MODIFICATION OF RAILROAD FINANCIAL STRUCTURES HEARINGS BEFORE SUBCOMMITTEE OF THE COMMITTEE ON A BILL TO AMEND THE INTERSTATE COMMERCE ACT, 62410 MAY 21, 23, 27, 28, 29, JUNE 4, 5, AND 6, 1947 Printed for the use of the UNITED STATES WASHINGTON: 1947 CONTENTS Statement of- Bourne, Edward W., Alexander & Green, for protective committee Bushby, Wilkie, Root, Clark, Buckner & Ballantine,_representing a Callaway, M. P., trustee, Central of Georgia Railway Co., Savannah, Carmichael, George T., vice president, New York, New Haven & Cocke, W. C., trustee, Seaboard Air Line Railway Co., Norfolk, Va.. Colnon, Aaron, trustee, Chicago, Rock Island & Pacific Railway Co., Cunningham, Thomas M., counsel for M. P. Callaway, trustee of Page 384 286 211 238 225 323 463 Gerdes, John, Gerdes & Montgomery, representing Chicago, Rock Hagerty, Harry, Metropolitan Life Insurance Co., New York, N. Y Henwood, Berryman, trustee, St. Louis Southwestern Railway, St. Jansen, Arthur, Barrons Magazine, New York, N. Y.. La Roe, Wilbur, attorney at law, Investment Building, Washington, Loomis, James Lee, chairman, board of directors, Connecticut Mutual Life Insurance Co., Hartford, and trustee, New York, New Haven, & Hartford Railroad Co., New Haven, Conn.. Mecartney, Malcolm, associate counsel, preferred stock committee, Miller, Paul, counsel, St. Louis Southwestern Railway, New York, 361 271 97 482 276 264 116, 351, 508 Minton, A. Albert, counsel, protective committee, Wisconsin, Central first mortgage bonds, New York, N. Y. Morfa, R. J., chairman of the board of directors, Missouri-Kansas- Texas Railroad Co., Dallas, Tex.... Noble, John, Jr., counsel for the trustee, Boston & Providence Rail- road Corp.; Warren, Garfield, Whiteside & Lamson, Canton, Mass Norton, Henry K., trustee, New York, Susquehanna & Western Railroad Co., 140 Cedar Street, New York, N. Y.. O'Connell, J. Harlin, representing a group of general mortgage bond- holders of the New York, Susquehanna & Western Railroad Co., Purcell, Robert T., vice chairman, Alleghany Corp.; vice chairman and general counsel, Chesapeake & Ohio Railway Co., Cleveland, 1348466 Tilden, Nathaniel, representative to the general court, Common- 153 15 Walpole, W. P., assistant to the trustee and chief executive officer, Walter, Luther M., Walter, Birchmore & Belnap, Chicago, Ill. Wells, H. J., vice president and general counsel, New York, New Haven & Hartford Railroad Co., Hamden, Conn Wyer, William, railway consultant, William Wyer & Co., 143 Liberty Reports of Government departments: Interstate Commerce Commission Bourne, Edward W., 120 Broadway, New York, N. Y., representing the protective committee for the Chicago, Rock Island & Pacific Burke, Coleman, Burke & Burke, 72 Wall Street, New York, N. Y., counsel for the protective committee of the New York, Susquehanna Claughton, Edward N., 310 Southeast First Street, Miami, Fla. (re 533 Colnon, Aaron, cotrustee, Chicago, Rock Island & Pacific Railway Co., 208 South La Salle Street, Chicago, Ill. Harrison, Carter H., Jr., chairman, protective committee for the Chicago, Rock Island & Pacific Railway Co. 7 percent and 6 percent preferred stock, 209 South La Salle Street, Chicago, Ill.. Major, C. A., president, Lehigh Valley Railroad Co., 143 Liberty Purcell, Robert W., vice chairman, Alleghany Corp. and vice chairman and general counsel, Cheasapeake & Ohio Railway Co., Terminal Railroad Security Owners Association, 110 East Forty-second Street, 582 Hagerty, Harry C., vice president and treasurer, Metropolitan Life Insurance Co., New York, N. Y. (as chairman of group of institu- tional holders of Missouri Pacific Railroad Co., first and refunding Halsey, Stuart & Co., Inc., 35 Wall Street, New York, N. Y Harrison, Carter H., Jr., chairman, protective committee for the 554 Sterling, Leon D., secretary-treasurer, International-Great Northern Railroad Co., first mortgage bondholders protective committee, 50 MODIFICATION OF RAILROAD FINANCIAL STRUCTURES WEDNESDAY, MAY 21, 1947 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, The subcommittee met at 10 a. m., pursuant to call, in the committee room of the Committee on Interstate and Foreign Commerce, Capitol Building, Senator Clyde M. Reed (chairman of the subcommittee), presiding. Present: Senators Reed, Hawkes, and Myers. Senator REED. The committee will come to order, please. This is a hearing of a duly constituted subcommittee appointed by the chairman of the full committee to hold hearings and analyze and make recommendations on Senate bill 249, a bill to amend the Interstate Commerce Act, as amended, and for other purposes, together with proposed amendments intended to be offered by Senator Myers and myself. The bill and amendments will be inserted in the record at this point. (The bill is as follows:) [S. 249, 80th Cong., 1st sess.] A BILL To amend the Interstate Commerce Act, as amended, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is hereby declared to be in aid of the national transportation policy of the Congress, as set forth in the preamble of the Interstate Commerce Act, as amended, in order to promote the public interest in avoiding the deterioration of service and the interruption of employment which inevitably attend the threat of financial difficulties and which follow upon financial collapse and in order to promote the public interest in increased stability of values of railroad securities with resulting greater confidence therein of investors, to assure, insofar as possible, continuity of sound financial condition of common carriers subject to part I of said Act, and to enable said common carriers, insofar as possible, to avoid prospective financial difficulties, inability to meet debts as they mature, and insolvency. To assist in accomplishing these ends and because certain classes of the obligations of such carriers are in the usual case held by a very large number of holders, and further to enable modification and reformation of provisions of the aforesaid classes of obligations and of provisions of the instruments pursuant to which they are issued or by which they are secured in cases where such modification and reformation shall have become necessary or desirable in the public interest in order to avoid obstruction to or interference with the economical, efficient, and orderly conduct by such carriers of their affairs, it is deemed necessary to provide means, in the manner and with the safeguards herein provided, for the alteration and modification, without the assent of every holder thereof, of the provisions of such classes of obligations and of the instruments pursuant to which they are outstanding or by which they are secured. Part I of the Interstate Commerce Act, as amended, is amended by adding after section 20a the following new section: "20b. (1) It shall be lawful (any express provision contained in any mortgage, indenture, deed of trust, or other instrument to the contrary notwithstanding), 1 |