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Show SEEN SEENand SEEN--'HEARD SEEN 'HEARD HEARD SEEN'HEARDaround and - " - ' HEARD HEARDaround around theNational the theNational . National Capital Capitalfa CapitalI fa- fa I- I faBy IBy r : - - -By By - B By ! CARTER FIELDWashingtonThe FIELD FIELDS.SSS.S -S.SSS.S SSSS.S S.SSS.S SSSSS - S.SSS.SWashington . . WashingtonThe Washington-The Washington The Washington -The The - The new plan for tor gov- gov government gov government - . ernment aid for tor financially sick rail railronds railroads railroads ronds roads , to be made possible posslble by bills bUls just justIntroduced justIntroduced justIntroduced Introduced with tlie tile the appro approval approsal ' al of the thendmInlstratlon thethdntlnistraton theadministration ndmInlstratlon thdntlnistraton in both house and sen sennte senate sendtc nte ate , , , is a combination comblDl\tlon comblDl tlon \ of scaling scal1ng do dorm dormthe downthe " n nthe the capital c'1.pltaJ c1.pltaJ c1pltaJ ' . structure and government governmentguar'lntee governmentguarantee governmentguarantee guar'lntee guarlntee guarantee ' of bond Interest . . Orlgln'lUy OrlglnlUy Originally Originallyas ' , as told In these dlspn dispatches tches last inst scar year.the yearthe car . , the plan phn was to have h'1Ve h1Ve hive ' the go\ernment go ernment gosernment goernmentguarantee gosernmentguarantee governmentguarantee \ guarantee the tile Interest and principal prlnclpl1 . ) inreturn In Inreturn Inreturn return for a concession by the bond bondholders bondholders bondholders holders botli both as to amount of ot the prln prin prlndp'll princip'tl prindpal dp'll dpll cip'tl ciptl ' ' and ond rate of Interest InterestThe . The new plan Is a"arI1tion a \ " variation \"arI1tion "arI1tion arI1tion of thIs thIsDot thisnot tillscot Dot not actually actun1Jy In the fundamental ques quesHon question questlon Hon tion 1m Involved insolved olved , but in the method of ap appro'lcb approncb approach pro'lcb prolcb proncb ' . As In the time first place plncc . , It is intended In Intended intended tended to be applied appUed only to railroads railroadstor railroadsfor railroadsfor tor for which bleb there is really ren1Jy some economic economicbope economichope economichope bope hope . It Is admitted thnt that there arequtte arequite are arequite quite qutte a few which "bleh bleh nhich " are simply slmply beyond beyondEmJng beyondBasing beyondjKivIng EmJng Basing , , economically economicaUy . All AU the proposed " does IS ISto isto to gh give gise e the RFC Rre the right to puichase puichaserailroad pui pm chase chaseral1road chaserailroad ral1road railroad bonds , regardless of their ma maturity mapurity , urtty turity date , at the market marJ.et marJet . price There Thereppon ThereVpon ppon pon the tile RFC nre regards the amount p'lld plld paid paidfor p'lldtor paidfor ' tor for the bonds as a debt of the rail railOD.d railroad railroad road % OD.d ODd . to the RFC nre : and rnd charges the rail railrO'ld railroad railroad rO'ld rOld road ' the regular reguhr RFC nre IWC rate This r\te r te rate rteIs rateis ratets ' \ Is now 4 per ccut cent ccutThis . This would not probably enable the thenre theXtrc tlieVTG nre Xtrc to get anywhere with the SItu"atlon situstion situ situetlon < : " etlon "atlon atlon stion , were It not for tor ' another 'mother mother law hw al already already already ready on the book bool , " . ' , , the new bankruptcy banltruptcy banltrupt bankrupt cy law . Under Se Section Settlon .tIon tIon < . 