~< ^i 16 <,^^IIBRARY^^ ^•OF-CAUFO/?^ -^NN^lIBRARYQr^ '^:lOSANCElfx> '^/iil3AINn3WV vvlOSMCElFX/ s ■^Aa3AlN(l•3\^^^ JAlNri-3\\^^- \ <^sMl!BRARYQr ^ ^^Aavdaii-#'' ITVJJO^ -^vM-lIBRARYQ^. 33 A'rtE-UNlVER .lOS-ANCflFj-^ ^,OF-CA[IFO% yym.i^ ^^■Auvaan-i^ .^WEUNIVER % • 1 I3JI1V wM.i f) /^ >^-lOS-AUCElfJV. g)!! .VlOS-ANGEia. ^tUBRARYQc <5^HIBRARYQ^ < SH so 2 =o ^OFCAIIFOI?^ ^OFCALIFO/?^ THE TRUTH ABOUT THE RAILROADS THE TRUTH ABOUT THE RAILROADS BY HOWARD ELLIOTT •^iT/v^ BOSTON AND NEW YORK HOUGHTON MIFFLIN COMPANY COPYRIGHT, 1913, BY HOWARD ELLIOTT ALL RIGHTS RESERVED Published November iqi^ E4-U PUBLISHERS' NOTE The several chapters of this book were first written as addresses to be delivered on various occasions and in various places. The publish- ers asked Mr. Elliott's permission to make a book out of them, believing that such a vol- ume would be useful in the consideration of the railroad situation in the United States. In the preparation of the addresses for publica- tion references to particular times and places have been for the most part omitted, but in some instances these have been retained be- cause they are applicable to general conditions existing to-day all the country over. 4 Park Street, Boston, This book about Railroads is presented with the compliments of a Lady who takes a great interest in the subject, in the hope that it may be found interesting and instructive. CONTENTS Introduction ix I. Cooperation between the Railway- Owner, THE Railway Employee, AND THE Railway-User ... 3 II. The Individual, the Corporation, AND THE Government • • • 35 III. The Conservation of Railway Ser- vice 70 IV. Rate-Making and the Government 92 V. The Relation between the Farmer and the Railroad . . . ♦ 131 VI. Agriculture, Banking, and the Car- rier 164 VII. Transportation in New England . 191 VIII. Public Opinion : Its Effect on Busi- ness 231 INTRODUCTION The time has now come for an impartial and serious consideration by the people at large, as to whether it might not be better for their in- terests individually and collectively, and for all business interests of the country, to give the railroads a breathing-spell, to eliminate some of the useless and unnecessary restric- tive law under which they are compelled to work, and to permit them to solve the very serious problem of giving the public what it wants in railroad service and railroad facilities, by encouraging friendly relations and friendly discussion with the public, rather than to have constant friction and bickering. For many years, and particularly in the last few, there has been agitation about the so- called railroad question, or problem. Through lack of complete information about the rail- roads there has arisen some antagonism to- ward them, and it is important to explain the ix INTRODUCTION real situation, because the American people, when they know the truth, are not likely to be unjust to any one class of people, or to any one business. [Upon the one hand there is a critical public. Upon the other, the railroads are struggling with forces which are causing rates to remain stationary or to decline, causing wages to rise or to remain stationary, bringing demands from a prosperous and luxurious people for increasingly expensive facilities and service, and causing taxation to rise at an alarming rate. These four forces are all at work reducing the margin between income and outgo and making it more and more difficult for the owners of railroad properties to keep their lines in suit- able condition to carry on the business of the country, and to obtain a return commensurate with the risk of the business and sufficient to attract further investment. If rates had not been fair and service ade- quate, neither agriculture nor commerce would have shown such gratifying gains as were made during the census period ending in 19 lo. If it INTRODUCTION were not a fact that since they were con- structed railroads have steadily lowered rates, while increasing the extent and raising the quality of their service, and at the same time steadily increasing expenditure and work for the development of the country, America to- day would not be what it is. Its development would have been retarded and its progress slow. To-day, however, the railroads are a big tar- get at which many shoot. Out of 92,000,000 people relatively few in the regular course of their lives and business come closely enough into contact with railroads to know railroad officers or understand the business. Those who do not must depend upon casual informa- tion — what politicians say, what magazines print, what appears in the daily press — for their knowledge about railroads. The argu- ments hurled at railroads by some of the mag- azines are often more calculated to increase circulation than to educate the American people as to the actual facts. Many of the charges which have been believed by thou- xi INTRODUCTION sands of people are not based on accurate knowledge. Railroad officers have been less active than they should have been in keeping in touch with the public. The railroad stockholders have not realized how strong the forces affect- ing their properties are. This condition has changed and the modern railroad-owners, officers, and employees should and do realize that it is necessary to maintain cordial and friendly relations with the public and by their personal efforts and examples to give full information about the business, and to build up a constantly better feeling toward the transportation machine of the United States. It is, no doubt, true that little things — the abruptness of an agent or a trainman, a lack of proper courtesy, inattention to complaints of the public, dilatoriness — often cause quite as much criticism from the public as things of greater importance. This irritation and criti- cism can be reduced by adjusting the relations between the railroads and the public at the point of contact. For example, the passenger xii INTRODUCTION men and their representatives during 191 3 came into touch with each one of nearly nine hundred million users of railroads. In each of nine hundred million instances some man had a chance to make or mar the reputation of his line and to affect just a little the attitude of the people toward the transportation business. Nine hundred million instances of courtesy and attention, or nine hundred million pas- sengers completing a journey with a feeling that the railroad was interested in their comfort or pleasure, would constitute a great leverage, moving public sentiment into better channels. Not only the passenger man but railroad men in general can build up cordial relations in this way, and have an opportunity to place before the people the real facts about the rail- road business of this country, which will show a majority of the American people — who are unfair only because they do not fully un- derstand this question — that the railroads cannot indefinitely provide at rising costs the increasingly good service which the public demands and should have, and survive, unless xiii INTRODUCTION there is more reason in directing and control- ing the four forces which are influencing rates, wages, demands, and taxes. There is plenty of information at hand about the railroad business. No form of busi- ness in the United States is conducted so openly, and in none are the facts and figures so available. This information does not reach the everyday citizen, who is interested but lacks ready sources of information, to the degree that it should. Every railroad man can do a great work by seeing that it does reach him. The press of the United States reaches the people. The press can help the relations be- tween the public and the railroads by giving correct information, and, if approached prop- erly, will usually manifest a fair attitude. Railroad men have a responsibility in this respect, and, with their more intimate knowl- edge of the business, they can in many ways help the newspapers to avoid misstatements and false conclusions. In fact, this is a legiti- mate and patriotic line of work for the railroad stockholder, officer, and employee, xiv INTRODUCTION The railroad is working hard to do its part, but it cannot accomplish the impossible, and it needs the careful thought, judgment, and help of men in business life, who need to have the railroads grow and improve. The railroad system of the United States is a great piece of commercial machinery, essential to every one in this complicated modern civilization; without this piece of machinery, there could not be the volume of business — agricultural, manufacturing, and commercial — that there now is. The magnitude of these transactions is so great that this piece of commercial machin- ery must be kept in the very best order, and its capacity must be increased all the time. With- out this, much business could not exist; on the other hand, without the business, this piece of commercial machinery would be idle and rust. The relation between the two is very close. Injustice and unfair treatment of either by the other is sure to react, and this fact is a much safer insurance against any injustice on the part of railroads than attempting to manage by legislation all of their affairs in great detail. XV INTRODUCTION To-day on all important questions but one the railroad-owner is directed by acts of Con- gress and of state legislatures and by the or- ders of commissions and bureaus. He has little control over the rates, over the hours of labor, over the rules for the conduct of the business in which his money is invested, over the taxes he shall pay. There is reserved to him the one duty and responsibility of finding money to pay the bills. In order to make clear what this interference with the details of management really means, a commonplace illustration may be used. Suppose, for example, that some men are engaged in the business of hauling freight of all kinds from the water-front to the various parts of a city. The owners and chief manag- ers are doing the best they can to deliver coal, merchandise, and other freight promptly and cheaply, though every pound must be hauled with difficulty over slippery streets and up heavy grades. Suddenly, however, a large number of men appear and begin to tell the owners and managers how to run their busi- xvi INTRODUCTION ness. None of these men have any financial interest in the business of transporting mer- chandise by wagon, and few of them have any practical knowledge of it. One man says, "I have been looking at your wagons and their beds are not the right height from the ground, and you must change them. I notice also that the steps are put on wrong and the buckles of your harnesses are not of the right character. You must fix these things. '^ Another man says, "The lanterns your teamsters carry are not suitable. You must buy a much more expensive kind and see that they are carried whether they are needed or not." Another says, "You must not use a certain lead horse any more because he is not suited to the busi- ness." Another says, " I noticed that you were carrying a calf on one of your wagons. In such cases you must get your wagon from the water- front to destination within one hour, and it must be moved at a speed of not less than ten miles per hour." Another says, "In our part of the city your wagons must not move faster than four miles an hour, and you must stop xvii INTRODUCTION them at every street-crossing." Another says, "The city authorities have decided that you must reduce all your charges 25 per cent." And still another says, "I represent a com- mittee that has decided that your sheds and barns are not of the right type and you must tear them down and build new ones." Mean- while some of the stablemen and others have come to the managers and owners saying that they have decided not to do any more work unless their pay is increased 25 per cent. Naturally the owners and their managers are somewhat confused and discouraged at all this interference and are tempted to say, as the fiddler did in the mining camp, "Please do not shoot, for I am doing the best I can." UVow this all sounds rather ridiculous when it is applied to the man hauling coal and mer- chandise In the city, but it Is exactly what is going on all the time In the United States to- day in relation to the railroads; only there is much more of it, because the Federal Govern- ment and all of the States are making rules and. regulations about the kind of equipment xviii INTRODUCTION to be used, the character of locomotive head- light, the kind of boiler in the engine, the speed of live-stock trains, the speed of trains in cities, the rates to be charged, the kind of buildings to be put up, and the labor unions are at the same time making demands for increases in Lincoln said the country could not endure "half slave and half free," and it is a grave question whether the railroads can continue to meet the demands of the people and be the efficient instruments that they should be, if owned by private individuals, but in all important matters of management, except finance, practically directed by governmental authority. The American people are strong enough to have any kind of railroad ownership and man- agement that they want, and if they want government ownership they can have it. I submit, however, that the management of business enterprises in this country by the Government has not given evidence of thor- oughness, efficiency, and economy equal to xix INTRODUCTION that displayed by private individuals, and that it is not to the best interest of this country to have government-owned and government- managed railroads. So I repeat, those in the railroad business, both owners and employees, have a greater responsibility than ever before; not only the responsibility of doing their best, whatever may be their position in the service, but the responsibility of telling the people the real facts — the truth — about the railroad busi- ness, the responsibility of using their opportu- nities to aid the nation by helping the move- ment to have a greater proportion of our pop- ulation live in the country than in the cities, the responsibility of directing the attention of the tourist to the beauties of America, so that the money now going to foreign lands will remain here and help to increase the balance of trade in our favor, and last, but not least, the responsibility, which to-day is a great one to every American and to every railroad employee, of encouraging the practice of those habits of industry, tshoroughness, and thrift, XX INTRODUCTION which have not been so common in the last twenty-five years as they were when our coun- try began its work of becoming a great nation. The average American citizen has good common sense. He lives in the best country in the world, has the best institutions, by far the best and cheapest rail transportation in the world, and if the individual will exercise his common sense there is no limit to the progress that this great nation will make. If he does not, there will be increasing danger of a change in our institutions, so that the railroads and corporations, which are and should be power- ful instruments for good, will be crippled, and later on the foundations of the Government itself will be shaken. Every patriotic individual should do his part to counteract the foolish talk and insidi- ous Influences that are at work in the land and should exercise his mental and moral strength. " Say not the days are evil — who's to blame? And fold the hands and acquiesce — O shame; Stand up, speak out — and bravely — in God's name." xxi INTRODUCTION It is in this cooperative and hopeful spirit, then, that the following addresses on the rail- road business in America are now submitted with the hope that they will throw some light on a subject most important to the future welfare of the United States. THE TRUTH ABOUT THE RAILROADS THE TRUTH ABOUT THE RAILROADS I -2.5 /^^ COOPERATION BETWEEN THE RAILWAY- OWNER, THE RAILWAY EMPLOYEE, AND THE RAILWAY- USER » Cooperation is defined as "the association of a number of persons for their common bene- fit," and my purpose is to show the absolute necessity, if prosperity and progress are to continue, of cooperation between the railway- owner, the railway employee, and the railway- user. In order to consider this question, a brief statement must be made showing what the railway system of the United States is to-day, what it represents, the work it does, and the work it must prepare to do if safe and ade- * Address delivered at the Montana State Fair, Helena, Mont., September 26, 1910. 3 THE TRUTH ABOUT THE RAILROADS quate transportation is to be furnished to the people of the United States. The railways of the country, in their present form, have been built since the close of the Civil War, or in less than fifty years, and are the wonder and admiration of students of the transportation problem who come here from other countries. / There are 234,182 miles of railway, and more than 340,000 miles of track in this country, as compared with a trifle less than 300,000 miles of railway in all the other countries of the world combined. There are nearly 58,000 locomotives; more than 45,000 passenger-train cars; nearly 2,200,000 freight- and service-cars. On these tracks, and with these engines and cars were run in the year ending June 30, 1909, freight-trains for 560,602,557 miles, and passen- ger-trains for 491,903,107 miles, or an average of 2,883,577 niiles everyday in the year. This is equal to a trip around the world at the equator 116 times each twenty-four hours. These trains handled in the year ending June 30, 1909, 217,756,776,000 tons of freight one mile and 29,452,000,000 passengers one 4 OWNER, EMPLOYEE AND USER mile. The significance of these figures will be better understood by stating that they are the equivalent of hauling a ton of freight 2419 miles for every man, woman, and child in the United States, and giving each of them a ride on a passenger-train of 327 miles. The number of tons of freight moved over each mile of rail- way during a year is the measure of the freight work performed for the country by the rail- ways. This was — In the United States 969,000 tons one mile in 1909 In England 530,000 tons one mile in 1908 In Germany 880,000 tons one mile in 1908 In France 497,000 tons one mile in 1907 — showing that the American railways are furnishing a greater service per mile of railway than the older countries. Since 1889 the miles of railway in the United States have increased 52.7 per cent; the pas- sengers carried one mile on those railways have increased 154.8 per cent, and the tons of freight carried one mile 224.3 per cent; the number of employees 116.2 per cent, and the taxes 230.8 per cent. With ninety million busy people In this 5 THE TRUTH ABOUT THE RAILROADS country the next twenty years must see a constant addition to the railway faciUties of the country if the commerce is to be moved satisfactorily, and the railway-user must see to it that the railway-owner has sufficient margin to justify the enormous additional investment that must be made in order to provide the needed transportatioiJJ pThe passenger-trains of the United States earned on the average for the year ending June 30, 1908, ^1.27 per train-mile, and the average cost per train-mile for expenses, not allowing anything for taxes, using the total freight- and passenger-train-miles, was ^1.47. From this it is plain that there is no margin in the passenger business for taxes, interest, and dividends, and that passenger-train service, as a whole, is furnished without profit, and often to the detriment of the freight business, which must be moved promptly for the devel- opment of the country;T/ This country, as it grows in population and wealth, wants more and better passenger-train service and better stations, just as it wants 6 OWNER, EMPLOYEE AND USER more and better hotels and more and better street-paving and lighting and more and better restaurants; but in the case of the hotels, paving, lighting, restaurants, and many other things, the public are willing to pay more, and do pay more, for the better facilities. Not so with the railways; with more trains, heavier trains, faster trains, more luxurious trains, and better track, there has swept over the country a wave of legislation for a 2-cent fare. /Xhe 2-cent maximum fare is unjust, and retards the development of the very things the railway-user wants, because it is obvious the railway-owner must sooner or later stop doing so much work without any margin of profit at all) In England the first-class passenger rate is 4 cents, second-class 2I cents, and third- class 2 cents. In Germany, the first-class is 3 cents, second-class 2.55 cents, third-class 1.79 cents; but the second- and third-class accom- modations in England and Germany are no- where near as good as those furnished the traveler in the United States. 7 THE TRUTH ABOUT THE RAILROADS In Great Britain the average freight charge for handling a ton of freight one hundred miles was ^2.31 in 1907 and $2.33 in 1908. In Ger- many the average charge was ^1.42 In 1908; in France, ^1.46; Austria, ^1.39; Belgium, $1.22. The great freight service of the Ameri- can railways was furnished in 1908 and in 1909 at an average charge of 75 cents for handling a ton one hundred miles. In 1888 the average rate per passenger- mile in the United States was 2,35 cents, and In 1908 only 1.937 cents, and yet the accom- modations provided have constantly improved In quality. In 1870, the average rate for hand- ling a ton of freight 100 miles was ^1.99, and in 1909, 75.4 cents, or a reduction In forty years of 62 per cent. \ The railway-owner, by his courage, energy, and intelligence In adopting advanced methods, has been able to improve the railway system of the United States steadily in the last forty years and still maintain and operate his prop- erty In spite of this reduction in rates. If the railway-user had paid, for the year which has OWNER, EMPLOYEE AND USER just passed, the same average freight rates as in 1870, he would have paid $2,691,473,751.36 more than he did pay; if he had paid the same average rates per passenger-mile as in 1888, the additional payment would have been $147,260,000, the two amounts being greater than the entire earnings of all the United States railways in the last yeaf^ But the railway-owner is now put to it to maintain and operate his property on the basis of present rates, present wages, present prices for material, present taxes, present rigid gov- ernment restrictions, and the growing demand of a prosperous people for more and better service. Railways are using rails of 90 and 100 pounds weight to the yard; freight-cars carry- ing 50 and 60 tons of freight; passenger-cars weighing 50 and 70 tons often carrying only a dozen people, or five tons of dead weight for one passenger, and locomotives weighing 300,- 000 to 600,000 pounds, with 58,000 pounds on a single axle. The railway-owner can go no further in using larger tools in his plant and 9 , THE TRUTH ABOUT THE RAILROADS must depend for any further economies upon an improvement in the work of the railway- user and the employee in using that plant. If the railway-user fails to load and unload the cars promptly, if the railway employee is careless and inefficient, the railway cannot be used to its full effect. The American railways to-day are repre- sented by a capitalization of ^13,600,000,000, or a trifle less than ^58,000 per mile of road, and less than ^40,000 per mile of track. Com- pare this total capitalization with the total reported for farm values, ^20,514,001,838 for 1900, and in manufacturing, $12,686,265,673 for 1905, and it will be seen that the railway is the second great industrial interest in this country. The railways in Europe are capital- ized per mile as follows : — United Kingdom ^275,040 France I39.390 Germany 109,788 Austria 112,879 Russia 80,985 Belgium 169,806 iHere is evidence that the American railway- owner has produced a piece of machinery with 10 OWNER, EMPLOYEE AND USER far less average capitalization than in any- other country; which does more work in mov- ing the commerce of the country per mile of railway than in any other countr}^, and which has steadily reduced the prices charged to the railway-user in spite of increasing costs and complications in doing the business. : The American railway-system of to-day could not be reproduced for a figure anywhere near what it stands for on the books. Monthly, daily, almost hourly, improvements have been made, and the railways are becoming seasoned and better adapted to the great work they have to perform. Go to any of the large cities and growing towns and try to acquire sufficient terminal ground to do even a moderate busi- ness. Not long ago in New York, an investiga- tion was made with the idea of seeing what it would cost to get an entrance to the city and a moderate terminal area, from the northern boundary down to about Fortieth Street. One of the best real-estate agents in New York made a calculation, and he thought that a right of way down through Manhattan Island II THE TRUTH ABOUT THE RAILROADS sufficient for two tracks and with a limited terminal at the end might be obtained for ^170,000,000, but would probably cost $200,- 000,000. This would be an investment of $170,000 or $200,000 a mile for the New York terminal alone of a railroad between Chicago and New York, and in addition right of way between the two cities, intermediate terminals, and the railway itself must be obtained. Every man, of his own knowledge, is aware of the fact that property suitable for terminals, in common with other real estate, has advanced very much in value in all cities, big and little, in the United States in the last twenty-five years. The railway-owner is paying taxes on those increased values and is surely as much entitled to a return on the increased value as is the owner of a farm, or the owner of a busi- ness block. Now, who is the owner of this enormous and complicated piece of machinery built up in the last fifty years .^ The best figures ob- tainable as to the number of stockholders show 440,000, and while the number of bondholders 12 OWNER, EMPLOYEE AND USER cannot be determined with the same accuracy, information about a few roads indicates that the number of bondholders exceeds the number of stockholders, and that 1,000,000 is not an unfair figure to represent those holding railway securities. IVIany of these holders are women and children, charitable and educational insti- tutions, national banks, savings banks, trust companies, and insurance companies. The average for each owner of railway property in this country is ^13,600. Of course, some indi- viduals hold more than this, and very many hold much less, but the statement that rail- ways are owned and controlled by a few very rich men is not correct. These 1,000,000 owners represent at least 4,000,000 people in the United States whose daily bread and butter depends more or less on the success or failure of the railways. Now, this railway-owner, with an average ownership of ^13,600, is dependent entirely, as to a return on his investment and as to the safety of his principal, on the honesty, intelli- gence, and efficiency of the railway employee, 13 THE TRUTH ABOUT THE RAILROADS and on the sense of justice and fair treatment of the railway-user. The railway-owner if he does not like his investment, cannot shut up shop and wait a while until business is better. He cannot even abandon his business and pocket his loss. He must go on, whatever the conditions may be, with the hope that the ultimate good sense and justice of the Ameri- can people will give him even a part of that protection and encouragement that is given to those who may be engaged in agriculture and in manufacturing. Then, in 1909 there were 8,831,863 deposi- tors in savings banks, having ^3,713,405,710 on deposit. In 1908 there w^ere 25,852,405 separate life-insurance policies held in this country with a face value of ^14,518,952,277. Every savings-bank depositor and every holder of a life-insurance policy is interested in having railway securities safe and profit- able, because the savings banks and the life- insurance companies are all holders of railway securities, and anything that affects the wel- fare of those two great institutions affects H OWNER, EiMPLOYEE AND USER millions of people outside of the owners of railway stocks and bonds. In 1909 there was ^33,117,068,129 of fire insurance written in the United States and ^126,171,492 fire losses paid. The large fire-insurance companies, like the large life-insurance companies, are inves- tors in railway bonds and stocks. The savings banks and insurance companies must have assets that pay a sure return and that can be converted easily and quickly into cash, and their ability to pay depends in part upon the stability and earning power of the great rail- way corporations. For the years 1906, 1907, and 1908, com- plete statistics are furnished by the Commerce Commission. These were three years of fairly good business in the country, when farmers and manufacturers did well. In round numbers, the results to the railways of the country from the transportation of persons and property were : — 1906 igo7 1908 Total earnings $2,325,765,167 $2,589,105,578 $2,394,780,410 Total expenses and taxes 1,611,662,886 1,828,828,189 1 ,754,951,949 Net earnings $714,102,281 $760,277,389 $639,828,461 IS THE TRUTH ABOUT THE RAILROADS These are very large sums, but the net earnings, on an average valuation of ^13,000,- 000,000, represent only 5.49 per cent for 1906, 5.85 per cent for 1907, 4.92 per cent for 1908, — not a very large return even if the railway- owner could take it all, but he must, of neces- sity, use a liberal share of any such net earn- ings for a multitude of improvements and ad- ditions to the railways, for as the Commerce Commission says in its report for 1908, ** Every safely administered railroad should recognize the difficulty of bringing operating expenses under control, and in times of pros- perity provide against the contingency of reduced traffic." The railway-owner recognizes this, for there was paid in interest and dividends, in the years named, 1906 — ^518,893,000, or 3.99 per cent; 1907 — ^551,129,000, or 4.24 per cent; 1908 — ^571,114,000, or 4.39 per cent; the balance going back into the property. In fact, in order to keep up a great piece of machinery like the railway, subject to damage in many ways and needing constant additions, an amount at 16 OWNER, EMPLOYEE AND USER least equal to 60 per cent of that paid in divi- dends should be put back out of current earn- ings into the property each year. How many farmers, merchants, and miners would think these returns attractive enough to justify their engaging in the business ? Out of every one hundred dollars of gross earnings of the railways in 1908 there was paid for — Labor — direct payment ^43-36 ■Labor in materials purchased 7.77 Labor in fuel and oil 6.88 Total for labor $58.01 Fuel and oil, less labor 1.72 Material, less labor 3.33 Hire of equipment and buildings 2.46 .Hire of tracks and terminals 4.60 Damages and injuries 1.80 Taxes 3.56 Interest 13-34 Deficits 2.39 Total $91.21 Betterments to property, etc 4.37 Dividends 4.42 $100.00 Out of each one hundred dollars, ninety-one dollars was paid out for labor, material, taxes, rents, interest, all of which must be paid if the railway-owner is to keep out of the hands of the 17 THE TRUTH ABOUT THE RAILROADS sheriff. The balance, nine dollars, was avail- able for improving the property and for dividends, and the margin is very small. There are 1,525,000 railway employees, in- cluding the officers, representing at least 6,000,000 of the population of this country. They are equal, in honesty, intelligence, in- dustry, and character to the average of Ameri- can citizens engaged in other pursuits. They are trying to do their part in managing and operating this great piece of commercial ma- chinery that the railway-owner has created. As they are human, they make mistakes, and sometimes forget that they assume an obliga- tion when they enter the railway service, to be honest, fair, and loyal to the railway-owner, and to the railway-user. The great army of railway employees, in their efforts to obtain the highest wages possible, must remember that there are only one hundred cents in a dol- lar; that it is possible to force wages to a point beyond the ability of the railway-owner to pay and still maintain his plant for the benefit of the railway-user, and that the constant wage- 18 OWNER, EMPLOYEE AND USER increase has already discouraged the railway- owner, and will tend to discourage him more unless additional revenue can be obtained from the railway-user. The railway-user often fails to understand the wage situation, and the railway employee and the railway-user must remember that in fixing wages they must con- sider the ability of the business to pay the wages demanded. In 1908, the official figures show that there were 1,458,244 railway employees receiving ^1,051,632,225 in wages, or an average of $721.16 per year. For the year 1907 the aver- age pay of railway employees in the United Kingdom was $260; in Germany $371, in Switzerland $292; in Belgium, where the rail- ways are owned by the state, firemen received $15 to $23 a month, the higher rate only after fifteen years' service; enginemen from $22.50 a month to $28 a month after twenty-four years' service; conductors from $15.97 a month to $34.70. The average railway worker in Belgium gets 43 cents a day. Certain classes of American railway employees get more in a 19 THE TRUTH ABOUT THE RAILROADS month than Belgium railway employees aver- age in a year. The advances made in wages in 1906 and 1907 increased the payrolls of the railways about ^120,000,000, and increases since then and now under discussion mean $60,000,000 to $75,000,000 additional. These two Increases are equal to 7 per cent per year on a capitaliza- tion of from $2,500,000,000 to $2,750,000,000, a sum of money that would go a long way in adding to the transportation facilities of the country. The railway employee has a responsibility to the railway-user to be sober, industrious, and careful, so as to furnish the best and safest transportation to the public, and he has a re- sponsibility to the railway-owner to furnish a full day's honest and efficient work for the com- pensation that he receives, whatever it maybe. The industrial supremacy of America cannot be maintained unless that is done, and every patriotic man, no matter what his employment, should stop waste in labor as well as in mate- rial, and expect hard work and rigid economy. 