Evening star. [volume] (Washington, D.C.) 1854-1972, 1917-12-27
CUTS IN SALARIES OF
RAILROAD PRESIDENTS
TO BE EARLY ACT OF U. S

Following the issuance of the proc
lamation last night taking over the op-
Grafton of railroads of the United States
during the war, attention today was
centered upon the legislative measures
President Wilson will ask from Con-
gress, when it reassembles, to eject
the unified operation aimed at.
The President is expected to address
Congress either January 3, the first day
of its reconvening. or the following
day. He will ask that the government
be empowered to buy railroad securt-
ties, and all earnings more than an
amount to be determined are to go to
the government.
1t is believed that the sum Congress
will be asked to appropriate Tor the
needed modification of equipment Will
be about $20o,000,0oo.
Will Cut Big Salaries.
One of the first acts of the govern
ment in beginning operation OF the
roads will be the reduction Of large
salaries now paid to the railroad ex-
ecutives and increase in some measure
=, the wages of the railway workers.
Securities to be issued while the gov
erument is in control will be at in
terest rates not less than 4 per cent.
and the issues will be made under joint
authority of Director General McAdoo
and the Interstate Commerce Commits
sion.
Secretary McAdoo spent the morning in
conferences and in a study of the tremen-
dous problem he now is called upon to
solve He has conferred with the Presi-
dent about it, but only week ago stated
that he had not been consulted about a
railroad administrator. The impression
gained within the last few days that Mr.
McAdoo would be called upon, because the
President realized that the railroad prob
lem essentially was financial one.
Congress that the railroads be guar
anteed the average net income of the
three years ending June 80. 1917. but
any railroad may abide by its constf-
basis of compensation. In that case
the question will pass to an arbitrating
body. the precise nature of which is to
be determined by Congress.
The equipment fund will also be used to
pay any deficit of earnings this year under
the pre-war average or the amount agreed
upon. but officials who have given the situ-
alton close study believe il may be un-
necessary to expend any great sum in this
way. They believe that the government.
by eliminating wasteful competition and
Unnecessary expenses under common
control. can save hundreds of millions of
dollars Some officials even estimate that
the saving will be billion dollars year.
ard tina. the government will be able to
garner revenue from the government oper-
alton plan in addition TO nsuring railroad
securities holders against loss
Although in most cases earned divi-
dends exceeding the guarantee viii re-
vert to the government Congress will
be asked to make provision for rail-
roads whose prewar earnings were alb
normally low, by authorizing the pay
ment of dividends in excess of those
amounts on approval of the Interstate
Commerce Commission.
Railroads will continue to provide for
their own issues of securities but will
be compelled TO obtain the approval of
the director general before going to
the Interstate Commerce Commission
for final sanction. The commission will
pass the size of the issue and the
director general will determine the in
terest rate. which could not be less than
4 per cent under the proposed plan.
In his dual position OF Secretary OF
the Treasury and director general OF
railroads. Mr. McAdoo would be in the
best position to pass on questions OF Sc
curities interest rates. 1t also would
be his duty to determine when the gov
ernment should purchase new securities
issued under his approval, and this plan
would prevent the rail securities from
interfering with future issues of liberty
bonds without necessitating actual gov
ernment financing of the roads
Will Centralize Authority.
The legislation which viii be recon
roads should remain subject to all ex-
fsting laws and regulations of the In
terstate Commerce Commission. Those
who have given careful thought to the
! situation believe the director general
will not modify the existing order rad
fcally at first, but eventually will go far
toward centralizing authority under tht
federal government.
The Association of State Railroad
Commissioners will give full supper,
to the new plan so long as their func.
tions are not reduced materially, but
they are expected TO protest against be
ing deprived of adjusting minor ques
tions of rates and rules within theil
territories,
Until Mr. McAdoo outlines his plan:
the status of express companies under
government operation of railroads will
not be fully determined Naturall,
they will be under very close govern
ment control. since most of their trans
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