The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1920-03-12
FEATURES Rail
ACT OUTLINED


were returned to their owners on
March 1. under the terms of the
Transportation Act, 1920, which the
president signed on February 28th. The
new legislation embodies the plan and
conditions upon which the president
relinquishes control. and then sets
forth arrangements for the future
from many of the restrictions which
powers of the Interstate Commerce
Commission, also frees the carriers
from dnay of the restrictions which
hampered economy and efficiency be-
fore the roads were taken over by
the government. 1t is impossible to
give here even a summary of the whole
act. Such a summary. together with
the full text for those who wish to
make a more intensive study of the
law, has been prepared in booklet
form by the Guaranty Trust Company
of New York and may be had upon
request to the Publicity Department.
The comprehensiveness of the legis-
lation and the attempt herein dis
closed to reach a solution of the most
perplexing problems relating to the
railroads will, however, be suggested
| by outlining broadly some of it's
| features.
Powers Of Commerce Commission.
The membership of the Interstate
| Commerce Commission is increased
from to IL, and it's powers are great
| ly increased. 1t is to decide between
| 5h per cent and 6h per cent, as to
which will be a fair return to the car
| riers on the value of their property
during 1920 and 1921. Thereafter the
percentage of return that will be fair
| is left entirely to the commission, as
well as the decision as to the values
upon which this return will be COM
puted, the latter decision being, how
ever, subject to review by the courts.
The commission may make a rate for
the entire country or different rates
for such regions as it may determine
upon. Questions as to the efficiency
and economy of management by the
carriers and as to what constitutes
reasonable expenditures for mainte-
nance lie within the discretion of The
commission.
/ 1t may order the construction OF new
lines or abandon others. if it believes
these steps to be in the public inter-
1 est. After July no carrier may issue
any stocks, bonds, or other securities
or assume any obligation with respect
| to the securities of others, without the
approval of the commission. This pro-
vision does not apply, however, to
notes maturing within two years of the
date thereof, and aggregating not more
than five per cent. of the par value of
the carriers securities then outstand-
! ing. Loans from new revolving fund
will also come under the commissions
supervision. It will be readily seen
that the restoration of railroad credit
will be profoundly affected, not only
by the attitude of the commission to-
ward issues of securities and the OBJ
tanning of loans by a carrier, but also
by the spirit in which it undertakes its
new duties and privileges under the
act.
Rates.
The commission is directed to es-
tablish rates which will yield the car
riers an annual net railway operat-
ing income equal to a fair return upon
the aggregate value of the carriers
property used in transportation ser
vice The aggregate value of the prop
erty and the fair return thereon are
to be determined and published from
! time to time but for 1920 and 1921
the commission is directed by the act
/ to take 5h per cent of aggregate value
| as a fair return. The commission may
increase this return to per cent. to
cover expenditures chargeable to
CAPITAL account In determining ag-
gregate value, only that consideration
is to be given to property investment
accounts which they are entitled TO in
establishing value for rate making
purposes. If any carrier earns a net
operating income in excess of 6 per
cent, one half of such excess is to be
placed in a reserve fund maintained by
the carrier, until 1t equals 5 per cent.
of the value of the property; the other
half of the excess goes to a contingent
fund out Of which the commission
i will make loans to carriers to meet
expenditures for capital account. After
1.-THE carriers reserve reaches 5 per cent.
of property value. one half of such ex-