Three Railroad Steps

Three Railroad Steps

President Roosevelt sat up until 3 o'clock one morning last week drafting a message to Congress on the railroads. In his campaign speech at Salt Lake City last September he promised, if elected, to stand back of the steam carriers for a specified period to boost them over the hump of hard times. Last week's message, with the customary White House bill in tow, was his first move in that direction. Not since the Railway Labor Act of 1926 has Congress seriously sunk its teeth into the railroad problem. But, said President Roosevelt. "I am not yet ready to submit to the Congress a comprehensive plan for permanent legislation." Instead, in his message, the President proposed "three emergency steps at this session": 1) Repeal of the Recapture Clause of the Transportation Act of 1920 whereunder the Interstate Commerce Commission was required to claim and impound one-half of all carrier profits over 6% as a loan fund for weak lines. Though recapture claims exceeded $360,000,000, actual cash collections by the I. C. C. amounted to only about $10,000,000. Echoing the longtime view of the I. C. C. the President found this clause "unworkable and impracticable." 2) I. C. C. regulation and control over railway holding companies like Pennsylvania's Pennroad Corp. and the Van Sweringens' Allegheny Corp. Stock deals by these non-carriers have long thwarted consolidation plans, kept the I. C. C. from getting its hands firmly on the financial forces that run the roads. 3) Appointment of a Federal Coordinator of Transportation "who will be able to encourage, promote or require action on the part of the carriers in order to avoid duplication of service, prevent waste and encourage financial reorganization." Under the Coordinator all U. S. roads would be divided into three groups --Eastern, Southern and Western. In each group would be a committee of five railroad men, each voting on the basis of his line's mileage. The Federal Coordinator would first try to induce the group committees voluntarily to cut out competing trains, pool rolling stock, exchange trackage and terminal rights, divide up traffic, reduce top-heavy capitalization. If he failed to persuade, he could order the roads to do these things, under penalty of $20,000 fine. From his orders the carrier could appeal to the I. C. C. Any Federal or State law, including the anti-trust statutes, which blocked the Coordinator's purpose was to be suspended during the economic emergency, thus depriving the roads of their best legal alibi for inaction. Most likely choice for the dictatorial job of Coordinator of Transportation was Joseph Bartlett Eastman, longtime liberal member of the I. C. C. Buried almost out of sight in the White House bill was a significant change in the basis of I. C. C. rate-making. Instead of a rate which would provide a "fair return" on the highly debatable valuation of a road's property, the Commission was instructed to give "due consideration among other factors, to the effect of rates on the movement of traffic, to the need of adequate and efficient railway transportation service at the lowest cost and to the need of revenues sufficient to enable the carriers ... to provide such service." Chief objector to President Roosevelt's bill was railway labor. The Brotherhoods loudly warned that economies, if any, would come first & foremost out of payrolls, might result in a layoff of 500,000 men.

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