who has had many years of
experience as a railroad attorney,
'efuSed to go as far as this. He
frankly admitted, however, that
here was danger of a more inten-
sive warfare for traffic than the
'ailroads have experienced in many
/ day.
With the intensified famine in
raff1c and earnings in the last five
after a short period of
steady revival in business from Jan.
| to June l." asserted Mr. Wehle, 1t
las become apparent that the finan-
,ial condition of a number of roads,
classed as strong roads, mas
become such that under the RFC
aw as it stands, their recourse to
government loans has become more
Uncertain.
Approaching Limit
Some of the carriers seem to be
the limit and there
may come a time not far distant
when some may be unable to cross
The Threshold, unless one Of two
things can happen. Either provi-
sionS of the RFC act must be re-
IaXed by congress, which would re-
luire adequate security in some
form for the further extension OF
loans, or there must be a marked
in cash position and
earning power established by flu
ture borrowers.
The result of this condition is a
tendency toward cannibalSm, which
can be averted only by invoking
such legal principles as have been
either by common law
or statute"