CHAPTER XIII

REGULATION

At the time that these lines are being written the railroads of the United

States are entering a veritable no man's land. The ponderous Newlands

committee of Congress has begun its hearing and accomplished little; so

little that it has asked and received an extension of time of nearly

eleven months in which to go into the entire question more thoroughly. We

all hope it does. The Adamson bill, establishing the so-called eight-hour

day for certain favored classes of railroad employees, is statute, but its

constitutionality is yet to be established. And the railroads are

preparing to fight it, in its present form, and to the bitter end. General

sympathy seems to be with them; it is quite probable that even the four

brotherhoods that fought for the measure--unlike the Pears Soap boy--are

not quite happy now that they have received it.

In the midst of all this confusion President Wilson, assured of a second

term of office and so of a reasonable opportunity to try to put a concrete

plan into effect, has emerged with his definite program, not radically

different from that which he evolved last August at the time of the

biggest of all crises between the railroads and their labor, but which was

warped and disfigured until its own father might not know it. His plan, as

now is generally known, provides not alone for the eight-hour day for all

classes of railroad employees, but includes the most important feature of

compulsory arbitration referred to in an earlier chapter.[17]

It now looks as if the United States was upon the threshold of the

eight-hour day--in many, many forms of its industrial life. I believe

that, in his heart, the average railroader--executive or employee--favors

it, fairly and honestly and efficiently applied. It has been charged as

the first large step forward toward the government operation of our

railroads, yet I cannot see it as nearly as large a step as the extension

of the maximum weight of packages entrusted to the parcel post, a system

which if further extended--and apparently both legally and logically

extended--might enable a man to go up to Scranton and place enough postage

stamps upon the sides of a carload of coal to send it to his factory

siding at tidewater. Compared with this the eight-hour day is as nothing

as a step toward government operation or ownership. A genuine eight-hour

day is, of course, a long step toward the nationalization of our

railroads--quite a different matter, if you please.

President Wilson's entire plan, as it has already been briefly outlined,

forms a very definite step toward such nationalization. It at once

supersedes the indefinite quality of the Newlands committee hearings--no

more indefinite at that than the average hearing of a legislative

committee. When the Wilson plan has been adopted, fully and squarely and

honestly, either by this Congress or by the next, it will then be the

order of the day to take up some of the next steps, not so much, perhaps,

toward the nationalization of our railroads as toward the further

bettering of their efficiency and their broadening to take advantage of

some of their great latent opportunities as carriers of men and of goods.

* * * * *

The men who control our railroads today look forward to such a definite

program with hope, but not without some misgivings. For, after all, we are

by no means nationally efficient, and there seems to be a wide gulf

between the making of our economic plans and their execution. No wonder,

then, that the railroads are dubious. They are uncertain. They have been

advised and threatened and legislated and regulated until they are in a

sea of confusion, with apparently no port ahead. The extent of the

confusion is indicated not alone by their failure to handle the traffic

that has come pouring in upon them in the last days of the most active

industrial period that America ever has known, but by the failure of their

securities to appeal to the average investor--a statement which is easily

corroborated by a study of recent Wall Street reports. And what would be a

bad enough situation at the best has been, of course, vastly complicated

by the labor situation.

We already have reviewed some of the salient features of that situation;

we have seen, of organized labor, the engineer and the conductor at work;

and of unorganized labor, the section-boss and the station agent. We have

seen the equality of their work and the inequality of their wage. It is

futile now to attempt to discuss what might have happened if the pay

envelopes of all these four typical classes of railroad employees had been

kept nearer parity. As a matter of fact the disagreeable and threatening

situation between the railroads and the employees of their four

brotherhoods is largely of their own making. If, in the past, the

railroads had done either one of two things there probably would be no

strike threats today, no Adamson legislation, no president of the United

States placed even temporarily in an embarrassing and somewhat humiliating

position. The railroads, in the succession of "crises," as we have already

studied them, must have foreseen the inevitable coming of the present

situation. They could have fought a strike--and perhaps won it--at any

time better in the past than at the present. The brotherhoods have gained

strength and the efficiency of unison more rapidly than the railroads. And

even if the railroads at some time in the past had fought the issue and

lost it, they at least would have had the satisfaction of having fought a

good fight and an honest one. Institutions are builded quite as frequently

on defeats as upon successes.

Or the railroads might have sedulously recognized the nonunion worker in

their ranks and by a careful devotion to his position and his pay envelope

kept his progress equal to that of his unionized brother. True, that would

have cost more in the first place, but it now looks as if the railroad

would have to pay the amount in the last place--and the accrued interest

is going to be sizable.

It is not yet too late to do this last thing; it is a principle for which

the railroaders should fight, into the last ditch. The greatest of the

many fundamental weaknesses of the Adamson bill is the bland way in which

it ignores this principle--the way in which, as we already have seen, it

singles out the four great brotherhoods for the generous protection of the

so-called "eight-hour day," and leaves all the other railroad workers out

in the cold. Or is it a method of proselyting by which the four

brotherhoods hope to force the other branches of railroad workers into

organization?

It is not too late for the men who control our railroads to offset such

brutal forms of proselyting by raising the status of their unorganized

labor--voluntarily and in advance of possible legislation, if you please;

with a generosity of heart that cannot fail to make a warm appeal to

public sentiment. It is not too late for our railroads, on their own part,

to consider labor from as scientific and as modern a viewpoint as they do

their physical and financial problems. It is not too late for them to

raise up high executives who shall make labor, its emoluments and its

privileges, its possibilities of evolution their whole study. In an

earlier chapter of this book we discussed this matter in detail; called

attention to the lack of new blood of the right sort coming to the ranks

of the railroad, to the opportunity of fixing wages upon a purely

scientific as well as a cost-of-living basis; suggested even the broad

possibilities of the bonus system as well as the abandonment of the

complicated double basis of payment to trainmen which has crept into

effect.

Upon these foundations the pay envelopes of the railroad worker in the

future must be figured. If the railroads themselves are incapable of so

establishing it--and in full fairness to them it must be stated that the

time may have passed when they were capable of accomplishing this, unaided

at least--then the national government must step in and do it. The

Interstate Commerce Commission may be asked to establish, with compulsory

arbitration, not only a minimum but a maximum rate which the railroad may

pay its various classes of employees--and so still another great step will

be taken in the nationalization of our system of transportation. Call it

socialism, if you like; I do not, but I do feel that it is another large

step toward nationalization.

Moreover, the very consideration of the topic brings us at once to the

greatest immediate necessity of the railroad--unified regulation.

* * * * *

Unified regulation is the crux of the railroad situation today, from the

railroad executive's, the investor's, and the patron's point of view. Your

wiser executive is holding the question of increased rates in abeyance for

the moment. He is devoting his best thought and his best energy toward

simplifying and bettering railroad control. He has a frank, honest motive

in so doing. Not only will he build toward permanence of the great

national institution with which he is connected but he will begin also to

induce Capital--the wherewithal with which to build up properties and

pay-rolls and possibilities--to come once again toward the bedside of the

sick man.

Capital is a sensitive creature. Conservative is far too mild a word to

apply to it. Capital takes few chances. And the steady and continued talk

of the plight of the railroad has driven Capital away from the bedside of

the sick man. Yet Capital, if unwilling to take chances, rarely overlooks

Opportunity. And if Capital be convinced that Opportunity is really

beckoning to the Railroad, that fair treatment is to be accorded to the

patient at last, he will return there himself and place his golden purse

in the sick man's hand. Only the wary Capital will demand assurances--he

will demand that the Railroad's two nurses, Labor and Regulation, be asked

to mend their manners and that that fine old physician, Public Sentiment,

be called to the bedside.

Let us cease speaking in parables, and come to the point:

Railroad regulation today is, of course, an established factor in the

economic existence of this nation. Already it is all but fundamental. It

came as a necessity at the end of the constructive and destructive period

of American railroading. I connote these two adjectives advisedly, for

while the railroad in a physically constructive sense was being built it

also was doing its very best to destroy its competitors. It had hardly

attained to any considerable size before the natural processes of economic

evolution began to assert themselves. Certain roads, stronger than

others, still stronger grew. And as they stronger grew, the sense of

power, the economic value of power, came home the more clearly to them. To

gain power meant, first of all, the crushing of their opponents, if not by

one means then by another.

This is not the time or place to discuss the great evils that arose from

the unbridled savagery of cut-throat competition in the seventies, the

eighties, and the early nineties. The whole rotten record of rebates, of

sinister political advantages gained through bribery of one form or

another, has long since been bared. The illegitimate use of the railroad

pass in itself makes a very picturesque chapter of this record.