20 OWNER, EMPLOYEE AND USER Suppose each one of the railway employees should, by better work and greater care, save only one cent a day; that would mean for the country ^5,566,250 a year, or enough to buy between 5000 and 6000 freight-cars ; or, enough to build two hundred miles of branch-line rail- way in Montana. If they could save ten cents a day, it would mean ^55,662,550 a year, which could be applied to adding to the rail- way facilities in the country. In addition to the 1,525,000 employees working directly for the railways, there are 2,500,000 in coal mines, steel mills, manufac- turing plants, all supplying what is necessary for the railways in their operations, who repre- sent at least 10,000,000 of our total popula- tion. So the railway employees and the em- ployees of the industries dependent more or less on the maintenance of railways on a sound basis represent approximately 16,000,000 peo- ple whose rights must be considered. The railways are the great purchasers of materials of many kinds, and the moment they are forced to stop buying, the effect begins to 21 THE TRUTH ABOUT THE RAILROADS be felt in the forest, the mine, the mill, and the factory. Of the 90,000,000 people in the United States, there are, as already pointed out, about 4,000,000 interested directly as railway- owners and their dependent families ; 6,000,000 as railway employees and their dependent families, leaving 80,000,000 as railway-users, with an indirect interest in the prosperity of the railway. Some of these 80,000,000 are vitally interested, because they work for indus- tries dependent upon the purchasing power of the railway for their success; others because they have their savings in banks and trust companies ; others because they hold life- insurance policies for the protection of their families, and fire-insurance policies for the pro- tection of their homes and business; and all are interested in having enough transportation and good and safe transportation. The railway-user, however, is too apt to think that his interest lies in having railway rates constantly reduced, railway wages con- stantly raised, and railway taxes constantly in- 22 OWNER, EMPLOYEE AND USER creased, forgetting that It Is equally important to him, and really more important, to have the railway system of the United States so han- dled that capital will feel safe In adding to in- vestments necessary to furnish the transporta- tion that the business of the country demands. Already, in certain parts of the country, the margin between adequate and inadequate transportation is too small. Only last winter, between the Missouri River and Chicago, and in the vicinity of Chicago, the railways could not furnish that prompt and regular service that Is essential for a satisfactory movement of the commerce of the country. The railway-user needs safe and adequate transportation, and It will be furnished just so long as the business pays. The railway-owner cannot constantly be borrowing money for every minor improvement and addition to the property. The cry Is sometimes raised that the railways should not make improvements out of current earnings. They should not make all of their improvements out of current earnings, but they should put back into the property ^3 THE TRUTH ABOUT THE RAILROADS every year a substantial amount of their earn- ings for improvements like better passenger- stations, more side tracks, better rails, better ballast, safety appliances, and other forms of improvement of which the present generation of railway-users get the immediate benefit, as well as making possible a higher development of the country for their children and grand- children. [.The railway-owner, the railway employee, and the railway-user must cooperate, and all must remember the definition of cooperation, — "the association of a number of persons for their common benefit." In the long run it will not benefit the railway-user to crowd down rates so low and raise taxes so high that he takes away all chance of profit from the rail- way-owner. The railway employee must re- member that in the long run he will not profit if he crowds up wages so high that the railway- owner has not sufficient margin for the devel- opment of the facilities along progressive and safe lines. On the other hand, the railway- owner must in fixing the rates do so in such a 24 OWNER, EMPLOYEE AND USER way that a healthy development of the coun- try will be promoteST] Individually, the railway-owner, the railway employee, and the railway-user, when they discuss the subject, are fair and agree there should be fair treatment to all. There is, how- ever, a school of politicians who make wild and extravagant statements and who are assuming, without knowing the facts and without ade- quate study of the situation, that great injus- tices are being done. It is important for the railway employee and the railway-user to post themselves about this general subject if they are to continue to exercise their present con- trol in the management of the business of the railway-owner. His business is now an open book, and every transaction is recorded in plain black and white and reported at frequent in- tervals to railway commissions, state or na- tional. The charges that he makes for service performed are largely decided by statute or by railway commissions. Many of the rules under which he conducts his business are made by law, or by various boards. The railway-user, 25 THE TRUTH ABOUT THE RAILROADS > if he wants the best railways and progressive development of them, must see to it that his law-makers and his boards of one kind and an- other are the right kind of men, and that they look at this question, not in a narrow, partisan way, but in a broad, far-sighted manner. On January i6, 1905, Senator Elkins intro- duced into the United States Senate a resolu- tion asking the Interstate Commerce Com- mission for a statement showing the work done by that body with respect to formal and in- formal complaints, hearings, decisions of the courts, exorbitant rates and rebates during the preceding eighteen years, or since the creation of the Commission. On May i, 1905, the Commission furnished figures showing that the total number of complaints which reached the Commission was 9099 and the total num- ber disposed of through the friendly offices of the Commission, 9054, or more than 99 per cent of the total. The cases appealed by the Com- mission to the courts were only 45 — about one half of i per cent of the total number of cases. Of the 45 cases appealed to the courts 26 OWNER, EMPLOYEE AND USER by the Commission, only 8, or less than one fifth, were sustained by the courts, all of which involved unjust discriminations (always a dif- ficult question in our complicated commercial life), and not a single case involved an exorbi- tant rate. Of the total number of complaints made to the Commission, 83 19, or 91 per cent, were of so simple and unimportant a character that they were disposed of informally. During these eighteen years the separate freight transactions of the railways in the United States were in excess of 3,000,000,000, or there was one complaint for each 330,000 separate commercial transactions, and not a single serious complaint about exorbitant rates. Certainly a marvelous record of com- pliance with a law, and one not equaled any- where in the history of the statutes regulating human conduct, — a compliance that should refute completely the idea that the railway business needs some peculiar treatment by law that is not required by other business and the idea that the railways do not try to obey the law. 27 THE TRUTH ABOUT THE RAILROADS The cost to the country of the Commerce Commission in 1888 was ^97,867, and in 1909, ^988,936. In the past, complaint has been made be- cause the railways engaged in politics; to-day the country is confronting a danger which is just as serious, if not more so, because politics is now taking charge of the railways and other forms of business, and assuming the re- sponsibility of many parts of the management, but with no responsibility for the financial results. The railway-owners and the railway officers and employees are just as loyal, high- minded, and energetic and industrious citizens of the United States, as a class, as any other body of men in the country. They have a great task imposed upon them, which they are manfully trying to carry out, and at times it seems as if every man's hand was against them. Edward Everett Hale, one of the grand old men of the nineteenth century, put into four short sentences some very sound philosophy about life : — 28 OWNER, EMPLOYEE AND USER "Look up, and not down; Look out, and not in; Look forward, and not back; Lend a hand." Will not greater progress be made in trying to put this great railway business on a sound basis, if all who are interested " look up " at the best features of it and of the men engaged in it, and do not assume, without knowing, that the business is conducted improperly and that the men giving their lives to the work are in- competent or dishonest? Will not the best re- sults come if all "look out" from their own surroundings and see the difficulties confront- ing others as well as themselves, instead of thinking only of their selfish, local advance- ment? Will not the best results be obtained if all "look forward" with hope to the future, in- stead of repining over the mistakes that may have been made honestly in the past in the effort to put the United States on a sound in- dustrial basis? Better than all, will not the best results be obtained if every one "lends a hand," and helps instead of raising all sorts of 29 THE TRUTH ABOUT THE RAILROADS objections, — many of which are not justified when the facts are known, — magnifying the errors, and minimizing the good work done ? The future welfare of the railway system of the United States is largely in the hands of the railway-user, and what will he do? Will he crowd the railway-owner so hard that the latter cannot produce the increasing amount of transportation needed for the free flow of the commercial life-blood of the nation ? Then what? The railway-user will have several courses open to him. He can have a less rigid system of regulation and government red tape and encourage the railway business and the railway-owner to go on as does other business, subject to the great laws of supply and de- mand, competition, and the natural desire of the owner to manage his business in such a way that it will be a success, with the hope of profit, which is the main incentive of all busi- ness. Or, he can take over the ownership and management of the railways and become responsible for their operation and for the money needed for additions and betterments 30 OWNER, EMPLOYEE AND USER to existing properties, and for the building of new ones. In the present state of poHtics in this countr)'', such a plan is almost terrifying in its possibilities, because the Government has not shown that it can do work of this character as efficiently and economically as private individuals can. Government owner- ship, management, and development of the railways would become a matter for the politi- cians to trade upon. Just recently, in Austria, there has been considerable discussion because the railways were taken over by the state on the theory that better service and lower rates would be given to the public. Now there is agitation to put them back into private hands, for, instead of proving profitable, there is a heavy annual deficit, which the general tax- payer has to make up. The service has deteri- orated and railway-expansion has ceased. Or he can continue the present system of rigid governmental control and supervision, and interference with the judgment and manage- ment of the owner, which is rapidly having a deadening and discouraging effect on the 31 THE TRUTH ABOUT THE RAILROADS development of the business, and Is preventing those additions and Improvements so much needed In a growing country like the United States. Or he can continue the present sys- tem of government regulation and control, but guarantee to the railway-owner some minimum return upon his investment, so he will be will- ing to put money into the business. Such a plan, however, means that the non-user of the railway will be taxed for the benefit of the user. To my mind the first course, of more com- mercial freedom, is by far the better for a growing and expanding country like the United States. We have not yet reached the state of perfection, politically or socially, where government ownership and bureaucratic management of the large, complicated, and delicately adjusted railway system of the country will be a success. Putting a govern- ment uniform on a railway employee does not at once endow him with a new kind of intelli- gence and supernatural powers, and it will reduce his feeling of responsibility. 32 OWNER, EMPLOYEE AND USER If the railway-user and the railway employee are not careful to see that justice is done to the railway-owner, and if he is not protected and encouraged a little, the time is rapidly coming when the railway-user will go to buy some transportation for his wheat, his coal, his cattle, his manufactured articles, and he will be confronted with the statement from the railway-owner that all the transportation he has has been sold, and furthermore, that he cannot produce any more transportation be- cause he cannot get any more money, and if the railway-user desires an increased quantity or quality of transportation he must organize and produce it for himself. The railway em- ployee will find that the monthly pay-day is not so regular and certain as it used to be, and that the wages paid are lower. The ultimate good sense of the American people and their belief in the rights of property will, in the long run, I believe, prevail over the misstatements and misrepresentations of some public men who, without careful study and full knowledge of the situation, and without 33 THE TRUTH ABOUT THE RAILROADS due regard to the effect of their extravagant language, make indiscriminate attacks upon the railway system of the United States, and upon the men who are giving the best that is in them to the work of advancing that system. II THE INDIVIDUAL, THE CORPORATION, AND THE GOVERNMENT » The welfare of the people of this country, of the manufacturers, and of all business, in- cluding the railroad business, is interdepend- ent, and in the long run there must be proper relations between them and the Government and fair and reasonable treatment of and by each to permit that progress in this country which its marvelous resources and intelligent population justify. Railroading is a business, and is conducted under much the same conditions as the manu- facturing business and has many of the same problems and difficulties. There are three important differences, however, between the manufacturing business and the railroad business. The first is that manufacturers can * Address delivered before the National Association of Manufacturers, New York, May 17, 191 1. 35 THE TRUTH ABOUT THE RAILROADS close their establishments, reduce their ex- penses to the necessary caretakers and lose the interest on their investment until such time as their inclinations or the demands for their particular articles make it worth while to operate their plants. The railroad, however, cannot stop; once started, it must go on unless the owners choose to abandon it absolutely, and lose not only all chance of interest on their money, but the entire principal as well. The second is that most manufacturers can ware- house their product, hold for rising prices, and sell at some future time. The railroad cannot do this. It must have ample transportation ready at any given time and place, and if it is not used then and there it is lost, not only to the railroad, but to the consumer. The manu- facturer of transportation must always be ready to furnish the maximum amount of transportation for the use of the American people. In other words, he must be ready for the "peak load" at any time. This "readiness to serve" means a great investment and a great expense which is given far too little con- 36 INDIVIDUAL, RAILROAD, GOVERNMENT sideration by those who now make the numer- ous laws, rates, rules, and regulations aflfecting the railroads. There should be enough margin of profit in the business so that at all times and places there will be this "readiness to serve." The third difference is that manufacturers have some control over their prices. In times of a great demand for any article they can and do increase their unit prices, and in poor times they are at liberty to reduce them to encourage trade, with no fear that later on they will be forbidden by the Government to advance them. They can meet competition and take on extra business without cutting their entire scale of prices. In the railroad business an excessive demand not only brings no increase in the unit price, but legislatures and commis- sions, which have practically taken charge of the management of the railroads (except the responsibility of their finances), more and more take the view that an increasing demand justifies lower prices, thus reversing the old- fashioned law of suppl}^ and demand. The so-called railroad question has been 37 THE TRUTH ABOUT THE RAILROADS magnified and much distorted by politicians and doctrinaires. The people have been led to believe that the railroad business is very dif- ferent from other forms of business and that it can be successfully conducted under many severe legislative handicaps and according to rigid mathematical formulas. That it has sus- tained itself to the present time is due to the great growth of the country and to the patient, able, and courageous work of men who have devoted their lives to the business. It has achieved moderate success, not because of legislative interference and tinkering, but in spite of them. What is business.^ Professor James Mark Baldwin, in his volume "The Individual and Society," says that "business has to do with the production and distribution of valuable things; money, utensils, anything for which there is a demand in society, or on which soci- ety or some individuals of it set value"; and again, "to produce such things in response to the demand and to distribute them to those from whom the demand comes, is the under- 38 INDIVIDUAL, RAILROAD, GOVERNMENT taking of business." Here is set forth very clearly the idea that the distribution of things is business just as much as is the production of them. One of our troubles in this country is the result of the fact that we have wandered away from the common-sense view that rail- roading is business. Naturally there always has been, and always will be, a difference of opinion between the buyers and the sellers as to quality and price of articles traded in, and only when there are reasonable and fair men in business and reasonable and fair rules governing business will men continue in busi- ness. There are four great primary forms of busi- ness: agriculture, transportation, manufactur- ing, and mining. As these grow, prosper, and interweave, conditions are created that pro- duce the many other forms of business that have been so successful in this country, — merchandising, banking, insurance, etc., — all essential to progress, but none of which can prosper unless the four great primary occupa- tions prosper, and this they cannot do unless 39 THE TRUTH ABOUT THE RAILROADS they are fairly treated by the Government and the people. The United States is a big nation, and I use the word "is" purposely because the growth of the country and the development of business has been so great that more and more must we think and act "continentally." We can no longer conduct our affairs on the basis that the United States "are" a big nation. This very fact of size is important in its bearing on the industrial, railroad, and economic questions of the day. Being a big nation, we need big tools to do our work. We must have big rail- roads; we must have big banks; we must have big lumber operations; we must have big insurance companies ; we must have big manu- facturing establishments. In working out the problem of providing food, shelter, clothing, heat, light, and transportation for the Ameri- can people we have developed great systems of railroads, great industrial corporations, great financial institutions. They are neces- sary and should not be condemned simply because of their bigness. Yet some critics of 40 INDIVIDUAL, RAILROAD, GOVERNMENT the American railroad and business situation are using the words "system" and "big busi- ness" as if they were in and of themselves a crime against society and inimical to the for- ward march of the country to a higher and better order of things. To bring out some points it will be necessary to burden you with some figures showing the growth of the country. The continental area of the United States has increased from 820,377 square miles in 1800 to 2,974,159 in 1910. In 1800, 305,708 square miles had at least two persons to the mile and in 1900, 1,925,590 square miles had that number or more per square mile. In 1800 the population of the country was 5,308,483, of which only 4 per cent lived in places having 8000 or m^ore people, while in 1910 the population was 91,972,266, and probably 40 per cent lived in places of 8000 or over. In 1910 in 228 cities of 25, 000 population or over there were 28, 508,007 of people or 3 1 per cent of our population. In 1840, 77.5 per cent of the people at work were employed in agriculture, and in 1900, 35.7 per 41 THE TRUTH ABOUT THE RAILROADS cent. In 1840 only 1,013,663 people, or 21. 1 per cent of all at work, were employed In com^ merce, manufacturing, mining, and transpor- tation, and in 1900, 11,852,273, or 40.8 per cent, were so employed, and the proportion was no doubt even greater in 19 10. These figures show clearly how our people have drifted to towns and cities and how important it is that the great primary occupations of agriculture and transportation be successful and adequate if we are to have food and if we are to avoid those difficulties that are incident to densely crowded cities. The great railroads and the great industrial corporations are all doing work in the direction of encouraging wise conservation of resources. The country- life movement is a good sign, and every patri- otic American should do what he can to help such movements, and to create a public opin- ion that gives as much credit, if not more, to the wholesome farmer and his wife and chil- dren, as to the dweller in the town and city. Manufacturing in this country has increased from 140,433 plants in i860, with $1,009,855,- 42 INDIVIDUAL, RAILROAD, GOVERNMENT 715 of capital and 1,311,246 employees re- ceiving $378,878,966 in wages to 533,769 plants in 1905 with $13,872,035,371 of capital and 6,723,926 employees receiving $3,625,- 911,957 in wages. In i860 the value of the products of the manufacturing plants was $1,885,861,676, and in 1905 it was $16,866,- 706,985. In 1850 there were only 8,571.48 miles of railroad in the United States, or 3.71 miles for each 10,000 people, and in 1909 there were 236,868.53 miles of railroad and 342,351 miles of track, or 37.2 per 10,000 people. In 1880 the gross earnings of the railroads were $615,401,931. In 1909 they were $2,418,677,- 538. In 1888 American railroads transported 61,329,000,000 tons one mile, and in 1910 they transported 250,418,000,000 tons one mile, an increase of 324 per cent in volume of ser- vice, and the rate per ton-mile the railroads received declined 24.5 per cent. In 1888 they carried 10,101,000,000 passengers one mile, and in 1910, 33,270,000,000, an increase of 229 per cent, though the average receipts per passenger per mile declined 26.9 per cent in 43 THE TRUTH ABOUT THE RAILROADS that period. Mileage of freight-trains increased 80 per cent and of passenger-trains 112 per cent, showing how much improved is the ser- vice of to-day to thousands of scattered com- munities. In 1880 the par value of all railroad securities outstanding was $5,004,521,666.08, and in 1909, $13,914,302,363 at par in the hands of the public represented the railroad property of the United States, including the great terminals, large equipment, lands, cash, and miscellaneous investments of all kinds, or a capitalization of less than $60,000 a mile of railroad and less than $41,000 a mile of tracks But the real capital in the railroad business is all the property owned and not the cost of the property or the amount of securities issued. In fact, the securities issued against American railroads as a whole to-day, in my judgment, are much less than their fair value as "going concerns." In what is known as the Minnesota Rate Case, just decided by Judge Walter H. San- born of the United States Circuit Court, a judicial valuation of the railroad property of 44 INDIVIDUAL, RAILROAD, GOVERNMENT the Northern Pacific Railway Company was made. This case was tried most thoroughly, the testimony being taken before a master, ex- Judge Charles E. Otis, and lasting nearly four years. Many expert witnesses were called on behalf of the railroad and the State, and elab- orate statements of valuations were submitted, analyzed, and dissected. The testimony in the Northern Pacific case filled 4258 pages, and the special statements supplementary thereto filled two volumes. As a result of this search- ing examination, the master on September 21, 1910, submitted his findings and recommenda- tions. He found that the value of the property of the Northern Pacific Railway Company employed in its transportation business was on June 30, 1908, ^452,666,489, as compared with securities in the hands of the public at that time amounting at par to ^405,225,575.29. These securities represent not only the rail- road property used for transportation pur- poses, but a large amount of other property, such as land, coal mines, new roads under construction, several important pieces of rail- 45 THE TRUTH ABOUT THE RAILROADS road recently acquired and constructed, im- portant terminal property, treasury securities, and cash. In passing upon the findings of the master, Judge Sanborn used the following language: "The master found the original cost of the acquisition and construction of the entire rail- road systems of each of the companies and the proportion thereof assignable on a track mile- age basis to Minnesota. The amounts thus found prove to be much less than the values ultimately found by the master, and for this very good reason: These railroads were pio- neers; they were built in large part over the prairies of Minnesota before they were settled and before many of the existing towns, vil- lages, and cities along their lines came into existence. A large part of the right of way of the Northern Pacific Company was granted to it by the nation. The cost of rights of way from five to forty years ago through wild lands, and through towns and villages whose popula- tion and the value of the property in which have since been multiplied by from two to ten, 46 INDIVIDUAL, RAILROAD, GOVERNMENT is obviously no criterion of the value of those rights of way in 1908, when they were used under these fares and rates and when agricul- tural lands in Minnesota were worth from ^35 to ^100 an acre, and rights of way and lands for yards and sites for stations in cities like St. Paul and Duluth have wonderfully increased in value. It is a fair return upon the reasonable value of their Minnesota property in 1908 to which these companies were entitled, and the cost of that property at times varying from five to forty years ago may be some evidence, but it is certainly no criterion of its value in that year. In view of these facts the master rightly decided that the cost of reproducing this property new was a more rational and reliable measure of its real value than the original cost of its acquisition and construc- tion or the market values of the stocks and bonds of the companies, and upon that basis he made his findings." Here is shown conclusively that the fair value of this one railroad is very much in excess of the securities issued, and this judicial 47 THE TRUTH ABOUT THE RAILROADS valuation is the best of evidence that there is no water in the securities of this particular company. Four Western States have made careful valuations of the railroads within their borders, and the commissions, if they err at all, have not made mistakes in favor of the railroads- The results were as follows : — Cost of reproduction Capitalization Washington (1905) $194,057,240 $161,582,000 South Dakota (1908) 106,494,503 109,444,600 Minnesota (1907) 360,961,548 300,027,676 Wisconsin (1909) 296,803,322 225,000,000 Total $958,3 16,613 $796,054,276 In Minnesota and Washington the valuations made by the railroads at the same time were considerably in excess of those made by state authority, and there is good reason to believe that they were made more thoroughly and accurately than those made by the States. Even on the lower valuations made by the States the capitalization is less than the cost of reproduction. There is every reason to assume that a similar careful calculation and computation 48 INDIVIDUAL, RAILROAD, GOVERNMENT of the value of American railroads as a whole will prove their value to be greater than their capitalization. There were in 1900 engaged in manufactur- ing, mechanical pursuits, trade, and transpor- tation nearly 12,000,000 persons. No very complete figures exist of the exact number of persons belonging to labor unions, but it is thought that the number is not more than 3,000,000, or about 25 per cent of the total number employed in these four lines, which do not include agriculture, in which there are no labor organizations. These figures clearly show the growth of the country, and how, from the rather simple forms of agriculture, transportation, mining, and manufacturing, that growth has made necessary the great instrumentalities of business as they now exist and has created the complex relations between the various forces that aflfect business to-day. Most of this great development has come since the Civil War, or in only forty-five years, and, as a result of this wonderful forward march, due largely to the unexcelled railroad facili- 49 THE TRUTH ABOUT THE RAILROADS ties of this country, a very large proportion of the people of the United States enjoy com- forts and even luxuries to a greater extent than in the period before and just after that great conflict, and to a much greater extent than the people of other nations. Every patriotic Amer- ican should be grateful and proud of the daring and directing minds that have helped to make the country as great and prosperous as it is. These big things could not have been done, and the people of this country could not have been fed, sheltered, kept warm, and trans- ported, had each been forced to depend upon his own efforts in obtaining what he needed and wanted. Individuals have, therefore, gradually banded themselves together into partnerships, corporations, banks, trusts, in- surance companies, labor unions, and other forms of collectivism, because only through cooperation could they do the big work of this country. In the last few years, however, there has grown up in this country a set of political economists and reformers who "see ghosts" 50 INDIVIDUAL, RAILROAD, GOVERNMENT and who are Inclined to think that these great instruments of commerce are all wrong be- cause of their size and that they should be regulated, controlled, and managed in detail by the Government. The exploitation of the natural resources of the United States and the really marvelous growth of the country have resulted in some large fortunes which catch the public attention, but they have also re- sulted in countless small accumulations of property all over the country, as shown by the deposits in the banks and by the amount of life insurance carried. In 1850 there were 251,354 depositors in the savings banks of the country, with ^43,431,130 to their credit, an average of ^172.79; and in 1909, 8,831,863 depositors, with $3,713,405,710, an average of $420.46. In 1880 the individual deposits in all banks were $2,134,234,861, and in 1909, $14,108,039,477. In 1850 there were 29,407 life-insurance policies for $68,614,189, and in 1908, 25,852,405 policies for $14,518,952,277. Every one of these depositors and every holder of a life-insurance policy has a personal interest 51 THE TRUTH ABOUT THE RAILROADS in seeing that justice is done to the railroads; and the railroads ask for nothing more than simple justice, based on accurate knowledge of the real facts. Because a very few individuals have, by superior brains, industry, and even luck, made large fortunes, is it wise to con- demn the splendid work of the American business man, destroy it, and fly to socialistic evils that lead no one knows where? The great force of collectivism has created manufacturing institutions, railroads, banks, insurance companies, labor unions, the Gov- ernment itself, through the voluntary acts of individual citizens. These institutions, upon which modern society so largely rests, cannot be eliminated from our system of life. Unless the chemist working with the great forces of nature uses them properly, he fails to get the result desired and perhaps has an explosion or conflagration. The engineer building a water- power or a great engine will have failure, fric- tion, and disruption of his whole scheme, unless he handles intelligently the forces with which he is dealing. The great industrial and social 52 INDIVIDUAL, RAILROAD, GOVERNMENT forces must be treated wisely or there will be friction, explosion, and perhaps disruption. The census of 1900 reported 21,329,819 male persons of voting age in the United States, and to-day there are, without doubt, 25,000,000. Most of them are busy with their daily work, taking care of their families and leading quiet and orderly lives and paying little attention to the great forces that are at work in this country. Suppose, however, that even one per cent, or 250,000 men, go about the country and preach on the platform and in the maga- zines and in the press that everything is wrong; that the rich are growing richer, and the poor are growing poorer, and that unless something is done the corporations are going to ruin the country, — the last thing they want to do. Such people can and do make a great deal of noise. If nobody shows that they are wrong, they make a big impression, and the people begin to think that, instead of living in the best country in the world and under the best conditions, they suffer from continually in- creasing evils. 