Read Ebook: The Railway Library 1909 A Collection of Noteworthy Chapters Addresses and Papers Relating to Railways Mostly Published During the Year by Thompson Slason Editor

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rvices which the Act to Regulate Commerce was passed to regulate.

BEWILDERING CHANGES IN NOMENCLATURE.

Scattered through the official reports for 1908 the student is confronted with numerous changes in terminology, many of which are for the better, but nearly all impair that continuity of names and phrases which is so desirable in comparative statistics. For instance, the public has been taught, by official practice, to speak of the revenues of the railways derived from the transportation of passengers, freight, mail and express, as "Gross earnings from operation." The phrase is descriptive, definite and clear. For this the Commission has substituted "Rail operations, operating revenues." Former reports spoke of "Income from operation," which now gives place to "Net operating revenue." To this is added the "net revenue from outside operations," making a "Total net revenue," from which "Taxes accrued" are deducted, the remainder being "Operating income."

It will be perceived that this last phrase, which covers revenues from which operating expenses and taxes have been deducted and to which the net revenues from outside operations have been added, comes perilously near the "Income from operation" of preceding reports.

The exclusion of the reports from switching and terminal companies in some instances, while they are included in others, introduces an element of perplexing uncertainty at every turn and really vitiates all comparisons with former reports.

The Commission itself seems to realize the bog into which the official statistician has plunged its accounts, when it says:

And now it is proposed to throw all the accumulated statistics of twenty-two years out of consecutive gear by substituting the calendar for the fiscal year.

The writer has deemed the foregoing comments necessary to clear the atmosphere before proceeding to the introductory summary showing the salient features of the railway industry in 1909 compared with similar items in 1899 and 1889. The data for 1909 is compiled from the annual reports to this Bureau covering 221,132 miles of operated line, together with the monthly reports to the Commission of earnings and expenses of all classes of roads for that year, covering an average operated mileage of 233,002.

SUMMARY OF RAILWAY RESULTS IN 1909, 1899 AND 1889, WITH PERCENTAGES OF INCREASE FOR EACH ITEM BY DECADES.

There is not a line or figure of this table, with its percentages of increase, that does not testify at once to the amazing growth of American railways and to the equally amazing economical basis upon which they render incalculable services to the American people on terms that challenge the admiration of less favored peoples.

REVIEW OF THE LAST THREE CALENDAR YEARS.

Where the Twenty-second Annual Report of the Interstate Commerce Commission minimized the loss inflicted on the railways by the business depression of 1908, the Twenty-third Annual Report naturally, and by reason of the same cause, minimizes the substantial recovery of 1909. Where the former showed a loss in gross earnings of only 4,464,941 below the preceding year, when the actual result of the depression was nearly 0,000,000 , the latter shows a recovery of only ,770,228, when it was approximately 2,000,000 .

The explanation of this discrepancy is, of course, the Commission's adherence to its own fiscal periods of statistics, which do not happen, in this instance, to coincide with the ebb and flow of adversity and prosperity. The true movement of railway traffic before, during and after the recent business depression is more nearly reflected in the following figures for the calendar years 1907, 1908 and 1909, compiled from the monthly returns to the Interstate Commerce Commission, divided into periods of six months:

SUMMARY OF GROSS EARNINGS OF THE RAILWAYS DURING THE CALENDAR YEARS 1907, 1908 AND 1909, BY MONTHS AND HALF-YEARLY DIVISIONS.

SUMMARY OF OPERATING EXPENSES OF THE RAILWAYS DURING THE CALENDAR YEARS 1907, 1908 AND 1909, BY MONTHS AND HALF-YEARLY PERIODS, WITH RATIOS TO GROSS EARNINGS.

Through these tables the reader is able to trace the upward course of railway receipts in 1907 to their culmination in October of that year; their rapid drop to February, 1908; through the hard summer following to the gradual recovery of 1909, until in October last they reached the highest monthly total on record.

