The Rail Week

Railroads made much Washington news last week. The Interstate Commerce Commission issued its annual report. Timing their outcry to coincide with the opening of Congress, rail executives announced their legislative demands for relief from "unfair competition." Labor assembled to advance its six-hour-day program. The Senate killed legislation to regulate interstate bus traffic. Pennsylvania R. R., disguised as a holding company, was ordered to drop its Wabash and Lehigh Valley stock in the interest of larger merger plans.

I.C.C. Most startling, most important of the Commission's eleven recommendations in its report was that for the repeal of the recapture clause of the Transportation Act of 1920. Under this provision the I.C.C. was authorized to take one-half of a carrier's profits in excess of 5.75% and deposit them in a Federal fund for the use of weaker roads. So bitterly have the roads fought recapture in the courts (the famed O'Fallon case turned on it [TIME, May 29, 1929]) that the Commission has collected only a scant $10,000,000 in ten years. Declared its report:

"While logical, the recapture provisions are open to serious practical objections. It is difficult to make the fund really useful after it has been recaptured. . . . More important are the difficulties and dangers attendant upon collection. . . . The possibilities of litigation are almost without limit. The valuation incident to recapture will alone provide a sufficiently fertile field.

"To state the matter baldly and frankly . . . litigation over questions of valuation, accounting and administration will arise in cases where the basic issue is whether or not, or to what extent, money shall be taken from carriers by the Government. . . . The result will be to establish in the course of this litigation certain principles, relative to valuation and the like which will have an unfavorable reaction on many broader phases of public regulation. . . ."

The Commission's report took notice of the roads' declining revenues, calculated their net income available for interest and dividends in 1930 at "nearly 33%" less than for 1929. According to the Commission, this revenue drop was not wholly due to hard times. Declared its report:

"A different and more threatening condition confronts the railroads . a steady lessening in the volume of passenger travel. . . . The prospect of a continued expansion in freight business to offset the loss in passenger business is darkened by competition of water lines, pipe lines and trucks." Executives. Competition by "water lines, pipe lines and trucks" was the major complaint of the Association of Railway Executives. Insisting that they faced their greatest emergency since 1920, the railmen compiled their demands upon Congress for legislative relief. The recapture repeal, they felt, would help some but they wanted much more. To draw up a program of legislation, the Association named a special commit tee headed by its smart Washington counsel and able Lobbyist Alfred Thorn. His job was to draft and somehow get Congress to pass bills which would: 1) compel oil companies to divest themselves of pipe carriers' lines which tank-car now traffic; 2) compete put with the U.S. coastal shipping under I.C.C. jurisdiction; 3) permit, through a change in the Panama Canal Act, the railroads to oper ate vessels also along the coast and in the Great Lakes; 4) impose strict inter state regulation on truck and bus traffic but at the same time permit the roads to operate similar vehicles (see col. 3); 5) reduce Federal waterway developments competing with land carriers. Railmen also complained against rate reductions by the I.C.C. Executives of ten western lines jointly requested the Commission to postpone for another year its order cutting rates on grain and grain products. Southwestern carriers appealed to the Commission for assistance against the trucking of cotton (25 bales to the truck) from 300 miles inland to Texas ports. Labor. The five big railroad labor Brotherhoods (Locomotive Engineers, Railway Trainmen, Railway Conductors of America, Locomotive Firemen & Enginemen, Switchmen of North America) and 16 smaller unions * were ready enough to help their bosses put through legislation to reduce competition, but they had a demand of their own. They wanted their eight-hour work day reduced to six --and their wages left unchanged./- Aid to Unemployment was their chief argument (on Class I roads 1,747,816 were working during September 1929; 1,485,906 during September 1930). Meeting in Washington this week at the call of David B. Robertson, B. of L. F. & E. president, railroad labor's representatives prepared to agitate on a nation-wide scale. Last week the Brotherhoods petitioned the I.C.C. to compel the roads to install automatic stokers on all locomotives. Bus Bill. By a vote of 51-10-29 the Senate recommitted a bill for I.C.C. regulation of bus traffic, which was equivalent to the bill's defeat at this session. Michigan's Senator James Couzens, the measure's Senate sponsor, charged that the railroads--i. e. Mr. Thorn--had lobbied the bill to death after they had failed to get inserted a provision whereby they could unify their motor and steam passenger traffic. Declared Senator Couzens: "That prohibition of consolidation of railroads and bus lines was placed in the bill to prevent monopoly of passenger traffic by railroads. When the bill permitted consolidations, they were for it. Now that the bill prevents it, they lobbied it to death." Consolidations. Though Senator Cou-zens' bill to "freeze" rail mergers pending an investigation of holding companies has never left committee, its influence has helped retard all consolidation moves. Last week the I.C.C took a step forward toward its own consolidation plan (TIME, Dec. 30). It ordered Pennsylvania R. R. to get rid of its 48% stock ownership in Wabash R. R. and 30% stock ownership in Lehigh Valley within six months. These holdings were valued at $106,592,757. The I.C.C. declared that the Perm's interest in these other roads was a violation of the Clayton act. Pennsylvania R. R. claimed it bought into these roads for defensive purposes in 1927 when eastern trunk lines were scrambling to enlarge their systems. Under the Commission's merger plan the Wabash and Lehigh Valley would be joined in a separate system combining the Wheeling & Lake Erie, Ann Arbor, Norfolk & Western, Seaboard Air Line. Western Maryland, Detroit, Toledo & Ironton, Pittsburgh & West Virginia.

* Such as: Railroad Signalmen, Blacksmiths, Drop Forgers & Helpers, Railway Carmen, Firemen & Oilers, Train Despatches, Clerks & Freight Handlers, Express & Station Employes. /-The eight-hour work day was set by the Adamson Law (1916) under threat of a national rail strike.

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