53 THE TRUTH ABOUT THE RAILROADS The old nursery rhyme reads : — "Multiplication is vexation, Division is as bad, The rule of three doth puzzle me, And practice drives me mad." Many of the people who are trying to tell others how to manage their business seem to think that "multiplication is vexation," and that the great big things accomplished by the hard-working men of the United States are wrong. They think that "division is as bad," and that, when after earnest efforts business pays a return or a dividend, the ability to make a profit must be checked. They have lost all sense of proportion and the "rule of three" puzzles them badly, for they are unable to see how great this country is and what great in- struments of commerce there must be. j, "Prac- tice" would drive them mad, for very few of them have ever done any actual work in con- ducting affairs about which they so readily instruct others. The individual citizen, having created the railroad, the corporation, the trust, the labor 54 INDIVIDUAL, RAILROAD, GOVERNMENT union, and our form of government, has been too much incHned to fold his hands and leave the management of his affairs to a few without much check upon them. The member of the labor union too often, by credulously following an unwise leader and neglecting to express his own views, has caused great trouble to himself and to society. The voter has left the represent- atives in the Government too much alone, and the boss, graft, extravagance, foolish legis- lation, inefficiency, and waste have resulted. The great mass of the American people are honest and fair, and when they really under- stand the great questions of the day, they will solve them correctly, just as they did the slav- ery and silver questions. But the individual must exert himself to obtain correct informa- tion and to form a sane public opinion. The printing of newspapers and periodicals in this country has grown from 11,314 publications in 1880, issuing 2,067,848,209 copies a year, to 22,603 i^ 1909? issuing 10,600,000,000 copies a year. It is a sad fact that some of these publications print statements that are not en- 55 THE TRUTH ABOUT THE RAILROADS tirely correct and that mislead and prejudice the unthinking. Every individual can do some good by encouraging decent newspapers and by frowning upon yellow journalism and muck- raking magazines. The schools of the country are teaching daily eighteen and one half mil- lion boys and girls, and every individual inter- ested in the welfare of his country should exer- cise some influence in seeing that common sense, industry, and self-denial are taught as well as some other things. For a long time it has been very fashionable to attack the railroads. They are a big target. The men engaged in other forms of business have looked on and to some extent have sym- pathized with such attacks, not realizing that sooner or later their turn will surely come, if the crusade against large forms of business continues. The railroad business represents more than 1,500,000 employees, receiving more than ^1,000,000,000 a year in wages; and about 1,000,000 security-holders. The em- ployees and the numerous small owners of the railroad as a whole are hard-working, consci- 56 INDIVIDUAL, RAILROAD, GOVERNMENT entious people, whose principal capital is their brains and industry and a limited amount of money that they may have saved from their wages and income. The daily lives of the em- ployees and security-holders of the railroads are affected by the success or failure of the railroads, and they are entitled to protection and encouragement from the people and the Government equal to that accorded other citizens. The owners of the railroads hold securities worth at par nearly ^14,000,000,000. The average net return from railroad operation for the year ending June 30, 1909, was 4.07 per cent. In 1905 the net income from manu- facturing Institutions was 13.06 per cent. At times the Impression is given in the press that great fortunes have been made and are being made In the railroad business. A very few have been made, but not nearly so many as in manufacturing, mining, merchan- dising, banking, lumbering. Go Into any com- munity, and except in rare instances It Is not the man building railroads or working for them who is the rich man, or even the well-to-do. S7 THE TRUTH ABOUT THE RAILROADS The increase in the cost of living in the last five years has been reflected in many increases In the wages of the great majority of the 1,500,000 employees; but the returns to the security- holders, who also must meet in their daily life the increased cost of living, not only are not increased, but in many cases have been de- creased. Many of these security-holders are persons of moderate means to whom any loss of income is important. Judge Sanborn, in his very exhaustive opin- ion in the Minnesota Rate Case, says about the return on railroad property: "Complaint is made that the master finds that the companies are entitled to a net return of 7 per cent per annum upon the respective values of their properties devoted to this public use. The character of the business in which an invest- ment is made, the locality in which it Is placed, the returns secured in that locality from other investments of a similar nature, the uniformity and certainty of the return, and the risks to which the principal and the income from It are subjected, condition the measure of a fair 58 INDIVIDUAL, RAILROAD, GOVERNMENT return upon capital invested. An investment in a bank, in a factory, in a mercantile, man- ufacturing, or agricultural business is substan- tially free from regulation by the Government and exempt from any duty to the public except that of paying taxes. If the business in which such an investment is made is unprofitable, its owners may promptly discontinue its oper- ation until more prosperous days come and then return to their undertaking. An invest- ment in a railroad which operates in many States is subject to the regulation of its busi- ness by many governments. Its owners owe the duty to the governments and to the public to operate their railroad continually in days when its operation is unprofitable as well as when it is remunerative, a duty they must dis- charge under the penalty of the forfeiture of their property, if they fail. In view of these facts, they ought to be permitted to receive a return large enough to enable them to accumu- late in prosperous days a surplus sufiicient to enable them to protect their property in days of disaster and to make their average return 59 THE TRUTH ABOUT THE RAILROADS through days of prosperity and of adversity fair and just. The lands in Minnesota through which these railroads extend are fertile and productive. The cities, villages, and towns they reach are rapidly increasing in popula- tion and wealth, and the people they serve are thriving and successful. The evidence satisfies that the railroads are maintained in excellent condition, that they are efficiently and on the whole economically managed and operated, and are rendering commendable service. Jus- tice to the thriving people they serve does not require that the owners of these railroad properties should be deprived of a fair return upon their values. To deprive them of such a return would prevent advances and tend to compel reductions in the wages and salaries of their employees, would tend to prevent the extension of their lines into portions of the State where the development and accommoda- tion that railroad service assures would be welcome and may be needed, to deteriorate the character of the service they render, and to retard the general prosperity. The legal rate 60 INDIVIDUAL, RAILROAD, GOVERNMENT of interest on a debt in Minnesota, in the ab- sence of contract, is 6 per cent, and by contract it may be lo per cent per annum. (Rev. Laws Minn. 1905, *2733.) Rational investments in agricultural, manufacturing, mercantile, and other industrial pursuits and even well secured loans yield returns in Minnesota correspond- ing with these lawful rates. Investments in railroads and the returns thereon are at the risk of failures and partial failures of crops, of the disasters, delays, and expenses of unusual storms, snow, and cold, of the great financial disasters which occasionally prevent or delay the movement of traffic, and of the burden of continuous operation, whether profitable or unremunerative. It is an axiom in economics that the greater the risk the greater must the return be upon invested capital, and the con- clusion is irresistible that a net return of 7 per cent per annum upon the respective values of the properties of these companies in Minnesota devoted to transportation is not more than the fair return to which they are entitled under the Constitution of the United States." 61 THE TRUTH ABOUT THE RAILROADS Manufacturers need a constantly growing market for their products, and there are large areas in the United States capable of support- ing a much greater population than they have at present, if agriculture and transportation both succeed. The Northern Pacific States, for example, have areas and population as follows : — Square miles Population Wisconsin 56,040 2,333,860 Minnesota 83,365 2,075,708 North Dakota 70,795 577,os6 Montana 146,080 376,053 Idaho 84,800 325,594 Washington 69,180 1,141,990 Oregon 96,030 672,765 Total 606,290 7,503,026 These seven States are nearly six and one half times as large as New York (49,170) and Pennsylvania (45,215) together, with their 94,385 square miles. They have a population of 7,503,026, as compared with 7,665,111 in Pennsylvania and 9,113,279 in New York. They produced in 1909 a total of 265,712,000 bushels of wheat, or 35 per cent of the crop of the United States, and received ^247,617,000, 62 INDIVIDUAL, RAILROAD, GOVERNMENT a sum which represents very large buying power. In some of these States there are regions which cannot be developed properly without more transportation. In eastern Montana, either Ad^aine (33,040 square miles) or Indiana (36,350 square miles) could be placed where no railroad would touch it. In central Oregon the Northern Pacific, Great Northern, and Union Pacific are building some railroads, opening a part of the State in which, until this recent construction, the great State of Ohio (41,106 square miles) could have been placed where not a railroad would touch it. This area would hold the great State of New York with Rhode Island and the District of Columbia thrown in for good measure. The cost of transportation in central Oregon has been very high because of the lack of rail- roads. On a ranch last summer, corn was needed and the freight charge by wagon for 100 miles was $20 per ton, 20 cents per ton per mile, while the average rail rate in the United States in 1909 was 7.63 mills per ton- mile. Corn is taken by railroad from the 63 THE TRUTH ABOUT THE RAILROADS Mississippi River to New York, 1200 miles, for ^3.20 per ton. The value of farm property in Ohio, Illinois, and Wisconsin increased in the last ten years 83 per cent; in Iowa, South Dakota, Nebraska, and Kansas, 165 per cent; in Minnesota, North Dakota, Montana, Idaho, Washington, and Oregon, 197 per cent. The increase in the value of farm property in all the States named has been from ^7,640,940,000 in 1900 to ^17,762,- 401,000 in 1910, or more than ^10,000,000,000, — at the enormous rate of ^1,000,000,000 per year. Without the rail transportation furnished by the American railroad-owner this great increase in national wealth would have been impossible. In 1880 the capital employed in manufacturing in this country was ^2,790,- 272,606, and in 1905 it was ^13,872,035,371, — an increase in twenty-five years of ^11,000,- 000,000 or ^440,000,000 a year. Without the work of the railroad-owner in creating the transportation machine that has enabled the country to expand its population, with a result- ing increase in farm values of $1,000,000,000 64 INDIVIDUAL, RAILROAD, GOVERNMENT per year, it would have been utterly impos- sible to have increased the value of the man- ufacturing business ^440,000,000 a year, and to have found a market for the products, which increased from ^5,369,579,191 in 1880 to ^16,866,706,985 in 1905. It may be urged that a development of waterways would provide needed transporta- tion. The waterways, if very highly devel- oped, would furnish a limited amount of transportation for narrow strips of country adjacent thereto, but trade could not be car- ried to any extent for more than a few miles away from the water. Climate in many parts of the country would close the waterways for a considerable period of the year. The rail- roads do not object to intelligent and eco- nomical use of waterways under the same con- ditions as govern the ownership and operation of railroads. The American railroad-owners and man- agers have done a great work in creating the great transportation machine as it exists to-day, and they can progress still further and 65 THE TRUTH ABOUT THE RAILROADS do better work if not too much hampered and discouraged. The railroad-owner, by his cour- age, energy, and intelligence in adopting advanced methods, has been able to improve the railroad system of the United States steadily in the last forty years and still main- tain and operate his property in spite of the reduction in rates. If the railroad-user had paid in 1910 the same average freight rate as in 1870, he would have paid ^3,092,662,300 more than he did pay; if he had paid the same average rate per passenger-mile in 19 10 as in 1888, the additional payment would have been ^163,023,000, the two amounts being ^837,- 007,762 greater than the entire earnings of all the railroads in the United States in 1909. The individual citizen who by his voice and vote makes or permits to be made the drastic laws now applicable to the railroads must remember that the railroads must either earn or borrow the money needed to improve the existing roads and to build new ones, if ade- quate service is to be given. In the face, how- ever, of constantly increasing wages and taxes 66 INDIVIDUAL, RAILROAD, GOVERNMENT and of stationary or falling rates, the task of furnishing the efficient transportation the American people must have is becoming more and more difficult. The individual has invested money in rail- roads in the past for the same reason that he has invested in other business, — with the hope of profit, — and there have been great losses to thousands of people because their investments turned out badly. Take away the hope of profit and the individual will not take the risk of loss. In five years, 1904-1908, the investor has taken up railroad securities amounting to ^4,167,554,569, or an average of ^833,510,914 per year. The growth of this country should be so great that a like sum or more will be needed annually for a number of years if transportation is furnished in sufficient quantity. If individuals do not furnish the money, who will.'' Enlightened self-interest should persuade business men to see to it that investment in railroads is made attractive enough so that money will seek them freely. "The laborer is worthy of his hire," and the 67 THE TRUTH ABOUT THE RAILROADS American people must permit the railroad, which is doing such a great work, to receive compensation sufficient to pay good wages, its share of the taxes, a fair return on the value of the property, a reasonable profit, and some- thing to be used each year for necessary improvements and betterments. Publicity of corporation affairs and reasonable regulation of the great business institutions of the coun- try are desirable, but attempting to manage in detail such concerns, and continual and foolish interference with the judgment of the men trained in that management, are unwise and un-American. Such policy tends to cripple the splendid initiative that has accomplished so much up to the present time. With that initiative unimpaired and encouraged to act, far better results will be accomplished for the whole country than under the management of the Government. Putting a government uni- form on a railroad employee does not make him energetic or infallible, and it will reduce his feeling of responsibility. While the attacks on the railroads have not 68 INDIVIDUAL, RAILROAD, GOVERNMENT ceased, similar action is now being considered and taken against many other forms of busi- ness, and unless individuals arouse themselves and take some active part in trying to create a sane, unprejudiced public opinion about business, the troubles that are now confront- ing the owners and managers of railroads will spread and confront the owners and managers of many other kinds of property. The railroads can exist without expansion, and under the protection of the Constitution and the courts their property will be allowed to earn some return; but if they do not expand and improve, it will be general business that will suffer in the long run. Business men are neglecting their own interests when they encourage or permit a governmental policy which tends to discourage investment in and improvement of railroads, for without the very best railroads business of all kinds can- not achieve its highest development. Ill THE CONSERVATION OF RAILWAY SERVICE » It is a hopeful sign that our people have realized the necessity for the conservation of the resources of the country. We have realized, and in parts of the country realized too late, that our timber-supply is not inexhaustible. The lack of conservation of the soil in the South vi^as indirectly one of the causes bring- ing on the Civil War, and the proper conser- vation of the soil is one of the great questions before the country to-day. Year after year the necessity of stopping waste in the mining of coal has been pointed out, and now the coun- try is paying attention to the care of its water- power; at the same time we are told that there is a limit to the amount of iron ore that can be reclaimed. In naming the soil, timber, coal, ore, and * Address delivered at the Second Minnesota Conserva- tion and Agricultural Development Congress, Minneapolis, Minn., November 20, 191 2. 70 CONSERVATION OF RAILWAY SERVICE power, we name the chief sources from which come nearly everything that enters into indus- try and commerce. Proper conservation of these great sources of supply necessarily means conservation of the various compli- cated processes of industry and commerce. Interwoven with these is a service to which, so far as I know, the term conservation has never been applied, and to the conservation of which the people of this country are giving scant attention. Yet without that service our soil, timber, coal, and ore would be of little use. The impairment of that service means that the benefit to be derived from the con- servation of soil, timber, coal, and ore will be lost. This service is that of transportation, and In the United States that service is per- formed chiefly by the railways, because in their marvelous development they have shown a greater ability to perform it economically than has any other agency. To conserve, as defined by the Standard Dictionary, means "to keep from loss, decay, or injury; especially, to preserve in its existing 71 THE TRUTH ABOUT THE RAILROADS state, from change or destruction." We do not, of course, desire to keep our ore and coal in their existing state, because they must be used, but this does not mean that coal deposits and ore deposits should be exploited in excess of need, nor that the processes of mining should be wasteful. With proper care, soil and timber can be so conserved that neither the farm nor the forest will be destroyed. The conservation of such resources as these is not my subject, and the attention of the country is well aroused to the importance of proper care of these great primary sources of prosperity. To all the processes of industry and com- merce, the service of transportation is essen- tial, and it is a plain duty of the people of this country to keep the railways from "loss, decay, or injury," and to preserve them from destruc- tion. This duty falls first upon those charged directly with the ownership, administration, and management of the railways, and in these recent years of rising expenses and taxes they have been obliged to skimp at every corner in order to make both ends meet, while at the 72 CONSERVATION OF RAILWAY SERVICE same time the rate of interest on new capital has gone up, and federal and state commissions have reduced rates. The people are beginning to realize the fact that railroad-owners and managers need help. The following figures, covering all the rail- roads in the United States, taken from reports filed with the Interstate Commerce Commis- sion for a term of years, are interesting: — COMPARISON OF RESULTS FROM REPORTS TO INTERSTATE COMMERCE COMMISSION Average miles operated Total operating revenue Total operating expenses Net operating revenue Net revenue from outside operations . . . Taxes Net operating income 1906-7 1909-10 1910-11 227,454 230,052 243.229 $2,589,105,000 $2,787,266,136 $2,818,780,398 1.748,515.000 1,847,150,773 i,93S.S".58i 840,590,000 940,076,363 883,268,817 2,684,892 104,144,076 2.072,538 103,108,490 80,312,000 760,278,000 838,617,180 776,232,865 246,511 $2,873,279,985 1,990,061,981 882,218,004 I.243.3I9 121,797,743 762,663,579 For the year ending June 30, 19 12, on 246,- 511 miles of railway the owners of the property received only two and one half million dollars 73 THE TRUTH ABOUT THE RAILROADS more Income than they did for the year ending June 30, 1907, on nearly 20,ocx) less miles of railroad. On a per-mile basis, the comparison is even more striking. The net operating income per mile of road after paying taxes was: — For the year ending June 30, 1907 ^3)342 For the year ending June 30, 1910 3.So8 For the year ending June 30, 1911 3, 188 For the year ending June 30, 1912 3>094 and in the mean time the owners have put millions upon millions into improvements on existing roads, in addition to creating nearly 20,000 miles of new road. It is well, therefore, to bear in mind that in the railway business large increases in amount of property and in gross earnings do not necessarily mean in- creases in net earnings. But the public may say that seven hundred and sixty millions of dollars is a staggering sum for the owners of railway property to receive, and that they are well paid. In the report of the Railway Securities Commission appointed by Mr. Taft, which made a most exhaustive examination of the whole subject of railway 74 CONSERVATION OF RAILWAY SERVICE capitalization and the returns'thereon, occurs the following paragraph : — "Neither the rate of return actually received on the par value of American railroad bonds and stocks to-day, nor the security which can be offered for additional railroad investments in the future will make it easy to raise the needed amount of capital. The ratio of inter- est and dividends to outstanding bonds and stocks of American railroads is not quite 4I per cent. In each case the average ratio of dividends to the capital of national banks Is between 10 and 1 1 per cent. There is a wide- spread belief based on imperfect examination of the evidence that the amount of capital needed for the future development of our rail- road system is small in proportion to that which has been required In the past; that the profits on such added investments of capital are reasonably well insured, and that we can therefore fix attention predominantly If not exclusively on the needs of the shipper without interfering with the necessary supply of new money from the Investors." 75 THE TRUTH ABOUT THE RAILROADS In answer to this the public may say that the low return of 4^ per cent is applied to a capitalization that is unfair. Valuations of railway property have been made in a number of States by public authorities, with the result that in the States of Washington, South Dakota, Michigan, Minnesota, and Wisconsin the figures for the value of the railway prop- erty were ^1,211,806,522 as compared with the aggregate gross capitalization of ^1,210,- 999,033. In Minnesota the State made a valuation of the property of the Northern Pacific, Great Northern, and Minneapolis & St. Louis roads of $193,094,302, while the capitalization for the three roads in Minnesota was $155,051,909. Here are a few cases where governmental authority has made a valuation of the railroads, and in every case the value is more than the capitalization. Taking the country as a whole, there is no doubt but that the railroad properties to-day as going con- cerns are worth more than the par value of the capital standing in the hands of the public. In all business transactions there are at 76 CONSERVATION OF RAILWAY SEEVICE least two parties, and If business is to succeed, there must be cooperation, fairness, and jus- tice from each to the other. In the current talk of the day there are the Government and the railways, the people and the railways, the employees and the railways, and the shippers and the railways. And the railways, in a way, are under lire from the four great forces, the Government, the people, the employees, and the shippers. Without attempting a long discussion over old contentions, or looking back to what the people ought to have done or what the rail- ways ought not to have done in the past, I want to call your attention to some things in which the people, who need and use the rail- ways, for whose service the railways are cre- ated, and who regulate the railways, can, with fairness and justice to themselves, be of assist- ance in conserving railway service for the common good. The most Important service performed by the railways is the transportation of freight. Not everybody has to travel, but everybody 77 THE TRUTH ABOUT THE RAILROADS must have food, clothing, shelter, and fuel, and nearly all of the food, clothing, shelter, and fuel of the people of this country is carried all or part of the way from producer to con- sumer in freight-cars. The use that the rail- ways make of their cars is, therefore, of the utmost importance, not only to the railways but to the people. When a freight-car is standing still, it is doing no good to the rail- way or to the people, but the railways have had to pay for that car, and a part of their capital is invested in it. When it is standing ptill, it is not earning anything on that capital, and as the capital of the railways is a part of the national wealth, the usefulness of the national wealth is impaired by the loss in- curred through the idleness of the car. When a freight-car is waiting to be loaded by a shipper, or when it is waiting to be unloaded by a consignee, that car is not in the service of the people, whose demand for transportation is now in excess of the capacity of the railways to supply. It would be a very happy condition if the 78 CONSERVATION OF RAILWAY SERVICE railways always had enough cars, so that they could supply every shipper with an empty car whenever he wanted it and just as soon as he wanted it. They have not enough cars to meet this requirement at times of the heaviest business in the country, and it is not their fault that they have not. In fact, it would be an economic waste, taking the country as a whole, to have enough cars for the very highest amount of business; this would mean that many cars would be idle for several months of the year. There would be too much idle capital in such a plan. On December 31, 191 1, there were 2,160,408 freight-cars in the United States. At ^800 a car this means a capital investment of ^1,728,- 326,400. If this large amount of capital is not used steadily and economically, there is direct loss to the business of the country. But remem- ber that the very livelihood of a railway com- pany depends upon its obtaining the utmost possible service from its freight-cars, and there is no phase of operation to which a railway- manager gives more attention than to the 79 THE TRUTH ABOUT THE RAILROADS most effective distribution and prompt hand- ling of equipment. Every now and then there is complaint of a coal famine, and that there are not cars enough to move the coal-supply. In reply to such complaints, the railways say, with some justice, that if users of coal defer their orders until cold weather, they cannot reasonably expect the railways to move in a few weeks the coal which should have been shipped during a period of months and stored in yards or bins at various points of consump- tion. Crowding the shipments into a short period of time creates car-shortage and a congestion on tracks and in yards. No less than shippers in the prompt loading of cars, can those who receive freight conserve railway service, and therefore the national wealth, by promptly unloading shipments received in carloads, and by promptly remov- ing their freight from the station sheds when it comes in less than carloads. Carelessness about this is one of the evils at which the rail- ways in former times connived under stress of competition. There was a time when a con- 80 CONSERVATION OF RAILWAY SERVICE signee was allowed to hold a car as long as he liked. The retail dealer who received a car of coal used it as a warehouse until little by little the contents were sold. A factory receiving carloads of coal, cement, lime, lumber, or any other article, kept the cars on its sidings until the contents were needed. And so it has been with dealers in hay and grain and fruit and vegetables. That is, freight-cars were held and used as warehouses, thus preventing the use of the same car for its proper purposes. Such practice is most wasteful, and demurrage charges have been established in the hope that cars would be released more promptly. In the United States, as a rule, consignees are now allowed forty-eight hours In which to unload cars before any demurrage charge begins. In Germany, in times of increased business, consignees are obliged by a strictly enforced law to unload their cars within six hours. Notwithstanding this allowance of free time, which is more liberal in the United States than in any other country, commercial customs have grown up so that cars are retained at 8i THE TRUTH ABOUT THE RAILROADS large terminals, and even at country stations, beyond the expiration of this time, being used as storage warehouses. This practice Is expen- sive to the railways, because the demurrage payment does not begin to pay for the idleness of the car; and it is expensive for the shipping public, because it reduces the carrying capa- city of the railways as a whole. The owners of freight, therefore, have a responsibility for creating suitable facilities for loading and unloading freight promptly and for warehousing it In structures of their own, rather than In railway-cars, because the railway-car Is the most expensive warehouse that can be used. A box- or a coal-car costs from $700 to ^1000, and a refrigerator-car costs from ^1200 to ^1500. When one of these cars is placed upon a team-track in Minne- apolis, for example, so that hay or grain or coal or fruit or meat can be unloaded, a piece of land sufhclently large for the car and team must be occupied, or at least 900 square feet. This land Is generally In a part of the city where real estate is valuable and is worth from 82 CONSERVATION OF RAILWAY SERVICE $1 to ^5 a square foot. For the sake of exam- ple, say it is worth $2 a square foot, making the ground worth ^i8oo. Here, then, is an investment for car and land of from ^2500 to ^3300. There are from 2500 to 3000 cubic feet of storage in a car, so that this storage space represents a capital investment of from ^i to ^1.33 a cubic foot. A good warehouse several stories high could be built, using the same land area over and over again, for very much less per cubic foot, so that present commercial customs of permitting freight to be warehoused in cars are resulting in a serious economic waste to the country as a whole as well as to the railroads. Prompt loading and unloading of freight-cars is one way in which owners of freight can conserve railway service and in the long run help themselves. The conservation of railway service has yet larger aspects. The moving of a freight-car from the place of shipment to its destination is the duty of the railway company, but it cannot perform that duty without adequate facilities. These facilities cannot be obtained unless the 83 THE TRUTH ABOUT THE RAILROADS people of the country allow the railways such earnings as will enable them, not only to pay their expenses, but to attract the capital needed for the provision of such facilities, and for their extension to meet the demands of our growing country. For the prompt movement of business, not only cars are necessary, but locomotives, sufficient trackage to move trains without delay, and terminal yards through which cars may be handled promptly, made up into trains, and dispatched. It has not been many years since there were more railway-tracks, more cars, and more locomotives than were needed, but now the situation has changed. In this rapidly developing country five years makes a difference, and ten years makes a very large difference. Mr. William M. Acworth is a noted English authority on railway economics. About a year ago he said: "You American railroad officials ought to stop talking about double-tracking your roads as if that were the end of the im- provement. The time will come when you 84 CONSERVATION OF RAILWAY SERVICE will have not only double tracks, but you will have four, six, eight, ten, twelve tracks. We are at that stage in England to-day, and yet the railroad problem in England is nothing com- pared with the United States. Here your dis- tances are so great, you have so far to move your traffic to get it to water, that it will become so dense that you will wonder why you talked about double tracks at all." Those of us who believe in the great growth of the United States realize that Mr. Acworth has not overdrawn the picture, and we realize how tremendous the problem is to get the money with which to do all the things that should be done in the way of giving safe and adequate transportation facilities. Mr. Samuel W. Fairchild, Chairman of the Committee on Internal Trade and Improve- ments of the New York Chamber of Com- merce, recently presented a very luminous re- port about the railroad situation. He says : — "It is estimated that it will require in the next five years, to maintain railroad facilities equal to the enormous traffic of the country, 85 THE TRUTH ABOUT THE RAILROADS the immense sum of ^8,500,000,000. Some idea of the magnitude of this sum may be had from the fact that it is eight times the national debt, it is more than two and a half times the amount of money in circulation, it is equal to all the deposits in the national and state banks, and nearly equal to the entire money value of all the farm products of the country in one year. It is over three times the annual gross revenue of the railroads, and it amounts to nearly one half of the existing railway capital represented by stocks and bonds. The question of obtaining the ^8,500,000,000 neces- sary to make railroad facilities equal to the expanding traffic of the country during the next five years, therefore, constitutes the most important problem now confronting business men." I have already quoted from the report of the Railway Securities Commission, showing the low rate of return on railway investments. That same Commission says: "A reasonable return is one which, under honest accounting and responsible management, will attract the 86 CONSERVATION OF RAILWAY SERVICE amount of investors' money needed for the development of our railroad facilities. If rates are going to be reduced whenever dividends exceed current rates of interest, investors will seek other fields where the hazard is less or the opportunity greater." And again: "The neces- sary development of railroad facilities is now endangered by the reluctance of investors to purchase new issues of railroad securities in the amounts required. This reluctance is likely to continue until the American public under- stands the essential community of interest be- tween shipper and investor and the folly of at- tempting to protect the one by taking away the rewards of good management from the other." Mr. Fairchild, also, whom I have previously quoted, points out that the time has arrived when there should be some support of the railroads. That the railways have been falling behind the business of the country is shown by statis- tics from the reports of the Bureau of Census and of the Interstate Commerce Commission. In the United States the value of the railways 87 THE TRUTH ABOUT THE RAILROADS increased only about half as fast as the value of all property during the fifteen years from 1890 to 1904. In 1910 the capital value of agricultural property throughout the United States was 100.5 P^r cent greater than in 1900; the capital value of manufacturing property 105.3 per cent greater; but the cost of road and equipment of the railways was but 40.2 per cent greater. By capital value is meant book value, and not capitalization. For the ten years ending in 19 10 there was an increase of 81.2 per cent in the gross value of manu- factured products, with an increase of 105.3 per cent in manufacturing capital. During the same time there was an increase of 85 per cent in the total operating revenues of the railways, accompanied by an increase of only 40.2 per cent in the cost of road and equipment. This indicates that the railways are exhausting that margin of elasticity which they ought always to preserve in order to meet the demands of growing business like that of the present. It is to the interest of the people as a whole that the railways be kept at all times in a condition of CONSERVATION OF RAILWAY SERVICE "readiness to serve" and with an ability to cany the "peak load" without breakdown. The percentage of net return on the capital value of the manufacturing Industry was over twice as great In 1910 as the percentage of the net return on the cost of road and equipment of the railways. This disparity between the growth in capital value of agriculture and the capital value of the railways is greatest in that portion of the West where great extension of the railways and an Increase in their facilities is necessary to keep them equal to the rapidly developing business. In 1910 In Colorado the value of farm lands and buildings was 284.1 per cent greater than in 1900; in Idaho, 479.1 per cent greater; in Montana, 305.7 per cent greater; in North Dakota, 313.9 per cent greater; in Oregon, 244.3 per cent greater; in South Dakota, 356.6 per cent greater; in Washington, 394.7 per cent greater; In Wyo- ming, 263.1 per cent greater. Yet In this time the gross capitalization of the railways In this western section Increased no more than from 53 per cent in that district which includes the 89 THE TRUTH ABOUT THE RAILROADS Dakotas to 87 per cent in that district which includes Wyoming and Montana. The saying that you cannot "eat your cake and have it too" is true of the railroads and the people to-day. We cannot have the good service and facilities that we need, give em- ployees the increasing wages they demand, pay the higher taxes imposed, keep rates down, and even reduce them farther; we can- not do all these things and still find investors who will furnish money for increased facilities. The conservation of railway service is a great national question; the owners and man- agers of the railways are doing all they can, but the people must help. So while so much is being said and done about conservation of soil, of forest, of agriculture, of the boy and girl, and of human life, a little thought and attention should be given to the urgent neces- sity for the conservation of railway service. It must be protected and kept "from loss, decay, or injury." Without proper conserva- tion of this great service which supplements all the others, development will be checked. 