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Show TUAKES CONTROL OF RAILROADS WITH M'ADOO AS DIRECTOR GENERAL President Wilson Ta'tes Action Under His War Powers as a Military Necessity Government Will Guarantee Earnings-Steamship Earnings-Steamship Lines Also Affected. THE PRESIDENTS STATEMENT Z By WOODROW WILSON. j; I whirh 8 eKerclsed the Powers over the transportation systems of the country j! i i , er6 e7'anted me by act of congress of August, 1916, because It has be- ,', I ce Imperatively necessary for me to do so. I m 3 18 a wnr of resources no less than of men, perhaps even more than of J J , ' t 11 ls nccessary for the complete mobilization of our resources that the I 4 transportation systems of the country should be organized and employed under ' 7 a single authority and a simplified method of co-ordination which have not I i P J, Psslb,e undr-r private management and control. i Ihe committee of railway executives who have been co-operating with the '. 1 Soernment In this all-Important matter have clone the utmost that It was Z X h,i U'em t0 fl0: llave done 11 with Patriotic zeal and with great ability; j J Du' there were difficulties that they could neither escape nor neutralize. s Complete unity of administration In the present circumstances Involves upon J occasion and at many points a serious dislocation of earnings, and the commlt ? tee was, of course, without power or authority to rearrange charges or effect l proper compensations and adjustments of earnings. s Several roads which were willingly and with admirable public spirit ac- I cepiing the orders of the committee have already suffered from these clrcum- ' stances anj should not be required to suffer further. i J In mere fairness to them the full authority of the government must be sub- ', stituted. The government Itself will thereby gain an immense increase of ef- ' J flciency In the conduct of the war and of the Innumerable activities upon which Its successful conduct depends. t The public interest must be first served, and. In addition, the financial In- ! forests of the government and the financial interests of the railways must be broutriit under a common direction. 2 The financial operations of the railways need not then interfere with the i borrowings of the government, and they themselves can be conducted at a Z greater advantage. ? Investors in railway securities may rest assured that their rights and inter- J ests will be as scrupulously looked after by the government as they could be i 4 by the directors of the several railway systems. Immediately upon the re- ' assembling of congress I shall recommend that these definite guarantees be u 4 given: ' ' ! 7 First Of course, that the railway properties will be maintained during the ' period of federal control in as good repair and as complete equipment as when , taken over by the government, and ' Second That the roads shall receive a net operating income equal In each i 4 case to the average net income of the three years preceding June 30, 1317. 7 And I am entirely confident that the congress will be disposed In this case, ji ? as In others, to see that Justice is done and full security assured to the owners j t and creditors of the great systems which the government must now use under J I its own direction or else suffer serious embarrassment. ', i The secretary of war and I are agreed that, all the circumstances being tak- J ! en Into consideration, the best results can be obtained under the Immediate exe- ji cutlve direction of the Honorable William G. McAdoo. whose practical expert- ence peculiarly fits him for the service and whose authority ns secretary of,the Jp treasury will enable him to co-ordinate as no other man could the many finan- i cial Interests which will be involved and which might, unless systematically J directed, suffer very embarrassing entanglements. i, The government of the United States is the only great government now engaged In the war which has not already assumed control of this sort. It was . thought to be in the spirit of American institutions to attempt to do everything that was necessary through private management, and if zeal and ability and ) patriotic motive could have accomplished the necessary unification of adminis- 2 tration it would certainly have been accomplished, but no zeal or ability could I overcome Insuperable obstacles, and I liave deemed it my duty to recognize ji that fact in all candor, now that it is demonstrated; and to use without reserve I the great authority reposed In me. J A great national necessity dictated the action and I was therefore not at i, liberty to abstain from It. ' ! Washington. The president has 1 taken over the railroads. Secretary of the Treasury McAdoo is named director direc-tor general of railroads, which job he will hold in connection with his present pres-ent office. That financial Justice will be done to the roads and their stockholders is the pledge of the president. He will urge congress to pass legislation guaranteeing: guar-anteeing: "That the railway properties shall be' maintained during the period of federal fed-eral control in as good repair and as complete equipment as when taken over by the government, and "That the roads shall receive a net operating income equal In each case to the average net income of the three years preceding June 30, 1)17. As the three years from which the guarantees to investors are to be calculated cal-culated were years of excellent railroad rail-road earnings, this will relieve a whole lot of anxiety. Cost to Be Heavy. This official backing is going to cost money, one estimate being in the neighborhood of $100,000,000, which will come either from increased rates or directly from the government. An increase In freight rates is confidently con-fidently expected. Also it is believed there will be a slight tilt in wages. Railroads will be permitted, when necessary, to issue new securities, and as these "will have the government's "O K.," they should be of value in strengthening the security market. The present officials of all roads will keep their jobs under the direction of the railroad war board, with McAdoo Mc-Adoo exercising general supervision. Actually the greatest railroad pool in the history of the government will be in operation under Ijncle Sam's direction. The government will do, as a war measure, what the attorney general gen-eral has forbidden individuals to do. Facilities Taken Over by U. S.. Under the president's proclamation the following are taken under United States control : All railroads, comprising 260,000 miles-of lines, valued at $17,000,000,-000. $17,000,000,-000. All coastwise, lake and river steamship" steam-ship" lines. All terminals, terminal companies and terminal associations. The Pullman company's sleeping cars and parlor cars. The packers' and other concerns' private car lines. All railroad elevators and warehouses. ware-houses. All railroads telegraph and telephone lines. The president also will ask legislation legisla-tion enabling h'1'1 t0 solve the labor problem of the roads. The application for a wage increase averaging 40 per cent is now pending The men have refused to accept com pulsory arbitration while the roads were under private control. This wage question, one of the mosi serious problems that confronts the government in operation of the roads must be settled by Mr. McAdoo. The president's proclamation states he will take possession of the rail ways through Newton D. Baker, see retary of war. This emphasizes his determination de-termination to run the roads strictlj as a part of the military system. War Department Can Handle Draft. The fact that the railways are under un-der the war department will simplifj the matter of drafting men for work in case an extreme step should be come necessary. The president's advisers do not be Heve such measures will be needed The brotherhoods have demonstrated their loyalty and are depended upoE to adopt action now that will guarantee guar-antee enthusiastic continued operation of the roads. In selecting Mr. McAdoo for the most powerful place In the administration, adminis-tration, the president is known to have been influenced by the fact that Mr. McAdoo has a thorough grasp not only of railway and government finance, but also of the world's financial situation. Furthermore, one of the president's advisers ad-visers stated, he is a man who does things. He can cut through red tape. These two considerations pointed to the secretary of the treasury as the one to untie the transportation knot. Power Is Great. The power placed in his hands isi greater than any ever before given a single American other than a president. presi-dent. ' He will take possession of every railroad and every system of transportation transpor-tation located wholly or in part within United States boundaries. Street railways rail-ways alone are excepted. All steamship steam-ship companies owned or controlled by railroads, will come under his control and operation. The present officers of the roads will remain in their places, but can be removed, or changed, at any time, by order of ths director general of railroads. His authority ls paramount even to that of the Interstate commerce commission, which hitherto has fixed rates and governed the traffic of the lines. The plan now put into effect has been worked out by the president through a period of several months. Almost Immediately after the United States entered the war it became evident evi-dent the railroads, under private control, con-trol, would not be able to stand the strain. |