The Railroad Problem Part 16

Last winter, when the state of Illinois seriously considered the legislation limiting train-lengths, the president of one of its greatest railroads went down into the southern part of the state and said:

"Do you wish us to discard these strong new locomotives that we have been building? Do you wish us to return to the small engines of a quarter of a century ago? It would be inefficient, wasteful to use our modern locomotives for the short-length trains. And sooner or later you would have to bear the cost of the discarded equipment. State laws may be erratic. Economic laws never are. They are as fixed as the laws of nature or of science."

And the state of Illinois took heed of what this man and his fellows said and killed the piece of ridiculous legislation. But it is by no means killed in some of the other states of the Union.

The conflicts between state authorities that we noticed already have borne directly upon the railroad's earnings. The conflicting intrastate rates have borne far more deeply and far more dangerously upon them. Indiana long since fixed the demurrage penalty at one dollar a day for each car which a railroad failed to furnish a shipper; North Dakota made it two dollars; while Kansas and North Carolina fixed it at five dollars a day.

Unscientific is hardly the word for such rate-making. And how shall one term Kansas' action, withholding pa.s.senger-fare legislation until she found whether or not the supreme court of Nebraska would permit the two-cent-a-mile bill of that state to stand?

If these rank discrepancies in the manhandling of rates by the various states affected only their own territories it would be quite bad enough.

Unfortunately they play sad and constant havoc with the interstate rates.[19] These are delicate and builded, many times, upon local or state conditions. And this despite the fact that the vast majority of freight traffic is interstate, rather than intrastate. The majority of the grain from the farm lands of Nebraska or Minnesota is not destined for Omaha in the one case, or Minneapolis in the other; yet these sovereign states take upon their solemn shoulders the regulating of grain rates--to the ultimate discomfiture and cost of the other portions of the land.

I have but to refer you to Justice Hughes's decision in the so-called Minnesota rate case. He showed how this arbitrary local outgrowth of the obsolete doctrine of states' rights worked to the utter and absolute detriment of the nation as a whole. And yet in the six long years while that case was pending the Great Northern and Northern Pacific companies lost more than $3,000,000--a sum of money never to be recovered from their shippers--as a result of the state's unsustained reductions in freight rates.[20] No better argument has ever been framed for the nationalization of our railroads, for making the powers of the Interstate Commerce Commission absolute and supreme.

No wonder, then, that the railroaders are praying that a way may be found and found soon for lifting the entire authority over them out of the hands of the forty-five present state boards of control--who never have agreed and who apparently can never be made to agree on any one form of procedure--and placing it in the hands of the very competent regulating board down at Washington, enlarged and strengthened for its new burdens.

The Interstate Commerce Commission has never shown a tendency toward freak rulings. Its time has been taken with genuinely important matters. On these it has raised itself to its present high degree of efficiency. It has shown itself capable of studying the details of complicated transportation problems and rendering decisions of great practical sense.

But the scope, and therefore the efficiency, of the Interstate Commerce Commission are closely hemmed in by existing laws. The latest "crisis"

between the railroads and the four great brotherhoods of their employees brought this limitation sharply to the fore. It is therefore equally essential that the power and scope of the Federal commission be broadened as well as being made superior to those of the state regulating boards.[21] And it is gratifying to note the progress that President Wilson already is making toward the first of these necessary immediate reliefs to the railroads of the land.

If President Wilson shall succeed in persuading Congress that the entire control of the railroads should be placed in the hands of an enlarged and strengthened Interstate Commerce Commission, he will have earned the thanks of every man who has made an honest study into the situation. Such a commission, clothed with the proper powers, could and would do much not only toward relieving the railroads' immediate necessities in regard to both physical betterment and the enlargement of their pay-rolls, but in enabling them to grasp some of the opportunities which we have outlined in previous chapters--opportunities requiring a generous outpouring of money at the beginning. If I mistake not, public sentiment is going to demand that, if the railroads be granted the relief of unified regulation, they shall be prompt in their acceptance of at least some of these great avenues of development.

We have heard much in late years of the banker control of our railroads and of absentee landlordism in their management. The two things are not to be confused. Banker control is not, in itself, a bad thing. Absentee landlordism invariably is. There are good stretches of railroad in every part of the country that today are failing to render not alone the proper income returns to their owners but, what is worse, service to their communities, because of this great canker, this lack of immediate executive control and understanding. And it is significant in this close connection of two phases of the railroad situation that it was the banker control in New York of the one-time Harriman system--the Union Pacific, the Southern Pacific, the Oregon Short Line, etc.--that gave to it at one fell swoop, five presidents--one at San Francisco, one at Omaha, one at Portland, one at Tucson, and one at Houston--each a young, vigorous man equipped with power and ability. The good effects of that far-seeing move--that instant wiping out of the charges of absentee landlordism that were being lodged against the Harriman system--are still being felt.

It is not banker control that is essentially bad for our railroads. It is banker control together with an utter lack of vision, that has cost them so many times their two greatest potential a.s.sets--public interest and public sympathy. Banker control plus vision may readily prove itself the best form of control for our carriers. And that our bankers do not entirely lack vision may be argued by the far-seeing and opportunity-grasping way in which our bankers of the newer school are today reaching for American development in South America, in China, in the Philippines, and in other parts of the world.