90 CONSERVATION OF RAILWAY SERVICE It is idle to blame the present owners and managers of the properties for errors of the past; the present and the future are the important points to consider. The old nursery rhyme reads : — "Old Mother Hubbard, Went to the cupboard, |To get her poor dog a bone. But when she got there. The cupboard was bare, And so the poor dog got none." Uncle Sam should study his transportation machine and understand it better, and take steps to conserve it. If he does not he may find that in an effort to have cheap transpor- tation he has not enough transportation, that his "cupboard is bare," and that it will take him a very long time and a vast amount of money to get it well equipped again. IV RATE-MAKING AND THE GOVERNMENT* I THINK all railroad-owners and officers agreed with President Roosevelt when he said in a message to Congress: "Above all else we must strive to keep the highways of commerce open to all on equal terms; and to do this it is necessary to put a complete stop to rebates. Whether the shipper or the railroad is to blame, makes no difference; the rebate must be stopped, the abuses of the private car, and private terminal track, and side-track systems must be stopped." In fact, the great bulk of the freight in the United States is now moving under that principle. I believe that there is much exaggeration and misconception about the alleged abuses that exist. There is no ques- tion of "railroads versus the people"; there is a demand for the correction of certain abuses ^ Remarks before the Committee on Interstate Com- merce, United States Senate, May 20, 1905. 92 RATE-MAKING AND THE GOVERNMENT and failures in the management of railroad business, resulting, unfortunately, in much confusion of ideas, which may produce results very detrimental to the growth of business in this country, and therefore harmful to the rail- roads. On the Northern Pacific road, for ex- ample, — comprising about six thousand miles, — there are no rebates; there are no private- car abuses; there are no side-track abuses. There are, of course, differences of opinion about the relations of rates, as there always; will be under any system. Railroad business, being conducted by human beings who are no more infallible than those in other walks of life, is not conducted with absolute perfection. For the errors made in the conduct of the enor- mous railroad business of this country, the plan of control and management should not be condemned and dislocated, any more than the general scheme of our government should be condemned because there are frauds in the administration of the Land Office and the Post Office Department, and inefficiencies in the administration of the government in places. 93 THE TRUTH ABOUT THE RAILROADS • It is my sincere belief that a very, very large I proportion of the transactions made daily j between the railroad-owner and the railroad- '! user go on without friction, without difS.culty, and without hardship or injustice to any one. Not long ago I caused a calculation to be made of the total number of individual freight trans- actions on the Northern Pacific road in a year, y In round figures there were something over I 3,000,000 separate freight transactions, or I about 9600 a working day. Each one of these transactions involved the use of freight tariffs, the making of bills of lading and waybills, the loading and transporting of the freight, the safe delivery to the consignee, the collection of the money, and the issuing of receipts. During the same time there were claims against the railroad for loss and damage, and other errors and failures connected with this large number of complicated transactions, of about one per cent of the shipments. Considering the complexity of the business and the large number of employees involved, this record, I believe, is creditable and shows reasonable 94 RATE-MAKING AND THE GOVERNMENT stability and efficiency in conducting the business. What is true on the Northern Pacific is doubtless true on other roads, and most of the transactions between the shipper and the railroad are completed without any feeling of injustice, or that there is something radically wrong with the American railway system. The same thing is true to an even greater extent in the passenger business. Passengers get on and off trains all over the country without feeling that they have any complaint against the railroads as to discrimination or injustice in rates, except in rare instances. With the growing railroad business of the United States, the distribution of railroad securities, and the demand for manufactured articles used by railroads, it is not unfair to say that, counting railroad employees and owners, and employees in industries furnish- ing material and supplies to railroads, there are from 2,500,000 to 3,000,000 persons whose daily bread and butter and general position in life, together with those of their families, depend very largely upon the railroad busi- 95 THE TRUTH ABOUT THE RAILROADS ness and its development along wholesome lines. Multiply this number by four and we have 10,000,000 to 12,000,000 persons, or from one eighth to one seventh of the population of the United States, who either fail to realize the importance of the policy under discussion, or who, if they do realize it, are generally silent through lack of opportunity or ability to make any statement in their own behalf. \ Most of these people are attending quietly to their duties on the railroad, in the factory, or in their homes, and they form a very im- portant part of the population of this country. Ultimately, any step under which the Federal Government exercises the power of fixing the actual rate to be charged by railroads will affect them adversely by introducing an economic force into their scheme of life which will mean repression and curtailment of the chance of success due to hard individual effort. In the clamor for fixing railroad rates, much of which comes from those who want some personal advantage, either political or com- mercial, from those who hope to obtain 96 RATE-MAKING AND THE GOVERNMENT through governmental aid success which they have not obtained by their own energy and ability, and from those who believe in social- ism, the rights of this large number of people should not be lost sight of, and they should not have imposed upon them governmental conditions that do not obtain in other forms of commercial and business life in this country. When this large class of people come to under- stand fully what is contemplated, their voice will be heard most plainly against the social- istic plan now proposed. The newspapers comment more or less upon the fact that great fortunes have been made out of the railroad business, and name a small number of individuals who, through superior ability, energy, foresight, and hard work, have built up large fortunes. From the constant discussion of this subject by the daily press, there is a more or less prevalent opinion that the railroad business furnishes a field for the rapid accumulation of money, and, to a cer- tain extent, that this money comes unjustly from the public. It is true that a few large 97 THE TRUTH ABOUT THE RAILROADS fortunes have been made in the railroad busi- ness, but no more than in the iron, coal, lum- ber, and manufacturing businesses, if as much. They are the capital prizes in the lottery of life that are open to every ambitious American. But of the great army of railroad-owners, officers, and employees, a very small propor- tion obtain more than enough for their daily living, whatever their position in society may be, and some saving for old age and their chil- dren outside of that. As a rule, the railroad officer or employee is as conscientious, high-minded, and devoted to the interest that employs him as any man in any other walk of life, and he appreciates that the best interests of his employer are served by building up the tributary country, which can be done only by adjusting rates and giving service that will develop the natural resources. He is also fair-minded and anxious to be fair and square with the user of the railroad, as well as with the company, because he realizes that the greatest success to the company comes from fair treatment to the patron; in 98 RATE-MAKING AND THE GOVERNMENT other words, a daily application of the "square deal." Take them as a class, moreover, the income received by the railroad officer and employee is no greater than that received by those inter- ested or engaged in other business pursuits in the United States requiring the same ability and experience; and in the case of the railroad- owner, it is less. We hear the expressions "railroad problem" and "railroad question" very often. There is nothing mysterious or unusual about the rail- road business, and the problems and questions surrounding it are the same as those affecting other commercial business. In considering the railroad business, however, the fact should not be lost sight of that the business of building, managing, and operating railroadsis compara- tively new. Only within the last thirty years has it assumed the great importance and pro- portions that it now has. The work done by the American investor, railroad-builder, owner, and manager in the last thirty years has been enormous in producing the present 99 THE TRUTH ABOUT THE RAILROADS railroad system of the country, — a system which, on the whole, is one of the most won- derful things ever produced by human energy. The performing of all this work has required many men, much money, making of great mis- takes, wasting of money before obtaining the present roads, learning by experience, training of men to administer the business, evolution of methods; and the wonder is, not that there are some abuses and failures in the conduct of the business, but that there are not more. The railroads of the United States are to- < day in an unfinished condition, and need to attract capital, administrative talent, and the wage-earner. The country wants, in the rail- roads, the same things that are being furnished in older and smaller countries like England, France, and Germany; that is to.say*. iictter road, track, and bridges, faster trains, greater safetj^more beautiful station facilities, all of which means an enormous investm.ent of capital and a considerable period of time, the training of many men, and the least interfer- ence possible with the development of the 100 RATE-MAKING AND THE GOVERNMENT business. Hamper the railroads by too much restrictive legislation and take away from the man who has to provide the money for these expanded facilities the naming of the price to be charged for the use of these facilities, and this expansion will gradually be stopped. "You can lead a horse to water, but you cannot make him drink." You can give to a branch of the Federal Government the power to fix an actual rate which the owner of property shall receive for the use of his property, but you cannot make the owner of the property improve his railroad, buy more cars, build more branch railroads, and expand his business. That the abuses connected with the railroad business, small in number as I believe them to be when compared with the total volume of trade, are not affecting materially the general growth of business in the United States is evidenced by the fact that everywhere you go in this country, from the Atlantic to the Pacific, you see thriving towns and cities, expanding agricultural productions, demand for lands, growing values of lands, increasing lOI THE TRUTH ABOUT THE RAILROADS manufacturing capacity, increasing ownership of homes, well employed labor, demand for more and better transportation, and a chance for the conscientious, sober, and industrious man to improve his standing, no matter what business he may enter. I If railroad rates, as a whole, were unjust, /unreasonable, wrongly discriminatory, as be- tween individuals and localities, this condition would not exist. It has been held that the power to fix a railroad rate should be lodged with some other authority than with the railroad-owner, because railroad transportation enters into the life of the people in every way, and, therefore, the railroad-owner should not fix that price. Is it not also true that the price of producing power enters into the life of the people in every way.'' The price of a pair of shoes, of a coat, or of any manufactured article, depends in part upon the cost of the power used to run the machinery that made the articles in question. If the final decision to fix the actual rate to be charged by the railroad is to be given to some branch of the Federal 102 RATE-MAKING AND THE GOVERNMENT Government because a railroad rate enters into every one's life, it is only a short step to say that the final decision as to the price of coal, or water-power, or of any other agency produc- ing power should be fixed by some govern- mental authority. Again, the price of labor enters into the cost of living of every one, and to a greater extent than the price of railroad transportation or the price of power, because the price of labor is the largest single item of expense to the railroad and to the coal-mine. If it is wise for the Federal Government to fix the price of railroad transportation because of its affecting every one in the nation, why is it not equally wise to fix the price of coal, of electricity, and of labor? And where are you going to stop ? One argument advanced for changing the present federal laws about rates is that there has been during the last few years a gradual elimination of competition, and there is a fear that rates will be so controlled that they will not fall gradually, or that they will be ad- vanced arbitrarily. 103 THE TRUTH ABOUT THE RAILROADS That there has been some elimination of certain kinds of competition is no doubt true. It has resulted, however, very largely from the better experience and sense of the railroad- owner or manager, who, each year, is conduct- ing his business on a more scientific basis, so as to produce the greatest amount of good trans- portation at the lowest possible figure, and who has eliminated considerable waste and foolish competition, thus permitting a great decrease in rates during the last twenty years. There has been, however, no elimination of competition as to markets, which is the real competition in a country so large as the United States. The wool-grower in Montana must sell wool in competition with the wool-growers of Arizona and Kentucky, as well as of Ohio and Australia, and the railroads, in order to help develop Montana, Arizona, Kentucky, and Ohio, are all striving to place the wool of their respective states at the point of consumption, at the lowest price possible. The Northern Pacific does not fix the rates on wool from Mon- tana. The price of wool in Boston, affected 104 RATE-MAKING AND THE GOVERNMENT by the number of sheep on the Australian farms and the amount of free tonnage con- trolled in Liverpool, are elements beyond the control of the American railroads and the American Government. The Northern Pacific cannot charge an infinitesimal fraction of a cent more than will enable the Montana man to place wool in the common market at a com- mon price, grade for grade. The makers of woodenware in Menasha, Wisconsin, and in Tacoma, Washington, are competing to reach the same markets, and the railroads leading from those two places, through self-interest, are adjusting the rates as low as they can, in order to help develop the trade in their respec- tive territories. The producers of lumber in Idaho, Montana, and Washington, and the producers in Minnesota, Arkansas, and Louisi- ana are all trying to sell in the markets of this country and abroad, and the railroads from the respective districts, if the business is to move at all, must meet competitive prices and adjust rates accordingly. Examples without number could be given 105 THE TRUTH ABOUT THE RAILROADS of this competition of markets in raw material, in all sorts of manufactured articles, and in products of the mine and farm. In fact, this competition as to markets has been so marked in the case of live-stock that rates have been brought down to such a point that the railroad- owner is hesitating about increasing his invest- ment in cars for the purpose of transporting live-stock, because the margin of possible profit in the business is so small. Another potent cause that tends to prevent \ an advance, and to continue a general fall in rates, is that the railroads, in order to succeed at all, must do the largest volume of business possible over their rails, as the cost decreases somewhat as the volume increases; so the officers of the railroads are continually endeav- oring to increase the volume of their trade, and stand ready to reduce charges whenever it is clear that a development of country and an increase in tonnage will result. There is an erroneous idea that rates are fixed arbitrarily, and that a few so-called "railroad magnates" fix and control all of the 1 06 RATE-MAKING AND THE GOVERNMENT rates in the United States; and that their chief idea is to fix them high. Nothing can be fur- ther from the truth. A railroad^jate is the result ofajarge number of commercial and geographical forces and conditions working one^ upon the other, consultation between shipper and railroads, consultation between officers of one railroad and another, a study of all the conditions surrounding the problem, — of the density or volume of business, of grades, engines, car-supply, and cost, — and this pro- cess is going on every day among thousands of railroad officers and shippers. Another element that is effective in the direction of causing a gradual reduction in rates, if the railroads are left reasonably free, is the fact that railroad transportation cannot be stored up and saved for future use. The railroad-owner and manager never can strike an exact balance between the demand for transportation and the supply. He has, there- fore, on his hands at all times some unused transportation, — empty cars standing on side- tracks, engines waiting in round-houses, a 107 THE TRUTH ABOUT THE RAILROADS large demand for them at one time of the year and a decreased demand at another, a demand to handle business east but nothing west. He therefore goes to work to increase trade by seeking to adjust rates so that he can use up part of his idle transportation by moving prod- ucts between points where there was no such movement before. It is claimed that if the Commission have power to fix rates, such power would only be exercised occasionally, and that the power to fix a given rate upon complaint does not carry with it the power to fix rates generally. This is not true. Rates in this country are so complicated, are so related to one another, different cities and sections are so competitive, that a change in one rate will force changes in many other rates. Rates really fix, or adjust, themselves, just las prices iii all business transactions fix and [adjust themselves. The man who slaughters cattle, hogs, and sheep cannot arbitrarily fix ~"the price to be charged for the different parts or products of the various animals, so much a pound for tenderloin steak, so much a pail for io8 RATE-MAKING AND THE GOVERNMENT lard, so much for hoofs, so much for sparerib, nor can any one else. His prices are fixed for him by competitive conditions, and unless he receives, on the whole, for all of the different kinds of things obtained from the animals enough to pay the total cost of his business, and some profit, he ultimately abandons his business. The railroad business is very much more complicated than the business of the butcher, and there are an almost infinite num- ber of prices in the business which are fixed and adjusted just as the prices for the butcher are fixed. If one man, if the Government itself, owned all the railroads of the United States, the rates could not be fixed mathematically at a central headquarters, and permit any development of business. Re^ulatiitg Is one thing, and fixing is an- other. The present law grants ample power to regulate, to say what Is unfair and unjust, and if it were enforced fairly and if the powers now in the hands of the Commission were used, much of the alleged popular demand for giving 109 THE TRUTH ABOUT THE RAILROADS the powers to fix the actual rate would disap- pear. It is a question whether we are not even going too far in the direction of regulating for the best expansion of trade. Our neighbor Canada encourages its railroads so much that to-day products of the United States factories are reaching the Pacific Coast via Canada in constantly increasing quantities, because the Canadian roads can and do make rates which the American roads cannot make without being charged with violation of the Interstate Commerce Law. The rule that the inland proportion of the rate necessary to move products between the United States and foreign countries be pub- lished, is a restriction that hampers the Amer- ican roads in the efforts to expand trade and increase foreign commerce. What good does it do any one in the United States to have car- loads of manufactured articles delivered at Seattle, for instance, by way of the Canadian Pacific, when the United States labor. United States coal, and United States railroads could haul the product all the way .^ What harm does no RATE-MAKING AND THE GOVERNMENT It do any one in the United States If locomo- tives are moved from Schenectady, New York, to China via United States railroads and Puget Sound rather than via New York and the Suez Canal, even if the rate from Schenectady to Puget Sound on the locomotives destined to China is less than on those used at Puget Sound, and even if the rate fluctuates day by day or week by week, to meet competition of the Suez Canal or the German maker of loco- motives ? What, then, are the complaints? Those charged with the duty of studying and admin- istering the great railroad business of the coun- try receive complaints of various kinds. West of the Mississippi and Missouri Rivers they may be classified as follows. In the order of their relative importance : — I. Complaint of insufficient facilities. This, in the growing, progressive, and expanding states of the West, is a steady and constant complaint, and it requires much time, money, and energy for the railroad-owners and officers to keep the supply of transportation up to the III THE TRUTH ABOUT THE RAILROADS demand. The complaints come in for more freight-cars, for more passenger-trains, for better passenger-stations, for more side-tracks, for more switch-engines, for under-crossings and over-crossings in growing cities, for branch Hnes into new and undeveloped sections of the country; and every railroad west of the Mis- sissippi must spend every year sums equivalent to from five to twenty per cent of its gross earnings for providing what is needed on the road already in existence, — not counting sums of money that must be raised for building branch lines and new lines. Would bureau- cratic rate-fixing stop this complaint, or would it make it worse? . 2. Complaints of the relation of rates between communities. The fact that communities are growing and strive each to outstrip the other in the West produces most energetic demands by mercantile organizations, commercial clubs, and other agencies that this town or that town have the rates so adjusted that it can enlarge its sphere of operation and diminish the terri- tory of its rival community. Much of this 112 RATE-MAKING AND THE GOVERNMENT complaint is caused by the competition of water-routes and Canadian roads that are not subject to the Interstate Commerce Law. The officers of the freight departments of the great railroads spend as much time, if not more, on this subject as on any other, making a constant study of the relation of rates and endeavoring, through consultation with all interests and without fear or favor, to harmonize the con- flicting demands of the various communities. A commission could not satisfy this class of complaints, and would be driven to a system of rates based on distance. 3. Complaint of relative rates between indi- viduals. Many individuals continue to ask the railroads for a better rate on their particular business than may be used by their competitor, although this request for personal preference in freight rates is diminishing steadily. Let it be understood that the federal authority will enforce the existing law, against both shipper and railroad, and this complaint will stop. 4. Complaints that the power of deciding ques- tions is being centralized too much. The rail- 113 THE TRUTH ABOUT THE RAILROADS roads, in their effort to conduct their business without personal and unjust discrimination, have centered the power of deciding various questions in their main offices, — with the result that sometimes there is considerable delay in deciding questions. A man wants a side-track to his warehouse, and in order to decide that question properly considerable information must be obtained and some one has to render a decision whether the company shall spend the one thousand dollars needed to furnish the track. Another man will build a manufacturing plant if he can get rates that will enable him to reach his market in compe- tition with some other point. In order to decide this intelligently, an investigation must be made of prices, cost of doing business, the relation of other factories producing the same article, and all of the other factors that enter into the making of the price of his product at the point of consumption. This takes the time, thought, and study of a great many men on the railroad and causes some delay. Give a commission power to fix rates and you would 114 RATE-MAKING AND THE GOVERNMENT not help this difficulty but would increase it. 5. Complaints that the rates charged by the railroads are in themselves too high. This com- plaint is not very common, because as a whole rates are very low, and in most cases the man who pays the freight is satisfied with the rate in itself, provided he feels sure that no one else is doing better than he is. There are, and always will be, abuses in the conduct of railroad business as in the conduct of other business. That the abuses of which there is now complaint will be corrected by taking a given number of American citizens and making them officers of the Government, and charging them with some of the same duties that are now performed by the same class of people as private citizens, is very doubtful. The rebate is one abuse, but that is prac- tically gone as to the freight business. There remains personal discrimination in the passen- ger business by means of the pass or free ticket. Discriminations between localities exist and must always exist in a country as large as the United States, and with as many vary- 115 t THE TRUTH ABOUT THE RAILROADS ^ ing conditions. Such discriminations are not caused by the railroads but are the result of geography and competition. The present law, if enforced, is ample to prevent any ^^ unjust" discrimination. High rates do not exist as a rule, and all evidence and the general conditions point to the fact that there is no real ground for appre- hension that rates will be materially higher than they are now if the natural play of com- mercial forces and geographical and market competition is allowed to go on without arti- ficial interference. In fact, if railroad-owners are not hampered and restricted too much, and are encouraged to perfect the means of transportation and the expansion of business, the rates in this country will probably con- tinue to fall gradually, so that they will be below the present very low average of three fourths of a cent. On the other hand, dis- courage the railroad-owner, and give the [Federal Government the power to fix the '.actual rate, and the tendency will be to an average higher rate. ii6 RATE-MAKING AND THE GOVERNMENT If the Federal Government is to fix the actual rate, it must always fix it high enough/ to pay to the owner of the property costj depreciation, and interest. If the Government does not so fix each rate, then it must provide means in some way to reimburse the owner of the road for any loss. To-day in handling an expanding business, the railroad-owner takes the risks of business and handles some at cost or less, and if he loses he must blame himself and pocket the loss. The Government could not force rates upon him that are non- compensatory, and the result would be that under a system where the Government fixed the actual rates, there would be a checking of the movement towards lower rates by the voluntary action of the roads in meeting commercial conditions. There are some abuses connected with the private car, but the private car has served a most useful purpose during the last ten or fifteen years in helping to care for the com- merce of the country. The money and energy of the railroad-builder in the last forty years 117 THE TRUTH ABOUT THE RAILROADS have been very fully occupied in trying to produce the railroad, and he has not, in every case, kept pace with the demand for special facilities. The owner of the private car stepped in and said, "I will provide cars for fruit and perishable produce," and the fact that he did so helped to develop the orange business, the butter, egg, and dairy business, the fruit busi- ness, and the meat business. The owner of the car naturally has tried to get as high rates as possible on his investment, and in some cases there have been unreasonable charges. In the evolution of the railroad business, however, now that some other parts of the railroad are more nearly completed, the tendency is. for the railroads to eliminate the private car and provide their own special equipment, and this alleged evil, if left alone, will correct itself in time, because a railroad, like every other business, must make use of all by-products, and cut out all waste, and will therefore buy and own all cars needed for its business. Railroads have naturally been unwilling to spend the money, in every case, for private ii8 RATE-MAKING AND THE GOVERNMENT tracks for an industry the success of which was uncertain.. As a result, those promoting a given industry have put in their own side- tracks, furnishing their own switch-engines within their works, and delivered their own business to the railways. Incident to this there have been some cases of excessive pay- ments to the owners of private side-tracks and private switch-engines, but here again the evolution of the business and the better experience and judgment of the railroad officers are eliminating any such payments. What are the remedies for these abuses J In my humble judgment these various abuses will correct themselves through the good sense of the American business man and through the friction of business. In addition, the Inter- state Commerce Law, with its amendments, provides ample machinery for correcting abso- lutely every discrimination as between indi- viduals. If that law is effectually enforced, it will drive out the few remaining cases of per- sonal discrimination as to freight shipments. I think the effect on railroad-management, 119 THE TRUTH ABOUT ^ THE RAILROADS on the government machinery, and on the public generally would be good if the princi- ples of the Interstate Commerce Law were applied strictly to the passenger business as well as to the freight business. That is to say, I would stop the making of preferential arrangements for transportation of passen- gers free or at reduced rates, because they occupy positions of more or less power, re- sponsibility, and trust. As is well known, it is customary for the officers of the Government — municipal, county, state, and federal — to ask for and to receive more or less transporta- tion, and some also for their family and friends. The revenue involved in this practice is rela- tively insignificant, because the great bulk of this travel would not take place if a free pass or reduced-rate ticket was not given. The effect, however, on' the mind of the public is bad, and indirectly the impression. is created that the railroad-owner, through the free pass, has a great deal more 'influence than he really has, that there is much more interference by the railroad in the machinery of the Govern- I20 RATE-MAKING AND THE GOVERNMENT ment than there really is, and that there is a much greater obligation on the part of the recipient of the pass than there really is. Most passes are given to the officers of the various governments as a compliment, and not with the idea that any direct benefit is to be received, — possibly with the hope, in some cases, that any unfair action within the power of the receiver of the pass will be postponed or prevented. In the long run, however, the railroad-owner, the government officer, and the public generally would be in a better rela- tion each to the other if this discrimination as to passenger transportation were eliminated. Such a step would go far toward making the general public feel that the railroad was not interfering improperly with politics, and that it did not have something within its power to give away to law-makers and others in author- ity that other people did not have. Let the officers of the Government, from the highest to the lowest, set the example of obeying the law, by paying for their railroad travel the same rates charged the general public. 121 THE TRUTH ABOUT THE RAILROADS The Interstate Commerce Law also has the power to prevent unjust discrimination between localities. Let the Commission be active in using the power it now has of stat- ing when there is unjust discrimination; their decision and the force of public opinion, the pressure of business men, the increasing good sense of the railroad-owners and officers, will all be elements in determining a new relation between the communities. As to private cars and private side-tracks, I believe that any difficulties or abuses Incident to their use will eliminate themselves, just as the foolish custom of paying ticket commis- sions eliminated itself by the voluntary action of the railroads. If, however, there is a feeling that the Government must In some way try to hasten the Inevitable result, the present law seems ample to cure the evils, provided the Federal Government will use its machinery for enforcing It. If more law Is needed, a very simple one will correct the alleged evil. Let it be the law that no payment shall be made by a railroad or by an Individual for the use 122 RATE-MAKING AND THE GOVERNMENT of, or service furnished by, a private car or private side-track, that is any greater than the payment made contemporaneously for the same kind of car and for the same kind of service by the railroads each to the other. Then, if the railroads are exchanging cars between themselves at twenty cents a day, or at fifty cents a day, that is all the private car-owner will get; if railroads furnish ice at ^2.50 per car, that is all the private car-owners will receive; if the railroads switch in Chicago for from two to five dollars per car, that is all the owner of the private side-track will get in that locality. The attempt by the Federal Government to fix in detail the exact rates to be charged by the railroads would be unfortunate for the United States. Such policy is un-American, in that it subjects a large number of the citi- zens of the United States to an economic restriction that does not apply to those en- gaged and interested in other classes of com- mercial, industrial, and agricultural business. By having the Government fix the price of 123 THE TRUTH ABOUT THE RAILROADS railroad transportation, an obstacle would be placed in the way of the highest success of individual effort that would gradually result in depressing and repressing the efforts of those interested in or engaged in the railroad business and would reduce all to the dead level of mediocrity. Such a plan is unjust, because it would apply to the large number of American people interested and engaged in the railroad busi- ness a rule not applicable to others. In good faith they have invested their time, their training, their energy, and their money with the idea that there were rewards for success as in all other businesses. They are taking, and have taken, great risks, as do all who are engaged in business, to obtain the benefits of success, if that comes, just as they must submit to the result of failure, if that comes. Such a plan is unnecessary, because the development of the railroad business in this country has been such that we have the most effective service as a whole, the lowest rates as a whole, the highest wages as a whole, and ■ I24~ RATE-MAKING AND THE GOVERNMENT the most progressive management of the busi- ness as a whole, of any country in the world. And all of this has been developed in fifty years by the energy, ability, and ingenuity of the American business man. With this record in the past, why is it necessary to take even a chance of delaying or changing this marvelous development.'