| Show SEEN SEEN HE 4 HEARD ARD around und th the National Capital CapitalI I tom I I U By Dy CARTER FIELD t- t i Washington A drive s against rackets In so-called so protective committees of ot stock or bondholders of ot corpor corporations especially those In receiverships is stoat about to begin asan as asan asan an altogether unexpected development development develop develop- ment went of ot the securities and exchange commission activities Every Investor has realized for some ome time there were grave abuses In these committees that they ran up tip fees and charges even when they were legitimate and that all too often orten their main purpose was to tobe tobe tobe be bought ort off by those really trying to revamp the corporation in the Interest of ot the stockholders So far tar there Is 18 no Indication that the commission is going any forth farther er but Its reports to congress which will be made In a few months will according to very reI reliable re re- liable sources at least start a move I whether It gets very far for or not notI not not- I at doing something about the high i cost of ot receiverships For the present the commission is aiming chiefly at men who have made practically a business of ot getting get ting unthinking stock and bondholders bond holders already faced with the prospect of losing part of ot their Investments In vestments to go Into moves which I the operators but In thelong the thelong long Jong run only Increased the loss of ot I the Investors I The next logical step senators familiar with the plan declare Is Isto isto to go after the perfectly exorbitant I legal and other fees being charged for tor administering financially crippled crIppled crip crIp- pled organizations One senator cited a case cose where a hotel property Is being administered admin by hy three lawyers no one FM of ot whom ever had hod any experience in the hotel business but hut who are being paid a B year each for their services In directing this property property's prop prop- erty's erty operations Actually of ot course no one of ot the three devotes very much time to the actual operation operation op op- of ot th the hotel Hits Bondholder The point this senator emphasized sized Is 1st what chance does docs a stock or bondholder have of getting anything any Rny thing when wilen a property already crippled or it would not be In re re- has this additional load lond put upon It I More to the point is the case ease of an office building where two lawyers law after neter performing a very minor legal service for one of ot the bondholders bondholders' bondholders bondholders' bond hond- holders' holders protective committees sent bills for each I It so sa happens happens hap hap- pens that It if this particular office building had possessed at atthe atthe atthe the time just time Just the total of ot this lawyers' lawyers bill bill It It would not have had bad to go into receivership at all alit I And it so happens that there are several other protective committees commit tees operating at the moment in behalf allegedly of ot the bondholders ers era of ot this particular enterprise The trouble about anything per per- anent being done the senator remarked re re- marked Is that there are too many lawyers In to congress I happen happen happen hap hap- pen to be Ie one myself but the fact tact is and la-and and If It you quote me by name I will deny I even had such a thought the the boys do stick together And the jud Judges es who appoint receivers and who pass on the fees of ot attorneys nets net's for or protective committees are all lawyers I do not know Just what ought to be done about It but j it has certainly approached the tile stage of a scandal And beyond the shadow of ot a doubt the property 1 Ii of ot Investors who are unfortunate enough to have hae put their money In 1 enterprises wll which h get into receiverships receiver I ships Is actually looted by the present present present pres pres- ent system I hope that what th the e I. I securities commission starts will bear fruit New Dealers Fussed I New Dealers are torn between l' l pride and alarm over the action of ot New York state electric companies In proposing a substantial reduction reduction redu o- o tion In rates They are proud that o- o President Roosevelt's policy of ot doIng doIng do do- Ing lug everything possible to lessen n the cost of ot electricity to consumers consumer s I Is meeting with such success The They y ere a little alarmed as to what wha t I these particular cuts in this par par- 1 tic lur territory may do to th the e 1 f reaching coaching In the senate over overn r r n fL of ot the St SL Lawrence Lawrenc e seaway treaty Not that the votes of at the New Net v York Tock senators t. t Lid Ie s involved Bot Doth h of at them are strongly against the treaty and are expected to stan stand d firmly against It regardless of at th the e power question Their concern 1 Is d with the port of ot New York and the railroads leading lending through New Net NewYork York state to It and with the Erl Erie e canal anal The question of or cheaper power power pow er Is very mild In Importance Indeed Indeed In In- In deed to them In contrast with e threat to the prosperity of ot their bi big g gs port and the communication lines s leading to It ft But Dut tills this cut in power rates 1 in nr n New York state presupposing fu futher further further fur fur- r ther cuts later on hits a very serious serious seri serl ous blow at the project as a whole so to speak It makes far tar more mor e difficult the problem of at convincing g gs other parts of or the United States s that the whole scheme Is economically can tally cally sound At present there are ore two i f lions s of the country arrayed cacti rach for local rea other on this treaty sons eons