Back of the President, back of the Newlands committee and its rather dazzling sense of importance, sits the nation. It is far superior to any mere committees of its own choosing and it is weighing the entire railroad situation as perhaps it never before has been weighed. It is considering the enlargement and the strengthening of the Interstate Commerce Commission--together with it a feasible method for the Federal incorporation of our roads--this last a vital necessity in the mind of any man who has ever tried to finance an issue of securities for an interstate property with each separate state trying to place its own regulations--in many cases both onerous and erratic--upon them. With the spirit of Congress willing, there still remains the very large question of how far its power would extend, in attempting either to reduce the power of the state boards or to make them more amenable to the Federal commission. Our states have been most jealous of their sovereign rights. And it is easy to conceive that their aid and cooperation--so very necessary to the success of the entire ultimate project of the nationalization of our railroads--is not to be obtained by the mere wishing.[22]

President Wilson has set the beginnings for the plan and set them well. As I write it is still up to Congress to undo its mischievous legislation which, if it is made to include an eight-hour day, should render a genuine eight-hour day, one applicable to every cla.s.s of railroad employee--although it would be difficult to imagine a railroad superintendent or general manager or president quitting at the end of the short-term service. They are schooled to harder things.

And with the eight-hour day must come these other things to which we have already referred, not once but several times. First among these are the matters so closely correlated in President Wilson's program that they cannot be separated from the eight-hour day: arbitration--compulsory arbitration, if you please--the strengthening of the power of the government to seize the railroads and operate them in a time of national panic or military necessity, the enlargement of the powers and the personnel of the Interstate Commerce Commission. With all these things accomplished, and the situation just so much strengthened, it will then become the duty of the railroads to reach out more generously toward their opportunities for further development as the transport service of a great and growing people. It will be necessary for them to attract, to train, to reward new executives of every sort; to further their credit by deserving credit, to show outwardly in a more potent way the thing that so many of them have believed they inwardly possess--true efficiency, both for service and for growth.

Please do not forget this great point of growth--of development, you may prefer to put it. In my mind, men, inst.i.tutions, nations, even railroads never stand still; they either grow, or else they decline, they shrink, they die. But the Railroad, as the greatest servant of a great people, cannot die without bringing death to the nation itself. Therefore he _must_ grow. He must plan. He must announce his plans. He must bring Public Sentiment to his aid. Law can do many things--but few of these latter ones. Public Sentiment may accomplish every one of them, and almost in a crack of a finger. No wonder that Capital--that conservative fellow--longs to have him stand at the bedside of the Railroad.

The sick man is not without his ambitions--you may be sure of that. He sees his opportunities, perhaps more clearly than ever before in the course of his long life. He is anxious to be up and at them. But before this can be done, some of these things, which we have outlined so briefly here, will have to come to pa.s.s. There are reckonings to be made, huge doctors' bills to be met--and the American public will have to help meet them.

The alternative?

There are many panaceas suggested; but I fear that most of these are but nostrums. Ingenious, many of them are, nevertheless. And some of them come from men who speak with both authority and experience. One man proposes to have the entire Federal taxes paid through the railroad, which, in turn, would recoup itself through its freight and pa.s.senger rates. He makes an interesting case for himself. Another suggests a Federal holding company for all the railroads of the United States and makes his suggestion read so cleverly and so ingeniously that you all but forget that he is drawing only a thin veil over government ownership. Of government ownership I am not going to treat at this time; not more than to say that to almost all American railroaders--big and little, employers and employed, stockholders and bondholders--it represents little less than death itself to the sick man of American business. In my own opinion it is, at the least, a major operation--an operation whose success is extremely dubious.

INDEX

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

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

American Railway a.s.sociation, cooperation of, with government, 211.

Arbitration, compulsory, 240, 258; in wage disputes, 57 ff.

Architectural problems in relation to increase of pa.s.senger traffic, 107 ff.

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

Automobile: effect of the, on railroad traffic, 134 ff.; as a freight feeder of the railroad, 158; operated on railroad tracks, 151.

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

_See also_ Railroads.

Branch-lines and their relation to automobile compet.i.tion, 142; opportunities neglected by railroads, 152, 156.

Brotherhoods, 90 ff.; influence of, on wages, 95, n.; strength of, 238.

_See also_ Labor.

Ca.n.a.ls, advantages of, to railroads, 176.

Capital, 4; relation of, to earnings, 17;

Conductor, efficiency of the present-day, 45.

Cooperation of public vital to railroads, 179.

Cost of living, how influenced by railroads, 6.

_De Luxe_ trains, economic wisdom of, 228.

Deficits, how met, 18.

_See also_ Railroads.

Droege, John A., 211, 214.

Efficiency, 12, 15; relation of, to economy, 13.

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

Electricity as motive power, 105, 125, 129; advantages of, 113 ff.; in Boston, 114; in Chicago, 117; in Philadelphia, 119; to freight traffic, 131; to railroad systems as a whole, 129, 132; to suburban systems, 121; transformation of gravity pull into motive energy, 131.

Elliott, Howard, 179.