* Or, to quote President Roose- velt again: "Nothing could be more foolish than the enactment of legislation which would unnecessarily interfere with the development and operation of these commercial agencies." Such a plan is unwise, because it would tend to a centralization of power in the making of the rates for the country. As I stated earlier, one of the complaints made now is that the decisions are not made promptly enough. What will be the inevitable effect upon the rate-making machinery of the railroads, if every rate can be challenged, and the power of fixing it is placed with a commission ? The natural effect will be that the shipper will not be satisfied with the rate made by the railroad, and the railroad will hesitate to make a new 125 THE TRUTH ABOUT THE RAILROADS decision, knowing that it is likely to be ap- pealed from. The commission will be in time deluged with complaints. In trying to settle the questions submitted to it, the com- mission would have to adopt one of two courses. It might try to do exactly what the railroad-owners are doing, — adjust rates upon business principles, taking into consider- ation every element that affects the movement of commodities, weighing every situation, discussing the claims of communities and ship- pers, and finally rendering a decision which, when made, must be the rate until the same process is gone through with again. No mat- ter how wise or able one set of commissioners may be, it would be physically impossible for them, sitting in Washington, to dispose promptly of the cases submitted to them. Then the suggestion would be for additional commissions, and in time the Federal Govern- ment would have as many people engaged in the rate-investigation, rate-discussion, and rate-adjusting business as the railroads now have. In other words, they would become the 126 RATE-MAKING AND THE GOVERNMENT business managers of the railroads, but they would have no responsibility for results, no responsibility of ownership, no interest in pro- viding large sums of money necessary to keep the railroads equal to the business, no respon- sibility or incentive for increasing business and developing new territory. If the commission did not adjust the rates on business principles, — and it could not, — it would have to adopt some simple basis to be applied to every one without regard to geo- graphical conditions or to previous commer- cial development. It is manifestly impossible for the Government to fix the rates on the postage-stamp principle, because that system creates unjust discrimination to the greatest extent conceivable. To-day mail is trans- ported from San Francisco to New York at as low a price as it is from Washington to Phila- delphia. Either the price from Washington to Philadelphia is too high, or the price from San Francisco to New York is too low, and this principle could not be applied to the fixing of freight rates unless the Government is pre- 127 THE TRUTH ABOUT THE RAILROADS pared to make good any deficiency in revenue from the taxpayers as a whole. The course that the commission would be driven into, and that every state commission is gradually being driven into, is to adopt a mjleaj;.e b^sis of rates. The effect of such a basis on a country of the size of the United States, with its past history of commercial development, is appalling to one interested in the growth of the country. If, in the begin- ning of tFelrailroad and business development of this country, rates had been fixed arbitrarily on the basis of mileage, the States west of the Mississippi River would still be thinly popu- lated, with few railroads and with little busi- ness of any kind. Inland cities, without access to water transportation, would not have been built up and the whole growth of the railroad and commercial system of this country would have been different. Fortunately for the growth of this country, the railroad-owners and operators did not adopt a rigid mileage basis of rates, and as a result the country has grown, agriculture has grown, diversified 128 RATE-MAKING AND THE GOVERNMENT manufacture has grown, and there has been an equahzation of commercial situations that has permitted a development of cities and communities, which under the mileage basis would all have been congested in a very few places. Give the commission the power to fix rates, and the land values of the agricultural States west of the Mississippi River would be at once affected. An advance of value would be stopped, and a decrease in value would result. To-day the railroads, in their desire to develop territory, make the rates on wheat from North Dakota, on wool from Montana,^ on lumber from Washington, on butter from Iowa, so as to compete with similar products raised in Ohio, in Kentucky, in Mississippi, in Pennsylvania, in New England. If the Government has to fix the rate, what right will it have to refuse to the wool-grower of Kentucky, the wheat-grower of Ohio, the lumber-producer of Mississippi, the butter man of Pennsylvania, the same rate per mile that is charged the producer in North Dakota, Iowa, Montana, and Washington? No matter 129 THE TRUTH ABOUT THE RAILROADS . how low the rate is made for the first ten miles, or for one mile of railroad transportation, when the haul is one thousand or two thou- sand miles and the mileage basis is used, the rate will be so high that the business will not move. On a mileage basis of rates the business of the commercial centers west of the Mississippi would be destroyed. Cities on the oceans and the Great Lakes would have advantages, but the inland cities and agricultural districts would be depressed. When the agricultural and manufacturing population in the great States between the Alleghanies and the Rocky Mountains realize — as they will sooner or later — what a set of rates based on distance will mean to them and to their children, there will be a real rate agitation compared with which the present stimulated demand will be as nothing. Far better the difficulties existing under the present system of commercial freedom than to turn to a rigid governmental plan for fixing railroad rates. THE RELATION BETWEEN THE FARMER AND THE RAILROAD 1 Agriculture was so highly regarded among the people of antiquity that the Hindus ascribed it to the great god Brahma, the Egyptians believed it to have been given to man by Isis, the Greeks credited it to Demeter, and the Romans to Ceres, and the farmer Cincinnatus was called from the plow to, and twice served in, the highest offices of the state. In the United States it is the greatest business, in the number of people engaged in it, in the money value of the product, and in its im- portance to the welfare of all the people. The development of agriculture in the United States began with the settlement of the colonies, and, until the Civil War, was rapidly extended. In the ten years ending in * Address delivered before the Tri-State Grain and Stock Growers' Association, at Fargo, N. D., Jan. 17, 191 2. THE TRUTH ABOUT THE RAILROADS 1800, the area brought within the limits of settlement was 65,000 square miles. Between 1 8 10 and 1820, the American people, then numbering 8,250,000, Increased the density of population In every section of their settled territory, increased their manufacturing cap- ital two-fold in spite of a three years' war, and occupied 101,000 additional square miles. The Civil War checked the westward flow of people, and retarded development, but did not stop it, and since 1870 the development that characterized earlier days has proceeded without interruption. The growth of farming In this country shows two distinct phases, one lasting until i860, and the other starting about that time and not yet complete. Prior to the Civil War, agriculture was treated more as an occupation, or means'of subsistence. Fertile soil was prac- tically free to all. There was little outside pressure to make a farmer careful to preserve the productiveness of the soil, and the agri- cultural products were generally greater than the demand, partly because transportation 132 THE FARMER AND THE RAILROAD was limited and high-priced, compared with to-day. A movement which began about the time of the war, coincident with the growing demand for technical education, has some- what changed the nature of farming in this country, and has made it an important busi- ness rather than an occupation. Population has grown rapidly, and the demands of the people for food have become great. More and more the attention of intelligent men, in the farming ranks and without, has been di- rected toward the future and the question of providing the necessities of life to a popula- tion fast approaching the one-hundred-million mark. A rapidly growing "country needed men skilled in the sciences and arts of life to deal with its new conditions, and while purely com- mercial activities were the first to feel this need, farming also began to feel it, and the movement which Introduced technical edu- cation and In a degree supplanted the old classical schools with those designed to develop the kind of men the country needed gave to 133 THE TRUTH ABOUT THE RAILROADS the business of fanning the first schools for the scientific teaching of agriculture. It was the West, and not the older and wealthier East, that gave the United States its first agricul- tural school. The second constitution of Michigan, then close to the western frontier, provided in 1850 for the founding of an insti- tution to teach agriculture, and the movement, spreading eastward, resulted in the incorpora- tion of what is now Pennsylvania's State Col- lege of Agriculture in 1854, and the incorpora- tion of Maryland's agricultural college and the founding of a school of agriculture in Massachusetts, both in 1856. The work thus started reached Congress, and resulted, in 1857, in the introduction of a "land-grant" aid bill, proposed by Hon. Justin S. Morrill, and passed in 1862. The Department of Agriculture was created, first as a bureau, in the same year. Up to 1905, the progress of agricultural education under this encouragement was such that 66 institutions had been organized, with an endowment fund amounting to ^12,045,629. 134 THE FARMER AND THE RAILROAD In May of 1910 there were 975 institutions giv- ing instruction in agriculture. There has been a rapid development at the same time of col- lege-extension work in agriculture, agricul- tural education under the county system, and consolidated rural schools, together with num- erous other activities, which have been of practical value in creating better standards of knowledge and practice of farming. One who studies the history of the world's farming cannot fail to be struck with the fact that the dignity and importance of the farm- er's calling have always been recognized, although more in some countries than in others, not alone by the passing of laws for his encouragement, but by the cooperation and help of those in other occupations. In the reign of Henry VII of England, in the year 1488, a statute was passed to prevent the acqui- sition of large land-holdings, in order to pre- vent lands formerly tilled from becoming idle and unproductive. Half a century later the English law shows a quaint statute, curiously like some of the legislation one hears about 135 THE TRUTH ABOUT THE RAILROADS now, which was passed because the growing of sheep had become so profitable that many had engaged therein. It says : " Some have 24,000 sheep, some 20,000, some 10,000, some 6,000, some 4,000, and some more and some less." And yet it alleged the price of wool had nearly doubled, "sheep being come to a few persons' hands." A penalty was therefore imposed on all who kept above 2000 sheep, and no person was to take in farm more than two tenements of husbandry. This attempt at "trust-bust- ing" apparently did not work, for in 1597 it was necessary to enact a new statute that arable land made into sheep-pasture be re- turned to tillage, and no more arable land be devoted to pasture. Literature of agriculture, prepared for the help of the farmer, dates back in England to the thirteenth century, and Thomas Tusser created so much interest in 1562 with a vol- ume called "Five Hundred Points of Hus- bandry" that one hundred and twenty-five years afterward Lord Molesworth recom- mended that it be taught in the schools. The 136 THE FARMER AND THE RAILROAD live-stock business was well understood and carefully studied even then. The preface to a volume of Sir Anthony Fitzherbert, published in 1523, is curiously similar to the publications the excellent agricultural colleges are now sending to the farmer, for it says: "An hous- bande cannot well thryve by his corne, with- out he have other cattell, nor by his cattell without corne. An because that shepe, in myne opinion, is the most profitablest cattell that any man can have, therefore I purpose to speake fyrst of shepe." This is sound advice to-day, except that the great "American Hog" is not mentioned, and he is really more impor- tant to the modem American farmer than sheep. Some phases of the present agricultural situation in the United States give reason to hope that the movement to make farming more than ever a business, conducted along scientific business lines, will develop great headway during the next decade. In the twenty years ending in 1910 the population of the United States Increased about one third, 137 THE TRUTH ABOUT THE RAILROADS — from 62,947,000 to 91,972,000. Immigra- tion during the ten years ending in 1910 was 8,795,386, or more than double that of the preceding ten years. The total of unappropri- ated and unreserved lands in the United States has fallen since 1890 from 55.32 per cent of the total area, to 40.98 per cent, and the 59 per cent appropriated or reserved represents the best selections. In the three States of North and South Dakota and Minnesota, there were, in 1900, 47,654,452 acres of unappropriated and unre- served lands, and in 1910 but 7,536,333 acres. With the reduction in the available government land, farms have become more valuable, and less easily obtained by those of small means. The average value per farm of all farm prop- erty has increased from $3,649 in North Dakota in 1900 to $13,109 in 1910. In South Dakota, the average value in 1900 was $2,901, and in 1910 it was $15,018. In Minnesota the average value in 1900 was $3,549, increasing in 1910 to $9,456. It is interesting to compare here the average value of the holdings of the 138 THE FARMER AND THE RAILROAD owners of the securities representing the Northern Pacific road, ^423,000,000, owned by nearly 25,000 people, ^16,290 to the individual owner, — not very much more than the value of the average farm in North and South Dakota. (A recent governmental valuation fixed the value of the road at $488,000,000, or $65,000,000 more than the capital outstand- ing.) The value of North Dakota's farms and buildings in i9iowas $822,035,000, an increase of 314 per cent in ten years. In South Dakota the total was $1,005,080,807, an increase of 356 per cent in a decade. In Minnesota farm land and buildings were worth $1,259,510,000, an increase in the same period of 88 per cent. These figures show how rapidly farm values have advanced as a result of energetic farm development and improvement, coupled with cheap rail transportation, permitting distribu- tion of farm products to many markets. In 1909 the wheat crop of these three states alone had a value of $216,647,000. The wealth- production of the farms of the United States has increased from $5,017,000,000 in 1900 to 139 , THE TRUTH ABOUT THE RAILROADS $8,926,000,000 In i9io,andhas nearly doubled since 1897. The movement of settlers to the West has reduced the areas of government land and increased the acreage on farms from 536,081,- 000 in 1880 to 873,729,000 in 191 1. The occu- pation of the rich and unoccupied prairie lands has greatly stimulated the development of irrigation in the West, the acres irrigated having grown from 3,361,000 in 1889 to 11,000,000 in 1907, because a decreasing land- supply has made it both necessary and desir- able for the people to find ways of utilizing areas formerly unproductive. Corn retained for domestic consumption has increased from 1,865,000,000 bushels In 1900 to 2,734,000,000 in 1910, while the 1900 exports of 213,123,000 bushels fell in 19 10 to 38,128,000 bushels. In 1900, 361,207,084 bushels of wheat were retained for domestic consumption, while in 19 10 there were re- tained 649,824,682 bushels, and the exports of 186,096,762 bushels in 1900 had fallen to 87,364,318 bushels. This drop in exports tells 140 THE FARMER AND THE RAILROAD clearly the story that our own people are drawing more heavily each year on our farms for their food-supply. Secretary Wilson of the Department of Agriculture takes the view expressed recently by President Taft, that farm production will keep pace with the country's necessities, yet it is very apparent, from the shrinking areas of land available and not in farms and from the rising prices of farm-lands due to greater de- mand for them with the increase of population, that the people of the United States are begin- ning to catch up with the immense annual farm production, and that in the future, with less raw and very productive land coming in, there must be increasing production, or the people will not be as well fed or as cheaply fed as they have been. In 1800 only 4 per cent of the people lived in cities of 8000 or more, while in 1910 the proportion was about 40 per cent. In 1840, 77.5 per cent of all at work were engaged in agriculture, and in 1900 but 35.7 per cent. Should the next decade demonstrate that the 14.1 THE TRUTH ABOUT THE RAILROADS continual drift of people Is away from agricul- ture, thus bringing about a greater demand than the present farm methods can meet, the responsibility upon the farmer will be heavy, for the welfare of the people will rest more than ever before upon him, and upon his efficient work on the farm will depend very largely the solution of the quality and price of living enjoyed by the man in the city. If the population grows at its present rate, we shall have In the United States by 1950 two hundred million people, and the demand for the farm products required for their sub- sistence will have doubled. Competent author- ities estimate that to meet this demand it will be necessary to Increase the product of each acre of land one per cent a year, or one tenth for each succeeding ten years. The land-heri- tage of the people of the continental United States is about 1,900,000,000 acres, of which 1,000,000,000 acres or a little less Is now con- sidered untlllable. The United States Depart- ment of Agriculture estimates the total arable land of the country at 950,000,000 acres, of 142 THE FARMER AND THE RAILROAD which 873,729,000 acres have already been taken up and are in farms. There remain 76,271,000 acres of arable area not in farms, and while it must be conceded that, of the area classed as untillable, future scientists will find means of utilizing some portion, it will prob- ably be no great part. What remains to be utilized for farm purposes, plus that which may later be brought under cultivation, is small, compared with the probable population in 1950 and the proportion of the arable area now occupied by farms. It is fortunate for the future of North Dakota and the adjoining States of South Dakota and Minnesota that their areas of unoccupied land, and consequent opportunities for the settler, are so large. Of North Dakota's total land-area, 45.5 per cent is in farms. Of South Dakota's area, the land in farms amounts to 32.2 per cent, and in Minnesota but 38 per cent of the land-area is in farms. The best authorities in North Dakota estimate that there still remain about 10,000,000 acres that can be profitably put into plow land, and 143 ; THE TRUTH ABOUT THE RAILROADS that future years will see some growth in this amount. In Minnesota and South Dakota similar possibiHties exist, yet neither the farmer nor the business man should forget that the present rate of farm-development is rapid, and that the time when these States will come to the limit of their present unused arable-land resources is within sight. The number of farms in North Dakota has increased two and two thirds times in twenty years. For the ten years ending in 1910 the increase of population was about 81 per cent, but the increase in acreage of farm land was about 83 per cent. The number of farms in- creased 64 per cent, and the increase in land- values alone added ^557,028,000 to the wealth of the farmers. In South Dakota the percent- age of increase in the number of farms was greater than the percentage of increase in population, and was ten times as large as the average increase for the ten years ending in 1900, Minnesota showed less increase during the decade, but added 1478 new farms. The effect of this demand for land is shown in the 144 THE FARMER AND THE RAILROAD large addition to the wealth of the farmers from the rising value of North Dakota land. For the three States this total amounts to the surprising sum of $1,730,228,000, or at the rate of $14,418,566 a month for the entire ten years. Railroad-building began in North Dakota in 1 87 1, when the Northern Pacific reached Fargo. In 1872 it extended its main line west. In only forty years there has been a great change. The people from i860 to 1875 suffered many discomforts, whether they were farmers or railroad men, compared with the comforts and even luxuries that are common to-day all over the State, as a result of the working to- gether of the two great forces of agriculture and transportation. The present conditions of life are gratifying, and younger men should remember the hard work of the last forty years in overcoming obstacles, and realize the responsibility for the future laid upon them. The people of this country will demand an increase of acre pro- duction amounting to 10 per cent a decade during the coming fifty years. 145 THE TRUTH ABOUT THE RAILROADS To the extent that the people of the country as a whole appreciate their growing needs, there will grow up a public sentiment and demand for better farming. There is a per- sonal responsibility upon every farmer to meet the demand of consumption. The average wheat-yield, which for a year like 1909 in these three States was 14.8 bushels an acre, must be raised ten years from now not merely one bushel an acre a year, which would add to the income from this crop from $10,000,000 to $15,000,000, depending on the price of wheat, but a bushel and a half, to make an average of 16.2 bushels. Within twenty years the average will have to be raised to 17.8 bushels. If only ten men farm well, and their fellow- farmers in a county farm poorly, these aver- ages cannot be met. It is the consistent result, rather than the occasional exploit of a brilliant man, that counts. In these three States there are men who are making good profits out of farming, producing yields far better than the average, and not only maintaining, but in some cases increasing, the fertility of their fields. 146 THE FARMER AND THE RAILROAD They are demonstrating what has been proved in Germany and England, where some of the cultivated land has been cropped for ten cen- turies, that constant cultivation, if it is wise cultivation, does not exhaust the soil. In those countries, and on this old land, the crop-yield is much heavier than in this country. The soil of Europe has no peculiar characteristics to account for this better production; on the con- trary, there is every reason to believe that the same methods of cultivation, which resulted there, as they will here, from the pressure of larger demands for the products of the farm, will produce the same yields in these states. There is great force in public opinion. The demand for a "safe and sane " Fourth of July In the United States reduced the deaths re- sulting from the celebration of the national holi- day from 215 in 1908 to 57 in 191 1, and greatly limited the sale of dangerous fire-crackers and explosives. Public opinion killed the practice of rebating on the railroads of the United States, for people generally came to the view that it was wrong, although it had existed 147 / THE TRUTH ABOUT THE RAILROADS for many years, and there were laws against it which were ignored by shipper and railroad man both until public opinion brought about their enforcement. In the Western Territories of the United States the possession of a horse was so essential to life that horse-stealing at one time was regarded as a crime of such degree that one taken in the act was put to death by hanging from a limb of a tree. Justice was thus sum- marily meted out to the offender who willfully deprived his neighbor of his property. Yet to-day a careless farmer allows weeds to grow in his fields without concern, and the seeds are carried by the wind, and a whole neighborhood may be seeded. The injury to his neighbor is just as definite and tangible as though he had deliberately gone into his neighbor's fields and gathered and carried away the crops. "An eye for an eye, a tooth for a tooth," was the ancient law. This would require damage for damage. In a case which was carried up to the highest tribunal in Missouri, where a property- owner allowed weeds to grow unrestrained in a 148 THE FARiMER AND THE RAILROAD vacant lot, it was decided that an ordinance compelling cutting of noxious weeds was valid, that no injustice was done the individual in requiring him to cut the weeds, that it was in the interest of the public health, and that the municipality had the authority to compel the owner of the offending property to cut the weeds and abate a public nuisance. What palliation can be offered for the man who, through carelessness and indifference to the welfare of the community, allows weeds of the most vicious character to grow unrestrained on his land and allows the seeds to be carried throughout the neighborhood? Is this less a crime than depriving a man of his just prop- erty by theft ? Yet we often see fields in which weeds are allowed to grow and mature their seed, where a few hours' work would save great loss. Whole valleys, thousands of acres in extent, have been polluted with foul seeds by the careless indifference of one man who neg- lected to destroy a small patch of weeds that grew in his field. Carelessness of regard for one's neighbor is 149 THE TRUTH ABOUT THE RAILROADS as wrong today as it was a thousand years before the time of Christ. Then it was decreed : " If an ox gore a man or woman, that they die, [and] if the ox were wont to push with his horn in time past, and it hath been testified to his owner, and he hath not kept him in, but that he hath killed a man or a woman; the ox shall be stoned, and his owner also shall be put to death." (Ex. xxi, 28, 29.) If a man was careless of the safety of his neighbor, if after he had been duly warned that his ox was "wont to push with his horn," he still allowed him to run at large, then the most severe pen- alty known to law, that of death, was meted out. Public sentiment in some states goes even further, and there are state boards charged with the stamping out of stock diseases, which are given power to enter upon a farm and destroy animals, if it is necessary for the pro- tection of the sound stock of other farmers. In the Pacific Northwest there are state laws and state inspectors for the purpose of stamping out orchard pests, and the inspectors have a 150 THE FARMER AND THE RAILROAD right to cut and burn diseased trees. The growth of a strong pubHc opinion against poor orcharding is marked by the formation of vol- untary associations of fruit-growers, with their own inspectors, having the same powers. Sound pubHc opinion should be encouraged, and the sentiment of farmers, as a body, should be such that poor farming will be stamped as a moral crime, a crime against one's fellows, for shiftless farm methods injure the property and offset the labor of the adjacent farmer who is trying to produce the best re- sults; and a crime against the people as a whole, for they have charged the farmer with produc- tion of their food and expect him to meet the responsibilities they have imposed. It is notice- able that an excellently managed, well main- tained, and highly productive farm in a com- munity creates a spirit of emulation, and tends to elevate the standards of farming on adja- cent properties. With a knowledge of how to farm better, local public opinion tends in the direction of condemnation of the careless and indifferent farmer. 151 THE TRUTH ABOUT THE RAILROADS The average wheat-yield of 1909 is a fair standard by which to judge the average pro- duction of these three states. The average wheat-production per acre for the United Kingdom during the ten years ending in 1899 was 33.1 bushels. These states, with com- paratively new and very rich land, are there- fore raising but 44.7 per cent of the crop that is being produced on the very old lands of Great Britain. Germany's average for the ten years ending in 1899 was 28.9 bushels, almost twice as much as Minnesota and North and South Dakota raised, and more than twice as much as the general wheat average in the United States. In 1900 the tri-state wheat acreage was 15,600,000 acres. At the average farm value of December ist, the value of the wheat- crop was ^216,647,000. If this new and rich land had produced as high an average yield as that of the United Kingdom, the harv^est would have been increased by 273,966,000 bushels, and ^255,500,691 additional would have found its way into the farmers' pockets. In other words, the farmers would have con- 152 THE FARMER AND THE RAILROAD siderably more than doubled their returns from a single crop. Divided among the 308,141 farms in these three states in 1910, this in- creased harvest would have brought each farmer an additional ^829.13, or a premium of ^829 in one year for doing as thorough and productive farming as is done in the United Kingdom. The business in which the farmer is engaged is the most important in the United States. The business of second importance is that of transportation, which I represent. The two are ver}^ closely related, and the success of agriculture means the success of the railroad, for it hauls what the farmer produces and con- sumes. The farmer is equally dependent upon the railroad, for without transportation he could not market his product, and his success depends upon the regularity and adequacy of the transportation available to him and the fairness of the rates. The close interrelation of these two businesses is less appreciated than it should be. The farmer should not be led into the error of believing that the railroad is trying 153 THE TRUTH ABOUT THE RAILROADS ; to charge more than a fair and reasonable rate, for the success of each business in its own field depends upon the fair and square treatment it receives from the other, and the degree of fairness shown toward it by the people. When one sees the ordinary operation of the railroad going on without much interruption, except from heavy weather, one does not al- ways realize the great work that has been done in creating the railroad machine in the United States, and the really vast amount of expense and work to keep it going day by day. It seems very simple to see the passenger-trains run in and out of the station, to order the freight-car and send the grain to market, to telegraph to the nearest large town for supplies and in twenty-four or forty-eight hours have them delivered. But it is not so easy and sim- ple as it seems, and there is danger to-day that the next great uplift in business in the United States will find the railroads, as a whole, sorely taxed to furnish the transportation needed for the commerce of the country. Why.^* Because a misdirected public opinion is demanding 154 THE FARMER AND THE RAILROAD rates too low, taxes too high, wages too high, service too elaborate, and there are not cents enough in the dollar to meet all these obliga- tions and still permit the business to be attrac- tive enough so the man with the dollar will invest it. Our American railroads have done good work, and can do better, and it is to the far- mer's own selfish interest to see that they are so treated that they will be ready at all times to handle his business. To be ready requires constant expenditure. American railroads are capitalized at $ 60,000 per mile British railroads are capitalized at 275,000 per mile French railroads are capitalized at 141,000 per mile German railroads are capitalized at 112,000 per mile Austrian railroads are capitalized at 115,000 per mile Average pay of American railway employees is . $668 per year Average pay of British railway employees is. . . 251 per year Average pay of French railway employees is. . . 260 per year Average pay of German railway employees is. . 382 per year Average pay of Austrian railway employees is.. 260 per year Average charge for hauling a ton of freight 100 miles United States $0.75 England 2.80 France 2.20 Germany 1.64 Austria 2.30 In the United States the railroads haul each year 2500 tons of freight one mile for every 155 THE TRUTH ABOUT THE RAILROADS person in the country, in France only 400 tons, and in Prussia only 700 tons. These few figures show you that the Ameri- can roads perform a greater freight service than the European roads, at a much lower average charge, pay the employees much higher wages, and have much less capital upon which a return should be made. Even with this relatively low capitalization, the Securi- ties Commission, whose report has just gone to Congress, shows that the return is less than four and one half per cent, a return not very satisfying to an energetic man, no matter what his business may be. In North Dakota the rates on all grain are about one fifth lower than they were ten years ago. On twelve-bushel wheat from 1000 acres, shipped from Bismarck to the Twin Cities or Duluth, the saving in freight to the farmer is $1 a ton, or more than enough in one year to buy the farmer two of the best eight-foot grain-binders with a couple of hay-rakes thrown in. In the country as a whole, the average freight-rate has gone down about one 156 THE FARMER AND THE RAILROAD fourth since 1888, very largely through the voluntary action of the railroads themselves. On the freight tonnage shipped over the rail- roads in 1 9 10, this meant the very large saving of ^615,928,000. A bushel of wheat sold for about ^.62 in Minneapolis in 1896. That ^.62 at that time paid for transporting a barrel of flour 161 miles back into Minnesota. A bushel of wheat sold for about ^i in Minneapolis in 191 1, and that ^i paid for transporting a barrel of flour from Minneapolis out into North Dakota 436 miles. In other words, the farmer's bushel of wheat in 191 1 would buy nearly two and three quarters times as much flour-transportation as in 1896, although the wages paid by the railroad and the cost of most materials used by it are very much higher now than in 1896. The present freight rate is very small. How small it is can be better understood when one realizes that for 25 cents, what it costs, accord- ing to the United States Department of Agri- culture, for the farmer to move a one-ton load by wagon one mile, the Northern Pacific Rail- 157 THE TRUTH ABOUT THE RAILROADS way, at its average rate last year, will move the one-ton load 27.2 miles. For the cost of a two-cent postage-stamp it will move a ton about two and a quarter miles. For the cost of ten pounds of ten-penny nails it will move a ton 44 miles; for the price of a No. 2 Ames shovel, 166 miles; for the money it takes to buy a good milk-pail, 138 miles; and for the price of an ordinary lantern-globe, 16 miles. In prosperous times the railroad returns very promptly to the community a large pro- portion of all the money it collects, in paying for labor and material. About 30,000 men are employed on the Northern Pacific, at an an- nual payroll expense for the fiscal year ending June 30, 191 1, of about ^23,000,000. Materi- als costing almost ^15,500,000 were purchased during the same year. Transactions are large, and it takes a great many passengers and a great many tons of freight to pay the bills. For example, coal burned by the Northern Pacific during the year ending June 30, 1911, cost ^6,858,764, and would have kept warm, during the same period, 800,000 persons, — more 158 THE FARMER AND THE RAILROAD than the population of North Dakota. During the calendar year of 191 1, the Northern Pacific Railway bought 65,398,665 feet of timber. That was sufficient to lay a plank road eight feet wide and two inches thick in a straight line for a distance of 774 miles; in 1910, before the great fall in earnings, necessitating the most rigid economy, the lumber purchased would have been enough to build a similar road from St. Paul to Boston, 1 108 miles. In one year the Northern Pacific used 29,470 gallons of paint on freight equipment, cars, and stations. That amount would be sufficient to paint 627 dwelling-houses of average size with two coats. To repaint a building 24 by 55 feet (equivalent to an average nine-room house) requires 47 gallons of paint. Here are some figures about smaller things: 105,000 lead-pencils are used in a year. That number would have supplied 5250 school- children two pencils per month during a school term of ten months. 