Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-25

NSOAOAlluCQ ETOkn F1TSC HdRe.)
departments or other public bodies, and
all roads earning q surplus over charges
as provided for In the law must turn
that surplus over to the Joint fund.
Any road which fails to earn its charges
may draw on the fund for the def
cheney.
If IN any year the revenues of the
joint fund are not sufficient for its pur-
poses, temporary advances may be made
to 1t by the French treasury. 1t is pro-
vloed that the treasury shall be reirn-
bursed for all such temporary advances
the roads, the, state guaranteeing the
interest and amortization of such obli-
cations issued for such purpose. The
railroad tariffs shall concurrently be
increased, so as to provide revenues
SUFFICIENT to retire these obligations and
repay to the state any sums advanced
In respect Of its guaranty thereof.
Charges for interest and amortization
Of obligations issued in respect of ad-
vances made by the state to the joint
fund shall not be paid by the individual
roads, but from the fund itself.
New Lines.
Expenditures for the construction of
new lines and on other capital account
are to be covered by the issue of new
stocks or bonds, which must carry pro-
vision for amortization within so years.
The interest and amortization of these
securities will be the direct obligation
OF the road concerned, with recourse
upon the joint fund for any deficiency.
but neither principal nor interest Of such
bonds will be guaranteed directly by the
French government Should the gov
eminent, however, purchase or take
over the property of any road, such OBJ
legation will be assumed by the gov
eminent
Each year the financial law of the
republic fixes the amount of the adj
vanceS which the treasury will be au-
thorized to make to the joint fund. The
same law also fixes the total amount of
bonds or other obligations which any
road may issue for any purpose, includ-
ing those issued to reimburse the treas
ury Tor advances, the nature of which
is referred to above.
This 1921 agreement arose from the
increasing burdens on the French gov
eminent resulting from the old guar
anteeS OF railroad obligations and of a
minimum return on the capital stock of
the various transportation systems. Prior
to the passage of the act the operation
OF the French roads was subject To
earlier agreements, especially those of
1893 and 1883, which were drawn I'D in
ORDER to permit the government to COM
plete its system of railroads with the
use of private capital, thereby avoiding
heaVy burden on the national budget.
Guarantee Against Loss.
Whenever new and less remunerativs
llnes were planned 1t became necessary
to utilize both the experience and the
credit of companies operating the old
lines. This was accomplished by pIac-
ing upon the latter large share of the
expense Of constructing and opening
new lines.
To compensate them for this burden.
the government guaranteed them
against loss on the capital employed for
this purpose. Each carrier joining the
plan received a guarantee of interest at
the rate Of per cent per annum for a.
period OF SO years, and amortization at
the same rate on the capital employed
If in any year the net income of a
carrier was not SUFFICIENT to cover the
interest and amortization on its bonded
debt and the stipulated rate of dividend
or its common stock, the French gov
eminent provided the company with the
amount necessary to make up the de-
f1ciency. Amounts so advanced were
scheduled to be repaid with interest out
VI ally surplus IcPOIIcu ny Tile company
after all charges and distribution of
dividends on its capital stock
1t was further provided that II at
any time prior to the end of the COM
pany's concession the government should
repurchase the property OF the company
and take over the operation of the lines
the government would pay the railroad
annuities not less than the aggregate
amount required for interest and sink
ing fund charges on its bonded debt, as
we'll as dividends on the common stock.
to run to the expiration Of the date of
the concession under which the COM
pany was operating.
Following the war these agreements
proved rather burdeuSome. which led to
the PRONUNCIATION Of the railway act of
1921, which appears to have worked
with q fair degree Of success.
(Copyright. 1891. by the North American
Newspaper Alliance, Incl