above all in the chairman, Judge T. M. Cooley, of Michigan, a
man whose character, knowledge of public law, and technical
familiarity with railroad business made him singularly well fitted
for the place. The work of the Interstate Commission, like that
of its Massachusetts prototype, shows how much more important is
personal power than mere technical authority. It was supposed at
first that the commission would be a purely administrative body,
with discretion to suspend the law. Instead of this, they have
enforced and interpreted it; and in the process of interpretation
have virtually created a body of additional law, which is read and
quoted as authority. With but little ground for expecting it from
the letter of the act, they have become a judicial body of the
highest importance. Their existence seems to furnish a possibility
for an elastic development of transportation law, neither so weak
as to be ineffective nor so strong as to break by its own rigidity.
But the final test of their success is yet to come. They have laid
down a few principles as to the cases when competition justifies
through rates lower than those at intermediate points. But the
application of these principles is as yet far from settled; and
it is rendered doubly hard by the clause against pools, which
does much to hamper the roads in any attempt to secure common
action on the matter of through rates. Each ill-judged piece of
State legislation, and each reckless attempt to attack railroad
profits, increases the difficulty. There was a time when the
powers of railroad managers were developed without corresponding
responsibility. In many parts of the country we are now going
to the other extreme--increasing the responsibility of railroad
authorities toward shipper and employees, State law and national
commission, and at the same time striving to restrict their powers
to the utmost. Such a policy cannot be continued indefinitely
without a disastrous effect upon railroad service, and, indirectly,
upon the business of the country as a whole.
FOOTNOTES:
[28] In 1886 the capital stock and the indebtedness of the
railroads of the United States amounted to about four thousand
million dollars each. Most of the debt represents money actually
paid in; but a very large fraction of the stock is a merely
nominal liability on which no payments have been made. Some was
issued as here described merely as a means of keeping control of
the property; some, as the easiest method of balancing unequal
values in reorganization; some, to represent increased value of
the property, so as to be able to divide all the current earnings
without calling public attention too prominently to the very
profitable character of the business. On the other hand, some stock
on which money was actually paid has been wiped out of existence;
and something has been paid out of earnings for capital account
without corresponding issue of securities. The net amount of
"water," or excess of nominal liabilities over actual investments,
in the capital account of the railroads of the country can only be
made the subject of guesswork. Estimates of responsible authorities
vary all the way from nothing to $4,000,000,000.
[29] See following article on "The Prevention of Railway Strikes."
[30] See "The Freight-car Service," page 287.
THE PREVENTION OF RAILWAY STRIKES.[31]
BY CHARLES FRANCIS ADAMS.
Railways the Largest Single Interest in the United
States--Some Impressive Statistics--Growth of a Complex
Organization--Five Divisions of Necessary Work--Other Special
Departments--Importance of the Operating Department--The Evil
of Strikes--To be Remedied by Thorough Organization--Not the
Ordinary Relation between Employer and Employee--Of what the
Model Railway Service Should Consist--Temporary and Permanent
Employees--Promotion from One Grade to the Other--Rights
and Privileges of the Permanent Service--Employment during
Good Behavior--Proposed Tribunal for Adjusting Differences
and Enforcing Discipline--A Regular Advance in Pay for
Faithful Service--A Fund for Hospital Service, Pensions, and
Insurance--Railroad Educational Institutions--The Employer
to Have a Voice in Management through a Council--A System of
Representation.
In 1836--fifty years ago--there were but a little more than 1,000
miles of railroad on the American continents, representing an
outlay of some $35,000,000, and controlled by a score or so of
corporations. There are now (1886) about 135,000 miles in the
United States alone, capitalized at over eight thousand millions of
dollars.
The railroad interest is thus the largest single interest in the
country. Probably 600,000 men are in its employ as wage-earners. It
is safe to say that over two millions of human beings are directly
dependent upon it for their daily support. The Union Pacific,
as a single and by no means the largest member of this system,
controls 5,150 miles of road, represented by stock and bonds to
the amount of $275,000,000. More than 15,000 names are borne upon
its pay-rolls. Its yearly income has exceeded $29,000,000, and
in 1885 was $26,000,000. Large as these aggregates sound, there
are other corporations which far exceed the Union Pacific both in
income and in capitalization, and not a few exceed it in mileage.
The Pennsylvania, for instance, either owns or directly controls
7,300 miles of road. It is represented by a capitalization of
$670,000,000; its annual income is $93,000,000; it carries 75,000
names on its pay-rolls.
