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(5) Make a lease to a new company, which shall provide for amortization of the determined valuation and for adequate reserves for depreciation, contingencies, and the like.

(6) Mortgage such lease to an amount approved by the commission, and issue stock and bonds not in excess of the valuations determined by the commission, in exchange for the securities retired.

(7) To promote prompt reorganization and revamping of lines without assessing security holders, defer interest and dividends for one or two years, as might be determined by the commission, and at the end of such period prescribe a rate of fare sufficient to pay all charges provided for in the lease.

(8) As an incentive to efficient management provision could be made for increased return on capital as fares are decreased, and a reduced return as they are increased.

(9) Looking to the eventual transfer of general regulatory powers to the single state-wide Public Service Commission, orovision could be made for a board of control, on which the city and the company should have proper representation. The alternative to that would be representation by the city on the board of directors of the company. The board of control plan is probably preferable, and that board might well have the powers of the present Transit Construction Commission.

(10) As all approved charges will adequately be provided for under the plan, the provisions of the dual contracts for preferential payments could be eliminated and such other changes made as will fit these contracts into the plan, and as may appear to be in the public interest.

(11) Provision for the imperative and immediate needs of the city for further transit facilities should be made promptly.

To many a plan involving these fundamentals would seem extremely radical. The situation in New York City, however, is acute. Palliatives will not do. The case has gone beyond that and calls for surgery. So that the unusual scope and nature of the plan to be adopted must be considered in relation to the most unusual conditions that imperatively call for a remedy.

The transit situation, and especially the present public resentment, should be considered from a far broader viewpoint than that of merely a settlement of an increased fare question of local nature. The dissatisfaction and unrest caused by the present ownership and operation of public utilities is acute. The effect politically is apparent and political success often goes, not to the deserving, but to the one who can damn railroad interests the loudest. In meeting the governmental problems resulting from, or brought to a focus by the World War, there is needed proper statesmanship that will not confine itself to measures of repression but will consider it its main and most important duty to search out and to relieve the underlying causes of public dissatisfaction and unrest. The situation of electric tractions throughout the country furnishes not only the most immediate but also

one of the biggest instances of the opportunity for the exercises of such statesmanship. On the one hand is involved the proper protection of an investment running into the billions in one of the country's major industries and, through protecting that industry by readjusting it to meet modern conditions and policies, to reduce or eliminate one of the most prolific and important causes of public dissatisfaction and unrest.



OF WASHINGTON, D. C. For many years prior to the recent great war this country enjoyed comparative freedom from sustained and extensive shortages of railroad service of the kind we have come to know since 1915. That year marked the beginning of the war time demands upon our railroads, and began the demonstration of the truth of assertions, often repeated but seldom taken seriously, that our railroad development was not keeping pace with the industrial and agricultural development of the country. Months before our nation became a belligerent the general shortage of railroad service, most easily visualized and therefore most commonly referred to as a car shortage, had developed, and contemporaneously there developed a recognition of the fact that our laws regulating interstate commerce, while extensive as to rates and fares, contained little that provided directly for the regulation of service. This peculiar lack in our regulatory scheme was in a way complimentary to our railroads, for seemingly it reflected the comparative adequacy of their service during that period when their rates and fares were a subject of constant complaint and agitation.

To be sure, the old act to regulate commerce did contain certain general provisions which had been relied upon to handle the few service problems that arose before the war period. These, however, soon proved themselves inadequate for a war emergency, from the standpoint of railroad operation as well as of regulation. In an attempt to remedy the difficulty Congress, in May, 1917, passed the Esch Car Service Bill, embodying therein what the experience of the Interstate Commerce Commission in thus far handling the situation had indicated to be necessary.

The bill marked an innovation in our scheme of interstate commerce regulation—an innovation since elaborated to a considerable degree in the Transportation Act, 1920. It conferred

upon the commission extraordinary powers to regulate car service in emergency periods without notice, hearing, or the making or filing of a report, and further empowered the commission to exercise that jurisdiction, should it so desire, through and by such agents or agencies as it should designate and appoint for that purpose. The bill was of material assistance in the handling of our freight car problems in 1917, not because of what the regulating body actually did under its powers, but rather because of the general supervision it was thereby enabled to exercise, and the general recognition of what it could and might have done had any recalcitrant railroad or shipper entered unreasonable objection to carrying out good faith instructions issued from Washington and necessary to the successful conduct of the war program. And it may be added by way of justification of that legislation and its recent amplification, that there was little subsequently done by the Railroad Administration in solving its car service problems, whether by co-operative use of equipment or otherwise, that could not have been done by the Interstate Commerce Commission and the carriers under the powers of the Esch Car Service Bill. All this, and all the experiences of federal control, the Congress was enabled to view as a matter of hindsight when, in the closing months of 1919 and in early 1920, it drafted and passed the Transportation Act, 1920. Therein, particularly in what have come to be quite commonly known as the service provisions, is the legal authority for the co-operative use of carriers' facilities in the future.

The emergency feature of this jurisdiction over railroad service has already been commented upon as something novel in our regulation of interstate commerce. It is of particular interest, also, because the exigencies of the railroad situation almost at the moment the law became effective required its immediate application, with the consequence that the regulatory body suffered considerable adverse and undeserved criticism. Under these emergency provisions, to quote the statute:

Whenever the commission is of opinion that shortage of equipment, congestion of traffic, or other emergency requiring immediate action exists in any section of the country, then and thereupon to quote again: the commission shall have, and it is hereby given, authority, either upon complaint, at once, it if so orders, without answer or other formal pleading by the interested carrier or carriers, and with or without notice, hearing, or the making or filing of a report, according as the commission may determine. to take action along these lines:

1. Suspend existing car service rules.

2. Establish new car service rules without regard to ownership as between carriers of the equipment affected.

3. Require joint or common use of terminals.

4. Give directions for preference or priority in transportation, for embargoes and permits, and modify them.

5. Temporarily establish such through routes as are necessary or desirable in the public interest. Upon the same procedure, the commission, when of opinion that a railroad is for any reason unable to transport the traffic offered it so as properly to serve the public, may make just and reasonable directions with respect to handling, routing and movement over other lines.

The extraordinary character of this jurisdiction is accentuated by the additional provision that the directions of the commission as to these matters, may, as the statute has itbe made through and by such agents or agencies as the commission shall designate for that purpose. And to appreciate the extent of this grant of power one must bear in mind the statutory definition of car service to include the use, control, supply, movement, distribution, exchange, interchange, and return of locomotives, cars, and other vehicles used in the transportation of property, including special types of equipment, and the supply of trains.

It will be observed that the last three of the emergency powers lodged with the commission—those referring to preferences, priorities, embargoes and permits, to the establishment of temporary routes, and to the unlimited re-routing of traffic—are peculiarly and naturally associated with transportation emergencies. As might be expected, therefore, the law contains no provisions which contemplate regulatory action of that sort in other than emergency periods.

With respect to car service and terminal facilities, however, the commission's power, other than as prescribed for emergencies, is quite full and complete, although, of course the statute requires then the usual orderly procedure of notice, hearing, report and order. There is first, the all-embracing definition of car service;

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