New-York tribune., 1918-09-06
Security Holders
Still Opposed to
u. s. Rail Contract

At joint special meeting yesterday
of the special committees of the Ma
tional Association of Owners of Rail-
road Securities it was resolved unani-
mously that the final draft OF the con-
tract now rendered for government con-
troll Of railroads is still unsatisfactory
and unacceptable in certain funda-
mental particulars, although materially
improved from previous drafts A
meeting of the Financial Committee of
Seventy has been called for Wednes-
day next, in this city, when further ac-
ton in regard to the contract by the
association will be determined upon.
Samuel Untermyer, counsel for the
association, in explaining present OBJ
jections by security holders to the con-
tract said the railroads should not be
required in advance of any knowledge
Of the extent to which their operations
are to be abandoned or their business
md traffic diverted to agiee that the
government may return them their
physical properties stripped of all
! business and connections which might
involve inestimablc loss, all of which
they must now release in ccns dera-
ton of receipt of compensation that
was intended only for the use of their
/ property and not for possible destruc-
ton of its value in the process Of uni
( tlcation.
If the present control should result
! In government ownership, it is claimed d
by the security holders that the ef-
. of 20
them Of all opportunity to claim loss
or damage through the destruction of
their good will; and that the physical
assets might be valued as abandoned d
property.
Differ With MIR. McAdoo
Security holders do not accept the
contention of the Director General
that when Congress enacted that the
properties should be returned in "sub-
stantially as good repair and in as
substantially complete equipment as
it was in at the beginning OF Federal
CONTROL" as Mr.. McAdoo says. "There
can be no escape from the view that
Congress intended the compensation
which it authorized to cover this ele-
ment." The security holders ask that
the question be left open and that the
railroad companies be not required to
may be.
The security holders also object to
the requirement that the railroads
shall be charged with and must finance
! all additions, improvements, better
ments and extensions for war purposes
| and for other purposes not benehc lal
to the companies. and claim that at tho
end of Federal control they may have
1iled up against them vast debts and
charges which they would be unable
to meet They also claim the contract
would require them to pay for add
tons and betterments on the basis OF
the inflated costs of these abnormal
times and not on the basis of THEN
value when companies get their prop
critics back. Such improvements. it is
asserted, may then be of no value tC
the railroads, but d liability rather
than an asset. The contract may near
t. the companies the waving of losses
Of hundreds of millions Of dollars.
What Security Holders Want
Security holders say "All that We
have asked is that the cost of these
additions and extensions shall in tn,
first instance be borne by the govern
ment, which makes then, for its owl
benefit, which gets all the revenues from
them and in the making of which the
companies should pay for them at theil
then value, and in the meantime they
are willing to finance them on theil
own credit"
Another complaint by security hold
ers is that on important questions they
are required to accept decisions of the
Interstate Commerce Commission as
final and conclusive. and are deprived
of their right of appeal to the courts.
7 In conclusion, 1t Is said the secur
ity holders are not unmindful of tn,
difficulties against which the govern
ment has had to contend, and have
made many concessions which igh
not otherwise be justified but tn,
leads Of the great life insurance com
panics, banks, etc, are acting as trus
tees for 5o,000,00O people who are in
terested in these securities, the value
of which they believe to be imperillet
by these provisions. These are thu
men constituting the Committee o
Seventy. who Will pass on these ques
tions on Wednesday next.