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diff --git a/old/50220-8.txt b/old/50220-8.txt deleted file mode 100644 index 4bde858..0000000 --- a/old/50220-8.txt +++ /dev/null @@ -1,20074 +0,0 @@ -The Project Gutenberg EBook of The Railway Library, 1909, by Various - -This eBook is for the use of anyone anywhere in the United States and most -other parts of the world at no cost and with almost no restrictions -whatsoever. You may copy it, give it away or re-use it under the terms of -the Project Gutenberg License included with this eBook or online at -www.gutenberg.org. If you are not located in the United States, you'll have -to check the laws of the country where you are located before using this ebook. - - - -Title: The Railway Library, 1909 - A Collection of Noteworthy Chapters, Addresses, and Papers - Relating to Railways, Mostly Published During the Year - -Author: Various - -Editor: Slason Thompson - -Release Date: October 15, 2015 [EBook #50220] - -Language: English - -Character set encoding: ISO-8859-1 - -*** START OF THIS PROJECT GUTENBERG EBOOK THE RAILWAY LIBRARY, 1909 *** - - - - -Produced by Charlene Taylor, John Campbell and the Online -Distributed Proofreading Team at http://www.pgdp.net (This -file was produced from images generously made available -by The Internet Archive/American Libraries.) - - - - - - - - - - TRANSCRIBER'S NOTE - - Italic text is denoted by _underscores_. - - Bold text is denoted by =equal signs=. - - Fractions have been left in the form a/b except for ¼ ½ ¾. A dozen - or so occurrences of 'nn a-b' have been changed to 'nn-a/b', mainly on - pages 27-40, for consistency. - - Footnote anchors in a table are of the form (a) and the corresponding - Footnote is placed at the bottom of that table. Other Footnote anchors - are of the form [A] with placement at the end of that Chapter. - - To save table space some column headings use the following - abbreviations: - Pass. for Passenger - Mill. for Millions - Prop. for Proportion - - Many wide tables have been split into two or more parts. Each part - after the first is labelled at the top with {table continued}. - - Obvious typographical errors and punctuation errors have been - corrected after careful comparison with other occurrences within - the text and consultation of external sources. - - More detail can be found at the end of the book. - - - - - THE RAILWAY LIBRARY - - 1909 - - - A COLLECTION OF NOTEWORTHY CHAPTERS, ADDRESSES - AND PAPERS RELATING TO RAILWAYS, MOSTLY - PUBLISHED DURING THE YEAR. - - - COMPILED AND EDITED BY - - SLASON THOMPSON - - MANAGER OF THE BUREAU OF RAILWAY NEWS - AND STATISTICS - CHICAGO - - - CHICAGO - THE GUNTHORP-WARREN PRINTING CO - 1910 - - - - -TABLE OF CONTENTS - - - Page - - INTRODUCTION 3 - - PRE-RAILWAY ERA IN AMERICA 5 - By F. A. Cleveland and F. W. Powell. - - FIRST ANNUAL REPORT OF THE CHIEF ENGINEER OF THE PENNSYLVANIA - RAILROAD COMPANY 21 - By J. Edgar Thomson. - - RAILWAYS AND THE PACIFIC NORTHWEST 45 - By James J. Hill. - - SOUTHERN RAILWAYS AND THEIR NEEDS 58 - By John F. Wallace. - - PROBLEMS CONFRONTING AMERICAN RAILWAYS 66 - By Daniel Willard. - - THE RAILROAD SITUATION OF TO-DAY 80 - By Frank Trumbull. - - TRANSPORTATION CHARGE AND PRICES 90 - By Logan G. McPherson. - - THE FREIGHT RATE PRIMER 107 - Issued by the N. Y. C. & H. R. R. R. Co. - - PROGRESSIVE SAFETY IN RAILWAY OPERATION 116 - By A. H. Smith. - - RAILWAY MAIL PAY 142 - By Julius Kruttschnitt. - - THE DIMINISHED PURCHASING POWER OF RAILWAY EARNINGS 165 - By C. C. McCain. - - THE RAILROADS AND PUBLIC APPROVAL 199 - By Edward P. Ripley. - - RAILROADS AND THE PUBLIC 205 - By John C. Spooner. - - RAILROAD PROBLEMS OF TO-DAY 211 - By J. B. Thayer. - - THE RELATION OF THE RAILROADS TO THE STATE 220 - By W. M. Acworth, M. A. - - RAILWAY NATIONALIZATION 238 - By Sir George S. Gibb. - - CONCERNING ADVANCES IN RAILWAY RATES 261 - By the Senate Committee on Interstate Commerce, 1909. - - STATISTICS OF AMERICAN RAILWAYS FOR 1909 291 - By Slason Thompson. - - I Mileage in 1909 306 - - II Equipment 314 - - III Employes and their Compensation 321 - - IV Capitalization 337 - - V Cost of Construction 342 - - VI Ownership of American Railways 345 - - VII Public Service of the Railways 346 - - VIII Earnings and Expenses 358 - - IX Taxes 363 - - X Damages and Injuries to Persons 365 - - XI Locomotive Fuel 367 - - XII The Safety of American Railways 368 - - XIII Railway Receiverships in 1909 384 - - XIV Cost of Railway Regulation 385 - - XV Statistics of Foreign Railways 386 - - XVI Growth of Railways 391 - - Recommendations 393 - - - INDEX 395 - - - - -INTRODUCTION - - -In the following pages is presented a number of the more timely -papers and addresses of the year 1909 on the present railway -situation, together with chapters from two books of current interest -on the same subject. As the object of the compilation has been to -present in permanent and accessible form information in regard to -American railways worthy of more than the ephemeral life of newspaper -or pamphlet publication, it has been thought well to accompany the -messages of today with a brief glance at the conditions on this -continent before the days of railways. Happily for this purpose -the first two chapters of Messrs. Cleveland and Powell's "Railroad -Promotion and Capitalization in the United States," fresh from the -press, afforded the very background needed, and the first report -of the engineer of the Pennsylvania Railroad provided the glasses -through which the reader can look forward from the small beginnings -to what is now known as the greatest railway system on the globe. - -After this study of conditions as they were, and of the opportunities -that invited the railway pioneers of 1848, it is instructive to -read the utterances of the latest of our empire builders, whose -foresight and indomitable will anticipated the development of our -Pacific Northwest with railway facilities that already lag behind the -necessities of its amazing growth. - -Of the other addresses and papers it is unnecessary to say more than -that they reflect the prevailing sentiments of all thoughtful railway -officials respecting conditions of the gravest import to the great -industry upon which the entire fabric of our national prosperity -and well-being depends. Only the shallowest student of our social, -economic and political system can view the persistent attacks upon -the American system of transportation without serious alarm for the -results. This alarm is the prevailing note of these papers and it -comes from men who are at the helm and who see the financial breakers -upon which the fierce blasts of political exigency are driving the -railways. - -The papers by Sir George S. Gibbs and Mr. A. M. Acworth, the leading -authorities on British railways, discuss the alternative to wisely -regulated railways--nationalization of railways. With a continuance -of unwise and burdensome regulation of railways, which strips -responsibility of all discretion, nationalization is inevitable. - -The Bureau's statistics of American railways for the year ending June -30, 1909, is included in THE RAILWAY LIBRARY because it affords the -latest data not only as to the railways of the United States but for -the world. - -Acknowledgments are made to the authors and publishers of the various -papers, and especially to the publishers of the two works from which -important chapters have been extracted by their courteous permission, -as well as that of their authors. - -If this publication fulfils the purpose of its compilation, it will -be succeeded by annual volumes of like character under the same title. - - S. T. - - Chicago, June 1, 1910. - - - - -PRE-RAILWAY ERA IN AMERICA - - From Chapters I and II of "Railroad Promotion and - Capitalization in the United States," by F. A. CLEVELAND and E. - W. POWELL. Longmans, Green & Co., 1909. - - (By permission of the authors.) - - -Inland transportation, as we know it, is the product of the last -century. It had its beginning in the industrial revolution. In -England at the close of the eighteenth century the manor as a -productive agency had been supplanted by a system of domestic -production, and this in turn was giving place to the factory. The -combined influences of increasing capital and invention had operated -to centralize the industrial population in the towns. Ocean commerce -was comparatively well developed, and manufacture was fast being -established upon a modern basis; but inland transportation was -still encumbered by such primitive methods as to make difficult the -utilization of the resources of the interior. A century and a half -before, Lord Bacon had called attention to the three great elements -necessary to make a nation great and prosperous--"a fertile soil, -busy workshops, and easy conveyance of men and things from one -place to another,"--but the significance of this reflection was not -appreciated until after the middle of the eighteenth century. The -controlling force of custom--social inertia--had stood in the way of -progress. - - -IN ENGLAND. - -Until about the opening of the nineteenth century the principal -manufacturing towns of Great Britain were situated on or near the -coast; for in the inland country goods were still carried on the -backs of men, or hauled in carts over heavy roads. Said Lardner: "The -internal transport of goods in England was performed by wagon, and -was not only intolerably slow, but so expensive as to exclude every -object except manufactured articles, and such as, being of light -weight and small bulk in proportion to their value, would allow of a -high rate of transport. Thus the charge for carriage by wagon from -London to Leeds was at the rate of £13 ($63.31) a ton, being 13½d. -(27 cents) per ton per mile. Between Liverpool and Manchester it -was 40s. ($9.60) a ton, or 15d. (30 cents) per ton per mile. Heavy -articles, such as coal and other materials, could only be available -for commerce where their position favored transport by sea, and, -consequently, many of the richest districts of the kingdom remained -unproductive, awaiting the tardy advancement of the art of transport." - - -IN AMERICA. - -Before the Revolution the American colonists lived in almost complete -isolation. Travel by land was limited, for water communication -presented fewer obstacles to progress. Population was arranged along -the seaboard, or in isolated groups a short distance inland. Living -narrow, self-centered lives, each community developed a distinct -dialect and characteristic customs and dress. Social activities were -limited to going to mill, market and church, or exchanging friendly -calls; traveling on foot or on horseback along wooded trails. Even -between seacoast towns there was little interchange of products or -population; and a citizen of one colony going to another was at once -struck with the many local peculiarities. It was less than twenty -years before the Revolutionary war when the first stage line was -opened between New York and Philadelphia, and three days were then -required for a single trip. It was ten years later when the first -stage line was established between Philadelphia and Baltimore. - - -METHODS OF TRAVEL AND TRANSPORT. - -Between towns of considerable size there were country roads over -which vehicles could pass when the weather would permit. The stage -coach, which was the only public land conveyance, plied along the -coast and between a few inland centers, but the coaches of that -day were rude boxes swung on wheels by leathern straps instead of -springs, with seats for a dozen or more and accommodations for a -limited amount of baggage. The rate of travel was from two to six -miles an hour, according to the condition of the roads and the -importance of the route. On the farm the mud-boat or stone sledge was -in common use, and at times it was even employed to carry produce to -local markets. In more progressive communities two-wheeled carts and -wagons were to be found. The best of roads, however, were nothing -but "mud roads"; and the wagons, commonly of the linchpin type, were -clumsy and awkward. Some of the more primitive wagons had wheels made -of cross sections of trees, trimmed and centered to roll on axles of -wood. Those who traveled had little thought of time; companionship -found expression in story-telling, gossip and tippling; and an -emergency which required all to get out and "take a wheel" only added -spice to the trip. - -We have the following description of the roads about Philadelphia, -the metropolis and commercial center of the New World: "On the best -lines of communication the ruts were deep, the descents precipitous. -* * * Near the great cities the state of the roads was so bad as to -render all approach difficult and dangerous. Out of Philadelphia -a quagmire of black mud covered a long stretch of road near the -village of Rising Sun. There horses were often seen floundering in -the mud up to their bellies. On the York road, long lines of wagons -were every day to be met with, drawn up near Logan's hill, while -the wagoners unhitched their teams, to assist each other in pulling -through the mire. At some places, stakes were set up to warn teams -of the quicksand pits; at others, the fences were pulled down, and -a new road made through the fields." Transportation facilities were -either entirely lacking or such as to make travel both expensive and -hazardous. It is difficult to realize that as late as 1780 the roads -over a large part of Pennsylvania were narrow paths which had been -made through the woods by Indians and traders. - - -ABSENCE OF ROADS IN THE INTERIOR. - -The isolation of interior settlements finds apt illustration in the -Wyoming valley. This rich region along the Susquehanna had been -until 1786 almost completely cut off from the outer world. A small -colony had moved in from the East, and taking color of title from -Connecticut, disclaimed the sovereignty of the Quaker proprietary. -War consequently broke out between this isolated settlement and the -Pennsylvania government. Several military expeditions were sent out -to reduce the "Yankees" to submission; but the absence of roads -and the necessity of carrying provisions on horseback left the -determined pioneers masters of the situation when the larger issue, -the Revolutionary war, suspended local strife. The spring after -Burgoyne's surrender at Saratoga the settlers of the Wyoming valley -learned that a detachment of Johnson's "Royal Greens" and Butler's -"Rangers," with a company of Tories, had allied themselves with the -Seneca Indians, and were preparing to descend upon the valley. A -courier was despatched to congress, and appeals for aid were made to -the neighboring states, but the isolation which had before served -for defense now brought disaster. With the June freshet the British -allies came down from Tioga, and nothing but ruins were left to mark -the scene. One of the reasons urged for the removal of the state -capitol from Philadelphia to Harrisburg in 1799 was the cost of -travel, which bore heavily upon legislators from the interior. - - -THE ROADS OF NEW ENGLAND. - -The early settlers of Springfield, Massachusetts, were obliged -to send their household goods from Roxbury around by way of Long -Island Sound and the Connecticut river, but they themselves were -able to proceed on foot along an Indian trail. In time this trail -was widened, and as the "Bay path" and the "Boston road" occupied -an important place among the transportation routes of the colonies. -It was, however, little more than a narrow wagon path until after -the Revolution, and so indistinct was it that travelers frequently -wandered off the route. A curious stone post marks the place -near the national armory at Springfield, where in 1763 a western -Massachusetts merchant lost his way, and set up a guide for other -travelers. Even as late as 1795 there were but two stages between -Boston and New York, and a week was required for the journey. John -Bernard, the English actor, thus described a typical New England -road in 1797: "Though far better than in any other quarter of the -Union, the frequent jolts and plunges of the vehicle brought it into -sad comparison with the bowling-greens of England. Very often we -surprised a family of pigs taking a bath in a gully of sufficient -compass to admit the coach. As often, such chasms were filled with -piles of stones that, at a distance, looked like Indian tumuli. The -driver's skill in steering was eminent. I found there were two evils -to be dreaded in New England traveling--a clayey soil in wet weather, -which, unqualified with gravel, made the road a canal; and a sandy -one in summer, which might emphatically be called an enormous insect -preserve." Such testimony makes real the difficulties which attended -travel over the important routes, and enables one to understand how -it could have required Washington nearly two weeks to make the trip -from Philadelphia to Cambridge at the outbreak of the Revolution. - - -AFTER THE REVOLUTIONARY WAR. - -Before the Revolution the subject of road improvement was seldom -considered in public assemblies, and the early laws contain few -provisions even for common roads. Those who proposed measures for -general improvement met with little encouragement. As early as -1690 William Penn suggested the practicability of a waterway from -the Schuylkill to the Susquehanna. In 1762 David Rittenhouse of -Philadelphia, and Provost Smith of the University of Pennsylvania, -proposed a similar project, and made surveys of the route by the -Swatara and the Tulpehocken; in 1769 the American Philosophical -Society interested itself in a canal survey between Chesapeake Bay -and the Delaware, recommending the enterprise to the public. In 1768 -Governor Moore of New York projected a canal around the Canajoharie -Falls of the Mohawk. But to none of these suggestions was there any -active response, for the time was not ripe for such undertakings. - -Contributing to the road-making impulse immediately after the war of -independence was a newly awakened community interest. At the time of -the adoption of the constitution there were two distinct classes in -the United States: a highly localized class of the seaboard and of -the inland trade routes, and a widely distributed agricultural class. -American commerce was largely confined to American products. England, -France and Holland monopolized the trade of their colonies, and in -other ways favored their own merchantmen in foreign trade. Such -being the condition, our commercial advantage lay in the development -of our own resources. The settlement of the Middle Atlantic states -and of the valleys of the interior only served to strengthen the -interdependence of the people, who found a common interest in -internal improvements. To the agriculturist, cheap conveyance to -market was a prerequisite to profitable industry. To the commercial -class on the seaboard and on the leading trade routes, inland -improvement was at that time no less important. - - -FIRST ERA OF ROAD MAKING. - -There was a notable change in the popular attitude toward road making -after the war, and all public-spirited men now saw in better means -of communication an instrument for the establishing of American -supremacy over the western continent. Legislatures made generous -appropriations for highways. An active migration set in from New York -and northern Pennsylvania to the West. In 1738 the first regular -mail service was established between Albany and Schenectady. In 1793 -the horse path from Albany to the Connecticut valley was widened to -a wagon road. Like activity in road making was shown throughout -southern and western New York, middle Pennsylvania, Maryland and -Virginia. - -In 1785 Pennsylvania appropriated $10,000 to lay out a road from a -point near the mouth of the Juanita to Pittsburgh. In 1786 an act -was passed appropriating $1,500 "to view and open a road from Lehigh -Water Gap to Wyoming," which was the first road into that valley -from the Delaware. In 1787 another road was authorized between the -Susquehanna and the Delaware. Activity in opening communication -with the interior increased until by 1791 the movement had assumed -proportions to be styled a "mania." By a single act over $150,000 was -appropriated for the improvement of eleven rivers and over a score -of roads in different parts of the state. Other acts were passed at -the same session, granting charters and appropriations for various -transportation enterprises. New York in 1797 authorized the raising -by _lotteries_ of $45,000 for the improvement of various roads -throughout the state. As if by common impulse, all the states now -became interested in road improvement, and congress was asked to aid -by this means the opening up of the resources of the interior. - - -BEGINNING OF THE CANALS AND PIKES. - -The low cost of water transportation had early directed popular -attention to canals as a means of overcoming obstructions in natural -water courses, thereby serving the needs of the inland population, -and also providing the means for diverting trade from one seaport to -another. The Revolutionary war was hardly over when Charles Carroll -organized a company to open a canal about the obstructions in the -lower Susquehanna. - -Those who took the most active interest in canal construction at this -time were men who, like Washington, viewed the future with patriotic -interest. This interest, however, was one which did not appeal to the -private investor. An enterprise based upon such public consideration -required government support. - -This period also marked the beginning of turnpike construction. The -first turnpike road in this country of which we have a record was -built between Alexandria and the Lower Shenandoah. It was begun in -1785-6, and its completion was the cause of great satisfaction to -Jefferson and other public-spirited men of Virginia, who had labored -in the cause of a "broader national life." Alexandria was at that -time an important competitor of the other seaboard cities. Across the -Maryland peninsula on the Chesapeake lay Baltimore, a commercial -rival of both Alexandria and Philadelphia. In 1787 the grand jury -sitting at Baltimore called attention to the deplorable condition of -the roads leading to that city, and urged the authorities to take -immediate action. As a result, the county government ordered the old -Frederick, Reistertown and York roads turnpiked at public expense. -To the west of Philadelphia lay the Susquehanna valley. The natural -outlet of this growing region was down the Chesapeake to Baltimore. -To attract traffic to the Quaker City a company was organized in -Philadelphia in 1792 to build the Lancaster pike, which was the first -turnpike in this country built by voluntary subscription. - - -EFFECT OF EUROPEAN WARS ON AMERICAN SITUATION. - -The outbreak of the European wars in 1793 was followed by a marked -change in the American industrial situation. The immediate effect -upon the grain growing of the West was to increase the demand for -wheat. Prices of cereals rose to twice their former height. The -average price of flour during the seven years from 1785 to 1793 had -been about $5.40 a barrel; the average price from 1793 to 1806 (the -two years of peace, 1802 and 1803, excluded) was $9.12. Such was the -inducement to grain growing during this period. - -Back from the North Atlantic coast radiated rich valleys--large -tracts of agricultural lands which were well adapted to grain -growing. A rush set in for the unclaimed resources of New York, -Pennsylvania and Maryland, and for a time the tide of migration moved -to the westward along the Ohio, and the border of the Great Lakes. -Those who cultivated lands near the coast shared in the increased -prosperity due to the European disturbance, but unless they could -obtain better means of transportation, those who had located inland -soon found that they could profit little. Grain as compared with -cotton and tobacco was a low priced product. At best, the cost of -transportation was ten dollars a ton for each hundred-mile haul; in -many places it was much higher. - - -AMERICANS TURN TO HOME MARKETS. - -Before 1807 the country had come to be divided into three sections: -the commercial, shipbuilding East, the cotton and tobacco exporting -South, and the isolated grain growing interior, linked with which was -a languishing manufacturing interest on or near the seaboard. Beyond -a limited range the producing proportion of our population could not -participate in the profits of the European trade. The grain growers -demanded a market, and the manufacturers saw their profits swept -away by an influx of foreign goods. These were the interests which -suffered from the diversion of capital to shipbuilding and foreign -trade. Both looked to internal improvements as a solution of their -troubles; their only hope was in a _home market_--in better roads, -and in the development of the resources about them. - -In the United States agriculturist and manufacturer turned to the -national government for relief. But so long as the administration -remained in the hands of the foreign trade party, the way was blocked -to internal improvements. During the first three administrations -after the adoption of the constitution, the individualistic -republicans had been unable to gain control of the government; but -with the admission of Kentucky, Tennessee and Ohio and the settlement -of the parts of the sea coast states remote from transportation -facilities, the anti-commercial constituency gained the balance of -power. It was to the voters of these new regions that Jefferson owed -his success. It was to satisfy the demands of the West for an outlet -to the gulf that Louisiana was purchased. To satisfy the insistent -demand for internal improvements the national government also built -the Cumberland road, and contributed to many other transportation -projects. It was the open hostility of the West and South toward -the commercial East which forced the embargo, and broke down the -domination of the seaboard interests in national affairs. - - -RIVER TRAFFIC DEVELOPED BY PRIVATE CAPITAL. - -The inland routes which required the least capital to utilize in -a primitive way were the rivers. Here the chief obstacle was the -current. In the early nineteenth century long lines of rafts, -flat-boats and "arks" might be seen floating down the Connecticut, -the Hudson, the Susquehanna and the Potomac. There were 2,800 miles -of rivers tributary to the Atlantic seaboard which were navigable, -or which needed only to be cleared of snags and rocks to render -them available for use by small craft. It was estimated that on -the eastern slope there were about 25,000 miles of streams which -might be utilized by the construction of locks and canals. In the -Mississippi valley there were 14,000 miles of navigable rivers, and -about 75,000 more which were considered possibilities. But with a -three or four-mile current it was impracticable to row, pole or -warp a boat and cargo upstream for a long distance. The result was -that along those streams which nature had provided as highways the -producer first built his boat out of the timbers of the forest, then -loaded it with the produce of his farm or mill, and floated down -stream to market. Upon reaching his destination, he abandoned his -craft and returned by stage or on foot. This was indeed an expensive -process--expensive in time, expensive in funds and expensive in human -effort. It was an expense of production, however, and one which did -not require capitalization. - -It was not until 1807 that the steamboat became a commercial success. -At this time New York was becoming well settled, and as the Hudson -was a natural highway a boat which could drive against wind and -stream had every promise of success. Robert Fulton, who had been -interested in the problem of steam navigation since 1802, returned -from Europe after several years of investigation, and brought back -one of Watt's engines. He obtained the financial co-operation of -Chancellor Livingston, and together they obtained a monopoly of -steam navigation in New York waters. A boat was fitted with the Watt -engine, and a successful trip was made from New York to Albany and -return. The route yielded large profits from the start, and other -boats were built. By 1813 six boats were doing a profitable business -on the Hudson. The success of Fulton and Livingston proved attractive -to others. Crowded out of New York's waters by the monopoly, John -Stevens, in 1809, took a steamboat around from Hoboken into the -Delaware. The Phoenix now found business so good in those waters -where Fitch had failed that it was soon followed by two other boats. -Soon the whole Atlantic seaboard, including the St. Lawrence, was -supplied with steam craft. - -But enterprise in steamboat navigation was not confined to the -coast. Business opportunities in the Mississippi valley attracted -the attention of one Nicholas Roosevelt, who proposed to Fulton and -Livingston that he would make a trip to New Orleans to survey the -prospects for an inland water route, with the understanding that -they should finance a steamboat line if his report was favorable. So -favorable was it that he was placed in charge of the construction of -a river boat at Pittsburg, and in 1811 the _New Orleans_ made her -maiden trip down the Mississippi. Thereafter Roosevelt's boat took -a regular route between New Orleans and Natchez. Other boats were -added, but it was not until 1815 that a voyage was made upstream -from New Orleans to Louisville and Cincinnati. After assisting -Jackson in the campaign about New Orleans, the _Enterprise_, taking -advantage of high water, steamed to Louisville in _twenty-five -days_. In 1817 the _Washington_ accomplished the same feat while the -river was within her banks, and the public became convinced of the -practicability of upstream navigation. The same year the _Shelby_ -reduced the time to twenty days, and by 1823 _fifteen days sufficed_. -With the success of the steamboat, the Middle West was opened to -rapid communication with the gulf. - - -WAGON ROADS INTO THE INTERIOR. - -From 1807 to 1815 two changes had a marked effect upon the national -attitude toward internal improvements. Before the outbreak of the -European wars manufactures had made some progress in New England and -in Pennsylvania. During the first struggle, and before the peace -of Amiens, the only serious obstacle to American industry was the -tendency to divert capital to wheat raising, shipbuilding and foreign -trade. Prices were high, and the makers of goods found encouragement -in large profits. With the cessation of hostilities American -manufacturers looked to Congress for protection, for foreign goods -poured into the country in such quantities and at such prices as to -threaten the destruction of domestic production. - -At the most, however, the manufacturing population was relatively -small, but the disturbances to industry from 1815 to 1818 were -such as to throw many out of employment, and to bring to the -verge of bankruptcy and starvation those who had been engaged in -shipbuilding and foreign trade. A great exodus to the interior was -the result. In wagons, on horseback, or on foot--sometimes using -handcarts, sleds and wheelbarrows to carry their provisions and -light luggage--emigrants crowded the wooded paths that led to the -West, where they might find conditions more favorable to independent -livelihood. - -All these conditions conspired to increase the depression in the -East, and drive her people into agriculture and the development of -the interior; while the opening of the Mississippi by the steamboat -added to the attractions of the rich valleys in the Middle West. -But upon his arrival in the West the newcomer found himself beyond -the range of any market except New Orleans. To reach this market he -"would produce or get together a quantity of corn, flour, bacon -and such articles. He would build a flat-bottomed boat on the shore -of some river or large creek, load his wares into it, and, awaiting -the rise, with a few of his negroes to assist him, would float down -to New Orleans. The voyage was long, tedious and expensive. When -he arrived there he found himself in a strange city, filled with -sharpers ready to take advantage of his necessities. Everybody -combined against him to profit by his ignorance of business, want -of friends or commercial connections, and nine times out of ten he -returned a broken merchant. His journey home was performed on foot, -through three or four nations of Indians inhabiting the western parts -of Mississippi, Tennessee and Kentucky. He returned to a desolate -farm, which had been neglected whilst he had been gone. One crop -was lost by absence and another by taking it to market. This kind -of business was persevered in astonishingly for several years, to -the great injury and utter ruin of a great many people." It was the -demand for safe transportation arising out of this situation which -made Roosevelt's steamboat enterprise a success. - - -DEVELOPMENT OF COASTWISE COMMERCE. - -The British blockade of our coast during the war of 1812 had a marked -effect upon the development of inland routes of transportation, as -may be seen from the following: "The interruption of the coasting -trade was indeed a very serious affair. For years past that trade had -given occupation to thousands of coasters and tens of thousands of -sailors. The shoes made at Lynn, the Yankee notions of Connecticut, -the cotton cards, the domestic cottons, the playing cards produced -in New England, the flour of the Middle States, the East India goods -brought in from abroad had found a ready market at Charleston, -Savannah and Augusta, whence great quantities of rice and cotton -were brought North. On the arrival of the British fleet this trade, -no longer to be carried on in safety by water, began of necessity -to be carried on by land. At first some merchants at Boston, having -chartered a few wagons, despatched them with loads to Philadelphia, -and even to Baltimore. This was enough. The hint was taken. A new -industry sprang up, and by early summer the roads leading southward -exhibited one continuous stream of huge canvas-covered wagons tugged -along by double or triple teams of horses or of oxen. No distance was -then too great, and hundreds of them would make their way from Salem -and Boston to Augusta and Savannah. An estimate made towards the -close of the year (1814) places the number of wagons thus employed at -four thousand, and the number of cattle, horses and oxen at twenty -thousand; nor does this seem excessive, for a traveler who drove from -New York to Richmond declares that he passed two hundred and sixty -wagons on the way." - - -THE CAPITALIZATION OF TURNPIKES. - -Both overland trade and westward migration drew attention to the -importance of good roads, both swelled the receipts of turnpike -companies, and gave encouragement to investment of local capital -in transportation improvement. By 1804 the Lancaster road had been -extended to Pittsburg, and a regular stage line established which -made a trip each way once a week. State governments lent every -encouragement to the building of turnpike roads, _even to the -extent of subscribing to their stock_. From contemporary writings -and charter grants, it is estimated that nearly eight hundred -turnpike companies were organized before the end of the war of 1812. -Pennsylvania was pre-eminent in granting liberal charters, and toll -rights, thereby encouraging the people of the more thickly settled -districts to make such improvements for themselves. The corporations -thus formed had little difficulty in obtaining capital subscriptions, -whether for the construction of turnpikes or bridges, or for the -operation of ferries. To the stock of these corporations several of -the states subscribed in varying amounts. Although a few toll roads -were constructed before that time, the turnpike movement may be said -to date from the opening of the nineteenth century. Turnpikes (so -called from the revolving, or turning bar, or pike which, when set -across a toll road, prevented passage until charges were paid) were -macadamized or otherwise improved at a cost varying from $500 to -$10,000 per mile. Almost without exception they followed in a general -way the old lines which had been worked out when travel on foot or -on horseback was the chief method of communication, but wherever -possible they were made straight, going over and not around hills -and other obstacles. When the Boston and Salem turnpike was built a -small but deep pond was encountered, but instead of going around the -road crossed on a floating bridge. The construction of bridges and -the operation of ferries were parts of this larger turnpike movement, -and like the turnpikes themselves, they were usually disappointing -to those who had invested with the hope of large dividends. At -best, this movement did but little to supply the great need for -improved transportation. To passenger service it was a great boon, -in that it added much to personal comfort, though the time and cost -of travel were little reduced. _It required five dollars and fifty -cents to pay tolls from Philadelphia to New York, besides the hotel -bills and other expenses of the road._ It took a week to go from -Philadelphia to Pittsburg. What the country most needed--a cheap -method of handling the bulky products of the interior--was not -supplied. Freight was carried upon the turnpike with great difficulty -and expense, and heavy goods were compelled to remain untouched on -account of the high tolls. - - -REVIVAL OF CANAL CONSTRUCTION. - -To meet this situation, canals had been proposed long before the -period of turnpike building, and some surveys had been made, but -because of lack of capital, construction was deferred. The earliest -projects were for short cuts around rapids or falls, or between -neighboring waters, but bolder plans followed. The first canal of any -importance actually begun in the United States was the two-mile cut -through the rocks about the South Hadley falls of the Connecticut. -The Massachusetts legislature passed an act in 1792 incorporating -the "Proprietors of the Locks and Canals on Connecticut River." Work -was begun at once with Dutch capital, and in two years the canal was -completed. - -The Santee canal in South Carolina was the first large work of this -kind constructed in the United States. It connected the Santee river -with the Cooper river at Charleston, and it was opened in 1800. Its -length was twenty-two miles, and its cost $600,000. - -A much more important project was the Middlesex canal in -Massachusetts, a charter for which was obtained in 1793. This canal -extended from the Charles river to the Merrimac, twenty-seven miles, -and was designed to attract to Boston the trade normally tributary to -Portsmouth. Work was begun in 1794, and ten years later the canal was -opened for traffic, though it was not entirely completed until 1808. - -The successful completion of the Erie canal, which became an assured -fact long before its actual accomplishment in 1825, stimulated -similar projects all over the country. The local strife between -trade centers, combined with the local demand for outlet, set -a number of private projects in motion. Boston, Philadelphia, -Baltimore and Georgetown were successfully appealed to for support -for transportation routes which would enable them to compete with -New York for the trade of the West. The Blackstone Canal Company, -chartered by Rhode Island and Massachusetts in 1823, began the -construction of a canal along the Blackstone river to connect -Providence and Worcester, and this route was opened for traffic in -1828. Another New England project started at about the same time -was for a canal to extend from New Haven northwards to Northampton, -and on up the Connecticut valley into Vermont. Two companies were -chartered for this purpose, the Farmington canal in Connecticut in -1822 and the Hampshire and Hampden canal in Massachusetts in 1823. -The Farmington canal was completed in 1830; but the work on the -Hampshire and Hampden project was for a time abandoned for want of -funds, and the canal was not cut through to Northampton until 1835. -While carrying a large traffic this canal, like the Blackstone canal, -was more beneficial to the general business of the section traversed -than to those who held its stock. Other private works of this period -upon which large sums were expended were: The Delaware and Raritan -canal, connecting Philadelphia with New York; the James River and -Kanawha, an unfinished canal project in Virginia; and the Chesapeake -and Ohio canal, which was not extended further west than Cumberland. - - -SCARCITY OF CAPITAL FOR CANALS. - -On account of local needs, few canal or navigation companies had -difficulty in obtaining their first subscriptions, but most of them -experienced trouble in collecting assessments and in obtaining -additional subscriptions. This timidity of investors, it now appears, -was not without ground, for few of the private canal companies were -able to bring their construction work to completion, and fewer still -paid any dividends to their stockholders. The Middlesex canal was -profitable until the building of a parallel line of railroad; the -Montague canal, also in Massachusetts, yielded a fair return during -the first twenty years that followed its completion in 1800. The -Delaware and Schuylkill canal may be cited as a third exception. But -it early became evident that public works of the number and magnitude -required could be constructed only at national expense. As the -constitution contains no direct provision for internal improvements, -the subject became a party question. - -From the first Congress had appropriated money for lighthouses, -public piers, buoys and other aids to navigation, and about such -action there had been no dispute, for it was agreed that these -matters lay strictly within federal jurisdiction. From the first, -also, Congress had been petitioned for appropriations for internal -improvements. Most of these demands were local in character, and so -were easily disposed of; but when the directors of the Chesapeake and -Delaware canal asked Congress to supply the funds which they had been -unable to obtain from sales of shares, the question was forced to an -issue. Two facts were incontestable, the general importance of the -work, and the ability of the national government to carry it on in -view of the revenue surplus in the treasury. - -In another way Congress had already committed itself to the support -of public works. So long as the country was made up of states -bordering on the Atlantic seaboard, improvements were matters of -interest to all alike, but with the admission of new states in the -interior, and the prospect of future accessions to the westward as -the country expanded, an element of injustice seemed to enter these -appropriations, which benefited the seaboard states at the expense of -all. The feeling of discontent was intensified by the fact that the -favored states were more thickly settled, and therefore better able -to incur the expense. With the admission of Ohio, however, this was -remedied by the establishment of the five per cent. land fund, and -the self-interest of the seaboard was appealed to by the argument -that the building of roads into the West would so stimulate sales of -the public lands as to increase the national revenues. - -The matter of national aid to internal improvements was again brought -before Congress in 1816 by Calhoun, who presented a bill providing -for the direct construction of roads and canals and the improvement -of waterways out of a fund to be created by setting apart the bonus -and dividends received by the government from the United States bank. -This bill, which was drawn up by Clay, passed through Congress in -1817, but it was vetoed by Madison, who, though favorably disposed -toward public works, had inherited from Jefferson a doubt as to the -rights of Congress to participate in their construction without a -constitutional amendment specifically granting the authority. And -Monroe, holding the same opinion, vetoed a bill for the repair of -the Cumberland road, and submitted to Congress a long statement of -the principles involved in his decision. In the meantime, weary of -waiting, New York had succeeded in building the Erie canal. Its -success shifted the whole plan of promotion. With credit established -abroad, internal improvements were taken up by the states, and for -the next two decades transportation interest centers in state funding. - -It was during this period of struggle for means of transportation -facilities adequate to meet the demands of those whose fortunes had -been cast in the remote interior that the railroad became the subject -of serious economic interest. - - * * * * * - -(In subsequent chapters, Messrs. Cleveland & Powell trace the -beginnings of the railroad, the physical and financial difficulties -that beset them at every turn; the indomitable spirit with which -they were projected, promoted and built into every quarter of the -Union, until through the investment of billions of private capital -the United States has been furnished with the best system of internal -transportation in the world. To their pages the reader is referred -for the continuation of this most interesting narrative.) - - - - -FIRST ANNUAL REPORT - -OF THE CHIEF ENGINEER OF THE - -PENNSYLVANIA RAILROAD COMPANY - -June 12, 1848. - -By J. EDGAR THOMSON. Chief Engineer. - - ENGINEER DEPARTMENT, PENNSYLVANIA R. R. CO. - - _Philadelphia, June 12, 1848._ - - - To the President and Directors of the - Pennsylvania Railroad Company: - -GENTLEMEN--I have the honor to communicate to you the following -Report of the operations of this Department since it was committed to -my charge, now something more than a year. - -Under the organization of the Engineer Department, as adopted -previous to my acceptance of the office you have conferred upon me, -the Road was to be divided into three divisions, Eastern, Western and -Middle: Edward Miller, Esq., as associate engineer, was assigned to -the Western, and W. B. Foster, Jr., to the Eastern division. These -gentlemen had entered upon the survey of their respective lines, -previous to my arrival, under instructions from the president, each -with two full corps of assistants. The middle, or mountain division, -not having been provided for, I concluded after a full consideration -of the subject that the interest of the Company would be best -promoted by so altering the organization as to abolish it altogether, -and extend the eastern and western divisions to the summit of the -Allegheny mountains, the natural boundary between them. Under this -arrangement, the surveys have since been prosecuted. - -The Board having directed me to cause a location of the whole line, -from Harrisburg to Pittsburg, to be made at the earliest practicable -period, I at once commenced a reconnoissance of that portion of the -intervening country, over which it seemed--from an inspection of a -map of the State--that the Road would probably pass, for the purpose -of determining the best plan of operations to carry out their views. - -The Legislature, in their grant to the Company, wisely left the -choice of a route for the Road, between its termini, entirely free, -throwing upon the Board the responsibility of selecting, upon -the wide field that was opened to them, a line for their great -work, which would offer the cheapest railroad conveyance for the -transportation of freight and the most expeditious for travel that -could be selected between the west and the northern Atlantic cities. - -Such a route, it was believed from previous surveys, lay within -the borders of Pennsylvania, an expectation which has been fully -justified by the results obtained from our examinations. - -Of the several routes proposed, I found no difficulty--after a -careful inspection of the plans of the various surveys, made under -the authority of the Commonwealth, and my reconnoissance of the -country--in coming to the conclusion that the valley of the Juniata -offered advantages for a line which, whether we consider the low -gradients that may be obtained along it or its general directness, -the desiderata required, is without a rival. - -This stream has its source in the Alleghenies, and consequently -severs, as it flows towards the Atlantic, all the secondary mountain -ranges that lie east of them, and it heads opposite to the Black -Lick and Conemaugh rivers, both of which sever those on the west, -leaving the main Allegheny only to be surmounted, which would have -to be encountered upon any other _direct_ route, in addition to many -of the inferior mountain ranges. A more northern route, by the west -branch of the Susquehanna (which has its source beyond the Allegheny -mountains), would have encountered less elevation at the principal -summit, but its great increased length precluded its adoption; while, -on the other hand, a southern route, though not indirect, was equally -objectionable on account of the rugged character of the country, and -the high gradients necessary to overcome the numerous summits upon -it. A partial examination of one of the proposed southern routes -was made, which followed the Cumberland Valley Railroad to near -Shippensburg, and thence, crossing to the west side of the valley at -Roxbury, it passed through the Blue Mountain, by a long tunnel, into -Path valley; thence, following around the point of Dividing mountain, -it crossed this valley and passed through Tuscarora, by another -tunnel, to the valley of Augwick creek. Thence it would have been -traced between Broad Top and Sideling mountains, and up Dunning and -Bob's creeks to the summit of the Alleghenies at Bob's Creek gap; -or, turning west by Bedford, crossed the Alleghenies at the head -waters of the tributaries of Castleman's river, where the mountain is -still much more elevated. - -A line leaving the Cumberland Valley Railroad at Chambersburg, and -turning the end of Blue mountain, thence seeking the low depression -at Cowan's gap in Tuscarora, would be too circuitous to compare -favorably with the bolder line from Shippensburg, already described. - -But that line would encounter engineering difficulties of the -most formidable character; leaving out of view its objectionable -gradients, and considering it in reference to its cost, and the local -accommodations it would extend to a large portion of the State--at -present in a great measure deprived of the advantages of the State -improvements--(the strongest argument in favor of the route), it -will be found that equal accommodations could be extended to that -region with a _less_ expenditure of _capital_ by placing the main -stem of the road on the Juniata, and running a branch along one of -the comparatively level valleys that lie between most of the parallel -mountain ranges that we pass. - -The facilities that railroads offer for extending their benefits to -remote districts by means of lateral lines constitute one of their -chief advantages over canals, and should prevent the error, too -frequently committed in locating leading routes, of turning from a -direct course to accommodate local interests to the injury of the -great object intended to be accomplished. - -Other modifications of the Juniata route have been suggested, and -their merits fully considered, but, upon examination, all of them -tended to confirm our preference in favor of the river line. - -These conclusions were communicated to the Board, and the general -route recommended having been adopted by them, I proceeded at once -to make arrangements to have the line surveyed throughout. For this -purpose three additional corps of engineers were organized--one for -Mr. Miller's division, under the immediate direction of Mr. G. W. -Leuffer, to operate on the summit and western slope of the mountain, -and two upon Mr. Foster's, the first of which was placed in charge -of Edward Tilghman, Esq., to whom was assigned the district between -Lewistown and the confluence of the Raystown branch and main Juniata -rivers. - -The other corps was given in charge to S. W. Mifflin, Esq., a -gentleman of well-known professional skill and experience, to whom -we committed the surveys of the region from the Raystown branch to -the summit of the Alleghenies, embracing the most important and -difficult district upon the whole route to Pittsburg. - -These parties did not take the field until the close of July, but -they prosecuted their examinations with so much energy and success -that we were enabled to determine the general line of the eastern -division in season to place the most difficult points upon it under -contract in November of last year. - -While these arrangements were in progress, the parties previously -in the field were actively engaged in examining the country between -Harrisburg and Lewistown. - -At the instance of a number of gentlemen from Perry county, a -line was tried up Little Juniata creek, leaving the Susquehanna -at Petersburg, thence near Bloomfield and along Sherman's valley -to Concord gap, where it passed the Tuscarora mountain, thence it -followed Tuscarora valley to Shade creek, and down that stream to -Augwick creek, along the valley of which it was carried to Drake's -ferry on the Juniata. The advantage promised for this route was a -considerable saving of distance. The result, however, demonstrated -that not only would we have had to encounter gradients running up -as high as sixty feet per mile, but the length of the line would be -increased four miles by its adoption. It was consequently abandoned. - -After a careful examination of the country bordering on the -Susquehanna and Juniata rivers, a line has been located as far up as -Huntingdon, which is believed to be the best that can be obtained. - -If the valleys of these streams had not been preoccupied by other -improvements, a route would have been selected differing somewhat in -its details from that adopted. Even for the short distance that we -are brought into close proximity with them, the cost of the grading -of the Road has been greatly enhanced by the confined ground we have -been forced upon. - -The located line commences at the Harrisburg and Lancaster Railroad -depot; thence, passing through Harrisburg, it follows the sloping -ground between the canal and the capitol ridge four miles, when it -crosses the canal and, touching the point of Blue mountain, recrosses -and passes to the west side of the Susquehanna river by a bridge -3,660 feet in length, and 44 feet above low water at grade line, -which enables us to place the road on the top of the bridge. Thence -we pursue this bank of the river through the villages of Duncannon -and Petersburg to the Juniata, along the southern side of which it is -continued through Newport and Perrysville to a point a short distance -above Lewistown. Here the line crosses to the north side of the -river, and within a short distance recrosses, to save nearly a mile -of road, and one hundred and eighty degrees of curvature, together -with some difficult ground along the bluff shores on the south side -of the stream. - -After regaining the southern side we follow the river slopes, -over favorable ground, to Mr. Harvey's, about seven miles above -Waynesburg, where the line again crosses to the north side, and -passing back of Newton Hamilton, cuts through the neck of land in the -great bend of that stream, 40 feet in depth at the summit and 3,100 -feet in length at grade. Descending along the eastern slope of the -river, we once more cross it at Shaeffer's aqueduct, and continue -upon its southwestern bank through Jack's narrows, without meeting -any serious difficulties, and finally pass to its north side, along -which it is continued through Huntingdon to the Little Juniata, above -Petersburg. Above Huntingdon, a preliminary location has been carried -up the Little Juniata to Logan's narrows, at which point this stream -divides Bald Eagle and Brush mountains in its passage from Tuckahoe -valley. - -Along the Little Juniata, from Dorsey's forge to the Narrows, the -line encounters much difficult ground, owing to the circuitous -character of the stream, and the high hills and mountains which bound -its course. To obtain a route with easy curves we are forced, within -this distance, to tunnel the point of Tussey's mountain, and to -cross the river twelve times. To follow the line recommended by Mr. -Schlatter through this region curves of 400 feet radius would have -had to be resorted to, which I deem wholly inadmissible upon a road -of the importance of that you have in view. - -At Logan's Narrows we reach the valley that skirts the whole eastern -base of the Allegheny mountains. Here it becomes necessary to -determine the plan to be adopted to overcome the great barrier that -separates us from the West. If it is to be surmounted by a road, with -the gradients of the western division, the ascent must commence at -this point, and gradually wind its way to the summit, by an almost -continuous gradient, along the declivities of the mountains for -nearly thirty-two miles, crossing the several streams that issue -from it, by high bridges, and cutting through or tunneling their -dividing summits. - -Mr. Schlatter, in his Report to the Canal Commissioners, estimates -the cost of grading the road, on this ascent, at $1,496,146, which I -consider too low for a line with the gradient he adopted, but with -the increased maximum grade found necessary on the western division, -and a somewhat lengthened line, it would probably prove sufficient. - -Upon my first reconnoissance of this portion of the country it -occurred to me that its peculiar topographical features were lost -sight of in the adoption of this plan of ascent, which seemed to look -to the single object of obtaining a line with a particular gradient, -without regard to the magnitude of the obstacles to be overcome to -procure it; while, by pursuing a course from the Narrows, nearly in -a direct line to Sugar Run gap (which we shall hereafter show is -the best point to cross the mountain), the line would pass through -a beautiful valley over comparatively favorable ground, gradually -gaining elevation through its whole course, without exceeding the -maximum inclination required on the line below, until it reaches the -summit of the valley at Robinson's, a distance of fifteen miles. At -this point we attain an elevation of 1,174 feet above tide, leaving -but 980 feet to be overcome to reach the height found most suitable -for passing the mountain, which is attained by a continuous gradient -of 80 feet per mile, encountering no _very_ formidable difficulties. - -A resort to a gradient of 80 or more feet per mile is by no means an -unusual expedient on leading railroads. - -Upon the Western Railroad, in Massachusetts, their maximum gradient -is 83½ feet per mile. On the Baltimore & Ohio Railroad they now -have, between the waters of the Patapsco and Potomac, on each side -of Parr's ridge, gradients of 82 feet per mile, and from the greater -elevation of the Allegheny mountains at the place they must cross, it -is to be presumed that their gradients at that point will still be -increased to a higher rate. - -Many other instances might be cited, some running up to 120 feet per -mile, but it seems unnecessary to extend the list. Theoretically, -the power necessary to overcome a given height is the same at all -inclinations of the plane of ascent, but in practice, it is to some -extent dependent upon the kind of power to be applied. - -In the case under consideration, the locomotive steam engine will be -the medium used, where the power is carried with the train, and forms -part of the load to be moved, consequently, the cost of power on a -plane ascending 80 feet per mile is greater than upon one of a more -moderate inclination of equal height, by the difference between the -gravity of the engines required to carry the same load on both planes. - -As a general principle this would be true when the lengths of the -roads to overcome the same height are equal, and it is necessary to -carry the locomotives, required for the high gradient, over the same -distance that they must run upon the low gradient. - -But in one of these cases the maximum gradient due to the line below -Logan's Narrows is carried to within 12¼ miles of the summit of the -mountain--requiring extra power for that distance only--and in the -other it ends 32 miles from it. - -To explain more fully the relative value of the maximum gradients -used on the different divisions of our Road, I have prepared the -following table: - - - Table headings: - Col A: Division of Road. - Col B: Maximum Gradient, ascending westwardly, per mile. - Col C: Maximum Gradient, ascending eastwardly, per mile. - Col D: Gross load of a 20 ton freight locomotive, - exclusive of engine, and a tender of 10 tons. Friction - 8½ lbs. per T. Adhesion ½. - Col E: Load of merchandise for a 20 ton freight engine, - the cars being estimated at 4/10ths of their - weight and load. - Col F: Relative load of locomotive on each gradient, - level being unit. - Col G: Number of locomotives of equal power necessary to carry - the same load up each gradient. - - ====================+========+========+=======+=======+=======+===== - A | B | C | D | E | F | G - --------------------+--------+--------+-------+-------+-------+----- - From Harrisburg | { 16 | | 346.6 | 207.9 | 0.534 | 1.87 - to Lewistown, | { | | | | | - 60-7/10 miles | { | 8 | 454.3 | 272.6 | 0.697 | 1.42 - --------------------+--------+--------+-------+-------+-------+----- - From Lewistown | { | | | | | - to foot of | { 21 | | 300.7 | 180.4 | 0.464 | 2.15 - Allegheny Mts., | { | 10½ | 414.6 | 248.8 | 0.640 | 1.56 - 72 miles | { | | | | | - --------------------+--------+--------+-------+-------+-------+----- - From foot to summit | { | | | | | - of Allegheny | { 80 | | 105.6 | 63.4 | 0.163 | 6.13 - Mountains, | { | Level | 648.0 | 388.8 | 1.000 | 1.00 - 12-3/10 miles | { | | | | | - --------------------+--------+--------|-------+-------+-------+----- - From summit to | { 47 | | 172.4 | 103.4 | 0.266 | 3.76 - Pittsburg, 106 | { 50 | 50 | 163.7 | 98.2 | 0.252 | 3.95 - miles | { 52.8 | 52.8 | 156.2 | 93.7 | 0.241 | 4.14 - --------------------+--------+----------------+-------+------------- - -It will be perceived from the foregoing table that three locomotives -are fully sufficient to transport the same load up the 80 feet -gradient that two will carry on the gradient of the western division, -and one on the eastern; hence the practical working of the road on -the two methods of ascent would be to run two locomotives with the -load brought from below from Logan's Narrows to the summit, say 31¾ -miles, up the 50 feet gradient; while, on the other, the same engine -that brought the load from Harrisburg would continue with it to -Robinson's (15 miles), where it would accompany the two destined for -Pittsburg to the summit of the mountain and return. - -In the first case the engines together will have traveled 63½ miles, -and, in the other, the three 51¾, leaving a difference in distance -to be traveled by the moving power due to each full train, from the -east, 11¾ miles in favor of the 80 feet gradient. - -In practice it will therefore be seen--chiefly on account of -the actual distance saved--that transportation can be afforded -cheaper, in this case, on the 80 feet gradient than on the 50, -without bringing into the estimate the interest on $841,000 that -the latter would cost to obtain it more than the former. Under -these circumstances we did not hesitate when the choice of routes -was reduced to a selection between these two methods of overcoming -the mountain, to decide in favor of the line by Robinson's, which -has the additional advantage of bringing us within 6-1/3 miles of -Hollidaysburg, where a connection may be made with the Allegheny -Portage by a branch line, passing over favorable ground. - -The distance from Harrisburg to Robinson's summit is 132-2/3 miles; -upon the whole of this line, the only extraordinary impediments -to the easy graduation of the road bed are the bridge over the -Susquehanna, a deep and long cut near Newton Hamilton, and a tunnel -1,200 feet in length through a point of Tussey's mountain, and in -this distance the maximum ascending gradient to Lewistown is 16 feet -per mile, and descending 8 feet. Thence, to Robinson's summit, they -are increased to 21 feet ascending, and 10-1/8 feet descending. - -The descending gradients are generally so short that they will not be -found, in practice, to decrease the load going east much below what -is due to a fair _working_ load for a locomotive on a level. - -The maximum ascending gradient above Lewistown is determined by the -deep cut near Newton Hamilton. The ascent of the Little Juniata -seems, however, to require--to obtain an economical line--the use -of this inclination, without much intermission, from Dorsey's forge -to Robinson's summit. Below Lewistown the gradients are fixed to -accommodate the increased trade that would fall upon the line between -that place and Harrisburg, without increasing the number of trains. - -These low gradients insure to us the important advantages of a single -pair of drivers for the passenger engines, upon the eastern division, -and, with these rates of inclination, we are enabled to make the line -conform to the natural features of the country (above high water -mark) without decreasing the curvature below 955 feet radius, except -at the east end of the Susquehanna bridge, where a radius of 880 feet -has been admitted. - -All of our efforts to save distance, by deviating, temporarily, from -the immediate valley of the river, involved either the use of high -gradients, not justified by the distance saved, or an increased -cost that was equally unwarranted. The beautiful valley of the -Kishacoquillas offered the greatest temptation to leave the river -route; but here we would have had to encounter gradients, in both -directions, of 26-4/10 feet per mile, a bridge over Mill creek, 1,200 -feet long, 111 high; another over a small tributary of the Juniata, -850 feet long and 150 feet in height, together with several others, -or embankments of great magnitude, across ravines in the north -slope of the river hills. These difficulties, added to 342 feet of -additional elevation to be surmounted at the Allentown summit, so -greatly overbalanced the small increase of curvature and distance -(7/10 of a mile), by the river route, that it could not be adopted. -It was also ascertained that by the _use of the maximum gradients_ -required on the valley route, the shortest line could have been -procured by the river, and at the least cost. A fact, conclusive in -itself, as to the proper route. - -I deemed it unnecessary to make further instrumental examinations of -the Stone mountain route, feeling satisfied that even if a line could -be obtained in that direction which would approximate to an equality, -in an engineering point of view, with the route selected--which, -from a reconnoissance of a portion of the line and an examination -of the plots of Mr. Schlatter's surveys, I should consider _quite_ -improbable--that its additional cost would entrench so much upon the -means of the Company as to place it entirely out of the question. - -A line was traced from Huntingdon to the Frankstown branch of the -Juniata, below Williamsburg, across Tussey's mountain, by which a -saving of distance could have been made nearly equal to the Stone -mountain route, but its high gradients, cost, and the length of time -that it would require to build the road over it rendered it equally -objectionable. The valley of the Frankstown branch was also surveyed; -the route by it joining the Little Juniata line at Robinson's ridge, -but it proved both longer and more expensive than the latter. The -searching examinations made of the whole region offering any chance -for a more practicable route, on the north or south of the Juniata, -leaves no doubt upon my mind but that the best line has been procured -for the eastern division. Its comparatively easy curvature and low -gradients, adapted in their inclination to the direction of the -largest business, and extending from the eastern terminus of our -Road to the foot of the great barrier that divides us from the west, -give it advantages that are not equaled by any other route proposed, -between the east and west, and can not be too highly appreciated by -the Company. - -Before determining the point to pass the mountain, a full examination -of its crest was made, from Cedar Swamp summit on the south, to -Three Springs Gap at the head of Moshannon creek on the north, -embracing a distance of 44 miles. The following table will show the -elevation, above tide, of each summit within that distance; also, -that at Emigh's Gap, on the northern route, and at the head waters of -Castleman's river on the southern: - - -_Tabular Statement of Depressions of Allegheny Mountain._ - - ===================+=============================+================ - | | - Name. | Waters Divided. | Authority. - | | - -------------------+-----------------------------+---------------- - Summit of Chesa. & | | - Ohio Canal | Castleman's and Potomac | U. S. Engineers - Albright's Summit | do. do. | - Sand Patch do. | do. do. | J. Knight - Chambersburg and | | - Pittsburg Survey | | H. Hage - Cedar Swamp Gap | Raystown Branch of Juniata | - | and S. Fork of Conemaugh | S. H. Long - Bob's Creek do. | Raystown B. and Conemaugh | do. - Big Spring do. | Juniata and Conemaugh | do. - Laurel do. | do. do. | do. - Adams do. | do. do. | do. - Portage and Summit | Juniata and Clearfield | C. L. Schlatter - Sugar Run Gap | | S. H. Long - Burgoon's do. | do. do. | C. L. Schlatter - Kittanning do. | do. do. | do. - Dry do. | do. do. | do. - Hamer's do. |Little Juniata and Clearfield| do. - Schultz do. | do. do. | E. Miller - Cock Run do. | do. do. | do. - Maple do. | do. do. | do. - Bell's do. | do. do. | do. - Three Springs Gap | Little Juniata and Moshannon| do. - Emigh's do. | do. do. | C. L. Schlatter - -------------------+-----------------------------+---------------- - - {table continued} - ===================+============+============+====== - | Feet above | Feet below | Feet - Name. | Sugar Run | Sugar Run | above - | Gap. | Gap. | Tide. - -------------------+------------+------------+------ - Summit of Chesa. & | | | - Ohio Canal | 476 | | 2739 - Albright's Summit | 141 | | 2424 - Sand Patch do. | 129 | | 2412 - Chambersburg and | | | - Pittsburg Survey | 264 | | 2547 - Cedar Swamp Gap | | | - | 160 | | 2443 - Bob's Creek do. | 213 | | 2496 - Big Spring do. | 314 | | 2597 - Laurel do. | 222 | | 2505 - Adams do. | 175 | | 2458 - Portage and Summit | 41 | | 2324 - Sugar Run Gap | 0 | | 2283 - Burgoon's do. | 80 | | 2363 - Kittanning do. | 75 | | 2358 - Dry do. | 67 | | 2350 - Hamer's do. | 177 | | 2460 - Schultz do. | | 17 | 2266 - Cock Run do. | | 55 | 2228 - Maple do. | | 61 | 2222 - Bell's do. | | 12 | 2271 - Three Springs Gap | | 53 | 2230 - Emigh's do. | | 240 | 2043 - -------------------+------------+------------+----- - -It will be perceived that the lowest point in the mountain, except -at Emigh's, is Maple Gap, from which issues Bell's Run (a branch of -the Little Juniata), on the east, and Sandy Run of Clearfield, on the -west. This point is 61 feet below Sugar Run Gap and could be further -reduced 150 feet by a tunnel 700 yards in length. If the ground had -been favorable beyond the summit, this route would probably have -offered the greatest advantages to cross the mountain, but it opens -westwardly upon the deep valley of Clearfield, a descent into which -would involve the necessity of a resort to as steep a gradient on -the west side of the mountain as that required on the east; and -the elevation thus lost would have to be regained by following up -the valley to Laurel Swamp or Munster summits, in the ridge that -separates Clearfield from the Conemaugh, which is here the true -backbone of the country. - -Any attempt to carry a line along the west slope of the mountain, to -avoid the descent to Clearfield, would, from the rugged character of -the ground, prove impracticable, without a vast increase in its cost, -length and curvature. No other point offers equal advantages to cross -the mountain until we reach Sugar Run Gap, which is 41 feet below -the Portage Railroad summit, and may be reduced 120 feet more by a -tunnel 2,000 feet in length. Emigh's Gap, which is still lower than -Maple Gap, could not, on account of its gradual slope, be reduced by -a tunnel of moderate cost, and it is also too far north for a direct -route to Pittsburg. South of the Portage the Alleghenies become the -watershed of the Union, dividing the streams that flow into the gulf -from those that empty into the Atlantic. They here assume a more -elevated character than while separating only the tributaries of the -Susquehanna, affording no opportunity to pass them by a line adapted -to locomotive power--unless by a tunnel of immense extent--until we -reach Bob's Creek Gap. The accompanying profile, which exhibits the -crest line of the mountain (for 44 miles) will give a more definite -idea of the relative height of these summits. - -The mountain on each side of Bob's Creek Gap rises to a considerable -height, making it appear, to a casual observer, a very deep -depression; and, from this circumstance, it has generally been -considered by the residents of the adjoining country to be the lowest -pass in the Alleghenies, and, as it falls off rapidly on either -side, it has also been supposed that it could be farther reduced by -a tunnel of moderate extent. The several surveys of the mountain, -however, prove it to be 212 feet higher than Sugar Run Gap, and, to -reduce it to a level with the surface of the ground at the latter -point, which is 120 feet above the grade of the adopted line, it -would require a tunnel 1¼ miles in length, to be constructed under -very disadvantageous local circumstances. - -Cedar Swamp Gap, still farther south, is 53 feet lower than Bob's -Creek Gap, but it falls off on each side so gradually that it could -not be reduced conveniently more than 40 feet. - -Neither of these points, therefore, which are the only passes worthy -of notice south of the Portage Railroad that lie within the region -over which a direct line to Pittsburg must necessarily traverse, -afford depressions that will compare favorably with those farther -north; nor does the ground leading to them, east or west of the -mountains, offer equal facilities to obtain a line of uniform -ascent to the summit. The distance from the Conemaugh is too short -to overcome the elevation with the gradient used on the western -division, and, from the Juniata, the greater height to be ascended -would continue the line so long upon the mountain steeps that it -would be exceedingly expensive to procure a roadbed with a gradient -even higher than 80 feet per mile. - -From the foregoing description of the most favorable mountain passes, -it will be seen that Sugar Run Gap offers the greatest facilities to -cross the Allegheny. - -It now becomes necessary to consider in what direction the Road can -be carried thence to Pittsburg. From an inspection of a map of the -State it will be seen that a straight line, drawn from this gap to -Pittsburg, will fall on Munster, Beulah, and follow the valley of -Black Lick for nearly its whole extent, and intersect the Conemaugh -near Blairsville; thence it crosses the country lying within the -elbow formed by the Kiskeminetas and Allegheny rivers, passing the -Loyalhanna and Crabtree waters, and following, generally, the high -and broken ridge parting the Allegheny and Monongahela rivers. That -line, which would approximate most nearly to this course, would--all -other things being equal--be the most desirable for the Road. - -The operations of the different corps, on this division, have been -confined to surveys that were necessary to determine the point of -crossing the mountain and to the regions between the Conemaugh and -Pittsburg, west of the Chestnut ridge. Our examinations have not yet -been sufficiently extensive to enable me to give a full description -of that part of the country between the mountain and Blairsville, -and I shall therefore leave it for a future report, with the simple -remark that, from the information before me, I am satisfied that a -practicable line may be obtained by the valleys, either of the Black -Lick or Conemaugh, within the maximum gradient used upon the western -division. - -The district of country over which it will be necessary to carry the -road from the Conemaugh to Pittsburg is one of remarkable intricacy. -It lies wholly within the coal measures, and has, at some period, -evidently been nearly a level plane of vast extent, covered by the -ocean. The discharge of the waters from this wide spread field seems -to have been sudden, forming numerous circuitous channels in every -direction, cutting deeply into the soft horizontal strata of this -region, in their descent to the tributaries of the Ohio, leaving the -intervening ridges washed into so uneven a surface as to render the -passage of a railroad along them entirely out of the question. A line -following the Conemaugh--which bears northwest from Blairsville--to -the Allegheny would avoid this difficult country, but the length -of the route would be increased fully 50 per cent., and it is, -therefore, inadmissible. - -A route with higher gradients than those adopted on the Juniata -throughout this division seems to be called for by the topography of -the country. - -In his report upon the western division, Mr. Miller gives the -following account of the surveys, conducted under his direction by -Messrs. Day and Pemberton, his principal assistants: "If a straight -line be drawn from Blairsville to Pittsburg, it will be seen that -Turtle creek is the only stream that approximates to the proper -course of the road, whilst the Loyalhanna, the chief tributary of -the Conemaugh, crosses it nearly at right angles, and Spruce Run, -Roaring Run, Porter's Run, Beaver Run and others intersect it at -various angles of obliquity. Much time and labor were bestowed by -Mr. Schlatter and his principal assistant, Mr. Roebling, upon the -investigation of this district, and their maps and profiles, loaned -to us by the Canal Commissioners, have been of much service in -our examinations. From a careful investigation of Mr. Schlatter's -preferred route on the ground, it appeared possible to avoid some -of the most formidable obstacles which he encountered by adopting -a higher gradient than his maximum of 45 feet per mile, and by a -reasonable increase of distance at a few points. - -"Our trial lines confirmed this, and, in the location made, a maximum -of 1. in 100, or 52-8/10 feet per mile, has been used at several -places. The cheapness of fuel throughout the whole extent of the -western division renders this increase of gradient less objectionable -than elsewhere. Bituminous coal, of the best quality, is everywhere -abundant, and can be delivered at the depots at from 56 to 84 cents -per ton." - -The principal changes made in the route referred to in Mr. -Schlatter's report Mr. Miller describes as follows: - -"Upon the White Thorn our line keeps the left bank, entirely to its -mouth, avoiding a tunnel of 600 feet, leading into the valley of Buck -Run, and a high bridge over White Thorn creek, and reducing that over -the Loyalhanna, from 90 to 50 feet in height. West of Buchanan's -summit we run level round the hill, between Porter's Run and Beaver -Run, avoiding the Still House summit entirely, where a tunnel of -1,000 feet was proposed, with a cut of 70 feet at its western end, -running out to grade in a distance of 1,700 feet. - -"Passing Burnt Cabin summit, by a deep cut, the line descends along -Turtle creek to the Monongahela. - -"Below Murraysville the creek makes a double bend, like the letter -S. The former line crossed one of these bends, by a tunnel 600 feet -long, whilst ours crosses the other by a short, deep cut, following -a remarkable pass by which the hill is nearly cut through. These -changes have reduced many of the deep cuts, avoided several bridges, -saved three tunnels, and reduced the length of a fourth, amounting in -all to a reduction of 2,300 feet of tunneling." - -After reaching the Monongahela, two routes present themselves, -one following the bank of the stream to Pittsburg, and the other -ascending along the slope of the river hills, enters a valley leading -by Wilkinsburg and East Liberty. Thence, following this valley, it -descends Two Mile Run, and enters the city on the Allegheny side. -The latter, though the longest route, and requiring gradients of 50 -feet per mile, has been adopted as it presented the only apparently -feasible route by which a connection could be formed with a road -extending towards the great west. - -The comparative cost of grading and damages, upon the two lines, -would be rather in favor of the route adopted. - -A line has also been located from the junction of Turtle and Bush -creeks, which passes up Bush creek and through Greensburg to -Bernhard's summit, thence by the valleys of Fourteen Mile Run, -Sauxman's and Magee's Runs, to the Conemaugh, at the gap through -Chestnut ridge. - -If the Conemaugh route, by Johnstown, should be adopted, the line by -Greensburg will be about 3¾ miles longer than that by Turtle creek, -but passes east of the Loyalhanna, over much more favorable ground -than any other line examined. - -Its advantages, in relation to the local trade of a rich and populous -section of country, west and east of Chestnut ridge, through the gap -formed by the Loyalhanna, give it strong claim for consideration. - -Whether the increased length of the line and the difficulties west -of Greensburg will be sufficient to counterbalance these local -advantages we will leave undecided until the comparative estimates -have been fully made out. Another line was traced, leaving Greensburg -and passing into Ligonier valley, through Chestnut ridge, at the -Loyalhanna Gap, thence north of this ridge along Coalpit and -Kendrick's Runs, to the Conemaugh, which resulted unfavorably. - -Further examinations will be made through Ligonier valley, striking -the Conemaugh higher up. The Black Lick and the country between it -and the Conemaugh will also be examined during the season. - -The following summary statement will exhibit the estimated cost and -distances of a continuous railroad from Harrisburg to Pittsburg, via -Johnstown and Blairsville, graded for a double track, and a single -track and turnouts laid. - -The estimate is based on prices that are believed to be ample to -finish the road in a substantial manner. If the work should be pushed -with _cautious energy_, it may be completed for a somewhat less sum. - -The width of the roadbed at grade line in thorough cuts of earth is -32 feet, in rock 26 feet and on embankments 25 feet. - - - ================+===================================+=======+========== - | | Dist. | - Items. | Places. | in | Cost. - | | Miles.| Dollars. - ----------------+-----------------------------------+-------+---------- - | {Between Harrisburg and Lewistown | 60.70 | 705,610 - | { " Lewistown and Huntingdon | 36.70 | 582,342 - | { " Huntingdon and Robinson's | 35.20 | 703,000 - Graduation | { " Robinson's and Sugar Run Gap | 12.25 | 655,000 - | { " Sugar Run Gap and Johnstown | 28.50 | 875,000 - | { " Johnstown and Blairsville | 28. | 445,000 - | { " Blairsville and Brush Creek | 33. | 925,000 - | { " Brush Creek and Pittsburg | 15. | 145,000 - | |-------+---------- - | Amount |249.35 | 5,035,952 - | +-------+ - | Superintendence, &c. | 250,000 - | Contingencies | 350,000 - | | - |{Single track, including an average of 450 | - Superstructure. |{ feet of turn-outs, per mile | 2,792,722 - | Interest account | 551,000 - | Land damages and fencing | 170,326 - | +---------- - | Grand Total | 9,150,000 - ----------------+-------------------------------------------+---------- - -That part of the line below Huntingdon has been located permanently; -thence to Logan's Narrows the calculations are based on a preliminary -location, and between this point and Blairsville upon an experimental -survey, with liberal allowances for contingencies. Between -Blairsville and Pittsburg the road has been carefully located. Upon -that portion of it, between Blairsville and Turtle creek, gradients -of 52-8/10 feet per mile have been admitted, which may be reduced to -50 feet per mile, by the expenditure of an additional sum of $40,000. - -Our measurements of distances commence at the depot of the Harrisburg -and Lancaster Railroad Company, 106¾ miles from the corner of Vine -and Broad streets, in the city of Philadelphia, and terminate at the -intersection of Liberty street, in the city of Pittsburg. Those made -for the Commonwealth, under the direction of Mr. Schlatter, began -at State street, in Harrisburg, and ended at Two Mile Run, on the -Monongahela river, giving a difference in favor of Mr. Schlatter's -line of about 1-8/10 miles in the points of starting. Between -Blairsville and Pittsburg our distance has been actually increased -2-8/10 miles over that proposed by Mr. S., after making allowance -for about 6/10 of a mile of an unaccountable discrepancy in the two -measurements. This increased distance is incurred to save three -tunnels, and other expensive work, amounting, together, to $280,000, -or $100,000 per mile. - -The whole difference between Mr. Schlatter's and Mr. Miller's -measurements, supposing the points of starting and ending to have -been the same, is 4-3/10 miles. The difference between the points of -starting of the two surveys, on Mr. Foster's division, is about 2/10 -of a mile. From Harrisburg to Huntingdon we lose, by following the -river route. 7/10 of a mile[A] on Mr. Schlatter's line, and save, -from thence to the summit of the mountain, about four miles. - -As a connection with the Allegheny Portage Railroad would insure to -us most of the advantages of an independent road to the western base -of the mountain, it is evidently the policy of the Company to make -it at the earliest practicable moment. Our location falling within -6-1/3 miles of that road, it becomes a very small matter to effect a -junction with it. If the present means of the Company, however, would -justify the expenditure, the connection could readily be made at the -foot of Plane No. 4, on the west side of the mountain, thus saving -7 out of 10 of the inclined planes. This could be effected for the -additional sum of $1,250,000, or for $950,000 a junction might be -made at the summit of the Portage, avoiding the five eastern planes. - -The branch to, or above, Hollidaysburg is, however, the cheapest and -most speedy way of effecting the connection, and when our road is -carried over the mountain it will remain a good feeder to the main -line, and a fair investment of the capital of the Company. - -The following is an estimate of the cost of a continuous road from -Harrisburg to Pittsburg, in connection with the Allegheny Portage -Railroad, graded for a double track throughout, except the branch to -Hollidaysburg: - - - ================+===================================+=======+========== - | | Dist. | - Items. | Places. | in | Cost - | | Miles.| Dollars. - ----------------+-----------------------------------+-------+---------- - | {From Harrisburg to Robinson's |132.67 |$1,990,952 - | { " Robinson's to Hollidaysburg | 6.33 | 32,000 - Graduation | { " Hollidaysburg to Johnstown | 36.67 | - | { " Johnstown to Pittsburg | 76.00 | 1,515,000 - | |-------|---------- - | Total |251.67 | 3,537,952 - | +-------| - | Superintendence and Contingencies | 419,754 - | | - Superstructure. | Including turn-outs on 215 miles | 2,408,000 - | |---------- - | Cost of Road |$6,365,706 - | Interest account | 450,000 - | Land damages and fencing | 154,294 - | |---------- - | Grand Total |$6,970,000 - ----------------+-------------------------------------------+---------- - -To the above amount should be added, for the purchase of depot -grounds, erection of warehouses and shops, and the construction of -cars and locomotives, as follows: - - Warehouses, including ground at depots $475,000.00 - Shops and machinery 185,000.00 - Locomotives 510,000.00 - Passenger and burden cars 820,000.00 - ------------ - Total $1,990,000.00 - -Making the whole cost of the Road, graded for a double and a single -track laid, including outfit, $8,960,000.00. - -It will not be necessary to expend the whole of this amount until -some time after the Road is in use to Pittsburg. As the business -increases the turnouts must be lengthened, depots and shops enlarged, -and the number of locomotives and cars added to. These will not -reach the sum estimated until probably four years after the Road is -completed, in connection with the Allegheny Portage. We shall also -reduce the cuttings and embankments to a single track width, wherever -the character of the excavations or a deficiency of material for -embankment will justify the curtailment. This will effect a saving, -in the first outlay, of about $450,000, which will not be required -until the business demands a double track. - -The expenditure for the outfit, when the Road is opened through, will -not exceed $1,340,000, leaving $650,000 of the estimate for this item -to be disbursed after the Road is finished, to meet the demands of -the increased business for the _time_ stated. - -This will leave the cost of the Road and outfit, when opened for use, -in connection with the Portage Road to Pittsburg, as follows: - - - Cost of Road, with single track and turn-outs, as - estimated $6,365,706.00 - Less estimated cost of unfinished grading required to - prepare the Road for double track 450,000.00 - ------------- - Leaving cost of grading and superstructure of Road $5,915,706.00 - To this add interest account $450,000 - And land damages and fencing 154,294 - -------- - 604,294.00 - Also, cost of locomotives, shops, depots and cars 1,340,000.00 - ------------- - Total $7,860,000.00 - -The Board having wisely determined in no event to enter into -engagements beyond their ascertained means, I have thought it best, -thus early, to present an estimate of the cost of the whole work -for their guidance. It will be recollected that the estimate for -the grading is made, in part, upon experimental surveys, with full -allowances for contingencies. By the close of the year we hope to be -able to give an estimate of the whole Road, in detail, from actual -location, which may show a somewhat reduced cost. - -Under the contemplated connection with that road, the Allegheny -Portage becomes an important part of our line, and, for the -information of the Board, I insert the following description of it, -extracted from a pamphlet written by S. W. Roberts, Civil Engineer: - -"The Portage Railroad consists of eleven levels, or graded lines, -and ten inclined planes. The ascent from Johnstown to the summit is -1,171.58 feet, in a distance of 26.59 miles, and the descent, from -the summit to Hollidaysburg, is 1,398.71 feet in a distance of -10-1/10 miles. There are five inclined planes on each side of the -mountain, varying, in inclination, from 4° 9´ to 5° 51´, or from 7.25 -feet to 10.25 feet elevation to each 100 feet base. They are numbered -eastwardly, the one nearest Johnstown being No. 1; that nearest -Hollidaysburg, No. 10. The following table shows the length, rise and -fall of each 'Level' or grade line, and each inclined plane." - - - ============+=============================+=============+============ - | | | Feet - Level No. 1 |From Johnstown to Plane No. 1| 4.13 miles|Rise, 101.46 - Plane 1 |Ascending |1607.74 feet | 150.00 - Level 2 |Long Level | 13.06 miles| 189.58 - Plane 2 |Ascending |1760.43 feet | 132.40 - Level 3 |Ascending | 1.49 miles| 14.50 - Plane 3 |Ascending |1480.25 feet | 130.50 - Level 4 |Ascending | 1.90 miles| 18.80 - Plane 4 |Ascending |2695.94 feet | 187.86 - Level 5 |Ascending | 2.56 miles| 25.80 - Plane 5 |Ascending |2628.60 feet | 201.64 - Level 6 |Summit of Mountain | 1.62 miles| 19.04 - | | | -------- - | |Total rise | 1171.58 - ------------+-----------------------------+-------------+------------ - | | | Feet - Plane No. 6 |Descending |2713.85 feet |Fall 266.50 - Level 7 |Descending | 15 miles| 0.00 - Plane 7 |Descending |2655.01 feet | 260.50 - Level 8 |Descending | .66 miles| 5.80 - Plane 8 |Descending |3116.92 feet | 307.60 - Level 9 |Descending | 1.25 miles| 12.00 - Plane 9 |Descending |2720.80 feet | 189.50 - Level 10 |Descending | 1.76 miles| 29.58 - Plane 10 |Descending |2295.61 feet| 180.52 - Level 11 |To Hollidaysburg | 3.72 miles| 146.71 - | | | -------- - | |Total fall | 1398.71 - ------------+-----------------------------+-------------+----------- - -In conformity with resolutions of the Board, eighteen miles of the -grading on the eastern and fifteen on the western ends of the Road -were placed under contract in July last. In November the contracts -upon the eastern division were extended to Lewistown, and on the 17th -ult., to Huntingdon, together with a few miles of heavy work along -the Little Juniata, embracing altogether 106 miles. - -Very little of the grading, on the western division, has been -executed, as there appeared to be no sufficient reason for pressing -that portion of the Road until the means of the Company would justify -a larger expenditure upon it than they have heretofore. - -The work upon the eastern division has been retarded from the -scarcity of labor. Time seems to be required to collect the necessary -force upon the line. With the exception, however, of the Susquehanna -bridge, the grading will be prepared for the superstructure, to -Lewistown, this year. The masonry of that important job was first -allotted to contractors. The principal of the firm, though highly -recommended by the officers of the Reading Railroad, proved unequal -to the task he had undertaken, and their contract was abandoned. In -consequence, the remnant of last season, after the contract was let, -was mostly lost. - -The work has been re-let to Holman, Simons and Burke, who have -carried it forward satisfactorily. The prevalence of high water, -since the season for laying masonry commenced, has prevented as much -progress, at this time, as could have been desired; but we still -entertain hopes that it will be completed before the ensuing winter. -If this is accomplished, the Road can be opened to Lewistown next -spring. Under any ordinary circumstances it will be finished to -Huntingdon (98½ miles) by the close of navigation in 1849--a point as -low down as we may anticipate a profitable use of the Road from. - -Our arrangements have been made with a view to the completion of -the Road to the Allegheny Portage, early in the spring of 1850. An -earlier period could not be fixed, owing to the magnitude of some -of the work on the Little Juniata; a portion of which, embracing -the tunnel, through a point of Tussey's mountain, was located -and contracted for last December, to avoid delay and a premature -expenditure of capital on the lighter work, which would have followed -a general letting of the whole Road at that time, or since, even if -it could have been prepared for contract in season. - -If sufficient means shall be obtained to prosecute the western -division, I would recommend that the heavy portions of the work, -between the Conemaugh and the confluence of Brush and Turtle -creeks, should be placed under contract, together with the grading, -continuously from the Portage road to the point of divergence of the -line from that river towards Pittsburg, if the Conemaugh route is -adopted. - -When the connection is made with the Portage Railroad, from the -east, there will then be a continuous railroad from Philadelphia -to Johnstown, 282 miles in length, and, if opened at the same time -to near Blairsville, it will be extended to 310 miles, with only -43 miles of turnpike thence to Pittsburg, or 75 miles of canal -navigation, giving a line of communication, with the Ohio river, far -superior to any railroad route existing, or any that will at that -time be built. On freight destined to the interior of Ohio but one -transshipment will then be necessary. The canal boats, loaded at the -terminus of the Road, can be conveyed to any point upon the Ohio -canal. - -If your Road possesses no other source of revenue than the local -travel and transportation of the rich and populous region to be -traversed by it--secured, as it will be, from competing lines by -_natural barriers_ stretching out on either side from the Susquehanna -to the Potomac--they would be sufficient to justify its construction. -The influence of the Pennsylvania canal has called into activity all -the elements necessary to render the enterprise profitable, and, -in consequence, it will be more successful with that improvement, -as a pioneer rival, than if it was now to enter upon an unoccupied -field. Whatever may be the effect of your work upon the business of -the canal--and I do not believe it will be injurious--there can be -no doubt but that it will add very materially to the revenues of the -Commonwealth. - -Important as the local sources of revenue are to the Company, they -will afford but a limited amount of business compared with that to -be derived from the great West. The route of your improvement is -directly on the line that would be most desirable for a railroad -to pass from St. Louis, or the confluence of the Mississippi and -Missouri rivers, through the center of the wealth and enterprise -of the Mississippi valley to the Atlantic. With a map of the Union -before you, it will be found to be impossible to draw a line upon it -that would accommodate so large an amount of population, or an equal -extent of fertile country. - -Through the broad bed of mountains that divide the Atlantic from -the Western States--traversed by our route for 190 miles--natural -gorges are found, cutting all of them to their bases, except the -Allegheny, which is passed with comparatively easy gradients, and -without encountering difficulties of a very unusual character. -These favorable features of the country give to us a line which is -the shortest and best that can be obtained between these sections -of the Union, and insures to the Company the whole of the travel -and light transportation, with much of the heavy trade, destined -to Philadelphia and points north of this city, of the vast region -between a line along the southern shores of Lake Erie, touching Lake -Michigan, and extending to the far West, and the immediate valley of -the Ohio river. The distance from Cleveland to New York being 80 -miles shorter by this route than by the New York and Erie Railroad, -much of the travel embarked upon the lakes for that city from the -north and west must also be diverted to this line. - -In view of these circumstances, can a reasonable doubt be entertained -by any one as to the profitableness of the stock of the Pennsylvania -Railroad Company? Its natural position must give to it more than -sufficient business to make it yield large profits. Indeed, I -confidently advance the opinion that when the Road shall have been -completed that it will not be a question "whether it will pay an -interest on its cost," _but to what point the rates of freight and -passage shall be reduced to give the Company ample revenues and at -the same time make the work most extensively useful to the public_. - -Dividends from its revenue can be made of 6, 8 or 10 per cent. by -changing the rates of freight and passage, at the discretion of the -Directors. - -From some experience in the management of the business of other -roads, much less favorably situated than this, I feel no hesitation -in making this prediction. I look upon the result as one upon which -there can be no doubt entertained. - -The inquiry may be made, "If this Road must prove a profitable -investment, why other works in Pennsylvania, favorably located, -have not yielded remunerating dividends to their proprietors?" In -reply it can be stated that there is no important work, leading from -Philadelphia, that ought not now to divide large profits, if their -stock and funded debts exhibited a fair cash value of the property -represented. Most, if not all, of these works, were commenced with -inadequate capital, for the object in view, and from the anxiety -of the stockholders to realize the large profits promised on their -completion, and the _public_ to _enjoy the use_ of the improvement, -they have been pressed forward faster than true economy, or the -funds of the company, would justify. Engagements were made, relying -upon fortune, or accident, to provide the means to meet them. These -resources failing, they were thrown upon the mercy of either the -contractors or the money lender. And, in consequence, the cost of the -works has been rolled up to an amount not anticipated, and, in many -cases, debts incurred, under the pressure of the moment, in the most -objectionable shape, to meet which the whole of the receipts of the -companies have necessarily been mortgaged. - -In New England, and also in New York--where railroads have, -in many cases, been deprived of the privilege of carrying -freight--judiciously located roads have invariably paid well. Their -success has not been caused by the exercise of any peculiar skill -or economy in their management, as generally supposed, for, in this -respect, though they stand deservedly high, there is none that -conduct their business, under all circumstances, with as much economy -as the Baltimore and Ohio Railroad, or some other southern companies. - -In closing this communication it gives me much pleasure to -acknowledge the zealous and cordial co-operation that I have received -from my Associate and Assistant Engineers in carrying on the -important work that you have committed to our charge. - - Respectfully submitted, by - Your obedient servant, - J. EDGAR THOMSON, - _Chief Engineer_. - -Note.--By way of "Then and Now" contrast, the income account of the -Pennsylvania Railroad Company for the year ending June 30, 1909, from -Interstate Commerce Commission Bulletin No. 5 is subjoined. - -Revenues and Expenses of the Pennsylvania Railroad Company for the -year ending June 30, 1909. - - Miles operated 4,087 - - Operating revenues $138,449,119 - From Freight $100,356,160 - Passengers 28,774,281 - Other transportation 8,438,972 - Non-transportation 879,706 - - Operating expenses 97,107,751 - For Maintenance of Way and - structures $16,503,246 - Maintenance of equipment 27,225,887 - Traffic 1,844,365 - Transportation 48,064,176 - General 3,470,077 - - Net operating revenue 41,341,368 - - Taxes(a) 2,370,314 - - (a) Exclusive of some $1,790,000 taxes paid on leased lines. - - Observe that the amount expended on maintenance of way and structures - in 1909 was more than double the total estimated cost of the road - from Harrisburg to Pittsburg in 1848. - - The amount expended during the calendar year 1909 in revision of - grades and alignment, and for additional tracks, yards and other - terminal facilities, abolition of grade crossings and improvement of - equipment was $5,581,809, exclusive of $4,000,000 applied towards - construction of New York Terminal Extension. - - This road as it exists today is a living monument to the sound policy - of the American railway practice of a dollar for improvements for - every dollar of dividends. - - S. T. - - -FOOTNOTE: - -[A] By an alteration of the line, since made, the distance lost by -the river route is reduced to four-tenths of a mile. - - - - -RAILWAYS AND THE PACIFIC NORTHWEST - -BY JAMES J. HILL. - - [On the occasion of the completion of the Spokane, Portland - & Seattle Ry., connecting Portland with British Columbia, - Mr. Hill delivered three noteworthy addresses at Portland, - November 6, 1908, at Tacoma November 9 and Seattle November - 10. The speech at Portland was an earnest plea for a more - intelligent and economical cultivation and conservation of the - vast agricultural resources of the Pacific northwest; the other - two related largely to the part played by the railways in the - development of that territory. The portions of these addresses - which follow are taken from the full reports which appeared in - the Seattle and Tacoma newspapers the next days.] - - -MR. HILL AT SEATTLE. - -After Mr. Hill had been introduced and warmly applauded as the -"Empire Builder," who had been intimately associated with the -development of the northern tier of states from the Lakes to the -Pacific Ocean, and he had acknowledged his obligation to the -indomitable spirit of Seattle and its people, he began his address -by disclaiming the ownership of the Great Northern railway. "Fifteen -thousand people own it." said he. "The average holding is about 120 -shares. Over 6,000 women are owners in the Great Northern railway, -and I have to manage their affairs." Then he proceeded: - -"It is three years since I was here, and I never expected that three -months would pass without my coming to Seattle, but three years -have passed and what do I find? I think the city in three years has -doubled. I think it has doubled in everything that goes to make a -city. Just look at the streets lined with commercial houses which -would be a credit to any city in the world. It is far beyond what I -expected to find, and I think that Seattle has a future. Seattle is -entitled to her growth, and if the same spirit that has moved her -citizens in the past continues, if the mantle of the older men falls -on the shoulders of the younger men, Seattle cannot help but thrive. -You have behind you one of the richest states in the Union; one of -the very richest. - - * * * * * - -DEVELOPMENT OF RAILWAYS. - -"Now, to come back to the relation of the railway to the development -of the country. Next to the cultivation of the soil itself, in the -amount of money invested and in the importance to all the people, is -the railway property of this country. It is on a little different -basis, I am sorry to say, from the general attitude of the public, -from any other property. From what Judge Burke says as to the Golden -Rule, if you can have it fairly applied, it would make our hearts -glad. - -"We frequently hear about railroad watered stock. It is a hackneyed -phrase which is used with which to catch gudgeons, and it has -caught a great many. Now, let us see. You can open a bank--five of -us sitting here, if we had the money, could open a bank, put up -the building and draw our checks, and that is disposed of. We have -a million or a million and a half of capital, and, conducting the -business of the bank within the law applied to bankers, we can earn -any dividend we like, and we can divide it, even up to 40 or 50 -per cent., and it has been done, and nobody finds any fault. Now, -we might start a manufacturing establishment and we can divide any -profits that we can legally make up to 40 or 50 or 100 per cent., or -we can start a mercantile establishment and conduct it so as to bring -any profit--there is no limit so long as we are within the laws of -trade. But take the railroad. - -"Now, remember, you can run your manufacturing establishment -twenty-four hours a day, or you can run it one day in the week, or -you can run it half the time and you can close it and it will not -affect you, or you need not run it at all; and if you do not like -the business you can dispose of it. You can liquidate your bank and -go out of business; and so with the mercantile establishment, you -can close it at any time. But when you have invested your money in -a railway, you have undertaken an obligation to serve the public; -you have taken a business risk that is greater than the business -risk of any other business in the world. If you do not run it, move -your trains with regularity, move your trains so as to accommodate -the business, the courts will appoint a receiver and will issue -receiver's certificates to an extent that would wipe out your -investment. If there were anything left they would hand it back, but -the chances are altogether that if you could not make it pay the -receiver could not. - - -RAILROAD BIGGEST RISK. - -"Now, I mention this simply to show that the business risk in -building or operating a railway is greater than it is in any other -business. There is nothing guaranteed, and sometimes you are told -what appliances you may use; you are told what you must not use; -you are told whom you can hire, and you are told when you can -discharge him, and it has been at least hinted as to what you should -pay him--what his wages and condition of work shall be. So that -the only privilege that was left for the railroads was to pay the -bills. That they are always expected to do, and it would be a great -disappointment if they were not able to. - -"In the section of this country, the portion of this country east -of Chicago, I do not know anywhere north of the Ohio River, where -a railroad, built with the greatest care and economy, could pay -one per cent. on its cost; that is, a new road, built between any -of the large cities of the west to the large cities of the east, -paying the present price of real estate and terminals and the cost of -construction, the cost of eliminating great profits, the cost of the -necessary expenditure of money to make life and limb safe. - -"Take, for instance, a railroad from New York to Chicago. I had -curiosity enough to inquire from the leading real estate man who -was getting the additional property for the New York Central, their -terminals, what it would cost from Thirty-eighth street to Harlem -River, a narrow strip of blocks on the East Side, say ten blocks, -from Thirty-eighth to Forty-eighth street, to be used as a terminal. -He told me it ought to be secured for $200,000,000, but he would not -like to take the contract. Now, follow that up through Albany and -Syracuse, Rochester and Buffalo and Erie and Cleveland and on to -Chicago, and if you can get into Chicago and get out of New York with -any reasonable cost I want to say that when your road was finished, -at the present rate, it could not pay 1 per cent. on what it cost in -money. - - -NO ROOM FOR MORE ROADS. - -"Now, what chance is there for more roads between New York and -Chicago, or between any Atlantic city and any large city in the west? -During the ten years from 1898 to 1908 the railroad mileage in the -United States increased about 24½ per cent., the passenger business -increased 125 per cent., and the freight business increased 148 per -cent. The additional burden was placed on the railways, with an -increase of over 148 per cent. in the tons moved. What is it costing -the Pennsylvania road to get into the City of New York? I do not know -the exact figures, but I have seen it estimated from time to time at -one hundred millions of dollars to secure passenger facilities in -the City of New York. When I think of these things and see what you -have here I think that we have reason to congratulate ourselves, and -I think that we had a narrow escape from being compelled to do our -business west of Commercial street in place of where we are today. -There are no places that I know of today where there is any room or -any use for any other large railway enterprise. - -"The Milwaukee & St. Paul are coming to the Coast--and we are glad -they are there. At different times, when people largely interested -in that enterprise talked with me, I said, 'By all means build to -the Coast; extend your road--if you do not, somebody who has more -enterprise than you will take the business and will keep it on -their own rails and you will not get a share of it.' But when that -enterprise is finished, I do not know, north of the Platte River, -where there is room for another railroad or occasion for one. There -will be branches built, and they are necessary for the development -of the country. You had expended, and there is being expended now, a -very large sum during the last two years. - -"The Northern Pacific and the Great Northern, within the State of -Washington, have spent millions of dollars between Portland and -Spokane. It ought not to frighten you; it will not wipe you out; you -have your roots deep in the ground and they will stay there. - - -TACOMA IS WAKING. - -"Now, I find in summing up the present population of the new country -between Blaine and Vancouver--Portland is on the other side of the -Columbia, although, fortunately, the state line does not limit our -commerce or our right to trade with each other--there are over -700,000 people living on the line of the railway between Blaine and -Vancouver. Portland claims 200,000, and I feel sure that she must be -near that figure. Portland has grown rapidly, and I think possibly -the young men have taken a sheet out of your book. There was a time -when they were altogether too wealthy in Portland. Every man had -business of his own to attend to and was so deeply engaged in it that -he overlooked the business of the city. They did not take hold. You -could come there if you were willing to bear all the expense and take -what you could get. But Portland has had an awakening, and I believe -that Portland, notwithstanding its remoteness from the sea, will have -a good growth. It has a good country behind it and there is no reason -why it should not have a good growth. - -"Another city down here where we were beautifully entertained last -night, Tacoma--I remember when we came out here they really did -not need us and we did not want to force ourselves on them, and -so we stayed right here. But I think, and I hope, that Tacoma is -getting its eyes open and that it wants more railways. We don't ask -much; we want the privilege of a place for foothold, a place to do -our business at our own expense; and I think that we will probably -succeed in getting it--I hope so. - - -GROWTH PLEASES HIM. - -"I wanted to come back to your city here. I was more than surprised -at your growth and I am more than gratified. I rather gathered that -you had grown fast and that possibly you wanted a resting spell, but -I don't see that there is any rest for you now. I think that you will -go on as you have begun, and I was more than glad to see what you are -doing in the way of adjusting your street grades. It is inexpensive; -the burden may be hard upon some people, and difficult to carry, but -it will cost infinitely less to do it now than in five or ten years, -after those streets were lined with buildings that had cost a great -deal of money and you could not afford to throw them away. Lay your -foundations right and the structure will take care of itself. - -"It will grow by degrees, and, when it is finished it will be part of -a complete whole and you will be glad you did it. We have a good many -communities to take care of along our railway, and with every one -of them we have always the feeling that their prosperity means our -prosperity. They have to earn the money before they can pay it to us, -and what they do pay us we think is a small part; but we expect the -railway business must depend upon close management and small savings. - -"Take the dividend of the Great Northern railway. _Three copper cents -in moving a ton of freight ten miles pays our dividends._ A ton of -freight on a country road would be a fair load for a farmer's wagon, -and ten miles would be a fair day's work if he returned the same -night. We do that. Our dividend amounts to about 3 cents--a little -less than three copper cents--for moving that load of freight. We -find that we have neither poisoned the air nor the water and you -have all the highways that you had before we came, but we give you a -better one and a cheaper one. - - -MUST HAVE MONEY. - -"And remember that you never can injure the railway without injuring -yourselves. The railway has only two sources from which to get -money. It must either earn it or borrow it, and if it borrows, and -borrows judiciously, the rate of interest ought not to be high, but -whatever it is, high or low, you pay it. Sometimes people who do not -know better think that they are serving a good cause to stick the -railway--the company is rich--a personal injury case or something of -that kind--but it is a railway and they can afford it--stick them. -Now, who pays the bill? Can we charge that up to the construction of -a station? - -"It is a part of the expense, and the law says that you must pay us -for the use of our property enough to pay our expenses and our taxes, -and a reasonable return upon the investment, so that all is charged -in your bills. - -"We had in one thriving city on the Great Northern, I recall, a suit -for $20,000. A young brakeman stumbled against a pile of cinders that -it was represented the trackmen threw out from between the rails and -poured water upon it, and it froze in the winter and was solid, and -as he was running alongside of his train he stumbled and fell and -was injured--some great injury to the spine that wrecked his entire -nervous system, and we inquired and found out how the coal got there, -and our experience and education have made us suspicious; we took -the cinders to the laboratory and had them analyzed and absolutely -they were anthracite, and there never was a ton of anthracite coal -burned in a locomotive in the State of Minnesota; we followed it up -and we found that the man who brought the suit--a professional suit -bringer--had, with a brakeman and his own son, taken the cinders from -his own office and piled them there and poured water on them. Now, I -speak of that just as an illustration of some applications of that -Golden Rule. - - -COMPARES RAILWAY COST. - -"Your future growth will depend on yourselves hereafter, as it has -largely depended upon your own efforts in the past. The commerce -going to and from the Pacific Coast cities by the sea is being -largely carried in foreign bottoms. There was a time when the -American nation was a nation of seafaring men, but that does not -apply any longer, and I am sorry that that is so. I believe that the -people of the United States, I believe that the genius of the country -is just as able to carry upon the sea as upon the land. As matters -stand today, any bay or inlet where a foreign flag can force its way -inland into our country they can call to us to drop the bundle and -they take it from us and we can't help ourselves. Now, we ought to be -able to help ourselves, for on the land we have so far surpassed the -others that there is no comparison. - -"In Great Britain their average railway cost is $234,000 per mile. -In the United States it is a little less than $60,000 per mile. In -Germany it is about $110,000, in France about $140,000, in Austria -about the same. Now let us see what they do with their two hundred -and thirty-four thousand dollar machine and their one hundred and -ten and one hundred and forty. In Great Britain they move an average -of five hundred thousand ton miles to the mile of road at a cost -of $2.16 for every hundred miles. In Germany they move about seven -hundred thousand ton miles at a cost of a trifle under $1.36 for -every hundred miles. In France 450,000 ton miles at a cost of $1.40 -for every hundred miles. In Austria the cost is $1.50 for moving a -ton of freight a hundred miles, and in the United States the cost is -74 cents and a fraction. - - -AGAINST SHIP SUBSIDY. - -"Now we in the United States move the business for less than half -the average cost of Europe. We pay from twice to four times the rate -of wages, and we do it with an investment of about a third of their -average. If we can do that on land, why can't we do it on the sea? I -know that if the ships of the United States had the same care and the -same opportunity that the ships of other nations have they would do -it, and until then no subsidy, no ship subsidy, will ever enable them -to compete with other business, because in principle it is wrong to -tax all the business of the country--to put your hand into the public -treasury and hand out to one particular business a cash subsidy in -order that it may live. - -"I want to tell you that a steamship line that cannot live without -a cash subsidy will make a mighty, mighty lean race with one. It -ought to rest on a business foundation. That is the only reason for -running ships, because they can be made to pay, and if we can make -our railways pay and work at the low rates that the railways in the -United States do carry and pay the scale of wages that they do pay, -why can't we succeed on the high seas? If we can't, let us hand that -business over to somebody who will do it cheaper and better; but I -don't feel that the case is a hopeless one, but, on the other hand, I -do feel that it would only limit the efforts of those who were trying -to make and to build up a merchant marine for the United States; it -would only limit their efforts to extend a subsidy to a few ships -engaged in the business. - - -FOREIGNERS GET SUBSIDY. - -"I remember on one occasion that I went home from here and there was -no tonnage to move the stuff we had to send to the Orient. Absolutely -no tonnage was available, and when I got home there was a reception -to one of our public men, and the late Senator Mark Hanna was there. -I took up in a few remarks the question of a subsidy, and I said. 