Business: Roosevelt on Railroads

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Emerging from the White House, where he was summoned three times last week to exchange ideas with Franklin Roosevelt on the railroad crisis, President John J. Pelley of the American Association of Railroads remarked: "I found the President very sympathetic with our situation and anxious to do anything he can consistently to help out. . . ."

Sympathetic indeed was Franklin Roosevelt to the railroads last week, and hardly a day went by without his active attention to the problem. As the roads gloomily revealed that car-loadings last week were lower than for the same week in 1932 when Depression was at its blackest, the President called a Cabinet meeting where he was reported to have said that he would favor letting the roads go "through the wringer" to reduce top-heavy capitalizations were it not that large insurance companies and banks would suffer greatly. That afternoon he told his press conference that he had decided against the outright subsidy proposed last fortnight by Railway Labor's George Harrison. Subsidies are hard to stop, said the President. What if, for example, the Government had undertaken to subsidize trolley cars ten years ago when that industry went on the skids? Precisely what he would do, said he, he still did not know, but sometime this week he would send recommendations to Congress and release the text of the special report prepared by ICCommissioners Splawn, Eastman and Mahaffie.

By the President's next press conference, however, the Splawn report had somehow become general knowledge. Its 60 pages offer both immediate remedies anda long-range program to pull the roads out of the deepest ditch in their history.

Immediate Proposals: 1) RFC to make available $300,000,000 for new rail equipment purchases; 2) ICC to be relieved of its present necessity to certify that roads applying for RFC loans are not in need of reorganization; 3) wage cuts; 4) abolition of the reduced rates on Government traffic over the so-called land-grant lines; 5) amendment of section 77 of the Bankruptcy Act to speed railroad reorganizations, possibly by a special railroad court; 6) the Government to guarantee or underwrite bonds issued in voluntary railroad reorganizations to insure their payment and thus expedite reorganizations.

Long-range Proposals: 1) Creation of a three-man Federal Transportation Authority to plan and promote operating economies and speed consolidations, unification of terminal facilities, car and revenue pooling, etc.; 2) methods of correcting railroad financing abuses to be left to the Senate Interstate Commerce Committee, which is now investigating them; 3) consideration of the desirability of placing all forms of transport under "equal and impartial regulation of a single agency of Government."