Business & State

To a century-old doctrine, separation of Church & State, has been added a new doctrine, separation of Business & State. The new doctrine was last week honored in the breach on several counts:

Oil. In Washington Secretary of Interior Ickes got together with large oil operators, independents and representatives of Governors of the 13 oil-producing States, trying to arrange for them what they had not been able to arrange for themselves: control of overproduction.

Securities. Congress was introduced to the Administration's bill for controlling the issuance of securities in order to help investors to do what they have not been able to do themselves: invest wisely (see p.17).

Farm Mortgages. The Administration put up to Congress its measure for 1) writing down interest on farm mortgages to 4 1/2%, thereby relieving the farmer, and 2) for a Federal guarantee of the interest on a $2,000,000,000 issue of Federal Land Bank bonds to be exchanged for mortgages, thereby relieving insurance companies, banks and others who have lent the farmer some eight and one-half billion dollars (see p. 18).

Banks. With $12,500,000 of R. F. C. money already invested in the new National Bank of Detroit, Government officials last week made tentative arrangements to invest $5,000,000 in a National Bank to succeed the closed Union Trust Co. of Cleveland.

Ships. Kermit Roosevelt and John Franklin (son of P. A. S. Franklin), vice presidents of the U. S. Lines, last week informed Merchant Fleet Corp. (subsidiary of the U. S. Shipping Board) that they would like to lay up the Leviathan, or better still sell it back to the U. S. Reason: the contract by which the Leviathan was purchased requires it to make seven Atlantic crossings a year; competition from new foreign ships and reduced ocean travel cause so great a loss on each crossing that it eats up the Line's profits from other ships. Merchant Fleet Corp. which received only $1,695,000 cash and $5,000,000 credit for the ship in 1929 will probably do as requested, for its chief job is not to make money but to promote U. S. shipping. Instead of selling the government-owned ships at a profit, which was impossible, it has taken what it could get in order to have the ships run. Hence Merchant Fleet Corp. (which took back the Republic, America and George Washington from U. S. Lines in 1931) is in the position of having to buy back the wares it sells if like the Leviathan they become too heavy on the hands of private owners.

Railroads. Four plans to push the Government even further into the railroad business than it already is were spread before President Roosevelt at a White House conference last week. Most drastic and most publicized was a plan presented by Boston's crusty old Frederick Henry Prince, whose heaviest investments are in railroads and whose particular aversion is professors in Government (TIME, Feb. 13).*

For weeks Mr. Prince's briefcase has been fat with charts and specifications for consolidating all U. S. railroads into seven regional systems. The man who kept the briefcase fat was John Walker Barriger III, chief railroad economist to the banking house of Calvin Bullock. Short, stocky John Barriger, 34, is rated one of the ablest railroad analysts in Wall Street. His chief source of pleasure is Pennsylvania R. R. over whose 12,000 mi. of way he scurries on endless inspection trips and whose bulky annual report he generally knows by heart before it is published. John Barriger figures that U. S. railroads could save $700,000,000 each year if they were forced into wholesale consolidation.

But his fine plans were received coolly in Washington. Consolidation on that scale would mean eventually laying off nearly 300,000 railroad employes.

This raised a howl from railroad labor. After an all-day session the Association of Railroad Labor Executives trumpeted: "The organized railway employes announce their unyielding opposition to every program for increasing unemployment . . . by either reducing work or cutting wages. . . . Every measure of so-called 'economy' which reduces the total income of the wage earners brings nearer the day when millions of dispossessed, destitute and desperate people will be goaded into seizing the food, clothing and shelter to which they have a right by the supreme law of self-preservation. . . . If the days of competition are ended, then the only monopoly control which the people will tolerate is actual and direct control by the Government."

The other three plans, submitted by the railroads, the New York savings banks and a committee headed by Secretary of Commerce Roper, all called for a Federal "Coordinator" to effect economies in railroad operations through elimination of wasteful competition, duplication of service and facilities. Though differing in detail the plans specified regional Co-ordinators under one potent chief with powers broad enough to modify contracts and overstep anti-trust laws if necessary. With the Administration behind him the Coordinator would always have the power of life & death over the railroads--control of R. F. C. loans, only present source of railroad capital. Last week either I. C. Commissioner Joseph Bartlett Eastman, who believes all railroads should be State-owned, or President Carl Raymond Gray of Union Pacific seemed slated for Federal Railroad Coordinator.

When President Roosevelt sends his railroad bill to Congress it will probably be built around the Coordinator principle. With the bill will probably also go requests for: 1) repeal retroactively of the recapture clause of the 1920 Transportation Act; 2) redefinition of R. F. C. authority to permit unsecured loans for payment of interest and operating expenses; 3) subjection of railroad holding companies to I. C. C. regulation.

* Mr. Prince's fellow conferees at the White House last week included Professors Berle and Moley, members of the Roosevelt "brain trust," Professor Splawn, formerly of University of Texas.

This file is automatically generated by a robot program, so reader's discretion is required.