'If -we are going to have one, let us pay a subsidy for something that is -going to do us some good. Let us pay a tonnage on the actual products -that reach a new market.' - -"That would have done some good. The tonnage of the products that -does not reach a new market, we wouldn't have anything to pay on -that, and on that that does we could afford to pay. Now, we were -driven out of the business on the Atlantic, but we might retain a -hold upon the business of this ocean. Immediately there was a scheme -for Congress for an appropriation, I think of $9,000,000, for ship -subsidies, and they found that 80 per cent. of it would go to one -line, under the bill that was being then drawn--and that line on the -Atlantic Ocean--and I know that the men and most of the officers -lived on the other side of the Atlantic, and the stock was owned -on the other side of the Atlantic. Now that would not build up a -merchant marine for us. - -"A company over there has disposed of this old boat to our people -and taken what new money they got and built new boats. That was all -and that was celebrated--a portion of that was celebrated as the -inauguration of a new merchant marine for the United States. Think of -it! - -"But some of our statesmen were wise enough to believe that it was -going to succeed, but it did not. It fell ingloriously. When we have -a merchant marine it will be because there is a reason for it. But -until that time comes, just put up with the business that we can get, -and let the others carry it who can carry it lower and better than we -can in this country. - -"But bear this in mind: That all your great harbors in the country -when compared with the railroad yards sink into insignificance in the -tonnage that they move. I think that, in Seattle, I would be safe in -saying that twenty tons are moved by rail where one goes by water, -unless you can count saw logs. And I had occasion to look up St. -Louis. The Mississippi at St. Louis has from eight to twelve feet of -water for nearly nine months in the year and boats run in and out of -St. Louis, and we are all anxious to make a deep water channel from -there to New Orleans. - -"Now, in looking up the amount, I found that, notwithstanding they -had from eight to twelve feet of water for nine months in the year, -or about nine months, less than 1 per cent. of the tonnage that came -into St. Louis moved by water; and out of over 1,500,000 tons of -coal--and if there is any article among all the shipments that could -be moved by water easily and cheaply it would be coal--not one ton of -coal moved out of St. Louis by water last year. - -"There is a scheme to spend the public money and create a channel -fourteen feet deep to the levees at the mouth of the Mississippi, and -there are plans to lath and plaster the bottoms of a great many other -streams throughout the country, and so many that in order to get -any appropriation for an enterprise of great national merit, it is -necessary to divide up and load it down with a lot of appropriations. -These make what is known as the pork barrel, the river and harbor -bill. They load it down with the various enterprises that have no -value to anybody, streams on which the government is called to spend -more money than all the boats would bring if sold at auction, and in -some cases where there have been no boats run for ten years. - - -LEADS WORLD IN TONNAGE. - -"They say they ought to regulate the railroads. Now, when you come -to consider the matter practically, I would rather have a railroad -alongside of a navigable river, or a river with six or eight or ten -feet of water in it, than to have it far away from the river. A box -car will beat any ten-foot channel in the world, but when we get -twenty or twenty-five-foot channels, the box car is not in it in -bulky freight. You have got to have depth of water. - -"Some years ago I built six freight steamers on the Great Lakes and -they were considered whales in their day. They could carry 3,000 -tons. Today a lake steamer and a double channel through the Soo Canal -carries 12,000 tons, and has two additional firemen and one deckhand, -and that is all the additional crew. - -"Sometime I would like to have the city council of the City of -Seattle, if they had the time, run down to the head of Lake Superior, -and see what is the greatest port in the matter of tons moved in -the world. London was, and Duluth and Superior a few years ago were -trailing along fifth or sixth place; but last year it took first -place with the cities of the world, and it handled more tonnage than -any other city. London had 30,000,000 tons and Duluth had 34,000,000. - -"Now, to show the enormous importance of that load of tonnage, that -tonnage that is greater than any other city in the world, I undertake -to say, and do say, that there are not 1,000 people, men, women and -children, connected directly or indirectly, with moving that traffic -between the land and the water in both directions. There is such a -thing as doing a very large business without a harbor at all. - - -SEATTLE SPIRIT WINS. - -"Although as far as foreign commerce is concerned, as far as business -is concerned, when we get to the seaside, we have to hand it over -to the ships. It must be done. But the great business is done in -the railroad yards. I would not be without the harbor--far from it, -but don't feel that the harbor is going to make you, and don't feel -as a gentleman in public life in Washington, when a friend of mine -talking with him said, 'You won't get any more railways built along -the policies you advocate.' 'Oh, well,' he said, 'we have got them, -we have got them.' And he was a member of the house committee of -interstate commerce, a rather dangerous statement for him to make." - - -AT TACOMA. - -In his address at the banquet of the Tacoma Chamber of Commerce on -the preceding evening (November 9), Mr. Hill dwelt especially on the -intimate relation of railway and agriculture interests. Among other -things he said: - -"The question of terminals means a great deal to a railroad and it is -getting to be more and more full of meaning every year. Some cities, -and large cities, today have all the railroads they will ever get, -simply on account of the difficulty in getting terminals. I think the -Northern Pacific terminals today--I think to buy them on the entire -system--would cost more money than to grade the whole road, and I do -not know but what it would cost more than to grade and put the rails -down. That is a condition and, remember, that you pay the freight. - - * * * * * - - -WILL SOON NEED ALL THE WHEAT WE RAISE. - -"Within a comparatively short time, I will say that within six years, -I will go on record, you won't send many cargoes of wheat from Tacoma -by sea, simply because the United States wants every bushel that will -be raised within the United States to feed her own people, and will -pay you more money for it. If they didn't pay you more money for it, -it would go to the foreigner, but our own people will pay more money -for it and take it somewhere and grind it into flour. If you look for -greater avenues or greater economy in transportation, but it will -cease to go out as wheat. I will give you an illustration and you can -draw your own conclusions as well as I can: In 1882 the United Slates -raised 504,000,000 bushels of wheat and we had 52,000,000 people and -we exported somewhere between 175,000,000 and 200,000,000 bushels. -Twenty-five years later, in 1907, we raised 634,000,000 bushels. We -increased in that twenty-five years a little less than 25 per cent. -in our wheat yield, or 130,000,000 bushels. - -"Our population increased 64 per cent., and converging lines meet -somewhere. Now, if we had 90,000,000 of people--and we have between -88,000,000 and 90,000,000 this year--and use six and a half bushels -per capita, it would take 585,000,000 bushels for bread and seed. -Professor Rogers, of the Minnesota Agricultural College, puts our -consumption for bread and seed for the last few years at a trifle -over or a trifle under seven bushels. I think he uses ten years for -his average, and I use twenty-five to get an average of about six -bushels and forty pounds, and I call it six and one-half bushels. - -"On last year's crop, with 634,000,000, we have had about 59,000,000 -bushels to sell and we sold about 80,000,000. What is the result? -After the 15th of January wheat was higher in Minneapolis than it was -in Chicago, even up to the first of August, and part of the time it -was higher than it was in New York, because they wanted it to make a -loaf of bread to feed our people at home. - -"We have not the great margin that we used to have. The seed on last -year's crop went down to 59,000,000 bushels and, if my figures are -equal to Professor Rogers'--and he is a professor of agriculture -in the Agricultural College and maybe he has more time to look -these questions up more carefully--but with his figures we hadn't a -bushel to sell. Suppose we had 60,000,000 bushels to sell, and we -are increasing in population at the rate of 2,000,000 per year, our -natural figure is between 1,300,000 and 1,400,000, and allow 700,000 -for immigration, not eleven, twelve, thirteen or fourteen as we have -been having, but say seven and by 1950 you will have in the United -States, it figures out to be accurate, 208,000,000, but suppose we -have 200,000,000, it might come by 1945, or 1947, or it might be in -1955, but about that time we will have 200,000,000 people, and if -they use six and a half bushels per capita for bread and seed, it -would take 1,300,000,000 bushels to feed them. - - -PROBLEM OF THE WHEAT. - -"That is a little more than twice what you are raising today, and -you haven't any new fields to put a new plow in. From 1882, when -we raised 504,000,000 bushels of wheat, following that time more -than half of Minnesota, all the northern part of Minnesota, was -brought under the plow, all of North Dakota, all of South Dakota, -all of the state of Washington and all of Oregon, except 3,000,000 -or 4,000,000 bushels raised in 1882, more than half of California, -two-thirds or three-quarters in Kansas and Nebraska, a large part, -practically all of Oklahoma or the Indian Territory and a large part -of Texas, and take what was raised in 1907 on the new fields that -were opened up, any new territory after 1882, and you will find that -it is approaching 300,000,000 bushels, but the increase in the whole -country in that twenty-five years was only 130,000,000 bushels, so -that the old fields fell off about 170,000,000 bushels. - -"Are we increasing our yield per acre? By no manner of means. It has -been a steady and uniform decline for the past thirty years. Now, we -have as good wheat fields as there are anywhere on the continent, and -they will be made better. I am not a disciple of Malthus, because -Malthus was an honest man no doubt, but when he wrote he did not -understand the science of modern agriculture or the adaptation of -the soil or of the seed to the soil, or the commercial value of a -correct analysis of the soil and the adaptation of the soil nor its -commercial value as suited to the crop it is best fitted for. All -these things we have learned, and while you are teaching your young -people let me advise you that the school that is most entitled to -your care and the school that will do the most for the state in -every place and will turn out men and women as they have always in -industry and intelligence and everything else that goes to make good -citizenship, the school attended by the boy on the farm is certainly -as good as the best. - -"When your forests are cut and hauled away, and sold to somebody -else you have then, and we will give you a perennial forest, a crop -every year of great value too. But we ought to be able to take -care of our land and we will. I have no doubt about the future. -We will do what other people have been compelled to do. In 1790, -Great Britain was down to fourteen bushels. We are down to thirteen -and nine-tenths now, average. They took the question up and it was -much easier for them to control, as far as territory was concerned, -because the territory was small, in the hands of a few land owners, -mostly rented, and they faced conditions compelling the land owner to -sub-fallow, and fertilize and carry one crop year after year. They -appointed a royal commission and that royal commission went to work -jointly. We have a royal commission, too, and they are able men. One -is a professor at Cornell and another is a publisher of books in -New York, and another is Mr. Pinchot, who is doing a great deal of -work, but he is overrun with the work he has to do. This commission -is to report in time for the meeting of Congress. Now, bear this in -mind, Great Britain started in 1790 trying to keep the people on the -land. The landlord was afraid of the great drift of the agricultural -people to the colonies and the new republic, the United States at -that time. The new republic was going to impoverish them, and leave -them without any rent rolls. They went to work intelligently and in -1810 and 1811 Sir Humphrey David, the foremost scientist of his time, -delivered most intelligent lectures on the qualities of the soil. In -forty or fifty years after they started they had gotten their yield -up to an average of twenty-five bushels per acre. Last year, it was -32.2. Starting at fourteen we ought to get up in place of 13.9 or -14, we ought to be able to get up to 28 or 30, and if we do we will -have grain to feed our 200,000,000 people and to spare, and what do I -hear? 'Some more, and then some?' Now in going over those questions, -I am not worrying about the future of the country. I have more -confidence in it today, the day for cheap wheat has left the United -States, not to return, and we can stand that. This land, this side of -the range, you can devote to better uses than raising wheat. I do not -know why you should not get returns, as I said, that would equal 10 -per cent. on $2,000 per acre. You can do it. There is no question as -to that." - - - - -SOUTHERN RAILWAYS AND THEIR NEEDS - -BY - -JOHN F. WALLACE. - - Abstract of Address before Southern Commercial Congress - Washington, D. C., Dec. 7 and 8, 1908. - - -This question has been extensively treated by leading railroad men, -statesmen and Press of the South, and admirably covered by addresses -on numerous occasions before various audiences throughout the South. - -I therefore feel that the southern railroad situation is gradually -becoming better understood, not only by the public at large, but by -the railway men of the South, who are jointly appreciative of the -fact that the greatest need of southern railroads is the confidence -and support of the communities through which they run and serve. - -Therefore, my remarks will be few, and are made in order that certain -fundamentals may be read into the record of this convention. - -For the purposes of this address the South is described as that -portion of the United States lying south of the Potomac and Ohio -Rivers and east of the Mississippi. - -Shortly after the close of the Civil war, the South realizing the -changed order of things, accepted the situation in the spirit -of American manhood and started on a new era of industrial and -commercial development. - -One of the first necessities was a comprehensive system of -transportation facilities. The railroads, which prior to the Civil -war had compared favorably with those in the North, at its close were -practically bankrupt financially and physically, and were more the -shadow than the substance of what they should have been. - -Southerners with brains and energy, starting with 11,587 miles of -detached, dilapidated and crippled railways, immediately commenced -to lay the foundation of the present industrial and commercial -prosperity in the South by constructing its lines of railway. - -The efforts of these men and the confidence they were able to inspire -in northern and foreign capital are best illustrated by the fact that -today the South is served with 46,434 miles of railroad, serving -eleven states, twenty million people, and representing a total -investment in round numbers of two billion dollars. - -Of these 46,434 miles of railroads only 1,134 miles approximately, or -2½ percent, are double track. It is possible that the next ten years -will see at least one-fourth, or over ten thousand, additional miles -of second track. - -It must be borne in mind that while transportation is the burden -bearer of both production and commerce, it is only able to perform -the full and complete measure of its functions when properly -nourished and assisted by finance. - -In ancient days the birth of civilization started with the ability -to preserve food products. This grew from the temporary necessity of -accumulating sufficient food to last from one chase to another, or to -enable journeys to be performed or winter climates endured, to the -storage of vast quantities of food to enable nations to survive years -of famine, as was exemplified by the storage of grain in Egypt in the -days of Joseph, which period history shows us was the crowning epoch -of Egyptian civilization. - -Today the measure of our modern civilization is our transportation -facilities. Safe, efficient and rapid communication, and the economy -of the world's transportation systems, are binding the nations of -the earth closer together day by day, and helping to create the -conditions which will ultimately place the crown of accomplishment -upon our modern civilization. - -Coming back to the South, from which we have been temporarily led -astray, it is self-evident to the careful observer that all the -diverse interests of this section--agriculture, mining, manufacture, -commerce and banking--are unavoidably and irrevocably bound up with -the transportation facilities furnished and to be furnished by the -railway systems ramifying its territory and performing a service for -the South similar to that performed by the arteries and blood-vessels -in the body of corporeal man. - -It is also apparent to the impartial observer that if the South is to -reach its highest state of development its transportation facilities -should not lag, but should lead the march of progress, and that this -development should be stimulated in every possible way; and men of -the South should never forget for a single moment that _the needs of -the railroads are the needs of the South_. - -It has been our custom in America to anticipate future needs in -transportation, and in a measure attempt to forestall and provide for -them. - -The policy of foreign countries has been practically the reverse. The -railway systems of England have been constructed to take care of and -supply a demand for transportation facilities that already existed. - -The railroads of the United States in the South and West have been -projected and constructed, and to a great extent financed, by men -whose inspiration was a firm belief in an unseen future and whose -assets were largely composed of hope and an undying faith in the -future development of their country. - -Now, the future demands for increased transportation facilities in -the South are plainly indicated by past records, showing the growth -of productive activities and the constant increase of tonnage to be -moved. - -If these requirements are to be met, demand and supply must move -forward hand in hand. Additional tonnage will justify increased -facilities and increased facilities will stimulate still greater -tonnage. - -During the past 25 years the total products of the South, from -agriculture, forest, mines and manufactures, have increased in -valuation over 225 per cent. During the last five years of this -period, ending in 1906, the increase has been 50 per cent. - -The common fallacy that a railroad is completed when opened for -traffic has long since passed away, at least in the minds of -intelligent men. - -The railroad of today is no sooner completed as a single track, than -it becomes necessary to provide industrial spurs; additional or -enlarged terminals; replace its temporary structures by permanent -ones; widen its excavations; strengthen its embankments; provide -passing tracks, additional shop facilities, enlarged passenger and -freight stations, warehouses, elevators, docks and wharves at water -terminals, additional tracks, heavier rail, rock ballast, elimination -of curves, reduction of grades, block signals, elimination of grade -crossings, heavier engines, larger and better cars, to the end that -the constantly growing requirements and exactions of modern traffic -conditions may be met; all of which requires increased expenditures, -which it is easily seen could not in any event be provided for out of -earnings. - -During the next ten years the railroads of the South will require -$1,000,000,000 to enable them to fully provide for the increased -demands for transportation facilities, an average of $100,000,000 -per annum. Including the estimated increased mileage and the present -capital investment, the resulting average capitalization would amount -to $53,000 per mile, being $20,000 per mile under the present average -capitalization of all the railroads of the United States today, which -is $73,000 per mile.[B] - -Meeting the requirements of the railroad situation in the South by -the expenditure of a round billion dollars during the next ten years, -as outlined herein, would make the total investment in southern -railways at the end of that period three billions of dollars on an -estimated mileage of 56,000. - -It would require average earnings of $9,000 gross per mile per -annum, with operating expenses at 70 per cent of the gross, to yield -sufficient net income to provide a return of 5 per cent on this total -investment. - -When these figures are compared with the present average gross -earnings of the railroads of the United States, $11,400 per mile -per annum, with an average cost of operation of $7,757 per annum, -resulting in a ratio of operating expenses to gross earnings of 68 -per cent, the above estimates appear reasonable and conservative. - -Even if this expenditure is made and the results predicted obtained -at the end of the ten-year period, southern railroads will still fall -approximately 25 per cent short of yielding the present average gross -earnings per mile per annum of the railroads of the United States -today. - -To provide funds to meet these ever-growing and incessant demands for -additional facilities, the railroad companies must necessarily be -large borrowers. - -The prosperity of the South in the next decade, and in those to -follow after, depends upon the ability of the owners and managers of -southern railways to foresee and provide for future necessities, and -upon the promptness with which the work is accomplished. - -The ability of railroads to construct these improvements, which are -so essential to the future prosperity of the South, depends upon the -willingness of capital to furnish the necessary funds for the purpose. - -While legislation may control and regulate the returns upon invested -capital, there is no process by which it can compel that investment -originally. While investment is easily retarded it is difficult to -attract. - -There is probably no form of capital investment more open to attack -or more liable to depreciation through unfair or unwise legislation -than the railway investments of today. - -While the speaker is a firm believer in the principles of -governmental control and supervision over the corporate entities -which have been created by the people and for the people, it must not -be forgotten that every shield has its reverse, and that the exercise -of such control and supervision must necessarily be along the lines -of right and justice, which no mere legislative enactment can change. -Any variance brings its own reward, which frequently spells disaster. - -The power to control, regulate and supervise necessarily carries with -it responsibilities from which there can be no escape. - -Every tax, every restriction, every requirement which costs money -or reduces revenue to our southern railroads is a tax which must -ultimately be paid by the communities which they serve. - -The prosperity of the southern railroads and the prosperity of the -South are irrevocably bound together, and the _needs of the South are -identical with the needs of the railroads_. - -The basis of securing capital must necessarily be the ability of -the borrower to inspire confidence in the lender that his capital -will ultimately be returned to him intact, and that he will receive -regularly and promptly adequate hire therefor. - -No section of our great country has such reputation for united action -as the South. In political matters this unity of action for years has -led to the designation "The Solid South." - -What the railroads in this section need today is _a solid South -behind and beneath them_; a solid South taking a calm and rational -view of the immense factor the railways have been and always will be -in the development of its future greatness. - -The recent reversion of sentiment in the State of Georgia, brought -about by a calm and deliberate analysis of the present situation by -the business men of that State, should be the keynote of the future -action of the solid South. - -_The adoption of a policy of fairness and liberality towards the -railroad interests on behalf of all the Southern States, and the -ability to convince the financial world that this action is sincere -and genuine and will be permanent, is the great paramount need of the -railroads of the South today._ - -Prompt action along these lines will enable the railroad companies of -this section to successfully compete in the markets of the world for -the capital needed to carry out the improvements outlined, and thus -provide the facilities which will enable the producers of the South -to ride the crest of the wave of coming prosperity. - -In its calls for capital the southern railroads must come into -competition in the markets of the world, not only with the railroad -requirements of the North, of the East and the West, but with all the -lines of human industry and endeavor throughout the wide world. - -The difference between the five or six per cent paid by southern -railroads for the money which goes into their additional facilities -or equipment, and the three or four per cent which may be yielded -by the high-class world investments, is merely the gauge by which -the confidence of the capitalist is measured in the integrity of his -investments. - -Today it is difficult to secure money for railroad development, -either South or North, at any ordinary rate of interest. Why? Is it -because money is scarce? No. - -I can best answer this by a story of the panic of '93, when a citizen -of Chicago dropped into the office of Lyman Gage, of the First -National Bank of that city, and inquired of Mr. Gage if money was -tight. He replied, "No, the bank had plenty of money." The citizen -said, "That's fine; can I secure a loan of $100,000?" Mr. Gage -replied, "Yes, you can have it; we will loan it to you. What is your -collateral, what security can you give?" It is needless to say that -the loan was not made. - -The customer afterwards remarked to a friend that he had found that -the trouble was not that money was tight, or that money was scarce, -but was due to the scarcity of collateral or security, which is only -another designation for guaranteed confidence. - -This is the situation today. There is not a railroad in the South, -North, East or West that could not secure all of the funds necessary -for any development it might desire to make provided it could show -the capitalists to whom application for the loan was made that it -could furnish security which would insure the repayment of the loan -and the interest thereon as due. - -I doubt if there is a single southern railway system, the officers of -which would not gladly today take up, consider and block out a scheme -for the improvement and betterment of their property, and commence -preparations to enable their system to fully perform the increased -functions of a common carrier, which the abundant years of the -immediate future promise to require, if they could be sure, and in -turn could assure their financial backers, that the earnings of their -road would be amply and safely sufficient to provide for, and take -care of, the investment necessary. - -Therefore, _remember that the needs of the railroads are the needs of -the South_. - -I presume there is no planter, miner, manufacturer, producer of any -sort, banker, merchant or professional man in the wide South who -would not say in a moment that every thousand dollars of capital -invested in his vicinity, or in his town, or in his state, would -be gladly welcomed and eagerly sought for, by the planter paying -eight per cent and the merchant and miscellaneous producer from six -to eight per cent, and that approximately one billion of dollars -injected into the commercial channels of the southern states during -the next ten years would bring a relative measure of prosperity to -every man, woman and child within its borders. - -When it is considered that this amount of money could be invested in -additional railroad improvements and facilities; that under proper -conditions it could be secured at a rate not in excess of five per -cent; that approximately eighty per cent or more would be spent for -southern labor and southern material, and would find its way through -every artery and vein of southern trade and commerce, it would seem -that the solid South would be thoroughly alive to the burning fact -that--_The needs of the railroads are the needs of the South_. - -I might talk to you for hours about the evil and unfairness of -legislative enactments to retard and make unproductive railway -investments; of the injustice of any body of men attempting by -legislation, without giving the railroad corporations proper hearing, -to arbitrarily adjust their rates of toll for either passenger or -freight simply because politicians consider it a popular thing to do. - -I might suggest a multitude of things which could be done to increase -the credit of railroads throughout your section. - -I might mention a multitude of things which have been done to injure -and impair and prevent railroads securing the necessary capital to -provide for their needs. - -I might also attempt to enumerate the ill-advised actions of railroad -managers and employees toward the public. - -I might expatiate upon the foolishness and unwisdom of a -corporation--the creature of the public--attempting to dictate to its -master or declining to obey its commands. - -It is doubtful, however, if the enumeration of the errors and -shortcomings of the fellow-members of the same family ever tends to -a better understanding or more harmonious relationships. The need -of the hour is a recognition of the interdependent relations which -exist between us all, and to remember--intensely, actively, potently -remember--that an "injury to one is an injury to all," and that -"united we stand, divided we fall." - - -FOOTNOTE: - -[B] This includes $15,000 per mile of duplicated capital.--S. T. - - - - -PROBLEMS CONFRONTING AMERICAN RAILWAYS - -BY DANIEL WILLARD, - -PRESIDENT OF THE BALTIMORE & OHIO RAILROAD. - - [An Address delivered at Galesburg, Illinois, to Burlington - Railroad Employes, February 20, 1909, by Mr. Willard, then - Second Vice-President of the Chicago, Burlington & Quincy - Railroad Company.] - - -A short time ago I had occasion to explain to some of your associates -who happened to be in my office, some of the difficulties the -railroads had been contending with during the two years just past, -and I was asked if I would be willing to come to Galesburg and -explain to other Burlington employes the things I had endeavored to -make clear to them. I replied that I would be very glad to do so, and -I suppose that is how I happen to be here tonight. - -I understand that this audience is composed largely of employes of -the Burlington Railroad Company, and I am glad that that is so, and -what I shall say will be addressed particularly to them. - -So much has been said and written about railroads during the last -two years, and by many well qualified to do both, as well as by some -not qualified to do either, that it can hardly be possible that any -new thing remains to be said, and I fear I shall only be able this -evening to repeat to you collectively the same things I have already -said to many of you individually. - -Under the Burlington plan of organization the Second Vice-President -has direct charge of the operation of the line (responsible, of -course, to the President), and for the last five years I have had -the privilege and honor of holding that office. I refer to this only -that I may by so doing establish my relationship with the various -matters to which I shall later specifically refer, because I propose -to confine my remarks chiefly to home matters; that is to say, to -matters pertaining directly to the Burlington Company. I feel that I -ought to be qualified to speak clearly on that subject, and while I -have naturally read much concerning the general railroad question as -a whole, the same sources of information have also been open to you, -I have no doubt many of you have given the general subject as much or -even more study than I have. - -In October, 1907--16 months ago--the Burlington Company did the -largest business in its entire history--ran the most trains, earned -the most money and employed the most men. During that month the names -of 53,000 men appeared upon its pay-rolls; and the same condition -existed quite generally throughout the entire United States. There -was a well-nigh universal complaint of car shortage and lack of -motive power. - -Four months later, reports from the Car Efficiency Bureau in Chicago -showed a surplus of over 325,000 freight cars on the American -railroads. In the meantime the Burlington Company had reduced -its force by nearly 18,000 men and it was estimated that the -transportation business of the country had fallen off more than 30 -per cent. - -What caused this unprecedented change? Men far abler than I have -undertaken to explain, and many reasons have been given, all, I -presume, more or less in harmony with the facts, but influenced no -doubt by each man's point of view. I say, candidly, I do not know -what caused it; that is, assuming that there _was any one cause_, but -I think I can point out to you _some_ of the _contributing_ causes, -at least so far as the Burlington Company is concerned. - -A railroad, as you all well know, is a living, growing thing. It is -never finished, or if we think we have finished some certain part, -as was probably thought when the original stone engine houses were -built here some years ago, or when the first bridge was built across -the Mississippi River at Burlington, it always happens that heavier, -larger, and longer engines come along in course of time, forced upon -us by the changed conditions, and our engine house which was built -for all time becomes too short, and our bridge is too light, and -both must be rebuilt. The same thing is going on in every department -of railroad operations--ballast, ties, rails, coaches, station -buildings, even grades and curvature, all come within the changing -influence of time and progress. I referred to the engine house -specifically simply to illustrate my point. - -Because of the constant change or evolution which is going on, it is -necessary that Railroad Companies, if they expect to keep abreast -of the times, should make annually large expenditures for such -improvements as from time to time become desirable or necessary, if -the standard of service is to be raised, or even maintained. These -are called extraordinary expenditures, and it is customary on this -Line to prepare each year, as of January 1st, what is called a -Budget, being in effect a list of the more important improvements -considered necessary by the officers of the Road. The Budget shows -the separate items, with description of each, and also estimated -cost. It may and does include such items as new cars or engines -needed, additional sidetracks, new terminal yards, such as you have -here, water treating plants, new coal chutes, etc. - -On January 1, 1907, the sum total of the Burlington Budget, as it -stood approved by the President on that date, amounted to something -over $16,000,000.00. It included some new equipment and also some -quite large improvements, such as new yard at Lincoln, grade -reductions between Galesburg and Savanna, etc. - -The Burlington System is over 9,000 miles in length, and goes through -parts of eleven different states. On the 1st of January, 1907, the -legislatures in all of the eleven states, I think, were in session. -The Federal Congress was also in session at Washington. Bills having -special reference to railroads were being introduced daily in some of -the legislative bodies above mentioned. I cannot say now that all of -them were against the railroads, but I feel I am justified in saying -that while perhaps some of them if passed might not have injured the -railroads much, none, or at most very few, were intended to help the -roads. In fact, the attitude of the Federal Congress as well as of -most of the state legislatures was considered by nearly all railroad -owners, and officers as well, as distinctly hostile. This belief may -or may not have been justified by the facts--at any rate it existed. -The owners of the Burlington Company believed it. Its executive -officers believed it. I believed it. - -The number of bills affecting railroads introduced in the -legislatures of the eleven states above referred to, and in the -Federal Congress, during the session of Winter of 1906-1907 was -over 800--at least, over 800 such bills were actually laid upon my -desk. Among these were bills reducing the passenger fares in several -states; others about reciprocal demurrage--if any one can explain how -such a matter can be made reciprocal; still others fixing the speed -of stock trains, and the size of caboose cars; fixing the hours of -labor for men in certain branches of the service (and I wish to say -here that that part of the Federal law fixing limit of hours for men -in train and engine service has my hearty support); bills having -reference to the liability of the railroads to their patrons and -employes, etc., etc. I do not wish you to understand that I criticise -all, or for that matter, any, of the bills by this enumeration. I -am now simply reciting the facts. But whether the bills were good or -bad, desirable or undesirable, it was clear if some of them became -laws that the expenses of the railroads would in consequence be -largely increased, and no way was provided whereby the revenue or -earnings would be correspondingly raised--in fact, there seemed to be -a demand from all directions that rates should be reduced, and they -were reduced in many states. - -Another important movement was also under way at the same time, and -that was in the direction of a general wage increase in practically -all departments. This one item alone cost the Burlington Company -$3,000,000.00 a year. - -Now, what effect do you suppose all these things had upon the Budget -and similar questions? Just the same effect that the same kind of -questions in a personal way would have had upon you and your personal -affairs. - -You will remember that I said the Budget amounted to $16,000,000 on -January 1, 1907. That was just before this wave of anti-railroad -legislation referred to had fully developed; but when we saw what -was happening, when we read the bills that were being passed -daily, and the others that were under consideration, we became -very much concerned. It seemed clear to us that even if business -continued good--and remember this was ten months before the panic of -November--that our earnings would probably be considerably reduced -by the reduction of freight and passenger rates in various states, -and our expenses were certain to be much increased by some of the -legislation and also by the advance in wages, and it was necessary -to consider where the money was coming from to pay the large bills -that would come due in connection with the Budget program. After -considering the matter very carefully early in January, we decided, -first, not to authorize anything further in the way of improvements -unless actually necessary; and, second, to stop as many things -already authorized as it was possible to get along without. Among -the things so put off or deferred were the building of a new engine -house and necessary shop buildings at Clyde; the construction of a -new line about 55 miles in length from Herrin to the Ohio River; -double track between Galesburg and Bushnell; new passenger depots at -Monmouth and several other places; work on new terminals at Lincoln, -etc. Of course, it may not have seemed to you at the time that we -were stopping, because we still had so many things under way, and you -cannot prudently stop large undertakings all at once--for instance, -we could not stop work on the new yard at Galesburg when it was half -done, and you will recall that it required more than two years to -complete the plan, but we did slow up as much as possible; that is -to say, we tried to finish up such things as were authorized before -January 1, 1907, and which were still considered necessary, but we -did not start any new things. The effect of this is best shown by -the size of the Budget on January 1, 1908--it was then a little over -$8,000,000.00, or about one-half what is was twelve months before. -In the meantime the November panic of 1907 had come upon us, and it -seemed not only best, but necessary, to continue the policy decided -upon in January of that year, and on the 1st of January, 1909, the -Budget, as it then stood, and as it now stands, amounts to a little -less than $1,000,000.00; and this brings us up to the present time. - -In February, 1907, I had the honor to be invited to the annual -banquet of the Commercial Club at Clarinda, Iowa, and I was asked -to speak about the railroad situation. After referring to some of -the proposed laws that were then under consideration in the various -states, I continued as follows: "I will not speak of the probable -effect of such a public policy as I have referred to, on the general -railroad situation, as others are much better qualified to do that, -but speaking for the Company which I represent, we view the situation -with much concern, and we have done, I think, what any prudent -manager would do if he saw confronting him conditions which he was -certain would increase his cost of operation a large but unknown -amount and at the same time reduce his revenues--we have planned to -curtail our expenditures wherever possible. I do not mean that we -shall let the property suffer, or lower the character of the service, -but we will not undertake extensions or large improvements until we -can see more clearly where the money is coming from, or if it comes -at all. How far reaching this policy of retrenchment, or perhaps I -should say curtailment, will be, I, at least, cannot say; it will -depend upon the future. Certain it is that our expenditures in that -direction will be much less this year than last, which means, of -course, fewer men employed and less material purchased." It is two -years since that was written, and I regret to say that circumstances -have not yet seemed to justify any considerable change of policy. - -The Burlington Company has on its pay-rolls today about 38,000 men, -15,000 less than in October, 1907, and 7,000 less than in February, -1907. We are doing all the things that we consider necessary for the -safe operation of the trains, and for the proper maintenance of the -property, but conditions so far have not seemed to us to justify a -resumption of the policy of betterments and extension followed during -1906 and the preceding years. I do not know absolutely that it is so, -but I imagine that the other Railroad Companies have been pursuing -much the same course as we have here. The latest reports indicate -that the total railroad mileage of the United States is about -230,000, so that the Burlington's mileage is about one-twenty-fifth -of the whole, and if you multiply what has happened on this road -by twenty-five, you will get a result for the whole country which -will probably not be far from the truth. In fact the Eastern roads -suffered much more from the actual business depression than we did in -the West. - -It has been stated by men who should be competent judges that from -one-third to one-half of all manufactured steel and iron is used -either directly or indirectly by the railroads, and that fully -one-half of all the lumber manufactured is so used. When it became -necessary for the railroads to stop buying new cars and engines, and -also to stop all new construction and improvements, when possible -to do so, you can well understand the effect that that course must -have had upon the two particular lines of business just mentioned. Of -course, many other lines were similarly affected, and it would seem -logical that no full and real resumption of business can be expected -until the railroads are again able to resume the policy which they -were forced to abandon early in 1907. - -When will that time come? I do not know. What will bring it about? -I do not know that either, but I do know what will help matters -greatly, at least so far as the Burlington Company is concerned; -but before saying what I have in mind in that connection, I will -digress a little, and briefly explain something of the financial -responsibilities of a large Railroad Company, because in spite of -all we hear about corrupt management, stock watering, etc., it is -still a fact that the railroads did cost something, and the money -that was used for that purpose was all, or very nearly all, furnished -by private persons like yourselves, and it was furnished by them -for investment because they thought or hoped such an investment -would be profitable to them, for there is, there can be no other -reason for investing money in anything, unless it be invested for -charitable purposes. The Burlington System today, as I have said, is -over 9,000 miles in length. It has large terminals in Chicago, St. -Louis, Kansas City, and the other great cities it reaches. It owns -1,600 locomotives, 1,200 passenger cars, and 52,000 freight cars. -The last annual report shows that its bonded debt (or the size of -its mortgage) amounts in round numbers to $165,000,000.00, equal -to about $18,000.00 a mile. This mortgage is legally entitled to -interest at the average rate of 4.185 per cent per annum, because -it is so specified in the bond, and that interest must be paid, -or the mortgage would be foreclosed just as would happen if you -failed to pay the interest on a mortgage, in case you happened -to have one on your home. In addition to the bonded debt above -referred to, there is outstanding $110,000,000.00 of stock in round -figures, or about $12,000.00 a mile, making a total capitalization -of $30,000.00 per mile. We are constantly told that the American -railroads are overcapitalized, and yet the Burlington Road could -not be replaced today for twice its capitalization. I doubt if it -could be duplicated for three times its outstanding capital. The -stock, as you know, receives as interest or dividends whatever sum -the Directors may decide to pay, out of what is left after paying -the operating expenses, taxes, and interest on the mortgage. If -there is nothing left after paying the other items mentioned above, -the stockholders receive nothing, so that there is a certain risk -connected with an investment in railroad stock that does not apply -to railway or Government bonds. For a number of years the Burlington -Company has paid 8 per cent dividends to its stockholders. It has -earned more than that, as the annual reports show, and the Directors -might legally and properly have paid larger dividends, but they did -not, and all the money earned in excess of 8 per cent on the stock -has been spent for betterments, new equipment, etc. This policy, -pursued through a long period of years, as it has been, explains how -it is that the Burlington is in such good physical condition as it -is today, and with such a low capitalization. With this explanation, -you will understand, I am sure, that with an increase per year in -wages alone of $3,000,000.00, together with other increases due to -legislation, such as $325,000.00 per year because of the nine-hour -law for operators, and a smaller income because of rates reduced -(freight and passenger) in many states, the surplus, if any, after -paying dividends would be much less than formerly, and if any new -work was undertaken it would be necessary to keep its cost within -such surplus as might be available, or else borrow the money with -which to pay for such work. I hope I have now made clear why it was -that we became worried about the Budget in January, 1907, and why for -the last two years we have been trying, so to speak, to get our house -in order. It will perhaps be said that we could have borrowed money -for new extensions, betterments, etc., and that is actually what we -were compelled to do, in order to complete the Budget plans above -referred to; but what prudent man would want to borrow beyond his -forced necessities, at a time when the future seemed so uncertain, -and when the interest on the money so borrowed would add that much -more to his existing burdens? The same sound principles should and -do underlie railroad operations that you should and do apply to -your own personal affairs. The items are larger in the case of the -railroad--that is all. - -I will now repeat the question--What will bring about a resumption -of business on railroads? And if I have succeeded in making clear -what I sought to explain, I think you can answer the question just as -well as 1 can, but I will give you my views, and you will now be in -position to judge whether they seem sound or otherwise. - -In my opinion, railroad business, which really means all business, -will recover its former proportions when the influences and forces -at work during the last two or three years shall have ceased doing -the things that have contributed so largely towards bringing about -the depression which we all deplore. Perhaps that is not quite -clear. I do not mean that laws already made must necessarily be -unmade, that wages raised must be reduced, but we must have a rest. -We must be given time and opportunity to work out the new problems -that have been forced upon us during the last two years. We must be -given a chance to find out what it is going to cost to meet the new -requirements, and also how much our revenues are going to be reduced -by reduction of rates. Perhaps it will be found that by new methods -growing out of the exigencies of the case we will still be able to -earn a surplus sufficient to justify the resumption of extraordinary -expenditures as formerly. If not, then, either rates must be -advanced, or wages be reduced, or improvements must wait or be -carried on with borrowed money and railroads will be slow to increase -their interest-bearing debt under such circumstances. - -As I have said, two years ago during the legislative period, 800 -bills affecting railroads were introduced in states reached by the -Burlington System, including those proposed at Washington. So far -this season, 272 such bills have been presented. It is too early now -to venture even a guess as to how many of them will become laws, -but until we know just what to expect, you can clearly see, I am -sure, that we will not feel like incurring any new or unnecessary -obligations. - -Among the bills so far introduced are two in Illinois, called -the full-crew bills. These two bills, if passed, will increase -the cost of operation on the Burlington Road alone $96,000.00 a -year, on basis of present business. In Nebraska a similar bill -is under consideration. It is true that the two Illinois bills -if they become laws will not necessarily make our operations in -Illinois unprofitable, but that class of legislation will do much -to discourage new developments, by making such developments more -difficult, or rather, less profitable; and besides, in my opinion, -such laws are not necessary. - -As Burlington employes, you may be interested in what I am now going -to tell you about the development of the coal business north through -Galesburg. I need not tell you how much it has increased during -the last four years, for you have seen it grow from practically -nothing up to its present proportions. Some six or seven years ago -the Burlington officers gave careful consideration to the problem -of increasing the Company's business, and you must bear in mind -that freight shipments do not just _happen_ to go this way or that. -Well, they finally decided that the most promising opening was to -try and develop a coal movement from Southern Illinois to the cities -of St. Paul and Minneapolis, and the Northwest generally, where the -winters are severe and fuel supply limited. It was found that if -coal from Illinois was taken to the Twin Cities it would have to be -sold in competition with coal from Pennsylvania and other eastern -states shipped by water to Duluth. It was also found that the coal -from Franklin and Williamson Counties in the southern part of the -state, while of very good quality, would not bring the same price -on the market in St. Paul as the eastern coal. It was also found -that in order to be sold at a sufficient profit to the dealer, in -competition with the eastern coal, the railroad would have to carry -it from Herrin, Ill., to St. Paul, 648 miles, for not more than $2.10 -per ton, or 3.2 mills per ton mile. It was also found that it was -impossible to do this at a profit to the railroad, as conditions -then were; that is to say, we could not haul coal at that rate and -make money on a road full of one per cent grades. The engineers were -put to work, however, and an estimate was prepared showing what it -would cost to put the line from Savanna to Herrin all to a standard -grade not exceeding sixteen feet per mile, the line above Savanna -being all right. It was believed that it would pay to make the -improvement--and you know the rest. The line was built from Centralia -to Herrin, the Fenton-Thompson cut-off was built, grades were cut, -and, altogether, more than $5,000,000 were spent to put the road -in shape to haul coal to St. Paul in 3,000-ton trains. Of course, -many new engines were bought, as well as new and high capacity cars -suitable for the coal trade. It is a low rate business, and as you -know, the cars as a rule return empty, but handled over low grades -and in full trains it pays a fair profit; but every additional item -of cost, of course, reduces the profit. - -Now to show the effect of proposed legislation. In Nebraska a bill -has been introduced placing the limit of cars that can be legally -handled in one train at fifty. If this bill becomes a law, how long -will it be before somebody will want a similar one in Illinois, -and if you are going to fix a limit so as to make it necessary to -run more trains, and consequently employ more men, and that is the -undoubted purpose of the bill, how long will it be before the limit -will be reduced to forty, or even twenty-five? Where will the thing -end, and when? With the mere possibility of such legislation looming -up in the future, can you expect improvements such as I have just -described to continue? Would you recommend them if in my place? - -How long will such legislation find favor in our halls of Congress? -Just as long as your representatives think you want it--by you -I mean the majority of their constituents--and no longer. Your -representatives and senators are human. They seek to obtain political -preferment at the polls, and desire to remain in office. They must -have a majority of the votes to be elected, and naturally they will -shape their course so as to meet your wishes, as they understand -them, because by so doing they hope to retain your support. - -No one today questions the right of the properly constituted -authorities to supervise the railroads. No one defends the rebate, -or discrimination of any kind, but, as the Supreme Court of the -United States has recently well said, "_It must be remembered that -railroads are the private property of their owners; that, while -from the public character of the work in which they are engaged, the -public has the power to prescribe rules for securing faithful and -efficient service and equality between shippers and communities, yet -in no proper sense is the public a general manager_." - -No doubt there may be much in connection with railway management -in the past (and for that matter at the present time as well) to -criticise; but please tell me what line of human undertaking since -the world began, be it industrial, educational or religious, has -been free from criticism; and, granting all that is said against -the railroads, then what? This is what we find: That the railroad -rates in this country are the lowest in the world, with few minor -exceptions not worth considering; that the wages paid railroad -employes in the United States are higher than anywhere else in the -world, and that the capitalization of American railroads per mile, -as reported by the Interstate Commerce Commission, is but one-fourth -as much as that of English railroads, and one-half that of the -railroads of Germany and France, and one-third that of Belgium; and -this has all been accomplished in a country where a high protective -tariff obtains, and where everything the railroad uses costs more -on that account. It is claimed that our manufacturers must have the -protection of a high tariff in order to enable them to meet the -prices of their foreign competitors and pay American wages; but the -American railroad sells its product, that is, transportation, for -less than any other nation and still pays higher wages. A locomotive -engineer, for instance, receives $4.01 per day here as against $1.62 -per day in England, and $1.01 per day in Belgium. - -It is sometimes said that railroads have received great help from the -people in the shape of land grants, and on that account should give -much in return. Let me give one instance of how this has worked with -the Burlington Company. In order to induce the original projectors -of this line to extend the road through Iowa, this Company was given -359,000 acres of government land in that state, selling at that time -at $1.25 per acre, amounting to less than $450,000 cash value. By an -act of Congress, passed over thirty-two years ago, a reduction is -made of 20 per cent from the mail pay on all land grant roads. At the -present time the amount so deducted from the Burlington, because of -the Iowa grant, amounts to over $65,000 a year, and since the law was -passed has amounted in the aggregate to over $1,500,000, or more than -three times the original value of the entire grant. Not only that, -but it goes on without end. Do you think that is fair? - -We do not ask for favors. We wish to be treated fairly; that is -all. No one can possibly be more interested in the prosperity of -the railroads than the railroad employes. From every dollar earned -by the railroad forty-two cents go directly to pay wages of railway -employes, while only twenty-one cents, or one-half that amount, go -to pay interest and dividends. In no other country in the world -does the railroad employe get so large a share and the security -holder so little. Why should not the man who invests his money in -railroad stock receive as much return in shape of dividends as the -man who invests his in a farm or factory? The last census report of -the government, that for 1900, showed that money invested in farm -lands in the United States earned an average return of over 10 per -cent, and money invested in manufactures earned over 19 per cent. -The governor of Iowa, in a printed article over his own signature, -appearing in the February, 1907, number of "Farming," gave a number -of specific instances where money invested in farm lands in Iowa -earned from 18 to 23 per cent, and he referred to such cases as -typical. The last report of the Interstate Commerce Commission shows -total earnings of all railroads in the United States for year ending -June 30, 1907, to have been $2,589,105,578. It also shows total -capitalization as $13,053,974,156, and money paid as interest and -dividends $551,128,713, equal to 4.2 per cent on capitalization. -Certainly this does not seem excessive when compared with profits in -farming and manufacturing as given above. - -We are glad to know that our farmers and manufacturers are -prosperous, because we have long since learned that when they are not -prosperous the railroads cannot prosper. I fear they have not yet -fully realized that it is better for them, also, that the railroads -should prosper. We hear no complaints in Congress or elsewhere -because our farmers and manufacturers are prosperous; in fact, we are -all inclined to boast about it. - -The last annual report of the Interstate Commerce Commission gives -the aggregate capitalization of the railroads in the United States -as over $13,000,000,000, showing that the railroad investment in -our country is second in amount only to that in agriculture. It is -estimated that the number of railroad stockholders today is over -400,000. We know that in 1907 over 1,600,000 men were employed on -American railroads. Do you know of any good reason why this army -of railroad men, together with the 400,000 stockholders, should not -receive as fair consideration from government and people at large -as the farmer and manufacturer receive? And yet the government in -effect lets the one have money without interest to buy his land, and -by means of a tariff makes you pay more for much that you buy, so -that the other can pay his employes good wages. Personally I make -no complaint because of either of these things; but so far as I can -learn no one in Congress has suggested that railroads should raise -their rates so that you might receive higher wages, and yet the two -things, rates and wages, are very closely related. - -If anything I have said has helped you to a better understanding -of the railroad problem, I am glad. If it has caused you to take a -renewed or deeper interest in the subject, I am glad. I could go on -and multiply cases in confirmation of what I have said had I the -time, but what I have said already is perhaps sufficient. Do you -intend to make railroading your life business? Are you interested in -the prosperity of railroads, and particularly of the Burlington? Do -you clearly see the relation between rates and wages? Do you think -wages are too high? If not, perhaps you do not agree with one of -your congressmen in Washington, who has just recently, on the floor -of the house, urged that the Interstate Commerce Commission be given -more power over rates, which means power to reduce them still more, -because they have never, so far as I have heard, exercised their -power over rates in any other way. Personally, I am glad I can claim -to be a railroad man, and not only glad, but proud of it as well. I -think the American railway is the one great institution above all -others that Americans should be proud of. - -Mr. W. R. Lawson, an Englishman, who investigated our railroads in -1903, wrote upon his return, in his book on American Industrial -Problems: "The science of transportation is going to be the special -contribution of the American people to political economy." - -Mr. Neville Priestley, an English gentleman and Under Secretary to -the Government of India, Railway Department, came to this country -in 1904 for the purpose of investigating our American railroads. -His report was submitted to the English government and printed.[C] -Among other things he said: "American railway men are quick to see a -new idea. They are quicker still to try it. They take a great pride -in their profession and are striving to get at the science of it. -That their methods are not always perfect is what might have been -expected, but they have managed to do what no other country in the -world has done, and that is, carry their goods traffic profitably at -extraordinarily low rates, notwithstanding the fact that they pay -more for their labor than any other country. It is in the study of -how they do this that much benefit can be derived by other countries." - -Mr. Leroy Beaulieu, a distinguished French economist, who visited -this country in 1905 and made a careful examination of American -economic conditions, wrote as follows upon his return to his native -country: "All in all, the prosperity of the American railway system -as well as the excellence of service it renders, is undeniable. If, -therefore, one were in search of model railway methods, it would be -wise to turn to those practiced under the free American system, not -to those illustrated by a system operated under the debilitating -control of the state." - -It has been well said that "a prophet is not without honor save in -his own country and in his own house." - - -FOOTNOTE: - -[C] A condensation of Mr. Priestley's able report was made for the -Bureau of Railway News and can be had on application. - - - - -THE RAILROAD SITUATION OF TODAY - -BY - -FRANK TRUMBULL - -PRESIDENT OF THE COLORADO & SOUTHERN RAILWAY COMPANY. - - An Address to the Western Society of Engineers at their Annual - Dinner, Chicago, Jan. 5, 1909. - - -_Mr. President and Gentlemen of the Society_: - -I shall not attempt to deal with any technical phase of the railroad -industry, and in saying this I am emboldened by a declaration which I -find in the Constitution of your society, to-wit: - - "This Society shall neither endorse nor recommend any - individual or any specific or engineering production, but the - opinion of the Society may be expressed on such subjects as - affect public welfare." - -The American railroad administration of today has abundantly -demonstrated its ability to solve all engineering and mechanical -problems, and we may rely upon it that the same American enterprise -and valor which have gridironed the continent with shining bands of -steel will solve any technical problem that may be ahead of us for -which money may be had. - -I therefore proceed at once to engage your thought for a few minutes, -if I may, upon what seems to me to be the great problem of the -American railroad situation of today; that is, how to satisfactorily -settle the relations between private capital and the users of the -railroads. - - -FOUR YEARS' RETROSPECT. - -During the last four years the American railroad has been in a -seething cauldron of publicity; a good deal of refuse has risen to -the surface and has needed to be skimmed off,--but I think I do not -violate any confidence in saying that not all of it has come from -the body of the railroad. Part of it seems to consist of political -bacteria and defunct statutes which attempted to violate the voice of -the people,--the Constitution which legislators had sworn to support. -And in this connection, perhaps I ought, in passing, to say a word -which has rarely been spoken in defense of the railroads, by pointing -out the shame of putting them to the great cost of proving in the -courts the unconstitutionality of statutes which ought never to have -been enacted because they were never valid. In the last four years -there has been much noise; the air has been filled with shouts and -cries, and more or less dust. Hysteria and virtue, although really -not at all alike, became confused, and a very large percentage of -the public absorbed the idea that the railroad highways are public -property, forgetting that all of us are absolutely dependent upon -private capital for the American railroad of today. Again, we seem to -have been upon a storm-tossed ocean. Fortunate are we that through -it all has run the Gulf Stream of our wonderful American resources. -If it were not for that, we should all have been ruined. We have -survived, but the pity of it is to think how much better off we might -be, if "We, the People of the United States," would, in financial -legislation, railroad regulation and other matters, only exercise our -wisdom as much as we do our power. Legislation has been restrictive, -not constructive. There is very little in it, thus far, to help the -railroad. Nearly everything seems to have been thought of, except -provision for money or for improving credit so as to command cheap -money. The country has been flooded with conflicting laws and still -the cry goes up for more bureaucratic power and more statutes. It -reminds me of an immigration meeting in Mississippi: - -The court-house was filled with an assemblage of white people, and -when the meeting adjourned an old darkey asked one of the gentlemen -who came out of the court-house what the meeting was for. The reply -was that it was an immigration meeting. "What is dat?" asked the -darkey, to which the gentleman responded, "We want to get more white -people from the North and East to settle here." Whereupon the darkey -said, "Foh de Lawd's sake, Majah, dars moh white people in dis county -now dan us niggahs can support!" - -I admit there have been many evils in railroad administration, but -I modestly affirm that there have been no more than in other lines -of business. The railroad industry of this country is young and it -acquired some children's diseases. Many people think the railroads -would have recovered from measles, mumps and whooping cough without -prescriptions from forty-seven varieties of doctors--forty-six -states plus the Federal government. It has seemed many times that -the railroad patient has been like the man who fell ill in some -mysterious way. The consulting surgeons determined that an operation -was necessary. They could not locate any definite malady, but they -found five hundred dollars on him so they operated on him for that! -Of one thing, however, we may be absolutely sure--that is that the -law of compensation is always at work. If we have an excess of -regulation, there is less of something else. It is entirely probable -that if there had been no political regulation of railroads, the -people of this country would have more roads, far better and safer -roads, and a greater distribution of wealth than they have today. -But I must not forget that, according to the subject assigned me, we -are here not to look backward, but to look at the present, and then -perhaps take a little look forward. - - -SOME CONTRADICTIONS. - -From a mechanical and traffic standpoint the American railroad of -today is one of the wonders of the age. I give one illustration only: -Compare its splendid performance with a report I have here of the -Northeastern Railway of England, which has a large mineral traffic. -This report shows average contents of loaded freight cars to be 5.72 -tons, and average contents of freight trains to be 114.7 tons.[D] - -On the other hand, the American railroad situation in its political -and governmental relations is a bundle of contradictions. If you were -to engage your money in merchandising or manufacturing, you would -no doubt be appalled if you should discover that some one entirely -outside of your line of business could fix the prices at which you -must sell your product, and that the burden of proof that the prices -so fixed are confiscatory, is upon you,--and that you could not -abandon your operations. Yet this is precisely what may happen if -you invest your money in a railroad. The contradiction is that there -are no reciprocal assurances in your behalf. Neither the State nor -the Federal government will give you any financial aid, nor will -they guarantee you anything, nor will they even protect you against -competition, as France has long since been wise enough to do. - -A second contradiction is that although there was a four years' -war to prevent a division of this country, and although thereafter -our American genius connected up remote sections of our common -country, and although the work of the railroads has been splendidly -national, the attempt to regulate them has been lamentably local and -Lilliputian. I need only cite the conflicts between the enactments -and rate-making of different states and those of the federal -government. We hear more or less these days about the "twilight -zone" between the states on the one hand and the Federal government -on the other; but for those who administer the affairs of a great -railroad system, the phrase "twilight zone" is too polite a term. It -is instead a jungle in which the wayfaring railroad man may easily -lose his way, and possibly be actually devoured by "laws with teeth -in them." We hear a great deal about the simple desire that the -railroads shall obey the law; but who is wise enough to say what the -law is, when only yesterday the Supreme Court of the United States -left an important case unsettled, so far as it was concerned, because -it was divided four to four. These uncertain and conflicting laws and -changes in rates confuse the railroad manager more than the public -has ever realized. - -A third contradiction is the attempt, by anti-trust laws, to maintain -the competitive idea alongside regulation, as if unrestricted -competition were compatible with compulsory uniformity in rates and -service. The President of the United States and other high officials -have spoken in no uncertain terms concerning the absurdity of a -situation like this, and yet thus far there is no relief. - -A fourth contradiction is found in the great increase in cost of -producing transportation without the corresponding increases in -selling prices which have taken place in other kinds of business in -which private capital is engaged. The erroneous impression seems to -prevail that the supply of capital for the railroad industry is an -inexhaustible reservoir, regardless of the compensation which it -shall receive and the conditions under which it shall perform its -work. - -A fifth contradiction is the effort to connect up rate-making with -physical valuations. If it will be a satisfaction to the politicians -to have a physical valuation of all the railroads in the United -States, and the people are willing to be taxed to pay the great -expense of obtaining it, perhaps no great harm will be done; but I -believe all of us here would concede that valuations by the ablest -engineers, if separately made, would not agree, and that before such -valuations could be finished, they would be out of date. Some of us -probably think that for rate-making purposes the Government may as -well be employed in making a physical valuation of farms and farm -improvements in order to ascertain what is a fair price for wheat; -or, for that matter, perhaps be as well employed in adding up car -numbers. I know something of a piece of railroad out west, which -in a great mining excitement was built through rocky and tortuous -gorges, and with four per cent grade hung upon the precipitous sides -of awful mountains in a climate described by one of the inhabitants -as consisting of three seasons--July, August and winter. Later the -boom evaporated and the business of the road got down to one train -a day. In the low ebb of traffic a brakeman one day "sifted" into -the trainmaster's office and asked for a job. The trainmaster put -him through the catechism, and among other things inquired, "What -would you think if you saw a train carrying green signals?" to which -the applicant promptly responded, "I'd think business was picking -up." Now, can any of us tell what they would do in Washington with -a physical valuation of a road like that? Its rates today are only -about one-fifth what they were at first. - -A sixth contradiction is the wide-spread desire to regulate -capitalization. Now it may be that there have been abuses; but if -one asks any of these critics what is the grievance to be remedied, -great silence usually falls upon them, for they are unable to -show any more relation between rate-making and either physical -valuation or capitalization than there is between the price of a -pair of suspenders and the physical valuation or capitalization of -a department store. Railroads are continually importuned to make -rates that will "move the business," as in the case of the Western -road just cited, and those parts of the United States which have the -highest railroad capitalization have the lowest average freight rate. -If you will look at the _American Review of Reviews_ for the month of -June, 1908, you will find a very interesting article by Interstate -Commerce Commissioner Lane on "Railroad Capitalization and Federal -Regulation." His program is a very simple one, and while pointing -out that there should be some way of insuring that the proceeds of -all railroad securities shall be actually invested in "acquisition -of property, construction, completion, extension, or improvement -of facilities, the improvement or maintenance of service and the -discharge or lawful refunding of obligations," he says: - - "Fundamentally, there is at present no inter-dependence of - capitalization and rate--the latter is not in law, nor in - railroad policy, the child of the former--though railroad men - have sometimes expediently urged the claim, and courts have - sometimes too kindly given it their nod of sanction." - -Also, - - "The most potent kind of regulation is that which casts the - burden upon the individual to do the regulating himself and - makes him responsible to the law for dereliction; and the plan - for the regulation of capitalization here presented is founded - upon that theory--to require the directors of the railroad - companies to make public announcement of their security issues, - to publish the objects for which such issues are made, and be - responsible for the use of the proceeds in the precise and - limited manner announced. This is far too modest a program to - please those who delight in elaborate methods of procedure - involving much filing of forms and petitions and many hearings, - appraisements, viseings, and solemn givings of consent; and - without question it is not nearly as thoroughgoing a plan as - others which have been devised. But the simpler the plan is, - the better, if it may effect its purpose." - -He further says that his program - - "does not guarantee the prospective purchaser of the stock that - the stock certificate which bears a printed par value upon - its face does in fact represent property of the full value so - designated; _but this is not a duty which the Government for - any reason is bound to assume_, and I know of no motive arising - out of national policy which compels the assumption of such - responsibility--certainly not at present." - -If our complex government shall control all future issues of railroad -capitalization, we may rely upon it that most of the new railroad -construction in this country, instead of being independent, will be -fathered by existing railroad systems, because their established -credit, whatever it may be, will be required. - - -RECONCILIATION. - -Is it not evident that these contradictions never can be reconciled -by untrained men? I believe that for the American railroad the time -has gone by when illiterate men will be put in charge of millions of -dollars' worth of machinery and other property. We are in a new era. -Railroading is rapidly coming to be a profession. We are necessarily -in all things doing more and more specializing. Why not insist that -the regulation also shall be in accordance with ethical principles -and not determined by political expediency? - -The great over-shadowing problem of reconciling private capital -and the users of railroads, and the contradictions which I have -mentioned, are the inheritance of this generation of railroad men; -and I have no doubt that this generation, like all previous ones, -will be equal to the task put upon it. Out of the painful processes -of the last four years, we have emerged with some gains. In the -first place, the country now realizes that the one million, five -hundred thousand employes and officers of American railroads are -not surpassed in integrity by any other similar number of business -men. During the four years hardly a voice has been lifted to say -this, and so I am glad to have this opportunity to raise my own in -their commendation. In the second place, it is easier for shippers -and railroad traffic men to be honest than it ever was before. -The stoppage of rebates is a distinct gain, morally as well as -financially. In the third place, it has been demonstrated, I think, -that our Government _ought_ always to be bigger than any corporation, -or any man, or any set of men, and this is a good thing for us never -to forget. - -Already publicity has brought about a friendlier feeling between the -people and the railroads, and along certain paths I have no doubt we -shall find our way out of our difficulties, for the American people -are _not_ unfair when they understand a situation. - -Upon one occasion I was making a trip over a division of road -where there was no competition and where we therefore enjoyed one -hundred per cent of the business. There was an unexpected stop for -something and a brakeman went to the rear to protect the train. -Presently a wagon-load of girls came in sight. The brakeman took -out his handkerchief and initiated a flirtation. Then discovering -that I had seen the performance and evidently desiring to square -himself, he said without hesitation, "If we make friends of these -people they ride on our road." One could hardly convey better than -that brakeman did to me, an idea which we should never abandon, -namely, that one of the best assets a road can have is friends, and -I suggest that probably our first duty is to keep in good humor and -be considerate one for another. That involves and includes good -service to the public, and nothing will help more to keep the public -in good humor. The people of this country already have the lowest -rates and the highest wages in the world. They are the best people -in the world and are entitled to the best service in everything. I -believe they should insist upon having the best railroads, and when -they so insist, and realize that our population has thus far doubled -every thirty years and will soon be one hundred million, and not -very long after that one hundred and twenty-five million, and that -our transportation necessities double faster than our population -does, they will set about finding out what is necessary to obtain -adequate railroads, and then we shall probably hear less about rates -and more about efficiency and safety. When the people do this they -will soon discover that it is no more disgraceful to make money in -building railroads than in selling land or in merchandising or in -manufacturing or in mining. They will also discover that although -the courts have said railroad investors are entitled to a reasonable -return upon a fair value, no court--not even that great tribunal, -the Supreme Court of the United States--can finally say what is a -reasonable return. This question would still be unsettled because we -have not yet gotten away from our dependence upon private capital. -What is a reasonable return must be answered by the investor as well -as by the commissions or the courts, because it always takes two to -make a bargain, and money, like its human owners, will go where it -has the best prospective reward and the greatest liberty. The people -will find that what we need in this country is not more bureaucratic -government by untrained officials with brief tenures of political -office, or more power to commissions, but more responsibility upon -boards of directors. If statutes are necessary to insure this, well -and good; but if regulation is general in character and national -in scope, is directed against oppression and discrimination, and -designed to promote safety and efficiency and faithful accounting, -the people will get better results from intelligent and honest -directors than they will from the best governmental management which -can be devised; and so long as the railroads are owned by private -investors, those investors will doubtless insist upon their directors -having more and more to do. - -I am aware that there is a socialistic trend all over the world. -There is more and more disposition to prescribe medicine for other -people to take, but no amount of legislation will change the -fundamental laws of the universe. The fact is,--notwithstanding our -Declaration of Independence,--men are not created equal. It is a -fine thing for all of us that they are not. There is a diversity of -gifts; money-making is one of them, but a man may have the talent -for making money and be totally unable to build a bridge or paint -a portrait or lead an orchestra or an army, and if fortunes are -acquired under the laws which we ourselves have made, why should we -be envious? Unless a rich man hoards money like a miser, it is--if -not alarmed--continuously at work for all of us, through the banks -or otherwise, in spite of anything he can do, and the cheaper it -can be had, the greater the economy to society as a whole. It is -impossible to reduce everybody to a dead level, and how monotonous -it would be if we could! We don't satisfy everybody even in our form -of government, which we are prone to think is the best in the world. -For example, at the last election six and a half million people -did not get what they voted for. Part of them got what they really -wanted, but on the face of the returns, six and a half million were -disappointed, and yet the country goes happily on, apparently to -greater prosperity than ever. - -But how much happier and how much more prosperous we might be if -there were not so much untrained meddling--if there were not so many -brakes upon the wheels of our progress! A brake, we all admit, is -a good thing in its place, but it has no _propulsive_ power, and -the efforts of the time to combine in one man or in any one body -of men the four functions of prosecuting attorney, judge, jury and -executioner, must sooner or later give way. First, because it is -un-American, and where such a condition exists, as Alexander Hamilton -pointed out to the people of New York, "There is no liberty." Second, -because it will not work practically. - -Reconciliation of private capital and the users of railroads might, -of course, be brought about by government ownership, because if -there were a deficit the people could pay it in their taxes. Even -then railroad rates could not be made mathematically consistent, -for government is never mathematically consistent. For example, if -I mail a letter to San Francisco or London, I pay two cents, and if -you mail a letter to Evanston you pay two cents. But nobody seems to -want government ownership, although many people contend that that -would be much fairer and more honest than governmental control of -railroads without financial responsibility. Perhaps a middle ground -may sometime be worked out by a profit-sharing arrangement, as in -Chicago between the city and the street railway companies. That would -have its advantages. Among the advantages would be cheaper money for -railroads, if the government would guarantee a minimum return on -agreed valuations. But of course this would be much more complex than -to work out an arrangement with corporations like street railways, -which do a single kind of business at one rate, instead of a business -affecting every commodity of human consumption and stretching through -forty-six states and two territories. However, I think there is -food for thought for all of us in what has been accomplished here -in Chicago, and the professional intellect present tonight may well -think it over. - -Finally,--while a man has as good a right to increase his fortune by -investing in railroads as in any other manner, no matter what it may -be, I believe we shall find a solution for some of the puzzles that -beset us,--not through the gospel of tyranny on the one hand, nor -the gospel of equality on the other hand, but through a gospel of -stewardship. Let us all feel that although the acquisitive faculty -is undoubtedly planted in the human breast for some wise purpose, -we are not here primarily for personal aggrandizement. We are -here for service, and the greater our talents or our wealth or our -opportunities the greater our responsibility. We are trustees--for -the users of our railroads, for our employees, and for investors; -and let us welcome all the additional responsibility which may be -put upon us as directors or salaried officials. I am sure this -sentiment will commend itself to all of you, because there is no body -of men in the world which has a higher code of ethics and which has -demonstrated personal fidelity in a higher degree than the Engineers -of America. - - -FOOTNOTE: - -[D] In the United States in 1908 the average contents of loaded -freight cars was 19.6 tons and the average of a freight train -was 351.80. On some of the mineral roads the averages were much -greater.--S. T. - - - - -TRANSPORTATION CHARGE AND PRICES - -BY LOGAN G. MCPHERSON, - -Lecturer on Transportation, Johns Hopkins University. Author of "The -Working of the Railroads." - - - CHAPTER VI. - - Reprinted by permission from "Railway Freight Rates in Relation - to the Industry and Commerce of the United States," by Logan G. - McPherson. Copyright 1909 by Henry Holt and Company, New York. - - -Vastly the greater proportion of the commodities moved by the -railroads are in the processes of commerce; that is, the conveyance -from the place of consignment to place of receipt in the majority -of cases is sequent to a transfer of ownership. The seller cannot -continue in business unless he obtain a market for his material, -or his merchandise, and the purchaser can not continue in business -unless he secure the material, or the merchandise, which he needs. -The margin within which the added charge for transportation may be -adjusted is therefore limited in one direction by the amount which -the seller of a commodity will accept and the purchaser will pay and -continue in business. If the seller or the purchaser cannot make a -profit at least approximately as great as from other operations in -which it might be feasible for him to engage he will, other things -equal, change his business, and the railroad will no longer have -the traffic that flowed from his operations. A railroad, therefore, -must adjust its transportation charges that production may continue. -This includes the adjustment of rates that products may be sent to -markets, that the products of the region tributary to one railroad -may reach markets in competition with similar products of other -regions, and in competition with other products that will answer the -same purpose. - -The wider the markets that the producers can reach, the greater is -the encouragement to production. The more numerous and varied the -sources of supply of which the purchaser has choice, the more likely -that his requirements will be met to his satisfaction. This is the -case whether the sale or purchase be of food, whether it be of raw -material to feed the processes of mill or factory, whether it be -of wares for wholesale distribution, or whether the purchase be of -merchandise by the retail dealer, or the final consumer. - -It has long been claimed by the railroads of the United States that -their rates of freight are lower than those of any other country, -and that the nation's progress in industry and commerce has in -large measure been due to the cheapness and the efficiency of its -transportation service. By way of proof has been instanced the -proportion that the transportation charge bears to the selling price -of the staple commodities. It is said that the rate charged for the -transportation of food products does not affect their selling price -in any market of the United States--that price being fixed by the -processes of supply and demand which the amount of the freight rate -does not influence. In the spring of 1907 inquiry was made upon this -point among the produce dealers of the city of New York, who gave the -information contained in the following paragraphs. - -The price paid by the housekeeper per dozen for eggs during the -season of shipment seldom exceeds by more than five cents the price -received by the Western farmer who takes them to the country store. -That is, the railroads bring eggs a thousand miles to New York for a -cent or a cent and a half a dozen, and two thousand miles or so for -about two cents and a half a dozen, the dealers taking the remainder -of the five cents as payment for handling. The net difference between -the price paid per pound for butter at the creamery, whether in New -York City or in the Mississippi Valley, and that paid by the New York -retail dealer averages about one and one-half cents for commission -and one cent for freight. - -In December, January and February turkeys are taken from the Texas -ranches to marketing centers, the transportation charge on ten -birds weighing one hundred and twenty pounds being about 25 cents. -After these ten birds have been dressed and packed they weigh about -one hundred and two pounds, and the freight rate from Texas to New -York is $1.50 for 100 pounds. That is, a Texas turkey that retails -in the New York market for 20 cents a pound will have paid one and -three-fourths cents per pound to the railroads that took it from -the ranch to the concentration point and thence to the market. The -farmer in Texas received about nine cents per pound, leaving a trifle -over nine cents to be divided between the packing house, the produce -merchant and the retail dealer. Chickens and other dressed poultry -that come from Chicago pay a freight rate of about three-fourths of a -cent a pound, the railroad company supplying a refrigerator car, and -keeping them iced while in transit. - -The rail rate from Chicago to New York on grain and grain products -for domestic consumption has been about 17½ cents per 100 pounds; -that is, a bushel of oats or corn or wheat, that may bring in New -York anywhere from 40 cents to $1, has been brought from the Western -farm for from eight to fifteen cents. Hay that has yielded the farmer -$18 or $19 a ton and sells in New York at about $24 has paid the -railroads somewhere from $3 to $5 per ton, according to whether it -came from the meadows of the Ohio or the Mississippi Valleys. - -A bullock that weighs 1,200 pounds will, at Chicago, bring on an -average $5.50 per 100 pounds, which includes an average of five cents -per 100 pounds for freight from the grazing grounds. Its total value -at the stock yards, therefore, is $66. When it has passed through -the packing house its weight will have been reduced to 700 pounds. -From Chicago to New York it will pay 45 cents per 100 pounds freight -or, in other words, the 700-pound carcass, which, if retailed at an -average of 15 cents a pound would bring $105, has paid the railroads -between $3.50 and $4 from the far West to the metropolis. - -On potatoes the freight rate per barrel containing about two and a -half bushels is $1.05 from Florida, 65 cents from South Carolina, 45 -cents from North Carolina, 30 cents from Virginia, and from this 12 -cents per bushel the rate scales down to five or six cents per bushel -from nearby regions. The freight rate on tomatoes from Florida is -25 cents per package of six baskets, from Texas 15 cents for twelve -quarts, from Mississippi 76 cents per 100 pounds, and from the nearby -farms eight cents per bushel of twenty-eight quarts. The freight -rate on cantaloups to New York ranges from less than a cent for a -melon from the Carolinas to about two and a half cents for that from -California. Oranges from Florida to New York pay the railroads from -four to nine cents a dozen, and those from California six to twelve -cents a dozen, as they may be large or small. A three-pound can of -tomatoes from Maryland pays the railroad about one-half cent per can. - -The freight rates to New York on foodstuffs have been selected as -typical of the transportation charges applying on such commodities -in the main channels of traffic from the West to the East; and, in -so far as fruits and vegetables are concerned, from the South to -the East. The transportation charge per consumer's unit on these -foodstuffs is a trifle less to Philadelphia and adjacent Delaware and -New Jersey; another fraction lower to the great Pittsburg district, -and still lower to the cities of the West and South that are nearer -the places of production. As prices of food products fluctuate within -a fairly wide range and freight rates also fluctuate, though within -but a very narrow range, the rates and prices specified in the -foregoing, as well as in the succeeding paragraphs of this chapter, -cannot be considered as of specific application at any given time in -the future. They were exact at the time they were collated and will -very closely approximate accuracy at any period. - -As New York may be considered representative of the places to which -edible products of the West and South are consigned, so also may St. -Louis be considered a typical center of reception of the manufactured -products of the East. The information given in the immediately -following paragraphs was obtained from merchants and manufacturers of -that city. - -The transportation charge on the material entering into a pair of -shoes made in a St. Louis factory averages one and one-quarter cents. -The transportation charge required to place that pair of shoes in -the hands of a consumer in any part of the United States averages -between two and three cents. The material entering into an ordinary -bedstead, such as retails in St. Louis for $8, will have paid the -railroad about 40 cents. From ten pounds of nails made in Pittsburg -and retailed in St. Louis the railroad will have obtained a trifle -over two cents, and from ten pounds of wire two and one-half cents. -An axe made in the Pittsburg district that retails in St. Louis for -$1 will have paid the railroads one and one-fourth cents. At Kansas -City that same axe will have paid freight of a fraction over four -cents and at Denver, where the retail price will have advanced to -$1.30, it will have paid 14 cents freight. A padlock retailing in -St. Louis at 50 cents will have paid the railroads a little more -than one-half cent; at Kansas City it will have paid one cent, and -at Denver, where the retail price advances to 75 cents, it will have -paid two cents to the railroads. An eighteen-gallon galvanized iron -tub that retails in St. Louis at 80 cents will have paid the railroad -from place of manufacture two and three-tenths cents; to Kansas City -the freight rate will have been six and one-fourth cents, and to -Denver 15 cents, but here the retail price of that tub is $1. A stove -that weighs two hundred pounds and retails in St. Louis for $18 will, -in carload lots, pay 44 cents to Kansas City or Omaha, and retail -there for $22; $1.48 to Denver, and retail there for $25; $2.50 to -Seattle, and retail there for $30. When a housewife of St. Louis buys -a dozen clothespins she has paid the railroad five ten thousandths of -a cent. If she buys a washboard at 50 cents she has paid the railroad -forty-two one-hundredths of a cent. In Denver she would pay for -that washboard 60 cents, of which the railroad would have received -two cents. The higher rates and prices that have been specified as -applying in Kansas City and Denver may also be taken as applicable to -cities in the interior South and Southwest, such as Oklahoma, Fort -Worth and San Antonio. - -In response to inquiries made concerning certain staple articles of -daily and general use in various of the smaller cities and towns -extending from Massachusetts to Georgia and Illinois, and from -Michigan to Mississippi, it has been ascertained that throughout this -region the transportation charge on such articles ranges as follows: -On a man's suit of clothes, from two to eight cents; on calicos and -ginghams, from one-fiftieth of a cent to one-fifth of a cent a yard; -the freight charge paid on the entire apparel of a fully dressed man -or woman in this section would range perhaps from six or seven to 16 -or 18 cents. The rate on an ordinary dining room suite consisting of -table, sideboard, six chairs and a china closet would average from -75 cents to $5, on a parlor suite of sofa and four chairs from 50 -cents to $4, on a bedstead and its equipment from 75 cents to $1.50, -in each case from the factory to the home. The lumber used in the -ordinary eight-room house will have paid the railroads from $35 to -$150, and the brick from $6 or $8 to $50 or $60, as the kiln may be -near or remote. A fifty-pound sack of flour from the mill, even at -Minneapolis, in but a few cases has paid a freight rate of over eight -or nine cents to the consumer. Products of the beef or the hog are -carried from the western packing houses throughout this territory at -rates that vary from a fifth of a cent to not exceeding a cent per -pound. - -It has not been difficult to secure such information as applies in -the main to the transportation charge borne by a manufactured article -from the place of making to the final market, or on foodstuff from -the place of growth to the place of sale to the consumer. Data as to -the amount of transportation charge carried by the various kinds of -raw material entering into a manufactured product has not in many -cases been so easy of ascertainment. A principal reason has been -that the manufacturers in numbers of instances do not know what it -is themselves. Many kinds of material are bought at a price which -includes delivery at the factory, the freight rate not coming under -the cognizance of the purchaser. The different materials used in -a product may have come from such diverse sources, and paid such -varying rates of freight, that the ascertainment of the total freight -charge in any given unit of manufacture would be too difficult -to be worth while. In numerous other cases the freight charge is -confessedly so small an item that no attempt is made to apportion it -as an item of expenditure per unit of product, the total simply being -grouped in the aggregate of expense. - -The statement that the transportation charge borne by the material -entering into an ordinary pair of men's shoes averages one and a -quarter cents is the result of a definite calculation made by one -of the largest shoe manufacturers of the country. A leading woolen -manufacturer estimates that the price of wool at Boston will average -perhaps 30 cents a pound "in the grease," including a transportation -charge that will average one cent a pound. The loss in cleaning and -scouring is about forty-five per cent., and the price of a pound of -scoured wool will average about 63 cents at the mill. Of this about -two cents is chargeable to transportation. One hundred pounds of -wool will make about seventy pounds of straight woolen cloth, on -which the transportation charge has therefore been a fraction less -than three cents a pound. On cloth that is mixed with cotton the -transportation charge is less. The rates on woolen goods from any of -the New England mills are so low that a yard of cloth which will sell -from $1.50 upwards in any of the western markets will not have paid -the railroads more than five cents from the sheep's back in Colorado -to Massachusetts and back again to the Mississippi River. - -The following information as to the extent of the transportation -charge borne by divers materials of various industries has been -obtained in each instance from an authority in that industry. - -The transportation charge on raw cotton to the mills in Massachusetts -will average from one-half to two-thirds of a cent a pound, not -exceeding one cent per pound even from plantations so remote as -those of Texas. Cotton loses from fifteen to twenty per cent. in -the cleaning, one hundred pounds of cotton making from eighty to -eighty-five pounds of cotton goods. As ordinary calico will run about -six yards to the pound and sell for about five cents, the cotton that -has paid a freight rate of from 50 cents to $1 is woven into $24 -worth of calico. - -The transportation charge on a pair of rubber overshoes, including -the rubber from South America, the cotton stock, and the shipment to -the western markets, averages about two and one-half per cent. of the -cost of those markets. That is, a pair of rubber overshoes retailing -for 75 cents will have paid for transportation, all told, less than -one and nine-tenths cents. - -In no one of these examples, which, perhaps, are typical of the -entire clothing industries in so far as the use of leather, wool and -cotton are concerned, is the transportation charge an appreciable -factor in the price either of the material to the manufacturer or of -the finished article to the consumer. - -A barrel of flour made in Minneapolis and transported to Boston is -sold at the time of this writing by the milling company to a dealer -of that city, or any other place in New England, for $6. Of that $6 -accrues to the transportation agencies, for carrying the wheat of -which that flour was made from the Western farm to the Minneapolis -mill, and for carrying the flour from the mill to Boston, an amount -that averages 85 cents. The proportion of the transportation charge -to price at different markets varies with the freight rate. At -New York the milling company would sell that barrel for $5.95, -which would include a total transportation charge of 80 cents; at -Philadelphia the selling price would be $5.90, the transportation -charge 75 cents; at Buffalo or Pittsburg the selling price $5.80, and -the total transportation charge 65 cents; at Atlanta the price $6.20, -the transportation charge $1.05; at New Orleans the price $6.10, the -transportation charge 95 cents. - -Typical rates on leaf tobacco, averaging in value $13 per 100 pounds -from plantation to warehouse in Virginia and the Carolinas, are -from 15 cents to 21 cents per 100 pounds; on the smoking tobacco -into which this leaf is converted, and which sells at $48 per 100 -pounds, from Richmond, Virginia, to New York City 30 cents, to -Chicago 59 cents, to Kansas City $1.16. Rates from the plantation -to the warehouse on the leaf tobacco of the Kentucky and Tennessee -region, which also brings an average of $13 per 100 pounds, are from -5 cents for short to 20 cents for longer distances. The plug tobacco -into which this leaf is converted is sold at $28 per 100 pounds, -being distributed on such rates as these: St. Louis to Louisville, -25½ cents; to New York City, 58½ cents; to Kansas City, 35 cents; to -Seattle, $2.20. Manufactured tobacco in all cases is sold at a price -which includes delivery from the factory to the place of consignment, -wherever it may be, in the United Stales. - -The freight rate on cane sugar from the "central" in the Louisiana -district to the final refinery ranges from 5 to 10 cents per 100 -pounds, the refinery paying from $3.50 to $4.50 for the sugar. -Sugar that is sold by the refining company at 4½ to 5½ cents a -pound retails at 6 cents, the dealer making little or no profit. -As a town of five to ten thousand people at the average per capita -consumption of seventy-five pounds a year will consume a carload of -sugar in about a week, the jobbing of sugar is greatly decentralized. -Contrasting with this retail price of $6 per hundred pounds typical -distributive rates are, from New York to Chicago 25 cents, to St. -Paul 30 cents, to Kansas City 42 cents; from New Orleans to Chicago -25 cents, to Atlanta 24 cents, to Kansas City 34 cents. - -The freight charge on sugar beets raised in Colorado and Utah from -the farm to the refinery is always paid by the sugar company. It -averages from 30 to 40 cents per ton, or for a distance of fifty -miles is as much as 50 cents. A ton of beets contains about three -hundred pounds of sugar, which, allowing for an average loss during -extraction, would produce two hundred and forty pounds of refined -sugar. This is sent from the factories to the principal places of -storage--Kansas City, Omaha and St. Louis. The aggregate freight -charge from the farm to St. Louis on these two hundred and forty -pounds is about $1.70, and the aggregate revenue to the refinery at -five cents a pound, $12. - -While the price of bananas is subject to great fluctuation, a fair -average at New York, Philadelphia, Baltimore, Charleston, Mobile -and New Orleans, the ports of import, is $1.75 per 100 pounds. The -average rail charge for carload lots from port to market is from 30 -to 50 cents per 100 pounds. About one-third of the bananas consumed -in this country are received at the North Atlantic ports, whence -they are distributed throughout the Eastern and Middle States. The -remaining two-thirds, which supply the South and West, are received -at the Southern ports. Immediately upon receipt at New Orleans, for -example, shipments are made to the North in train loads that they -may be taken out of the warm climate before they spoil, and cars -are re-consigned en route at the instance of the company which has -very thoroughly organized the banana business, an allied company -having about sixty agencies with men who devote their entire time to -extending the sale of the fruit. - -For hides that pay a freight rate from the packing houses at Chicago -to New York of 30 cents per 100 pounds, the butcher receives, -according to quality, from $6 or $7 to $11 or $12 per 100 pounds. The -butchers remote from market have the freight rate deducted from the -price paid them for hides, but it is a trifle, seldom exceeding five -cents per 100 pounds. The hide loses from twenty-five to thirty-five -per cent. in the process of tanning; the price of leather is fixed -by measure and not by weight. The rate on tanned leather, however, -between Chicago and Boston is 39 cents per 100 pounds. - -The railroads make low rates on fertilizer to encourage its use by -the farmers, it being, of course, to the interest of a railroad to -encourage the production of larger crops that its traffic may be -augmented. Fertilizer of different grades brings from $18 and $20 to -$55 and $60 a ton. Typical rail rates from the places of manufacture -are from Jersey City to Trenton, New Jersey, $1.10 per ton, and from -Boston to Portland $1.20 per ton--both rates applying in carload -lots. In the South, where fertilizer is extensively utilized, -representative rates are from Atlanta to Thomasville $2.50, from -Charleston to Columbia $2.00 per ton. - -When allowance is made for the elimination of water from pulp and the -shrinkage in its manufacture into paper, the average freight rate -borne by the material entering into paper at the northern New England -mill is about 13½ cents per 100 pounds. The manufacturers consider -17 cents per 100 pounds to be the average freight rate on the paper -from the mill to places north of the Ohio and east of the Mississippi -Rivers. The aggregate freight charge borne on the average by the 100 -pounds of paper which sells at the factory for $2.50 is therefore 30 -cents. - -As with all things else, the rates on the ores of the far western -region have been adjusted under the necessity of the transportation -agencies to so serve the mines that their products may be marketed. -The rate upon the ore from the mine to the smelter, upon the -metal from the smelter to the refinery, and upon the refined lead -or refined copper from Chicago to the seaboard market, are all -determined by this prime factor. The freight charges, for example, -from the Coeur d'Alene district in northern Idaho on the ores from -which the extraneous material has been roughly separated, to the -Puget Sound refineries, reach a maximum of $6 per ton for a distance -of four or five hundred miles, and the rate from Puget Sound to New -York is $14.50, the average transportation charge, therefore, being -about $20 per ton. The value of a ton of copper at 12 cents a pound -is $240, and a ton of lead at four cents a pound is $80. Copper -passes through manifold and expensive processes and its extensive -consumption has followed the development of electricity. Lead does -not require so many or so expensive workings, and it has long been -a great staple of general use. The mine farther from a smelter -naturally has to pay a higher rate of freight than a mine nearer to -it, receiving, therefore, a lesser net price for its product, _but -the railroads are obliged to so adjust rates that practically every -mine can reach a market_. - -The rate on refined petroleum between New York and Chicago is 27½ -cents per 100 pounds, the average rate paid north of the Ohio and -east of the Mississippi Rivers being from eight to ten cents per 100 -pounds. From Toledo to Atlanta the rate is 48 cents, from Whiting -46½ cents, from New Orleans 35 cents. The rate from Chicago to the -Missouri River is 22 cents, to St. Louis 10 cents; while the rate -from the Kansas field to St. Louis is 17 cents. One hundred pounds -of refined oil contain approximately sixteen gallons which, at an -average price of 12½ cents a gallon at the refinery, would aggregate -$2. The price per gallon to the consumer is increased one cent with -each increment of seven cents in the freight charge. - -The principal biscuit company receives from $8 to $16 per 100 pounds -for its crackers and cakes, averaging $10 per 100 pounds for its -leading brand. From its New York plant to Boston the freight rates -are 19 cents per 100 pounds, to Atlanta 62 cents. The rate from -Chicago to Montgomery is 69 cents, to Houston 81 cents, to Denver 97 -cents. From either New York or Chicago to the Pacific Coast the rate -is $1.60. These rates apply to carload lots, all goods being sold -delivered, the company absorbing the freight. The retail price is the -same all over the United States as it is with shoes, cigars, soap, -proprietary medicines and dozens of other familiar articles. - -On cotton, the great staple product of the South, the freight rate -structure has been in process of development even a longer time -than that affecting the movement of grain from the West. From -the plantation into Memphis, the largest inland cotton center of -the United States, a typical rate is 30 cents per 100 pounds for -one hundred and fifty miles. From Memphis to Boston the rate is -57½ cents, and from Memphis to the Gulf 30 cents per 100 pounds. -From Augusta, Ga., a central market of the Eastern cotton growing -district, the rate to Charleston and Savannah is 21 cents, to -Brunswick 23 cents and to Norfolk 26 cents per 100 pounds. A bale of -cotton contains five hundred pounds and is therefore worth, at 11 -cents a pound, $55. The aggregate transportation charge on this bale -from the plantation, one hundred and fifty miles from Memphis, to -Boston, is $4.27. - -Mainly because of the rapid shifting of the sources of supply, -there has not yet been developed a stable structure of rates for -the movement of lumber in all parts of the United States. By way of -illustration, however, it may be said that a fair average rate on -lumber into Memphis from the forests of Arkansas is six cents per -100 pounds, or $2.40 per 1,000 feet. Lumber going from Memphis to -New Orleans for export will pay $4.80, or a total transportation -charge from the forest of $7.20 per 1,000 feet. A fair average rate -to the markets in Ohio and Indiana is $8 per 1,000 feet, a total -transportation charge from the forest of $10.40. This is on the kind -of lumber that in 1905 and 1906 sold at about $40. The rate on yellow -pine from New Orleans to Chicago is 24 cents per 100 pounds. - -There is an equalization of rates on the iron ore from the upper -lakes in that the rates of the boat lines from the ore mines are the -same to each of the Lake Erie ports. From thence to the furnaces -they are adjusted under the policy of the railroads to make the -transportation charge on the raw material required to make a ton -of pig iron approximate the same amount at each of the competing -furnaces of southern Ohio, Pittsburg, Wheeling, in the Mahoning and -Shenango Valleys, and even as far as the Schuylkill Valley. How -closely this equalization is effected is shown by the fact that -the transportation charge on the ore, coke and limestone required -to produce one ton of pig-iron is as follows in these respective -districts: At the furnaces on the Monongahela River in the Pittsburg -district, $5.82; at the furnaces of the Mahoning and Shenango -Valleys, $5.57; at the furnaces of the Wheeling district, $5.78. -These charges compare favorably with those at the furnaces on the -Lake Shore in the Chicago district, which aggregate $5.63 per ton of -pig-iron, but are higher than at the furnaces on the Lake Shore in -the Cleveland district, where they aggregate but $4.72. The rates on -coal, which gives return loads to the cars that take the ore south -front the Lake Erie ports, are maintained at established differences -between the coal fields of Ohio, Pittsburg and West Virginia. The -rates in effect in the spring of 1908 were $1 per ton from southern -Ohio, 90 cents from southeastern Ohio, $1 per ton from the Pittsburg -field and $1.15 a ton from West Virginia. - -The claim of the railroads that the rates on foodstuffs are not high -enough to enter as a factor in fixing the selling price is fully -substantiated by the statements of the dealers in such products. That -is, the conditions are, with negligible exceptions, such that if -the price obtainable in the markets be sufficient to encourage the -growing of livestock, grains, dairy products, fruits or vegetables, -the rate of freight, from whatever locality to whatever market, is -sufficiently low to allow the producer to enter that market. His -profits are, however, as a matter of course, diminished by the amount -of freight which he pays, and, as a rule, the farther the place of -production from the markets the greater is the freight charge. The -differences in the net return to the producer are almost invariably -reflected in the value of the land, which is lower as the distance -from the markets is greater. Largely because of the defective system -of mercantile distribution the grower of foodstuffs obtains a smaller -proportion of the price paid by the consumer than accrues to the -grower of any other agricultural product. Where, as in this country, -the opportunity for the extension of cultivation is practically -unlimited, a good market one season leads the farmers of any district -to increase their production up to the point of minimum profit and -the railroads are then besought for lower rates; when unfavorable -weather or other conditions reduce their output they are also -disgruntled. It therefore rarely happens that the grower, especially -of the quickly perishable foodstuffs, is entirely satisfied with the -freight rates. - -A controversy, that it is scarcely an exaggeration to designate -as typical, occurred several years ago between the growers of -watermelons in a Southwestern State and the railroads conveying the -melons to the primary markets. In comparatively a few years that -region had become so productive that the shipments of watermelons -over one road alone ranged from 1,400 to 1,800 cars during a -watermelon season, deliveries being made all over Ohio and Indiana -through dealers from those States who came down and bought the melons -at the farms. The contention for lower rates had waxed so warm that -a reduction in the watermelon rate became the issue upon which a -legislative campaign was fought. The candidate pledged to secure a -reduction in the rate was elected, and introduced a bill, which was -enacted by the legislature, making the rate to the nearest primary -market 7½ cents per 100 pounds. The railroad companies put this -rate in effect and used it as a basis for the lowering of rates to -the territory beyond. During the year of this rate reduction the -traffic department of the railroad company referred to sent word to -the farmers that the company had handled 1,500 cars of melons that -season, the prompt shipment of which had been highly satisfactory -to the growers. It furthermore said that the movement of these -melons from that territory was a one-way traffic entirely, it being -necessary to send special cars empty for the crop. These were -necessarily stock cars that there might be ample ventilation, but -they had to be supplied with extra slats in order that the melons -might not fall out. It was necessary for them to be switched in -requisite number on side tracks especially built adjoining the farms -where the fruit was grown; that switching engines be kept at work, -putting cars in and taking cars out all night and all day. The cars -of melons, moreover, had to be hauled on special trains at a high -rate of speed to get them to the markets before they spoiled. This -reduced the tonnage per train fifteen or twenty per cent below the -maximum that could be hauled at the normal freight train speed. A car -with the average allowable load of 1,100 watermelons would contain -but about twelve tons, although its capacity would be eighteen or -twenty tons; the weight of the car exceeded the weight of the load. -The switching and other special movements necessitated the employment -of night telegraph operators and other extra help at the melon fields. - -All of these conditions led the assistant to the general manager of -the company to make an analysis of the expenditure as compared with -the earnings. Waybills were abstracted and the receipts listed. A -tabulation was made of the revenue tonnage, the gross tonnage, the -tare weight, and the expenses incurred in behalf of the traffic. He -found that the handling of the 1,500 cars of watermelons involved a -loss to the company of $12,000 if the expenses of operation alone -were considered. - -The results of this investigation were brought to the attention of -the traffic department and the next spring it sent a circular to the -farmers in the truck region urging that the watermelon acreage be -reduced, as the rates on that business were not remunerative, and -stating that the railroad would not undertake to handle it except in -the regular cars that were brought into the territory in the ordinary -course of traffic; that there would be no special trains, nor special -service of any character. The melon growers at once notified the -State Railroad Commission, which, in turn, requested the railroad -company and the melon growers to attend a meeting to discuss the -whole subject. When the meeting convened the chairman called upon the -railroads to say why they had caused so much trouble. The railroad -representative, who was the aforesaid assistant to the general -manager, stated that as he had been invited to attend the meeting it -might be proper for whomsoever instigated it to open the discussion. -Several shippers made statements of their complaints, all admitting, -however, that the melon business had become very profitable,--one -grower saying that $300 to $500 per car was being made out of a -crop. The railroad representative then made a reply, showing the -loss to the company from handling the business for the previous -year, and stated that unless cost for the handling and something by -way of profit could be obtained, the company would prefer to move -other crops. He showed that it had been necessary to park 350 to 400 -especially prepared stock cars in the melon territory; that it had -taken a month or six weeks to gather these cars, which had to be -hauled empty to the melon fields. He then pointed out that the rate -per melon was less than a cent and a quarter, whereas it had cost -the farmer four or five cents per melon to bring it by wagon the one -or two or three miles to the railroad track. The chairman objected -to some of the analyses, especially to the contrast of four or five -cents per melon for the wagon haul from the farm with the cent or -a cent and a half per melon for the railroad haul of two hundred -miles. When the railroad man had finished, farmers from all over the -room began to ask questions directly of him. They wanted to know how -much they should pay to afford the railroad some slight profit. They -were told 12 or 12½, cents. The chairman said: "The rate cannot be -changed. It has been fixed by law at 7½ cents and that is the rate. -I am here to protect the people of these counties." The railroad man -suggested that his company might be willing in addition to affix the -necessary slats to the stock cars and perform the switching for $5 to -$6 per car. The farmers were willing to accept this, but the chairman -insisted that it was contrary to law, and finally said in his wrath, -"If you men here are going to deal with the railroad company you can -do it without me. This meeting is adjourned." - -With one exception the farmers remained in the hall and expressed a -willingness to pay a rate of 12 cents per 100 pounds. - -Returning to the main discussion, we have found that the rates on -raw materials are so adjusted as to permit the manufacture of any -staple article at any logical place of manufacture. On the raw -material of wearing apparel the freight rate is entirely unimportant. -On the lumber that enters into building material, on the ore, coke, -and limestone used in the manufacture of iron and steel the freight -rate is sufficient to become an appreciable factor in the cost of -manufacture. On brick, coal and cement the selling price is the -higher by the amount of the freight charge, which for distances -sometimes not considerable exceeds the value of the commodity at -the place of production. The freight charge, even on those heavier -commodities, however, is far less in proportion to the wage of the -day laborer as well as to the incomes and salaries received in the -United States than in any other country. This is obviously a better -test of comparison than that based upon rates of freight as expressed -in money. To say that a specific rate is twenty cents in the United -States, a shilling in Great Britain, a franc in France, or a mark in -Germany, conveys an inadequate idea. When it is ascertained that the -average wage of the day laborer in the United States is higher in -comparison with the average rate of transportation than in any other -country, the comparison is significant. In this country a continually -increasing amount of railroad transportation can be purchased with -the wage of the day laborer. With the sum of money representing the -value of a given unit of any of the staple commodities of commerce, -also can a continually increasing amount of railroad transportation -be purchased. - -That which makes possible the low freight rate of the American -railroads is the magnitude of the scale upon which the transportation -is conducted. The large cars, with a capacity of from thirty to fifty -tons, and the powerful locomotives that draw a score or more of these -loaded cars in one train, permit an almost infinitesimal freight -charge per pound or per yard that, however, yields by the carload or -by the trainload no inconsiderable revenue. For example, the average -weight of the carload of food products is about 30,000 pounds. If the -freight on such a carload be $300 the rate per pound would be only -one cent, and there is scarcely a commodity upon which a freight rate -of one cent per pound makes any difference in the retail price. As -a matter of fact a carload of food products does not bring to the -railroad so much revenue as $300 unless it has been moved from a far -region; for instance, from the Dakotas or Texas to New York. Specific -complaint in regard to the freight rates of the United States for -many years has not, except in a small minority of cases, been based -on the ground that they have prevented foodstuffs from finding a -market, raw material from reaching places of manufacture, or finished -products from distribution. While the difference of a cent or two in -the rate of freight may not in the least interfere with the conduct -of industry or commerce in the aggregate, such a slight difference, -may perhaps determine whether a manufacturer obtain his raw material -from this or that source of supply, whether a wholesale dealer -obtain his stock from the manufacturer in one, or the manufacturer -in another city, whether a retail dealer make his purchases from the -wholesale dealer in this city or in that city. That is, for example, -the prices of the products at the sources of supply being equal, a -difference in the rate of freight may determine whether Cleveland, -Ohio, obtain potatoes from Michigan or from upper New York; whether a -factory in Louisville obtain coal from the fields of southern Indiana -or central Kentucky. A carpenter in Des Moines may perhaps pay a -dollar for twenty pounds of nails without knowing or caring what -the freight rate may have been, or where they may have come from. A -difference, however, of a few cents a hundred pounds in the rate of -freight may have led the hardware dealer to have purchased the nails -in Chicago or St. Louis or even directly from Pittsburg. - -As the purchase of raw material tends toward the prosperity of the -region where it is produced, as the operation of a factory tends to -the increase of population, to appreciation in the value of real -estate and the augmentation of business at the place of its location, -so also does the growth of a wholesale business or of a retail -business aid in the development of its surroundings. Producers, -manufacturers, wholesalers and retailers naturally all desire to -extend their sales, to reach further markets in competition with -their rivals, and are supported in this desire by the communities -to whose welfare they contribute. Any difference in freight rates -that gives a producer of raw material, a manufacturer, a wholesale -distributer, or a retail merchant an advantage over a competitor of -another locality is therefore promptly made the subject of complaint. - -The pressure brought upon the railroads by such competing producers, -manufacturers and dealers has been a very important factor in the -development of certain arrangements of freight rates, which we shall -term the Regional Rate Structures, each of which has grown out of the -various characteristics of a traffic region and has become adapted to -those characteristics. - -Other arrangements of freight rates which have grown out of the needs -entailed by the production and marketing of certain of the principal -articles entering into commerce we shall designate as the Commodity -Rate Structures. - -(End of Chapter VI.) - - - - -THE FREIGHT RATE PRIMER - - Adapted from the Illustrated Pamphlet, So Entitled. - - Issued by the New York Central and Hudson River Railroad Company. - - -THE A. B. C. OF THE MATTER. - -"There has been much wild talk as to the extent of the -over-capitalization of our railroads. The census reports on the -commercial value of the railroads of the country, together with the -reports made to the Interstate Commerce Commission by the railroads -on their cost of construction, tend to show that, as a whole, the -railroad property of the country is worth as much as the securities -representing it, and that, in the consensus of opinion of investors, -the total value of stock and bonds is greater than their total -face value, notwithstanding the 'water' that has been injected -in particular places. The huge value of terminals, the immense -expenditures in recent years in double-tracking and improving grades, -roadbeds and structures, have brought the total investments to a -point where the opinion that the real value is greater than the face -value is probably true." - - (From President Roosevelt's Decoration-Day address at Indianapolis, - May 30, 1907.) - - -THE X. Y. Z. OF THE SITUATION. - -"An army of more than 1,500,000 men is employed directly in the -operation and maintenance of the railroads in the United States, -and millions of other men are furnished employment indirectly in -the mines, the forests and the factories, supplying the railroads -with approximately one and one-quarter billions of dollars' worth of -material and equipment annually consumed. - -"These are wonderfully interesting and impressive facts; but the -fact of greater interest and worthy of the most careful thought of -every citizen of this country is that this vast army of men engaged -in producing the commodity of transportation at an average cost more -than _40 per cent lower_ than is shown by any other country is paid -an average wage more than _50 per cent higher_ than is paid in any -other country where railroads exist." - - (W. C. Brown, before the Michigan Manufacturers' Association, June - 22, 1908.) - - -LESSON I. - -FREIGHT RATES AND THE CLOTHES WE WEAR. - -Whom have we here? - -Eleven different types of American citizens, standing in a row, -clad in the varied uniforms or togs of their several occupations or -leisure from hod-carrier to the dude in dress suit and opera hat. - -These men all live in the Mississippi Valley. - -Their clothes were made in New England. - -They paid the railroads _nine cents_ apiece for transporting their -clothes, including shoes and hats, from the point of manufacture to -the Mississippi Valley. - -The combined freight charges on _all_ the clothes worn by the eleven -men in the group, including shoes and hats, was _less than one -dollar_. - -If freight rates were advanced 10 per cent the increased price to -these men on their entire wearing apparel would be _less than one -cent each_. - -If they have to pay more than that per cent it will not be because -freight rates are advanced. - - -LESSON II. - -FREIGHT RATES AND AGRICULTURAL IMPLEMENTS. - -Consider the McCormick harvester. It mows, gathers, binds and stacks -the bearded grain, while its proud possessor cracks his whip above -the backs of his three-horse team. It has banished the nightmare of -farm mortgages from the great prairies of the West. - -This particular harvester we are considering is cutting grain one -hundred miles west of the Mississippi River. It was built in Chicago -and sold for $130. - -The farmer paid $1.76 to have it brought to him from Chicago, three -hundred miles away. - -If freight rates were advanced 10 per cent the cost of the harvester -would be increased _seventeen and one-half cents_. - - -LESSON III. - -FREIGHT RATES AND COOKING UTENSILS. - -Next to the harvester the modern kitchen cooking range has added more -joys and years to the farmer's life than anything in the cornucopia -of modern civilization. - -Here is a standard range. It is a thing of beauty as well as a means -for cooking everything your mother used to cook and much more. - -The freight on a steel range, weighing from 400 to 500 pounds, from -Detroit to points in the Mississippi Valley, approximates from $2 to -$2.50 per stove on stoves which retail at from $55 to $60 each. - -An increase of 10 per cent would add from twenty to _twenty-five -cents_ to the cost of the stove, which, divided by the life of -the stove, taking the low average of ten years, would add one and -one-half to _two cents_ per year to the cost. - -On heating stoves the increase would be about _one-third less_. - - -LESSON IV. - -FREIGHT RATES AND REFRIGERATORS. - -What are the cold facts about refrigerators? - -What cold storage is to the whole people, the modern refrigerator is -to the individual family. - -It preserves all things sweet and clean and wholesome. - -Now the freight on a refrigerator, such as is used by the ordinary -family, from Belding, Mich., where they are manufactured in large -quantities, to New York is approximately seventy-five cents. - -An increase of 10 per cent would add _seven and one-half cents_ to -the cost of the refrigerator, delivered in New York City. - - -LESSON V. - -FREIGHT RATES AND HOUSEHOLD FURNITURE. - -Ever since Grand Rapids became the furniture hub of the Union there -has been no excuse for any American family being without its antique -or modern dining room set. - -Look at this suite consisting of a solid table, six chairs, sideboard -and china closet, etc. It could be bought F. O. B. at Grand Rapids -for from $55 to $75, according to the wood and finish. - -It weighs approximately 750 pounds and the freight from the factory -to Chicago would be $1.60. - -An increase of 10 per cent would add _sixteen cents_ to the cost of -all this furniture. - - -LESSON VI. - -FREIGHT RATES AND A BUSINESS SUIT. - -Behold this business suit which no one would be ashamed to wear. - -It might cost anywhere from $10 up to $35, according to the -reputation of the tailor or the rent and advertising rates he pays. - -The freight rate on such a suit of clothes, including hat and -shoes, for a distance of 300 miles from any of our large jobbing or -distributing centers is approximately _three and one-half cents_. - -A 10 per cent increase would add a little more than _one-third of one -cent_ to the cost of this suit, and it would add no more if it cost -$50 or $100. - - -LESSON VII. - -FREIGHT RATES AND "KING COTTON." - -"Befo' de wah" cotton was king. Of our exports it still leads all our -domestic products, having no second in sight. - -If the entire cotton crop of the United States was compressed into -one bale its value would be about $750,000,000. - -Of this bale in 1908 the railways got a little "jag" worth according -to the Interstate Commerce Commission $12,394,000, or less than 2 per -cent. - -An advance of 10 per cent in rates on cotton could not add more than -one-fiftieth of a cent per pound to the price of cotton. - - -LESSON VIII. - -FREIGHT RATES AND A SACK OF FLOUR. - -Minneapolis, as all good little school children know, is the seat of -the flour industry of the United States. - -If they do not learn this at school it is impressed upon their -receptive minds by every illuminated billboard and painted rock that -meets their gaze from Eastport to California. - -There are half a dozen brands of flour ground at Minneapolis and -every one is better than all others. - -The rate on this incomparable product in carloads from Minneapolis to -New York is 25 cents per hundred pounds. - -That is 12½ cents per fifty-pound sack. - -This flour is sold to the consumer in New York at approximately $1.85 -per fifty-pound sack (or it was when this was written). - -An increase of 10 per cent in freight rates would add but one and -one-quarter cents to the price of a fifty-pound sack, or a little -less than two one-hundredths of one cent per pound. - -The freight rate on a fifty-pound sack of flour from Minneapolis to -Chicago is five cents per sack. An increase of 10 per cent in rates -would add only five mills per sack between these points, or _one -one-hundredth of one cent per pound_. - - -LESSON IX. - -FREIGHT RATES AND DRESSED BEEF. - -The reason cattle are butchered and carried to the consumer as -dressed beef rather than driven to market on foot or hauled as live -stock, is that the freight charge is less and the beef arrives in -better condition. - -Little children in New York and Boston appreciate this, if the wise -grown-ups of the West sometimes seem to doubt it. - -The rate on dressed beef from Chicago to New York is forty-five cents -per hundred pounds. The average price of this beef to the consumer -in New York is (or was) approximately twenty-five cents per pound. -A 10 per cent increase in freight rates would add _less than five -one-hundredths of one cent per pound_. - -If freight rates were advanced 10 per cent, the increased cost in -New York City of a two-rib roast of the best quality, weighing eight -pounds, retailing for $1.92, would be _less than one-half cent_. - -Surely this is not an excessive price to pay for _National prosperity -and industrial peace_. - - -LESSON X. - -FREIGHT ON EGGS, BUTTER AND POULTRY. - -Eggs were cheaper when Columbus experimented with them than they are -now, but it cost more to carry a dozen eggs or a firkin of butter ten -miles in 1492 than it would to carry them 100 miles now. - -The rate on butter and eggs from points in Eastern Iowa to New -York--a distance of approximately 1,200 miles--is eighty-four cents -per hundred pounds. On dressed poultry from the same points to New -York the rate is ninety-six and one-half cents. - -The eggs are sold to the consumer by the dozen and the other -commodities by the pound; _and the consumer pays every farthing of -freight that has accrued from the time the egg is laid, which he buys -in the "original package," or as dressed poultry, or from the time -the cow is milked, from which the butter is made_. - -An increase of 10 per cent would add eight one-hundredths of one cent -per pound to the price the consumer pays for butter and eggs, and it -would add nine and one-half one-hundredths of one per cent per pound -to the cost of dressed poultry, for which he pays from twenty to -thirty cents per pound. - - -LESSON XI. - -FREIGHT RATES AND LEATHER BELTING. - -Some little children and many of their mothers do not know that -a great deal of the power that makes the wheels go round in this -industrial beehive is transmitted by belting. - -The shops of the Lake Shore & Michigan Southern Railway at Elkhart, -Indiana, are equipped with 13,288 running feet, or _practically -two and one-half miles_, of leather belting. This belting cost the -railroad company $6,235, or an average of 46.9 cents per running -foot. The belting was shipped from Boston to Elkhart, a distance of -937 miles. The total freight charges amounted to $18.37, or fourteen -one-hundredths of one cent per running foot. An increase of 10 per -cent would add $1.83 to this cost, or _fourteen one-thousandths of -one cent per running foot_. - -This belting, moreover, cost the railroad company $1,082 more than -it would have cost at the prices prevailing in 1899, representing an -increase of 21 per cent. During this same period there was no change -whatever in the freight rate. - - -LESSON XII. - -THE RAILWAYS AND NATIONAL DEVELOPMENT. - -Now listen to the sober words of the one man who has perhaps given -more official attention to the subject than any other citizen of the -republic: - -"Without regard to the personnel of railroad officials, without -regard primarily to the interest of stockholders, but in the interest -of public welfare and national prosperity, we must permit railway -earnings to be adequate for railroad improvement at advantage and -profit. - -"To my mind it is a most impressive fact, so great as to elude the -grasp of imagination, that the railway traffic of the country fully -doubled in the first seven years of this twentieth century. This -enormous addition to the volume of transportable goods overtaxed, -as you know, the existing facilities, and the resulting condition -perhaps accounts for much of the hostility which has been manifested -in various quarters. For the man who has raised something by hard -labor or made something with painstaking skill, which he could sell -at a handsome profit in an eager market, and finds that he cannot get -it carried to destination, and so sees his anticipated gains turned -into a positive loss, is naturally exasperated and unthinkingly -'blames it' on the railroads, and is ready to hit them with anything -he can lay his hands to; and as the state legislature seemed to be -the most convenient weapon he wielded it for all it was worth. - -"I dwell upon this a moment further, because it seems plain to me -that the prosperity of the country is measured and will be measured -by the ability of its railroads and waterways to transport its -increasing commerce. With a country of such vast extent and limitless -resources, with all the means of production developed to a wonderful -state of efficiency, the continued advancement of this great people -depends primarily upon such an increase of transportation facilities -as will provide prompt and safe movement everywhere from producer -to consumer; and that we shall not secure unless the men who are -relied upon to manage these great highways of commerce have fitting -opportunity, and the capital which is required for their needful -expansion is permitted to realize fairly liberal returns." - - (Hon. Martin A. Knapp, Chairman Interstate Commerce Commission, - in "Annals of the American Academy of Political and Social - Science.") - - -LESSON XIII. - -LOOK UPON THIS PICTURE. - -What is this I see? - -Smokeless chimneys! Closed factories. Spiders' webs across the doors -of opportunity. Grass growing rankly in the streets of industrial -towns. Dejection on the face of nature and of man. - -What does it mean? - -The railways have ceased to earn enough to meet expenses and provide -for the progressive maintenance of their equipment and plant. - -Why, are not their receipts greater than ever? - -True, but their expenses have increased more rapidly than their -earnings and their net revenues have only been maintained by -postponing purchases that must be made some time or the railways will -be incapable of performing their public service with safety, dispatch -and economy. - -In 1908 and 1909 the railways scrimped maintenance $300,000,000 and -this will have to be made good some time, some how, before they are -on as sound an operating basis as they were before the panic of 1907. - -What must be done to avert the consequences described above? - -A readjustment of freight rates, involving a reasonable increase -applied to such articles and commodities as can stand it, without any -appreciable hardship either to manufacturer, merchant or consumer, -means the difference between grinding economy and a fair degree of -prosperity. - - -THE REVERSE OF THE PICTURE. - -Would a 10 per cent increase in freight rates mean such a difference? - -It most certainly would. - -It would mean the difference between closed shops and suspended -improvements and the resumption of improvements with the ability -to resume the large purchases of material and equipment, giving -full employment to labor and furnishing improved transportation -facilities, which, within a very short time the commerce of the -country is going to demand more insistently than ever. To hundreds -of thousands of workingmen it means the difference between steady, -well-paid employment and walking the streets looking in vain for work. - - -LESSON XIV. - -NARROW MARGIN BETWEEN EARNINGS AND EXPENSE. - -"I have looked up the statement of about 80 per cent of the principal -railroads of the country and find that during the last half of the -year 1907, after the tremendous increase in expenses had become -effective, while the gross earnings of the railroads increased -$57,413,078 over the same period of the preceding year, their -expenses increased $80,235,823, showing a net loss for the period, -despite the tremendous business handled, of $22,822,745. - -"The converging lines of cost and compensation in railroad operation, -which for years have been steadily approaching each other, are now -separated by so narrow a margin that in order to pay fixed charges, -taxes and operating expenses, with even a very moderate return to -shareholders, there must be either _a moderate increase in freight -rates_ or a very _substantial reduction in the wages of railroad -employes_." - - (W. C. Brown, before the Mich. Mfrs. Assn., 6-22-08.) - - -LESSON XV. - -WHICH SHALL IT BE? - -"Is it not better, Mr. President, that you and I, and tens of -thousands of people who buy and use automobiles, should pay a dollar -or two more freight on our machines than that the family of the -engineer, the conductor, the brakeman, the switchman or the humble -section hand shall be deprived of the actual necessities and comforts -of life, which we know they must give up if the monthly pay check is -reduced? - -"No question of greater importance confronts the people of the -country today, for upon its righteous solution hangs the momentous -issue of an early return of prosperity or a continuance of the -depression of the past six months, emphasized and darkened by -a struggle with organized labor such as this country has never -experienced." - - (W. C. Brown, before the Mich. Mfrs. Assn., 6-22-08.) - - -LESSON XVI. - -MORAL. - -"_Our prosperity came with the prosperity of the railroads; it -declined when adversity struck the railroads. We do not believe we -can have the full measure of prosperity again until the railroads are -prosperous._" - - (National Prosperity Association of St. Louis.) - - - - -PROGRESSIVE SAFETY IN RAILWAY OPERATION - -By A. H. SMITH, - -Vice-President of the N. Y. C. & H. R. R. Co. - - An Address Delivered Before the National Association of Railroad - Commissioners, at their Annual Convention, held in Washington, - D. C., November 16, 1909. - - -In examining into the state of an art of such far-reaching importance -and such diversified nature as that of transportation by rail, it -seems necessary to acquaint ourselves with its beginnings and growth; -to determine the elements upon which its development relies and the -necessity which has invoked the various steps of improvement in -the plant devoted to transportation and the art of employing and -controlling it in the performance of a public service. - -The lay observer will scarcely appreciate, in the absence of the -actual analysis, that there exists so many branches of this subject, -each branch of which, by itself, may be considered the object of a -separate professional science and a distinct human industry. - - -EARLY RAILROAD HISTORY. - -Railways had their origin in tramways laid over 200 years ago in the -mineral districts of England, which conveyed coal to the sea. Animal -motive power was used. By the discovery, in 1814, of the adhesion -of a smooth wheel to a smooth rail, it became possible to consider -the employment of the tractive power of a rolling locomotive, and -for some time subsequent to this, to the trial trip of the "Rocket," -in 1829, which may be described as the first successful steam -locomotive, the experiments were along these lines. - -While industrial railroads similar in character to the English -existed in this country, the Baltimore & Ohio was the pioneer -American railroad built for public use. On July 4, 1828, the first -rail was laid by Charles Carroll, the only surviving signer of the -Declaration of Independence, and thirteen miles were opened for -traffic in 1830. In the same year the West Point Foundry began -building locomotives, producing the "De Witt Clinton," in 1831. It -weighed three and one-half tons, and was built for the Mohawk & -Hudson Railroad, the pioneer company of the present New York Central -Lines, which had been chartered in 1826, four years before actual -construction was begun. - -The line was opened from Albany to Schenectady in 1831; to Utica in -1836, and to Buffalo in 1842. Connections to New York and Boston were -built in rapid succession. - -About this time, in Pennsylvania, the Columbia Railroad was built -from Philadelphia to Columbia, on the Susquehanna River, forming the -pioneer division of the present Pennsylvania System. - -Several companies were chartered about the same time in Massachusetts. - -Following the panic of 1837 there was little industrial development -and a lull in railroad construction, but with 1850 begins the era -of rapid extension and the welding of short connecting lines under -single ownerships. The consolidation was vigorously objected to at -first. Originally there were eleven companies owning and operating -the line between Albany and Buffalo. Between Buffalo and Cleveland, -changes of passengers and freight were made at Dunkirk and Erie. -The latter change was made necessary by the difference in gauge; to -the east six feet and to the west four feet ten inches. Plans for -the consolidation of some of these lines made in 1853 entailed for -through operation the change of the gauge east to conform to that -west of Erie, to obviate transfer. This proposition so aroused the -inhabitants of Erie that they resorted to violence. In December, -1853, they tore down the railroad bridge, no trains going through -until February, 1854. This same bridge was rebuilt in 1855, but again -torn down and burned by a mob. Finally a compromise ended what is -known as the Erie War and the gauge was changed, from which time -dates the beginning of definite through operation. - -In 1851 the Erie Railroad joined New York with Lake Erie. The -Baltimore & Ohio reached the Ohio River. Two years later the Atlantic -seaboard and Chicago were connected by rail, which the following -year reached the Mississippi River. These extensions to the Western -Frontier opened the traffic between the Ohio and Mississippi rivers. - -In the early days the public desire for rail transportation -facilities led to numerous enterprises securing public financial -support, but owing to the disaster that was experienced in some of -these enterprises the Ohio law prohibited any town, county or State -from rendering such assistance. When the Louisville & Nashville -Railroad was built, Cincinnati found it imperative to have railroad -communication to the South, but the prohibition of the aforesaid -law prevented public assistance, and the scheme was devised of -building and owning a line. This line went south through Kentucky to -Chattanooga, was built and operated, and eventually leased to the -Cincinnati, New Orleans & Texas Pacific. - -The railroads played an important part in the conduct of the Civil -War, many of them being practically devoted to the transportation of -Government troops and supplies. Great damage was done to the many -lines in the South owing to the military operations. By the close of -the war there had been no pronounced advance in protection by the -appliances which are now commonly employed in the control of train -operation. This was largely due to the light equipment, slow speeds -and sparse traffic. - -The first Pacific railroad was begun, with Government aid, in the -'60s. With the opening up of the West and the return to industrial -pursuits of the people after the close of the war dates a remarkable -era in railroad extension. In the decade from 1880 to 1890, 70,000 -miles were built in the central and western districts, opening vast -unoccupied agricultural, grazing and mineral sections to immigration -and development. The panic of 1893 exerted considerable influence on -railroad construction during the following decade. - -The period since 1900 has been more one of reconstruction and -improving existing lines; the growth of industries and population -tributary to existing lines necessitating this course. - -The vastness of the railroad industry may be imagined when one -considers that from fifteen to twenty per cent of the capital of the -United States is invested in railroads. As an exhibit of the growth -and importance let me quote the following statistics of railroad -growth by decades since the first operation: - - 1830 23 miles - 1840 2,814 " - 1850 9,021 " - 1860 30,635 " - 1870 52,914 " - 1880 93,296 " - 1890 163,597 " - 1900 193,346 " - 1909 about 250,000 " - -Such is the exhibit of progress in the extent of railroads, -broadly viewed. With the growth in extent the elements of safety -have multiplied and have become very numerous; in fact, an almost -indefinite subdivision of railroad property and operation in -respect of safety might be conceived. We will consider, however, the -beginnings and the growth of a few of the more important and striking -items and their relationship to the state of the art, as portraying -in a more graphic manner the adjustment, if you may call it such, -of safety to progress, or, as the subject has been assigned to me, -"Progressive Safety." - - -AIR BRAKES. - -As the density of traffic, and the speed, together with the weight of -equipment, developed, following upon the greater transportation to -be undertaken, the question of brakes was an important factor. More -efficient brakes were needed; the essential characteristics being -that they should be continuous throughout the length of the train, -simultaneously applied and released, with a single point of control. - -In 1869 George Westinghouse, Jr., brought forth what is known as the -straight air brake, consisting of a pump, main reservoir, three-way -valve, brake cylinder and train line. Application was made by -admitting air from the main reservoir into the train line. The brakes -were released by reducing the train-line pressure into the atmosphere -through the three-way valve. The brakes were useless if there was a -leak, a burst in the air line or a parted train. - -With these shortcomings in mind, the automatic air brake was produced -in 1873, in which the method was reversed. With the addition of an -auxiliary reservoir under each passenger car and a triple valve, -application of brakes was secured by reducing the train-line -pressure, while admitting air from the main reservoir raised the -pressure and released the brakes. On the application of the automatic -air brake to freight cars it was found the reduction of pressure was -not quick enough to set the rear brakes promptly, and in consequence -accidents occurred from the bunching of the cars. - -The consideration of the brake question by the Master Car Builders' -Association in 1885, and public tests under their auspices in 1886, -at which time the manufacturers were represented, did not succeed in -stopping freight trains without violent and disastrous shocks. So -discouraging did these tests seem for the time being, that a report -was made, suggesting that the successful application of such brakes -on long trains could only be accomplished by electricity. However, -the following January witnessed the introduction of the Westinghouse -Quick-Action air brake, which corrected the previous trouble and -made practicable the application of air brakes to long freight -trains. Continuing from this time there has been marked improvement -and development in all features of the apparatus, without, however, -modifying the essential elements of which it is constituted. - -With the solution of a means of train control came a further growth -in their size and weight; sooner or later this had to emphasize -the necessity for efficient coupling devices. Not only were there -accidents due to the primitive link and pin couplers, but the various -standards in existence both complicated the operations of coupling -and uncoupling of cars and involved the question of interchange and -safety. - - -AUTOMATIC COUPLERS. - -Owing to the large number of accidents, Mr. F. D. Adams, of the -Boston & Albany Railroad, recommended to the Master Car Builders' -Association, at its third convention, in 1869, that a uniform height -should be established for couplers; their failure to meet when cars -came together being considered the cause of numerous accidents. In -1871 that convention adopted 33 inches as the standard height for -standard-gauge cars. At the convention of 1873 Mr. M. N. Forney -urged that a committee investigate the cause of accidents and make -recommendation. This committee in the following year gave as the -principal cause the same as reported by Mr. Adams eight years before. -They pronounced the tests of automatic couplers to date a failure. -Another committee at this same convention gave the first recognition -to automatic couplers by reporting that a great advantage would -be derived from a uniform drawbar, such as would be accepted as a -standard and which would be a self-coupler. During several years -following various models were examined, but nothing was found to meet -the demands. In 1877 Mr. John Kirby, of the Lake Shore, reported that -his company intended to equip 100 cars with self-couplers, and at the -same meeting Mr. Garey, of the New York Central, told of having been -waited upon by a committee of yardmasters, asking for dead blocks or -some such safety device. This turned the attention of the Association -from the coupler to the dead block. In the year following they -invited the Yardmasters' Association to act in concert with their -committee in reporting upon means of safety for protection of yard -and train men in the performance of their duties. - -This was the situation when on March 19, 1880, the Massachusetts -Legislature instructed the Railroad Commission to investigate and -report with recommendation as to means of prevention of accidents in -the coupling of cars. They reported that they preferred to be guided -by the action of the railroad companies, and any device made standard -by them would, in their opinion, be the best recommendation for such -device. - -In 1882 the Connecticut Railroad Commissioners recommended to the -Legislature that automatic couplers be required on all new cars. - -In 1883 the Massachusetts Commissioners expressed the hope that the -Master Car Builders' Association would at its convention agree upon -some type of coupler for freight cars. - -In 1884 the Association selected Mr. M. N. Forney to conduct tests -of automatic couplers and report. Attention was called at that time -to less than a dozen varieties that were worthy of consideration. -With this action of the Association as a guide, the Massachusetts -Commissioners undertook to solve the problem, and announced that they -would not prescribe any coupler that had not been tested in actual -traffic, but notified the railroad companies in the State that all -new cars, and cars requiring new couplers, should be provided with -one of five kinds specified. It happened that the kinds specified -would not couple with each other. - -In 1885 public tests were held at Buffalo by Mr. Forney. Forty-two -couplers were tested, twelve of which were recommended for further -tests. In the following year the trials made of power brakes on -freight trains made it very evident that the link and pin type of -coupling would not suffice, and it was eliminated from further -consideration. - -In 1887 the Executive Committee reported in favor of the Janney type -of coupler and all other forms that would automatically couple with -it under all conditions of service. This report was adopted in 1888 -by a vote of 474 for and 194 against. The Executive Committee then -undertook to establish contour lines, drawings and templates as -standard, but found that the Janney patents covered the contour of -vertical plane couplers. This was remedied in 1888, when the Janney -Coupler Company waived all claims for patents on contour lines of -coupling surfaces of car couplers used on railroads members of the -Master Car Builders' Association, which enabled the Association to -formally adopt in all respects this type of coupler as standard. -At the convention of 1889 such action was taken, on motion of Mr. -Voorhees, General Superintendent of the New York Central Railroad, -and since that time this type of coupler has been the standard, and -called the "Master Car Builders' Coupler." - -In 1893 Congress enacted a law requiring all railroads engaged -in interstate commerce to provide on all cars and locomotives a -continuous power brake capable of being controlled by the engineman -in the locomotive cab, and also automatic couplers which would -operate by impact. January 1, 1898, was the date set by which these -changes must be made--subsequently extended two years. We now have -uniformity in height and contour to insure perfect contact between -all classes of equipment, and a positively locked knuckle. The design -and attachments to car body are prescribed of a strength in excess -of the power of locomotives, and in modern friction draft gear the -strength reaches 250,000 pounds. - - -SIGNALING. - -The need of indicating the conditions of the road to trains came -with the increasing traffic and speed. As these conditions developed -in England before they did here, the first steps were taken in -that country. In 1834 the Liverpool & Manchester introduced the -first system of fixed signals, consisting of an upright post with -a rotating disk at its top, showing red for danger and the absence -of indication by day and a white light by night for clear. On the -opening of the Great Western Railway this method was improved. -Experiments by Messrs. Chappe, the inventors of optical telegraphy, -showed that under certain conditions of illumination the color of -any body would disappear. This demonstrated that the form, and not -the color, of the day signal could be relied on. It was also found -that a long, narrow surface could be seen further as projected -against the horizon or landscape than the same area in a square or -circle. Making use of these results, Sir Charles Gregory, in 1841, -designed and erected at New Cross the first semaphore signal. There -was no communication between stations; each signalman displaying his -signal at danger after the passage of a train until a certain time -had elapsed, when it was cleared. The only information conveyed to -the engineman was that the preceding train had passed the station at -least the required time before him. - -The failure or inability to act with sufficient promptness at the -display of the danger position, and the consequent collisions, led to -the installation of additional signals to give advance information -to the engineman of the position of the signal he was to obey. Thus -we have clearly portrayed the inception of the present block and -caution signals. - -Mr. C. V. Walker, of the Southwestern Company, introduced the -"Bell Code," which was the first audible method of communication -between signal stations. The same year Mr. Tyer supplemented this -with electric visual signals, the object being to give the operator -indication of the signal having been received and given, and at all -times to show the exact position of the signal itself. This suggested -the space interval between trains, in place of the time interval, -making signal indications definite. In 1858 the positive block system -was established in England, based on the space interval system. - -Making use of telegraph communication, Mr. Ashbel Welch, Chief -Engineer of the United New Jersey Canal and Railroad Company, devised -and installed during 1863 and 1864 the first block system of signals -in this country, on the double-track line between Philadelphia and -New Brunswick. Signal stations were suitably spaced, and at each -station a signal was provided, visible as far as possible each -way. The signal itself was a white board by day and a white light -by night, indicating "clear," shown through a glass aperture two -feet in diameter in front of the block signal box. For the "danger" -indication a red screen fell to cover the white board or light. On a -train's passing a station the signalman released the screen, which -fell by gravity, and did not raise it until advised by telegraph that -the preceding train had passed the next station, thereby maintaining -a space interval. Thus was evolved the telegraph block system, still -generally used, with modifications of apparatus and signals, on lines -of light traffic. Elaborations of this system were later installed -following more closely the English practice, perhaps reaching -the most complete development upon the New Haven and New York -Central lines, where it is still in use. Notwithstanding numerous -improvements in apparatus, the same practice of fixing a positive -space interval by means of communication between block stations still -holds. The addition of track circuits for locking and indicating -purposes and interlocking between stations, more fully effected by -the introduction of the "Coleman block instrument," in 1896, has thus -evolved the controlled manual block system as now used. - - -AUTOMATIC SIGNALS. - -In 1867 Thomas S. Hall patented an electric signal and alarm bell, -used in connection with a switch or drawbridge. Its shortcoming lay -in the fact that a break in the circuit or failure of the latter gave -no danger indication. To correct this a closed circuit was necessary, -although more expensive. In 1870 Mr. Wm. Robinson devised the plan -of having the circuit closed at the point of danger, if conditions -were favorable, and opened a short distance in advance of the signal. -The wheels of the approaching train depressed a lever, which closed -the circuit and cleared the signal, unless interrupted at the point -of danger. Subsequent modifications were made, whereby the circuit -once completed remained so through the agency of an electromagnet, -and reopened when the train passed out of that portion of the track -governed by the signal. - -In 1871 Mr. Hall put in operation the first automatic electric -block system, on the New York & Harlem Railroad, between the Grand -Central Station and Mott Haven Junction. It was normal "safety." -The wheels of a passing train striking a lever completed a circuit, -which put the signal to danger, after the train, and held it so until -the succeeding signal went to danger, when a separate circuit was -completed, which released the former signal, allowing it to return to -clear. - -The disadvantage in having the wheels of a train strike a lever -to complete the circuit led Mr. F. L. Pope to experiment. After a -successful attempt in transmitting an electric circuit through an -ordinary track with fishplate joints, he made a signal test at East -Cambridge, Mass. A section of track was insulated from the rest, with -a wire circuit, including a battery and electromagnet for operating -the signal, fastened at either end to the opposite rails. The metal -wheels and axles completed the circuit, throwing the signal to danger -against following trains. A detent served to keep the circuit closed -until the next signal was reached, when a separate circuit released -the detent, permitting the signal to clear. - -In 1879 this system was put in service, and, with some alterations, -still remains in some localities. - -Following the original manual semaphore and the controlled manual -system of operation came the pneumatic and electric systems, for -localities which required a great number of signal movements. -With the development of motors and batteries capable of economic -operation, automatic signals of the semaphore type have been -successfully and widely installed. - -In the semaphore system numerous failures have occurred, due to -the formation of ice and sleet upon the blades. This has led to -the introduction of the so-called "upper quadrant" operation; that -is, the motion of the signal being from horizontal to an upwardly -inclined position and back. - -On account of the widespread prevalence of electric lighting and -the building up of the territory adjacent to railroads, changes in -the color indication of night signals have been adopted, generally -in such localities using green instead of white for the safety -indication. - - -INTERLOCKING. - -Developing with the manual operation of signals, and as a safeguard -against mistakes of the signalmen, interlocking grew up as a means -for preventing conflicting signals being given at the same time. -As with signals, so with interlocking, England led at first. After -a trip to that country in 1869, Mr. Ashbel Welch recommended the -advantage derived from the English method of operating switches and -signals in large yards and terminals, where the entire control fell -to one man so located as to be in touch with the whole situation -and equipped with a machine that would not permit of setting up -conflicting routes. The plea resulted in the order of a twenty-lever -Saxby & Farmer interlocking machine, which was installed in 1874 on -the New Jersey Division of his line. Railroads were prompt to see -its advantage, and in a short time machines performing the functions -were made and installed in this country, not only for the protection -of railroad intersections, but for the control of large terminal -layouts. In 1876 the first power-operated interlocking system was -perfected, which was the pneumatic type. In 1900 an all-electric -interlocking system, advantageous where distant functions were to -be embraced within the operation of the plant, and applicable to -localities where electric traction was in use, was devised. - -The more recent development of power-operated interlocking systems, -with complete electric indication of the conditions on all tracks, -has made it possible for larger systems to be consolidated under -the control of a central plant, and thus under the direction of a -central authority; these machines, being of a completely interlocked -character, insure greater safety by the central control, as well as -greater facility of operation. - - -TRAIN DISPATCHING. - -In this country the first radical departure from the time interval -and flagging method of operation came in 1851. The New York & Erie -Railroad had established a single line of telegraph between Piermont, -on the Hudson River, and Dunkirk, on Lake Erie, for company business. -The Superintendent of Telegraph, Mr. Luther C. Tillottson, and the -Division Superintendent were together in the Elmira depot on an -occasion and learned that the westbound express from New York was -four hours late. At Corning an eastbound stock train and a westbound -freight at Elmira waited for the express. With this information, -Mr. Tillottson suggested that the freight train at Elmira could be -sent to Corning and the stock train at that point ordered to Elmira, -with perfect safety, before the arrival of the express. The move -was successful and encouraged similar operation, which shortly led -to the adoption, with some modifications, of this train-dispatching -method on the Susquehanna Division of the Erie. Its adoption over -the entire line followed, in spite of the great opposition which Mr. -Charles Minot, the General Superintendent, met when planning for its -introduction. Some of the conductors and enginemen went so far as -to resign rather than run on telegraphic orders against the time of -another train. - -This system spread rapidly to other lines and, in company with other -features of railroad operation, has been progressively developed and -improved. One of the important elements of safety in the dispatching -practice has been the tendency to the same words in the same sequence -to convey the same instructions, insuring a uniform understanding of -the instructions instead of permitting a discretionary phraseology -in originating or a misunderstanding in construing the order -transmitted. The rules for train dispatching now prescribe the use -of standard forms of expression for orders governing the movement of -trains. - -Within the past few years experiments have been made with a system of -train dispatching by telephone, now in successful operation upon some -important lines, and growing in extent. Advantage lies in the ability -to use trained railroad employes who cannot work under the telegraph -system, not being telegraph operators. The telephone-dispatching -system not only insures a rapid distribution of information, but by -its greater capacity enables a more complete knowledge of the state -of the line to be had in the controlling office, as well as in all -the offices tributary to the dispatching system. - - -DEVELOPMENT OF THE LOCOMOTIVE. - -While it is not our intention to take up your time with the recital, -even in condensed form, of the development of all the items which go -to make up the parts of a railroad, we cannot forego the opportunity -to speak briefly about the locomotive, the motive power, giving -action and effect to transportation. - -As early as 1680 Sir Isaac Newton predicted steam-propelled -carriages, and even made suggestions bearing on their design. Through -the eighteenth century various types of steam vehicles appeared, more -as curiosities than anything else, some of them forerunners of the -locomotive and others of the automobile. It was not until 1803 that -anything really deserving the name "locomotive" was built. Richard -Trevithick, a Cornish miner, constructed the locomotive bearing -his name, curiously enough as the result of a wager. On trial this -machine did convey ten tons of iron for nine miles on a cast-iron -tramway by steam power, winning the wager. The desire of Christopher -Blackett, a mine owner, to use steam motive power in place of animals -led to the practical demonstration of adhesion. On this principle, -Blackett's Superintendent, William Hedley, built his "Puffing Billy," -a complicated affair of levers, beams and gears. On the completion of -the Liverpool & Manchester Railroad, the directors, being undecided -as to the motive power, offered a prize of five hundred pounds for -a locomotive that would fulfill certain conditions. The test came -off at Rainhill, in October, 1829, on a level piece of track about -one and one-half miles long, between four competitors. Stephenson's -"Rocket" won and gave the world the mechanical combination -essentially represented in locomotive practice since that time. -American locomotive practice followed the Stephenson model. Among the -early builders were Phineas Davis, Ross Winans and Matthias Baldwin. -The four-wheel engines of the English type proved injurious to the -light rail and sharp curves on our early roads, and to overcome this -Mr. John B. Jervis, Chief Engineer of the Mohawk & Hudson Railroad, -introduced the four-wheel "Bogie" truck. For some twenty years this -design remained, until in the '50s the demand for more tractive power -brought about the addition of another pair of coupled drivers, thus -evolving the well-known "American" type. Additional drivers were -added with the demand for increased tractive power, leading in turn -to the development of the "Mogul" and "Consolidated" types. - -In the decade between 1880 and 1890 more drivers, such as in the -ten-wheel type, began to be used in high-speed service, and the -adaptation of wide fire-boxes to the American type necessitated the -addition of a trailer truck to support the rear end of the locomotive -frame, and brought about the "Atlantic" type, in 1895. - -The "Pacific" type, or the most modern high-speed passenger -locomotive, is a development of this. In 1888 Anatole Mallett -designed the articulated locomotive. In 1904 the first one of this -type was placed in operation on an American railroad, and since that -time has gained favor where maximum tractive power on heavy grades is -required. - -There is perhaps no more striking illustration of the progress of the -art than can be obtained from an examination of the illustrations of -the various types of locomotives built and operated since 1829. It -all bespeaks a tremendous growth, based on a tremendous necessity. -We can point to the strengthening of all parts commensurate with -the work to be done; to the perfection of detail in materials; -manufacture, maintenance and inspection; and possibly observe -with pride that the motive power of the railroads of the present -contributes an almost negligible part of the difficulties of modern -railroad operation, due to features of design or control. - - -CAR CONSTRUCTION. - -One of the early problems in transportation was to secure the -carrying capacity of cars as well as safety. We have pointed out how -it was necessary to add a guiding truck to the English locomotive, -designed to adapt the same locomotive safely to American conditions. -Both the excessive wheel loads on four-wheel freight cars and the -greater liability to accident or derailment led at an early time to -the use of four-wheel trucks under cars. Between 1831 and 1834 Mr. -Ross Winans, of Baltimore, made improvements on cars on the Baltimore -& Ohio Railroad. He applied the swivel four-wheel truck, the outside -bearing for axles, and the application of the draft gear to the car -body and not to the trucks. The increase in lengths of passenger -cars, with corresponding increases in weight, led, about 1880, to -the quite general employment of a six-wheel truck instead of a -four-wheel truck, and even eight-wheel trucks were used for a time, -but rejected on account of the excessive length of wheel base and -other complications. - -In 1879 the Allen wheel, consisting of built-up construction with -forged-steel tire, was introduced and rapidly became applied to cars -in the most exacting service. Originally the tires were imported from -the Krupp Works, in Germany, but later were manufactured here. - -Great interest attaches itself at the present time to the manufacture -of solid-steel forged wheels, on account of the reduction in parts. - -In the latter '80s experiments were made in the development of steel -framing for car construction, and built-up steel underframes were -introduced shortly after; at first on cars for mineral traffic, where -excessive weights and capacities were required. The success of this -type of construction has led to its adaptation at the present time -to all classes of equipment, and not only steel underframes, but -complete steel construction in certain classes of service where the -conditions require. - -With the increase in through passenger service we note the appearance -of the vestibule, protecting the communication between cars. -Originally this vestibule was narrow, about the width of the car -door, and was introduced about 1882, although experimented with as -far back as 1845. The equipment of the "Exposition Flyer," operated -from New York to Chicago during the World's Fair, was the first, we -believe, to appear with full-width vestibules, these being originally -designed as offering less atmospheric resistance to high-speed -trains, but having subsequently been found a more economical, -attractive and safer form of construction. - -The question of steel cars and composite steel and wooden cars is -having very careful investigation and experiment at the present time. -While considerably used, the results of the use of these cars must be -awaited. After the factor of safety has been determined the question -of tare weight per passenger carried will naturally arise. In this -country our weights are now far in excess of all foreign railroad -practice. This enters into the resistance and cost to produce the -service. - - -CAR HEATING. - -The original method of heating passenger cars by direct radiation -from coal or wood stoves was a source of discomfort to the passengers -as well as a menace in case of disaster. This brought about in the -late '80s the introduction of the "Baker Hot-Water Heater," which was -a great improvement for the comfort of passengers, but still left -a fire in the car. In many instances of collisions and derailments -during this period, especially in winter, the cars were set on fire -and the wreckage consumed from the fire scattered from the stoves or -heaters. Experimentally, steam from the locomotives was used, but the -difficulties in securing satisfactory couplings between the cars, the -drain on the boiler, and the fact that the locomotive was sometimes -detached from the train, were obstacles. One of the Western roads -even attached a separate car for the sole purpose of supplying heat -and light. The growth in the capacity of locomotive boilers, and the -perfection of the couplings between cars, have led to the present -practice of car heating, which entirely eliminates the presence of -any fire or source of danger from that source. - - -CAR LIGHTING. - -Car lighting has passed through the same stages as house lighting, -possibly more gradually, on account of the greater difficulties. -The old low-roofed passenger cars were illuminated by candles about -two inches in diameter, placed in racks along the sides of the car. -With the advent of mineral oil, just before the Civil War, the -candles gave place to oil lamps. Great difficulty was experienced -in maintaining a steady flame, until the principle of the student -lamp was adopted. The flame was shielded from the outside air by -a chimney, and the central draft to the burner provided the air -necessary, at the right point, to insure combustion. For more than -fifteen years this method prevailed, and while the presence of oil -lamps in wrecks contributed fuel to the flames, the proof that they -were in any way the principal cause was lacking. Still, to eliminate -this contributory feature, attempts were made to use ordinary -coal gas, compressed in tanks on each car. This, however, proved -unsatisfactory. In 1870 a system of compressed gas made from crude -petroleum had been invented by Julius Pintsch, of Berlin, and by 1887 -had been put into a number of cars on European railroads. The light -was too dim to satisfy American conditions. It was only a question of -time, however, for its proper and adequate development to our needs, -when its use became general, on the perfection of the lamp and burner. - -For the last fifteen years electric lighting of various types -has been in use on cars in an experimental way. While possessing -advantages, perhaps, in safety, owing to low voltages and small -quantity of current, its general use has not yet been entirely -practicable, owing to the complications involved, either in -generating and satisfactorily controlling the current upon the cars, -or in supplying it at terminals through storage batteries. - -So far we have been considering largely features either of equipment -or train control. Perhaps more important than these is the permanent -way. Compared with engines, cars, signals and dispatching, the -variety of problems presented in the construction and maintenance -are many. We perhaps owe to the ancient beginnings and highly -scientific development of the profession of civil engineering and -its branches the fact that these problems of construction and -maintenance are so well met and the source of so little anxiety in -connection with railroad transportation at the present time. American -engineering ingenuity and courage have devised structures to meet -every requirement of railroad development. In bridge construction for -centuries the simple beam or the arch were the only spans employed. -The natural barriers to construction of railroads required something -more than either. Between 1830 and 1850 many wooden trusses were -built in the Eastern and Middle States after the design of Burr -and Palmer. S. H. Long's introduction of counter-braces in truss -construction in 1830 was a long step in advance, and after ten years -the celebrated Howe truss was brought out by the inventor. Four years -later came the Pratt truss. In 1859 several riveted lattice trusses -were built for the New York Central, varying from 40 to 90 feet in -length, by Howard Carroll. The Lehigh Valley built a Whipple-Murphy -pin-connected bridge of 165-foot span. - -This progress in truss construction enabled the railroads to bridge -streams and secure continuous roadway. - -As an interesting historical note in connection with railroad -bridges, we find that the first railroad bridge was built across -the Mississippi River at Rock Island in 1856. It had hardly been -completed, at great expense, before St. Louis steamboat interests -demanded its removal as a nuisance and an obstruction to navigation. -The United States District Court so adjudged it, and ordered its -removal within six months. The presiding judge in his opinion stated -that "if one railroad is able to transfer freight and passengers -without delay and expense of changing at the river, financial -necessity will compel competing roads to provide themselves with -the same facilities," which led him to foresee great interference -to river traffic and great mischief in the establishment of such a -precedent. - -The case was appealed, and Abraham Lincoln was the counsel for the -bridge company before the United States Supreme Court. He argued that -both the river and the railroad were great highways for the people, -and while at the immediate time the water traffic was possibly -greater, he predicted that the time might come when the railroads -might equal or exceed the traffic on the river, and he consequently -felt that each interest was entitled to equal consideration. His -broad grasp of the subject secured for his company a reversal of the -decision of the lower court, and the bridge remained. - -With the advent of steel the possibilities of bridge construction may -be said to have become almost unlimited, and their design exceedingly -simplified and standardized. - - -EVOLUTION OF THE RAIL. - -Equally important is the evolution of the rail and its fastenings. -The type of metal rails of which the bottom served as the running -surface for flat wheels guided by a flange on the rail gave place to -"edge" rails on which flanged wheels used the upper surface of the -rail before the day of the steam locomotive. - -Of the edge type, the first were cast iron, fish-bellied, in sections -about three feet in length. They were supported by stone blocks or -in cast-iron chairs which were in turn made secure to the stone. -Later the same type was made of wrought iron by John Birkinshaw, in -England, who rolled it up to 15 or 18 feet in length. - -From 1820 to 1850 the flat strap rail, spiked to longitudinal -timbers, in turn supported by cross-ties, was largely used in this -country, as it was the only shape that could be rolled here. In 1834 -Mr. Strickland designed the Bridge, or "U"-shaped section, which was -used on some of our earlier roads and was the first style of edge -rail rolled in this country, in 1844. - -The present "T" section was invented in 1830 by Colonel Stevens, -Chief Engineer of the Camden & Amboy Railway, and until 1845, -when it was first rolled in this country, had to be imported from -England. The poor quality of the iron at this time required such -a broad support, in the design of the rail, for the head, that no -satisfactory plate fastening could be secured. Iron shoes, into which -the rail ends fitted, were the means of connection. - -The greatest improvement dates from 1855, when the first steel rails -were rolled in England. Ten years later they were experimentally -rolled here. In 1867, through the introduction of the Bessemer -process, which made possible their manufacture at a greatly reduced -cost, began a revolution in track construction. - -While the decade from 1880 to 1890 witnessed the greatest rate of -railroad building in this country, it also witnessed the substantial -substitution of steel rails on our lines. The earlier rails weighed -from 50 to 70 pounds per yard. The increasing weight of equipment -brought out a heavier section, and fifteen years ago there was -a large percentage of mileage on which weights of 90 pounds and -over--and even 100 pounds--per yard had been introduced. Under -special conditions rails weighing as high as 140 pounds per yard are -used. - -With the increasing weights of rails, and the development of steel -manufacture, greater attention has been paid to details of analysis, -process of manufacture, shape and laying, and it may be briefly -stated that all these matters are uniformly prescribed at the present -time. - -Our rail fastenings, ties and ballast have kept pace with the -development of the rail and equipment. An orthodox part of the rules -governing the maintenance of railway property places in the hands of -the maintenance force standard plans and specifications, not only for -the elements, such as rail and ties, but for the complete make-up of -the finished track structure and roadbed, and these plans are the -result of current experience and study of the several railroads, and -of the various associations of engineers, maintenance officers and -manufacturers, and it is safe to say that these plans, specifications -and standard practices represent the best known state of the art. - - -GRADE-CROSSING ELIMINATION. - -In the early days both the railroads and public ways used the natural -surface of the ground, as a matter of economy. The public question -then was how they were to get the railroads, and _not_ how they were -to restrict them in the manner of their construction. The districts -traversed were sparsely settled and trains were few and slow in -their movement; the highways were little used; all of which made for -freedom from accident where the two crossed. - -The conditions in England were vastly different. There the country -was thickly settled and an assured traffic was evident from the -inception of the enterprise, which would warrant expenditures on -original construction that could not be entertained by the promoters -of our first companies. So it was not through any blindness that made -grade crossings grow up in this country, but it was purely the result -of economic conditions which precluded their elimination. - -With the increase in population and the development of the country -came the need of increased transportation facilities. More frequent, -faster and heavier trains were moving up the railroads and a greater -number of people came to use the highways. The inevitable result -followed, and at length the great number of accidents occurring at -the grade crossings attracted public attention. - -The Legislature of Massachusetts took the first action in 1869, -when it provided for the appointment of a Railroad Commission, to -investigate and report upon "Safer and Better Methods of Construction -and Operation." They very promptly took up the Grade-Crossing -question. - -At this time in - - Massachusetts there was 1 mile of track to 5.47 square miles - New York there was 1 mile of track to 14.12 square miles - United States there was 1 mile of track to 46.72 square miles - Great Britain there was 1 mile of track to 8.60 square miles - -This showed that the railroad network in Massachusetts was more -extensive in proportion to the area of the State than existed in -Great Britain. In their report the Commission suggested the avoidance -of future crossings of railroads and highways at grade, and the -propriety of the railroads changing some existing crossings which -presented no great difficulty or expense. - -In 1873 a law was passed providing for the separation of grade -when a town and railroad effected an agreement. The cost was to be -apportioned by a Commission appointed by the Superior Court. This law -did accomplish something, but hardly abolished existing crossings as -fast as new ones were built. Under it the Fitchburg Railroad did away -with twenty-five between 1875 and 1890, bearing varying portions of -the expense. - -In 1885 an Act provided that the County Commissioners could order the -abolition of a grade crossing on a petition of twenty legal voters -if the cost would not exceed $3,000. Again, in 1888 the Legislature -asked the Governor to appoint another Commission to investigate -and report upon a scheme for gradual abolition and the method of -apportioning the expense. In February, 1889, this Commission, -composed of Kimball, Weber and Locke, submitted systematic plans, -with estimates, etc., in which they fixed forty years as not an -unreasonable length of time for the completion of the work. The next -step came in 1890 with the passage of the Grade Crossing Law, which -provided that the directors of a railroad or the authorities of a -town or city could petition the Supreme Court for a Commission on -the Abolition of a Grade Crossing. This Commission was to determine -the manner of the separation and by whom the work was to be done, and -how the expense was to be divided as between the railroad, city and -State. Before the report was presented to the Court for approval it -was incumbent upon the Commissioners to ascertain that the aggregate -proportion of the State's liability in this connection would not -exceed $500,000 per year for ten years. While on the one hand the -Legislature authorized this expenditure of $5,000,000 to abolish the -crossings of highways with railroads at grade, they granted charters -indefinitely to electric lines to cross steam roads at grade. - -The New York State Board of Railroad Commissioners was created -in 1882 and its membership appointed by the Governor. Among the -functions which they immediately assumed was the question of public -safety in connection with crossings at grade of railroads and -highways. The consideration which this received and the complaints -of unsafe conditions, as well as the complications and adjudications -involved, led to the passing of the Grade Crossing Law, which went -into effect July 1, 1897. - -Not only by the New York State law, but by the Massachusetts law, -the method of elimination, as well as the apportionment of expense, -is specific. The initiative is open to both the railroad and to the -community, and the rapid progress of eliminations in these two States -may be taken as an endorsement of the wisdom of such legislation, -paving the way, as it does, for more progress on the question of -eliminations than it is believed would ordinarily take place where no -specific rule existed for the undertaking. - -While the exact conditions throughout the country are not definitely -known, it is believed that progress is being made quite generally -in this direction. The influence of grade-crossing elimination upon -the safety of operation is of such importance as to deserve serious -consideration, as I will further suggest. Perhaps the elimination -of grade crossings, thereby separating the public from the railroad -except as authorized in connection with their patronage of it, is one -of the most important factors as safety. - - -HUMAN ELEMENT IN OPERATION. - -Notwithstanding the great improvements in roadbed, track, bridges, -signals, equipment and other respects, all securing increased service -and safety in railroad operation, the human element is a vital -factor. With a view of raising the standard of individual service, -a system of physical and educational examinations has been adopted. -In the early days of railroads the individual service was possibly -less definitely classified and qualified than must prevail under -the exactions of modern conditions. In keeping with the progress -in mechanical and safety devices and the necessity of a better -system, we have today a preliminary examination, both physical and -as to fitness. Employes must pass examinations as to vision, color -sense and hearing, and their knowledge of the fundamental rules and -regulations, as well as the fundamental knowledge of road, appliances -and equipment. These examinations are repeated from time to time as -the class of service and further advancement of the employes may -require. Many of the large railroads have established schools, with -capable instructors, where employes may receive instruction upon the -performance of their duties, as well as affording them an opportunity -to fit themselves for promotion. - -Beginning with the General Time Convention some thirty years ago, the -need to standardize railroad practices and systematically qualify -employes began to be realized. - -The Convention, largely through the efforts of Mr. W. F. Allen, saw -that, as time is the term in which railroad schedules are expressed, -it was a fundamental necessity that there should be standard time, -and that the timepieces of employes which should govern their -observance of instructions and schedules must conform to the -standard. This led to the present system of standard time; to the -system whereby employes must compare watches with standard clocks; -must have watches inspected regularly and record taken of same; must -compare watches and register before trips. - -The General Time Convention led to the formation of the American -Railway Association, consisting of the executive and operating -officers of the railroads of the United States and Canada. The -Association considers problems of railroad operation, construction -and equipment, and recommends practices for their solution. Their -investigations, conclusions and recommended practices embrace train -operation, dispatching, block-signal operation, air-brake operation, -physical and educational qualifications of employes, regulations -for the transportation of dangerous articles, clearances, rail -manufacture, safety appliances, inspection, car construction, track -gauge, train heating and lighting, methods of loading, etc. Marked -progress has been made in co-ordinating the work of the various -organizations of railroad officers with the work of the Association, -to secure the benefit of the broadest and most careful consideration -of the subjects. - -Assurance, therefore, exists that the experience and knowledge of -railway management and officers will be brought from time to time -into the text and fact of standard practices, promoting convenience -by close interline relationships and uniformity of regulation, and -causing a uniform, systematic and careful regard for safety. - - -BY WAY OF RECAPITULATION. - -So, to recapitulate: - -From a few miles of crude tramways the world has in a century built -500,000 miles of steam operated and 100,000 miles of electrically -operated roads; instead of spragging the wheels we rely on the -automatic high-speed brake; the coupling of cars has become an -imitation of the action of human hands instead of risking their -destruction; each train finds the condition of road ahead and -protects itself by the agency of electric circuits and semaphores, -the sequence of whose operation discloses on behalf of safety any -obstruction of the route; four-wheel barrows are replaced by steel -cars, larger than the miner's cabin, and carrying more than his -month's output; instead of traveling on a tramway stage coach, -the passenger finds available for his comfort a modern hotel on -wheels, with every luxury known to-day--electrically lighted, steam -heated, weather-proof; the old strap iron, which became detached and -penetrated the car floor, frequently impinging passengers to the -roof, is replaced by the bar of steel weighing 100 pounds to the -yard, whose manufacture, installation and maintenance is prescribed -with every degree of refinement known to the chemist and engineer; -we have learned to treat sub-grade, drainage and ballast as an -architectural science, and our bridges, from the single-log span, -now make continuous roadbed for high-speed operation, even over the -continental rivers. - -Some one has said that the builders' art consisted in making the -structure proclaim the purpose for which designed, and to my mind -there is nothing which quite so dramatically fulfils this as the -modern steam locomotive. How many of you have seen a huge Pacific -locomotive, drawing a train of 600 tons at a speed of 70 miles an -hour, yet under control of one man, just the same as Stephenson's -"Rocket," which could have been lifted off its track and set on the -ground by four strong men, and which was a world-wonder when for a -short distance it attained a speed of twenty miles an hour? We know -that our engineman with a Pacific locomotive and the high-speed train -can stop his train with the air brake in a definite distance. - -These comparisons, briefly as might be, between, we will say, the -beginnings of the nineteenth and of the twentieth centuries, show -how the commercial growth and increase of trade have produced a -demand for transportation to be performed, and with the performance -an economic revolution. We have, in a general way, though with far -less than the thoroughness of which the subject is worthy, outlined -what might be called the "state of the art," of railroad plant and -operation, in a relative sense. - -Progress of a pronounced character has occurred. That this progress -has been accomplished by increased safety is demonstrated by common -knowledge and confirmed by the records, both of the railroads and -the public authorities. As an illustration, take the statistics of -the Interstate Commerce Commission. The increased safety of railroad -operation is indicated in part by the following figures: - - For the decade following the beginning of the records, namely, - 1888 to 1897, the fatalities were 1 in 45,300,000; for the next - decade, bringing it down to the present time, the fatalities - were 1 in 54,900,000; the gain in ratio being, for the nation - at large, fully 20 per cent. - - Looking at the conditions in the State of New York, where the - density of travel is considerably in excess of that of the - country as a whole, we find a report of the State Engineer in - the year 1862 showing ratio of fatalities of 1 in 28,200,000; - the average for six years, 1902 to 1907, inclusive, shows 1 in - 200,000,000; an increase in relative safety of 800 per cent. - -We may assume that never before in the history of railroad -transportation was there presented a bigger problem than to-day. -The weights are greater; the distances are greater; the speed is -greater; the population is more dense; prices and wages are higher, -and the public service more exacting. A gathering of the official -representatives of the nation and of every State, possibly with -a desire for uniform and concerted action, even though it may be -unofficial, points with emphasis to the attitude from which the -public contemplates the employment of the railways in their behalf. -It is, I believe, an accepted fact of our political constitution -at the present time that the public, through its authorized -representatives and through lawful channels, has a right to be -reasonably assured in this respect. I believe that the co-operation -manifested, as well as the inquiries by the various railway boards, -has in a great sense aided in reaching our present standard of -excellence, to which we can point with pride in comparison with any -other national railway system of the globe. We are becoming more -familiar--the railroad management and employes--with the standpoint -of the public, and the public is becoming more familiar with the -problems of the railroads. The mutual aim is: First, safety and -service; and, second, economy. The public concern for the safety and -service is for its own protection, and the railroad management must -give both with economy. - -So far we have been dealing largely with the progressive safety -of railroad operation as furthered by the action of the railways, -either initiatively or responsively, as the case might be. We have -described the improvement in roadway, equipment and appliances; -the standardizing of regulations for operation; the selection of -employees and their government. - -With the better understanding of the problem of the railroad by the -public through and in connection with the special boards represented -here today, it might not be amiss to express the hope that such -needs as cannot be met without the active support of public opinion -and perhaps legislation will be clearly brought out. One of the -thoughts that occurs to me was suggested by a recent exhibit, from -the records, of the loss of life, damage to railroad property, as -well as injury to persons and property conveyed, due to the presence -of unauthorized persons upon railroad property, whether wilfully -or carelessly trespassing. As an illustration of its seriousness: -during last year over 5,000 trespassers lost their lives on railroads -besides a large number injured. Numerous mishaps have been traced -to acts of trespassers, which may be the secret of many unexplained -casualties. The railroads are a highway for the migration of tramps -and unemployed persons, who commit petty depredations, jeopardize -the safety of trains and the lives of employees and passengers. It -seems of no avail that thousands of the worst class are arrested by -railroad police forces and convictions secured, as the sentences in -the majority of cases serve rather to aggravate, than to mitigate, -the evil. One line arrested over 9,000 trespassers during the past -year, and secured convictions in 75 per cent of the cases; but in -half of them sentence was suspended, which usually meant that the -offender used the railroad to escape from the scene. I do not wish -to be understood to asperse the administration of justice, nor to -insist that offences of a serious character are always committed by -railroad trespassers, but the hazard involved is one that should not -be permitted to exist, the railroad property destroyed or damaged -bearing no relation to the risk of persons and property transported, -and to the enormous loss of life involved. - -I feel that the attention of those accustomed to broadly viewing -problems of public concern should be brought to bear upon these -facts, with the hope that measures may be taken to insure greater -safety in this respect, as well as to save the waste of life and -property now resulting from or incident to the practice. I might -venture to suggest that the loss of life is far greater than entailed -through decades by boiler explosions or rear-end collisions, the -seriousness of which I do not wish to deprecate; and the situation -might warrant special record of the facts being obtained in behalf of -the public through the regular channels. - -Wherein lies the increased safety of the future may perhaps be the -query in many minds. It is universally sought. - -It would be mere conjecture on my part, and, with your indulgence, -I am not inclined to prophesy. As I see it, the great problem is to -make our progress sure, taking no doubtful measures, adopting no -specious devices which may appeal to us at first blush until we have -satisfied ourselves that no greater risk is involved by the change. - -The multiplication of rules enjoining obedience, together with -devices for additional protection, may yield a false sense of -security if fundamental obedience to existing rules and efficiency -of existing appliances is one bit impaired by the addition. We must -not embrace paper reforms, even though clamor and pressure be great. -An "ounce of prevention is better than a pound of cure," we grant, -but reverse the proverb, and the pound of prevention may over-whelm -us. The public official would seem to be in a judicial position, -mindful of public justice and safety, basing his judgment and acts -upon facts alone. Improvement in general safety and character of -railroad operation must be the product not only of an enlightened -public opinion and the conservative wisdom of public representatives, -but progressive and careful management, coupled with a sense of -discipline and responsibility and industry of railroad employees, who -must jointly share the obligations of the problem. - -Speaking of the compliance we have cheerfully made to the suggestions -of the public representatives--the Commissions--in regard to -improvements of service, facilities and conditions of operation, -etc., we believe in the long run that these things mean a better -standard and greater security for railroad property, as well as the -enormous benefit that accrues to the public by reason of proper and -efficient railway service, and we have only thoughts of admiration -for the attitudes of the Commissions as we have found them. They have -a large problem. We are glad to avail ourselves of their wisdom, and -believe it to be the means whereby the responsibility of the carriers -to the public is secured, and through whom the responsibility of the -public to the railroads must be voiced. - -Gentlemen, I thank you for your kind attention, and the favor, which -I acknowledge, of being permitted to address you as best I may upon -a subject to which we are all devoted. In the absence of a distinct -literature on the subject that your worthy President assigned to me, -my efforts are perhaps a bit crudely devised, having no pattern. -In another generation we may perhaps evolve a distinct species of -railroad statesman and an encyclopedia from which we will be able to -point back to the beginnings and the efforts at mutual advice, and to -the growth and knowledge that have ensued, just as we have seen the -day of small things in railroads to be the beginning of a constant -growth to the wonders of today. I am sure that the American people -can congratulate themselves upon an institution of the character -of your Convention and of your several honorable bodies, and trust -that this meeting will be such that you will feel that you have made -definite progress in your concurrent aims. - - - - -RAILWAY MAIL PAY - -BY - -JULIUS KRUTTSCHNITT, - -DIRECTOR OF MAINTENANCE AND OPERATION OF THE UNION PACIFIC SYSTEM -AND SOUTHERN PACIFIC COMPANY. - - -The question of compensation to the railroads of the United States -for carrying the mails has been under review before Congress -at different times during the past ten years. The subject was -exhaustively investigated by a Joint Commission of the Senate -and House of Representatives in 1898 and 1899, which reached the -following conclusion after full consideration and taking of a mass of -testimony on all sides of the question: - - "Upon a careful consideration of all the evidence and the - statements and arguments submitted, and in view of all the - services rendered by the railroads, we are of the opinion - that the prices now paid to the railroad companies for the - transportation of the mails are not excessive, and recommend - that no reduction thereof be made at this time." - -(See Report 2284, House of Representatives, 56th Congress, 2d -Session.) - -This Commission also concluded as to the pay for railway postoffice -cars: - - "Taking in view all these facts as disclosed by the testimony - filed herewith, we are of the opinion that the prices paid as - compensation for the postal car service are not excessive, and - recommend that no reduction be made therein so long as the - methods, conditions and requirements of the postal service - continue the same as at present." - -Since the above recommendations were made, the operating costs -on railroads, and, consequently, the cost of handling the mail, -as hereafter shown, have been largely increased, through higher -prices for both material and labor, so that if the railways were -not over-paid ten years ago, the present rates, being lower than -those paid at that time, would be too low and should really be -increased to give the railroads a reasonable return. Far from doing -this, legislation enacted in the past few years has had the effect -of cutting down the mail pay of the railroads, whilst the special -requirements as to service and equipment have been made more severe -and exacting. - -Recent acts of Congress or orders of the Postoffice Department, -which have the force of law, that have caused reduction of railroad -revenues, are the following: - -1. Act of Congress of March 2, 1907, reduced pay on all routes moving -in excess of 5,000 pounds per day. This reduced the pay for handling -mails $1,740,494.63, or 3½ per cent. of the total earnings. The same -act reduced the rental rates for railway postal cars $935,974.09 per -annum, or 16 per cent. The total reduction in pay to the railroads -under this act was $2,676,468.72, or 6 per cent. of the total -compensation for both classes of service. - -2. Act of Congress of June 26, 1906, effective July 1, 1906, withdrew -from the mails empty mail bags and certain supplies, to be thereafter -shipped as freight or express. It may be conservatively estimated -that the annual loss in mail revenue to the railroads by withdrawing -these shipments from the mails is at least $1,000,000, with -practically no reduction in space furnished because of this change. - -3. Order of Postmaster-General of June 7, 1907, changing with each -mail weighing thereafter the method of computing average weights on -which pay is based from that always previously used and theretofore -regarded as the proper interpretation of the law. The effect of this -on the mail weighings of 1907 and 1908 was to reduce railway mail pay -in two sections of the country, $2,222,108.92, or 9½ per cent., or at -the rate of $4,500,000 per annum for all roads of the country. - -4. Orders of Postmaster-General reducing railway postal car pay -by allowing "shorter-car" pay on certain lines than heretofore -authorized and changing certain full lines to half lines; that is, -reducing pay for return movement, thus causing an annual loss to the -railroads of $345,287.06. (Second Assistant Postmaster-General's -Annual Report 1908, page 13.) - -The effect of all of these reductions on the mail revenue of the -railroads aggregate $8,500,000 per annum, or 17 per cent. of the -total pay received by them in the year ending June 30, 1908, for -handling the mail and furnishing railway postal cars. - -These reductions were made without justification and for the purpose -of reducing railroad revenues--and, incidentally, the expenses -of the Postoffice Department, at a time when the net earnings of -the carriers seemed large to the public mind, although under these -favorable conditions the returns to the shareholders approximated -but 4 per cent., whilst farmers were receiving 10 per cent., -manufacturers 15 per cent. and National banks 18 to 20 per cent. - -It is true that there has been a large increase in the gross revenue -of the railroads in the last ten years, but this has accrued from -traffic other than carriage of the mails and has been accompanied -by great increase in operating expenses. In fact, were it not for -the economies of the carriers, effected by the use of more powerful -locomotives and larger freight cars, the increase in operating -expenses would, without doubt, have fully neutralized the growth in -revenue. In the months preceding the panic of October, 1907, the -railroads were quite generally showing decreases in net earnings in -face of the largest gross earnings in their history. It was costing -them much more than a dollar to handle every dollar increase in gross -earnings. - -Since the hasty enactment of ill-considered legislation reducing -mail pay, the revenues of the roads have been seriously affected by -a change in business conditions which has reduced traffic without -reducing prices of materials and labor. At the same time, legislation -has increased labor costs by reducing hours of service. - -In 1898 rates for transporting the mails were too low to cover the -cost of service, they are much too low now, and the losses on the -mail service as a whole--there are some routes that pay--are borne by -freight traffic entirely. - - -RECEIPTS FROM MAIL AND OTHER RAILROAD TRAFFIC. - -The latest statistics of operations of all railroads of the United -States are for the year ending June 30, 1907, issued by the -Interstate Commerce Commission, July 9, 1908. From them we compile -the following exhibit comparing results of 1907 with 1898--when a -Commission of Congress, after complete investigation of the subject, -recommended that mail rates be not reduced. - - Pct. Pct. - Year ending June 30th-- 1907. 1898. Inc. Dec. - - Earnings from passengers $ 564,606,343 $266,970,490 111 -- - Earnings from express $ 57,332,931 $ 25,908,075 121 -- - Earnings from mails $ 50,378,964 $ 34,608,352 46 -- - Earnings from freight $1,823,651,998 $876,727,719 108 -- - Operating expenses $1,748,515,814 $817,973,276 114 -- - Passenger train mileage 541,439,176(a) 341,526,769 58 -- - Freight train mileage 662,106,857(a) 503,766,258 31 -- - - (a) Including mixed trains. - - Earnings per passenger train mile (cents): - Pct. Pct. - 1907. 1898 Inc. Dec. - - From passengers 105.7 79.4 31 -- - From express 10.7 7.7 38 -- - From mails 9.4 10.3 10 - ----- ---- -- -- - Total 125.8 97.4 29 -- - Number passengers carried per train 51 39 31 -- - Tons of mail carried per train .86 .80 7 -- - Earnings per freight train mile (cents): - Earned from freight 274.0 173.1 58 -- - Tons of freight carried per train 357.35 226.45 58 -- - Operating expenses per total train mile - (cents) 147.0 95.6 54 -- - Net earnings per train mile (cents): - Passenger trains 21.2 (Loss) 1.8 - Freight 127.0 77.5 64 -- - Passenger earnings per passenger mile - (cents) 2.014 1.973 2 -- - Mail earnings per mail ton mile (cents) 10.66 12.57 -- 15 - Freight earnings per freight ton mile 0.759 0.753 1 -- - (cents) - - Note.--Bear in mind these figures do not, of course, show - effect of cut of $8,500,000 in mail pay effective July 1, - 1907, or losses in net revenue through depression in business - conditions commencing in latter part of 1907. As an index of - the latter, the Commercial and Financial Chronicle of September - 5, 1908, showed that 141 roads, aggregating 168,839 miles or 70 - per cent. of all roads in the country, had suffered a loss of - $63,484,902, or 24.97 per cent., in net earnings in the first - half of the calendar year 1908, as compared with same period of - previous year. - -The foregoing statement clearly shows the difference between the -revenue obtained from passenger trains as compared with freight -trains. The control of the former is largely out of the hands of -railroad operating officers, as to meet competitive and traffic -conditions, heavier and more luxurious passenger cars must constantly -be furnished, which, of course, means largely increased expense -with very little increase in the paying train load. In fact, as -to the mails, notwithstanding an increase in tonnage carried on -the average train, the mail earnings per passenger train mile were -actually less in 1907 than in 1898, due largely to the automatic -reduction of railway mail pay per ton mile. Considering the freight -train mile, the composition of which is almost entirely within the -control of the railroads, which institute methods for reducing cost -of transportation, it will be observed that by such methods the -railroads have been enabled to place 58 per cent. more tonnage in a -train, bring them 58 per cent. more earnings, which can be applied as -an offset to the increase of 54 per cent. in the cost of running a -train one mile. - -This increase in operating expenses per train mile last referred to -has been brought about largely because of the increased cost of labor -and materials, which, as is well known, has been general throughout -the country. - -Comparing results of operation of all railroads of the United States -for the year ending June 30, 1907, with 1898, when this question -was last up, it is shown by reports of the Interstate Commerce -Commission that gross revenue from operations, as well as income -from investments, increased $1,380,000,000. This is a very large -sum, but let us see what becomes of it. Increased wages paid to -employes consumed $577,000,000, or 42 per cent., purchase of material -included in operating expenses, $354,000,000, or 26 per cent. of the -increased income, and these material purchases represented largely -labor involved in their production. Increases in betterments and -miscellaneous deductions consumed $77,000,000, or 6 per cent. of the -increased income. Larger payments for interest on funded debt and -current liabilities consumed $96,000,000, or 7 per cent., and larger -taxes 2.5 per cent., leaving $240,000,000, or 16.5 per cent. of the -increased income for the owners of the properties, the stockholders. -In 1898 dividends were less than 2 per cent. of the capital stock, -and in 1907, even with the large increase noted, they were only 4 per -cent. Contrast this with the manufacturers' returns of 15 per cent., -the farmers' of 10 per cent., and the National banks' of 18 to 20 per -cent. on their capitalization. - -Reduction in railway mail pay was not justified in 1898; it was far -less justified in 1907. On the contrary, there has been a large fall -in mail pay per ton mile, and conditions under which mails are -transported are becoming more and more onerous. The cost of building -a railway postoffice car to the present plans and specifications of -the Postoffice Department is at least 50 per cent. more than it was -in 1898, although pay received for handling these cars, that weigh -from 25 to 30 per cent. more than formerly, has been arbitrarily cut -over 16 per cent. by the Act of Congress of 1907, and has since been -further cut through readjustment of routes. For the year ending June -30, 1908, the railroads received gross $48,155,379, including railway -postoffice pay, for carrying 80 per cent. greater tonnage of mails -than in 1898, a sum $12,747,629 less than it would have been but for -the reduction of rate from 12.59 cents in 1898 to 9.94 cents in 1908. -In face of this, as we have shown, arbitrary cuts of $8,500,000 more -have been made, a grand total of over $21,000,000 less paid now than -ten years ago. - -About eighteen months ago the conclusion was reached that heavier -and stronger cars were demanded by changed conditions resulting in -heavier trains, greater speed and increased frequency and consequent -risk of accident to clerks and mail in collisions and wrecks. After -careful investigation and expert testimony the specifications were -revised so that full 60-foot cars would weigh about 100,000 pounds -instead of 80,000 pounds, and be greatly strengthened by the free use -of steel plates and oak timbers. To meet the views of car builders, -east and west, two plans and specifications, slightly differing, -were adopted as standard, and railroads were given the option of -conforming to one or the other. The best known anti-telescoping -features were adopted in both plans, producing in the judgment of -responsible car builders a car of exceptional resisting and carrying -power. When new lines of cars are authorized by the Department, -or new cars are ordered to take the place of old cars in service, -companies operating the routes are furnished copies of these -specifications and the superintendent of division is instructed to -see that cars are built in conformity therewith. Inspections are made -while the car is in the shop, and when it is completed a full report -is made and forwarded to the Department. A decision is then reached -as to whether the car is satisfactory and can be accepted. - -(Annual Report Postmaster-General for 1905.) - -This increase in weight of a postal car might not be thought of much -moment, but it means to the railroads the movement of 1,000,000 -additional gross ton miles per car per year, costing them $10,000 -per annum in operating expenses, whilst, as shown, they receive 16 -per cent. less railway postoffice pay now than formerly. - -United States Postal Laws and Regulations, Section 1164, provide -that the average weight of the mails used in fixing rates shall be -established by the actual weighing of the mails for a period of not -less than thirty days and "_not less frequently_ than one in every -four years." The construction placed upon this by the Department has -been the one which reduced to the minimum the pay which the railroads -receive for services rendered. If mail traffic were stationary, -weighing every four years would not matter much, but the increase of -mail matter throughout the United States has been very great, and, -because of the policy of the Department, to weigh the mails not more -frequently than every four years, heavy losses have resulted through -the railroads having to haul tonnage for three successive years -following each weighing for which they receive no pay. - -As a result of this policy of quadrennial weighings, the roads in -Interstate Commerce Groups 7, 8, 9 and 10 (including the territory -west of the Missouri river and the Mississippi below St. Louis) -between 1878 and 1905 suffered a loss of $19,200,000, or 12 per cent. -of the aggregate railway mail pay, compared with what they should -have received if the mails had been weighed annually. In other words, -this loss is equivalent to a reduction in the rate received per ton -mile in these groups of states of 12 per cent. The loss to roads in -the western part of the United States is most striking, due as it is -to the rapid growth of that section. The same reduction, though to a -slightly less degree, obtains in other parts of the United States. - - -COMPARATIVE RETURNS TO THE RAILROADS FROM CONDUCTING MAIL. PASSENGER -AND FREIGHT SERVICE IN THE UNITED STATES. - -In order to make a fair comparison of operating results from -different classes of traffic, it is necessary to consider them under -substantially similar conditions. The best measure of railroad -service is work done, or weight multiplied by distance carried; in -other words, the ton mileage. A comparison of services differing so -widely as the mail, passenger and freight on the basis of ton mileage -of such business is, however, unfair, because in the two former an -excessive proportion of dead weight must be transported for each ton -of paying load, whilst with freight traffic the proportion of dead -weight is small. The hauling power of a locomotive is measured not -by revenue ton miles, but by ton miles of gross weight, it making -little difference to the locomotive as to what this gross ton mileage -is composed of, the gross tonnage and the speed at which it must be -moved being the factors that consume the energy of the locomotive. - -A computation has been made of ton mileage on each individual mail -route by multiplying weight carried by length of route; to the sum -of these we add the dead weight of cars. The report of the Second -Assistant Postmaster-General for year ending June 30, 1908, page -32, gives the number of cars engaged in mail service, which we have -multiplied by the average mileage made by the average car, based -on experience of the Union Pacific and Southern Pacific Systems, -to ascertain total car mileage for the United States. Multiplying -this by the dead weight of a car gives the ton mileage of dead -weight, which, added to the ton mileage of mails, gives the gross -ton mileage, measure of work and cost imposed on the railroads -in return for the pay they receive for handling the mails. These -computations are shown in the following statements, the results being -conservative, as for want of accurate data it has been necessary to -omit some work which the railroads do, which, if ascertainable, would -increase the cost. For example, we have made no charge for the dead -weight of that portion of baggage cars devoted to the handling of -pouch mail, such pouch service, according to the Postmaster-General's -report, covering annually on railroads and express trains -122,027,597 miles; nor for the dead weight of storage mail cars -provided by the railroads. Neither has any account been taken of -the value of transportation given mail clerks, which, based on the -Postmaster-General's report of 1908, amounted to 629,778,443 miles, -which at 2 cents a mile would be $12,500,000; nor for the value -of transportation or postal commissions of Postoffice Department -officials; nor does it take into account special service rendered by -the railroads, such as delivering mail at stations, value of space -furnished by the railroads and required of them by the Postoffice -Department at important junction and terminal points for mail -distribution and accommodation of government transfer clerks. - -The statistics of passenger service in the following statements are -based on the 1907 Annual Report of Statistics of Railways published -by the Interstate Commerce Commission (1908 figures, which would -show higher operating cost, not available), with the exception that -the average mileage per car per annum run by passenger cars is based -on the experience of the Union Pacific and Southern Pacific Systems. - -Statistics of freight service are likewise based on the 1907 Report -of Statistics of Railways, freight car mileage being actually -reported by the Interstate Commerce Commission, dead weight per car -being computed from all freight cars handled on Union Pacific and -Southern Pacific Systems. - - -MAIL SERVICE. - - Year Ending June 30, 1908. - - Paid to the railroads for railway postoffice cars $ 4,567,366 - Paid to the railroads for mail transportation 43,588,013 - ----------- - Total $48,155,379 - - Ton mileage of mails handled by railroads 484,683,135 - Pay per revenue ton mile, including railway - postal pay car 9.94c - Pay per revenue ton mile, excluding railway - postal car pay 8.99c - - R.P.O. Apartment. Total. - Number of cars (Postoffice Department - Report) 1,342 3,568 4,910 - Average length (special mail weighing - 1907), feet of mail apartment 59 27 -- - Equivalent full R.P.O. cars 1,342 1,633 2,975 - Miles run per car per annum (experience - of U. P. System and Southern - Pacific Company) 100,000 60,000 -- - Total equivalent R.P.O. car miles 134,200,000 97,980,000 232,180,000 - - Miles traveled by R.P.O. clerks - (miles reported as traveled by crews - multiplied by average number of men - per crews) -- 629,778,443 - - Gross ton mileage-- - Equivalent railway postal clerks, 232,180,000 miles, at - 45 tons per car 10,448,100,000 - Ton miles of clerks at 160 pounds per man 50,382,275 - Revenue ton miles of mail, including pouch mail 484,683,135 - -------------- - Total gross ton miles(a) 10,983,165,410 - - Average weight of mail per equivalent full R.P.O. car (tons)(a) 2.09 - Average weight of clerks per equivalent full R.P.O. car (tons) .22 - Average weight of car per equivalent full R.P.O. car (tons) 45.00 - Rate of mail and R.P.O. car pay per gross ton mile (cents) 0.438 - Ratio of paying to dead load(a) 1 to 21.7 - - (a) No portion of mileage or weight of storage cars or cars handling - pouch mail has been considered. - - -PASSENGER SERVICE OTHER THAN MAILS. - - Miles run Total car - Number per car miles run - of cars. per annum. per annum. - (a) (b) - Baggage and express, excluding 2,975 - equivalent postal cars 7,404 60,000 444,240,000 - Sleepers, diners and parlor cars 2,000 100,000 200,000,000 - Coaches, etc. 31,594 40,000 1,263,760,000 - ------ ------------- - Total 40,998 1,908,000,000 - - Passenger train miles, including mixed trains 541,439,176 - Cars per train mile-- - Mail 0.43 - Others 3.52 - ---- - Total 3.95 - - Gross ton mileage-- - Baggage and express cars, 444,240,000x30 tons 13,327,000,000 - Sleepers, diners and parlor cars, 200,000,000x50 tons 10,000,000,000 - Coaches, etc., 1,263,000,000x40 tons 50,550,400,000 - -------------- - Total ton miles dead weight 73,877,400,000 - -------------- - Ton miles of passengers, 27,718,030 (a) passenger - miles at 150 pounds per passenger 2,078,891,552 - Ton miles of baggage and express, 444,240,000 car miles - estimated at only 3 tons average load in a car 1,332,700,000 - ------------- - Total ton miles revenue load 3,411,591,552 - Total gross ton miles 77,288,991,552 - Total revenue received from passengers and express $621,939,274 - Total revenue received per gross ton mile (cents) 0.805 - Total revenue received per revenue ton mile (cents) 18.23 - Ratio of paying weight to dead load 1 to 21.7 - - -FREIGHT SERVICE. - - Total miles run by freight cars (a) 17,122,259,754 - Total ton miles dead weight, each car estimated - at 15 tons (b) 256,833,896,310 - Total ton miles revenue freight (a) 236,601,390,413 - --------------- - Total gross ton miles 510,557,546,477 - - Ratio of paying to dead load 1 to 1.1 - Total revenue received for transporting freight $1,823,651,998 - Total revenue received per gross ton mile (cents) 0.369 - Total revenue received per revenue ton mile (cents), (a) 0.759 - Tons per car revenue freight (loaded and empty) 13.8 - Revenue per car mile (cents) 10.5 - - (a) Statistics of Railways of United States, 1907. - - (b) Experience of Union Pacific and Southern Pacific Systems. - - -RELATIVE COST OF SERVICE. - -To determine the relative costs to the railroads of performing mail, -passenger and freight service, we must allocate the expenses to -freight and passenger service as a whole, afterwards apportioning -the latter to mails and other service. Railroad operating expenses -apply jointly to both passenger and freight trains, so that, with few -exceptions, it is impossible to determine exactly from any published -statistics the cost of passenger train service as distinguished -from freight. There are some items of train mile expense directly -connected with movement which are less for passenger than for freight -trains, whilst, on the other hand, many other expenses are greater -for passenger than for freight, such as danger from casualties, -necessity of expensive terminals, delays to other traffic through -preference given to passenger trains, additional main tracks, and, -particularly, higher standards of maintenance of roadbed required for -high speed passenger train movement. - -On account of the impossibility of separating the expenses, we assume -that the above factors about balance each other and that the average -cost of running _all_ trains can be taken as either passenger or -freight train mile cost, respectively, without serious error. - -We allocate a proportion of the passenger train cost to the mails on -the basis of the gross ton miles handled in each class of passenger -traffic. - -The relative revenues and expenses are shown on opposite page, mail -revenues being as shown by 1908 Report of Postoffice Department, and -other statistics as given in the 1907 Statistics of Railways of the -United States, published by the Interstate Commerce Commission, or -are computed therefrom. - - -ALL RAILROADS IN UNITED STATES. - - Summary of Mail, Passenger and Freight Service. - - Other Total - Mails. Passenger. Passenger. Freight. - - Gross revenue $ 48,155,379 621,939,274 670,094,653 1,823,651,998 - Operating expenses $ 96,322,357 677,614,637 773,936,994 974,577,820 - Taxes and interest on - bonds $ 23,503,973 165,582,552 189,086,525 235,468,467 - Total expenses $119,826,330 843,197,189 963,023,519 1,210,046,281 - Surplus -- -- -- 613,605,711 - Deficit $ 71,670,951 221,257,915 292,928,866 -- - Ton mileage (thousands)-- - Revenue weight 484,683 3,411,592 3,896,275 236,601,390 - Dead weight 10,498,482 73,877,400 84,375,882 256,833,896 - Total gross 10,983,165 77,288,992 88,272,157 493,435,286 - Tons dead weight per - ton revenue 21.7 21.7 21.7 1.1 - Per gross ton mile (cents)-- - Gross earnings 0.438 0.805 0.759 0.369 - Operating expenses 0.877 0.877 0.877 0.197 - Earnings over operating - expenses -- -- -- 0.172 - Operating expenses over - earnings 0.439 0.072 0.118 -- - Taxes and interest on - bonds 0.214 0.214 0.214 0.048 - Surplus -- -- -- 0.124 - Deficit 0.653 0.286 0.332 -- - Per cent of operating - expenses to earnings 200 109 115 53 - Gross expenses to earnings 249 135 144 67 - - Figures exclude dividends, betterments and additions, etc. - -The above shows that whilst passenger service as a whole is -unremunerative, the mail earnings are hardly what they should be to -pay a fair share of the railroad operating expenses only, regardless -of taxes and interest. - -Or, put in another way, our computations have shown that in each -passenger train run the railroads haul an average of 43/100 of a -mail car, and the contents of this car yielded average earnings of -9.4 cents for each mile run. The computation just made shows that -each freight car run, loaded or empty, yields a revenue to the -carrier of 10.5 cents per mile. Incredible as this may seem, it is -understandable when we reflect that the railroads transport 1.1 tons -of dead weight for each ton of freight for which they are paid; with -mail they transport 21.7 tons, or twenty times as much. The freight -rate is .759c per ton mile, the mail rate 9.94c, or only thirteen -times as much. - -Arguing in still another way: Average number of cars in each -passenger train handled in United States is 3.95, of which mail cars -amount to 0.43, or 11 per cent. Eleven per cent. of the average -earnings of a passenger train is 13.8 cents, but mail contributed -only 9.4 cents. That is, it should pay 47 per cent. more than it does -to be made to contribute a fair share to the insufficient earnings -of a passenger train. Mails are fairly responsible on basis of space -used for 11 per cent. of the cost of running a passenger train, or -16.17 cents, and as dead weight per foot of space is greater with -mails, their proportion of train mile cost is even