New-York tribune., 1918-09-06
Government Refuses Con-
cessions Requested in
General Schedule
Right to Litigate
For Losses Denied
Roads Saved From Losses
in Operation, Director
Announces

WASHINGTON, Sept. 5.-Terms of
the standard contract between the gov
ernment and railroads made public to-
day by Director General McAdoo, after
months of negotiation with company
representatives., show that most con-
tentions of the Association of Railway
Security Holders have been denied.
These included the claim that rail
road companies should be given the
right to ltgate in court after the war
for losses on account of diversion of
business, and to appeal to courts from
decisions of the Interstate Commerce
Commission, acting as referee in dis
putes over administrative questions.
The contract now will be offered to
all roads under Federal control, and it
is believed most leading lines will
sign it.
Roads Saved by u. S., Says McAdoo
In statement explaining the con-
tract the Director General expressed
the opinion that if railroads had been
under private control during the first
four months Of this year they would
have lost S136, 6,l160O0 in operating in
come as compared with the correspond
ing period of the preceding year, and
S96,064 900 as compared with the aver
age for those months Of 1915, 1916 and
1917.
These conditions, together with the
necessity railroads would have faced
for raising wages and the difficulty of
borrowing money, said Mr. McAdoo,
would probably have resulted in the
failure of some of the most important
railroad companies in the country to
meet their obligations under private
management"
The fact that railroads now are
guaranteed a fixed net income under
Federal management and are able to
borrow from the government for nee
essary improvements, the director GEN
eral said, "are fundamental things
which impress the great body of rail-
road investors and should make them
satisfied with the status as it now ex.
lists"
Mr.. McAdoo characterized most OBJ
jections of representatives of the As
sociation of Railway Security Holders
to the contract as Unreasonable and
said he did not believe they represent
ed views of railroad companies or Sc
curity owners generally.
Final Action Taken
Final action on disputed points was
as follows:
The refusal to approve a provision
for litigation over damages on account
of diversion of traffic was by advice of
the Department of Justice. There is
nothing to prevent a company from
appealing to the Court of Claims, which
handles suits against the government,
over disputed questions of the amount
of compensation due.
The objection to the provision requir.
ing a company to pay out of its compen-
sation expenses necessary to bring run
down property up to condition of safe
operation was overruled.
The contention that company's
compensation should not be used to
pay its debts to the government until
after customary dividends have been
paid, also was overruled.
The director general agreed to strike
out, AS urged by company representa- l.
tives. the section requiring a railway
to turn over to the government one
months supply f working capital
without interest.
Claim that the government should
pay corporate expenses of railway
companies was denied.