RFC into Tunnel

Last week for the first time since the War the Federal Government took over a private U. S. railroad. More significant, it was the Government's first direct move to exercise its power as the railroads' biggest banker. Holding most of the stock of Denver & Salt Lake ("Moffat Line''), as collateral against RFC loans, RFChairman Jesse Jones ousted the old road's management, put in as president, Judge Wilson McCarthy of Salt Lake City, a onetime RFC director. Adolf Augustus Berle Jr., the RFC's railroad counsel who is now chamberlain of the City of New York, was made a Denver & Salt Lake director.

Until last June the Moffat Line ran west from Denver through the Moffat Tunnel, down the western slope of the Rocky Mountains and out into the sagebrush where it stopped 346 mi. short of Salt Lake City. When Denver & Rio Grande Western completed the Dotsero Cutoff which linked the Moffat Line to its main line into Salt Lake, Denver for the first time in history was on a through transcontinental route (TIME, June 25).

Before Denver & Rio Grande broke ground for the Dotsero Cutoff, it bought control of the Moffat Line. But the Interstate Commerce Commission required the Denver & Rio Grande to buy any or all minority stock offered for the same fat price paid for control. For these various undertakings Denver & Rio Grande needed RFC assistance, and in a deal which the New York Herald Tribune rated as "one of the most complicated and most involved in railroad history," Mr. Jones ended up with practically all of the Moffat stock in his bulging portfolio of collateral. To "keep in touch with the situation" Mr. Jones put in his own management. Denver & Rio Grande, still legally the parent company, may redeem its Moffat stock when & if it pays off a total of $10,700,000 in RFC loans.

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