Evening star., 1920-01-03
TWO RAILROAD BILLS TOUCH
VITALITY SECURITIES OWNERS
Aim to Re-Establish Credit and to Rescue
Many Roads From Threatened Bank
ruptcy-Provision of Measures.

, of materials required by the reads has
increased more than % per cent. On
the other hand. the freight rates and
passenger rates have been increased
only rs per cent. The government op-
Grated the roads at loss of hundreds
of millions of dollars.
But the Senate evolved new plan
for the establishment Of rates. and
for limiting the amount of net in
come to be allowed the roads. 1t has
been the subject of great criticism
on the part of some of the railroad
executives. The Senate bill declares
that 51s per cent is reasonable re-
turn" on the property investment of
cal1y all in excess of per cent upon
such value shall be handed over to
the government.
1t allows the company, however, to
retain one-half of its earnings be-
tween and per cent and one
fourth of it's earnings in excess of
per cent, to be put into a reserve
fund until the reserve fund amounts
to per cent of the value of the prop
erty. This reserve fund may be drawn
upon for dividends or interest in
years when the net earnings amount
to less than per cent. After the re-
serve fund amounts to S per cent of
the value of the property: the car
rier is allowed one-third of its earn
ings in excess of per cent. -
Except these fractions, all earnings
and savings of the roads in excess OF
6 per cent are to be paid over to the
government within four months after
the end of each year, to be used by the
government to aid in building UP the
weaker roads so as to increase the
public service rendered by the car
riers.
The Senate bill instructs the Inter-
state Commerce Commission so far as
practica BILE to adjust rates, fares,
charges and classifications so that
the net operating income OF the sew
eral carriers shall bear the same re-
lation to the value of their respective
properties
View Of Critics.
Critics of this feature Of the Senate
bill contend that in attempting so to
equalize the income of the roads. the
commission must either raise the
value of the inefficient or lower the
value of the efficient roads. They say
that it will mean an increase of rates
to aid the inefficient roads. or taking
some of the earnings of the efficient
roads and giving them to the in
efficient.
The Senate bill also provides that in
1925 and eveery fifth year thereafter
the commission shall determine What
under conditions then existing, is
fair return to the roads on their IN
commission may determine to increase
or decrease the 5 u per cent basis pre-
scribed for the determination OF ex-
cess income.
The Senate bill authorizes the fed
eral Incorporation of roads. setting
forth in detail how reincorporat1on
of existing roads may be accomplish
ed. and how new roads may obtain
federal incorporation. No such provi-
sion is contained in the House bill.
Both bills recognize that the roads
may have to borrow from the gov
ernment so as to help them get on
their feet. The House 49, provides
a revolving fund Of $250,o00.000 for
this purpose. and the Senate bill au-
thorizes a fund of $50o.000,00o
The Senate bill provides in great
detail for the consolidation of the
roads. 1t establishes a transporta-
ton board. with many duties. among
them the duty of supervising the plan
for consolidation of the lines. The
board is directed to draft plan
whereby all the roads may be con-
solidated into from twenty to thirty
five systems If these consultations
are not effected voluntarily within
seven years. then the board is to
proceed to bring about the consoli-
dations according to its plans.