77 of ot the bank bankruptcy bankruptey bankruptcy ruptcy ruptey act any federal fedeml court may direct directft directn ft n scaling down of ot all aU classes of ot secur security seciirIty - Uy ity of any railroad ral1ro'1d ral1ro1d ' if It two thirds of the theholders theholders theholders holders of each class of bonds and pre preterred preerred preferred ( terred erred stocks stocJ.s stocJs . approve . Were it not for the bankruptcy b'lnhruptcy blnhruptcy ' act a apD'll1 aitnall annall pD'll1 pDll1 itnall ' group of ot bondholders , by rerus refus rerusng refuslog refusIng log ) ng to sell at what had been market marketprices marketprices prices ] ) rlces , might either pre\ pre prevent preent present \ ent anvthing anything anvthingfrom anythingfrom anythingfrom from being done or force the gO\ gO gos gOern governncnt \ ernwent ern ernment ment went or the railroad raUroad company to buy buythem buythem buvthem them off ofr . Thus a 5 lS per cent railroad bond bondmight bondmight bondmight might be selling se1Ung for 20 , but the plan plancould plancould plancould could not be applied nppUed because 5 per cent centof centof centof of the ! holders hoIders molders Insisted on being patd paid patdpar paidpar paidpar par . Many Mnny a railroad raJIro'ld raJIrold ' merger In the thepast thepast thepast past has been blocked by such attempt attempted attempted attempted ed holdups , and many another has been beenoverc'lplt'1l1zed beenoverespit beenovercapitalized overc'lplt'1l1zed overclplt1l1zed overespit ' ' tlhzed becau because e the promoters promoterspnld promoterspaid promoterspaid pnld paid too much to mhnotihesHits mmoilties mmolltIes mhnotihes mmoiltiesHits Hits Sharpshooters SharpshootersThe The new proposal strikes haid h'lld hlld herd ' at atthese atthese atthese these would be sharpshooters It would wouldworJ wouldwork wouldwork worJ work , something sometbltlg like IIJ.e IIJe . this " ' . The New NewYork NewYork NewYork York Cripple Creek CreeI . , to take taI.e taIe , . an ImagI rmagi rmaginary ImagIDRry imaginary DRry nary name , Is a fairly falrlv sound railroad railroadexcept , except that It Is overcapitalized overcaplt'lllzed overcapltlllzed ' It ItC1nnot Itcannot Itcannot C1nnot cannot possibly posslblv pav par the coupons on its itsgencr'll itsgeneral Itsgeneral gencr'll gencrll general ' mortgage 7 per cent bonds honds , or orits orits orIts its 5 ' ) per cent first mortgage bondC bond So Sothat Sothat Sothat that for tlie the time being bemg the bondholders bondholdersare are getting nothingAs nothingAs nothing nothingAs As a result resuIt , . the first mortgage mortnge . ; 5s 55 sell selldown selldown selldown down to 40 , and the general gt.neral gtneral gcnernl . mortg'lge mortglge mortgage mortgagebonds mortg'lgebonds mortgagebonds ' bonds sell down to 20 If the ratlro\d ratlro d railroad ratlrodcomQany railroadcamj railroadcompany ' \ comQany camj any could buy in all 'In In ' those bonds bondsat , at those th'Qse thQse ' prices with money borrowed borrowedat at 4 per cent cent , , it could then emerge emergefrom emergefrom emergefrom from : receivership , . and earn enough to topay topay topay pay the 4 per cent . . Assuming a total totalof totalof totalof of $100,000,000 100000000 $ , , on each e'1.ch e1.ch e1ch ' . bond Issue the theinterest theinterest theInterest interest on the general mortgage bonds bondswould bondswould bondswould would be 7,000,000 7000000 $1,000,000 1000000 $7,000,000 ? $ , , a year , and on the thefirsts thefirsts thefirsts firsts $5,000 5000 $ $5,000000 5000000 $ , , 000 a n year a n total of or $12 12 $12- $12 12 $12000,000 $12-000,000 $12 12 000,000 000000 $ - . 000,000 000000 , a year yellI " . Whereas the interestat Interest Interestat Interestat at 4 per cent on the market marlet , value valuc of ofthe ofthe ofthe the bonds would ould be only $2,400 2400 $2,400000 2400000 $2,100000 2100000 $ , 000 a ayear ayear ayear year , So appeal is made to the bondholders bondholdersto to agree on this plan plln ! If two thirds of ofthem ofthem ofthem I them will WIn consent , . the RFC fire will buy buytl buytheir buytheir tl > their elr bonds They will w111 get something somethingInste somethinginstead somethingInstead Inste Insted instead \d d < \ of nothing nothmg in the way of Inter Interest interest interest est , and from one-fifth one fifth - - to t\\ t two t0 \ 0 fifths of oftheir oftheir oftheir their principal at