The Railroad Problem Part 19

"'For instance, in the case (of an important subsidiary property), I know that for a long period we had to defer selling bonds on more than one occasion, although the construction work was proceeding, because market conditions were not favorable. Its mortgage bonds would be guaranteed by (its owners), but in lieu of selling them, we temporarily authorized short-term borrowing at lower interest rates. For the period 1908 to 1915 the general experience of most of the railroads was that they had not sufficient business, or earnings, to furnish a credit basis to make proper additions to their property and equipment, nor was there sufficient prospect of any increased traffic to justify proceeding with any great expenditure program. During this period, short-term financing had to be resorted to because of the impossibility of selling capital stock on any basis, or mortgage bonds, except on onerous conditions.'"--_Railway Age Gazette._

[6] "The bitter fight now raging as to the content and enforcement of the Adamson Act should not make us lose sight of certain things which are more fundamental in railroading than either wages or hours. The transportation service of this country has been the best in the world, partly because it gave us a free field for able and ambitious men. Rising from the commonest sort of day labor, these executives command the respect and obedience of the rank and file, but sometimes forget to cooperate. That is the root cause of the present-day troubles. It is natural that a corporation president should stand for the interests of the company, but if the men are to be bound up heart and soul in loyalty to the work, then their interests are, and must be, part of the interests of the company. A railroad cannot be run exclusively by presidents, superintendents, and managers; there must be engineers and firemen of training and long experience. As a practical matter, this means that these occupations must hold many capable men during their entire working lives. In a country of free inst.i.tutions this situation cannot be held down by autocratic rule.

If the men have no say in the company, they will try to get one in the union. The great mistake of American railroad presidents during the last thirty years has been to force this growth of factionalism, to make it plain that the union was the means by which the men could get ahead. The railroad brotherhoods secured one concession after another in hours, wages, and operating rules, concessions which the nonunion men could not get. The limits of this method have about been reached. Cannot railroad executives save the future by definitely abandoning this policy of quarrel and drift, by making themselves the true leaders of all their men? We think they can. They have had too much of a caste point of view and have been too much absorbed in other things. It is time to change. The general alternatives have been well stated by Edward A. Filene, a leader of the new mercantile New England, in these words:

"'If American employers are farsighted they will begin to put as much hard thinking into the problem of men as they have put into the problem of machinery, for, finally, that contentment of labor which is based upon a welfare that springs from justice and frank dealing is the only soil from which permanently prosperous business can spring.

"'All of the initiative in solving the labor problem must not in the future come from the employees. If the employers of America do not solve the labor problems by business statesmanship, the employees of America will determine the outcome by force; and what labor cannot get in the future by the physical force of strikes, it may be able to get through the legal force of legislation and the income-taxing power.'

"If our railroad employers, among others, will learn and apply the wisdom expressed in this excerpt, all will yet be well."--_Collier's Weekly._

[7] Already it has been followed by several other railroad and express systems--conspicuous among these, the Southern Pacific, the Union Pacific, the Erie, Wells Fargo & Co. Express, and the American Express Company. The Union Pacific's plan, embracing an expenditure of approximately $2,500,000 in bonus payments, differs from those of the other railroads, except the Erie, in that it does not make a distinction between the men who belong to the brotherhoods or other forms of union labor, and those who are not "contract labor." The Union Pacific's plan also embraces a scheme of group insurance, in the benefits of which its employes partic.i.p.ate without cost to themselves. Insurance plans, of one sort or another, have recently become popular, and are being recognized as a logical outgrowth of the pension systems which have long since become part of the fiber and structure of the older and more conservative of our railroad and express companies.

