The Washington herald., 1921-08-07
Claims Against q. s. Held
Void by Interstate Com
merce Body.
DEMANDS TOTALED
NEAR HALF BILLION
Decision Places Roads in
Puzzle on Promised
US. Help.


ernment for several hundred mil
alleged -ineniciency of labor" dur
ing the period of Federal control
an dguaranty were rejected by the
Interstate Commerce Commission
yesterday.
The decision is of sweeping i'm
portance, for, in addition to the
specific claims involved. it affects
also the recent agreement between
the government and the railroads
as set forth by President Harding
in his message to Congress urging
relief for the roadA
Roads in Dilemma.
Under that agreement the roads
consented to drop the labor ineffi-
cheney" claims. The significant
clause was inserted. however. that
this action was to be without sur
render of any rights in court in
case there. is a failure to settle"
Informed officials are inclined to
regard the Commerce Commission
decision as placing the carriers on
the horns of a dilemma.
If it is decided to press the Ia
bor inefficiency" claims in court
the pending agreement with the
government, by which $500.OO0, 900
is to be paid the roads by the War
Finance Corporation and the Rail-
road Administration. while the car
ricrs' Indebtedness to the govern
n.ent is to be funded for ten years,
will be placed in grave dubt as to
final consummation-
On the other hand. the decision
Of the commission is held to be
tantamount to "a failure to settle
and the acceptance by the railroads
of the government advances will
place them in a position where II
would be difficult to press the
claims through litigation
The decision of the commission
reverses :be position it formerly
took informally several months ago
when there was a majority Of one
in favor of the carriers contentious.
Both U. s. Bodies Agree.
II also places the commission In
absolute harmony with the United
States Railroad Administration
Director General James C. Davis
states the position Of the latter
body with respect to the claims as
follows:
Claims for inefficiency of labor
have not been allowed by the RAIL
road Administration not only as
contended by the Railroad Admin
istration. because such claims are
NOT contemplated by the standard
contract, but they are of a too
highly indefinite, speculative and
contingent character to warrant
consideration"
1t is difficult to estimate the
amount of the railroads claims rep.
resented by the labor inethclency
rententions. because only part have
baen filed, Davis said. but on the
basis of Partial reports it is esti-
mated that such claims would
amount to approximately SSoo.-
900. 900.
aaThjs item represents some 10 to
IL per cent of the total undermain-
tenancc claims of the carriers, ne
explained
shorn of the technical distinc'
tions, the issue between the rail-
roads and the government may be
explained as follows:
The government. during Federal
control and the six-months guar
anty period following, agreed IN
the standard contract to reimburse
the carriers on the basis of a
standard return which was COM
puted by the railroad earnings and
expenses during a three-year test
period." beginning June 80, 1914.
In Popular Language.
To be taken into cnsideration
were increases in the cost Of ma
teriaI and increases in the cost OF
labor" It was the latter half OF
the phrase which has brought about
the present controversy.
To take an illustration: Say
Iaborer employed by the roads dur
ing the test period was paid 81 a
day ands laid 200 ties during his
working hours Under government
control his wages increased to 81
a day, but his labor decreased so
that only 100 ties were laid in a
w~-king day.
The railroads argue that the DIFF
ference in actual work performed
should be construed as ian increase
In the cost of labor" but the de-
cision of the commission limits
claims only to the difference in
actual wages paid, which in the
present illustration would be So for
the wage increase granted.
Particularly stressed in the deci-
sion of the commission. from which
Commissioners Daniels. Potter and
Campbell dissent, Is the fact that
the phrase decreases in the ef-
fieiency, of labor" was expressly
eliminated from the draft of the
standard contract before IL was
finally agreed upon by the govern
ment.
Another part OF the decision holds
that "Tn fixing thu amount to be
included in operating expenses for
maintenance under said guaranty,
the commission will compute
charges representing depreciations
and retirements upon the same
basis as those which were used
during an average six months of
'As test period"