Such a condition of affairs could not go forward indefinitely. In this day

and age it is a wonder that it existed as long as it did exist. Out of

this turmoil and seething chaos was born Railroad Regulation. She was a

timid creature at first, gradually feeling her increasing strength,

however, and not hesitating to use it. For a long time she had a dangerous

enemy, a fellow who up to that time had allied himself almost invariably

with railroads and railroaders--the practical politician. Eventually this

fellow took upon himself the rôle of best friend to Railroad Regulation.

[Illustration: THE ROYAL GORGE, GRAND CANYON OF THE ARKANSAS, COLORADO

The most remarkable chasm in the world traversed by a railroad.]

The effect of the railroad pass upon the dishonest newspapers was only a

little less potent than upon the dishonest politician. Put in its

kindliest light it was a softening influence in the editorial sanctum.

When it was gone a sterner spirit began to assert itself in a large

portion of the press. The railroad was being called to account for its

sins more sharply than ever before. And a smarting politician who went

before a legislature with some measure striking hard at a railroad could

be reasonably assured of a large measure of support from the Fourth

Estate.

* * * * *

In the golden age of journalism both editors and reporters spent their

vacations in delightful, but distant, points. It was a pretty poor sort of

journalist who paid his fare when he wished to ride upon the cars.

Generally his own office took care of his rather extensive and extravagant

demands for travel. If, however, he happened to be employed upon one of

the few honest newspapers who had conscientious scruples about accepting

free transportation, either wholesale or retail, from the railroads, he

generally had recourse to the local politicians. There were aldermen in

New York, in Philadelphia, and in Chicago, undoubtedly politicians in

numerous other cities, who carried whole pads of blank railroad passes in

their pockets. It was only necessary for them to fill these out to have

them good for immediate transportation. The effect of this transportation

upon the political welfare of the railroads in city halls, in courthouses,

in state capitols, even in the national capitol itself--can well be

imagined.

There was another evidence of this golden stream of free transportation.

It was having a notable effect upon the passenger revenues of the

railroads, particularly in the relation of these revenues to the cost of

operating the trains. It was no unusual thing for a popular evening train

from some state metropolis up to its capital, to be chiefly filled with

deadheads. The railroads grew alarmed at the situation. It was beginning

to overwhelm them. They looked for someone to help them out of it. They

found that someone in Railroad Regulation--that spiritual young creature

who had been brought into the world and clothed with honesty and idealism.

Railroad Regulation came to their aid. Railroad Regulation abolished the

pass--the illegitimate use of the pass, at any rate. Long before this time

she had made rebating and bribery cardinal and unforgivable sins.

The effect upon the dishonest politician as well as the dishonest

newspaper was pronounced. The reaction was instant. If this new creature,

Railroad Regulation, possessed so vast a strength, the roads should be

taught to feel it. They would be shown exactly where they stood. And so it

was that viciousness, revenge, and a crafty knowledge of the inborn

dislike of the average human mind to the overwhelming and widespread

corporation seized upon Railroad Regulation.

Now the railroads were indeed to be regulated. The spiritual creature was

given not one iron hand but eventually forty-six. In addition to the

Interstate Commerce Commission down at Washington, each of forty-five

separate states gradually created for themselves local railroad-regulating

commissions. The efficiency of these boards was a variable quality--to say

the least. But if each of them had been gifted with the wisdom of Solomon

as well as with the honesty of Moses, the plan would not have worked,

except to the great detriment of the welfare of the railroads. No

railroader today will deny that it has worked in just such detrimental

fashion. He will tell you of instance after instance of the conflicts of

authority between the various regulatory boards of the various states

through which his property operates; of the still further instances where

these conflict with the rulings and orders of the Federal board at

Washington.

Railroaders have large faith in the Interstate Commerce Commission. They

believe that is both fair and able, a great deal more able than most of

the state regulatory boards. Yet even if all the state boards were as

efficient as those of Massachusetts or Wisconsin--to make two shining

examples--the system still would be a bad one. Today these state boards,

in many cases under the influence, the guiding power, or the orders of

erratic state legislatures, are imposing strange restrictions upon the

railroads under their control. In sixteen states there are laws regulating

the type of caboose a freight train must haul. Linen covers are required

for head rests in the coaches in one commonwealth; in another they are

forbidden as unsanitary. Oklahoma and Arkansas are neighbors, but their

regulations in regard to the use of screens in the day coaches of their

railroads are not at all neighborly. In one of them screens are required;

in the other, absolutely forbidden. It, therefore, is hard work to get a

train over the imaginary line which separates Arkansas and Oklahoma

without fracturing the law. According to a man who has made a careful

study of the entire subject, thirty-seven states have diverse laws

regulating locomotive bells, thirty-five have laws about whistles and

thirty-two have headlight laws. The bells required range from twenty to

thirty-five pounds and one state absolutely insists upon an automatic

bell-ringing device. The five-hundred candle-power headlights that are

good enough for Virginia may be used across the border in Kentucky, but

not in North Carolina, which will not permit lights under fifteen-hundred

candle-power. And South Carolina insists that the headlight shall be

ten-thousand candle-power or a searchlight strong enough to discern a man

at eight hundred feet. Nevada goes still further and says that the light

must show objects at a distance of a thousand feet.

Even the lowly caboose, the "hack" of the freight-trainmen, has not

escaped the attention of state legislators. While many states are quite

content with the standard eighteen-foot caboose mounted on a single

four-wheel truck, thirteen of them demand a minimum length of twenty-four

feet--Missouri twenty-eight and Maine twenty-nine--while fifteen insist

that there must be two of the four-wheel trucks. The legislators at eight

commonwealths have solemnly decreed that caboose platforms be fixed at

twenty-four inches in width, Illinois and Missouri require thirty inches,

while Iowa and Nebraska are content with eighteen and with twenty inches

respectively. A legislator's lot cannot be an entirely happy one when it

comes to determining these details of railroad equipment. But then compare

his lot with that of the man who must operate the railroad--who finds that

one state compels the continuous ringing of the locomotive bell while a

train is passing through one of its towns; despite the fact that an

adjoining state makes such an act a criminal offense. The life of a man

who must operate a railroad over some seven or eight of these states is

certainly cast upon no bed of roses.[18]

Yet these are but the smaller troubles which await him. Take the question

of the so-called "full-crew" law: Beginning only a very few years ago a

wave of legislation swept over the country, compelling the railroads to

increase the number of brakemen that they carried upon each of their

trains. The carriers protested bitterly against the measure. They said

that it was arbitrary, expensive, illogical, unnecessary. But it was

indorsed by the labor organizations, and the politicians fell in line.

Twenty-two states passed the law. Governors Foss of Massachusetts, Cruce

of Oklahoma, and Harmon of Ohio vetoed it. So did Governor Hughes of New

York. Later Governor Sulzer of New York signed it. It also became

operative in Ohio. The people of Missouri, speaking through their

referendum, threw it out. But in twenty states it became and remains

statute--a greatly increased operating charge against the railroads which

operate through them. The "full-crew" law in Pennsylvania, in New York,

and in New Jersey costs the Pennsylvania Railroad an extra $850,000 a

year--five per cent, if you please, on $17,000,000 worth of capital.

The "full-crew" legislation has been followed more recently by an attempt

at legislation regulating the length of trains--freight trains in

particular. Some of the men who engineered the first crusade have been

responsible for the second. They have volunteered the suggestion that the

railroads have sought to offset the effects of the "extra crew" by

lengthening the trains. And they have countered by proposing statutes

suggesting that all freight trains be limited to fifty cars, about half of

the present maximum.

To the average man this will seem as logical as if the state were to step

in and tell him how long he must take to reach his office in the morning

or how long he must wear a single pair of shoes. To the railroader the

injustice of the thing comes home even more sharply. For these ten years

or more he has been working to increase the efficiency of his plant. He

has believed that one of the straightest paths to this end has been in

increasing the capacity of his trains--just as the carrying capacity of

merchant ships has steadily been increased. He has made this possible by

enlarging his locomotives and his cars, by laying heavier rails, by

rebuilding his bridges and by ironing out the curves and reducing the

grades in his tracks, by multiplying the capacity of his yards and

terminals--all at great cost. These things have made the 100-car,

5,000-ton capacity freight train not merely a possibility, but to his mind

an economic necessity as well. And this despite the interesting opinion of

Mr. Harrington Emerson which I have given in an earlier chapter.