[8] The filing of further plans for the development of its main pa.s.senger terminal in Chicago would indicate decidedly that the Illinois Central had not overlooked the possibility of the electric development of its great suburban territory there. For the plans now not only include the new terminal, itself, but the complete electrification of the suburban service on the main line, as well as the South Chicago, Blue Island, Kensington and Eastern branches--all told, some forty miles of line--and involving for electric equipment alone the expenditure of about $25,000,000. The railroad is to give up a large portion of the ground occupied by the existing station to permit of the widening and extension of the Lake Front Park, and its approaches. An interesting part of the whole terminal scheme is that which provides that the entire portion of the Illinois Central tracks between the present main pa.s.senger terminal at Twelfth street, which, in a general way, will become the site of the new one, and Randolph street--reaching the entire eastern edge of the Loop District--will become an elongated suburban station. From the several platforms of this station subways will pa.s.s under Michigan avenue, and so enable commuters to avoid the heavy automobile traffic of that great thoroughfare.

The new terminal is to be planned large enough to accommodate eventually the many pa.s.senger trains of the several large railroads that now enter the LaSalle and Dearborn stations. If this is ever brought to pa.s.s the city of Chicago will have accomplished a real economic benefit. For the land occupied by these two great stations and their yards is not alone a considerable acreage, but the terminals themselves have acted as real barriers to the most logical growth of the so-called Loop District--the busy heart of commercial Chicago. Barred on the east by Lake Michigan, and on the north and west by the Chicago River, this commercial center would have grown south long ago had it not been for these two great terminals.

Their removal, therefore, would not only accomplish a pa.s.senger traffic consolidation--of great advantage to the through traveler--but would open a great downtown area for the development of Chicago's heart.

[9] Definite announcement has been made by the Milwaukee that it will begin the extension of its electric-equipped main line through the Cascades to Puget Sound early in the summer of 1917. This will mean that for a time there will be a "gap" for about 400 miles in the vicinity of Spokane, where steam will continue to be used as a motive power. For a number of miles west of Spokane the Milwaukee's main pa.s.senger line has trackage rights over the Oregon-Washington system. This fact, and the fact that electrification is best justified economically in mountainous districts is responsible for this "gap." It is probable that it will not continue to exist for many years more.

At the present time the very high cost of electric locomotives suitable for hauling heavy freight and pa.s.senger trains for long distances is making the Milwaukee--today the unquestioned leader in this great progressive policy of electrification--move both slowly and surely.

According to the last annual report of the road the most recent lot of twenty engines cost an average of $114,396.30 each--or about four or five times the cost of the largest steam locomotive. Despite the tremendous initial expense of these electric engines, their remarkable performances more than justify their cost.

[10] To a very prominent hotel in the White Mountains five years ago, ninety per cent of the patrons came by train; last year ninety-five per cent of the guests arrived in their motor cars.

"Talk about getting folks to go to California, or even to the Rocky Mountains," said the veteran pa.s.senger traffic manager of one of the greatest of our transcontinental carriers, when he was in Boston a few weeks ago and heard of this, "we can and will advertise, but we are up against two tremendous compet.i.tors: The first of these is New York City, which is a tremendous permanent and perpetual attraction to all the rest of America 365 days out of the year. The second is the automobile, the family car, if you please, into which has gone the recreation money which otherwise might have been going into the ticket wickets of our railroads.

Think of it, there were 900,000 pleasure cars built and sold in the United States last year, while the experts are placing 1,250,000 as the figure for 1917! More than $1,500,000,000--an almost incredible sum--was spent by Americans last year on automobiles, and all the things which directly pertain to them. What chance has the railroad against such a giant of a compet.i.tor?"

[11] "The railroad that neglects its branch-line service is playing with fire vastly more than it may suppose," said a distinguished railroad economist only the other day. "It may feel that it has an economic right to neglect branch-line opportunities because of the limited revenue opportunities that these feeders ofttimes present. But it must not overlook one thing--the patent fact that many of the voters, the men and women whose sentiment expressed in their ballots may build or ruin the future of so many of our overland carriers, reside upon these same branch lines. Indeed, one may say that the manufacture of sentiment upon branch-line railroads is a business well worth the attention of a keen traffic-man. For it may be just that very amount of sentiment that might swing the balance for or against a railroad."

