Central Settlement

On the walls of his Washington office, RFChairman Jesse Holman Jones has two maps of his native Houston. One shows the city with all its Jones buildings. The other shows all the Jones buildings rubbed out. Houston without a Jones building is a sorry sight. Even sorrier would be a U. S. railroad map with all lines supported by Mr. Jones's RFC rubbed out. Total RFC advances to railroads have been $487,000,000, of which some $74,000,000 has been repaid. Last week after a 25-minute conference with Harold Stirling ("Mike") Vanderbilt, New York Central's finance committee chairman, Mr. Jones announced that he was about to receive the second largest repayment yet made-- $15,600,000.*

Mr. Jones was not particularly elated by New York Central's thumping repayment. Fact was, he was quite willing to sink more RFC money in New York Central provided the road's bankers accepted one of his proposals. In addition to its RFC debt New York Central owes its bankers $65,000,000, payable on demand. New York Central notes held by Mr. Jones's RFC are due on fixed dates, hence are technically inferior to the bank loans. Mr. Jones wanted equality. One way to obtain it, suggested Mr. Jones, was to fund the road's short-term bank and Government debt with a big bond issue, the RFC subscribing one half, the bankers the other half.

To that proposal Financier Vanderbilt and his bankers had a number of objections, including the belief that for the banks it might constitute illegal underwriting. Moreover, they strongly urged Mr. Jones to cease & desist from discussing New York Central's financial affairs in the Press (TIME, Oct. 14). Upshot: Mr. Jones published his entire New York Central correspondence, writing Mr. Vanderbilt tartly, ''One very good way to avoid further publicity of this character would be to put your finances in order."

Nothing was said about the bond issue in the memoranda which Mr. Jones released last week. But New York Central's remaining RFC debt of $11,900,000 was extended to 1941. RFC will receive the same interest as the banks (currently 4%), and while the bank loans are still on a demand basis, the RFC loans become payable if New York Central ever defaults. Furthermore, Mr. Vanderbilt tried to patch up his spat with the RFChairman by writing: "Please accept our sincere thanks for the co-operative spirit which you have evinced in reaching a final and permanent settlement.

*Largest was $28,900,000 from Pennsylvania.

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