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The Commoner
JANUARY, 1918
11
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President Issues Proclamation Taking
Over Railroads During War
The following' was made public by authoriza
tion of President Wilson, December .27, 1917:
I have exercised the powers over the trans
portation systems of the country which were
granted me by the act of congress of August,
1916, because it has become imperatively neces
, sary for me to do so. This is a war of resources
no less than of men, perhaps even more than
of men, and it is necessary for the complete
mobilization of our -resources that the trans
portation systems of the country should 'be or
ganized and employed under a single authority
and a simplified method of co-ordination which
.have not proved possible under private manage
ment and control. The committee of railway
executives who have been co-operating with the
government in this all-important matter have
done the utmost that it was possible for- them
to do; have done it with patriotic zeal and with
great ability; but there were difficulties that
" they could neither escape nor neutralize. Com
plete unity of administration in the present cir
cumstancesinvolves upon occasion and at many
points a serious dislocation of earnings, and the
committee was, of course, without power or au
thority to re-arrange charges or effect proper
compensations and adjustments of earnings.
Several roads which were willingly and with
admirable public spirit accepting the orders of
the committee have already suffered fro'in these
circumstances, and Bhauld not be required to
suffer further. In mere fairness to them the
full authority of the government must be sub
stituted. The government itself will thereby
gain an infmense increase of efficiency in. the
conduct of the war and of the innumerable ac
tivities upon which its successful conduct de-?
pends.
PUBLIC INTERESTS. FIRST SERVED
The public interests must be Urst served and,
in addition, the financial interests of the govern
ment and" the financial interests of the railways
must be brought under a common direction.
The financial operations of the railways need
not then interfere with the borrowings of the
government, and they themselves can be con
ducted at a greater advantage. Investors in
railway securities may rest assured that their
rights and interests will be as scrupulously
looked after by the government as they could be
by the directors of the several railways systems.
Immediately upon the re-assembling- of congress
I shall recommend that these definite guaran
tees be given: First, of course, that the railway
properties will be maintained during the period
. of federal control in as-good repr.Ir and as com
plete equipment as when taken over by the gov
ernment, and, second, tbfjt the roads shall re
ceive a net operating Income equal in each case
to the' average "net income of the three years
preceding, June 30, 1917; and I am entirely con
fident that the congress will be disposed In this
case, as in others, to see that justice is "done
and full security assured to the owners and
creditors of the great systems which the gov- .
ernment must now use under its own d'rectioh
or else suffer serious embarrassment. -
SELECTION OF MR. MoADOO
The secretary of war and I are agreed that,
all the circumstances b Ing taken into consid
eration, the best "results can be obtained under
the immediate executive direction of the Hon.
William G. McAdoo whose practical experience
peculiarly fits him for the service and whose au
thority as secretary of the treasury will enable
him to co-ordinate as no other man could the
many financial interests which will be involved
and which might, unless systematically directed,
suffer very embarrassing entanglements.
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 in
stitutions 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 ad
' ministration it would certainly have -been accomplished,-
tut no zeal or ability could over
come insuperable obstacles, and I have deemed
PRESIDENT ADDRESSES CONGRESS
A Washington dispatch, dated Jan. 4,
says: "All private interests must for the
present give way to the public necessity."
That was the dominant note of Pres
ident Wilson's address this afternoon to
congress, recommending legislation to
carry out the control already assumed
by the government over the railroads.
But he stipulated that full protection
must be accorded to railroad creditors
and owners bondholders and stock
holders and that the interest of the
shipper be safeguarded.
Immediately after the address Senator
Smith of South Carolina and Represent-
. ative Sims of Tennessee, heads of the
two commerce committees, introduced in
duplicate the administration bill framed
on Mr. Wilson's suggestions. The meas-
ure provides for a "revolving fund" of
$50p, 000,000 to meet governmental ob-
ligations as controller of the lines; au-
thorizes compensation to the roads on
the basig of their average earnings for
the laBt-three years, and sets up machln-
ery for the adjustment of any claims
they may find against the government.
Congressional leaders forecast speedy
passage of the 1)111.
2J
it my dutyto recognize that fact in all candor
now that it is demonstrated and to use without
reserve the great authority reposed in me. A
great national necessity dictated the 'action and,
I was therefore not at liberty to abstain from it.'
WOODROW WILSON.
THE PRESIDENT'S PROCLAMATION
By the President of the United States of
America. A proclamation: "
Whereas the congress of the United States,
in- the exercise of the constitutional authority
vested in them, by joint resolution of the senate
and house of represeutatives, bearing date
April 6, 1917, resolved:
That the state of wt.r between the United
States and the Imperial German government
which has been thrust upon the United States
is hereby formally declared; and that the Pres
ident be, and he is hereby, authorized and di
rected to employ the entire naval and military
forces of the United States and the resources
of the government to carry on wai against the
imperial German government; and to bring the
conflict to a successful termination, all of the
resources of the country are hereby pledged by
""the congress of the United States.