maturity Instead of ofprobably ofprobably ofprobably probably nothing nothmg Not only onlv that . , but butIf butIf butIt If they act promptly prompUy , they will get prac prat prattlcally practically tlcnUy tlcally practlcnUy government bonds , so that ac actuany actually actually tuany tually they thcy need not worry In the fu future future future ture about whether their raflro'ld raflrold railroad railroadmakes raflro'ldmahes railroadmakes ' mahes makes money or not For ror another section see sec seetIon sectlon tIon of the time bill authorizes the RFC nFe to toexchange toexchange toexchange exchange Its own bonds , which In ef effect . fect teet feet are government bonds , for the se securtues securities securities curtues curities so taken tahen . All An of which is apt npt to Induce the thebondholders thebondholders thebondholders bondholders onlytwo to approve , and as only two thirds need approve appro\e appro e approse \ to have a court courtorder courtorder courtorder order the tile plan in effect , the path p'lth plth ' to toreorganization toreorganization toreorganization reorganization on a sound basis has at atlenst atleast atleast lenst least been smoothedCummings smoothed smoothedCummings Cummings on SpotAttorney Spot SpotAttorney Attorney General Homer SCum SCummlngs S Cum Cummings Cumrnlngs mlngs mings has jumped from No 10 to No 1 1in 1in 1In in the list 1Ist of most criticized cabinet cabinetmembers cabinetmembers cabinetmembers members since he argued before the theSupreme theSupreme theSupreme Supreme court the constitutionality ofwhat ofwhat of I aboutthe what tlie the government had bad done about aboutthe aboutthe the gold cl1useslIe clauseslie clauses cl1uses clausesHe He lIe Is not only being criticized critlclzed b ) } bylawyers lawyers outside the administration admmlstratlon , but by butby New Deal insiders The criticIsm criticismas , as usually is the tbe case . , comes from two twoextremesthose twoextremesthose twoextremes extremes-those extremes those - those ' " who ho think he did not notmahe notmake notmake mahe make the case strong enough , and thosewho thosewho those who think he made m'lde mlde m'ide mide ' ' It too strong strongInstancing strongInstanctng Instancing Instanctng the latterIewpolnt latter \ viewpoint \Iewpolnt Iewpolnt siewpoint , n a avery avery very prominent diplomat , at a recent dInner recentdinner party , wag was asked what wh'lt whlt whit ' he thought hethought would be the effect It if the Su Suplema Supfeme Sup/eme Sup eme plema pfeme / court . should E.hould Ehould rule against the thegovernment thegovernment thegovernment government . . * I would rather ask that questIoll question questionthan questIollthan than lln an&wer anwer llner answer & ! > \\er er \ it , . " be he beJan began be an , in true dip diplomatic dip10matIc 10matIc lomatic 'suddenlyseeing suddenlyseeing fashion , but then theD , .suddenly suddenly ' . , , seeIng a perfect "out out " , " , " exclilmed exc11Imed excliimed : : "but but " I am inclined to agree with your OUl.tI OUltI " . , , Attorney yourAttorney OUl.tIAttorney General Gencral Cummmgs-that Cummmgs that Cummings-that Cummings Cummings - that It Itwould itwould itwould would mean chaos ' ' That Th'lt Thlt Thgt ' is e exactly ' ' { nctly cty ] the kind hind of rol talk ] " the theadministratIon theadministration theadministration administratIon does not want going on onE onE onEspecially E lIeciany peclally as it docs does not believe belIe\c belIe c beliese \ the theeffect theeffect theeffect effect of an ad\ ad adverse aderse adberse \ erse decision would be benn benn beanything nn thIng like m.e me . chaosA chaosA chaos chaosA A representative ot of Important finanda1 tlnanr1a1 flnan finan tlnan flnanlal da1 r1a1 < lal . Interests 1.uterests 1uterests In Washington has just completed Lompleted tornpleted a 8 canvass C8mnss cansass of a large number anmbet numberof anmbetof numuctof of prominent constitutional constltutloun ! lawyerf lawyers