Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-10-06

lOSSil' W Liz WHERE. lHey were not wanted Dy
the people then in possession, the unspoiled. red
men OF the forest and plain:
RAILROAD GUARANTEE
In his candidacy for the senate Mr.. Frazier laws
ldown>as one plank in-his platform the repeal of the
law, guaranteeing railroad earnings. That is a piece
|of %clap-trap which one might expect Mr.. Frazier to
make a feature OF his campaign. There is no law
guaranteeing railroad earnings, and Mr.. Frazier
ought to know it. If he does know it he is attempt
ing a deliberate deception of the voters. If he does
not know it he demonstrates his; un6tness for the
office which he seeks.
Under the federal transportation act rates are
nxed by the Interstate Commerce commission The
transfer Of rate-making functions to a government
lagency has been a slow process. For a long time
it was not certain that the Interstate Commerce
commission had any authority whatever. It might
advise, but it took several lawsuits to establish, the
tact that it had any other than advisory functions.
Its powers, when it was decided that it had any.
were at first restricted to the exercise of the veto
power. New rates: were proposed by the railroads.
The commission might approve or disapprove, but
1T could not initiate. a new rate Congress had es-
|ta3llshed no standard upon which the roads might
make their own rates. or upon Which rates which
they proposed might be approved or disallqwed.
Railroad companies and private parties appealed to
the courts from time to time for a final decision as
ITO the legality of given rates. The courts establish
ed the gei4ral rule that neither state nor federal
authority could force heSpplication of rates lower
than a basis which, under reasonable conditions,
would afford revenues sufficient, to meet fixed
charges and operating expenses and yield a reason
able return on the investment. In several court de-
cisions such reasonable yield was fixed at Z per
cent. E.
lhe new transportation act empowers and d.
reefs the federal commission to fix rates. 1t pre-
|scribes a.basis on which the commission is to oper-
ate. The commission is to take into account all the
factors which, enter into the operation of-a railroad
value of fixed and movable property necessary
to the operation of the road, cost of labor and ma
terlal, volume of business, efficiency of management
and SO forth. 1t is directed to prescribe such rates
as will, as nearly as possible. after, meeting ali costs
under efficient and economical management Weld
a net return on the actual value of the properly in
an amount to be determined according % the iudg-
menfr OF the commission, but not less than 5H per
cent, and not more than 6 per cent on such value.
All net earnings in excess of the limit SO fixed are
to, be divided between the railroad and the govern
ment until the rates, can be revised to bring, the earn
ings within the proper limit.
The valuation, upon which such earnings are to
be permitted Is determined, not BY the railroads
themselves, but by the commission. The exact value
OF the railroad properties in the United States is now
being determined as accurately as may be BY a sur
Ivey which is being conducted by the commission
In the meantime, in the light of the best information
at itsrdisposal, the commission has fixed the valua-
ton at a little over $lsa;;oooyo 900, 900. It may be as
oui1Su tlfdl his VdludtlON Is approximately correct.
At any rate, the railroad people have no part "a tx
ing this figure; the decision Is made by the govern
|ment agency. %afAx. . .| s T&@S& {.
The commission, in the exercise Of its discretion
has fixed 5N per cent as the proper basis for aver
age earnings in the various districts. The effort has
been. TO fix rates which would yield approximately
that average rate.As The earnings are not guaranteed.
in anyway. If the roads are able to realize that
figure, they are entitled tos it i they do not realize
It they must make the best Of the situation. The.
government assumes no obligation toward them.
As = matter Of fac, since the act has been ii, opera
|tion the earnings have been only about 5 per cent
instead Of the rate permitted. And tic. roads have,
claim on the government for tire deficiency.
he only obligation that. the goyernn1ent ever
assumed with referencesto earningsswzs for3the frst
|six months after the roads were restored "a their
owners after having been operated by .hkg govern
ln!et,t during the war That period has longg since Sex-
pred and the roads aIeS sstrictlysssso their own
Ihey ere new p permitted 20 make up 10 percent.
They have actually made only, per cenf. which 8
Their nlisfortuhe but which involves the royeern-
nsnt mnosobGsation u any Kind