Last winter, when the state of Illinois seriously considered the

legislation limiting train-lengths, the president of one of its greatest

railroads went down into the southern part of the state and said:

"Do you wish us to discard these strong new locomotives that we have been

building? Do you wish us to return to the small engines of a quarter of a

century ago? It would be inefficient, wasteful to use our modern

locomotives for the short-length trains. And sooner or later you would

have to bear the cost of the discarded equipment. State laws may be

erratic. Economic laws never are. They are as fixed as the laws of nature

or of science."

And the state of Illinois took heed of what this man and his fellows said

and killed the piece of ridiculous legislation. But it is by no means

killed in some of the other states of the Union.

* * * * *

The conflicts between state authorities that we noticed already have borne

directly upon the railroad's earnings. The conflicting intrastate rates

have borne far more deeply and far more dangerously upon them. Indiana

long since fixed the demurrage penalty at one dollar a day for each car

which a railroad failed to furnish a shipper; North Dakota made it two

dollars; while Kansas and North Carolina fixed it at five dollars a day.

Unscientific is hardly the word for such rate-making. And how shall one

term Kansas' action, withholding passenger-fare legislation until she

found whether or not the supreme court of Nebraska would permit the

two-cent-a-mile bill of that state to stand?

If these rank discrepancies in the manhandling of rates by the various

states affected only their own territories it would be quite bad enough.

Unfortunately they play sad and constant havoc with the interstate

rates.[19] These are delicate and builded, many times, upon local or

state conditions. And this despite the fact that the vast majority of

freight traffic is interstate, rather than intrastate. The majority of the

grain from the farm lands of Nebraska or Minnesota is not destined for

Omaha in the one case, or Minneapolis in the other; yet these sovereign

states take upon their solemn shoulders the regulating of grain rates--to

the ultimate discomfiture and cost of the other portions of the land.

I have but to refer you to Justice Hughes's decision in the so-called

Minnesota rate case. He showed how this arbitrary local outgrowth of the

obsolete doctrine of states' rights worked to the utter and absolute

detriment of the nation as a whole. And yet in the six long years while

that case was pending the Great Northern and Northern Pacific companies

lost more than $3,000,000--a sum of money never to be recovered from their

shippers--as a result of the state's unsustained reductions in freight

rates.[20] No better argument has ever been framed for the nationalization

of our railroads, for making the powers of the Interstate Commerce

Commission absolute and supreme.

* * * * *

No wonder, then, that the railroaders are praying that a way may be found

and found soon for lifting the entire authority over them out of the hands

of the forty-five present state boards of control--who never have agreed

and who apparently can never be made to agree on any one form of

procedure--and placing it in the hands of the very competent regulating

board down at Washington, enlarged and strengthened for its new burdens.

The Interstate Commerce Commission has never shown a tendency toward freak

rulings. Its time has been taken with genuinely important matters. On

these it has raised itself to its present high degree of efficiency. It

has shown itself capable of studying the details of complicated

transportation problems and rendering decisions of great practical sense.

But the scope, and therefore the efficiency, of the Interstate Commerce

Commission are closely hemmed in by existing laws. The latest "crisis"

between the railroads and the four great brotherhoods of their employees

brought this limitation sharply to the fore. It is therefore equally

essential that the power and scope of the Federal commission be broadened

as well as being made superior to those of the state regulating

boards.[21] And it is gratifying to note the progress that President

Wilson already is making toward the first of these necessary immediate

reliefs to the railroads of the land.

If President Wilson shall succeed in persuading Congress that the entire

control of the railroads should be placed in the hands of an enlarged and

strengthened Interstate Commerce Commission, he will have earned the

thanks of every man who has made an honest study into the situation. Such

a commission, clothed with the proper powers, could and would do much not

only toward relieving the railroads' immediate necessities in regard to

both physical betterment and the enlargement of their pay-rolls, but in

enabling them to grasp some of the opportunities which we have outlined in

previous chapters--opportunities requiring a generous outpouring of money

at the beginning. If I mistake not, public sentiment is going to demand

that, if the railroads be granted the relief of unified regulation, they

shall be prompt in their acceptance of at least some of these great

avenues of development.

We have heard much in late years of the banker control of our railroads

and of absentee landlordism in their management. The two things are not to

be confused. Banker control is not, in itself, a bad thing. Absentee

landlordism invariably is. There are good stretches of railroad in every

part of the country that today are failing to render not alone the proper

income returns to their owners but, what is worse, service to their

communities, because of this great canker, this lack of immediate

executive control and understanding. And it is significant in this close

connection of two phases of the railroad situation that it was the banker

control in New York of the one-time Harriman system--the Union Pacific,

the Southern Pacific, the Oregon Short Line, etc.--that gave to it at one

fell swoop, five presidents--one at San Francisco, one at Omaha, one at

Portland, one at Tucson, and one at Houston--each a young, vigorous man

equipped with power and ability. The good effects of that far-seeing

move--that instant wiping out of the charges of absentee landlordism that

were being lodged against the Harriman system--are still being felt.

It is not banker control that is essentially bad for our railroads. It is

banker control together with an utter lack of vision, that has cost them

so many times their two greatest potential assets--public interest and

public sympathy. Banker control plus vision may readily prove itself

the best form of control for our carriers. And that our bankers

do not entirely lack vision may be argued by the far-seeing and

opportunity-grasping way in which our bankers of the newer school are

today reaching for American development in South America, in China, in the

Philippines, and in other parts of the world.

Back of the President, back of the Newlands committee and its rather

dazzling sense of importance, sits the nation. It is far superior to any

mere committees of its own choosing and it is weighing the entire

railroad situation as perhaps it never before has been weighed. It is

considering the enlargement and the strengthening of the Interstate

Commerce Commission--together with it a feasible method for the Federal

incorporation of our roads--this last a vital necessity in the mind of any

man who has ever tried to finance an issue of securities for an interstate

property with each separate state trying to place its own regulations--in

many cases both onerous and erratic--upon them. With the spirit of

Congress willing, there still remains the very large question of how far

its power would extend, in attempting either to reduce the power of the

state boards or to make them more amenable to the Federal commission. Our

states have been most jealous of their sovereign rights. And it is easy to

conceive that their aid and cooperation--so very necessary to the success

of the entire ultimate project of the nationalization of our railroads--is

not to be obtained by the mere wishing.[22]

President Wilson has set the beginnings for the plan and set them well. As

I write it is still up to Congress to undo its mischievous legislation

which, if it is made to include an eight-hour day, should render a genuine

eight-hour day, one applicable to every class of railroad

employee--although it would be difficult to imagine a railroad

superintendent or general manager or president quitting at the end of the

short-term service. They are schooled to harder things.

And with the eight-hour day must come these other things to which we have

already referred, not once but several times. First among these are the

matters so closely correlated in President Wilson's program that they

cannot be separated from the eight-hour day: arbitration--compulsory

arbitration, if you please--the strengthening of the power of the

government to seize the railroads and operate them in a time of national

panic or military necessity, the enlargement of the powers and the

personnel of the Interstate Commerce Commission. With all these things

accomplished, and the situation just so much strengthened, it will then

become the duty of the railroads to reach out more generously toward their

opportunities for further development as the transport service of a great

and growing people. It will be necessary for them to attract, to train, to

reward new executives of every sort; to further their credit by deserving

credit, to show outwardly in a more potent way the thing that so many of

them have believed they inwardly possess--true efficiency, both for

service and for growth.

Please do not forget this great point of growth--of development, you may

prefer to put it. In my mind, men, institutions, nations, even railroads

never stand still; they either grow, or else they decline, they shrink,

they die. But the Railroad, as the greatest servant of a great people,

cannot die without bringing death to the nation itself. Therefore he

_must_ grow. He must plan. He must announce his plans. He must bring

Public Sentiment to his aid. Law can do many things--but few of these

latter ones. Public Sentiment may accomplish every one of them, and almost

in a crack of a finger. No wonder that Capital--that conservative

fellow--longs to have him stand at the bedside of the Railroad.

The sick man is not without his ambitions--you may be sure of that. He

sees his opportunities, perhaps more clearly than ever before in the

course of his long life. He is anxious to be up and at them. But before

this can be done, some of these things, which we have outlined so briefly

here, will have to come to pass. There are reckonings to be made, huge

doctors' bills to be met--and the American public will have to help meet

them.

The alternative?

