The sun., 1918-10-11
RAILWAY CONTRACT
FIGHT is STILL ON
s. Davies Warfield Says Bond.
holders Have Not Aban.
doned Rental Case.
CITES PLANS OF ACTION
One Is to Go Into Court Of
Claims to Obtain "Just
Compensation

The following statement was ls,y,,
yesterday by s. Davies warfeld, pr.s.
dent OF the National Association q,
owners OF Railroad securitiss:
at is necessary to correct Statements
made by one portion OF this morning,
press in connection with the proceedings
of the financial committee of seventy o.
the association at It's meeting held YES.
terday.
"one statement said that tie commit.
tee decided unanimously to recommend
that the railroad rental contract as Il
stands at present be accepted by tn.
railroads and virtually abandon Itsplan,
for a suit to test Federal control III.
action of the committee was in all re.
spects directly the opposite. At its meet.
ing on September IL the committee o.
seventy adopted resolutions stating tina;
the contract was unsatisfactory and
and instructed counsel 10
see Director-General McAdoo and asl
his cooperation in securing an authori-
tative construction OF the two disputed
provisions OF the contract
The position of the committee Is the
same to-day as outlined in tho resolution
then passed.
1.-THE meeting yesterday was called %
receive the report Of Mr.. Cnssrmyer o.
counsel, who saw Mr.. McAdoo For res-
Yesterday Mr.. McAdoo felt that he must
withhold his cooperation.
1.-THE resolution OF yesterday con.
/. op,nnr nfhar racitalq ha solInrr
ing:
Whereas, This association and thu
bondholders Of the respective companies
have no voice in the management OF ths
railroads, and the bondholders must d.
pend for their protection upon the trus-
tees of their respective mortgages in &C.
cordanco with the state OF facts In each
case
This recital made It perfectly clear
that the association was not in position
to control the action of the railroads.
Notwithstanding its disapproval Of The
contract Therefore specific resolution
was passed calling upon the trustees o.
railroad mortgages to investigate the
law and facts appertaining to the effect
Of the operating contract on the rights o.
the bondholders' and take such action
as is necessary or proper for the pro-
lection OF the interests OF the bond
holders represented by them respectively
as trustees A copy OF the resolutions
was ordered forwarded to the trustees
of railroad mortgages and directors OF
the railroads.
This was the only course left open At
this time. The association has througs
the press and In notices to the railroads
and it's members called attention 10 u
serious objection to two of the fuDla.
mental provisions OF the contract
1T is the opinion of our counsel and
others that the Federal control act nrs
eventually be construed by the courts
and that this may be necessitated !,
due course, through the applications O.
the trustees OF mortgages securing IS
sues Of bonds OF railroads affected
through the operation OF the contract
THE railroads have now before them
the CHOICE of action between th-s.
plans: % To make a contract on Il.
terms now offered by the Government,
(2) apply to the board of referees pro
vided for IN the Federal control act 70
fix their Just compensation with III.
right OF appeal from the decision O.
said board to tine Court of Claims) and
make contract OH the basis OF suca
findings: or (3) to proceed ndeperi'
emily of the Federal control act 10 o..
tain their just compensation IN s
Court OF Claims without reference %
said board of referees.
This Is we'll known by the coUass!
and directors of every railroad. and Il .
assumed that at the meetings o! Their
stockholders there Will be presented tho
opportunity OF deciding under which Z
the three plans their properties shall ,.
operated.
Our contentious with respect 20 ms
contract are both strengthened and just
fed by the recently announced te.-
phone contract. II our information Is
correct that contract secures not only 70
the bondholders their interest, but th'
stockholders are to receive the fui! CIV
dends regularly declared h. these com
panies. It also provides that eSpeno'-
lures made upon their properties .o'
betteIments. improvement and ado,
lions during Federal control Wi. ue PAID
by the Government, the companies TO u
given twenty years for the repayment
thereof. and In case the companies haV'
not consented TO the improvements Oh!
at their appraised value after FederS
control. These are the things that We
have continuously contended for IN In
case OF tho railroad contyac; daring a.
the negotiations with resper; 10 H. ON
which have been denied TO tie selurN
holders"