The sun., 1919-07-24
SUBMITS NEW PLAN
FOR THE RAILROADS
Twenty or Thirty Competing
Systems, Transportation
Conference Suggests.
UNDER FEDERAL BOARD
Statutory Rule for Rates
Would Assure Roads 6 Per
Cent. Net Return.

WASHINGTON, July 23.-Private own
ership and operation Of railroads. merged
into twenty or thirty great competing
systems under the supervision OF
Federal transportation board, With a
statutory rule or rate making assuring to
the roads net return OF per cent
was offered to the House Commerce
Committee to-day as the plan for the
National Transportation Conference
Harry A Wheeler OF Chicago. formerly
president of the Chamber of Commerce
OF the United States. which assembled
the conference, explained that hearings
had been held for six months at which
shippers railroad men. labor union off,
cials and bankers had been heard. The
plan evolved was said to be combina-
tion Of the best features OF plans already
put forward with some new elements
assembled into what the conference re-
garded as a harmonious whole.
Continued Government operation I'M
til remedial legislation should be enact
ed with the limitation that such legis-
lation should be enacted this year. was
urged by the conference. With the re-
turn of the roads at time when many
probably will be showing deficits, the
conference thought, there should be
made available by Congress a railroad
reserve fund, of s50o,000,000, admins
tered by the proposed Federal Trans
portation Board. for the sterilization of
the roads credit and to facilitate the
recommended consolidation. The sum
eventually would be returned to the Gov
eminent
Government guarantee OF earnings
was not favored by the conference. In
stead, It was urged that the Interstate
Commerce Commission be made respon-
sible for rates and fares designed to
yield the carriers in each designated
traffic section not less than per cent
upon the aggregate fair value Of the
property.
Excess Earnings to Go to Fund.
Those roads earning more than per
cent. would be required to put half of
the excess into a company contingent
fund until the fund amounted TO per
cent of the fair value OF the company 8
property, the other half going to gem
eral railroad contingent fund. admins
tered by trustees appointed by Govern
ment authority and maintained for the
beneft of. all the railroads of the coun-
try. After any roads contingent fund
reached the 6 per cent requirement Its
annual contribution of excess earnings
10 the general contingent fund would be
Increased to two-thirds, the remaining
third being retained by the company for
distribution among stockholders or other
lawful purposes
The general railroad contingent fund
would be used to assure the per cent.
return without entailing Government
guarantee or unreasonable rates. 1t
would be drawn on by all roads Of n
DESIGNATED traffic section when in any
year the net return fell below s per
cent. and those roads would share In
the distribution pro rata to their gross
earnings. The fund would be built up to
s750,000, 900, and any excess would be
surrendered to the Government, to be
used for providing additional transpor-
tation facilities or lessening the cost or
TRANSPORTATION to the public by reducing
capital and investment accounts OF the
roads.
Grouping or consolidation of the roads
into competing systems was declared to
be Essential. because railroad rates
must be the same for similar services,
whether performed by the weak nednssi-
tous railroad or by the strong and pros
porous one"
Grouping About Present Systems.
The grouping should be about the
present strong systems, It was urged,
along commercial lines and not by ar
pitrary territorial subdivisions. Result
ing corporations should be subject to
Jurisdiction Of Congress, according to
the conference, although Federal incor-
roration with powers OF police regula-
ton and local taxation reserved to the
States
All of the consolidated companies
would be required to have twelve d.
rectors, three of whom would be Sc
Iected by the Federal Transportation
Board and one by the employees.
Regulation of the capital expenditures
and security issues of railroads by the
Federal Government was said to be one
subject on which there was virtually no
difference in the conference. 1t was one
Of the duties which the conference would
assign to a Federal transportation board
The Interstate Commerce Commission
was deCaered TO be too burdened by
rate QuoHtions TO assume carrying out
the extensive legislation recommended
by the conference and for which a new
agency, composed OF experts of high
standing. was urged. The new board
would administer the general railroad
contingent fund, determine the consoli-
dalton of roads deemed to be in the pub
lie interest, promote the development OF
a national system OF rail, waSr and
highway transportation and act as q
board of appeal for labor questions
which local boards could not adjust.
Finally It was urged that Federal
TRANSPORTATION board or the War Finance
Corporation be empowered TO advance
public funds under adequate guarantees
10 certain roads. the credits and financial
operations Of which 1t might be neces-
sary, in the public interest, temporarily
20 protect during the transition to norma
stable conditions.