There are many panaceas suggested; but I fear that most of these are but

nostrums. Ingenious, many of them are, nevertheless. And some of them come

from men who speak with both authority and experience. One man proposes to

have the entire Federal taxes paid through the railroad, which, in turn,

would recoup itself through its freight and passenger rates. He makes an

interesting case for himself. Another suggests a Federal holding company

for all the railroads of the United States and makes his suggestion read

so cleverly and so ingeniously that you all but forget that he is drawing

only a thin veil over government ownership. Of government ownership I am

not going to treat at this time; not more than to say that to almost all

American railroaders--big and little, employers and employed, stockholders

and bondholders--it represents little less than death itself to the sick

man of American business. In my own opinion it is, at the least, a major

operation--an operation whose success is extremely dubious.

INDEX

Adamson Bill, object and effect of, 235-239.

Aliens, value of, in railroad work, 74 ff.

American Railway Association, cooperation of, with government, 211.

Arbitration, compulsory, 240, 258;

in wage disputes, 57 ff.

Architectural problems in relation to increase of passenger traffic,

107 ff.

Atlantic coast, service of railroads in defense of, 192.

Automobile: effect of the, on railroad traffic, 134 ff.;

as a freight feeder of the railroad, 158;

operated on railroad tracks, 151.

Betterments and additions, amount needed for, 18 ff., 22, 26.

_See also_ Railroads.

Branch-lines and their relation to automobile competition, 142;

opportunities neglected by railroads, 152, 156.

Brotherhoods, 90 ff.;

influence of, on wages, 95, n.;

strength of, 238.

_See also_ Labor.

Canals, advantages of, to railroads, 176.

Capital, 4;

relation of, to earnings, 17;

Conductor, efficiency of the present-day, 45.

Cooperation of public vital to railroads, 179.

Cost of living, how influenced by railroads, 6.

_De Luxe_ trains, economic wisdom of, 228.

Deficits, how met, 18.

_See also_ Railroads.

Droege, John A., 211, 214.

Efficiency, 12, 15;

relation of, to economy, 13.

Eight-hour day legislation, 220, 236, 257.

Electricity as motive power, 105, 125, 129;

advantages of, 113 ff.;

in Boston, 114;

in Chicago, 117;

in Philadelphia, 119;

to freight traffic, 131;

to railroad systems as a whole, 129, 132;

to suburban systems, 121;

transformation of gravity pull into motive energy, 131.

Elliott, Howard, 179.

Embargoes: cause of, 9;

effect of, 15, 159;

motor truck, value of, in case of, 160.

Emerson, Harrington, 99.

Employees, number of, in interests allied to railroads, 5;

number of, on steam railroads, 5.

Engineer, efficiency of the present-day, 33 ff.

Engineering problems in relation to increase of passenger traffic, 109.

Excess-fare trains, 222, 226;

pending inauguration of, on western railroads, 227.

Extensions, difficulty of raising funds for, 26, n.

Freight and passenger traffic, economic difference between, 232.

Freight cars, number and condition of, in use, 24;

number needed per year, 22, n.

_See also_ Railroads.

Freight feeder for railroad, automobile and motor truck recommended as,

158, 162.

Freight gateways as housing places of affiliated industries, 166.

Freight terminals, development of, 169.

Full-Crew Bill, the, 219;

legislation regarding, 247.

German railroads, efficiency of, 188.

Government ownership, 259.

Grade crossings, extent of removal of, 20-21.

Grain, cost of transportation of, 8.

Grand Central Station, the, 107, 110.

Gray, Carl R., 179, 211.

Harriman, E. H., 179.

Harrison, Fairfax, 211.

Hill, James J., 19, 21, 179.

Hine, Major Charles, 212.

Holden, Hale, 179.

Hustis, James H., 179.

Interstate Commerce Commission, effectiveness of, 253;

enlargement of powers of, 258.

Labor, bonus payments, 97 ff.;

brotherhoods, affiliation of labor with, 90;

improvement in quality of, 31;

relations of organized, with the railroads, 30, 56;

unorganized labor, interests and responsibilities of, 62 ff.;

wage adjustments between railroads and employees, 56 ff.;

wages of, 92 ff.

Labor question, the, 3, 4.

Legislation, conflict of state, 245 ff.

Liquor, opposition of railroads to its use by employees, 31.

Locomotives, number ordered per year, 24, n.

Markham, Charles H., 179, 211.

Mellen, Charles S., 196.

Military Reserve Corps among railroad men, 212.

Negro, value of the, in railroad work, 73.

Nonunion labor, employment of, 238.

Noonan, William T., 179.

Operation, what it involves, 18.

_See also_ Railroads.

Pacific coast, service of railroads in defense of, 200.

Panic of 1907, effect of, 26.

Passenger and freight traffic, economic difference between, 232.

Passenger-mile, statistics of, 17;

unit of traffic, 17.

Passenger rates, increases in, 220;

prospects for future increase in, 229, 233.

_See also_ Railroads.

Passenger service, state of, 25, n.

_See also_ Passenger-mile.

Pullman cars, comparison of, with European cars, 224.

Pullman Company, control by, of sleeping and parlor cars, 224.

Railroad fares, effect of automobile on rate of, 139 ff.

Railroads, and national defense, 181;

army operation of, in case of war, 207;

as military lines of communication, 191 ff.;

banker control of, 254;

betterments and additions, expenditures for, 18;

capitalization of, 14;

car famine now existing, 22, n., 23;

condition of, in case of present-day war, 185;

in Middle West and South, 19;

congestion, effect of, on, 15;

cooperation of public vital to, 179;

cost of living, how affected by, 6;

credit of, affected, 16;

debt of American farmer to, 8;

deficits, how met, 18;

depreciation fund, an asset, when, 28;

development extent of, yet needed, 21;

difficulties under which they labor, 2;

double-track, military value of, 202;

needed, 21;

earnings of, in relation to capital, 17;

efficiency, as applied to, 12;

emergencies, ability of, to meet, 214;

employees, number of, on, 5;

equipment, 25;

federal incorporation of, 256;

flexibility of equipment of, 210;

freight and passenger traffic, economic difference between, 232;

German military use of, 188;

governmental operation of, in case of war, 206;

inadequacy of, to meet needs of nation, 15, n.;

labor and tax, 31 ff.;

locomotives, condition of, in operation by, 25, and note;

losses, extent of, 29;

necessity and value of, to the country, 217;

operating, cost of, in relation to capital and earnings, 17;

opportunity of, 105;

passenger rates, part played by, in cost of operation, 232;

part played by, in Civil War, 182;

possibilities of development for, 151 ff., 158, 163, 166, 171, 176;

receiverships of, 10-12;

regulation of, 235, 240 ff.;

rehabilitation, extent of, needed, 29;

relations of, with employees, 30;

resources of, need for study of, 177;

service of, in defense of Pacific coast, 200;

service of, in defense of Atlantic coast, 192;

superiority of, in 1898, over those in Civil War, 184;

seizure of, by government, 258;

trained officials necessary for efficient handling of, 208;

upkeep, failure of, to meet, 23;

value of, to the nation, in time of war, 181;

wealth of the nation, how affected by, 6;

_See also_ Labor.

Rate increases, need of, 219.

Regulation of railroads, 4, 235;

confusion resulting from present methods, 237;

essential and advantageous, 241 ff.;

unified, 240.

Section boss, the, 62 ff.

_See also_ Labor.

Standard unit container, a factor in freight traffic, 163.

_See also_ Railroads _s. v._ "Possibilities of development."

State railroad commissions, ineffectiveness of, 244.

Station agent, the, 62 ff., 77 ff.

_See also_ Labor.

Supervisor, the, 66.

_See also_ Labor.

Telegraph, value of the, in time of war, 181.

Telephone, effectiveness of the, in national crisis, 181.

Terminals, development of, 106.

Ton-mile, statistics of, 17;

unit of traffic, 17.

Tonnage-mile costs, 101.

_See also_ Labor; Wages.

Track foreman, the, 62 ff.

_See also_ Labor.

Traffic tides and congestion, 217.

Trains, legislation regulating length of, 101, 248.

Union Pacific Railroad, military value of, 200.

Vanderlip, Frank A., 32, n.

"Vital area" of country, how served by railroads, 192, 195.

Wage adjustments and arbitration, 56 ff.

Wages, bonus payments, 97, 102;

hour basis, the, 100;

maximum and minimum rates of, 240;

mile basis, the, 100;

"piece-rate" principle, the, 100 ff.;

rate of, discussed, 92 ff.

_See also_ Labor.

Waterways: development of inland, 171;

objectionable provisions of navigation law, 172;

vessels, need of, 175.

Wealth of nation, how affected by railroads, 6.

Willard, Daniel, 179, 211.

