The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1921-08-24
POLICY OF
HARDING IS
|T|C|zED
AS REMEDY
Former Head of Treasury Takes
Issue With Administration
on Rail Plans.
BY H. X. REYNOLDS.
International News Service.

L
| International News Service.
President Harding was Clearly
mistaken" in telling Congress that
the Government was morally and
legally bound" to fund the $685.
100000 debt which the railroads
owe the United States for additions
and betterments, according to the
expressed opinion of William G. Nc
Adoo. former Secretary of the
Treasury and Director of the Rail
road Administration.
Road Debt Deferred.
Stripped Of confusing non-essen-
tials." McAdoo declared today in. a
letter to Senator Stanley, Democrat,
OF Kentucky, a member of the Sen
ate Interstate Commerce Committee,
what is proposed is that the Gov
ernment shall wait ten years for
S763, 100000 the railroads owe it for
betterments and improvements and
ray Immediately $500, ,00o, 900 to the
tailroads on account of claims for
alleged undermaintenance, taking Sc
curities which in many instances
may not be adequate to protect the
Government against loss.
Question Of Policy.
ut is not a question of legal or
moral obligation but a question of
policy"
McAdoos criticism of the Harding
scheme to help the railroads over the
rocks was placed in the Senate Record
by Senator Stanley after the former
head of the railroad administration had
been refused a hearing before the
Interstate Commerce Committee pre-
vious to the reporting of the Adminis-
tration enabling bill TO the Senate.
McAdoo admitted that the Esch-
Cummins act conferred upon the Pres
ident discretion to determine, within
certain limitations, how much of the
debt the United States owes the rail
roads may be set off against the debt
the railroads owe the United States,
but held that the act does not contem-
plate that none of the debts of the
United States will be set off.
"On the contrary" McAdoo went
on, the act assumes that ii will be,
because in express terms 1t provides
for funding only the remaining in
debtedness of the carrier 20 the United
States.'"
Says Harding MisIed.
1T Is indubitably clear that under
the law and the contract between the
parties the United States is not moral.
ly and legally bound to fund as stated
by the President in his message, the
$763 900, 900 of debt the railroads owe
the Treasury for additions and bet
terments. The President must have
been misled into making such a state
ment."
McAdoo suggested that settlements
with the railroads be effected by
funding for ten years the difference
between the amount which the rail-
roads owe the Government and which
the Government owes the railroads.
This difference Is estimated at $685.
900 900.
But the President proposes a new
plan" McAdoo continued, namely, to
defer for ten years at 5 per cent in
terest the entire S763,000, 900 due by
the carrier to the United States and
to pay the carriers in cash $500 200, 900
for alleged undermaintenance claims.
The President assures us that this in
wolves ~ no added investment (2)
no added liability (3) no added tax
burden
Premise Is Wrong.
There is an added investment of
taxpayers money amounting to $780,
600 900, because, instead of offsetting
or canceling $500. 000, 900 with an
equal amount of the debt the rail-
roads owe the United States, the
Treasury will have to pay the rail
roads $500, 900, 900 of new money.
There Is an added liability Of
$500, 900, 900, because the Treasury
must continue to lend that sum to the
railroads. some with good and some
Continued on Page 3, Column g.