larger. They pay -little more than one-half this cost. - -By building larger capacity cars and larger engines, the cost of -handling freight traffic, entirely in the control of the carrier, has -been reduced to follow rate reductions and increased expenses. - -On the other hand, because methods of conducting passenger traffic -are largely--and mail traffic entirely--beyond their control the cost -of handling mail and passengers has been steadily increasing, and, as -revenue has not increased, the net revenue or margin of profit has -been cut to a point where it is unremunerative. - -The argument advanced by advocates of reduced mail pay, that -increasing density permitted economies and that lower rates would -yield more net, is not applicable when the carriers' hands are tied -and measures of economy so successfully applied to handling freight -are prohibited. The following will illustrate this: - -On routes where pouch service is used mail is handled with express -and baggage without much increase of cost over other passenger -traffic. A somewhat greater mail traffic obliges the railroads to -furnish apartment cars, at increased expense and dead weight for the -postoffice feature, but still permitting the railroads to carry other -traffic in the same car. A still further increase in weight means the -establishment of full R. P. O. lines for which the railroads receive -extra, but inadequate, compensation, these cars being used for no -other class of traffic and adding largely to the weight and cost of -train service. Even after the route has been made an R. P. O. route, -the railroads are not permitted to economize by carrying more mail -in the car, and as traffic density grows the roads must under the -requirements of the Department add more cars, almost in proportion -to the business, as the loads carried in R. P. O. cars, as shown -by recent special weighing, average only 2¾ tons, and many of them -return empty--for which empty haul the railroads often receive no -pay. When the mail business has assumed very large proportions and -the R. P. O. cars have multiplied in ratio therewith, special trains -are then added to carry the bulk of the mail, being run at very high -speed and adding to the railroad expense account in a far higher -degree per unit of business than any other class of traffic. - -In contrast to the above, baggage and express are very generally -hauled in the same and a much lighter and less costly car than the -mail car, and increase in tonnage is accommodated by hauling greater -loads per car. In the case of freight, increased density means larger -car and train loads and greatly reduced costs of operating per ton -mile. - -Despite these differences in conditions, the automatic scale has -secured to the Government a larger reduction in mail rates per -ton mile in the last ten years than the percentage of fall in -freight rates, despite higher labor and material costs of railroad -operating. As a result, the mail business--which, according to -evidence introduced before the Congressional Committee of 1899, was -unprofitable at that time, has been made more unprofitable at the -present time by the heavy rate reductions of 1906-7. - -As the greatest reduction made deals with mail routes on which -traffic is heaviest, a consideration should be given to the following -conditions of handling mail on such routes: - - -HEAVY TRAFFIC MAIL ROUTES. - -On very many of the heavy traffic routes where the principal -reduction in pay occurred a large part of the mail is now handled -in special mail trains run at excessively high rates of speed. Such -trains introduce the following conditions: - -1. A very much greater liability to accident. A large proportion of -the deplorable accidents that have occurred on the American railroads -in recent years have occurred to excessively high speed trains, -accidents to such trains being almost invariably destructive to -life and property. An examination of serious accidents on the Union -Pacific System and Southern Pacific Company for the calendar year -1906 shows that 36 per cent. of the property damage from all causes, -including negligence, as traceable to trains not under control and -excessive speed, whilst 30 per cent. additional damage was due to -causes that might prevent inferior trains getting out of their way, -such as keeping main line on time of superior trains, failure to -observe signals or orders, etc. - -2. Mail trains run at excessive high speed are much more expensive to -operate than other trains, for the following reasons: - - (_a_) Fuel consumption per traffic unit is very much greater at - high speed because of diminished tractive power of locomotives. - - (_b_) A relative greater hauling capacity of locomotives must - be consumed in moving trains at higher speeds. - - (_c_) Excessive speed requires higher standards of track - maintenance, double-tracking, block signals, heavy rail, better - ballasted roadbed, etc., etc. - - (_d_) High speed means increased wear and tear on equipment and - track. - - (_e_) High speed trains are expensive, delaying and adding to - the cost of other traffic. - -3. Speed of trains carrying mails has been constantly increased, a -study made of the speed per hour made on fastest trains on which -R. P. O. cars are handled on seventeen of the principal mail routes -giving the following results: - -Average of fastest train on seventeen mail routes: - - Speed - Year. (Miles per Hour.) Relative. - - 1905 42.21 136 - 1899 39.23 126 - 1890 34.35 110 - 1885 31.34 100 - Average increase per year 0.55 - -With the above increase in speed, rates paid the railroads have -automatically decreased whilst expenses have largely increased to -provide for the above greater speed and because of increase in -prices of labor and materials of all kinds in the past five or six -years. This increase in speed has been made coincident with growth -of freight traffic, which is the railroads' profitable business, -_the non-profitable high speed trains delaying the profitable ones, -increasing their cost and incurring liability to accident_. - -4. Earnings of mail trains supposedly high are not higher than other -passenger trains, which, as a whole, earn very much less per mile -run than freight, relative figures being as shown by last report of -the Interstate Commerce Commission--as 100 is to 218, whilst the -cost of running passenger trains is as much, if not more. This is -particularly the case with high speed passenger trains, which is -the most unprofitable business in which railroads are engaged. (On -Union Pacific System last year earnings per passenger train mile were -$1.71, per freight train mile $4.31.) - -5. Passenger engines in hauling fast passenger trains on principal -main lines at the present time have assumed, on account of increased -weight of equipment and excessive speed required, enormous -proportions. We now have in such service on our lines engines -weighing exclusive of tender 222,000 pounds, this power being 60 per -cent. heavier and twice as costly as locomotives used in the same -class of service ten years ago, burning double the amount of fuel. -Engineers running these locomotives receive higher pay because of the -greater size of these engines--to say nothing of recent increases -made in their schedules. Such heavy power moving at fast speed -is extremely destructive to the roadbed, requiring a much higher -standard of maintenance than formerly, maintenance of way cost in -the past few years having gone up 50 per cent. Engine failures are -largely confined to fast passenger trains, and, in general, expenses -are increased all along the line because of their introduction. - -6. As illustrating the additions to expenses because of increased -track maintenance on account of fast passenger and mail trains, we -have made a study of statistics, using the Interstate Commerce report -of 1906 as a basis, of seven roads having a large proportion of fast -passenger service and seven roads having a moderate speed passenger -service, but with a large proportion of freight service. On the -roads first named the average cost of maintenance of way per mile -was $2,951, and on roads in the latter class $1,565. The operating -expenses per train mile in the former class were $1.47, and in the -latter $1.33. The roads in the former class, on account of large -number of excessively high-speed trains, were obliged to double-track -their lines, which directly increased maintenance expenses. - - -PAY FOR RAILWAY POSTAL CARS. - -The large reduction made by Act of March 2, 1907, in pay for railway -postal cars was made in face of large increase in the cost of -constructing such cars, due to higher prices of labor and material -and greater cost of meeting the more exacting specifications of the -Postoffice Department. Changing to steel construction, increases in -weight, and generally heavier operating expenses, have created an -extremely large increase in cost of moving these cars. The standard -railway postal car of only a few years ago, 60 feet long, weighed -80,000 pounds and cost about $5,500. The standard railway postoffice -cars, 60 feet long, of wooden construction, used on the railroads -with which I am connected, weigh over 100,000 pounds each, or -one-fourth more weight, and costs 40 per cent. more, whilst our new -standard postal cars of steel construction weigh 108,000 pounds and -cost over $9,000, or 60 per cent. more than the car of a few years -ago. - -An argument sometimes made in favor of a lowering of R. P. O. car -pay is that for apartment cars used in runs where mail density does -not require a full car, no additional compensation is allowed. But -we feel that a fair consideration of the circumstances under which -mail is handled as compared with other traffic will justify the -conclusion that this is not an argument in favor of reducing R. P. -O. pay, but rather for allowing the railroad additional compensation -for the apartment cars as well. Both services require the furnishing -of special features in the way of traveling postoffices not required -except for the convenience of the Postoffice Department to enable it -to do work while mail is in transit, such as ordinarily performed in -office buildings. The full postal car is more expensive to the roads, -as it always means additional car service, whilst in some cases of -apartment cars the space not occupied by the traveling postoffice is -adequate to take care of baggage and express, though very frequently -this service also means additional car movement that would not be -necessary but for the postoffice feature. - -The saving to the railroads from reduction in car mileage that would -be possible if it were not obliged to furnish traveling postoffices, -but could use the space occupied by racks and other postoffice -features by loading additional mail in cars, would be many times the -revenue allowed by the railway postal cars. - -To illustrate: The car mileage of postal cars (changing apartment -cars to full cars on basis of length) is 232,180,000 per annum; -the ton mileage of mail 484,683,135, or 2.09 tons per car. From -figures obtained from the Postoffice Department, average car weights -shown on page 59, table "EE," special mail weighing of 1907, it is -ascertained that storage mail cars, which, of course, contain no -postoffice features, carry an average of 7.04 tons of mail. At this -rate the whole mail business could be carried by the movement of -68,844,000 car miles, or 163,336,000 less than actually employed, due -to the postoffice features. The total railway postal car pay is only -$4,567,366, or only 2.8 cents per additional car mile, whilst the -operating expenses chargeable to running these 163,336,000 car miles, -of 70 per cent. of the total movement, amount to $67,000,000. - -But for the postoffice feature, the combined weight of an entire -route could many times be handled in a single car such as is used -for express instead of several heavy and expensive postoffice cars, -whilst often extra cars for storage mail must be added, for which no -extra pay is allowed, the cost of running these storage cars also not -being included in the computation of cost of service, as no accurate -statistics of their number or car mileage are available. - -In addition to the furnishing of storage cars, although many -R. P. O. routes are paid for on a basis of 40 foot cars, it is not -economical for the railroads to construct such cars which are not -interchangeable with other equipment and which would have to be -thrown aside if through growth of traffic larger cars are afterwards -required. As a result, full 60-foot R. P. O. cars have for years been -furnished on many 40 and 50-foot routes, the railroad getting no -credit for this, whilst on many other routes R. P. O. cars have been -run in advance of the fixing of R. P. O. pay for them. - -On a number of routes postal car pay has been allowed for running -full cars in one direction only, classing such routes as half-lines. -This obliges the railroads to move the car in the opposite direction -without pay, the small additional compensation of less than 4 cents -per mile run received in one direction being entirely inadequate to -compensate the road for the empty haul--to say nothing of allowing -anything for moving it in direction for which pay is received. To -illustrate: The Union Pacific Railroad in one case between Council -Bluffs, Iowa, and Ogden, Utah, 1,003 miles, receives no pay for -handling east-bound a 60-foot mail car, which is paid for west-bound -only, six mail cars being required on this line. The R. P. O. pay per -car mile, including movement in both directions, is only 2.24 cents, -or about what would be received for transporting a single passenger, -although a standard passenger coach has a capacity for 70 passengers. - -In connection with the railway postoffice, an item not often -considered is the value of transportation furnished clerks in the -railway mail and compartment cars. Figuring this at 2 cents per -mile, which is about the lowest passenger fare, the total value of -this transportation for clerks in railway postoffice cars would be -$8,600,000 per annum, or $4,000,000 more than the railroads receive -for the handling of these cars, and the value of transportation in -the case of apartment cars would be $4,000,000 per annum additional. -In addition to this, a large amount of free transportation is -required annually by the Postoffice Department for inspectors and -other officers of the Department. - -The Postoffice Department issues annually about six hundred traveling -commissions to postoffice inspectors and other postal officials, -and requires railroad companies to honor such commissions for free -transportation on all trains on all lines on which mails are carried. -In some cases these commissions are issued to Government officials -whose official duties are in no way connected with the transportation -of mails on railroads. The railroads have no control whatever over -the issuance of these commissions and can not even secure from the -Postoffice Department a list of them, the Department holding that -the list is confidential. These commissions are frequently used -for personal travel in violation of the rulings of the Interstate -Commerce Commission. In brief, the Postoffice Department in effect -arbitrarily issued about six hundred annual passes over every mail -carrying railroad in the United States, which is equivalent to about -200,000 annual passes. - - -POSTAL DEFICIT. - -In investigating the subject of railway mail pay, we have been -struck very forcibly with changes which have taken place in the -revenues and expenditures of the Postoffice Department since 1899, -when this subject was last reviewed. Although postal operations -still show a deficit, it is a fact that its revenues have increased -in a remarkable degree, and the deficit is certainly not due to the -amounts paid to the railroads for hauling mail, as these payments are -relatively far less now than formerly. Revenues of the Postoffice -Department have grown from $102,000,000 in 1900 to over $191,000,000 -in 1908, or 87 per cent., this increase in revenue in eight years -being as great as the entire increase in the previous thirty-five -years. - -But in this same period of eight years there was an increase -of $100,600,000, or 93 per cent., in Postoffice Department -expenditures, of which only $10,900,000, or 11 per cent., was paid -to the railroads, $33,935,000, or 34 per cent., going to Rural Free -Delivery, $25,000,000, or 25 per cent., to postmasters and their -clerks, and the balance to other items. - -The following statement shows for the year 1895 and for the years -1899 to 1908, inclusive, postal revenue and postal expenditures -divided between amounts paid the railroads, cost of rural delivery -and other expenditures: - - - REVENUE. EXPENDITURES. - - Paid Rural - Year. Railroads. Delivery. Other. Total. - - 1895 $ 70,983,000 $31,189,000(a) $ -- $57,637,000 $ 88,826,000(a) - 1899 95,021,000 35,775,000 150,000 65,607,000 101,632,000 - 1900 102,355,000 37,315,000 420,000 70,005,000 107,740,000 - 1901 111,631,000 38,161,000 1,778,000 75,616,000 115,555,000 - 1902 121,848,000 39,519,000 3,998,000 81,269,000 124,786,000 - 1903 134,224,000 41,377,000 8,102,000 89,305,000 138,784,000 - 1904 143,583,000 43,971,000 12,682,000 95,709,000 152,362,000 - 1905 152,827,000 45,482,000 20,824,000 101,093,000 167,399,000 - 1906 167,933,000 46,953,000 24,774,000 106,543,000 178,270,000 - 1907 183,585,000 49,831,000 26,643,000 113,754,000 190,238,000 - 1908 191,479,000 48,155,000 34,355,000 125,842,000 208,352,000 - - (a) Includes $1,646,741 accrued in favor of Pacific Railroads in 1895, - but not charged to postal expenditures. - - The railroads are themselves large contributors to the revenues of the - Postoffice Department. It is ascertained that nine roads, covering - 27,500 miles, pay annually $261,000 for postage stamps, or at the rate - of $2,000,000 for the entire railroad mileage of the country. - -The next statement shows clearly that the ratio of expenses to -receipts of the Postoffice Department would in 1908 have been but 91 -per cent. and no deficit but for the expenditures made for Rural Free -Delivery, the amount paid the railroads being now only 25 per cent. -of the total revenue as compared with 41 per cent. in 1895. - - -RATIO OF EXPENSES OF POSTOFFICE DEPARTMENT TO POSTAL REVENUES -1895-1908. - - Percentage Percentage Percentage - of Postal Rev. Paid to Paid to - Year. Paid to R'ys. Rural Free Del. Other Expenses. Total. - - 1895 41 0 75 116 - 1899 38 0 69 107 - 1900 36 0 69 105 - 1901 34 1 69 104 - 1902 32 3 67 102 - 1903 31 6 66 103 - 1904 31 9 66 106 - 1905 30 14 66 110 - 1906 28 15 63 106 - 1907 27 15 62 104 - 1908 25 18 66 109 - -In order to avoid a deficit, attention has been concentrated on this -25 per cent. of the postal expenditure, which we contend is at least -not an unfair compensation to the railroads for services rendered. -Though the proportion of the total revenue going to the railroads has -fallen one-third in ten years, the deficit still remains, and is it -reasonable to suppose that any reduction in railway mail pay would -not be speedily absorbed in other directions? On the contrary, ought -not efforts be concentrated to bring within reasonable figures the -other expenses of the Department, which now absorb 84 per cent. of -its revenue as compared with only 69 per cent. in 1900--despite an -actual growth in postal revenue in the same time of $89,000,000, or -87 per cent.? - -It will be noted from these figures that a reduction of 10 per cent. -in the ratio of railway mail pay to total revenue can be entirely -wiped out by an increase of only 3 per cent. in other postal -expenses, whilst a retrenchment of 10 per cent. in the latter would -have put the Department almost on a paying basis, notwithstanding -the heavy cost of Rural Free Delivery. From 1895 to 1908 actual -totals show that the railroads' pay has increased 54 per cent. for -handling 114 per cent. more mail tonnage, whilst in the same period -other expenses of the Postoffice Department have grown 178 per cent., -revenues increasing 149 per cent. - -Increased mail business means a direct increase in postal revenue, -as postage remains the same regardless of tonnage, but carrying -this increased business on the part of the railroads means less -proportionate revenue to them according to volume of tonnage, so that -the proportion of the postal revenue they now receive is very much -less than formerly. Labor, material, and the price of everything sold -in commerce have advanced materially, as we all know, in the past -seven or eight years; railway mail pay being practically the only -thing that has decreased in the face of conditions that should have -raised it. - -As a large increase in mail tonnage means to the Postoffice -Department about an equal increase in revenue with a decreased -payment per ton to the railroads through lower rates, the avoidance -of a deficit would seem not a difficult matter if other postal -expenses were kept at least within sufficient control, so they would -not increase faster than the increase in volume of mail handled. - -The Postoffice Department enjoys this peculiar advantage of receiving -with the growth of the country an increase in revenue directly in -proportion to the increase in business handled. In disbursing this -revenue, it must pay less to the railroads in proportion to the -density of business, thus retaining to apply on other expenses a -larger net revenue year by year. It is reasonable to suppose that -the cost of many branches of the Department should not increase in -the same ratio as tonnage of mail (for example, that expenses of -individual postoffices and administrative and general expenses should -not grow in this proportion). Yet, regardless of these favorable -influences, expenditures in other directions have absorbed the -great net revenues after paying the railroads, and it is in these -directions that the cause of the postal deficit must be looked for. - -The growth of these expenditures, which since 1900 has been much -faster than the rise in mail tonnage, is shown in the following -comparison of 1908 with 1898: - - 1908. 1898. Increase. Pct. - Ton mileage of mails handled - by railroads 484,683,135 272,714,017 211,969,118 78 - Postal revenues $191,478,663 $89,012,619 $102,466,044 115 - Less paid to railroads 48,155,379 34,379,227 13,776,152 40 - Net applicable to other - expenditures 143,323,284 54,633,392 88,689,892 162 - Other expenditures 160,196,507 63,654,297 96,542,210 152 - Deficit 16,873,223 9,020,905 7,852,318 87 - Per ton of mail handled by railroads (cents)-- - Postal revenues 39.5 32.6 +6.9 - Paid to railroads 9.9 12.6 -2.7 - ---- ---- ---- - Net applicable to other items 29.6 20.0 +9.6 - Other expenditures 33.1 23.3 +9.4 - ---- ---- ---- - Deficit 3.5 3.3 +0.2 - - Note.--The increase in gross postal revenue per unit of mail - handled by railroads is no doubt due to increase in city mail - not handled by railroads. - -Chicago, Ill., March 1, 1909. - - - - -THE DIMINISHED PURCHASING POWER OF RAILWAY EARNINGS - -BY C. C. MCCAIN. - -Chairman of the Trunk Line Association, New York, 1909; Formerly -Auditor Interstate Commerce Commission. - - -INTRODUCTION. - -The ten years or more which have elapsed since the resumption -of industrial activity that began some time in 1897 have been -characterized by changes in rates of wages for substantially all -kinds of labor, and in the prices of most commodities which amount -to a profound and material alteration in the value of money. Wages -of railway labor, prices of railway materials and supplies and -prices of commodities carried by railways and of those produced by -the purchasers of railway transportation have rapidly increased. -This is equivalent to a decrease in the value of the money in which -railway charges are paid _for the appreciation of commodities is the -depreciation of money_. Commodities cannot have generally augmented -value without money having diminished value. Railway rates have not -been adjusted to this diminished value of money. The involuntary and -unsolicited reduction in railway rates has gone so far as seriously -to threaten the stability of railway wages and that of the whole -railway industry. Some adjustment through compensatory advances -in money rates (_i. e._, nominal rates) is, therefore, absolutely -necessary. The extent of the changes which have taken place, their -relation to the problem of railway rates and the adjustments which -they have made necessary are set forth in the following pages. - - -TYPICAL UNCHANGED RATES. - -A fifteen-ton car-load of fourth class freight carried all-rail -between Chicago and New York at any time during the year 1897 would -have brought the railways transporting it $105.00 in gross receipts. - -There has been no change in the class-rates between Chicago and New -York since 1897 and the same quantity of freight, classified in the -same way, produces the same gross receipts now that it did in 1897.[E] - -The rates between Chicago and New York, as is very well known, are -the basis of all rates in the region north of the James, Potomac -and Ohio Rivers, and east of the Mississippi River and of a large -proportion of the rates applicable to traffic originating or destined -to any point in that region. Without a change in rates between -Chicago and New York there could have been, during the continuance of -the system of rate adjustment that has been in force since long prior -to the year 1897, no general change in the rates based upon those in -force between those cities. - - -WAGES OF RAILWAY EMPLOYEES. - -More than forty per cent. of the gross receipts of the railways of -the United States are expended in the payment of employees, the sums -annually paid out for that purpose since 1897 being as follows: - - Amount paid to - Year. employees. - - 1897 $465,601,581 - 1898 495,055,618 - 1899 522,967,896 - 1900 577,264,841 - 1901 610,713,701 - 1902 676,028,592 - 1903 (a)776,321,415 - 1904 817,598,810 - 1905 839,944,680 - 1906 (a)927,801,653 - 1907 1,072,386,427 - --------------- - Total $7,781,685,214 - - (a) Includes $19,000,000 estimated for Chicago, Milwaukee & St. Paul - in 1903 and $27,000,000 for the Southern Pacific in 1906. - -It is a matter of common knowledge and of frequent comment that -a given sum of money will now buy very much less in labor or -commodities than it would in 1897. The change has been gradual but -substantially continuous and the aggregate result has been enormous. -The consequence of this change has worked great hardship to those -whose incomes have not been adjusted to the changed purchasing power -of money but fortunately the rates of wages of nearly all workmen and -the prices of practically all products of labor expended upon farms -or in factories or otherwise have been raised sufficiently to more or -less completely offset it. The principal sufferers are those salaried -employees whose salaries have not been readjusted and those whose -incomes are received under contracts covering long periods of time or -are derived from the marketing of commodities or services at prices -more or less effectively controlled by custom or statute. Many of the -owners of railway bonds are in the second class and all interstate -railways are, as to the disposal of their services, in the third -class. - -As already noted, the gross revenue derivable by the railways from -the transportation of a carload consisting of fifteen tons of fourth -class freight between Chicago and New York is the same now that it -was in 1897--_i. e._, $105.00. But $105.00 is worth much less to any -railway now than it was in 1897 for money is worth at any time what -it will buy at that time. The reports of the Interstate Commerce -Commission show the following increases in rates of average daily -wages paid to railway employees: - - Wages per day. - Class of Employees. ------------------------- - Increase, - 1897. 1907. per cent. - - Station agents $1.73 $2.05 18.50 - Other stationmen 1.62 1.78 9.88 - Enginemen 3.65 4.30 17.81 - Firemen 2.05 2.54 23.90 - Conductors 3.07 3.69 20.20 - Other trainmen 1.90 2.54 33.68 - Machinists 2.23 2.87 28.70 - Carpenters 2.01 2.40 19.40 - Other shopmen 1.71 2.06 20.47 - Section foreman 1.70 1.90 11.76 - Other trackmen 1.16 1.46 25.86 - Switchmen, flagmen and watchmen 1.72 1.87 8.72 - Telegraph operators and despatchers 1.90 2.26 18.95 - Employees, account floating equipment 1.86 2.27 22.04 - All other employees and laborers 1.64 1.92 17.07 - -The foregoing affords a means of ascertaining the real value of -$105.00 of railway gross receipts in 1897 and 1907 and the decrease -from the earlier to the later year. The following table shows the -number of days labor of each of the different classes of railway -labor which $105.00 would buy in each of the years indicated: - - Number of days labor - purchasable for $105.00. - Class of Employees. ------------------------ - Decrease, - 1897. 1907. per cent. - - Station agents 60.7 51.2 15.65 - Other station men 64.8 59.0 8.95 - Enginemen 28.8 24.4 15.28 - Firemen 51.2 41.3 19.34 - Conductors 34.2 28.5 16.67 - Other trainmen 55.3 41.3 25.32 - Machinists 47.1 36.6 22.29 - Carpenters 52.2 43.8 16.09 - Other shopmen 61.4 51.0 16.94 - Section 61.8 55.3 10.52 - Other trackmen 90.5 71.9 20.55 - Switchmen, flagmen and watchmen 61.0 56.1 8.03 - Telegraph operators and despatchers 55.3 46.5 15.91 - Employees, account floating equipment 56.5 46.3 18.05 - All other employees and laborers 64.0 54.7 14.53 - ---- ---- ----- - Average -- -- 16.27 - -The foregoing shows that on the average the gross railway receipts -derived from the service assumed as the basis of the calculation -would purchase 16.27 per cent. less of the necessary services -of railway employees, in 1907 than in 1897 and what is true of -the receipts from this service is true of every dollar received -by a railway--that is, no railway dollar will pay for more than -eighty-four per cent., on the average, as much railway labor as it -would in 1897. - -The change in railway rates necessary fully to offset this decrease -in the value of the money in which rates are paid would amount to an -apparent advance of 19.43 per cent, of the money rates now in force. - - -COST OF FUEL FOR LOCOMOTIVES. - -Next to labor the principal single item of expense incurred in the -operation of the railways of the United States is for the fuel -used in their locomotives. The expenditures for this purpose now -constitute about eleven per cent. of the cost of operation and since -1897 have been as follows: - - Cost of fuel - Year. for locomotives. - - 1897 $65,044,670 - 1898 72,469,777 - 1899 77,187,344 - 1900 90,593,965 - 1901 104,926,568 - 1902 120,074,192 - 1903 146,509,031 - 1904 158,948,886 - 1905 156,429,245 - 1906 170,499,133 - 1907 200,261,975 - -------------- - Total $1,362,944,786 - -Thus, from 1897 to 1907, the cost of fuel for locomotives, in -spite of the economies in its use partially suggested by the -contemporaneous increase in the train-load of freight from 204.62 -to 357.35 tons, or 74.64 per cent., increased 207.88 per cent., -while passenger traffic increased but 126.15 per cent. and freight -traffic by 148.69 per cent. Thus while there was one dollar spent for -locomotive fuel in 1897 for each $17.25 of gross railway receipts -the ratio had declined by 1907 to one dollar for locomotive fuel for -each $12.93 of gross receipts--a difference which must plainly be -productive of profound changes in the proportion of gross receipts -remaining after the payment of necessary operating expenses. The -average prices of coal, per ton of 2,000 pounds, at the mines, in the -several states, in the years 1897 and 1907, as given by the United -States Geological Survey, were as follows: - - Price per ton. - ----------------------------- - Increase, - State. 1897. 1907. per cent. - - Alabama $0.88 $1.29 46.59 - Arkansas 1.06 1.68 56.49 - California (a)2.55 (a)3.81 49.41 - Colorado 1.17 1.40 19.66 - Georgia (b)1.03 (b)1.38 33.98 - Idaho (c)3.33 (c)4.10 23.12 - Illinois .72 1.07 48.61 - Indiana .84 1.08 28.57 - Iowa 1.13 1.62 43.36 - Kansas 1.18 1.52 28.81 - Kentucky .79 1.06 34.18 - Maryland .76 1.20 57.89 - Michigan 1.46 1.80 23.29 - Missouri 1.08 1.64 51.85 - Montana 1.76 1.94 10.23 - New Mexico 1.38 1.46 5.80 - North Dakota 1.08 1.61 49.07 - Ohio .78 1.10 41.03 - Oklahoma 1.34 2.04 52.24 - Oregon 3.09 2.34 Decrease - Pennsylvania-- - Bituminous .69 1.04 50.72 - Anthracite 1.51 1.91 26.49 - Tennessee .81 1.25 54.32 - Texas 1.52 1.69 11.18 - Utah 1.19 1.52 27.73 - Virginia .67 1.02 52.24 - Washington 1.94 2.09 7.73 - West Virginia .63 .99 57.14 - Wyoming 1.21 1.56 28.93 - - (a) Includes Alaska. - - (b) Includes North Carolina. - - (c) Includes Nebraska. - -It will be noted that the cost of coal increased in every state of -considerable production. In California much of the locomotive fuel -used consists of petroleum, and the same fuel is used to some extent -in Oregon and New Mexico. - -The number of tons of coal purchasable at the mines in the several -states with $105.00, the gross revenue from the typical shipment -which has been used for illustrative purposes, in 1897 and in 1907, -would have been as follows: - - - Tons of coal purchasable - for $105.00. - ------------------------ - Decrease, - State. 1897. 1907. per cent. - - Alabama 119 81 31.93 - Arkansas 99 62 37.37 - California 41 28 31.71 - Colorado 90 75 16.67 - Georgia 102 76 25.49 - Idaho 32 26 18.75 - Illinois 146 98 32.88 - Indiana 125 97 22.40 - Iowa 93 65 30.11 - Kansas 89 69 22.47 - Kentucky 133 99 25.56 - Maryland 138 88 36.23 - Michigan 72 58 19.44 - Missouri 97 64 34.02 - Montana 60 54 10.00 - New Mexico 76 72 5.26 - North Dakota 97 65 32.99 - Ohio 135 95 29.63 - Oklahoma 78 51 34.62 - Oregon 34 45 Increase - Pennsylvania-- - Bituminous 152 101 33.55 - Anthracite 70 55 21.43 - Tennessee 130 84 35.38 - Texas 69 62 10.14 - Utah 88 69 21.59 - Virginia 157 103 34.39 - Washington 54 50 7.41 - West Virginia 167 106 36.53 - Wyoming 87 67 22.99 - -In this connection it should be noted that the United States -Department of Labor reports an increase, between 1897 and 1907, in -the price of anthracite of 29.23 per cent., and in bituminous coal -from the Georges Creek region of 85.54 per cent. - - -COST OF RAILWAY SUPPLIES. - -Bulletin No. 75, of the United States Bureau of Labor, shows average -prices for the following articles used by railways, or, as raw -materials, for the manufacture of railway supplies: - - - Price. - ------------------------------- - Articles. Increase, - Unit. 1897. 1907. per cent. - - Axes, M. C. O. Yankee Each .39 .68 74.36 - Coke, Connellsville, furnace Ton 1.62 2.83 74.69 - Bar iron, best refined, from mill Pound .011 .0175 59.09 - Barbed wire, galvanized Cwt. 1.80 2.63 46.11 - Copper wire, bare Pound .1375 .2402 74.69 - Doorknobs, steel, bronze, plated Pair .166 .450 171.08 - Files, 8-inch Dozen .81 1.00 23.46 - Hammers, Magdole, No. 1½ Each .38 .47 23.68 - Lead pipe Cwt. 4.32 6.71 55.32 - Locks, common, mortise Each .0833 .20 140.10 - Nails, cut, 8-penny, fence and common Cwt. 1.33 2.16 62.41 - Nails, wire, 8-penny, fence and common Cwt. 1.49 2.12 42.28 - Pig iron, Bessemer Ton 10.13 22.84 125.47 - Pig iron, foundry No. 1 Ton 12.10 23.90 97.52 - Pig iron, foundry No. 2 Ton 10.10 23.87 136.34 - Pig iron, gray, forge, southern, coke Ton 8.80 20.99 138.52 - Steel billets Ton 15.08 29.25 93.97 - Steel rails Ton 18.75 28.00 49.33 - Steel sheets, black, No. 27 Pound 0.019 0.025 31.58 - Tin, pig Pound .1358 .3875 185.35 - Tin, plates, domestic, Bessemer, coke Cwt. 3.18 4.09 28.62 - Zinc, sheet Cwt. 4.94 7.49 51.62 - Brick, common domestic M 4.94 6.16 24.70 - Cement, Rosendale Bbl. .75 .95 26.67 - Doors, pine Each .81 1.88 132.10 - Lumber, hemlock M feet 11.00 22.25 102.27 - Lime, common Bbl. .72 .95 31.94 - Linseed oil, raw Gal. .33 .43 30.30 - Lumber, maple, hard M feet 26.50 32.25 21.70 - Lumber, oak, white, plain M feet 36.25 55.21 52.30 - Lumber, oak, white, quartered M feet 53.83 80.00 48.62 - Lumber, pine, yellow M feet 16.44 30.50 85.52 - Lumber, poplar M feet 30.67 58.08 89.37 - Shingles, cypress M 2.35 4.23 80.00 - Lumber, spruce M feet 14.00 24.00 71.43 - Window glass, American, single, - firsts, 6 by 8 to 10 by 15 inch 50 sq. ft. 2.20 2.81 27.73 - Window glass, American, single, - thirds, 6 by 8 to 10 by 15 inch 50 sq. ft. 1.96 2.24 14.29 - -The bulletin indicates that putty, Portland cement and Ames shovels -are about the only exceptions to the general rule of greatly -increased prices of railway supplies. It is plain that as to all of -the important supplies and materials included in the foregoing list -the $105.00 of gross receipts from the typical shipment heretofore -used as an example would show the same, or a greater, loss in -purchasing power which has characterized the comparisons previously -shown. - -Evidence from official sources thus shows that in purchasing the same -quantities either of labor or of supplies the railways have now to -expend much larger sums than they did ten years ago. The official -statistics already quoted are fully supported and their pertinence -to the problem in hand is fully proven by the accounting records of -the purchasing departments of the several railways. The Trunk Line -Association has obtained detailed information concerning purchases in -1897 and 1907, by important railways represented in its organization, -and this information has been carefully and accurately tabulated. -A table showing the largely increased cost of articles which this -tabulation reveals has been made Appendix B and will be found at -pages 194 to 198 of this pamphlet. An examination of this appendix -and, particularly of the classes of labor and of the articles shown -to have greatly increased in cost, discloses the unquestionable fact -that the increased cost pervades the whole aggregate of operating -expenses and that there is no considerable exception to the rule that -every item of operating expenditure is now very much greater than it -was in 1897. - - -OTHER COSTS OF SUPPLYING RAILWAY SERVICES. - -The cost of railway transportation which must be borne out of the -receipts for railway services includes operating expenses, interest -on capital and taxes. Before discussing the increase in the rate of -interest demanded it is worth while to note that the exactions made -by the taxing power upon the railways have also notably increased. - -The sums annually paid as taxes on railway property since 1897 -follow: - - Taxes paid. - Miles operated ---------------------- - and included Average - in reports Amount. per mile - of taxes paid. operated. - - 1897 183,284.25 $43,137,844 $235.36 - 1898 184,648.26 43,828,224 237.36 - 1899 187,534.68 46,337,632 247.09 - 1900 192,556.03 48,332,273 251.00 - 1901 195,561.92 50,944,372 260.50 - 1902 200,154.56 54,465,437 272.12 - 1903 205,313.54 57,849,569 281.76 - 1904 212,243.20 61,696,354 290.69 - 1905 216,973.61 63,474,679 292.55 - 1906 222,340.30 74,785,615 336.36 - 1907 227,454.83 80,312,375 353.09 - ---------- ------------ ------ - * * $625,164,374 * * - -Thus in the years from 1897 to 1907 railway taxation per mile of line -has increased from $235.36 to $353.09, or no less than 50.02 per cent. - - -COST OF REGULATION. - -Closely akin to taxation of railway property are the additional -expenses which have to be met out of railway revenues on account -of public regulation. The increased and, in many cases, minute -regulation imposed by the Hepburn law of 1906 and the rules and -requirements established thereunder by the Interstate Commerce -Commission and by various State enactments have caused the railways -many new and augmented expenditures. Among the many purposes for -which these expenditures have become necessary are those enumerated -below: - -1. Preparation, publication, filing, posting, etc., of rate schedules. - -2. Compilation and tabulation of statistics, preparation and filing -of annual reports of operation and finance. - -3. Litigation under regulatory statutes including cases before -National and State commissions and including legal and incidental -expenses thereof. - -4. Appliances and special equipment required by safety appliance laws. - -5. Additional employees and additional wages paid on account of laws -regulating the hours of labor. - -Besides these and other positive additions to the expenses of -operation there have been considerable reductions in revenue brought -about by the various regulative statutes. Thus there have been -reductions in revenue caused by the following: - -1. Orders, or suggestions having practically the force of orders, -requiring changes in the classification of freight. - -2. Orders, or suggestions having practically the force of orders, -requiring reductions in rates. - -3. Statutory reduction in the rates of compensation for carrying the -mail. - -4. Reduction of compensation for carrying the mail made by executive -order. - -A painstaking effort to secure accurate statistics concerning recent -increases in these expenditures and losses has been made and data for -that purpose have been supplied by many of the railways operating -east of the Mississippi river. These data are necessarily incomplete -and fragmentary, the accounts of many of the companies not being kept -in such form as fully to disclose the items desired. In few cases -were the data which could be obtained for any line complete--some -companies were able to report particular items while other companies -could not give these, but could supply others. Generally speaking, -it should be realized that the tabulation of these reports makes -a showing which is incomplete mainly in the form of omissions. A -conservative computation discloses that the costs due to increases -in expenses or reductions in revenue imposed by statutes or by -Commissions acting under Federal and State regulatory laws costs -the railways of the United States approximately $200,000,000 in two -years. That this is not an exaggerated estimate will be appreciated -by reference to the principal general items of expenditures as -enumerated on the preceding pages. Until these items shall have been -assigned a proper classification in the accounts of the railroads -the accurate results may not be ascertained, but it will at once -occur to those in any measure informed that there has been an -enormous increase of work and expense placed upon the carriers to -conform to the innumerable requirements of State and Federal laws -and the rulings of the Commissions thereunder, and that this burden -has extended to all departments of the carriers. Litigation and -miscellaneous expenses appear as a large part of these new costs, -and in addition the carriers' revenues have been greatly depleted -either directly by the laws, orders of Commissions or suggestions -having practically the force of orders, resulting in reductions of -freight and passenger charges. - - -COST OF OBTAINING NEW CAPITAL. - -In the matter of interest on the capital employed the railways -have apparently enjoyed an advantage which would seem to offset -the natural tendency of interest rates to rise in response to the -stimulus of augmented cost, in dollars and cents, of the commodities -entering into the budget of expenditures of the average recipient -of interest--that is to say, the advantage growing out of the fact -that a large proportion of railway capital is secured under long-time -contracts and that many of the contracts now in force unquestionably -run back to a time before the extensive depreciation of the American -dollar began. This advantage is a real one, but its extent is easily -exaggerated. For the purpose of throwing light upon the effect upon -the cost of railway transportation of the rise in interest rates -which has characterized recent years an analytical study of railway -indebtedness (including guaranteed dividends) amounting, in the -aggregate, to $9,499,099,065 has been made. This sum represents -indebtedness now outstanding and includes some duplication owing to -the fact that certain of the securities represented in the aggregate -are themselves based upon other securities deposited as collateral -or held in the treasuries of the corporations making the secondary -issues; duplication which could not be eliminated without adding -vastly to the difficulty of the inquiry with no corresponding gain -in the accuracy of the result. These data are also subject to the -qualification necessarily due to the fact that all of the issues -included were not sold at par. In some cases a small premium was -doubtless obtained and in other cases a slight discount was required, -but, nevertheless, it is believed that the data fairly indicate the -general change in interest rates on capital loaned to railways. Of -the total outstanding indebtedness of $9,499,099,065 the portion -incurred during the years 1897 to 1908, inclusive, amounts to -$5,466,340,252, or 57.55 per cent. The following table shows the -amounts incurred at the different rates during each of the years -named: - - Rate of Interest and Amount Incurred During Year and Outstanding. - - Year. 6½ per cent. 6 per cent. 5 per cent. 4½ per cent. - - 1897 -- $11,039,000 $42,126,000 $7,700,000 - 1898 -- 487,000 7,486,700 207,000 - 1899 -- 13,094,000 29,197,000 15,896,000 - 1900 -- 1,133,000 15,926,351 7,979,000 - 1901 -- 1,777,775 38,840,000 37,845,378 - 1902 -- -- 44,949,508 19,949,600 - 1903 -- 1,552,000 53,592,030 22,092,500 - 1904 -- 256,000 61,191,561 30,241,729 - 1905 -- 1,810,000 66,346,000 73,996,100 - 1906 $350,000 1,180,579 141,786,511 40,922,181 - 1907 -- 30,325,000 289,458,892 177,805,962 - 1908(a) -- 114,504,970 47,546,385 2,850,000 - -------- ------------ ------------ ------------ - Total $350,000 $177,159,324 $838,446,938 $437,485,450 - - - Rate of Interest and Amount Incurred During Year and Outstanding. - - Year. 4 per cent. 3¾ per cent. 3½ per cent. 3 per cent. - - 1897 $205,882,500 $ -- $221,663,000 4,998,275 - 1898 187,898,000 -- 194,724,325 -- - 1899 277,784,400 -- 126,734,000 43,231,272 - 1900 83,735,500 -- 62,577,000 43,689,000 - 1901 382,131,250 330,000 51,635,000 -- - 1902 348,038,050 -- 58,641,500 -- - 1903 317,948,000 -- 22,308,000 9,866,435 - 1904 193,499,500 -- 39,890,000 -- - 1905 364,507,404 -- 112,645,155 16,000,000 - 1906 251,037,681 48,262,548 31,098,670 -- - 1907 210,399,075 -- 423,000 -- - 1908(a) 101,380,000 -- -- -- - ------------- ----------- ------------- ------------ - Total $2,924,181,360 $48,592,548 $922,339,650 $117,784,982 - - (a) January to July, only. - -Even a cursory examination of the foregoing statement shows that the -average rate of interest demanded by those who supply railway capital -has greatly increased. In 1897 and 1898 the largest aggregate of -new indebtedness was incurred at the rate of three and one-half per -cent. per annum; in 1899, 1900, 1902, 1903, 1904, 1905 and 1906 the -preponderating portion was at four per cent.; in 1907 the largest -aggregate was at five per cent., while in the months of 1908 for -which data are available the greater portion was obtained at six -per cent. Loans at three and three and one-half per cent., which -supplied a considerable aggregate during all of the years to and -including 1906 and particularly in the earlier years of the period, -had substantially disappeared before 1907 and no funds were procured -at less than four per cent. during the portion of 1908 which is -included. The increased volume of loans at five and six per cent. is -equally marked. The following table makes this analysis clearer by -showing the total borrowings of each year and the percentage at each -rate: - - - ======================================================================== - Rate of Interest and Proportion of Total Indebtedness - Incurred During Year and Outstanding. - Year. Borrowed. ----------------------------------------------------- - 6½ 6 5 4½ 4 3¾ 3½ 3 - per per per per per per per per - cent. cent. cent. cent. cent. cent. cent. cent. - ------------------------------------------------------------------------ - 1897 $493,408,775 -- 2.24 8.54 1.56 41.73 -- 44.92 1.01 - 1898 390,803,025 -- .12 1.92 .05 48.08 -- 49.83 -- - 1899 505,936,672 -- 2.59 5.77 3.14 54.91 -- 25.05 8.54 - 1900 215,039,851 -- .53 7.40 3.71 38.94 -- 29.10 20.32 - 1901 512,559,403 -- .35 7.58 7.38 74.55 0.07 10.07 -- - 1902 471,578,658 -- -- 9.53 4.23 73.80 -- 12.44 -- - 1903 427,358,965 -- .36 12.54 5.17 74.40 -- 5.22 2.31 - 1904 325,078,790 -- .08 18.82 9.30 59.53 -- 12.27 -- - 1905 635,304,659 -- .28 10.44 11.65 57.38 -- 17.73 2.52 - 1906 514,638,170 0.07 .23 27.55 7.95 48.78 9.38 6.04 -- - 1907 708,351,929 -- 4.28 40.86 25.10 29.70 -- .06 -- - (a)1908 266,281,355 -- 43.00 17.86 1.07 38.07 -- -- -- - ------------------------------------------------------------------------ - Total 5,466,340,252 0.01 3.25 15.34 8.00 53.49 0.89 16.87 2.15 - ------------------------------------------------------------------------ - - (a) January to July, only. - -The foregoing table shows that while, in 1897, the railways borrowed -87.66 per cent. and in 1898, 97.91 per cent. of the new capital -obtained in the form of loans at four per cent. or better, they were -compelled, in 1907, to promise more than four per cent. on 70.24 per -cent. and in the first six months of 1908 to promise six per cent. on -43.00 of their borrowings. The significance of these figures is made -still more apparent by the following table, which shows opposite the -aggregate borrowings of each year, the interest charges thereon and -the average rate upon the portion of the capital which it represents: - - Year. Aggregate - interest Av. rate - Borrowed. charges. interest. - - 1897 $ 493,408,775 $ 19,258,593 3.90 - 1898 390,803,025 14,744,141 3.77 - 1899 505,936,672 19,804,814 3.91 - 1900 215,039,851 8,073,638 3.75 - 1901 512,559,403 20,856,559 4.07 - 1902 471,578,658 19,119,182 4.05 - 1903 427,358,965 17,561,577 4.11 - 1904 325,078,790 13,571,945 4.17 - 1905 635,304,659 25,758,601 4.05 - 1906 514,638,170 21,964,215 4.27 - 1907 708,351,929 32,722,081 4.62 - 1908(a) 266,281,355 13,431,067 5.04 - -------------- ------------ ---- - Total $5,466,340,252 $226,886,413 4.15 - - (a) January to July, only. - -The foregoing shows an increase, in the average interest rate -demanded upon new loans to railway corporations, from 3.90 per cent. -in 1897 to 4.62 in 1907 and 5.04 in 1908. The increase in the rate -from 1897 to 1907 was equal to 18.46 per cent. and from 1897 to 1908 -it was 29.23 per cent. In other words, one dollar would pay interest -on as much of the new capital secured by loans in 1897 as $1.29 -would of the loans of 1908. The gross revenue of $105.00 obtained in -both years from the typical shipment of fourth class freight between -Chicago and New York, at the unchanged rate applicable to such a -shipment in both years, would pay interest on $2,692.31 secured in -the earlier year and on only $2,083.33 secured in the later year. -The loss in power to purchase loaned capital therefore amounts to -22.62 per cent. In order fully to appreciate the importance of this -rise in the cost of capital it is necessary to realize that very -great sums of new capital are annually required for the necessary -augmentation and improvement of railway facilities. This is made -evident by the total yearly borrowings as shown in the foregoing -tables, but it should be borne in mind that further sums, certainly -not less extensive in the aggregate, have been raised through issues -of stock, which promise no certain rate of interest, although -these sums could not have been obtained unless the subscribers had -considered it probable that they would, in the long run, receive -returns in dividends at least equal to the "going rate" of interest. -It is interesting to note that the aggregate of new capital secured -by loans in each year has very largely exceeded the total interest -payments to all capital obtained by borrowing. This is shown by -the following table, the data in which, except those as to the sums -obtained by loans, are from the reports of the Interstate Commerce -Commission: - - Per ct. int. - New capital Interest on paym'ts new - Year.(a) borrowed. funded debt. borrow'gs. - - 1898 $ 390,803,025 $ 237,578,706 60.79 - 1899 215,039,851 241,657,535 47.76 - 1900 215,039,851 242,998,285 113.00 - 1901 512,559,403 252,594,808 49.28 - 1902 471,578,658 260,295,847 55.20 - 1903 427,358,965 268,830,564 62.90 - 1904 325,078,790 282,118,438 86.78 - 1905 635,304,659 294,803,884 46.40 - 1906 514,638,170 305,337,754 59.33 - 1907 708,351,929 323,733,751 45.70 - -------------- -------------- ----- - Total $4,706,650,122 $2,709,949,572 57.58 - - (a) Accurate data for payments to capital in 1897 are not available. - - -FROM THE VIEWPOINT OF THE PURCHASER OF THE SERVICES. - -So far the extent and significance of the changes in the value, -or purchasing power, of money have been considered from the point -of view of those who produce and sell railway transportation. But -equally striking changes will appear and similar conclusions are -inevitable when recent history is reviewed in the aspect which -it presents to those whose earnings are devoted, in part, to the -purchase of the services which the railways supply. For the important -consideration to the wage-earner who wishes to travel by rail or -who buys commodities that have been so carried, or to the producer -whose products must go to market over railway routes, is not, how -much money must be paid for the railway services, but, rather, how -much labor must be expended, or what quantity of his goods must be -produced, in order to obtain that sum of money. If the earnings of -a particular wage-earner have increased from fifty to seventy-two -cents per hour, a railway service is cheaper, to him, if it costs -twelve cents than it was at ten cents when his earnings were on the -fifty-cent basis, for he now procures with the fruit of ten minutes' -toil what formerly cost the result of twelve minutes' labor. In -Bulletin No. 77, just issued by the United States Bureau of Labor, -the official statistician presents data showing the relative wages -per hour of many different classes of wage-earners, not including -railway employees, in 1897 and 1907. While these data show that -wages have almost uniformly advanced (there are ten somewhat -questionable exceptions among the 342 classes) the data supplied by -the Interstate Commerce Commission show that during the same period -average railway freight rates have declined from 7.98 mills to 7.59 -mills per ton per mile, or 4.89 per cent. A table presenting and -based upon these official statistics and showing the relative wages -per hour of the various classes of labor, in 1897 and 1907, the -percentage increase in wages rates per hour and the increased command -over railway freight services which these wage-earners have obtained -through the combined effect of higher wages and lower ton-mile rates -is given in Appendix C[F]. In studying the data presented in this -appendix it should be borne in mind that the wages are relative -and not absolute. They mean, for example, that the average male -blacksmith in the agricultural implement industry was paid, in 1907, -$1.25 for the same quality and period of labor for which he was paid -a little less than ninety-six cents, in 1897. This increase amounted -to 30.58 per cent. of the wages rate of 1897, and, combined with a -decreased cost of railway freight service of 4.89 per cent., which -made 95.11 cents go as far in purchasing the latter in 1907 as one -dollar would go in 1897, gave him 37.29 per cent. greater command -over railway freight services. - -In an earlier bulletin, No. 75, published during the current year, -the Bureau of Labor continued its "index numbers," which show, -in similar manner, the average relative wholesale prices of the -commodities entering into the ordinary budget of family expenditures. -For the purpose of presenting the changes in these prices on a -uniform basis the Bureau represents the averages for the ten years -from 1890 to 1899, inclusive, as one hundred per cent. and reduces -the averages for each year to percentages of the averages for the -basic period. The following table presents these figures for the year -1897 to 1907, inclusive: - - Relative Wholesale Prices. - - Cloths Fuel Metals - Farm and and and - Year. Products. Food. Clothing. Lighting. Implements. - - 1890-1899 100.00 100.00 100.00 100.00 100.00 - 1897 85.2 87.7 91.1 86.4 86.6 - 1898 96.1 94.4 93.4 95.4 86.4 - 1899 100.0 98.3 96.7 105.0 114.7 - 1900 109.5 104.2 106.8 120.9 120.5 - 1901 116.9 105.9 101.0 119.5 111.9 - 1902 130.5 111.3 102.0 134.3 117.2 - 1903 118.8 107.1 106.6 149.3 117.6 - 1904 126.2 107.2 109.8 132.6 109.6 - 1905 124.2 108.7 112.0 128.8 122.5 - 1906 123.6 112.6 120.0 131.9 135.2 - 1907 137.1 117.8 126.7 135.0 143.4 - - Lumber and House - Building Drugs and Furnishing Miscell- All Com- - Year Materials. Chemicals. Goods. aneous. modities. - - 1890-1899 100.00 100.00 100.00 100.00 100.00 - 1897 94.4 94.4 89.8 92.1 89.7 - 1898 95.8 106.6 92.0 92.4 93.4 - 1899 105.8 111.3 95.1 97.7 101.7 - 1900 115.7 115.7 106.1 109.8 110.5 - 1901 116.7 115.2 110.9 107.4 108.5 - 1902 118.8 114.2 112.2 114.1 112.9 - 1903 121.4 112.6 113.0 113.6 113.6 - 1904 122.7 110.0 111.7 111.7 113.0 - 1905 127.7 109.1 109.1 112.8 115.9 - 1906 140.1 101.2 111.0 121.1 122.5 - 1907 146.9 109.6 118.5 127.1 129.5 - -From the data in the foregoing table, which show advances averaging -nearly forty-five per cent., the following table, indicating the -present purchasing power over railway freight service of each class -of articles, in a manner similar to that adopted to measure the -increased power of labor to buy railway freight transportation, has -been derived: - - Increased - Relative prices. power to pur- - ---------------------- chase railway - Commodities. Increase freight services - 1897. 1907. per cent. per cent. - - Farm products 85.2 137.1 60.92 69.19 - Food 87.7 117.8 34.32 41.22 - Cloths and clothing 91.1 126.7 39.08 46.23 - Fuel and lighting 96.4 135.0 40.04 47.24 - Metals and implements 86.6 143.4 65.59 74.10 - Lumber and building materials 90.4 146.9 62.50 70.85 - Drugs and chemicals 94.4 109.6 16.10 22.07 - House furnishing goods 89.8 118.5 31.96 38.74 - Miscellaneous 92.1 127.1 38.00 45.00 - All commodities 89.7 129.5 44.37 51.79 - - -AGRICULTURAL PRODUCTS AND FREIGHT RATES. - -The statistician to the United States Department of Agriculture -obtains annually a very large number of reports from farmers as to -prices obtained for their products and these are carefully tabulated. -The results show the average prices, at the farms, of the principal -agricultural products. The following table shows the increased prices -obtained for such products, and the increased power which these -producers enjoy, per unit of their products, to purchase railway -freight services: - - Increased - power to - purchase - Price. railway - ------------------------- freight - Product. Value of Increase service - crop of 1907. Unit. 1897. 1907. per cent. per cent. - - Corn $1,336,901,000 Bushel $0.263 $0.516 96.20 106.28 - Wheat 554,437,000 " .808 .874 8.17 13.73 - Oats 334,568,000 " .212 .443 108.96 119.70 - Barley 102,290,000 " .377 .666 76.66 85.74 - Rye 23,068,000 " .447 .731 63.53 71.94 - Buckwheat 9,975,000 " .421 .698 65.80 74.32 - Potatoes 184,184,000 " .547 .618 12.98 18.79 - Hay 773,507,000 Ton 6.62 11.68 76.44 85.51 - Cotton 613,630,436 Pound .066 .104 57.58 65.68 - -------------- - Total $3,932,560,436 - -Detailed tables presenting the data from which the foregoing averages -for the whole country have been derived and showing prices and -purchasing power over freight service are given in Appendix D[G]. -These tables disclose the uniformity, throughout the United States, -of the advance in agricultural prices and of the augmented command of -agricultural producers over railway freight service. - - -FARM ANIMALS AND FREIGHT RATES. - -The Department of Agriculture of the United States also collects -data concerning the value of farm animals and annually publishes the -average values reported for the first day of each successive year. -All classes of farm animals have increased in value since 1897 and -each represents a great command over railway freight services, for -the sum representing the average value of each animal will now buy -much more freight transportation than it would in 1897. This is shown -by the following table: - - Increased - power to - purchase - Average price, each. railway - -------------------------------- freight - January 1, January 1, January 1, Increase, service, - 1908. 1897. 1908. per cent. per cent. - - Horses $1,867,530,000 $31.51 $ 93.41 196.45 211.69 - Mules 416,939,000 41.66 107.76 158.67 171.97 - Milch cows 650,057,000 23.16 30.67 32.43 39.24 - Cattle, except - milch cows 845,938,000 16.65 16.89 1.44 6.65 - Sheep 211,736,000 1.82 3.88 113.19 124.15 - Swine 339,030,000 4.10 6.05 47.56 55.14 - -------------- ----- ------ ------ ------ - Total $4,331,230,000 -- -- -- -- - -In considering the foregoing the fact that the prices relate solely -to animals on farms should be borne in mind. They are doubtless -somewhat lower than for animals elsewhere located, but prices of the -latter have probably moved in the same direction and in about the -same extent.[H] - - -RAILWAY RATES IN 1897 AND AT PRESENT MEASURED IN MONEY. - -Throughout the foregoing discussion reference has frequently been -made to what has been assumed to be a typical shipment, that is, -a fifteen-ton carload of fourth class freight transported between -Chicago and New York. The typical service rendered in moving this -shipment would have brought the railways gross receipts of $105.00, -in 1897 or in any of the intermediate years, and would bring the -same amount now. The period in question, however, has witnessed -many thousands of changes in railway rates on particular commodities -and between particular points, and, confining the discussion for -the present to the mere expression of rates in terms of money, it -is necessary to inquire whether the general level of all rates has -been raised or lowered and how far the change, if any is discovered, -has gone in either direction. Now, it is manifestly impossible to -correlate all rates in a single tabulation, and, giving to each its -proper weight in the determination of a final average, thus establish -definitely and with complete precision the relation between the money -rates of 1897 and those at the present time. The number of different -articles shipped and the great number of different points at which -each article may enter into the aggregate of traffic movement or -to which it may be destined, as well as the elusive character of -the factors which would indicate the relative weight properly to be -allowed to each separate rate, wholly preclude the adoption of such a -method. Fortunately, however, American railway accountants long ago -adopted a measure of traffic movement, which was later officially -sanctioned by its adoption for the same purpose by the Interstate -Commerce Commission, and which, when compared with the gross receipts -from freight service, results in an average that throws great light -upon the movement or absence of movement in the general level of the -rates charged. When the weight of any shipment, expressed in tons, is -multiplied by the distance which it is carried, expressed in miles, -the resulting product gives a measure of the service performed, in -units which are designated as "ton-miles." When the ton-miles (or -ton-mileage) of all shipments are aggregated the total represents -the sum of all services. The result of dividing the revenue from a -particular shipment by its ton-mileage is the average rate per ton -per mile for that shipment and if the sum representing the aggregate -gross receipts from all railway freight services is divided by the -aggregate ton-mileage of those services the quotient obtained is the -average ton-mile rate for all services. During the period from 1897 -to 1907 these data have been compiled annually by the Interstate -Commerce Commission under the direction of Professor Henry C. Adams, -its statistician. The average rates thus established are given both -for the United States as a whole and for each of ten districts or -groups. The following table shows these averages as they are given in -the successive annual statistical reports of the Commission: - - - TABLE LEGEND - - REGION: - A == Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and - Connecticut. - - B == New Jersey, Delaware, Maryland, New York, east of Buffalo, - Pennsylvania, east of Pittsburgh, West Virginia, North of - Parkersburg. - - C == New York, west of Buffalo, Pennsylvania, west of Pittsburgh, - Michigan, lower Peninsula, Ohio, Indiana. - - D == West Virginia, south of Parkersburg, Virginia, North Carolina - and South Carolina. - - E == Kentucky, Tennessee, Georgia, Florida, Alabama, Mississippi, - Louisiana, east of Mississippi River. - - F == Illinois, Wisconsin, Minnesota, Iowa, Missouri, north of St. - Louis and Kansas City, South and North Dakota, east of - Missouri river, Michigan, upper Peninsula. - - G == Nebraska, Wyoming, Montana, North and South Dakota, east of - Missouri River, Colorado, north of Denver. - - H == Arkansas, Indian Territory, Oklahoma Territory, Kansas, Colorado, - south of Denver, Texas, Panhandle, New Mexico, north of - Santa Fe. - - I == Texas, except Panhandle, Louisiana, west of Mississippi River, - New Mexico, north of Santa Fe. - - J == Washington, Oregon, Idaho, California, Arizona, Nevada, Utah, - New Mexico, western portion. - - ============================================================== - Year and average rate in mills per ton per mile. - ----------------------------------------------- - Group. Region. 1897 1898 1899 1900 1901 1902 - -------------------------------------------------------------- - I. A 12.02 11.76 11.23 11.52 11.51 11.72 - II. B 6.75 6.17 5.82 6.13 6.46 6.64 - III. C 6.05 5.78 5.29 5.46 5.68 5.76 - IV. D 6.48 5.92 5.94 5.95 6.41 6.50 - V. E 8.64 8.35 8.07 8.08 8.02 8.16 - VI. F 8.55 8.26 8.21 8.06 7.89 7.87 - VII. G 11.48 11.57 11.01 10.64 10.43 9.94 - VIII. H 10.79 9.61 9.68 9.64 9.71 9.78 - IX. I 10.40 10.42 10.65 9.38 10.18 9.84 - X. J 12.75 11.46 11.36 10.67 10.55 10.37 - -------------------------------------------------------------- - United States 7.98 7.53 7.24 7.29 7.50 7.57 - -------------------------------------------------------------- - - {table continued} - =============================================================== - Year and average rate in mills per ton per mile. - ------------------------------------------------ - Group. Region. 1903 1904 1905 1906 1907 1908(a) - --------------------------------------------------------------- - I. A 11.67 11.96 11.79 11.72 11.45 11.10 - II. B 6.67 6.86 6.65 6.50 6.55 6.43 - III. C 6.07 6.20 6.07 5.94 5.98 5.94 - IV. D 7.14 7.16 6.91 6.90 7.03 6.96 - V. E 8.27 8.51 8.39 8.13 8.27 8.25 - VI. F 7.74 7.79 7.66 7.45 7.43 7.35 - VII. G 9.80 9.64 9.00 8.94 9.33 9.42 - VIII. H 9.62 9.98 9.88 9.47 9.66 9.53 - IX. I 9.74 10.00 10.96 10.09 10.51 10.02 - X. J 10.05 10.36 10.98 11.03 11.63 12.04 - --------------------------------------------------------------- - United States 7.63 7.80 7.66 7.48 7.59 7.5 - --------------------------------------------------------------- - - (a) Average for 1908 added from 21st annual Report of Prof. Adams. - S. T. - -The foregoing shows that the average rates per ton per mile, -expressed in money, were lower in every group but one, as well as -in the whole country, in 1907 than they were in 1897. The average -for the whole country was lower in 1907 than in any other year -shown except the years 1898 to 1902, inclusive, and for three of -those years the difference was less than one-tenth of one mill. The -decrease in the general average from 1897 to 1907 was 4.89 per cent. -and the increase from 1899, the year of the lowest average, was 4.83 -per cent. - -So far as the quality of the ton-mile unit is affected by changes in -the geographical distribution of traffic the tendency between 1897 -and 1907 was toward a higher quality, for traffic movement grew more -rapidly in the regions where rates are normally higher than it did -in the regions of lower rates. In the following statement the groups -used by the Interstate Commerce Commission are arranged with the -group in which ton-mileage increased most rapidly from 1897 to 1907 -at the top, the group that increased next most rapidly in the second -line, and so on to the group that increased least rapidly at the -bottom: - - Average rate per ton - Tons of freight carried one mile. Increase, per mile in mills. - Group. 1897. 1907. per cent. In 1897. In 1907. - - X 3,133,623,734 11,252,450,440 259.09 12.75 11.63 - VII 2,633,860,958 9,300,234,849 253.10 11.48 9.33 - VIII 6,333,591,463 17,406,430,971 174.83 10.79 9.66 - III 17,587,334,609 47,994,909,002 172.89 6.05 5.98 - V 6,802,119,489 17,397,321,360 155.76 8.64 8.27 - VI 17,393,471,480 44,318,734,155 154.80 8.55 7.43 - IX 3,165,108,561 7,546,655,555 138.43 10.40 10.51 - IV 4,936,635,046 11,418,243,141 131.30 6.48 7.03 - II 29,579,613,559 63,455,243,659 114.52 6.75 6.55 - I 3,573,663,326 6,511,166,971 82.20 12.02 11.45 - -------------- --------------- ------ ----- ----- - U. S. 95,139,022,225 236,601,390,103 148.69 7.98 7.59 - -It will be noted from the foregoing that the group in which the -average rates were highest in both 1897 and 1907 shows the most rapid -increase in traffic movement and that, with few exceptions, the -regions of higher rates show more rapid augmentation of ton-mileage. -This is exactly what might have been anticipated, for the highest -average rates are usually to be found in the regions most scantily -populated and, as these regions are filling up and are therefore -those most rapidly growing in population and industry, they -naturally show the greatest relative increases in freight tonnage. -The only notable exception is furnished by New England, a region -of high development, but where traffic movement is largely of a -character which imposes higher average rates. In the following table -the traffic increase is given for the regions that had ton-mile rate -averages above and below the average for the whole country, in 1897: - - Ton mileage. Increase. - In 1897. In 1907. per cent. - Ton mile rates above - the average 43,035,439,011 113,732,994,301 164.28 - Ton mile rates below - the average 52,103,583,214 122,868,395,802 135.82 - -------------- --------------- ------ - Total 95,139,022,255 236,601,390,103 148.69 - -The region with rates above the average in 1897 had 45.23 per cent. -of the total ton-mileage in that year, and 48.07 per cent. in the -year 1907. Of the total increase in traffic movement 49.98 per -cent. was in this region. The precise effect that these changes in -the geographical distribution of ton-mileage would have had upon -the average ton-mile rate for the whole country is shown by the -computation set forth in the following table: - - Product of - ton-mileage of - Ton mileage Ton-mile rates of 1907 and ton-mile - Group of 1907. 1897 in mills. rates of 1897. - - I 6,511,166,971 12.02 $ 78,264,226.99 - II 63,455,243,659 6.75 428,322,894.70 - III 47,994,909,002 6.05 290,369,199.46 - IV 11,418,243,141 6.48 73,990,215.55 - V 17,397,321,360 8.64 150,312,856.55 - VI 44,318,734,155 8.55 378,925,177.03 - VII 9,300,234,849 11.48 106,766,696.07 - VIII 17,406,430,971 10.79 187,815,390.18 - IX 7,546,655,555 10.40 78,485,217.77 - X 11,252,450,440 12.75 143,468,743.11 - --------------- ----- ----------------- - United States 236,601,390,103 -- $1,916,720,617.41 - -By dividing the aggregate of the products in the last column of the -foregoing by the total ton-mileage shown in the second column, an -average is obtained which represents the ton-mile rate that would -have resulted in 1907 had the traffic of each group in that year -moved in precisely the same volume in which it actually moved and -had the average rates in each group been exactly the same as they -were in 1897. This shows that, under the conditions assumed, the -average ton-mile rate for the whole country would have been 8.10 -mills or 0.12 mill higher than in 1897. This advance of 1.50 per -cent. would have been wholly due to the more rapid growth of traffic -in the regions of normally higher rates. The chief significance of so -small a change in so long a period is, really, to indicate that the -ton-mile unit, so far from being of rapidly changing character, is -actually, at least as far as it might be assumed to be affected by -changes in the location of traffic movement, a fairly stable unit and -thus an excellent measure of the rise or fall in rates. Whether the -same conclusion is to be derived from a study of the changes in the -proportion of the total movement made up of commodities of different -grades and naturally taking different rates is now to be made the -subject of inquiry. - -Publication of the classified statistics of tonnage necessary for -such an inquiry was begun by the Interstate Commerce Commission with -the report for the year 1899. Consequently it is not practicable to -extend the inquiry to a period prior to that year. The following -statement shows the number of tons of freight of each of the -classes of commodities named which were received by the railways -for transportation in 1899, 1903 and 1907 and the proportion of the -tonnage in each class to the total number of tons carried: - - - Tons. - Class of commodity. 1899. 1903. 1907. - Products of agriculture 50,073,963 61,056,212 77,030,071 - Products of animals 13,774,964 16,802,893 20,473,486 - Products of mines 227,453,154 329,335,621 476,899,638 - Products of forest 48,122,447 74,559,980 101,617,724 - Manufactures 54,415,205 91,980,903 137,621,443 - Merchandise 19,844,735 29,949,022 34,718,487 - Miscellaneous 23,197,155 35,116,027 44,824,123 - ----------- ----------- ----------- - Total 441,881,623 638,800,658 893,184,972 - - - {table continued} - Percentage of - total tonnage. - Class of commodity. 1899. 1903. 1907. - Products of agriculture 11.33 9.56 8.62 - Products of animals 3.12 2.63 2.29 - Products of mines 51.47 51.56 53.59 - Products of forest 10.89 11.67 11.38 - Manufactures 13.45 14.39 15.41 - Merchandise 4.49 4.69 3.89 - Miscellaneous 5.25 5.50 5.02 - ------ ------ ------ - Total 100.00 100.00 100.00 - -It should be observed that the foregoing statement represents tons -received for shipment regardless of the distance carried and, in -consequence, does not throw the light upon traffic movement that -would be available if it were possible to know the ton-mileage of -each class of commodities. Nevertheless, the data undoubtedly convey -some information as to the character of the ton-mile unit during the -different years and the nature of the changes in its quality which -are in progress. This will be made more evident by the following -table showing comparisons for the years 1899 and 1907: - - Tons. - Increase. - Class of commodity. 1899. 1907. Amount. Per cent. - - Products of agriculture 50,073,963 77,030,071 26,956,108 53.83 - Products of animals 13,774,964 20,473,846 6,698,522 48.63 - Products of mines 227,453,154 476,899,638 249,446,484 109.67 - Products of forest 48,122,447 101,617,724 53,495,277 111.16 - Manufactures 59,415,205 137,621,443 78,206,238 131.63 - Merchandise 19,844,735 34,718,487 14,873,752 74.95 - Miscellaneous 23,197,155 44,824,123 21,626,968 93.23 - ----------- ----------- ----------- ------ - Total 441,881,623 893,184,972 451,303,349 102.13 - -Obviously the effect of the increases shown in the foregoing upon the -quality of the average ton-mile must be in proportion as they have -exceeded or fallen short of the average increase shown at the foot of -the last column. There is no question that, in general, products of -agriculture, animals, forests and mines are low-grade commodities, -or that, on the other hand, the commodities classed as manufactures, -merchandise and miscellaneous are high-grade articles. An increase -in excess of the general average increase in the first four classes -named would tend to lower the quality of the average ton-mile while -the opposite effect, that is, a raising of the quality, would result -if the last three classes should increase more rapidly than the -increase in all tonnage. Adopting this classification, the following -shows the respective increases in high-grade and low-grade tonnage: - - Tons. - Increase. - Class of commodity. 1899. 1907. Amount. Per cent. - - High-grade 102,457,095 217,164,053 114,706,958 111.96 - Low-grade 339,424,528 676,020,919 336,596,391 99.17 - ----------- ----------- ----------- ------ - Total 441,881,623 893,184,972 451,303,349 102.13 - -The considerably greater increase in the tonnage of high-grade -articles indicated by the foregoing is scarcely within the possible -margin of error in the classification, but, in any event, what the -figures certainly prove is the absence of any actually far-reaching -change in the typical or average unit of traffic. That this -conclusion extends to traffic movement is clearly probable. - - -PRICES AND ACTUAL RATES. - -Comparisons between actual prices of commodities shipped by rail -and typical freight charges on the same articles, for 1897 and -1907, demonstrate the fact that while prices have almost uniformly -advanced the greater number of rates have remained stationary while -among those which have changed the reductions are as numerous as the -advances and exceed the latter in extent and importance. - -[Mr. McCain here presents a table compiled from reports of the Bureau -of Labor of the actual prices of commodities and the rates between -principal points of shipment, occupying pp. 50-58 of his pamphlet.] - -Examination of prices collected and reported by the Bureau of Labor, -giving the prices in 1899 and 1907 of 229 articles, shows that among -these 204 prices or 89.08 per cent. of the total were increased. The -rates on forty-nine of these articles were advanced an average of -13.14 per cent. and the rates on forty-eight of them were reduced -an average of 16.44 per cent. Other conclusions are shown in the -following summary table: - - Aggregate Average - Per cent. percentage changes, - Item. Number. of total. of changes. per cent. - - Prices-- - Advanced 204 89.08 11,340 55.59 - Reduced 13 5.68 330 25.38 - Unchanged 12 5.24 -- -- - Total 229 100.00 -- -- - - Rates advanced-- - Prices advanced 44 19.22 606 13.77 - Prices reduced 3 1.31 30 10.00 - Prices unchanged 2 .87 8 4.00 - Total 49 21.40 644 13.14 - - Rates reduced-- - Prices advanced 42 18.34 708 16.86 - Prices reduced 3 1.31 33 11.00 - Prices unchanged 3 1.31 48 16.00 - Total 48 20.96 789 16.44 - - Rates unchanged-- - Prices advanced 118 51.52 -- -- - Prices reduced 7 3.06 -- -- - Prices unchanged 7 3.06 -- -- - Total 132 57.64 -- -- - -The foregoing shows that while prices were advanced for 204 out of -229 articles, or 89.08 per cent. of the entire number included in the -table, the freight rates on the same articles, as expressed in money, -were advanced in but forty-nine instances, or 21.40 per cent. of the -total, money rates were reduced in forty-eight instances, or 20.96 -per cent. of the total, and remained stationary in 118 instances, or -57.64 per cent. of the total. Of the rates advanced forty-four were -in cases in which the prices had also advanced, and of the rates -reduced forty-two applied to articles which had advanced in price. -Even as to the commodities which had advanced in price, the average -advance being over fifty-five per cent., money rates were advanced in -but forty-four instances out of 204 and the average advance was but -13.77 per cent. and there were forty-two reductions in money rates, -such reductions averaging 16.86 per cent. - - -SIGNIFICANCE OF THE DEPRECIATION OF MONEY. - -It has now been fully demonstrated (first) that the railways have -to pay much more, probably not less on the average than twenty-five -per cent. more, for everything they require in the conduct of their -business, including labor, than they did ten years ago, (second) that -those who make use of railway services receive much more, probably -not less on the average than twenty-five per cent. more, for their -labor or for the commodities which they produce than they did ten -years ago, (third) that average rates per ton per mile for railway -freight transportation, expressed in money, that is to say, in -dollars and decimal fractions of dollars, are now somewhat lower than -they were in 1897 or formerly, and (fourth) that the ton-mile unit -is a highly stable one as to quality and that in consequence of this -stability the ton-mile rates accurately answer the question whether -rates, expressed in money, have remained stationary, have advanced -or have declined. The latter conclusion has been supplemented and -re-enforced by data from the classifications and rate schedules -which tend strongly to prove the same fact. Therefore, it has been -made plainly apparent that there has been a decline in money rates -since 1897. But railways require money only to remunerate the -highly skilled labor they employ, to purchase necessary materials -and supplies, to pay taxes and to compensate the capital they -use. Consequently money is worth to the railway corporation, as -to the wage-earner, only what it will buy for the satisfaction of -wants. A dollar which will pay for less labor or buy less fuel for -locomotives is worth less to the railway just as a dollar that will -buy less bread or clothing is worth less to the man who works for -wages or receives it as interest on his savings. It has long been -realized that any effort to study the question of wages, throughout -an extended period, which fails to take into consideration the -purchasing power of the money received is worse than valueless, -because it is deceptive and misleading. It has been generally -recognized also that any effort to consider the condition of -particular classes of producers by comparisons of the prices obtained -for their products at different periods, as that of farmers by the -prices of corn and wheat, is similarly dangerous unless these prices -are turned into quantities of the commodities which such producers -must purchase. - -[In elucidating this obvious point Mr. McCain cites such authorities -as Adam Smith, John Stuart Mill, President Hadley of Yale, Professor -Frank W. Taussig of Harvard, and then continues.] - -A rapid decrease in the purchasing power of the money they receive -has brought about, within a single decade, a reduction in railway -freight rates that cannot be less than twenty-five per cent. This -reduction began almost imperceptibly at a time when American -railway rates were already lower than ever before in the history -of railways and lower than anywhere else in the world. It has -proceeded, concurrently with the fall in the real value (that is in -the purchasing power) of the American dollar, but in such subtle -form that only when its consequences threaten the stability of the -American railway system, the wages of railway employes and the -prosperity of the great rail-manufacturing, car-building and other -allied industries is its real significance and extent perceived -even by those most immediately interested. That such a threat now -hangs over the railway industry of America and every employe and -industry dependent upon it is too plain for argument. The situation -is acute and nothing but a prompt adjustment of the rates obtained -for the services rendered to offset, partially, at least, the loss -in the value of the money received will prevent disaster. That such -an adjustment, if effected now, will, at best, be tardy and belated -is evident from the facts herein presented, which show that prices -in every other industry and the wages of all artisans were long ago -adjusted to this fundamental condition. - - -APPENDIX B - -Statement showing prices of railway supplies purchased in 1897 and -1907 as disclosed by the records of various Eastern railways. It -should be noted that the quality of the supplies, made the basis of -this statement, may have changed somewhat between 1897 and 1907, but -in few instances would the allowance for this source of variation -materially affect the results. - - Prices. - Increase. - Class. 1897. 1907. Per cent. - - Locomotives-- - Mogul $10,181.00 $14,111.00 38.6 - 10-Wheel passenger 11,026.00 15,734.00 42.7 - Atlantic not built 16,236.00 -- - Pacific not built 19,580.00 -- - Prairie not built 16,468.00 -- - 8-Wheel passenger 10,243.00 13,581.00 32.5 - 6-Wheel switcher 9,392.00 12,098.00 28.8 - - Cars (1899-1907)-- - Hopper 475.00 1,185.00 -- - Box 783.00 1,110.00 -- - 490.00 844.00 -- - 519.00 897.00 -- - - Note.--The prices of cars shown above are typical prices paid - by different roads in the respective years and employed in the - same service. As the cars purchased in 1907 are of more modern - construction, better quality and larger capacity than those - purchased in 1899, no accurate comparison can be made or percentage - of increased cost shown. - - (1902-1907)-- - - 100,000 lbs. Capacity Box Car - with Steel Underframe and - wood superstructure $1,043.49 $1,148.88 10.09 - 100,000 lbs. Capacity Composite - Gondola Car with Steel Under- - frame and wood superstructure 1,021.62 1,148.45 12.42 - 100,000 lbs. Capacity Composite - Flat Car with Steel Underframe - and wood floor 953.23 1,010.60 6.02 - 100,000 lbs. Capacity, all steel - Hopper Cars 1,002.22 1,076.05 7.47 - - Angle Bars Cwt. 1.02 1.55 52.0 - Axles-- - Locomotive Cwt. 2.75 2.95 7.2 - Cwt. 2.72 2.85 4.7 - Tender Cwt. 1.40 2.35 67.8 - Car Cwt. 1.60 1.95 21.9 - Cwt. 1.45 2.20 51.7 - Cwt. 1.68 2.25 34.0 - Bar Iron Cwt. 1.19 1.78 49.5 - Cwt. 1.10 1.80 63.6 - Cwt. 1.05 1.50 42.8 - Brick-- - Common M 4.50 6.00 33.3 - Paving M 8.00 11.00 37.5 - Castings-- - Brass Lb. 0.11 0.25 127.3 - Brass Lb. 0.12 0.25¾ 114.6 - Steel Cwt. 3.50 6.00 71.4 - M. Iron Cwt. 2.50 4.25 70.0 - Cwt. 2.70 3.60 33.3 - Cwt. 2.35 2.85 21.2 - Gray Cwt. 1.15 2.00 74.0 - Cwt. 1.20 1.65 37.5 - Coal Ton 1.46 1.76 20.5 - Ton 1.32 1.82 38.0 - Ton 1.17 1.52 29.8 - Ton 1.83 2.07 13.1 - Run of Mine Ton .65 1.05 61.5 - ¾ Ton .75 1.15 53.3 - Couplers-- - Freight Set 14.00 15.00 7.1 - Passenger Set 20.50 27.00 31.7 - Tender Set 18.00 18.50 2.8 - Fencing M. Ft. 12.00 25.00 108.3 - M. Ft. 10.00 18.15 81.5 - Flues Ft. 0.13 0.15½ 19.2 - Ft. 0.14 0.15 7.1 - Forgings-- - Axles Lb. 0.02 0.03 50.0 - Crank Pins Lb. 0.05 0.10 100.0 - Piston Rods Lb. 0.06 0.10 66.6 - Main Rods Lb. 0.08 0.10 25.0 - Side Rods Lb. 0.08 0.10 25.0 - Lead-- - White Cwt. 4.95 6.25 26.3 - Lumber-- - Large Bridge Timbers M. Ft. 13.12 25.62 95.3 - M. Ft. 23.00 38.00 65.2 - M. Ft. 20.00 33.00 65.0 - M. Ft. 17.00 28.00 64.7 - M. Ft. 22.50 38.00 68.9 - M. Ft. 15.00 27.00 80.0 - Car Sidings M. Ft. 17.00 35.00 105.9 - M. Ft. 18.00 33.00 83.3 - Stringers M. Ft. 18.00 28.00 55.5 - M. Ft. 16.00 34.00 112.5 - M. Ft. 18.00 26.00 44.4 - M. Ft. 17.00 28.00 64.7 - Car Flooring M. Ft. 17.00 24.00 41.2 - M. Ft. 20.00 33.00 65.0 - M. Ft. 11.00 25.00 127.2 - M. Ft. 14.00 19.71 40.8 - Piles (Soft) Ft. 0.08 0.14 75.0 - Ft. 0.08 0.11 37.5 - (Hard) Ft. 0.12 0.17 41.7 - Heavy Planks M. Ft. 14.00 22.00 57.1 - M. Ft. 14.00 30.00 114.3 - M. Ft. 16.00 27.00 68.8 - Cross Ties (Hardwood) Each 0.47 0.80 70.2 - Each 0.60 0.85 41.7 - Each 0.55 0.75 36.4 - Each 0.37 0.70 89.2 - Each 0.45 0.60 33.3 - Each 0.45 0.55 22.2 - Each 0.48 0.90 87.5 - Each 0.38 0.80 110.5 - Each 0.38 0.67 76.4 - Softwood Each 0.22 0.60 172.7 - Each 0.20 0.28 40.0 - Each 0.23 0.48 108.7 - Each 0.48 0.58 20.8 - Nails Cwt. 1.60 2.20 37.5 - Cwt. 1.33 2.16 62.4 - Cwt. 1.10 2.15 104.5 - Wire Cwt. 1.27 1.85 45.7 - Cwt. 1.48 2.11 42.6 - Oil-- - Kerosene Gal. 0.06 0.09½ 58.3 - Signal Gal. 0.28 0.36 28.6 - Gal. 0.20 0.36 80.0 - 300 degree Gal. 0.09 0.10 11.1 - Paint-- - Gal. 0.77 1.03 33.8 - Gal. 0.50 0.65 30.0 - Cwt. 4.75 6.62 39.4 - Cwt. 5.50 6.50 18.2 - Pipe-- - Cast Iron Ton 16.00 34.00 112.5 - Ton 16.75 29.15 74.0 - Ton 13.50 21.00 55.6 - Ton 16.00 32.00 100.0 - Copper Lb. 0.31 0.34 9.7 - Lb. 0.30 0.33 10.0 - Lb. 0.30 0.35 16.7 - Rails-- - Steel Gross Ton 19.00 28.00 47.4 - Gross Ton 18.00 28.00 55.6 - Gross Ton 18.05 26.60 47.4 - Rubber Hose-- - 1 Inch Ft. 0.34 0.41 20.6 - 1¼ inch Ft. 0.40 0.46 15.0 - Springs-- - Loco. Cwt. 4.05 4.10 1.2 - Switches-- - Comp. 80 31.90 40.77 27.8 - Frogs 80 18.75 27.50 46.7 - Switch Lamps Doz. 45.00 65.00 44.4 - Tile Rod 0.40 0.60 50.0 - Track Bolts Cwt. 1.70 2.45 44.1 - Cwt. 1.65 2.60 57.6 - Cwt. 2.20 2.75 25.0 - Cwt. 1.65 2.45 48.5 - Cwt. 1.75 2.76 57.7 - Track Spikes Cwt. 1.85 2.52 36.2 - Cwt. 1.35 1.70 25.9 - Cwt. 1.50 2.60 73.3 - Cwt. 1.65 2.25 36.4 - Cwt. 1.50 1.90 26.7 - Cwt. 1.45 1.90 31.0 - Cwt. 1.75 2.00 14.3 - Track Tools-- - Axes Doz. 8.00 9.00 12.5 - Drills Each 0.35 0.46 31.4 - Ratchets Doz. 5.13 6.65 29.6 - Shovels Doz. 5.00 5.65 13.0 - Lamp Bars Each 0.52 0.65 25.0 - Waste-- - Colored Lb. 0.047 0.055 17.0 - White Lb. 0.06 0.08 33.3 - Wheels-- - Car Each 5.60 7.80 39.29 - Each 6.00 8.35 39.17 - Each 7.50 9.30 24.0 - Each 4.78 8.46 76.9 - Each 4.50 9.00 100.0 - Each 6.75 8.00 18.5 - Each 6.50 9.00 38.5 - Each 6.00 9.05 50.8 - 33-in Steel Each 50.00 56.00 12.0 - Each 42.50 44.50 4.7 - 36-in. Steel Each 42.50 50.50 18.8 - Each 54.00 60.00 11.1 - Wire-- - Barbed Cwt. 1.70 2.50 47.0 - Iron Cwt. 1.50 2.20 46.7 - Copper Lb. .13 .26 100.0 - Lb. .13 .18 38.5 - - -FOOTNOTES: - -[E] A partial list of the articles in each class in 1807 which are -still in the same class, as shown by Official Classifications Nos. 16 -and 32, is given in Appendix A to Mr. McCain's pamphlet. There were -approximately 3,000 various articles bearing the same classification -or rating in 1908 as in 1898. - -[F] Appendix C occupies pages 89 to 95 of Mr. McCain's pamphlet. - -[G] Appendix D occupies pages 96 to 101 of McCain's pamphlet. - -[H] Details from which the table was derived are given in Appendix E -to Mr. McCain's pamphlet, pp. 102-106. - - - - -THE RAILROADS AND PUBLIC APPROVAL - -BY EDWARD P. RIPLEY, - -President Atchison, Topeka and Santa Fe Railway Company. - - Address delivered at the annual dinner of the Railway Business - Association, New York, November 10, 1909. - - -Circumstances over which I had no control caused me to be born with a -distinct inability to think consecutively, or talk coherently, in a -standing position and before an audience. - -Seated on the small of my back with my feet on the desk I sometimes -think I am thinking, but when I get before an audience I am like -the little steamer plying on the Sangamon River that had a 10-foot -boiler and a 12-foot whistle--when she whistled she stopped. But -my weakness, or rather one of my weaknesses, is susceptibility to -flattery, and when one of your officers represented in honeyed -phrase the importance of your organization and of this meeting, and -laid particular stress upon the importance of my saying something, -I weakly yielded. I know the result will be disappointment, but the -responsibility is only partly mine, and you know we railroad men get -so little flattery that when properly administered the result is -intoxicating. - -Also, let me state in extenuation of the crime I am about to commit -that the subject was not my own selection, but was chosen for me. -My natural disposition in discussing railroads and the public is -to growl, while, if I understand your officers' wishes, I am here -expected to "purr." - -But while a better man might have been selected to say it, there is -much to be said as to the railroads and public opinion. - -In this country the people rule--and in the long run that system, -that method or that personality that does not meet the approbation of -the public can not succeed. True, the public is often fooled; true, -it "gets on the wrong feet," as often perhaps as on the right; true, -it has to be guided, controlled, and at times abruptly stopped by -those authorities which it has selected for that purpose; yet the -fact remains that the government of the people, that Congress, the -legislatures and even the courts are keenly alive to public sentiment -and anxious not to stray far from the line of public opinion. - -Our forefathers recognized the danger that the majority would not -necessarily be right, but might often be wrong, and sought to provide -safeguards for the rights of the minority. But these safeguards are -obviously growing less efficient; obviously growing weaker; obviously -more sensitive to the public clamor which for the moment stands for -public opinion, and when all safeguards have been exhausted it is to -public opinion that we must look at last. - -There are two things about which the public is most critical--one -is the management of the newspaper, the other the management of the -railroad. In his heart the average citizen believes that he could -operate either his daily newspaper or the railroad passing through -his town much better than it is being operated; he would perhaps -hesitate to announce this opinion, but his attitude is coldly -critical, and it is to be remembered that the railroad is all out -of doors--all out in the weather, everything about it exposed to -the limelight and visible to anybody's naked eye. There is no human -activity the operation of which is attended with so much publicity. -All our earnings and expenses are published; all our charges and all -our methods the subject of regulation, intelligent or otherwise. - -Many years ago Mr. W. K. Vanderbilt, journeying to Chicago, was met -on the outskirts of the city by an enterprising reporter for a daily -paper, who boarded the train and forced himself into the presence -of Mr. Vanderbilt and his party, and demanded news on behalf of -"the public." Probably Mr. Vanderbilt, resenting the intrusion, -said something uncomplimentary to the reporter and possibly to the -"public" he claimed to represent, and the next issue of that paper -quoted him in scare headlines as using the phrase, "The public be -damned." Mr. Vanderbilt subsequently denied having said it, but -whether he did or not and whatever may have been his provocation, -the phrase has for nearly forty years been used as indicative of the -railway man's attitude toward his patrons. - -Many years ago also the late George B. Blanchard, being on the -witness stand at Albany, was asked what was the correct basis for -making freight rates, and replied, "What the traffic will bear"--a -most excellent answer, but a most unfortunate one--for it has passed -into history as meaning "all the traffic will bear," which is a very -different thing. - -Such things as these, distorted as they have been, conspired to -inflame public opinion, but that is not all. - -It is the custom and privilege of men past middle age to be -reminiscent and I ask your indulgence for a very brief history of -the events that have led us to our present status. My railroad -experience began about forty years ago and the railroad business was -then much like any other business--it had its price list as did the -merchant; but, like the merchant, it had its discounts for large -shippers and for special conditions, and the discounts were irregular -and various. The larger shippers demanded concessions as a right, -and the principle was generally admitted. Naturally the result was -favoritism, not because the railroads desired especially to favor one -as against another, but because in the nature of things secret rates -could not well be given to everybody. - -Nobody regarded these secret rates as criminal or objectionable. But -as time passed and these discriminations became more frequent and -greater there arose a demand from the less favored portion of the -shipping community for legislation forbidding the discrimination and -providing for like opportunity for all. This was strenuously opposed -by the favored shippers and by those railroad men who believed the -railroad to be purely a private institution and not amenable to law -as to its charges. It was common enough to hear it seriously argued -that the larger shipper was entitled to the lower rate--this view -was held by many shippers and, I believe, by most railroad managers. -They argued that the business was like any other business--that each -interest must look out for itself, and that competition between the -roads would prevent rates from ever being too high. - -For myself I may say that I realized from an early period that -discrimination as to rates was unjust and at no time objected to laws -forbidding it. - -The interstate commerce law was passed in 1887. It was crude in its -provisions and was the result of compromises between radicals and -conservatives; it sought both to foster competition and to abolish -it, and in that respect remains still contradictory and impossible. - -Upon the passage of the law, that which had been looked upon as -perfectly proper and as the working of natural competitive forces -became illegal and criminal. The railroads generally accepted -the law and made an honest effort to observe it--the mercantile -community did not--indeed, they openly defied it, soliciting rebates -unblushingly and threatening with the loss of their tonnage those -roads who would not succumb. The Interstate Commission, new to its -duties, contented itself with comparatively unimportant decisions and -practically did nothing to help those railroads who desired honestly -to carry out the provisions of the law; and, as a result, within a -year of the passage of the law it was quite generally disregarded. -A few railroad men were fined, a few shippers convicted--and almost -immediately pardoned--and the law fell into disrepute, a condition -disgraceful alike to the government, the shippers and the railroads -and especially distasteful to the latter, but exactly what was to be -expected. - -The result was the passage of the so-called Elkins bill, and later -the Hepburn bill, which, while amateurish and in many ways vicious, -have effectually stopped the rebate system--a result for which we may -all be thankful. - -In all the controversies that have led up to this almost complete -control of railroad earnings and railroad policies by governmental -agencies, the railroads have, as a rule, acted in active opposition. -They have not been unanimous--some of us were willing to accept it -long before it became a fact, but the majority could see nothing in -it but disaster--it is too early to say which was right--perhaps -an earlier acceptance of control would have made the control more -lenient; perhaps its earlier acceptance would, on the other hand, -have bound the chains more tightly. But the fact remains that while -the basic principle of absolute equality as to rates has been -accepted by the railroads gladly and in all good faith, and they -have also accepted the principle of government regulation, the scars -of the conflict remain and a large section of the public still -suspects and misjudges us. It is true, of course, that in the rapid -development of our business and in the exigencies of a most exacting -profession there have been abuses and lapses, but I am here to -maintain that the standards of fair dealing and commercial honesty in -our business have been as high as in any other, and I appeal to you -who sit around this table to say if it be not so. - -But whatever sins may be laid at our door, however much we may have -once believed that ours was a private business to be controlled -exclusively by its owners, however much we have resented or still -resent the interference of the public as manifested in the various -governing bodies, it is, after all, the public that is master and -we must all recognize it. It is, however, still our privilege to -exercise our right as citizens and members of the body politic to -use our efforts to guide it. Acknowledging as we must that the public -is all-powerful, the question is, How may we satisfy our masters and -thus mitigate our woes and preserve our properties? - -First. We must realize, as I think we all do (after a series of very -hard knocks), that the railroads are not strictly private property, -but subject to regulation by the public through its regularly -constituted authorities--that the Government may reduce our earnings -and increase our expenses has been sufficiently proved. - -Second. To meet this situation we must endeavor to get in touch with -public opinion. Perhaps you will smile when I say that for years I -have read every article on railroad matters in each of the papers -published along our ten thousand miles of road--not an easy task for -a busy man--but while I have waded through much chaff I am sure it -has resulted in some reforms. - -Third. The avoidance of action seriously counter to public opinion, -except for compelling reasons. - -Fourth. The disposition to explain these reasons through officers and -employes of all grades. Generally, the loudest criticisms come from -those who are not anxious to know the truth. - -Fifth. Efforts to improve service in many cases without hope of -reward and for the deliberate purpose of winning public approval, -such as better stations, improved heating and lighting devices, -better equipment, better terminal facilities, separation of grades, -etc.--all with due regard to the rights of those whose money we are -spending. - -As we do all these things, meet us half way. Encourage the habit -of not rushing into abuse. Try to consider the facts and the -difficulties--this is for the public interest as well as ours. Oppose -unnecessary and restrictive legislation and give us a chance. - -Most of our railroads are mere imitations of what a railroad should -be, and what it must be to keep abreast of the country--yet even the -poorest serves a useful purpose and can not be spared. An eminent -authority has said that five thousand millions of dollars would be -required to supply the transportation needs of the next decade, and -I do not believe it is an over-estimate. Can private capital be -found to that amount unless "public sentiment" is willing to assure -it of return? A portion of the public is clamoring for facilities -involving great additions to expenses; another portion for limitation -of earnings; will the investor consent to accept the risks while -strictly limited as to his return? Since the public may do as it will -with us and since we are necessary to the public, we may properly -call attention to the fact that railway investments already pay less -than any other line, and to ask what is to be done--really, it is -quite as much the public's affair as ours. - -Is it certain that the mixture of private ownership and public -regulation which is now prevalent will succeed? Is it not contrary to -all rules of political economy and to all the teachings of history? -Starting as a purely private industry it has been appropriated in -part and other parts are apparently to follow. Granting whatever -may be claimed for the advantages of regulation by government, do -not equity and ordinary commercial decency require that such close -restriction and supervision should be accompanied by some guaranty of -return? - -I have endeavored to sketch briefly what should be the attitude of -the railway man _as_ a railway man toward the public. I am sure I -voice the sentiment of all managing railroad officers when I say -that our great desire is to please the public and to give it the -best possible service for the least possible compensation consistent -with reason. Discriminations have long since passed away and nobody -is better pleased than the railroad man that it is so. There is no -desire to escape either responsibility or regulation. We desire to -accord only justice and we ask in return only justice. May I now, -as a citizen, appeal to the railway employe, to the members of this -Association, and to all other good citizens, to resist to the utmost -of their powers the encroachment of government on private rights? - -Mr. Elbert Hubbard, of East Aurora, N. Y., recently remarked that -"when God sent a current of common sense through the universe most of -the reformers wore rubber boots and stood on glass." Our troubles are -with this class--well-meaning men who have zeal without knowledge and -enthusiasm without sanity; these we may not reach, but the great mass -of the solid and substantial citizenship may perhaps be induced to -stop and consider whither we are drifting and whether this greatest -of all the country's industries is being fairly treated. - - - - -RAILROADS AND THE PUBLIC - -BY HON. JOHN C. SPOONER. - - From the address delivered at the annual dinner of the Railway - Business Association, New York, November 10, 1909. - - -The topic which has been assigned to me is brief, but very large: -"Railroads and the Public." It suggests nothing of humor, but -everything of gravity and involves considerations which affect the -prosperity of our whole people. The railroads, often berated in -legislatures and in congresses as leechlike and piratical, are, after -all, vital to the happiness of our people and to the progress of -our industries and commerce. The people are apt to forget that they -have been the greatest factors--I say the _greatest_ factors--in the -development of our resources and the enlargement of our commerce, -both in times of war and in times of peace. If one would stop -to think of what would have happened if, during the war for the -preservation of the Union, we had been without railroads, ready -and willing to serve the government upon its demand and at prices -fixed by it, how long would the war have continued? And what might -not have been its result? They carried troops from the North to the -places of rendezvous in the fields; they enabled the government -to transfer quickly from the East to the West, or the West to the -East, as emergency demanded, troops essential to successful military -operations. They carried munitions of war, they carried the mail -to our soldiers, they carried food and raiment to those who were -fighting under our flag. - -And in time of peace, what would this country have been without the -railroads? The railroad has been the advance courier of progress, of -settlement, of production, of commerce. It is absolutely, and has -been, indispensable to the government, to the commerce and to the -happiness and comfort of our people. Its mission is not performed or -fulfilled. Considered solely with reference to construction, there -are new fields to be penetrated by them. Today men of courage and men -of means are building railways with characteristic American energy -in far off Alaska, to bring the gold mines and the coal mines and -the timber and the unknown resources of that distant territory into -the markets of the United States. If there is one instrumentality -which above another has been a factor, appreciable by all thoughtful -men, in making this country what it is, it is the railroad. And the -railroad has kept abreast with the demands of commerce. Every device -which ingenuity or invention has presented has been promptly adopted -by the railway companies of the country. They have kept abreast of -invention and improvement, until today the railway system of the -United States is the most luxurious, the safest, the best managed -railway system under the bending sky. - -The first thing that would occur to one from this toast, the -railroads being first mentioned, is what do the railroad companies -owe to the public? That is easily defined. They owe it to the public -to furnish safe roadbeds and equipment; they owe it to the public -to furnish prompt service; they owe it to the public to treat all -men, with obvious limitations, passengers and shippers under the -same circumstances, equally and without unjust discrimination, and -they owe to the public the duty of, as far as it is possible, so -maintaining their roads and their equipment as to be able to meet -in a fair way all the demands of commerce and traffic at reasonable -rates. That excludes the rebate which never had any justification in -logic or in fair play. I think those who hated it most were those who -felt obliged to adopt it. When one railway company gave rebates it -is quite manifest that the competitor was obliged to, or go out of -business. And I believe that railway companies of the United States -were glad, and their officers were glad, when it was made a penal -offense for railway companies to give rebates. I think a railway -company owes to the public to be careful in the selection of its -employes; they should be capable, of course, and they should not -only be capable, but they should be courteous and polite. To sum it -up, you would say that what the railway in the enlarged sense--which -includes details--owes to the public is just and fair treatment. - -What does the public owe to the railway companies? Precisely, as -I view it, the same thing, just and fair treatment. Only that and -nothing more. Everybody knows that the railway companies of the -United States--I won't put it that way--that the railway system -of the United States never could have been created without the -utilization of corporate entities. Partnerships never could have -concentrated the capital necessary to that end. Only corporations -could have achieved it. That was true in the past and it always -will be true. Now, why is the railway company different from other -corporations, most other corporations? One trouble with the general -public is that they don't seem to understand--and they are not -perhaps to be chided for it--their relation to the railway company. -They think, and they are told, they have been told it in Congress, -and they have been told it where one would least have expected it, -that railway corporations are public corporations, and they have -been taught to believe that their power over public corporations was -supreme, which is not far from the truth; but the railway corporation -is not a public corporation. The Supreme Court has many times decided -that a railway company is a private corporation, that its property -is private property, under the protection and safeguards of the -Constitution of the United States against the public as well as -against individuals who attack it. Then, wherein lies the difference -between a private corporation engaged in manufacture and a railway -corporation? Right here: A railway corporation can not construct its -railway without being clothed with a power which is not given to the -usual private corporation, a power which inheres in the sovereignty -of the state, the ultimate power of the people delegated to the -railway corporations and very few others, and that is the power to -take your land without your will at a price fixed not by you but by a -jury. Why? Because it is for the public use, and private interest and -private sentiment can not be permitted to obstruct the interest of -the state, and therefore the property of a railway company while it -is private property is, as the Supreme Court of the United States has -said, affected with the public interest. - -A railway company serves the public, that is what it is organized -to do. Those who apply for the corporate franchises do not apply -for an altruistic purpose. They wish it because they think they can -make profit out of it, and that is legitimate, but the state grants -it for the public use. And so it comes about that the state has the -power to regulate it. Mark what I say, to regulate it, to prevent it -from exacting extortionate rates from the people; to prevent it from -putting upon the people abuses in its management, but that does not -mean that the state may take its property. That does not mean that -the state may take its management out of the hands of its owners. -It means simply that the state may protect the public from any -abdication by it or violation by it of its duty as a common carrier, -and this principle is too often forgotten. - -In these days regulation has apparently achieved a wider field for -operation, and is deemed to be broad enough to regulate not only the -property and the management of the property, but the management of -everybody connected with it. That won't do. Why, I see it is stated -in the report of your Business Association that commissions which -have been organized by the states and the Commission organized under -the act of Congress, have come to stay. Of course they have come--we -know that, and we know another thing, that whenever a governmental -commission comes, it stays. The commissions in the states, most -of the states--God knows I wish I could say all the states, but -I can not truthfully--have subserved a useful purpose. The state -lays down the rule and the commission administers the law. There -is one thing about a commission in the regulation under the law of -railway carriers which places it in respect of proprietary, fairness -and fitness for that function, far above Congress or any other -legislative body, and that is this: That they have time to listen, -to investigate, to get at the truth, which a legislative body does -not have time to do in the very nature of things. I do not know, but -I think nothing added more to the reputation of Governor Charles E. -Hughes, of New York, than the fact that he refused to sign a bill, -but vetoed it, reducing the rates which railway companies might -charge, upon the ground that there had been no investigation which -enabled fair judgment as to what was fair treatment to the railway -corporations. - -I was in public life a good many years and I am a firm believer in -the sober second thought of the American people, for it represents -the average judgment of every class of our people; but they get -wrong, they get wrong about men, and they get wrong about policies -and measures. They are subject, en masse, as men are individually, -to moments of passion and excitement, and they know it. As Mr. -Webster said, and as the Supreme Court of the United States has said, -the fundamental object of a constitution adopted by the people is -that they may protect themselves against themselves in moments of -excitement and passion. And the American people will always give heed -to the popular translation of the phrase, "Due process of law," that -is, hear before you strike. - -Now the Commission, the Interstate Commerce Commission, was intended -by the Congress which created it to be an absolutely independent -body. It was to report to the Congress, it was not to be subject to -the command of either House of Congress, or of the Executive of -the United States. It was intended to be a quasi-judicial body. I -know all of its members, and I do not depreciate to the slightest -extent the services which it has rendered. The only criticism I -would have of it, and that does not arise from its membership, but -it is inherent in the system, is that it is never satisfied with the -powers it has got. It is as insatiable as death for power. It has -been proposed that they shall have the power to regulate the issue -of stocks and bonds by railway corporations created by the states, -that is, if the state which creates the railway company authorizes -it, desiring it to utilize its privileges for the construction of -a new railroad, to issue stock, or issue bonds, that it shall not -be permitted to do that thing until the act of the legislature and -the approval of the governor shall have been supplemented by the -approval of the Interstate Commerce Commission. Now I am getting -along in years, and I am a little old-fashioned, and I have not yet -been able to satisfy myself that where one government creates a stock -corporation, another government shall regulate the amount of its -capital stock and its bonded indebtedness. - -I have seen it proposed lately that the Commission should have -the power to fix a rate, and that that rate should be final until -a final judgment setting it aside was reached. What becomes of -the constitution under such a law as that? A railway company, as -I have said, owns its property. It renders a compulsory service -to the public over its own property, with its own equipment, with -its own employes, and at its own risk, and is entitled to a fair -compensation, based upon the fair value of the property which it -devotes to the public convenience, and the Supreme Court has held -that that property can not be taken--because the use of property -is the property--can not be taken for the public use without just -compensation, and if the state, the legislature, or the Congress may -authorize a commission to fix a rate as reasonable and fair, beyond -which the railway company may not charge for services it renders, and -require it to observe that rate until the final adjudication as to -whether the rate is reasonable or not, and after the lapse of months -it is decided that it was unreasonable, how can the railway company -recover the great sum in unreasonable rates which it had lost? It -is a taking of a private property for a public use without just -compensation, and I deny the constitutional power of Congress to do -that thing. I admit the power, and the exercise of it to the fullest -extent to so far regulate railway corporations as to secure to the -public a faithful discharge of all their duties to the public at -reasonable rates, and under fair regulations; beyond that I believe -that the owners of the property ought to be permitted to manage the -property. - -The business of railway management has become one of the learned -professions. It calls for some of the brightest intellects in the -country. It calls for the exercise of powers which, if devoted to -the law or to finance or to any other business, would place those -who exercise it among those at the head. It is one of infinite -complication, and it is not to be supposed that railway commissions -can manage railway properties as well as the men who have been -trained from boyhood to that business. I have never questioned that -the Interstate Commerce Commission, the Commission in Wisconsin, and -other commissions, earnestly set out to do the just and fair thing, -but the trouble with this whole question is, and has been through -many a year, that it gets too often into politics. I do not believe -myself that questions of business ever ought to find their way into -the political platform of the party, any more than I believe that the -relations of the employer to the employe, whatever the business may -be, ought to become the football of party politics. - -This Association was born out of a happy inspiration. I think these -troublesome problems are approaching solution. The railway companies -must obey the law. The people ought to see to it that the law which -the railway corporations are obliged to obey is a just law, and that -is to be ascertained only on painstaking inquiry, and not through -the speeches of enthusiastic orators or on the floors of Congress. -It has got to be at times that where there was no other issue upon -which a political contest could be fought out, the easy, obvious and -last resort was "let us go for the railroads," or, as a Governor of -Minnesota once expressed it, "Let's shake the railroads over hell." -The truth is that the interest of the railroads is the interest of -the people. The railroad company is dependent upon the people for its -life and its sustenance, and the people are no less dependent upon -the railway company, and between the two there should be even-handed -justice. They should be dealt with calmly, and legislation should -only follow deliberation and investigation, and a law once enacted -should be impersonally enforced, not enforced against some and left -to fall into innocuous desuetude as to others. - - - - -RAILROAD PROBLEMS OF TODAY - -BY J. B. THAYER, - -Vice-President Pennsylvania Railroad Company. - - Address delivered before the Traffic Club of New York, Saturday - Evening, February 16, 1909. - - -Problems--both many and varied--have always confronted the railway -manager. Particular problems come to the front from time to time that -tax all of our resources. They differ with different periods of our -history. Today one of the most serious depends more for its solution -upon our lawmaking bodies, both State and national, than upon the -railroad men, and for the present, at least, we must feel like the -old Arkansas darky, who said he was "in the hands of an all-wise and -unscrupulous Providence." - -In the early days of railroads the chief problem was that of -construction and equipment; later, when more railroads had been built -than there was traffic to feed, there came the traffic problem, and -all the abuses