B & O Blast

All last year President Daniel Willard of Baltimore & Ohio R.R. was plagued by a ghost-- a $63,250,000 mortgage falling due three days before President Roosevelt entered the White House. Biggest railroad maturity of 1933, it could not be refunded because the public would not touch any railroad bonds with a ten-foot pole. So B. & O. offered its bondholders a chance to take one-half of their maturing principal in new bonds, one-half in cash borrowed from the R.F.C. Long before March 1, President Willard knew his plan had succeeded: 99.9 % of the issue had been deposited. Last week the only holders who objected publicly to the plan-- George Le Boutiller & wife* of Ridgefield, Conn.-- turned in their $5,000 of B. & O. bonds. Meantime another and more fearsome ghost had risen to plague Daniel Willard. Last spring Boston's crusty old Frederick Henry Prince, whose pet aversion is professors in Government and whose fortune is chiefly in railroads, turned up in Washington with one of Wall Street's smartest statisticians and a plan to merge all U. S. railroads into seven regional systems (TIME, April 10). Because it involved firing 300,000 railroad employees, the Prince plan was pigeonholed. But Mr. Prince's statistician, John Walker Barriger III, remained in Washington to become Chief Examiner of R. F. C.'s railroad division. When Joseph Bartlett Eastman became President Roosevelt's Coordinator of Transportation, he dusted off the Prince plan and set his staff to investigationg its possibilities.

This was a threat that no railroadman (except the heads of the seven key roads) could ignore-- particularly Daniel Willard, whose efficient and progressive B. & O. Messrs. Prince & Barriger planned to dump into the lap of its big rival, Pennsylvania. Last week at a Baltimore banquet, Lawyer John J. Cornwell, onetime Governor of West Virginia and now B. & O.'s general counsel, told the world what was going through Daniel Willard's long head. "This so-called Prince plan . . . is destructive in every phase except as to the interests of the seven big railroads in the country to which he [Mr. Barriger] would hand, without mercy, all the others. In our eagerness . . . to support the President and his program of recovery we must, nevertheless, keep our eyes in those who would use this emergency to put across selfish schemes as well as on those accidentally elevated to high places who would try to out on a confiding and distressed people pipe dreams with which their muddled minds are troubled.

"Make no mistake. There are powerful financial and political influences behind this so-called Prince plan. . . . Mr. Barriger devised it and Mr. Prince . . . of whom the I. C. C. spoke in rather harsh terms a good many years ago, financed the work on it. "But who is Mr. Barriger? Formerly connected with the Pennsylvania R. R.,* he is chief examiner of the . . . Government agency which has lent Government money to the railroads. . . . For that reason, if for no other, it cannot be dismissed lightly. "Those proposing the plan claim that . . . it would reduce railroad operating costs $700,000,000 annually . . . At what cost would these savings be made? First, 300,000 railroad workers would be dismissed. . . . The promoters of the plan hold out the bait. . . . that the savings would be so large all railroad employees over 50 years of age could be pensioned-- a rosy promise which might or might not be kept.

"But what would happen to property values . . . in all those cities and towns where terminals, shops and other railroad facilities would be scrapped and abandoned? What would become of industries now on main line railroads which suddenly found themselves left on branch lines where there were no through freight or passenger service? Of course those industries would be forced to move to get back on the main line, and then what would happen to their employes and the towns in which they live? . . ."

*Distant kin of George ("Boots") Le Boutillier who is vice president of Pennsylvania R. R. and active head of its subsidiary Long Island R. R. * Statistician Barriger's principal joy in life is still the Pennsylvania, whose system he is constantly inspecting and whose entire annual report he is reputedly able to quote from memory, but for the past few years he has been chief railroad statistician for the Manhattan banking house of Calvin Bullock.

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