Evening star., 1951-06-02
Justice Department
Studies Tobey Report
On RFC Loanto B. 90.
By Robert K. Walsh

The Justice Department today
received copies of 1947 report
sponsored by Senator Tobey, Re-
publican, of New Hampshire,
charging "collusive and irregular
dealings in a Reconstruction FL
nance Corp. loan to the Baltimore
& Ohio Railroad.
Senate Banking Committee
Chairman Maybank said he for
warded the copies at the request
of James M. McInerney, head OF
the departments criminal division
While Investigations were pushed
by the Justice Department and the
RFC itself, there were no signs OF
similar action at this time by Con-
gressional committees.
Maybank Plans No Action.
Senator Maybank told reporters
he planned no further action un-
less the committee specifically
voted to look further into the
B. g. o. loans that totaled about
$50 million in 1947.
The committee early this week
referred the matter. to the SUBJ
committee headed by Senator
Fulbright, Democrat, of Arkansas
But Senator Fulbright said again
yesterday that he saw nothing to
be gained by reviving an inquiry
made by a similar subcommittee
four years ago.
Since last March the Justice
Department has been examining
testimony at hearings by the Full
bright subcommittee investigating
influence affecting RFC. A Fed
eral grand jury here also has been
considering material developed at
those hearings.
RFC Administrator w. Stuart
ISymington said yesterday he has
asked the Justice Department for
appropriate assistance" in con-
nection with his study of the
b. & o. loans.
He also selected Joseph j. Smith,
| jr., a Washington attorney, to
study the loan. Mr.. Smith, he
said. will report directly to him
and will not interfere with any in
Ivestigation by the Justice Depart
ment or the Senate committee
The RFC re-examination of the
loan was started several months
ago by the former directors, whose
jobs were abolished when Mr.
ISymington became administrator
Loans in 1929 Described.
The 1947 report issued yesterday
by the Senate committee never
was approved by that group. Ii
was signed by Senator Tobey and
prepared under his supervision. Il
dealt with loans between 1882 enc
1889 and later "readjustments."
| Reviewing testimony at COM
mittee hearings in April, 1947, the
document asserted that RFC wa.
party to "collusive and irregular
bankruptcy proceedings by the B
81 o., that the agencys dealing.
with the railroad violated the
RFC Act. and that some RFC
officials resigned to take jobs with
the railroad.
Russell Snodgrass, who was RFC
assistant general counsel, became
a B. & o. vice president in 1912
/ The Tobey report declared that
evidence indicated that Mr.. Snod-
grass wrote two letters which
formed the basis Of the railroads
bankruptcy petition.
The B. & o. reorganization pro-
cedures were approved by the
courts. Several members of the
committee that investigated the
matter in 1947 said they found nc
illegalities.
! The Tobey report criticized tht
manner in which it said the rail.
road used none of it's net income
of $45 million in 1912 to make
payments on the RFC loans. TIL,
company still owes about $76 mil
lion to RFC. 1t repaid 81 milliol
early this year. Mr.. Symingtoi
ireportedly has conferred will
company officials to arrange fo
further payments.
/ In Baltimore the executive of
fees refused to comment on tn
Tobey report.