The circle banner. [volume] (Circle, Mont.) 1914-1939, 1918-01-04
GOVERNMENT TAKES
CHARGE RAILROADS
POSSESSION AND OPERATION Eff
FEcTiVE DURING THE
WAR PERIOD.
McADOO PLACED IN CHARGE
Congress Will Be Asked to Guarantee
Earnings Equivalent to income of
Each Road during the Past
Three Years.

Washington Dec. 27.-Government
possession and operation of the ma
TONS railroads for the war was pro
night, to become effective at noon to.
morrow, Friday, December 2S. VIII
liam G. McAdoo, retaining his place
in the cabinet as secretary of the treas
ury, is placed in charge as director gen
eral of railroads.
Every railroad engaged in general
| transportation, with its appurtenances,
including steamship lines, is taken
over and all systems will be operated
| as one under the director general.
In statement accompanying his
proclamation the president announc-
ed that as soon as congress reassem-
bles he will recommend legislation
guaranteeing pre-war earnings and
maintenance of railroad properties in
good repair.
Government backing will be given
to new issues of railroad securities
that ready market may be found
The presidents move, although fore
cast for weeks, came at this time as
surprise TO nearly everybody in Wash
ingt0n, including railroad officials. Ii
had been generally believed that he
would wait the reassembling of con
gress before taking any steps. He
acted through Secretary of War Baker.
under the authority conferred in the
army appropriation act.
No Change of Management.
Direct management of the roads
will remain in the hands of railroad
officials and the railroad war board.
comprised of five railroad heads, will |
continue to direct actual operations |
under Secretary McAdoo's general |
supervision.
The chief practicable effect of gov
eminent operation will be to permit Il
complete unification of all rail sys-
tens, impossible under private opera
tion by reason of statutes prohibit
ing pooling of rail traffic and earn
ings. The roads themselves had
gone as far as they dared in this di-
rection, and it became known only yes
terday that they had been warned by
Attorney General Gregory that a VIC
De permitted.
Roads Had Reached Limit.
The situation was fully realized by
President Wilson, who in his state
nent declared that the railroads had
zone as far as they could and that
already some systems were endanger-
ng their earnings in attempting uni
ication.
Local Systems Exempt.
Although the proclamation applies
o all electric lines engaged in gen.
raj transportation, local interurban
ystems are specifically exempted.
Congress will be asked to guaran-
ee earnings equivalent to the aver
ge net operating income of each rail- Z
Dad in the three year period end d
ng June 30, 1917. Railroad experts
stimate that this will cost the gov L
rnment next year in the neighbor- a
God of $100,O0O,000, which can be L
aised In large part by increased
reights if the interstate commerce q
commission grants the roads applica- y
ION for the Is per cent rate increase
ow pending. Otherwise it will be
aid largely out of the general gov
funds. #
Director Is Supreme.
The interstate commerce commits
on and other government agencies =
hich have to do with the railroads
ill continue to perform their func-
ons as heretofore, except that they cj
.ctor of railroads. al
The president makes it clear that W
IS decision was not made because of fl
ny failure on the part of the rail- W
'ads to perform their whole duty in
far as they could, as there were la
gal restrictions. OF
The plan of control as outlined in til
e proclamation and statement lie
ayes much unsaid as to details, but HI
e general scheme appears to fol- al
W closely the British system. In al
lgland, however, government freight
carried free and the guaranteed si
rnings require an enormous amount Al
money from government funds, ST
nile in the United States the gov Al
nment will pay for its freight as te
the past and will stand it's part of sc
creased freight rates if they are nj
und to be necessary. be