The Western news. [volume] (Libby, Mont.) 1933-current, 1938-06-23

any more government help IN the
form of loans. They think more
borrowing merely increases the in
terest they are already grooming
under, and making the future black
er instead of brighter.
They are strongly in favor OF
permitting such railroads as cannot
now pay their bond interest to go
through the wringer OF course this
does not include borrowing from the
government to retire existing bond
issues. For example, if bond IS
sue of Sl0,000,000 should fall due
next month for railroad A, and this
bond issue bears interest at 3 per
cent, while the government is will
ing to lend railroad A the ten mil
lion at 4 per cent, then the road
will save $500, 900 in interest charges
every year from now on by taking |
advantage of the RFC offer.
That is quite a different thing
from borrowing money for no other
reason than to pay bond interest,
and thus keep out of the hands of
receivers. In this latter case, which
is typical of most of them, the rail-
road would be in a worse fix next
year than this, so far as interest
charges are concerned. Next year
it would have to pay as much IN
terest on outstanding bonds as this
wear. and in addition would have
to pay interest on the money it Dor
rowed from RFC to pay the interest
this year.
Tnare are plenty of reasons for
the present difficulty of the rail-
roads, but most of them are not
susceptible to much change. The
only improvement, apparently, can
come from increased traffic, and
this can come only with better
times. Even that is threatened here
and there by the development Of
more and more rivers for naviga-
ton. It is not important, from the
standpoint of the railroads, that
these rivers may never actually
handle much traffic. The important
thing is that the development of the
rivers for traffic will prove an ample
excuse for shippers in that territory
sto obtain rate reductions on heavy
products from the interstate COM
nerce commission.
Hit by River Traffic
1t is only on heavy products
that the railroads at present can
depend for revenue. A very small
increase in rates on light products
will drive shippers to trucks. Sc
that the railroads are menaced from
the top by trucks, and from the
bottom, measuring in terms of rev
enue per pound, by river traffic
The administration, however, is
anxious to avoid flood of railroad
receiverships. 1t sounds bad.
tends to make conditions general,
worse. From the cold-bloodeS
Treasury standpoint, it tends to re
duce revenue, particularly from
personal income tax returns. Flo
obviously every time a railroad de
faults payment of bond interest
good many personal incomes ar
reduced, and this reduction is tn
cream Of the income from the Treas
ury standpoint Naturally it come
off the. top, and hence out OF tn
higher tax brackets.
There is the additional worry
the administration that default {
railroad bond interest bears hea,
lily on the savings banks and lii
insurance companies, which have
heavy stake in these securities
once considered the most pruder
investments in the world.
Some of the railroad men who d
not wish to increase the preser
debt load of their properties are ne
averse, however, to advertising
the country the tremendous bul
den the roads are bearing in tax;
ton, not only federal but state, coul
ty and local.
Tennessee Is Next
The next political question i
volved in the purge" now that Il
Iowa contest has become history,
what is to be done about Tennessee
Senator George L. Berry h
from the administration standpoi
''stuck his neck out" and is SUI
to face attempted reprisals.
Never was any senator closer
the White House at the time Maj
Berry took his oath before vi
President Garner. He had work
for President Roosevelt in a doz
different capacities. He had be
put in the senate, on appointing
by Governor Gordon Browning,
the persuasive powers Of the Pr,
ident. In fact, Browning had We
II. different ideas when the vacan
in the senate occurred through I
death of Senator Nathan l.. Bat
man.
But all that has been chang
The split began, apparently, alb,
the time Senator Berry discover
that David E. Lilienthal, of the T
was not as friendly as had
peared. Or perhaps Lilienthal
been sincere in his friendship
was compelled to change his a
tude.
AT any rate Berry thought Lii