This has been the outgrowth of a single half-century. The vast
and intricate organization implied in the management of such an
interest had, as it were, to be improvised. The original companies
were small and simple affairs. Some retired man of business
held, as a rule, the position of president; while another man,
generally a civil engineer, and as such supposed to be more or
less acquainted with the practical working of railroads, acted as
superintendent. The superintendent, in point of fact, attended
to everything. He was the head of the commercial department; the
head of the operating department; the head of the construction
department; and the head of the mechanical department. But
there is a limit to what any single man can do; and so, as the
organization developed, it became necessary to relieve the railroad
superintendent of many of his duties. Accordingly, the working
management naturally subdivided itself into separate departments,
at the head of which men were placed who had been trained all their
lives to do the particular work required in each department. In
the same way, the employees of the company--the wage-earners, as
they are called--originally few in number, held toward the company
relations similar to those which the employees in factories, shops,
or on farms, held to those who employed them. In other words, there
was in the railroad system no organized service. As the employees
increased until they were numbered by hundreds, better organization
became a necessity. The community was absolutely dependent upon its
railroad service for continued existence, for the running of trains
is to the modern body politic very much what the circulation of
blood is to the human being. An organized system, therefore, had
to grow up. This fact was not recognized at first; and, indeed,
is only imperfectly recognized yet. Still the fact was there; and
inasmuch as it was there and was not recognized, trouble ensued.
No rationally organized railroad service--that is, no service in
which the employer and employed occupy definite relations toward
each other, recognized by each, and by the body politic--no such
service exists. Approaches to it only have been made. A discussion,
therefore, of the form that such a service would naturally take if
it were organized, cannot be otherwise than timely.
It has already been noticed that in the process of organization the
railroad, following the invariable law, naturally subdivides itself
into different departments.[32] In the case of every corporation of
magnitude there are of these departments, whether one man is at the
head of one or several of them, at least five. These are:
1st. The financial department, which provides the ways and means.
2d. The construction department, which builds the railroad after
the means to build it are provided.
3d. The operating department, which operates the road after it is
built.
4th. The commercial department, which finds business for the
operated road to do, and regulates the rates which are to be
charged for doing it.
5th. The legal department, which attends to all the numerous
questions which arise in the practical working of everyone of the
other departments.
These five divisions of necessary work exist in the organization of
every company, no matter how small it may be, or how few officers
it may employ. In the larger companies the need is found for yet
other special departments. In the case of the Union Pacific, for
instance, there are two such: First, the comptroller's department,
which establishes and is responsible for the whole method of
accounting; second, a department which is responsible for all
the numerous interests which a large railroad company almost of
necessity develops outside of its strict, legitimate work as a
common carrier.
When it comes to dealing with the employees of the company, it
will be found that the vast majority of those whose names are on
the pay-rolls belong to the operating department. This department
is responsible not only for the running of trains and, usually,
for the maintenance of the permanent way, but also for the repairs
of rolling stock. All the train-hands, all the section-men and
bridge-gangs, and all the mechanics in the repair shops thus belong
to the operating department. The accounting department employs
only clerks. The same is true of the commercial department, though
the commercial department has also agents at different business
centres who look after the company's interests and secure traffic
for it. The construction department is in the hands of civil
engineers, and the force employed by it depends entirely upon the
amount of building which may at any time be going on. As a rule,
the bulk of the employees in the construction department are paid
by contractors, and not directly by the railroad company. The legal
department consists only of lawyers and the few clerks necessary to
aid them in transacting their business.
In the operating department of the Union Pacific at the present
time (1886) about 14,000 names are carried upon the pay-roll. The
number varies according to the season of the year and the pressure
of traffic. In January, and during the winter months, the average
will fall to 12,000, while in June and during the summer it rises
to 14,000.
Of these, 2,800, or 20 per cent., are engaged in train movement;
4,200, or 30 per cent, are in the machine-shops and in charge
of motive power and rolling-stock; 7,000, or 50 per cent., are
employed in various miscellaneous ways, as flag-men, section-hands,
station agents, switch-men, etc., etc.
So far as the wage-earner is concerned, it is, therefore, this
portion of the force of a railroad company which may be called
distinctively "the service." If good relations exist between the
men employed in its operating department and the company no
serious trouble can ever arise in the operation of the road.
