B. & O. Indicted

For five years scores of investigators for Congress, the RFC and the Department of Justice have hunted for skulduggery in the RFC's relations with its biggest ($86 million) railroad debtor, the Baltimore & Ohio. All of them found plenty of things to criticize, such as the RFC's agreement to swap collateral for less valuable security, its failure to nail down repayment terms, and the way ex-RFC officials grabbed off juicy B. & O. executive jobs. But none of them found anything on which to prosecute. Last week in Washington, a federal grand jury decided it had something. On evidence presented by the Department of Justice, it indicted the B. & O. on eleven counts of "knowingly and willfully" making "false and fraudulent statements."

The indictment was based on charges that on several occasions in 1943 the B. & O. filed statements with the RFC and the ICC reporting cash balances considerably lower than the actual balances. Presumably, the smaller balances minimized the road's ability to repay the loan (now reduced to about $68 million). The evidence seemed none too strong, and railroad experts explained the discrepancies by saying that the bookkeepers had merely reported, in advance, transfers of funds which the B. & O.'s funding contracts required them to make later on.

The investigation on which the charges were based was demanded 18 months ago by W. Stuart Symington, then RFC boss, and now the new Democratic Senator from Missouri. But the Justice Department took its time, did not start presenting evidence until Dec. 8, did not obtain the indictment until one day before the statute of limitations would have outlawed any prosecution. It looked as if the Fair Dealers merely wanted to embarrass incoming Attorney General Brownell. If he prosecutes--and loses--a weak case, he will look bad; if he drops it, the Fair Dealers will say that he is favoring big business.

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