New-York tribune., 1919-10-23
to and approved by the Interstate Com
merce Commission.
May Consolidate Voluntarily

May Consolidate Voluntarily
"A period of seven years from the
passage of the act is allowed for vol
untary consolidation into these pre-
scrlbed systems. Any railroad com
pany. may apply for consolidation with
another, but all these voluntary con-
solldations must harmonic with the
general plan so that the process shall
lead to the perfected scheme Of con-
solldation as outlined in the measure.
These voluntary consultations must
be approved by the railway transporta-
tlon board, and based on valuations Of
fixed by public authority, the aim
being to settle for ever the questions
value and capitalization and insure
that hereafter the charge that railway
capitalization is extensively watered
may be put at rest.
mo consolidation may be carried out
unless the owning company Is FEEDER
ally incorporated, giving the United
States full authority over it. When
the period Of seven years has expired
and the time comes for the compulsory
consolidation, the railway transporta-
tion board will have power to secure
the incorporation of companies re-
quired to complete the scheme of con-
solidation. Back of all this is the
railway properties or Il cir security.
Rate-Making Districts
"Meantime. pending the compilation
CT this scheme, in order to protect the
public and also the weaker roads the
Interstate Commerce Commission is re-
quired to divide the country into rate
making districts. A new power of
transportation regulation enters here.
The commission is required to see that
the rates prescribed for each rate dis
only sufficient to produce net op-
Grating income for all the roads in that
district of 51a per cent annually on
the value of the property as deter
mined by the Interstate Commerce
Commissions valuation.
"rhis plan of valuation and limited
earnings has not at all pleased the
more profitable roads. which insist that
the return is too low, and it has like
wise displeased some important ship
ping interests, which insist that the
auth orized return will be too high.
The commission is authorized in its
discretion to increase the fixed return
to per cent, but the additional II per
cent is to be used for mon productive
improvements in the properties.s For
example, a road having depot that
represents $4,000 investment. desiring
to replace it with one costing $40 600,
will be allowed to pay the additional
$4,000 from this fund, but amounts
taken from this fund are not to be
capitalized, now or in future.
Maximum Earning Fixed
"Now comes the feature which the
committee found most difficult. A
schedule of rates which will produce
an average of 51a per cent on all the
roads will enable the more prosperous
companies to earn anywhere from 6 to
perhaps Is per cent, while less fortu-
nate ones will earn much less than
5 z per cent. So the bill fixes maxi
mum. If a company gets an operating
income above 6 per cent one-half Of
the excess, between and per cent,
shall be placed in a company reserve
fund and the other half will go to the
railway transportation board as a gen
era railroad contingent fund. Above
7 per cent the company will place one
fourth of the excess in its reserve
fund and three-fourths will go to the
general railroad contingent fund. When
the reserve fund has accumulated to an
amount equal to per cent Of the
value of the property its accumulation
must cease, and one-third Of the oper-
ating income above per cent shall
thereafter be retained by the company
and two-thirds paid into the general
railway contingent fund.
"The issue of all securities Is put
under absolute Federal authority to
prevent watering them. and also to
protect the railroads against the evil
of too much regulation, state commits
sions or other authorities will here
after have absolutely no control over
capitalization of railroads, which be-
comes an exclusively Federal func-
ton. This control cf transportation
will be exercised by the railway trans
portation board.
"The procedure In settling disputes
which involve state and interstate rates
is set forth with much detail, and it is
believed plan has been perfected
which will insure the end Of conflicting
authority in this regard. When a state
rate q scriminates against Interstate
commerce or localities the Interstate
Commerce Commission is given the
complete auth prity to determine the
matter, after hearing the state authori-
ties as to state interests.
"The Interstate Commission is given,
in this connection, the power to sub
stitute specific new rate for the rate
which it finds unreasonable 1t has
never had this power heretofore.
"The Interstate Commission is given
power to name minimum, as we'll as
maximum rates. The broadest powers
are conferred as regards the use of
railroad property The commission may
: order the common use of terminals
thus unifying the service and prevent
ing waste.
Strikes Made Unlawful
THE anti-strike provisions make II
unlawful for two or more employees, in
connection with a dispute over any
thing that is subject to settlement
through this plan, to agree together tc
prevent the operation of trains and rail
way service or to hinder the operation
of these. This applies to officers, di
rectors, managers, agents, attorneys o,