The clerks in the financial department, or the engineers in the
construction department, might leave the company's employ in a
body, and their places could soon be filled. In point of fact,
they never do leave it; but should they do so, the public would
experience no inconvenience. The inconvenience--and it would
be very considerable--would be confined to the office of the
company, and their work would fall into arrears. It is not so with
the operating department. So far as the community at large is
concerned, whatever difficulties arise in the working of railroads
develop themselves here. All serious railroad strikes take place
among those engaged in the shops, on the track, or in handling
trains. That these difficulties should be reduced to a minimum is
therefore a necessity. They can be reduced to a minimum only when
the railroad service is thoroughly organized.
How then can this service be better organized than it is? It is
usually maintained that only the ordinary relation of employer
and employed should exist between the railroad company and the
men engaged in operating its road. If the farmer is dissatisfied
with his hands, he can dismiss them. In like manner, if the
laborer is dissatisfied with the farmer, he can leave his employ.
It is argued that exactly the same relation should exist between
the great railroad corporation and the tens of thousands of men
in its operating department. The proposition is not tenable.
The circumstances are different. In the first place, it is of
no practical consequence to the community whether difficulties
which prevent the work of the farm from going on arise or do not
arise between an individual farmer and his laborers. The work of
innumerable other farms goes on all the same, and it is a matter
of indifference what occurs in the management of the particular
farm. So it is even with large factories, machine-shops--in fact,
with all industrial concerns which do not perform immediate
public functions. A railroad company does perform immediate
public functions. The community depends upon it for the daily
and necessary movements of civilized existence. This fact has to
be recognized. For a railroad to pause in its operation implies
paralysis to the community which it serves.
Such being the fact, it is futile to argue that the ordinary
relations of employer and employed should obtain in the railroad
service. Something else is required; and because something
else is required but has not yet been devised we have had the
numerous difficulties which have taken place during the present
year--difficulties which have occasioned the community much
inconvenience and loss.
The model railroad service, therefore, is now to be considered.
Of what would it consist? At present, there is practically no
difference between individuals in the employ of a great railroad
corporation. All the wage-earners in its pay stand in like position
toward it. There should be a difference among them; and a marked
difference, due to circumstances which should receive recognition.
Take again the case of the Union Pacific. The Union Pacific, it has
already been mentioned, numbers 14,000 employees in its operating
department as a maximum, and 12,000 as a minimum. They vary with
the season of the year, increasing in summer and diminishing
in winter. Consequently there is a large body of men who are
permanently in its employ; and there is a smaller body, although
a very considerable portion of the whole, who are in its employ
only temporarily. Here is a fact, and facts should be recognized.
If this particular fact is recognized, the service of the company
should be organized accordingly, and each of the several divisions
of the operating department would have on its rolls two classes of
men: First, those who have been admitted into the permanent service
of the company; and, second, those who for any cause are only
temporarily in that service. And no man should be admitted into
the permanent service until after he has served an apprenticeship
in the temporary service. In other words, admission into the
permanent service would be in the nature of a promotion from an
apprenticeship in the temporary service.
Those in the temporary service need not, therefore, be at present
considered. They hold to the companies only the ordinary relation
of employee to employer. They may be looked upon as candidates for
admission into the permanent service--they are on probation. So
long as they are on probation they may be engaged and discharged at
pleasure. The permanent service alone is now referred to.
The permanent service of a great railroad company should in many
essential respects be very much like a national service, that of
the army or navy, for instance, except in one particular, and a
very important particular: to wit, those in it must of necessity
always be at liberty to resign from it--in other words, to leave
it. The railroad company can hold no one in its employ one moment
against his will. Meanwhile, to belong to the permanent service
of a railroad company of the first class, so far as the employee
is concerned, should mean a great deal. It should carry with it
certain rights and privileges which would cause that service to be
eagerly sought. In the first place, he who had passed through his
period of probation and whose name was enrolled in the permanent
service would naturally feel that his interests were to a large
extent identified with those of the company; and that he on the
other hand had rights and privileges which the company was bound
to respect. It has been a matter of boast in France that every
private soldier in the French army carried the possibility of
the field-marshal's baton in his knapsack. It should be the same
with every employee in the permanent service of a great American
railroad company. The possibility of his rising to any position in
that service for which he showed himself qualified should be open
before him and constantly present in his mind. Many of the most
remarkable and successful men who have handled railroads in the
United States began their active lives as brakemen, as telegraph
operators, even as laborers on the track. Such examples are of
inestimable value. They reveal possibilities open to all.