which followed in its train. These, in turn, led -to the legislative problem accompanied by the Interstate Commerce -Law of 1887, and through the '90s all sorts of problems--including -bankruptcy for many. Now, within the past few years has come the -great problem of enlargement--the construction period again, but in -a different shape. Not experimental, for we had learned how to build -and how to equip; not the building so much into new country, but to -take care of the traffic which was overflowing our rails. - -Events of the past year have proved the absolute necessity for -almost all the large railroads in this country to enlarge their -trackage, their terminals, and their equipment; and yet, here again, -when in considering where to obtain the necessary funds for such -purposes,--which must, of course, come from the public,--the railroad -managers find themselves confronted with great difficulties. This, -of course, is largely due to the tremendous demands for capital, -in the development that is going on in all parts of the world, but -it is increased, at the moment, by the natural timidity of capital -to invest its funds in railroad securities, in view of the violent -attacks that are being made against corporations through Congress and -the State legislatures. - - -POPULAR HOSTILITY TO THE RAILROADS. - -This brings us, then, to our greatest and most perplexing -problem--that of how to restore a state of reciprocal understanding -and fairness between the carriers and the public. Many railroad -officials believe that so deep-seated is the apparent hostility -of the people that the management of the railways will be taken -practically out of the hands of their owners, and that great -disasters are to follow. I do not share this view, principally for -the reason that whatever may have been the faults in the past, the -methods and practices of railroad management are now based upon a -decent regard for their public responsibilities. Sooner or later the -people will recognize this--as I believe they are already beginning -to do. But by no means can we minimize the actual situation of today. -It is, indeed, a time of great anxiety to all those entrusted with -railroad management, and who have the interests of their country at -heart as well. - -With the old rebates and secret discriminations things of the -past, with all kinds of business in a most prosperous condition, -we all know that within the past three years, suddenly, out of an -almost cloudless sky, there has burst forth upon the railroads of -this country a torrent of the most bitter and violent attacks--by -political orators upon the stump; in magazines and newspapers; in -Congress and State legislatures. It is fair to say, I think, that -this onslaught had its origin in the agitation of 1904 for changes -in the Interstate Commerce law. It was based upon a misunderstanding -of existing railroad conditions and the position of the railroad in -regard to the points at issue, which I shall presently explain. - -Following the agitation surrounding the passage of the rate bill has -come a swarm of bills in Congress and State legislatures, which, if -they become laws, and are enforced, will prove disastrous to the -railroads, and, equally so, to the public at large. The question is, -What is to be done to prevent it? The old method of influence has -been abandoned, and, I hope, forever. Has it left us unequipped to -meet the issue? To answer this question let us get a perspective. - - -RAILROADS NOT BLAMELESS. - -We must not imagine, to begin with, that we are entirely blameless. -We are in some respects only realizing the wages of past sins. We -have done many of "those things which we ought not to have done," -and we have left undone many of "those things we ought to have done." -Most of the evils date back many years and many of them might have -been prevented had the government done its duty and enforced the -law. Yet even in most recent years we can find some mistakes with -which to concern ourselves. It is not strange that many men who have -suffered loss through delays in their traffic, or in their personal -transportation, or who saw themselves deprived of profitable business -because they could not secure cars, should have become exasperated -and, not having time to properly analyze the difficulty, thought that -the railroads were lacking in foresight and management. - -But let us go back a few years. It is a great mistake to hold the -railroads responsible for such practices as rebating in those days, -when it would have been impossible to throw a stone in a commercial -community without hitting somebody who was taking rebates and -wanting more. Many men are today running for office on anti-railroad -platforms who if you were to say "Rebates" would duck their heads -very much as David Harum said his Newport friends would do if he -called out "Low bridge!" That rebates were wrong nobody questions, -but to pillory a man today for accepting rebates at that time is a -farce. - -Many persons believe that the so-called discriminations, resulting -in the secret arrangements, were largely influenced by the desire -upon the part of railroad officials to favor one man against another, -but no thoughtful man who has at all studied the problem believes -this. Rebates and other forms of discrimination,--whatever may have -been the result in specific instances,--had their origin mainly in -the competition between carriers for the traffic. Incidentally, in -transacting railroad business through secret arrangements, as became -the custom in that period, there were many cases of discrimination in -favor of the strong and against the weak. - -There was a strong feeling upon the part of many men, both in and -out of railway service, that the larger shipper, under the ordinary -rules of business, was entitled to a lower rate, and they could -not conceive the real principle which should govern the making of -railroad rates,--which, however, has come clearly to be realized -since that time. The railroad systems, generally, were not more -anxious to pay rebates than they were to pay higher prices for their -supplies, and simply pursued the course of their competitors because, -otherwise, they saw nothing but loss and probable bankruptcy staring -them in the face. The railroads were forbidden by law to meet and -make formal agreements for the maintenance of rates, and by another -law were required to compete. We all thought that the old plan _was_ -competition. - -Had the Government, through its Interstate Commerce Commission, -vigorously undertaken to enforce the law--passing if necessary, -long before it did, the Elkins Act--I think we should have seen a -correction of these abuses long before the reform came; but, as a -matter of fact, neither the Government authorities nor many of those -managing the railroads had yet reached a clear conception of the -significance of the abuses which existed and of the proper legal -method of uprooting those evils. - - -GETTING AWAY FROM OLD ABUSES. - -Upon the resumption of business activity, in 1898 and 1899, and, -later, following the passage of the Elkins Act, the opportunity was -presented,--and in general accepted by the railroads,--to get away -from the old methods. While since then there have been some cases of -violation of the law, in the matter of secret arrangements, yet I -think that, at least within the last four or five years, it is safe -to say that they have been of small importance, and perhaps, in many -of the cases--while a technical violation of the law--were actually -not discriminations. I say this advisedly, so far as the eastern -situation is concerned, because I know that the Pennsylvania Railroad -Company has not paid a rebate for years, and it is fair to believe -that as that company held its traffic,--in fact, largely increased -it,--without the necessity for such arrangements, its competitors -must have to a large extent pursued the same policy. - -But not alone in reference to freight rates was there more or -less complicity in evil between the people and the railroads, but -let me ask you to consider, for a moment, the question of free -transportation, or passes,--whether political or business. It is -only within the last year or two that the public conscience has been -awakened on this subject. It is true, the railroads have been abused -for several years by those who did not enjoy such favors, but is the -railroad more responsible for the conditions that existed than the -Government of the people, either in the National Congress or in the -State legislatures, and how could it be expected that the legislators -in one State could feel that they were doing very wrong in accepting -passes, when the legislators of another State enjoyed them by law of -the State? How could members of Congress be criticised for accepting -such privileges, or the railroads for extending them, when the -Presidents of the United States and member of their cabinets, and -other important officers of the Government not only accepted them, -but practically exacted them, and, further, expected that private -cars and private trains should be furnished without charge? Upon -one occasion within the past two years I called upon the Interstate -Commerce Commission to ask its assistance in eliminating the pass -abuse, and was very frankly told that it could make no move, nor -take any interest in the subject, in view of the fact that important -public officials including Senators and the members of Congress -felt that it was not improper for them to accept them. Out of this -situation grew a large part of the pass abuse, because, following the -national government and the legislatures, the large men of business -felt that they could properly accept similar privileges. - -Therefore, I repeat, that while there were great abuses--especially -during the period referred to--embittering a large portion of -people, yet the railroads were no more responsible than the people -themselves; and yet, without doubt it was during this period that the -foundation was laid for the feeling of the present day. - - -RAILWAYS WELCOME JUST REGULATION. - -But, as I stated, we were forced to bear the brunt of our past -sins--and more--in the campaign for increasing the powers of the -Interstate Commerce Commission. Do not misunderstand me. Many -thoughtful railroad men believed always, in the value, both to -the railroads and the public, of an interstate law, and, further, -considered it wise to strengthen the power of the Commission. -The distinction, however, between what railroad men did and did -not believe in, is very clear. We felt and we feel now that the -government is perfectly justified in regulating railroad practices -to the extent of preventing discriminations. Indeed, the government -should act as a sort of policeman to see to it that the weak and the -helpless are protected. If reasonably administered, the railroads -need the law. But the government should not have the right to -interfere with the proper play of the natural commercial forces of -the nation. The great distinction between police and commercial -powers should never be lost sight of. - -The danger does not lie in the provisions of the new national -law. There is no substantial difference between its provisions -and those of the old law, except in respect to the powers of the -Commission. There was no necessity for the new law, so far as the -prevention of the old abuse of secret rates and discrimination was -concerned. The operation of this law does not involve any material -change in traffic operations of the railroads; the only danger is -as to how the Commission may exercise their power in influencing -reductions in rates, but even in that respect the railroads have -the right of appeal to the courts. It is from various other bills -being presented in Congress in which the immediate danger lies, -showing possible interference by the national government with the -operation of railroads, with respect to the hours of labor of its -employes, systems of signals, and other methods of operation, which -should properly be left to the railroads themselves. This threatened -interference of the federal government is having a powerful and -dangerous influence upon the legislatures of the various states, who -apparently are--in a slang term--"Seeing Congress and going them -five or six better"--in the bills for reduction of state rates, both -passenger and freight; for increase in taxation, and all sorts of -measures which tend to reduce the earnings and increase the expenses, -and hamper and delay the actual development necessary. - -It was unfortunate that in the agitation and discussion following -the President's recommendations, until the present law was finally -adopted, there was a total misunderstanding upon the part of the -public at large as to this attitude of the railroads. It was most -unfortunate in that campaign that the principal point of contest -upon the part of the railroads was lost sight of--and that is--the -objection upon their part not to reasonable amendments to the law, -and not--if the people wanted it--to some increase of power to the -Commission, but to the attempt to make a commission of five or seven -men--in many respects a political body--the final arbiters as to the -rates and fares of the railroads. - - -DIFFICULTIES UNDER THE PRESENT LAW. - -Yet even with the new law on the statute books, our traffic problems -are still with us. We are forbidden by law to make formal agreements -as to rates, yet it is universally recognized that in order to secure -an equitable adjustment of rates, it is absolutely necessary that the -traffic managers of the railroads shall confer frequently. It is well -known that such conferences are held and must be held to prevent -discriminations, yet no definite agreements can be made. - -The present law stipulates that there shall be no discrimination by -railroads against persons or communities. Right here, however, the -railroads are face to face with a problem all their own, which is -a very serious one, and that is: How shall a particular railroad -prevent discrimination against a community on its own line by -some other railroad seeking to specially favor a community on its -line? Is it not absolutely essential that there should be both -an understanding and a virtual agreement on the part of the two -railroads concerned for the purpose of protecting both communities? - -Cases of dispute between railroads as to proper rate adjustments -have, indeed, been referred to Interstate Commerce Commissioners -as arbitrators and their findings have been observed. This shows -how absolutely vital to all business is the necessity for that -co-operation which can only be secured by agreement and conference -between all interested parties. The President of the United States -recognized the necessity for this fact in his last annual message -and recommended that some legislation be passed which would permit -agreements between railroads as to rates. - -We are thus in the presence of this ridiculous situation; that on the -one hand we are being threatened with prosecution by the Government -for violation of the Sherman Act in respect to methods which on the -other hand the President of the United States and the Interstate -Commerce Commissioners agree must be followed in order to properly -discharge our responsibility to the public--in other words, we are -"between the devil and the deep sea," or we are damned if we do, or -we are damned if we don't. - -So much for the moment, for our national problem. As to State -regulation: while not believing--now that we have a national -law--that it is necessary or desirable for the public to establish -state commissions and special railroad laws, at the same time, if -the people desire such commissions, we have no right to look upon -such a demand as "anarchistic," but we feel that the working of such -commissions will be unsatisfactory to the business interests. - - -CONFIDENCE AND JUSTICE NEEDED. - -These are but a few of our problems and difficulties. While I do -not wish to minimize the dangers of the present situation, while I -recognize that it is now to some extent, by adding to the timidity of -investors, retarding our ability to secure funds necessary to make -extensions and buy equipment required for the ever-increasing traffic -of the country, and if continued will make it impossible, yet I am -firmly of the opinion that the good sense of the people will prevail -and the unjust attacks cease. Confidence of investors both here and -abroad is needed to furnish funds, and, if this is seriously shaken, -the prosperity of the railroads, which are the keystone of the arch -of business, will be destroyed. - -To avoid these dangers a regime of confidence and fairness on the -part of the public toward the railroads must be restored, and to -accomplish this we must place our case, as it were, before the -legislators and the people and make clear our difficulties and the -complications which beset us. Few, after all, understand the railroad -problem, and we have not made it plain to the people, either because -it was the fashion not to do so, or because we could not realize that -things simple to us were not understood by the public. We must not -stop at one statement, but discourse upon and elucidate every subject -which the public misunderstands. - -Let us be frank and take the public into our confidence as fully -as is consistent with the proper conduct of our business. Let -us approach the subject with the feeling that the railroads are -not absolutely perfect, that we have to some extent brought this -condition of affairs upon ourselves, and that we should govern -ourselves in the future accordingly. Let us undertake to go frankly -before the people and present the actual facts in connection with our -affairs. - - -THE PENNSYLVANIA AS AN ILLUSTRATION. - -Let me illustrate: The Pennsylvania Legislature is in session. -Numerous bills have been presented, of a most radical nature. It -is our purpose to appear before every committee that will hear us, -and tell our side of the story. I doubt very much if the average -legislator--and certainly not the average citizen--understands -whom he is injuring in unjust acts towards the railroads. Take our -company, for example. It is not a small group of rich capitalists; -it is not Mr. McCrea and myself and a few others; the Pennsylvania -Railroad is owned by more than 50,000 people, 30 per cent of whom -live in Pennsylvania. Forty-seven per cent of our shareholders are -women; and in many cases the dividend is their only source of -income. Then there are thousands of bondholders; beyond them are -nearly 100,000 employes in the State of Pennsylvania dependent upon -the prosperity of the Pennsylvania Railroad for their livelihood. - -Therefore, by the usual computation, it is safe to say that -approximately half a million people--men, women and children--are -actually dependent upon the welfare of this company in the State of -Pennsylvania alone. - -Upon the Pennsylvania Railroad's prosperity depends the prosperity of -the other lines in its system, and including the employes of these -lines, there are 200,000 men, who, with their families, constitute an -army of a million or more. Behind them, again, are the thousands of -men, with their families, who produce the coal and other materials -which the railroads use. Anything that cripples the railroads injures -every one of these people. - -When we make these and other facts plain, I cannot but feel that -no injustice will be done. In the meantime, let us keep our minds -well balanced, and not allow ourselves to believe that chaos is -coming; let us meet the issue fairly and squarely and frankly. While, -therefore, necessary for the present, at least, to suspend many -improvements, let us keep our courage, trusting to the ultimate good -sense of the lawmakers and the people for that sympathy and support -to which we feel that we are entitled. - - - - -THE RELATION OF RAILROADS TO THE STATE. - -BY W. M. ACWORTH, M. A. - - Delivered before the British Association at Dublin, Ireland, - September 2, 1908. - - -I propose to treat the subject in two aspects; first, the history in -outline of the relations between railroads and the state in different -countries, and, second, the question of the factors which are of -primary importance in any consideration of the matter. - -Ever since the year 1830, when the dramatic success of the Liverpool -& Manchester Railway first revealed to a generation less accustomed -than our own to revolutionary advances in material efficiency the -startling improvements in transport that railroads were about to -effect, theorists have discussed the question whether state or -private ownership of railroads be in the abstract the more desirable. -But it is safe to say that in no country has the practical question, -"Shall the state own or not own the railroads?" been decided on -abstract considerations. The dominant considerations have always been -the historical, political and economic position of the particular -country at the time when the question came up in concrete shape for -decision. - - -BELGIUM. - -The Belgian railroads have belonged to the state from the outset, -because they were constructed just after Belgium separated from -Holland, and (the available private capital being in Holland and -not in Belgium) King Leopold and his Ministers felt that, if the -railroads were in private hands, that would mean in Dutch hands, -and the newly acquired independence of Belgium would be thereby -jeopardized. Within the last few years this history has repeated -itself, and the fact that the bulk of the Swiss railroad capital was -held in France and Germany was one main reason, if not _the_ main -reason, which induced the Swiss people to nationalize their railroads. - - -GERMANY. - -In Germany 70 years ago the smaller states were regarded as the -personal property of their respective Sovereigns, almost as -definitely as Sutherlandshire is the property of the Duke of -Sutherland. And it was therefore as natural that the Dukes of -Oldenburg or Mecklenburg should make railroads for the development of -their estates as that the Duke of Sutherland should build a railroad -in Sutherland. - - -AUSTRALASIA. - -Take, again, Australasia. In that region the whole of the railroads, -with negligible exceptions, now belong to the different state -governments, and the public sentiment that railroads ought to be -public property is today so strong that it is impossible to imagine -any serious development of private lines. But at the outset the -traditional English preference for private enterprise was just -as strong there as it was at home, and it was only the fact that -the whole of the available private capital was absorbed in the -development of the gold fields and that, therefore, if railroads were -to be built at all, public credit must be pledged and English capital -must be obtained, that caused the state to go into the railroad -business. - - -ITALY. - -Take, once more, the case of Italy. In the days when Italy was only a -geographical expression, the various Italian states experimented with -railroad management of all sorts and kinds. When, after 1870, Italy -was unified, it was necessary to adopt a national railroad policy, -and the Italian government instituted an inquiry whose exhaustiveness -has not since been approached. The force of circumstances has indeed -already compelled the government to acquire the ownership of the -railroads, but the Commission reported that it was not desirable -that the government should work them. The railroads were accordingly -leased for a period of 60 years, running from 1884, to three -operating companies, and it was provided that the leases might be -broken at the end of the 20th or the 40th year. From the very outset -a condition of things developed which had not been contemplated when -the leases were granted, and for which the leases made no provision. -Constant disputes took place between the government and their -lessees. Capital for extensions and improvements was urgently needed; -neither party was bound to find it; and agreement for finding it on -terms mutually acceptable was impossible of attainment. In the end -the government has been forced to cut the knot, to break the lease at -the end of the first 20 years' period, and for the last two years the -Italian government has operated its own railroads. But it is safe to -say that an _a priori_ preference for state management over private -management played but scant part in the ultimate decision. - - -GENERAL INCREASE OF STATE CONTROL. - -It is impossible to review, even in the merest outline, the railroad -history of all the countries in the world, but the instances already -given will serve to illustrate my proposition that the position in -each country depends not on abstract considerations, but on the -practical facts of the local situation. Yet one cannot look round -the world and fail to recognize that the connection between the -railroads and the state is everywhere becoming more intimate year by -year. Whatever have been the causes, the fact remains that Italy and -Switzerland have converted their railroads from private to public. In -Germany the few remaining private lines are becoming still fewer. In -Belgium the process is practically completed. In Austria it is moving -steadily in the same direction; four-fifths of the total mileage is -now operated by the state. In Russia the story would have been the -same, had it not been for the war with Japan. Even in France, whose -railroads have a very definite local and national history of their -own, an act for the purchase of the Western Railway by the state was -passed last year by the Chamber of Deputies, and has now, after much -contention, been passed by the Senate within the last few weeks. But -it is not without interest to note that, though a majority both of -deputies and of senators supported the bill, the representatives of -the district served by the company were by a large majority opposed -to it, while the commercial community of the whole of France, as -represented by the Chambers of Commerce, were almost unanimously -hostile.[I] So far as can be seen at present, the purchase of the -Western Railway by the state is not likely to be made a precedent -for the general nationalization of the French railroads. Still, the -broad fact remains that a series of railroad maps of the continent -of Europe, constructed at intervals of ten years, would undoubtedly -show an ever-increasing proportion of state lines, and that the last -of the series would exhibit the private lines as very far below the -state lines both in extent and in volume of traffic. - -A word ought to be said of Holland, not only because Holland is a -country with free institutions like our own, but because the railroad -position of Holland is unique. The railroads of that country were -built partly by the state and partly by private enterprise, but the -working has always been wholly in private hands. Some ten years -ago, however, the Dutch government bought up the private lines and -rearranged the whole system. The main lines of the country are now -leased to two operating companies, so organized that each company -has access to every important town, and railroad competition is now -practically ubiquitous throughout Holland. So far there are no signs -that the Dutch people are otherwise than satisfied with their system. -Now compare this with France. The French government, though it has -hitherto, except on the comparatively unimportant state railroads in -the southwest of the country, stood aloof from the actual operation, -has always kept entire control of railroad construction and of the -allocation of new lines between the several companies. And the French -government has proceeded on a principle diametrically opposed to -the Dutch principle. In France railroad competition has, as far as -possible, been definitely excluded, and the various systems have -been made to meet, not, as in Holland, at the great towns, but at -the points where the competitive traffic was, as near as might -be, a negligible quantity. Now that questions of competition and -combination are to the fore in England, and seem likely to give -very practical occupation to Parliament in the session of 1909, the -precedents on both sides are perhaps not without interest. - - -AMERICA. - -When we turn from the continent of Europe to the continent of America -the position of affairs is startlingly dissimilar. The railroads of -America far surpass in length those of the continent of Europe, while -in capital expenditure they are equal. State ownership and operation -of railroads on the continent of America is as much the exception -as it is the rule in Europe. In Canada there is one comparatively -important state railroad, the Intercolonial, about 1,500 miles in -length. Though its earnings are quite considerable--about £20 per -mile per week--it barely pays working expenses. I may add that in -all the voluminous literature of the subject I have never seen this -line cited as an example of the benefits of state management. There -is another small line, in Prince Edward Island, which is worked at a -loss; and a third, the Temiskaming & Northern Ontario Railway, owned -not by the Dominion but by the Provincial government, which is too -new to afford any ground for conclusions. - -The Federal government of the United States has never owned a -railroad, though some of the individual states did own, and in -some cases also work, railroads in very early days. They all burnt -their fingers badly. But the story is so old a one that it would be -unreasonable to found any argument on it today. - -In Mexico, of which I shall have more to say directly, the state -owns no railroads. As for Central America, Costa Rica and Honduras -have some petty lines, which are worked at a loss. Guatemala had a -railroad till 1904, when it was transferred to a private company. -Nicaragua has also leased its lines. Colombia owns and works at a -profit, all of which is said to be devoted to betterment, 24 miles of -line. - -In South America, Peru and Argentina own, as far as I am aware, no -railroads. The Chilian government owns about 1,600 miles out of the -3,000 miles in the country. Needless to say private capital has -secured the most profitable lines. The government railroad receipts -hardly cover the working expenses. The Brazilian government formerly -owned a considerable proportion of its railroad network of nearly -11,000 miles. Financial straits forced it some years ago to dispose -of a large part to private companies, to the apparent advantage at -once of the taxpayer, the shareholder and the railroad customer. -About 1,800 miles of line are still operated by the government, the -receipts of which, roughly speaking, do a little more than balance -working expenses. But it may be broadly said that the present -Brazilian policy is adverse to state ownership and in favor of the -development of the railroad system by private enterprise. - - -THE UNITED STATES SITUATION. - -The question of public ownership and operation was, however, raised -very definitely in the United States only two years ago, when -Mr. Bryan made a speech stating that his European experience had -convinced him that it was desirable to nationalize the railroads of -the United States. For many weeks after, Mr. Bryan's pronouncement -was discussed in every newspaper and on every platform, from Maine -to California. Practically, Mr. Bryan found no followers, and today, -though he is the accepted candidate of the Democratic party for the -Presidency, the subject has been tacitly shelved. To some extent -this may have been due to the ludicrous impossibility, if I may -say so with all respect for a possible President, of Mr. Bryan's -proposals. In order, presumably, not to offend his own Democratic -party, the traditional upholders of the rights of the several states, -he seriously suggested that the Federal government should work the -trunk lines, and the respective state governments the branches. Even -if anybody knew in every case what is a trunk line and what is a -branch, the result would be to create an organism about as useful for -practical purposes as would be a human body in which the spinal cord -was severed from the brain. Mr. Bryan's proposal was never discussed -in detail: public sentiment throughout the Union was unexpectedly -unanimous against it, and it is safe to say that the nationalization -of the railroads of the United States is not in sight at present. - -But though nationalization is nowhere in America a practical issue, -everywhere in America the relations between the railroads and the -state have become much closer within the last few years. Canada -a few years ago consolidated its railroad laws and established a -Railway Commission, to which was given very wide powers of control -both over railroad construction and operation and over rates and -fares for goods and passengers. Argentina has also moved in the -same direction. In the United States, not only has there been the -passage by the Federal Congress at Washington of the law amending the -original Act to Regulate Commerce and giving much increased powers -to the Interstate Commerce Commission, besides various other Acts -dealing with subsidiary points, such as hours of railroad employes, -but scores, if not hundreds, of Acts have been passed by the various -state legislatures. With these it is quite impossible to deal in -detail; many of them impose new pecuniary burdens upon the railroad -companies, as, for instance, the obligation to carry passengers at -the maximum rate of a penny per mile. All of them, speaking broadly, -impose new obligations and new restrictions upon the railroad -companies. Not a few have already been declared unconstitutional, and -therefore invalid, by the law courts. And when the mills of American -legal procedure shall at length have finished their exceedingly -slow grinding, it is safe to prophesy that a good many more will -have ceased to operate. But for all that, the net result of state -and Federal legislation in the sessions of 1906 and 1907 will -unquestionably be that even after the reaction and repeal, which, -thanks to the Wall street panic of last year, is now in progress, -the railroads of the United States will in the future be subject to -much more rigid and detailed control by public authority than there -has been in the past. The reign of railroad despotism, more or less -benevolent, is definitely at an end; the reign of law has begun. It -is only to be regretted that the quantity of the law errs as much on -the side of excess as its quality on the side of deficiency. - - -THE MEXICAN SITUATION. - -Apart from its interest as a quite startling example of how not -to do it, the recent railroad legislation of the United States is -only valuable as an indication of the tendency, universal in all -countries, however governed, for the state to take a closer control -over its railroads. Much more interesting as containing a definite -political ideal, worked out in detail in a statesmanlike manner, is -the recent railroad legislation of Mexico. One may be thought to be -verging on paradox in suggesting that England, with seven centuries -of parliamentary history, can learn something from the Republic of -Mexico. But for all that I would say, with all seriousness, that I -believe the relation between the state and the national railroads is -one of the most difficult and important questions of modern politics, -and that the one valuable and original contribution to the solution -of that question which has been made in the present generation is due -to the President of the Mexican Republic and his Finance Minister, -Señor Limantour. - -Broadly, the Mexican situation is this: The Mexican railroads were in -the hands of foreign capitalists, English mainly so far as the older -lines were concerned, American in respect to the newer railroads, -more especially those which constituted continuations southwards -of the great American railroad systems. The foreign companies, -whether English or American, naturally regarded Mexico as a field -for earning dividends for their shareholders. The American companies -further, equally naturally, tended to regard Mexico as an annexe and -_dépendance_ of the United States. If they thought at all of the -interest of Mexico in developing as an independent self-contained -state, they were bound to regard it with hostility rather than with -favor, and such a point of view could hardly commend itself to the -statesmen at the head of the Mexican government. Yet Mexico is a -poor and undeveloped country, quite unable to dispense with foreign -capital; and, further, it was at least questionable whether Mexican -political virtue was sufficiently firm-rooted to withstand the -manifold temptations inherent in the direct management of railroads -under a parliamentary _régime_. Under these circumstances the -Mexicans have adopted the following scheme: For a comparatively -small expenditure in actual cash, coupled with a not very serious -obligation to guarantee the interest on necessary bond issues, -the Mexican government have acquired such a holding of deferred -ordinary stock in the National Railroad Company of Mexico as gives -them, not, indeed, any immediate dividend on their investment, but -a present control in all essentials of the policy of the company, -and also prospects of considerable profit when the country shall -have further developed. The organization of the company as a private -commercial undertaking subsists as before. A board of directors, -elected in the ordinary manner by the votes of shareholders, remains -as a barrier against political or local pressure in the direction -of uncommercial concessions, whether of new lines or of extended -facilities or reduced rates on the old lines; but--and here is the -fundamental difference between the new system and the old--whereas -under the old system the final appeal was to a body of shareholders -with no interest beyond their own dividend, the majority shareholder -is now the Government of Mexico, with every inducement to regard the -interests, both present and prospective, of the country as a whole. - - -IRREFRAGABLE THEORY OF PUBLIC OWNERSHIP. - -Public ownership of railroads is in theory irrefragable. Railroads -are a public service; it is right that they should be operated by -public servants in the public interest. Unfortunately, especially in -democratically organized communities, the facts have not infrequently -refused to fit the theories, and the public servants have allowed, -or been constrained to allow, the railroads to be run, not in the -permanent interest of the community as a whole, but in the temporary -interest of that portion of the community which at the moment could -exert the most strenuous pressure. The Mexican system, if it succeeds -in establishing itself permanently--for as yet it is only on its -trial--may perhaps have avoided both Scylla and Charybdis. Faced with -a powerful but local and temporary demand, the government may be able -to reply that this is a matter to be dealt with on commercial lines -by the board of directors. If, on the other hand, permanent national -interests are involved, the government can exercise its reserve -power as a shareholder, can vote the directors out of office, and -so prevent the continuance of a policy which would in its judgment -be prejudicial to those interests, however much it might be to the -advantage of the railroad as a mere commercial concern. - - -STATE CONTROL OR OWNERSHIP. - -The history whose outline I have now very briefly sketched shows, I -think, that whereas there is everywhere a tendency towards further -state control, the tendency towards absolute state-ownership and -state-operation is far from being equally universal. I shall have -a word to say presently as to the reasons why America shows no -signs of intention to follow the example of continental Europe. -Meanwhile it is well to notice that American experience proves also -the extreme difficulty of finding satisfactory methods of control. -Sir Henry Tyler said some five-and-thirty years ago in England, in -words that have often been quoted since, "If the state can't control -the railroads, the railroads will control the state"; and President -Roosevelt has again and again in the last few years insisted on the -same point. "The American people," he said in effect, "must work -out a satisfactory method of controlling these great organizations. -If left uncontrolled, there will be such abuses and such consequent -popular indignation that state-ownership will become inevitable, and -state-ownership is alien to American ideas, and might cause very -serious political dangers." - -Perhaps some of my hearers may remember Macaulay's graphic -description of the passion that was aroused by Charles James -Fox's proposed India Bill; it was described as a Bill for giving -in perpetuity to the Whigs, whether in or out of office, the -whole patronage of the Indian government. The objection felt by -American statesmen to handing over their railroads to the National -government--for I think it may be taken for granted that if they were -nationalized it would have to be wholly under Federal management, -and that the separate states could take no part in the matter--is in -principle the same. There are something like a million and a half -men employed on the railroads of the United States, say roughly 7 -or 8 per cent. of the voters. Americans feel that rival political -parties might bid against each other for the support of so vast and -homogeneous a body of voters; that the amount of patronage placed at -the disposal of the executive government for the time being would -be enormous; and that the general interests of the nation might -be sacrificed by politicians anxious to placate--to use their own -term--particular local and sectional interests. How far this fear, -which is undoubtedly very prevalent in the states, is justified -by the history of state railroads in other countries is a question -exceedingly difficult to answer. Dealing with state railroads in the -lump, it is easy to point to some against which the charge would -be conspicuously untrue. To take the most important state railroad -organization in the world, the Prussian system, no one, I think, can -fairly deny that it has been operated--in intention at least, if not -always in result--for the greatest good of the greatest number. But -then Prussia is Prussia, with a government in effect autocratic, with -a civil service with strong _esprit de corps_ and permeated with old -traditions, leading them to regard themselves as the servants of -the king rather than as candidates for popular favor. An American -statesman, Charles Francis Adams, wrote as follows more than 30 years -ago: "In applying results drawn from the experience of one country -to problems which present themselves in another, the difference of -social and political habit and education should ever be borne in -mind. Because in the countries of continental Europe the state can -and does hold close relations, amounting even to ownership, with -the railroads, it does not follow that the same course could be -successfully pursued in England or in America. The former nations are -by political habit administrative, the latter are parliamentary. In -other words, France and Germany are essentially executive in their -governmental systems, while England and America are legislative. -Now the executive may design, construct or operate a railroad; the -legislative never can. A country therefore with a weak or unstable -executive, or a crude and imperfect civil service, should accept with -caution results achieved under a government of bureaus. Nevertheless, -though conclusions cannot be adopted in the gross, there may be in -them much good food for reflection." - - -CONTROL BY DEMOCRACY, OR OWNERSHIP BY AUTOCRACY. - -I am inclined to think that the effect of the evidence is that the -further a government departs from autocracy and develops in the -direction of democracy, the less successful it is likely to be in -the direct management of railroads. Belgium is far from being a pure -democracy; but compared with Prussia it is democratic, and compared -with Prussia its railroad management is certainly inferior. Popular -opinion in Belgium seems at present to be exceedingly hostile to the -railroad administration; official documents assert that, while the -service to the public is bad, the staff are scandalously underpaid, -and yet that the railroads are actually not paying their way. There -was, it is true, till recently an accumulated surplus of profits -carried in the railroad accounts, but the official figures have been -recently revised, and the surplus is shown to be non-existent. - -The Swiss experiment is too new to justify any very positive -conclusions being drawn from it; but this much is clear: the state -has had to pay for the acquisition of the private lines sums very -much larger than were put forward in the original estimate; the -surplus profits that were counted on have not been obtained in -practice; the economies that were expected to result from unification -have not been realized; the expenditure for salaries and wages -has increased very largely; and so far from there being a profit -to the Federal government, the official statement of the railroad -administration is that, unless the utmost care is exercised in the -future, the railroad receipts will not cover the railroad expenditure. - -The Italian experiment is still newer. It would not be fair to say -that it proves anything against state management; but I do not think -that the most fervid _Etatist_ would claim that, either on the ground -of efficiency or on the ground of economy, it has so far furnished -any argument in favor of that policy. - -If we wish to study the state management of railroads by pure -democracies of Anglo-Saxon type, we must go to our own Colonies. -My own impressions, formed after considerable study of the subject -and having had the advantage of talking with not a few of the men -who have made the history, I hesitate to give. It is easy to find -partisan statements on both sides; for example, in a recent article -in the _Nineteenth Century_, entitled "The Pure Politics Campaign -in Canada," I find the following quotation from the _Montreal -Gazette_--a paper of high standing--dated May 27, 1907: "Every job -alleged against the Russian autocracy has been paralleled in kind -in Canada. First, there is the awful example of the Intercolonial -Railway, probably as to construction the most costly single-track -system in North America, serving a good traffic-bearing country, with -little or no competition during much of the year, and in connection -with much of its length no competition at all, but so mishandled that -one of its managers, giving up his job in disgust, said it was run -like a comic opera. Some years it does not earn enough to pay the -cost of operation and maintenance (I may interpolate that its gross -earnings per mile are equal to those of an average United States -railroad), and every year it needs a grant of one, two, three or four -million dollars out of the Treasury to keep it in condition to do at -a loss the business that comes to it. When land is to be bought for -the road, somebody who knows what is intended obtains possession of -it, and turns it over to the government at 40, 50 and 100 per cent -advance. This is established by the records of Parliament and of the -courts of the land." - - -AFRICAN CAPE GOVERNMENT RAILROADS. - -Probably no one outside the somewhat heated air of Canadian politics -is likely to believe this damning accusation quite implicitly; but -even if there were not a word of truth in it--and that the management -of the Intercolonial Railway is, for whatever cause, bad, appears, I -think, clearly from the public figures--it is bad enough that such -charges should be publicly made and apparently believed. Let me quote -now from a document of a very different type referring to a colony -very far distant from Canada: "A memorandum relative to Railroad -Organization, prepared at the request of the Railroad Commissioners -of the Cape Government Railways, by Sir Thomas R. Price, formerly -general manager of those railroads, and now general manager of the -Central South Africa (_i. e._, Transvaal and Orange River) Railways, -dated Johannesburg, February 22, 1907." - - "The drawbacks in the management of the railroads in the Cape - that call for removal arise from the extent to which, and the - manner in which, the authority of Parliament is exercised. They - are twofold in their character, viz.: - - "(1) The practice of public authorities, influential - persons, and others bent on securing concessions or other - advantages which the general manager has either refused in - the conscientious exercise of his functions, or is not likely - to grant, making representation to the Commissioner (as the - ministerial head of the Government), supplemented by such - pressure, political influence, or other means as are considered - perfectly legitimate in their way, and are best calculated to - attain the end applicants have in view. - - "(Many members of Parliament act similarly in the interests - of the districts, constituents, or railroad employes in whom - they happen to be interested. It is by no means unknown for the - requests in both classes of cases to coincide somewhat with a - critical division in Parliament--present or in prospect--or - otherwise something has occurred which is regarded as - irritating to the public or embarrassing to the Government, and - the desire to minimize the effect by some conciliatory act is - not unnatural.) - - "(2) The extent to which the fictitious, and often transitory, - importance which a community or district manages to acquire - obscures (under the guise of the Colony's welfare) the - consideration of the railroad and general interest in the - Colony as a whole." - - (During the earlier period of my railroad service in the Cape - Colony few things impressed me more, coming as I had from a - railroad conducted on strictly business lines, than the extent - to which the conduct of railroad affairs was influenced by - certain conditions. Nor was this impression lessened afterwards - when, in the course of a conversation on the matter, Sir - Charles Elliott mentioned to me that he had more than once told - a late railway commissioner, "The Government is powerful, but - [mentioning the town and authority] is more powerful still.") - - "I do not regard it as open to doubt that the Colony as a whole - has suffered severely in consequence, the inland portions of - the Colony particularly so; and that the need for a remedy is - pressing if the railroads are to be conducted as a business - concern for the benefit of the Colony. - - "The necessity for the railroads and their administration being - removed from such an atmosphere, and treated as a most valuable - means of benefiting the Colony as a whole, while not neglecting - the interests of a district (but not subordinating the welfare - of the whole Colony thereto), is pressing. That there should be - an authority to refer to in case of real necessity, where the - decision or action of the general manager is not regarded as - being in the public interests, is also clear. But it is equally - manifest that the Commissioner or the Government of the day, - with political or party consideration always in view, is not - the proper court of reference. - - "There can be little doubt that in the Cape Colony political - considerations have influenced the adoption of new lines - and their construction--many, if not most of them of an - unprofitable character--without sufficient inquiry or - information, often with scanty particulars, and possibly - contrary to the advice of the officer afterwards entrusted with - the construction and working of the line. - - "A material change is imperatively necessary in this respect, - if only to insure the solvency of the Colony." - - -VICTORIAN (AUSTRALIA) RAILROADS. - -It is sometimes conceded that improper exercise of political -influence may be a real danger where railroads are managed under -a parliamentary _régime_ by a Minister directly responsible to -Parliament; but that difficulty, it is said, can be got over by -the appointment of an independent Commission entirely outside the -political arena. History does not altogether justify the contention. -The last report of the Victorian State Railways gives a list of seven -branches, with an aggregate length of 46 miles, constructed under the -Commissioner _régime_ at a cost of £387,000, which are now closed -for traffic and abandoned because the gross receipts failed even to -cover the out-of-pocket working expenses. It is not alleged, nor is -it a fact, that those lines were constructed in consequence of any -error of judgment on the part of the Commissioners. But in truth it -is inherently impossible to use a Commission to protect a community -against itself. In theory a Commission might be a despot perfectly -benevolent and perfectly intelligent; in that case, however, it -can hardly be said that the nation manages its own railroads. But -of course any such idea is practically impossible, because despots, -however benevolent and intelligent, cannot be made to fit into the -framework of an Anglo-Saxon constitution. In practical life the -Railway Commission must be responsible to someone, and that someone -can only be a member of the political government of the day. - - -COMPETITION HAS CEASED TO REGULATE. - -I have indicated what in America, where the subject is much more -carefully considered than here, is regarded as a great obstacle to a -state-railroad system; but I have pointed out also that it is quite -possible that statesmen fully alive to the dangers may yet find -themselves constrained to risk them unless some satisfactory method -of controlling private railroad enterprise can be found. I do not -think it can be considered that this has been done in England at the -present time. In the main we have relied on the force of competition -to secure for us reasonable service at not unreasonable rates; and -as I still cherish a long-formed belief that English railroads are -on the whole among the best, if not actually the best, in the world, -I am far from saying that competition has not done its work well. -But competition is an instrument that is at this moment breaking in -our hands. Within quite a few years the South Eastern Railway was -united with the Chatham; the Great Southern has obtained a monopoly -over a large part of Ireland; in Scotland the Caledonian and the -North British, the Highland and the Great North have in very great -measure ceased to compete. If the present proposals for the working -union of the Great Eastern, the Great Northern and the Great Central -go through, competition in the East of England will be absolutely -non-existent from the Channel to the Tweed. And one can hardly -suppose that matters will stop there. In fact, since this address -was in type a comprehensive scheme of arrangement for a long term of -years between the London & North Western and the Midland has been -announced. We must, I think, assume that competition, which has done -good work for the public in its day, is practically ceasing to have -any real operation in regulating English railroads. - - -HOW SHALL GOVERNMENT REGULATE? - -For regulation, therefore, we must fall back on government; but -how shall a government exercise its functions? Regulation may be -legislative, judicial, executive, or, as usually happens in practice, -a combination of all three. But we may notice that, as Mr. Adams -points out, in Anglo-Saxon countries it is the Legislature and the -Judicature that are predominant; whereas in a country like France, -which though a democracy is bureaucratically organized, it is -executive regulation that is most important. Now, the capacity of the -Legislature to regulate is strictly limited; it can lay down general -rules; it can, so to speak, provide a framework, but it cannot decide -_ad hoc_ how to fit into that framework the innumerable questions -that come up for practical decision day by day. - -The capacity of the law courts to regulate is even more strictly -limited. For not only is it confined within the precise limits of -the jurisdiction expressly conferred upon it by the Legislature, but -further, by the necessity of the case, a court of law can only decide -the particular case brought before it; a hundred other cases, equally -important in principle, and perhaps more important in practice, may -never be brought before it at all. Even if the court had decided -all the principles, it has no machinery to secure their application -to any other case than the one particular case on which judgment -was given. There was a case decided 30 years ago by our Railroad -Commission, the principle of which, had it been generally applied -throughout the country, would have revolutionized the whole carrying -business of Great Britain. It has not been so applied, to the great -advantage, in my judgment, of English trade. Further, the great bulk -of the cases which make up the practical work of a railroad: "What is -a reasonable rate, having regard to all the circumstances, present -and prospective, of the case? Would it be reasonable to run a new -train or to take off an old one? Would it be reasonable to open a -new station, to extend the area of free cartage, and the like?"--all -these are questions of discretion, of commercial instinct. They -can only be answered with a "Probably on the whole," not with a -categorical "Yes" or "No," and they are absolutely unsuitable for -determination by the positive methods of the law court with its -precisely defined issues, its sworn evidence, and its rigorous -exclusion of what, while the lawyer describes it as irrelevant, is -often precisely the class of consideration which would determine one -way or other the decision of the practical man of business. - -It seems to me, therefore, that both in England and in America we -must expect to see in the near future a considerable development of -executive government control over railroads. - -This is not the place to discuss in detail the form that control -should take, but one or two general observations seem worth making. -The leading example of executive control is France; in that country -the system is worked out with all the French neatness and all the -French logic. But it is impossible to imagine the French principle -being transplanted here. For one thing, the whole French railroad -finance rests upon the guarantee of the government. The French -government pays, or at least is liable to pay, the piper, and has, -therefore, the right to call the tune. The English government has -not paid and does not propose to pay, and its claim to call the -tune is therefore much less. Morally the French government has a -right--so far at least as the railroad shareholders are concerned--to -call on a French company to carry workmen at a loss; morally, in my -judgment at least, the English government has no such right. But -there is a further objection to the French system; the officers of -the French companies have on their own responsibility to form their -own decisions, and then the officers of the French government have, -also on their own responsibility, to decide whether the decision -of the company's officer shall be allowed to take effect or not. -The company's officer has the most knowledge and the most interest -in deciding rightly, but the government official has the supreme -power. The system has worked--largely, I think, because the principal -officers of the companies have been trained as government servants in -one or other of the great Engineering Corps, des Mines or des Ponts -et Chaussées. But it is vicious in principle, and in any case would -not bear transplanting. - -What we need is a system under which the responsibility rests, as at -present, with a single man (let us call him the general manager), and -he does what he on the whole decides to be best, subject however to -this: that if he does what no reasonable man could do, or refuses to -do what any reasonable man would do, there shall be a power behind to -restrain, or, as the case may be, to compel him. And that power may, -I think, safely be simply the Minister--let us call him the President -of the Board of Trade. For, be it observed, the question for him is -not the exceedingly difficult and complicated question, "What is best -to be done?" but the quite simple question, "Is the decision come to -which I am asked to reverse so obviously wrong that no reasonable man -could honestly make it?" - -And even this comparatively simple question the President would not -be expected to decide unaided. He will need competent advisory -bodies. Railroad history shows two such bodies that have been -eminently successful--the Prussian State Railway Councils and the -Massachusetts Railroad Commission. Wholly unlike in most respects, -they are yet alike in this: their proceedings are public, their -conclusions are published, and those conclusions have no mandatory -force whatever. And it is to these causes that, in my judgment, their -success, which is undeniable, is mainly due. Let me describe both -bodies a little more at length. - -There are in Prussia a number (about ten I think) of District Railway -Councils, and there is also one National Council; they consist -of a certain number of representative traders, manufacturers, -agriculturists, and the like, together with a certain number of -government nominees; and the railroad officials concerned take part -in their proceedings, but without votes. The Councils meet three or -four times a year, their agenda paper is prepared and circulated -in advance, and all proposed changes of general interest, whether -in rates or in service, are brought before them, from the railroad -side or the public side, as the case may be. The decision of the -Council is then available for information of the Minister and his -subordinates, but as has been said, it binds nobody. - -The Massachusetts Railroad Commission is a body of three persons, -usually one lawyer, one engineer and one man of business, appointed -for a term of years by the Governor of the state. Originally the -powers of this Commission were confined to the expression of opinion. -If a trade, or a locality, or indeed a single individual, thought -he was being treated badly by a Massachusetts railroad, he could -complain to the Commission; his complaint was heard in public; the -answer of the railroad company was made there and then; and thereupon -the Commissioners expressed their reasoned opinion. The system has -existed now for more than 30 years, and it is safe to say that, -with negligible exceptions, if the Commission expresses the opinion -that the railroad is in the right, the applicant accepts it; if the -Commission says that the applicant has a real grievance, the railroad -promptly redresses it on the lines which the Commission's opinion has -indicated. The success of the Commission in gaining the confidence -of both sides has been so great that of late years its powers have -been extended, and it has been given, for example, authority to -control the issue of new capital and the construction of new lines. -But on the question with which we are specially concerned here, the -conduct of existing railroad companies as public servants, it can -still do nothing but express an opinion; and it may be added that the -Commission itself has more than once objected to any extension of -that power. - -Mr. Adams, from whom I have already quoted, was the first Chairman -of the Commission. He has described their position as resting "on -the one great social feature which distinguishes modern civilization -from any other of which we have a record, the eventual supremacy of -an enlightened public opinion." That public opinion is supreme in -this country, few would be found to deny; that public opinion in -railroad matters is enlightened, few would care to assert. But given -the enlightened public opinion, one can hardly doubt that it will -secure not merely eventual but immediate supremacy. In truth, as -Bagehot once pointed out, a great company is of necessity timorous -in confronting public opinion. It is so large that it must have many -enemies, and its business is so extended that it offers innumerable -marks to shoot at. It is much more likely to make, for the sake of -peace, concessions that ought not to be made than it is to resist a -demand that reasonable men with no personal interest in the matter -publicly declare to be such as ought rightly to be conceded. - -To sum up in a sentence the lesson which I think the history we -have been considering conveys, it is this: Closer connection than -has hitherto existed between the state and its railroads has got to -come, both in this country and in the United States. Hitherto in -Anglo-Saxon democracies neither state ownership nor state control has -been over-successful. The best success has been obtained by relying -for control, not on the constable, but on the eventual supremacy of -an enlightened public opinion. Nearly 20 years ago, in the pages of -the _Economic Journal_, I appealed to English economists to give us a -serious study of what the Americans call the transportation problem -in its broad economic and political aspects. Since then half-a-dozen -partisan works have appeared on the subject, not one of them in my -judgment worth the paper on which it is printed; but not a single -serious work by a trained economist. And yet such a work is today -needed more than ever. Let me once more appeal to some of our younger -men to come forward, stop the gap, and enlighten public opinion. - - -FOOTNOTE: - -[I] Further, it is common knowledge that the Senate only passed -the bill (and that by a majority of no more than three) because -M. Clemenceau insisted that he would resign if it was not passed, -and, though they disliked nationalization much, they disliked M. -Clemenceau's resignation more. - - - - -RAILWAY NATIONALIZATION - -BY SIR GEORGE S. GIBB. - - A paper read at a meeting of the Royal Economic Society, on - 10th November, 1908. - - -Railway nationalization has for many years occupied the minds of -economic and political students and the practical activities of -statesmen in many countries and in English colonies. It has been -regarded here as a remote possibility which might some day or other -come to the front for practical discussion. But quite recently it -would have been thought to be as incredible that any responsible -politicians should be considering proposals for purchasing our -railways for the State as that any substantial number of persons -could be found who would advocate an abandonment of the fundamental -principle that there should be no taxation of imports into England -except for revenue purposes. In these days, however, public opinion -moves suddenly and rapidly. The despised fallacy of yesterday rises -as the creed of to-day. There are already many indications that, -before long, there will be a numerous and influential, though perhaps -a somewhat heterogeneous party, who will urge that immediate steps -should be taken to nationalize our railways. - -The test, and the only test, to be applied to proposals for railway -nationalization is whether railways owned by the State and worked -directly by Government officials would be better and more efficient -than railways owned and worked by private corporations, and whether, -after taking account of all the effects of the change, upon each -class, each district, each interest, the net result would increase -the wealth and well-being of the community, and be a permanent -benefit to the public. - -We may, I think, start from the assumption that railway proprietors -as such have no interest in opposing nationalization. The value of -their property, whether measured in terms of capital value or in -terms of future income, estimated on a fair basis, would, it is -assumed, be fully provided for in the gigantic financial operation -which railway purchase would involve. There is no legal flaw in -the title of railway proprietors. They enjoy the fundamental -rights attached by our law to absolute property, subject only to -the performance of obligations definitely prescribed by Acts of -Parliament. I think, therefore, that we may discuss this subject of -railway nationalization without apprehension that the change, if it -were adopted by the deliberate judgment of the community, would be -accompanied by anything in the nature of confiscation of existing -rights. - -This might not be the intention or the wish of all who think that our -railways should be nationalized. Probably some extreme Socialists -would like to transfer railways to the State without giving what, -in our judgment, would be adequate compensation to existing owners. -Their aim is the substitution of a new social polity for that which -exists, in which antiquated ideas of private property would have no -place. But that is only a phase of their creed which condemns it to -sterility. It is not the small band of Socialist zealots, but the -majority of the nation that we have to consider in estimating the -risk of anything being done in the nature of confiscation. - -Those who join the party for nationalizing will, no doubt, find -themselves in strange company. There can be little doubt that the -movement up to the present has been mainly Socialistic. A trader, -who advocates nationalization because he hopes that he might be -able to transfer to somebody else, perhaps he does not very much -care whom, some part of the burden of the charges which he has -to pay for railway carriage, will find that his next neighbor at -a meeting of the party is a man who has joined for quite other -reasons, with the object, indeed, of ultimately seizing for the -State some part of his neighbor, the trader's, property, which -the latter was reckoning to increase at the expense of, amongst -others, his neighbor the Socialist, through the plan of railway -nationalization. But the homogeneity of the party need not concern -us, nor the question whether each and every member of it would be -actuated by a single-minded desire for the public good. The forces -making for honesty and equity in the treatment of existing interests -would, I think, so overwhelmingly outweigh the influences tending -in a contrary direction that we need not complicate the question by -importing into it a discussion as to whether adequate compensation -should or would be paid to existing owners in the event of the State -deciding to acquire their property. Fair and adequate compensation -for existing interests may be taken for granted. - -But although compensation can be paid for property, it cannot be -paid to the general community who would suffer in the event of the -administration and operation of railways under State management being -less efficient than under private management. If a mistake be made, -all would suffer, and their sufferings would not, and could not, be -mitigated by compensation in any form. - -It may be useful at the outset to consider what has led to the -question of railway nationalization in this country being discussed. - -The origin and the causes of those movements in public opinion which -bring about great constitutional and social changes are frequently -most difficult to trace, especially by contemporary observers. For -a full understanding of such movements, it is necessary to wait for -the historian's point of view, and to survey a wider field than is -possible whilst the events are occurring, when much of the material -for final judgment as to the causes in operation is concealed in an -undisclosed future. - -That there is a movement in progress tending to the nationalization -of railways in England is apparent to every thoughtful observer of -the times. But whence does this movement come, and what are its -principal causes? We are able to identify some of them, less able to -weigh the relative importance of each, still less able to foretell -the ultimate share which each will have on the future course of -development, which will depend on the direction taken by other -movements in public opinion which, at the moment, may seem to be -entirely independent of all connection with the particular movement -we are considering. - -I will refer to a few of the causes which seem to me to be most -prominently at work, but I will not attempt to state them in the -order of their importance. I will merely enumerate those which are -plainly discernible as existing in some shape or other. - -The first I will name, though it may not be the most influential, is -the existence of a certain amount of dissatisfaction with the present -state of railway administration. I suppose that if railway services -were as good as possible, charges as cheap as possible, profits as -high as possible, and the management as perfect as it is possible -for railway management to be, and these conditions were generally -admitted to exist, the natural instinct to leave well alone would -prevent any proposal for nationalization from obtaining a hearing. - -It must be conceded that there is a certain feeling of -dissatisfaction, superficial and indefinite though it be, to -which advocates of nationalization, whose schemes originate in -considerations which have no relation either to the excellence or -to the imperfections of railway arrangements, are able to appeal -in the pursuit of their aims. It is not that many people really -think that our railways do not, as a whole, serve the public well, -whatever individuals may say in moments of haste. Hut complaints are -sufficiently numerous to have a real importance as an influence on -public opinion. And, unfortunately, their influence is to a large -extent independent of their justice. The existence of criticism, -which, after all, is only another name for difference of opinion, is -inevitable, and probably would be inevitable under the most perfect -system of railway management which the world has seen or ever can -see. State railways would not be immaculate. The nature of railway -business lays it open, to an exceptional extent, to the unpopularity -which unavoidably gathers round every institution on which there -is universal dependence. Providence itself does not wholly escape -unpopularity. No other industry is comparable with the railway -industry in the close dependence upon it of the vast majority of -the people. The necessity for transport services penetrates more -frequently and more deeply into the lives and habits of the people -than any of the other prime necessities of civilization. The need for -transport is a tyranny. All tyrants are unpopular. And the tyranny -of a need is apt to beget, by an illogical transposition of ideas, a -dislike of those who are responsible for supplying the need. People -are conscious of grievances, or, let us say, unsupplied wants. They -cannot measure the range of possibility which limits the supply of -those wants or remedies for those grievances. They constantly wish -for the impossible, but have not sufficient knowledge to distinguish -between the possible and the impossible. Defects which cannot be -remedied are generally condemned with more emphasis than those which -are due to mismanagement. It is irrelevant to consider whether the -dissatisfaction to which I have referred is justified or not. Whether -well or ill founded, it must be set down as one of the causes of the -movement for nationalization. - -The second cause I would mention is a belief, growing from a -suspicion into a conviction under the stimulus of repeated failures -in control experiments, that it is impossible for any Government, by -any legislative or executive action in any form, to exercise useful -and effective control over railways. People turn in despair from -ideas of regulation and control to ideas of ownership. - -The third cause is the prevalence of that feeling which, for want -of a better name, I will call district jealousy. The competition of -privately-owned railways undoubtedly does create inequalities. It -would be mere affectation to pretend that the railway accommodation -and facilities afforded to all places and all districts are equal -in merit and value. The less favored districts see other districts -enjoying superior facilities. They do not allow for differences in -conditions which, in some cases, explain and justify the differences -of service. I say in some cases, because it would be impossible to -deny that in other cases the comparative inferiority of railway -facilities cannot be explained away by inevitable determining -conditions. Hence district jealousy arises and a desire for -uniformity, such uniformity as it is hoped a State system of railways -would give. - -The fourth cause I would name is the example of other countries. -This is affecting men's judgments with great force. We are slow to -be moved by foreign example. But there is an increasing tendency -to submit to international influences, and foreign example in this -matter does, on the whole, point to national railways becoming the -generally accepted system. - -The fifth cause is the one which, I think, has more to do with the -initiation of the discussion of nationalization schemes than any -other cause. This is the general tendency of the time to Socialistic -experiments. If there were no Socialists, and no Socialism in the -thought of the age, there would, we may safely conclude, be no talk -of nationalization of railways. It is the Socialistic propaganda, and -the influence which that propaganda has had on many minds, which more -than anything else has brought the question of the nationalization of -railways within the range of practical discussion. - -The sixth cause is the anxious search for more revenue for the -State. National expenditure has grown to such enormous and alarming -dimensions that the provision of revenue to meet it has become a -serious and urgent difficulty. A Chancellor of the Exchequer on -the lookout for cash has not been able to resist the attraction of -railways as a source of revenue for the State. He has noted the -various influences at work which are tending to bring the question -of railway nationalization to the front, has looked with envy at the -large revenue which Prussian railways yield to the State, and has -at least gone the length of asking himself the question, within the -hearing of reporters, whether he ought not to encourage and to take -advantage of a state of opinion which might conceivably be worked -upon so as to create a majority prepared to approve the principle of -State ownership of what might be a highly lucrative State monopoly. - -The mileage of railways open for traffic in the United Kingdom at -the end of each of the last four decades up to 1907 is shown in the -following table: - - Mileage open Increase in Average increase - Year. for traffic. ten years. per annum. - - 1877 17,077 -- -- - 1887 19,578 2,501 250.1 - 1897 21,433 1,855 185.5 - 1907 23,108 1,675 167.5 - -The growth has been slow and decreases with each decade. It is -probably true that the period of construction has nearly come -to an end. Future additions to the mileage are not likely to be -either large or of substantial importance. This rather indicates -the present as a suitable time for considering a change of system. -The considerations which are applicable to what I may call the age -of construction are very different from those which become most -important in the age of operation. - -It would probably be accepted as indisputable that in a country like -England, where capital is plentiful and enterprise active, the system -of leaving the construction of railways to private enterprise is the -best system. - -Whatever may be thought as to the respective merits of private and -public ownership, it cannot be denied that private enterprise does -take more risk than any Government is likely to do, except under -pressure of military necessities. The hope of gain is the strongest -motive for enterprise, and this desire operates more strongly on the -private citizen than it does on the State. - -The growth of railway mileage during the age of construction in any -country is promoted by the constant influence and moving force of -those incentives which act on capitalists. The spur of competition -is always in active operation. Then there are the very powerful -professional influences which are constantly at work to induce -capitalists to spend their money on works and enterprises which -afford professional work, even if they do not subsequently provide -dividends. - -Theoretically; no doubt, railways promoted by private enterprise -tend to the favoring of particular localities at the expense of -other localities. Perhaps it is right that the stronger should grow -at the expense of the weaker, but, at all events, it is inevitable. -You cannot expect private competitors to think of anything but their -own interests. And if this be so, you cannot expect from a system in -which private interests predominate the same consideration of general -design, from the point of view of the interests of the whole country, -as from a system which places public in front of private interests. - -It is difficult to deny that the miscellaneous and unequal activities -of private enterprise fail in the absence of some central guidance -to produce the best results so far as harmony and completeness of -design are concerned. In England railway construction has not been, -as in America, almost entirely free from any public control. We -have had the control, I think the most salutary and useful control -of Parliament, so far as it has gone, both over location and -capitalization. But it has not gone far. Although there has been a -certain amount of control, there has been practically no guidance. -The control, under the system of private bill legislation, has been -very ineffectual except as regards capitalization. It has been mainly -negative; never constructive. All that Parliament could practically -do was to prohibit the making of particular railways which aroused -opposition from some landowning or railway interests powerful enough -to oppose and wealthy enough to pay the heavy costs of opposition. -Private interests have been protected, but the general interest has, -in the main, been ignored. - -But whilst conceding that it would have been a great advantage if -the vagaries of private enterprise had been more restrained by some -prudent, general guidance, I think that the chief public requirement -during the age of construction is that as much mileage as possible -should be constructed; and I submit, as a true conclusion on the -point I am discussing, that, as regards the age of construction, at -all events, England has derived incalculable benefit from the fact -that the railway system has been made by private enterprise. But the -problem of working the railway system after it has been constructed -is, I admit, essentially different from the problem of securing its -construction. - -My subject is not one which admits of discussion except on very -general lines. Our views on it must necessarily be formed under the -influence of the opinions we hold as to the legitimate functions of -the State. It has been truly said that no country has ever adopted -State ownership of railways from theoretical considerations. In -each and every instance there were some practical reasons, based on -military necessities or concrete and pressing economic conditions to -meet which State ownership was accepted, not as a system desirable -in itself, but as an expedient which, in the circumstances, was -considered to be the best practical solution of difficulties which -stood in the way of the satisfactory development of railways. -But whilst agreeing with this as a true historical statement, I -doubt whether theory can be entirely excluded from a statement -of the genesis of national railway systems. In a country where -Individualist opinions prevail, as I think at the present time they -do in England, no temptations, no pressure of circumstances short of -extreme national emergency, would induce people to face the evils -which the Individualist knows must result from the intrusion of -State action into matters of trade. This is theory, although those -who are influenced by it may think that it is founded on practical -experience. On the other hand, those persons who wish to secure -trading profits for the State even at the cost of taking commercial -risks, or who, when difficulties and obstacles arise in commercial -development, resort to the powers of the State to overcome them, -either by the imposition of taxes on the general community in -the interests of a class, or by handing over to State officials -the direction of an industry, instead of relying on the skill, -self-reliance, enterprise, energy, and character of the people, are -Socialists at heart, whether they know it or not, and are actuated -by the radical theory of a creed which, perhaps, most of them would -disavow. - -But, after all, the question is not whether State purchase would be -a step in the Socialist direction, but whether it would be a step -in the right direction. Why should we change? Are we suffering from -intolerable evils from which there is no other way of escape, or is -there some great national benefit to be derived from the change? - -The general case for nationalization, as put forward by its -advocates, rests on very few arguments, and it is not, I think, -unfair to describe these as being mainly assumptions, the accuracy -of which it is impossible to verify. I may summarize a few of these:-- - -(1) Government management would be more efficient and less costly -than private management. - -(2) Government management would primarily regard the interests of -the community and of the country as a whole, and the substitution of -that condition for the existing system under which the interests of -private trading concerns take first place in the thoughts and efforts -of those responsible for management would have the effect of securing -a more equal and more satisfactory development of the resources of -the country, and, as one writer expresses it with more than the usual -proportion of assumption in his statement, trade would be stimulated -under equitable, reasonable, and uniform systems of rates. - -(3) The change would result in the removal of most of the serious -complaints made against the existing administration of railways. - -(4) Those who refuse to look upon the matter as mainly a commercial -problem think and hope that new means would be found for the -satisfaction of the social needs of the nation if the railways were -at the disposal of the Government. - -(5) Experience of the economy resulting from large combinations in -other industries is invoked in support of the proposal to get rid -of the separate administrations of private railways. It is said -that the advantage of production on the largest scale by a single -corporation in place of production by a number of smaller units is -being verified by the experience of nearly every important trade and -industry. The principle has been recognized in the history of railway -development in this country by the amalgamation of large numbers of -small railways into the great railway systems which we now see, and -it is argued that a further step should now be taken in the same -direction. But a step involving the creation of so great a monopoly -as further large amalgamations would involve can only, it is thought, -be taken by the State. In this country the largest railway system -under one management is no greater than about 2,000 miles in length, -whereas in the United States of America railway systems covering -about 15,000 miles are now under the control of a single President -and a Board of Directors. It is said, therefore, that modern methods -of administration have made it feasible to direct the 23,000 miles of -railway in the United Kingdom efficiently and successfully by means -of one comprehensive organization, and probably if there is to be one -organization there would be no difference of opinion that the single -organization to own, control, and manage the railways must be the -State. - -Most of the principal objections are, I think, covered by the -following list:-- - -(1) State management would be less efficient than management under -private enterprise. - -(2) The extension of Government patronage, by placing at the disposal -of Government such a vast number of appointments to lucrative offices. - -(3) The risk of political corruption, not only in connection with the -exercise of patronage, but also in ordinary administration in the -settlement of questions relating to charges, wages, and services. - -(4) The danger that interested parties would, by political pressure, -compel the State to expend public money on unremunerative lines and -unremunerative services. - -(5) The contraction of the available field for private enterprise, -and hence the weakening of the foundation of all individual and -national progress. - -(6) The introduction of serious dangers in connection with labor -disputes between the Government and the large body of railway -servants. - -The subject has not been sufficiently long under public discussion to -make it easy to state fully the hopes of its supporters and the fears -of its opponents. Probably both are exaggerated. If one examines the -complaints made against the existing railway system, it is obvious -that many of these must exist under any system, whilst some are the -necessary accompaniments of every system into which competition -enters. But if competition is discarded in favor of monopoly it does -not need argument to show that this merely means a change from the -evils of competition to the evils of monopoly. No one would deny that -each system contains inherent and characteristic evils. The evil of -competition is waste; the evils of monopoly are stagnation and the -restriction of freedom. - -Hitherto, for the regulation of railways, reliance has been placed on -two factors--competition and control. Parliamentary action and public -opinion have veered about from one to the other, and the absence of -clear principle in the policy of the Legislature has introduced evils -which a more logical and consistent adherence either to the policy of -free competition on the one hand, or to the policy of strict control -on the other, would have avoided. That some regulation is necessary -all would admit. Railways sell transportation as a commodity, but the -nature of the business makes it impossible to secure the conditions -of absolutely free competition as in the case of other industries. -Hence the necessity for control, but every plan of control that has -been tried has proved practically inoperative and ineffective mainly -because it has endeavored to leave competition in operation, and it -is the evils which necessarily arise from competition which lead to -most of the complaints against railways. The inevitable weakness of -the dual system of competition and control is that control checks -competition just where it would be useful in the public interest, and -competition nullifies control just where it could be advantageously -applied. - -Under no system could we expect railways to be free from complaints. -They arise equally from the nature of the business and the nature -of the customers. But with a view to seeing whether State ownership -would remedy the complaints that exist, let us try to understand as -clearly as possible what the complaints are. The Chancellor of the -Exchequer (Mr. Lloyd-George), speaking to a deputation of traders -in 1906, when he was President of the Board of Trade, said that he -was impressed with the "great and growing discontent with the whole -system." - -Now what are the causes of the present discontent? Is it great? Is -it growing? These are questions very difficult to answer. But there -are some useful data available for the answer. The way has been made -plain and easy for complainants against railways. Every encouragement -and every facility has been afforded to them. A special Court has -been created--the Railway and Canal Commission--the constitution of -which was carefully framed so as to encourage anyone with a grievance -against railways to hope that he would get a sympathetic hearing -of his case. The applications to that Court were so few that those -people who cannot bring themselves to believe that the number of -real, as distinct from imaginary, grievances against railways are -remarkably few, said that the public were deterred from bringing -complaints forward by the expense of litigation before the Railway -Commissioners. So, to render the path of the complainant still -easier, a procedure was introduced which is unique for simplicity -and cheapness. All, without distinction, who had any complaint or -grievance of any sort or kind against any railway or canal company, -were invited to come and lay the same before a Department of -Government, the Board of Trade, who practically promised to use their -influence to secure an amicable adjustment of any differences. This -procedure is so simple, so sweeping, so all-embracing, so encouraging -to complainants, and has, on the whole, been exercised by the Board -of Trade with so much tact and success, that its records should -supply the information we are seeking. - -In view of these efforts to get every aggrieved or discontented -person to come forward and disclose his complaint, is it possible to -imagine that there are now any concealed complaints? It is often said -that traders will not complain, that they are afraid of rousing the -hostility of those terrible tyrants, the railways, whose power in -England, at any rate, whatever it may be in America, is ludicrously -exaggerated. It is true that a sensible trader who has a fair case -does not fly with it to the Board of Trade. He submits it to the -railway officers in the ordinary daily course of business, and almost -invariably gets the matter adjusted. But I do not believe that there -is any trader who would be deterred from submitting a complaint to -the Board of Trade by any feeling of fear. On the contrary, traders -in these days suffer from an excess of boldness. If a trader is -dissatisfied with any railway charge, he simply refuses to pay, -and only those who have experience of the daily conduct of railway -business can know how common, and unfortunately how effective, this -remedy is. - -The Board of Trade make an annual report to Parliament of all -complaints made to them under their conciliation jurisdiction, and -I think the contents of these reports may fairly be relied on as -presenting a complete view of the kind of complaints that exist -against railways. A useful table is given in the tenth report of the -Board of Trade, issued in July last, showing the total number of -complaints for ten years, classified according to their nature as -follows: - - No. per - Total. annum. - - 1. Rates unreasonable or excessive in - themselves or which were unreasonably - increased 715 71.5 - - 2. Undue preference 352 35.2 - - 3. Sundry complaints 510 51 - ----- ----- - 1,577 157.7 - -Of the total number forty-eight were complaints against canal -companies, but these are not separated in the classification. - -Surely the above is a remarkable table, considering the vast -aggregate of business and the facilities offered for complaints. Only -1,529 complaints against railways, or an average of about 153 per -annum, have been found to exist. - -Then look at the results of these complaints. These are given -in another table, and only 573 complaints, or an average of 57 -per annum, are entered as resulting in the complainants finally -expressing themselves as dissatisfied. - -Services for which the aggregate payment amounts to 120 millions -sterling per annum are rendered, and yet there are only an average -of fifty-seven cases per annum of dissatisfied complainants to the -most open, most favorable, and least costly tribunal in the world for -hearing complaints against railways. - -Now let us look at the nature of the complaints made. Would State -ownership remedy any of these complaints? I set aside the 510 -cases of miscellaneous complaints about delay in transit and other -minor matters, because it is obvious that complaints about such -matters would not disappear under any conceivable system of railway -management. - -Practically all other complaints group themselves under two heads: - - 1. Excessive rates. - - 2. Undue preference. - -The complaint that railway rates are excessive generally takes the -shape of a comparison of the charges on some foreign railway. Now, I -confess that it is very difficult to meet such allegations, because -of the difficulty of presenting all the conditions of which account -must be taken in order to make a fair and sound comparison, and also -owing to the absence of adequate data or materials in the published -statistics of English railways. - -A general allegation that English rates are higher than those charged -in some countries cannot even be discussed, because the factors -needed for the comparison are not available. Are they in fact -higher is a question the answer to which must precede discussion -as to reasons and explanations. The facts in regard to the average -length of haul, the average rate per ton mile for different kinds -of traffic, or the average charge per passenger mile, and general -information as to the nature of commodities carried, speed of -transit, and services rendered for the rates charged must be -ascertained before any comparison is possible, and these facts are -not ascertainable for English railways. - -My belief is that having regard to the capital expended on -construction of railways, English railway rates are not excessive -for the services rendered, and I greatly doubt whether, after -making proper allowances for differences in capital cost of railway -accommodation, and for other essentially different conditions, rates -in any country are lower, comparing like with like, than railway -rates in England. This is an issue of fact. It lies at the threshold -of any inquiry into the subject of railway rates, and I confess I do -not see how much progress can be made with any discussion which turns -on assertions as to the relative dearness of English railway rates -until adequate materials are available for a sound comparison. - -It is true beyond question that English railways have cost more -to construct than the railways of any other country. The capital -expenditure of all railways in England is represented by the figure -of about £56,000 per mile as compared with about £21,000, which is -the corresponding figure for German railways, and about £12,000 per -mile for American railways. Railway proprietors in England are not -responsible for the high capital cost. They were forced by law, -and by custom powerful as law, to pay monstrously inflated values -for their lands. Burden upon burden has been heaped upon them by -the action of the Legislature, by the requirements of Government -departments, and by the exactions of public opinion. They have borne -heavy losses in being compelled to spend capital without regard to -their ability to secure adequate return upon it, and assuredly no -reckoning is due from them to the public in this matter. The reverse -would be more true. - -The total capitalization of railways in the United Kingdom in the -year 1907, as given in the Board of Trade Returns, was 1,294 millions -sterling, of which 196 millions represents nominal additions. The -net earnings (some of which, however, arose from miscellaneous -sources independent of the operation of the railways) amounted to -£44,940,000, or 3.47 per cent on the nominal capital. Out of a total -of 1,294 millions sterling, 136 millions of loan and preferential -capital received interest or dividends in excess of 4 per cent. -This presumably arose from the insecurity of capital, involving the -payment of a high rate of interest or dividend. One hundred and -eighty-one millions of ordinary capital received dividends in excess -of 4 per cent. per annum. The capital receiving interest or dividends -in excess of 4 per cent. per annum is, therefore, 317 millions, or -24.5 per cent. of the total. It cannot be said on these figures that -the interest received by those who provided the capital for the -railways is excessive. - -But would it be possible for State railways to reduce the amount -included in railway rates for interest and dividends? It cannot be -denied that our present system does involve the needless duplication -of railway accommodation--the inevitable waste of competition. There -is the constant endeavor to divert traffic, the corresponding effort -to keep it. Capital is wasted, but public facilities are increased. -The public could certainly secure by monopoly the saving of waste, -but only at the cost of losing the advantages, such as they are, -of getting more than they pay for. I suspect that on a broad and -comprehensive view these advantages are not worth to the community -the waste of capital involved in providing them. But it is rather -late in the day to adopt this view. Enormous waste has already been -incurred, and it must be remembered that this drain on the resources -of the nation is not likely to be so serious in the future as it has -been in the past, even if the system of leaving railways to private -enterprise is not abandoned. - -The private ownership of railways provides for the absorption of -the wastage of capital in a manner which would be impossible under -State ownership. Eighty-eight millions of the capital expenditure -on railways goes without dividend, and 151 millions has to be -content with a return less than 2 per cent per annum. Although -this undoubtedly represents a loss to the community, the loss is -distributed. It falls on those who voluntarily spent their money in -the hope of gain, and lost it. The State cannot lose capital in this -way. All expenditure incurred by the State would be represented by -money borrowed on the public credit, and the interest would have to -be paid in full, whether the expenditure proved remunerative or the -reverse. - -That there would be savings, and large savings, under State -management I would not deny, but that is because the railways would -be worked as a monopoly, and not because they would be worked by -the State. The same and still larger economies in working could be -effected under private enterprise if competition were abandoned -in favor of universal combination or monopoly. The whole question -depends on the waste of competition. Each railway company works for -its own route. The result is that unnecessary train mileage is run, -and train loads are lessened. The secret of success, the foundation -of all economy in railway working, lies in securing the largest -possible train loads. This is a simple rule, but it embodies a -universal truth. If those responsible for the handling and carriage -of railway traffic could work with a single eye to economical -results, and in all cases forward traffic by the routes which -yielded the best working results, great economies could undoubtedly -be effected. This consideration does indicate that a source of -improvements in railway results would be open to a railway system -under Government management which is not available for privately -owned railways competing with one another. And in fairness one -must admit that this source of economy obtainable only under the -conditions of monopoly must be set down as a point to the credit of -State ownership. - -Many of the complaints against railway rates as excessive are really, -when analyzed, complaints of undue preference. They are based on -comparisons with other rates, and, in nearly every case, it is the -factor of competition which lies at the root of the difficulty. This -is the natural result of our mixed system of competition and control. -In principle all would admit that there should be equal treatment on -railways. But what is and what ought to be equality are questions in -regard to which there is much room for difference of opinion. - -To what extent does the law really require equality? The Railway -and Canal Traffic Act, 1888, enacts in substance that a railway -company shall not make any difference in the treatment of traders -which shall amount to an undue preference. It permits the grouping -of places situated at various places from any point of destination -or departure of merchandise, provided that the distances shall not -be unreasonable, and that the rates charged and the places grouped -together shall not be so grouped as to create an undue preference. -Now, in this legislation there is no definite or tangible principle. -The Legislature has not really made up its mind how traders should -be treated. It simply says that any preference given to one trader -over another shall not be undue, but the interpretation of the word -undue is left open. The prohibition of undue preference only applies -to the actions of one company on its own railway, and, therefore, -covers but a small part of the matter. A trader desiring to have his -goods sent to some market which is prejudiced by the competition of -goods carried to the same market from some other place by some other -railway which, for some reason or other, good or bad, gives better -treatment to its customers--a prejudice far more likely to happen, -in fact, than one arising from differences in treatment on the same -railway--is not protected or assisted by any legislation. - -The question may be asked whether national railways would or could -cure this somewhat indefinite position? - -If railways were nationalized, would it not be necessary, and would -it be practicable to settle the principles to be applied in treating -different districts in competition with one another? At present there -are no principles if the districts are served by different railways. -If one railway serves two districts, the law provides that such -railway shall not mete out unequal treatment so as to constitute -undue preference, whatever that may mean, but if these two competing -districts are served by different railways, the law shrinks from any -interference. - -Now, in practically every case the favorable treatment complained -of, due or undue, as the case may be, is forced upon the railway -company by competition in some shape or other. It may be competition -of other carriers by sea or by land, or it may be the necessity -for enabling one district to compete with another less favorably -situated. Such consideration for the commercial needs of districts -in relatively advantageous positions is permitted and encouraged -when it is afforded by different railways, though rendered difficult -when one railway serves the competing districts. What would State -railways do? If the law of undue preference now operative within -the limits of particular railway systems became, by reason of State -ownership, applicable to all railways, there would be a stupendous -disturbance of existing trading conditions. Instead of State purchase -diminishing the complaints of undue preference, it would be the -signal for the commencement of fierce conflicts between districts. It -would be necessary to face the question whether and to what extent -geographical advantage of position should be recognized in fixing -railway rates. The centers of production and consumption in England -have been fixed away back in commercial history, and from a railway -point of view these have largely to be taken as facts beyond control. -Facilities for reaching the populous centers of consumption are of -vital importance to producers and importers. Would State railways -be compelled by the pressure of interested landowners and others to -fix rates for agricultural produce and manufactured articles and for -import and export trade rigidly in proportion to distance? - -It is probable that a bitter controversy would arise on the question, -and discontent with the railway arrangements which have gradually, -and with very general approval, been established in England, instead -of being lessened, would be greatly extended if we embarked on the -experiment of State ownership. - -Would the management of railways by Government officials be, on the -whole, better than management by the officers of private corporations -working for profit? - -That is the question which lies at the root of the subject which -we are discussing. So far as I am concerned, I have no inclination -to jibe at the management of those enterprises which are conducted -by the State and municipal bodies. I do not think that the postal -services would be better managed if they were under private control, -probably not so well. Municipal tramways show the weakness of public -management, chiefly in the tendency towards fixing charges at figures -which sacrifice the interests of ratepayers to the interests of the -working classes who possess votes, but who generally occupy houses -in respect of which they do not directly pay rates. That there would -be very grave risks in substituting State management for commercial -management of railways must, I think, be generally admitted. - -But some of the principal arguments against municipal trading do -not seem to me to apply to the working of railways by the State. Of -course, the objection of those who think that no public authority -should become directly responsible for the management of any -commercial undertaking is as valid against State working of railways -as against municipal working of tramways, or municipal supply of -electricity for light and power. In both cases there is a restriction -of the field of private enterprise, and that is enough for the -out-and-out Individualist. He is convinced, on general grounds, that -all commercial undertakings should be left exclusively to private -enterprise. But those who are not prepared to settle such matters -on any general theory, and who prefer to weigh the advantages and -disadvantages in each case, see that many of the reasons against -municipal trading cannot fairly be urged against the national -ownership of railways. Municipal trading is indefensible because it -unfairly competes with private traders. Competition in commerce must -be fair competition on equal terms, otherwise it fails to secure any -of the economic advantages which do undoubtedly flow from the free -competition of private traders. A commercial undertaking must be -worked for a commercial profit. A municipality raises money on public -credit, and thus gains an advantage over every private competitor. It -also fixes scales of charges and rates of wages without reference, -or, at all events, without exclusive reference, to considerations of -profit, and thus makes it impossible for any competing trader to earn -a legitimate commercial profit. And to make it possible to do this it -uses the power of taxation, and levies rates on the competing traders -themselves, so that the municipal business can be carried on without -the commercial profit which the private trader must earn in order to -live. No one can say that this is fair competition. - -Then municipal bodies are, from their composition, unsuitable for -carrying on commercial business. Their organization cannot be adapted -to commercial management. The individuals who serve on these bodies -have neither the time nor, as a collective body, the capacity for -managing the business on which they embark with efficiency and -success. The difference in results due to the difference between good -and bad management is paid for out of the rates. - -These considerations do not, however, apply with equal force to the -State management of railways. The State would have a complete and -universal monopoly. There would be no private competition left, -except, of course, competition by sea or by tramway or any other mode -of conveyance which can compete with railways. - -Then there would not be, it may be assumed, any body like a municipal -council who would practically interfere with the management. There -might be Advisory Councils, like the Prussian State Railway Councils, -and, of course, there would be a Minister of State responsible to -Parliament for the railway administration, and Parliament itself, -already, one may remark in passing, clogged and overburdened with -work. But it is certain that whatever the details of the organization -adopted might be, the whole of the management would practically be -left to the expert permanent officials of the railways. There is no -reason to doubt that railway officers would serve the State with as -much loyalty and with as great a measure of success as they now serve -the proprietors. Instead of being responsible to boards of directors -and shareholders, they would be responsible to a certain number of -officers of State, probably, indeed necessarily, to a large extent -recruited from their own ranks, and I do not think that the change -would result in much practical difference so far as the work of those -who really carry out the duties of management are concerned. The only -difference would be that these officers would have in view that they -were working for the State instead of for shareholders. - -There can be little doubt that if railways were nationalized they -would be used as a field for many kinds of social experiments. The -combination of philanthropy with business is generally regarded -with suspicion, but the conversion of the railway manager into -a social reformer would, I think, arouse serious and legitimate -alarm. The certainty which we now possess that the action of any -railway company, whether it be wise or foolish in itself, is wholly -commercial in its motives and its aims, is a valuable safeguard. But -if railway policy were to become the medium for the promotion of -social or even economic theories under the guidance of politicians, -would not this be a most alarming peril to trading and industrial -interests? One group might insist, by political pressure, that the -standard of wages should be maintained at a higher level than could -be commercially justified. Another group, or many groups, might -devote their efforts to securing the construction of railways in -districts which could not support them with sufficient traffic, with -the result of burdening the railway system with many unremunerative -branches for which either traders, passengers, or the taxpayers -throughout the country would have to pay. The policy of others would -be to make suburban railways at enormous cost, and run cheap trains -to serve the population resident in large cities, regardless whether -such railways or trains were self-supporting or not. In this policy -they would have the ardent and influential support of the owners of -suburban land, who would rejoice in the increase of their rents, -brought about by the expenditure of public money in creating railway -facilities on uncommercial terms. These are not fanciful dangers. -They are the results which we may feel sure would inevitably follow -the nationalization of our railways, and the advantages to be gained -from State management would need to be very great to compensate for -these burdens. - -Another aspect of the question which requires the gravest -consideration is that which concerns the position of the State as -an employer of labor. There are upwards of 620,000 railway officers -and servants. The State would become the direct employer of that -huge army, and would have to settle all questions relating to hours, -wages, and other conditions of service. If a railway company is -unable to settle differences with its men the ultimate resort of the -men is the withdrawal of their labor, whilst the company are free -to employ other men who are willing to accept their conditions of -employment. Any railway strike on a large scale is a dire calamity to -trade and to the public, but if one were compelled to consider the -possibility of a general strike on a national railway system, even -the deplorable results which accompany strikes on privately-owned -railways would seem comparatively insignificant. Probably a railway -department of Government would not urge the adoption of compulsory -arbitration, if they were themselves concerned, with as much -equanimity as they do in the case of strikes on private railways. It -is true that in this matter the advocates of State railways can point -to the comparative absence of labor conflicts in connection with the -services now under Government control, but municipal undertakings -have not been so successful in avoiding labor disputes, and in many -cases have secured even the degree of immunity from such conflicts -which they enjoy by the concession of terms of employment which -constitute heavy burdens on the ratepayers. It seems to me that the -danger of serious labor disputes cannot be put aside, and I confess -that I am unable to see any safe way of meeting the objection to -State ownership on the ground that the State ought to limit, as far -as possible, its liability to become directly concerned in such -disputes. - -In conclusion, I would say that I have felt unable to take up a -partisan attitude on the question. For many years past both my -studies on railway subjects and my practical experience have led me -to a convinced belief in the advantages of well-regulated monopoly, -and I am unable wholly to disapprove of a scheme which would secure -for the country the advantages of a system of well-regulated monopoly -in which I believe, even although it should come in the guise of -State ownership. - -Competition, in my judgment, creates more evils than it cures, -especially the half-hearted and imperfect competition which exists in -England so far as railways are concerned, which cannot be regarded as -free competition on a commercial basis. - -I recognize that it is impracticable to secure unification or any -very extensive or far-reaching combinations of railways under -our system of private ownership. The public would not tolerate -uncontrolled railways under private management, and I doubt whether -any form of control which has yet been devised, or is likely to -be devised, combined with partial competition, can give entirely -satisfactory results. That there are grave dangers and risks in the -public ownership of railways I fully admit; indeed, so grave are -they, that I think he would be a very bold minister who would venture -to bring forward, under Government sanction, a proposal for the -nationalization of our railways. The existence of such a huge amount -of Government patronage would open the door to political corruption. -The existence of such an enormous body of Government servants -possessing the franchise--and I confess it seems to me impracticable -to hope that any measure could be carried subject to disfranchisement -of Government servants--would imperil the financial stability of -the railway system, and introduce new and very serious sources of -weakness and danger into the body politic. - -The risk of loss from the charging of unduly low rates under pressure -from the influential body of traders seeking to enrich themselves -at the expense of the general community seems to me a risk which no -thoughtful man can ignore. No expedients for checking and restraining -political influence so that it could not reach or sway the decision -of the officers of State responsible for railway management seem to -me practicable under our democratic constitution. - -If the nation owns the railways, the nation must take all the risks -of State ownership, and we could only trust that the existing -purity of our politics and the common sense, honorable character, -and long experience in self-government of the English people would -suffice to protect the commonwealth from these perils resulting in -serious harm. But whatever may be the issue of the consideration of -the question of State purchase of railways, I am prepared to believe -that English railways will continue, whether under State management -or under private management, to deserve the praise which Mr. W. M. -Acworth expressed in his recent address as President of the Economic -Section of the British Association in Dublin, by saying that in -his judgment--after, I may remind you, a fuller study of railway -conditions in all countries of the world than has been given to the -subject of many men in England--that "English railways are, on the -whole, among the best, if not actually the best, in the world." - - - - -CONCERNING ADVANCES IN RAILWAY RATES - -FEBRUARY 8, 1909.