FOOTNOTES:

[1] "Not only have the developments of the last fifteen months disclosed

the enormous productive capacity of the people and industry of this

country, but they have also shown that when it is being fully utilized the

facilities of the railroads are not adequate to the demands which it

causes to be made upon them. To sum up, then, the industry and commerce of

the country grew rapidly throughout the ten years ending in 1907, and

almost throughout that period the facilities of the railroads were

increased so rapidly that they proved adequate to the demands made upon

them. At last, however, the traffic did catch up with the facilities, the

result being the great car shortage of 1906-1907. The year 1916, unlike

the year 1906, marks the beginning, not the approach of the end, of a

period of industrial and commercial activity and growth. There will

doubtless be a painful and violent readjustment after the war ends, but

there will be another period of industrial expansion after the

readjustment is passed.

"Since our railroad facilities have proved inadequate at the beginning of

the present period of prosperity, will they not prove inadequate to the

demands which will be made upon them as soon as the period of readjustment

is over. And if they prove inadequate at the beginning of a period of

prosperity, what kind of a situation will they cause to develop if

industry steadily grows more active and traffic heavier, as it did for

several years prior to 1906?

"There seems to be only one rational answer to this question. No matter

how favorable to a period of prolonged and great prosperity other

conditions may be, progress in industry and commerce will be sharply

arrested, and there will not be any long continuance of prosperity, if the

facilities of transportation are not greatly increased. The net operating

income of the railroads during the year now closing has been

unprecedented, probably averaging more than six per cent on the investment

in road and equipment. In the past whenever it has averaged over five per

cent there has resulted a largely increased investment in new facilities.

In view of the large net earnings now being made the expenditures during

1916 for new mileage and trackage, for new equipment and other improvement

have been relatively small."--_Railway Age Gazette._

[2] Frank A. Vanderlip, President of the City National Bank, New York

city, in an address delivered in Washington, late in October, 1916, called

attention to the fact that in the year just closing, $400,000,000 had been

invested in new industrials in America, but practically not a dollar for

railroad investment. The only new capital which the railroads have been

able to obtain has been through borrowing. On top of this Congress has

taken the extraordinary responsibility of advancing the wages of the

railroad trainmen. The extent of the railroad business is such that it

ought to be building 200,000 freight cars a year. Last year (1915) they

built 74,000, in 1916 the total was little, if any, greater. And week

after week the reports are published, showing the car famine in America.

[3] "In the five years, ending with 1906, the number of locomotives

ordered by the railroads of the United States was almost 22,400, or almost

4,500 per year. During the five years, ending with 1916, the number

ordered has been less than 14,000, or about 2,800 a year.

"In the five years, ending with 1906, the total number of freight cars

ordered was almost 1,100,000, an average of over 218,000 a year. During

the five years, ending with 1916, the number ordered has been only about

740,000, or an average of about 148,000 a year."--_Railway Age Gazette._

[4] The winter which ushered in 1917 has seen not only great freight

congestion, and in consequence many embargoes, but a serious impairment of

passenger service, particularly in the northern and eastern sections of

the United States. This impairment has taken the form of constant and

irritating passenger train delays. These have come despite a winter more

mild and open, particularly in the East, than we have had for a number of

years. They have been so constant and so pronounced as to arouse much

comment as to their possible causes. By some they have been attributed to

labor disaffection, and by others, to the congestion caused by the

abnormal movement of freight. But the railroaders who know best feel that

the real cause is in "engine failure." In the hard years of stringent

economy through which our carriers have just passed they not only failed

to purchase sufficient new locomotives, but to repair and maintain

properly the ones already in their roundhouses. And in February,

1917--after eighteen months of grilling traffic--these locomotives have

begun to bend and break under the strain. After all, a locomotive is not

so very much different from a man. There comes a limit to its endurance.

[5] "Some question has been raised repeatedly as to whether the condition

of railroad net earnings really has been the cause of the decline in new

construction, and in the acquisition of new equipment. For example, in the

hearings before the Newlands Committee at Washington some of the members

of the committee have called attention to the fact that the stocks of many

of the better managed and more prosperous railroads have steadily sold

above par, that their bonds also have commanded what seem to the

questioners figures which indicate a good market for bonds, and it has

been asked whether any cases can actually be cited where strong railroad

companies have sought and have failed to sell at good prices securities to

raise money for improvements. Points of this kind having been raised, the

_Railway Age Gazette_ recently addressed a letter to the presidents of

several of the leading railroads of the country, asking them to give

specific examples of how the condition of earnings and of the money market

during recent years has interfered with their raising money for extensions

and improvements. There has not been time as yet for replies to all these

inquiries to be received. Some have been received, however, and they

contain significant information. One letter which has been received is

from the president of an important and relatively strong, prosperous and

conservatively managed railroad in the Northwest. He says in part:

"'This company has been for some time, and is now desirous of building

about four hundred miles of extensions of its railroad in sections of the

Northwest that are not at present adequately served by transportation

facilities; but, because of its inability to dispose of its securities, at

a price that, as a business proposition, would warrant their sale, has

been unable to make these much needed extensions.

"'Until within the past few years this company was able to dispose of its

four per cent bonds at approximately par, and in common with other first

class securities, these were considered by the purchasers to be a good

investment; but in the last few years we have found it practically

impossible to dispose of these bonds at a price that would meet the

demands of an economical and proper administration of its financial

affairs.

"'In 1915 in order to secure funds required for needed improvements and

betterments, we were compelled to issue bonds drawing five per cent, and

for improvements on our Chicago division we were unable to find purchasers

for its bonds, and were compelled to issue notes due in three years,

bearing interest at five per cent for that purpose.'

"Another letter which has been received is from the president of one of

the greatest railroad systems, not only of the eastern part of the United

States, but of the world, a system which has been managed with notable

conservatism and ability, and which has regularly paid substantial

dividends. The president of this railroad says:

"'Replying to your letter regarding cases where railroads had found it

impracticable to do any new construction work because of their inability

to get the public to invest in their securities, much depends upon how

this question is put. Railroads cannot issue bonds and stock and throw

them on the market to discover whether the public will take them or not. I

know of no instance where any company with sound credit and good earnings

had any difficulty in selling its securities to the public, provided the

rate was satisfactory, compared with others, but there have been very many

cases where the railroads have discovered, through consultation with

investors and bankers, that there was no market for railroad securities,

except on terms too onerous for the railroads to accept, and, further,

because many railroads, including our own, suffered such a reduction in

earnings that they were not warranted in offering securities to the public

or proceeding with large items of construction work or large orders for

equipment.

"'For instance, in the case (of an important subsidiary property), I know

that for a long period we had to defer selling bonds on more than one

occasion, although the construction work was proceeding, because market

conditions were not favorable. Its mortgage bonds would be guaranteed by

(its owners), but in lieu of selling them, we temporarily authorized

short-term borrowing at lower interest rates. For the period 1908 to 1915

the general experience of most of the railroads was that they had not

sufficient business, or earnings, to furnish a credit basis to make proper

additions to their property and equipment, nor was there sufficient

prospect of any increased traffic to justify proceeding with any great

expenditure program. During this period, short-term financing had to be

resorted to because of the impossibility of selling capital stock on any

basis, or mortgage bonds, except on onerous conditions.'"--_Railway Age

Gazette._

[6] "The bitter fight now raging as to the content and enforcement of the

Adamson Act should not make us lose sight of certain things which are more

fundamental in railroading than either wages or hours. The transportation

service of this country has been the best in the world, partly because it

gave us a free field for able and ambitious men. Rising from the commonest

sort of day labor, these executives command the respect and obedience of

the rank and file, but sometimes forget to cooperate. That is the root

cause of the present-day troubles. It is natural that a corporation

president should stand for the interests of the company, but if the men

are to be bound up heart and soul in loyalty to the work, then their

interests are, and must be, part of the interests of the company. A

railroad cannot be run exclusively by presidents, superintendents, and

managers; there must be engineers and firemen of training and long

experience. As a practical matter, this means that these occupations must

hold many capable men during their entire working lives. In a country of

free institutions this situation cannot be held down by autocratic rule.

If the men have no say in the company, they will try to get one in the

union. The great mistake of American railroad presidents during the last

thirty years has been to force this growth of factionalism, to make it

plain that the union was the means by which the men could get ahead. The

railroad brotherhoods secured one concession after another in hours,

wages, and operating rules, concessions which the nonunion men could not

get. The limits of this method have about been reached. Cannot railroad

executives save the future by definitely abandoning this policy of quarrel

and drift, by making themselves the true leaders of all their men? We

think they can. They have had too much of a caste point of view and have

been too much absorbed in other things. It is time to change. The general

alternatives have been well stated by Edward A. Filene, a leader of the

new mercantile New England, in these words:

"'If American employers are farsighted they will begin to put as much hard

thinking into the problem of men as they have put into the problem of

machinery, for, finally, that contentment of labor which is based upon a

welfare that springs from justice and frank dealing is the only soil from

which permanently prosperous business can spring.

