Evening star., 1921-08-11
Director General of U. S. Ad-
ministration Declares Lines
Are Threatened.
SAYS FULL settlement
COULD BE MADE IN 1922
Secretary Mellon Asks Passage OF
Bill-Says War Corporation
Funds Are Not Available.

involving the contracts, the puik y,
the adjustments should be concluded
by that date" he said.
The administration had on July l
last $149,000.000 on hand. Mr.. Davis
!. said. and would require about $2OO,-
100000 in addition, a total of about
$340 100000, for final settlements.
Before the House interstate COM
merce committee Director Meyer OF
the War Finance Corporation reported
substantially the explanation OF the
measure given previously to the SEN
ate committee. Passage of the fund
ing bill would stimulate the economic
situation, he said, adding: RAILROAD
traffic Is gradually settling down TO
state Of more normal equilibrium, ana
good railroads will soon have the same
substantial credits as heretofore.
snys Roads Need Money.
Mr.. Davis stated that the pressing
need of the railroads was available
money, which could not be obtained by
the carriers except at high rates of
interest. The government can pro-
vide the money at lower rates. he SAID
Reviewing government operation OF
the railroads, Mr.. Davis said the rail-
roads found 1t dimcult 10 un-
scramble" themselves.
ut seems to me an exlgency result
ing from the war;" he said, which
presents the obligation Of the gov
ernment to refrain from collecting
certain amounts these railroads owe
and do for the transportation sys-
TENS, what the government is doing
for the foreign debtor nations"
Senator La Toilette asserted the gov
ernment had arranged for extension OF
the foreign loans without asking au-
thority. while with regard to the rail-
roads it was asking authority.
Only Paying What Is Due.
1--WE do not propose to pay the rail-
roads anything except what the goV-
ernment owes" Senator Kellogg, re-
pubhcan. Minnesota, ,interjected.
the railroads haqis to help rehabii-
tate them" Mr.. Davis said. "by max
Ing available to them the money the
government owes"
"The. funding that is proposed is
for improvements made during the
war under the transportation act?" IN
quired Senator Kellogg. :,
THAT is correct" replied the d.
rector general. THAT is the authority
now requested
What percentage of the railroads
are solvent?" asked Senator Towns
chairman.
IF the roads do not do better all
will be insolvent," answered Mr.. Da-
Wis.
IF this bill is not passed before jan
uary Is next, which i'm my judgment
fect?" asked Senator Watson, repub-
lican, Indiana.
Fears Winter Service.
."The railroads would go into the
winter unable to give the public that
degree of efficient service which the
people demand" was the directors
answer.
senator La Toilette precipitat.d heat.
committee by asking that former Di-
iectors General Of Railroads William G.
McAdoo and Walsar D. Hines be called
hefore the committee.
Urging "eariy and favorable" ac-
$500,000,000 of government funds
available for use of the railroads. Sec
retary Mellon, in letter today to
Chairman McFadden of the House
banking committee, said the War
Finance Corporation had no availa-
BILE funds at present. except a credit
balance of about $500, 100000 with the
Treasury.
The Secretary expressed belief that
the bill offered "a helpful and pgacti-
cable plan for financing the settle
ment of matters growing out of fed
eral control
Hope to Meet Drain.
-''WltnQraWalS Dy the war + nance
Corporation" Mr.. Mellon stated,
would involve cash expenditures by
the Treasury but it is the understand
ing between the War Finance Cor
poration and the Treasury that the
corporation will finance its proposed
of railroads by the sale of railroad
securities to the public. or, If neces-
sary, by the sale of the corporations
own bonds to the public.
"Under this plan withdrawal by the
War Finance Corporation would re-
suit temporarily in corresponding
draft on the Treasury, but the bal
ance would be replenished by the de-
posit of proceeds of sale Of railroad
securities or the corporations own
bonds. 1 understand that the railroad
securities which it is proposed that
the War Finance Corporation pur-
chase from the director general of
public would consist not only of se-
curities resulting from the funding
of additions and betterments, but also
railroad securities already acquired
by the director general of railroads
under authority of the federal con-
troll act, approved November 10. 1919,
which provides for the reimbursement
OF the United States for equipment,
and section 207 Of the Transportation
act as amended"
The bill limits the amount of se-
curities which the War Finance Cor
poratfon may purchase to an aggre-
gate purchase price not exceeding
$500, ,000. .000."
Senator Kellogg urged that the COM
mittee should proceed at once to
finally dispose. of the bill, emphasiz-
, ing the need for Immediate legisla.
ton, and Senator La. Toilette. declared
that the committee. should not act
without having full information,
The discussion developed that the
attitude of Messrs. McAdoo and Hines
On the pending measure is not known,
and Senator La Toilette insisted that
he was not asking for them with the
expectation they would oppose the
proposed legislation. The COMMITTEES
will determine at its meeting tOmor-
row the scope the hearings win take.
the disposition Of the majority being
to hasten q report and oppose pro-
tracing hearings. d, Is
Senator La Toilette, In q letter to
Chaifrnsp Cummings. stated that the
question Of contracts with the rail-
roads is so much involved I'm the
pending bin that MIR. McAdoo and
Mr.. Hines should be cakled upon to
give their Interpretation Of the con-