[12] "Something more than a nation-wide railroad strike would have been required to interfere seriously with the business of the Norton Grinding Company, of Worcester, Ma.s.s., of the Halle Brothers Company, of Cleveland, the American Telephone and Telegraph Company, and some other far-sighted concerns," says a circular issued by the White Automobile Company at the time of the strike crisis in August, 1916. In meeting the threatened emergency of having all freight shipments blockaded, these companies outlined a new example in industrial preparedness.

"The Worcester machinery makers and the great Bell inst.i.tution increased their fleets of trucks by having the machines delivered overland to avoid all chance of strike congestion, while the Cleveland department store planned its own transportation system between the Atlantic seaboard and the Sixth City.

"The situation confronting the Norton company was one which demanded immediate action, and in which normal methods were of no avail. When a general suspension of all the ordinary facilities for moving goods seemed imminent, the Norton company placed its order for three five-ton trucks with the Seymour Automobile Company, The White Company's Worcester dealer, and it was stipulated in the contract that the trucks should be delivered in Worcester within three days, independent of railroad service.

"The trucks were shipped by boat from Cleveland to Buffalo, and then driven overland to Worcester. The 500-mile journey was completed in the remarkably short time of forty-eight hours, with a gasoline consumption of better than eleven miles to a gallon. Stops were made only for the purpose of replenishing the gasoline and oil supply, and for meals for the drivers."

[13] "The effect of the improvements wrought as the result of the self-propelled vehicle's influence is already strikingly apparent. When Franklin County, New York, voted $500,000 in bonds to improve its system of roads, twenty-five cans of milk, weighing one hundred and twenty pounds each, const.i.tuted the average two-horse load. After the money raised by the bond issue had been spent, motor-trucks hauled fifty cans to the load.

With the sum of $28,000 the twelve-mile stretch of road leading from Spottsylvania Court House to Fredericksburg was improved. In a single year $14,000 was saved in draying.

"The estimated cost of hauling the corn, wheat, oats, potatoes, cotton, and hay crops of the country is annually $153,000,000. No one knows how much of that vast sum could be saved if motors were able to ply between the farm and the railroad station. Very few cities have compiled statistics. Some light is shed on the subject in a report prepared by the Chicago munic.i.p.al markets--not so much on the influence of good roads as on the reduction in haulage costs, which is effected by self-propelled vehicles running on fine pavements. It appears that it costs eleven and one-quarter cents to carry one ton a mile by motor in the city of Chicago, and seventeen and three-quarter cents by horse. The average cost of delivering a package by the department stores, grocery stores, and meat markets of the city is approximately eight cents by motor and sixteen cents by horse for each mile.

"Apply these figures to the cities of the entire country, and consider further that motor-trucks can deliver goods directly from the farm to the city retailer, and it seems not unreasonable to expect that the cost of living must at least be held stationary, if it is not actually reduced by the wider introduction of mechanical road vehicles. Surely, the horse must eventually disappear in our towns, at least, if the city consumer pays an average of one dollar and ninety cents for vegetables which the farmer sells for one dollar; if it costs more to haul by horse one hundred pounds of produce five miles from Chicago wharves to the householder or the retail store than to ship it by boat from the sh.o.r.es of Lake Michigan to Chicago; if it costs nearly half as much to deliver a ton of coal by horse from the railroad tracks to the business district of Chicago as it does to ship it four hundred miles by rail from southern Illinois to the city."--Waldemar Kaempffert in _Harper's Magazine_.

[14] "During 1916 the largest movement of troops took place in the United States, since the Spanish-American war. It began early in the year when regular army detachments of cavalry, infantry, artillery and engineers were sent to the border on March 11, March 20, May 9 and June 11. The transportation of these organizations was accomplished in an excellent manner, in exceptionally good time, and without accidents of any nature.

