Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-19
CARRIERS PROPOSE
!. RAIL CREDIT GROUP
Plan to Administer Rate Pool
), Which !. C! C. Sponsors
i{ Is Submitted Here.


laid before the Interstate Commerce
Commission their plan for administer
ing the utdezarge pool for the benefit
of those carriers unapis 20 meet their
OBLIGATIONS. which was offered last
month by the commission as an alterna-
tive when denying the is per cent
horizontal freight rate increase.
Through the Association OF Railway
Executives, the carriers proposed the
formation of 1.-The Railroad Credit
Corporation" to handle the pool which
would be created by raising the rates
on certain commodities, and asked that
any assistance given from it should be
in the form Of a loan rather than a
gratuity to avoid otherwise serious
obstacles"
In their petition. the railroads point
out that the commission did not specify
whether the fund was to be distributed
in loans or gifts, and add that the
railroads stand for the former as
r-i2-iple.
Loan Plan Is Advocated.
at is respectfully submitted" the
petition explains, that to treat Cne
amounts distributed as gratuities Is In
no sense a necessary part OF the plan
or Essential TO the accomplishment OF
the commissions purpose. the COM
missions essential purpose Is to pre-
vent. by means of the fund to be creat-
ed, defaults in fixed charges ana con-
seouent financial disturbance and re-
ceiverships This can be done equally
as effectively by treating the amount
which each carrier receives from the
fund as loan as 1t could be by treat
ing it as q gratuity. %
lit Is obvious that to treat the al
vances as loans does not In any degree
jncrease the amount of the indebted
iless of the recipient carrier. With the
amount received, 1t Is to pay on ana
eXtinguish its indebtedness In announcer
form to an amount exactly equal 10
the amount received, It simply changes
the form Of Is indebtedness from an
OBLIGATION which, unless satisfied, WIZ
result in o default Of fixed ooIga-
ton, with the consequent menace OF q
recelyership and foreclosure, into an
OBLIGATION free from these undesirable
consequences"
When the commission has acted on
the petition o poll VIII be taken among
the railroads for formal adoption OF
the plan, which was drawn up with
the participation Of practically every
class 1 carrier. Complete concurrence
by the roads Is expected ID the COM
mission goes along with thetR, and to
make it effective it was said that vir-
tually unanimous adherence must be
had.
100000 900 Gain Expected.
The proposed increases would remain
In effect until March 81, 1888, and
would give the carriers from $1e0, 000,-
900 to $l2b, 100000 additional revenues,
it Is estimated, IS compared 10 tne
$500, O0O, 900 annually which the 10 per
cent boost was expected to yield.
The loans, It is said. VIII be made on
terms requiring the best available col
lateral in each case, but with Giscre-
ton allowed the corporation to relax
this requirement whenever such action
Is demanded In public interest.
The obligations would come due py
the end Of two years ana would De re-
movable for an additional period not
to exceed two years.
The roads also seek some medlncaaieols
in regard to the charges which the
commission proposed to NIX to create
the pool, which were 50 TO IS per car
for some commodities, and 2 cents per
100 pounds on others.
They ask elimination Of the section
which would require q road making
q reduction in the proposed increase to
make it from their basic or present
rate. It Is pointed out that such
eut might be necessary to preserve COM
petition, and that to apply this section
carriers Of revenues not growing out OF
increased rates.
Tonnage Basis Preferred.
Inclusion of increased nghterage
charges, along with the higher SWITCH
ing charges the commission proposed
to grant, also is requested.
Where the commission proposed .
carload rate increase, the carriers ask
that this raise be converted into the
equivalent charge expressed IN cents
per net ton.
A Encouragement Of the proposed
tariffs for less-than-carload shipments
In the interest of practical application,
stantial effect on the new rates. also Is
requested.
Pool Participants Limited.
All railroads the rates Of which are
subject to the Interstate Commerce
Commission, asserting to the plan, viii
be participants. However, no carrier
already in default as to its fixed charges
or in receivership, or which derives less
than so per cent of its revenue from
freight transportation, may either con-
tribute to or receive any money from
the pool These excepted classes keep
what they earn from the increases.
Other carriers barred from getting
advances from the fund are those, OF
course, able to meet fixed charges from
earnings or other resources, and any
which, even with the aid Of q loan,
could not meet fixed charges or avoid q
default.
The corporation will have IL direc-
tors, i've from the Eastern district, in
Guiding one from New England; three
from the western district and two from
the Southern district, while one shall
be named by the board Of directors of
the American Shortline Railroad Asso-
citation. The twelfth director will be a
director at large and will be president
No compensation will be paid to any
director. Administration Offices would
be maintained here.
TRAVELS TO STAY IN U. S.