4464 penholders are issued in a year. 249,552 pen-points are issued in a year. That number would have 159 THE TRUTH ABOUT THE RAILROADS supplied 4991 school-children five pen-points per month during a school term of ten months. 1 125 gallons of ink are furnished in one year. That amount would have supplied 5800 school- children with ten two-and-one-half-ounce bot- tles of ink for a school term of ten months. The total charge for "stationery and print- ing" for the fiscal year ending June 30, 191 1, amounted to ^259.968.76, and the officers are all the time trying to save on small items as well as on large ones. Ten per cent saving of this class of expense would be nearly ^26,000, — enough to build a mile of branch-line rail- road in certain parts of North Dakota. If the 30,000 employees of the Northern Pacific, by energetic work and careful use of material, saved only one cent a day, it would amount in a year to ^109,500, — enough to buy five good locomotives. If the great army of railroad employees in the United States, more than 1,500,000, should save, by careful, thorough work, one cent a day, the total would be the large sum of ^5,475,000. A freight locomotive, suitable for handling the grain-crop, costs, 160 THE FARMER AND THE RAILROAD delivered at Fargo, a little more than ^21,000. The average receipt to the railroad for hauling grain from North Dakota points to the Head of the Lakes or the Twin Cities is 1 5 cents a hundredweight, or 9 cents a bushel, — say 10 cents for ease in calculation. To buy a loco- motive requires the gross earnings to the rail- road for handling 210,000 bushels of wheat, which at 13 bushels to the acre means 16,150 acres. The capital requirements of railroads, if they are to keep pace with the demands of the public, and provide safe, adequate, and regular service, will continue to be very heavy. Dur- ing the five years from 1904 to 1908 invest- ors added $4,167,554,569, or an average of $833,510,914 per year, necessary to add to and improve the railroads so that they could serve the public. It will require in the future from $600,000,000 to $1,000,000,000 a year for a number of years if the railroads are to grow fast enough to keep ahead of the growth of the country and the demands of the people. In providing this capital, the railroads have a 161 THE TRUTH ABOUT. THE RAILROADS task fully as difficult and serious as that of the farmer in increasing his product one per cent per acre per year, and both tasks must be accomplished if we are to make the best use of our wonderful resources. You cannot have a good railroad without good track and good equipment, and good men to maintain and operate that track and equip- ment. You cannot have good farms without good soil, which you have in these three states; good farm equipment, which you can get and should keep in good order; good men, who will use that soil and equipment by proper plowing and cultivation, by the selection of good, clean seed instead of poor, dirty seed, by intelligent combination of various crops and live-stock. Sound public opinion can help both the farmer and the railroads in the important work of the farmer and of the railroad. It is important that fairness and consideration be shown to both: to the farmer, that he may have every encouragement and the assistance of the best agricultural education, scientific 162 THE FARMER AND THE RAILROAD research, and extension work, so as to produce a larger food-supply; and to the railroad, that it may help the general prosperity by being able to provide sufficient transportation when it is needed. The people can have good farming and good railroading, but it means hard work and plenty of it. Men who stand off on one side and find fault, criticise, and embarrass those who are really doing the constructive work in the coun- try, by numerous petty, foolish restrictions, are not helping, but are really hindering the work of better farming and better railroading, and the country will sooner or later wake up to this fact. VI AGRICULTURE, BANKING, AND THE CARRIERS The three agencies, agriculture, banking, and the carrier, are most important in our part of the country. Upon the wisdom and energy with which they are conducted, upon their cooperation each with the other, and upon the wise and fair treatment accorded them by the public through the forces of Government, depend their success and the continued growth and success of our great Northwestern country. The American Northwest is a great empire, very young but very strong and full of oppor- tunity for the best kind of human endeavor. Much has been done, and great has been the growth in the last thirty years, as some of these figures will show : — * Address delivered before the Minneapolis Chapter of the American Institute of Banking, at Minneapolis, Minn., April 26, 1913. 164 AGRICULTURE, BANKING, AND CARRIER States Admitted to tlie Union as a State Land area sq. miles Area acres Population 1880 1910 Minnesota .... North Dakota South Dakota. Montana Idaho Washington . . Oregon 1858 1889 1889 1889 1890 1889 1859 80,858 70.183 76,863 146,201 83.354 66,836 95,607 51.749.120 44.917,120 49,195.520 93.568,640 53.346,560 42.775,040 61,188,480 780.773 1 135.177 1 39.159 32,610 75.116 174.768 a,o7S.708 577.056 583.888 376.053 325,594 1,141,990 672,76s Total 619.907 396.740.480 1.237,603 5.753,054 States Railroad mileage Banking capital (a) 1880 I9IO 1880 (b) 1913 3.IS1 }I.22S| 106 206 289 SO8 8,669 4.201 3.947 4,207 2,178 4.875 2,284 $6,539,238 1 555.363 1 382.700 126.88s 203,533 640,657 $ 67.338.460 18,427.504 16.838.792 North Dakota South Dakota 18.834,517 Oregon , Total 548s 30,361 $8,448,376 $194,937,271 (a) Banking capital includes capital, surplus, and undivided profits. (b) National banks only. This American Northwest of ours comprises 21 per cent of the area of the whole United States, but has only a little more than 6 per cent of the population. The railroads have been active In providing facilities, and there are only 190 people to the mile of railroad as 165 THE TRUTH ABOUT THE RAILROADS compared with 382 people for the United States as a whole, showing that the railroads have been doing their share in the develop- ment of this region. The banking capital, from such figures as I have been able to obtain, is ^33.88 per person for all classes of banks in the Northwest, and ^18.00 for national banks only, as compared with ^45.28 for all classes of banks and ^18,98 per person far national banking capital for the whole country. The deposits in our banks are ^941,935,000 — not quite 5 per cent of the total deposits in the United States of ^19,663,857,000; and the deposit per capita in our part of the country is $164.00 against $214.00 in the United States as a whole. What a chance here for growth ! I have spoken of agriculture as the first of the great agencies the success of which is so vital to all, and in agriculture I include all forms of activity engaged in by the farmer. It is true that in Minnesota, Montana, Wash- ington, Idaho, and Oregon lumbering is, and in the last four states for a considerable time will continue to be, a most important part of 166 AGRICULTURE, BANKING, AND CARRIER the business of the people. It is also true that in North Dakota, Montana, Idaho, and Washington, mining furnishes a field for the employment of labor, capital, and brains, but upon the wise and efficient use of the soil de- pends, more than upon all else, the future prosperity of the American Northwest. Consider for a moment some of the figures about people engaged in agriculture and the results obtained in the American Northwest. 1880 All land in farms (acres) 23,561,289 Improved land in farms (acres) 11,540,115 Land capable of being farmed and not in use (acres) 12,021,174 Number of farms I3S,97I 124,345,917 72,992,996 51,352,921 466,856 1870 1909 Bushel Value not available Bushels Value Wheat Oats Barley Corn Flaxseed 47,842,928 32,919,797 5,048,623 17,020,707 174,300 290,802,583 252,593,225 97,253,571 130,004,006 18,731,213 $267,708,909 96,305,612 47,696,131 60,400,992 28,031,509 Total Hay and Forage 103,006,355 Tons 2,420,913 789,384,598 Tons 18,954,653 $500,143,153 $111,154,653 167 THE TRUTH ABOUT THE RAILROADS LIVE-STOCK ON FARMS 1880 IQIO Number Value not available Number Value Cattle 1,607,915 528,321 1,885,490 3,345,325 672,315 « « « 7,150,802 3,139,153 13,078,131 25,333,553 3,572,890 ^172,843,915 347,783,768 65,923,572 12,150,697 32,972,560 Horses Sheep Poultry(all fowls) Hogs Total 8,039,366 52,274,529 ^631,674,512 ORCHARD FRUIT 1879 Value $ 857,812 1909 Value 10,106,702 POTATOES iSgg igog Acres 276,242 479,024 Bushels 29,497,186 56,237,161 Value ^8,303,259 $19,706,596 These figures are interesting in showing the development in a term of years. When we look at them we are inclined to "pat ourselves on the back" and think we have done wonders, for the total value of all crops, not counting live-stock and its products, for the last census 168 AGRICULTURE, BANKING, AND CARRIER year in the states comprising the American Northwest was ^691,634,435. This Is a very large sum of money, equal to ^120 per inhab- itant, but to only ^5.50 per acre for all of the farms, and to ^9.50 per acre based on the Improved land in farms. Denmark, with a much more dense population of 183 to the square mile as compared with a little over 9 in the American Northwest, has so Improved methods of work and of agriculture that the average annual value for the same classes of products for every acre in that little kingdom Is ^225.16. Because of the greater density of population, the production per person aver- ages $65.33. Something has been done in the direction of improving agricultural methods in this coun- try, but these figures show how far behind we are In making the best and most productive use of our soil. Suppose that the yield per acre on improved farms only was one half of the average for the whole of Denmark, then the production from the soil In the American Northwest would amount to more than 169 THE TRUTH ABOUT THE RAILROADS ^8,000,000,000 of value, instead of the present ^691,000,000. The addition of this vast sum to the wealth-production of the country north and west of here would mean much to every farmer, every banker, every business man, and every railroad employee in the country. These startling figures emphasize that there is a great responsibility upon the man engaged in agriculture in improving his efficiency, and also a responsibility upon all in seeing that hand in hand with the development of agri- culture shall go proper development of the banking and transportation interests of the country. How about the banking capacity of the American Northwest.'' The growth of the banks in these states from less than ^9,000,000 capital in 1880 to $195,000,000 in 1912 shows clearly that this agency has been keeping pace with the growth of the country, and in the whole United States the growth has been from $825,000,000 in 1880 to $4,164,914,181 in 191 2. To-day there are more than 3360 banks in the American Northwest, taking care of 170 AGRICULTURE, BANKING, AND CARRIER nearly ^1,000,000,000 of the people's money and helping the farmer, the business man, and the railroad employee carry on their daily lives. In the United States as a whole, the deposits have increased from $2,201,900,000 in 1880 to $19,663,857,000 in 1912. The banker in his business meets many people and has a chance to direct attention to the right way of solving some of the difficulties that confront the country. What about the carrier.^ What has been accomplished in creating that agency.^ In our part of the country, the principal carrier for any distance is the railroad, and to a very large extent this is true in the United States as a whole. Without efficient railroads the country cannot develop any more than it can develop without efficient agriculture and safe and sound banks. Here are a few figures that will show what the owners of the railroad have done in producing a transportation machine to handle the people and products of the country: — The American railroad system has been 171 THE TRUTH ABOUT THE RAILROADS created in its present form since the Civil War, and practically built and rebuilt within the last forty years. The railroad-owner has provided, in round figures, 250,000 miles of railroad, 370,000 miles of track, 62,000 locomotives, 51,000 passenger-cars, and 2,200,000 freight- cars. The fair present value of this tremen- dous piece of machinery is probably at least ^18,000,000,000, and in keeping it in order and in operating it about 1,700,000 men are em- ployed with an annual payroll of nearly ^1,300,000,000. The securities representing this value are held by hundreds of thousands of individuals, and also by insurance companies, savings banks and trust companies, hospitals, churches, and colleges; and the people as a whole have as vital an interest in maintaining the credit and prosperity of the railroads as they have in maintaining the solvency of the banks. It is stated on good authority, that the life-insur- ance companies doing business in the state of New York hold one eighth of the entire railroad-bond issue of the country. There are 172 AGRICULTURE, BANKING, AND CARRIER about 20,000,000 policy-holders in these com- panies, and they are very much interested in the soundness of this great investment. There are 16,108 holders of Northern Pacific stock, of which 5675, or 35 per cent, are women, and presumably the same relation obtains in other large railroads. This great piece of machinery handled last year 33,510,673,000 passengers one mile, and carried 267,313,687,000 tons of freight one mile. These figures are so vast that the human mind cannot comprehend them. But, if we as- sume that there are 92,000,000 people in the United States, it means that the railroads pro- vided a trip of 364 miles and hauled 2905 tons of freight one mile for every man, woman, and child in the United States. People from all over the world come to examine the American railroads and the Amer- ican railroad system, and go away in wonder because the American railroads perform a greater service per mile of track than those of any other nation, at lower rates, and pay their employees higher wages. 173 THE TRUTH ABOUT THE RAILROADS The following are the average rates per ton per mile for handling freight in some of the important countries for the last years for which figures are obtainable : — United Kingdom 2.33 cents Germany 1.41 France 1. 39 Russia 95 Austria 1.45 Hungary 1.3 1 Denmark 2.16 Holland 1. 32 Switzerland 2.91 United States 741 And here are some figures for capitalization per mile of road : — United Kingdom $275,000 Germany 1 14,000 France 144,000 Russia, including Siberia 81,000 Austria 118,000 Hungary 67,000 Denmark 58,000 Holland 82,000 Switzerland 1 17,000 United States 60,000 And here are the average wages paid railroad employees per year: — United Kingdom $270 German Empire 388 France 260 Russian Empire r^6 AGRICULTURE, BANKING, AND CARRIER Austria $277 Hungary 283 Italy 287 Switzerland 292 United States 733 People who do not study the figures often look upon the railroad as a great piece of machinery with an unlimited ability to obtain money in indefinite amounts for increasing its capacity and Improving the quality of the ser- vice. The transactions are so large and the figures run into so many millions that the impression prevails that the railroads must be very rich, and that any failure or refusal of the management to do the things that people want done is due to an unwillingness and to a spirit of parsimony, when as a matter of fact it is because of the absolute inability of the owners and managers to obtain the money from any source whatsoever. The equipment of the railroads alone repre- sents at least ^3,500,000,000, and that equip- ment must be maintained in good order, that it may perform the duty imposed upon it by the public. It must be improved in quality and 175 THE TRUTH ABOUT THE RAILROADS quantity year by year. The Imagination of the people is fired by the building of the Panama Canal, and It is thought of as a great work; but the railroad equipment for the use of the peo- ple is worth at least eight times the cost of that canal, and the annual cost of repairing and replacing that equipment, about ^446,000,000 in 19 1 2, is as much as the cost of the canal. To maintain a high standard of equipment for the use of the American people is fully as impor- tant as to have the Panama Canal, and yet rarely is any suggestion made to encourage the railroads in the work they are trying to do and to help them to make a better use of that equipment or to obtain rates that will enable them to have adequate facilities and adequate equipment for the fast-growing business of the country. The railroads are struggling all the time to perform their work with less loss and damage to life and property, and few people not in the business realize the vast capital expenditures that should be made in order to equip the rail- roads with modern safety appliances that help 176 AGRICULTURE, BANKING, AND CARRIER to prevent accidents. Such appliances will not entirely stop accidents, because In the last analysis the human equation Is the test, and not until public opinion holds to a rigid ac- count railroad officers and employees who are unfaithful to their duty will accidents be mini- mized, In spite of all the appliances that mod- ern science may adopt. Statistics show that about one twelfth of the accidents on the American railroads are due to causes that can be remedied by mechanical appliances for the protection of trains ; the other eleven twelfths come from causes that are common to all classes of business. Much has been said about accidents in this country, as If we were very far behind other countries in this respect. Look at the figures for a moment : — In Europe, on 206,987 miles In 19 10 there were killed 554 passengers, 2607 employees, and 4465 other persons, or a total of 7626. In the United States on 248,888 miles reported in 191 2, there were killed 318 passengers, 3235 employees, and 6632 other persons, or a 177 THE TRUTH ABOUT THE RAILROADS total of 10,185. Included in the figures for the United States were 5434 trespassers, and it is well known that in most European countries the public realize they have no right to trespass on railroad property, while in this country, except in a few states, people think the rail- road right of way can be used as a highway, with the result that there are about 14 tres- passers a day killed in the United States. These trespassers not only lose their own lives, but endanger most seriously the lives of the employees and passengers on the trains. Absolute obedience is not encouraged enough in American education or in the Ameri- can home, and in spite of everything that rail- road managers can do, it is very difficult to secure absolute obedience to reasonable rules. Nearly $300,000,000 is needed to install suit- able block signals on the American railroads, which means an annual charge for mainten- ance and depreciation of about $75,000,000. The revenue of the railroads is collected in the main from the handling of property and passengers, and they cannot pay out more than 178 AGRICULTURE, BANKING, AND CARRIER they take in. In 191 2, of every dollar that the railroads received, the following disposition was made : — Labor direct 44-17 cents Fuel and oil, 70 per cent labor 8.93 Material, supplies, and miscellaneous expenses 14.06 Loss and damages 2.20 Taxes 4.21 Rents for leased roads 4.41 Interest on debt 13-43 Total 91.41 Balance 8.59 100.00 Of this balance 3.75 cents was for better- ments and deficits, and 4.84 cents for divi- dends. In other words, of the dollar collected there had to be paid out 91.41 cents for those things that were absolutely necessary for maintaining and operating the property and paying taxes and interest, leaving only the small balance of 8.59 cents for improvements and dividends. Without effective banking the great railroad systems of the country could not have been developed to the extent that they have been, and one of the great problems confronting the 179 THE TRUTH ABOUT THE RAILROADS carriers to-day Is that of making both ends meet, and having enough money left over so that bankers will be able to obtain from inves- tors new funds to Increase the facilities. It is a matter of common knowledge and evident In the lives of all of us that expenses and the cost of living are greater to-day than a few years ago, and the same causes that affect the indi- vidual affect the great transportation compan- ies. The demands of labor, the Increased cost of material, ever-growing taxes, many new fed- eral and state laws unnecessarily increasing the payroll, requirements of prosperous people for better service, all tend to increase the rail- road expense, but so far with no Increase In rates. As a result, the balance left to pay a return upon Investments Is not the amount that It should be to enable the banker to say to his client, "Lend me your money, that I may furnish It to the railroads so they can go on with their work." Figures compiled from the reports of the Interstate Commerce Commission for the fiscal years 1907 and 191 1 are given below: — 180 AGRICULTURE, BANKING, AND CARRIER 1911 1907 Cost of road and equipment.. .* ^14,984,796,837 $12,940,379,220 Revenues 2,852,854.721 2,570,795,058 Expenses 2,005,528,462 1,737,698,201 Balance 847,326,259 833,096,857 Taxes 102,657,157 79,640,013 Operating income 744,669,102 753,456,844 Increased cost of road com- pared with 1907 2,044,417,617 Decrease in income 8,787,742 * Cost, taken from balance sheets, is far less than present real value. In Other words, with ^2,000,000,000 new capi- tal put into the business there was nearly ^9,000,000 less return. How long will people go on putting money into a business that makes no return on the new capital required? In 1900 the value of farm property In the States of the American Northwest was ^1,843,409,554, and in 1910 it was $5,436,- 255,070, an increase of 194.9 per cent. 1900 1910 Minnesota $788,684,642 $1,476,41 1,737 North Dakota 255,266,751 974,814,205 South Dakota 297,525,302 1,166,096,980 Montana 117,859,823 347,828,770 Idaho 67,271,202 305,317,185 Washington 144,040,547 637,543,411 Oregon 172,761,287 528,243,782 $1,843,409,554 $5,436,256,070 181 THE TRUTH ABOUT THE RAILROADS The capital value represented by agriculture in the United States for 19 lo was estimated at ^40,991,449,000, and the returns from agriculture for various periods are: 13.8 per cent in 1890; 16.3 per cent in 1900; 16.8 per cent in 1905. The farmer of the American Northwest has prospered as much as in any other section, and his property has increased largely in value, and presumably he has made as handsome a return on that value as for the average of the United States. The capital, surplus, and undivided profits of all the banks of the United States for 19 12 are given as ^4,164,914,181. The net earnings In the same periods for national banks, and not including state and private banks, which are said to do as well, if not better than na- tional banks, based on capital and surplus, were 6.66 per cent in 1880; 8.63 per cent in 1890; 8.20 per cent in 1900; 9.67 per cent in 19 10. Or, if based upon capital alone, the net earnings were: 8.36 per cent in 1880; 11.48 per cent in 1890; 11.60 per cent in 1900; 16 per cent in 19 10. 182 AGRICULTURE, BANKING, AND CARRIER The capitalization of the railroads in 1910, represented by securities in the hands of the pubHc, was ^14,338,575,940. The return on capital invested in railroads was investigated carefully by the Railroad Securities Com- mission, with President Hadley of Yale at the head, whose report was sent to Congress by the President on December 8, 191 1. What the Commission says in that report tells the story : — "Neither the rate of return actually received on the par value of American railroad bonds and stocks to-day, nor the security which can be offered for additional railroad investments in the future, will make it easy to raise the needed amount of capital. The rates of inter- est and dividends to outstanding bonds and stocks of American railroads is not quite four and one half per cent in each case." And again: — "A reasonable return is one which, under honest accounting and responsible manage- ment, will attract the amount of investors' money needed for the development of our rail- 183 THE TRUTH ABOUT THE RAILROADS road facilities. If rates are going to be reduced whenever dividends exceed current rates of interest, investors will seek other fields where the hazard Is less or the opportunity greater." To quote again from this report: — "The necessary development of railroad facilities is now endangered by the reluctance of investors to purchase new issues of railroad securities in the amounts required. This reluctance Is likely to continue until the American public understands the essential community of interest between shipper and Investor, and the folly of attempting to protect the one by taking away the rewards of good management from the other." The evidence all Indicates that the returns upon capital invested from both agriculture and banking have been much more attractive to the Investor than have the returns upon capital advanced to the carrier, and the Securi- ties Commission points out very clearly that the returns upon railroad investment are not enough to attract the needed capital. I have tried to give you a few of the im- 184 AGRICULTURE, BANKING, AND CARRIER portant facts about agriculture, banking, and the carrier, — the A, B, C of the alphabet of progress in the American Northwest, If these three agencies are not efficient and progres- sive, then there will be indifferent progress in merchandising, in manufacturing, and in the development of the more complex forms of human effort that do not flourish until there is some surplus of brains, energy, and capital over and above the imperative needs of the simpler forms of business. Following, and to some extent coincident with the success of, this A, B, and C, come the things every man works for, and hopes for, — better homes, better care of women and chil- dren in schools, hospitals, and churches, and better facilities for the general welfare and up- lifting of society. We all of us want these things, and we all want agriculture, banking, and the carrier to go on with their work, and to succeed. The practical question is. What can any one of us do to help out, that we are not doing.'* It is gratifying that the country generally is 185 , THE TRUTH ABOUT THE RAILROADS awakening to the fact that agriculture is an occupation that needs the best attention and the best brains that can be given to it. Too long has the farmer's life been pictured as unattractive, unremunerative, and something that the young men and young women should shun. Lately, however, the Government, the bankers, the carriers, and people generally have awakened to the fact that It Is important to Improve living conditions on the farm and to increase the productivity of the farm. Progress has been made, but much remains to be done to help and encourage the farmer and his family and to Increase the product from each acre. For many years the attention of thoughtful men has been directed to our monetary policy, and the mantle of government protec- tion has been thrown around our banking methods, and every reasonable effort made to safeguard that important business. There are some weak spots in our system which It is hoped will be cured in due time. The third great agency, that of the carrier, 1 86 AGRICULTURE, BANKING, AND CARRIER has for forty years struggled to create a good transportation machine, much of the time without helpful support from either the public or the Government, and of late years in the face of restrictive and harassing legislation. That the business has succeeded to the extent that it has, has been due to the wonderful growth of the United States, which has carried forward all classes of business to a fair, and in some cases a high, degree of prosperity. Now a problem is confronting the American people that is just as important to their future welfare as is the success of agriculture, or of our monetary system. When the silver ques- tion was rampant, many people said they did not care about that, because it was a question for the bankers, and it did not affect them; they learned later on, however, that the policy of our financial system affected every man from one end of the country to the other. Many people say now that in some miraculous way the railroads are going to provide all the facilities that are necessary for the expanding country, and that it is their business to get the 187 THE TRUTH ABOUT THE RAILROADS money, spend it, and have adequate facilities. The inability or failure in providing these facil- ities will sooner or later aifect every one from one end of the country to the other, and it Is just as much to the interest of the farmer, the banker, and the business man to see that fair treatment is accorded to the railroads, so that money will be attracted to that business, as It is to have sound agricultural practice and a sound banking policy. There is one feature of railroad-operation that is not often considered, and that is the question of manning this great machine. There are many high-minded, earnest men In all departments of railroad work who are giving the best that is In them in trying to do their duty to the owners of the property and to the public. It is an unfortunate fact, however, that of late years young men In the United States who are fortunate enough to be trained In the best schools and colleges for business and professional life, and who have the liberty of choice In selecting their life work, do not select the transportation business, so that the 1 88 AGRICULTURE, BANKING, AND CARRIER supply of trained railroad officers is not as great as it should be for the magnitude of the business. Experienced men of high character in the management of the railroads give confi- dence to the investor and to the public, and they are more important than money, engines, tracks, and physical facilities, if progress in the right direction is to be made. It is very much to the interest of the future growth of the United States to have the railroad business offer such rewards to the investor that money will flow freely into building up the transport- ation machine, and to offer such attractions to the best talent of the country, that men will engage in the business as freely as they engage in banking, in law, in medicine, in manufac- turing, and in agriculture. There is the closest connection between the railroads and the bankers, because the railroads must turn to the banking fraternity to help them in getting funds to carry on the great work of providing sufficient transportation. Is it not to the interest of bankers to try so to shape public opinion that not only will the 189 THE TRUTH ABOUT THE RAILROADS particular business in which they are engaged receive fair treatment, and agriculture receive help and fair treatment, but the great business of the carrier will receive like encouragement and fair treatment, so that the capital now invested in that important business, and needed so much in the future, will receive a return sufficient to justify bankers in recom- mending and obtaining the funds to be used for expanding the facilities of this great coun- try? I believe that it is, and that every one can do something in his own life to foster a better understanding and a saner public opin- ion about these questions so vital to all. VII TRANSPORTATION IN NEW ENGLAND » On August 9, 191 3, there was reprinted in the "Outlook" "A Little Catechism on Money." One of the questions asked is, "What are the things which are exchanged in modern commerce?" The answer given is, "Those essential things which are bought and sold, as we say, in modern commerce are food, water, clothing, shelter from inclemency of weather and climate, human intelligence or skill, and human strength or labor." The writer of the catechism failed to mention one very vital element in modern commerce, namely, transportation, unless he included it under the general terms "Human intelligence or skill and human strength or labor"; all of which are needed of the best quality in order to produce the high-grade ^ Address delivered before the Boston Chamber of Com- merce, September 30, 191 3. 191 THE TRUTH ABOUT THE RAILROADS transportation that in these modern days is so necessary to the health and prosperity of all, and that is so vitally necessary here in New England. Professor James Mark Baldwin, in his book "The Individual and Society," says, "Busi- ness has to do with the production of and dis- tribution of valuable things — money, uten- sils — anything for which there is a demand in society, on which society or some individuals of it set value"; and again, "To produce such things in response to the demand and to distribute them to those from whom the demand comes is the undertaking of business." The transportation, or the distribution, of the numerous products of New England and of her food and fuel is a most important business, not only in itself but in its relations to all other forms of business and to society generally. Some of my friends in New England, New York, and Philadelphia have asked me to come back to the East and to help in the develop- ment of this great transportation business, and I am very glad to come, although I realize 192 TRANSPORTATION IN NEW ENGLAND that I am taking up a heavy load and trying to solve a difficult problem. My experience for thirty-three years has been west of the Mississippi River, where some of the conditions are very different from those in New England, but where some are much the same. At points in the West there are complicated and congested terminals, — Chicago, St. Louis, Kansas City, Omaha, Denver, St. Paul, Minneapolis, Duluth and Superior, Spokane, Portland, Tacoma, and Seattle. In places the trackage is insufficient for the number of trains moving over it. There are branch lines that cannot earn enough to pay expenses, to say nothing of taxes and a return on their value. There is complaint, and discussion in communities about facilities, rates, and service. All of these conditions exist in New England. The growth that has come and is coming to that great area west of the Mississippi River will have a reflex action and a great effect on New England, and there are certain facts that are most interesting. Minnesota, where I have 193 THE TRUTH ABOUT THE RAILROADS lived for the past ten years, Is a beautiful State with many natural resources. It Is large enough to Include within Its boundaries all of the New England states; In that state the last census reports 2,075,000 people as compared with 6,550,000 In the New England states. The beautiful states of Idaho, Washington, and Oregon, only just beginning their majestic development, have an area of 250,000 square miles and less than 3,000,000 people. Austria- Hungary has 261,000 square miles and nearly 50,000,000 people. Minnesota, Idaho, Wash- ington, and Oregon are capable of supporting, in due time, as dense a population as New Eng- land, and New England can support as dense a population as Austria-Hungary. What does this mean.