On May 9, the militia of Arizona, New Mexico, and Texas, were called to the border, and on June 18, 1916, the National Guard troops of all the other States were called into the service of the United States, and directed to a.s.semble at their state mobilization camps. From these points to designated stations on the frontier transportation arrangements were under the direction of the War Department. The troops began leaving their mobilization camps about midnight on June 26. On July 1 there were en route to the border from various sections of the United States, 122 troop trains, carrying over 2,000 freight, pa.s.senger, and baggage cars, with a total strength of 36,042 men. On July 4, 101 troop trains were en route, and 52,681 militia troops (not including Arizona, New Mexico, and Texas) were either at the border or on the way thereto. From the beginning of the movement up to July 31, 111,919 militia troops were moved to the international boundary.

"Some idea of the task imposed upon the railroads of the country by the transportation of the National Guard may be had when it is considered that 350 trains were necessary to carry the first 100,000 troops. Over 3,000 pa.s.senger cars, including standard Pullman and tourist cars and coaches, were provided, and in addition about 400 baggage cars, most of which were equipped as kitchen cars for serving hot meals en route, 1,300 box cars, 2,000 stock cars, 800 flat cars, and approximately 4,900 locomotives and crews, not including switching engines, yard engines and their crews. The call upon the railroads for the transportation of the militia occurred in the fortnight which includes the Fourth of July, the time of the greatest density of pa.s.senger travel in the eastern States. Instructions were issued by all railroads concerned that the movement of troop trains was to be given preference over other travel, and it is believed that this was done in all cases.

"To have effected the entire movement of all the troops in tourist sleepers would have required approximately 3,000 cars, or five times as many as were in existence. The Pullman Company, by utilizing some standard sleeping cars, made available for the movement 623 tourist cars. In all cases where it was possible to do so tourist equipment was furnished, and where they were not immediately available the troop were met en route and transferred to tourists in every possible case. Official reports from all military departments show that no organization moved in coaches in less s.p.a.ce than three men to every four seats, and wherever possible two seats for each man. The total number of men transported in coaches averaged 30 men to each coach.

"Although the movement of organized militia came at a time when the commercial traffic on the railroads was the largest in years, it was accomplished with very little interference with regular train service, and with no congestion whatever, either at initial or terminal points or en route. In July there were moved into the Brownsville, Texas, district 106 special trains, composed of 1,216 cars of pa.s.sengers and 1,201 cars of freight for the army, in addition to 680 cars of army supplies, handled in freight trains, and the usual commercial traffic. This district is reached only by one single-track line, and all rolling stock had to be returned over the same line.

"The concentration of the militia on the Mexican border and the mobilization for the great war in 1914 are not comparable, as all civil traffic was suspended in Europe to make way for military movements, and the distances involved in the movement to the Mexican border were very much greater than those in Europe. The longest run in Germany was about 700 miles, and in France much less, whereas the distances traveled by the troops in the United States varied from 608 miles, in the case of Louisiana troops, to 2,916 miles in the case of Connecticut troops. The majority of the troops came from northern and northeastern states and were carried over 2,000 miles, in most cases in remarkably fast time. For example, the Seventh New York Infantry with 1,400 men, equipment, ammunition, and baggage left New York at 2 p. m. on June 27, and arrived at San Antonio, Texas, at 8:30 p. m., on June 30, a distance of 2,087 miles. Shipments of freight were made from Washington and vicinity to the border in four days, from New York and vicinity in five days, and from the Great Lakes in a little more than forty-eight hours.

"As a specific example showing how the cooperation of the railroad companies a.s.sisted the army, there may be cited the case of the first motor trucks purchased for the expeditionary forces in Mexico.

Twenty-seven trucks were purchased under bid in Wisconsin on March 14.

