Evening star., 1938-11-05

cut into effect, Notwithstanding the
adverse findings of the Presidents
Emergency Board of three, and thus
precipitating a railroad strike, or
OF receding in the hope of working
out program of genuine co-opera-
ton between all interested parties.
To withdraw the pay cut was not
obligatory on the roads in any
sense. except that the findings of
the board pretty we'll demolished
their case before the court of public
opinion. The executives. as a mat
ter of record, iii their formal letter
withdrawing the pay cut, state that
they do not agree with the findings
This may or may not mean that
they will revive the pay cut if eco
nomic conditions do not improve.
Board Pointed to Renewal.
Certainly the Presidents Emer-
gency Board pointed the way to
such renewal of the pay cut plan
If the financial condition of the
railroads was not soon improved.
But if such proposal is made again
1t probably will not be a horizontal
decrease of Is per cent, but a grad
uated scale which would not put
so much of burden on the workers
In the loW-income groups.
Business conditions, of course,
contain a substantial part of the
answer to the problem of the rail-
roads. With a big armament pro-
gram coming and resumption of
spending by the public utilities, the
car loadingS should increase. because
both these steps are related to heavy
goods industries which produce a
considerable part of freight traffic.
But what to do with the insolvent
railroads. or those known as prob
lem roads" which constitute very
big part of the total mileage of the
railroads today? The Government
has IN mind a lending program.
1t has been suggested again and
again in recent months, but as
long as there was a pay-cut con-
troversy the railroad labor unions
had sufficient leverage to prevent
the administration and the Con-
gress from doing much about lend
ing except to express a few hopes
about rehabilitation.
Back at Federal Doorstep.
Now that the pay-cut controversy
has been removed, at least for the
present. the whole railroad problem
comes back to the governmental
doorstep. Congress will be asked
to enact certain enabling legislation
which will permit loans to be made
TO certain railroads which need it;
but here, on the other hand, the
Government will insist upon certain
reorganization moves so as to scale
down the interest of the bondhold-
ers, especially in those instances
where the bonds already are selling
at around so per cent of par value
or less.
The financial reorganization of
he weaker roads is considered def
nltely a governmental responsibility.
but there is no tendency here to
build any plans for Government
ownership or operation Some OBJ
servers inside the Government and
among the rail labor executives talk
of Government ownership as inevi-
table, but the President has made
it clear that he doesn't believe in it.
The program that will be adopted,
therefore, is one in which the Gov
ernment will have an influential
part-aS investment bankers often
do in reorganizations-a since the
money will be provided through
the R. F. c., it seems likely that
Jesse Jones will be the man who
will be handling the railroad prob
lem in few months. The President
has confidence in him, and, while
legislation will be needed from Con-
gress. it may be anticipated that
the withdrawal of the IS per cent
pay cut proposal has cleared the
tracks for action. Maybe the rail
executives knew this all along and
merely hoped for some recognition
of the plight of the roads which,
indeed, the Presidents Emergency
Board of three has fully dramatized
for the benefit of Congress and the
country.
(COpyright 1881