You all know the result. The spirit of enterprise in railroading was
killed. Subjected to an obsolete and incongruous national policy,
hampered, confined, harassed by multifarious, minute, narrow, and
sometimes flatly contradictory regulations and restrictions, State and
Federal, starved as to rates in the face of steadily mounting costs of
labor and materials--that great industry began to fall away. Initiative
on the part of those in charge became chilled, the free flow of
investment capital was halted, creative ability was stopped, growth was
stifled, credit was crippled.
The theory of governmental regulation and supervision was entirely
right. No fair-minded man would quarrel with that. The railroads had
exercised great, and in certain respects undoubtedly excessive power for
a long time, and all power tends to breed abuses and requires
limitations and restraints. But the practical application of that theory
was wholly at fault and in defiance of both economic law and common
sense. It was bound to lead to a crisis.
It is not the railroads that have broken down, it is our railroad
legislation and commissions which have broken down.
And now the Government, in the emergency of war, probably wisely and, in
view of the prevailing circumstances, necessarily, has assumed the
operation of the railroads.
The Director General of Railroads, rightly and courageously, proceeded
to do immediately that which the railroads for years had again and again
asked in vain to be permitted to do--only more so.
Freight rates were raised twenty-five per cent., passenger rates in
varying degrees up to fifty per cent. Many wasteful and needless
practices heretofore compulsorily imposed were done away with.
Passenger train service, for the abolition of some of which the
railroads had petitioned unsuccessfully for years, was cut to the extent
of an aggregate train mileage of over 47,000,000.
The system of pooling for which since years many of the railroads had in
vain endeavored to obtain legal sanction was promptly adopted with the
natural result of greater simplicity and directness of service and of
considerable savings.
The whole theory under which intelligent, effective and systematic
co-operation between the different railways had been made impossible
formerly, was thrown into the scrap heap.
Incidentally, certain services and conveniences were abolished, of which
the railroad managements would never have sought to deprive the public,
and the very suggestion of the abrogation of which would have led to
indignant and quickly effective protest had it been attempted in the
days of private control.
Lest this remark might be misunderstood, let me say that I have no word
of criticism against Mr. McAdoo's administration of the railroads, as
far as I have been able to observe it.
I think, on the contrary, that he is entitled to great praise and that
he has handled the formidable and complex task confided to him with a
high degree of ability, fine courage, indefatigable energy, and with the
evident determination to keep the running of the railroads clear of
politics and to make them above all things effective instruments in our
war effort.