--Ordered to be printed. - -Mr. ELKINS, from the Committee on Interstate Commerce, submitted the -following - - ADVERSE REPORT. - - [To accompany S. 423.] - - -The Committee on Interstate Commerce, to which was referred -Senate bill 423 "To amend section 6 of an act entitled 'An act to -regulate commerce,' approved February fourth, eighteen hundred and -eighty-seven, and acts amendatory thereof," respectfully reports said -bill adversely, and recommends its indefinite postponement. - -The amendment proposed to section 6 will be found on page 4, -commencing on line 10, and ending on page 5, on line 8, of the bill, -as follows: - - _Provided further_, That at any time prior to the expiration of - the notice herein required to be given of a proposed increase - of rates, fares, or charges, or of joint rates, fares, or - charges, any shipper or any number of shippers, jointly or - severally, may file with the commission a protest, in writing, - against the proposed increase in whole or in part, stating - succinctly the grounds of his or their objections to the - proposed change. The filing of such protest shall operate to - continue in force the then existing rate or rates, fare or - fares, charge or charges, proposed to be changed and protested - against as aforesaid, until the reasonableness of the rate - or rates, fare or fares, charge or charges, proposed to be - substituted shall have been determined by the commission. Upon - the filing of such protest, a copy thereof shall be mailed by - the Secretary of the commission to the carrier or carriers - proposing the change and thereafter the commission shall - proceed to hear and determine the matter in all respects as it - is required to do by sections thirteen and fifteen of this act, - in case of a complaint made because of anything done or omitted - to be done by any common carrier, as provided in said section - thirteen; but throughout the proceeding, the burden of proof - shall be on the carrier proposing the change to show that the - rate, fare or charge proposed to be substituted is just and - reasonable. - -An amendment was offered in the committee which would modify -the original proposition of the amendment, by leaving it to the -discretion of the Interstate Commerce Commission, upon the filing -of a protest against the proposed increase of rates, to determine -whether the schedule filed should go into effect at the end of -thirty days or should be suspended by order of the commission until -after final hearing, upon the question as to whether the advance was -reasonable. - -This proposed amendment to the amendment of the 6th section, although -somewhat modifying its effect, did not alter the principle upon -which the original amendment rested, or remove the objections that -influenced the committee in reporting the bill adversely. The reasons -which control the action of the committee may be briefly stated as -follows: - - -REVIEW OF QUESTION BEFORE COMMITTEE. - -1. From 1887 Congress, by the act then passed "to regulate commerce" -through all of its amendments to that act, including the act of June -29, 1906 (which was passed after the most elaborate investigation of -the entire subject and the fullest debate), has adhered to a fixed -policy in its legislation upon this subject. It has declared its -constitutional right to regulate the transportation of persons and -property in interstate and foreign commerce, while, at the same time, -it has recognized the right of the owners of the instrumentalities -of commerce to control and manage their properties subject to the -supervision and limitation imposed by the regulating statute, that -the charges, fares and rates must be fair, just, and reasonable; -that neither discrimination as to person or place must be found in -the schedules; and that no device of any character should result in -unlawful preference between shippers. - -It has in all these acts recognized the right of the responsible -managers of the transportation interests of the country to fix -the rates for transportation, as upon its revenue must rest the -efficiency of its service to the public and the value of its property -to its holders, subject only to those wise limitations which prohibit -the exercise of these property rights to the injury of the public. -Congress has appreciated the magnitude of the vast interest affected -by such legislation. With 230,000 miles of track, with millions of -rates published in accordance with the statute, with changes of rates -numbering between 600 and 700 a day, and reaching the enormous sum of -225,000 a year, it has, with the practical experience of twenty-two -years, refused to take the initiation of rates from the carrier and -impose it upon its administrative tribunal. Congress and the Supreme -Court have adopted the construction of the act to regulate commerce, -announced by Judge Jackson (Interstate Commerce Commission _v._ B. & -O. R. R. Co., 43 Fed. Rep., 37, and affirmed, 145 U. S., 263): - - Subject to the two leading prohibitions that their charges - shall not be unjust or unreasonable, and that they shall not - unjustly discriminate, so as to give undue preference or - disadvantage to persons or traffic similarly circumstanced, the - act to regulate commerce leaves common carriers as they were - at the common law, free to make special contracts looking to - the increase of their business, to classify their traffic, to - adjust and apportion their rates so as to meet the necessities - of commerce, same principles, which are regarded as sound, and - adopted in other trades and pursuits. - -This policy, we believe, has been approved by the country during that -period. Pending the elaborate investigation of this subject prior to -the passage of the act of June 29, 1906, no crystallized sentiment -was manifested, either in the press or during the hearings, that -indicated a public sentiment that this policy should be departed -from. Since this bill has been before your committee no such public -sentiment has been shown to exist by those who appeared before it. - -The conferring upon the commission the power to suspend a rate -advanced, either upon the filing of a protest by a shipper or in the -discretion of the commission, taken in connection with the provision -of the statute which gives to the commission the power to fix a rate -and to designate the time, not longer than two years, that it should -remain in force, would ultimately turn over to that administrative -body the function of initiating the rates of the entire country. It -would offer a premium to every shipper to enter a protest to the -advance of rates, whether they were reasonable or unreasonable, even -if discretion was vested in the commission. The protest, prepared -by skilled attorneys, presenting a prima facie case of unreasonable -advance of the rate, with no opportunity for an investigation before -it must be acted upon, an official body, on which was imposed the -responsibility to act would be constrained to suspend the rate until -a final determination of the complaint. - -The existing law permits any shipper to protest any rate that has -gone into effect, the hearing on the protest is made without formal -pleadings, and the commission is authorized then to determine -the question whether the rate put in effect by the carrier was a -reasonable rate or not, and, if not, to make the rate reasonable. So -far, in the practical operation of the act of June 29, 1906, this -provision of law has worked satisfactorily, and but comparatively -few of the decisions of the commission have been contested by -the carriers. Under existing law both parties are protected. If -the decision is that the rate is unreasonable a judgment may be -rendered in favor of the protestant for the difference between -what the commissioners determine is a reasonable rate and the rate -fixed by the carrier, with 6 per cent interest from the date of the -overcharge. If, on the other hand, this amendment should receive the -approval of Congress and the rate filed by the carrier should be -protested and then suspended by the commission (in the multiplicity -of duties imposed upon that tribunal), considerable time would elapse -before a final determination of the question could be reached. During -that period the carrier would be receiving only the old rate, and if -the commission finally decided that the advance was reasonable no -reparation in any way could be awarded. - -It was alleged before the committee that this last result would -not be very injurious to the carrier, for the reason that it would -be receiving the rate which it had fixed as a fair compensation -for the service performed prior to the change. The answer to this -seems reasonable, which was, that conditions had so changed that -it required an advance of the rate to meet those new conditions. -Otherwise the advanced rate would have no justification. That traffic -officials fully appreciate the fact that, with the watchful eyes of -every shipper affected by an advanced rate and the authority of the -commission to determine and fix a just and reasonable rate (as a -general rule), rates would not be advanced by such officials without -a belief upon their part that there were sufficient reasons to -sustain them, if protested. - -The attention of the committee has been called to the attitude of -the commission in its rulings upon the advance of rates, even where -the facts have shown that the rates have been lowered with a view -of developing a particular industry. In the case of the New Albany -Furniture Company against Mobile, Jackson and Kansas City Railroad -Company, etc., decided June 2, 1908, the commission held: - - "The rates were low before the increase, but having been - established, after prolonged negotiations, especially for the - purpose of permitting complainant to reach a particular market, - and in preference to making a readjustment in some other - direction or territory, and complainant having adjusted its - business thereto, defendants may not by an arbitrary advance - in those rates destroy complainant's business, there being no - evidence that the rates advanced were less than the cost of - service." - -A similar decision was rendered on the 1st of June in the case of -Western Oregon Lumber Manufacturers' Association against the Southern -Pacific Company. - -Knowledge of the views held by the commission by the traffic -officials and shippers will serve as the most effective check upon -the part of the carrier in advancing rates over those which have been -in existence for any considerable period of time, unless they can -support the advance by the most satisfactory reasons. - - -WOULD THE AMENDMENT PROPOSED BE IN CONFLICT WITH THE FIFTH AMENDMENT -TO THE CONSTITUTION? - -2. An objection urged to the approval of this amendment, even though -modified as suggested in committee, was that it conflicted with the -fifth amendment in depriving the carrier of its property without due -process of law. - -The existing law authorizes carriers to make reasonable rates. -Congress recognizing the right of control by the carrier has provided -reasonable regulations to safeguard the interests of the public in -the exercise of that right. It authorizes a protest after the rate -had gone into effect; it provides for a full hearing after notice by -the commission; it has further extended the time when the rate shall -be made effective to thirty days from the filing of the schedule -with the commission. These were held to be reasonable regulations, -but it is claimed that under the amendment proposed to the sixth -section, that if the rate is suspended from going into effect at the -end of the thirty days by a protest, there is no limitation in the -act fixing the time when the commission shall determine the question -of the reasonableness of the advance; that the period is therefore -indefinite, depending upon numerous considerations which might extend -the time when the rate would be effective, if it was finally held to -be reasonable, to six months or a year. - -That the act of suspension either by the operation of the statute or -by the commission is without notice or hearing to the carrier; that -Congress has no greater right to authorize an administrative tribunal -to suspend indefinitely the taking effect of a reasonable rate -without notice or hearing than it has the right to provide that an -administrative tribunal may authorize a rate which would yield less -than the cost of the service. - -It was decided in the case of Chicago, M. & St. P. R. R. Co. against -Minnesota, 134 U. S., 418, that the right to make a reasonable rate -was a property right. In the case of Interstate Commerce Commission -_v._ Chicago Great Western Ry., 209 U. S., 118, the Supreme Court -said: - - "It must be remembered that railroads are the private property - of their owners; that while from the public character of the - work in which they are engaged the public has the power to - prescribe rules for securing faithful and efficient service and - equality between shippers and communities, yet in no proper - sense is the public a general manager." - -Justice Brewer, in the above case, page 108, speaking for the court -said: - - "It must also be remembered that there is no presumption - of wrong arising from a change of rate by a carrier. The - presumption of honest intent and right conduct attends the - action of carriers as well as it does the action of other - corporations or individuals in their transactions in life. - Undoubtedly when rates are changed the carrier making the - change must, when properly called upon, be able to give a good - reason therefor, but the mere fact that a rate has been raised - carries with it no presumption that it was not rightfully done. - Those presumptions of good faith and integrity which have been - recognized for ages as attending human action have not been - overthrown by any legislation in respect to common carriers." - -It is claimed that the indefinite suspension of the rate until -final hearing is to deprive the carrier, if the rate advanced is -reasonable, of its right of property during the period of suspension, -without having given it any opportunity to be heard prior to the -act of suspension. Due process of law must precede, and should not -follow, the suspension. To set aside the carrier's act in fixing -the rate pending the investigation required by due process of law -is to deprive the carrier, pro tanto, of its property right to -charge a reasonable rate. The fact that the statute requires an -investigation after the suspension of the rate does not avoid the -constitutional inhibition, as that provision can only be satisfied -when the investigation precedes any disturbance of property rights. -The carrier is entitled to the investigation before it is restrained -in the _exercise_ of its property rights; the theory of the amendment -suggested is that the shipper is entitled to an investigation before -the carrier can _exercise_ its property rights. - -Those contending for this objection to the amendment assumed that -the indefinite suspension without hearing of the act of the carrier -which deprived it, beyond a reasonable time, of the benefit of the -advanced rate, was in effect the same as that which was condemned by -the Supreme Court in the case of the Chicago, M. & St. P. R. R. Co. -against Minnesota. Under the statute of that State, a carrier had -the right to initiate the rate, and to put it in effect, and, under -the law, the commission was authorized to make such changes as it -deemed proper in the schedule so filed, and to direct the carrier -to modify or change the schedule in accordance with the decision of -the tribunal. In the one case the going into effect of the rate is -suspended indefinitely without notice or hearing; in the other, the -rate is changed or modified without hearing. On page 418 the court -condemns this in the following language: - - "No hearing is provided for, no summons or notice to the - company before the commission has found what it is to find and - declared what it is to declare, no opportunity provided for the - company to introduce witnesses before the commission, in fact, - nothing which has the semblance of the process of law." - -On page 458 the court said: - - "If the company is deprived of the power of charging reasonable - rates for the use of its property, and such deprivation takes - place in the absence of an investigation by judicial machinery, - it is deprived of the lawful use of its property, and thus, in - substance and effect of the property itself without due process - of law and in violation of the Constitution of the United - States." - -This view of the law as announced in 134 U. S. was affirmed by the -Supreme Court in the case of Louisville and Nashville Co. against -Kentucky, 183 U. S., 510. - -It was further suggested that if this amendment was incorporated in -the sixth section, that it was so fundamental in its character, that -if the court should hold that it was an unconstitutional exercise of -power by Congress, that it might have the effect of destroying the -entire value of this remedial legislation, as it would be impossible -to separate the clause from those provisions of the law directly -controlling the subject of rates. - -The committee, without expressing any opinion upon the constitutional -questions suggested, feels that it is of sufficient importance and -gravity to cause it to hesitate to incorporate such amendment into -the sixth section, especially in view of the other objections to such -legislation. - - -COULD THE COMMISSION, UNDER THE AMENDMENT, FIX A REASONABLE RATE, IF -IT HELD THE PROPOSED ADVANCE RATE UNREASONABLE? - -3. One of the most serious objections to this measure, if the -contentions of those who oppose it are well founded, is the assertion -that the adoption of this amendment would, in reference to advanced -rates that were protested, deprive the commission of the power -conferred upon it by the fifteenth section of the act of June 29, -1906, empowering it, if on protest and hearing it found a rate to be -unreasonable, to fix a reasonable rate. - -The authority to the commission proposed in the amendment "to hear -and determine the matter in all respects as it was required to do by -sections 13 and 15 of this act," can only be construed to refer to -the procedure as provided in the thirteenth and fifteenth sections -of the interstate commerce law. There is no attempt to amend the -provisions of section 15, which confers upon the commission the -right to declare a rate unreasonable, and when so declared to fix -a reasonable rate. There are no provisions found in the amendment -suggested to the sixth section conferring upon the commission the -power, when it finds a rate proposed to be advanced unreasonable, -that it may then proceed to fix a reasonable rate. - -An examination of section 15 in reference to the power of the -commission to fix a rate depends upon a condition precedent that is -clearly set forth in said section. It is, that before the commission -has the authority to fix a rate it must first reach the opinion that-- - - "The rates, or charges whatsoever, demanded, charged, or - collected by any common carrier or carriers, * * * or that - any regulation or practice whatsoever of such carrier or - carriers affecting such rates, are unreasonable, or unjustly - discriminatory, or are unduly preferential or prejudicial, or - otherwise in violation of the provisions of this act." - -When this conclusion has been reached as to existing rates the -section then authorizes the commission-- - - "to determine and prescribe what will be the just and - reasonable rate or rates, charge or charges, to be thereafter - observed in such cases as the maximum to be charged; and what - regulations or practice in respect to such transportation is - just, fair and reasonable to be thereafter followed." - -To leave no doubt of the true construction of this section, an -examination of the order required to be entered by the commission is -conclusive of the meaning and intention of Congress in the enactment -of this portion of the fifteenth section. It provides: - - "And to make an order that the carrier shall cease and desist - from such violation to the extent to which the commission finds - the same to exist, and shall not thereafter publish, demand, or - collect any rate or charge for such transportation in excess of - the maximum rate or charge so prescribed." - -An analysis of this order of the commission which requires it -to provide "that the carrier shall cease and desist from such -violation, to the extent to which the commission finds the same to -exist," recognizes the fact that the rate is an existing rate, is an -effective rate, is a rate in full operation, and cannot, therefore, -be applied under the provisions of the amendment suggested to the -sixth section, as no rate has gone into effect and become operative. - -The subject we are considering as affected by the proposed amendment -and the provisions of the fifteenth section, do not rest upon any -principle of the common law, but are purely statutory enactments to -carry out a policy in reference to interstate commerce deemed wise -by Congress. The construction, therefore, of the statute in this -respect cannot be aided by any principles of the common law, and the -conclusion as to its meaning must rest entirely upon the intention of -the legislature as expressed by the language of the act. - -If this view of the fifteenth section is correct, the adoption of the -amendment to the sixth section would change one of the most effective -provisions of the act of June 29, 1906, and which was contended for -with such earnestness in its passage through Congress. - -Under the amendment to the sixth section, if adopted, and a protest -was made to the advanced rate, or the commission under a protest was -authorized in its discretion to suspend the advanced rate, until -hearing as to its reasonableness, the only decision that could be -made under that amendment would be, that the rate proposed to be -advanced was either reasonable or unreasonable, but there would exist -no power in the commission, if they found the rate unreasonable, to -fix what in its judgment would be a reasonable rate. The committee -does not believe that it is the desire of Congress, in view of the -sentiment of the country as expressed in the press and before it, -to pass additional legislation which would invite and suggest such -confusion and legal difficulties in the construction of an act which -has not yet been put in full operation by the tribunal charged with -that duty. - - -COULD THE DECISION OF THE COMMISSION, CONDEMNING AN ADVANCE OF RATES, -BE REVIEWED BY THE COURTS? - -4. It was suggested to the committee that the incorporation of this -amendment to the sixth section of the act of June 29, 1906, would -deprive the carrier of the right to review by a bill in equity a -decision of the commission which denied to the carrier the right -to advance a rate. This contention is based upon the ruling of the -courts, that the making of a future rate is a legislative act, and -not a question for judicial review, and that until the rate is fixed -and becomes effective it is purely one within the legislative -function, and presents no subject cognizable by the court. - -Under the amendment proposed a carrier would file a schedule of -advanced rates; a shipper enters a protest to the rate taking effect; -either by operation of the statute or the exercise of discretion -by the commission, the rate is suspended until final hearing; -subsequently there is a notice of the hearing and a decision rendered -adverse to the contention of the carrier seeking an advance of the -rate. Under these circumstances there is no remedy of review of that -act of the commission provided for by existing law or under the -principles of equity. - -Existing law, providing for a review of a decision of the commission, -does not by its terms enlarge the subject of equitable jurisdiction. -The provision of the statute confers upon the court the right to -take jurisdiction of a case against the commission and to review its -decision when based upon an existing rate. There is no provision of -the statute that contemplates the exercise of a jurisdiction by the -courts in a case arising under a provision of law similar to the -amendment sought to the sixth section of the act of June 29, 1906. In -the decision rendered by the commission denying the right to advance -the rate, the question of the reasonableness of the former rate or -of any existing rate is not involved in the order to be entered by -the commission. Under this proposed amendment the carrier submits a -proposition to advance the rate, which has never become effective. -The order of the commission would simply approve the proposition or -deny the advance of the rate. This, under the proposed amendment, -would be the extent of the authority and act of the commission. - -In the case of McChord _v._ L. & N. R. R. Co. (183 U. S., 483), -followed by the case of L. & N. R. R. Co. _v._ Ky. (183 U. S., 503), -the court sustains the doctrine announced, and held that before -a court of equity can intervene, the administrative body must do -some act that advances beyond the legislative function. (Reagan -_v._ Farmers' Loan & Trust Co., 154 U. S., 362; Interstate Commerce -Commission _v._ Railway Co., 167 U. S., 479.) - -It is contended that the decision of the commission prohibiting the -advance is a legislative act, and that under the decisions of the -courts the order simply prohibiting the taking effect of a proposed -advance could not be the subject of equitable cognizance. If this -view is not correct, it is contended that the courts by overruling -the order of the commission would in effect be putting in force -a future rate. Under existing law, however, if the rate has taken -effect its reasonableness is a matter of judicial review, and -should the commission after protest and hearing declare it to be an -unreasonable rate and set the same aside in its order, that decision -is reviewable by the courts, as it presents a judicial question. The -statute conferring upon the commission the power to determine whether -an existing rate is reasonable or unreasonable has fixed the standard -which must determine the jurisdiction of the administrative tribunal, -and the courts have a right to review the act of the commission, with -a view of ascertaining whether it has acted within the limitations of -the power conferred upon it. - -In the case of the State Corporation Commission of Virginia against -Railways, decided by Mr. Justice Holmes November 30, 1908, speaking -of the power of the commission to fix a rate and the appeal from its -decision to the court of appeals of Virginia, the court said: - - "A judicial inquiry investigates, declares, and enforces - liabilities as they stand on present or past facts and under - laws supposed already to exist. That is its purpose and end. - Legislation, on the other hand, looks to the future and - changes existing conditions by making a new rule to be applied - thereafter to all or some parts of those subject to its power. - The establishment of a rate is the making of a rule for the - future, and therefore is an act legislative, not judicial, in - kind. * * * - - "Proceedings legislative in nature are not proceedings in a - court within the meaning of the Revised Statutes, section 720, - no matter what may be the general or dominant character of the - body in which they may take place. * * * That question depends - not upon the character of the body, but upon the character of - the proceedings. (Ex parte Va., 100; U. S., 339-348.) They are - not a suit in which a writ of error would lie under Revised - Statutes, section 709, and act of February 18, 1875. (C. 80 - Stat., 318.) * * * Litigation can not arise until the moment - of legislation is passed. * * * We may add that when the rate - is fixed a bill against the commission to restrain the members - from enforcing it will not be bad as an attempt to enjoin - legislation or as a suit against a State, and will be the - proper form of remedy." - -The recent decision of the Supreme Court in the case of Public -Service Commission _v._ Consolidated Gas Co. of New York, in which -the opinion was delivered by Mr. Justice Peckham, in deciding what is -known as the Eighty-Cent Gas Case from the southern district of New -York, is instructive upon the question discussed in this objection. - -In that case, the parties had gone to issue upon the question as to -whether the rate of 80 cents enjoined by the court from taking effect -was confiscatory. After deciding the case upon the merits in favor of -the commission, the court was unwilling, upon the supposed effect of -a rate which had never been in operation, to bar the parties of their -right when the same became effective from asking the protection of -the court against its practical results. The memorandum announcing -the position of the court upon that question is as follows: - - "As it may possibly be that a practical experience of the - effect of the acts by actual operation under them might - prevent the complainant from obtaining a fair and just return - upon its property used in its business of supplying gas, the - complainant, in that event, ought to have the opportunity - of again presenting its case to the court. Therefore, the - decree is reversed, with direction to dismiss the bill without - prejudice." - -This case simply illustrates the fact that the court was unwilling -to decide the question finally until the rate contested had become -effective. This was a suit involving a schedule of rates, and the -question made by the record was that these rates would result in -the confiscation of the property of the complainant in violation -of the Federal Constitution. Where that question can be properly -made, the courts have intervened upon clear proof and sustained -their jurisdiction to prevent such a violation of the constitutional -protection. In this case, although the court held that the evidence -developed the fact that this allegation of the bill was not -sustained, it was so reluctant to give effect to testimony as to what -might be the effect of the rates before they were made operative that -it preserved the rights of the parties by authorizing a new suit -after the rate should become effective. Under the act to regulate -commerce, such a constitutional question could hardly be practically -raised, and the rights of the court to intervene must depend upon -the limit placed upon the power of the commission by Congress in the -enactment of the law, in fixing the standard which should guide the -commission in its action. - - -BURDEN IMPOSED ON THE COMMISSION.--CONFLICT OF JURISDICTION.--HOW -RATES ARE MADE. - -5. Your committee has deemed it proper that it should report to the -Senate the legal objections to the incorporation of this amendment in -the sixth section of the act of the 29th of June, 1906, but although -giving due weight to these objections, the committee has been more -strongly influenced in its adverse report upon this bill because -of the strong and forcible practical objections which have been -urged to the adoption of this amendment as a part of the interstate -commerce law. - -Should this amendment become a part of the law, it would be in the -power of any shipper, whether interested or not in the result, to -file a protest against the advance of the rate which under the -proposed amendment would at once suspend its going into effect, -and under the amendment offered in committee would place it in the -power of the commission to order its suspension, if a prima facie -case was presented in the protest. The shipper in filing a protest -assumes no responsibility, either as to the effect of his action -upon the carrier or liability in any way for cost accruing during -the proceeding. Considering the thousands of articles transported -by the carriers of the country, the hundreds of thousands of rates -published for the transportation of these articles, and the thousands -of shippers interested in their movement, some idea of the number of -protests that probably would be filed on the advance of rates can -be imagined. The burden that would be thrown upon the commission in -its effort to meet this responsibility would, as Judge Cooley well -remarked, require "superhuman" efforts on its part. He said: - - "Moreover, an adjudication upon a petition for relief would in - many cases be far from concluding the labors of the commission - in respect to the equities involved, for questions of rates - assume new forms, and may require to be met differently from - day to day; and in those sections of the country in which the - reasons or supposed reasons for exceptional rates are most - prevalent the commission would, in effect, be required to - act as rate makers for all the roads and compelled to adjust - the tariffs so as to meet the exigencies of business while - at the same time endeavoring to protect relative rights and - equities of rival carriers and rival localities. This in any - considerable State would be an enormous task. In a country so - large as ours, and with so vast a mileage of roads, it would be - superhuman. A construction of the statute which should require - its performance would render the due administration of the law - altogether impracticable, and that fact tends strongly to show - that such a construction could not have been intended." - -If the advance of rates was ultimately decided to be reasonable, the -carrier would have been deprived during the period of suspension of -the additional earnings to which it was entitled, and under such a -provision of law would be required to maintain, at enormous expense, -a large force of attorneys to answer and defend these protests. It -would confer upon the commission the powers now exercised by the -courts, and the jurisdictions over the same subject by both the -courts and the commission would necessarily produce conflict and -confusion. - -The Supreme Court in the case of Texas Pacific R. R. Co. _v._ -Abilene Cotton Oil Co. (204 U. S., 426), construing the ninth and -twenty-second sections on the right of a shipper to apply to the -courts for pecuniary redress for an alleged unreasonable rate held -that, until the protested rate was condemned by the commission, there -was no relief in the courts. This decision avoided a conflict of -jurisdiction between the courts and the commission. It would lessen -very greatly the value of the amendment of the act of June 29, 1906, -which requires thirty days' notice in a change of rate, which was -adopted, with a view of investing rate conditions with a greater -degree of stability than formerly. Under existing law, the shipper is -assured of that degree of stability, and can predicate his sales and -purchases accordingly. Under the amendment, shippers would never know -whether or not a rate is to become effective on schedule time, or at -any future time. The effect of the amendment would, therefore, be to -a considerable degree to nullify the permanency which this amendment -to the act to regulate commerce sought to impress upon the law. - -We must remember in considering this question that the majority -of advances have resulted from the practice of the roads in the -reduction of rates to meet certain commercial and economic conditions -at the time, which have usually been the result of appeals from -shippers and suggestions from commercial organizations. - -We desire to direct attention to the statement filed before the -Committee on Interstate and Foreign Commerce upon a similar bill to -this by the chairman of the committee of the Southwestern Traffic -Association, which is as follows: - - "A very small percentage of the changes in freight rates, - either reductions or advances, is evolved by railroad - officials. Practically every change in rates is the result of - suggestion from one or more shippers, who find that by some - modification in the existing schedules their business in a - certain territory can be increased by enabling them to meet - competition which they encounter from other sources of supply, - which are in most cases served by rival railroads. Their - representation is that by the proposed change their profit - or business will be increased, and consequently the railroad - serving them will share in an augmented traffic which, at the - time of the suggestion, is being handled by the rival shipper - and carrier. - - "Ninety or more per cent. of these suggestions are for - reductions in rates or for changes in rules and regulations - beneficial to shippers and classed as reductions. The railroad - company is anxious at all times to increase its traffic and - gives a keen ear to such pleas of the shipper. The railroad - official to whom such requests are made carefully investigates - the conditions recited by the shipper and, by correspondence - with such railroad's representatives at the points of origin - and destination, confirms, if possible, the views of the - shipper and the effect of the proposed change on the tonnage - and revenue of the company. The traffic official of the - railroad thus being daily engaged in investigations of this - kind becomes very proficient in his knowledge of the factors - surrounding the movement of the principal articles of commerce - and becomes, after experience, a ready judge of the merit of - such propositions. When thus convinced, he becomes the agent of - the shipper in securing the proposed adjustment. This may take - the form of suggesting to a rival railroad that the advantage - which its shippers have enjoyed is unjust and that he should be - permitted, without any corresponding reduction on the part of - such rival railroad, to reduce his rate that the complaining - shipper may profitably secure an increased share of the - competitive traffic in question. Being unable to thus persuade - the competing railroad of the merits of such a contention he - is forced to proceed by reducing his own rate without regard - to the possible change which may follow on the part of other - railroads as a consequence of his reduction. - - "It will, therefore, naturally be seen that the railroad - official and the shipper are constantly planning to increase - the business in which they are jointly interested, to the - disadvantage of the rival railroad and shipper. Sometimes - these efforts result in serious rate wars until the point in - controversy has been adjusted and the competitive rates placed - on a basis which is more nearly equitable to all concerned. In - many instances these disputes result in arbitration either by - the Interstate Commerce Commission or by individuals who may be - agreed upon by the contending interests. - - "Bearing in mind, therefore, that practically all rate - reductions are the result of the effort of the railroad company - to serve the shipper, it can easily be seen what the result - will be if no advances in rates can be made without practically - the approval of the Interstate Commerce Commission. Where it is - difficult to restore rates to normal figures, the carrier will - be loath to reduce them in order that the shipper dependent - upon such carrier may increase, for the time being, his share - in the competitive traffic in which he is interested." - - -ADJUSTMENT OF RATES.--INTERRELATION OF RATES.--PRACTICAL OPERATION OF -AMENDMENT. - -6. The subject of rate adjustment, even upon a single system of -transportation, is one involving great difficulty and perplexity. -When this adjustment is considered in its relation to the entire -country, to the diversified commercial conditions, as affected by -commercial competition, and as controlled by the interrelation of -rates, it stands forth as one of the most difficult of all the -problems which must be mastered that the transportation agencies -may not be injuriously crippled in the performance of their quasi -public functions, or the prosperity and development of the commercial -interests be retarded by the failure to enact proper, reasonable, and -just governmental regulations. - -Rates which can be considered alone are comparatively few in number. -In the large majority of cases they are interrelated with other -rates, and frequently this interrelation exists as between areas -widely separated. The rates upon iron and steel from mills within 50 -to 100 miles of New York, Philadelphia and Baltimore, whose relations -to each other are established by long custom and usage, are based -primarily upon the necessity of preserving a fair comparative charge -between the different shipping points and destinations. Rates upon -coal from central Pennsylvania to tide water have close relations -with the rates upon coal from West Virginia to tide water, competing -as such coal does, in the same markets. The rates upon lumber from -the Michigan markets must bear some relation to the rates on lumber -from Louisiana and Georgia to the same market of distribution, -although separated by hundreds of miles. - -The rates upon grain from western farms to eastern points bear -a relation to the other, and upon export grain the rates to the -Atlantic seaboard bear a close relation to the rates to the Gulf. -The rates upon fruit and vegetable traffic from the various shipping -districts, as California on the West and Florida on the South, -must be considered in the making of rates. The structure of rates -between the territory east of the Mississippi and north of the Ohio -River, and the territory east of Pittsburg and Buffalo, including -New England, is closely interrelated; as an example, the rates -between Chicago and New York take a percentage of the Chicago rate -from all points west of Pittsburg and Buffalo. The principle of -the interrelation of rates has frequently been recognized in the -decisions of the Interstate Commerce Commission. - -In the interest of the manufacturer there is a very important -relationship between rates upon different products entering into -the manufacture of a given article. In the great steel-producing -districts of the Shenango and Mahoning valleys and Pittsburg for many -years the rates upon raw material to the furnaces for the production -of pig iron have been adjusted upon a basis, so far as possible, of -making the freight cost of assembling the raw materials that enter -into this product the same to each furnace. In the one case the rate -upon coke may be higher and the rate upon ore or limestone lower; in -other cases the reverse. The adjustment of rates upon these different -raw materials is so made that when assembled at the different -furnaces the aggregate cost is relatively the same. This illustrates -the contention that such rates cannot be considered separately, but -must be taken as a whole. - -Bearing these facts in mind it is manifest that if an advance in -rates is made and the protest of one shipper shall operate as a stay -to the advance of a particular rate in which he may be interested the -result would be to burden thousands of other shippers who have made -no objection. The protesting shipper would thus secure an advantage, -enjoying for a time, at least, a rate relatively lower than that to -which he was entitled. It might be urged that it would be open to all -other shippers to file similar protests, but under the provisions of -the bill, or of the amendments suggested in committee, the protesting -shipper might wait until the last day of the thirty-day period, thus -giving no opportunity to other shippers, who would be ignorant of -his purpose, to file their protest. It would be possible if this -amendment became a law that many individual shippers would take -advantage of their competitors by making contracts upon the basis of -a lower rate and at the last moment file the protest, suspend the -advance rate, and deliver their product under such contracts within -the period of the suspension of the advanced rates and thus profit at -the expense of their competitors. - -The effect of this amendment becomes more serious where the relation -of rates is between wide areas, and these relative rate adjustments -cannot be made simultaneously. The rates upon grain for export, from -the West to the Gulf, as compared with the Atlantic seaboard, will -illustrate this statement. The protest of one shipper between two -specific points would not only result in throwing out of relation -the rates from all points in that section, but would also affect -the competitive rates from other sections. Such a result would -necessarily render the rate situation in reference to the grain rates -"confusion worse confounded." - -Rates in a country like the United States, which is comparatively -young, and the development of which attracts the attention of the -world, must, necessarily, be elastic, not only in the interest of -the carrier, but of the shipping public. The principle is sound and -has received the approval of the Interstate Commerce Commission, -that rates must be fixed with regard to their relations one with -the other, and not entirely upon the cost of service. This relation -is because of the competition between shippers, between sections -of shippers, and between localities, and as (because of the rapid -development of our country in the production of new sources of -supply, in the opening up of new grain fields, flour mills, mines, -and factories, etc.) this competition is constantly changing. It is -manifest that rates must constantly fluctuate, so as to be adjusted -to the new condition; it is essential in the development of the -country, even in the older sections, that rates must be elastic, -which means constant reductions and advances. - -This is in the interest of communities and the individual shipper. -There must be elasticity for other reasons, in the interest of -communities as of the railroads; in meeting changes in commercial -conditions that necessitates reductions in rates for shorter or -longer periods, as an illustration, to enable our grain and other -products of the farm to reach foreign markets, which would be -impossible in one period unless rates were lowered, whereas in other -periods higher rates could be charged without injurious results. -Understanding the conditions that surround this complex subject, -it is manifest that if a single shipper, or even the Interstate -Commerce Commission, is to have the power to prevent at any time that -elasticity which involves an advance in rates, the natural result -will be that reductions will not be made by the carrier, and the -elasticity will be lost. The fear would be ever presented to the mind -of the traffic official that the rate once reduced could not--at -least, until after exhaustive and long-drawn-out hearings before the -commission--be advanced. - -The necessary fluctuation in rates to meet the changing conditions of -commerce, when examined in the light of the reports of the Interstate -Commerce Commission, is startling to one not familiar with the -rapid change of commercial conditions in this country. There were -225,982 tariff publications filed with the commission in one year, -all containing changes of rates, either reductions or increases, -and rules governing transportation. These publications--many of -them--contained a great number of different tariffs. The Pennsylvania -lines, east of Pittsburg, issued 2,200 tariffs and 3,600 supplements. -About 33-1/3 per cent of these covered advances, and 66-2/3 per -cent were reductions. As the law exists today, there was no special -inducement to the shipper to file protests against the advances. -Suppose, however, that this amendment had been a part of the act to -regulate commerce, how many protests would have been filed, and what -length of time would it have taken the commission to have disposed -of them? What uncertainty would have resulted to the commercial -interests while waiting for the adjudication of these questions? - - -OPPORTUNITY FOR FRAUD AND DISCRIMINATION UNDER THE AMENDMENT. - -7. One of the most serious objections urged to the passage of this -amendment is the opportunity which such a law would present for the -perpetration of frauds under it, and in the case of even honest -protest to the advance of rates, where rates rest on a differential -basis, in producing thousands of instances of unfair discrimination. - -An example under the first proposition may be stated briefly, as -follows: There are two men engaged in the same line of trade; they -are both called upon to bid on a contract involving a large amount -of a given commodity in which both deal. The carrier has given -notice of an advance in rate, effective thirty days from the filing -and publication of the schedule; the commodity is not to move -for some days; one of the bidders files his bid, based upon the -advanced rate, assuming that the notice of the carrier will be made -effective; the other shipper and bidder waits until two or three days -before the date the rate is to be made effective, files a protest, -confident that it will take three or four months to have the matter -adjudicated, files his bid against his competitor, based on the -current rate, and being the lowest, secures the contract. An example -under the second proposition would be in case of a rate published -from St. Louis to be followed differentially from Chicago by a number -of competing roads. A shipper on one of the lines, just prior to the -taking effect of the rate, would file his protest as to the rate east -of Chicago. The differential adjustment that has been made by all -these roads will at once be destroyed, and the shipper on the road -against which the protest was filed would have the advantage over all -of his competitors on the other lines in shipping east. - -These discriminations between shippers would be the direct result of -the power placed by Congress in the hands of shippers and would have -received the sanction of legislative approval, and, therefore, be -lawful. The statute has taken it out of the power of the carrier to -meet such a condition and to prevent the discrimination. It cannot -change its rate under thirty days without a special order of the -commission, and that order, it must be assumed, cannot be granted -without a reasonable hearing. Congress since 1887 has sought by the -most stringent measures of legislation to prevent discrimination -and preserve equality among shippers. The original act was demanded -more to accomplish that purpose than for any other. The Elkins Act -was confined almost entirely to the subject, and the act of June 29, -1906, increased the penalties for the violation of these provisions. -Should this policy, which has been followed for more than twenty -years, be modified and an act passed, the tendency of which is to -tempt the cupidity of the shipper to accomplish results which it has -earnestly and vigorously fought to stamp out? - - -WOULD PREVENT REDUCTIONS, AS WELL AS ADVANCES, IN RATES, AND DESTROY -THEIR FLEXIBILITY. - -8. On the face of this amendment, it seems only to give to the -commission the authority to prevent an increase in rates, but the -practical result of such a law would be far more reaching. Such a law -would mean a rigid freight tariff in place of the present flexible -and elastic system of rates which exists alone in this country. -Stability of freight rates is important, but not to the extent that -the carrier shall not feel warranted in promptly applying remedies -for the relief or assistance of shippers who find themselves no -longer able to compete, due to advantages which other shippers have -secured, or changes which have occurred in the conditions surrounding -the marketing of their products. - -A law which tends to minimize the commercial or competitive -conditions existing at the present time will necessarily result -to the disadvantage of shippers, to the carrier, and to the -communities they serve. It is not necessary here to again refer to -the presentation of the importance of the flexibility of rates, -which is so clearly shown in the discussion of the influences which -control in making reductions, as well as advances of rates by the -chairman of the Southwestern Traffic Committee, as quoted under -section 5 of this report. The more the committee has reflected upon -the probable tendency of the principle announced by this amendment, -if incorporated into the law, the more definite has become its -conviction that it would ultimately result in destroying that -important factor in American railroad management, "the flexibility -of their tariffs--their adaptability to the changing commercial and -economic conditions." - -One of the most distinguished and skilled traffic officials in the -country, Mr. Henry Fink, in considering this amendment uses the -following language: - - "Railroad officials are constantly engaged in the work of - adjusting rates so as to meet as far as practicable the - requirement of their patrons. In times of depression of - business they make reduction in rates in order to enable - shippers to send their commodities to certain markets, and - keep industrial establishments from being closed. These - reduced rates are often so low as to barely cover the cost of - transportation. But they are meant to be temporary in their - operation, and to be advanced when business conditions have - become more favorable. - - "It must be obvious that when the restoration of such rates is - obstructed, so that railroad officials are not permitted to - advance rates except by permission of a government bureau after - an investigation which must consume considerable time, railroad - officials will naturally hesitate, and often decline, to make - reductions in rates which involve considerable loss of revenue - without any compensating benefits to their companies, either in - the present or future. - - "It is easy to see the effect of this. Railroads would no - longer be able to afford the desired assistance to shippers, - however anxious they might be to do so. The rates would in a - large measure lose their elasticity, and become rigid, and a - condition similar to that existing in France would be created, - where state controlled rates prevent railroads from building up - the territory." - -In considering this question, we must not forget that when we destroy -elasticity and flexibility in our rates, we prevent reductions of -rates, as well as the raising of rates. Its tendency is not only to -prevent the reduction in particular instances that has resulted in -great advantage to the shippers and the country in the past, but it -prevents the lowering of the general average of rates. There have -been comparatively few complaints, as to the unreasonableness of -the rates of this country per se. The vast majority of complaints, -against the reasonableness of rates, is the claim that they -are relatively unreasonable. Under the American system of rate -adjustment, with its freedom to meet commercial and economic -conditions, the general average of rates per ton per mile has -voluntarily been reduced by the carriers of the country from 1870; -not so strikingly since 1896 as previously, but substantial reduction -as follows:[J] - - 1896 802 - 1897 789 - 1898 753 - 1899 724 - 1900 729 - 1901 750 - 1902 757 - 1903 763 - 1904 780 - 1905 766 - 1906 748 - 1907 759 - -The leaders of railroad management and the ablest experts on railroad -economics in foreign countries have approved in the most enthusiastic -language, the wisdom which has preserved to the American railway -system its freedom of management and its flexibility of rates, -subject only to the limitations of reasonable rates, equality -among shippers, and the avoiding of all devices that might result -in discrimination among those who use these public means of -transportation. - -The view of M. Emile Heurteau, president of the Orleans Railroad, -speaking of the American system of roads, said: - - "We would be only too glad to adopt the American system - of fixing the lowest rates proper, and making up the loss - of profit on each shipment out of the increased volume of - business they make the railways available to, which is the - only economically and commercially right and sensible way - of doing. We would be glad to build up our territory as the - American railways do, by encouraging its industries, by opening - its markets, by enabling it to compete with other territory - contributing to the same markets. - - "But we can not do that; the state-controlled rates prevent it, - however strong our desire or the people's may be. - - * * * * * - - "Railroads under government supervision must set their rates - close to the maxima then, and maintain them there, for their - own salvation. There are many times when, if it were possible, - we would like to lower freight charges to meet some special - emergency, such as the necessities of a district suffering from - a crop failure, for example. - - "That is not philanthropy, but commercial sense, to help the - man who creates business for you, when he is hard pressed, - and to increase the volume of traffic that is falling because - people have not the money to pay the price they have been - accustomed to pay easily. But if we should once lower our - rates--possibly to the point of loss, as American railways have - done frequently in crises--we would not be allowed to restore - them later, when they could be fairly restored. - - * * * * * - - "The wonderful growth and development of the United States is - the admiration of the whole world. I have no doubt it is to be - attributed largely to the freedom you have always enjoyed in - your commercial and industrial life. - - "Opportunity is given here for railways and communities to be - mutually helpful, and splendid use has been made and is being - made of it. The few cases of complaints against your railways, - the expansion of trade through the opening of European markets - to the producers of your Central and Western States, who - are enabled to deliver their products abroad, the low cost - of transportation that enables them to compete there with - the foreign producer near at hand, whose railways are in no - position to help him--all these things seem to me sufficient - evidence of the success and desirability of the American - practice in the management and regulation of railway matters. - - "Any economist, any business man, any transportation manager - will tell you that the present American method of fixing - freight rates is the only logical and rational one." - -In the investigation of railways by the Senate committee in 1905, -Mr. W. M. Acworth, who is regarded as one of the leading experts -in England on railroad transportation and railroad economics, was -invited to appear before the committee, with the request to give a -review of the historical facts bearing on the control and management -of the railways of England. After complying with the request of -the committee, certain questions were asked him that were of great -importance at that time in the consideration of the questions then -being investigated by the committee. One of these questions involved -the effect of the provision of the new canal and traffic act of -Parliament, which for the first time embodied the provision that -"railway companies must make no increase except for good cause, if -anybody objects," and which, as construed by the courts, prevented -any increase of a rate where objection was made, until after hearing -by the board of trade. - -His examination will be found in the third volume of the hearings -of that investigation, pages 1848, 1852, 1853 and 1854, and was as -follows: - - "Since it has been decided that no rate can be put up once - it has been put down, without appeal to the law courts, the - railway companies have practically arrived at the conclusion - that they will not put them down because they do not know - whether they will have an opportunity to put them up again. - - "Senator CULLOM: Do you think it works to the advantage of the - people that the railways will not put the rates down for fear - they will not get a chance to put them up again? - - "Mr. ACWORTH: Personally, I have no doubt it does not. It is - fair to remember always that it may protect the weaker in - commercial strife. It is rather hard on the weaker man to be - crowded to the wall by a wholesale concern in any walk of life. - But if it be true in ordinary business that, on the whole, the - public gains by the wholesaling method, it is probably true in - railway business also. I think that, so to speak, the heart has - been taken out of the railway man. The railway men understand - this business; they know how to manage it in their own way. The - railway men think 'the responsibility has ceased to be ours; we - must maintain the status quo,' and that is what they do. - - "The CHAIRMAN: You think that dividing responsibility impairs - the administrative power of the officials of the roads as well - as the service they render to the public? - - "Mr. ACWORTH: From the operating point of view, I do not think - our railways have been sufficiently interfered with to prevent - them developing the goodness of the service. But as to rate - making, I have no doubt that the interference of Parliament, - the courts, and the Executive has all tended to stereotype and - keep rates at an unnecessarily high level. - - "The CHAIRMAN: Would you say that, on the whole, the power - to make rates generally and primarily should be left to the - railroads and to the free play of the forces of the business - world? - - "Mr. ACWORTH: Speaking as an individual student, I have no - doubt that that is the process that will arrive at the best - results for the community, with this exception: That I fully - think it is necessary that the community in some way should - interfere to protect all customers from unfair treatment. - - "The CHAIRMAN: You think that the power should reside somewhere - to correct excessive and extortionate rates by summary and - proper proceedings? - - "Mr. ACWORTH: I am not sure that I should go so far as to say - excessive rates regarded as excessive in themselves. I am - myself inclined to think that excessive rates will correct - themselves. The wise men will discover that it does not pay to - charge excessive rates. But I think the law should interfere to - prevent unfair rates to A as compared with the rates given to - B. It seems to me that the State is bound to insist that the - rates shall be public, and that practically will settle it, - for if they are public they have got to be fair; I am inclined - to think the law should confine itself to securing that, where - there is a difference made as between A and B, the difference - should be a difference for a commercial reason, and not for any - reason of personal favoritism. - - "Senator FORAKER: And I understand you to say that the effect - of fixing maximum rates is to lessen the tendency to reduce - rates, which railroads had practiced before this legislation - was enacted? - - "Mr. ACWORTH: I am not quite sure that the maxima have really - had very much effect at all. It has been a tendency, but I do - not think an important tendency. But the interpretation by the - courts of the undue preference law, and the recent limitation - that having once reduced you can not subsequently increase, - have had that effect markedly, I believe. - - "Senator FORAKER: So that the rates for the transportation of - freight on railroads in England have not been declining, I take - it from your statement, in recent years, but have remained - practically stationary? - - "Mr. ACWORTH: I do not know what the average rate is, because - there are no statistics in England; but my own impression would - be that it had probably not declined to an appreciable extent, - whereas in an earlier period it certainly did decline pretty - fast." - -The effect of a similar law, passed in England, as shown by the -testimony of Mr. Acworth, confirms the views of the committee which -have been expressed in this report, that with such a provision -embodied in the present interstate commerce law, there would be few -reductions or advances in American rates. If it had the effect in -England of destroying the flexibility of the rates of the carrier and -interfered with the development of England's commerce, as well as her -railroads, how much more serious would be the result in this country, -that is in the process of rapid development, both as to its commerce -and territory? It has been credibly stated that the Board of Trade of -England is now seriously considering a recommendation for the repeal -of that provision of the statute. - - -AN ANALYSIS OF THE COMMUNICATION TO THE COMMISSION--MANY OF ITS -OBJECTIONS APPLY TO THE AMENDMENT OFFERED IN COMMITTEE. - -9. When this bill was referred to your committee for its -consideration the chairman addressed a letter to the Interstate -Commerce Commission, inclosing the bill, and requested the opinion of -the commission as to the wisdom of incorporating the amendment into -the interstate commerce law. - -The chairman replied in the following communication: - - "INTERSTATE COMMERCE COMMISSION, - "_Washington, January 29, 1908._ - - "HON. STEPHEN B. ELKINS, - "_Chairman Committee on Interstate Commerce_, - "_United States Senate, Washington, D. C._ - - "DEAR SIR: The Interstate Commerce Commission has the honor to - submit the following in response to your communication of 24th - instant, transmitting a bill (S. 423) to amend section 6 of the - act to regulate commerce, introduced by Senator Fulton December - 4, 1907, and requesting the commission to 'advise the committee - before its next meeting, January 31, their opinion of said bill - and what action they would suggest thereon.' - - "Whilst the views of the entire commission can not be - definitely ascertained within the time named, because of - absences on official business, a majority of the commissioners - and probably all of them would not be disposed to favor the - enactment of this measure. - - "To give to the protest of a single shipper the effect of - preventing the advance of any rate until the reasonableness of - that advance was affirmatively determined by the commission - would establish a hard and fast rule of doubtful fairness - to the railroads and questionable advantage to the public. - Under existing conditions we are of the opinion that it would - be unwise to adopt the arbitrary limitation which this bill - proposes, whatever may be found desirable or necessary in this - regard in the future. - - "It is further to be observed that the passage of such a bill - at this time would impose a burden upon the commission which - it ought not to be asked to undertake. If every proposed - advance had to be investigated by the commission and officially - sanctioned before it could take effect, the number of cases - to be considered would presumably be so great as to render - their prompt disposition almost impossible. In instances of - justifiable increase the necessary delay resulting from the - probable volume of cases would work injustice to the carriers. - Until conditions become more stable and the substantive - provisions of the act are more completely observed in railway - tariffs and practices we entertain the belief that a wider - latitude of discretion on the part of carriers than this - measure allows should be permitted. - - "It is also suggested that the practical effect of the proposed - amendment might be to prevent voluntary reductions of rates - by the carriers. If no rate could be increased without the - approval of the commission after affirmative showing by the - carrier it might happen that many reductions now voluntarily - accorded would not be made. - - "This subject of rate advances was discussed in our recent - annual report to the Congress, and that portion of the report - is transmitted herewith for the information of your committee. - It concludes with a recommendation relating to the matter in - question in which the entire commission concurred, and that - recommendation is now respectfully renewed. - - "Very respectfully, - "MARTIN A. KNAPP, - _Chairman_." - -It will be observed by an examination of this communication from the -commission that it deemed it unwise to recommend the adoption of the -amendment to the sixth section as offered in Senate bill 423, but the -letter refers to its former report as expressive of its views upon -this subject, which recommended a somewhat similar provision, but -differing in this respect. In Senate bill 423 the filing of a protest -would suspend the taking effect of the rate until after full hearing -as to the merits of the advance. The recommendation of the commission -in its former report, referred to in the communication, recommended -the adoption of a provision that would confer upon the commission, -upon the filing of a complaint, the discretion to suspend the rate -until final hearing. The amendment to the bill before your committee -offered during its consideration, and which has been fully discussed -in this report, was in substance the recommendation of the commission. - -An analysis of the letter of the chairman of the commission, stating -the objections to the enactments of the proposed amendment into law, -sustains many of the reasons which have been urged in this report -against the approval of the principle announced by that amendment. -The committee quotes from the letter, as follows: - - "(a) To give to the protest of a single shipper the effect of - preventing the advance of any rate until the reasonableness of - that advance was affirmatively determined by the commission, - would establish a hard and fast rule of doubtful fairness to - the railroads and questionable advantage to the public. - - "(b) Under existing conditions we are of the opinion that it - would be unwise to adopt the arbitrary limitation which this - bill proposes. - - "(c) If every proposed advance had to be investigated by the - commission and officially sanctioned before it could take - effect the number of cases to be considered would presumably be - so great as to render this prompt disposition almost impossible. - - "(d) It is further to be observed that the passage of such a - bill at this time would impose a burden upon the commission, - which it should not be asked to undertake. - - "(e) In instances of justifiable increase all necessary delay - resulting from probable volume of cases would work injustice to - the carriers. - - "(f) Until conditions become more stable and the substantive - operations of the act are more completely observed in railway - tariffs and practices, we entertain the belief that a wider - latitude of discretion on the part of carriers than this - measure allows would be permitted. - - "(g) It is also suggested that the practical effect of a - proposed amendment might be to prevent voluntary reductions of - rates by the carriers. - - "(h) If no rate could be increased without the approval of the - commission after affirmative showing by the carrier, it might - happen that many reductions now voluntarily accorded would not - be made." - -The nine reasons suggested by the commission why the original -amendment offered to section 6 should not be adopted, fully sustain -the committee in reporting the bill adversely, and to a great extent, -fully justify the views which it has expressed in this report as -influencing the actions of the committee in its adverse report upon -the amendment proposed in the committee. - -The committee is unable to appreciate the force of the suggestion -of the modification proposed to the original amendment, as in any -way changing the principle embodied in it, or the practical results -which would flow from its adoption. If the power was conferred upon -the commission, when a rate was advanced, upon complaint to suspend -the going into effect of that rate until a final hearing, every -objection urged by the commission to the adoption of the bill, but -the first two, would be applicable to the modification proposed by -the commission to the original amendment. - -Under the modification suggested by the commission the burden -imposed upon it would be greater, if possible, than under the -original amendment. Under the original amendment, by force of the -statute, the filing of the protest would suspend the advanced rate, -and the hearing upon the merits would take place after the thirty -days had expired. Under the suggestion of the commission conferring -upon it the discretionary authority upon complaint to determine -whether the rate should go into effect at the time prescribed by -law or be suspended, there is imposed an official quasi judicial -duty upon the commission, which it should not perform except upon -proof that probably the rate sought to be advanced would ultimately -be determined to be unreasonable. Remembering the large number of -changes of rates daily, and the fact that under the law the complaint -could be filed at any time within the thirty days, would it not be -an impossible undertaking for the commission to hope to perform this -official act with justice to the public or to the carrier? In the -multiplicity of duties now demanding its most earnest attention, -would not the practical operation of such a law compel it to enter -a pro forma order of suspension until the final hearing, when the -commission, upon an examination of the complaint, is satisfied that -it presented a prima facie case of unreasonable advance? - -An official tribunal charged with the duty of preventing -an unreasonable advance in rates would be constrained, on -the presentation of such a complaint, to issue the order of -suspension. If the slightest doubt was raised in its mind as to the -reasonableness of the advance, its official obligation would require -it to enter the order of suspension. Is there any question that such -a prima facie case could be made where the consideration of the -protest would, of necessity, be ex parte? - -The committee is not, therefore, able to draw a distinction between -the original amendment and that proposed in committee. In the opinion -of the committee the reasons stated in the letter of the chairman -of the commission, and the reasons given in this report, not only -justify it but compel an adverse report. - - -CONDITIONS CONFRONTING CONGRESS. - -10. The act of June 29, 1906, took effect August 28, 1906. It has -been operative only about twenty-eight months. During half of that -period of time the country has experienced the effects of a severe -commercial panic; business has been prostrated; transportation -paralyzed; thousands of cars have been stored on the sidings, and -hundreds of engines have been placed in the shops, awaiting the -revival of business. From conditions existing today, we have a right -to assume that before many months we shall be approaching normal -conditions. The commission has not had sufficient time to interpret -and construe the recent law and to promulgate its orders in reference -to the action of the carriers under it. Many of the traffic questions -involved, under the provisions of that law, are yet to be construed -and put in force by orders of the commission. Is it wise, under these -conditions, to begin amending that statute by introducing provisions -inconsistent with the basis of the act? It has been shown that under -the power conferred by that recent enactment, the commission is -vested with the power to change an existing unreasonable rate and -to fix for the future a reasonable rate. It has also the authority -conferred upon it to award reparation to the extent of any injury -resulting to a shipper, by reason of the existence of an unreasonable -rate. - -Attention has been called to the opinion of the commission, as -expressed in its decisions, narrowing very greatly the right of the -carrier to advance a rate that would meet with its approval upon -hearing. The committee must assume, in considering this question, -that both the shippers and traffic officials, with knowledge of the -views entertained by the commission upon the question of an advance -of rates, will in the one case be prompt to avail themselves of that -attitude of the commission, and in the other that they will seek to -so adjust their rates as to bring their schedules within the rulings -of that tribunal. The committee believes the highest duty of the -commission is to bring together shippers and carriers, to the end -that each may see that neither can be permanently prosperous at the -expense of the other. It further believes that in many instances -this effort has been made by the commission, and successfully made. -It cannot be accomplished by statutes causing rigidity of rates. The -most sensitive spot in the great business dealings of the country -is the railroad rate. This rate must be raised or lowered, not in -obedience to a rigid statutory law, but in obedience to the varying -conditions of trade and commerce. - -The National Board of Trade, one of the most important commercial -organizations in the country and one of the most influential, met in -Washington on Tuesday, January 19, 1909. Two proposed resolutions -were submitted to that convention. First, by the Philadelphia Press -League, urging an amendment to the interstate commerce law, to permit -railroads engaged in interstate traffic to enter into the making -of agreements under the supervision and control of the Interstate -Commerce Commission. The second proposition was submitted by the -Scranton Board of Trade, embodying the provisions of the amendment -offered in the committee upon the consideration of Senate bill 423, -and approved in the report of the Interstate Commerce Commission as -to the advance of rates. - -These resolutions were referred to the committee on resolutions -having charge of interstate commerce matters. That committee, through -its chairman, made the following report, which was unanimously -indorsed by the convention of the National Board of Trade: - - "The committee on interstate commerce law respectfully reports - that, in its judgment, the National Board of Trade ought not - at this time to recommend any change in the laws relating to - interstate commerce." - -The convention was not satisfied with the passage of this resolution, -but the chairmen of the several committees of that association were -subsequently authorized and directed by resolution to urge the -conclusions of the board in its name whenever possible. - -The country is now demanding repose in its industrial upbuilding. It -is not a time to experiment and to change the basis upon which the -former acts to regulate commerce have been predicated. The recent -law passed by Congress so greatly enlarging the authority of the -commission should, before changes are sought, have the opportunity -of at least a fair trial as to the value of its provisions in the -regulation of interstate commerce. When trial has been given and -normal conditions have been restored, any defect in the regulating -statute can then, in the light of experience, be promptly remedied. - - -FOOTNOTE: - -[J] The average rate per ton mile in 1908 was 7.54 mills. - - - - -STATISTICS OF AMERICAN RAILWAYS - -FOR THE YEAR ENDING JUNE 30 - -1909 - -PREPARED BY - -SLASON THOMPSON - -MANAGER OF THE BUREAU OF RAILWAY NEWS AND STATISTICS - - -INTRODUCTION - - "The function of accounts is to record facts. True accounting - is nothing more, nor nothing less, than the correct statement - of what in fact has taken place, and the measurement of that - fact in an appropriate figure."--Prof Henry C. Adams. - - To be of the highest value, statistics must be accurate, - uniform and continuous. - -Nothing in the nature of statistics under official authority more -confusing and misleading has ever been issued from the government -printing office than those portions of the Twenty-third Annual Report -of the Interstate Commerce Commission for the year ending June 30, -1909, purporting to deal with the financial results of the railways -of the United States for the fiscal years 1908 and 1909. - -On the first page of the Report the financial results of the last two -fiscal years are set down thus: - - - =================================================================== - | Operating | Operating | | Operating - | Revenues | Expenses | Taxes | Income - -----+----------------+----------------+-------------+------------- - 1908 | $2,461,521,345 | $1,721,327,155 | $83,775,869 | $655,418,321 - 1909 | 2,494,115,589 | 1,662,102,172 | 89,026,226 | 742,987,191 - -----+----------------+----------------+-------------+------------- - -The mileage operated in 1908 is stated as 228,164.80 and in 1909 as -233,002.67 miles. - -On page 54 of the report the summary compiled from the monthly -reports gives the following comparative figures for the same years: - - - =================================================================== - | Total | Total | | - | Operating | Operating | Net Revenue | Taxes - | Revenues | Expenses | | - 1908 | $2,421,542,004 | $1,687,144,975 | $734,397,029 | $83,775,869 - 1909 | 2,443,312,232 | 1,615,497,233 | 827,814,998 | 89,026,226 - -----+----------------+----------------+--------------+------------ - -The mileage is the same as above, with the added information that the -mileage operated at the end of the fiscal year 1908 was 229,952.36; -and at the end of 1909, 234,182.70. - -It will be observed that the taxes in both summaries are identical, -but in one they are subtracted from net revenues and in the other -they are not. - -An insert facing page 54, giving the details of the monthly reports -from which the table on that page is compiled, reveals the common -source of both sets of returns and gives the key to the discrepancy -between them. This is no less than the inclusion in the former of the -revenues and expenses from "outside operations," which are excluded -from the summary on page 54, in which the "net revenue" only from -such outside source is mentioned and added to the net revenue from -rail operations. - -The impropriety and inaccuracy of such accounting becomes manifest -when its effect is seen to vary the ratio of operating expenses to -earnings from 69.67% to 69.93% in 1908, and from 66.12% to 66.64% in -1909. - -On pages 64 and 65 appears another set of income figures for the year -ending June 30, 1908. This is compiled from the annual reports of the -carriers operating 230,494 miles of line, from which _the mileage -of switching and terminal companies is excluded_. It supplies the -following summary: - - - YEAR ENDING JUNE 30, 1908. - - ===========================================+================= - Rail operations: | - Operating revenues | $2,393,805,989 - Operating expenses | 1,669,547,876 - Net operating revenue | 724,258,113 - Taxes | 78,673,794 - Net revenue from outside operations | 5,977,268 - Operating income | 651,561,587 - Ratio of operating expenses to earnings | 69.72 - -------------------------------------------+----------------- - -As these figures are compiled from the only returns which furnish -data respecting all the various phases of railway operation in the -United States, they will be accepted in subsequent pages as the -official returns for 1908. - -The above figures are exclusive of returns from switching and -terminal companies, whose earnings, according to the monthly reports -in 1908, were $23,028,773; expenses, $16,383,481, and taxes, -$1,245,261. - - -GROSSLY EXAGGERATED DIVIDENDS. - -But these are venial variations compared to the deliberate -misrepresentation as to dividends on page 62 of the report, where it -is stated: - -"The amount of dividends declared during the year was $386,879,362, -being equivalent to 7.99 per cent on dividend-paying stock. For the -year ending June 30, 1907, the amount of dividends declared was -$308,088,627." - -This statement is the more reprehensible because the inaccuracy -of the reference to dividends in 1907 was exposed a year ago, and -$115,550,909 of the 1908 total is proved to be fictitious by the line -in the condensed income statement of the report (page 65) reading: -"Dividends declared from current income, $271,388,453." It takes -dividends from surplus, dividends by leased companies, and dividends -from surplus of leased companies to make up that gross deception as -to the dividends declared in 1908. And all these "several dividends" -are only made statistically possible by including in current income -$274,450,192 "other income" NOT derived from transportation. - -It is impossible to overestimate the harmful popular effect of -exaggerating the dividends paid by the railways by $80,693,665 in -1907 and $115,550,909 in 1908. The public mind does not stop to -distinguish between dividends "declared," dividends paid out of -"income" and net dividends actually paid out of net earnings of -railway traffic. - -This whole statistical structure of fictitious dividends has been -built up in successive reports upon the false premise of including -intercorporate payments on both sides of the income account. What the -public is entitled to know is the disposition of the gross sum paid -by it for transportation services--those services which the Act to -Regulate Commerce was passed to regulate. - - -BEWILDERING CHANGES IN NOMENCLATURE. - -Scattered through the official reports for 1908 the student is -confronted with numerous changes in terminology, many of which are -for the better, but nearly all impair that continuity of names -and phrases which is so desirable in comparative statistics. For -instance, the public has been taught, by official practice, to speak -of the revenues of the railways derived from the transportation -of passengers, freight, mail and express, as "Gross earnings from -operation." The phrase is descriptive, definite and clear. For this -the Commission has substituted "Rail operations, operating revenues." -Former reports spoke of "Income from operation," which now gives -place to "Net operating revenue." To this is added the "net revenue -from outside operations," making a "Total net revenue," from which -"Taxes accrued" are deducted, the remainder being "Operating income." - -It will be perceived that this last phrase, which covers revenues -from which operating expenses and taxes have been deducted and to -which the net revenues from outside operations (sometimes they -involve a deficit) have been added, comes perilously near the "Income -from operation" of preceding reports. - -The exclusion of the reports from switching and terminal companies -in some instances, while they are included in others, introduces an -element of perplexing uncertainty at every turn and really vitiates -all comparisons with former reports. - -The Commission itself seems to realize the bog into which the -official statistician has plunged its accounts, when it says: - -"The changes in the income account submitted in the report under -consideration _are so far reaching in their results_, in a number of -instances, as to impair direct or close comparison with figures for -similar items in previous statistical reports." - -And now it is proposed to throw all the accumulated statistics of -twenty-two years out of consecutive gear by substituting the calendar -for the fiscal year. - - * * * * * - -The writer has deemed the foregoing comments necessary to clear the -atmosphere before proceeding to the introductory summary showing -the salient features of the railway industry in 1909 compared with -similar items in 1899 and 1889. The data for 1909 is compiled from -the annual reports to this Bureau covering 221,132 miles of operated -line, together with the monthly reports to the Commission of earnings -and expenses of all classes of roads for that year, covering an -average operated mileage of 233,002. - - -SUMMARY OF RAILWAY RESULTS IN 1909, 1899 AND 1889, WITH PERCENTAGES -OF INCREASE FOR EACH ITEM BY DECADES. - - (m = 1,000; d = decrease.) - - ====================================+============+============ - | | - Item | 1889 | 1899 - | | - | | - ------------------------------------+------------+------------ - Miles of line | 153,385| 187,534 - Miles of all track | 195,958| 250,784 - | | - Net capitalization (m) | $7,366,745| $9,432,041 - Net capitalization per mile of line | 48,021| 51,764 - Net capitalization per mile of track| 37,593| 38,527 - | | - Gross earnings from operation (m) | 964,816| 1,313,610 - Gross earnings per mile of line | 6,290| 7,005 - Expenses of operation (m) | 644,706| 856,968 - Expenses of operation per mile of | | - line | 4,204| 4,570 - Net earnings from operation (m) | 320,101| 456,642 - Net earnings per mile of line (m) | 2,086| 2,435 - Ratio of expenses to earnings | 66.81| 65.24 - | | - Receipts from freight (m) | $254,041| $291,113 - Receipts from passengers (m) | 642,662| 913,737 - Receipts from mail (m) | 21,901| 35,999 - Receipts from express (m) | 19,778| 26,756 - | | - Passengers carried (m) | 472,171| 523,176 - Passengers carried one mile (m) | 11,553,820| 14,591,327 - Receipts per passenger per mile | | - (cents) | 2.165| 1.978 - | | - Freight tons carried (m) | 539,639| 959,763 - Freight tons carried one mile (m) | 68,727,223| 123,667,257 - Receipts per ton per mile (mills) | 9.22| 7.24 - | | - Locomotives, number | 29,036| 36,703 - Locomotives, weight (tons) | 1,161,440| 1,945,259 - | | - Passenger cars (number) | 24,586| 33,850 - | | - Freight cars, number | 829,885| 1,295,510 - Freight cars, capacity (tons) | 16,597,700| 34,978,770 - | | - Average tons in train | 179| 243 - | | - Employes, number | 704,743| 928,924 - Employes, compensation |$389,785,664|$522,967,896 - Proportion of gross earnings | 40.40| 39.80 - Proportion of operating expenses | 60.46| 61.02 - | | - Taxes | $27,590,394| $46,337,632 - Per mile of line | 180| 247 - Proportion of gross earnings | 2.86| 3.53 - ------------------------------------+------------+------------ - - {table continued} - ====================================+==============+================= - | |Increase|Increase - Item | 1909 | over | over - | | 1889 | 1899 - | | % | % - ------------------------------------+--------------+--------+-------- - Miles of line | 234,182| 52.7 | 24.9 - Miles of all track | 340,000| 73.5 | 35.5 - | | | - Net capitalization (m) | $13,508,711| 83.3 | 43.2 - Net capitalization per mile of line | 57,962| 20.7 | 11.9 - Net capitalization per mile of track| 39,730| 5.6 | 3.1 - | | | - Gross earnings from operation (m) | 2,443,312| 153.2 | 86.0 - Gross earnings per mile of line | 10,486| 66.7 | 49.7 - Expenses of operation (m) | 1,615,497| 150.5 | 88.4 - Expenses of operation per mile of | | | - line | 6,933| 64.9 | 51.7 - Net earnings from operation (m) | 827,814| 157.9 | 81.2 - Net earnings per mile of line (m) | 3,552| 70.2 | 45.8 - Ratio of expenses to earnings | 66.12| d 2.3 | 1.0 - | | | - Receipts from passengers (m) | $564,302| 122.1 | 93.8 - Receipts from freight (m) | 1,682,919| 161.8 | 84.1 - Receipts from mail (m) | 50,935| 132.6 | 41.5 - Receipts from express (m) | 63,669| 221.9 | 137.9 - | | | - Passengers carried (m) | 880,764| 86.5 | 68.3 - Passengers carried one mile (m) | 29,452,000| 154.8 | 101.8 - Receipts per passenger per mile | | | - (cents) | 1.916| d 11.5 | d 3.1 - | | | - Freight tons carried (m) | 1,486,000| 175.3 | 54.8 - Freight tons carried one mile (m) | 222,900,000| 224.3 | 80.2 - Receipts per ton per mile (mills) | 7.55| d 17.0 | 4.2 - | | | - Locomotives, number | 57,220| 97.0 | 55.9 - Locomotives, weight (tons) | 4,158,000| 258.0 | 113.7 - | | | - Passenger cars (number) | 46,026| 87.2 | 35.9 - | | | - Freight cars, number | 2,113,450| 154.6 | 63.1 - Freight cars, capacity (tons) | 73,126,370| 340.5 | 109.0 - | | | - Average tons in train | 388| 116.9 | 59.6 - | | | - Employes, number | 1,524,000| 116.2 | 64.0 - Employes, compensation |$1,003,270,000| 157.4 | 91.8 - Proportion of gross earnings | 41.00| 1.4 | 3.0 - Proportion of operating expenses | 62.10| 2.7 | 1.7 - | | | - Taxes | $91,280,000| 230.8 | 96.9 - Per mile of line | 390| 116.6 | 57.9 - Proportion of gross earnings | 3.73| 30.4 | 5.6 - ------------------------------------+--------------+--------+-------- - -There is not a line or figure of this table, with its percentages -of increase, that does not testify at once to the amazing growth of -American railways and to the equally amazing economical basis upon -which they render incalculable services to the American people on -terms that challenge the admiration of less favored peoples. - - -REVIEW OF THE LAST THREE CALENDAR YEARS. - -Where the Twenty-second Annual Report of the Interstate Commerce -Commission minimized the loss inflicted on the railways by the -business depression of 1908, the Twenty-third Annual Report -naturally, and by reason of the same cause, minimizes the substantial -recovery of 1909. Where the former showed a loss in gross earnings of -only $164,464,941 below the preceding year, when the actual result -of the depression was nearly $300,000,000 ($298,457,576), the latter -shows a recovery of only $21,770,228, when it was approximately -$282,000,000 ($281,934,932). - -The explanation of this discrepancy is, of course, the Commission's -adherence to its own fiscal periods of statistics, which do not -happen, in this instance, to coincide with the ebb and flow of -adversity and prosperity. The true movement of railway traffic -before, during and after the recent business depression is more -nearly reflected in the following figures for the calendar years -1907, 1908 and 1909, compiled from the monthly returns to the -Interstate Commerce Commission, divided into periods of six months: - - -SUMMARY OF GROSS EARNINGS OF THE RAILWAYS DURING THE CALENDAR YEARS -1907, 1908 AND 1909, BY MONTHS AND HALF-YEARLY DIVISIONS. - - ======================+================+================+=============== - | 1907 | 1908 | 1909 - ----------------------+----------------+----------------+--------------- - January | $199,000,000 | $173,611,809 | $183,139,419 - February | 178,300,000 | 161,085,493 | 174,425,832 - March | 211,700,000 | 183,509,935 | 205,700,012 - April | 214,800,000 | 175,071,604 | 196,993,104 - May | 224,800,000 | 174,527,138 | 201,572,072 - June | 223,000,000 | 184,047,216 | 210,356,965 - +----------------+----------------+--------------- - Half year | $1,251,600,000 | $1,051,853,195 | $1,172,185,404 - +----------------+----------------+--------------- - July | $228,672,250 | $195,245,655 | $219,964,739 - August | 241,303,469 | 206,877,014 | 236,559,877 - September | 234,386,899 | 219,013,703 | 246,065,955 - October | 250,575,757 | 233,105,042 | 260,613,053 - November | 220,445,465 | 211,281,504 | 247,370,954 - December | 194,304,969 | 205,455,170 | 222,006,183 - +----------------+----------------+--------------- - Half year | $1,369,688,809 | $1,270,978,038 | $1,432,580,761 - Total | 2,621,288,809 | 2,322,831,233 | 2,604,766,165 - Average mileage | 227,000 | 231,584 | 234,950 - Earnings per mile | $11,548 | $10,030 | $11,086 - | | | - ----------------------+----------------+----------------+--------------- - - -SUMMARY OF OPERATING EXPENSES OF THE RAILWAYS DURING THE CALENDAR -YEARS 1907, 1908 AND 1909, BY MONTHS AND HALF-YEARLY PERIODS, WITH -RATIOS TO GROSS EARNINGS. - - ======================+================+================+=============== - | 1907 | 1908 | 1909 - ----------------------+----------------+----------------+--------------- - January | $134,225,000 | $132,502,830 | $132,659,037 - February | 121,500,000 | 123,773,906 | 125,229,071 - March | 142,425,000 | 128,200,065 | 136,086,299 - April | 144,990,000 | 124,284,164 | 134,612,576 - May | 151,740,000 | 123,932,568 | 135,846,301 - June | 150,525,000 | 124,208,561 | 136,160,775 - +----------------+----------------+--------------- - Half year | $845,405,000 | $756,902,094 | $800,594,059 - Ratio | 67.7% | 72% | 68.3% - +----------------+----------------+--------------- - July | $152,992,445 | $127,978,304 | $141,613,967 - August | 156,837,914 | 131,557,475 | 146,175,338 - September | 156,631,780 | 137,155,143 | 150,621,999 - October | 166,999,266 | 144,195,330 | 156,628,513 - November | 154,150,468 | 136,809,421 | 153,043,599 - December | 142,631,008 | 136,867,622 | 153,699,578 - +----------------+----------------+--------------- - Half year | $930,242,881 | $814,563,295 | $901,782,994 - Ratio | 68% | 64.1% | 62.9% - +----------------+----------------+--------------- - Total | $1,775,647,881 | $1,571,465,389 | $1,702,377,053 - Ratio | 67.8% | 67.7% | 65.4% - +----------------+----------------+--------------- - Net operating revenue | $845,640,928 | $751,365,844 | $902,389,113 - Taxes | 83,156,188 | 86,872,885 | 92,964,510 - +----------------+----------------+--------------- - Net operating income | $762,484,740 | $664,492,959 | $809,424,603 - ----------------------+----------------+----------------+--------------- - -Through these tables the reader is able to trace the upward course -of railway receipts in 1907 to their culmination in October of that -year; their rapid drop to February, 1908; through the hard summer -following to the gradual recovery of 1909, until in October last they -reached the highest monthly total on record. - -Concurrently with this story of the depression of 1908, the tale -of railway distress and of the drastic measures adopted to meet -the emergency can be read in the half-yearly ratios. The ratio for -the fiscal year 1906-'07 was 67.53%, and the shadow of approaching -trouble was shown in an increase of this ratio to 67.7% for the first -six months in the table. By December this ratio had risen to 73.40%. -The enormous receipts of the autumn months held the ratio for the -six months down to 68%. In February, 1908, it marked the high and -ruinous figure of 76.84, and from that point the trend, due to severe -retrenchments, was steadily downward until it touched 60.10% in -October, 1909. - -The ratio of 64.1% for the second half of 1908 is the true measure -of the ability of the railways to cut their expenditures to fit the -times. But they were on bed rock, as the succeeding months of small -receipts proved, when the ratio went up to 72.43% in January, and -averaged the high figure of 68.3% for the first six months of 1909. -The heavy receipts of October and November without a corresponding -expansion of expenditures resulted in the phenomenally low ratios -of these months. But the severity and necessities of operating -conditions in December, 1909, ran the ratio of expenses up to 69.23%. - -The net earnings for the three years under consideration are apt to -lead to erroneous conclusions as to the effect of the depression. -Neither the loss in 1908 nor the recovery in 1909 reflects the -true swing of the pendulum. The one minimizes the loss, because it -conceals the cessation of all constructive work, the curtailment of -betterments and improvements, and the postponement of all purchases -for replacements except of the most immediate and imperative nature; -the other exaggerates the recovery because of heavy receipts without -the resumption of the concurrent expenditures that should attend -them. The railways in the fall of 1909 were simply doing business -on the margin of facilities provided during the fat months of 1907 -in anticipation of a continuation of prosperous times. Some idea of -the extent of this margin may be gained from the parking of 400,000 -freight cars in the yards with 200,000 in the shops in April, 1908. -At no time since has this margin been wholly exhausted. - -But a continuation of traffic on the scale of the past six months -will necessitate an immediate expenditure of $100,000,000 to -$150,000,000 for the replacement of freight cars alone. - - -INCOME ACCOUNT FOR THE CALENDAR YEAR 1909. - -The monthly summaries issued by the Interstate Commerce Commission -from time to time afford the details for the construction of the -following statement of the transportation revenues and expenses of -the railways for the calendar year 1909, from which the averages per -mile and the ratios have been computed on the basis of 234,950 miles -of operated line. - - -STATEMENT OF OPERATING RECEIPTS AND EXPENSES OF THE RAILWAYS OF THE -UNITED STATES FOR THE CALENDAR YEAR ENDING DECEMBER 31, 1909, WITH -AMOUNTS PER MILE AND RATIOS. - -(Average miles of line operated, 234,950.) (a) - - ====================================+================+=========+======== - | | |Ratio to - | Amount |Per Mile | Gross - | | |Earnings - ------------------------------------+----------------+---------+-------- - Receipts from: | | | - Freight | $1,796,258,314 | $ 7,645 | 68.96 - Passengers | 601,722,959 | 2,561 | 23.10 - Other transportation revenues | 182,706,090 | 777 | 7.01 - Non-transportation sources | 24,080,802 | 103 | .93 - +----------------+---------+-------- - Total revenues | $2,604,766,165 | $11,086 | 100.00 - | | | - Expenses: | | | - Maintenance of way and structures | $ 339,167,666 | $ 1,448 | 13.06 - Maintenance of equipment | 387,155,080 | 1,644 | 14.83 - Traffic expenses | 53,257,408 | 223 | 2.01 - Transportation | 857,339,037 | 3,650 | 32.92 - General expenses | 65,441,053 | 280 | 2.52 - Unclassified | 16,809 | -- | -- - +----------------+---------+-------- - Total expenses | $1,702,377,052 | $ 7,245 | 65.35 - Net operating revenues | 902,389,112 | 3,841 | 34.65 - Profit from outside operations | 3,367,713 | 14 | - +----------------+---------+-------- - Net revenues | $ 905,756,825 | -- | -- - Taxes | 92,964,510 | 395 | 3.56 - +----------------+ | - Net income | $ 812,792,315 | $ 3,460 | - ------------------------------------+----------------+---------+-------- - - (a) At the close of the year the reports covered 236,166 miles of - operated line. - -Unfortunately there are no similar figures for the calendar year -1907 with which comparisons may be made, but the official returns -for the year ending June 30, 1907, when railway earnings reached -their maximum before the panic of that year, afford the following -instructive comparisons: - - - ===============================+=====================+================ - | Year to | Year to - | June 30, 1907 | Dec. 31, 1909 - -------------------------------+---------------------+---------------- - Gross earnings | $2,589,105,578 | $2,604,766,165 - Per mile | 11,383 | 11,086 - Operating expenses | 1,748,515,814 | 1,702,377,053 - Per mile | 7,687 | 7,245 - Ratio | 67.53 | 65.35 - Net revenues | 840,589,764 | 902,389,112 - Per mile | 3,696 | 3,841 - Taxes | 80,108,006 | 92,964,510 - Per mile | 367 | 395 - -------------------------------+---------------------+---------------- - -It will be perceived that while the earnings in 1909 exceeded those -of 1907 by over 15½ millions they were almost $300 less per mile, -while the operating expenses were actually $442 less per mile. The -decreased operating ratio in 1909 bears unmistakable testimony as to -where the increase in net revenues came from. - -With an increase of nearly 9,000 miles of line only $339,167,665 -was spent on maintenance of way and structures in 1909 against -$343,544,907 in 1907, and the urgent demands of returning activity -made the expenditures on this account liberal in comparison with -those for the year ending June 30, 1909, i. e. $311,368,083, or -$1,336 per mile. It will be years before the railways recover from -the economies forced on them by the loss of $300,000,000 in revenues -in 1908. - - -UNREGULATED REGULATION OF AMERICAN RAILWAYS. - -Today the railways of the United States are "cribb'd, cabin'd and -confined" in their services to the American people, not so much by -the laws for their regulation as by the spirit in which those laws -are administered. To the general tenor and purposes of statutory -regulation the railways have become largely reconciled; but from the -spirit in which the laws are sought to be enforced, there has to be -continuous appeal to the courts and to the public sense of justice. - -Regulation of railways has been persistently interpreted by political -Commissions to spell reduction of rates and exacting conditions -that would drain the purse of Fortunatus. Between 1889, when the -Interstate Commerce Commission's statistics first became a valuable -index of railway operation, and 1909, the average rate per ton mile -has fallen from 9.22 to 7.55 mills. On the freight tonnage of 1909 -this meant a reduction of over $372,000,000 in the yearly revenues of -the railways. The railways suffered that loss from their income when -they needed every cent of it to maintain the people's highway in a -condition to transport the people's ever-growing traffic. - -The railways lost it, but who got it? The people? Search the market -reports of the land, from Eastport to San Diego, and you will find -incontestable proof that not one cent of these millions reached the -pockets of the people, in whose name all regulation of railways -is demanded and for whose benefit all reductions are claimed. The -average rate on all commodities has gone down, the price of every -commodity transported by the railways has gone up. Who has pocketed -the difference? - -There can be only one answer--the producers, the shippers and the -traders. Today nine-tenths of the increased cost of living in the -United States is chargeable to this ever vigilant and aggressive -coalition. For everything the railways must buy--labor, supplies, -money--they have to pay the advanced prices of the day. But the -protests of the shippers and the rulings of the Commission forbid -their raising a rate or adopting a money-saving economy. They -attempted to readjust freight rates in 1900 one-fiftieth of a cent -per ton mile above a ruinously low average and the outraged shippers -secured the passage of the Hepburn Act! - -How the federal Commission and shippers work together for the -so-called regulation of the railways is evidenced in the unbroken -tenor of the decisions handed down by the Commission. Out of 357 -decisions printed during the year 1908-09, no less than 219, or -61.3%, were orders granting reductions of rates or reparation for -charges found comparatively excessive or unreasonable. In not one -case in a score was the rate found excessive or unreasonable per se. -In only one case out of the 357 was an increased rate ordered, and -this was done reluctantly and as unavoidable. - -Although the decisions are for the most part the unanimous finding of -the Commission, the following table distributes the opinions of the -year among its members into dismissals and reductions or reparations -among the Commissioners writing them: - - - =================================+============+============== - | | Granting - Opinion by | Dismissing | Reductions or - | Complaints | Reparation - ---------------------------------+------------+-------------- - Chairman Knapp | 21 | 20 - Commissioner Clement | 16 | 29 - " Prouty | 13 | 40 - " Cockerill | 20 | 20 - " Lane | 20 | 42 - " Clark | 29 | 28 - " Harlan | 19 | 40 - +------------+-------------- - Total | 138 | 219 - Per cent | 39.7 | 61.3 - ---------------------------------+------------+-------------- - -Some of the cases upon which the Commission is called on to pass are -so trivial as to be beneath the notice of a justice's court, while -others involve issues so momentous as to threaten the whole structure -of railway rates by which the unparalleled prosperity of the country -has been made possible. - -But the number of cases reaching the Commission for adjudication is -insignificant compared with the grist of informal reparation orders -that runs an endless stream through its regulating rollers. In the -twelve months from December 1, 1908, to November 30, 1909, these -aggregated no less than 2,223 separate orders involving amounts all -the way from 47 cents to $14,717.64, as seen in the following orders: - - 7100. _Larabee Flour Mills Company_ v. _Atchison, Topeka & - Santa Fe Railway Company_. September 11, 1909. Refund of - $0.47 on shipment of cotton bags from Kansas City, Mo., to - Hutchinson, Kas., on account of excessive rate. - - 3629. _Lackawanna Steel Company_ v. _Central Railroad Company - of New Jersey_. June 26, 1909. Refund of $14,717.64 on - shipments of spiegeleisen from Newark, N. J., and Hazard, Pa., - to Buffalo, N. Y., on account of excessive rates. - -Multiplying these awards by the number of orders enables the reader -to imagine the range of their respective pettiness or portentous -possibilities. - -It is doubtful if the American people, or even the Interstate -Commerce Commissioners themselves, realize how the formal decisions -and informal orders of the Commission are slowly but surely whittling -away the safe margin of American railway profits. At the rate of two -decisions every three days and forty informal orders per week, the -work of incipient confiscation proceeds with remorseless enthusiasm. - -With the best intentions in the world the present Interstate Commerce -Commission is so enmeshed in its own anti-railway traditions, so -enamored of the administrative control theories of its statistician, -so covetous of unbridled, irresponsible authority to tear down where -it has no constructive capacity, that anything like co-operation -between the Commission and the railway management for the public good -seems out of the question. - -To the writer it appears that only blind rejection of facts can find -any conserving element in the regulation of railways as at present -administered. Signs of a helpful disposition in official acts are -entirely lacking. The Senate and House calendars groan under bills -for the further regulation and restriction of the railways, but not -one contains a promise of relief. For not one is there a genuine -public demand. - -And what is the situation as this is written? It can be stated in -a few lines. As a consequence of the drop of $300,000,000 in gross -earnings in 1908, the railways in 1908 and 1909 cut $277,000,000 -out of their expenditures. This was done mainly at the expense of -maintenance of way and structures and in a cessation in the purchase -of equipment, but the so-called economies of postponed expenditures -permeated every line of railway extension, operation and replacement. -In 1908, with 6,000 more miles of track to maintain, $18,788,217 less -was spent for maintenance than in 1907, and in 1909 with 12,000 more -miles of track $32,176,824 less was expended. - -Between 1897 and 1907 the expenditures for maintenance of way -increased from $159,434,403 to $343,544,907, or over 115%. This means -an increase of approximately 8% a year, or at least $25,000,000 on -present plant. Therefore at least $43,000,000 was withheld from this -essential line of railway maintenance in 1908 and fully $82,000,000 -in 1909, a total of $125,000,000. The saving on equipment was nearly -as great and is dealt with in the body of the report. - -A comparison of the income accounts for the month of October, 1907 -and 1908, corroborates the foregoing statement as to the economies -forced on the railways by the adverse winds of regulation and -business depression. - - - =================================+===============+============= - Month of October | 1907 | 1909 - ---------------------------------+---------------+------------- - Earnings from operation | $250,575,757 | $260,613,053 - Operating expenses | 166,999,266 | 156,628,513 - +---------------+------------- - Net earnings | $ 83,576,491 | $113,984,540 - Operating ratio | 66.64 | 60.10 - ---------------------------------+---------------+------------- - -The canker worm in this, the most promising flower of returning -prosperity, is revealed in the abnormal ratio of 60.10 for October, -1909, or nearly 7% below the American average. Now this 7% on the -revenues of last October means that in some way over $16,000,000 less -than normal was expended on American railways in that month alone. -And October, 1909, was only a sample of how railways had cut expenses -for 24 consecutive months. - -That this should be so, with no reduction in the scale of wages or -the price of supplies, is, in the view of the writer, a situation -of serious national concern. Happily he is not charged with any -commission to suggest how or where the deferred debt of nearly -$300,000,000 to efficient railway road and equipment is to be met. -But that it must be met, to place the railways in as good condition -as they were before the panic of 1907, when the cry was for more, -not less facilities, does not admit of question. If it, together -with the advance in wages now being adjusted, is to be met out of -income, only an advance in freight rates can take care of it. If out -of fresh capital, it can only be coaxed from the pockets of shrewd -investors by rates of interest that discount the risk attendant on -the unregulated and irresponsible regulation of railway revenues, -resources and responsibilities. And it is proposed to make an -irresponsible Commission, unfamiliar with the necessities of the -situation and unversed in the ways and means of raising capital -arbiters of these necessities, ways and means. - -All attempts to meet such a situation by legislation, unless it be -directed to a reform of the instrumentalities of regulation, must -prove ineffectual. In a broader, saner, more helpful administration -of the laws already on the federal and state statute books lies the -hope for the future of the great American transportation industry. -"Whate'er is best administered is best." - - -THE BUREAU'S STATISTICS FOR 1909. - -Thus far what has been written has related almost wholly to the -financial aspect of the transportation industry as presented through -the monthly reports of the railways. While these in their way serve -as an admirable barometer in keeping the public informed as to -general business conditions throughout the Union, they throw little -light upon the railway operations behind the financial results. They -are absolutely dumb on the main question upon which all railway -legislation and regulation should hinge--adequate and efficient -public service. - -In the following pages the Bureau attempts to remedy this omission, -in the essential particulars for the year ending June 30, 1909. The -reports from which its summaries have been compiled were received -almost a month earlier this year than last, but the publication -of the Bureau's statistics has been delayed in order to make the -usual comparisons with the Official Statistics for 1908. The writer -is advised from Washington that the fault for this unusual delay -rests with the Government printer--whose office is overwhelmed with -Congressional and departmental work--and not with the Interstate -Commerce Commission or its Bureau of Statistics and Accounts. - -For the first time, the reports to this Bureau cover the division of -freight movement into the seven chief commodities; the separation -of revenues from Mail and Express; the distribution of expenses for -injuries and damages, and the summaries of expenses for maintenance -of way and equipment, traffic expenses, transportation expenses and -general expenses. It is believed that with the addition of these -accounts the annual report of the Bureau has become so comprehensive -as to warrant its publication hereafter at an earlier date, without -waiting on the publication of the official statistics for the -preceding year. - -This year the Bureau has received reports from 368 roads operating -221,132 miles of line or approximately 94.4% of the mileage and -carrying over 97% of the traffic of the country. Last year reports -were received covering 216,460 miles. The increase of 4,672 miles -fairly represents the actual increase of railway mileage in the -United States for the twelve months. - -In presenting these statistics, the writer has endeavored to make -them as colorless summaries of facts as an earnest desire to arrive -at the truth permits. Such comment as accompanies them will be -confined to comparisons and elucidation and not to the furtherance of -any personal theories. - -For the sake of brevity, the Interstate Commerce Commission will be -referred to herein as the "Commission"; the Commission's "Statistics -of Railways in the United States" as "Official Statistics" and "the -year ending June 30th" will be implied before the year named unless -otherwise specified. - -The statements as to foreign railways are compiled from the latest -official sources available. - -Here the writer wishes to record his personal appreciation of the -assistance rendered by the executives and accounting officials of -the railways, whose co-operation has made this report possible. In -the midst of increasing burdens imposed on them in reporting to -federal and state commissions and legislatures, the requests for -information from this Bureau might have seemed excusably negligible. -The completeness of the report itself testifies to the cordiality -with which the Bureau's work is viewed. - -Acknowledgments are also due to Federal and State officials for their -uniform courtesy in responding to the many requests from this Bureau, -and the writer has been much gratified to receive from the chief -government railway official of one foreign country the assurance that -he considers its Annual Report "one of the most comprehensive and -useful compilations of statistical matter relating to railways that -has come into his hands." - - SLASON THOMPSON. - - CHICAGO, April 30, 1910. - - - - -I - -MILEAGE IN 1909 - - -According to the preliminary income report of the Interstate Commerce -Commission for the year ending June 30, 1909, compiled from the -monthly returns, the average railway mileage operated in the United -States during the year was 233,002.67 miles; and the total mileage -operated at the end of the year was 234,182.70. - - - ============================================+================= - The former total is made up of: | - Large roads operating 251 miles or more | 214,916.86 miles - Small roads " 250 " or less | 16,801.52 " - Switching or terminal companies | 1,284.29 " - +----------------- - Total | 233,002.67 miles - --------------------------------------------+----------------- - -The returns to this Bureau, compiled from the annual reports for the -same year, cover 221,132 miles, against 216,460 in 1908, an increase -of 4,672 miles. Reports to the Commission for December, 1909, showed -a total operated mileage of 236,166 miles. - -In its report dated December 21, 1909, the Commission stated that for -the year ending June 30, 1908, substantially complete returns had -been received for 230,494 miles of line operated, including 8,661.34 -miles used under trackage rights. These are the official figures of -mileage for 1908, which will be used in all subsequent comparisons -with the Bureau's figures for 1909--the latter, however, may include -some switching and terminal mileage excluded from the former. - -Of the mileage reporting to this Bureau, 8,927 miles were operated -under trackage rights, leaving a net of 212,205 miles of line covered -by capitalization and rental. - -Assuming that the total operated mileage in the United States at the -close of the fiscal year 1909 was 234,182, the complete returns to -this Bureau cover approximately 94.4% of the mileage and 97% of the -traffic of all the railways in the United States. No attempt has been -made, or will be made, to segregate the returns of switching and -terminal companies from the Bureau's figures, of which they are an -integral part. - -The first summary under this table presents the _operated_ mileage -reported to this Bureau in 1909 and 1908, classified by states and -territories in comparison with the official figures of mileage owned -in 1908, with relation to area and population of the respective -territorial divisions: - - -SUMMARY OF RAILWAY MILEAGE IN THE UNITED STATES BY STATES AND -TERRITORIES IN 1909, 1908 AND 1907 AND ITS RELATION TO AREA AND -POPULATION. - - ================|=================|==========|============|=========== - |Bureau's Figures | | Miles of | - +--------+--------+ 1907(a) | Line |Inhabitants - | 1909 | 1908 | Owned | per 100 | per - |Operated|Operated|(Official)|Sq. Miles of| Mile of - | Miles | Miles | Miles | Territory | Line - ----------------+--------+--------+----------+------------+----------- - Alabama | 4,917 | 4,644 | 4,840 | 9.77 | 406 - Arkansas | 3,996 | 3,758 | 4,861 | 9.21 | 301 - California | 6,376 | 6,251 | 6,664 | 4.38 | 243 - Colorado | 5,229 | 5,096 | 