Evening star., 1941-06-22
Federal Control
OF Railroads
Held Unlikely
|. c. c. Has Ample
Powers to Coordinate
All Transportation
Special Dispatc to The Star.


over the railroads, occasional reports
to the contrary Notwithstanding
according to Standard & Poor's in
survey of the railroad situation.
Active supervision, aimed at eX-
peditious routing of defense mate
rials, checking of loading and un-
loading conditions and warehouse
facilities, as we'll as preferential
routing of prioritieS materials, will
be employed, it is believed. This Is
in line with the original m day
plans of the Army, which called
for ID retention of active manage
ment of the railroads and Otner
carriers in private hands and 90
a war transportation commission.
The latter would assume the task
of co-ordinating the functions of
air, rail, inland waterway and pipe
line carriers, including the i'm
posing of prioritieS.
Commission Has Powers.
The chance are that Mr.. Ralph
Budd, Commissioner of the Trans
portation Division of the Office
of Emergency Management, working
with the Interstate Commerce Com
mission, will perform the functions
envisaged for a transportation COM
mission under the industrial mobill-
zation plan. The I. G. G. was given
ample powers for such an under
taking by the Interstate Commerce
Act, as follows:
Section ! (l5) In time of war or
threatened war. the President may
certify to the Commission that 1t
is essential to the national defense
and security that certain traffic
shall have preference or priority in
transportation. and the commission
shall. under the power herein con-
ferred, direct that such preference
or priority be afforded"
Section ~ That in time of
war or threatened war preference
and precedence shall upon demand
of the President of the United
States. be given over all other
traffic for the transportation OF
troops and materials of war. and
carriers shall adopt every means
within their control to facilitate
and expedite the military traffic" !"
While there is some uncertainty as
to when and to what extent these
powers will be exercised. fears OF
traffic congestion this fall suggest
their application fairly soon. From
the standpoint of the railroads,
any aid that can be given in
avoiding congestion would be highly
salutary, reducing both criticism
and the possibilities of actual
Government operation. From the
standpoint of efficiency in the
national defense. such a program
would be greatly preferable to Gov
eminent operation.
World War Experience
While continued private opera
ton of the railroads is regarded as
the present objective. serious traffic
would, however. unreaS-
onably. increase the chances OF
operation. This would
be provided for in the bill recently
by Senator Reynolds
IS. 1879 that would authorize the
to take over tranSporta-
ton agencies in the present national
If it should not pass
and if this country should become
involved in the war, how
ever, the President could invoke
that part of the Army Appropriations
Act of August 29, 1916, which
said:
The President in time of war
is empowered, through the Secre-
tary of War, to take possession and
assume control of any system or
systems of transportation. or any
part thereof and to utilize the
same to the exclusion, as far as
may be necessary, of all other traffic
thereon for the transfer or trans
portation of troops, war material
and equipment or for such other
purposes connected with the emer-
gency as may be needful or de-
Sirable."
1t was under this statute, still on
the books, that the Government took
over operation of the railroads by
proclamation on De-
cember %, 1917, or more than eight
after this country declared
war on Germany. While under
operations, the rail-
roads were guaranteed an operat-
ing return equal to their average
operating earnings for the three
years to June 80, 1917. Corporate
financial matters-receipt of ''other
income" payment of fixed charges
and dividendS-were carried on by
the private arrangements, with GER
tain restrictions: for example, divi-
dend rates could not be increased
without Government. approval.
Costs Boosted Sharply.
The guarantee was extended for
six months after March l. 1920,
when the railroads were returned
to private control. During that
time, net operating income shrank
despite two large general
rate increases and heavy traffic.
including wages and costs
of materials and supplies, increased
sharply.
Many of the 'featherbed rules"
that the railroads are only now at
to modify had their orig
in in the period of federal control.
Efficiency dropped to low point.
to report submitted to
President Coolidge in 1924 by James
c. Davis, then Director General of
the Railroad Administration, Fed
eral control cost the Government
81 ,696, 100000.
If presently indicated plans should
be changed and the Government
again takes over the railroads, there
is no assurance that the World War
pattern would be followed, but it
affords logical blueprint, accord
ing to Standard & Poor's In many
other particulars, however, develop
ments would diverge from those of
the last war. Labor costs would be
unlikely to rise to anywhere near
the extent they did then Likewise,
rates probably would be increased
little if at all.
Similarly, there can be no as
surance that security prices would
follow the previous pattern.