The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-09-06

rector-General a working capital which
had been tentatively agreed upon as rep
resenting the expenses Of the carrier for
one month without interest II was IN
sisted that this provision should be
stricken out. and that no working CAPT.
tai as such should be insisted upon. and
that such balances as came over to the
Railroad Administration from any car.
rier should bear interest at the average
year 1917 or Its daily cash balances in
bank.
There is great force In the contention
that the carriers should provide a work.
| Ing capital. but 1t has been decided to
waive this and sustain the contention OF
| counsel. and the contract has been d.
rected changed accordingly.
"3. The Acceptance Clause: Counse
have insisted, especially the counsel rep
| resenting the Association of Security
Holders, that the acceptance clause Of
| the contract, whereby It was required
that all loss and damage to the business
| or trafic by reason of the diversion
thereof or otherwise which has been OF
may be caused by the taking over or the
possession. use. control or operation OF
the carriers. was unjust to the carriers
and should be stricken out that the
carriers should have the right now OF
at the end of Federal control:
"(a) To sue for the loss of good will
loss OF business, diversion Of traffic OF
loss Of corporate organization: or
lob That II the road should not bs
returned to the carriers as now contem.
plated by the Federal control act. the
effect Of the acceptance clause as now
written would be to deprive the carriers
OF the right to claim damages by reason
OF said items.
This presents the question as ts
whether the compensation provided te
DO paid by the Federal control act Ii
Intended to be inclusive and exclusive
BY the terms of the act of 1916 the
President was authorised to take over
the railroads for war purposes, to use
the same as a unified system Of trans.
portation. to divert traffic and to make
such use Of the railroads las the wal
situation required.
Federal Control Provfsions.y
''The Federal control act not only con
templates the same use but definitely
contemplates a unified control and use
OF the railroads as one great system oil
transportation. There can, in my judg.
ment be no doubt but that the methods
provided in said act Of compensation
that Is by agreement. II an agreemen,
can be made. II not by the decision OF
the Court of Claims, was intended &c
embrace all Of the damage which the
owners have q right to claim This wa,
the view OF the general counsel of the
Railroad Administration and Of all O,
! my advisers. but the question was
pressed upon me SO strenuously that 1,
seemed wise to refer II to the Attorney.
General for an opinion. and an opinion
was received, written by the Solicitor.
General. as follows
The contention made by counsel fol
the security holders as to paragraph
ta). section should be rejected. They
are not expected to have the contract sc
framed as to leave them. after the &C.
with right Of action for further dam.
ages based upon the loss of good will
and the division or diversion of trafiic.
'Unquestionably the just compensa
ton which the statute provides is in.
fenced to cover these 8 well as all other
elements Of loss and damage.
The contention, therefore. must be re.
jected.
-. 1t was also commended that the
Director-General should pay to the car.
riers sufficient sum from operating
expenses during Federal control to pay
the corporate expenses of the carriers
saw SdiCiuA 10 tHlS SUD-
Ject some months ago and reached the
conclusion to which still adhere tina,
this contention Is unsound and must b.
rejected.
70. 1t was insisted that paragraph /
of section should be stricken out This
provides that the Director-General may
expend and charge to the carriers a
sufficient sum to make such deferred
maintenance as may be necessary to
make the operation of the carrier safe
assuming a use of the road similar Ia
the Use during the test period, and not
substantially enhancing the cost OF
maintenance over the normal standard
OF maintenance of railroads of like char.
acter and business during said period.
1t does not seem to me open to dis
pute that the power TO make deferred
maintenance is a necessary power, and
Is one which the statute contemplates
may be exercised. and the contention
should, therefore. be rejected.
Is. 1t was contended that section T.
providing for compensation, should be
so amended that the power to deduct
from the amount of compensation pro-
vided in the contract to be paid the
carrier should not be exercised for de.
ferred maintenance. additions and bet
terments or road extensions.
nave given very Caretul cOnSldera-
ton to the arguments and have decided
to provide in the contract that the power
OF deduction will not be exercised 80
as to prevent the payment of interest
where interest was regularly paid dur.
ing the three year period, or to provide
sum sufficient to support the corporate
organization, to keep up the sinking
funds of the carriers required by con.
tracts in force December 81, 1917; Ia
pay taxes and other sums necessary for
the payment of rents for leased, ope.
rated or controlled roads, nor shall such
deduction be made in respect OF add.
lions and betterments which are for war
purposes and not for the normal de.
velopment of the company, nor In re-
spect of road extensions.
A Question of Dividends.
This substantially grants the conten.
ton of the carriers and the security
holders. except to the extent that they
request that such power OF deduction bt
not insisted upon when It's exercise
would interfere with the payment OF
dividends regularly paid during the
three year period. l must deny this
portion OF the request. because IL
should accede to 1t the result would be
that railroad companies would be per.
mitted to pay improvident dividends
when the funds SO used ought to bs
| employed in taking care of deferred
maintenance and in payment of thei,
just debts to the Government.
This ruling need not operate to EN-