Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-05-19
RAIL GUARAN TEE PLAN
FAVORED BY CUMM|NS
Senator Claims Higher Rates
Necessary and Wants
System Operation
WOULD AID SMALL ROADS

Washington, May 19.-Scnator Cum
minis tIa.). who will be chairman of
the Interstate Commerce Committee in
the Sixty sixth Congress, which con
, vened today, outlined his plans for legis
lation handling the railroad situation.
Senator Cummins said that his pro-
gram was based on three general prin-
ciplcs that he believed should outline
the policy.
These principles are:
First. The roads should be organized
in comparatively small number of
systems. say fifteen or twenty, but not
on what has been called regional plan.
Second. There should be govern
mcnt guarantee assuring the roads some
fixed minimum of earnings, say per
cent on their valuation.
Third. They should be operated hy
private corporations, all of them or
ganizcd under federal law. the law pro
viding for this plan making provision
for their formation and the terms on
which they should operate.
when large road and a weak
road compete in tho same territory,
said the senator. ''they must make the
same rates, and those rates must either
Starve the poor or else give its powerful
neighbor earning that that would be
regarded as excessive and n burden on
pntt;rr ,hN,,, tau,tl,, l. oo
it possible to provide identical rates and
avoid either starving one or ovcrfatten
ing the other.'
This plan involves the actual valua
ton at which the roads should be taken
over. For several years the Bureau of
Valuation, under the director of the In =
terstate Commerce Commission, has been
engaged in making a valuation. Sen
ator Cummins has investigated the
progress made in the task, and com =
mented:
Actual valuations have been com =
pletcd of only n small group of roads
and these all minor ones. But on the
other hand, the inventory of the rail
road property of the country is about
80 per cent finished. In addition the
commission has decided many of the
difficult questions that must be settled
in order to fix the principles, that
when applied to the inventory, will en-.
able determination of the actual value
The data which the bureau of valuation
has gathered, will be of the utmos
utility in the final determination o
value under the plan in mind"
/ 1t is explained that as a whole abou
60 per cent Of the value of the rail
roads is represented by underlying SO
curities, the bonds; the other 40 pei
cent, by the stock; if, when the valua
ton was completed it be found that tn,
actual value of any road was less thar
the face of the bonds outstanding, thel
the bonds would be required to seal
down and be brought to the amount o
the determined value and on such
road nothing would be added to repre-
sent stock value.
In handling the guarantee, it is to b.
understood. the bonds under no condi
tions would be entitled to more than tn
fixed rate, say, 4 per cent, but on tn
remainder of the valuation the 40 pc
cent or observation-disclosures represented
i by the stock issues-there would be al
lowed a minimum of per cent, or a
much more as the property could eG,'n
up to 6 per cent, and above 6 per cen
the excess would be turned over to tn
government.
Senator Cummins, after discussing
the heavy losses of the roads, said i
was obvious that an increase of rate
must be granted.