The sun., 1918-08-09
ROADS BENEFIT
BY REVISION OF
RENT CONTRACT
McAdOO Expected to Act
Fayorably Soon OH New
Standard Agreement.
SITUATION IS CLARIFIED
Entire Section Added Covering
Final Accounting of U. s.
With Companies.
SITUATION IS CLARIFIED
Special Despdtch to THE suS.

WASHINGTON, aug. o. - Inc rallroau
rental agreement. the form OF contract
which will furnish the basis for Govern
ment compensation to all OF the nor
NAL" railroads under Government con-
trol. was made public by the Railroad
Administration to-day.
The agreement Is substantially that
printed exclusively in THE SUN on July
3 but with several changes and addi-
tlonal clauses. nearly all of which are
more favorable to the railroads. One Of
the most important and significant
changes provides that the Director-Gen-
eral may in any case, and in all cases
where railroad assets exceeded liabilities
on January l. 1918. shall. pay and charge
10 the road all operating expenses in
CURED previous to January which were
unpaid when the Government took con-
troll.
Section is changed to provide for the
payments OF rentals on leased lines as
contracted for and to make q more IA
vorable arrangement on deductions for
Letterments and improvements.
The agreement as given out Is prob
ably In its final form. though 1t has not
yet been formally approved and signed
by Director General McAdoo or the rail-
road executives. 1t Is the result OF six
months Of patient negotiations between
representatives of the legal department
Of the Railroad Administration. headed
by Judge John Barton Payne. and the
Railroad Executives Advisory Commit
tee, represented by A. p. Thorn.
Prompt Action Is Expected.
Director General McAdoo Will take up
the agreement as prepared and printed
Immediately on his return to washing
ON tomorrow or Saturday. AS drawn
It is acceptable to the Government and
10 a majority Of the railroad executives
OF the country, though there has been a
sharp division OF opinion among them.
it is not so favorably received by the
financial interests involved in the ma
tons railroad development or by great
number OF railroad security holders, as
represented by Davies warheld and
Samuel Untermyer.
Even though 1t is finally approved
and signed the agreement 10 not oind-
ing on the individual railroads. Each
must contract individually with the
Advisory Committee is prepared to rec
ommend it's universal adoption. 1t ap-
plies only in the case OF the norman
roads; that is, roads that operated un-
der normal conditions during the COM
pensaton period. Roads which were
in the hands OF receivers at any time
during the three pre-war years or those
which had their operating revenues ad-
versely affected by serious strikes or
other disturbances can ask for special
adjustments and allowances on this
ground.
OF the 600 roads under Government
control It is estimated by officials that
SIS per cent. are normal roads. Sign
'ng OF individual contracts will be taken
up Immediately after the tentative agree
ment is finally approved. In the mean
time the roads are receiving no COM
pensation from the Government, though
many of them have received advances Of
funds to maintain their operations.
Full Compe nsa tion for All Roads.
Under the agreement all the roads will
receive full compensation. The form
OF allowance for the "subnormal' roads
mas not been fixed, though the agree
lnent will be the basis OF negotiations.
significant change in Section Of
the agreement provides that the recitals
or provisions Of the agreement shall not
be used as evidence or otherwise by
either party in any pending or future
action which involves valuation or ac-
QUESTION OF the companies property.
Similar protection Is given for Govern
ment control for the present capitaliza-
ton Of the various roads.
tax provision is added to Section 6
10 cover the roads in case of any change
IN war taxes affecting them. making the
Director-General bear a fair proportion
Of them.
An entire new section. Section 8. has
been added providing that all property
taken over, all repairs and renewals. re-
placements, extensions and betterments
existing when the roads are returned
shall be turned back to the owners.
CASH working capital and all other ac-
counts receivable are likewise to be
turned over to the owners.
In Section l the following paragraph
has been inserted as Paragraph C:
Wherever In this agreement the word
commission Is used It shall be understood
- referring to the !. C. c. acting by d.
Visions or otherwise as authorized by
Aw."
Conditions of Taking Property.
Section two has been changed to read
as follows:
Section 2. Property taken over (A).
lhe companies. railroad and system OF