1

of public to private interests, by enormous political and municipal corruption." Roberts well says, "The officers may manipulate the market price of the securities of the corporation to their own advantage, using inside information before it reaches other stockholders or the public. Closely associated with this weakness is the manner in which unscrupulous directors and officers have at times handled the properties to their own advantage. The history of railroading affords illustrations of this." 2 The picture is not pleasant.

Judge Anderson of the United States Circuit Court of Appeals in Boston told the Joint New England Railroad Committee on December 20, 1922, that the railroad presidents are "lacking in virility, ingenuity, and elasticity." But is it not asking too much of a railroad president to operate his railroad, finance its necessities, negotiate contracts with other railroads, watch legislation and taxation, and yet perform the public duty of good service and low rates? The fault is in giving him too much to do and too much power. Railroading is a hard business and produces hard men. The public is apt to suffer. What cares the railroad man for high rates if he can get plenty of traffic and plenty of money for his railroad to spend? There is an irreconcilable conflict between the interests of the railroad and the duty to the public, and the former prevails. Those railroad men are not wonders. Most of them came up from the ranks through a hard school and the wonder is that they do as well as they do. Modern railroad presidents are not large stockholders in their companies, as was the case with Huntington, Vanderbilt, Harriman, and Hill. The modern president represents not himself but some controlling interests that look for results. Here again conflict arises between the president retaining his position on the one hand and operating his railroad for the public on the other. Interest conflicts with duty.

In 1921 twenty-five railroad presidents received salaries of $50,000 or over. Nearly all began their railway careers as

workers in the ranks. Ten had attended college, seven having been in the engineering course. They earn their salaries and no one is more competent to operate those railroads, but is the duty of the railroads to the public to be learned only by being hammered in by courts, commissions, and legislatures? Railroad service teaches railroad operation, but apparently does not teach public duty and a recognition that railroads are public institutions. Moreover, there is a touch of arrogance in railroad men, who resent any suggestions from outsiders or any idea that railroad men are not the most competent to decide each, every, and all questions that arise between the public and the railroads. That attitude has had a severe jolt during the past few years and will encounter others.

Commissions now regulate the financing. Criminal laws have almost stopped rebates and discriminations. Consolidations must first be approved by the government. The field for financial exploiting and juggling has been restricted. Financiers have betaken themselves to "fresh woods and pastures new." Railroad men still grow rich but not as of old. Irregular perquisites are more dangerous.

The railroad problem is unsolved; namely, how to get low rates and efficient service with minimum governmental control. Present railroad men do not represent public opinion, and railroad directors generally represent a hope of gain by advance information or collateral contracts. Government ownership on the other hand would bring domination by railroad unions, unnecessary service, unnecessary new lines, higher wages, higher rates, poorer service. But the present situation cannot last. The public dislike equally the selfishness of private ownership and the incapacity of government ownership. The solution probably will be a Federal Railroad Board electing railroad directors of federal railroad consolidations, and with responsibility of the government for reasonable dividends as well as control over rates and expenses.

As an element in the American character, railroad men are not to be ignored. They are resourceful, combative, forceful, alert to grapple with difficulties and responsibilities. Formerly in their power and irresponsibility they obeyed but one law, the law of nature, the law of survival of the fittest. Those days have passed but a railroad president or general manager is still a subject of curiosity and admiration, as personifying the fighting, dominating qualities of the race. Nor are the locomotive drivers to be overlooked. Roosevelt correctly considered them, it is said, as the most virile class of men in the nation. They do not come in contact with the public and hence are free from graft and guile. They are intelligent, reserved, and efficient. An engineer driving a locomotive at fifty miles an hour in the night is a highly organized type of being. It is quite immaterial how high the wages may be for this kind of man. He is cheap at any price.

There are about two million railroad men in the country in times of prosperity. This is a very substantial part of the thirty-two millions of adult male population. And they are distributed through every part of the country. They are true Americans. Their vocation is a hard one, but it makes men. Their unions keep them away from capitalistic influences. They are intelligent and active and are large factors in American life. They are for American institutions and will never be backward in the fight.

CHAPTER XXIV

THE RAILROADS

SHALL the railroads own the government or shall the government own the railroads, or shall the government merely control the railroads, and if so in what form? The answer will have a profound effect on the American problem of self government. Government ownership is desired only by radicals, who care little for American institutions. Economically such ownership would be disastrous and inefficient, as has been shown repeatedly by the experience of Europe. Politically it would be demoralizing and highly dangerous. Government ownership, however, is inevitable unless low rates and good service can be obtained by government control. The evils of government ownership would be so fundamental and far reaching in their effect on the delicate machinery of republican institutions, and so prolific of corruption and grasp for power at Washington, and so full of bitter conflict of section with section of the country, that America does well to hesitate to abandon the present policy of public control and private ownership. But to get low rates and good service some fundamental change is necessary.

If E. H. Harriman had lived and been allowed to carry out his ideas he would probably by this time have had half the railroads of the country consolidated into one system. He controlled or was connected with over 70,000 miles of railroad. Harriman was not working for the public, but as generally happens with geniuses, his gain was infinitesimal as compared with the public good he wrought. He would have made a great saving in eliminating duplicate service. He would have given lower rates and better service. Harriman had no illusions as to competition in

service or in rates. He knew that they meant waste. He was no philanthropist in his motives but was a philanthropist in his results.

Competition in rates has practically disappeared and moreover they are now fixed by the Interstate Commerce Commission. Competition in service is still a fetish with the American people. With the great majority of railroad points those served by only one railroad — it does not exist at all. Between cities where competition in service exists it is wasteful and discriminatory. An illustration of the waste was pointed out by Mr. Ripley of the Atchison a few years ago, when he said that every night five competing trains started from Chicago for Kansas City, six for Omaha, and five for St. Paul, and that probably one for each city would suffice. Wyman on Railroad Valuation and Rates refers to the same facts and points out that the waste applies to freight as well as passengers. Consolidation would do away with this.

Take another illustration. Plan to increase the use and to in and about New York City. But the plan is blocked because the particular railroads now owning terminals costing vast sums of money very naturally refuse to allow other railroads to use these terminals and thus take traffic away from the former. This is competition in service with a vengeance and the public suffer. It holds up prices to the consumer, reduces prices paid to the producer, and blocks commerce. Consolidation of competing lines would do away with this. Railroad men realize the waste and futility of railroad competition but know the American superstition on that subject and do not care to be crucified for exploding it. At the public hearing on this Port Plan instances were given of waste by roundabout routing which were astonishing. If the public realized the extent of similar waste throughout the country they would rise in their wrath and stop it. Competition in service means duplicate

New York has worked out a Port decrease the expense of terminals Congress has approved that plan.