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This legislation was designed only to meet the emergency conditions arising from the war and it was specifically provided therein that it was not to be construed as expressing the future policy of the Government concerning the ownership, control or regulation of the carriers or the method or basis of their capitalization. With the war ended, it became incumbent upon Congress to enact the necessary legislation to bring about the return of the railroads to their original owners and many plans were brought forward, designed to accomplish this result. Among these may be mentioned the plans offered by the railway executives; by the security owners; by the rail way brotherhoods, which, under the name of the Plumb Plan, advocated purchase of the railroads by the Government and operation by the employees; by the National Transportation Conference, representing a composite of the ideas of the various interests involved; by the Senate Interstate Commerce Committee, known as the Cummins Bill; and by the Interstate Commerce Commission, known as the Esch Bill.

On December 24, 1919, the President issued a proclamation relinquishing control and operation of the railroads, such relinquishment to be effective at 12.01 a.m. March 1, 1920. The approach of the termination of the period of Federal control emphasized the necessity for immediate action by Congress. As a result, the Senate passed the Cummins Bill and the House passed the Esch Bill, each with numerous changes and amendments. The Conferees of the Senate and House, after considering the two bills, made their report which was approved by both Houses and became a law on February 28, 1920 upon being signed by the President.

Summary of the Transportation

Act, 1920

Termination of Federal Control

Under the provisions of the Act, Federal control* will terminate at 12:01 a. m., March 1, 1920, at which time the President will relinquish possession and control of all railroads and systems of transportation then under Federal control and will discontinue Federal operation. Thereafter the President shall not have or exercise any of the powers conferred upon him by the Federal Control Act relating to

(1) The use or operation of railroads or systems of trans-
portation;

(2) The control or supervision of the carriers owning or
operating them, or of their business or affairs;
(3) Their rates, fares, charges, classifications, regula-
tions, or practices;

(4) The purchase, construction, or other acquisition of
transportation facilities on the inland, canal, or
coastwise waterways, or (except in pursuance of
contracts entered into before the termination of
Federal control) of terminals, motive power, cars,
or equipment, on or in connection with any railroad
or system of transportation;

(5) The utilization or operation of canals;

(6) The purchase of securities of carriers, except in pursuance of contracts entered into before the termination of Federal control, or as a necessary or proper

"Federal control" means the possession, use, control, and operation of railroads and systems of transportation taken over or assumed by the President under Section 1 of the Act of August 29, 1916, or under the Federal Control Act.

incident to the adjustment, settlement, liquidation and winding up of matters arising out of Federal control; or

(7) The use of the revolving fund created by the Act of

March 21, 1918, or any of the additions thereto, made under such Act or by the Act of June 30, 1919, for any of the purposes above stated, except in pur

suance of contracts entered into before the termination of Federal control and for the settlement of matters arising out of it and except as provided in Section 202 (page 40).

The power conferred upon the President, under the Act of August 29, 1916, with respect to taking possession, assuming control and utilizing any system of transportation in time of war is not affected by this

Act.

All transportation facilities on the inland, canal and coastwise waterways acquired by the United States under Section 6 of the Federal Control Act, except those constituting parts of railroads or transportation systems over which Federal control was assumed, are transferred to the Secretary of War, who shall operate or cause the same to be operated in accordance with the provisions of Section 201 (page 39).

Settlement of Matters Arising Out of
Federal Control

As soon as practicable after the termination of Federal control the President is directed to wind up all matters arising out of and incident to Federal control. In addition to other funds which are made available for the purpose, the sum of $200,000,000 is appropriated.

The President is also given the right, at all reasonable times until the affairs of Federal control are concluded, to inspect the property and records of all

systems of transportation which were under Federal control at any time, if such action is necessary (1) to protect the interests of the United States; (2) to supervise matters being handled for the United States by agents of the carriers; or, (3) to secure information concerning matters arising during Federal control. Carriers are required to provide all reasonable facilities therefor and, upon request of the President, to furnish all necessary and proper information and reports compiled from the records kept during the period of Federal control. They must also keep and continue such records and furnish like information and reports compiled therefrom.

Compensation of Carriers With Which

No Contract Was Made

Upon request of any carrier entitled to just compensation under the Federal Control Act, but with which no contract, fixing or waiving compensation, has been made and which has made no waiver of compensation, the President

(1) shall pay it so much of the amount he may determine to be just compensation, as may be necessary to meet corporate charges and expenses referred to in paragraph (b) of Section 7 of the standard contract between the United States and the carriers, accruing during the period for which such carrier is entitled to just compensation under the Federal Control Act, and also the sums required for dividends; and (2) may, in his discretion, pay it the whole or any part of the remainder of such estimated amount of just compensation.

The acceptance, however, of any of the above benefits by a carrier shall not deprive it of the right to claim additional compensation, which unless agreed upon

shall be ascertained as provided in Section 3 of the Federal Control Act, but shall constitute an acceptance of all its provisions as modified by this Act, and shall obligate the carrier to pay to the United States, with interest at the rate of six per centum per annum from a date or dates fixed in proceedings under Section 3 of the Federal Control Act, the amount by which the sums received on account of such compensation under this section or otherwise exceed the sum found due in such proceedings (Section 203).

Reimbursement of Deficits During
Federal Control

As soon as practicable after March 1, 1920, the Interstate Commerce Commission shall ascertain for every carrier, as defined in Section 204, for every month of the period of Federal control during which its system of transportation was not under Federal operation, its deficit in railway operating income, if any, and its railway operating income, if any, (called "Federal control return") and the average of each, if any, for the three corresponding months of the test period* taken together (called "test period return"†).

For every month of the period of Federal control during which a carrier's system was not under Federal operation, the Commission shall ascertain:

(1) the difference between its Federal control return, if a deficit, and its test period return, if a smaller deficit, or

* "Test period" means the three years ending June 30, 1917.

"Test period return" in the case of a carrier which operated its railroad or system of transportation for at least one year during, but not for the whole of, the test period, means its railway operating income, or the deficit therein for the corresponding month during the test period, or the average thereof for the corresponding months during the test period taken together, during which the carrier operated its railroad or system of transportation.

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