And by joint resolution bearing date of De
cember 7, 1917, resolved:
That a state of war is hereby declared to exist
between the United States of America and the
imperial and , royal Austro-Hungarian govern
ment; and that the President be, and he is here
by, authorized and directed to employ the entire
naval and military forces v of the United States
and the resources' of the government to carry
on war against the imperial and royal Austro
Hungarian government; and to bring the con
flict to a successful termination, all the re
sources, of the country are hereby pledged by
the congress of the United States.
And whereas it is provided by section 1 of the
act approved Augu-t 29, 1916, entilted "An act
making appropriations for thw support of the
army for the fiscal year ending June 3 1917,
and for other purposes," as follows:
The President, In time cf war, Is empowered,
through the secretary of war, to take possession
and assume control of any system or systems of
transportation,' or any part thereof, and to util
ize the same to the exclusion, as far as may be
necessary, of all other traffic thereon for the
transfer or transportation of troops, war ma
terial, and equipment, or for such other pur
poses connected with the emergency as may l
needful or desirable. t
And whereas It has now become necessary i
the national defense to take possession and as
sume control of certain systems 6f transporta
tion and to utilize the same to the exclusion1,
as far as may bo necessary,, of other than war
traffic thereon for the transportation of troops,
war. material, and equipment therefor, and for
other needful and desirable purposes connected
with the prosecution of the war;
Now, therefore, I, Woodrow Wilson, President
of tho United States, under and by virtue of the
powors vested in mo by the foregoing resolutions
and statute, and by virtue of all other powers
thereto me enabling, do hereby, through New
ton D. Baker, secretary of war, take possession
and assume control at 12 o'clock noon on the
twenty-eighth day of December, 1917, of each
and every system of transportation and the ap
purtenances thereof located wholly or in "part
within the boundaries of the continental United
States and consisting of railroads, and owned or
controlled systems of coastwise and inland trans
portation, engaged in general transportation,
whether operated by steam or by electric power,
including also terminals, terminal companies,
and tormina), associations, sleeping and parlor
cars, private cars and private car lines, elevators,
warehouses, telegraph and telephone,Unes( and
all other equipment and appurtenances com
monly used upon" or operated as a paTt of such
rail or combined rail and water systems of
transportation to the end that silch systems of
transportation be utilized for the transfer and
transportation of troops, war material and
equipment, to tho exclusion, so far as may be
necessary, of all other traffic thereon, and .that
so far as such exclusive use bo not necessary or
desirable, such systems of transportation be op
erated and utilized in the performance of such
other services as the national interest may re
quire and of the usual and ordinary business and
duties of common carriers.
It is hereby directed that the possession, con
trol, operation and utilization qf such transport
ation systems hereby by me undertaken shall be
exercised by and through Wm. G. McAdoo, who
is hereby appointed and des'gnated Director
" General of Railroads. Said director may per
form the dut'eo imposed upon him, so long and
b tosuch extent as he shall determine, through
" the boards pf directors, receivers, officers, and
employees of said systems of transportation.
Until- and except so far as said director shall
from time to time by general or special orders
otherwise provide, Che boards of directors, re
ceivers, jofficers, and employees of the various
transportation systems shall continue the opera
tion thereof In the usual and ordinary course of
the business of common carriers, in the names
of their respective companies.
Until and, except so far as said director shall
from time to time otherwise by general or spe
cial orders determine, such systems of trans
portation shall remain subject to all existing
statutes and orders of the interstate commerce
commission, and to all statutes and orders ot
regulating commissions of the various states in
which said systems or any part thereof may be
situated. But any orders, general or special,
hereafter made by said director shall have para
mount authority and be obeyed as such,
Nothing herein shall be construed as now af
fecting the possession, operation, and control of
street electric passenger railways, including rail
ways comniwnly called intcrurbans, whether
such railways be or be not owned or controlled
by such railroad companies or systems. By sub
sequent order and proclamation, if and when it
shall be found necessary or desirable, possession,
control, or operation may be taken of all or any
part of such street railway systems, including
subways and tunnels; and by subsequent order
and proclamation possession, control, andbper
ation in whole or in part may also be relin
quished to the owners thereof of any part of tha
railroad systems or rail and water systems, pos
session and control of which are hereby assumed.
The director shall, as soon as may be after
having assumed such possession and control, en
ter upon negotiations with the several companies
looking to agreements for just and reasonable
compensation for the possession, use, and con
trol of their respective properties on the basis
of an annual guaranteed compensation above
accruing depreciation and the maintenance f
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