Evening star., 1938-10-30
Executives Predict
u. S. Advances on
Easy Terms.
Dy the Associated Press.


81 ,000, 900. 900 in rehabilitation loans
on easy terms by the Federal Govern
ment as = sequel to submission to the
"no-wage-cut" report, some executives
predicted today.
The loans would be made in coming
months as MAJ jor part of 15-month,
5000, 900 900 mulated
national defense program. in which
utilities, automobile and airplane fac
tories. chemical factories and heavy
industry generally also play big parts,
they said
While the loans were not expected
to be offered in deal" to maintain
present wage scales, 1t was pointed out
that refusal Of the roads to submit to
the wage-freezing recommendation of
the Presidents Rail Fhct-Finding
Board, made public today. might pre-
cipitate labor emergency which the
Government might take strong steps
to forestall in the midst Of 4 national
defense program. .
The proposal of Government lending
on broad scale for national rehabili-
tation was described as still In . tenta-
tive state calling for extended discus
sion through coming weeks. zone
month must elapse after todays report
before roads could cut wages or labor
could strike)
Terms Of Lean Plan.
some key rail executives who re-
putedly turned down = previous Gov
ernment-lending plan because Of the
terms. are said to look favorably ON
the plan, providing:
l. The terms Of the lending do not
lead to reorganization.
2. The Government does not insist
on complete priority Of its obligations
over secured claims Of private investors
3. The interest rates are low.
4. The loans are payable out Of In
come as business picks up.
Conferences about six weeks ago
between some rail executives and ad-
ministration leaders. brought about by
steel manufacturers and rail equip
ment makers-who would profit pos
sibly even more than the roads by such
an expansion plan-came to nothing,
they said, because of the terms sug-
gested by Government spokesmen.
Their attitude 1t that time, one rail
man In close touch with the confer
ences said, was summed up as follows:
why should we bofrow more money
when We have trouble meeting present
commitments, with the industry gen.
orally in its old age operating costs
going up more than revenue, and espe-
cially II the new loans might serve to
throw into reorganization those Of us
who have kept going?"
Others More Open Minded.
The road spokesmen were described
as then having flatly rejected a sug-
gestion Of . deal by which they
would maintain wages at present levels
in return for Government lending
program to assist the roads.
However, number Of factors in the
meanwhile have led some executives to
take . more open minded view.
First is the general business pic
ture. with many published predictions
of business improvement leading some
roads to believe their revenues may sub
stantially increase in coming months.
Second Is the conceded fact that the
roads generally are not in shape to
meet maximum national defense re-
quirements and Furthermore that the
roads cannot refuse any reasonable
Government program to bring the
roads to tiptop military preparedness
BY reasonable" 1t was held that
any improvements made solely for
military purposes should be borne out
right by Government; improvements
made to bring the roads into shape
to meet maximum peacetime business
demands and incidentally for military
purposes should be financed on 4 basis
Of repayment of capital and interest
when, as and If revenue improved &C.
cordingly.
Views Differ on Costs.
Some rail executives hold now that
greatly increased efnciency' Of OPERA
ton which has resulted from the re-
quirements Of depression years will
make unnecessary much more than
seasonal expenditure-with the single
exception Of high-speed, long distance
freight engines-to meet the demands
Of anything short Of q war or a ma jor
and sweeping business improvement in
the heavy industry field.
Some others believe several times
q billion dollars" would be necessarv
to bring the roads to condition to meet
peak wartime loads.
The billion-dollar figure was offered
as q round estimate of the cost to
take care of maximum peacetime de.
mands in the next is months or two
years, plus minimum military pre-.
paredness expenditures.
In previous years, during their ex-
panding period, it was not unusual for
(see LOANS, Page A-e.)