rently so charged are greatly in excess of what is necessary to accomplish the purposes which, according to a reasonable construction, would be chargeable against the Government. Under the circumstances it is desired that each carrier claiming that any such expense should be chargeable against the Government shall present a statement showing the amount of this expense and what amount, if any, it is claimed should fairly be charged to the Government, and the reasons why the carrier believes such expense is so chargeable. And on and after April 1, 1918, the said expense shall cease to be charged against operating income, except in so far as the same shall be expressly authorized after the facts shall have been considered as provided herein. With reference to paragraph 3 of General Order No. 9, carriers will submit to the regional director a statement marked "Nothing to report" for each month in which no changes covered by that paragraph occur. With reference to paragraph 4 of General Order No. 9, carriers will submit to the Director General and also to the regional director a statement marked "Nothing to report" for each month in which no changes covered by that paragraph occur. W. G. McADOO, Director General of Railroads. CIRCULAR No. 12. WASHINGTON, March 23, 1918. Unless and except so far as reasonable showing shall be made to the contrary, the Director General will proceed upon the theory that the totals of accounts "cash," "demand loans and deposits," and "time drafts and deposits," appearing on the railroad company's books at the close of business December 31, 1917, was for railroad purposes and is therefore subject to the control and order of the Director General. If, and to the extent that, the Director General shall find it appropriate, in the mobilization and unification of the resources of the railroad companies, to transfer any such cash from the control of the officers of the company, full accounting provision will of course be made for the protection of the company's rights. The Director General will entertain any applications which may be made to him to show that any portion of the cash on hand Decem ber 31 was not for railroad purposes and should not be under the Director General's control. Carriers subject to Federal control must not make disbursements out of the cash represented by the accounts above designated as of December 31, 1917, except for the following purposes: (a) The payment of interest maturing up to and including July 1, 1918, upon obligations of the railroad company. (b) The payment of dividends not in excess of regular rate of dividends during the three years ended June 30, 1917, in the regular installments, according to the established practice of the company, payable up to and including July 1, 1918. (c) The payment for materials and supplies for railroad use and for other expenses of operation. Operation to include, both upon the debit and credit side, joint facility rents, car hire, and all items of that character which accrue out of the operation of the property. (d) Taxes, including war taxes. (e) Expenditures for permanent improvements. Application will be entertained for any payments which the carrier may desire to make out of cash on hand December 31, 1917, for purposes other than those above specified or, as to clauses (a) and (b), at dates beyond July 1, 1918. W. G. MCADOO, Director General of Railroads. CIRCULAR No. 13. WASHINGTON, March 25, 1918. Will you please give the following information: 1. State the total amount, if any, of Liberty loan 34's, and separately of Liberty loan 4's, bought by your company or subsidiaries (a) as investment, (b) for employees. 2. State aggregate amount now held of each of said issues (a) as investment, (b) for employees. Of amounts of each issue disposed of by you, other than bonds disposed of to employees, please show (a) amounts sold in the market, or through brokers; (b) amounts sold at private sale to investors; (c) prices realized for each lot sold and dates of sale. W. G. McADOO, Director General of Railroads. CIRCULAR No. 14. WASHINGTON, March 26, 1918. To all railroad officials and employees: A section for the Protection of Railroad Property and property of shippers in transit has been established in the Division of Law by the Director General to enforce rigorously the Federal law against theft from cars, stations, sidings, and wharves, and to take all necessary measures in cooperation with carriers to prevent loss from this cause, which in past years has been enormous. Philip J. Doherty is hereby appointed manager of such section. Full cooperation with this section is required from all officers and employees of the railroads, and special agents or secret service men employed by the carriers are especially required to cooperate with this section, both in preventing and investigating thefts, making arrests, or prosecuting offenders, and railroad attorneys and all other officials are required to give all possible aid. Anyone having knowledge of any such offense should report the same to the nearest railroad official or to this section in order that indictment of the guilty parties may be had under the Federal law which carries a maximum penalty of 10 years' imprisonment. Communications should be addressed to Philip J. Doherty, manager, section for Protection of Railroad Property, United States Railroad Administration, Washington, D. C. Officers and employees must understand that all property being transported by the railroads is in the custody of the United States and they owe an especial duty to guard and protect the same and to report promptly