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Show . S rN , N NHEXRD HEXRD HEARD rNHEARD HEARDarfutnd'the 1a'11d 1a11d 1a'11dar6 ' HEXRDNOTIONALCAPITAL arfutnd'the arfutndthe ar6 ar6ind ind ' the theNAITIN NATIONAL NAITIN NOTIONALCAPITAL NATIONALCAPITAL / " - I ICAPI NOTIONALCAPITALpy CAPITAL CAPI TAiI fY CAPITALfY TAiIft fYCarter py ft ' Carter Field . Wa Washington Vachington hlngtonPresident VachingtonPresident hlngton President -President - Roosevelt Is Isheartily Isheartily Isheartily heartily In f:1\ f:1 f1 favor f:1or fator : \ or of or the recent action actionot actionof actionof ot of the Interstate Commerce commls commis commlsslon commission commisslon slon sion . , as a result of which the New NewHaven NewHaven NewHaven Haven nilioad rulroad Mlho d Is now seeking recelv recely recelvershlp recelyership recelvcrship ershlp ership \ with \ Ith a view to scaling down Its Itscaplt'll Itscapltil itscapitSiI caplt'll capltll capitSiI ' debt structure structureIt It has bas been In the President's Presidents ' mInd mIndfor mindfor mindfor for some time that the . Interest pay payments paymeats payments ments meats bcln being mide m'lde mlde made ' by the rallro'tds rallrotds raliro'ids raliroids raliro'idsHere rallroidswere ' ' Here \ ere entirely too high . He lIe has bas fre fre- frequentlv frequently frequentiv - quently quentlv quentiv commented to friends that thatwhenever thatwhenever whenever \ hen ever a bond issue Isgue is made mnde , by n a nral1road arailroad arailroad ral1road railroad or any other business , provl provi provlslon provision provlslon slon sion should be made mnde for an annual annualcurtal1ment annualcurtailment annualcurtailment curtal1ment curtailment of ot that loan so that at atthe atthe atthe the end of a given number of or years yearsthe yearsthe yearsthe the bonds bondf ! could be retired retircl ( from the thesinking thesinking thesinking sinking fund Frequently , he has poInt poInted pointed pointed ed out . , the bonds are still sUIl part of the theroad's theroad's theroad's theroads road's roads ' capital debt : . , , and adding sharp sharp- sharply sharply sharply - - ly to Ita Its hied h ed charges , v . when hen the 1m fro 1mpro fropro Impro\ement Impro ement pro pro\ pro proement \ ement for \ which hlch they were Issued Issuedhas issuedhas Issuedhas has long since been worn out and nnd re re- replaced replaced replaced - placed , usually by another bond issueThe IssueThe Issue IssueThe The origin onginil origin'll originll ' t1 Idea of the admlnlstra administra admlnlstratlon administration adminlstratlon tlon tion was to use the Missouri Pacific Pacificas Pacificas Pacificas as a J 3ard yard ard stick in cutting do down " 11 thecapital the thecapital thecapital capital structures of ot the r nllroads r'lllroads rlllroads iilroads ' The Theplan Theplan Theplan plan planas \ wag \\as as was \ to reorginize reorg'lnlze reorglnlze reorganize ' this railroad railroad.always railroadalways . , al"a\5 al"a ala 5 alwats " \ a weak weal , . sister , though ah\aJs ah aJs alnnys alnnysprominent ahaJspromment alwaysprominent \ promment prominent as a'n an an ' Important link IInh in first firstthis firstthis firsrtthis this and then that transcontinental transcontinentalJine transcontinentalline line . . In liLSuch such ashloiL fashion th\t th t that thitiLJould ' \ It could : eirn C'lrn Clrn e'irn ' ' several times its fi'ted fited teed fi ' ed charges and andhence andhence ; hence sell bonds on a 3 to 4 per cent centbasis centbasig ' basis . Actual figures as to amount of bonds bondsand bondsand bondsand and Interest are so complicated , wIth wIththe withthe withthe the Missouri Pacific and the Ne\\ Ne Nen NeHa NenHaven NewHaven \ Ha Haven en and for that matter with all allrailroads allrailroads allrailroads railroads , that Illustrations would take takea a column to epl'1ln epl1ln eeplaln e " { pliln ' But here is the theRoosevclt theRoosevelt theRoosevelt Roosevclt Roosevelt Idci