The New York herald., 1921-07-13
RAILWAY FUNDING
Is NEAR SOLUTION
Settlement of Claims Against
L. S. Without Appropria-
tion Possible.
$500, 100000 DUE ROADS
Problem Has Been Great Con-
Germ Of Administration
and Rail Heads.

Final settlement of the claims OF tne
railroads against the United States Rail-
road Administration and the funding of
the $500 900, 900 debt owed by the carriers
to the Government for capital expendi-
lures made during Federal control. with
out an appropriation by the Congress 3r
an addition to the Federal tax burden
loomed up-as a definite possibility yes-
terday as a result of conference De-
tween Eugene Meyer, Jr.. chairman of
the War Finance Corporation. and the
steering committee of the Association OF
Railway Executives.
Since President Harding expressed mis-
desire 10 fund the debt owed for addi-
tions and betterments to railway PROV
erty in the twenty-six months of Gov
ernment operation and to settle the
claims of the carriers for undermain-
tenance, depreciation, balances due for
materials and supplies and unpai1
standard return the greatest difficulty
faced by the representatives of his Adj
ministraton and the railway executives
has been to find a way of financing the
settlement and at the same time avoid
, further drain on the Federal Treasury.
During The war the War Finance
Corporation i.dvanced the railroads up-
ward of s2o0,000,o00 in loans. but the
signing of the armistice caused the
corporation 20 discontinue the considera-
zion of advances for purposes "neces-
sary and co1tributory to the prosecution
OF the war The borrowing roads have
since repaid all but about s45, 200, 600 Of
the loans Thus the Harding Adminis-
tration, il IL approves The suggestion
for use of The War Finance Corporation
as the agency 10 finance the settlement.
will be required to initiate legislation
extending the powers of the corporation.
In that event the operation of the
plan would involve "A transfer 20 the
corporation of certain assets now in the
treasury OF the Railroad Administra-
tion. Those assets include approximate
ly s400,000,000 in the bonds and notes
of railroads which have funded expendi-
lures made by the Government for adj
dtions and betterments to equipment.
way and structures. Against those as
sets the corporation would be em2ow-
cred 20 make the necessary advances to
the carriers and gradually reimburse
itself through issue and sale Of its own
bonds
The proposal follows in principle the
recent suggestion made to Secretary
Hoover by Mortimer Schiff OF Kuhn.
Loeb & Co. that a new corporation be
created to handle the financing of the
railroad funding and the final settle
ment.
The indications are that the Govern
ment will insist on substantial conces-
sions by the roads In their claims for
undermaintenance in return for the
funding of the Indebtedness. whatever
may be the final decision on the method
to be followed in the latter operation.
The undermaintenance claims. II Is esti-
mated will reach an aggregate in ex-
cess of $1,000. 100000. The percentage
Of the claims allowed to such roads as
have effected final settlements with the
Government. however, indicates that the
foregoing figure in any case would be
reduced to something like s500.000,000.
The discussion OF the entire question
will be resumed in Washington within
few days i'm a conference between Secre-
tary Hoover. representing the Admin
istration and members of the steering
committee of the Association of Rail-
way Executives