The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-09-04
M'ADOO APPROVES
RAILWAY CONTRACT
Rental Of Nearly Billion Dol
lars a Year Entailed in
Agreement.
BIG DEFICIT INDICATED
Receipts Show That Govern
ment Will Operate Lines at
Considerable Loss.
BIG DEFICIT INDICATED

WASHINGTON, Sept s.-The form OF
will pay nearly a billion dollars rental
every year to railroads under Federal
control has been approved finally by d.
rector-Generai McAdoo and representa-
tives Of the leading railroads. 1t will be
offered to the companies for signature
within a few days.
Many protests of company representa-
tives, made during long months Of dis
cussion OF the contract. have been needed
In the final draft. It was announced to-
day, although some roads may yet decline
to sign It and resort to further negotia-
ton or possibly to court action. Without
a formal contract during the eight
months of Federal control the Govern
ment has paid 30 per cent. OF compensa-
ton claims to needy roads and left the
balance for adjudication after conclusion
Of the agreement
Zach of the ITO roads under Federal
management will be asked to sign the
contract, which will be Identical for all
except that the specific annual compensa-
way operating income for the three years
ended June 80, 1917.
Commerce Com issiOn Referee.
As provision against disputes over
questions OF fact the contract specifies
that the Interstate Commerce Commission
shall be called on to act as referee.
Questions Of law involved in disputes
between any company and the Director
General may be submitted to a court.
All operating revenues of the rail-
roads are to 60 to the Government, to
be used In paying the compensation.
Experience so far this year has demon
strated, however. that these revenues
will fall far short of the billion dollar
compensation which It is estimated the
Government will have to pay.
Property taken over by the Govern
ment must be returned in good condition
at the end OF the Federal control and
provision made for depreciation. but the
Government is permitted to make addi-
tional expenditures to insure safe oper-
alton
II any railroad property is destroyed
by fire or other means the Govern
ment must replace II. but is not held
responsible for destruction by public
enemies" This Is taken to mean that
II war were carried to this side Of the
Atlantic and railroads were destroyed II
would be the companies loss
War Needs Not Charged.
The Railroad Administration must
notify company OF additions and bet
terments or road extensions to be made.
but IL these finally are held to be re-
quired by war needs. and not for proper
operation OF the line. the company will
not be called on to stand the expense.
During Federal control the Govern
ment Is to assume all expenses growing
out of settlement of claims arising since
the roads were taken over, joint facility
and equipment rents and of damage
suits against railroads.
Salaries OF corporation officers or
other corporation or railroad expenses
not directly necessary to actual opera
ton must be paid by the companies un-
less provided otherwise by the Director
General.
Ordinary Federal, State and local
taxes will be paid by the Government,
but each company must pay special war
taxes.
The contract specifically provides
that since Government operation Is to
tide the nation over a war emergency
nothing In the contract terms is to be
construed as expressing or prejudicing
the future policy of the Government con-
corning ownership, control or regula-
ton OF the company.