Railroad Administration and the necessity for preparing the computations underlying the certifications of average annual income. Violations of the Safety Appliance Acts occurring subsequent to December 28, 1917, on roads under government operation could no longer be filed with the various United States attorneys for prosecution. Instead, they were filed with the Director General, who attempted corrective measures as announced in his order No. 8 as follows:

Now that the railroads are in the possession and control of the government, it would be futile to impose fines for violations of said laws and orders upon the government, therefore, it will become the duty of the Director General in the enforcement of said laws and orders to impose punishments for willful and inexcusable violations thereof upon the person or persons responsible therefor, such punishment to be determined by the facts in each

case.

As to the roads which were not under federal control, information of violations was transmitted to the several United States attorneys for prosecution as usual. The Bureau of Locomotive Inspection furnished monthly statements to the assistant director of operation of the Railroad Administration, showing in detail all defects representing violations of the laws and rules which are found in locomotives operating under the jurisdiction of the Director General of Railroads, and the locomotives were ordered out of service in accordance with the provisions of the law.

Return to Private Operation. After the signing of the armistice a complex and serious problem faced the country in the disposition of the railroads. The Senate Committee on Interstate Commerce requested the commission to designate one of its members to present at the hearings of the committee all available data bearing on the railroad situation in the United States. The commission then presented through one of its members, a statement drawn up in conference, outlining a legislative program for the readjustment of the carriers from war to peace conditions. In brief, this statement urged consideration of the transportation question "in a spirit as big and broad as are the interests to be affected thereby," and recommended that "whatever line of policy is determined upon the fundamental aim or purpose should

be to secure transportation systems that would be adequate for the nations's needs even in times of national stress or peril." It recommended that provision be made for (1) the prompt merger without friction, of all the carriers' lines, facilities, and organizations into a continental and unified system in time of stress or emergency, (2) merger within proper limits of the carriers' lines and facilities in such part and to such extent as might be necessary in the general public interest to meet the reasonable demands of domestic and foreign commerce, (3) limitation of construction to the necessities and convenience of the government and of the public and assuring construction to the point of those limitations, and (4) development and encouragement of inland waterways and coördination of rail and water transportation systems.

As to the plan of ownership and operation for the future, the commission stated its view that "with the adoption of appropriate provisions and safeguards for regulation under private ownership it would not be wise or best at this time to assume government ownership or operation of the railways of the country." A reasonable period of readjustment or preparation and reasonable notice of the date upon which return to private ownership was to take place was urged. Under the policy of private ownership and operation under governmental regulation, the following matters required legislative consideration:

1. Revision of limitation upon united or coöperative activities among common carriers by rail and by water.

2. Emancipation of railroad operation from financial dictation. 3. Regulation of the issuance of securities.

4. Establishment of a relationship between national and state authority which would eliminate the twilight zone of jurisdiction and under which a harmonious rate structure and adequate service could be secured, state and interstate.

5. Restrictions governing the treatment of competitive as compared with noncompetitive traffic.

6. The most efficient utilization of equipment and provision for distributing the burden of furnishing equipment on an equitable basis among the respective carriers.

7. A more liberal use of terminal facilities in the interest of proper movement of commerce.

8. Limitations within which common-carrier facilities and services might be furnished by shippers or receivers of freight.

In regard to rates the commission said, "the patrons of the transportation companies must pay rates that will yield revenues sufficient to justify rendering the quantity and character of service demanded. The charges should not be higher than those that will yield proper compensation for the service performed and appropriate return upon the property devoted to the public use." The above formal statement was supplemented by extensive oral testimony and statistical data. Subsequently similar information and explanatory statements were submitted to the House Committee on Interstate and Foreign Commerce.

After extended hearings and debate Congress made provision for the return of the railroads to their owners and for their future conduct by the Transportation Act of February 28, 1920 (41 Stat. L., 456). This law provided for termination of the President's powers under the Control Act, thus restoring the power of the commission over rates to the status prior to the passage of that act. The enlargement of the duties and powers of the commission resulting from the enactment of the law may be divided into two groups: The powers and duties relating to liquidation of government operation, and those relating to control of the carriers after return to their owners.

