The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-06-08
FLYNN URGES
REORGANIZATION
OF RAILROADS
Government Provides Mil
lions TO Aid TOp-HeavY
Structures.
BY JOHN T. FLYNN
-. S-.~faf Writer


WASHINGTON. June S-Those
who call on the government 70 let
business alone so that DO may pull
itself I'D tv its own b0otstraps' over
look several interesting little cnap-
tiers in industrial history.
one OF the chapters concerns
railroads. r. IS an account Of mil
lions poured by the government into
the railroads % keep them IN oper-
alton. support their top-heavy capt.
tai structures and protect the con-
troll Of a small group 81 banking
Housrs which have dominated the
roads f0r years.
In the past these banking houses
mainta.ned their Fup because they
could supply money when the roads
needed 10. NOW they can supply no
more
Congress MAY Investigate
But their grip is being maintained
b. the vast sums supplied by the
government. Many observers BE-
Ieve that Congress soon must in
quire into the economic and finan-
cisI soundness Of this whole pro-
gram
I'D N the beginning Of this year.
the Reconstruction Finance Corp.
had made loans 70 railroads
amounting m s457 1856 OOO. OF this
sum. $40 727s37 was repaid The
balance was still owed 70 the gov
eminent
Many millions Of this money was
loaned By the government 10 the
railroads 70 enable them 70 pay
loans IN the bankers whose very con-
troll was threatened. Most Of 10 was
% pay interest on bonds, 70 paw of
binds and notes which had become
due and 70 pay taxes and IN many
cases rents due 10 other roads for
use 81 their properties.
PWA Provides Large sums
one road alone got as much as
STs. 600 COO. Some Of this money
was loaned for buying equipment
and making repairs. But this was
only a small fraction. Very large
sums we're made available for this
purpose BY the PWA. and these
sums are not included IN the totals
given here
The idea back % the plan was TO
keep the roads out Of receiverships
and bankruptcy. But in a large
number Of cases that was utterly
unsuccessful. many roads going into
bankruptcy.
The government continued to
make loans 10 these bankrupt roads
after receivership proceedings. while
the insiders proceeded 10 lay their
plans for reorganization according
10 their Well-knOwn pattern.
Many other roads which did not
20 into receivership are now ap-
preaching that state and are being
kept from IL By further government
loans.
Reorganization Is Necessary
The extent to which the whole
railroad world Is involved in this
policy may be gathered from the
following estimates which make.
based on RFC and railroad reports.
Class I railroads operate some 239.-
797 miles Of track RFC loans TO
lust 10 large railroads involve mile
age Of $4,000 miles Of track or more
than so per cent Of our total mile
age
At least IS per cent Of our rail-
road mileage is involved in all the
RFC loans. What is more. these 10
roads have gotten from the govern
ment in RFC loans mot including
PwA loans) s345. 900 900 Of all the
railroad loans. or rs per cent Of the
total
The importance Of this subject is
now heightened because. after all
this aid. the government is being
called on to continue It. Further
more. the necessity for reorganiza-
tion. which should have been recOg-
nized in the beginning. Is now be-
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