"'All of the initiative in solving the labor problem must not in the

future come from the employees. If the employers of America do not solve

the labor problems by business statesmanship, the employees of America

will determine the outcome by force; and what labor cannot get in the

future by the physical force of strikes, it may be able to get through the

legal force of legislation and the income-taxing power.'

"If our railroad employers, among others, will learn and apply the wisdom

expressed in this excerpt, all will yet be well."--_Collier's Weekly._

[7] Already it has been followed by several other railroad and express

systems--conspicuous among these, the Southern Pacific, the Union Pacific,

the Erie, Wells Fargo & Co. Express, and the American Express Company. The

Union Pacific's plan, embracing an expenditure of approximately $2,500,000

in bonus payments, differs from those of the other railroads, except the

Erie, in that it does not make a distinction between the men who belong to

the brotherhoods or other forms of union labor, and those who are not

"contract labor." The Union Pacific's plan also embraces a scheme of group

insurance, in the benefits of which its employes participate without cost

to themselves. Insurance plans, of one sort or another, have recently

become popular, and are being recognized as a logical outgrowth of the

pension systems which have long since become part of the fiber and

structure of the older and more conservative of our railroad and express

companies.

[8] The filing of further plans for the development of its main passenger

terminal in Chicago would indicate decidedly that the Illinois Central had

not overlooked the possibility of the electric development of its great

suburban territory there. For the plans now not only include the new

terminal, itself, but the complete electrification of the suburban service

on the main line, as well as the South Chicago, Blue Island, Kensington

and Eastern branches--all told, some forty miles of line--and involving

for electric equipment alone the expenditure of about $25,000,000. The

railroad is to give up a large portion of the ground occupied by the

existing station to permit of the widening and extension of the Lake Front

Park, and its approaches. An interesting part of the whole terminal scheme

is that which provides that the entire portion of the Illinois Central

tracks between the present main passenger terminal at Twelfth street,

which, in a general way, will become the site of the new one, and Randolph

street--reaching the entire eastern edge of the Loop District--will become

an elongated suburban station. From the several platforms of this station

subways will pass under Michigan avenue, and so enable commuters to avoid

the heavy automobile traffic of that great thoroughfare.

The new terminal is to be planned large enough to accommodate eventually

the many passenger trains of the several large railroads that now enter

the LaSalle and Dearborn stations. If this is ever brought to pass the

city of Chicago will have accomplished a real economic benefit. For the

land occupied by these two great stations and their yards is not alone a

considerable acreage, but the terminals themselves have acted as real

barriers to the most logical growth of the so-called Loop District--the

busy heart of commercial Chicago. Barred on the east by Lake Michigan, and

on the north and west by the Chicago River, this commercial center would

have grown south long ago had it not been for these two great terminals.

Their removal, therefore, would not only accomplish a passenger traffic

consolidation--of great advantage to the through traveler--but would open

a great downtown area for the development of Chicago's heart.

[9] Definite announcement has been made by the Milwaukee that it will

begin the extension of its electric-equipped main line through the

Cascades to Puget Sound early in the summer of 1917. This will mean that

for a time there will be a "gap" for about 400 miles in the vicinity of

Spokane, where steam will continue to be used as a motive power. For a

number of miles west of Spokane the Milwaukee's main passenger line has

trackage rights over the Oregon-Washington system. This fact, and the fact

that electrification is best justified economically in mountainous

districts is responsible for this "gap." It is probable that it will not

continue to exist for many years more.

At the present time the very high cost of electric locomotives suitable

for hauling heavy freight and passenger trains for long distances is

making the Milwaukee--today the unquestioned leader in this great

progressive policy of electrification--move both slowly and surely.

According to the last annual report of the road the most recent lot of

twenty engines cost an average of $114,396.30 each--or about four or five

times the cost of the largest steam locomotive. Despite the tremendous

initial expense of these electric engines, their remarkable performances

more than justify their cost.

[10] To a very prominent hotel in the White Mountains five years ago,

ninety per cent of the patrons came by train; last year ninety-five per

cent of the guests arrived in their motor cars.

"Talk about getting folks to go to California, or even to the Rocky

Mountains," said the veteran passenger traffic manager of one of the

greatest of our transcontinental carriers, when he was in Boston a few

weeks ago and heard of this, "we can and will advertise, but we are up

against two tremendous competitors: The first of these is New York City,

which is a tremendous permanent and perpetual attraction to all the rest

of America 365 days out of the year. The second is the automobile, the

family car, if you please, into which has gone the recreation money which

otherwise might have been going into the ticket wickets of our railroads.

Think of it, there were 900,000 pleasure cars built and sold in the United

States last year, while the experts are placing 1,250,000 as the figure

for 1917! More than $1,500,000,000--an almost incredible sum--was spent by

Americans last year on automobiles, and all the things which directly

pertain to them. What chance has the railroad against such a giant of a

competitor?"

[11] "The railroad that neglects its branch-line service is playing with

fire vastly more than it may suppose," said a distinguished railroad

economist only the other day. "It may feel that it has an economic right

to neglect branch-line opportunities because of the limited revenue

opportunities that these feeders ofttimes present. But it must not

overlook one thing--the patent fact that many of the voters, the men and

women whose sentiment expressed in their ballots may build or ruin the

future of so many of our overland carriers, reside upon these same branch

lines. Indeed, one may say that the manufacture of sentiment upon

branch-line railroads is a business well worth the attention of a keen

traffic-man. For it may be just that very amount of sentiment that might

swing the balance for or against a railroad."

[12] "Something more than a nation-wide railroad strike would have been

required to interfere seriously with the business of the Norton Grinding

Company, of Worcester, Mass., of the Halle Brothers Company, of Cleveland,

the American Telephone and Telegraph Company, and some other far-sighted

concerns," says a circular issued by the White Automobile Company at the

time of the strike crisis in August, 1916. In meeting the threatened

emergency of having all freight shipments blockaded, these companies

outlined a new example in industrial preparedness.

"The Worcester machinery makers and the great Bell institution increased

their fleets of trucks by having the machines delivered overland to avoid

all chance of strike congestion, while the Cleveland department store

planned its own transportation system between the Atlantic seaboard and

the Sixth City.

"The situation confronting the Norton company was one which demanded

immediate action, and in which normal methods were of no avail. When a

general suspension of all the ordinary facilities for moving goods seemed

imminent, the Norton company placed its order for three five-ton trucks

with the Seymour Automobile Company, The White Company's Worcester dealer,

and it was stipulated in the contract that the trucks should be delivered

in Worcester within three days, independent of railroad service.

"The trucks were shipped by boat from Cleveland to Buffalo, and then

driven overland to Worcester. The 500-mile journey was completed in the

remarkably short time of forty-eight hours, with a gasoline consumption of

better than eleven miles to a gallon. Stops were made only for the purpose

of replenishing the gasoline and oil supply, and for meals for the

drivers."

[13] "The effect of the improvements wrought as the result of the

self-propelled vehicle's influence is already strikingly apparent. When

Franklin County, New York, voted $500,000 in bonds to improve its system

of roads, twenty-five cans of milk, weighing one hundred and twenty pounds

each, constituted the average two-horse load. After the money raised by

the bond issue had been spent, motor-trucks hauled fifty cans to the load.

With the sum of $28,000 the twelve-mile stretch of road leading from

Spottsylvania Court House to Fredericksburg was improved. In a single year

$14,000 was saved in draying.

"The estimated cost of hauling the corn, wheat, oats, potatoes, cotton,

and hay crops of the country is annually $153,000,000. No one knows how

much of that vast sum could be saved if motors were able to ply between

the farm and the railroad station. Very few cities have compiled

statistics. Some light is shed on the subject in a report prepared by the

Chicago municipal markets--not so much on the influence of good roads as

on the reduction in haulage costs, which is effected by self-propelled

vehicles running on fine pavements. It appears that it costs eleven and

one-quarter cents to carry one ton a mile by motor in the city of Chicago,

and seventeen and three-quarter cents by horse. The average cost of

delivering a package by the department stores, grocery stores, and meat

markets of the city is approximately eight cents by motor and sixteen

cents by horse for each mile.

