The Emmett index. [volume] (Emmett, Idaho) 1893-1925, 1922-02-02
NO GUARANTEE TO THE
RAILROADS
Fiction of Government Guaran-
tee" Exposed by Records
Nothing for Deficit.

| The fiction which has been KEEP
alive in certain quarters to the effec
that the United States government
under the provisions of the Esch- Cum
minis Transportation act guarantee
the railroads a minimum income of
per cent upon their investment is Civ
en- very cold expose by the Inter
state Commerce Commission records
The reports filed with the Inter
state Commerce Commission for tht
first IL months of 1921 show the net
operating income of the 200 odd rail
roads to have been 1851, All ,608. Bas-
ed on the valuation of the railroads
as fixed by the Interstate Commerce
Commission for rate making purpos-
es, this net income gives the railroads
return Of only 3.3 per cent upon
their valuation. 1t lacks $464, ,6O5, ,00O
or little less than half, of earning
6 per cent upon the valuation Of the
roads. The figures for the month of
December will not improve the situa-
tion any from the standpoint of the
railroads, as traffic for that month
was less than in some previous
months of 1921, which will lower the
average for the year.
The reports show that nearly one
fourth of all the railroads Of the
country during the first IL months Of
1921 operated at deficit. The aver
age of 3.3 per cent net income for all
the roads is obtained because some of
the stronger carriers earned a very
high percentage upon their valuation.
Proof of the falsity of the charge
that the government, under the trans
portation act, guarantees the rail
roads minimum return of per cent
upon their valuation, is furnished by
the very evident fact that the govern
ment is not going to give them one
cent toward making up the differ
cnce between the 3.3 per cent they
did earn and 6 per cent, the alleged
guarantee.
Moreover, approximately so of the
200 railroad systems incurred an &C.
tual deficit during the year 1921, and
the government is not obligated tn,
nor does it intend to, pay any of these
roads cent in order to relieve them
If their deficit, much less to enable |
hem to show q net income of per
.ent upon their valuation.
These figures should put an end to
he persistent charges that have been
made, largely for demagogic purposes,
hat the railroads are being guarant-
ed any income by the federal govern
nent under the provisions of the
act through rates fixed
y the InterstateC Commerce Commits
ion. Some of those responsible for
his misleading propaganda have been
o reckless as to call the railroads "a
referred creditor of the govern
,ent," under the provisions of the
act.
AS has been repeatedly shown,
hat the transportation act really {
i'd was to authorize the Interstate /
ommerce Commission to group the
lilroad systems of the country geo
and to fix rate for each
roup that would enable that group, $
! a whole, on the basis of business c
ing carried at the time the rate was c
xed august, 1920), to earn a "fair v
turn" upon the aggregate value of C
e railroad property of that group. d
lis fair return was fixed by law not Il
exceed 6 per cent. But the law in S
place directs the Interstate Com D
cree Commission to fix a rate that u
'uld guarantee the roads per cent, IL
d in no place does it pledge the in
vernment to guarantee or to pay a fl
.kel to any railroad earning less W
IN 6 per cent. ds
u any railroad, under the rates fix in
August, 1920, fails to make 6 per er
It on its valuation that is its own tn
s. It can not look to the govern sa
mt or call upon the government for
help. Those who persist in cir
ating the report regarding a gov
ment guarantee" Of railroad in tn
ne certainly know that such state da
nts are gross misrepresentation, erl
olutely contrary to the law and the Bo
IS in the case. tic