5,295 | 5.11 | 114 - Connecticut | 930 | 936 | 1,016 | 20.96 | 999 - Delaware | 342 | 343 | 336 | 17.14 | 615 - Florida | 3,117 | 2,960 | 3,970 | 7.39 | 148 - Georgia | 6,485 | 6,293 | 6,783 | 11.65 | 361 - Idaho | 1,651 | 1,568 | 1,731 | 2.09 | 102 - Illinois | 13,216 | 12,796 | 12,137 | 21.80 | 442 - Indiana | 7,774 | 7,326 | 7,259 | 20.24 | 388 - Iowa | 9,923 | 9,865 | 9,867 | 17.87 | 252 - Kansas | 9,125 | 9,175 | 8,936 | 10.94 | 184 - Kentucky | 3,229 | 3,205 | 3,441 | 8.71 | 690 - Louisiana | 3,860 | 3,805 | 4,558 | 10.43 | 326 - Maine | 1,984 | 1,750 | 2,093 | 7.19 | 361 - Maryland | 1,325 | 1,278 | 1,432 | 14.90 | 906 - Massachusetts | 2,079 | 2,079 | 2,112 | 26.45 | 1,492 - Michigan | 8,384 | 8,312 | 8,941 | 15.63 | 302 - Minnesota | 8,258 | 8,100 | 8,246 | 10.46 | 236 - Mississippi | 3,545 | 3,281 | 4,081 | 9.00 | 416 - Missouri | 8,200 | 8,141 | 8,039 | 11.79 | 429 - Montana | 3,537 | 3,406 | 3,307 | 2.28 | 91 - Nebraska | 6,099 | 6,083 | 5,932 | 7.76 | 200 - Nevada | 1,621 | 1,540 | 1,700 | 1.55 | 28 - New Hampshire | 1,211 | 1,211 | 1,248 | 13.86 | 369 - New Jersey | 2,046 | 2,046 | 2,250 | 30.59 | 917 - New York | 8,106 | 7,989 | 8,472 | 17.86 | 957 - North Carolina | 3,567 | 3,332 | 4,385 | 9.21 | 473 - North Dakota | 4,026 | 4,025 | 3,906 | 5.56 | 118 - Ohio | 8,951 | 9,041 | 9,261 | 22.75 | 502 - Oklahoma | 5,572 | 5,532 | 2,821 | 7.84 | 202 - Oregon | 1,687 | 1,600 | 1,939 | 2.07 | 237 - Pennsylvania | 10,532 | 10,224 | 11,259 | 25.25 | 621 - Rhode Island | 192 | 190 | 208 | 20.11 | 2,262 - South Carolina | 2,892 | 2,975 | 3,271 | 11.02 | 451 - South Dakota | 3,646 | 3,568 | 3,703 | 4.82 | 122 - Tennessee | 3,283 | 3,528 | 3,725 | 9.01 | 600 - Texas | 12,847 | 12,932 | 12,932 | 4.95 | 263 - Utah | 1,820 | 1,772 | 1,957 | 2.42 | 156 - Vermont | 941 | 926 | 1,071 | 11.98 | 351 - Virginia | 4,099 | 3,900 | 4,056 | 10.43 | 495 - Washington | 3,353 | 3,207 | 3,767 | 5.69 | 152 - West Virginia | 2,846 | 2,777 | 3,264 | 13.62 | 320 - Wisconsin | 7,039 | 6,900 | 7,459 | 14.01 | 304 - Wyoming | 1,429 | 1,414 | 1,526 | 1.56 | 70 - Arizona | 1,705 | 1,684 | 1,928 | 1.71 | 71 - New Mexico | 2,782 | 2,521 | 2,965 | 2.42 | 74 - District of | | | | | - Columbia | 51 | 42 | 31 | 53.53 | 9,709 - Canada(b) | 1,343 | 1,273 | | | - +--------+--------+----------+------------+----------- - United States |221,132 |216,460 | 227,671 | 7.74 | 370 - ----------------+--------+--------+----------+------------+----------- - - (a) Official mileage by States not available for 1908. - - (b) Mileage operated in Canada by American roads. - - -SUMMARY OF RAILWAY MILEAGE IN THE UNITED STATES BY STATES AND -TERRITORIES IN 1909 AND 1908 AND ITS RELATION TO AREA AND -POPULATION--Continued. - - =================================+===========+============+=========== - | 1908 | Miles of | - | Owned | Line |Inhabitants - |(Official) | per 100 | per - | Miles |Sq. Miles of| Mile of - | | Territory | Line - ---------------------------------+-----------+------------+----------- - United States, 1909 | 234,182 | 7.88 | 379 - " " 1908 | 230,494 | 7.76 | 378 - " " 1907 | 227,671 | 7.74 | 370 - " " 1906 | 222,575 | 7.55 | 373 - " " 1905 | 217,018 | 7.34 | 378 - " " 1904 | 212,577 | 7.20 | 379 - " " 1903 | 207,187 | 7.00 | 384 - " " 1902 | 201,673 | 6.82 | 388 - " " 1901 | 196,075 | 6.64 | 391 - " " 1900 | 192,941 | 6.51 | 393 - " " 1899 | 188,277 | 6.37 | 395 - " " 1898 | 185,371 | 6.28 | 394 - " " 1897 | 182,920 | 6.21 | 390 - " " 1896 | 181,154 | 6.15 | 384 - " " 1895 | 179,176 | 6.08 | 382 - " " 1894 | 176,603 | 6.02 | 379 - " " 1893 | 170,332 | 5.94 | 377 - " " 1892 | 165,691 | 5.78 | 380 - " " 1891 | 164,603 | 5.67 | 380 - " " 1890 | 159,272 | 5.51 | 384 - ---------------------------------+-----------+------------+----------- - -The column of operated mileage in 1909 testifies to the comprehensive -character of the reports to this Bureau, while the last two columns -demonstrate how railway extension has kept pace with the growth -of the country. Territorially the United States now has 43% more -railway mileage than it had in 1890, and the last column proves that -the mileage is greater proportionately to the population than it -was twenty years ago. The contrast in the density of population per -mile of line between Rhode Island and Nevada is illustrative of the -startling diversity of conditions under which railways are operated -in the United States. - - -RAILWAYS BUILT IN 1909. - -The new mileage reported as constructed in 1909 tallies more nearly -than usual with the increase in mileage for which operating reports -are received. As reported in the _Railway and Engineering Review_, -February 19, 1910, the new mileage by states was as follows: - - -MILES OF LINE CONSTRUCTED DURING THE CALENDAR YEAR 1909 BY STATES AND -TERRITORIES. - - ==============================+======== - | Miles - State | Built - | 1909 - ------------------------------+-------- - Alaska | 48 - Alabama | 35.62 - Arkansas | 155.20 - Arizona | 48.02 - California | 248.60 - Colorado | 98.13 - District of Columbia | 3.81 - Florida | 102.81 - Georgia | 138.70 - Idaho | 50.49 - Illinois | 23.45 - Indiana | 10.82 - Kansas | 87.21 - Kentucky | 101.52 - Louisiana | 131.57 - Maine | 87.00 - Maryland | 4.68 - Michigan | 77.58 - Minnesota | 164.70 - Mississippi | 36.60 - Missouri | 11.84 - Montana | 125.08 - Nebraska | 13.15 - Nevada | 304.50 - New Hampshire | 1.55 - New Jersey | 33.95 - New Mexico | 35.00 - New York | 52.20 - North Carolina | 111.92 - Ohio | 18.41 - Oklahoma | 163.20 - Oregon | 158.38 - Pennsylvania | 106.66 - South Carolina | 66.14 - Tennessee | 94.26 - Texas | 650.61 - Utah | 28.00 - Virginia | 85.75 - Washington | 209.84 - West Virginia | 131.78 - Wisconsin | 68.30 - Wyoming | 15.57 - ------------------------------+-------- - Total |4,040.60 - Second track, sidings, etc. |1,515.07 - |-------- - Total all tracks |5,555.67 - ------------------------------+-------- - - -RAILWAY MILEAGE OF FOREIGN COUNTRIES. - -The ratios of railway mileage to area and population in the table on -page 19 may be compared with those of foreign countries for 1907 in -the following statement: - - -SUMMARY OF THE WORLD'S RAILWAYS AND RATIO OF THE MILEAGE TO THE AREA -AND POPULATION OF EACH COUNTRY IN 1907. - - _From Archiv fur Eisenbahnwesen_, May-June, 1909. - - ===================================+=========+============+=========== - | | Miles of |Inhabitants - | Miles | Line per | per - Countries | 1907 | 100 Square | Mile of - | | Miles | Line - -----------------------------------+---------+------------+----------- - Europe: | | | - Germany | 36,065 | 17.2 | 1,563 - Austria-Hungary | 25,852 | 10.0 | 1,818 - Great Britain and Ireland | 23,084 | 19.0 | 1,785 - France | 29,716 | 14.2 | 1,316 - Russia in Europe and Finland | | | - (2,057 miles) | 36,279 | 1.8 | 2,941 - Italy | 10,312 | 9.3 | 3,125 - Belgium | 4,874 | 42.8 | 1,370 - Netherlands and Luxemburg | 2,230 | 15.0 | 2,564 - Switzerland | 2,763 | 12.2 | 1,205 - Spain | 9,227 | 4.8 | 1,923 - Portugal | 1,689 | 4.7 | 3,226 - Denmark | 2,141 | 14.3 | 1,150 - Norway | 1,606 | 1.3 | 1,390 - Sweden | 8,321 | 4.8 | 617 - Servia | 379 | 2.1 | 6,666 - Roumania | 1,994 | 3.2 | 2,941 - Greece | 771 | 3.1 | 3,125 - Turkey in Europe, Bulgaria and | | | - Rumelia | 1,967 | 1.9 | 5,000 - Malta, Jersey and Isle of Man | 68 | 16.1 | 5,273 - +---------+------------+----------- - Total for Europe, 1907 | 199,345 | 5.3 | 1,887 - " " " 1906 | 196,437 | 5.2 | 1,993 - " " " 1905 | 192,507 | 5.1 | 2,084 - " " " 1904 | 189,806 | 5.0 | 2,084 - " " " 1903 | 186,685 | 5.0 | 2,084 - " " " 1902 | 183,989 | 4.9 | 2,127 - " " " 1901 | 180,817 | 4.8 | 2,174 - " " " 1900 | 176,396 | 4.7 | 2,220 - " " " 1899 | 172,953 | 4.6 | 2,220 - " " " 1898 | 167,614 | 4.4 | -- - " " " 1897 | 163,550 | 4.3 | -- - " " " 1896 | 160,030 | 4.2 | -- - +---------+------------+----------- - Increase in eleven years | 39,315 | -- | -- - | | | - Other Foreign Countries in 1907: | | | - Canada | 22,447 | 0.6 | 373 - Mexico | 13,612 | 1.8 | 321 - Brazil | 10,713 | .32 | 1,408 - Argentine Republic | 13,673 | 1.3 | 356 - Peru | 1,332 | .32 | 3,449 - Uruguay | 1,210 | 1.8 | 769 - Chili | 2,939 | 1.0 | 1.123 - Central Russia in Asia | 2,808 | 1.3 | 2,777 - Siberia and Manchuria | 5,664 | .11 | 1,020 - Japan | 5,012 | 3.1 | 9,090 - China | 4,162 | 0.1 | 85,820 - British India | 29,892 | 1.4 | 10,000 - New Zealand | 2,570 | 2.4 | 324 - Victoria | 3,428 | 3.9 | 351 - New South Wales | 3,471 | 1.1 | 394 - South Australia | 1,924 | 0.16 | 188 - Queensland | 3,404 | 0.5 | 142 - Egypt | 3,445 | 1.0 | 2,860 - Cape Colony | 3,804 | 1.3 | 463 - Natal | 976 | 3.5 | 793 - Transvaal | 1,361 | 1.1 | 636 - Recapitulation: | | | - Total for Europe | 199,345 | 5.3 | 1,889 - " " America | 302,927 | 2.3 | 524 - " " Asia | 56,283 | 0.38 | 15,540 - " " Africa | 18,516 | 0.16 | 8,014 - " " Australia | 17,766 | 0.6 | 279 - " " the whole world | 594,837 | -- | -- - -----------------------------------+---------+------------+----------- - -Of the above total railway mileage for the whole world, no less -than 332,360 miles, or nearly 56%, is operated in English speaking -countries, the mileage of the United States alone being over 35% of -the whole. - -To the most casual student the disparity between the density of -population to railway mileage in the United States and Europe of one -to five, is as apparent as it is significant of our necessity for so -much greater provision of transportation facilities per capita. If -our per capita mileage were relatively the same as that of Europe, -the United States would be set back to the transportation facilities -of 1869, when the completion of the Union Pacific raised its total -mileage to 47,254 miles. But even then it had a ratio of one mile -of railway to 810 inhabitants, which was higher than Europe's ratio -today. - -Clearly there is nothing in the statistics of the railway mileage -of the world to account for the epidemic of railway phobia that -periodically convulses the people and legislatures of the United -States of America. - - -MILEAGE OF ALL TRACKS IN 1909. - -Of almost equal importance to the mileage of American railways are -the auxiliary tracks upon which the extent and efficiency of their -public service so largely depends. As the next statement shows, these -continue to increase more rapidly than the miles of line. - - -SUMMARY OF MILEAGE OF SINGLE TRACK, SECOND TRACK, THIRD TRACK, FOURTH -TRACK AND YARD TRACK AND SIDINGS, IN THE UNITED STATES, 1897 TO 1909. - - ==============+===========+========+=======+=======+========+========= - | | | | | | Total - | Single | Second | Third |Fourth | Yard | Mileage - Year | Track | Track | Track |Track | Track | Operated - | | | | | and | (all - | | | | |Sidings | tracks) - --------------+-----------+--------+-------+-------+--------+--------- - 1909 (94.4%) | | | | | | - Bureau | 221,132 | 20,637 | 2,186 | 1,491 | 80,669 | 326,115 - 1908 Official |(a)230,494 | 20,209 | 2,081 | 1,409 | 79,452 | 333,646 - 1907 | 227,455 | 19,421 | 1,960 | 1,390 | 77,749 | 327,975 - 1906 | 222,340 | 17,396 | 1,766 | 1,279 | 73,760 | 317,083 - 1905 | 216,973 | 17,056 | 1,609 | 1,215 | 69,941 | 306,796 - 1904 | 212,243 | 15,824 | 1,467 | 1,046 | 66,492 | 297,073 - 1903 | 205,313 | 14,681 | 1,303 | 963 | 61,560 | 283,821 - 1902 | 200,154 | 13,720 | 1,204 | 895 | 58,220 | 274,195 - 1901 | 195,561 | 12,845 | 1,153 | 876 | 54,914 | 265,352 - 1900 | 192,556 | 12,151 | 1,094 | 829 | 52,153 | 258,784 - 1899 | 187,543 | 11,546 | 1,047 | 790 | 49,223 | 250,142 - 1898 | 184,648 | 11,293 | 1,009 | 793 | 47,589 | 245,333 - 1897 | 183,284 | 11,018 | 995 | 780 | 45,934 | 242,013 - --------------+-----------+--------+-------+-------+--------+--------- - - (a) To the figures for 1908 should be added the 1,626 miles of main - track and 2,085 of yard track and sidings of switching and - terminal companies, excluded by the Official Statistician, raising - the total of all tracks to 337,357. - -By adding the auxiliary trackage reported to this Bureau for 1909 -to the 234,182 miles of operated line reported to the Interstate -Commerce Commission for June 30 of that year, it appears that the -total of all tracks on that date was _upwards of 340,000 miles_. - -It will be observed that in every instance the mileage of second, -third and fourth track and yard track and sidings reported to this -Bureau in 1909, the year of comparative stagnation in railway -construction, exceeded the complete mileage of these tracks in 1908 -reported to the Commission. - -The above table (with the Commission's figures for single track) -shows that where there has been an increase of only 50,798 miles of -single track, or 27.7%, in twelve years, all trackage has increased -over 98,000, or 42%, during the same period. It also shows that -during the same twelve years second track has increased 87%; third -track 120%; fourth track 91%, and yard track and sidings 76%. - - -MILEAGE AND TRACK OF BRITISH RAILWAYS. - -As English railways are so often brought into comparison with -American railways, it is well to know the total of all tracks in -the United Kingdom as well as the mileage. Both are given in the -following statement, compiled from returns to the British Board of -Trade for the years ending December 31, 1904 to 1908: - - ---------------------------+--------+--------+--------+--------+------- - Description of Track | 1908 | 1907 | 1906 | 1905 | 1904 - ---------------------------+--------+--------+--------+--------+------- - Single track (miles) | 23,209 | 23,112 | 23,063 | 22,870 | 22,601 - Second track | 13,048 | 12,963 | 12,934 | 12,819 | 12,692 - Third track | 1,435 | 1,385 | 1,363 | 1,324 | 1,271 - Fourth track | 1,141 | 1,103 | 1,091 | 1,067 | 1,030 - Fifth track | 208 | 195 | 186 | 170 | 153 - Sixth track | 122 | 117 | 111 | 97 | 85 - Seventh track | 59 | 51 | 47 | 40 | 35 - Eighth to twentieth tracks | 94 | 87 | 75 | 44 | 34 - Sidings | 14,353 | 14,145 | 14,032 | 13,891 | 13,733 - +--------+--------+--------+--------+------- - Total trackage | 53,669 | 53,189 | 52,904 | 52,322 | 51,634 - ---------------------------+--------+--------+--------+--------+------- - -Here it will be perceived the mileage of British roads increased only -608 miles and the trackage only 2,035 miles in four years. During the -same period, as shown in the preceding table, the mileage of American -railways increased 18,251 miles and their total trackage 36,543. It -is this continuous demand for increased mileage and trackage in the -United States, to say nothing of equipment, that differentiates the -problem confronting American railway management from British. In the -United States we need more railways and still more railways, and the -problem is to get the capital on reasonable terms to provide the -facilities. - -In railroad mileage alone we have over ten times that of the United -Kingdom and we have more than six times as many miles of track. We -have enough trackage in our yards and sidings to double track all the -British railways, with enough over to put four tracks where they have -only two tracks now. - - - - -II - -EQUIPMENT - -AN OBJECT LESSON IN EQUIPMENT. - - -No car shortage occurred to interrupt the orderly movement of railway -traffic during the fiscal year 1908-09. On the contrary, there was -an unprofitable surplus of cars throughout the year, ranging from -110,912 in September, 1908, to 333,019 in January, 1909. From this -high figure the surplus was slowly reduced by the demands of traffic -until subsequent to the close of the fiscal year, in September last, -it reached a practical level of shortages and surpluses. During the -year there was an average of 150,000 freight cars in the shops, where -in times of ordinary activity the mean would be in the neighborhood -of 100,000. - -These conditions, which prevailed since November, 1907, account for -the greatly reduced purchases of rolling stock during the years 1908 -and 1909 shown in the following record of locomotives and cars built -in the United States during the past eleven years: - - -ELEVEN YEARS' OUTPUT OF CARS AND LOCOMOTIVES. - - _From the Railroad Age-Gazette._ - - ========================+=============+===========+========== - | | Number | - Year | Locomotives | Passenger | Freight - | | Cars | Cars - ------------------------+-------------+-----------+---------- - 1909(a) | 2,887 | 2,849 | 96,419 - 1908(a) | 2,342 | 1,716 | 76,555 - 1907(a) | 7,362 | 5,457 | 284,188 - 1906(a) | 6,952 | 3,167 | 243,670 - 1905(a) | 5,491 | 2,551 | 168,006 - 1904 | 3,441 | 2,144 | 60,806 - 1903 | 5,152 | 2,007 | 153,195 - 1902 | 4,070 | 1,948 | 162,599 - 1901 | 3,384 | 2,055 | 136,950 - 1900 | 3,153 | 1,636 | 115,631 - 1899 | 2,475 | 1,305 | 119,886 - +-------------+-----------+---------- - Total | 46,709 | 26,835 | 1,617,905 - ------------------------+-------------+-----------+---------- - - (a) Includes Canadian output. - -Between 1898 and 1908 the Interstate Commerce Commission reported an -increase of 21,464 locomotives, 11,697 passenger cars, and 856,999 -freight and company cars. Allowing for the Canadian output in the -above table, this would show 22,742 more locomotives, 13,821 more -passenger cars, and 674,023 more freight cars built in ten years -than are accounted for in the official returns. Roughly speaking, -these last figures represent the number of locomotives and cars worn -out beyond repair or destroyed that have to be replaced annually. -It means that provision has to be made every year for the purchase -of new equipment amounting to approximately 5% of locomotives and -passenger cars and 4% of freight cars in order to maintain the -equipment numerically, irrespective of the sums spent on maintaining -the remainder in serviceable condition. - -On the equipment reported by the Commission for 1908 this would -necessitate the following outlay for replacement alone: - - - ======================+===========+=============+=========+============= - | Number | Needed for | Average | Total - | | Replacement | Cost | Cost - ----------------------+-----------+-------------+---------+------------- - Locomotives | 57,698 | 5% = 2,884 | $15,000 | $ 43,260,000 - Passenger cars | 45,292 | 5% = 2,214 | 6,000 | 13,284,000 - Freight cars | 2,100,784 | 4% = 84,031 | 1,000 | 84,000,000 - Company cars | 98,281 | 3,931 | 500 | 1,965,500 - | | | +------------- - Total cost for | | | | - replacing equipment | | | | $142,509,500 - ----------------------+-----------+-------------+---------+------------- - -It is probable that the computed percentage for the replacement of -locomotives and passenger cars is too high and that for freight cars -too low. This is the opinion of operating officials. If so, it would -amount to a set off and the aggregate would still be approximately -$142,000,000 to be expended annually for new equipment to take the -place of old, worn out and discarded rolling stock. Conditions -forbade the expenditure of any such sum in 1908 and 1909. - - -NUMBER AND CAPACITY OF LOCOMOTIVES FOR EIGHT YEARS, 1909 TO 1902. - -Next follows a summary giving the number and capacity of locomotives -for the seven years since the Commission has included capacity in the -published returns: - - - ==========================+========+===========================+======== - | | | Weight | - | | Tractive | without | Average - Year | Number | Power | Tender | Weight - | | (Pounds) | (Tons) | (Tons) - --------------------------+--------+---------------|-----------+-------- - 1909 (94.4% represented) | 55,495 | 1,421,114,798 | 4,033,309 | 72.7 - 1908 Final returns | 57,698 | 1,519,568,551 | 4,071,554 | 71.5 - 1907 | 55,388 | 1,429,626,658 | 3,828,045 | 69.1 - 1906 | 51,672 | 1,277,865,673 | 3,459,052 | 66.9 - 1905 | 48,357 | 1,141,330,082 | 3,079,673 | 63.6 - 1904 | 46,743 | 1,063,651,261 | 2,889,492 | 62.1 - 1903 | 43,871 | 953,799,540 | 2,606,587 | 59.4 - 1902 | 41,225 | 839,073,779 | 2,323,877 | 56.3 - +--------+---------------+-----------+-------- - Increase seven years | | | | - to 1909 | 34.6% | 69.4% | 73.6% | 29.1 - --------------------------+--------+---------------+-----------+-------- - -Complete returns will raise the totals for 1909 approximately to -57,704 locomotives of 1,465,070,000 pounds tractive power and -4,158,000 tons weight, exclusive of tenders. These figures bear out -the conclusion expressed above that the purchase of new locomotives -in 1909 was barely sufficient to replace those abandoned or destroyed -during the year. The loss, however, was in a measure made good by -the greater weight of the new engines. As the average weight of -locomotives in 1899 was approximately 53 tons, the figures just given -indicate an increase of nearly 114% in the weight of all locomotives -during the decade. - -In connection with the estimate of $15,000 put on locomotives in this -report, it is of interest to reproduce the return to the legislature -of New South Wales of the cost of engines built in the railway shops -at Sydney recently. The figures refer to 6-wheel-coupled heavy -mail and express engines weighing, with tender, 163,128 pounds, as -published in the _Railway Age-Gazette_, December 3, 1909: - - -DETAILS OF LOCOMOTIVE COSTS. - - ====================================+=============+============+======== - | 10 Engines | Cost | Per - | | Per Engine | Ton(a) - ------------------------------------+-------------+------------+-------- - Direct charges: | | | - Materials | $117,462.77 | $11,746.28 | $161.29 - Wages | 76,484.23 | 7,648.42 | 104.99 - +-------------+------------+-------- - Total | $193,947.00 | $19,394.70 | $266.28 - | | | - Indirect charges: | | | - Percentage of shop charges | | | - (exclusive of superintendence) | | | - on wage basis in each shop, | | | - 37.84% | 28,943.79 | 2,894.38 | 39.74 - Superintendence, on wage basis, | | | - 3% | 2,294.51 | 229.45 | 3.10 - Interest on capital cost of new | | | - shop and machinery, including | | | - land | 4,850.52 | 485.05 | 6.63 - Proportion of interest on capital | | | - cost of old shops on locomotive | | | - work produced for new engines | 5,449.53 | 544.95 | 7.45 - Depreciation of machinery and | | | - plant, 2% on capital cost | 5,149.99 | 515.00 | 7.03 - +-------------+------------+-------- - Total indirect charges | $46,688.34 | $ 4,668.83 | $ 63.95 - | | | - Total charges | $240,635.34 | $24,063.53 | $330.23 - ----------------------------------+-------------+------------+-------- - - (a) Ton of 2,240 lbs. - -Applied to a Mallet articulated compound locomotive, such as that -built for the Erie weighing 410,000 pounds on the drivers, the rate -per ton paid by the government of New South Wales would make it cost -over $60,000. It did not cost any such sum, but the Australian -experience is a straw which shows how the cost of locomotives is -soaring. American railways find it necessary economy to build engines -whose average weight is well above that built in the government shops -at Sydney. - - -PASSENGER AND FREIGHT CARS. - -During the same period, 1902 to 1909, covered in the table relating -to locomotives, for which alone full data is available, the increase -in the number of passenger cars and freight cars, and in the capacity -of the latter, is shown in the following statement: - - - ===================+=========+========================+=======+========= - | | Freight Service | | - | +-----------+------------+ |Company's - Year |Passenger| Number | Capacity |Average| Service - | Service | | (tons) | tons | Number - -------------------+---------+-----------+------------+-------+--------- - 1909 | | | | | - (97% represented) | 44,665 | 2,050,049 | 71,028,266 | 34.6 | 96,739 - 1908 | | | | | - (Final returns) | 45,292 | 2,100,784 | 73,526,440 | 35 | 98,281 - 1907 | 43,973 | 1,991,557 | 67,216,144 | 34 | 91,064 - 1906 | 42,282 | 1,837,914 | 59,196,230 | 32 | 78,736 - 1905 | 40,713 | 1,731,409 | 53,372,552 | 31 | 70,749 - 1904 | 39,752 | 1,692,194 | 50,874,723 | 30 | 66,615 - 1903 | 38,140 | 1,653,782 | 48,622,125 | 29 | 61,467 - 1902 | 36,987 | 1,546,101 | 43,416,977 | 28 | 57,097 - +---------+-----------+------------+-------+--------- - Seven years' | | | | | - increase(a) | 20.8% | 35.9% | 64.0% | 23.5% | 69.6% - -------------------+---------+------------------------+-------+--------- - - (a) Final returns for 1909 will raise these percentages materially. - -It is in the increased capacity of locomotives and cars rather -than in their numbers that the seeker after truth will find the -explanation of how American railways have been able to handle freight -traffic that has increased in volume over 80% in ten years where -numerically the increase of equipment has been less than 60%. During -that period the average capacity of the freight car has increased -from 27 to nearly 35 tons, accounting for an aggregate increase of -109.6%. - -Between 1899 and 1909 the population of the United States increased -from 74,318,000 to 88,806,000, or 19.5%. (On April 1, 1910, the -treasury estimate was an even 90,000,000.) In the same ten years the -number of passenger cars increased over 36%, accompanied by a steady -advance in their size, strength and conveniences. - -Between 1902 and 1907 the Official Statistics furnish the following -information showing the gradual transformation taking place in the -number and capacity of freight cars: - - -NUMBER AND CAPACITY OF DIFFERENT SIZES OF FREIGHT CARS, 1902-1907. - - ===========+==========+=========+===========+============ - | Capacity | | | Increase or - Class | Pounds | 1902 | 1907 | Decrease - | | | | Per Cent - -----------+----------+---------+-----------+------------ - I | 10,000 | 5,122 | 4,277 | Dec. 16.5 - II | 20,000 | 15,615 | 7,244 | " 53.5 - III | 30,000 | 46,353 | 10,132 | " 78.1 - IV | 40,000 | 327,342 | 204,583 | " 37.5 - V | 50,000 | 246,684 | 178,827 | " 27.5 - VI | 60,000 | 634,626 | 802,187 | Inc. 26.4 - VII | 70,000 | 22,493 | 34,652 | " 53.6 - VIII | 80,000 | 158,179 | 452,070 | " 185.9 - IX | 90,000 | 310 | 5,054 | " 1,527.1 - X | 100,000 | 48,834 | 285,241 | " 484.3 - XI | 110,000 | 389 | 1,476 | " 279.4 - XII | 120,000 | 43 | 60 | " 39.5 - All over | 120,000 | 2 | 214 | - -----------+----------+---------+-----------+------------ - -The line of cleavage between former and modern railway methods of -handling freight is clearly shown in the above table to lie between -cars of 25 and 30 ton capacity. The former and all of less capacity -are on the decline, whereas the latter and all of greater capacity -are on the increase. Numerically the 30-ton cars still exceed those -of 40 and 50 tons, but already they are exceeded by the combined -capacity of the latter. - - -THE SURPLUS OF FREIGHT CARS. - -For two years (28 months as this is written) the reports of the -Committee on Car Efficiency of the American Railway Association show -that the supply of freight cars has been in excess of the demand. In -other words, the railways during that period were paying interest on -a considerable percentage of unremunerative equipment, besides the -cost of its maintenance. The rise and fall of this surplus of freight -cars is set forth below: - - -FREIGHT CAR SHORTAGES AND SURPLUS BY MONTHS FROM JANUARY, 1907, TO -APRIL, 1910. - - ===========================+==========+=========+=========+======== - | 1907 | 1908 | 1909 | 1910 - Month | Shortage | Surplus | Surplus | Surplus - ---------------------------+----------+---------+---------+-------- - January | 110,000 | 342,580 | 333,019 | 52,309 - February | 150,000 | 322,513 | 301,571 | 45,513 - March | No data | 297,042 | 291,418 | 45,672 - April | 100,000 | 413,605 | 282,328 | 84,887 - May | 60,000 | 404,534 | 273,890 | -- - June | 40,000 | 349,994 | 262,944 | -- - July(a) | 20,000 | 308,680 | 243,354 | -- - August(a) | 15,000 | 253,003 | 159,424 | -- - September | 60,000 | 133,792 | 78,798 | -- - October | 90,757 | 110,912 | 35,977 | -- - November | 57,003 | 132,829 | 39,528 | -- - December (surplus) | 209,310 | 222,077 | 58,354 | -- - ---------------------------+----------+---------+---------+-------- - - (a) In July and August, 1907, there was a net surplus. - -At the date of one report in October, 1909, a surplus of cars in one -territory was practically offset by a shortage in another territory. - - -FREIGHT CAR PERFORMANCE. - -According to Statistical Bulletin No. 58 of the Committee on -Relations between Railroads of the American Railway Association, the -average performance of the freight cars of American and Canadian -railways during the year ending June 30, 1909, including and -excluding surplus cars, was as follows: - - - ==================+=======================+====================== - | Average Miles | Average Ton Miles - | per Day | per Car per Day - +-----------+-----------+-----------+---------- - Month | Including | Excluding | Including | Excluding - | Surplus | Surplus | Surplus | Surplus - | Cars | Cars | Cars | Cars - ------------------+-----------+-----------+-----------+---------- - July, 1908 | 20.0 | 24.8 | 275 | 342 - August, " | 20.8 | 25.1 | 292 | 354 - September, " | 22.0 | 25.2 | 320 | 367 - October, " | 23.8 | 25.9 | 346 | 376 - November, " | 23.5 | 25.8 | 341 | 375 - December, " | 22.3 | 25.2 | 332 | 376 - January, 1909 | 20.9 | 25.3 | 293 | 354 - February, " | 21.7 | 25.9 | 306 | 365 - March, " | 22.7 | 27.2 | 330 | 393 - April, " | 22.4 | 26.8 | 310 | 371 - May, " | 22.5 | 26.8 | 304 | 362 - June, " | 22.4 | 26.5 | 314 | 371 - ------------------+-----------+-----------+-----------+---------- - -These figures of the average miles per day of freight cars are the -delight of demagogues and other detractors of American railways who -ignore, or have never been able to comprehend, that the average -performance of a car per day depends from six to nine times more on -the time allowed for shippers to load and unload cars than on its -speed in transit. This speed runs all the way from ten to forty miles -and over an hour. But if freight trains averaged 40 miles an hour -it would make little impression on the per day average of cars so -long as 48 hours has to be allowed as a minimum at either end for -loading and unloading and almost as much more for placing notices -and disposing of cars, to say nothing of time consumed in making up -trains. - -The salient and significant feature of this table is the proof it -affords that each car of those in commission averages the movement of -one ton 367 miles per day. This means an average load of 14 tons per -car. It would take at least three English or European freight cars to -average such a load. - - -SAFETY APPLIANCES. - -Of all the locomotives and cars in railway service in 1908, -aggregating 2,302,055, less than 4% were not fitted with train -brakes, and less than three quarters of 1% were unprovided with -automatic couplers. - - -BLOCK SIGNALS. - -While the gain in mileage protected by some form of block signals -in 1909 is only slightly more than half the increase in 1907, it -shows a healthy revival of this most important constructive work. -At the close of the last calendar year, according to the _Railroad -Age-Gazette,_ the mileage on which some system of block signals had -been installed was as follows: - - - ====================+===============+=============+========+======= - System | Single Track | Two or | Total | Total - | | More Tracks | 1909 | 1908 - --------------------+---------------+-------------+--------+------- - Automatic block | | | | - signals (miles) | 6,436 | 7,983 | 14,419 | 11,932 - Non-automatic block | | | | - signals (miles) | 40,323 | 8,593 | 48,916 | 48,777 - +---------------+-------------+--------+-------- - Total miles | 46,759 | 16,576 | 63,335 | 60,709 - --------------------+---------------+-------------+--------+-------- - - Miles of line operated by the companies, 1909 158,938 - -The second annual report of the government Block Signal and Train -Control Board shows that little advance has been made in the search -after the perfect system of automatic mechanical operation. Since -the organization of the board in 1907 no less than 835 plans and -descriptions of inventions designed to enhance the safety of railway -operation have been submitted for its consideration. Of these 184 -were examined and reported upon in 1908 and 12 were found worthy of -further investigation. During the past year 327 others have been -reviewed with a net result that again 12 have been found to possess -enough merit to warrant the Board in conducting further tests. It -finds that the vast majority of the proposed devices are unsound -either in principle or design. - -With regard to some form of automatic stop, the Board says that it -is not yet prepared to make a definite and positive recommendation, -but it thinks it reasonable to expect that several forms of automatic -train controlling devices will be found available for use. In this -connection it very sensibly concludes: - -"It is not to be expected that trials or tests conducted by the -government will, independently of extended use by railways, result in -the production of devices or systems fully developed to meet all the -exacting conditions of railway operation." - - - - -III - -EMPLOYES AND THEIR COMPENSATION - -NUMBER 1,524,400 - -COMPENSATION $1,008,270,000 - - -The 368 railway companies reporting to this Bureau had 1,463,429 -persons in their employ June 30, 1909, and their pay roll for the -twelve months to that date amounted to $973,172,497. Experience has -shown that these roads employ over 96% of the labor and pay 97% of -the compensation earned by railway employes. From which it appears -that the employes of all the railways in 1909 numbered 1,524,400, -whose compensation for that year was approximately $1,003,270,000. -This would show an increase of 66,756 men employed and a decrease of -$48,362,225 in compensation--a discrepancy accounted for by the fact -that the pay roll in June, 1908, was numerically at low tide while -the aggregate compensation was swelled by the large pay rolls of -the first six months of the fiscal year. The conditions were nearly -reversed in 1909, for the pay roll was at the ebb during the first -half of the year whereas the number on it did not begin to show the -demands of increasing traffic until the very close of the fiscal year. - -These statistics would be more enlightening if the number of employes -was determined by the average from the monthly pay rolls throughout -the year and not as at present "from the pay rolls on June 30." -The discrepancies noted are liable to increase if the Commission -succeeds in getting the permission of Congress to substitute December -31st for June 30th as the end of its statistical year. Under the -present practice, the summary which follows reflects the improvement -of business in the increase of employes, while their aggregate -compensation continues to show the effect of the depression that -prevailed throughout the greater part of the year. When, however, -that compensation comes to be divided by the "Aggregate number of -days worked by all employes" during the year, the daily average which -results is found to be within a fraction of a cent the same as for -the preceding year. - -The aggregate number of days worked by the employes of the roads -reporting to this Bureau was 434,328,026 days in 1909 against -453,002,228 for the preceding year. - -The first summary under this title gives the number, compensation and -average pay of the several classes of employes of the roads reporting -for the year 1909, together with the aggregates as reported to the -Interstate Commerce Commission for the preceding years: - - -SUMMARY OF RAILWAY EMPLOYES, COMPENSATION AND RATES OF PAY BY CLASSES -IN 1909 AND AGGREGATES FROM 1889 TO 1909. - - ======================+=========+=====+==============+=======+======== - Class 1909 | |Per 100| |Average|Per Cent - (221,132 Miles | Number | Miles | Compensation| Pay |of Gross - Represented) | |of Line| |per Day|Receipts - ----------------------+---------+-----+--------------+-------+-------- - General officers | 3,312 | 1.6 | $15,484,008 | 14.82 | 0.6 - Other officers | 7,415 | 3.3 | 16,847,754 | 6.53 | 0.7 - General office clerks | 67,222 | 30 | 51,945,231 | 2.31 | 2.2 - Station agents | 34,765 | 15 | 24,944,100 | 2.10 | 1.0 - Other station men | 135,056 | 61 | 78,289,039 | 1.81 | 3.3 - Enginemen | 55,747 | 25 | 77,762,158 | 4.46 | 3.3 - Firemen | 58,927 | 27 | 47,591,953 | 2.67 | 2.0 - Conductors | 42,325 | 19 | 50,269,581 | 3.76 | 2.1 - Other trainmen | 112,398 | 51 | 88,751,753 | 2.60 | 3.7 - Machinists | 47,629 | 22 | 41,381,054 | 2.98 | 1.7 - Carpenters | 59,477 | 27 | 42,954,993 | 2.43 | 1.8 - Other shopmen | 192,784 | 87 | 118,891,679 | 2.13 | 5.0 - Section foremen | 39,953 | 18 | 26,377,380 | 1.96 | 1.2 - Other trackmen | 308,369 | 140 | 107,734,419 | 1.38 | 4.5 - Switch tenders, | | | | | - crossing tenders | | | | | - and watchmen | 44,155 | 20 | 26,019,105 | 1.78 | 1.1 - Telegraph operators | | | | | - and dispatchers | 38,656 | 17 | 29,655,916 | 2.30 | 1.3 - Employes, account | | | | | - floating equipment | 8,632 | 4 | 6,537,196 | 2.32 | 0.3 - All other employes | | | | | - and laborers | 206,607 | 93 | 121,735,178 | 1.98 | 5.2 - +---------+-----+--------------+-------+------ - Total (94.4% mileage| | | | | - represented) |1,463,429| 661 | $973,172,497| 2.24 | 41.00 - | | | | | - 1908 Official figures |1,458,244| 632 |$1,051,632,225|(b)2.25| 43.38 - 1907 |1,672,074| 735 | 1,072,386,427| 2.20 | 41.42 - 1906 |1,521,355| 684 |(a)930,801,653| 2.09 | 40.02 - 1905 |1,382,196| 637 | 839,944,680| 2.07 | 40.34 - 1904 |1,296,121| 611 | 817,598,810|No data| 41.36 - 1903 |1,312,537| 639 | 775,321,415|No data| 40.78 - 1902 |1,189,315| 594 | 676,028,592|No data| 39.28 - 1901 |1,071,169| 548 | 610,713,701|No data| 38.39 - 1900 |1,017,653| 529 | 577,264,841|No data| 38.82 - 1899 | 928,924| 495 | 522,967,896|No data| 39.81 - 1898 | 874,558| 474 | 495,055,618|No data| 39.70 - 1897 | 823,476| 449 | 465,601,581|No data| 41.50 - 1896 | 826,620| 454 | 468,824,531|No data| 40.77 - 1895 | 785,034| 441 | 445,508,261|No data| 41.44 - 1894 | 779,608| 444 | No data |No data| -- - 1893 | 873,602| 515 | No data |No data| -- - 1892 | 821,415| 506 | No data |No data| -- - 1891 | 784,285| 486 | No data |No data| -- - 1890 | 749,301| 479 | No data |No data| -- - 1889 | 704,743| 459 | No data |No data| -- - ----------------------+---------+-----+--------------+-------+------ - - (a) Includes $30,000,000 estimate pay-roll of Southern Pacific, whose - records were destroyed in the San Francisco disaster. - - (b) Bureau computations. - -This table brings out clearly the effect of the depression of 1908 on -railway labor. While there was a decrease in numbers employed in 1908 -of 213,830 or nearly 13%, coincident with a proportionate decrease in -gross revenues, the reduction in compensation amounted to less than -2%. This anomaly was due to the fact that the increased scale of pay -adopted in the winter of 1906-07 was only effective during six months -of the fiscal year 1907, whereas it was in full operation throughout -1908, as it still is, with demands, negotiations and arbitrations -regarding wages all tending upward. - - -UNREMUNERATIVE EXPENDITURES. - -Last year attention was called to the unremunerative burdens -imposed on the railways by the multiplying demands of legislatures -and commissions for reports on every conceivable feature of their -multifarious affairs. This year with the compensation of every other -class showing the effects of the enforced retrenchments of the -period, that of the several classes especially affected by these -requirements and the enactments relating to the hours and conditions -of employment continue to be the only ones marked by advances over -the record figures of 1907, as appears from the following comparison: - - -COMPENSATION OF CLASSES ESPECIALLY AFFECTED BY MULTIPLYING DEMANDS OF -COMMISSIONS AND LEGISLATURES IN 1907 AND 1909. - - =====================================+==============+============== - | 1907 | 1909 - Class | 227,455 Miles| 221,132 Miles - | Represented | Represented - -------------------------------------+--------------+-------------- - Other officers | $15,012,226 | $16,847,754 - General office clerks | 48,340,123 | 51,945,231 - Station agents | 24,831,066 | 24,944,100 - Telegraph operators and dispatchers | 29,058,251 | 29,655,916 - Employes, account floating equipment | 6,035,415 | 6,537,196 - +--------------+-------------- - Total | $123,277,081 | $129,930,197 - -------------------------------------+--------------+-------------- - Add 4% for unreported mileage, 1909 | 5,197,207 - Total | $135,127,404 - Increase over 1907 | 11,850,323 - ----------------------------------------------------+-------------- - -Moreover, had the aggregate compensation of these five classes -followed the general trend of all other railway compensation, the -expenditure on this account would have been at least $22,000,000 less -than it was. This sum represents only a part of what the railways -have to pay for a system of accounting and reporting out of all -proportion to its published results. The public has no idea of the -onerous and unprofitable burdens imposed on the railways by the -impractical theory of administering railways through the medium of -arbitrary and theoretical accounts. - - -AVERAGE DAILY COMPENSATION 1909-1892. - -Where the data in regard to total compensation of railway employes -has been kept since 1895, that of their daily average pay runs back -to 1892, thus covering the period of the last preceding severe panic. -Under instructions of the Official Statistician, these averages are -computed by dividing the compensation paid by the actual days worked -throughout the year in the several classes as nearly as it has been -practicable to do so. Although the formula is more or less arbitrary, -the system has been continuous and so the results are reliable for -comparative purposes. - -In the statement following, figures for 1895, 1896 and 1905 have been -omitted to economize space, and because they present no significant -variations from the years preceding them. - - -COMPARATIVE SUMMARY OF AVERAGE DAILY COMPENSATION OF RAILWAY EMPLOYES -FOR THE YEARS ENDING JUNE 30, 1908 TO 1892. - - ======================+=======+========+=====+=====+=====+=====+===== - Class |1909(a)| 1908(a)| 1907| 1906| 1904| 1903| 1902 - ----------------------+-------+--------+-----+-----+-----+-----+----- - General officers | 14.82 | 15.18 |11.93|11.81|11.61|11.27|11.17 - Other officers | 6.53 | 6.42 | 5.99| 5.82| 6.07| 5.76| 5.60 - General office clerks | 2.31 | 2.35 | 2.30| 2.24| 2.22| 2.21| 2.18 - Station agents | 2.10 | 2.10 | 2.05| 1.94| 1.93| 1.87| 1.80 - Other station men | 1.81 | 1.82 | 1.78| 1.69| 1.69| 1.64| 1.61 - Enginemen | 4.46 | 4.46 | 4.30| 4.12| 4.10| 4.01| 3.84 - Firemen | 2.67 | 2.65 | 2.54| 2.42| 2.35| 2.28| 2.20 - Conductors | 3.76 | 3.83 | 3.69| 3.51| 3.50| 3.38| 3.21 - Other trainmen | 2.60 | 2.64 | 2.54| 2.35| 2.27| 2.17| 2.04 - Machinists | 2.98 | 2.95 | 2.87| 2.69| 2.61| 2.50| 2.36 - Carpenters | 2.43 | 2.40 | 2.40| 2.28| 2.26| 2.19| 2.08 - Other shopmen | 2.13 | 2.13 | 2.06| 1.92| 1.91| 1.86| 1.78 - Section foremen | 1.96 | 1.96 | 1.90| 1.80| 1.78| 1.78| 1.72 - Other trackmen | 1.38 | 1.45 | 1.46| 1.36| 1.33| 1.31| 1.25 - Switchmen, flagmen | | | | | | | - and watchmen | 1.78 | 1.82 | 1.87| 1.80| 1.77| 1.76| 1.77 - Telegraph operators | | | | | | | - and dispatchers | 2.30 | 2.30 | 2.26| 2.13| 2.15| 2.08| 2.01 - Employes account | | | | | | | - floating equipment | 2.32 | 2.37 | 2.27| 2.10| 2.17| 2.11| 2.00 - All other employes and| | | | | | | - laborers | 1.98 | 1.98 | 1.92| 1.83| 1.82| 1.77| 1.71 - ----------------------+-------+--------+-----+-----+-----+-----+----- - - {table continued} - ======================+=====+=====+=====+=====+=====+=====+=====+===== - Class | 1901| 1900| 1899| 1898| 1897| 1894| 1893| 1892 - ----------------------+-----+-----+-----+-----+-----+-----+-----+----- - General officers |10.97|10.45|10.03| 9.73| 9.54| 9.71| 7.84| 7.62 - Other officers | 5.56| 5.22| 5.18| 5.21| 5.12| 5.75| -- | -- - General office clerks | 2.19| 2.19| 2.20| 2.25| 2.18| 2.34| 2.23| 2.20 - Station agents | 1.77| 1.75| 1.74| 1.73| 1.73| 1.75| 1.83| 1.81 - Other station men | 1.59| 1.60| 1.60| 1.61| 1.62| 1.63| 1.65| 1.68 - Enginemen | 3.78| 3.75| 3.72| 3.72| 3.65| 3.61| 3.66| 3.68 - Firemen | 2.16| 2.14| 2.10| 2.09| 2.05| 2.03| 2.04| 2.07 - Conductors | 3.17| 3.17| 3.13| 3.13| 3.07| 3.04| 3.08| 3.07 - Other trainmen | 2.00| 1.96| 1.94| 1.95| 1.90| 1.89| 1.91| 1.89 - Machinists | 2.32| 2.30| 2.29| 2.28| 2.23| 2.21| 2.33| 2.29 - Carpenters | 2.06| 2.04| 2.03| 2.02| 2.01| 2.02| 2.11| 2.08 - Other shopmen | 1.75| 1.73| 1.72| 1.70| 1.71| 1.69| 1.75| 1.71 - Section foremen | 1.71| 1.68| 1.68| 1.69| 1.70| 1.71| 1.75| 1.76 - Other trackmen | 1.23| 1.22| 1.18| 1.16| 1.16| 1.18| 1.22| 1.22 - Switchmen, flagmen | | | | | | | | - and watchmen | 1.74| 1.80| 1.77| 1.74| 1.72| 1.75| 1.80| 1.78 - Telegraph operators | | | | | | | | - and dispatchers | 1.98| 1.96| 1.93| 1.92| 1.90| 1.93| 1.97| 1.93 - Employes account | | | | | | | | - floating equipment | 1.97| 1.92| 1.89| 1.89| 1.86| 1.97| 1.96| 2.07 - All other employes and| | | | | | | | - laborers | 1.69| 1.71| 1.68| 1.67| 1.64| 1.65| 1.70| 1.67 - ----------------------+-----+-----+-----+-----+-----+-----+-----+----- - - (a) Averages for 1909 and 1908 are calculated from the returns to the - Bureau of days worked and compensation of the several classes of - roads representing 97% of the traffic. - -The average pay of general officers for 1909 and 1908 in this summary -is out of proportion, for the reason that the returns to the Bureau -cover only 60% of the class numerically and include all the larger -systems. Before 1894, this class included "Other officers," so the -returns for 1893 and 1892 are not comparable with those for this -class in subsequent years. - -Comparing the average daily compensation of the four great classes -most intimately associated in the public mind with railway operations -in 1899 and 1909, it appears that during the decade the average -wages of enginemen increased approximately 20%; of firemen 27%; of -conductors 20%; and of other trainmen, including switchmen, brakemen -and baggagemen--the most numerous body--34%. - -An estimate based on the number employed and their aggregate -compensation in 1899, allowing 310 working days to the year, would -place the increase for all employes during the decade at 23%. - -The relation of the compensation of railway employes to the gross -earnings of the railways, which furnish the fund from which they are -paid, and also to the sum of the expenses incurred in producing those -earnings for the past ten years, is shown in the next summary, in -conjunction with the operating ratio: - - -SUMMARY SHOWING PROPORTION OF COMPENSATION OF EMPLOYES TO GROSS -EARNINGS AND OPERATING EXPENSES, AND OF OPERATING RATIO TEN YEARS, -1899 TO 1909. - - ===============+==============+==================+================== - | Ratio | Ratio | Ratio of - | Compensation | Compensation |Operating Expenses - | of Labor to | of Labor to | to - |Gross Earnings|Operating Expenses| Gross Earnings - ---------------+--------------+------------------+------------------ - 1909 | 41.00% | 62.06% | 66.12% - 1908 | 43.38% | 62.33% | 69.67% - 1907 | 41.42% | 61.41% | 67.53% - 1906 | 40.02% | 60.79% | 66.08% - 1905 | 40.34% | 60.40% | 66.78% - 1904 | 41.36% | 61.07% | 67.79% - 1903 | 40.78% | 61.65% | 66.16% - 1902 | 39.28% | 60.58% | 64.66% - 1901 | 38.39% | 59.27% | 64.86% - 1900 | 38.82% | 60.04% | 64.65% - 1899 | 39.81% | 61.04% | 65.24% - | | | - Increase 1899 | | | - to 1909 | 3.00% | 1.65% | 1.35% - ---------------+--------------+------------------+------------------ - -The significance of this statement is that in spite of all the labor -saving devices and economies of operation--reduced grades, modified -curves and more efficient equipment--adopted by the railways during -the past decade, the proportionate cost of labor to earnings and to -expenses has increased. It reached an abnormally high ratio in 1908 -because of the unprecedented recession in revenues during the second -half of the year. The fact that it has been above 40% persistently -since 1902 proves that labor continues to receive its full proportion -of the receipts of American railways. - - -PAY OF EMPLOYES ON BRITISH RAILWAYS. - -Although the statistics of British railways are singularly barren of -details respecting the compensation of British railway "servants," as -they are termed, the reports of Boards of Conciliation afford data as -to the rates of pay of several classes as follows: - - -SCALE OF WAGES OF DRIVERS AND FIREMEN ON NORTH BRITISH RAILWAY, 1909. - - ======================================================+=============== - |Rate per Day of - | 12 Hours - +-------+------- - |Drivers|Firemen - ------------------------------------------------------+-------+------- - Passenger engines, main line, long road | $1.56 | $0.88 - Passenger engines running into chief terminal station | 1.44 | .84 - Passenger engines, branch lines | 1.32 | .80 - Goods engines, main line, long road, trip men | 1.44 | .88 - Goods engines, main line, other than long road | 1.32 | .84 - Goods and mineral engines running into depots and | | - terminal stations | 1.20 | .80 - Goods and mineral engines working branch lines and | | - collieries | 1.14 | .76 - Mineral pilot, pilot and shunting engines | 1.04 | .72 - ------------------------------------------------------+-------+------- - -In his award in the case of the North Eastern Railway, Sir James -Woodhouse fixed the following scales: - -Firemen.--First year, 84 cents per day; 2d year, 90 cents; 3d year, -96 cents; 4th and 5th years, $1.02; 6th year, $1.08; 7th year, $1.14; -8th year, and subsequent years, $1.20. Firemen to pass for drivers -during the 8th year. - -Cleaners.--Age 16 to 17 years, $2.40 per week; 17 to 18 years, $2.64; -18 to 19 years, $3.12; 19 to 20 years, $3.60; 20 to 21 years, $4.08; -and an advance of 24 cents per week for each subsequent year up to a -maximum of $4.80 per week. - -"That the wages of all goods and mineral guards be increased as -follows: - -"(a) The wages of those who have been in receipt of $7.20 (the -maximum of the existing scale) for not less than two years shall be -increased to $7.44 per week. - -"(b) The wages of those who have been in receipt of the said maximum -for not less than five years shall be increased to $7.68 per week. - -"The bonus for working with large engines on freight trains -discontinued when any guard becomes entitled to the maximum wages of -$7.68 per week." - -Men working in the London district get from 6 to 12 cents more per -day than those in outside districts. - -The award in the case of the Great Northern made an addition of 24 -cents to the weekly scale of the following grades: Signalmen $4.32, -$4.56, $4.80 and $5.04; passenger guards and brakemen $5.28 up to -$6.00; goods guards and brakemen $5.04 up to $6.24; ticket collectors -$5.04 up to $5.52; horse shunters $4.56 up to $5.04; parcels porters -$4.32 to $5.04; carriage cleaners $4.08 to $4.32; plate layers, -second men and under men $4.32 and less up to $5.04; ballast train -guards, flagmen and greasers rates less than $5.04 per week. - -An additional allowance of 24 cents per week is made to men stationed -in the London district. - -From these figures a fair idea is gained of the average pay of -British railway labor. They support the statement that there are -over 100,000 railway men in the United Kingdom working for less -than one pound ($4.87) a week. The total compensation paid British -railway employes in 1908 was $150,248,000 against $162,440,000 for -the preceding year. But whether the decrease was due to a reduction -in pay or in numbers employed cannot be told, as there has been no -census of railway "servants" since 1907. The average pay may be -safely approximated at $260 per year per man, boy and porter, who two -years ago numbered 621,341. - -In 1907, Special Agent Ames, of the Interstate Commerce Commission, -reported wages on the railways of the United Kingdom as follows: - - - =================+================= - Enginemen | $9.32 per week - Firemen | 5.76 " " - Conductors | 6.26 " " - Brakemen | 6.44 " " - Shunters | 5.80 " " - Examiners | 5.80 " " - Signalmen | 5.66 " " - Trackmen | 5.58 " " - -----------------+----------------- - - -PAY OF RAILWAY EMPLOYES IN OTHER COUNTRIES. - -The contrast between the wages of American and European railway -employes is emphasized by those paid on the continent. The official -statistics of the empire show an increase of 5% in the average yearly -compensation of German railway employes in 1908. Their number and -pay for that year to December 31st in the four main classes into -which they are divided were as follows: - - -NUMBER AND PAY OF GERMAN RAILWAY EMPLOYES BY PRINCIPAL DIVISIONS FOR -THE YEAR ENDING DECEMBER 31, 1908. - - ==========================+==========+==============+=========+======== - Division | Employes | Compensation |Average |Increase - | Number | (Total) |per year|over 1907 - --------------------------+----------+--------------+--------+--------- - General administration | 31,996 | $25,167,240 | $787 | $34 - Maintenance and guarding | | | | - road | 177,633 | 42,891,753 | 241 | 5 - Station service and train | | | | - crews | 302,343 | 116,219,657 | 384 | 24 - Switching crews and shops | 187,183 | 75,328,084 | 402 | 18 - +----------+--------------+--------+--------- - Total | 699,155 | $259,606,734 | $371 | $19 - | | | | - Increase over 1907 | 3,598 | 14,216,875 | -- | -- - --------------------------+----------+--------------+--------+--------- - -Combined with a falling off in revenues and an increase in the cost -of materials this increase in the compensation of employes had the -effect of raising the operating ratio of German railways from 69.01 -in 1907 to 73.56 in 1908. It also increased the proportion of wages -to gross earnings from 37.25 to 40.1% and had the effect of reducing -the net revenues from 5.60% to 4.51% on the cost of construction. - -How railway labor fares under government ownership in a republic as -compared with its pay in an empire may be judged from a comparison of -the following statement as to the number and pay of the railways of -Switzerland with the like classes in the preceding table for Germany. - - -NUMBER AND PAY OF SWISS RAILWAY EMPLOYES BY PRINCIPAL DIVISIONS IN -1907. - - ==================================+==========+==============+========= - Division | Employes | Compensation | Average - | Number | (Total) | per Year - ----------------------------------+----------+--------------+--------- - General administration | 1,631 | $ 780,715 | $478 - Maintenance and inspection of way | 10,308 | 1,459,977 | 142 - Transportation and train service | 17,815 | 6,829,426 | 383 - Porters and laborers | 12,219 | 3,209,810 | 262 - +----------+--------------+--------- - Total | 41,973 | $12,279,928 | $292 - ----------------------------------+----------+--------------+--------- - -The wages paid the employes of Swiss railways in 1907 amounted to -only 31.9 per cent. of the gross earnings, and yet they added enough -to the cost of operation to help increase the telltale ratio of -expenses to revenues from 64.99 in 1906 to 67.29 in 1907. The result -was increased operating expenses per mile and a decrease in the -amount available for interest in dividends from 3.26% in 1906 to -3.23% in 1907. - -As the Swiss republic has to pay 3½% on government loans its -investment in railways does not appear to be a very profitable one. - - -EMPLOYES OF FRENCH RAILWAYS. - -The employes of the railways of France are divided into the following -classes: - - - ================================================== - General administration | 3,119 - Transportation and traffic | 128,823 - Traction and material | 80,732 - Way and structures | 81,897 - Auxiliaries | 82,809 - Female employes | 29,178 - |--------- - Total | 406,558 - -------------------------------------------------- - -The official statistics only give the compensation of employes in the -division of traction and material, where the 80,732 men employed get -an average of $187 per year. - -On the state railways of Belgium, firemen receive from $15.20 to -$22.80 per month, the higher wage only after 15 years' service; -enginemen begin at $22.50 per month and at the end of 24 years' -service work up to $38.00 per month; conductors earn from $15.97 per -month up to a maximum of $34.70; brakemen, beginning as shunters -(switchmen) at 45 cents a day, when promoted get a minimum of $17.10 -per month, from which they are slowly advanced to a maximum of -$22.00. The average railway worker in Belgium gets 2.22 francs (43 -cents) a day. - -Whole classes of American railway employes get more in a month than -Belgian railway employes average in a year. - - -THE COST OF LIVING. - - What and how great the virtue and the art, - To live on little with a cheerful heart.--Pope. - -Not because it has any legitimate place in fixing the standard -of railway wages, which should be relative to the part capacity, -intelligence, industry, loyalty and experience play in railway -service, but because in recent years the steady increase in the cost -of living has been made the fulcrum on which every lever to advance -wages works, is it proper to refer to the subject in this report. - -Now there is nothing in the whole wilderness of economics so utterly -illusive and misleading as this same cost of living. It is as -incapable of statistical expression as the airy imaginings of a dream -and yet it broods over the domestic happiness of nations with all -the disquieting effects of a nightmare--and like every nightmare it -comes from eating too much and wanting to eat more. - -In economics, beyond the barest subsistence, the cost of living is -not ruled by necessity but by individual choice. Each person and -family settles it along the lines of abstinence or indulgence. It -ranges from the "dinner of herbs where love is" and the virtues of -self-denial are nourished, to the feasts of Lucullus and Pompeian -profligacy in whose indulgence whole peoples have perished. - -In every discussion of the subject first consideration is given to -the price of food. This amounts to measuring the cost of living -with an elastic string. The proportion of the cost of food to the -cost of living varies in every land, in every occupation and in -every household. It amounts to less than 40% in an average American -family, but each family fixes it for itself. Following certain well -recognized economic laws the percentage for subsistence increases as -the income decreases. For instance, in France families with an income -of under $4.80 per week spend 63% of it for food alone, whereas those -with $9.60 a week spend 53%. In England, families averaging $5.12 -a week spend 67% on food, while those of $9.60 spend 57% or less. -In Germany, a similar inquiry showed that families with an average -income of $4.23 per week spent 68.7% on food (excluding beer), or -69.5% (with beer); whereas families with an income of $9.60 per week -spent less than 57% on food "excluding beer." - -The exhaustive investigation made by Commissioner Carroll D. Wright -when head of the Bureau of Labor in 1903 anticipated for the United -States these results of more recent European inquiries, as appears -from the following table showing the per cent of total expenditure -made for various purposes in normal families according to classified -incomes: - - -PER CENT OF EXPENDITURE FOR VARIOUS PURPOSES IN 11,156 NORMAL -FAMILIES, BY CLASSIFIED INCOMES, 1901. - - ========================+======+=====+========+======+========+======== - Classified income |Rent |Fuel |Lighting| Food |Clothing|Sundries - ------------------------+------+-----+--------+------+--------+-------- - Under $200 |16.93 |6.69 | 1.27 | 50.85| 8.68 | 15.58 - $200 or under $300 |18.02 |6.09 | 1.13 | 47.33| 8.66 | 18.77 - $300 or under $400 |18.69 |5.97 | 1.14 | 48.09| 10.02 | 16.09 - $400 or under $500 |18.57 |5.54 | 1.12 | 46.88| 11.39 | 16.50 - $500 or under $600 |18.43 |5.09 | 1.12 | 46.16| 11.98 | 17.22 - $600 or under $700 |18.48 |4.65 | 1.12 | 43.48| 12.88 | 19.39 - $700 or under $800 |18.17 |4.14 | 1.12 | 41.44| 13.50 | 21.63 - $800 or under $900 |17.07 |3.87 | 1.10 | 41.37| 13.57 | 23.02 - $900 or under $1000 |17.58 |3.85 | 1.11 | 39.90| 14.35 | 23.21 - $1000 or under $1100 |17.53 |3.77 | 1.16 | 38.79| 15.06 | 23.69 - $1100 or under $1200 |16.59 |3.63 | 1.08 | 37.68| 14.89 | 26.13 - $1200 or over |17.40 |3.85 | 1.18 | 36.45| 15.72 | 25.40 - +------+-----+--------+------+--------+-------- - All classes |18.12 |4.57 | 1.12 | 43.13| 12.95 | 20.11 - ------------------------+------+-----+--------+------+--------+-------- - -While it is scarcely believable that many American families with -incomes under $200 spent less than $100 a year on food--the European -percentage in such cases being more credible--there is no reason -to question the general economic law reflected in this table, that -"the proportion of income spent on food diminishes as the income -increases." But it is governed more by individual tendencies, -character and taste than by any rule or principle. Each family works -out the problem on its own account. - -According to the evidence presented at recent arbitration hearings in -this city, American switchmen, as a body, belong in the classes whose -family expenditures are $1,000 or over. Irrespective of the incomes -of other members of their families, the arbitrators found "that the -actual monthly earnings of switchmen in the Chicago district, for -those who worked full time _runs from about $80 to $100 per month_." -This means over $1,000 yearly compensation. Therefore they are in the -class which spends less than 39% of its income on food. - -The average income for all railway employes engaged in train -service, that is, enginemen, firemen, conductors and other trainmen, -is probably above the highest figure in the foregoing table and -therefore the proportion of their income spent for food would be -approximately 36%. - -But accepting 40% as approximately the proportion of the pay of -all railway employes spent on food, it follows that it takes only -two-fifths of one per cent increase in wages to take care of an -increase of one per cent in the price of food. - -With this in mind it becomes instructive to follow the retail prices -of the various articles of food as selected by Mr. Wright in his -inquiry into the cost of living in 1901 and adopted by the Bureau of -Labor in subsequent Bulletins. These for thirty articles of food for -the eighteen years 1890 to 1907, as given in Bulletin No. 77 of the -Bureau of Labor, and for the two years 1908-1909 as computed from -Bradstreet's index and other sources of commodity prices, are given -in the following statement relatively to the average price for 1890 -to 1899 == 100: - - -RELATIVE RETAIL PRICES OF THE PRINCIPAL ARTICLES OF FOOD IN THE -UNITED STATES, 1890 TO 1909. (Average price for 1890-1899 == 100.0.) - - =====+======+======+======+======+======+======+======+======+======+====== - | | | | | | | | |Chickns| - | | | | | | | | | (year | - |Apples|Beans,|Beef, |Beef, |Beef, |Bread,|Butter|Cheese|or more|Cof- - Year |Evapo-| Dry |Fresh,|Fresh,|Salt |Wheat | | | old) | fee - | rated| |Roasts|Roasts| | | | |dressed| - -----+------+------+------+------+------+------+------+------+------+------ - 1890 |109.0 |103.3 | 99.5 | 98.8 | 97.5 | 100.3| 99.2| 98.8 | 101.3| 105.4 - 1891 |110.3 |106.2 |100.0 | 99.4 | 98.3 | 100.3| 106.4|100.3 | 104.0| 105.2 - 1892 | 99.3 |102.4 | 99.6 | 99.3 | 99.5 | 100.3| 106.8|101.5 | 103.8| 103.8 - 1893 |107.0 |105.0 | 99.0 | 99.6 |100.3 | 100.1| 109.9|101.8 | 104.2| 104.8 - 1894 |105.8 |102.8 | 98.3 | 98.2 | 98.9 | 99.9| 101.7|101.6 | 98.6| 103.3 - 1895 | 97.4 |100.5 | 98.6 | 99.1 | 99.6 | 99.7| 97.0| 99.2 | 98.4| 101.7 - 1896 | 88.6 | 92.7 | 99.1 | 99.5 | 99.8 | 99.9| 92.7| 97.9 | 97.1| 99.6 - 1897 | 87.8 | 91.5 |100.3 |100.2 |100.9 | 100.0| 93.1| 99.0 | 94.0| 94.6 - 1898 | 95.4 | 95.9 |101.7 |102.0 |102.1 | 99.8| 95.1| 97.5 | 96.8| 91.1 - 1899 | 99.5 | 99.7 |103.7 |103.9 |103.2 | 99.6| 97.7|102.4 | 101.8| 90.5 - 1900 | 95.2 |110.0 |106.5 |106.4 |103.7 | 99.7| 101.4|103.9 | 100.8| 91.1 - 1901 | 96.8 |113.9 |110.7 |111.0 |106.1 | 99.4| 103.2|103.3 | 103.0| 90.7 - 1902 |104.4 |116.8 |118.6 |118.5 |116.0 | 99.4| 111.5|107.3 | 113.2| 89.6 - 1903 |100.8 |118.1 |113.1 |112.9 |108.8 | 100.2| 110.8|109.4 | 113.5| 89.3 - 1904 | 99.2 |116.8 |112.8 |113.4 |108.3 | 103.9| 109.0|107.4 | 120.7| 91.8 - 1905 |106.0 |116.3 |112.2 |112.9 |107.9 | 104.5| 112.7|110.9 | 123.6| 93.6 - 1906 |115.6 |115.2 |115.7 |116.5 |110.8 | 102.3| 118.2|115.5 | 129.1| 94.7 - 1907 |124.6 |118.8 |119.1 |120.6 |114.1 | 104.5| 127.6|123.2 | 131.4| 95.0 - 1908 |126.4 |138.9 |126.2 |131.5 |116.4 | 124.5| 123.5|121.3 | 128.6| 94.7 - 1909 |128.6 |141.2 |132.6 |134.1 |128.2 | 124.5| 134.8|142.0 | 150.2| 108.6 - | | | | | | | | | | - -----+------+------+------+------+------+------+------+------+------+------ - | | | | | | |Milk, | | | - Year | Corn | Eggs |Fish, |Fish, |Flour | Lard |Fresh,|Mola- |Mutton|Pork, - | Meal | |Fresh | Salt |Wheat | |unski-| sses | |Fresh - | | | | | | |mmed | | | - -----+------+------+------+------+------+------+------+------+------+------ - 1890 |100.0 |100.6 | 99.3 |100.7 |109.7 | 98.2| 100.5|104.7 | 100.7| 97.0 - 1891 |109.7 |106.9 | 99.6 |101.7 |112.5 | 99.8| 100.5|101.7 | 100.6| 98.7 - 1892 |105.2 |106.8 |100.1 |102.2 |105.1 | 103.6| 100.6|101.2 | 101.0| 100.5 - 1893 |103.1 |108.1 |100.1 |103.4 | 96.1 | 117.9| 100.4|100.6 | 99.9| 107.0 - 1894 |102.2 | 96.3 |100.4 |101.5 | 88.7 | 106.9| 100.2|100.3 | 97.8| 101.8 - 1895 |100.8 | 99.3 | 99.8 | 98.9 | 89.0 | 100.1| 100.0| 99.0 | 98.7| 99.7 - 1896 | 95.0 | 92.8 |100.2 | 97.5 | 92.7 | 92.5| 99.9| 98.7 | 98.7| 97.4 - 1897 | 93.7 | 91.4 | 99.8 | 95.2 |104.3 | 89.8| 99.7| 97.7 | 99.6| 97.6 - 1898 | 95.0 | 96.2 |100.5 | 98.8 |107.4 | 93.9| 99.4| 97.9 | 100.4| 98.6 - 1899 | 95.1 |101.1 |100.2 |100.2 | 94.6 | 97.1| 98.9| 98.2 | 102.6| 101.7 - 1900 | 97.4 | 99.9 |100.4 | 99.1 | 94.3 | 104.4| 99.9|102.2 | 105.6| 107.7 - 1901 |107.1 |105.7 |101.4 |100.9 | 94.4 | 118.1| 101.1|101.3 | 109.0| 117.9 - 1902 |118.8 |119.1 |105.0 |102.8 | 94.9 | 134.3| 103.3|102.1 | 114.7| 128.3 - 1903 |120.7 |125.3 |107.3 |108.4 |101.2 | 126.7| 105.8|103.8 | 112.6| 127.0 - 1904 |121.5 |130.9 |107.9 |111.7 |119.9 | 117.3| 106.3|104.0 | 114.1| 124.0 - 1905 |122.2 |131.6 |109.9 |113.8 |119.9 | 116.6| 107.0|104.4 | 117.8| 126.6 - 1906 |123.2 |134.2 |116.2 |116.8 |180.1 | 128.0| 108.9|105.3 | 124.1| 137.7 - 1907 |131.6 |137.7 |120.6 |121.6 |117.7 | 134.2| 116.8|107.7 | 130.1| 142.5 - 1908 |154.0 |140.2 |116.2 |118.4 |140.0 | 132.1| 115.4|102.2 | 126.4| 141.6 - 1909 |160 |142.2 |120.4 |122.6 |154.4 | 153.8| 141.6|106.4 | 134.8| 168.2 - | | | | | | | | | | - -----+------+------+------+------+------+------+------+------+------+------ - |Pork, |Pork, | Pork,|Potat-| | | | | | - Year |Salt, |Salt, | Salt,| oes, |Prunes| Rice | Sugar| Tea | Veal |Vine- - |Bacon |dry or| Ham |Irish | | | | | | gar - | |pickled| | | | | | | | - -----+------+------+------+------+------+------+------+------+------+------ - 1890 | 95.8 | 95.3 | 98.7 |109.3 |116.8 | 101.3| 118.6| 100.0| 98.8| 102.9 - 1891 | 96.6 | 98.9 | 99.3 |116.6 |116.5 | 102.5| 102.7| 100.4| 99.6| 105.5 - 1892 | 99.1 |100.5 |101.9 | 95.7 |113.5 | 101.3| 96.2| 100.2| 100.0| 102.7 - 1893 |109.0 |108.7 |109.3 |112.3 |115.6 | 98.4| 101.5| 100.1| 100.0| 99.5 - 1894 |103.6 |103.4 |101.9 |102.6 |100.9 | 99.0| 93.8| 98.7| 98.7| 99.8 - 1895 | 99.4 | 99.2 | 98.8 | 91.8 | 94.2 | 98.8| 91.8| 98.5| 98.5| 98.9 - 1896 | 96.7 | 95.5 | 97.6 | 77.0 | 86.8 | 96.7| 96.6| 98.8| 99.5| 97.2 - 1897 | 97.4 | 97.3 | 98.2 | 93.0 | 84.3 | 97.9| 95.7| 98.5| 99.9| 97.4 - 1898 |100.2 | 99.1 | 95.1 |105.4 | 86.3 | 101.7| 101.3| 100.7| 101.2| 97.9 - 1899 |102.9 |101.8 | 99.2 | 96.1 | 85.1 | 102.4| 101.7| 104.4| 103.7| 98.3 - 1900 |109.7 |107.7 |105.3 | 93.5 | 83.0 | 102.4| 104.9| 105.5| 104.9| 98.5 - 1901 |121.0 |117.5 |110.2 |116.8 | 82.6 | 103.5| 103.0| 106.7| 108.8| 98.9 - 1902 |135.6 |132.5 |119.4 |117.0 | 83.4 | 103.5| 96.1| 106.0| 114.9| 99.1 - 1904 |137.9 |125.8 |118.4 |121.3 | 79.6 | 101.6| 101.9| 105.8| 115.5| 98.9 - 1905 |138.8 |126.0 |118.5 |110.2 | 81.4 | 102.6| 98.2| 105.5| 123.2| 102.6 - 1907 |157.3 |141.2 |130.7 |120.6 | 88.4 | 108.5| 99.6| 105.3| 125.0| 104.5 - 1908 |142.4 |137.4 |112.0 |138.4 | -- | 105.1| 100.0| 108.6| 124.2| 112.4 - 1909 |180.0 |151.2 |145.0 |120.0 | -- | 103.3| 105.0| 109.0| 130.2| 113.0 - | | | | | | | | | | - -----+------+------+------+------+------+------+------+------+------+------ - -No authority is claimed for the prices in these tables for the -years 1908 and 1909. They merely represent the tendencies in those -years, as found in official and unofficial wholesale prices of the -several commodities, and there are often striking divergences between -wholesale and retail prices over short periods. Eventually they -follow the same course, although not always in the same proportion. - -Now let us see how the average retail price of these 30 articles of -food compares with the average daily pay of the four representative -classes of railway employes in train service for the ten years 1899 -to 1909. - - - =====================+========================================+========= - | Average Daily Compensation |Relative - +---------+---------+----------+---------+Prices of - | | | | Other | Food, - Year |Enginemen| Firemen |Conductors| Trainmen|1890-1899 - | | | | | = 100 - ---------------------+---------+---------+----------+---------+--------- - 1899 | $3.72 | $2.10 | $3.13 | $1.94 | 99.6 - 1900 | 3.75 | 2.14 | 3.17 | 1.96 | 101.5 - 1901 | 3.78 | 2.16 | 3.17 | 2.00 | 105.5 - 1902 | 3.84 | 2.20 | 3.21 | 2.04 | 110.9 - 1903 | 4.01 | 2.28 | 3.50 | 2.27 | 111.6 - 1905 | 4.12 | 2.38 | 3.50 | 2.31 | 112.5 - 1906 | 4.12 | 2.42 | 3.51 | 2.35 | 116.2 - 1907 | 4.30 | 2.54 | 3.69 | 2.54 | 120.7 - 1908 | 4.46 | 2.65 | 3.83 | 2.64 | 117.7 - 1909 | 4.46 | 2.67 | 3.76 | 2.60 | 127.7 - +---------+---------+----------+---------+--------- - Per cent. increase | 19.9 | 27.1 | 20.1 | 34.0 | 28.2 - ---------------------+---------+---------+----------+---------+--------- - -Here it will be observed the percentage of increase in the average -daily compensation of "Other trainmen" exceeds the relative increase -in the price of food, that of firemen almost equals it, while that of -enginemen and conductors is below it by approximately 8 points. But, -as demonstrated in the table from the Eighteenth Annual Report of -the Commissioner of Labor (1903), a smaller percentage of the income -of enginemen and conductors is spent on food than of those employes -receiving lower pay. - -Moreover as only two-fifths of all expenditures is spent on food -an increase of 20% in wages would take care of a 50% advance in -the average price of food--provided the increase in wages was not -attended by a corresponding increase in every other item entering -into the cost of living. - -And right here's the rub with any attempt to measure wages by the -cost of living. Which is the egg and which is the hen, in the matter -of precedence. Does the cost of living lay the income or does the -income hatch the cost of living? - -Economically and theoretically it is not up to the railways to -solve this world old conundrum. Practically they are called on -to meet every advance in the cost of living of their employes to -which in twenty years they have not added a nickel, and they are -denied the privilege, enjoyed by every other employer of labor, -to add its increased cost to the price of their only commodity or -service--transportation. - -Today the advances in the scale of railway wages awarded, proposed -and demanded mean an increase of from $60,000,000 to $75,000,000 in -the annual "cost of living" of the railways. The advance made in -1906-07 added $120,000,000 to the pay roll of 1908. Combined, these -two advances within three years mean an increase of approximately -$200,000,000 a year to the operating expenses of the railways without -adding a single unit to efficiency of the labor factor in railway -operation. - -_This is equal to an annual first charge of 5% on $4,000,000,000!_ -Imagine the hue and cry from the press, the immediate injunctions -from Washington, the despondent wail from Wall Street, if the -railways proposed to pour that much "water" into their own cost of -living without getting a mile of track, a single engine, car, or -coach, a cubic yard of ballast, one untreated tie or any semblance of -improvement or new facility to show for the vast expenditure! - -And yet the railways have their increased cost of living to meet just -as the rest of us. Nothing they need and must have can be purchased -at the prices of a few years back. When you mention steel rails you -have named about the only railway necessity that has not advanced -its cost of living in recent years, and the railways have to buy -100-pound rails where five years ago 80-pound rails sufficed, and ten -years ago 70 pounds was heavy enough for the lighter cars and engines -of the time. - -But at the first suggestion of advancing rates to meet advancing -prices of commodities the Commissions were overwhelmed with protests -from shippers and the paring of freight rates down went on as the -prices of the goods they carried went up. - -In ten years the price of lumber advanced nearly 50%. As a cheap -bulky commodity it had enjoyed a low rate in order to move it and -it was moved at the expense of other commodities. When it was -able to pay a little more toward the cost of getting it to market -the proposal of an advance was met with indignant protests from -lumber shippers and dealers and reversed thumbs by the sympathetic -commissions. - -The railways pay more for their lumber and other material today than -they did ten years ago but they will have to fight for any advance -in rates to meet this part of their cost of living. It is said to -be a poor rule that will not work both ways--but the cost of living -seems to have only one way of working so far as railway economics are -concerned. - -Just as a straw to indicate that high prices of food are the result -and not the basis of high wages the following table of comparative -prices in London and New York from the New York _Times_ of March 27, -1910, is instructive: - - -COMPARATIVE RETAIL PRICES OF ARTICLES OF FOOD IN LONDON AND NEW YORK -IN MARCH, 1910. - - =====================================+============+============= - | London. | New York. - | Cents. | Cents. - -------------------------------------+------------+------------- - Apples, 1 lb | 4 to 6 | 10 - Bread, 1 lb | 4 | 5 - Butter, 1 lb | 24 to 32 | 30 to 35 - Cheese, 1 lb | 14 to 16 | 18 to 22 - Cocoa, 1 lb | 16 to 36 | 25 to 50 - Coffee, 1 lb | 16 to 30 | 20 to 50 - Currants, 1 lb | 4 to 8 | 8 to 12 - Eggs, 12 to 16 | 25 | 6 to 12--25 - Codfish, 1 lb | 8 to 12 | 15 to 29 - Fish (general), 1 lb | 4 to 12 | 10 to 25 - Flour, 3 lbs | 9 to 10 | 12 - Meats: | | - Bacon, 1 lb | 16 to 24 | 25 to 30 - Beef, 1 lb | 16 to 20 | 22 to 30 - Pork, 1 lb | 12 to 16 | 20 to 24 - Milk, 1 pint | 4 | 4 to 5 - Oatmeal, 1 lb | 4 to 6 | 5 to 10 - Onions, 1 lb | 2 | 4 - Oranges, 1 doz | 10 to 12 | 18 to 50 - Potatoes, 1 lb | 1 to 2 | 3 to 4 - Prunes, 1 lb | 8 to 12 | 10 to 18 - Raisins, 1 lb | 6 to 10 | 10 to 16 - Rice, 1 lb | 4 | 6 - Syrup, 1 lb | 6 | 10 - Sugar white, 1 lb | 6 | 6 - Sugar, yellow, 1 lb | 4 | 5 - Tapioca, 1 lb | 8 | 10 - Tea, 1 lb | 20 to 60 | 30 to 1.50 - Tomatoes, 1 lb | 8 | 12 - -------------------------------------+------------+------------- - -The amazing feature of this statement is that the United States -produces and exports to the United Kingdom enormous quantities of -breadstuffs, meat and provisions, which constitute the chief articles -of food in London and which are sold there at prices from 20% to 25% -lower than in New York. Clearly it is the high scale of wages that -fosters the high cost of living in the United States and there can be -little question but it breeds the high wages it feeds on. - -It is humanly certain, though economically unsound, that wages will -continue to advance with the cost of living and will not recede -proportionately as prices of food fall. But both will decline -together when for any considerable period there is a surplus of -efficient labor for the requirements of American industry. Even -railway labor in the most stable of all employments yielded to this -influence in 1893 and 1894; and the prices of food receded to the low -mark in the following years 1895, 1896 and 1897. Not until wages took -their upward turn in 1898 did the cost of food begin to show above -the index average of 1890-1899. - - - - -IV - -CAPITALIZATION - - -According to the Twenty-third Annual Report of the Interstate -Commerce Commission the amount of railway capital, including stocks -and bonds "outstanding in the hands of the public on June 30, 1908, -was $12,840,091,462, which, if assigned on a mileage basis, shows a -capitalization of $57,230 per mile of line." - -In the face of all the fustian about over-capitalization of American -railways, this is a most remarkable admission, not only of their -moderate, but of their decreasing capitalization per mile. - -In its report on the Intercorporate Relationships of Railways, dated -March 10, 1908, the Commission found that as the result of its -investigation the figure for railway capital outstanding in the hands -of the public, "Measuring the claim of railway securities on railway -revenues," reduced the amount "from $67,936 per mile of line (1906) -to $58,050 per mile of line." - -Of course there was never any justification for using the larger sum -as a true measure of railway capitalization, for it was known to -contain at least 15% duplicated capital. - -In its Statistics of Railways for the year ending June 30, 1907, the -Commission gave the net amount of railway capital outstanding in the -hands of the public at that date, "assigned on a mileage basis as -$58,298 per mile of line," or $1,068 more than the figure reported -for 1908. - -As the computation for 1908 was made on a basis of 224,363 miles of -line, this would indicate a shrinkage of no less than $239,616,480 in -the par value of railway capital. It is needless to say there was no -such shrinkage. - - -NET CAPITALIZATION IN 1909. - -Following the earlier judgment of the Official Statistician, this -Bureau seeks to arrive at a fair approximation of the capitalization -of the railways of the United States through the reports of operating -roads and the capitalization of the rentals paid for leased roads. -This, in the more recent language of the Statistician, furnishes the -only capitalization that "measures the claim of railway securities on -railway revenues." - -Applied to the returns received by this Bureau from 221,132 miles of -operated line, this formula yields the following result for the year -ending June 30, 1909: - - -SUMMARY SHOWING CAPITALIZATION OF 368 COMPANIES OPERATING 221,132 -MILES OF LINE FOR THE YEAR ENDING JUNE 30, 1909. - - ======================================+================================= - | Capitalization - | 1909 - | (182,046 Miles Owned) - --------------------------------------+----------------+---------------- - Capital stock | $6,199,919,551 | - Funded debt | 8,015,841,805 | - Receivers' certificates | 20,497,447 | - |----------------+ $14,236,258,803 - Rental of 39,086 miles, $120,784,982, | | - capitalized at 5%. | | 2,415,699,640 - | +---------------- - Total | | $16,651,958,443 - | | - Deduct:(a) | | - Railway stocks owned (actual value) | $1,889,157,214 | - Other stocks owned (actual value) | 206,461,423 | - Railway bonds owned (actual value) | 1,054,095,905 | - Other bonds owned (actual value) | 140,282,728 | - |----------------+ 3,289,997,270 - | | - Net capitalization, 1909 | | $13,361,961,173 - Net capitalization per mile operated | | 60,425 - --------------------------------------+----------------+---------------- - - (a) The par value of these stocks and bonds owned is given - as $4,739,231,832. - -An estimate of $25,000 per mile for the 11,870 miles of line not -reporting to this Bureau would add $296,750,000 to the above total. -From this should be deducted $150,000,000 for the sum assigned by -the Official Statistician "to other properties," and we arrive at -the following close approximation of the true measure of the capital -employed in the transportation industry of the United States: - - - =======================================================+=============== - Net capitalization, 233,002 miles operated line, 1909 |$13,508,711,173 - Net capitalization per mile of line | 57,962 - Net capitalization per mile of track | 39,730 - -------------------------------------------------------+--------------- - -In computing the average capital per mile last given, no allowance -has been made for the 8,927 miles operated under trackage rights for -the sufficient reason that the rental paid therefor is represented in -the total capitalization just as fully as if so much capital had been -expended in the construction of that many miles of line. - -It is worthy of note that the net capitalization thus arrived at -through a straightforward analysis of the returns of the operating -companies is in substantial agreement with the Commission's report on -the Intercorporate Relationship of Railways in 1908. The construction -of 11,000 miles of line since 1906 would undoubtedly account for the -difference between $58,050 and $57,962 per mile of line. - - -SUMMARY SHOWING NET CAPITALIZATION OF THE RAILWAYS OF THE UNITED -STATES, 1909-1904. - - ==================+==================+========= - Year | Net | Per Mile - | Capital | of Line - ------------------+------------------+--------- - 1909 | $13,508,711,173 | $57,962 - 1908 | 13,007,012,563 | 58,864 - 1907 | 13,064,279,303 | 59,600 - 1906 | 12,628,000,000 | 57,966 - 1905 | 11,167,105,992 | 53,328 - 1904 | 10,711,794,278 | 52,099 - ------------------+------------------+--------- - -Owing to the intercorporate ownership of stocks and bonds and the -consequent intercorporate payments of interest and dividends, it -is no easy matter to make an entirely satisfactory estimate of the -return paid to capital out of the purely transportation revenues -of the railways. But the persistent reiteration by the Official -Statistician of the fictitious aggregate of all the dividends paid by -operating and non-operating companies, covering in 1908, by his own -admission, $3,927,453,365 duplicated capital, justifies the attempt. - -The operating income of the roads reporting to this Bureau for the -year 1909 is arrived at thus: - - - ===============================================+=============== - Gross earnings (221,132 miles operated) | $2,375,141,766 - Operating expenses | 1,568,008,389 - +--------------- - Net earnings from operation | $ 807,133,377 - Less taxes | 82,650,214 - +--------------- - Net operating income | $ 724,483,163 - -----------------------------------------------+--------------- - -This $724,483,163 is the balance in the hands of the 368 companies -of the moneys received by them from transportation, or, as the -Official Statistician now calls it, "rail operations," for the -payment of interest, rent, other deductions, dividends, additions and -betterments, reserves, surplus and deficits. But before proceeding to -this distribution these companies received $200,725,696 income from -other sources, principally interest and dividends on stocks and bonds -owned and for rent of track, and a net balance of $5,410,338 from -outside operations. The total of these two sums, $206,136,034, may be -arbitrarily applied first to offset the item of rent, $120,784,982, -paid for leased lines and track, and the balance in payment of -interest and dividends in proportion to the value of bonds and stocks -owned as above, viz.: 36% and 64%, respectively. - -This enables us to make the following distribution of the net -operating income of the railways reporting to this Bureau, as follows: - - - ===============================+=============+========================== - Net operating income, as above | | |$724,483,163 - Disposition of same: | | | - Interest on funded debt |$324,181,521 | | - Less paid from "other income"| 30,843,416 |$293,338,105 | - Interest on current liab- | | | - ilities | | 22,546,779 | - Other deductions | | 70,174,473 | - Dividends preferred stock | 50,183,739 | | - Dividends common stock | 176,607,550 | | - +-------------+ | - |$226,791,289 | | - Less paid from "other income"| 54,832,742 | 171,958,547 | - +-------------+ | - Dividends on other securities| | 769,222 | - Additions and betterments | | | - charged to income | | 24,807,546 | - Appropriations to reserves | | 16,984,447 | - Miscellaneous | | 5,602,761 | - Deficits of weak lines | | 4,996,195 | - Surplus available for adjust-| | | - ments and improvements | | 113,205,088 |$724,483,163 - -------------------------------+-------------+-------------+------------ - -This table shows the actual disposition made of the net income from -operation of the roads reporting to this Bureau, representing 97% of -the railway business of the United States, except that $120,784,982 -of the income from other sources has been eliminated from the account -and applied to offset the rental paid by the reporting roads. - -It will be observed that the gross dividends declared were only -$226,791,289, which is 3.64% on the par value of the stock of the 368 -reporting companies. - - -MISREPRESENTATIONS AS TO DIVIDENDS. - -The discrepancy between this condition and the official statement as -to dividends declared in 1908 calls for an analysis of the latter. -This reads, "The amount of dividends declared during the year (1908) -was $386,879,362, being equivalent to 7.99% on dividend-paying stock. -For the year ending June 30, 1907, the amount of dividends declared -was $308,088,027." - -Two income accounts--one of operating roads and the other of leased -roads--for the year ending June 30, 1908, give a clew as to how the -Official Statistician more than doubles the dividends actually paid -out of transportation revenues. The gross total is made up of these -four items: - - - ===================================================+============= - Operating roads: | - Dividends declared from current income | $271,328,453 - Dividends declared out of surplus | 57,733,808 - | - Leased roads: | - Dividends declared from current income | 33,843,577 - Dividends declared out of surplus | 27,550,596 - +------------- - Total | $390,456,434 - ---------------------------------------------------+------------- - -As these income accounts show that the operating companies received -$280,427,460 "other income" from outside operations and sources other -than transportation, and the leased roads received $111,153,013 -"income from lease of road," the source of the major part of this -fictitious dividend is revealed. The $280,427,460 from other sources -would pay the entire income of the leased roads and leave nearly -$170,000,000 to extinguish so much of the dividends declared by the -operating roads. - -Modified as to details, this is what actually occurs every year. In -the year 1908 the total amount paid out of transportation revenues on -account of capital of the 97% of the railways of the United States -reporting to this Bureau was represented in the sums: - - - ===================================================+============= - Net interest on funded debt | $282,354,000 - Interest on current liabilities | 31,835,708 - Rent paid for lease of roads | 113,529,261 - Net dividends | 104,074,006 - +------------- - Total | $531,792,975 - ---------------------------------------------------+------------- - -This total was equivalent to 4.15% on the net capitalization -of the roads represented. The rental paid the lessor roads -constituted the fund from which those roads paid their interest and -dividends. Further remark on the misleading and harmful statement -of the Official Statistician as to dividends declared in 1908 is -unnecessary. - - - - -V - -COST OF CONSTRUCTION - - -Incomplete as are the figures of the cost of the railways of the -United States, and exclusive as they are of the millions put back -into the properties out of income for additions, betterments and -reconstruction in the process of operation, yet the statistics of the -cost of construction and equipment afford a complete answer to all -charges that American railways are over-capitalized. - -Upon the question of the cost of road and equipment in 1909, the -returns of the 368 roads reporting to this Bureau furnish the -following data: - - -SUMMARY OF COST OF ROAD AND EQUIPMENT COVERING 221,132 MILES OF -OPERATED LINE FOR 1909. - - =====================================================+================ - Item | Amount - -----------------------------------------------------+---------------- - Cost of road (182,046 miles owned) | $6,603,504,463 - Cost of equipment | 1,122,409,813 - Undistributed cost of road and equipment | 3,080,064,960 - Cost of 39,086 miles leased lines rental capitalized | 2,415,699,876 - +---------------- - Total | $13,220,678,876 - -----------------------------------------------------+---------------- - -Adding to this $290,750,000 to represent the 11,870 miles of road not -reporting to this Bureau at $25,000 per mile, we obtain - - =$13,417,438,876= - -as the cost of road and equipment of the 233,002 miles of line -employed in the transportation industry of the United States in 1909, -or - - =$58,031 per mile of line.= - -This is an underestimate by reason of the failure of a few lines -to furnish even approximate figures on the accumulated cost of -their properties. Averaging the cost of locomotives at $15,000, -of passenger cars at $6,000, of freight cars at $800, and of -company's cars at $500 apiece--their present cost rates much -higher--the equipment of American railways represents an investment -of over $3,000,000,000, and its bare maintenance alone involves an -expenditure of nearly $400,000,000 annually. - - -PHYSICAL VALUATION OF THE RAILWAYS. - -It is worthy of passing note that just as the railway companies have -shown their indifference to a physical valuation of their property, -the clamor of regulators and agitators in its favor has subsided. -The proposal lost its attractiveness to them the moment they became -convinced that such an investigation would put a valuation on the -roads so high as to take not only the wind out of their sails but the -last drop of water out of their mouths. To-day the only insistent -demand for this futile undertaking comes from quarters interested in -the distribution of the appropriation of several millions it would -cost. - -Credit for the reversal in the popular and political attitude on this -subject is largely due to the valuations attempted by the states of -Minnesota, Washington and Wisconsin. The results in these states may -be briefly summarized as follows: - - - ===============================+========+==============+=============== - | Miles |Capitalization| Valuation by - | of Line| per Mile |State, per Mile - -------------------------------+--------+--------------+--------------- - Minnesota, 1907 | 7,596 | $44,206 | $54,201 - | | | - Washington, 1908: | | | - Great Northern | 806 | 44,078 | 73,900 - Northern Pacific | 942 | 70,278 | 106,500 - Oregon R. R. & Navigation Co | 501 | 43,012 | 38,900 - | | | - Wisconsin, 1906 | 7,135 | 33,424 | 34,630 - -------------------------------+--------+--------------+--------------- - -Even Senator Albert B. Cummins of Iowa has seen such a bright light -on this subject that in his speech before the Traffic Club of Chicago -last February he said that he would not be willing to make a present -valuation of railroad property a basis for determining rates, -"for the reason that it was more than probable that the present -capitalization of between fifteen and sixteen billions would be -increased to twenty billions." - -In the Bureau's Statistics for 1908 it was said: - -"If the valuations in Minnesota and Washington, made by none too -friendly commissions, are any criterions of what a national valuation -made under presumably unbiased federal authority would be, the -present cost to reproduce the railways of the United States would be -nearer $20,000,000,000 than any sum within the anticipations of those -agitating for such valuation." - - -CAPITALIZATION OF FOREIGN RAILWAYS. - -With both sides of the balance sheet testifying to a capital -investment in American railways of under $60,000, and official -valuation abandoned _because it would demonstrate that they could not -be reproduced for less than $80,000 per mile_, the reader is asked -to compare the American figures with those of the capitalization, or -cost of construction, of the principal foreign countries set forth -below. These have been compiled from the latest available official -returns. - - -SUMMARY OF RAILWAY CAPITALIZATION OF THE PRINCIPAL FOREIGN RAILWAYS -FROM LATEST DATA. - - ======+===========================+==========+=================+========= - Year | Country | Miles of | Capital or Cost | Per - | | Line | of Construction | Mile - ------+---------------------------+----------+-----------------+--------- - |Europe: | | | - 1908 | United Kingdom | 23,205 | $6,382,296,742 | $275,040 - 1908 | Germany | 35,558 | 3,903,848,400 | 109,788 - 1907 | Russia in Europe (excl- | | | - | usive of Finland) | 32,900 |(a)3,170,876,360 | 80,985 - 1907 | France |(b)24,730 | 3,447,366,000 | 139,390 - 1907 | Austria | 13,427 | 1,515,576,885 | 112,879 - 1907 | Hungary | 11,769 | 741,586,391 | 63,010 - 1907-8| Italy (State roads only) | 8,699 | 1,086,000,000 | 124,730 - 1905 | Spain (13 roads) | 6,840 | 583,632,000 | 85,327 - 1906 | Sweden | 7,938 | 257,408,450 | 32,427 - 1907 | Belgium (State only) | 2,537 | 430,800,000 | 169,806 - 1907 | Switzerland | 2,740 | 298,709,210 | 109,000 - | | | | - |Other Countries: | | | - 1909 | Canada | 24,104 | 1,608,990,656 | 66,752 - 1908 | British India | 30,576 | 1,364,669,375 | 44,632 - 1907 | Argentine Republic | 13,690 | 820,433,796 | 59,930 - 1908 | Japan | 4,444 | 190,173,728 | 42,800 - 1909 | United States of America | 233,002 | 13,508,711,173 | 57,976 - ------+---------------------------+----------+-----------------+--------- - - (a) Russian capitalization, including railways in Asia, covers a total - of 39,277 miles, from which the capital per mile is computed. - - (b) This is exclusive of 4,259 miles of local interest. - -The most striking feature in this table is the steady advance it -shows in the capital cost of German railways. In ten years this has -increased from 251,597 marks per kilometer in 1898 to 283,608 in -1908, _i. e._ 31,731 marks per kilometer or $12,282 per mile. This -means an increase of $991,687,440 in capital cost for an increase of -only 5,525 miles of line. - - - - -VI - -OWNERSHIP OF AMERICAN RAILWAYS - - -Returns to this Bureau place the number of stockholders of record at -the date of the last election of directors prior to June 30, 1909, of -the 368 roads reporting at 320,696. As only 182,046 of the 221,132 -miles operated by these roads was covered by the capital stock, this -would show 1¾ stockholders for each mile of road and would indicate -that there are at least 415,000 stockholders in all the railways of -the United States. Owing to the incompleteness of the returns on this -subject and the fact that large blocks of stock are held in the names -of associations and trustees, it is safe to estimate that the actual -ownership of railway stock is distributed among at least 440,000 -persons. - -In 1905 the Commission reported the number of stockholders of record -prior to June 30, 1904, as 327,851, but has given no later figures. -It may be of interest to compare these figures with the partial -reports to this Bureau since then. - - - ===================+=================+============== - Year | Number | Number of - | Reporting | Stockholders - -------------------+-----------------+-------------- - 1904 | 1,182 roads | 327,851 - 1906 | 284 " | 226,986 - 1907 | 317 " | 240,554 - 1908 | 315 " | 315,727 - 1909 | 340 " | 320,696 - -------------------+-----------------+-------------- - -If the ownership of railway bonds, which is even more widely -distributed than that of stocks, could be traced, it would be found -that over a million investors are interested in the financial welfare -of the railways. This would give to each an interest of $13,000, from -which the average income is not over $520 a year. - -The attempt of the Commission in 1908 to secure evidence that the -control of the railways was concentrated in a few hands by calling -for a statement of the "ten largest holders of voting securities" -of the reporting companies having established that nowhere did they -_own_ a majority or an approach to a majority of the controlling -stock, inquiry along that line was dropped in 1909. - -In railways, as in any republic, the latent power is widely -distributed among the many, while the administrative responsibility -is necessarily entrusted to the few. - - - - -VII - -PUBLIC SERVICE OF THE RAILWAYS - - -It is the reproach of our system of government statistics of railways -that their first concern is financial results, which the government -takes no thought to improve, and the harrowing roll of accidents, and -not the adequacy of the service and the steady development of the -means of transportation. Every month, almost every week, the public -is informed of the volume of traffic, and every quarter the record of -casualties is told in sensational head lines. It is left for belated -annual reports to record the public service of this great industry -upon whose progressive efficiency every other industry in the United -States depends. - -It is not upon what the railways earn, but upon what they DO that the -whole industrial fabric of the republic rests. It is not upon the -dividends they pay but upon the traffic they carry, the net income -withheld from dividends and put into improvements, that their success -as carriers depends. - - -THE PASSENGER TRAFFIC. - -In considering the public service of the railways it is customary to -give first attention to the passenger traffic. This is not because it -is the most important branch of the service but because passengers -are numbered by millions, where thousands suffice in the enumeration -of the shippers, who frequently mistake themselves for the entire -American people. - -In twenty years between June 1, 1889, and June 1, 1909, the -population of the United States increased from 61,289,000 to -88,806,000, or nearly 45%. In the meantime the passenger cars -provided by the railways increased from 24,586 to 46,026, or over -87%. But this does not measure the liberal provision made by the -railway for the travelling public, which is more fully and accurately -expressed by the amazing growth of the number of passengers carried -one mile from 11,553,820,445 in 1889 to approximately 29,452,000,000 -in 1909, or nearly 155%. - -Here is shown an increase of cars not far short of double the -increase in population and an increase in passengers carried -proportionately greater than the numerical increase in cars. - -In the meantime the average receipts of the traffic have declined -from 2.165 cents per passenger mile in 1889 to 1.916 in 1909--a -decline of over 11%, although every item involved in the service, -locomotives, cars, track, stations, labor, etc., cost more. The -passenger service, except as precursor to the freight service, and in -certain densely populated sections, was unremunerative in 1889 and is -more so now. It is maintained at the expense of the freight service -by what the Railroad Commission of Wisconsin has characterized as "a -species of piracy practiced upon the shippers of freight." - -The salient features of the passenger service reported to this Bureau -for the year 1909, as compared with the final official returns for -the preceding year, are shown in the following statement: - - - ======================================+================+================ - Item | Bureau Figures |Official Figures - | 1909 | 1908 - --------------------------------------+----------------+---------------- - Miles of line represented | 221,132 | 230,494 - Passengers carried. | 854,255,337 | 890,009,574 - Passengers carried 1 mile | 28,788,855,000 | 29,082,836,944 - Passenger revenue | $551,634,278 | $566,832,746 - Mileage of passenger trains | 491,903,107 | 505,945,582 - Average number of passengers in train | 58 | 54 - Average cars to a train | 5.3 | - Passenger car miles | 2,594,508,987 | 2,705,659,994 - Average passenger journey (miles) | 33.71 | 32.66 - Average receipts per passenger mile | | - (cents) | 1.916 | 1.937 - --------------------------------------+----------------+---------------- - -According to the monthly reports to the Interstate Commerce -Commission covering an average of 233,002 miles of line, the -passenger revenues in 1909 were $564,302,580, or $1,943,077 less than -the above revenues for only 228,164 miles of line in 1908. - -The average receipts per passenger mile in 1909 are the lowest ever -reported for American railways. - -Taken in connection with the official returns covering the period -since 1900, the above figures afford evidence of the confiscatory -effect of the 2-cent passenger laws on railway revenues, as appears -from the following statement: - - -SUMMARY OF PASSENGER MILEAGE, REVENUE AND RECEIPTS PER PASSENGER -MILE, 1900 TO 1909. - - ============+================+===========+==============+========== - | | Increase | | - | Passengers | Over | | Receipts - Year | Carried | Preceding | Passenger | per - | One Mile | Year | Revenue | Passenger - | |(Per Cent) | | Mile - ------------+----------------+-----------+--------------+---------- - 1900 | 16,038,076,200 | | $323,715,639 | 2.003 - 1901 | 17,353,588,444 | 8.2 | 351,356,265 | 2.013 - 1902 | 19,689,937,620 | 13.4 | 392,963,248 | 1.986 - 1903 | 20,915,763,881 | 6.2 | 421,704,592 | 2.006 - 1904 | 21,923,213,536 | 4.8 | 444,326,991 | 2.006 - 1905 | 23,800,149,436 | 8.6 | 472,694,732 | 1.962 - 1906 | 25,167,240,831 | 5.7 | 510,032,583 | 2.003 - 1907 | 27,718,554,030 | 10.1 | 564,606,343 | 2.014 - 1908 | 29,082,836,944 | 4.9 | 566,245,657 | 1.937 - 1909 | 29,452,000,000 | 1.3 | 564,302,580 | 1.916 - | | | | - Increase, | | | | - per cent | 83.7 | -- | 74.6 | -- - ------------+----------------+-----------+--------------+---------- - -Here it is shown that the passenger service rendered has increased -12% more than the passenger revenues. But more significant than -this is the column of yearly increases in service by percentages. -This utterly explodes the theory that passenger travel is greatly -stimulated by low fares--aside from some positive incentive to -increased travel, such as periodical expositions, the Louisiana -Purchase Exposition for instance, the effect of which is clearly -traceable in the increased service in 1905, which includes the heavy -travel during the months of heavy attendance, July 1 to December 1, -1904. - -The 2-cent passenger laws were passed so as to become generally -effective July 1, 1907, and their effect on passenger receipts during -the following year was such that these receipts were actually less in -1909 than in 1907, although the service performed by the railways was -over 6% greater. Had the railways received the same rate in 1909 that -they did in 1907 their revenue from passengers would have been nearly -$29,000,000 more than it was. - - -PASSENGER TRAFFIC 1909-1888. - -In the next statement the salient facts in regard to the passenger -traffic since the Commission began collecting the data is passed -under review. - - - ======+==========+==========+=======+========+=======+=======+======== - | | | | | | |Average - |Passengers|Passengers|Mileage|Average |Average|Pass. |Receipts - Year | Carried | Carried | Pass. | Pass. |Journey|Revenue| per - |(Millions)| One Mile | Trains|in Train| Miles |(Mill.)|Pass. - | |(Millions)|(Mill.)| | | |Mile - | | | | | | |(Cents) - ------+----------+----------+-------+--------+-------+-------+------- - 1909 | 888 | 29,452 | 507 | 58 | 33 | 504 | 1.916 - 1908 | 890 | 29,082 | 500 | 59 | 33 | 566 | 1.937 - 1907 | 873 | 27,718 | 509 | 51 | 32 | 564 | 2.014 - 1906 | 797 | 25,167 | 479 | 49 | 31 | 510 | 2.003 - 1905 | 738 | 23,800 | 459 | 48 | 32 | 472 | 1.962 - 1904 | 715 | 21,923 | 440 | 46 | 31 | 444 | 2.006 - 1903 | 694 | 20,915 | 425 | 46 | 30 | 421 | 2.006 - 1902 | 649 | 19,689 | 405 | 45 | 30 | 392 | 1.986 - 1901 | 607 | 17,353 | 385 | 42 | 29 | 351 | 2.013 - 1900 | 576 | 16,038 | 363 | 41 | 28 | 323 | 2.003 - 1899 | 523 | 14,591 | 347 | 41 | 28 | 291 | 1.978 - 1898 | 501 | 13,379 | 334 | 39 | 27 | 267 | 1.973 - 1897 | 489 | 12,256 | 335 | 37 | 25 | 251 | 2.022 - 1896 | 511 | 13,049 | 332 | 39 | 26 | 266 | 2.019 - 1895 | 507 | 12,188 | 317 | 38 | 24 | 252 | 2.040 - 1894 | 540 | 14,289 | 326 | 44 | 26 | 285 | 1.986 - 1893 | 593 | 14,229 | 335 | 42 | 24 | 301 | 2.108 - 1892 | 560 | 13,362 | 317 | 42 | 24 | 286 | 2.126 - 1891 | 531 | 12,844 | 308 | 42 | 24 | 281 | 2.142 - 1890 | 492 | 11,847 | 285 | 41 | 24 | 260 | 2.167 - 1889 | 472 | 11,553 | 277 | 42 | 25 | 254 | 2.199 - 1888 | 412 | 10,101 | 252 | 40 | 24 | 237 | 2.349 - ------+----------+----------+-------+--------+-------+-------+------- - Increase 1888 to | | | | | | - 1907 115% | 191% | 101% | 45% | 38% | 138% | - Decrease | | | | | | 18.4 - ------+----------+----------+-------+--------+-------+-------+------- -The several increases shown in the first, second, third and sixth -columns of the table reflect the general advancement in passenger -traffic. That of 45% in the average passengers to a train marks the -progress in density of that traffic which may eventually place it -on a profitable basis. In Massachusetts, where this density yields -an average of 79 passengers to a train there is no demand for a -two-cent rate statute, for the conditions have made a rate of 1.64 -cents profitable. In the group of states consisting of Ohio, Indiana, -Michigan, Illinois, Iowa, Wisconsin and Minnesota, where the density -of traffic yields only 46 passengers by train, a statutory two-cent -fare becomes confiscatory because it costs at least one dollar to -operate a passenger train one mile and 46 times two cents is only -92 cents. Moreover the 46 passengers per train is only an average -and there are as many trains that average less as more. The average -has to be raised above 50 to yield any margin of profit on passenger -traffic. If it were not for the density of traffic in the New England -and North Atlantic group of states the average for the entire United -States would be well below 46 passengers per train. - -The steady increase in the distance traveled per passenger reflects -the effect of trolley competition in diverting the short haul -passenger traffic. - -The most noteworthy feature of the seventh column is the decline -of 98/1000ths of a cent in the average receipts per passenger mile -between 1907 and 1909, making a new low record after hovering around -the two cent mark for fourteen years. As noted above, this reduction -in the average cost the railways nearly $29,000,000 on the passenger -traffic of 1909. - -In this connection it is interesting to recall that between 1888 and -1893 the Official Statistician, then as now Professor Adams, made the -following computation of the average cost of carrying one passenger -one mile for the whole United States: - - - ============================+======+======+======+======+======+====== - | 1888 | 1889 | 1890 | 1891 | 1892 | 1893 - ----------------------------+------+------+------+------+------+------ - Average cost of carrying a | | | | | | - passenger one mile, cents | 2.042| 1.993| 1.917| 1.910| 1.939| 1.955 - ----------------------------+------+------+------+------+------+------ - -It will be observed that the average receipts per passenger mile in -1909 are below the computed cost in every one of the years above -named, except 1891. When the advance in the cost of everything -necessary to the service--track, labor, equipment, conveniences, -speed, terminal facilities--is considered, the practical coincidence -of average cost and receipts leaves no margin for legitimate profits. - - -RECEIPTS FROM MAIL AND EXPRESS. - -Closely associated with the passenger traffic of the railways are -the mail and express services. Although principally carried by -passenger trains, each has a special service of its own by mail and -express trains. But all are included under the passenger service. -The receipts from these two branches of the service during the last -decade are shown in the following statement: - - -SUMMARY OF RECEIPTS FROM MAIL AND EXPRESS, 1899 TO 1908. - - ====================+=====================+===================== - | Mail | Express - +------------+--------+--------------------- - Year | Revenues |Percent-| Revenues |Percent- - | | age of | |age of - | |Earnings| |Earnings - --------------------+------------+--------+------------+-------- - 1899 |$35,999,011 | 2.74 |$26,756,054 | 2.04 - 1900 | 37,752,474 | 2.54 | 28,416,150 | 1.91 - 1901 | 38,453,602 | 2.42 | 31,121,613 | 1.96 - 1902 | 39,963,248 | 2.31 | 34,253,459 | 2.07 - 1903 | 41,709,396 | 2.19 | 38,331,964 | 1.98 - 1904 | 44,499,732 | 2.25 | 41,875,636 | 2.12 - 1905 | 45,426,125 | 2.18 | 45,149,155 | 2.17 - 1906 | 47,371,453 | 2.04 | 51,010,930 | 2.19 - 1907 | 50,378,964 | 1.94 | 57,332,931 | 2.21 - 1908 | 48,517,563 | 2.03 | 58,602,091 | 2.45 - 1909 | 50,935,000 | 2.08 | 63,669,000 | 2.60 - | | | | - Increase, per cent | 41.5 | -- | 138.0 | -- - --------------------+------------+--------+------------+-------- - -Aside from the striking contrast in the percentages of increase of -revenues from these two sources, the most significant feature of this -table is the reversal it shows in their respective importance from -the railway revenue point of view. Prior to 1905, carrying the mails -brought larger, if not more profitable, returns to the railways. -Since then the returns from express have increased so much more -rapidly that they are now nearly 23% more than those from mails. - -If proof were needed of the absolute falsity of the charge that the -railways are receiving an exorbitant rate for carrying mail, the -above table of their receipts from the service in connection with -the following statement of mail handled and revenues in view of the -finding of the Joint Commission of Congress in 1899 would furnish it. -After a thorough investigation of the subject lasting from August, -1898, to July, 1900, the Commission came to the following conclusion: - -"Upon a careful consideration of all the evidence and the statements -and arguments submitted, and in view of all the services rendered -by the railroads, we are of the opinion that the prices now paid to -the railroad companies for the transportation of the mails are not -excessive, and recommend that no reduction thereof be made at this -time." - -The increase in the railroad service since this report was made is -shown in the following statement of miles of mail transportation -by railroads, the postal revenues and the number of clerks in the -railway mail service since 1899: - - - ===============================+==============+=============+========= - | Annual | | - |Transportation| |Number of - | of Mail | Postal | Railway - | by Railroads | Revenues | Mail - | (Miles) | | Clerks - -------------------------------+--------------+-------------+--------- - 1899 | 287,591,269 | $95,021,384 | 8,388 - 1900 | 297,256,303 | 102,354,579 | 8,695 - 1901 | 302,613,325 | 111,631,193 | 9,105 - 1902 | 312,521,478 | 121,848,047 | 9,627 - 1903 | 333,491,684 | 134,224,443 | 10,418 - 1904 | 353,038,397 | 143,582,624 | 11,621 - 1905 | 362,645,731 | 152,826,585 | 12,474 - 1906 | 371,661,071 | 167,932,783 | 13,598 - 1907 | 387,557,165 | 183,585,006 | 14,357 - 1908 | 407,799,039 | 191,478,663 | 15,295 - 1909 | | 203,562,383 | 15,866 - | | | - Increase in 10 years, per cent | 50.5 | 124.7 | 89.1 - -------------------------------+--------------+-------------+--------- - -Compared with the increase of only 41.5% in the revenues from mail -received by the railways during the same period, each one of the -above percentages testifies to a positive reduction in the rate -received by the railways for the service. And if the increase in -weight of mail carried in 1909 were known, the contrast between -the service and the pay would be more striking. In 1899 the total -weight of all mail was reported as 635,180,362 pounds. In 1907 the -estimates made from the special weighing placed the weight of mail -carried that year at 1,290,358,284 pounds, or an increase of nearly -105% in eight years. By reference to the above table it will be seen -that the railway revenues from mail between 1899 and 1907 increased -only 40%. The contrast is illuminating. In its light the charge that -the railways are in any way responsible for the postal deficit is -grotesque. - - -FREIGHT TRAFFIC - -According to the monthly returns to the Interstate Commerce -Commission, the proportion of revenues from freight of the railways -of the United States to total earnings from operation, for the years -1908 and 1909, receded to the unusually low figures of 68.51% and -68.88% respectively. The official summary for 1908, based on the -annual returns, shows a proportion of 69.17% for that year, which -probably is nearer the mark. - -The annual reports to this Bureau for 1909 yield a proportion of -69.18% for last year. - -Accepting this proportion taken from the annual returns as being -based on the same character of reports as those from which former -ratios were derived, the preponderance of freight traffic is shown -in bold relief in the following statement of the ratio of its -revenues to total earnings from operation, 1899 to 1909: - - - ===========+================= - | Proportion of - | Freight Revenues - Year | to Total - | Earnings - -----------+----------------- - 1899 | 69.55% - 1900 | 70.56% - 1901 | 70.41% - 1902 | 69.93% - 1903 | 70.39% - 1904 | 69.82% - 1905 | 69.67% - 1906 | 70.54% - 1907 | 70.44% - 1908 | 69.17% - 1909 | 69.18% - -----------+----------------- - -The average proportion for the nine years preceding 1908 is seen to -be slightly above 70%, and the fact that it was almost one point -below 70% in 1908 and 1909 indicates that it was the freight traffic -that bore the brunt of the business depression which curtailed -railway revenues during those years. - -In no other of the leading countries of the world does the freight -traffic assume the overwhelming relative proportion that it does in -the United States. In the United Kingdom it amounts to 50.35%; in -France to 53.64%; and in Germany, including express and mail, to 65%. -If these were classed with freight in the United States, it would -raise the proportion for that traffic here to over 74%. - - -FREIGHT TRAFFIC 1909 AND 1908. - -The next statement presents the significant items of the freight -traffic in 1909 for the roads reporting to this Bureau compared with -those of the final official returns for the preceding year. - - - ================================+=================+================ - | | - Item | 1909 | 1908 - | Bureau Figures |Official Figures - --------------------------------+-----------------+---------------- - Miles operated | 221,132 | 230,494 - Number of tons carried | 1,441,012,426 | 1,532,981,790 - Tons carried 1 mile | 217,756,776,000 | 218,381,554,802 - Freight revenue | $1,643,028,564 | $1,655,419,108 - Mileage of freight trains | 560,602,557 | 587,218,454 - Number of cars in train | 29.7 | 28.3 - Average number of tons in train | 388 | 351.80 - Average haul per ton (miles) | 151.1 | 143.83 - Average receipts per ton mile | | - (mills) | 7.54 | 7.54 - --------------------------------+-----------------+---------------- - -Experience has shown that in comparing these statements of averages -for passenger and freight traffic, allowance has to be made for the -fact that the Bureau's figures include all the great systems and -are exclusive of some 13,000 miles of minor lines. It is difficult -to estimate the effect of these discrepancies with anything like -exactness. But complete returns invariably show a shorter mean -haul and journey for the entire country than the Bureau's figures -indicate and also a less train load of passengers and freight, the -result being a slightly higher average for passenger and freight ton -receipts per mile. - -Last year from its returns the Bureau computed the passenger mile -receipts at 1.933 cents and the ton mile receipts at 7.53 mills. -The Commission's final figures were 1.937 cents and 7.54 mills -respectively. - - -FREIGHT TRAFFIC 1909 TO 1888. - -In the next summary is presented a condensed statement of the -significant data relating to the freight traffic for the twenty-two -years that the Commission has been compiling statistics. - - -SUMMARY OF TONS CARRIED, TON MILEAGE, MILEAGE OF FREIGHT TRAINS, -AVERAGE TONS IN TRAIN, FREIGHT REVENUES AND AVERAGE RECEIPTS PER TON -MILE. - - =====+==========+==========+========+=======+========+========+======== - | | Tons |Mileage | | Average| |Receipts - | Tons | Carried |Freight |Average|Haul per|Freight |per Ton - Year | Carried | One Mile |Trains |Tons in| Ton |Revenue | Mile - |(Millions)|(Millions)|(Mill.) | Train |(Miles) |(Mill.) |(Cents) - -----+----------+----------+--------+-------+--------+--------+-------- - 1909 |(a)1,486 | 222,900 | 579 | 388 | 151 | $1,682 | .755 - 1908 | 1,532 | 218,381 | 597 | 360 | 143 | 1,655 | .754 - 1907 | 1,796 | 236,601 | 629 | 357 | 131 | 1,823 | .759 - 1906 | 1,631 | 215,877 | 594 | 344 | 132 | 1,640 | .748 - 1905 | 1,427 | 186,463 | 546 | 322 | 130 | 1,450 | .766 - 1904 | 1,309 | 174,522 | 535 | 307 | 133 | 1,379 | .780 - 1903 | 1,304 | 173,221 | 526 | 310 | 132 | 1,338 | .763 - 1902 | 1,200 | 157,289 | 499 | 296 | 131 | 1,207 | .757 - 1901 | 1,089 | 147,077 | 491 | 281 | 135 | 1,118 | .750 - 1900 | 1,081 | 141,596 | 492 | 270 | 130 | 1,049 | .729 - 1899 | 943 | 123,667 |(b)507 | 243 | 131 | 913 | .724 - 1898 | 863 | 114,077 | 503 | 226 | 132 | 876 | .753 - 1897 | 728 | 95,139 | 464 | 204 | 130 | 772 | .798 - 1896 | 765 | 95,328 | 479 | 198 | 124 | 786 | .806 - 1895 | 696 | 85,227 | 449 | 189 | 122 | 729 | .839 - 1894 | 638 | 80,335 | 446 | 179 | 125 | 699 | .860 - 1893 | 745 | 93,588 | 508 | 183 | 125 | 829 | .878 - 1892 | 706 | 88,241 | 485 | 181 | 124 | 799 | .898 - 1891 | 675 | 81,073 | 446 | 181 | 120 | 736 | .895 - 1890 | 636 | 76,207 | 435 | 175 | 119 | 714 | .941 - 1889 | 539 | 68,727 | 383 | 179 | 127 | 644 | .922 - 1888 | 480 | 61,329 | 348 | 176 | 128 | 613 | 1.001 - +----------+----------+--------+-------+--------+--------+-------- - Increase 1888 to| | | | | | - 1909 209% | 263% | 66% | 120% | 18% | 174% | - =Decrease= | | | | | | =24.0=% - ----------------+----------+--------+-------+--------+--------+-------- - - (a) Figures for 1909 computed on basis of returns to this Bureau. - - (b) Includes 75% of mixed train mileage, that being the practice prior - to 1900. - -Mark the one column which shows a decrease. This means a remission -of almost exactly a quarter of a cent per ton mile in the average -receipts from freight. On the tonnage carried in 1909 it meant a -saving of over $540,000,000 to the shippers. In the presence of the -present high price of everything carried by the railways, there is -no ground for assuming that any portion of this half billion dollars -withheld from the railways ever reached the ultimate consumer. On the -contrary the presumption is unavoidable that it has been absorbed by -the shippers and consignors, whose profits are greater than ever. - - -PROPORTION OF COMMODITIES MOVED 1899-1909. - -Referring to the movement of different classes of commodities in his -report for 1904, the Official Statistician said: "A slight change in -the ratio of freight carried for any one of the classes named may -have decided results, not only upon the earnings of the roads, _but -upon the average rate per ton mile_." But without knowing the length -of the haul of the respective classes, any estimate of the effect of -such variation must be largely speculative. - -In 1909, for the first time the Bureau undertook to collect the -information as to the tonnage of the main divisions of commodities -carried. Its inquiries were limited to the tonnage originating on -the several roads, and the next statement presents the results in -comparison with the official figures for 1907, which are the last -available: - - -TONNAGE AND PROPORTION OF DIFFERENT CLASSES OF COMMODITIES MOVED 1909 -AND 1907. - - =======================+=======================+======================= - | 1909 | 1907 - +-------------+---------+-------------+--------- - Class of Commodity | Tonnage | | Tonnage | - | Reported as |Per Cent | Reported as |Per Cent - | Originating | of | Originating | of - | on Line |Aggregate| on Line |Aggregate - -----------------------+-------------+---------+-------------+--------- - Products of agriculture| 76,955,131 | 9.49 | 77,030,071 | 8.62 - Products of animals | 21,807,486 | 2.69 | 20,473,486 | 2.29 - Products of mines | 449,938,248 | 55.50 | 476,899,638 | 53.39 - Products of forests | 83,679,179 | 10.33 | 101,617,724 | 11.38 - | | | | - Manufactures | 109,625,669 | 13.52 | 137,621,443 | 15.41 - Merchandise | 35,500,833 | 4.38 | 34,718,487 | 3.89 - Miscellaneous | 33,318,272 | 4.09 | 44,824,123 | 5.02 - +-------------+---------+-------------+--------- - Total | 810,784,818 | 100.00 | 893,184,972 | 100.00 - -----------------------+-------------+---------+-------------+--------- - - NOTE.