They were inspected and loaded in fourteen cars; the men to operate them were employed and tourist cars furnished for them, following which a train was made up which left Wisconsin at 3:11 a. m., on March 16. It arrived at Columbus, N. M., 1,591 miles away, shortly after noon on the 18th; the trucks were unloaded from the cars, loaded with supplies, and sent across the border, reaching General Pershing's command with adequate supplies of food before he had exhausted the supplies taken with him from Columbus."--From the report of Quartermaster-General Henry G. Sharpe, of the United States Army, as reprinted in the _Railway Age Gazette_.

[15] "When railroads were started in England, they were influenced by stage coach precedents. They put the engineer behind the iron horse and called him a driver, they called the railroad car a coach or a van. They imitated the cla.s.s distinction of the four-in-hand, and then charged by the mile. Coach travel cost by the mile. There were no terminal charges, no road upkeep charges. It was a piece rate proposition, a price per mile proposition as to revenues. The great difference between horse coaches and railroads was overlooked. Probably 90 per cent of stage coach expenses, whether of capital investment or operation, lies in the coaches, horses and harness. Even in the modern railroad, in the United States, only 20 per cent of the capital and 20 per cent of the operating expense are in the moving trains. Cla.s.sified pa.s.senger and cla.s.sified freight rates based on distance are founded on one-fifth of the real cost. This is not all.

The cost of the other four-fifths has been increasing steadily from the start. Yard expenses are increasing far more rapidly than road expenses.

The cost of terminals is growing with the square of the population. What is more serious, both will continue to rise. Getting so much for nothing, both pa.s.sengers and shippers congregate in the big cities, and add still further to the congestion, to the increased cost of the part of railroading.

"Every railroad man, every banker, every investor, every student of transportation knows that rates should be increased because the roads can no longer stand the drain of deferred obsolescence, or unremunerative investments, especially in terminals.

"Rates ought to be based on four elements and probably a fifth added. The four basic elements are. (1) Cost of collecting the traffic; (2) Cost of transporting the traffic; (3) Cost of insurance or cla.s.sification; (4) Cost of delivering the traffic.

"Only (2) and (3) now enter into rates. It is as cheap to arrive at New York at the Pennsylvania, or New York Central Station, as to drop the train in Newark or Tarrytown. It is as cheap to ship freight to a New York dock as to unload it from the car at a country siding.

"In the New York Subway the cost of (1), (3) and (4) sinks to a vanishing point, and nothing is left but the flat cost of running trains and a flat revenue per pa.s.senger.

"In steam railroads operation costs of both (1) and (2) are very great, but not made up by revenue. The fifth element that ought to govern charges is a principle that even frogs know all about, but which human beings operating railroads have not yet learned, namely, to put on flat and expand when prices are high so as to acc.u.mulate a surplus to tide over the lean years. This fifth element is really included in (3) cla.s.sification.

Railroads now have different rates for different commodities, but $1.80 a bushel wheat and $0.20 cotton are not the same as $0.50 wheat and $0.05 cotton. The wheat raised and the cotton grown, and the iron made into pig iron at $30.00 a ton can afford to pay rates that vary with the price.

"Piece rates applied to traffic is the tuberculosis that is gradually but surely consuming our railroads."--Harrington Emerson.

[16] As an evidence of the fact that the sick man of American business has by no means lost his ability to render service, consider what might have seemed to travelers a minor detail of ordinary service, and yet was in reality a tremendous task. On a certain snowy morning in January, 1917, traffic into New York was unusually heavy. The great automobile show was just opening, folk were flocking to it from all corners of the country.

The facilities of even as great a railroad as the New York Central were severely taxed. Its Twentieth Century Limited was in three sections, the Detroiter in two, Train Six in three. On these and two other trains due into the Grand Central Station between 8 and 9:40 a. m., 1,200 persons were served with breakfast. This breakfast required sixteen dining-cars, eighty-two stewards, cooks, and a.s.sistants, and 105 waiters. Advance advice was received of the requirements, the cars a.s.sembled, the crews brought together, and everything made ready to attach the cars to the train at Albany in the early morning. And this was all in addition to the regular dining-car service of the road.

