Evening star., 1931-12-26
Help for the Railroads.

The decision OF the Interstate Com
merce Commission, granting to the rail-
roads Of the country the right to in
crease freight rates on many commodi-
ties, excluding particularly agricultural
commodities, with the proviso that the
gains from the increased rates are to
be used to aid the weaker roads. is a
step in the right direction. The rail-
roads are the backbone of the trans
portation system, and any serious break
down in them would be a disaster to
business and industry generally. 1t
has become increasingly apparent that
unless some steps were taken to aid
the roads there was grave danger that
be impaired but also railroad credit.
impairment of railroad credit would
have a widespread effect, hitting hard
both the individual investors in rail-
road securities and the holders of huge
blocks Of railroad bonds, including in
surance companies and savings banks
and other institutions.
The adjustment of the proposal for
the increase in rates provides that the
additional earnings are to be pooled and
then loaned to the weaker roads so that
they may be able to meet their interest
charges. Originally the Interstate Com
merce Commission recommended that
these increased earnings be pooled, but
with the understanding that they be
gifts to the weaker roads. This the
railway executives strenuously opposed.
One argument advanced by them was
that the proposed gifts could not be
legally consummated and that any
stockholder objecting could go into the
courts and prevent the operation of the
whole plan. The roads then made an
pooled from the increased earnings due
to the rate raises be loaned" to the
weaker roads. 1t is this proposition
that the commission has now agreed
to accept, wise decision.
1t has been estimated that the pro-
posed increases in freight rates will net
about $125,000,000. This is materially
less than the roads sought when last
Summer they applied to the commission
to be allowed to impose blanket fifteen
per cent increase in all freight rates.
Such an increase, it was estimated,
would have brought the roads in S400,-
600 900 of additional revenue. The COM
mission in denying this request made by
the roads took into consideration the
the country. 1t did not appear wise,
even in the interest of aiding the rail-
roads, to place such an added burden
on the farmer and the industrialist and
the consumer. The commission, how
ever, took cogniZance of the plight OF
the railroads. with their revenues drop
ping lower and lower and many of them
threatened with disaster and number
of them already "in the red" In de-
cision which was constructive in Its ad-
vice to the railways and which partic-
ularly sought to aid the weaker roads
during the depression, the commission
suggested its counter proposal. The
railroads finally agreed to try out the
plan of the commission, but with the
amendment already described.
A revival of business is the great need
of the railroads today, as, generally
speaking, it is of every activity In the
country. The railway executives have
sought in many ways to save the situa-
ton for their companies by reducing
expenditures to the minimum. Their
last resort was q reduction in the wage
scale, and steps have been taken to
negotiate such a reduction, in accord
ance with the provisions of the trans
portation act. If the decision of the
Interstate Commerce Commission now
to permit the proposed increase in rates
on many commodities will aid in max
ing wage cuts unnecessary, so much the
better However, the railroad problem
Is one that cannot wait much longer
for solution. 1t changes with condi-
tions of business and industry. Under
rigid supervision and rate fixing by the
agency of the Federal Government, the
Interstate Commerce Commission. the
roads have been powerless to help them
selves as they otherwise would have
done 1t is the duty Of the Government,
under all the circumstances, to come
TO the aid of the railroads now. Addi-
tional credit facilities for them are in
the making. Congress has been asked
to take steps which will better the
situation. 1t should do so.