The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-08-10
RAILROAD LEADERS
APPROVE CONTRACT
But Association of Owners Of
Securities Still Not Pleased
With It's Provisions.
ASKS FURTHER FARLEY
Revised Form of Document 40
ceptable to Investment Bank
ers in Principle.

Railroad executives who could HI
reached yesterday were unanimous Il
expressing approval OF the amendments
to the galway rental contract, as de-
scribed In THE SUN The Investment
Bankers Association made public yes
terday suggestions sent to Directors
General McAdoo regarding notifications
of the July contract, many of which
are met by the recent amendments
naming the revised contract acceptable
to that association in principle. But
the National Association Of Owners of
Railroad Securities issued a letter de-
claring that the contract In its present
form Is unacceptable to their assocas
ton and calling for further negotiation
over this important question which has
been in conference for several months
These were the outstanding develops
ments yesterday which call for Directors
General McAdoos consideration when ho
reaches Washington next Monday. Tho
financial district was inclined to pay
greater attention to the recommends
tons OF the Investment Bankers Assos
citation. which has made a careful study
to the entire banking and business situ-
alton. than TO other organizations whose
responsibility to all interests Is of lesser
magnitude. The Investment Bankers
board of governors had before them
copies OF the contract before final res
vision and the recommendations they
adopted at last weeks. meeting in De-
troit and forwarded Thursday to Direc.
tor-General MclAdoo have lost signifi-
IN, nf hn mr.
made public.
The Investment Bankers. according to
their letter to William G. McAdoos
looked at the contract solely from tho
point Of view OF the maintenance of tho
credit Of railroad securities. The main
notifications they suggested were three:
l. The provisions for the payment Of
interest and sinking funds on bonds and
notes and rentals OF leased lines which
were earned and paid during the test
period should be definite and positive
and not subject to any deductions which
might impair the confidence of investors
therein.
.. The provisions for the payment of
dividends at the average rate main-
tanned during the test period IL fully
earned during the test period should be
made as positive and certain as possible.
3. II the companies are to be required
TO accept the covenants and obligations
| OF the Director General" in the contract
as a complete discharge Of any liability
| for loss or damage caused by the die
version or impairment OF traffic or busi-
| ness by the unified operation during
| Federal control the contract should cons
| tain some such covenant and obligation
| providing for the ascertainment and pay.
ment Of such loss or damage.
| While the contract agreement as IL
| now stands fails to meet these modifica-
| tons in entirety n member OF the ms
| vestment Bankers Association expressed
| satisfaction with the amendments and
| declared there would be no vital danger
to railroad credit II the present standard
form of contract was Immediately signed
| without further modification. He en-
| pressed the belief that Director-General
| McAdoo would sign 1t early next week.
on the other hand S. Davies Warfield
| yesterday sent letter TO all the menu
| bers Of the National Association of own-
| erS OF Railroad Securities. of which he
| is president. declaring that his associa-
| ton secured the modification OF the cou-
| tracts thus far granted, but asserting
! that the proposed contract still falls -
| meet the associations contentious Nv
| continuing to make excess maintenance
| minority to fixed charges and to such
dividends as were paid during the tot
! period by making only a slight change
| in the acceptance" clause Of the COW
| tract and by neglecting TO solve tho
| question of the right OF court review *
| decisions under the contract by the In
| terstate Commerce Commission. Mr..
| Warfield declares that his association
/ will continue negotiations but does not
state whether his association will advise
| stockholders to take the matter of tho
| railway rental contract Into the courts.
| provided Director-General McAdoo signs
| the contract in its present form.