Evening star. [volume], May 23, 1932, Page B-5, Image 21

About Evening star. [volume] (Washington, D.C.) 1854-1972

Image provided by: Library of Congress, Washington, DC

                
Interest Expenses Reduced
Through finance Corporation
Debentures.
BY FREDERIC J. MASKIN'.
The Reconstruction Finance Corpo
ration, the 52,000.000.000 organization
created by Congress at the instance of
President Hoover to set an example
to all other-American business in lead
ing the wav out of the depression, has
feund a workable scheme for saving
probably a score of railroads and in
numerable other properties from col
lapse under too burdensome interest
charges.
The corporation is reported even now
to be negotiating with railroad cor
porations suffering temporary financial
difficulties for an exchange of securities
which will lighten interest charges for
a while and safeguard the bodv of the
property in the interests of the cred
itors.
The plan is as follows: The railroads
of the country have a heavy bonded
indebtedness outstanding, although
one which is regarded as sound in rea
sonably normal times. The heavy fall
ing off in prices and the selling wave
which has swept the country have
dashed the quotations of many of these
bonds downward. Moreover, the gen
eral slackness of business has injured
the earnings of the carriers seriously.
The highways, built at pub'ic expense,
have taken, through passenger bus and
motor truck traffic, a vast amount of
business away from the carriers, which
had to construct their lines at private
expense. No taxes have to be paid in
many States and counties for the high
way rights of way, but the railroads are
the largest taxpayers in the country.
Pipe lines pumping oil and gas for
long distances have taken hauling busi
ness away from the rail lines. A vast
amount of coal-carrying has been dis
placed. at the expense of the railroads,
by the construction of high-tension
transmission lines over long distances
for the transportation of electrical en
ergy. A new pipe line development is
•ncroaehing on the grain-carrying
business of the roads. Wheat is being
font through pipe lines for a mere frac
tion of the cost of shipping by rail
and even by water.
The grain is fed into the pipe fine
mouth and then a stream of compressed
air is turned on. The grain continues
to feed in at the shipping point an A is
carried along, suspended in the swift -
air current, falling out, hundreds of
miles away, at the point of destination.
Th- time saving is tremendous, but the
money saving is as great. A wheat pipe
line will rend wheat over a given dis
tance for 2 cents a bushel, whereas the
cost of railway transportation would be
nearer 20 cents.
Would Reduce Interest Expense.
Realizing such extraordinary fact? to
have placed the railroads at a disad
vantage. the Reconstruction Finance
Corporation has found a way for them
to reduce their in'erest expense. It
proposes to buv their bends, giving
debentures of the corporation in pay
ment. Railroad bonds pay 4 and 5 per
cent and tlvs crushing burden cf outgo
is swamping the carrier corporations.
The average market prices cf bonds cf
this character is arcund 59 per cent of
face value.
It is premosed that the railroads buy
In rt the "market as many of these
bonds rs they can and advances wi.l
be made to them bv the corporation
to assist them in so doing. In addition,
the railroads are to address their stock
holders. offering to arrange for a switch |
cf their deteriorated bone's to the re- I
ccn'tru'ticn body, which will give the :
bondholder, in return, the corporation
debentures. |
It will mean a loss of interest to the
bondholders, but he can. bv making this
exchange, be certain cf at least 3 per :
cent rn his nrney, as the cornoration
debentures will have the backing of
the Treasury. A large part of the in
terest load will be taken off the shoul
ders of the carriers.
The corporation and the railroad, in
proposing this refinancing cn a lower
interest basts, are expected to offer to
reluctant bondholders the alternative of
railroad receiverships, forced by inability
to pay the whole interest. In the event
of such receiverships, the bondholders
would get nothing instead cf the 3 per
cent Government debenture.
Such an emergency move is regard
ed as necessary, in view of the losses
the railroads have suffered, to stave
off a score or more receiverships which
would mean far-reaching losses, likely
to grow into general panic. The latter
effect would ’ be due to the fact that
many trust funds are invested in rail
road bonds. The insurance companies
have something like S4.000.000.000 of
them. Were these to deteriorate in
value further, the insurance companies
themselves would suffer loss of the
public's confidence, with possible dire
results.