The ratio of 64.1% for the second half of 1908 is the true measure of the ability of the railways to cut their expenditures to fit the times. But they were on bed rock, as the succeeding months of small receipts proved, when the ratio went up to 72.43% in January, and averaged the high figure of 68.3% for the first six months of 1909. The heavy receipts of October and November without a corresponding expansion of expenditures resulted in the phenomenally low ratios of these months. But the severity and necessities of operating conditions in December, 1909, ran the ratio of expenses up to 69.23%.

The net earnings for the three years under consideration are apt to lead to erroneous conclusions as to the effect of the depression. Neither the loss in 1908 nor the recovery in 1909 reflects the true swing of the pendulum. The one minimizes the loss, because it conceals the cessation of all constructive work, the curtailment of betterments and improvements, and the postponement of all purchases for replacements except of the most immediate and imperative nature; the other exaggerates the recovery because of heavy receipts without the resumption of the concurrent expenditures that should attend them. The railways in the fall of 1909 were simply doing business on the margin of facilities provided during the fat months of 1907 in anticipation of a continuation of prosperous times. Some idea of the extent of this margin may be gained from the parking of 400,000 freight cars in the yards with 200,000 in the shops in April, 1908. At no time since has this margin been wholly exhausted.

But a continuation of traffic on the scale of the past six months will necessitate an immediate expenditure of 0,000,000 to 0,000,000 for the replacement of freight cars alone.

INCOME ACCOUNT FOR THE CALENDAR YEAR 1909.

The monthly summaries issued by the Interstate Commerce Commission from time to time afford the details for the construction of the following statement of the transportation revenues and expenses of the railways for the calendar year 1909, from which the averages per mile and the ratios have been computed on the basis of 234,950 miles of operated line.

STATEMENT OF OPERATING RECEIPTS AND EXPENSES OF THE RAILWAYS OF THE UNITED STATES FOR THE CALENDAR YEAR ENDING DECEMBER 31, 1909, WITH AMOUNTS PER MILE AND RATIOS.

At the close of the year the reports covered 236,166 miles of operated line.

Unfortunately there are no similar figures for the calendar year 1907 with which comparisons may be made, but the official returns for the year ending June 30, 1907, when railway earnings reached their maximum before the panic of that year, afford the following instructive comparisons:

It will be perceived that while the earnings in 1909 exceeded those of 1907 by over 15 1/2 millions they were almost 0 less per mile, while the operating expenses were actually 2 less per mile. The decreased operating ratio in 1909 bears unmistakable testimony as to where the increase in net revenues came from.

With an increase of nearly 9,000 miles of line only 9,167,665 was spent on maintenance of way and structures in 1909 against 3,544,907 in 1907, and the urgent demands of returning activity made the expenditures on this account liberal in comparison with those for the year ending June 30, 1909, i. e. 1,368,083, or ,336 per mile. It will be years before the railways recover from the economies forced on them by the loss of 0,000,000 in revenues in 1908.

UNREGULATED REGULATION OF AMERICAN RAILWAYS.

Today the railways of the United States are "cribb'd, cabin'd and confined" in their services to the American people, not so much by the laws for their regulation as by the spirit in which those laws are administered. To the general tenor and purposes of statutory regulation the railways have become largely reconciled; but from the spirit in which the laws are sought to be enforced, there has to be continuous appeal to the courts and to the public sense of justice.

Regulation of railways has been persistently interpreted by political Commissions to spell reduction of rates and exacting conditions that would drain the purse of Fortunatus. Between 1889, when the Interstate Commerce Commission's statistics first became a valuable index of railway operation, and 1909, the average rate per ton mile has fallen from 9.22 to 7.55 mills. On the freight tonnage of 1909 this meant a reduction of over 2,000,000 in the yearly revenues of the railways. The railways suffered that loss from their income when they needed every cent of it to maintain the people's highway in a condition to transport the people's ever-growing traffic.

The railways lost it, but who got it? The people? Search the market reports of the land, from Eastport to San Diego, and you will find incontestable proof that not one cent of these millions reached the pockets of the people, in whose name all regulation of railways is demanded and for whose benefit all reductions are claimed. The average rate on all commodities has gone down, the price of every commodity transported by the railways has gone up. Who has pocketed the difference?

