The Washington times., 1937-01-18
SEN. WHEELER
FINDS SETUP
FANTASTIC
Probe Is Uncoverinq
MuIcting on Huge
Scale, He Says
BY FRANK M. SMITH

terestS is necessary to save tht
railroads of this country from tht
inevitable plunge into Govern
ment ownership in the next de
preston, Senator Burton K
Wheeler Cd, Montana, chairman
of the Senate Interstate Com
merce Committee, warned today
AS the committee ended the frs
week of a far-reaching investiga
tion into the "story behind" thu
difficulties now faced by rail trans
portation, he declared that detail
Of the transaction revealed by hi
committee followed a trail closel!
akin to the old dime novels. HI
said:
FABULOUS STORY
at is one of the most remark
able situations ever brought to
light in this country, and the
trail that can be followed back
and forth through these various
holding companies and corpora
tiOns is the most fantastic pic
ture that has ever been pre-
Sented to this country.
"The highlights of the investi-
CATION so far are first, the use
of the two million shares of the
Allegheny Corporation by which
the Van Sweringen interests
have controlled a railroad en-
pire that is almost beyond the
imagination of man.
Back and forth through a
web of corporations and hold
ing companies these two mil
lion shares have been used as a
basis Of transactions which have
drained the railroads of their
revenue and eventually mulcted
the public of millions of dollars
in worthless stocks and bonds
which have been placed on the
market in connection with the
bankers dominance of the rail-
road empire.
"This dominance must stop.
The work of the Senate Inter-
state Commerce Committee
must be directed to expose in
minute detail the extent and the
results of these transactions or
it is inevitable that the railroads
will be thrown into government
ownership at the next depreS-
sion when the bottom falls out
of the financial Setup.
PREFERRED LIST
"SecOnd is the revelation of
the committee that members of
the listing committee of the New
York Stock Exchange were on
the preferential list Of the Al
leghany Corporation so that
they were allowed to purchase
blocks of stock at price lower
than the market price is of un-
usual interest.
cat the hearings l questioned
Mr.. Richard Whitney, vice pres
ident of the New York Stock Ex-
change, and others closely on
this proposition. They declared
that although they had received
blocks of this stock at a lower
price than the market value
they were not influenced in the
slightest when it came to listing
stocks on the market.
Il said to Mr.. Whitney as I
say now that if member of a
city council was given blocks
of a public utility at lower
price than it was being sold on
the market while that council
was passing IN the granting of
that utility'S charter it would be
called bribery.
THE man who sold the stock
to the city councilman on that
basis would be branded as a
bribe giver. And the councilman
who accepted it would be bribe
taker. Also If a county treas
urer would accept a block of the
stock under those conditions and
then placed the city funds in the
bank that took care of the deal
he would land in the peniten-
tiary. In the city council or the
county treasurer that would be
bribery. But in the New York
Stock Exchange where the men
hold a Semi-public position it is
legitimate business we are told.
PROBE JUST STARTED
"This committee has just
started. We have a great deal
more to bring to the attention of
of the public. We are going to
delve into the background of the
railroads that are in the hands
of receivers and % per cent of
them are in that situation today.
81 hope that legislation will be
forthcoming to correct these
evils when the investigation
closes. 1t seems to me that more
stringent laws should be enacted
to give the Interstate Commerce
Commission authority to check
up on these transactions and /
think that the Government
should be given the power to act
as the lending agency in these
financial transactions concern.
ing the railroads.
"SOme plan must be evolved to
take away this financial dOmi-
nance of the railroad empire so
that it may cut rates and give
the public just return for its
money or as l have said before
Government ownership is inev-
table"