Monday, May. 05, 1958

Rescue for the Rails?

From Secretary of Commerce Sinclair Weeks last week came the Administration's program designed to bolster the nation's sick railroads. For immediate relief, the Administration proposed that the Government guarantee $700 million in loans; $500 million would be used to improve plant and facilities, $200 million for new freight cars. For long-term aid, the Administration wants to: P: Give the Interstate Commerce Commission power to drop unprofitable passenger and freight runs, and end the power of state commissions to block the ICC. P:Tighten up on truckers now exempt from ICC rate regulations, since the Administration feels that many cut-rate, "private" truckers are actually public carriers, deserve no exemption. P:Cut down on rate exemptions for farm produce truckers. Designed to help farmers, the exemptions have been so broadened that many commercial truckers of farm products use them to dodge regulation, win business from regulated carriers. P:Change federal rate-making policies to "encourage more service and price competition."

Railroaders found the program far short of what they need to prevent what Pennsylvania President James M. Symes calls "the collapse of some railroads." Last week, as further evidence of their dire straits, the New York Central showed a first-quarter loss of $17.6 million, the Pennsylvania lost $14.9 million. Even railmen still in the black were disappointed, believing that the need is for ways to increase earning power. "The real problem," said Ben Heineman. chairman of the Chicago & North Western, "is one of allowing us to attain a position where we can pay back the loans we've already made."

The railmen are now looking for major help in new legislation recommended to Congress this week by the Senate Subcommittee on Surface Transportation, headed by Florida's George Smathers. It advocated almost all the requests for changes made by railroad presidents at the hearings in January (TIME, Jan. 27). The Smathers committee wants to: P:Set up a guaranteed loan fund to be used for a variety of projects. Increase payments to the railroads for carrying the mail.

P:Eliminate wartime excise taxes (10% on passenger fares, 3% on freight), which have long been a sore point with railroads. P:Cut depreciation periods for rail equipment, now 40 years, by as much as 50%.

Smathers expects the legislation to anger farmers and truckers, but he is optimistic about its chances. He expects support from Representative Oren Harris, Chairman of the House Interstate and Foreign Commerce Committee, and Senator Warren Magnuson, Chairman of the Senate Interstate and Foreign Commerce Committee, who criticized the Weeks report because it left excise taxes alone.

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