[17] And now Congress has adjourned without pa.s.sing the supplementary feature of the Adamson bill--the all important requirement of arbitration in labor disputes.

[18] "Fifteen States have laws designed to secure preferential treatment for their freight by prescribing a minimum movement for freight cars.

Several of these require a minimum movement of fifty miles a day, though the average daily movement throughout the nation is only twenty-six miles.

One state imposes a penalty of ten dollars an hour for the forbidden delay. Though under the Federal law there is no demurrage penalty for failure to furnish cars to a shipper, several states have penalties running from one dollar to five dollars per car per day. The result is that the railroads are compelled to discriminate against Interstate Commerce and against commerce in the states that have no demurrage penalties.

"One by-product of all this chaotic regulation has been an increase in ten years of eighty-seven per cent in the number of general office clerks employed by the railroads, and an increase of nearly 120 per cent (over $40,000,000) in the annual wages paid to them. During this period the gross earnings of the roads increased only fifty per cent. In the fiscal year of 1915 the railroads were compelled to furnish to the national and state commission and other bodies over two million separate reports."--Harold Kellock in _The Century Magazine_.

[19] Illinois a few years ago pa.s.sed a statute limiting pa.s.senger fares within her boundaries to two cents a mile. To this, the Business Men's League of St. Louis filed a complaint with the Interstate Commerce Commission, stating that a discrimination had been created against St.

Louis. The Federal board had made most of the interstate pa.s.senger fares in the central portion of the country average two and one-half cents. This made the fare from Chicago to St. Louis (in Missouri) $7.50, while the fare from Chicago to East St. Louis (directly across the river, but in Illinois) only $5.62. A similar complaint was received from Keokuk, Iowa, also just across the Mississippi from Illinois. After reviewing these complaints the Federal Commission held that two and four-tenths cents was a reasonable rate for interstate fares in this territory and required the railroads to remove the discrimination against St. Louis, Mo., and Keokuk, Iowa. The decision was limited, however, to the points involved in the complaint. The supplemental report covers all points in Illinois.

"'In our original report in this proceeding,' Commissioner Daniels says, 'it was shown how the lower state fares within Illinois furnished a means whereby pa.s.sengers could and did defeat the lawfully established interstate fares between St. Louis and Illinois points. This was done by using interstate tickets purchased at interstate fares from St. Louis to an east side point in Illinois, and thence continuing the journey to any Illinois destination on a ticket purchased at the lower state fare.

"'We deem it advisable to point out that the interstate fares between St.

Louis and Keokuk on the one hand and interior Illinois points on the other, made on a per mile basis of two and four-tenths cents, would likewise be subject to defeat if the state fares to and from interior Illinois points intermediate to the pa.s.sengers' ultimate destination be made upon a basis lower than the fares applying between St. Louis or Keokuk and such Illinois destination. It would be necessary merely for the pa.s.senger who desired to defeat the interstate fare to shift the intermediate point at which to purchase his state ticket. The burden and discrimination which a lower basis of fares within the state casts upon the interstate commerce would not be removed merely by an increase in the intra-state fares to and from the east bank points.

"'And not only this burden, but the direct undue prejudice to St. Louis and Keokuk will also continue if the east side cities while on the face of the published tariff paying fares to and from Illinois points upon the same basis as do St. Louis and Keokuk can in practice defeat such fares by paying lower state fares in the aggregate to and from Illinois destination, by virtue of such an adjustment of fares.'"

As soon, however, as the railroads attempted to put this edict of the Interstate Commerce Commission into effect the state courts of Illinois stepped in and tied their hands. At the present time the matter is still involved in much litigation. And a man may buy a ticket from Chicago to East St. Louis for $5.62, and for ten-cent trolley fare cross the Eads bridge into St. Louis. This is, of course, a great injustice to the railroads--an inequality which must sooner or later be adjusted, and the sooner, the better.