^ It means that the West must and will grow, but It also means that New England must and will grow. A virile, prosperous, and happy people in the Mississippi Valley and between there and the Pacific Coast means an Increasing purchasing power for those things that New England makes, and an Increasing demand upon her 194 TRANSPORTATION IN NEW ENGLAND intellectual and financial capacity. With the growth of New England every agency that is connected with and necessary to that growth must grow too. It means an increas- ing number of her sons and daughters to return each year to her schools and colleges, and to enjoy her beautiful seacoast, lovely valleys, and picturesque hill and mountain country. When I decided to come back to my old home in New England, some of my friends said, Why leave this great and growing West for a country that is developed and finished f I told them that in my judgment there was going to be just as much growth and develop- ment in New England in the next twenty-five years as anywhere else, and there will be if the intellectual and financial ability of the men in New England can cooperate unselfishly with that end in view. I told them that I had a great love for New England, and that, strong as was my feeling for the West, the idea of spending the last years of my life here, where my relatives and lifelong friends are, and 195 THE TRUTH ABOUT THE RAILROADS where my children are going to school and college, appealed very strongly to me. There is an old saying that reads: "Man's work lasts till set of sun; woman's work is never done." This is true about the railroad. Its work is never done. Men may think they have provided sufficient transportation facili- ties for years to come, but the growth of the country is so great that things that looked far too big a few years ago are far too small now. For every dollar of gross earnings produced by the railroad there is a value in the plant used of nearly ^6 upon which owners are entitled to a fair return. For every increase of ^i in gross earnings which reflects the increase in general business in the country there must be provided by some one more than $6 of new capital for increased and improved facilities. For New England to grow as she will in common with the rest of the country she must have a com- prehensive, adequate, and safe system of transportation. The new capital needed in this section for each increase oi $i of gross earnings will be greater than the average in the 196 TRANSPORTATION IN NEW ENGLAND United States because of more perfect and luxurious service demanded. As indicating the large sums needed by the railroads in the United States, it is estimated that nearly ^700,000,000 will be required to replace wooden cars with steel; to equip the railroads with suitable signals will cost nearly ^300,000,000; or nearly ^1,000,000,000 for these two moves in the direction of safety; and in addition a great amount of money should be spent for better track, bridges, stations, grade-separation, etc. To have a safe, adequate, and smooth- running transportation machine in New Eng- land is just as important to her future growth as to have adequate banking facilities, ade- quate commercial organizations, and a sensi- ble, sane, and honest public opinion that will be reflected in a government that will not be swayed by the whims, prejudice, or fads of the moment. To perfect that transportation machine, to keep it ready to serve, to operate it safely and economically and in harmony with the public, is a very interesting and com- 197 THE TRUTH ABOUT THE RAILROADS plicated problem, worthy of the best intellect- ual effort of any man. It was my good fortune to work for twenty- three years on the Chicago, Burlington & Quincy, first pushed out into the West by one of the pioneer railroad men of the world and one of that fine type of men of whom New England has produced so many, — John Mur- ray Forbes. And then, later on, that road was further developed to a very high degree by another very fine type of New England man who had one of the ablest intellects in this country and who devoted forty years of his life to the work, — Charles Elliott Perkins. He realized to a very remarkable degree the fact that, in the long run, the railroad that is selling transportation and the people who are buying transportation must consider the inter- ests of each other and work together. He also realized that character, high purpose, scrupu- lous honesty, not only as to money but as to statement and point of view, were absolutely essential to the real welfare of the country and of the railroads that were trying to serve it. 193 TRANSPORTATION IN NEW ENGLAND Yet, with all this, he was tenacious and able In safeguarding the rights of the owners who had risked their money In building railroads, and he pointed out on many occasions the fact, stated by Professor Baldwin, that the distribu- tion of products or things was business just as much as the production of things was business. Some of the difficulties and Inadequacies of the transportation machine of the United States to-day are the result of drifting away too far from the idea that transportation Is business, which, in the long run, must be governed by the same great human and natural laws that affect all human affairs. In saying this I do not wish to be understood as meaning that there should not be supervi- sion and regulation of the great public-service corporations, and that changing conditions do not make necessary changes in method and In law. But I do say that care should be taken not to have that supervision and regulation go so far that it practically takes the real power of management away from those who have in- vested their money In the business. So long as 199 THE TRUTH ABOUT THE RAILROADS they have their money Invested, so long as they are responsible for the financial results, so long as they give adequate, reasonable, and safe service at rates that will permit of gross earnings sufficient to pay expenses, taxes, in- terest on debts, take care of depreciation and obsolescence, and pay a reasonable return to the owners, they must have the right to decide many important questions, particularly those relating to the details of service, the organiza- tion of the staff, and the rules and regulations under which the staff and employees must work to produce the greatest efficiency and safety. A public opinion that will impress officers and men with the fact that reasonable rules and regulations in the interest of safeguarding human life and of efficient operation must be made and obeyed, and that swift punishment will be meted out to all, whether directors, officers, or employees, whether members of labor unions or not, who fail to respond to that public opinion. Is of vital importance to the welfare of all. Sentiment of this kind and less 200 TRANSPORTATION IN NEW ENGLAND insistent demand for high speed will do more to insure safety than steel cars and automatic signals. And then, after twenty-three years of ser- vice on that great C. B. & Q., and a close asso- ciation with Mr. Perkins during a large part of that time, I was equally fortunate in working under and with another most remarkable man, who has made a lasting impression, not only on the Northwest but on the whole country, — James Jerome Hill. Mr. Hill has a peculiar faculty of being able to look into the future, of gauging the growth of the country, and of fore- seeing how business will develop. He was the leader in promoting an idea that seems very simple, but was too long neglected and even now is neglected, namely, that the efficient use of the railroad and the elimination of waste in operating the railroad are absolutely necessary if, in a country as large as the United States and as populous and prosperous as it is and will be, food, clothing, and shelter are to be provided at a minimum investment of capital and at a minimum charge to the public. 201 THE TRUTH ABOUT THE RAILROADS Here In New England, as much as In any part of the country, the teachings and Inspira- tions of these two great masters of the art of transportation are of vital Importance. Here are the most complicated relations between the railroads and those that they are trying to serve. Here Is the greatest necessity for the elimination of all waste and lost motion. Here, because of the extreme difficulty, both finan- cial and physical, of Improving and adding to the capacity of that machine, the most effi- cient use of the transportation machine Is absolutely essential. Any man who has been fortunate enough to receive the benefit of training under and with these two men has had an experience of priceless value to him in doing his daily work. During the last five years I have tried throughout the West to present the railroad side of the transportation question. Some have criticised me and said my motive was purely selfish and that all I was after was increased earnings for the railroads. These critics did not look quite far enough. It Is true 202 TRANSPORTATION IN NEW ENGLAND I had that point in mind, as any honest trustee for other people's property should have. But I also had in mind a much broader considera- tion, namely, that the country can not attain its best growth unless the people can be made to see that adequate and safe transportation is absolutely necessary, and that it cannot be obtained through private ownership unless, under honest management, enough money is earned to pay approximately the same return to the investor as is received by investors in other classes of business in the same territory, and in addition lay up a fund to provide for bad times, when earnings are poor. If we are to continue to have privately owned railroads supervised and regulated by governmental authority, and if we are to avoid ownership by the Government, the owners and users of the railroads must all work together. Personally, I do not believe in governmental ownership in a country like the United States, where our political methods are still in need of improve- ment. The policy of the Government, national and 203 THE TRUTH ABOUT THE RAILROADS state, during the last twenty-five years seems to have been to decide rate questions in the great majority of cases in such a way that rates were rarely advanced and generally were re- duced, and to introduce rules, regulations, and methods that increased expenses. I am not contending at this time that this policy was and is wrong, or that control and restraint by governmental authorities should cease, al- though something could be said about that great question. I do, however, want to make a plea that coupled with restraint and control there should be protection to the owners of the securities. The commissions, both state and national, naturally feel the great pressure of the millions of users of the railroads for reduced rates and increased facilities. But if the rates continue to decline, or even remain on the present level, and if expenses are in- creased by higher wages and cost of materials, and by the introduction of different appliances and facilities more rapidly than the roads can obtain money, then there is but one result for some of the railroads of the United States, and 204 . TRANSPORTATION IN NEW ENGLAND that Is bankruptcy. This will naturally be preceded by a desperate effort on the part of the management to postpone that evil day as long as possible by stopping every improve- ment and betterment that can be stopped. I believe the commissioners who have such great powers realize their responsibility to the owners of the properties as well as to the users, and I hope earnestly that they will give practi- cal evidence of their realization by permitting some advances In rates. Should the commissions, federal and state, make a positive declaration that rates may be advanced so as to permit the properties to meet all of their obligations, pay a fair return to stockholders, and leave a balance for im- provements, they will do much for the entire country and particularly for New England. Such a declaration will at once inspire confi- dence and give to existing securities a better standing than they now have, both here and in Europe, and will help to market new securities upon an interest basis more favorable than Is now possible, with the uneasiness In the 20:; THE TRUTH ABOUT THE RAILROADS minds of investors about the future net earnings of the railroads. Let us look for a minute at a few facts about the great transportation machine made up of the New Haven and New England lines and associated properties. There are 7976 miles of railroad and 14,175 miles of track. Of the track 29 per cent is in Massachusetts, 20 per cent in Connecticut, 14 per cent in Maine, 13 per cent in New York, 12 per cent in New Hampshire, 6 per cent in Rhode Island, 4 per cent in Vermont, and 2 per cent elsewhere. (See Table A, page 227.) There are 3 197 loco- motives, 8088 passenger-train cars, 79,522 freight-train cars, and 3541 work-cars. These units of rolling stock, which aggregate more than 94,000, if coupled together, would occupy about 750 miles of track, or make an unbroken train which would stretch from Vanceboro, on the Canadian border in Maine, through Port- land, Boston, and New York to and beyond Philadelphia. Then there is the marine equip- ment of 240 steamers, tugs, barges, etc. But this rolling stock is not standing still. Each 206 TRANSPORTATION IN NEW ENGLAND year the locomotives run about 80,000,000 miles, the passenger-train cars move 220,000,- 000 miles, and the freight-cars move 624,000,- 000 miles. The total mileage of these units of equipment is 2,500,000 miles per day, or more than 100,000 miles every hour. These impressive figures are even more im- pressive when used as an index of service in carrying passengers and freight. Each year the New England lines and associated proper- ties, including the steamboats and electric lines, carry 252,000,000 passengers, a number which is more than double the entire popula- tion of North America. Expressed in other terms, the New England lines hourly trans- port 30,000 people. The figures for the volume of freight busi- ness indicate an immensity of transactions which few appreciate. Every year 78,000,000 tons of freight are carried, 9000 tons every hour. The'complexity of the problem, however, is not indicated by the tonnage alone. In con- nection with its movement 13,600,000 way- bills are issued. Each waybill, however, usu- 207 .THE TRUTH ABOUT THE RAILROADS ally covers several Items, and it is estimated that the number of freight transactions in a year is 44,000,000, — 141,000 for each work- ing day, or nearly 5875 for every hour of the day. Is it to be wondered at that some shipments go astray or that some freight is damaged? The unusual character of the railroad busi- ness of New England Is apparent when the returns for the New Haven road are compared with those for the entire United States. Con- sidering all the railroads of the country as one system, two tons of freight are transported for every passenger. On the New Haven road alone, the ratio of freight to passenger business is reversed. That road transports only one third of a ton to one passenger. The passenger density of the New Haven road is more than six times as great as that on all the railroads of the country considered as a system. These figures show the marked preponderance of passenger business In New England. Through the Boston South Station alone 105,000 people pass daily. The passengers passing through 208 TRANSPORTATION IN NEW ENGLAND that one station each week equal the total population of Boston. To have this great transportation machine work smoothly, with the fewest points of obstruction and interruption — the least amount of friction — and with the greatest harmony among all its constituent parts, means, in the long run, the furnishing of the best transportation service to the people of New England. The operating revenues of all of the proper- ties for the last fiscal year were in round num- bers ^155,000,000, The operating expenses were ^112,000,000. Of operating expenses approximately ^66,000,000, or 59 per cent, was paid in wages, — an average payment to each employee of about ^700 a year. The remain- ing 41 per cent, or ^46,000,000, was paid for fuel, supplies, etc., but a large part of it goes indirectly to labor engaged in the production of the materials purchased. This large payroll is an important factor to the communities served by the properties, as much of the money finds its way each month to merchants and 209 THE TRUTH ABOUT THE RAILROADS others. The total taxes paid by these proper- ties was ^7,640,000, a very substantial contri- bution to the funds for carrying on the gov- ernment. But the people of New England have other interests in their railroads. Not only is the railroad service a vital part of the social organ- ization, but its earning power as well affects a large and widely distributed number of invest- ors. The number of security-holders of the New Haven and New England lines and associated properties is estimated at 60,000. The great majority of them live in New Eng- land. Of the stock in the New Haven road, 36 per cent is held in Massachusetts, and the stockholders in Massachusetts constitute 48 per cent of the total. Connecticut holds 19 per cent of the shares. New York 32 per cent, and Rhode Island 3 per cent. Of the remaining 10 per cent, many shares are held by residents of New Hampshire, Vermont, and Maine. Of Boston & Maine stock, 88 per cent is held in Massachusetts by 66 per cent of the stock- holders, and only 3 per cent of the shares are 210 TRANSPORTATION IN NEW ENGLAND held outside of Massachusetts, New Hamp- shire, and Maine. (See Table B, page 228.) It is commonly believed that railroad stocks are concentrated in the hands of a few. That this is not true of the New Haven and Boston & Maine will be apparent when it is known that 43 per cent of the New Haven stockholders own only from one to ten shares each, and 38 per cent own from 11 to 50 shares each. With Boston & Maine stock the proportion of investors holding a small number of shares is even more striking. Those who have from one to ten shares comprise 60 per cent of the total shareholders; those holding from 11 to 50 shares make up 3 1 per cent; leaving only 9 per cent with holdings which exceed 50 shares each. Of the New Haven stock, 44 per cent is held by women and 15 per cent by trustees and guardians. Of Boston & Maine stock, 49 per cent is held by women and 14 per cent by trustees and guardians. (See Table B, page 228.) To maintain and operate this great trans- portation machine requires the services of from 211 THE TRUTH ABOUT THE RAILROADS 90,000 to 100,000 men (92,792 on last pay- roll). These employees and these investors are drawn from all walks of life. They are human beings with hopes and aspirations and joys and sorrows. The livelihood of employees neces- sarily depends upon the return from their labor, and this in turn depends upon the pros- perity of New England and the railroads of New England. In a smaller degree the com- fort and well-being of many investors depend upon the return from their investment, and this also depends upon the prosperity of New England and of her railroads. These investors and these employees, with their families, on a basis of four to one, make 640,000 people, or nearly one tenth of the population of New England. Should not their rights, comforts, and feelings be considered carefully in the cur- rent tempestuous discussion in regard to the New England railroads ^ The stockholders of the three important New England railroads — the New Haven, the Boston & Maine, and the Maine Central — have selected forty-eight men to act as their 212 TRANSPORTATION IN NEW ENGLAND directors, (See Table C, page 230.) Of these, three sit on all three boards and eight sit on two boards. Of the forty-eight directors, forty-two live in New England, four in New York, and two in Philadelphia. Those who are also directors of the so-called trunk lines out- side of New England are five in number. These directors are interested in the welfare of the roads they represent, and of the country that those roads are trying to serve. They exercise the final powers of management, and can approve or disapprove the action of the officers, and can direct them. They cannot know all details, and they must rely largely on the reports and recommendations of the officers on whom rests the first responsibility of careful investigation of the problems of management. They demand that the officers give their undivided time and attention to the railroad business, and to working harmoniously with the patrons of the roads, the employees, and the public authorities. It is difficult to obtain the material things needed for the upbuilding of a railroad, but it 213 THE TRUTH ABOUT THE RAILROADS is even more difficult to get men. No more important work faces the management than to create a staff of officers that can carry on this great work and have it so organized that when for any reason one man retires there is another to take his place. Equally important is the work of encouraging the great army of em- ployees, of inspiring them with a feeling of loyalty to New England and to the railroad, and of making safe the conditions under which they work. Every effort will be made to build up a complete staff of officers and men from those now in the service and in New England, men who know the local conditions, and who will respond loyally to suggestions for the closest, most efficient, and most economical operation. These two pieces of work are even more important to the traveling and shipping public than to the owners, because the daily work of the railroad must be done, or people will starve or freeze, and business stop. This daily work cannot be done right if officers and men are harassed and worried. All of us are animated with a high purpose 214 TRANSPORTATION IN NEW ENGLAND to do our full duty, and we have no desire for self-aggrandizement and self-glorification. Our reward will come, if, in time, this compli- cated machine can be adjusted so that it will run smoothly, without friction, pay a fair return to the owners, and become so much a part of the daily life of the public that no more attention is paid to it than is paid now to drawing water from a faucet or turning on an electric light. Shall we not advance the Interests of New England, and the peace, prosperity, and con- tentment of her people if we are careful to be temperate and accurate in our statements and criticisms of others, and if we try to follow the principle the patient Lincoln laid down when he said : " I do the best I know — the very best I can; and I mean to keep right on doing so until the end. If the end brings me out all right, what is said against me won't amount to anything; if the end brings me out wrong, ten angels swearing I was right would make no difference." I have faith in the future of New England 215 THE TRUTH ABOUT THE RAILROADS and in the good sense and judgment of her people in arriving at the right conclusions when they understand and appreciate the real facts. I have hope that a better understanding of the railroad side of the problem will be brought home to the people, so that they can see the difficulties which directors, officers, and employees in the railroad service are try- ing to overcome, and that the people will real- ize the sincere spirit which animates these men to do the best they can with a difficult situation. Man-fashion, we must take the situation as it is and carry the burden as well as we can. We must be thankful for the good things of the past, and try so to improve the situation that those who come after us will be thankful for some good work and not too uncharitable about the mistakes that will undoubtedly be made. We will try, however, not to make the same mistakes twice. It does not seem as if any positive beneficial results could be ob- tained by a lack of confidence and by continu- ous wrangling. If the people of New England 216 TRANSPORTATION IN NEW ENGLAND cannot trust their railroad management, and if the railroad management cannot trust the people of New England, a situation is created that is unfortunate now and more unfortunate for the future and for our children and grand- children, because so much needs to be done in the developing and upbuilding of the New England States. I believe we can all trust one another, and I, for my part, will do all that I can, and see that the officers and employees of the various railroads do all they can to bring about that condition. Intelligent and whole- some criticism is asked for and expected, and such criticism is a spur to the management to be faithful to their trust and careful in their work. There will always be differences of opinion between buyers and users of transportation on the one hand and manufacturers and sellers of transportation on the other hand, because buyers and sellers, in the nature of things, will not always agree about the price and the qual- ity of the article or service furnished. In such cases I hope wc can discuss the differences 217 THE TRUTH ABOUT THE RAILROADS calmly, without prejudice, without any dis- turbance to the transportation machine which is so dehcately adjusted, and without any de- moralization among officers and employees, because any disturbance of this transportation machine reacts in many directions. I hope that if we should be unable to agree among ourselves, we can arbitrate the matter in an orderly way before those tribunals and courts which have been created for such purposes. Important complaints about the railroad generally arise from : (i) A desire of one per- son or community to have better rates or bet- ter relation of rates than some other person or community. These complaints are very diffi- cult to handle, because the railroad must con- sider all persons and all communities, and is sometimes blamed unjustly for not doing something that one person or one community wants, when If it did so act It would do an injustice and invite other and more serious complaints from other persons or other com- munities. (2) A desire of persons or communi- ties for Improved physical facilities, better 218 TRANSPORTATION IN NEW ENGLAND cars, better stations, more and better trains, grade-separations, etc. These complaints can be adjusted only by expenditures of very large sums of money, which, of course, can be ob- tained only by earning it or by borrowing it. Borrowing cannot continue indefinitely unless the rates received for service are sufficient to pay all proper expenses, — taxes, interest, and a sufficient margin to permit some improve- ments to be made each year out of earnings and some return to the owners of the securities. It is, therefore, to the interest of every one to realize that while he, or the community in which he lives, would like to have his or its particular rate reduced, or its particular facil- ity improved, nevertheless, in the interest of New England as a whole, the general rate- situation should permit earnings sufficient to meet the payments above described. It is no disparagement of Theodore Roose- velt to say that for a part of his official life he seemed to be opposed to railroads and railroad methods as he understood them, and yet in one of his messages to Congress he used these 219 THE TRUTH ABOUT THE RAILROADS words: "It must not be forgotten that your railways are the arteries through which the commercial life blood of the nation flows. Nothing could be more foolish than the enact- ment of legislation which would unnecessarily interfere with the development and operation of these commercial agencies." Recently, as a keen observer and student of public opinion, he seems to realize, as do many others, that there is danger that the people have gone too far in reducing the power of the railroads to make net earnings. He wrote a forceful article published in the "Outlook" of July 5, 191 3, entitled " The Living Wage and the Living Rate." Two paragraphs in that article are pertinent to the New England rail- road situation. The first is : — "But it must be a cardinal principle in deal- ing with honestly built and wisely managed railways that the investor, the shareholder, is just as much entitled to protection as is the wage-worker, the shipper, or the representa- tives of the general public. Unless the investor finds that he is to get a fair return on his 220 TRANSPORTATION IN NEW ENGLAND money, he will not invest, and in such case not only will no new railways be built but existing railways will not be able to repair the waste, the wear and tear, to which they are subject, and will not be able to make needed improve- ments. All governmental action, whether by legislature or the executive, should be condi- tioned upon keeping in view this fact." And again, referring to the advance in rates requested by some of the Eastern lines, he says : " In the concrete case before us it is for the Commission to determine with strict jus- tice to all parties how the relative and often conflicting demands of the shareholders, the wage-workers, the shippers, and the general public can properly be met. I am not dis- cussing — I have not the knowledge which would warrant my discussing — whether the rates should be raised. If the facts do not warrant a raise, then the raise should not be permitted; but if justice and the interest of our people as a whole demand a raise in rates, then that raise in rates should unhesitatingly be authorized." 221 THE TRUTH ABOUT THE RAILROADS In managing a railroad, just as in any other business, different kinds of talent and ability must be employed to safeguard the business, — engineering talent, operating talent, com- mercial talent, and financial talent. In a very large business the best talent should be em- ployed and the going prices for such talent must be paid. The management of the New England lines wants to use the best financial talent it can find to help it in raising the money needed. It wishes to employ those bankers, no matter where they live, who can do the work. It would prefer to employ bankers in New York and Boston, who naturally want to help the development of the country and of the roads. The management of the properties will be more than pleased if New England bankers, banks, and investors will furnish their full share of the money needed now and in the future, and will assist in obtaining that money in the markets of the world. If a business is stagnant and dying of dry rot, no new money will be needed and there will be no need of the help of the experienced 222 TRANSPORTATION IN NEW ENGLAND banker or financial agent; but if the business is to grow, especially if it is a public-service busi- ness, which must respond to the demands of the public for good service, new money over and above what can be obtained from earnings is needed at frequent intervals and in very large amounts. The greater the amounts needed, the greater the need of expert advice and financial aid of the very best quality, because by training and experience bankers know where and how money can be obtained. With proper aid from bankers the officers of the company will not have their attention too much diverted from the work of careful man- agement, safe and efficient operation, and good service to the public. The United States Government, state governments, and munici- palities all turn at times to the banker for his aid in placing their securities in the hands of small investors all over the country. The complete development of New Eng- land's varied resources has not been accom- plished. The day is not far distant when to a greater extent than ever before the unused 223 THE TRUTH ABOUT THE RAILROADS water-power will supply the energy to turn the wheels of factories now here and those which will come with cheaper power and adequate transportation. New England's farms must be repeopled, and a change is going on even now. Progressive farmers and immigrants from Europe are teaching a lesson which should be heeded, — namely, that agriculture and horti- culture in New England can be revived and pursued with profit. In addition to this, more animals fit for food should be produced. Mod- ern scientific methods, together with hard work, patience, and intelligence, should pro- duce a greater proportion of the food which New England annually consumes. More and more is this region becoming the summer play- ground for North America. The more factories and industries, the greater agricultural devel- opment, the larger influx of visitors, all will mean more prosperity for New England, and for her railroads. Boston and New England have a just pride in the harbor facilities here, and every reason- able step should be taken to build up this port 224 TRANSPORTATION IN NEW ENGLAND and to help the movement of business via this port. The growth of the country back of the port is the best guaranty for the success of the port. With the completion of the Panama Canal there will be a physical opportunity for vessels to clear from Boston direct to the Ori- ent and to the Pacific Coast. Should capital be found that is willing to invest in steamer lines sailing between this port and other parts of the country and of the world, there will be no effort made by this management to discourage such investment. On the contrary, any move- ment that will help to market the products of New England, that will place them in greater quantities in the hands of the ultimate con- sumer, will receive support. As a boy in Cambridge, it was my good for- tune, with three other smaller boys, to spend one afternoon a week with the Rev. Samuel Longfellow. He read to us, told us stories, and now and then took us to see his brother, whose writings are so full of humanity and good sense. The epigram Longfellow emphasizes in "Hyperion" is applicable to the present 225 THE TRUTH ABOUT THE RAILROADS industrial and railroad situation in New Eng- land: — "Look not mournfully into the Past. It comes not back again. Wisely improve the Present. It is thine. Go forth to meet the shadowy Future without fear, and with a manly heart." New England has had a glorious past and has had a wonderful influence in the develop- ment of the whole United States. She has great influence and power to-day. Her loyal, public-spirited sons have always taken their full share of the work in solving the problems of the country. Her own industrial and trans- portation problems will be solved, and all obstacles will be overcome, if all will work loy- ally together for a greater New England, if all will exercise some of the self-denial and patriot- ism that Robert Gould Shaw displayed when he marched away to his death at the head of his troops, to serve his country first and his family and himself second. Let us all work for the best development of all New England first, and not be swayed too much by the local 226 TRANSPORTATION IN NEW ENGLAND . or selfish interest of one community. The highest development and conservation of the resources of New England — country, town, and city, especially the country — will, in the long run, mean the best development for the particular community in which any individual maybe interested. TABLE A DISTRIBUTION OF ROAD AND TRACK MILEAGE New York, New Haven & Hartford, Boston & Maine, Maine Central, and Allied Properties September, 1913 States Maine New Hampshire Vermont Massachusetts.. Rhode Island... Connecticut. . . . New York Pennsylvania.. . New Jersey Quebec New Brunswick. Total Road mileage Miles 1,346.73 1,174.22 403.29 1,882.82 491.67 1,549.96 925.04 53.66 53-07 90.59 5.10 7,976.15 227 Per cent 16.8 14.7 S-I 23.6 6.2 19.4 II.6 •7 •7 I.I .1 lOO.O Track mileage Miles 1,923.75 1,6974s 537-98 4,144.90 838.98 2,808.89 1,863.41 139-56 106.14 109.42 5.10 14,175-58 Per cent 13.6 12.0 3.8 29-3 5-9 19.8 I3-I i.o .7 1 00.0 THE TRUTH ABOUT THE RAILROADS TABLE B CLASSIFICATION OF OUTSTANDING CAPITAL STOCK New York, New Haven & Hartford Railroad Company as of July i, 1913 No. of shares Per cent No. of shareholders Per cent Massachusetts Connecticut New York 571,009 306,766 495,602 47,606 150,196 36.29 19-54 31-56 3-05 9-56 11,481 5,682 3,510 735 2,560 47.90 23-70 14.65 Rhode Island 3 -07 Elsewhere 10.68 Total 1,571,179 100.00 23,968 100.00 Boston & Maine Railroad Company as of July i, 1912 No. of shares Per cent No. of shareholders Per cent Massachusetts New Hampshire Maine 375,691 17,543 19,158 14,156 88.1 4.1 4-5 3-3 5,372 1,446 622 682 66.2 17.8 7.6 Elsewhere 8.4 Total 426,548 lOO.O 8,122 lOO.O 228 TRANSPORTATION IN NEW ENGLAND TABLE B {continued) • Distribution of Shares Number of shares N.Y.,N.H. &H. Per cent B. &M. Per cent I to 10 shares, inclusive II to so do SI to lOO do loi to 500 do SOI to 1,000 do 1,001 and over do 10,222 8,987 2,383 2,0X2 217 147 42.6 37.6 9.9 8.4 •9 .6 4,89s 2,531 403 264 IS 14 60.2 31.2 S-o .2 23,968 100 .0 8,122 1 00.0 Distribution of Shareholders Stockholders N.Y.,N.H. & H. R. R. Co. Boston & Maine Number Per cent Number Per cent Males 9,008 10,474 3,702 784 37-9 43-S iS-4 3-2 2,742 3,941 1,116 323 33-8 48.6 13.6 4.0 Females Trusts and guardianships . . . Insurance companies and other corporations Total 23,968 1 00.0 8,122 lOO.O 229 THE TRUTH ABOUT THE RAILROADS TABLE C DIRECTORS OF THE NEW YORK, NEW HAVEN & HARTFORD, BOSTON & MAINE, AND MAINE CENTRAL RAILROADS September 30, 1913 Residents of New England New York Philadelphia Totel New York, New Ha- ven & Hartford Railroad Boston & Maine Railroad 21 18 16 5S 4 4 2 I 3 27 18 Maine Central Rail- road 17 Total 67 Number of Directors serving on boards of the three Companies 3 Number of Directors serving on boards of two of the three Companies 8 Number of Directors serving on board of one of the three Companies 37 Total number of Directors 48 RESIDENTIAL DISTRIBUTION OF DIRECTORS Massachusetts 12 Connecticut. . . . s 15 Maine 9 New Hampshire S Rhode Island I New York 4 Pennsylvania 2 Total. 