--These tables fail to include nearly 200,000,000 tons unassigned. - -The most significant feature of this statement is the marked -decrease, absolutely and relatively, in the tonnage of manufactures -carried. Great as was the decrease in the tonnage of animals carried -there was an increase relatively. - -The next statement shows the percentages of commodity tonnage moved -since the Commission has compiled the information divided between low -and high rate freight. - - -SUMMARY SHOWING PERCENTAGE OF FREIGHT TRAFFIC MOVEMENT BY CLASSES OF -COMMODITIES, 1907 TO 1899. - - Table headings: - Col A: Products of Agriculture - Col B: Animals - Col C: Mines - Col D: Forest - Col E: Total - Col F: Manufactures - Col G: Merchandise - Col H: Miscellaneous - Col I: Total - - =====+======================================+============================ - | Low Rate Freight | High Rate Freight - | Percentage of Aggregate | Percentage of Aggregate - Year +-------+------+-------+-------+-------+-------+------+------+------ - | A | B | C | D | E | F | G | H | I - -----+-------+------+-------+-------+-------+-------+------+------+------ - 1899 | 11.33 | 3.12 | 51.47 | 10.89 | 76.81 | 13.45 | 4.49 | 5.25 | 23.19 - 1900 | 10.35 | 2.87 | 52.59 | 11.61 | 77.42 | 13.41 | 4.26 | 4.91 | 22.58 - 1901 | 10.76 | 2.91 | 51.67 | 11.67 | 77.01 | 13.75 | 4.16 | 5.08 | 22.99 - 1902 | 9.23 | 2.64 | 52.36 | 11.64 | 75.87 | 14.49 | 4.37 | 5.27 | 24.13 - 1903 | 9.56 | 2.63 | 51.56 | 11.67 | 75.42 | 14.39 | 4.69 | 5.50 | 24.58 - 1904 | 9.59 | 2.74 | 51.56 | 12.53 | 76.42 | 13.41 | 4.83 | 5.34 | 23.58 - 1905 | 9.03 | 2.54 | 53.59 | 11.24 | 76.40 | 13.60 | 4.32 | 5.68 | 23.60 - 1906 | 8.56 | 2.32 | 53.09 | 11.24 | 75.21 | 14.81 | 4.06 | 5.92 | 24.79 - 1907 | 8.62 | 2.29 | 53.39 | 11.38 | 75.68 | 15.41 | 3.89 | 5.02 | 24.32 - 1908 | 8.74 | 2.46 | 55.72 | 11.35 | 78.27 | 13.15 | 4.04 | 4.54 | 21.73 - 1909 | 9.49 | 2.69 | 55.50 | 10.33 | 78.01 | 13.52 | 4.38 | 4.09 | 21.99 - -----+-------+------+-------+-------+-------+-------+------+------+------ - -It will be observed that the percentage of low rate freight carried -in 1909 was greater than for any other year covered by these -statistics. This was due more to the falling off in manufactures and -miscellaneous freight than to any increased movement of low class -freight. - - -CAR SERVICE OPERATIONS. - -What the Department of Commerce and Labor calls "a convenient index -to the traffic activities of the country" is found in the following -comparative statement of cars handled by the various car service -associations and demurrage bureaus, 1905-1909. - - -NUMBER OF CARS HANDLED BY 36 CAR SERVICE ASSOCIATIONS AND DEMURRAGE -BUREAUS DURING TWELVE MONTHS ENDING DECEMBER, 1905-1909. - - ==========================+===================================== - | Twelve Months Ending December - +------------+------------+----------- - Names of Associations and | | | - Bureaus | 1905 | 1906 | 1907 - --------------------------+------------+------------+----------- - Alabama | 752,982 | 744,548 | 779,402 - Central New York | 611,601 | 654,861 | 753,269 - Central (St. Louis) | 863,788 | 908,096 | 919,130 - Chicago | 2,166,910 | 2,251,763 | 2,282,191 - Cincinnati | 675,117 | 748,763 | 771,990 - | | | - Cleveland (a) | 640,364 | 796,687 | 1,016,003 - Colorado | 425,140 | 455,540 | 445,900 - Columbus | 394,152 | 443,638 | 469,773 - East Tennessee | 320,855 | 358,733 | 388,066 - Indiana | 912,827 | 962,941 | 1,104,855 - | | | - Intermountain | 116,533 | 158,231 | 184,577 - Lake Superior | 332,633 | 371,312 | 415,642 - Louisville Car | 495,095 | 541,945 | 506,528 - Memphis | 235,569 | 258,316 | 255,169 - Michigan | 687,428 | 766,950 | 838,928 - | | | - Missabe Range | 30,241 | 37,613 | 42,786 - Missouri Valley | 1,538,087 | 1,665,882 | 1,910,139 - Nashville | 300,602 | 336,110 | 351,572 - New York and New Jersey | 997,304 | 1,100,067 | 1,409,161 - North Carolina | 357,474 | 374,710 | 407,257 - | | | - Northeastern Pennsylvania | 802,072 | 836,443 | 917,936 - Northern | 1,467,041 | 1,722,345 | 1,736,981 - Pacific | 761,382 | 972,398 | 1,166,886 - Pacific Northwest | 647,726 | 727,474 | 888,093 - Philadelphia | 2,056,744 | 2,218,755 | 2,326,723 - | | | - Pittsburg | 3,375,530 | 3,295,463 | 2,935,299 - Southeastern | 813,444 | 862,379 | 853,720 - Southern | 273,273 | 301,273 | 492,914 - Texas | 932,992 | 977,630 | 986,475 - Toledo | 262,875 | 312,329 | 530,617 - | | | - Virginia and West Virginia| 818,915 | 866,861 | 893,905 - Western New York | 812,409 | 881,640 | 986,962 - Western (Omaha) | 622,868 | 718,872 | 770,470 - Wisconsin | 1,157,036 | 1,119,326 | 1,118,720 - +------------+------------+----------- - Total reported by 34 | | | - associations and | | | - bureaus (b) | 27,659,009 | 29,749,894 | 31,858,039 - +------------+------------+------------ - Baltimore and Washington | | | - Demurrage Bureau | (c)721,428 | (c)740,903 | (c)735,103 - | | | - Illinois and Iowa | | | - Demurrage Bureau | (d) | 3,054,315 | 3,258,770 - --------------------------+-------------------------+------------ - - {table continued} - =================================================== - | Twelve Months Ending - | December - +------------+----------- - Names of Associations and | | - Bureaus | 1908 | 1909 - --------------------------+------------+----------- - Alabama | 631,487 | 700,393 - Central New York | 738,054 | 804,419 - Central (St. Louis) | 838,017 | 1,001,136 - Chicago | 2,161,767 | 2,790,801 - Cincinnati | 635,365 | 712,145 - | | - Cleveland (a) | 715,764 | 843,609 - Colorado | 385,260 | 428,760 - Columbus | 363,130 | 401,696 - East Tennessee | 293,597 | 330,055 - Indiana | 1,077,786 | 1,211,793 - | | - Intermountain | 153,885 | 201,077 - Lake Superior | 338,109 | 370,490 - Louisville Car | 518,955 | 565,748 - Memphis | 239,156 | 224,648 - Michigan | 696,926 | 859,812 - | | - Missabe Range | 42,930 | 54,934 - Missouri Valley | 1,606,758 | 1,863,052 - Nashville | 326,385 | 337,234 - New York and New Jersey | 1,248,609 | 1,416,831 - North Carolina | 404,334 | 445,398 - | | - Northeastern Pennsylvania | 633,655 | 594,231 - Northern | 1,515,706 | 1,636,588 - Pacific | 1,147,345 | 1,390,948 - Pacific Northwest | 845,405 | 987,115 - Philadelphia | 1,921,142 | 2,508,204 - | | - Pittsburg | 1,977,891 | 2,807,256 - Southeastern | 823,948 | 981,737 - Southern | 513,437 | 649,384 - Texas | 1,118,622 | 1,302,211 - Toledo | 383,870 | 492,127 - | | - Virginia and West Virgini | 778,940 | 942,231 - Western New York | 806,488 | 931,185 - Western (Omaha) | 733,346 | 775,828 - Wisconsin | 1,022,270 | 1,006,050 - +------------+----------- - Total reported by 34 | | - associations and | | - bureaus (b) | 27,638,339 | 32,569,156 - +------------+----------- - Baltimore and Washington | | - Demurrage Bureau | 588,930 | 672,954 - | | - Illinois and Iowa | | - Demurrage Bureau | (d) | 3,561,740 - ---------------------------------------+----------- - - (a) Cleveland reported 10,016 lake coal cars for December, 1909. - - (b) The Butte Terminal Association was superseded by the Montana - Demurrage Bureau in May, 1908. The returns of the new bureau for - the twelve months ending December, is 448,381 cars. - - (c) Figures apply to larger territory; change and revision of 1907, - 1908 and 1909 figures made October 1, 1909. - - (d) Not reported. - - - - -VIII - -EARNINGS AND EXPENSES - - -Having in the preceding pages given the facts as to the provision -made by the railways for fulfilling their obligations as common -carriers, it is now in order to present a brief review of their -receipts and expenditures in relation to their public service. - -For the second successive year the Bureau has to warn the reader that -innovations in the forms of keeping railway accounts prescribed by -the Commission preclude the making of strictly accurate comparisons -of the returns for 1909 with those of any preceding year. In -submitting its report for 1908 the Commission made the following -explanation: - -"A number of important changes have been made in the annual report -forms for 1908, particularly in the grouping of certain items in -connection with the Income Account and the Profit and Loss Account. -The figures which follow do not include returns applying to carriers -classed as switching and terminal. The changes in the income account -submitted in the report under consideration are so far reaching in -their results, in a number of instances, as to impair direct or close -comparison with figures for similar items contained in previous -statistical reports." - -In the comparative Income Account below, which aims to present the -situation as it would result from the actual operations had such -operations been conducted by a single corporation, the Bureau has -sought to make the returns for 1908 and 1909 conform as nearly as -possible to "previous statistical reports." It should be premised, -however, that the official figures for 1908 exclude the returns from -switching and terminal companies, whereas the Bureau's figures for -1909 include some portion of these returns, which are as much an -integral part of the transportation service of American railways as -any they perform. The official figures for 1908 do not correspond -absolutely to the preliminary figures for the same year compiled from -the monthly reports as reviewed in the Introduction to this report. - -With this by way of explanation, the comparative Income Account for -the years 1909 and 1908 is submitted: - - -COMPARATIVE INCOME ACCOUNT OF THE RAILWAYS IN THE UNITED STATES -CONSIDERED AS A SYSTEM FOR THE YEARS ENDING JUNE 30, 1909 AND 1908. - - ====================================================================== - | Amount - Item | - | 1909 | 1908 - | (221,132 miles | (230,002 miles - | operated) | operated) - ---------------------------------+-------------------+---------------- - Passenger revenue | $ 551,634,278 | $ 566,832,746 - Mail revenue | 49,508,972 | 48,517,563 - Express revenue | 61,883,695 | 58,692,091 - Freight revenue | 1,643,028,564 | 1,655,419,108 - Other earnings from operation | 69,086,257 | 64,344,481 - +-------------------+---------------- - Gross earnings from operation | $2,375,141,766 | $2,393,805,989 - | | - Operating expenses | $1,568,111,272 | $1,669,547,876 - Taxes | 82,650,214 | 78,673,794 - +-------------------+---------------- - Total | $1,650,761,486 | $1,748,221,670 - +-------------------+---------------- - Net earnings from operation | 724,380,280 | 645,584,310 - Net revenue from outside | | - operations | 5,410,338 | 5,977,268 - | | - Operating income | $ 729,790,618 | $ 651,561,587 - | | - Disposition: | | - Net interest on funded debt | $ 293,338,105 | $ 282,354,001 - Interest on current liabilities| 22,546,779 | 31,835,708 - Rent paid for lease of road | 120,784,982 | 111,153,013 - Additions and betterments | | - charged to income | 24,807,546 | 28,086,454 - Appropriations to reserves | | - and miscellaneous items | 22,587,208 | 21,636,182 - Other deductions | 70,174,473 | 64,669,546 - +-------------------+---------------- - Total deductions | $ 554,239,093 | $ 539,734,904 - +-------------------+---------------- - Surplus available for dividends, | | - adjustments and improvements | 175,551,525 | 111,826,683 - Net dividends | 171,607,550 | 104,074,006 - +-------------------+---------------- - Balance to profit and loss | $ 3,943,975 | $ 7,752,677 - ---------------------------------+-------------------+---------------- - -In 1909 the "Income Account" of the railways was swelled and confused -by including therein $200,725,696 of intercorporate payments, while -that for 1908 includes $274,450,192 "Other Income" which, as has -been formerly noted by the Official Statistician, swells the totals -to a fictitious figure. It is out of this fictitious income that -fictitious interest and dividends are paid, fictitious deductions -made, and fictitious surpluses accumulated. If "Other deductions" in -the above statement had been charged against "Other income" instead -of being deducted from earnings from operation the balance to Profit -and Loss for each year would have been so much larger. - -What becomes of the rent paid by operating roads for leased roads is -well shown in the statement included in the Commission's preliminary -report of statistics for 1908 in which the amount received by the -latter mentioned in the table just submitted is disposed of. - - -CONDENSED INCOME ACCOUNT AND PROFIT AND LOSS ACCOUNT OF LEASED ROADS -FOR THE YEAR ENDING JUNE 30, 1908. - - =============================================+=============+============ - Income Account | | - ---------------------------------------------+-------------+------------ - Gross income from lease of road |$111,153,013 | - Salaries and maintenance of organization | 390,841 | - Taxes accrued | 5,881,352 | - +-------------+ - Net income from lease of road | |$104,880,820 - Other income | | 5,436,129 - | +------------ - Gross corporate income | |$110,316,949 - Deductions from gross corporate income | | 62,232,508 - | +------------ - Net corporate income | |$ 48,084,441 - | | - Disposition of net corporate income: | | - Dividends declared from current income |$ 33,843,577 | - Additions and betterments charged to income| 1,088,002 | - Appropriations to reserves and | | - miscellaneous items | 258,580 | - +-------------+ - Total | |$ 35,190,159 - Balance carried forward to credit of | | - profit and loss | | 12,894,282 - ---------------------------------------------+-------------+------------ - Profit and Loss Account - -----------------------------------------------------------+------------ - Credit balance in Profit and Loss Account, June 30, 1907 |$ 45,852,031 - Credit balance brought from Income Account, June 30, 1908 | 12,894,282 - +------------ - Total |$ 58,746,313 - | - Dividends declared out of surplus | 27,550,596 - Other profit and loss items--debit balance | 2,006,573 - +------------ - Balance credit June 30, 1908, carried to balance sheet |$ 29,189,144 - -----------------------------------------------------------+------------ - -Included under the blind item of "Deductions from gross corporate -income, $62,232,508" in this statement may be mentioned rents of -other roads and facilities of which these leased roads are the -lessees, interest on funded debt and other interest, sinking funds -chargeable to income and other deductions not specifically provided -for elsewhere. In case of operating roads this item also includes the -balance of hire of equipment, to which, of course, there is a credit -with other operating roads. - -The significant feature in this statement is the decrease in the -profit and loss credit balance of $16,662,887. But this does not -alter the fact that what becomes of rent paid for lease of road -is no more a concern of interstate commerce than what becomes of -the rent paid for warehouses or office space in any terminal. The -operating roads pay all the cost of maintenance of way and equipment. -The leased roads are not common carriers in any sense. They are -simply distributing mediums of the rents paid them--this rent being -the equivalent of interest on so much capital. As appears from the -foregoing table, the expense of maintaining the organization of these -leased properties amounted in 1908 to 35/100ths of 1 per cent. - - -DISTRIBUTION OF GROSS EARNINGS. - -How the gross earnings of the railways reporting to this Bureau in -1909 ($2,375,141,766) were distributed is shown in the next statement -in comparison with a similar division of earnings in 1908 and 1907. - - -STATEMENT OF DISTRIBUTION OF GROSS EARNINGS OF 221,132 MILES OF LINE -IN 1909 COMPARED WITH THE PERCENTAGES FOR 1908 AND 1907. - -(GROSS EARNINGS 1909, $2,375,141,766.) - - ======================================================================= - Item | Amount |Per Cent|Per Cent|Per Cent - | 1909 | 1909 | 1908 | 1907 - -----------------------------+--------------+--------+--------+-------- - Operating expenses: | | | | - Maintenance of way and | | | | - structures | $ 299,757,077| 12.62 | 13.41 | 13.27 - Maintenance of equipment | 358,747,371| 15.10 | 15.42 | 14.22 - Traffic expenses | 48,453,707| 2.08 | 2.00 | - Transportation expenses | 799,690,194| 33.67 | 36.24 | 37.50 - General expenses | 61,462,923| 2.58 | 2.58 | 2.54 - +--------------+--------+--------+-------- - Total |$1,568,111,272| 66.03 | 69.67 | 67.53 - | | | | - Disposition of same: | | | | - Pay of employes | $ 973,174,419| 41.00 | 43.43 | 41.42 - Fuel for locomotives | 184,359,112| 7.76 | | 7.74 - Oil and water for | | | | - locomotives | 19,951,184| .84 | | .88 - Material and supplies | 219,463,028| 9.24 | | 11.81 - Hire and rent of equipment | | | | - and facilities | 54,638,243| 2.30 | | 2.46 - Loss and damage | 56,379,042| 2.37 | | 1.83 - Miscellaneous(a) | 60,146,242| 2.52 | | 1.39 - +--------------+--------+--------+-------- - Total expenses |$1,568,111,272| 66.03 | 69.67 | 67.53 - Taxes(b) | 88,531,566| 3.72 | 3.53 | 3.10 - Rentals of leased roads | 114,903,630| 4.84 | 4.64 | 4.69 - Interest on funded debt and | | | | - current liabilities | 315,884,884| 13.30 | 13.34 | 13.14 - Dividends | 171,607,550| 7.23 | 4.42 | 8.78 - Deficits of weak companies | 20,223,246| .85 | 1.24 | .19 - Betterments, reserves and | | | | - sundries | 47,494,754| 2.00 | 2.07 | 1.50 - Surplus | 48,384,864| 2.03 | 1.09 | 1.07 - +--------------+--------+--------+-------- - Total (gross earnings) |$2,375,141,766| 100.00 | 100.00 | 100.00 - Gross earnings 1908 | 2,393,805,989| | | - Gross earnings 1907 | 2,589,105,578| | | - -----------------------------+--------------+--------+--------+-------- - - (a) Legal expenses, advertising and insurance are included under - "Miscellaneous"; stationery and printing under "Material and - Supplies." - - (b) Includes taxes paid by leased lines and deducted from rent. - -Owing to the fact that interest on funded debt and dividends are paid -out of the common fund derived from operation and investments, the -amounts devoted to these items in the above statement are necessarily -computations. That they are not underestimates is proved by the fact -that the surplus would not permit of larger charges for interest -and dividends paid out of net earnings. Any interest or dividends -materially greater than the amounts stated above, not paid out of the -rents accruing to leased roads as given, must necessarily be derived -from other sources than transportation revenues, and has no place in -railway accounts coming under the provisions of the Act to Regulate -Commerce among the several states. - - - - -IX - -TAXES - - -So far as taxes are concerned, seasons of prosperity, depression and -marking time are alike to American railways. The burden of their -taxation knows no recession but mounts steadily, absolutely, per mile -and in proportion to gross earnings. - -The 368 roads reporting to this Bureau owning 182,046 miles of line -and operating 221,132 miles, of which 39,086 miles were leased, paid -$82,650,214 taxes in 1909. The Commission's report for 1908 shows -that the leased roads paid $5,881,352 taxes out of their rents. -Putting a conservative estimate of $200 a mile on the 11,870 miles of -line not represented in this report would add $2,374,000 to the above -figures and bring the aggregate taxes paid by the railways of the -United States in 1909 up to the striking total of $90,905,566. - -How railway taxation has increased absolutely and relatively to -earnings and mileage during the past twenty-one years is shown in the -following statement: - - -TAXES ANNUALLY AND RELATIVELY, 1889 TO 1909. - - ============================+=============+==========+=========== - | | | Percentage - Year | Taxes Paid | Per Mile | of - | | | Earnings - ----------------------------+-------------+----------+----------- - 1909 (Official figures) | $89,026,226 | $382 | 3.73 - 1908 | 84,555,146 | 367 | 3.53 - 1907 | 80,312,375 | 353 | 3.10 - 1906 | 74,785,615 | 336 | 3.21 - 1905 | 63,474,679 | 292 | 3.04 - 1904 | 61,696,354 | 290 | 3.12 - 1903 | 57,849,569 | 281 | 3.04 - 1902 | 54,465,437 | 272 | 3.15 - 1901 | 50,944,372 | 260 | 3.20 - 1900 | 48,332,273 | 250 | 3.24 - 1899 | 46,337,632 | 247 | 3.53 - 1898 | 43,828,224 | 237 | 3.51 - 1897 | 43,137,844 | 235 | 3.84 - 1896 | 39,970,791 | 219 | 3.48 - 1895 | 39,832,433 | 224 | 3.70 - 1894 | 38,125,274 | 216 | 3.56 - 1893 | 36,514,689 | 215 | 2.99 - 1892 | 34,053,495 | 209 | 2.90 - 1891 | 33,280,095 | 206 | 3.04 - 1890 | 31,207,469 | 199 | 2.96 - 1889 | 27,590,394 | 179 | 2.86 - ----------------------------+-------------+----------+----------- - -In this table the figures for 1909 are based on the monthly reports -to the Commission and are subject to revision, but they are in -substantial agreement with the estimate on the returns to the Bureau. - -Observe that the highest ratio of taxes to gross earnings shown -in this table was 3.84 per cent in 1897, when everything relating -to railways, except taxes, was prostrated under the reign of -receiverships that followed the panic of 1893. It was of 1897 that -the Official Statistician recorded the fact that "70.10 per cent -of outstanding stock paid no dividends, and 16.59 per cent of -outstanding bonds, exclusive of equipment trust obligations, paid no -interest." - -There is instruction and warning behind the remarkable increase in -the ratio of taxation shown in the figures for 1894 to 1897. There is -the reflection of similar conditions in the rising ratios of 1908 and -1909. - - - - -X - -DAMAGES AND INJURIES TO PERSONS - - -There are two items in railway accounts connected with the expense of -operation that give the management most serious concern, because no -means has been devised to limit or control them. In a leaflet issued -by this Bureau in September last, it was estimated that the payments -of American railways on account of "Injuries to Persons" and "Loss -and Damage" for the year 1908 would approximate $56,700,000, or more -than 2.3 per cent of their gross earnings. The Commission has not -yet made public the final figures for 1908, but the returns on these -accounts of the 368 roads reporting to this Bureau for the year 1909, -aggregate $56,379,024, or 2.37 per cent of their gross earnings. - -Divided according to the new system of accounting adopted by the -Commission, these returns show the following figures: - - -SUMMARY OF PAYMENTS ON ACCOUNT OF INJURIES TO PERSONS AND LOSS AND -DAMAGE DURING THE YEAR 1909. - - ===========================================+=============+========= - | | Per Cent - Account | Amount | of - | | Earnings - -------------------------------------------+-------------+--------- - Injuries to persons | $23,456,038 | .99 - Maintenance of way $ 2,702,066 | | - Maintenance of equipment 2,315,119 | | - Transportation 18,438,853 | | - | | - Loss and damage | 32,922,986 | 1.38 - To freight $24,768,453 | | - To baggage 300,869 | | - To property 4,469,496 | | - To live stock, etc. 3,384,168 | | - +-------------+--------- - Total | $56,379,024 | 2.37 - -------------------------------------------+-------------+--------- - -Unlike many of the other expenses of American railways, the burden of -this "cost of operation" does not fall heaviest on the large systems. -In the case of one road of moderate importance payments on these two -accounts amounting to 4.8 per cent of gross earnings were enough to -tip the balance into a deficit after paying interest on funded debt; -one minor but prosperous road, after paying 14 per cent of gross -receipts to meet these two accounts, had nothing left for dividends -after paying interest, which amounted to less than 10 per cent of its -earnings; and a small third road after being called on to pay 21.5 -per cent of its earnings for injuries and damages had only 6 per cent -of its operating revenue left to pay interest on funded debt, which -called for 20 per cent of the earnings, and taxes reduced the net -operating revenue to less than 4 per cent. - -These are extreme cases but they illustrate how the "Injury and -Damage" claims strike roads that can ill afford to pay them as well -as the great systems which are the common prey of every claimant with -enough of a grievance to interest an attorney who scents a contingent -fee. - -That the claims behind these expenses are largely meretricious is -indicated, if not proved, by their disproportionate increase in the -past ten years, during which the railways have expended millions in -providing safeguards for their trains and employes. This increase -absolutely and relatively to gross earnings is shown in the following -statement: - - -PAYMENTS ON ACCOUNT OR "LOSS AND DAMAGE" AND "INJURIES TO PERSONS" -DURING THE DECADE 1899 TO 1909 AND PROPORTION TO GROSS EARNINGS. - - ======================+=======================+====================== - | Loss and Damage | Injuries to Persons - +------------+----------+------------+--------- - Year | | Per Cent | | Per Cent - | Amount | of | Amount | of - | | Earnings | | Earnings - ----------------------+------------+----------+------------+--------- - 1899 |$ 5,976,082 | .455 |$ 7,116,212 | .541 - 1900 | 7,055,622 | .474 | 8,405,980 | .565 - 1901 | 8,109,637 | .510 | 9,014,144 | .567 - 1902 | 11,034,686 | .639 | 11,682,756 | .676 - 1903 | 13,726,508 | .722 | 14,052,123 | .739 - 1904 | 17,002,602 | .861 | 15,838,179 | .802 - 1905 | 19,782,692 | .946 | 16,034,727 | .770 - 1906 | 21,086,219 | .907 | 17,466,864 | .751 - 1907 | 25,796,083 | .996 | 21,462,504 | .829 - 1908 | -- | -- | -- | -- - 1909 | 32,922,986 | 1.386 | 23,456,038 | .988 - | | | | - Increase in 10 years, | | | | - per cent | 450.5 | 204.6 | 229.6 | 82.6 - ----------------------+------------+----------+------------+--------- - -Startling as are these increases absolutely, those relatively to -earnings present a condition truly alarming, for which there is no -apparent relief except through a revulsion in the popular tolerance -of blackmail at the expense of the railways. - -In no other country in the world are the railways held up on bogus -claims for damages to the extent they are in the United States. Under -the strict laws of the United Kingdom, as to compensation for damages -and injuries, the British railways paid less than 7/10ths of 1 per -cent of their earnings for all damages, losses and injuries, or less -than one-third the proportion paid by American railways on the same -account. - - - - -XI - -LOCOMOTIVE FUEL - - -Despite the continuous improvements in the steam-producing capacity -of railway locomotives per ton of coal, the steady advance in the -cost of coal during the past ten years has more than offset the -economies of locomotive construction. This is shown in the next -statement, which gives the cost of locomotive fuel and its relative -proportion to gross earnings and operating expenses, and also the -average price per short ton of coal in the United States since 1899: - - -SUMMARY OF COST OF LOCOMOTIVE FUEL AND PROPORTION TO EARNINGS AND -EXPENSES OF AMERICAN RAILWAYS, 1909 TO 1899, WITH PRICE OF BITUMINOUS -COAL PER TON DURING THE SAME PERIOD. - - ======+=========+==============+==========+==========+========== - | | |Proportion|Proportion|Price of - |Miles of | Cost of | to | to | Coal at - Year | Line | Locomotive | Operating| Gross | Mines - | | Fuel | Expenses | Earnings |per Ton(a) - ------+---------+--------------+----------+----------+---------- - 1909 | 221,132 | $184,359,112 | 11.757 | 7.77 | -- - 1908 | 230,494 | 197,385,513 | 12.098 | 8.25 | 1.12 - 1907 | 227,454 | 200,261,975 | 11.471 | 7.74 | 1.14 - 1906 | 222,340 | 170,499,133 | 11.119 | 7.34 | 1.11 - 1905 | 216,973 | 156,429,245 | 11.278 | 7.51 | 1.06 - 1904 | 212,243 | 158,948,886 | 11.893 | 8.05 | 1.10 - 1903 | 205,313 | 116,509,031 | 11.675 | 7.70 | 1.24 - 1902 | 200,154 | 120,074,192 | 10.776 | 6.96 | 1.12 - 1901 | 195,561 | 104,926,568 | 10.602 | 6.61 | 1.05 - 1900 | 192,556 | 90,593,965 | 9.809 | 6.09 | 1.04 - 1899 | 187,534 | 77,187,344 | 9.478 | 5.88 | .87 - ------+---------+--------------+----------+----------+---------- - - (a) These figures are from the latest report of the United States - Geological Survey. - -The significance of this table is that it cost the railways almost -one-third more for fuel per dollar earned in 1909 than it did in -1899, the increase in the proportion of fuel cost to gross earnings -having been 32%, due to the advance of 31% in the price of coal at -the mines during that period. - -The effect of the anthracite coal strike and the Commission's award -of date March 18, 1903, upon the cost of bituminous coal is seen in -the sharp advances in 1902 and 1903. - -The railways have not escaped the advance in their cost of living due -to the increased price of fuel any more than the public at large, and -so far they have not been able to shift any portion of that cost, as -manufacturers and shippers have done. - - - - -XII - -THE SAFETY OF AMERICAN RAILWAYS - - -Never before in the history of railways has such a record for -comparative safety been made as that recorded of American railways -during the year ending June 30, 1909. Following its custom the -Interstate Commerce Commission has published the report of accidents. -It remains to set forth here the more remarkable record of safety. - -OF THE 368 COMPANIES REPORTING TO THIS BUREAU, NO LESS THAN 347, -OPERATING 159,657 MILES OF LINE AND CARRYING 570,617,563 PASSENGERS, -WENT THROUGH THE YEAR WITHOUT A SINGLE FATALITY TO A PASSENGER IN A -TRAIN ACCIDENT. - -Of the remaining 21 companies, no less than 10, operating 27,681 -miles and carrying 185,447,507 passengers, only missed such perfect -immunity by a single fatality each in accidents to trains. This -leaves 11 roads whose misfortune it was to bear the burden of train -accident fatalities to passengers during the year. - -The invariable rule of the Bureau precludes the publication of -the honor roll of safety. And it is well so, for it would lead to -invidious comparisons, where, in such matters as accidents, all -comparisons are as irrelevant as they are invidious. - -But it may be stated that the roll of immunity includes roads in -every section of the union, from Maine to California, several great -systems operating over 7,000 miles of line each, as well as little -branch lines of below ten miles of single track; lines operated with -all the safety appliances known to twentieth century progress and -lines operated under as primitive conditions as prevailed on this -continent more than half a century ago. - -THIS RECORD OF COMPLETE IMMUNITY, STRETCHING OVER 159,657 MILES OF -OPERATED LINE, REPRESENTS A MILEAGE NEARLY SEVEN TIMES THAT OF ALL -BRITISH ROADS, AND EQUALS THE AGGREGATE OF ALL EUROPE, EXCLUDING -RUSSIA BUT INCLUDING THE BRITISH ISLES. - -What immunity to fatalities to passengers over such a vast mileage -means may be partly realized from the fact that only twice in half a -century has it occurred on the 23,000 miles of British railways, and -never, to the writer's knowledge, so far as statistics reveal, on the -railways of any of the great divisions of Europe. Certainly it has -never occurred on the aggregate railways of Europe. - -It would take seven consecutive years of immunity from fatalities -to passengers in train accidents on British railways to equal this -phenomenal record of American roads. - -In presenting similar returns for 1908, it was said that "considering -the myriad units of risk involved, the record for immunity from fatal -accidents to passengers is without parallel in the history of railway -operation." How that record has been not only equalled but surpassed -is shown in the following statement for the last two years: - - -SUMMARY OF MILEAGE AND TRAFFIC OF ROADS ON WHICH NO PASSENGER WAS -KILLED IN A TRAIN ACCIDENT DURING THE YEARS 1908 AND 1909. - - =====================================+=================+================ - | 1909 | 1908 - -------------------------------------+-----------------+---------------- - Number of operating companies | 347 | 316 - Mileage of these companies | 159,657 | 124,050 - Passengers carried | 570,617,563 | 455,365,447 - Passengers carried 1 mile | 18,953,025,000 | 14,776,368,000 - Tons of freight carried | 1,116,877,052 | 916,123,410 - Tons of freight carried 1 mile | 151,974,495,000 | 121,589,399,000 - Passengers killed in train accidents | None | None - Passengers injured in train accidents| 2,585 | 2,695 - -------------------------------------+-----------------+---------------- - -This table proves that the area of perfect safety, so to speak, was -extended over from 22% to 26% more units of risk in 1909 than in -1908, which already held the palm for immunity in train accident -fatalities to passengers. - -The figures given above as to passengers injured in train accidents -are equally illuminating as to the safety of American railways, -for they demonstrate that with the multiplication of risks in 1909 -the number of injured was less by 4%. The fact that no passenger -is killed in train accidents is more or less adventitious, but a -reduction in the number injured testifies to a reduction in the -opportunities for fatalities. - -During the past ten years the average of passengers injured in train -accidents on British railroads has been 580, which, considering the -difference in the units of risk, is 100% higher than the above record -for 159,657 miles of American railway in 1909. - -The following table, which includes no less than six great systems of -over 2,000 miles each, presents similar data in respect to the ten -roads whose record for safety to passengers in train accidents is -marred by a single fatality: - - -SUMMARY OF MILEAGE AND TRAFFIC OF ROADS ON WHICH ONLY ONE PASSENGER -WAS KILLED IN A TRAIN ACCIDENT DURING THE YEAR 1909. - - =========================================+=============== - | 1909 - -----------------------------------------+--------------- - Number of operating companies | 10 - Mileage of these companies | 27,681 - Passengers carried | 185,447,507 - Passengers carried 1 mile | 5,778,621,000 - Tons of freight carried | 213,086,612 - Tons of freight carried 1 mile | 40,177,881,000 - Passengers killed in train accidents | 10 - Passengers injured in train accidents | 778 - -----------------------------------------+--------------- - -These figures show a mileage of 4,481 miles greater than all the -railways of the United Kingdom, approximately one-half the passenger -mileage, and over three times the ton mileage, with only 10 -passengers killed in train accidents, to an average of 20 on British -railways during the past ten years. - -Further analysis of the returns to the Bureau, since data along this -line has been compiled, affords the following statement of the number -of roads and their mileage that have records of entire immunity from -fatalities to passengers in train accidents of from one up to six -years: - - -STATEMENT SHOWING NUMBER OF RAILWAYS AND MILEAGE ON WHICH NO -PASSENGER HAS BEEN KILLED IN A TRAIN ACCIDENT, 1904 TO 1909. - - =======================================+===========+========= - | Number of | Miles of - | Companies | Line - ---------------------------------------+-----------+--------- - Six consecutive years, 1904-1909 | 17 | 9,641 - Five " " 1905-1909 | 95 | 44,894 - Four " " 1906-1909 | 177 | 57,331 - Three " " 1907-1909 | 228 | 69,713 - Two " " 1908-1909 | 287 | 108,710 - One year, 1909 | 347 | 159,657 - ---------------------------------------+-----------+--------- - -Gratifying and remarkable as was the immunity from fatalities of the -class under consideration in 1909, the fact that for a period of five -years 95 American roads with a mileage practically double that of -all British railways have carried hundreds of millions of passengers -without a fatality to one of them is so at variance with the popular -impression regarding the dangers of American railway travel as to -seem little short of marvelous. - -The impressive character of this showing will be better appreciated -when it is understood that the immunity from fatalities in train -accidents represents consecutive years counting back from 1909. -No road has been admitted to the list where the immunity has been -interrupted by a single accident. With this fact in mind, the clean -slate of the 17 roads for six years challenges admiration, especially -as the Bureau's reports in 1904 covered less than two-fifths of the -operated mileage of the United States. - - -RAILWAY ACCIDENTS IN 1909. - -Having thus shown the gratifying immunity from fatalities to -passengers in train accidents during the year 1909, and on 9,641 -miles of line since 1904, it remains to present the reverse side -of the picture, which is so invariably thrust forward in official -documents. Accident Bulletin No. 32 of the Interstate Commerce -Commission furnishes the following data as to the number killed and -injured on the railroads of the United States during the last two -fiscal years: - - -SUMMARY OF CASUALTIES TO PERSONS IN RAILWAY ACCIDENTS FOR THE YEARS -ENDING JUNE 30, 1909 AND 1908. - - ================================+================================ - | 1909 - +---------------+---------------- - Class of Accident | Passengers | Employes - +------+--------+-------+-------- - |Killed| Injured| Killed| Injured - --------------------------------+------|--------+-------+-------- - Collisions | 94 | 3,033 | 248 | 2,362 - Derailments | 37 | 2,717 | 227 | 1,448 - Miscellaneous train accidents, | | | | - including locomotive | | | | - boiler explosions | -- | 115 | 45 | 1,067 - +------+--------+-------+-------- - Total train accidents | 131 | 5,865 | 520 | 4,877 - +------+--------+-------+-------- - Coupling or uncoupling | -- | -- | 161 | 2,353 - While doing other work | | | | - about trains or while | | | | - attending switches | -- | -- | 93 | 14,315 - Coming in contact with | | | | - overhead bridges, structures | | | | - at side of track, etc | 2 | 36 | 76 | 1,229 - Falling from cars or engines | | | | - or while getting on or off | 137 | 3,076 | 481 | 10,259 - Other causes | 65 | 3,139 | 1,125 | 18,771 - +------+--------+-------+-------- - Total (other than train | | | | - accidents) | 204 | 6,251 | 1,936 | 46,927 - +------+--------+-------+-------- - Total (all classes) | 335 | 12,116 | 2,456 | 51,804 - | | | | - Totals in 1907: | | | | - In train accidents | 410 | 9,070 | 1,011 | 8,924 - In other than train accidents | 237 | 4,527 | 3,342 | 53,765 - +------+--------|-------+-------- - All classes of accidents | 647 | 13,597 | 4,353 | 62,689 - --------------------------------+------+--------+-------+-------- - - {table continued} - ================================+================================ - | 1908 - +---------------+---------------- - Class of Accident | Passengers | Employes - +------+--------+-------|-------- - |Killed| Injured| Killed| Injured - --------------------------------+------|--------+-------+-------- - Collisions | 111 | 4,284 | 303 | 3,428 - Derailments | 54 | 3,057 | 260 | 2,065 - Miscellaneous train accidents, | | | | - including locomotive | | | | - boiler explosions | -- | 89 | 79 | 1,325 - +------+--------+-------+-------- - Total train accidents | 165 | 7,430 | 642 | 6,818 - +------+--------+-------+-------- - Coupling or uncoupling | -- | -- | 239 | 3,121 - While doing other work | | | | - about trains or while | | | | - attending switches | -- | -- | 206 | 15,991 - Coming in contact with | | | | - overhead bridges, structures | | | | - at side of track, etc | 4 | 37 | 110 | 1,353 - Falling from cars or engines | | | | - or while getting on or off | 159 | 2,501 | 668 | 11,735 - Other causes | 78 | 2,677 | 1,493 | 17,326 - +------+--------+-------+-------- - Total (other than train | | | | - accidents) | 241 | 5,215 | 2,716 | 49,526 - +------+--------+-------+-------- - Total (all classes) | 406 | 12,645 | 3,358 | 56,344 - | | | | - Totals in 1907: | | | | - In train accidents | 410 | 9,070 | 1,011 | 8,924 - In other than train accidents | 237 | 4,527 | 3,342 | 53,765 - +------+--------|-------+-------- - All classes of accidents | 647 | 13,597 | 4,353 | 62,689 - --------------------------------+------+--------+-------+-------- - -The same cause which accounted for the remarkable recession of -railway casualties in 1908 was still operative in a more marked -degree throughout 1909, as evidenced in the above table. Here is -shown a reduction from 1907 of 68% in fatalities to passengers in -train accidents and of nearly 50% in those to employes. Even in all -classes of accidents the decrease is almost as striking. A drop from -647 to 335 in fatalities to passengers and from 4,353 to 2,456 in -fatalities to employes, resulting from whatever cause, should be a -matter for national congratulation and thanksgiving. - -That the facts herein set forth should have no lesson for national -authorities beyond moving them to appeal for additional control -of safety appliances is nothing short of a national scandal. As -for safety devices, the railways in 1907 were practically as well -equipped as in 1909. The percentage operated under the protection of -block signals was 27.1% in 1909 against 26.2% in 1907, a difference -inappreciable as compared with the recorded difference in fatalities. -The government inspectors reported the equipment in better condition -in 1907 than for any previous year by fully 30%, and yet that was the -worst year in the annals of railway accidents. - -An English writer (H. Raynor Wilson), his vision unobscured by the -propinquity of patent devices, has placed his finger on the true -cause of the reduction in railway accidents in the United States in -1908 and 1909 when writing in "The Safety of British Railways" he -says: - - "Experience in America during the period of depression that has - prevailed since the summer of 1907 shows that fewer accidents - occur during such times. There are not so many goods trains, - the men are less 'pushed,' they work fewer hours, and the - careless and indifferent are weeded out." - -But we do not have to go to England for a convincing analysis of the -causes of the remarkable decrease in accidents on American railways -in 1908 and 1909. In the presence of similar conditions Statistician -Adams in his official report for 1894 penned the following: - - "Another explanation may be suggested for this decrease in - casualties to railway employes. The character of equipment - used during the year covered by this report was undoubtedly of - a higher grade than in previous years. A large number of old - cars of abandoned type were destroyed during the year, while - there was an increase in the better grades of cars equipped - with train brakes and automatic couplers. This, however, is - a suggestion merely, there being no statistical proof of any - relation between a higher grade equipment and the decrease of - accidents to employes. It is also probable, in view of the fact - that liability to accident is increased by the employment of - the shiftless and unskilled, that the grade of labor was raised - through the discharge of so large a number of employes. This - latter suggestion finds support in the fact that the ratio of - casualties in the Southern States, where the grade of labor is - somewhat inferior, has for a series of years been higher than - in the Northern and Eastern States." - -With a continuation of similar conditions as to traffic and labor -throughout 1895, the Official Statistician, having not yet accepted -the theory that violation of rules, carelessness and negligence are -amenable to patent appliances, emphasized the concluding suggestion -of his 1894 report in these terms: - - "From the above comparative statement it is clear that the year - ending June 30, 1895, is more satisfactory, so far as accidents - are concerned, than any previous year. Reference was made in - last year's report to the fact that the marked reduction in - the pay roll of the railways, by which the incompetent and - inefficient were dropped from the railway service, and the - consignment to the scrap heap of equipment worn out or out - of date, were largely responsible for the greater safety in - railway travel and railway employment shown by the statistics - of the year. The result of raising the character of the - railway service and grade of railway equipment is yet more - marked during the present year, and to this must be added the - fact that the demands upon the passenger service during the - present year have been somewhat decreased. It is also worthy of - suggestion, although the facts yet at command are not adequate - for confident assertion, that the fitting of equipment with - automatic devices is beginning to show beneficial results." - -From that year to this the fitting of equipment with automatic -devices has proceeded with uninterrupted despatch. Where in 1895 only -27.7% of it was equipped with train brakes and 31.3% with automatic -couplers, in 1907 the Commission reported 94.4% equipped with train -brakes and 99% with automatic couplers. In every form of mechanical -safety device the railway equipment of 1907 was incomparably better -than in 1895, and yet the number of fatal accidents to employes in -1907 exceeded those in 1895 seven to three and to passengers three -and four-fifths to one. In the matter of deaths in coupling accidents -alone are "beneficial results" traceable to automatic safety devices. -The character of the men in the service, their automatic observance -of regulations, intelligence and alert devotion to duty are the best -preventives of railway accidents, and the conditions prevalent after -the panics of 1893 and 1907 are conducive to these conditions. - -It is not likely, however, that the American people will welcome -experiences, even in homeopathic doses, such as we knew in 1904, -as the cure for railway accidents. But from the lessons of every -depression, as read in the statistics of railway fatalities, the -American people have a right to expect their representatives in -federal and state legislatures to learn that the prevention of -railway accidents rests on the intelligence, vigilance and experience -of the man and not with the multiplication of devices. Automatic -obedience to rules will prevent more accidents than all the safety -devices that cumber the shelves of the Patent Office at Washington. -Invention, however, is easier to the average American than plain -everyday observance of rules. Besides the selling of devices to -railways is a profitable business. - - -ACCIDENTS INCREASE IN 1909-10. - -Accident Bulletin No. 33 for the first quarter of the current fiscal -year shows the unfavorable turn in casualties always attendant on -reviving business. Given in brief the figures are as follows: - - -CASUALTIES TO PERSONS, JULY, AUGUST AND SEPTEMBER, 1909. - - -----------------------------------+--------+-------- - | Killed | Injured - -----------------------------------+--------+-------- - To passengers: | | - From accidents to trains | 56 | 2,325 - By accidents from other causes | 48 | 2,088 - | | - To employes: | | - From accidents to trains | 137 | 1,427 - By accidents from other causes | 611 | 13,401 - +--------+-------- - Total classes | | 19,241 - Corresponding quarter 1908 | | 16,545 - -----------------------------------+--------+-------- - -As this report goes to press, the Commission, through the Associated -Press, has issued a summary of Accident Bulletin No. 34 which states -that there were 1,073 persons (105 passengers and 969 employes) -killed and 21,849 injured on the steam railways of the United States -during the three months ending December 31, 1909. - -This shows an increase over the corresponding quarter last year of -275 killed and 5,003 injured. For the same quarter in 1907 the killed -were 1,092; in 1906, 1,430; and in 1905, 1,109. As the quarter ending -December 31, 1909, saw railway traffic at its highest pressure, it -shows an improvement over the records of 1907, '06 and '05. - -The number injured is the highest ever recorded for three months, -surpassing the quarter ending September 30, 1907, however, by only -126. But as explained elsewhere, "injuries" is too elastic a term for -comparative statistics. - - -ACCIDENTS TO OTHER PERSONS. - -Where the quarterly Bulletins of the Commission make no mention -of the accidents to persons other than passengers and employes, -the annual reports of the carriers supply the missing data as to -"Other Persons." These include casualties at highway crossings, to -trespassers, persons walking, standing or sleeping on the track, -workmen in railway shops and all other accidents directly or -indirectly connected with the transportation industry. Accidents -to "Other Persons" cover over 60% of all fatalities charged to the -railways and of these over 80% are to trespassers. - -The returns to this Bureau show the following casualties to persons -other than passengers and employes during the year ending June 30, -1909: - - - ==================================+========+======== - Class | Killed | Injured - ----------------------------------+--------+-------- - Trespassers (including suicides) | 4,919 | 5,697 - Not trespassing | 820 | 3,069 - +--------+-------- - Total other persons | 5,739 | 8,766 - ----------------------------------+--------+-------- - -These figures warrant the estimate that the total number of -trespassers and other persons killed and injured in the United States -in 1909 through the operation of railways was approximately 5,978 and -9,132 respectively. This marks a decrease from 1908, but not nearly -so great as in the case of passengers and employes. - - -FATALITIES IN RAILWAY ACCIDENTS SINCE 1888. - -We are now enabled to present a complete statement of the fatalities -connected with the transportation industry since the Commission began -compiling casualty statistics in 1888. The figures in this summary -are confined to fatalities, for the reason given by the Commission -that it "is well known the term 'injury,' as used in statistics of -this character, is elastic." As a matter of fact the terms injury and -casualty are so individually or locally indefinite and variable as to -have little or no statistical value. - - -PASSENGERS, EMPLOYES AND OTHER PERSONS KILLED IN RAILWAY ACCIDENTS -FROM 1888 TO 1908. - - =========+==========+=========+===========================+======= - | | | Other Persons | - Year |Passengers|Employes +-----------+---------------+ Total - | | |Trespassers|Not Trespassing| - ---------+----------+---------+-----------+---------------+------- - 1909 | 335 | 2,456 | 5,124 | 854 | 8,769 - 1908 | 406 | 3,358 | 5,560 | 940 | 10,264 - 1907 | 647 | 4,353 | 5,612 | 1,044 | 11,656 - 1906 | 359 | 3,929 | 5,381 | 949 | 10,618 - 1905 | 537 | 3,361 | 4,865 | 940 | 9,703 - 1904 | 441 | 3,632 | 5,105 | 868 | 10,046 - 1903 | 355 | 3,606 | 5,000 | 879 | 9,840 - 1902 | 345 | 2,969 | 4,403 | 871 | 8,588 - 1901 | 282 | 2,675 | 4,601 | 897 | 8,455 - 1900 | 249 | 2,550 | 4,346 | 660 | 7,865 - 1899 | 239 | 2,210 | 4,040 | 634 | 7,123 - 1898 | 221 | 1,958 | 4,063 | 617 | 6,859 - 1897 | 222 | 1,693 | 3,919 | 603 | 6,437 - 1896 | 181 | 1,861 | 3,811 | 595 | 6,448 - 1895 | 170 | 1,811 | 3,631 | 524 | 6,136 - 1894 | 324 | 1,823 | 3,720 | 580 | 6,447 - 1893 | 299 | 2,627 | 3,673 | 647 | 7,346 - 1892 | 376 | 2,554 | 3,603 | 614 | 7,147 - 1891 | 293 | 2,660 | 3,465 | 611 | 7,029 - 1890 | 286 | 2,451 | 3,062 | 536 | 6,335 - 1889 | 310 | 1,972 | Not | (a)3,541 | 5,823 - 1888 | 315 | 2,070 | given | (a)2,897 | 5,282 - ---------+----------+---------+-----------+---------------+------- - - (a) Includes trespassers. - -To the most casual student this table illustrates how railway -accidents increase and decline with periods of business activity and -recession. The effect of the panic of 1893-94 is seen in the decrease -in accidents in 1895 and 1896. The temporary slowing up in 1904 is -reflected in fewer fatalities in 1905, and a drop of 11% in the -business of 1908 was followed by a decreased death roll of 12% for -that year and 25% in 1909. - - -RELATION OF ACCIDENTS TO PASSENGER TRAFFIC. - -The relation of railway accidents to passenger travel is most -accurately measured in the following statement of the number of -passengers carried one mile to one killed in train accidents during -the years for which these statistics have been compiled: - - -PASSENGERS CARRIED ONE MILE TO ONE KILLED. - - ==========+===================+====================+=================== - | Passengers Killed | Passengers Carried | Passengers Carried - Year | in | One Mile | One Mile - | Train Accidents | | to One Killed - ----------+-------------------+--------------------+------------------- - 1909 | 131(a) | 29,452,000,000 | 288,745,100 - 1908 | 165(b) | 29,082,836,944 | 196,505,648 - 1907 | 410 | 27,718,554,030 | 72,802,600 - 1906 | 182 | 25,167,240,831 | 183,702,488 - 1905 | 350 | 23,800,149,436 | 68,000,427 - 1904 | 270 | 21,923,213,536 | 81,197,087 - 1903 | 164 | 20,915,763,881 | 127,535,745 - 1902 | 170 | 19,689,937,620 | 115,823,162 - 1901 | 110 | 17,353,588,444 | 157,759,894 - 1900 | 93 | 16,038,076,200 | 172,463,183 - 1899 | 83 | 14,591,327,613 | 175,799,127 - 1898 | 74 | 13,379,930,004 | 180,809,864 - 1897 | 96 | 12,256,939,647 | 127,676,454 - 1896 | 41 | 13,049,007,233 | 318,268,469 - 1895 | 30 | 12,188,446,271 | 406,281,542 - 1894 | 162 | 14,289,445,893 | 88,206,456 - 1893 | 100 | 14,229,101,084 | 142,291,010 - 1892 | 195 | 13,362,898,299 | 68,522,555 - 1891 | 110 | 12,844,243,881 | 116,765,853 - 1890 | 113 | 11,847,785,617 | 104,847,660 - 1889 | 161 | 11,553,820,445 | 71,762,859 - ----------+-------------------+--------------------+------------------- - - (a) Of these only 102 were passengers in the ordinary sense of - the term. - - (b) Of these only 148 were passengers in the ordinary sense of - the term. - -The student has to go back to the years of continued business -paralysis, 1895 and 1896, to find any record of immunity to -passengers from fatalities in train accidents at all comparable with -the conditions that prevailed in 1909. - - -DECREASED HAZARD TO TRAIN CREWS. - -Never in the history of American railways has the occupation of the -men directly engaged in the operation of trains been as free from -fatalities as during the year 1909. This is proved by the following -statement showing the number of trainmen killed in all descriptions -of accidents since the figures have been compiled, with the ratio to -the number employed: - - -SUMMARY SHOWING NUMBER OF TRAINMEN KILLED IN RAILWAY ACCIDENTS 1889 -TO 1909, WITH RATIO TO NUMBER EMPLOYED. - - ==========+==========+==========+===========+==========+========== - | | | Yard | | Number of - | Trainmen | Trainmen | Trainmen | All | Trainmen - | | in Yards | Switching | Trainmen | for One - | | | Crews | | Killed - ----------+----------+----------+-----------+----------+---------- - 1889 | 1,179 | | | 1,179 | 117 - 1890 | 1,459 | | | 1,459 | 105 - 1891 | 1,533 | | | 1,533 | 104 - 1892 | 1,503 | | | 1,503 | 113 - 1893 | 1,567 | | | 1,567 | 115 - 1894 | 1,029 | | | 1,029 | 156 - 1895 | 1,017 | | | 1,017 | 155 - 1896 | 1,073 | | | 1,073 | 152 - 1897 | 976 | | | 976 | 165 - 1898 | 1,141 | | | 1,141 | 150 - 1899 | 1,155 | | | 1,155 | 155 - 1900 | 1,396 | | | 1,396 | 137 - 1901 | 1,537 | | | 1,537 | 136 - 1902 | 1,507 | | | 1,507 | 135 - 1903 | 2,021 | | | 2,021 | 123 - 1904 | 1,181 | 487 | 488 | 2,156 | 120 - 1905 | 1,155 | 386 | 493 | 2,034 | 133 - 1906 | 1,360 | 400 | 575 | 2,335 | 124 - 1907 | 1,507 | 459 | 630 | 2,596 | 125 - 1908 | 1,097 | 362 | 496 | 1,955 | 150 - 1909 | 789 | 270 | 313 | 1,372 | 202 - ----------+----------+----------+-----------+----------+---------- - -The figures of the Interstate Commerce Commission have only made -the division of trainmen shown above since 1904. Here again the -last column proves the relation of accidents to the ebb and flow of -traffic. - - -FREIGHT TRAFFIC AND ACCIDENTS. - -The preponderating part played by the immense freight traffic of -American railways as a cause of accidents is shown in the following -analysis of the sixty "prominent collisions" described in the -Commission's quarterly Accident Bulletins for the year 1909: - - - =================================+============+========+======== - Kind of Train in Accident | Number of | Killed | Injured - | Collisions | | - ---------------------------------+------------+--------+-------- - Passenger and passenger | 8 | 30 | 225 - Freight and passenger | 18 | 68 | 374 - Freight and freight | 34 | 47 | 91 - +------------+--------+-------- - Total | 60 | 145 | 690 - ---------------------------------+------------+--------+-------- - -Here it will be observed freight trains were involved in 86.6% of the -prominent collisions of the year and shared in responsibility for -79.3% of the fatalities. The proportion of injured in accidents to -freight trains is not so great for the obvious reason that the number -of persons exposed in collisions involving only freight trains is -generally limited to train crews. - - -CAUSES OF TRAIN ACCIDENTS. - -An examination of the causes given for the prominent collisions and -derailments in the Accident Bulletins of the Commission since the -passage of the Act of March 3, 1901, requiring the railway companies -to make full monthly reports of all accidents affords the following -general statement: - - - =========================================================+========== - Cause | Number of - | Accidents - ---------------------------------------------------------+---------- - Negligence, error or forgetfulness of some member of | 241 - train crew | - Recklessness, carelessness, overlooking or disregarding | 233 - orders or taking chances | - Disobedience | 53 - Incompetence or inexperience | 20 - Defect of equipment, tires, wheels, etc. | 64 - Defect of roadway | 24 - Malicious acts | 27 - Misadventure, washouts, landslides, cyclones, etc. | 91 - Undiscovered | 41 - +---------- - Total | 794 - ---------------------------------------------------------+---------- - -Among the prominent derailments charged against the railways in the -Bulletin for April, May and June, 1909, is the following, resulting -in one killed and three injured. - - "Automobile running on track, derailed by running over a dog, - one guest killed." - -Through the inclusion in these Bulletins of accidents on trolley -lines, their value as records of railway accidents is being greatly -impaired. Without any information as to the number of passengers -carried by the electric cars it is impossible to arrive at an -accurate idea of the relation of accidents to traffic, and without -this the mere record of accidents has little information value. - - -ACCIDENTS ON BRITISH RAILWAYS. - -For a second time in their history, in the year ending December 31, -1908, British railways went through a twelvemonth without killing a -single passenger in a train accident, thus paralleling their record -of 1901 in this respect. In the matter of passengers injured, the -year 1908 showed a remarkable improvement, not only over 1901 but -over any other year in the history of British railways. When it comes -to the totals of casualties, however, 1908 shows little variation -from the average record. - -The following table shows the total number of persons killed and -injured in the working of British railways, as reported to the Board -of Trade for the calendar year 1908 as compared with 1901: - - - ======================================+================+=============== - | 1908 | 1901 - Class +-------+--------+-------+------- - |Killed |Injured |Killed |Injured - --------------------------------------+-------+--------+-------+------- - Passengers: | | | | - In accidents to trains | -- | 283 | -- | 476 - By accidents from other causes | 107 | 3,105 | 135 | 2,269 - +-------+--------+-------+-------- - Total passengers | 107 | 3,388 | 135 | 2,745 - | | | | - Employes: | | | | - In accidents to trains | 6 | 164 | 8 | 156 - By accidents from other causes | 426 | 24,017 | 568 | 14,522 - +-------+--------+-------+-------- - Total employes | 432 | 24,181 | 576 | 14,678 - | | | | - Other persons: | | | | - Accidents to trains | -- | 7 | 3 | 5 - While passing over railways at | | | | - level crossings | 51 | 44 | 55 | 26 - While trespassing on line | | | | - (including suicides) | 479 | 118 | 426 | 171 - Not coming under above | | | | - classification | 59 | 747 | 82 | 750 - +-------+--------+-------+-------- - Total other persons | 589 | 916 | 566 | 952 - | | | | - Grand total all classes, 1908 | 1,128 | 28,485 | 1,277 | 18,375 - " " " " 1907 | 1,211 | 25,975 | | - " " " " 1906 | 1,252 | 20,444 | | - " " " " 1905 | 1,180 | 18,236 | | - " " " " 1904 | 1,158 | 18,802 | | - " " " " 1903 | 1,262 | 18,557 | | - " " " " 1902 | 1,171 | 17,814 | | - " " " " 1901 | 1,277 | 18,375 | | - " " " " 1900 | 1,325 | 19,572 | | - " " " " 1899 | 1,340 | 19,155 | | - +-------+--------+-------+-------- - Total, ten years |12,294 |205,415 | | - --------------------------------------+-------+--------+-------+-------- - -As one year of traffic on American railways approximates ten years on -British railways, the above totals for ten years on the latter may be -compared with 8769 killed and 73,052 injured on the former last year, -or with 11,839 killed and 111,016 injured in 1907, the darkest year -in the annals of American railway accidents. - -Attention is asked to the apparently startling increase in injuries -on British railways since 1905. The increase is absolutely -fictitious, having resulted from "a change in the definition of a -reportable accident," and not from any greater hazard in the working -of British roads. This confirms the objection, expressed in the -report of the British Board of Trade in 1903, to any changes in the -form of tables extending over a long series of years that "admit -of comparisons, which any change of form would invalidate if not -destroy." - -It will be perceived that the mere change in the definition of what -constitutes a reportable accident increased the number of injuries -reported against British railways fully 50%. This justifies the -writer's view that comparisons of injuries in railway accidents are -of little value. Even the same injury does not affect two persons in -the same degree. One "hollers" and cries for a doctor where the other -whistles and goes on with his work. - -The inquiries of the Board of Trade into the causes of British -railway accidents in 1908 confirm former findings that, exclusive of -train accidents, in the case of passengers "they mostly arise from -carelessness of the passengers themselves," and the same is true of -the vast majority of accidents to employes. - - -OVERWORK AND RAILWAY ACCIDENTS. - -At last the statistics of the British Board of Trade furnish what -well nigh amounts to demonstration that long hours play very little -part as an actual cause of railway accidents. Under the statute the -Board requires reports of all instances of periods of duty in excess -of twelve hours worked on British railways. For the month of October, -1908, the returns show 31,052 excess hours worked out of 2,773,891; -and for October, 1909, 24,486 out of 2,695,036, or an excess of 1.12% -in 1908 and .92%, in 1909. - -Now, out of 861 accidents investigated in 1908, only 16, or 1.85%, -occurred to men working in excess of 12 hours; and out of 804 -investigated in 1909 only 9, or 1.12%. This bears out the opinion of -a high English official, that experience "does not show any close -connection between long hours and accidents." - -The following statement shows the relation of accidents to the hours -the persons involved have been on duty on British railways for a -period of five years: - - -HOURS WHEN BRITISH ACCIDENTS OCCUR. - - ====================================================================== - | | Hours on Duty when Accidents Occurred - Three months |Off +----+----+----+----+----+----+----+----+----+---- - to |duty| 1st| 2d | 3d | 4th| 5th| 6th| 7th| 8th| 9th|10th - ---------------|----+----+----+----+----+----+----+----+----+----+---- - Sept. 30, 1908 | 1 | 20 | 18 | 19 | 17 | 15 | 23 | 19 | 11 | 11 | 17 - Dec. 31, 1908 | 5 | 12 | 22 | 34 | 14 | 23 | 23 | 16 | 14 | 19 | 13 - March 31, 1909 | 4 | 14 | 16 | 29 | 28 | 16 | 17 | 18 | 19 | 11 | 12 - June 30, 1909 | 1 | 15 | 16 | 10 | 19 | 15 | 14 | 15 | 16 | 24 | 12 - ---------------+----+----+----+----+----+----+----+----+----+----+---- - Year 1909 | 11 | 61 | 72 | 92 | 78 | 69 | 77 | 68 | 60 | 65 | 54 - Year 1908 | 6 | 60 |103 | 83 | 85 | 77 | 81 | 72 | 70 | 63 | 57 - Year 1907 | 1 | 70 | 86 | 78 | 78 | 71 | 64 | 59 | 48 | 68 | 62 - Year 1906 | 6 | 52 | 64 | 70 | 86 | 63 | 81 | 68 | 70 | 71 | 61 - Year 1905 | 3 | 52 | 74 | 65 | 54 | 71 | 66 | 59 | 48 | 53 | 56 - ---------------+----+----+----+----+----+----+----+----+----+----+---- - Five years | 27 |295 |399 |388 |381 |351 |369 |326 |296 |320 |290 - ---------------+----+----+----+----+----+----+----+----+----+----+---- - - {table continued} - ============================================================== - | | Hours on Duty when Accidents Occurred - Three months |Off +-----+-----+-----+-----+-----+-----+----- - to |duty| 11th| 12th| 13th| 14th| 15th| 16th| 17th - ---------------|----+-----+-----+-----+-----+-----+-----+----- - Sept. 30, 1908 | 1 | 14 | 17 | 3 | 0 | 0 | 1 | 0 - Dec. 31, 1908 | 5 | 11 | 8 | 5 | 0 | 0 | 0 | 0 - March 31, 1909 | 4 | 15 | 7 | 0 | 0 | 0 | 0 | 0 - June 30, 1909 | 1 | 11 | 5 | 0 | 0 | 0 | 0 | 0 - ---------------+----+-----+-----+-----+-----+-----+-----+----- - Year 1909 | 11 | 51 | 37 | 8 | 0 | 0 | 1 | 0 - Year 1908 | 6 | 53 | 35 | 8 | 8 | 0 | 0 | 0 - Year 1907 | 1 | 43 | 35 | 14 | 12 | 5 | 3 | 1 - Year 1906 | 6 | 42 | 39 | 7 | 4 | 3 | 0 | 2 - Year 1905 | 3 | 41 | 37 | 7 | 3 | 3 | 0 | 1 - ---------------+----+-----+-----+-----+-----+-----+-----+----- - Five years | 27 | 230 | 183 | 44 | 7 | 11 | 4 | 4 - ---------------+----+-----+-----+-----+-----+-----+-----+----- - -It will be observed that out of these 3,945 accidents investigated -and reported on by British inspectors during the years 1905 to 1909, -inclusive, a majority happened during the first half of the twelve -hours for which the men were booked and 2.28% when they were working -overtime. In no instance was the accident attributed to long hours. - - -RAILWAY ACCIDENTS IN EUROPE. - -Excluding the returns of injured, for the reason that no two -countries have a common definition of a reportable injury, the -accidents on European railways, according to the latest reports, -resulted in the following fatalities: - - -KILLED IN EUROPEAN RAILWAY ACCIDENTS. - -(Total mileage represented 182,459.) - - -----------------+--------+----------+--------+-------+-------+--------- - Country | Year |Passengers|Employes| Other | Total |Preceding - | | | |Persons| | Year - -----------------+--------+----------+--------+-------+-------+--------- - United Kingdom | 1908 | 107 | 432 | 587 | 1,128 | 1,211 - Germany | 1908 | 105 | 604 | 644 | 1,353 | 1,558 - Russia in Europe | 1905 | 231 | 478 | 1,149 | 1,858 | 1,632 - France | 1907 | (a)36 | 322 |(b)301 | 659 | 627 - Austria | 1907 | 11 | 147 | 145 | 303 | 213 - Hungary | 1907 | 32 | 138 | 172 | 343 | 319 - Italy | 1907-8 | (c)42 | 105 | 115 | 262 | 277 - Spain | 1907 | 25 | 64 | 213 | 302 | 219 - Portugal | 1904 | | | | 55 | - Sweden | 1906 | 10 | 45 | 57 | 112 | 105 - Norway | 1908 | 1 | 4 | 6 | 11 | 9 - Denmark | 1907-8 | (c)1 | 20 | 9 | 30 | 22 - Belgium | 1907 | 4 | 72 | 70 | 146 | 125 - Holland | 1907 | 3 | 18 | 25 | 46 | 60 - Switzerland | 1907 | 14 | 45 | 36 | 95 | 78 - Roumania | 1907-8 | 8 | 42 | 50 | 100 | 103 - +--------+----------+--------+-------+-------+-------- - Totals | | 630 | 2,536 | 3,580 | 6,803 | 6,595 - -----------------+--------+----------+--------+-------+-------+-------- - - (a) Train accidents only; other accidents to passengers included under - "Other Persons." - - (b) Excluding suicides. - - (c) Statistics cover State railways only. - -These figures, representing a European mileage of 182,459, may -be compared with those of the United States in 1897 when it had -183,284 miles of line and an accident record of 222 fatalities to -passengers, 1,693 to employes and 4,522 to other persons; or even -with the American record for 1909, when with a mileage 27% greater -the record stood 335 fatalities to passengers, 2,456 to employes and -5,978 to other persons. The excess of fatalities to other persons -in this country is due to the notorious indifference to danger and -law of all classes of citizens in using railway right of way as a -common thoroughfare for adults and playground for children. Despite -the elevation of the tracks in Chicago, the writer has seen scores of -youngsters scarcely able to walk playing on those raised tracks and -laughing at the locomotives as they went shrieking by. - -In all comparisons of accidents on American railways with those on -foreign roads, it should be remembered that our excess of mileage and -freight traffic more than balance their density of passenger traffic -and that nowhere else on earth is railway right of way common to -foolhardy pedestrians and creeping children. - -The Railroad Commission of Indiana is to be commended for its efforts -to enlist public sentiment against trespassing on railway tracks. - - - - -XIII - -RAILWAY RECEIVERSHIPS IN 1909 - - -Only five railway companies, operating 859 miles of line, went into -the hands of receivers during the calendar year 1909, as compared -with 24 companies, operating 8,009 miles, for the preceding year. -The capitalization of these five roads was $78,095,000, against -$596,359,000 for those financially involved in 1908. The following -statement gives the names, mileage, funded debt and capital stock of -the roads for which receivers were appointed in 1909: - - - ===============================+=========+=============+============ - | Mileage | Funded Debt | Stock - -------------------------------+---------+-------------+------------ - Atlanta, Birmingham & Atlantic | 572 | $18,533,000 | $35,000,000 - Alabama Terminal | -- | 2,445,000 | 3,000,000 - Georgia Terminal | -- | 3,000,000 | 1,500,000 - Yellowstone Park | 32 | 696,000 | 696,000 - Chicago, Peoria & St. Louis | 255 | 5,875,000 | 7,350,000 - -------------------------------+---------+-------------+------------ - Total | 859 | $30,549,000 | $47,546,000 - -------------------------------+---------+-------------+------------ - -The number, mileage and capitalization of the railways that have -failed since 1875 are as follows, the figures being from the -_Railroad Age Gazette_: - - -RECEIVERSHIPS SINCE 1876. - - =====+=======+=========+=========== - | | | Bonds and - | Roads | Miles | Stock - -----+-------+---------+----------- - 1876 | 42 | 6,662 | $467,000 - 1877 | 38 | 3,637 | 220,294 - 1878 | 27 | 2,320 | 92,385 - 1879 | 12 | 1,102 | 39,367 - 1880 | 13 | 885 | 140,265 - 1881 | 5 | 110 | 3,742 - 1882 | 12 | 912 | 39,074 - 1883 | 11 | 1,990 | 108,470 - 1884 | 37 | 11,038 | 714,755 - 1885 | 44 | 8,836 | 385,460 - 1886 | 13 | 1,799 | 70,346 - 1887 | 9 | 1,046 | 90,318 - 1888 | 22 | 3,270 | 186,814 - 1889 | 22 | 3,803 | 99,664 - 1890 | 26 | 2,963 | 105,007 - 1891 | 26 | 2,159 | 84,479 - 1892 | 36 | 10,508 | 357,692 - 1893 | 74 | 29,340 | 1,781,046 - 1894 | 38 | 7,025 | 395,791 - 1895 | 31 | 4,089 | 369,075 - 1896 | 34 | 5,441 | 275,597 - 1897 | 18 | 1,537 | 92,909 - 1898 | 18 | 2,069 | 138,701 - 1899 | 10 | 1,019 | 52,285 - 1900 | 16 | 1,165 | 78,234 - 1901 | 4 | 73 | 1,627 - 1902 | 5 | 278 | 5,835 - 1903 | 9 | 229 | 18,823 - 1904 | 8 | 744 | 36,069 - 1905 | 10 | 3,593 | 176,321 - 1906 | 6 | 204 | 55,042 - 1907 | 7 | 317 | 13,585 - 1908 | 24 | 8,009 | 596,359 - 1909 | 5 | 859 | 78,095 - -----+-------+---------+----------- - Total, 34 years | - | 712 | 128,498 | $7,370,526 - -----+-------+---------+----------- - - [Three figures omitted in bonds and stock column.] - - - - -XIV - -COST OF RAILWAY REGULATION - - -Nothing in the record of railway development in the United States -has increased with the rapidity of the cost of their regulation -under the act creating the Interstate Commerce Commission. Since the -first Commission, composed of Judge Thomas M. Cooley, of Michigan, -chairman, William R. Morrison, of Illinois, Augustus Schoonmaker, -of New York, Aldace F. Walker of Vermont, and Walter L. Bragg, of -Alabama, Commissioners, and Edward E. Moseley, Secretary, and Prof. -Henry C. Adams, Statistician, to date the yearly expenditures on its -account have been as follows: - - - ============================+======== - 1888 Five Commissioners | $97,867 - 1889 " " | 149,453 - 1890 " " | 180,440 - 1891 " " | 214,844 - 1892 " " | 221,745 - 1893 " " | 217,792 - 1894 " " | 209,250 - 1895 " " | 216,206 - 1896 " " | 234,941 - 1897 " " | 234,909 - 1898 " " | 237,358 - 1899 " " | 238,125 - 1900 " " | 243,624 - 1901 " " | 255,979 - 1902 " " | 271,728 - 1903 " " | 298,842 - 1904 " " | 321,533 - 1905 " " | 330,739 - 1906 " " | 382,141 - 1907 Seven Commissioners | 538,827 - 1908 " " | 736,530 - 1909 " " | 988,936 - ----------------------------+-------- - -From this it appears that the cost of regulating American railways -has increased tenfold in twenty years. Of this only $34,000 is -chargeable to the increase in number and compensation for the -Commission under the Hepburn Act. Of the balance it was charged by -Representative Adair of Indiana in a speech in Congress last January -that $450,000 annually was for "Interstate Commerce Detectives." - - - - -XV - -STATISTICS OF FOREIGN RAILWAYS - - -In the following review of the mileage and traffic statistics of the -principal divisions of Europe and other countries, the information -has been derived from the latest official sources wherever available, -and where estimates have been resorted to as noted they have been -computed from ascertained facts. - - - ====================================================================== - | | Miles | | - | | Covered | Capitalization | Passenger - Country | Year | by | or Cost of | Revenues - | |Capitalization| Construction | - -----------------+------+--------------+-----------------+------------ - United Kingdom | 1908 | 23,205 | $ 6,382,296,742|$207,539,004 - German Empire | 1908 | 35,558 | 3,903,848,400| 178,100,400 - France | 1907 | 24,817 | 3,455,436,000| 145,355,448 - Russia in Europe | 1905 | 31,545 | (b)3,170,876,360| 58,813,500 - Austria | 1907 | 13,427 | 1,515,576,800| 41,716,800 - Hungary | 1907 | 11,769 | 741,586,200| 20,836,800 - Italy(a) |1907-8| 8,762 | (c)1,091,608,000| 31,149,886 - Spain | 1905 | 8,432 | 649,919,610| 16,215,866 - Portugal | 1905 | 1,425 | 162,385,280| 4,014,196 - Sweden | 1906 | 7,938 | 267,408,450| 10,665,270 - Norway | 1908 | 1,608 | 61,841,610| 2,253,420 - Denmark(a) |1907-8| 1,191 | 59,806,620| 5,111,910 - Belgium | 1907 | 2,871 | (d)451,592,980| 18,340,790 - Holland | 1907 | 2,225 | 191,821,000| 10,978,400 - Switzerland | 1907 | 2,740 | 303,426,747| 16,222,422 - Roumania |1907-8| 1,979 | 183,492,074| 5,089,191 - Canada | 1909 | 24,104 | 1,608,963,337| 39,073,488 - Argentine | 1907 | 13,690 | 820,433,280| 19,853,760 - Japan(a) | 1908 | 3,982 | 190,173,728| 18,786,895 - British India | 1908 | 30,809 | 1,336,005,760| 55,132,160 - New South Wales | 1909 | 3,623 | 231,870,440| 8,380,744 - |------+--------------+-----------------+------------ - Total | | 255,700 | $ 26,780,369,418|$913,630,350 - | | | | - United States | 1908 | 230,494 |(e)12,840,091,462| 566,832,746 - | | | | - -----------------+------+--------------+-----------------+------------ - - (a) State only. - - (b) Including Siberian. - - (c) 1906-7. - - (d) State only. 2,543 miles. - - (e) Exclusive of switching and terminal companies (1,626 miles). - - {table continued; part 2} - =================================================================== - | | | | - | | Freight | Other | Total - Country | Year | Revenues | Revenues | Earnings - | | | | - -----------------+------+--------------+------------+-------------- - United Kingdom | 1908 | $ 286,786,249|$ 89,560,115| $ 583,885,371 - German Empire | 1908 | 412,635,760| 56,715,200| 647,451,360 - France | 1907 | 176,664,215| 6,421,010| 323,440,673 - Russia in Europe | 1905 | 221,967,500| 39,678,500| 320,459,500 - Austria | 1907 | 122,214,200| 5,692,800| 169,628,800 - Hungary | 1907 | 54,650,400| 3,327,000| 78,814,200 - Italy(a) |1907-8| 51,266,976| 6,929,979| 89,346,841 - Spain | 1905 | 34,694,555| 6,190,271| 57,100,692 - Portugal | 1905 | 5,322,875| 423,936| 9,761,000 - Sweden | 1906 | 21,051,360| 815,670| 32,572,300 - Norway | 1908 | 3,029,920| 108,810| 5,392,150 - Denmark(a) |1907-8| 5,266,350| 680,400| 11,058,660 - Belgium | 1907 | 38,532,450| 858,271| 89,731,511 - Holland | 1907 | 10,664,400| 1,300,000| 22,942,800 - Switzerland | 1907 | 21,204,331| 1,677,556| 39,114,310 - Roumania |1907-8| 10,269,530| 629,373| 15,988,094 - Canada | 1909 | 95,714,783| 10,268,065| 145,056,336 - Argentine | 1907 | 56,597,760| 7,578,240| 83,029,760 - Japan(a) | 1908 | 14,651,808| 1,448,881| 34,887,584 - British India | 1908 | 84,225,280| 4,088,640| 143,446,080 - New South Wales | 1909 | 14,437,981| 1,669,826| 24,488,551 - |------+--------------+------------+-------------- - Total | |$1,741,848,683|$246,062,543|$2,927,596,573 - | | | | - United States | 1908 | 1,665,419,108| 171,554,135| 2,393,805,989 - | | | | - -----------------+------+--------------+------------+-------------- - - (a) State only. - - {table continued; part 3} - ======================================================================== - | | | | | | - | | |Per Cent| | | - Country | Year | Operating |Expense | |Average | - | | Expenses | to | Passengers|Journey | - | | |Revenue | Carried | Miles | - | | | | | | - -----------------+------+--------------+--------+-------------+--------+ - United Kingdom | 1908 | $372,103,990| 63.7 |1,725,631,620| 7.8 | - German Empire | 1908 | 476,290,080| 73.6 |1,361,655,150| 14.1 | - France | 1907 | 183,444,503| 55.9 | 474,335,306| 19.9 | - Russia in Europe | 1905 | 216,987,500| 67.8 | 116,441,000| 73.2 | - Austria | 1907 | 120,103,800| 70.8 | 223,717,302| 19.1 | - Hungary | 1907 | 53,309,000| 67.6 | 107,171,000| 21.4 | - Italy(a) |1907-8| 73,735,071| 82.6 | 64,276,501| 25.0(f)| - Spain | 1905 | 27,750,936| 48.6 | 41,846,249| 26.0(f)| - Portugal | 1905 | 4,426,236| 45.3 | 13,446,043| 20.0(f)| - Sweden | 1906 | 21,624,840| 66.3 | 46,452,445| 16.8 | - Norway | 1908 | 3,727,620| 69.1 | 10,679,732| 15.5 | - Denmark(a) |1907-8| 9,344,430| 84.5 | 20,818,639| 21.7 | - Belgium | 1907 | 38,428,809| 64.4 | 181,216,314| 14.0 | - Holland | 1907 | 19,174,400| 83.6 | 42,319,000| 18.4 | - Switzerland | 1907 | 26,311,883| 67.3 | 97,752,465| 12.8 | - Roumania |1907-8| 9,587,468| 60.0 | 8,193,037| 42.2 | - Canada | 1909 | 104,600,082| 72.1 | 32,683,309| 62.0 | - Argentine | 1907 | 56,198,080| 67.7 | 41,911,512| 25.2 | - Japan(a) | 1908 | 17,875,971| 51.2 | 101,115,739| 23.3 | - British India | 1908 | 86,408,000| 60.2 | 321,169,000| 37.7 | - New South Wales | 1909 | 14,380,252| 58.7 | 52,051,556| 11.1 | - |------+--------------+--------|-------------+--------+ - Total | |$1,935,812,951| 66.1 |5,084,882,919| 16.52 | - | | | | | | - United States | 1908 | 1,669,547,876| 69.75 | 890,009,574| 32.66 | - | | | | | | - -----------------+------+--------------+--------+-------------+--------+ - - (a) State only. - - (f) Estimated. - - - {table continued; part 4} - ========================================================== - | | | | | - | | | |Per Cent| - Country | Year |Freight Tons | Average | Net | - | | Carried | Haul |Revenues| - | | | (Miles) | to | - | | | |Capital | - -----------------+------+-------------+---------+--------+ - United Kingdom | 1908 | 491,595,056| 25.0 | 3.32 | - German Empire | 1908 | 461,296,759| 61.6 | 4.51 | - France | 1907 | 156,504,353| 78.8 | 4.18 | - Russia in Europe | 1905 | 156,129,875| 151.1 | 3.73 | - Austria | 1907 | 151,941,132| 53.7 | 3.27 | - Hungary | 1907 | 61,483,000| 69.5 | 3.6 | - Italy(a) |1907-8| 32,635,763| 66.0(f)| 1.4 | - Spain | 1905 | 22,662,548| 69.4 | 4.5 | - Portugal | 1905 | 3,775,559| 54.0(f)| 3.3 | - Sweden | 1906 | 31,961,244| 43.4 | 4.24 | - Norway | 1908 | 4,501,455| 35.4 | 2.55 | - Denmark(a) |1907-8| 4,726,757| 55.1 | 2.92 | - Belgium | 1907 | 72,494,073| 43.5 | 4.72 | - Holland | 1907 | 15,924,600| 53.8 | 1.93 | - Switzerland | 1907 | 17,411,711| 69.5 | 3.7 | - Roumania |1907-8| 6,796,315| 55.9 | 3.54 | - Canada | 1909 | 66,842,258| 197.0 | 2.51 | - Argentine | 1907 | 27,933,828| 115.9 | 3.95 | - Japan(a) | 1908 | 18,312,223| 78.7 | 8.9 | - British India | 1908 | 62,398,000| 159.1 | 4.33 | - New South Wales | 1909 | 9,298,929| 68.4 | 4.36 | - |------+-------------+---------+--------+ - Total | |1,876,625,438| 66.7 | 3.71 | - | | | | | - United States | 1908 |1,532,981,790| 142.5 | 4.17 | - | | | | | - -----------------+------+-------------+---------+--------+ - - (a) State only. - - (f) Estimated. - - -From the data here furnished it is possible to arrive at a close -approximation of the passenger and freight rates in the countries -named. The average passenger journey and freight haul in the United -States is nearly twice as long as the average for the rest of the -world. In comparing net results it should be remembered that rentals -and taxes should be deducted from the American figures. - -For further details of the railways of Canada, the United Kingdom and -the German Empire, for which complete statistics are available, the -reader is referred to succeeding pages. - - -Here the writer would acknowledge the courtesy of the Railway -Department of Canada for advance copies of the Dominion railway -statistics for 1909. - - -RAILWAYS OF CANADA. - -STATISTICS OF THE RAILWAYS OF THE DOMINION FOR THE YEARS ENDING JUNE -30, 1907, 1908 AND 1909. - - =========================+===============+===============+============== - | 1907 | 1908 | 1909 - -------------------------+---------------+---------------+-------------- - Miles of line operated | 22,608 | 22,966 | 24,104 - Second track | 1,096 | 1,211 | 1,464 - Yard track and sidings | 4,092 | 4,546 | 4,761 - +---------------+---------------+-------------- - All tracks | 27,796 | 28,723 | 30,329 - Capital cost: | | | - Stock | $588,563,591 | $607,425,349 | $647,534,647 - Funded debt | 583,369,217 | 631,869,664 | 660,946,769 - Government railways | 100,958,402 | 109,423,104 | 111,545,903 - Subsidies | 162,017,157 | 166,291,482 | 188,963,337 - +---------------+---------------+-------------- - Total capital cost |$1,434,908,367 |$1,515,009,599 |$1,608,990,656 - Per mile of line | 63,910 | 65,968 | 66,752 - Passenger traffic: | | | - Passengers carried | 32,137,319 | 34,044,992 | 32,683,309 - Pass. carried 1 mile | 2,049,549,813 | 2,081,960,864 | 2,033,001,225 - Average journey (miles)| 64 | 61 | 62 - Average pass. per train| 56 | 54 | 51 - Mileage of pass. trains| 30,220,461 | 31,950,349 | 32,295,730 - Mileage of mixed trains| 5,971,414 | 6,210,807 | 7,061,580 - Receipts from pass. | $39,184,437 | $39,992,503 | $39,073,488 - Receipts per pass. mile| | | - (cents) | 1.911 | 1.920 | 1.921 - Freight traffic: | | | - Tons carried | 56,497,885 | 63,019,900 | 66,842,258 - Tons carried 1 mile |11,687,711,830 |12,961,512,519 |12,961,512,519 - Average haul (miles) | 183 | 206 | 197 - Freight train mileage | 38,923,890 | 40,476,370 | 40,304,906 - Average tons per train | 260 | 278 | 278 - Receipts from freight | $94,995,087 | $93,746,655 | $95,714,783 - Receipts per ton mile | | | - (mills) | 8.12 | 7.23 | 7.27 - Miscellaneous receipts | $12,558,689 | $13,179,155 | $10,268,065 - Total receipts | 146,738,214 | 146,918,313 | 145,056,336 - | | | - Expenses of operation: | | | - Way and structures | 20,887,092 | 20,778,610 | $21,153,274 - Maintenance of | | | - equipment | 21,666,373 | 20,273,626 | 21,510,303 - Conducting | | | - transportation | 57,325,543 | 62,486,270 | 54,284,587 - General expenses | 3,869,664 | 3,765,636 | 3,853,094 - Traffic expenses | -- | -- | 3,798,824 - +---------------+---------------+-------------- - Total expenses | $103,748,672 | $107,304,142 | $104,600,082 - Ratio to earnings | 70.72% | 73.04% | 72.11% - | | | - Net receipts | $42,989,552 | $39,614,171 | $40,456,251 - Percentage to | | | - capital cost | 3.00% | 2.61% | 2.51% - Gross receipts per mile | $6,535 | $6,398 | $6,018 - Gross expenses per mile | 4,621 | 4,672 | 4,339 - Number of employes | 124,012 | 106,404 | 125,195 - Compensation | $58,719,493 | $60,376,607 | $63,216,662 - Prop. of gross earnings | 40.02% | 41.10% | 43.58% - Prop. of operating | | | - expenses | 56.61% | 56.27% | 60.43% - Average per employe | | | - per year | $473 | $569 | $505 - -------------------------+---------------+---------------+-------------- - - -RAILWAYS OF THE UNITED KINGDOM. - -STATISTICS OF MILEAGE, CAPITALIZATION, AND TRAFFIC FOR THE YEARS 1907 -AND 1908. - - ========================================+===============+=============== - | 1907 | 1908 - ----------------------------------------+---------------+--------------- - Length of railways: | | - Double track or more (miles) | 12,845| 12,926 - Single track | 10,263| 10,279 - |---------------|--------------- - Total length of line | 23,108| 23,205 - Total length, all tracks, | | - sidings, etc. | 53,158| 53,669 - | | - Total capitalization (paid up) | $6,302,099,773| $6,382,296,742 - Capitalization per mile of line | 272,723| 275,040 - | | - Passenger traffic: | | - Passengers carried | 1,259,481,000| 1,278,115,000 - Season ticket journeys | 445,101,956| 447,516,620 - Passengers carried one mile | 13,295,747,058| 13,459,926,636 - Average journey (miles) | 7.8| 7.8 - Receipts from passengers | $205,036,740| $207,539,004 - Average receipts per passenger | | - per mile (cents) | 1.54| 1.542 - Mail and other passenger train | | - receipts | $43,213,632| $44,067,043 - | | - Freight traffic: | | - Minerals, tons carried | 407,602,177| 388,424,541 - General merchandise | 108,284,939| 103,170,515 - Total freight, tons | 515,887,116| 491,595,056 - Tons carried one mile | 12,897,177,900| 12,289,876,400 - Average haul (miles) | 25| 25 - Receipts from freight | $298,058,610| $286,786,249 - Average receipts per ton mile (cents) | 2.31| 2.333 - | | - Miscellaneous receipts | $45,634,648| $45,493,075 - |---------------|--------------- - Total receipts | $591,943,630| $583,885,371 - | | - Expenses of operation | 373,085,840| 372,103,990 - Ratio of expenses to earnings | 63.0 | 63.75 - | | - Net receipts | $218,857,790| - Percentage to total paid-up capital | 3.47| - | | - Gross receipts per mile | $25,616| $25,162 - Gross expenses per mile | 16,165| 16,035 - | | - Number of employes | 621,341| (a)621,341 - Total compensation | $158,116,560| $156,348,915 - Proportion of gross earnings | 26.7| 26.78 - Proportion of operating expenses | 42.4| 42.02 - Average per employe per year | $254.47| $251.78 - ----------------------------------------+---------------+--------------- - - (a) No enumeration of employes has been made since 1907, the last - preceding, in 1904, gave a total of 581,664. - - -RAILWAYS OF GERMANY. - -STATISTICS OF MILEAGE, COST OF CONSTRUCTION, AND TRAFFIC FOR THE -YEARS 1906, 1907 AND 1908. - - ===========================+==============+==============+============== - | 1906 | 1907 | 1908 - ---------------------------+--------------+--------------+-------------- - Length of State railways | | | - (miles) | 32,050| 32,367| 32,922 - Length of private railways | 2,513| 2,613| 2,636 - |--------------|--------------|-------------- - Total | 34,563| 34,980| 35,558 - | | | - Cost of construction |$3,613,493,706|$3,767,220,777|$3,903,848,400 - Cost per mile | 104,548| 107,694| 109,788 - | | | - Passenger traffic: | | | - Passengers carried | 1,209,224,072| 1,294,881,923| 1,361,655,150 - Passengers carried (one | | | - mile) |17,189,336,940|18,372,644,327|19,202,935,120 - Average journey (miles) | 14.21| 14.18| 14.10 - Receipts from passengers | $170,165,002| $172,339,593| $178,100,400 - Receipts per passenger | | | - per mile (cents) | 0.99| 0.94| 0.93 - | | | - Freight traffic: | | | - Fast freight and express:| | | - Tons carried | 3,791,769| 3,935,538| 4,013,970 - Tons carried 1 mile | 265,115,720| 272,898,271| 269,726,040 - Average haul (miles) | 69.91| 69.34| 66.96 - Receipts from same | $16,924,080| $17,295,969| $17,015,040 - Receipts per ton mile | | | - (cents) | 6.38| 6.34| 6.32 - | | | - All freight: | | | - Tons carried | 455,144,382| 484,147,325| 461,296,759 - Tons carried one mile |28,118,620,680|29,702,981,149|29,420,680,340 - Average haul (miles) | 61.78| 61.35| 61.60 - Receipts from freight | $397,580,738| $418,021,052| $412,635,760 - Receipts per ton mile | | | - (cents) | 1.41| 1.41| 1.42 - | | | - Miscellaneous receipts | $63,151,060| $68,413,909| $56,715,200 - |--------------|--------------|-------------- - Total receipts | $630,796,800| $658,774,554| $647,451,503 - | | | - Expenses of operation | 407,174,400| 454,610,032| 476,290,080 - Ratio expenses to earnings| 64.5| 69.1| 73.6 - | | | - Net receipts | $223,622,400| $204,645,522| $171,261,040 - Percentage on cost of | | | - construction | 6.18| 5.42| 4.51 - | | | - Gross receipts per mile | $18,251| $18,833| $28,173 - Gross expenses per mile | 11,780| 12,996| 13,489 - | | | - Number of employes | 648,437| 695,557| 699,155 - Total compensation | $219,390,932| $245,389,859| $259,606,560 - Prop. of gross earnings | 34.78| 37.25| 40.10 - Prop. of operating expenses| 53.88| 53.98| 54.50 - Average per employe | | | - per year | $338.35| $352.82| $371.00 - ---------------------------+--------------+--------------+-------------- - -Mark the increased capital cost per mile and in proportion of wages -to earnings, and the increased ratio of net earnings to cost of -construction. Then figure how long it will take at this rate before -the German people are taxed to support their railways or by increased -rates because the railways have been run for politics and not for the -people. - - - - -XVI - -GROWTH OF RAILWAYS - - -In three-quarters of a century American railways, from small -beginnings in Pennsylvania in 1827, Maryland in 1828, South Carolina -in 1830, and New York and Massachusetts in 1831, show the following -remarkable growth by decades: - -PROGRESS OF RAILWAYS IN THE UNITED STATES SINCE 1835. - - --------------+-----+-----+-----+------+------+------+------+------+------ - | | | | | | | | | 1909 - States | 1835| 1840| 1850| 1860 | 1870 | 1880 | 1890 | 1900 |Incom- - | | | | | | | | |plete - --------------+-----+-----+-----+------+------+------+------+------+------ - Alabama | 46| 46| 75| 743| 1,429| 1,851| 3,148| 4,219| 5,037 - Arkansas | | | | 38| 256| 896| 2,113| 3,341| 4,883 - California | | | | 23| 925| 2,220| 4,148| 5,744| 6,835 - Colorado | | | | | 157| 1,531| 4,154| 4,587| 5,295 - Connecticut | | 102| 402| 601| 742| 954| 1,007| 1,023| 1,015 - Delaware | 16| 39| 39| 127| 224| 280| 328| 346| 342 - Florida | | | 21| 402| 446| 530| 2,390| 3,272| 4,010 - Georgia | | 185| 643| 1,420| 1,845| 2,535| 4,105| 5,639| 6,868 - Idaho | | | | | | 220| 941| 1,261| 1,763 - Illinois | | | 111| 2,799| 4,823| 7,955| 9,843|10,997|13,216 - Indiana | | | 228| 2,163| 3,177| 5,454| 5,891| 6,469| 7,774 - Iowa | | | | 655| 2,683| 5,235| 8,347| 9,180| 9,923 - Kansas | | | | | 1,501| 3,439| 8,806| 8,719| 9,125 - Kentucky | 15| 28| 78| 534| 1,017| 1,598| 2,694| 3,059| 3,484 - Louisiana | 40| 40| 80| 335| 479| 633| 1,658| 2,824| 4,737 - Maine | | 11| 245| 472| 786| 1,013| 1,313| 1,915| 2,150 - Maryland and | | | | | | | | | - D.C. | 117| 213| 259| 386| 671| 1,012| 1,168| 1,407| 1,468 - Massachusetts | 113| 301|1,035| 1,264| 1,480| 1,893| 2,094| 2,118| 2,126 - Michigan | | 50| 342| 779| 1,638| 3,931| 6,789| 8,193| 8,976 - Minnesota | | | | | 1,072| 3,108| 5,466| 6,942| 8,285 - Mississippi | | | 75| 862| 990| 1,183| 2,292| 2,919| 4,169 - Missouri | | | | 817| 2,000| 4,011| 5,897| 6,867| 8,200 - Montana | | | | | | 48| 2,181| 3,010| 3,537 - Nebraska | | | | | 1,812| 2,000| 5,274| 5,684| 6,099 - Nevada | | | | | 593| 769| 925| 909| 1,699 - New Hampshire | | 53| 467| 661| 736| 1,015| 1,133| 1,239| 1,248 - New Jersey | 99| 186| 206| 560| 1,125| 1,701| 2,034| 2,237| 2,302 - New York | 104| 374|1,361| 2,682| 3,928| 6,019| 7,462| 8,121| 8,504 - North Carolina| | 53| 154| 937| 1,178| 1,499| 2,904| 3,808| 4,476 - North Dakota | | | | | 35| 635| 1,940| 2,731| 4,026 - Ohio | | 30| 575| 2,946| 3,538| 5,912| 7,719| 8,774| 9,274 - Oklahoma | | | | | | 275| 1,213| 2,150| 5,572 - Oregon | | | | | 159| 582| 1,269| 1,723| 1,939 - Pennsylvania | 318| 754|1,240| 2,598| 4,656| 6,243| 8,307|10,277|11,357 - Rhode Island | | 50| 68| 108| 136| 210| 212| 212| 212 - South Carolina| 137| 137| 289| 973| 1,139| 1,429| 2,096| 2,795| 3,324 - South Dakota | | | | | 30| 630| 2,485| 2,850| 3,703 - Tennessee | | | | 1,253| 1,492| 1,824| 2,710| 3,124| 3,761 - Texas | | | | 307| 711| 3,293| 7,911| 9,873|12,987 - Utah | | | | | 257| 770| 1,090| 1,547| 1,986 - Vermont | | | 290| 554| 614| 912| 913| 1,012| 1,094 - Virginia | 93| 147| 384| 1,379| 1,486| 1,826| 3,142| 3,729| 4,187 - Washington | | | | | | 274| 1,699| 2,890| 3,806 - West Virginia | | | | | 387| 694| 1,306| 2,198| 3,355 - Wisconsin | | | 20| 905| 1,525| 3,130| 5,468| 6,496| 7,626 - Wyoming | | | | | | 472| 941| 1,228| 1,526 - Arizona | | | | | | 384| 1,061| 1,511| 1,930 - New Mexico | | | | | | 643| 1,284| 1,752| 2,967 - --------------+-----+-----+-----+------+------+------+------+------+------ - Total |1,098|2,818|9,021|30,635|52,922|93,671|159,271 192,940 -- - --------------+-----+-----+-----+------+------+------+------+------+------ - -The most striking feature of this statement is the number of states -devoid of railway mileage previous to 1870, which since then the -railways have converted into mighty commonwealths whose resources -have been multiplied "some thirty fold, some sixty and some an -hundred". And those to which the railways have made the greatest -prosperity possible are the states whose politicians today are trying -the hardest to muzzle the ox that treads out the corn for their -people. - - -GROWTH OF RAILWAYS OF THE WORLD. - -In the following table is given the mileage of the principal -countries in the world from the earliest date available to the latest: - - - ============+============================================================== - | Miles of Road Completed - Country +------+-----+-----+------+------+------+-------+------+------- - |Opened| 1840| 1850| 1860 | 1870 | 1880 | 1889 | 1899 |1909(b) - ------------+------+-----+-----+------+------+------+-------+------+------- - Great | 1825 |1,857|6,621|10,433|15,537|17,933| 19,943|21,666| 23,205 - Britain | | | | | | | | | - United | 1827 |2,818|9,021|30,626|52,922|93,296|160,544| |234,182 - States | | | | | | | | | - Canada | 1836 | 16| 66| 2,065| 2,617| 7,194| 12,585|17,250| 24,104 - France | 1828 | |1,714| 5,700|11,142|16,275| 21,899|26,229| 29,364 - Germany | 1835 | 341|3,637| 6,979|11,729|20,693| 24,845|31,386| 35,558 - Belgium | 1835 | 207| 554| 1,074| 1,799| 2,399| 2,776| 2,833| 2,871 - Austria | 1837 | | 817| 1,813| 3,790| 7,083| 9,345|11,921| 13,427 - (proper) | | | | | | | | | - Russia in | 1838 | | 310| 988| 7,098|14,026| 17,534|26,889| 31,545 - Europe | | | | | | | | | - Italy | 1839 | 13| 265| 1,117| 3,825| 5,340| 7,830| 9,770| 10,312 - Holland | 1839 | 10| 110| 208| 874| 1,143| 1,632| 1,966| 2,225 - Switzerland | 1844 | | 15| 653| 885| 1,596| 1,869| 2,342| 2,740 - Hungary | 1846 | | 137| 1,004| 2,157| 4,421| 6,751|10,619| 11,769 - Denmark | 1847 | | 20| 69| 470| 975| 1,217| 1,764| 2,141 - Spain | 1848 | | 17| 1,190| 3,400| 4,550| 5,951| 8,252| 8,432 - Chili | 1851 | | | 120| 452| 1,100| 1,801| 2,791| 2,939 - Brazil | 1851 | | | 134| 504| 2,174| 5,546| 9,195| 10,713 - Norway | 1854 | | | 42| 692| 970| 970| 1,231| 1,608 - Sweden | 1858 | | | 375| 1,089| 3,654| 4,899| 6,663| 8,321 - Argentine | 1857 | | | | 637| 1,536| 4,506|10,013| 13,690 - Republic | | | | | | | | | - Turkey in | | | | 41| 392| 727| 1,024| 1,900| 1,967 - Europe | | | | | | | | | - Peru | | | | 47| 247| 1,179| 993| 1,035| 1,332 - Portugal | | | | 42| 444| 710| 1,188| 1,475| 1,689 - Greece | 1869 | | | | 6| 7| 416| 604| 771 - Uruguay | 1869 | | | | 61| 268| 399| 997| 1,210 - Mexico | 1868 | | | | 215| 655| 5,012| 8,503| 13,612 - Roumania | | | | | 152| 859| 1,537| 1,920| 19,942 - Australia(a)| | | | | | 789| 4,850|11,111| 16,502 - Japan | 1874 | | | | | 75| 542| 3,632| 5,755 - British | 1853 | | | 838| 4,771| 9,162| 15,887|23,523| 30,576 - India | | | | | | | | | - China | 1883 | | | | | | 124| 401| 4,162 - Africa | | | | | | 583| 2,873| 5,353| 18,516 - ------------+------+-----+-----+------+------+------+-------+------+------- - - (a) Including New Zealand. - - (b) Or latest figures. - - - - -RECOMMENDATIONS - - -In conclusion I would reiterate the following recommendations: - - -RAILWAY STATISTICS. - -That the Bureau of Railway Statistics and Accounts, now a division of -the Interstate Commerce Commission, be transferred to the Department -of Commerce and Labor. - -That its statistics be confined to the affairs of operating railway -companies, the only carrier companies engaged in Interstate Commerce. - -That its inquiries be confined to the data necessary to furnish the -public with a comprehensive knowledge of railway conditions and -operations in the United States from year to year. - -That these statistics be devoted to publicity and not to the -promotion of personal or official theories. - - -ACCIDENTS. - -That Congress provide for an official investigation of all railway -accidents in the United States along the lines so successfully -adopted in the United Kingdom, and not in a spirit of hostility to -the railways, as proposed in pending legislation. - -This investigation should be through a Bureau of the Department of -Commerce and Labor, composed as follows: - -One Chief Inspector. - -Ten District Inspectors, one for each Interstate Commerce group, -appointed from Engineer service of the United States Army, with the -rank of Major. This would insure fitness and impartiality for the -work and valuable experience in regard to railway operations to the -Army Engineers. - -Three Deputy Inspectors for each group. - -Three Assistant Inspectors for each group. - -Several groups might require four inspectors of each class, and as -many could get along with two. - -Enough money could be deducted from the Interstate Commerce -Commission appropriation to pay these officials liberally, so as to -secure competent service, without crippling the legitimate work of -the Commission. - - Respectfully submitted, - - SLASON THOMPSON. - - - - -INDEX - - - Page - - Abuses, old, reformed, 214 - - Accidents, decrease in 1909, 371 - - Accidents, effect of freight traffic on, 378 - - Accidents, fatalities in, since 1888, 375 - - Accidents on British railways, 379 - - Accidents on European railways, 382 - - Accidents, overwork seldom cause of, 381 - - Accidents, train, causes of, 379 - - Acworth, W. M., on relations of railroads to the state, 220 - - Acworth, W. M., testimony before Senate committee, 283 - - Additional lines, little room for, 47 - - Advances in railway rates, concerning, 261 - - African Cape government railroads, 231 - - Agricultural implements, freight rates on, 108 - - Agricultural products and freight rates, 183 - - Air brakes, introduction of, 119 - - Allegheny Mountains, elevations, 31 - - American railways by states, 1835 to 1909, 391 - - Area, number of miles to, in 1869, 134 - - Australian railways under government ownership, 221, 232 - - Automatic couplers, 120 - - Automatic mechanical stop, 320 - - Automatic signaling, 124 - - - Bacon, Lord, on the necessity of easy transportation, 5 - - Bananas, relation of freight rate to price, 97 - - Beaulieu, Leroy, on American railways, 79 - - Belgian railroads owned by the state, 220 - - Bills, multitude of, affecting railways, 68 - - Block signaling, evolution of, 123 - - Block signals, miles protected by, 1908, 1909, 320 - - Brewer, Judge, on the right to change rates, 266 - - British railway commission discussed, 248 - - British railways, slow growth of, 243 - - British railways, statistics of, 389 - - Brown, W. C., on the freight rate situation, 107 - - Business suit, freight rates on a, 110 - - Butter, freight rates on, 111 - - Butter, price of, little affected by freight charge, 91 - - Canada railways, statistics of, 388 - - Canals, beginnings of American, 10 - - Canal construction, revival of, 17 - - Canals, scarcity of capital for, 18 - - Capital expenditure of British, German and American railways, 251 - - Capital for improvements the railway problem of to-day, 211 - - Capital, increased cost of, 176 - - Capital needed for Southern railways, 61 - - Capital, private, develops river traffic, 12 - - Capitalization, 1909, 337 - - Capitalization, foreign railways, 344 - - Capitalization, net, 1904-1909, 339 - - Capitalization of turnpikes, 16 - - Capitalization, Pres. Roosevelt rejects claims of over, 107 - - Car construction, 128 - - Car service operation, 356 - - Cars, number and capacity, 1902 to 1909, 317 - - Chicago, Burlington and Quincy R. R., condition of, 72 - - Civil war, importance of railways during, 118 - - Class rates, no change in certain, since 1897, 165 - - Coastwise commerce first developed, 15 - - Clothes we wear, freight rates on, 108 - - Commission, Interstate Commerce, its creation and purpose, 208 - - Commissions have advantages over legislatures, 208 - - Commodities, proportions of various, moved, 355 - - Comparison of American and English loads, 82 - - Competition has ceased to regulate, 233 - - Competition, public facilities increased by, 252 - - Conflict between competitive and uniform rates, 83 - - Congress, conditions confronting, in 1909, 288 - - Construction, cost of, 342 - - Control by democracy, 229 - - Cooking utensils, freight rates on, 108 - - Cooley, Judge, on superhuman task of fixing rates by Commission, 273 - - Cost of American and foreign railways compared, 50 - - Cost of living, 329 - - Cost, original, of Penn R. R., Harrisburg to Pittsburg, 36 - - Corporate entities necessary to railway construction, 206 - - Cotton, effect of freight charge on, 95-99 - - Cotton, freight rates on, 110 - - Crackers, relation of freight charge to price, 99 - - Cummins, Senator, on physical value of railways, 343 - - - Daily compensation of employes, average, 1892 to 1908, 324 - - Damages and injuries to persons, 365 - - Dead weight hauled in mail service excessive, 149 - - Decisions of I. C. C. reducing rates, 301 - - Depreciation of money, significance, 192 - - Development of railways, 45 - - Depression, 1908, effect of, 296 - - Depression of 1908, effect on C. B. & Q. pay roll, 67-71 - - Difficulties under the present law, 216 - - Diminished purchasing power of railway earnings, 165 - - Discriminations once the rule without objection, 201, 213 - - Distribution of gross earnings, 1909, 361 - - Dividends, 1908, exaggerated, 292, 340 - - Dollar purchases less labor or commodities now than 1897, 166 - - Dressed beef, freight rates on, 111 - - - Early history of railroads, 116 - - Early methods of travel, 6 - - Earnings and expenses, 1908-1909, 358 - - Earnings, gross, calendar years 1907, 1908, 1909, 296 - - Eggs, freight rates on, 111 - - Eggs, price slightly affected by freight charge, 91 - - Employes, average daily compensation, 1892-1909, 324 - - Employes, number and compensation, 1909, 321 - - Employes, pay of foreign, 326 - - Enlightened public opinion the hope of the railways, 237 - - Equipment cost, 1897-1907, 194 - - Equipment of American railways, 1909, 314 - - Equipment, output, 1899 to 1909, 314 - - Equipment requirements for replacement, 315 - - Erie railroad completed to Lake Erie, 117 - - Ethics of railroad operation high and just, 202 - - European wars, effect on American development, 11 - - Expenses, calendar years 1907, 1908, 1909, 297 - - Express, receipts from carrying, 350 - - - Farm animals and freight rates, 184 - - Farms better investments than railways, 77 - - Fatalities, proportion of, to traffic, 138 - - Fink, Henry, on the right to increase rates, 281 - - Flour, effect of freight charge on price, 96 - - Flour, freight rates on a sack of, 110 - - Food stuffs, relation of freight charge to price, 101 - - Foreign railways, mileage of, 310 - - Foreign railways, ratio to area and population, 310 - - Foreign railways, statistics of, 386 - - Freight car performance, 1908-1909, 319 - - Freight car shortages and surplus, 1907-1910, 318 - - Freight cars, number and capacity, 1902-1909, 317, 318 - - Freight moved ten miles for three cents, 49 - - Freight rate primer, 107 - - Freight rates decrease in 1897-1907, 180 - - Freight rates, low, encourage production, 90 - - Freight service compared with mail service, 151 - - Freight traffic, 1908-1909, 352 - - Freight traffic, statistics of, 1888 to 1909, 354 - - French railway employes, number of, 329 - - French system vicious, 235 - - Fuel, cost of, 1899 to 1909, 367 - - Fuel, cost of, in several states, 170 - - Fuel for locomotives, cost of, 168 - - - German railway employes, number and pay of, 328 - - German railways owned and operated by the state, 220 - - Germany, railway statistics of, 390 - - Gibb, Sir George S., on Railway Nationalization, 238 - - Government assistance sought, 12 - - Government may not usurp management of railways, 207 - - Government ownership must assume all risks, 259 - - Gradients on first Pennsylvania railroad, 22-26 - - Grade crossings, elimination of, 133 - - Growth of the railways, 137-391 - - - Harbors insignificant compared to railroad yards, 52 - - Harrisburg to Pittsburg, location of road from, 21 - - Hazard, decreased, to train crews, 377 - - Heating cars, 129 - - Heurteau, Emile, on American railway system, 282 - - Hides, relation of freight rates to price, 98 - - High grade tonnage, increase in, 190 - - Highways in the 18th century, 9 - - Hill, James J., speeches at Seattle and Tacoma, 45 - - Home markets, Americans turn to, 11 - - Hostility to railroads, reasons therefor, 241 - - Household furniture, freight rates on, 109 - - Human element in operation, 135 - - - Improvements, demand for, imperative, 203 - - Improvements, postponement of, 68 - - Income account, 1908, 292 - - Income account, calendar year 1909, 298 - - Income account of leased roads, 360 - - Increasing cost of railway maintenance and operation, 67 - - Injuries to persons and damages, 365 - - Interrelation of rates, 275 - - Interlocking signals, 125 - - Interstate Commerce Law contradictory, 201 - - Iron ore, relation of freight charge on, to industry, 100 - - Isolation of interior settlements, 7 - - Italian railways owned by the state, 221 - - - Knapp, Chairman I. C. C., letter to Senate committee, 285 - - Knapp, Chairman I. C. C., analysis of same, 286 - - Knapp, Chairman I. C. C., on fair returns for railway investments, 113 - - Kruttschnitt, Julius, on railway mail pay, 142 - - - Land grants unremunerative to railways, 76 - - Lane, Commissioner I. C. C., on relation of capitalization to - rates, 84 - - Leather belting, freight rates on, 112 - - Legislation adds to expense of railways, 74 - - Lighting cars, 130 - - Lincoln, Abraham, in Mississippi bridge case, 131 - - Living, cost of, 329 - - Living, cost of, for normal families, 1901, 330 - - Locomotives, cost, 1897-1907, 194 - - Locomotives, cost to build in Australia, 316 - - Locomotives, development, 129 - - Locomotives, hauling power measured by weight, not revenues, 149 - - Locomotives, number and capacity, 1902 to 1909, 315 - - Low freight rates, how made possible, 104 - - Lumber, relation of freight charge to price, 100 - - - Mail carrying made unremunerative, 143 - - Mail cars stronger and cost more, 146 - - Mail pay, railway, 142 - - Mail, receipts for carrying, 350 - - Mail, receipts from, compared with other receipts, 144 - - Mail routes, effect of heavy traffic on, 155 - - Management, railway, a learned profession, 210 - - Manufactures earn more than railways, 77 - - Margin between earnings and expenses narrow, 114 - - Massachusetts railroad commission commended, 236 - - Meat, effect of freight charge on price, 92 - - Mexican railway situation, 226 - - Mileage by states, 1907, 1908 and 1909, 307 - - Mileage of American railways, 1909, 306 - - Mileage, ratio to area and population, 307 - - Mileage, 1890 to 1909, 308 - - Miles built in 1890-1909, by states, 308 - - Mississippi river, first bridge across, 131 - - Money for improvements must be earned or borrowed, 50 - - Municipal bodies unfitted for business enterprises, 256 - - McCain, C. C., on diminished purchasing power of railway earnings, 165 - - McPherson, Logan G., on transportation charge and prices, 90 - - - National aid for internal improvements, 19 - - National Board of Trade opposes changes in I. C. Law, 290 - - National development and the railways, 112 - - Nationalization, arguments for, 246 - - Nationalization, arguments against, 247 - - Nationalization of the railways, 238 - - Nationalized railways a field for social experiments, 257 - - New England, early railways of, 8 - - Nomenclature, changes in, 293 - - - Ores, relation of freight rates to values, 98 - - Ownership of American railways, 345 - - Ownership of the Great Northern, 98 - - Owners of railways not opposed to nationalization, 238 - - - Pacific Northwest, railways of, 45 - - Panic of 1837, effect on railways, 117 - - Passenger cars, number, 1902-1909, 317 - - Passenger service compared with mail service, 151 - - Passenger traffic, 1909, 346 - - Passenger traffic, relation of accidents to, 376 - - Passenger traffic, statistics concerning, 1888 to 1909, 348 - - Pay, increase in average daily compensation, 334 - - Pay of British railway employes, 326 - - Pay of foreign railway employes, 327 - - Pay roll, proportion to gross earnings, 1899-1909, 325 - - Pennsylvania R. R. Co., first report of engineer, 21 - - Pennsylvania R. R. Co., how located, 24 - - Pennsylvania R. R. Co. in 1848 and 1909, 44 - - Pennsylvania R. R. Co. owned by 50,000 people, 218 - - Petroleum, relation of freight charge to price of, 99 - - Physical valuation and rate making, 83 - - Physical valuation, Senator Cummins on, 343 - - Policy of fairness and liberality needed, 62 - - Popular hostility to the railroads, 212 - - Postal cars, increasing cost of, 158 - - Postal cars, pay for, 157 - - Postal deficit, cause of, 160 - - Potatoes, effect of freight charge on price, 92 - - Poultry, freight rates on, 111 - - Preference, undue, would increase under nationalization, 255 - - Pre-railway era in America, 5 - - Pre-railway era in England, 5 - - Prices and actual rates, 191 - - Prices, relative, wholesale, 182 - - Prices, retail, London and New York, 336 - - Prices, retail, of principal articles, 1890-1909, 382 - - Priestley, Neville, on American railways, 78 - - Private capital, dependence on, 87 - - Private corporations, railway companies are, 207 - - Private property, railways are, 75 - - Problems confronting railways, Daniel Willard on, 66 - - Problems of construction and operation essentially different, 244 - - Problems, railroad, of to-day, J. B. Thayer on, 211 - - Property rights involved in fixing rates, 266 - - Proportion of pay roll to gross earnings, 1899-1909, 325 - - Prosperity of the country depends on prosperous railways, 115 - - Public and the railroads, John C. Spooner on, 205 - - Public approval and the railroads, E. P. Ripley on, 199 - - "Public be damned," origin of saying, 200 - - Public control and private ownership, are they compatible?, 204 - - Public sentiment rules in the United States, 200 - - Public service of American railways, 346 - - - Rails, their evolution, 132 - - Railway mail pay in 1899 reported not excessive, 132 - - Railways, American, are private property, 75 - - Railways essential to happiness of American people, 205 - - Railways, situation of, to-day, Frank Trumbull on, 80 - - Rates before the era of railways, 5 - - Rates by I. C. C., groups, 1897-1908, 186 - - Rates, discussion of how made, 272 - - Rates in United States must be elastic, 277 - - Rates made to get the business, 74 - - Rates measured in money, 1897-1907, 184 - - Rates must fluctuate to meet conditions, 278 - - Rates, true principle of making, recognized from the first, 43 - - Raw materials, how rates are adjusted on, 104 - - Reasonable rates, right to make, fundamental, 265 - - Rebates past, 202 - - Receiverships, railway, since 1876, 384 - - Reduction in railway mail pay not warranted in 1899, 146 - - Reductions, no, without the right to advance, 280 - - Relations of railways to the state, 220 - - Relative cost of mail, freight and passenger service, 152 - - Refrigerators, freight rates on, 109 - - Regulate, how shall government, 233 - - Regulation, cost of, 174 - - Regulation, cost of, increase since 1888, 385 - - Regulation of American railways, 300 - - Regulation, just, welcomed by the railways, 215 - - Results, comparative, 1889, 1899 and 1909, 295 - - Retrospect of four years, 80 - - Returns from mail, freight and passengers compared, 148 - - Revolution, highways before and after, 8 - - Right of railways to fix rates recognized, 262 - - Ripley, E. P., on the railways and public approval, 199 - - Risk in railway investments, 46 - - Roosevelt, President, rejects over-capitalization theory, 107 - - - Safety appliances, 320 - - Safety in railway operation progressive, 116 - - Safety of American railways, 368 - - Seattle, James J. Hill at, 45 - - Senate committee concerning advance in railway rates, 261 - - Shareholders, number of railway, 345 - - Ship subsidy criticised, 51 - - Shippers protected under existing law, 263 - - Shoes, effect of freight charge on price of, 93 - - Signaling, development of railway, 122 - - Smith, A. H., on progressive safety in railway operation, 116 - - Socialistic aspect of nationalization of railways, 239 - - Southern products increase in 25 years, 60 - - Southern railways and their needs, 58 - - Southern railways crippled by the civil war, 58 - - Southern railways, mileage of, 59 - - Spooner, John C., on railroads and the public, 205 - - Stage line, first, between New York and Philadelphia, 6 - - State control or state ownership, 228 - - State ownership by autocracy, 229 - - State ownership not favored in America, 223 - - State ownership widely extended, 222 - - Standard time, adoption of, 136 - - Statistics of American railways, 1909, 291 - - Statistics of foreign railways, 386 - - Steamboat, when first a commercial success, 13 - - Sugar beets, relation of freight rate to industry, 97 - - Sugar, effect of freight charge on price of, 97 - - Supplies, cost of railway, 171-194 - - Supreme court gives control of rates to carriers, 263 - - Surplus of freight cars in 1908-1909, 318 - - Swiss railway employes, number and pay of, 328 - - - Tacoma, James J. Hill at, 54 - - Tacoma waking up, 48 - - Taxes, 1889-1909, 363 - - Taxes, increase, 1897-1907, 174 - - Terminals, increased cost of, 47 - - Thayer, J. B., on railroad problems of to-day, 211 - - Tobacco, effect of freight charge on price of, 96 - - Tolls on turnpikes, 17 - - Tonnage, classified, 189 - - Tonnage, water, at Duluth leads the world, 53 - - Tracks, all, mileage of, in the United States, 312 - - Tracks, all, mileage of, in the United Kingdom, 313 - - Train despatching, 126 - - Transportation charge and prices, Logan G. McPherson on, 90 - - Transportation needs anticipated in America, 59 - - Trespassers, fatalities to, 139 - - Trumbull, Frank, on railroad situation of to-day, 80 - - Turnpikes, capitalization of, 16 - - Turnpikes, the early American, 10 - - - United Kingdom railways, statistics of, 389 - - - Valuation, physical, 343 - - Vastness of railway industry, 118 - - - Wages, effect of increase on C. B. & Q., 69 - - Wages, railway, in the United States and abroad, 76 - - Wages, railway employes, 1897-1907, 166 - - Wages, railway, per day, 1897-1907, 167 - - Wages, railway, 1909, 322 - - Wages, railway, per day, 1892-1909, 324 - - Wagon roads into interior of America, 14 - - Wallace, John F., on needs of Southern railroads, 58 - - "Watered Stock" discussed by James J. Hill, 46 - - Watermelons, relation of freight charge to the industry, 101 - - Wearing apparel, effect of freight charge on price, 94 - - "What the traffic will bear" misconstrued, 200 - - Wheat margin between production and consumption, 55 - - Wheat, the problem of, discussed by James J. Hill, 54 - - Willard, Daniel, on American railway problems, 65 - - World railways, mileage of, 1840 to 1909, 392 - - - - - TRANSCRIBER'S NOTE - - Italic text is denoted by _underscores_. - - Bold text is denoted by =equal signs=. - - Fractions have been left in the form a/b except for ¼ ½ ¾. A dozen - or so occurrences of 'nn a-b' have been changed to 'nn-a/b', mainly on - pages 27-40, for consistency. - - Footnote anchors in a table are of the form (a) and the corresponding - Footnote is placed at the bottom of that table. Other Footnote anchors - are of the form [A] with placement at the end of that Chapter. - - To save table space some column headings use the following - abbreviations: - Pass. for Passenger - Mill. for Millions - Prop. for Proportion - - Many wide tables have been split into two or more parts. Each part - after the first is labelled at the top with {table continued}. - - Obvious typographical errors and punctuation errors have been - corrected after careful comparison with other occurrences within - the text and consultation of external sources. - - The Table of Contents has been expanded to include the seventeen - sections under the 'Statistics' chapter at page 291. - - Except for those changes noted below, all misspellings in the text, - and inconsistent or archaic usage, have been retained. For example: - employes, employees; pay roll, pay-roll; reconnoissance; asperse. - - Pg 15, 'would built' replaced by 'would build'. - Pg 19, 'incontestible' replaced by 'incontestable'. - Pg 38, column headings, copied from the earlier similar table on pg 36, - have been added to this table for clarity. - Pg 42, 'transhipment' replaced by 'transshipment'. - Pg 97, 'Oamha' replaced by 'Omaha'. - Pg 97, 'remainding' replaced by 'remaining'. - Pg 133, 'uniformily' replaced by 'uniformly'. - Pg 150, 'R. P. O.' in the Table replaced by 'R.P.O.' to save space. - Pg 153, some $ signs removed from the Table to save space. - Pg 177, missing Table Footnote '(a) January to July, only.' added. - Pg 181 Footnote [F], '89 and 95' replaced by '89 to 95'. - Pg 200, 'correst' replaced by 'correct'. - Pg 205, 'leachlike' replaced by 'leechlike'. - Pg 210, 'inocuous' replaced by 'innocuous'. - Pg 226, 'parlimentary' replaced by 'parliamentary'. - Pg 272, 'is practical' replaced by 'its practical'. - Pg 295, '(m = 1,000.)' replaced by '(m = 1,000; d = decrease.)'. - Pg 298, 'phenomenonally' replaced by 'phenomenally'. - Pg 316, 'direct charges' replaced by 'Indirect charges'. - Pg 316, '$250,635.34' replaced by '$240,635.34'. - Pg 318, Table 11th row, 'XII' replaced by 'XI'. - Pg 331, 'arbitraters' replaced by 'arbitrators'. - Pg 335, 'desponding' replaced by 'despondent'. - Pg 357, Table note (b), 'Bureau 99' replaced by 'Bureau in'. - Pg 357, Table note (b), 'December, in 10' replaced by 'December, is'. - Pg 359, to save space in the Table, the two columns with totals have - been merged into the columns with their constituent data. No - data has been omitted. - - - - - -End of the Project Gutenberg EBook of The Railway Library, 1909, by Various - -*** END OF THIS PROJECT GUTENBERG EBOOK THE RAILWAY LIBRARY, 1909 *** - -***** This file should be named 50220-8.txt or 50220-8.zip ***** -This and all associated files of various formats will be found in: - http://www.gutenberg.org/5/0/2/2/50220/ - -Produced by Charlene Taylor, John Campbell and the Online -Distributed Proofreading Team at http://www.pgdp.net (This -file was produced from images generously made available -by The Internet Archive/American Libraries.) - - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the United -States without permission and without paying copyright -royalties. 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