"Apply these figures to the cities of the entire country, and consider

further that motor-trucks can deliver goods directly from the farm to the

city retailer, and it seems not unreasonable to expect that the cost of

living must at least be held stationary, if it is not actually reduced by

the wider introduction of mechanical road vehicles. Surely, the horse must

eventually disappear in our towns, at least, if the city consumer pays an

average of one dollar and ninety cents for vegetables which the farmer

sells for one dollar; if it costs more to haul by horse one hundred pounds

of produce five miles from Chicago wharves to the householder or the

retail store than to ship it by boat from the shores of Lake Michigan to

Chicago; if it costs nearly half as much to deliver a ton of coal by horse

from the railroad tracks to the business district of Chicago as it does to

ship it four hundred miles by rail from southern Illinois to the

city."--Waldemar Kaempffert in _Harper's Magazine_.

[14] "During 1916 the largest movement of troops took place in the United

States, since the Spanish-American war. It began early in the year when

regular army detachments of cavalry, infantry, artillery and engineers

were sent to the border on March 11, March 20, May 9 and June 11. The

transportation of these organizations was accomplished in an excellent

manner, in exceptionally good time, and without accidents of any nature.

On May 9, the militia of Arizona, New Mexico, and Texas, were called to

the border, and on June 18, 1916, the National Guard troops of all the

other States were called into the service of the United States, and

directed to assemble at their state mobilization camps. From these points

to designated stations on the frontier transportation arrangements were

under the direction of the War Department. The troops began leaving their

mobilization camps about midnight on June 26. On July 1 there were en

route to the border from various sections of the United States, 122 troop

trains, carrying over 2,000 freight, passenger, and baggage cars, with a

total strength of 36,042 men. On July 4, 101 troop trains were en route,

and 52,681 militia troops (not including Arizona, New Mexico, and Texas)

were either at the border or on the way thereto. From the beginning of the

movement up to July 31, 111,919 militia troops were moved to the

international boundary.

"Some idea of the task imposed upon the railroads of the country by the

transportation of the National Guard may be had when it is considered that

350 trains were necessary to carry the first 100,000 troops. Over 3,000

passenger cars, including standard Pullman and tourist cars and coaches,

were provided, and in addition about 400 baggage cars, most of which were

equipped as kitchen cars for serving hot meals en route, 1,300 box cars,

2,000 stock cars, 800 flat cars, and approximately 4,900 locomotives and

crews, not including switching engines, yard engines and their crews. The

call upon the railroads for the transportation of the militia occurred in

the fortnight which includes the Fourth of July, the time of the greatest

density of passenger travel in the eastern States. Instructions were

issued by all railroads concerned that the movement of troop trains was to

be given preference over other travel, and it is believed that this was

done in all cases.

"To have effected the entire movement of all the troops in tourist

sleepers would have required approximately 3,000 cars, or five times as

many as were in existence. The Pullman Company, by utilizing some standard

sleeping cars, made available for the movement 623 tourist cars. In all

cases where it was possible to do so tourist equipment was furnished, and

where they were not immediately available the troop were met en route and

transferred to tourists in every possible case. Official reports from all

military departments show that no organization moved in coaches in less

space than three men to every four seats, and wherever possible two seats

for each man. The total number of men transported in coaches averaged 30

men to each coach.

"Although the movement of organized militia came at a time when the

commercial traffic on the railroads was the largest in years, it was

accomplished with very little interference with regular train service, and

with no congestion whatever, either at initial or terminal points or en

route. In July there were moved into the Brownsville, Texas, district 106

special trains, composed of 1,216 cars of passengers and 1,201 cars of

freight for the army, in addition to 680 cars of army supplies, handled in

freight trains, and the usual commercial traffic. This district is reached

only by one single-track line, and all rolling stock had to be returned

over the same line.

"The concentration of the militia on the Mexican border and the

mobilization for the great war in 1914 are not comparable, as all civil

traffic was suspended in Europe to make way for military movements, and

the distances involved in the movement to the Mexican border were very

much greater than those in Europe. The longest run in Germany was about

700 miles, and in France much less, whereas the distances traveled by the

troops in the United States varied from 608 miles, in the case of

Louisiana troops, to 2,916 miles in the case of Connecticut troops. The

majority of the troops came from northern and northeastern states and were

carried over 2,000 miles, in most cases in remarkably fast time. For

example, the Seventh New York Infantry with 1,400 men, equipment,

ammunition, and baggage left New York at 2 p. m. on June 27, and arrived

at San Antonio, Texas, at 8:30 p. m., on June 30, a distance of 2,087

miles. Shipments of freight were made from Washington and vicinity to the

border in four days, from New York and vicinity in five days, and from the

Great Lakes in a little more than forty-eight hours.

"As a specific example showing how the cooperation of the railroad

companies assisted the army, there may be cited the case of the first

motor trucks purchased for the expeditionary forces in Mexico.

Twenty-seven trucks were purchased under bid in Wisconsin on March 14.

They were inspected and loaded in fourteen cars; the men to operate them

were employed and tourist cars furnished for them, following which a train

was made up which left Wisconsin at 3:11 a. m., on March 16. It arrived at

Columbus, N. M., 1,591 miles away, shortly after noon on the 18th; the

trucks were unloaded from the cars, loaded with supplies, and sent across

the border, reaching General Pershing's command with adequate supplies of

food before he had exhausted the supplies taken with him from

Columbus."--From the report of Quartermaster-General Henry G. Sharpe, of

the United States Army, as reprinted in the _Railway Age Gazette_.

[15] "When railroads were started in England, they were influenced by

stage coach precedents. They put the engineer behind the iron horse and

called him a driver, they called the railroad car a coach or a van. They

imitated the class distinction of the four-in-hand, and then charged by

the mile. Coach travel cost by the mile. There were no terminal charges,

no road upkeep charges. It was a piece rate proposition, a price per mile

proposition as to revenues. The great difference between horse coaches and

railroads was overlooked. Probably 90 per cent of stage coach expenses,

whether of capital investment or operation, lies in the coaches, horses

and harness. Even in the modern railroad, in the United States, only 20

per cent of the capital and 20 per cent of the operating expense are in

the moving trains. Classified passenger and classified freight rates based

on distance are founded on one-fifth of the real cost. This is not all.

The cost of the other four-fifths has been increasing steadily from the

start. Yard expenses are increasing far more rapidly than road expenses.

The cost of terminals is growing with the square of the population. What

is more serious, both will continue to rise. Getting so much for nothing,

both passengers and shippers congregate in the big cities, and add still

further to the congestion, to the increased cost of the part of

railroading.

"Every railroad man, every banker, every investor, every student of

transportation knows that rates should be increased because the roads can

no longer stand the drain of deferred obsolescence, or unremunerative

investments, especially in terminals.

"Rates ought to be based on four elements and probably a fifth added. The

four basic elements are. (1) Cost of collecting the traffic; (2) Cost of

transporting the traffic; (3) Cost of insurance or classification; (4)

Cost of delivering the traffic.

"Only (2) and (3) now enter into rates. It is as cheap to arrive at New

York at the Pennsylvania, or New York Central Station, as to drop the

train in Newark or Tarrytown. It is as cheap to ship freight to a New York

dock as to unload it from the car at a country siding.

"In the New York Subway the cost of (1), (3) and (4) sinks to a vanishing

point, and nothing is left but the flat cost of running trains and a flat

revenue per passenger.

"In steam railroads operation costs of both (1) and (2) are very great,

but not made up by revenue. The fifth element that ought to govern charges

is a principle that even frogs know all about, but which human beings

operating railroads have not yet learned, namely, to put on flat and

expand when prices are high so as to accumulate a surplus to tide over the

lean years. This fifth element is really included in (3) classification.

Railroads now have different rates for different commodities, but $1.80 a

bushel wheat and $0.20 cotton are not the same as $0.50 wheat and $0.05

cotton. The wheat raised and the cotton grown, and the iron made into pig

iron at $30.00 a ton can afford to pay rates that vary with the price.

"Piece rates applied to traffic is the tuberculosis that is gradually but

surely consuming our railroads."--Harrington Emerson.

[16] As an evidence of the fact that the sick man of American business has

by no means lost his ability to render service, consider what might have

seemed to travelers a minor detail of ordinary service, and yet was in

reality a tremendous task. On a certain snowy morning in January, 1917,

traffic into New York was unusually heavy. The great automobile show was

just opening, folk were flocking to it from all corners of the country.

