Evening star., 1921-07-26
PRESIDENT ASKS CONGRESS
TO AUTHORIZE PURCHASE
OF RAILROAD SECURITIES
PRESIDENTS MESSAGE
URGING EARLY RELIEF
FOR THE RAILROADS

President Harding's message to
Congress on railroad and agricul-
tural financing. follows in full:
To the Senate and House of Rep
resentatives:
1t is necessary to call the atten-
tion of Congress to the obligations
of the government to the railroads.
and ask your CO. cooperation in order
to enable the government to dis
charge these obligations. There is
nothing new about them. but only
recently has there come an under
standing which seems well to JUS
tify a sincere endeavor to effect
an early settlement. These obli-
cations already have been recog-
nized by Congress. in the passage
of the transportation act. restor-
ing the railroads to their owners.
but previous recognition was made
in the contract under which the
railroads were operated by the
government for the period of the
world war.
The contract covering operation
provided that the railways should
be returned to their owners in as
good condition as when taken over
by the government, and the trans
portation act. recognizing that bet
terments and additions belong to
capital account. provided that such
sums as the railway companies
owed the government for better
ments and new equipment. added
during the period of government
operation. might be funded. There
has been. at no time, any question
about the justice of funding such
Indebtedness to the government.
Indeed. it has been in progress to
a measurable degree ever since
the return of the railroads to their
owners. 1t has been limited. how
ever. to such cases as those in
which final settlements with the
railway administration have been
enected. The process is admittedly
too slow to meet the difficult sit
uation which the owners of the
railroads have been facing, ind l
believe it essential to restore rail-
way activities and essential to the
country's good fortune to hasten
both funding and settlement.
Quite apart from the large sums
owing to the government, which
we are morally and legally bound
TO fund, the government admitted
~ owes the railway companies
large sums on various accounts.
such as compensation. depreciation
and maintenance. There has been
q wide difference of opinion relat-
ing to the amount the government
owes. due in the main to the claim
of the owners that in spite Of ma
terials and hours of labor being
estimated In proper relations to
similar expenditure in the pre-war
test period, the 'inefflciency Of
labor still left a wide difference
between actual upkeep and the
expenditure made during the gov
ernment operation.
and funding an Informal under
standing. which is all that is pos
sible or practical, has been
reached. under which the railway
claims based on the "inefficiency
OF labor" are to be waived to
hasten complete and final settle
ments. without surrender of any
rights in courts in case there is
faHure to settle. I have no doubt
tnat early, final and satisfactory
settlements will be reached, since
the policy of the railway admins
tration already has been effective
In finally settling the accounts of
roads filing claims amounting to
$225.56S.764. resulting in the pay
ment to them Of $6s.141.222.
The way now would seem to be
clear to very early adjustment and
relief, except for the fact that the
railway administration though
possessing assets, does not COM
mand the funds necessary to meet
what will be its admitted obliga-
tions.
There is no thought to ask Con-
gress for additional funds. Perhaps
$500.000.000 will be necessary. The
railroad administration has. or will
have in the progress of funding.
ample securities to meet all re-
quirements If Congress only will
grant the authority to negotiate
these securities and provide the
agency for their negotiation.
With this end in view you are
asked to extend the authority of
the War Finance Corporation SO
that 1t may purchase these railway
funding securities accepted by the
director general of railroads. No
added expense. no added invest
government: there is no added liza
biHty, no added tax burden. 1t is
merely the grant Of authority nee
essary, to enable most useful and
efficient government agency to use
its available funds to purchase se-
curities for which Congress al
ready has authorized the issue,
and turn them into the channels of
finance ready to float them.
1 can readily believe that so SIM
pie a remedy will have your prompt
sanction. The question of our OBJ
legation cannot be raised, the wis
dom of affording early relief is not
to be doubted, and the avoidance
Of added appropriation or liability
will appeal to Congress and the
public alike.
The after-war dIstresses of two
great and fundamental activities
have been riveting the anxious at
tention of the country. One is the
readjustment and restoration of
agriculture, the other is the dis
tress of our railway transportation
system.
Pending proposals for relief and
their discussion have already
brought to the attention of Con-
gress the very promising possibili-
ties of broadening the powers of
the War Finance Corporation for
the further relief of agriculture
and live stock production. This
corporation has proven itself so
helpful in the relief thus far un-
dertaken that I cannot help but
believe that its broadened powers,
as have been proposed, to meet
TsODr inIed IN Do 100 , CoI,,Vo0