Idc'l Idcl idea ' Illustrated simply . . Suppose a railroad had hnd $500 500 $500000000 500000000 $500000000of 500000000of $ 000 000 000of of bonds bonlls outstinding outst'lndmg outstlndmg outstanding ' . , at an avera average averageinterest averageinterest e eintercst intercst interest rite r'lte rlte rate ' of or G 0 per cent . . . Some rall rail rallro'td railroad railroid ro'td rotd road ' bonds beir bC'lr bClr bear ' ' is 'lS lS is 10as low 10\\ 10 \ \ as 4 per cent centand centand cent'and centand -and and ' - some as high as 7 per cent . , but butthe butthe butthe the a average \ erage is not far ( from rom G per percent percent percent cent becmse bec'1use bec1use because ' there are more of thehigher the thehigher thehigher higher rate bonds thin th'ln thln than ' of ot the 10er lower lowerrate 10\\ 10 lowerrate \ er errate rate . To Illustrate IllustrateIn In this Illustration , the fited fted fieed " , charges chargesof of the road , so far as bond Interest Is Isconcerned Isconcerned isconcerned concerned , . would woulll be $40000000 40000000 $ ' 50000000 O 000 000 a year yearT'lXes yearTaxes yearTixes T'lXes TlXes Taxes ' and this bond Interest as well wellof wellof wellof of course , as all aU nil operating xpenses gxpenses gxpensesmust expensesmust xpensesmust must be paid before anything can be begh beghen beghen gh ghen en the stockholders In addition additionevery additionevery additionevery every time some of the bonds fall due duethe , the railroad has a terrible time float floatIng floatlag floating Ing lag a new issue Igsue even If It It Is a fairly fairlyprosperous fairlyprosperous fairlyprosperous prosperous road . , and usually has to topay topay topay pay handsome banl bankers ers * ' commissions commissionsfor commissionsfor commissionstor tor for placing the nebonds new ne\\ ne \ \ bonds . . Now No\v No v \ suppose , further , thit th1t that the road roadafter roadafter roadafter after paying operating expenses and andtaxes andtaxes andtaxes taxes , his h'lS hlS has ' just $20,000000 20000000 $ , left leff otter o\er o er \ . , on onthe onthe onthe the average n\"erage n "erage erage \ " , for bond Interest Which Whichactually Whichactually Whichactually actually Is little better than the case caseot caseof caseof ot of the Missouri Pacific Pacific , , , and nnd a little littleworse littleworse littleworse worse than the case of the New NewHaven NewHaven NewHaven Haven . . The New Deal plan would be for forthis forthis forthis this m my mythical thlcal thical road to go through re- re recelvershlp re re- receivership receivership - - ceivership celvershlp . , as the New H'1 H1 Hiven Haven ' en is about aboutto aboutto aboutto to do . , and take tal.e tale . advantige ad\"ant'1ge ad "ant'1ge ant1ge advantage \ " ' of ot Section Section71b Section77b Section77b 71b 77b ( ) of or the bankruptcy banhruptcy act When It Itemerges itemerges Itemerges emerges . , It might h:1\ h:1 h1 have h:1e hate : \ e a total capital capitaldebt capitaldebt capitaldebt debt In bonds of 5400000000 3400000000 400 000 000 but on ona ona ona a 3Vi 3th 3'k 3k ' per cent basis . . , This would mahe make maheits makeits makeits its annual bond interest bill 814000- 814000 814000000 14000- 14000 14000000 14000-000 14000 000 - 000 Instead of $ . $30000000 30000000 $ O 000 000 As the av average average average erage earnings applicable to bond In Interest interest Interest terest would be 5GOOOOOO 36040000 ' SG 000 000 in excess of ofthis ofthis ofthis this , . however hnwever ho " ever , the road cou could Id e1pect ecpect e1pectthe ecpectthe expectthe ; : the 10\\ 10 lower 10er iower \ er Interest rate But Instead o of ofthe ofthe ( the $ GOLX1,0tk1 GOLX10tk1 G 000,000 000000 0X,0l10 0X0l10 ! ) , , In addition adrlitinn heln being pild p'lld plld paid ' In Indl indhtdends Individends dl\ dl dlIdends dhtdends \ Idends , . a sizable sl7.ahle sl7ahle sizahle . fraction of or It . , 81y say . ' $5000)00 500000 $5000 5000 say$5000000 say5000000 $ ( noo ) . , would wOllld be used to retire retirebonds retirebonds I bonrls bonds e\pry e pry epry eery e\ e \ pry ypar year . I IThe actuallybetter The st stockholders stnd.holders stndholders chholders . \ would \ ould be actually actuallyI actuall actuallbetter y I better nff off thin than th'1 th1 ' " they were before hefore In Inthe i ithe Inthe n the Illiistritlon Illnstritinn IIIl1str lUon gh ghen given en there soul soulprobahiy \ wouldprobably \ ouM ouMprobalIy d probal-Iy probal Iy probahiy - , be bl he ' no dividends ( for or some sometime sometime sometime time after nfter the reor.nnI7'ltlon reor.nnI7ltlon reornnI7ltlon reor.r reorr reor . . . inlyitinn nhSition ' But .the the .theprOlll'rt dh dhproperty . .theproperty theproperty . e prOlll'rt\ prOlll'rt prOlllrt property prOlll'rtIn ' \ In \ which uhirh hlrh tlipy thpy they have ho\"e ho "e e hnve \ " an nn equity equitywould equitywould equitywould would lie he at Ipist Ip'1st Ip1st least ' on the roid rO'ld rOld road ' to a abetter abetter L Lbetter better sitintlnii sltll'ltlol1 sltllltlol1 situation ' Wht Where IVhere > re is If renran reorgan renranIzed ; : Ized reorganized iitidpr uuc1pr under thp the old tooth and nnd chw clot chwmethod clotmethod clawmethod v method , , tho the they " would "ould ould probably get noth nothIng nothIng nothing nothingThe Ing IngThe _ The same sort of or plin phn plan has hns been beenworl.l1 bee beeworked beenworked n worl.l/1 worl.l1 worl.l worll 1 worked . ' / r.itlier ritlier r.1ther r1ther rather . slllce successfully sutcessfullt sflllh on nnn non railroad rail railro'td railroid ro'td rotd road ' rpiratlong corporatllln9 cnrporntlns ci ) , thnu though h of course coursethe sours soursthe coursethe e the most IIII1"t IIII1t must " ImpDrtnnt hllllllrtHnt intpnrtnnt npw new ph 1111 ise of the thelaw th thlaw thelaw e law I Is ' thnt that ( lint It Ilrf prevents Ilrff'nrs pretenrs > \f'nrs f'nrs fnrs \ ' such 8u'h 8uh ( ' reorjanl renrgani reorjanlzatlons renrganizatlons reorganizatlnns . : ; zatlons In III hi In , ; hpid hplll hell hv by , . : up 11)1 111 ) minority mlnorltv se se- securlt securirt security - - curity curlt\ curlt curirt curlthllhlers \ holders hllhlers demandln demanding : ; mo'e moe mo"e ' " than thantheIr thantheir thantheir theIr sluire sllure share "Pitiless Pitiless " Publicity " Prc Prcblilint i'residnt iresidnt ' 111t ( nt Koosuvelt Hllllsee1t Itunseelt Hllllse\ Hllllse \ % e1t Is e exported eepeeted erted to todecillc todecide todecide decillc decide ( tli tl1 Ii it Ilrt present Ilrtcwnt > cwnt reJulHlllns regul regal . : itlons itlns , andprat and andprae andpradlies prae prat tll tic M ec prntntin lrotettin flrotN , tin , . : , ; the mmes n'lnws nlnws names ' of or e ca caporters c\portrrs c portrrs \ porlt'rs porltrs porters ' of nr \ war ar iuppllps IIIPIIII's IIIPIIIIs Qulpilps ' < : ) ( ' from frllm pllhllclty puhllclty pllhllcltysholl puhllcltyshould puhljcltyshould should sholl III he hl ' modified lnlltllnell mndifed thus thlls aPIII applying npDilog > , In the the"pltllt the"pitiless the"pitiless thepitiless "pitiless pitiless "pltllt pltllt " > cs ; publicity lll1hllrlt\ lll1hllrlt pabiiettt lll1hllrltso \ " so much talked talkedabollt talkedabout talkedabout abollt about I li\ li 11\ 11 litils 11his \ tils his fnrnipr rormpr former chief , . Wondro\\ Wondro Woodrow WoodrowWilson Wondro'Vllson WoodrowWilsun \ 'Vllson Vllson Wilson ' to tn Hie the prt present ' pnt sltll'ltlonUnlIt situationUnhr sitintinn sltll'ltlon sltllltlon situation sitintinnUndtr ' Undtr Unhr UnlIt r the present presellt pnntke Imlltile prnctke . , ship shipm'lnl"f shipmanVestc shipminl'e shipminle m'lnl"f mlnlf manVestc ' " ' ' > < ; < 5ts t l < ire held confldenthi cnnfldentl'11 cnnfldentl11 cnnfidentlal ' If Ir such sucha ! a rJlH redo re ( ' inst ( st la 19 Is nude mille m tee by hy the epnrter ecporter epnrterE ecporterEven exporterEven " { E\ E Een Even \ en Shire \ w \ litre hue publicity IlIIhlJritv Is 