any person who tampers therewith; and the United States looks to the officers and employees to do their duty in this behalf. W. G. McADOO, Director General of Railroads. CIRCULAR No. 15. WASHINGTON, March 29, 1918. The Inspection and Test Section of the Division of Transportation is hereby created and Mr. C. B. Young is appointed manager, with office in the Southern Railway Building, Washington, D. C. The manager of the Inspection and Test Section will have charge of the test and inspection of materials and work in connection with the construction of standard locomotives and cars. W. G. MCADOO, Director General of Railroads. CIRCULAR No. 16. [Corrected.] WASHINGTON, April 1, 1918. The Car Repair Section of the Division of Transportation is hereby created, and Mr. J. J. Tatum is appointed manager, with office in Southern Railway Building, Washington, D. C. The manager of the Car Repair Section will supervise the condition of and repairs to freight and passenger cars in all existing railway shops and at outside points. W. G. McADOO, Director General of Railroads. CIRCULAR No. 17. WASHINGTON, March 30, 1918. The Director General is of opinion that the Government ought not to pay the salaries and office and traveling expenses of officers whose services are not reasonably required for the operation of the railroads. It is, of course, evident that in the past the railroad companies, in establishing and maintaining their staffs of officers, have provided not only for the actual necessities of operation but, in addition, have provided (a) for financial and corporate functions beyond what is necessarily connected with operation-for example, functions calling for chairmen of boards of directors and of executive committees, etc.; (b) for other activities in which the company may be lawfully engaged but whose operation is not to be conducted by the Government; (c) for operating functions which were natural when railroads were operated under the competitive system but which are unnecessary under existing conditions-for example, traffic functions connected with the obtaining of traffic rather than with the giving of adequate and convenient information and assistance to the public; (d) for officers who have practically retired from service and whose salaries have been continued because of their past services rather than because of their need for current operation; (e) for counsel whose services have not been needed for the conduct of ordinary operating activities of the company, but who, to a large extent, if not entirely, have devoted themselves to matters of a corporate character-for example, many of whom are now devoting themselves to the problems in connection with the making of the contracts with the Government for the use of the railroads. It will be necessary for the Government to make a careful study to determine the extent to which operating expenses under Government control should be relieved of charges for the salaries and office and traveling expenses of officers not necessary to carry on operating functions, and this circular is to give notice that this subject is and will be under consideration, and that in clear cases the Government may charge back against the company any amounts charged into operating expenses on and after April 1, 1918, for the salaries and office and traveling expenses of officers who are not required to conduct railroad operation. This policy will not affect the positions of any officers whom the company itself may desire to continue to pay out of its own funds, but who are not necessary to railroad operations. It is the purpose of the Government to carry out the above policy in a reasonable and considerate way and not to disturb unnecessarily the operating forces of the railroads. In general, it is anticipated that the rank and file of railroad officers are needed for the conduct of the company's business and that practically all railroad employees, as distinguished from officers, can be continued in service even though the offices in which they now work may no longer be continued. It is believed that the readjustment of operating charges above suggested will be called for almost, if not entirely, with reference to general officers of the character illustrated by clauses (a) to (e), whose functions are not necessarily connected with operation. W. G. McADOO, Director General of Railroads. CIRCULAR No. 18. WASHINGTON, April 2, 1918. In order to encourage officers and employees, to subscribe to the third Liberty loan, carriers may take such amount of the bonds as may be necessary to care for such subscriptions, and current operating revenues may be used as far as necessary in paying for such bonds. Officers and employees may be permitted to pay in installments covering a period of not exceeding 10 months. In case they have not completed payments on prior subscriptions, and in order to avoid making payments on both subscriptions at the same time, payments on new subscriptions may begin not later than three months from now, in which event the 10 months shall date from the time payments shall begin on the new subscription. The regional directors have been requested to organize regional committees to promote these subscriptions. In addition it is hoped that the various carriers will cooperate heartily with the Federal reserve banks in organizing committees of officers and employees to canvass the matter. W. G. McADOO, Director General of Railroads. CIRCULAR No. 19. WASHINGTON, April 3, 1918. Director General McAdoo announced to-day that Angus D. McDonald, vice president and comptroller of the Southern Pacific Co., |