New-York tribune., 1921-06-01
Harding Will
State u. S. Rail
Policy To-day
President Is Expected TO
Announce Roads Will Be
Allowed Perhaps 10 Yrs.
TO Refund $3.50, GOO, 600
Test Suit Is Expected
Court of Claims Action to
Determine Legal Meth
ods in the Settlement

From The T,ibune's Wdshinoton Bureeu
WASHINGTON, May Sl.-President
Harding will make an announcement to-
morrow with respect to the adjustment
of accounts between the railroads and
the government for the Federal control
period.
This announcement is expected to
state the Administration policy with
reference to the funding of the ap-
proximately S750,000,000 which the
railroads owe the government for ad-
ditions and betterments. The President
IS expected also to make a statement
with reference to the sums due the
roads from the government, estimated
by the roads at as high as $500, 900, 900,
The whole subject was gone into to-
day at a luncheon conference at the
White House participated in by the
President, Attorney General Daugher-
~, Senator Cummins, chairman Of the
Interstate Commerce Commission, and
Jaiaes G. Davis, Director General of the
Railway Administration.
Inc financial troubles of the roads
were reviewed and the possible courses
OF action discussed, The subject was
ALSO reviewed at the Cabinet meeting
IL, the afternoon.
While no announcement is vet forth
coming as to what the President will
do, it is believed that the railroads
Will be allowed to fund over a period
OF years, perhaps ten years, the $780,
100000 they owe the government, or a
large part of it. The President under
the transportation act has the power to
decide on this. At the same time it is
believed the government will make
payment of what it owes the roads as
1lQ NV VoJv y
Will take time to settle the claims
Will Bring Test Suit
! One or more of the roads, it is said.
Will soon bring test suit in the Court
Oh Claims to determine certain legal
principles to be followed in the settle
ment of the claims. There is a sharp
dispute between the roads and the
! railway administration because, the
roads claim more for undermainten-
ance OF the properties during the Fed
eral control period than the govern
ment is willing to pay The roads in
1 sist the lowering in efficiency of labor
! IN the Federal control period was such
| as to make them entitled to vast sums
Tor undermaintenance. The govern
ment estimates it owes the roads about
| $500, 100000.
Senator Cummins is understood to
| 'S NN'SSo VIC RESILIENT CnaC the
$76o,ooo,00O should be funded, other
wise the roads would have to paw out
OF current earnings sums chargeable
to capital expenditures. This would
greatly cripple the roads, which al
ready are in serious financial con-
dltion. Senator Cummins has said re-
| peatedly that he is anxious to keen
the roads from government ownership
and II this is accomplished the gov
ernment cannot pursue drastic pol
ICY in making an adjustment with
them
The subject Of adjusting the financial
accounts between the roads and the
| government came up to-day before the
| Senate Interstate Commerce Commit
tee. President Samuel Rea, of the
| Pennsylvania Railroad, told the COM
mittee that the government could
greatly aid the roads in their existing
difficult situation by at once complet-
ing the payments which are still due
lie said that if these payments were
made and the roads allowed to issue
iifteen-year obligations for the
amounts expended by the government
Tor permanent improvements, as would
have been done if the roads them
selves expended the money, the condi
tlon of the roads would be much bet
| tered.
Edward Chambers, vice-pre sident of
the Santa Fe, in completing his testi-
mony before the committee, said busi-
ness would be stabilized at present lev
els II all doubt was removed as to like
hhood OF general rate reduction.