11110\\ 11110 allowed 11110ell nllowed \ \ ell , , . thename the thename thename name of or tlie the e a e'tpm etpm ' cpnr piii tor tcr ter Is not nnt mude made mudepublic madepublic madepublic public 11111It 'I I ' Ilius 11111\ 11111 guy ' \ It wis w'ts wts \ \ ' 'lS lS ' Impossible hllpnsslhle itriposslhle fur for re-I re I re-s s reIporters resporters re- re reporters - - porters In leIIrk \ New l\e\\ l e Aeu \ 1 \ vork IIrk urk recently rel'nth relnth reeentit ( ' to be be besure bpfcure ' bure sure \ which \ hlrh of the oil 011 compinlcs romp'1nles romp1nles companies ' hailmade hOll hail hOllID'1cle hadinide ID'1cle ID1cle made ' \ > very ery In large lar r e shipments of oil 011 to toItaly toItaly toItaly Italy . Treasury Trpasury oflklals offidals ofliclais are consIdering consIderingpermlttln consideringpermitting consideringpermitting permlttln permitting ) ; plllllh publlc.ttlun publlcttlun pul ll.itlon llitlon ( .Itlon Itlon . by ne'ij new ne\\ ne \ \ shrpers shrpersof 'ij ij ' pipersof ) I Jers Jersof [ of every e\erv e erv e > \ erv dot dpt det ill 111 iii as to e\ports e ports e'ports eports exports \ ' Naturally Natur Natur.ally Naturally .ally ally . , . thx-y thx y they tb - y \ will t1I not Dot do so if It the State objects , , nnd and conversations conversationson epnrtment department . Offi- Offi Otri- Otri Otricfals Officlnls - nr ar- ar arnow ! noW proceeding on this point - . , as they ad- ad admit admit - clnls cfals oC of both departments mit In private , . . conversations-though conversations though conversations , - - , ' 1U11 111 ( Jij > they decline to be quoted- quoted quotedfavor quotedfavor quoted quotedfavor - of course , theirconfident their theirconfIdent theirconfident and It Is favor such publicity publJcltr , that the president President . confIdent expectation dent will wlIl agreeItll agree with \\Itll Itll \ them . . would have haveno haveno haveno of ot course Such change a who whowished whowished whowished deterring anyone no legal effect in wished to ship such war oar \ ar supplies as as'Ire asSire asire 'Ire Ire Sire ' not banned by the President's Presidents ' ' proc- proc pros- pros proslamatlon proclam'ltlon proc-lamition proc lamition - compa compa- companies companies companies - oil oll reason renson the lam'ltlon lamltlon lamatlon ' . . The of other war sup supplies supplies nies and shippers snlppers sand sandplies and andwish andwish change chane : ; , , plies are nre opposed to anywish any protective protectivesecrecy protectivesecrecy protectivesecrecy wish to retain retnln the present prescnt secrecy . , Is that the they ) fear a boycott boycottof Individuals whowould who whowould whowould of their products by would resent v . what hat they would regard regardas as "war war " profiteering protlteermg " manifest that the thesentiment thesentiment thesentiment It Is Increasingly sentiment of ot the country was strongl strongly stronglybehind stronglybehind ) already taken tahen by the thePresIdent thePresident thePresident behind the ' iction 'tctlon tctlon Siction favor go goIng golag going PresIdent , and that tJmt it would the thepoclcetbooh thepocketbook thepocketbook where here ve " Ing lag e\ e even een \ % en furtbel-ga furtbel ga further-save further save further ' - - gave Individual sections sectionsmight sectionsmight sectionsmight poclcetbooh pocketbook of reillzed re'tllzed retllzed realized by bythe bythe bythe might be afTected a1Tected affected This Is ' the compinies comp'1nles comp1nles companies ' now selling selI1ng oil 011 to Italy Italyand , and those selling metal " which "hlcll hlcll nhicli , while whilenot \ whilenot bile not actu illy ammunition nmmunltlon , , cm C'ln Cln can ' be made madeInto madeinto madeInto Into ammunition by very simple p pesses proc proc- processes processes - esses once it reaches Italian Italiaa woik woikshops " vvoikshops 011 . shops . . Limit Motor Speede Speed SpeedAutomobile notAutomobile Automobile Automoblte minufacturers |