Business & Finance: Midwest Partition

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In the heyday of absolutism a favorite sport of the Great Powers was partitioning Poland. Last week RFC Chairman Jesse Jones, who is something of a Great Power in U. S. business, proposed to partition a Class I railroad with 1,600 mi. of track and $100,000,000 of assets, good & bad.

Minneapolis & St. Louis, operating west and south from Minneapolis but not to St. Louis, has been in receivership for eleven years. All its mortgage bonds are in default including $2,000,000 worth held by the U. S. Government—not acquired by Mr. Jones's RFC but by the Treasury in connection with loans from the Wartime Director General of Railroads.

Back interest alone amounts to $25,000,000. Numerous attempts have been made to reorganize the decrepit carrier, the last plan calling for RFC financing. But Jesse Jones had a "thought," which he borrowed from President Ralph Budd of Chicago, Burlington & Quincy.

To his Washington office last week Mr. Jones summoned the heads of the seven major roads that connect with M. & St. L. Let the corpse of M. & St. L. be cut into seven pieces, Mr. Jones suggested, each of the connecting carriers buying one piece. RFC would, if necessary, prefer to lend them the purchase price rather than try to resuscitate M. & St. L. itself with cash direct. The seven big lines—Great Northern, Illinois Central, Rock Island, Wabash, Milwaukee, Chicago & North Western and Burlington—seemed to like the Jones "thought." Adjourning to Chicago, they ordered a thorough technical investigation. RFC has a $340,000,000 stake in the U. S. railroads as a whole.

And the M. & St. L. partitioning was merely one more proof that Mr. Jones is no passive investor. Because RFC money is almost invariably involved, reorganization plans must satisfy Mr. Jones as well as the courts, the Interstate Commerce Commission and the security holders. Last week Cleveland's Oris Paxton Van Sweringen dropped in to see Mr. Jones about pulling Missouri Pacific out of the courts. In referring to plans for reorganizing Chicago & Eastern Illinois, Mr. Jones announced that he might have one or two ideas. Fortnight ago when ICCommissioner Mahaffie flatly refused to approve RFC loans to several carriers including New York, New Haven & Hartford and Chicago & North Western, Mr. Jones promptly told the disappointed executives that he was going to see the "Chief" about it. The ICC received a call from the White House and two other Commissioners gave the necessary approval. When the railroadmen thanked him, Mr. Jones chuckled: "Well, we don't want you fellows to die now anyway. We've got to help you along until Congress meets."