The Washington herald., 1921-07-23
HARDING TO TELE;.:
ACREEMENTTERaiS
WITH RAILROADS
Government to Settle Tan
gled Financial Relations
With Owners.
ELIMINATE DISPUTE
ON LABOR PROBLEM
Predict Early Business: Re
vival by Payment of
Huge Sums.

President Harding will send an
informal message 20 Congress next
Tuesday explaining the terms OF
an agreement that has been
reached for settling the tangled
financial relations Of the railroads
and the government
The agreement. it IL learned on
highest authority. will make pos
sible the payment Of large sums TO
the railroads within q short time
while at the same time the In
debtedness Of the roads TO the gov
ernment will be funded over q pc
riod of years. No additional -aPpro-
priations will be asked from Con-
gress. -
EiIni.ate Labor Qsestiou-
Settlement was made possible
when the railroads acceded 70 the
request OF the administration that
the question over which there has
been most dispute be eliminated
from consideration, for the time
being at least This question has
to do with the efficiency OF labor
employed on the roads while they
were under control of the govern
ment-
The roads contended that labor
was less efficient under the gov
ernment than IL would have been
under private management. Since
the government was obligated by
contract to employ on the roads the
same amount of labor as had.been
employed under private MANAGEMENT
huge claims based on this alleged
inefficiency of labor were presented.
Tho nahnE claims fnr1nAAd IN
the claims for under-maintensnce.
The government disputed them.
and as a result all settlements
we're delayed.
But with the question OF labor
efficiency left out of account. the
way lis opened for payment OF
claims about which there is no. dis
pute. These total several hundred
million dollars. and constitute sums
which the government acknowi-
edges il owes for deterioration Of
equipment and property and un-
| der-maintenance in other tirec-
tions.
Courts Msy Decide
The railroads in agreeing to side
| track the labor claims do not for
felt their right 10 press them at a
later date. IL the government sd
heres to its position that they are
unjust, final adjudication will come
through the courts.
The sums the railroads owe the
government are for permanent i'm
provements-the so-called capital
expenditures" which add to tne
value Of railroad property. The
transportation act provides that
payment of these amounts can be
spread over q term of years. on the
theory that the improvements will
pay for themselves. Railroads. in
arguing for a funding arrangement.
have asserted that had they made
the expenditures themselves pay
ment would have been deferred
The administration, IL is learned.
believes that the railroads have
not been treated fairly 10 Just
which has been reached is fair TO
the roads and the government alike.
II considers that the government
is pledged TO make prompt payment
OF just claims and at the same 1ine
is obligated to carry through the
funding project But the Labor
claims were said by a high spokes-
man of the administration to he
"extravsgant" and in many in
stances unfair"
Sees Industrial Benefit. .s
Payment OF large sums 20 the
railroads at an early date, the Id
ministration holds. will have a
beneficial effect on all industry.
The railroads difficulties have been
! considered as possibly the key log
in the industrial jam" When the
roads have funds. il is pointed out.
/ they can resume purchases, which
in normal times are a large part Of
/ all purchases from every source.
Industries supplying roads VIII DE
| stimulated. and Unemployment.
both in these industries and di7
rectly on the roads. will be oimin-
ished. In the background is the de-
sire for the rehabilitation Of tke
| roads. and an increase in their ef-
| ficiency. with the eventful hope. Tor
a reduction in freight rates.