On February 20, 1893. the Philadel
phia and Reading Railroad failed. This
collapse of one railroad’s credit precipi
tated the panic cf '93, whibh swept the
country. It has been estimated that
I
anywhere from 20 to 30 railroads are
on the verge cf failure and receiver
ship in the United States today. This
move of the Reconstruction Finance
Corporation has been timed to ward
off such an eventuality.
Efforts to Ease Credit.
The matter penetrates farther than
the railroad situation. It will have been
noted that special efforts are being made
by the Federal Reserve banks and other
leaders cf finance to ease credit. Fa
cilities for getting more money into
, circulation are being tuned up. Above
all, the adoption on the part of credi
tors of a more lenient policy and the
establishment of a sort of tacit mora
torium or scaling down of present fixed
obligations is being recommended as
the means of sustaining American
credit.
Leaders from the White House to
every branch of American life recognize
that what the country needs is stimu
lated activity, rather than a further
closing of the throttle of business. The
Reconstruction Finance Corporation j
policy in relation to railroad credit ap- J
plies with equal force to all kinds of j
property from office buildings and dwell
ings to peanut stands.
If the revenue-producing property Is
taken by creditors out of the hands of
its operators, creditors and debtors alike
would lose. If, by scaling down the fixed
capital charge demands, in line with the
decline in the general price level, the I
properties can be held in the category |
of going concerns, all parties stand to
win, for all experience of depressions
points to the temporary character of
such phenomena.
A turn in the depression tide is ex
pected to come from these fresh finan- !
cial developments. No mortgage holder !
really wants to steke thp furnace and |
run the elevators of an office building
or apartment house, and no banker is
eager to don overalls and ply an oil can
on the Salt River Line or any other line.
They would rather have their interest
and eventually recover their principal.
They are now realizing that the only
way to get it is to give the debtors, who
have any chance of making good, time |
enough to pay up.
Witch Murderers Must Die.
Sixty natives of the Wakamba tribe
at Nairobi, Kenya Colony, have been
sentenced to death for killing an old
woman they believed to be a witch. Ten
other natives under 16 years of age
were ordered to be detained fiuring his
majesty’s pleasure. The "witch” was
believed to have cast a spell on the wife
of one of the accused men, so that she
was struck dumb. The husband collect
ed 69 companions and took the old
woman -to his hut, where she was
ordered to remove the spell. The sup
posed witch escaped, but was chased by
the men. who. in accordance with an
ancient Wakamba custom, beat her to
death with thin sticks.
-%
Swims Every Day.
Rev. R. H. Hart-Davies, 84. of Read
ing. Englsnd, takes a swim in the
Thames River every day in the year.
CL veuj&ncJijjvL
~s
_
^'^neMek \
i Wp,\
Cool wash silks . . . re
freshing printed crepes
and sheers ... the better
cottons. Sizes 12 to 44.
RUGS
Cleaned
and
Stored
by
Experts
FIDELITY
STORAGE
1420 U Street N.W.
North 3400
Now! For the First Time
We Offer ;
FREE
TUBE
With Every
Kelly Lotta
Miles TIRE
—Kelly Lotta-Miles tires are
priced to meet the most exacting
demand for economy. In this sale
Kelly Lotta-Miles Tubes are in
cluded at No Extra Cost.
Kelly Lotta-Miles Low Prices
\
29x4.40-21 .$4.80
30x4.50-21 .$5.45 f$S£
28x4.75-19 .$6.35
30x5.00-20 .$6.75 KSf
All Other Sizes Loin Priced—Tubes Free
—Charge Them to Your Account or Use Our Convenient
Payment Plan. Tires Mounted Free at Our Service
Station. V
Fourth District
Floor 7200
*
JUSTICE TO FILIPINOS
IS URGED BY FORBES
Former Governor General Urges
Restriction cn Island
Imports.
By the Associated Press.
As a matter of "simple justice" to the
Filipinos, W. Cameron Forbes, former
governor general of the Philippines, has
recommended to the Senate Territorial
Committee that restrictions on imports
from the islands not be fixed at less
than present amounts.
Forbes expressed his views in a letter
to Senator Walcott (Republican of
Connecticut), that Chairman Bingham
put into the Congressional Record to
day, along with the former governor
general's opinions on the Hawes
Cutting bill to give the islands inde
pendence.