In regard to liquidation of matters relating to governmental operation, the commission was directed to ascertain as soon as practical after March 1, 1920, the deficits of the carriers during the period of government control, and to certify the amounts to the Secretary of the Treasury for reimbursement to the carriers. Jurisdiction was conferred upon the commission to hear and decide all complaints praying for reparation on account of damage claimed to have been caused by reason of the collection or enforcement by the President during the period of government control, of unjust, unreasonable, or unjustly discriminatory rates, charges, classifications, practices, etc., in violation of the Interstate Commerce Act. The rates, practices, classifications, etc., in effect on February 29, 1920 were to remain in force until changed by state or national authority, but prior to September 1, 1920, no change was to be made except upon approval of the commission. In determination of the guaranty to the carriers after termination of control, maintenance expenses were to be fixed by the commission, which was also to make correction for dis

proportionate or unreasonable charges to the period involved and to certify to the Secretary of the Treasury, as soon as practicable after the expiration of the guaranty period, the several amounts necessary to make good the guaranty to each carrier. The commission, upon application of any carrier, was also empowered to certify to the Secretary the amount of advance during the guaranty period that should be granted to a carrier from time to time to enable it to meet its fixed charges and operating expenses, such amounts not to exceed the amount estimated to be necessary to make good the guaranty. Similar duties were imposed upon the commission in determining the guaranty to the American Railway Express Company. The commission was empowered to certify to the Secretary of the Treasury its findings of fact and recommendations, after hearing and investigation, as to the desirability of granting loans requested by carriers from the United States. to enable them to serve the public properly during the transition period immediately following the termination of control.

In regard to the extension of the commission's powers under private operation, the most significant feature of the law was the dominance of the constructive spirit, in harmony with the commission's recommendations. Thus the commission was directed to prescribe such rates as would yield a fair return on the aggregate value of the property used in the service of transportation.

Important powers were conferred upon the commission to control the financial operations of the carriers, which were prohibited from issuing securities or from assuming obligations or liabilities in respect to securities of others except after authorization by the commission under conditions prescribed in the law.

As to rates the most significant inovation aside from the general policy referred to, was in the authorization granted the commission to fix minimum as well as maximum rates. A period of 150 days was fixed as the maximum time during which the commission could suspend the operation of proposed schedules, and it was provided that if the proceedings upon suspension were not concluded within that time, the proposed schedule should go into effect, but the commission could require the carriers to keep account in detail of all amounts received by reason of increases in such rates and charges and, if the decision of the commission were adverse, it could require the carrier or carriers to

refund with interest such portions of such increased rates or charges as by its decision should be found unjustified.

To remove the twilight zone between state and national regulation, the commission was authorized to prescribe the rates, classifications, regulations, and practices to be substituted for any made by authority of a state when, after hearing, it found them to be unjustly discriminatory against interstate or foreign commerce. Modifications were made in the long-and-short-haul clause, which only enacted into law certain practices long since adopted by the commission in the administration of that section. of the Interstate Commerce Act. The commission was authorized under certain conditions to draw up rules and regulations to permit the pooling of freights of different and competing railroads, to divide the aggregate or net proceeds of the earnings of such railroads, and to permit the acquisition by one carrier of the control of another carrier in any manner not involving the consolidation of such carriers into a single system for ownership and operation.

More extensive jurisdiction than in the act of May 29, 1917, was given to the commission over the use, control, supply, movement, distribution, exchange, interchange, and return of locomotives, cars, and other vehicles, including special types of equipment and the supply of trains.

In matters relating to safety, a notable advance was made in the provision permitting the commission, after investigation, to require carriers to install automatic train-stop or train-control devices or other safety devices in compliance with specifications upon the whole or any part of the carrier's railroad. It was stipulated, however, that any order made by the commission should be issued and published at least two years before the date indicated for its fulfillment.

A unique feature of the new law was the creation of the Railroad Labor Board to hear and decide labor disputes unsettled in the manner otherwise provided in the law. The commission's modest yet pivotal rôle in this field of activity was to draw up regulations under which the labor group and the management group were each to nominate six or more nominees, from which lists the President, with the concurrence of the Senate, was to appoint three members, representing each group.