Evening star., 1920-01-03

Owners of railroad securities are
| vitalll' interested in the provisions
of the Senate and House bills relat-
| ing TO the finances of the roads. now
the subject of conference betw zen
representative of the two houses. The
| fate of the roads after they are re-
turned 40 private operation will de-
pend to a large extent upon the de-
cisions reached by the conferees. The
two bills. which the conferees are try
| ing to mold into. one, are radically
different in a number of provisions.
r. S. Lovett, chairman of the Union
! Pacific system. discussing the rail-
| road bill recently. said
! THE controlling necessity for addl-
| tional railroad Legislation is to re
! establish railroad credit, which failed
| even before the war under the system
| of regulation in force, and to save
i from bankruptcy and ruin many, ana
| perhaps most, of the railroads OF the
; country because of the extraordinary
| increases in wages and in prices of
/ fuel and othev materials during fed
| eral control"
, From sources connected with the
| railroad administration it has been
! learned that during the year 1871 the
! railroads of the country should nave
between $3.50. .OOG. 900 and $10OO. 100000
| to be used exclusively for equipment
! and extensions. When the roads go
| back to private operation, there is only
1
! funds-outside of loans from the gov
! ernment-and that is the investing
public Unless railroad credit IS re-
! established firmly, it seems that there
! will be little chance of the roaos pc
| ing able to keep pace with the de-
! mands of the country for transporta-
| tion facilities. cons stantly growing as
! they are.
| Provision. OF Two Bills.
| The provisions of the two bills now
| in conference.-the Senate substl-
! tuted it's own bill for the House olii
i when it passed the measure-whlcn
relate particularly to the finances ana
! bear upon the credat OF the roaoS
| are:
| l. The government guaranty OF rail-.
I road dividends during the period OIL
| readjustment.
2. The proposals for the repayment
to the government of money expended
| by the government in building eX-
| tensions and betterments during us
operation of the roads. which have not
! been paid for out of the receipts of
! the roads.
8. The provisions relating to rates
and net earnings to be allowed the
| roads.
4. The provisions for federal in
| corporation of the roads.
s. Provisions for loans to the roads
/ by the government.
1 b. fTOVlSlOuS lOI ~
! the railroads.
Taking these provisions up in more
detail, it is found that both the Sen
ate and House have provided that the
| rates. fares and charges established
! by the government during its opera :
| ton of the roads shall remain in enect
| until changed by state or federal au-
thorities, or-in pursuance to authority
| of law.
The guaranty provision in the House
bill pledges the government to see to
it that the operating income of the
railroads for six months after the
government relinquishes control shall
be not less than the average of It's
railway operating income for the
three corresponding periods of six
months each" during the test perlod,
the three years ending June 80, 1917.
| The Senate guaranty provision is TO
| the effect that the roads may file
schedules of rates. charges. ETC., with
| the Interstate Commerce Commission
| within sixty days after federal control
ceases. and that these rates shall be-
| come effective four months after they
are SO filed. with such modlncatlons
! as may be ordered by the commission.
Until the commission renders it's
decision in that regard (the rates so
| filed) or until the expiration or tne
four months period" the Senate Dill
says, this act shall. constitute
| guaranty to each carrier. accepting
in writing the provisions of this sec
/ ton and with which the President has
; entered into a contract for compen-
! sation, of an operating income for
the said period proportionate to the
! compensation so agreed upon. Pro-
vision is made also for guarantee to
! those roads with which the President
| did not make a contract.
Provision for Deficits.
/ Under both bills. where deficit is
! found in the operating expenses and
the guaranty. provision is made for
| the Secretary of the Treasury to draw
warrants in favor of the road in ques-
| ton.
j Dissatisfaction with the House guar
anty provision has been found by
| railroad executives, who point out
that the roads are to go back into
! private control in the winter and that
months the earnings of the roads are
at the lowest ebb. They contend this
| is not fair.
! Much money was expended by the
! government during it's two years of
| operation of the roads for additions
and betterments, and the government
! proposes to make the roads pay this
money back. The refunding provision
! of the House bill requires that the
| amount due from the government to
| any company. 1nCluQlnS RENTAL snail
| be set off against amounts incurred
! for additions and betterments made
| during federal control. Any balance
! due by the company to the govern
| ment for these additions and better
| ments may be funded into not eX-
! ceeding ten equal amounts. one of
| these amounts to be payable each
! year. beginning at the expiration of
| five years from the termination of
! federal control, with interest at the
| rate of per cent from date. The
!, carrier is given the right to pay the
! sum due before maturity.
| Question of Refunding.
The Senate tackled the refunding of
money expended for additions and
| factory to the roads than the House.
It's bill provides that the Indebtedness
| of any carrier existing at the time
| federal control is relinquished. in
Cured for addition and betterments.
or for advances made by the United
| States. or incurred to pay off any
carriers indebtednessp properly charge
able to capital account. shall at the
request of the carrier be extended
for a period of ten years. or shorter
period at the option of the carrier.
| with interest at the rate of per cent
per ahnum. payable semi-annually.
| Both the bills provide that any other
Indebtedness of the carriers to the
| government shall be evidenced by
notes payable on demand, with per
cent interest.
In regard to the rates permitted to
be charged by the roads. the Inter
state Commerce Commission is to