Bingham told the Senate that advo
cates and opponents of independence
"attach great Importance” to Forbes’
views, "not only because he has hereto
fore opposed it. and still believes that
the interests of the Philippines would
be best served by a continuance of
American sovereignty under the present
law, but also because his long experi
ence In the Islands and his recent
service as Ambassador to Japan give
his statements a high degree of au
thority and influence.”
Forbes said he felt “some such meas- :
ure as the Hawes-Cutting bill" was “the
best compromise” among the various
proposals for a change in the status of
the islands.
“It is pointed out as significant that
his recognition and acceptance of inde
pendence. even as a compromise, indi
cates that he has no fear of Japan's
annexation of the islands after inde
pendence," Bingham said, adding many
opponents were against freedom on
that ground.
■ ■ • —
Build Power Plants.
MOSCOW (A>).—Construction of three
more hydroelectric stations, with aggre
gate capacity of nearly 1.000.000 kilo
watts. has been ordered by Soviet
authorities. The plants will be finished
in 1935.
SUCCUMBS IN NEBRASKA
Grandson of Gen. T. H. Stanton Is
Dead in Omaha.
Word has been received here of the
death Saturday In Omaha, Nebr., of
Stanton Francis Kennedy, son of Mr.
and Mrs. T. F. Kennedy of Omaha, and
grandson of the late Oen. Thaddeus H.
Stanton, famous Indian fighter, who
served as paymaster general here dur
ing the Cleveland and McKinley
administrations.
Stanton Kennedy was graduated
from the Yale University Law School
two years ago and was considered a
writer of promise. •
' SOUPS >
of >11 kinds are made more
appetizing when seasoned with
LEA & PERRINS
V SAUCE J
Soldiers’ Height Standard Cut.
The height standard for recruits in
the British Infantry units has been re
duced to 5 feet 3 Inches.
Auto-Intoxication
( Self-Poi toning)
Headaches, dizziness, rheumatic
symptoms of faulty functioning
of the eliminative organs-pois
onous body wastes "intoxicating”
the system. Mountain Valley Min
eral Water aids the kidneys to
eject these health-sapping im
purities from the blood. Let us
tell you how it has helped others.
Phone us today!
Sold in Wathington IS Yeart
Mountain Valley Water
America’t Foremott Health Water
From HOT SPRINGS, ARK.
230 Woodward Bldg. Met. 1062
NOW BABY CAN I
SLEEP. PLYOEAH |
HAS KILLED ALL I
THE ELIES IN l
THE HOUSE. I
| . . . YESI AND
FLYOSAN’S THE
iONE SPRAY
! THAT LEAVES
[NO ODOR I
Flyosan, the new-day spray, leaves no
odor. And yet it kills flies and mosqui
toes instantly. Thousands already using
it. No stain. No smell. At your druggist’s.
Experienced AdvertisersPrefer T heStar
Extra Space Allotted!
Extra Salespeople!
All to make it much simpler for you! Quicker
service! Plan to be here bright and early—you’ll
want to—quantities are limited.
Furniture Store—Across the
Street From the Main Store
Park FREE While Shopping Here
Opposite 8th Street Entrance
It Took More Than 50
Mfrs. to Make This Bi
Furniture Sale Passible
A \
m from o«r
l\ , ow pR(CE5' —•»—1
flsSSS^^ A£“;nl
Our Budget Plan!
Many Washington people have taken advantage of this
economical way of buying furniture—for they realize how
simple and thrifty it is!
If you haven’t a Goldenberg Account, now it the time to open one
and share in these extraordinary savings!
To the EAST ... To the SOUTH ... To the WEST—Trips
by our buyer to all these furniture marts! The purchases of
a few suites here, a few suites there—from manufacturers
hard pressed for cash and willing to take sharp cuts—makes
this sale a reality for Washington homes and adds new pres
tige to the LOWER PRICED STORES!
Without doubt these are some of the best furniture
“BUYS” we’ve put over in years. Anybody can boast—
hut “the proof of the pudding is m the taste”—come and
see for yourself.
*12,000 Worth
$70 Three-Piece Velour i O A
Living Room Suite.at \
$119 Three-Piece Mohair I
Living Room Suite.at \ w®
$139 Three-Piece Frizette / S *!
