Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1923-02-06
RAIL SETTLEMENTS
COST UNCLE SAM
NEARLY z BILLION

WASHINGTON, Feb. 3.-Losses
suffered by the government from
wartime operation Of railroads and
it's aftermath of earnings guaran-
tees and damage settlements will
total approximately $1,000, 900,
according to data made available
today for the first time in a re-
port by James c. Davis, director
general of railroads, transmitted to
congress by President Harding. Not
only does the amount come with
in congressional appropriations a.
ready made but there also will be
a return to the treasury of about
| $400, 600 900 in cash and railroad
securities.
Mr.. Davis estimates are based on
the showing actually made in liqui-
dalton of accounts between the gov
eminent and corporate owners OF
| 80 per cent of the railroad mileage
which the government took over.
Most of the settlements yet to be
| payment by the government in
either cash or securities
Accounting in connection with
| the government operation has gone
through three phases, and involves
| the interstate commerce commits
sion as we'll as the railroad admin
istration. Losses in direct operation
of the roads and in the later set
| Element of capital investment and
| other claims, as now practically
completed by Director General
| Davis, are shown to reach a tota,
of $780, 100000. To this is added
a sum of between 525,000,000 and
| $600,0 100000, which has or will be
paid by the commission to short
| line railroads and to class one car
riers.
Includes Guarantees
This last amount includes pay
ment under the guarantee given the
roads by congress of earnings dur
ing the six months of 1920 JUS
after the government relinquishet
e, the properties.
A remarkable scaling down IL
claims originally made by the roads
against the government is shown
| by Mr.. Davis report, which marks
the beginning of the end of the en-
tire venture. To date the roads
have demanded $685., SAP, COS OF
grounds of under maintenance, dam
ages, loss Of inventory, and fol
other reasons. Up to December 81
final adjustment had been mad
with corporations which sough
1871 ,921,S14 of that total, the gov
eminent having paid out a ne
amount Of only $171, S15,541. Mr.
Davis expects the balance of unad
/ justed claims, amounting to $220
720.253, to be closed out by Octo
Der, without any additional expen
Il diture.
| Although much litigation wa
feared, only one road SO far ha
taken the director generals decisio;
into court, it was added. One fac
! tor pointed out by Mr.. Davis i
facilitating the settlements, ha
been the ability of the railroad ad
ministration to pay cash to carrier
willing to accept an award. Govera
i ment funds for these operations il
part were derived from sale o
equipment trust securities amount
ing to $274,000,000 which were lef
on the director generals hand
| oLleL tIIl6 peflOu OIL OpefdClOn, Du
subsequently became desirable t,
private investors.
! Few Fail to Agree
"T believe it may be confidently
predicted" Mr.. Davis report stated
| %that there will be not to exceed
a half dozen carriers unable to agree
with the government in arriving al
final adjustment. From the finan
cial showing it is evident that nc
further appropriations will be re
quired to complete this liquidation
in every particular, and it may be
anticipated with some confidence
that after all liabilities of the gov
eminent arising out of federal con
troll have been liquidated, the rail
4 road administration can return tC
the treasury in collectable obliga
tons of solvent companies and un
expended appropriations an amount
aggregating about $500, 1000"
Maintenance of the rainroad adj
ninistration organization which has
checked the railroad claims and ac
countings in the settlement cost the
government last year in payroll ex
penditures $3,110,000, Mr.. Davis re
marked, "but has resulted in the saw
ings of many hundreds of millions
Of dollars to the government"