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Guaranty to Carriers After Termination of
Federal Control.

Under Section 209 of the Act, the United States guarantees to carriers, as therein defined, operating income as follows:

(1) With respect to any carrier with which a contract (except a cooperative contract or waiver) fixing compensation has been made, that the railway operating income for the guaranty period, namely, the six months beginning March 1, 1920, as a whole, shall not be less than one-half the amount named as annual compensation, or where the contract fixed a lump sum for the whole period of Federal operation, that the railway operating income for the guaranty period as a whole shall not be less than an amount which shall bear the same proportion to the lump sum so fixed as six months bears to the number of months during which the carrier was under Federal operation, including in both cases the increases in such compensation provided for in Section 4 of the Federal Control Act;

(2) With respect to any carrier entitled to just compensation under the Federal Control Act, with which such contract has not been made, that the railway operating income for the guaranty period as a whole shall not be less than one-half of the annual amount estimated by the President under the Federal Control Act, including the increases in such compensation provided for in Section 4 of that Act. If a carrier does not accept the President's estimate and tries its remedy in the Court of Claims, in which proceeding it is determined that a larger or smaller annual amount is due, the guaranty shall be increased or decreased accordingly;

(3) With respect to any carrier, whether or not entitled to just compensation under the Federal Control Act, with which such a contract has not been made, and as to which no estimate of just compensation is

made by the President, and which in the test period sustained a deficit in railway operating income, the guaranty shall be the amount by which the deficit for the guaranty period as a whole exceeds one-half of its average annual deficit, plus an amount equal to one-half the annual sum fixed by the President under Section 4 of the Federal Control Act; (4) With respect to any carrier not entitled to just compensation under the Federal Control Act, which for the test period as a whole had an average annual railway operating income, that the guaranty shall be not less than one-half of the average annual railway operating income of such carrier during the test period.

If for the guaranty period as a whole the railway operating income of any carrier entitled to a guaranty under (1), (2) or (4) above exceeds the minimum railway operating income guaranteed therein, or under (3) above exceeds one-half of the annual sum fixed by the President with respect to such carrier under Section 4 of the Federal Control Act, such carrier shall pay the amount of such excess into the Treasury of the United States. Any carrier, however, may retain out of any such excess an amount necessary to enable it to pay its fixed charges accruing during the guaranty period. The definition of “railway operating income" and the details of its determination are contained in Section 209 (page 50).

The Commission shall, as soon as practicable after the expiration of the guaranty period, ascertain and certify to the Secretary of the Treasury the amount necessary to make good the guaranty to each carrier.

Upon application to the Commission, advances may be made to the carrier, during the guaranty period, not in excess of the estimated amount of the guaranty, to enable it to meet its fixed charges and operating expenses. [21]

American Railway Express Company

The contract of June 26, 1918, between the American Railway Express Company and the Director General of Railroads, as amended and continued by the agreement of November 21, 1918, in so far as it constitutes a guaranty on the part of the United States against a deficit in operating income, is to remain in full force and effect during the guaranty period, if the Company files with the Interstate Commerce Commission not later than March 15, 1920, a statement that it accepts all the provisions of subdivision (i) of Section 209 of the law.

For the guaranty period, the American Railway Express Company shall pay to every carrier accepting the provisions of Section 209 regarding the guaranty, 50.25% of the gross revenue earned from all its express traffic on the carrier's lines, and the carrier shall accept from the former such percentage of the gross revenue as its compensation.

In arriving at the gross revenue on through or joint express traffic, the method of dividing the revenue between the carriers shall be that agreed upon between the carriers and the express company with the approval of the Commission.

If for the guaranty period the American Railway Express Company has no deficit in operating income, it shall pay the amount of its operating income for such period into the Treasury of the United States.

Upon application of the American Railway Express Company requesting during the guaranty period an advance of such sums, not exceeding the estimated amount necessary to make good the guaranty, as are necessary to enable it to meet its operating expenses,

the Commission may certify to the Secretary of the Treasury the amount of and times at which such advances shall be made. The Secretary is thereupon empowered to make such advances upon the execution by the Company of a contract with proper security, that upon final determination of the amount of the guaranty, the company will repay to the United States any amounts received from such advances in excess of the guaranty with interest at the rate of 6 per centum per annum from the time such excess was paid.

New Loans to Railways

During the period of transition immediately following the termination of Federal control, any carrier may at any time after the passage of this Act and before the expiration of two years after the termination of Federal control apply to the Commission for a loan from the United States, stating (1) the amount of and purpose of the loan and the uses to which it will be applied, (2) the term for which desired, (3) the present and prospective ability of the applicant to repay the loan and meet the requirements of its obligations in that regard, (4) the character and value of the security offered, and (5) the extent to which the public convenience and necessity will be served. The application must be accompanied by the other data called for in Section 210.

If it is found that the making of the proposed loan or any part thereof by the United States is necessary to enable the applicant to properly meet the transportation needs of the public and that the prospective earning power and the character and value of the security offered are sufficient to furnish reasonable assurance of the ability to repay the loan within the

time fixed and to meet its other obligations in connection with the loan, the Commission may certify its findings of fact and its recommendations to the Secretary of the Treasury as to the amount of the loan which is to be made, the time, not exceeding five years from the making thereof, within which it is to be repaid, the character of the security offered, and the terms and conditions of the loan. The Secretary of the Treasury is authorized at any time before the expiration of 26 months after the termination of Federal control to make a loan not exceeding the maximum amount recommended in the certificate, out of any moneys in the revolving fund of $300,000,000 provided for by Section 210. Such loans shall bear interest at the rate of 6 per centum per annum and be placed to the credit of the revolving fund. The Secretary of the Treasury shall prescribe the time, not exceeding five years from the making thereof, within which such loan is to be repaid, the security which is to be taken therefor, the terms and conditions of the loan, and the form of the obligation to be entered into.

A carrier may issue evidences of indebtedness to the United States pursuant to the provisions of Section 210, without the authorization or approval of any state or Federal authority and without compliance with any state or Federal requirement as to notification.

Disputes Between Carriers and Their Employees and Subordinate Officials

The law provides that it shall be the duty of all carriers, as defined in Section 300 (page 58), and their officers, employees and agents to exert every reasonable effort and adopt every available means to

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