Transportation Program

Last week Senator Cummins of Iowa introduced into the Senate a new transportation bill--a bill which seems destined to be a bone of contention. These are, by and large, its provisions:

1) For three years voluntary consolidations of railways are invited. The Interstate Commerce Commission would have the power to approve or reject such mergers. During this three-year period any railway which earns more than 6% on its valuation may place half the excess in a reserve fund, and must give the remaining half to the Government for distribution pro rata among railways which have earned less than 5%.

2) If at the end of three years all the railways are not merged into a limited number of competitive systems, the Commission shall devise a plan for such consolidation, and carriers with the aid of the Commission can acquire the property of other carriers by condemnation proceedings. Until the plan of the Commission is completed, all railways not consolidated must give all earnings in excess of 6% to the Government for distribution pro rata among the roads which earn less than 5%.

3) After any consolidation is completed, the members of the consolidated system shall not be subject to Government recapture of their earnings in excess of 6%.

The railways began at once to criticize this plan: The period for voluntary consolidations (three years) was too short; in effect compulsory consolidation was being applied at once; the provision that the successful roads should give their earnings over 6% to the unsuccessful roads was purely political, putting a premium upon inefficiency. As yet the argument has not entered into its more acute stages.