Living Room Suite.at \ J ™
$169 Three-Piece Mohair / gOA
Living Room Suite.at ( ®
ot Living Room
$178 Three-Piece Mohair ( CAW
Living Room Suite.at ( A
$250 Three-Piece Mohair I S ^
Living Room Suite.at \
$129 Three-Piece Bed
Davenport Suite.
$138 Three-Piece Bed
Davenport Suite.
Suites
$169 Three-Piece Bed
Davenport Suite.
$189 Three-Piece Bed
Davenpcrt Suite.
$219 Three-Piece Bed
Davenport Suite.
$299 Three-Piece Bed
Davenport Suite.
*11,000 Worth of Dining Room Suites—*7,100
$125 Ten-Piece Dining /
Room Suite.at only \ J 3
$147 Ten-Piece Dining / gQM
Room Suite.at only ( ^ J
$169 Ten-Piece Dining / | A
Room Suite.at only ( ^ ^ ”
$187 Ten-Piece Dining • ( | Q
Room Suite.at only (
$225 Ten-Piece Dining / £ ^
Room Suite.at only ^
$269 Ten-Piece Dining / £ JI9Q
Room Suite.at only \ * M r
*17*000 Worth of Bedroom Furniture—*11*800
$119 Four-Piece Bed | ftZf*
Room Suite.at only \
$130 Four-Piece Bed / y^Q
Room Suite.at only \ M
$165 Four-Piece Bed I a AM
Room Suite.at only ( J
$180 Four-Piece Bed I SOA
Room Suite.at only \ ’ ^™
$200 Four-Piece Bed ( g | AQ
Room Suite.at only \ * "
$270 Four-Piece Bed / $ f Am
Room Suite.at only \ * ™ M
Slwmberland Savings!—Miscellaneous Lots!
$6.00 METAL BEDS— a a
double or twin sizes in yAO”
smart brown finish.
$8.00 WINDSOR
METAL BEDS—double 6 as
and twin sizes; neat
brown finish. ™
$40 DOUBLE DAY BEDS —ladder
back coil spring, a ^ A
Complete with mat- $ 1 0*7J
tress . m *
$5.00 COTTON MAT- aa aa
TRESS—roll edge — very yA#77
comfortable. All sizes. .
$16.00 INNER-SPRING
MATTRESS — double or ftA Af
twin sizes—covered with
art ticking.
$15.00 FOUR POSTER
BEDS — mahogany and oaa aa
maple finish. Double or YwO”
twin size. ^
$20.00 DAY BEDS — open into large
size bed; have roll- a ^ aa aaaa
edge cretonne covered y 1 ||»vV
.mattress.' * ^
$30.00 INNER-COIL MATTRESS —
damask covering — a a ^ ^ aaaa
Nachman unit. All y 1 CtVO
sizes . ™
$8.00 COIL SPRINGS aa
—made to fit any size bed. yA*a)
Splendid values. ■
$12.00 FELT MAT
TRESS — Imperial edge ma
quality — to fit any size yB*/a
‘ bed . W
$3.45 WINDSOR SIDE
CHAIRS — braced back; a ZQ
well constructed. Mahog- y 1
any finish.
$35.00 and $40.00 CLUB CHAIRS—
velour, mohair, tapes- a ^ aa aaaa
try coverings. Rever- ^ 1 il»”»
sible cushions. ®
$1.50 CARD TABLES— ^
strongly braced. Fold flat. W
Attractive covering. • v
$1.00 FOOT STOOLS—
metal with green or red ve- KIlC
lour tops. Special value. . .
$7.50 DROP LEAF END
TABLES — red, green or
mahogany finish. 2 drop O A*75
leaves }. . **
_
$10.00 CHEST OF
DRAWERS — nicely fin- AO
ished walnut on gum- $
wood. 4 drawers.
$20.00 DRESSERS—
Colonial style with mir- Ag
ror; gum wood, walnut or
mahogany finish . ~
$7.00 BOUDOIR
CHAIRS — chintz cover- A{%
ed; wood arms, shaped
legs. Special at. ™
$10.00 SERVING CAB- 6
I NETS—walnut with two
doors; finished interior. . *(|
$1.50 UNFINISHED
CHAIRS—ready for paint—
very sturdily made..