Canal Rescue

In 1774 a Virginia gentleman, George Washington, with large landed interests on both sides of the Alleghenies, began urging the construction of a canal to link the Atlantic seaboard with the trading centres of the Ohio valley. Though the need for trade routes was obvious, engineers sneered at such an undertaking, and the plan was forgotten. Half a century later, the Chesapeake & Ohio Canal Co. was founded, and in 1850 an $11,500,000, 184-mile canal between Georgetown, D. C. and Cumberland, Md. was opened. For 73 years hundreds of coal barges plied between the mouth of the Potomac and mining towns over the mountains. Eventually the Baltimore & Ohio Railroad, whose tracks paralleled the waterway, gained control of the canal.

Early this, year B. & O. needed cash. Its charges have zoomed steadily for years, now total $32,000,000 annually on fixed obligations of $674,000,000. In January, B. & O.'s resourceful President Daniel Willard got an $8,233,000 RFC loan through his good friend, RFC Chairman Jesse Jones. To get it he had to put up all his available collateral--including the Chesapeake & Ohio Canal, which has not been used for shipping since 1923. Last week, B. & 0. again needed funds to meet $1,700,000 in interest payments due first of this month. No less resourceful than his father, Daniel Willard Jr. appealed to Washington, quickly and unexpectedly raised the money.*

Presumably put through privately by Chairman Jones and Daniel Willard Jr., the deal was as fabulous as it was timely: through RFC, B. & O. sold its down-at-the-heel canal to PWA (subject to a court receivership settlement) for $2,000,000, approximately $1,000,000 above its book value, thereby getting enough cash to meet its interest payments. Exactly what PWA will do with its canal is still uncertain. According to present plans, it will turn the property over to National Park Service, which may restore the picturesque taverns and lock houses flanking the waterway. The 22-mile section between Washington and Point of Rocks, Md., it may turn into a boating and canoeing paradise. There were also rumors of an elaborate scheme to use part of the canal as right-of-way for a national highway between Washington and Gettysburg, Pa.

*Simultaneously it was reported that Mr. Willard, 77, dean of U. S. railroaders, now in his 29th year as B. & O. president, might retire this fall.

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