The Bemidji daily pioneer. [volume] (Bemidji, Minn.) 1904-1971, 1921-08-25

1879 and Walker D. Hines was
director general January, 1919, tc
March 1920 the railroads were moi
required to pay for traditions and
betterments" out of the rental due
them at the expense of dividends,
nor to sell bonds or stock as they
had heretofore done, to reimburse
the government for these expendi-
| lures. The cost of such additions and
betterments was generously advanced
by the United States so that on March
/, 1920, when the railroads were re-
turned to private control, they owed
| land still owe) the United States
the enormous sum of 81, IA 900, 900.
These additions and betterments"
include motive power and equip
:'"~>" Th=Se expe"";"'lres were not
forced upon the railroads. The rail-
roads needed them and were glad to
have the government lend them the
money at per cent (which was less
than the market rate. Congress had
to appropriate this $1,144 900, 900
| out of taxes levied on the people
and these very appropriations for
lccns to the railroads have been
used by unfriendly critics as basis
for the charge that federal control
was wasteful of government money,
whereas the debt the railroads owe
the government on this account is
valuable asset if those charged
with the execution of the act insist
upon satisfactory security as the law
requires.
February 20, 1920, Congress en-
acted the Transportation Act" pro-
viding for the return of the rail
roads to private control on March
I. 1920, and gave the President, ir
substance, discretion within certain
limitations to set off against the
debt the railroads o:ye the United
State any Indebtedness, arising out
of federal control, that the United
States might be found to owe the
railroads.
"any remaining indebtedness of the
carrier to the United States in re-
spect to such additions and better
ments shall, at the request of the
carrier. be funded for a period Of
ten years from the termination of
federal control. or a shorter period.
at the option Of the carrier. with in
terest at per cent per annum, and
upon such security as the President,
in his discretion, may prescribe"
While it is true that the Trans
portation Act seems to confer upon
the President discretion to deter
mine within certain limitations, how
much of the debt the United States
owes the railroads may be set off
against the debt the railroads owe
the United States, nevertheless the
act does not contemplate that none
of the debt of the United States
shall be set off, but, on the contrary,
assumes that it will be because in
express terms it provides for fund
ing only "the remaining Indebtedness
of the carrier to the United States"
At any rate, it is Individually clear
that under the law and the contract
between the parties. the United
States is not morally and legally
bound to fund.-" as stated by the
President in his message, the $685.
900, 900 of debt the railroads owe
the United States for traditions and
betterments." The President must
have been mislcd into making such
statement. All that the United
States is required to do, legally and
morally, is to fund, for ten years,
any remaining indebtedness of the
carriers to the United States" after
balancing of accounts.
Up to July Is, 1920, the railroads
had filed with the director general
counter claims against the United
States aggregating $75s,OO0, 900.
Director General Davis says that the
greater part of these claims is for
under-maintenance Of way, struc-
lures and equipment, and that from
70 per cent to rs per cent of that
part is for alleged "inefficiency Of la.
Dor" The Director General char.
acterizes these "inefficiency of labor
claims as ''of too highly Indefinite,
speculative and contingent character
to warrant consideration" and states
that they are not contemplated by
the STANDARD Contract" and that he
has refused to allow them. The III
terstate Commerce Commission has
in a recent decision, upheld the posi-
ton of the Director General.
The president, in his message, sug-
gests that the claims Of the railroads
against the United States may
amount to $500, 100000. 1t is diff
cult to conceive that the just claim:
Of the railroads against the United
States can approach any such sum.
But assuming. for illustration. that
they may, the accounted may be
roughly stated as follows:
Due tho United States by
the railroads, s763. 100000.
Due the railroads account of
alleged undr:~ maintenance,
tenaace, s5O0,0O0,O0O.
balance due United States,
$3.50, 100000. ~
Payment Of this balance the. gov
eminent would have to DEFER for ter
years at 6 per cent interest on the re-
guest of the carrier, provided secur-
ity satisfactory to the president is
given. This is the kind Of settle