48 VIII PUBLIC OPINION: ITS EFFECT ON BUSINESS » In the preface to his friendly volume "The United States in the Twentieth Century," M. Pierre Leroy-Beaulieu, one of the keenest of foreign observers of conditions in the United States, and a noted economist, uses this strik- ing language: — "Moral worth, which includes the recogni- tion of duties as well as of rights, self-respect, and respect for one's fellows, has contributed, fully as much as the magnificent resources of their country, to the brilliant success of the American people. Of the qualities that have cooperated to elevate them so rapidly to such a commanding position, the most impressive is a great, a tireless energy. Now that the obstacles raised by nature have been overcome, now that the country is already so wealthy * Address delivered before the Publicity Club of Minne- apolis, January lo, 1912. 231 THE TRUTH ABOUT THE RAILROADS that the individual cannot always hope to see his efforts as richly compensated as was form- erly the case, there is danger that this precious quality may be to some degree lost. It seems to me that the first care of the Americans should be to maintain it in all its integrity. The essential condition to the development of energy is liberty. Every restriction on liberty, with however good purpose, diminishes the individual responsibility and initiative. Yet we often hear mooted in America, as elsewhere, measures which, under the pretext of correct- ing abuses, would immeasurably extend the state's field of action, and reduce the liberty of citizens. It is my earnest hope that the Ameri- can democracy will reject such enervating proposals, and will remain true to the virile and liberal traditions that have insured the United States so wonderful a growth." In this short space a foreign observer and admirer has placed his finger on one danger that threatens the American people to-day, namely, the tendency to take away by law the freedom of action of the individual and to 232 PUBLIC OPINION AND BUSINESS attempt to shift upon numerous and often half- digested laws burdens that the individual him- self should cany, and to try to solve problems by law that public opinion should settle, — based on a few of the great fundamental laws of life that no legislature or commission can change. M. Leroy-Beaulieu Is right in declaring that a tireless energy characterizes the American people, and the economic progress of the country has been so rapid as to astonish foreign students of American social and business con- ditions. It has wrought great changes in our methods of business and of living. The aver- age American enjoys luxuries and conveniences which were not dreamed of twenty-five years ago, and the inventive genius of Americans is daily placing In the hands of ever>^ man new and improved tools with which to do his work. Our prosperity has Increased the complications of government, and the close attention given by our people to business has resulted in less personal attention to public affairs, about which there is not the feeling of interest and responsibility that characterized 233 THE TRUTH ABOUT THE RAILROADS the American people when there were fewer people and less wealth. The average American must realize that with a more complex civilization and govern- ment the duties that devolve upon him indi- vidually are more important than before. He must take a broader and better view. He must not consider the law a crutch to take the place of a direct and personal responsibility that our system of government places upon him. He should realize that he is one of many who make government in this country and deter- mine whether it shall be lax or efficient. The law is only the expression of the sound public opinion of many individuals. During a hundred years Americans have taken a pride in the extent of the country, in its great natural wealth and resources, in its development, and in the large machinery of business and Industry that has grown up un- der their hands. We have been proud that we are big; so much so that we have exposed ourselves sometimes to the smiles of foreign- ers, who have thought us boastful. 234 PUBLIC OPINION AND BUSINESS It is related that a French business man accepted the invitation of a prominent man of that city to visit Chicago. The two started from New York and began to talk about the rapid development of the country, and the visitor remarked: "You Americans are a boastful people. I will wager a sum of money that before we have been in Chicago thirty, minutes, at least two of your fellow-citizens will have proven it to me." The wager was made. Upon alighting from the train the Chicago man met a friend and introduced his guest. Almost in a breath the friend saluted the French visitor, and urged him to visit the stockyards at once, because "they are the largest in the world!" Fifteen minutes later, at a club, the Frenchman won his wager, when a prominent merchant invited him to tour the business district in an automobile and see the "greatest commercial center in the world!" Such pride is natural in a people who have done great things in a short period of years. Our commerce is great, and our trade extends to the corners of the earth, — the product of 235 THE TRUTH ABOUT THE RAILROADS a hundred years. Our transportation system, with a capitaHzation which is the lowest in any civiHzed country in the world, with the lowest rates, and with the highest efficiency of service and ability to meet the demands of business, is second to none. An elaborate system of public education has been built up, and is aided by many universities and schools created by private gifts, which rank with the best insti- tutions of learning in other countries. In the common things of life, corresponding progress has been made, and the average American lives better, profits more from his labor, and has greater opportunities of advancement than the citizen of any other country. In all this wonderful progress, there is one weakness which many Americans realize. Our progress has been largely material, and public opinion has been busy with purely material things. In transportation, business, invention, and the spread of learning, our achievements are equal to or superior to those in foreign countries. What we have done in one hundred years is due largely to the tireless energy, 236 PUBLIC OPINION AND BUSINESS individual responsibility, and initiative spoken of by M. Lcroy-Beaulicu. If we turn to our national life, the welfare of which is dependent upon the degree of personal responsibility felt by the average citizen, a less favorable result comes to our attention. There are defects of political and governmental machinery which are apparent to every one. Efforts toward better standards are made, yet there are still preserved, in the methods of government in most of the cities of the land, customs and practices which are not thorough, efficient, and economical, or equal to the methods in- sisted upon in ordinary business. In private business affairs the progress toward genuine efficiency is more rapid than in national, state, or municipal government. This may be attributed to the lack of a vigorous public opinion insisting that a man in the service of the public shall work just as long and as hard as the man in private business. The American people are divided in their views about present conditions. The ultra- conservative are content to watch their in- 237 THE TRUTH ABOUT THE RAILROADS come grow with not much thought of public duty. The sentimentalists and the radicals, actuated more by the heart and self-interest than by reason, declare that all things are wrong and that we must tear down and begin over again, introducing doubtful principles and ideas often obsolete and unpractical. It is probable that the true view Is between these extremes, — that there is sound public opinion in this country, but that it is not making Itself felt as It should, because the pressure of material things and personal interest prevents proper expression of it. Society as a whole needs a stronger sense of personal responsi- bility, creating a foundation upon which a really sensible and constructive public opinion may be built. Few people realize the number of men in this country entitled to vote who fail to do so. In 1900 there were In the United States 21,329,- 819 males of voting age, or potential voters; and there would be some increase each suc- ceeding year, and yet the vote for President was in 1896, 13,827,212; In 1900, 13,970,134; 2^8 PUBLIC OPINION AND BUSINESS in 1904, 13,524,349; In 1908, 14,887,133; or about 35 per cent not voting. This is certainly not a good showing of interest. PubHc opinion should arouse people to take more interest in selecting the men who are to make and ad- minister the laws that affect their daily lives in many directions. One result of this indifference and neglect is that there is a class described generally as "politicians," who make the laws — and make too many of them. That is their business, and the more elaborate the governmental ma- chinery and the more laws to be made and unmade, the better for the "politician" and his friends, who are living at the expense of the rest of us because we are too busy to express our real views about matters of grave impor- tance. The disposition to try to adjust everything by passing laws is nowhere more strikingly shown than in the number of laws introduced into Congress. While the largest number of proposed enactments submitted to any Ameri- can Congress, during the ten-year period end- 239 THE TRUTH ABOUT THE RAILROADS ing in 1909, was at the Sixtieth Congress, when 38,388 bills were introduced, the more deliberate and careful methods of the English are shown in the fact that the largest number of bills before any Parliament in that period, that of 1900, was only 621, Less than 2 per cent of the bills before the Sixtieth Congress became law, while 67 per cent of the bills pro- posed in Parliament in 1900 were enacted. During this ten-year period, our national Sen- ate and House considered 146,471 different bills. During the same period the English Parliament considered but 6251 measures. The congressional "mill" added 15,782 mea- sures to the law of the land; Parliament en- acted but 3822 new laws. The figures in both instances include both public and private bills, and it should be added that Parliament con- siders and acts upon many subjects which are considered by state and municipal bodies in the United States. The state legislatures for 191 1 considered, as a part of new railroad legislation proposed, a total of 512 bills affecting the physical opera- 240 PUBLIC OPINION AND BUSINESS tion of railroads. These proposed bills related to hours of service, terms of employment, the kind of uniforms to be worn and other matters affecting employees, compulsory and volun- tary arbitration, train rules, regulations for the operation of freight- and passenger-trains, equipment, car-supply, claims, signals, clear- ances, crossings, maintenance of tracks, and many details to which it would be supposed that the long experience and extensive knowl- edge of railroad managers under the varying conditions of business would be a better guide than the judgment of a legislative body, no matter how excellent its intentions. Legislation that is a response to a real public opinion should not be objected to by any con- scientious citizen. Such laws, backed by the will of the people, will be enforced. But the deluge of new laws that is dumped upon the country has the effect of weakening respect for the law, because too many laws prove unwise in practice, and are not enforced, with the result that too many people grow up with a lack of respect for law and order and do not 241 THE TRUTH ABOUT THE RAILROADS obey promptly those who have the right to give orders. There is a very proper concern because of railroad accidents, and no one Is more con- cerned about them than the railway owner and manager: they have the greatest Incentives to avoid them, — pride In their profession, the natural desire of all men to prevent sorrow and suffering and the loss of money and repu- tation. And yet most accidents are due to three fundamental causes: disobedience by some one of a rule that If followed would have prevented the accident; negligence of some Individual somewhere in doing his particular work, making the car-wheel, or rail, laying the track, inspecting the track, throwing the signal, etc.; recklessness among passengers and em- ployees. This disobedience, negligence, and recklessness cannot be eliminated by law, but public opinion can have a marked effect upon it. The lack of public opinion of sufficient weight to compel the enforcement of many of the laws passed in the United States is one of 242 PUBLIC OPINION AND BUSINESS the causes of our homicides. Every day of the year murders are committed somewhere in the United States. Many have tried to point out the reason. It is probable that several factors rather than one are responsible, and that they may be summed up in the laxity of public opinion and the consequent laxity of law and its administration. For this death-roll every individual of the American people should feel a responsibility. It is the lack of such public opinion that caused the Indiana Railroad Commission to make this sad comment in its accident bulletin issued in March, 1910: "Trespassers continue to pay the usual toll in blood for the fatal right to make thoroughfares of the railroads. If the railroad ties were three times as many, and were saturated with oil and burning all the time; if dynamite were placed on the track every ten feet, and people walked on the tracks, nevertheless the deaths would be no more certain than in a country whose laws do not prohibit such use of the tracks, and whose customs and carelessness of human life permit these astounding fatalities." 243 THE TRUTH ABOUT THE RAILROADS From 1901 to 191 1, 50,708 persons lost their lives by "walking on the railroad tracks," — taking chances of death that were obvious. Add 54,183 more who were injured, and you have a total of death and destruction because the American people have not developed a public opinion upon this question that makes a person who recklessly takes such chances of death feel the opprobrium of his associates. Three pretty Iowa maids walked from Bur- lington to Chicago last autumn. Interviewed by a Chicago paper, they said: "Last Sunday we must have walked four hours on the road, though without seeing a soul. So we got back on the tracks, walking * goose fashion' along the cinder path. It was n't long before trains were going by, the people waving their hand- kerchiefs at us. That was great fun." A rail- road statistician posted on the death-roll among those who walk the tracks "for fun," adds the comment: "What's the use of signals, colored lights, or other forms of warning!" The accident-record of the American rail- roads has often been made a weapon in the 244 PUBLIC OPINION AND BUSINESS hands of their critics, but the press and the public do not set forth clearly the true facts. From the total number of employees killed and injured must be deducted the number of casualties due to their own recklessness, care- lessness, or willingness to take chances, of which Mr. William J. Cunningham in speak- ing in February, 191 1, before the New Eng- land Railroad Club said: "American railway employees are proverbially chance-takers, and are not as amenable to discipline as British railway trainmen, who have a greater respect for authority and instructions. Americans are noted for always being impatient and in a hurry. These national differences in both passenger and employee bear a relation to acci- dents, indefinite to be sure, but nevertheless important, particularly in the * chance-taking' by employees." An analysis of the railroad accidents in the United States for the year ending with June, 191 1, shows that out of 356 passengers who were killed, there were only 96 persons killed while riding on trains in accidents for which 245 THE TRUTH ABOUT THE RAILROADS railroads were probably responsible. In the same year the railroads handled more than 900,000,000 passengers. For 1909 the results showed that a passenger could travel 4000 times around the earth without being killed, or he could travel 60 miles an hour for 220 years without being killed! During 1908, 316 railroad companies hauled 455,365,447 passen- gers without the death of a single passenger In a train accident. In 1909 there were 347 rail- road companies, hauling a total of 570,617,563 passengers, without a single accident to a passenger in a train accident. These figures cover a mileage of railway equal to that of the United Kingdom, Germany, and France com- bined, and present a record of immunity from fatalities among those who travel unequaled except in the United States in previous years. Incomplete records for 1910 show that 156 lost their lives in automobile fatalities. The death-roll of the automobile for eleven months of 191 1 was 257, more than two and a half times the death-roll of passengers In train accidents for which railroads were responsible. 246 PUBLIC OPINION AND BUSINESS One hundred persons met death by accident during the hunting-season of 191 1, in the Northwestern States. What a vigorous public opinion might do in diminishing the railway death and accident list is well shown in the remarkable figures of Fourth-of-July accidents which have recently become public. The death-roll from the cele- bration of this holiday was for years a matter of anxious concern to many. In nine years it meant 39,219 killed and injured. It was within recent years that the vigorous agitation for a "safe and sane Fourth" started. The figures for 191 1 show but 57 killed, while In 1910 the death-list was 131 and In 1909 It was 215. Within a little more than two years' time a vigorous public opinion intervened between the American small boy and a time-honored method of celebrating a national holiday, changed the customs of a people, and reduced the death-list from 215 to 57. The railway-owner may make a very fine physical machine, but when It Is done It must be operated with all of Its complications by 247 THE TRUTH ABOUT THE RAILROADS human beings, who are not perfect, and who make mistakes. In our country of large distances and large cities, the question of feeding people and keep- ing them warm means that transportation must be regular, sufficient, and continuous. What would happen to New York or Chicago or Minneapolis if for one week all railroad transportation were abandoned.'' The railway-owner may make rules and regulations and make effort to continue in business, but he cannot always do so unless public opinion in time makes it clear that when a man chooses as his means of livelihood work on a railroad, he assumes a duty to society as a whole to give absolute obedience to rules, and to remain at work until suitable arrange- ments are made to relieve him. So dependent is the welfare of the whole country upon regular transportation that in time public opinion will declare that men on a railroad have no more right to disobey reasonable rules than have the men in the army, have no more right to leave in a body than have the men in 248 PUBLIC OPINION AND BUSINESS the army. When they act thus in the army they are punished for mutiny and desertion. Probably no law could be framed at the present time that would cover these ideas, because it is contrary to our American ideas to say that a man shall or shall not work as he may wish. But public opinion would in time crystallize so that in some way strikes or industrial war would be things of the past, and men could only leave in a body by being mustered out in some orderly manner. We hear much about quasi-public corporations, and public opinion has gone a long way in taking away from the owner of public-service corporations the right to manage his own property, to name his own rates or prices, to decide about his methods, and has imposed on him the responsibility of providing safe and adequate public service from his private means, but so far has exerted little influence upon the men who have to make the quasi-public corporation of use to the public. If a man decides to work for a quasi-public corporation, he becomes a quasi- public servant, and he has a moral duty and 249 THE TRUTH ABOUT THE RAILROADS responsibility to society just as much as the owner has, to see that society is not deprived of the service necessary for its existence. The railroad manager! Is hampered In ob- taining absolute precision and reliability, not alone by the human equation, but by the operation of the force M. Leroy-Beaulieu points out. Over many of the employees his authority is divided with the labor unions, which exercise a powerful influence in deter- mining the extent of the authority he is to be permitted to exercise over their members. To the unions he must look for acquiescence not alone in the rates of pay and terms of employ- ment, but in the rules he makes, the authority he exercises over men charged with various duties, and the obligations under which a large number of men work. His power to cull his forces and discard not only the unfit, but those who do not demonstrate their entire capability, is limited. The American people have corrected some of the errors in corporate management and realize that organized capital is necessary to 250 PUBLIC OPINION AND BUSINESS the welfare of the country, but that it must be controlled and regulated. Organized labor is a great force that makes for good or evil of labor and of society as a whole, depending on the wisdom and patriotism of the lead- ers. Most men want to work and support their families, but they fear the ridicule of their fellows and sometimes follow too blindly an unwise leader who may do them a real harm. Public opinion at one time justified burning and torturing people because they did not follow the same religious practices as those in authority. In old Salem it justified hanging women who were thought to be witches. Less than one hundred years ago it justified one man's killing another in a duel because of some insult, real or fancied. To-day physical violence and social ostracism are still in prac- tice toward those who do not wish to join a labor organization but who do wish to work. But public opinion will change and say to organized labor, as It has said to organized capital, "You must be fair to all." J. B. 251 , THE TRUTH ABOUT THE RAILROADS McNamara, in his confession, said, "I did what I did for principle." It is only necessary for an aroused public opinion to speak out and show the unfortunate men like the McNa- maras that the many good men in the ranks of labor and the many good men in the other walks of life will not stand for that kind of principle. The transportation business, now trying to readjust itself physically to the growing needs of a great country which has developed rap- idly, has been subjected to severe attack and criticism. That transportation is a vital part of commerce, and the greatest element, after agriculture, in business success, has been ignored. With other kinds of business it has felt public opprobrium, because an element of the people have revolted somewhat against alleged improprieties of the past. Railroads have had to struggle for existence, as have other forms of business. Their history is simi- lar to the history of other forms of business of contemporaneous development, and their present critics, forgetting all that has been 252 PUBLIC OPINION AND BUSINESS done to bring the American railroad to its present high plane of efficiency, have been led into a somewhat unfair attitude. Of the 609,994 miles of road in the world, which is the mileage as of 1908, nearly 40 per cent, or 233,468 miles, were in the United States. The railroad-mileage operated has grown from 159,272 in 1890, to 239,652 in 1910. The number of employees of railroads has grown from 750,017 in 1890 to 1,502,823 in 1909, and there are at least 1,000,000 holders of securities. These 2,500,000 owners and employees represent about 10,000,000 of our population, and their rights should be con- sidered and protected just as much as those of other classes of people. In the United States the railroads have low- ered their rates, largely by voluntary action, about 25 per cent since 1888, but the tons of freight carried have increased 257 per cent, the mileage of freight-trains 80 per cent, and the average haul per ton in miles 14 per cent. The lowering of rates saves the shipper ^i out of every $4. he formerly paid, and on the ton- 253 THE TRUTH ABOUT THE RAILROADS nage moved by the railroads in 19 lo effected the saving of ^615,928,000. As compared with ^275,000 per mile in the United Kingdom, $109,788 per mile in Ger- many, $80,985 in Russia, $139,390 in France, and $112,879 ill Austria, the capitalization of the railroads in the United States is smaller than that of the railroads of any country of the first class, and especially low when considered from the standpoint of comparative service to business, for in this country the citizens command the service of five miles of a rail- way to one mile that serves the average Eu- ropean. The Railroad Securities Commission says in its report transmitted by the President to Congress, December 11, 191 1: — "Neither the rate of return actually re- ceived on the par value of American railroad bonds and stocks to-day, nor the security which can be offered for additional railroad investments in the future, will make it easy to raise the needed amount of capital. The rates of interest and dividends to outstand- 254 PUBLIC OPINION AND BUSINESS ing bonds and stocks of American railroads is not quite four and one half per cent in each case." Public opinion must be exerted to see that railroads are fairly treated, so that the money needed for increased and improved transporta- tion facilities can be obtained and spent rapidly and freely. Every age has its problems, and we some- times think that ours are different from, and much more difficult than, those that others have had to deal with. I read the following the other day; " The merchants form great com- panies and become wealthy, but many of them are dishonest and cheat one another. Hence the directors of the companies who have charge of the accounts are nearly always richer than their associates. Those who thus grow rich are clever, since they do not have the reputation of being thieves." This sounds familiar, as if it might have been said very recently, but it was published in the Chronicle of Augsburg, Germany, in 15 12, four hundred years ago; so the modern reformer who 255 THE TRUTH ABOUT THE RAILROADS thinks business is all wrong, and that he has discovered the trouble and can remedy it, is somewhat behind the times. The following also came to my notice: "It is impossible to limit the size of the companies, for that would limit business and hurt the common welfare. The bigger and more numer- ous they are, the better for everybody. If a merchant is not perfectly free to do business in Germany he will go elsewhere, to Germany's loss. Any one can see what harm and evil such an action would mean to us. If a merchant cannot do business above a certain amount, what is he to do with his surplus money? It is impossible to set a limit to business, and it would be well to let the merchant alone and put no restriction on his ability or capital. Some people talk of limiting the earning capac- ity of investments. This would be unbearable and would work great injustice and harm by taking away the livelihood of widows, orphans, and other sufferers, noble and non-noble, who derive their income from investments in these companies. Many merchants out of love and 256 PUBLIC OPINION AND BUSINESS friendship invest the money of their friends — men, women, and children — who know noth- ing of business, in order to provide them with an assured income. Hence any one can see that the idea that the merchant companies undermine the pubHc welfare ought to be seri- ously considered. The small merchant com- plains that he cannot earn as much as the companies. That is like the old complaint of the common laborer that he earns so little wages. All this is true enough, but are the complaints justifiable?" This is from a report of a committee appointed by the Diet of Nuremberg to investigate monopolies, and they made their report in 1522. And the com- mittee found then, as is true now, that they could not change the situation very much without doing more harm than good! I read in the "Literary Digest" a few days ago four paragraphs which are said to repre- sent the Chinese view of certain business practices. They read as follows: — "Those who deal with merchants unfairly are to be beheaded." 257 THE TRUTH ABOUT THE RAILROADS "Those who interrupt commerce are to be beheaded." "Those who attempt to close the markets are to be beheaded." "Those who maintain the prosperity of commerce are to be rewarded." The Chinese seem to recognize that injus- tice, interruption of business, and control of markets are undesirable things and that the expansion and growth of commerce is a good thing! They suggest pretty drastic remedies, which can hardly be followed out in this country; and they suggest rewarding those who expand commerce, while in this country the tendency is to condemn them. Public opinion, however, in this country, if created wisely by the action of the true ma- jority, can accomplish the desired results without beheading anybody. Public opinion can insist: — That, in the schools supported by the pub- lic, children shall be taught the great importance of absolute obedience, con- tinuous work, accuracy, and economy, 258. PUBLIC OPINION AND BUSINESS and that these habits are essential for any one who is to become a good citizen ; — That the press, supported by the subscrip- tions and advertisements of the pubHc, , and putting forth each year more than io,cxx),ooo,ooo copies, can, by telling the real truth in simple form, do much good to the country and in the long run make more money than by being sensational and yellow; — That the great public-service and other cor- porations must be fair to those who need their service, but on the other hand they must receive fair treatment and a chance to make money, or they will not be ready to serve when the public needs them badly; — That the honest, hard-working laboring man must be allowed to work, whether his convictions lead him to belong to a labor organization or not, and that labor organ- izations must be fair and square in their dealings with their members and with the public at large; — 259 THE TRUTH ABOUT THE RAILROADS That in the effort to correct abuses that may- have developed in business Hfe during the very rapid and really marvelous growth of this country, the tireless energy of our people should not be destroyed by crip- pling the development of individual responsibility and initiative; and — . That laws should only be made on complete knowledge of the real facts. To create an enlightened public opinion, every one must contribute, and not leave the formation of that opinion to a small minority who make a great deal of noise but are not always very wise. Every one can do a little toward helping out. Maltbie says : — " We are not here to play, to dream, to drift; We have hard work to do, and loads to lift. Shun not the struggle; face it, 't is God's gift." This is good advice. THE END CAMBRIDGE . MASSACHUSETTS U . S . A THE CONFESSIONS OF A RAILROAD SIGNALMAN By J. O. FAGAN " Extremely well written and forcible." — The Outlook. ** A terrible indictment of our railway management." — New York Post. " The literature of the day contains few things more interesting than these confessions. They relate to rail- road accidents, and the confessor is manifestly a man not only of remarkable discernment, but likewise of rhetorical skill." — Stone and Webster Public Service Journal. "Throws much light on the frequency of railroad accidents and will stimulate serious thought on the part of readers." — Troy Times. "Remarkable and interesting." — Boston Herald. Illustrated from photographs, i2mo, ^i.oo net. Postage lo cents. HOUGHTON /^8^ BOSTON MIFFUN /y'i^ ^^^ COMPANY ^Isi) NEW YORK A YEAR IN A COAL-MINE By JOSEPH HUSBAND " Mr. Husband enables the reader to carry away a vitalized impression of a coal-mine, its working and its workers, and a grasp of vivid details." — San Francisco Chronicle. " It is a story of vivid and compelling interest and every word bears the impress of truth." — Living Age, " Apart from its informative value, this is a book that no one can fail to enjoy." — Phila* delphia Press. " A refreshingly frank narrative." — New York Su7u With frontispiece, ^i.io net. Postage 9 cents. HOUGHTON /^S^ BOSTON MIFFLIN /^S^ AND COMPANY rara NEW YORK (,V 3s^^ ^' IJUlTl University of California Library Los Angeles This book is DUE on the last date stamped below. / ^ ^ gt^ ftTI. "^ C& O ^ ^ ^^^ ^ o ^'^ ^/^a; f//> ^^0 o I? :<^ %a fQ^ ;ii^ m 33 '^Aflvoairr Aavaaira^ jujnv'iur A^EUNIVERS/^ o ^10SANCE% o c^ "^AaaAiNrt-aw^^ 3 1158 01314 6633 ^mi\m-i^ MEUNIVERJ/A ^lOSANCElfj^ o ^OfCAllFO/,: FCAIIFO/?^ UC SOUTHERN REGIONAL LIBRARY FACILITY \^my\^'^ '^.'/ojnv>jo>^ '%fl3AINn]W> .OF-CALIFOftfe ^.OFCAUFO/?^ ■i?AavaaiiT ^'?Aavaan# g^ ^^rtEUNIVERy/Zi ^ ^.'-Ni**^ ..y^ i —PI o '^/saaAiNiiJi\> \\^EUNIVER% ^^lOSANGElfj> ^;^IUBRARYQ^ § 1 ir"^ filiONYSOV'^"^ %a3AINn-3WV^ '^<^0JITV3JO^ m 4r> A^tllBRARYQ^ .\^EUNIVER5'/A v^lOSANCElfj-^ ■'!y7fu3Aiun.iviV.' .;^OFCALIFO/?,fc, ^ «>5 ■XAinx/wana"^ AOfCAllFO% ^,