New-York tribune., 1918-08-09
Any Company May Dispute
Charges Levied by the
Government
McAdoo to Approve
Compensation Of Roads May
Be Increased, but Future
Course Is Not Restricted

WASHINGTON, Aug. S.-Provisions
safeguarding the private rights OF
railroad companies during government
control have been inserted in the form
Of contract now tentatively agreed
upon by the Railroad Administration
and company representatives. Final
adoption of the contract is expected
soon after Director General McAdoo
returns from two-months' vacation
trip next week.
A copy OF the tentative agreement
issued tonight by the railroad admin
istration showed that prolonged nego-
tiations during the last month between
railroad attorneys and representatives
of the railroad administration lave re-
suited in adoption of plans which may
tend to increase the compensation of
the roads to some extent and to re-
duce the danger of the governments
making excess charges for improve
ments and extensions against any
cOmpany's account.
This eliminates much of the objection
formerly entered by railroad companies
who feared that the expense of big
scale developments of transportation
facilities made necessary by the war
and ordered by the government might
result in cutting down actual compensa-
tion payments to less than enough to
meet ordinary capital obligations, or to
pay fair dividends.
Nearly Billion Involved
Inasmuch as the aggregate compen-
to hn lc L.
nearly a billion dollars q year, the
transfer of millions of dollars de-
pended on these contract modlica-
tions. Similarly, multitude of rail
road security holders are affected by
the new contract terms.
The latest draft provides more spc-
citically that nothing in the contract
shall be construed "as prejudicing the
future policy of the Federal govern
ment concerning the ownership, con-
troll or regulation" of railroads nor af-
feet any proceedings involving the ac-
QUESTION or valuation of railroad prop
erty."
Another provision is that in case any
company and the railroad administra-
tlon fail to agree as to whether addi-
tons and betterments are for purely
war purposes the dispute is to be de-
termined by the Interstate Commerce
Commission
Companies May Protest Charges
The Director General of Railroads is
authorized to order any improvements
or extensions deemed necessary for
proper maintenance or for war exgen-
cies, but any company may protest
against the charging of this cost to it's
account
The contract specifies, however, that
no company may claim a loss because
of the increased cost of materials and
labor under abnormal war conditions
This is interpreted as assurance that
the government will not be burdened
with inflated costs of ordinary improve
ments which probably would have been
made by railroads under present con-
troll
A newly added provision that the Di-
rector General may not purchase more
locomotives or cars for road than is
necessary for its own traffic leaves
much to the Director General in de-
termlning exactly what additional
stock is necessary.
The basis of compensation, the
average net operating income for the
three years ended June 30, 1917, is
specified by the railroad act, and con-
sequently only the minor policies af-
fecting it are involved in the contract