The facilities of even as great a railroad as the New York Central were

severely taxed. Its Twentieth Century Limited was in three sections, the

Detroiter in two, Train Six in three. On these and two other trains due

into the Grand Central Station between 8 and 9:40 a. m., 1,200 persons

were served with breakfast. This breakfast required sixteen dining-cars,

eighty-two stewards, cooks, and assistants, and 105 waiters. Advance

advice was received of the requirements, the cars assembled, the crews

brought together, and everything made ready to attach the cars to the

train at Albany in the early morning. And this was all in addition to the

regular dining-car service of the road.

[17] And now Congress has adjourned without passing the supplementary

feature of the Adamson bill--the all important requirement of arbitration

in labor disputes.

[18] "Fifteen States have laws designed to secure preferential treatment

for their freight by prescribing a minimum movement for freight cars.

Several of these require a minimum movement of fifty miles a day, though

the average daily movement throughout the nation is only twenty-six miles.

One state imposes a penalty of ten dollars an hour for the forbidden

delay. Though under the Federal law there is no demurrage penalty for

failure to furnish cars to a shipper, several states have penalties

running from one dollar to five dollars per car per day. The result is

that the railroads are compelled to discriminate against Interstate

Commerce and against commerce in the states that have no demurrage

penalties.

"One by-product of all this chaotic regulation has been an increase in ten

years of eighty-seven per cent in the number of general office clerks

employed by the railroads, and an increase of nearly 120 per cent (over

$40,000,000) in the annual wages paid to them. During this period the

gross earnings of the roads increased only fifty per cent. In the fiscal

year of 1915 the railroads were compelled to furnish to the national and

state commission and other bodies over two million separate

reports."--Harold Kellock in _The Century Magazine_.

[19] Illinois a few years ago passed a statute limiting passenger fares

within her boundaries to two cents a mile. To this, the Business Men's

League of St. Louis filed a complaint with the Interstate Commerce

Commission, stating that a discrimination had been created against St.

Louis. The Federal board had made most of the interstate passenger fares

in the central portion of the country average two and one-half cents. This

made the fare from Chicago to St. Louis (in Missouri) $7.50, while the

fare from Chicago to East St. Louis (directly across the river, but in

Illinois) only $5.62. A similar complaint was received from Keokuk, Iowa,

also just across the Mississippi from Illinois. After reviewing these

complaints the Federal Commission held that two and four-tenths cents was

a reasonable rate for interstate fares in this territory and required the

railroads to remove the discrimination against St. Louis, Mo., and Keokuk,

Iowa. The decision was limited, however, to the points involved in the

complaint. The supplemental report covers all points in Illinois.

"'In our original report in this proceeding,' Commissioner Daniels says,

'it was shown how the lower state fares within Illinois furnished a means

whereby passengers could and did defeat the lawfully established

interstate fares between St. Louis and Illinois points. This was done by

using interstate tickets purchased at interstate fares from St. Louis to

an east side point in Illinois, and thence continuing the journey to any

Illinois destination on a ticket purchased at the lower state fare.

"'We deem it advisable to point out that the interstate fares between St.

Louis and Keokuk on the one hand and interior Illinois points on the

other, made on a per mile basis of two and four-tenths cents, would

likewise be subject to defeat if the state fares to and from interior

Illinois points intermediate to the passengers' ultimate destination be

made upon a basis lower than the fares applying between St. Louis or

Keokuk and such Illinois destination. It would be necessary merely for the

passenger who desired to defeat the interstate fare to shift the

intermediate point at which to purchase his state ticket. The burden and

discrimination which a lower basis of fares within the state casts upon

the interstate commerce would not be removed merely by an increase in the

intra-state fares to and from the east bank points.

"'And not only this burden, but the direct undue prejudice to St. Louis

and Keokuk will also continue if the east side cities while on the face of

the published tariff paying fares to and from Illinois points upon the

same basis as do St. Louis and Keokuk can in practice defeat such fares by

paying lower state fares in the aggregate to and from Illinois

destination, by virtue of such an adjustment of fares.'"

As soon, however, as the railroads attempted to put this edict of the

Interstate Commerce Commission into effect the state courts of Illinois

stepped in and tied their hands. At the present time the matter is still

involved in much litigation. And a man may buy a ticket from Chicago to

East St. Louis for $5.62, and for ten-cent trolley fare cross the Eads

bridge into St. Louis. This is, of course, a great injustice to the

railroads--an inequality which must sooner or later be adjusted, and the

sooner, the better.

[20] "A curious light was thrown on this condition in connection with the

Shreveport rate case. Texas, in order to keep Louisiana merchants from

competing in its markets, had fixed a number of rates within the State

applying between points of production and jobbing centers and markets in

the direction of the Louisiana line. These rates were substantially lower

than the interstate rates from Shreveport, Louisiana, to the same Texas

points of consumption. The United States Supreme Court sustained the

Interstate Commerce Commission in raising the Texas rates so that

Louisiana business men could get a square deal.

"Thereafter Senator Shepard, of Texas, introduced a bill in the Senate to

abolish the doctrine of the Shreveport case. In a hearing on this bill it

developed that while Louisiana was protesting against rate discrimination

on the part of Texas, the city of Natchez, in Mississippi, was making a

similar protest against the action of Louisiana in fixing rates which

excluded the business men of Natchez from the Louisiana markets. Moreover,

one of those who appeared in favor of the bill was Judge Prentice,

chairman of the Virginia Railroad Commission, which was at that time

complaining that the state rate-fixers in North Carolina had discriminated

against Virginia cities.

"In short, an appalling condition of interstate warfare was revealed that

was hurting business generally and killing railroad development."--Harold

Kellock in _The Century Magazine_.

[21] When one comes to consider the possibility of the Interstate Commerce

Commission being made supreme in these matters of railroad regulation, he

must assume that the members of this Commission are to be held immune from

interference; save by the actual and necessary processes of the higher

courts. The objection by Senator Cummins, of Iowa, recently to the

Senate's affirmation of the reappointment of Commissioner Winthrop M.

Daniels, is in this connection, most illuminating and disquieting. Senator

Cummins was careful to say that he held no quarrel against Mr. Daniel's

character or personality. He added that he would be glad to vote for a

confirmation of appointment to any other government position.

Unfortunately, Commissioner Daniels had written several of the

commission's opinions advocating recent raises in railroad rates. For this

offense the Senator from Iowa sought to punish him by blocking his

reappointment. Fortunately, however, Mr. Cummins carefully conceived

revenge failed of execution. The Senate promptly and generously confirmed

the President's appointment. But the episode shows clearly a great

potential danger to which the members of this Commission, as well as all

other regulatory boards, are subject if their honest opinions, as

expressed in decisions, run counter to the whim of popular opinion.

[22] "No one who has traveled about the world will seriously contend that

there is any other country where the quality and quantity of rail

transportation is so good or so abundant as in the United States. In most

European countries rail transportation is furnished by the government at

great cost to the public, both directly in the form of heavier taxes and

indirectly in the form of high rates. In this country it is furnished by

the investment of private capital. This capital is supplied by about

2,000,000 persons. It is absolutely at the mercy not only of the Federal

Government, but, within their boundaries, of the legislatures of

forty-eight States. How much it may earn depends upon the whim of these

masters. How much it may lose has never been determined; for when a

certain point is reached the courts step in and administer the bankrupt's

business.

"Last year the railways of the country earned about $1,000,000,000 net, a

greater sum than ever before in their history. It was less than six per

cent on railroad property devoted to the use of the public.

"The record earnings of the railroads in 1916 are being used and will be

used to urge Government ownership. But how about the lean years? If in the

most prosperous year of their lives the railroads of the country cannot

earn six per cent, what happens in poor years? Ask the courts. They know.

"It is possible now, by right administration, to make particular railroads

yield liberal returns to investors; but under Government ownership there

could be no such incentive to careful management; the bad would be lumped

with the good; the profits in one quarter would be required to meet the

deficits in another; the Government would have to assume all necessary

capital, and this would by so much impair the Government's borrowing

power.

"If the people of this country can once be brought to appreciate the

importance of maintaining the quality and expanding the quantity of rail

transportation they will see to it that private enterprise is supported,

not hampered, in furnishing this most vital of public services. They will

manifest overwhelmingly a wish that the roads be set free from the

conflicting authorities of forty-eight masters and be controlled by only

one, greater than all the rest put together. They will demand that the

Federal Government allow such rates as will permit earnings sufficient to

attract private capital actually needed to supply public service. They

will insist that the Federal control and regulation of transportation

shall be as constructive and helpful as Federal control and regulation of

banking. It is painful to look at the Federal Reserve system and then to

contemplate the plight into which haphazard regulation has brought the

railroads."--The _New York Sun_.