lawyerfwho lawyerswho lawyerwho * before be be- before before - - who have been practicing for tor years fore tlie the Supreme court as ns to tht their > ir opln opin oplnIon opinion opinIon Ion of tlie the time outcome . . A very vuy l < large lrge majorlty ma maJorlty jorlty thought tlie thc the court would upholdthe upholdthe upholdthe the government . Whatas What \ was \\as as appraised'is appraised | ' as 18 'is is a l ! , very tery ery Intelligent Intelltgent minority did not notBut . But here Is the time Interesting pointabout pointabout point 1 about this mlnorft nilnorltj minority ) vtew vlcw view . It held that thatthe thaithe the court would [ piobably probably 'Ilobably Ilobably ' upliold uphold the thi theright theright : right of the time govcrnnient government governnment to change the theterms theterms terms of prh private prisate ate contracts , but not tc tcchange tcchange tcchange change the terms of flf gO\ gO government gOernment gosernment \ ernment bondsJust bonds . . Just Supposing SupposingNow Now assume assumc for the moment that th'tt thtt th'rt thrt ' ' th tht thtcourt thicourt court will wl1I rule this way , and conslulf consluu consluuthe conslulfthe considerthe the results . . The ; government Oernmcnt osernment O\ O \ ernmcnt "ould ould would "ouldhm wouldhase " wouldhave hm hase e to pay gold for its gold chu clauac clauacbonds clausebonds c cbonds bonds on maturity DJ'lturlty DJlturlty ' . But the Supreme Supremecourt Supremecourt Supremecourt court has upheld the right of the time gov government goveminent goveminent ernment eminent to commandeer comm'1ndeer comm1ndeer conmmandeer ' gold nt at the old oldprice oldprice oldprice price So thnt that anyone holding such a abond abond abond bond could demand demnnl1 the gold , receive recelse recch e it it.and Itand it-and it and .and and . - then have hue hive It taken tnlen , right awav a1V an'rv anrv , ' ' by bythe bythe bythe the government go\ernment go ernment gosernment \ nt at the old price The Thenet Thenet Thenet net effect of which , so far as American Americanholders Americanholders Americanholders holders of the bonds arc nre are concerned concernedwould , , would be precisely preciselyero /ero ero lero zero lerorOI zerorotelgn / eroFoielgti rOI Foielgti rotelgn elglJ liolders hoMers holders of such bonds bonde ; . , , howe howeser how howvcr e\ e ecr eser \ vcr cr , , would not be subject to ha\ ha has having haII1g \ II1g mg I their gold goid commandeered comm'1ndeered comm1ndeered ' at the old oldprice oldprice oldprice price So that th'1t th1t ' the net effect , acsumlng assuming assumingall acsumlngnn assumingnil : nn nil foreign holders deman demanded ed an and re re- receh recelsed received - ceived celsed ceh cd gold at the old rate r'lte rlte ' for their theirbonde theirbond theirbonds bonde bond : , " would "ould ould cost the government gOernment gosernment gO\ gO \ ernment , , it itIS itIs Itis IS c estimated < ; tlmated , less than th'1.n th1.n th1n ' . $00,000000 00000000 $00,000 00000 SGOOOO $ , , 000 Not Notso Notso Notso so good , but h'lrdl hlrdl hardly inrdb ' , } chaos ch'1oS ch1oS ch'1oSBut chaosBut chaosBut ' But there ar are ' " other otlmer complications compUcatIons to tominimize tominimize tominimize minimize even e\en e en esen \ tlmis thi t1u For Instance Instauce , the theHague theHague theHague Hague court decision that th'lt thlt ' the actIOn actIOnof actionof actionof of the American Amer1can g\ g gos government gernment : ) \ ernment had s set settied settied < > t ttIed tIed the matter ! What gl\ gl gives glps gigs \ ps that th'lt thlt ' 'yorrled yorrled ' worried look 1001 . to the thetreasury thetreasury thetreasury treasury t'l tl tT ta\ ta taexperts ' \ c e experts ' ' < perts , trying to figure figureollt figureout figureout ollt out the ne\t ne t nest \ " : ta\cs ta cs taes tnees \ " { to be ad\ ad ads adocatc advocated \ ocatc\ ocatc ocatecl ocatcto ( \ to toward toward toward ward thr tIll time ' end of this |