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MODIFICATION OF RAILROAD FINANCIAL

STRUCTURES

HEARINGS

BEFORE

SUBCOMMITTEE OF THE COMMITTEE ON
INTERSTATE AND FOREIGN COMMERCE
UNITED STATES SENATE

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A BILL TO AMEND THE INTERSTATE COMMERCE ACT,
AS AMENDED, AND FOR OTHER PURPOSES

62410

MAY 21, 23, 27, 28, 29, JUNE 4, 5, AND 6, 1947

Printed for the use of the
Committee on Interstate and Foreign Commerce

UNITED STATES
GOVERNMENT PRINTING OFFICE

WASHINGTON: 1947

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CONTENTS

Statement of-

Bourne, Edward W., Alexander & Green, for protective committee
of the Chicago, Rock Island & Pacific bonds, 120 Broadway, New
York, N. Y

Bushby, Wilkie, Root, Clark, Buckner & Ballantine,_representing a
group of insurance companies holding Chicago, Rock Island &
Pacific bonds, New York, N. Y..

Callaway, M. P., trustee, Central of Georgia Railway Co., Savannah,
Ga...

Carmichael, George T., vice president, New York, New Haven &
Hartford Railroad Co., New Haven, Conn.

Cocke, W. C., trustee, Seaboard Air Line Railway Co., Norfolk, Va..

Colnon, Aaron, trustee, Chicago, Rock Island & Pacific Railway Co.,

debtor, Chicago, Ill.

Cunningham, Thomas M., counsel for M. P. Callaway, trustee of
Central of Georgia Railway Co., Savannah, Ga.--
Davis, C. McD., president, Atlantic Coast Line Railroad Co., Wil-
mington, N. Ć.

Page

384

286

211

238

225

323

463

Gerdes, John, Gerdes & Montgomery, representing Chicago, Rock
Island & Pacific Railway Co., New York, N. Y..

Hagerty, Harry, Metropolitan Life Insurance Co., New York, N. Y
Hand, Frank B. Jr., attorney at law, Transportation Building, Wash-
ington, D. C., representing Alabama, Georgia & Florida Railway---
Harrison, Carter H., Jr., chairman, protective committee, Chicago
Rock Island & Pacific preferred stock, Chicago, Ill.

Henwood, Berryman, trustee, St. Louis Southwestern Railway, St.
Louis, Mo..

Jansen, Arthur, Barrons Magazine, New York, N. Y..

La Roe, Wilbur, attorney at law, Investment Building, Washington,
D. C., representing Susquehanna & Western Railroad

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,
Chicago, Rock Island & Pacific Railway Co.....

Miller, Paul, counsel, St. Louis Southwestern Railway, New York,

N. Y.

361

271

97

482

276

264

116, 351, 508

1348466

Tilden, Nathaniel, representative to the general court, Common-
wealth of Massachusetts, Scituate, Mass.-

153

15

Claughton, Edward N., 310 Southeast First Street, Miami, Fla. (re
Florida East Coast Railway)__

533

Railroad Security Owners Association, 110 East Forty-second Street,
New York, N. Y. (submitted by Fred N. Oliver).

582

Halsey, Stuart & Co., Inc., 35 Wall Street, New York, N. Y

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_-

Palmer, Howard S., trustee, New York, New Haven & Hartford

Railroad Co., New Haven, Conn...

554

MODIFICATION OF RAILROAD FINANCIAL STRUCTURES

WEDNESDAY, MAY 21, 1947

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON

INTERSTATE AND FOREIGN COMMERCE,
Washington, D. C.

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),

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