All of or the tile Atlantic and Gulf Gult seaboards are a ai nut It for th e same re reason llon that New York Is against It Most ost of ot the Central and Northwestern states are for it on the theory that It would provide cheaper freight rates for tor their export ex export port products b by letting ocean goIng goIng go go- Ing lag ships come Into the Great Lakes Lake Illinois Is an as exception Its geographic geographic geo geo- graphic position would naturally make It for the treaty Just as Mich Ign igan Wisconsin and Minnesota are for It The canal would make Chicago Chi Chi- cago virtually an ocean port But Dut this Is le complicated by bl the fact that Illinois and Chicago want to take more water out of ot Lake Michigan And President Roosevelt has not the tho slightest Intention of giving In Into into to Illinois on this Might Be Liability This leaves the Southwest and the Pacific coast not directly Interested In in one way or the other except except ex as the project ma may tend to prove an additional burden on their taxpayers And there Is where the possibilities of 01 these rate cuts cuta al already ready planned and those obviously In prospect come into the picture For they mean that the current produced by the St. St Lawrence seaway seaway sea flea way project mn may actually turn from what has been regarded as an asset In consideration of ot the project as asan asan an economic whole into a liability It Is even een conceivable that the President Ires Pres ident may lose some of ot his keen keln in Interest In terest in the project thou though h he has said nothing to Indicate this But Dut If It the proposed cuts of or elece electric electric elec elec- trig rate are toll followed owed by such fluch s a program of ot future cuts as has been suggested actually the chief reason renson for his being so strong for the treaty will have disappeared lie Ue la has bas never said so but so publicly but all his close friends know that since the beginning of his Interest In the project his chief concern was not the seaway to make cheaper freight rates to Europe for tor the Middle and Northwest but the power It Jt was part and parcel of ot his plan for tor forc fore forcing ing lag down dOlln electric rates all over the country He lIe never never said so for tor the simple reason that the St St. Lawrence seaway seaway sea sea- way has been a very popular Issue Issue Issue- as a seaway not a hydroelectric scheme scheme scheme-In in the Middle and Northwest North west for tor many years year But Dut the fact tact stands out that unless he be pulls wires with really extraordinary success success suc suc- cess the treaty will be defeated again this year President Optimistic President t Roosevelt Is much more optimistic about the financial future future fu fu- ture of ot this government providing he can hold bold the bonus compromise down to a reasonable figure than either his budget message or his explanations ex ex- of ot It U to newspaper men senators and members of ot the house indicate To begin with there Is ts a kitty to use his own word wordin in conversations about It Only he does not speak of he he speaks of or Which Is another indication of ot how his mind Is working For It will be re re- recalled recalled called that in each ench of ot his budget messages he has lias gone out of at his way to put the worst foot forward the aim always being to be able to tomake tomake tomake make the picture look better better by by contrast contrast contrast-at at some Rome future date As a matter of or fact had his strategy been of ot a different variety had had he been trying to make the financial picture look rosy Instead of dark with doubt he doubt he could have painted a rather optimistic picture Instance He Ill could have made a fair calculation say somewhere from 50 cents to 00 cents on the dollar of ot the debts owed the Reconstruction Re Reconstruction construction Finance corporation Actually the corporation expects a anet anet anet net profit when it finally winds up He tie could have used the kitty on another offset This kitty consists of ot profit made on the revaluation of ot gold and ad lI In the equalization fund which was voted by congress andis and andIs andIs Is being administered In absolute secrecy by Secretary Se of ot the Treasury Treasury Treas Treas- oury ury Profit in Silver Experts who have bave tried to figure fig fig- ure tire without Inside information which is not obtainable all agree that there Is a considerable profit already On the silver purchase for example Some estimate It as being more than half halt a billion dollars dollars dol dol- lars profit right now without calculating calculating cal cal- any further advance In the price of ot silver sliver But Dut the President did not want to tomake tomake tomake make the budget statement an any more optimistic than he could help lie He wanted as blue a picture an aJ pos Bible sibil for two reasons One Is that the more rosy rose ros the budget outlook the greater dim culty he would have hae restraining the bonus bOllus seekers seeker That Is fairly obvious ous aus It fits In with his direct threat that If It congress boosts the expenditures pro pro i in the budget budget budget bud bud- get In any anI sub sut initial particular congress must provide the money by Imposing additional taxation The other and In a way the mire mure Important Is for tor the effect at sometime some sometime time In the future There will nil be b. another budget message one year from Irom now which will be In tin tin- J year jear ear of ot a residential election If Ir things should not be so ros rosy for tor forthe the administration at that time all as they are ore now It might be very helpful to ta present a more optimistic picture to the country w NU arric |