Beyond this, the man who is permanently enrolled should feel that,
though he may not rise to a high position, yet, as a matter of
right, he is entitled to hold the position to which he has risen
just so long as he demeans himself properly and does his duty well.
He should be free from fear of arbitrary dismissal. In order that
he may have this security, a tribunal should be devised before
which he would have the right to be heard in case charges of
misdemeanor are advanced against him.
No such tribunal has yet been provided in the organization of any
railroad company; neither, as a rule, has the suggestion of such a
tribunal been looked upon with favor either by the official or the
employee. The latter is apt to argue that he already has such a
tribunal in the executive committee of his own labor organization;
and a tribunal, too, upon which he can depend to decide always in
his favor. The official, on the other hand, contends that if he is
to be responsible for results he must have the power of arbitrarily
dismissing the employee. Without it he will not be able to maintain
discipline. The two arguments, besides answering each other, divide
the railroad service into hostile camps. The executive committees
of the labor organizations practically cannot save the members of
those organizations from being got rid of, though they do in many
cases protect them against summary discharge; and, on the other
hand, the official, in the face of the executive committee, enjoys
only in theory the power of summary discharge. The situation is
accordingly false and bad. It provokes hostility. The one party
boasts of a protection which he does not enjoy; the other insists
upon a power which he dares not exercise. The remedy is manifest. A
system should be devised based on recognized facts; a system which
would secure reasonable protection to the employee, and at the
same time enable the official to enforce all necessary discipline.
This a permanent service, with a properly organized tribunal to
appeal to, would bring about. Meanwhile the winnowing process would
be provided for in the temporary service. Over that the official
would have complete control, and the idle, the worthless, and the
insubordinate would be kept off. The wheat would there be separated
from the chaff. Until such a system is devised the existing chaos,
made up of powerless protection and impotent power, must apparently
continue. None the less it is a delusion on the one side and a
mockery on the other.
How the members of such a court as has been suggested would be
appointed and by whom is matter for consideration. It would,
of course, be essential that the appointees should command the
confidence of all in the company's service, whether officials
or employees. The possible means of reaching this result will
presently be discussed.
Not only should permanent employees be entitled to retain their
position during good behavior, but they should also look forward
to the continual bettering of their condition. That is, apart
from promotion, seniority in the service should carry with it
certain rights and privileges. Take the case of conductors,
brakemen, engineers, machinists, and the like; there seems to be
no reason why length of faithful service should not carry with it
a stipulated increase of pay. If conductors, for example, have
a regular pay of $100 a month, there seems no good reason why
the pay should not increase by steps of $5 with each five years'
service, so that when the conductor has been twenty-five years in
the service his pay should be increased by one-quarter, or $25 a
month. The increase might be more or less. The figures suggested
merely illustrate. So also with the engineer, the brakeman, the
section-man, the machinist. A certain prospect of increased pay, if
a man demeans himself faithfully, is a great incentive to faithful
demeanor. This is another fact which it would be well not to lose
sight of.
There ought likewise to be connected with every large railroad
organization certain funds, contributed partly by the company and
partly by the voluntary action of employees, which would provide
for hospital service, retiring pensions, sick pensions, and
insurance against accident and death. Every man whose name has once
been enrolled in the permanent employ of the company should be
entitled to the benefit of these funds; and he should be deprived
of it only by his own voluntary act, or as the consequence of some
misdemeanor proved before a tribunal. At present the railroad
companies of this country are under no inducement to establish
these mutual insurance societies, or to contribute to them. Their
service, in principle at least, is a shifting service; and so long
as it is shifting the elaborate organizations which are essential
to the safe management of the funds referred to cannot be called
into existence. A tie-up, as it might be called, between the
companies and their employees is a condition precedent. Were this
once effected the rest would follow by steps both natural and easy.
For a company like the Union Pacific to contribute $100,000 a year
to a hospital fund and retiring pension and insurance associations
would be a small matter, if the thing could be so arranged that
the permanent employees themselves would contribute a like sum;
and permanent employees only would contribute at all. Once let
the growth of associations like these begin, and it proceeds with
almost startling rapidity. At the end of ten years the accumulated
capital on the basis of contribution suggested would probably
amount to millions. Every man who was so fortunate as to become
a permanent employee of the company would then be assured of
provision in case of sickness or disability, and his family would
be assured of it in case of his death.