There can be only one answer--the producers, the shippers and the traders. Today nine-tenths of the increased cost of living in the United States is chargeable to this ever vigilant and aggressive coalition. For everything the railways must buy--labor, supplies, money--they have to pay the advanced prices of the day. But the protests of the shippers and the rulings of the Commission forbid their raising a rate or adopting a money-saving economy. They attempted to readjust freight rates in 1900 one-fiftieth of a cent per ton mile above a ruinously low average and the outraged shippers secured the passage of the Hepburn Act!

How the federal Commission and shippers work together for the so-called regulation of the railways is evidenced in the unbroken tenor of the decisions handed down by the Commission. Out of 357 decisions printed during the year 1908-09, no less than 219, or 61.3%, were orders granting reductions of rates or reparation for charges found comparatively excessive or unreasonable. In not one case in a score was the rate found excessive or unreasonable per se. In only one case out of the 357 was an increased rate ordered, and this was done reluctantly and as unavoidable.

Although the decisions are for the most part the unanimous finding of the Commission, the following table distributes the opinions of the year among its members into dismissals and reductions or reparations among the Commissioners writing them:

Some of the cases upon which the Commission is called on to pass are so trivial as to be beneath the notice of a justice's court, while others involve issues so momentous as to threaten the whole structure of railway rates by which the unparalleled prosperity of the country has been made possible.

But the number of cases reaching the Commission for adjudication is insignificant compared with the grist of informal reparation orders that runs an endless stream through its regulating rollers. In the twelve months from December 1, 1908, to November 30, 1909, these aggregated no less than 2,223 separate orders involving amounts all the way from 47 cents to ,717.64, as seen in the following orders:

Multiplying these awards by the number of orders enables the reader to imagine the range of their respective pettiness or portentous possibilities.

It is doubtful if the American people, or even the Interstate Commerce Commissioners themselves, realize how the formal decisions and informal orders of the Commission are slowly but surely whittling away the safe margin of American railway profits. At the rate of two decisions every three days and forty informal orders per week, the work of incipient confiscation proceeds with remorseless enthusiasm.

With the best intentions in the world the present Interstate Commerce Commission is so enmeshed in its own anti-railway traditions, so enamored of the administrative control theories of its statistician, so covetous of unbridled, irresponsible authority to tear down where it has no constructive capacity, that anything like co-operation between the Commission and the railway management for the public good seems out of the question.

To the writer it appears that only blind rejection of facts can find any conserving element in the regulation of railways as at present administered. Signs of a helpful disposition in official acts are entirely lacking. The Senate and House calendars groan under bills for the further regulation and restriction of the railways, but not one contains a promise of relief. For not one is there a genuine public demand.

And what is the situation as this is written? It can be stated in a few lines. As a consequence of the drop of 0,000,000 in gross earnings in 1908, the railways in 1908 and 1909 cut 7,000,000 out of their expenditures. This was done mainly at the expense of maintenance of way and structures and in a cessation in the purchase of equipment, but the so-called economies of postponed expenditures permeated every line of railway extension, operation and replacement. In 1908, with 6,000 more miles of track to maintain, ,788,217 less was spent for maintenance than in 1907, and in 1909 with 12,000 more miles of track ,176,824 less was expended.

Between 1897 and 1907 the expenditures for maintenance of way increased from 9,434,403 to 3,544,907, or over 115%. This means an increase of approximately 8% a year, or at least ,000,000 on present plant. Therefore at least ,000,000 was withheld from this essential line of railway maintenance in 1908 and fully ,000,000 in 1909, a total of 5,000,000. The saving on equipment was nearly as great and is dealt with in the body of the report.

A comparison of the income accounts for the month of October, 1907 and 1908, corroborates the foregoing statement as to the economies forced on the railways by the adverse winds of regulation and business depression.

The canker worm in this, the most promising flower of returning prosperity, is revealed in the abnormal ratio of 60.10 for October, 1909, or nearly 7% below the American average. Now this 7% on the revenues of last October means that in some way over ,000,000 less than normal was expended on American railways in that month alone. And October, 1909, was only a sample of how railways had cut expenses for 24 consecutive months.

That this should be so, with no reduction in the scale of wages or the price of supplies, is, in the view of the writer, a situation of serious national concern. Happily he is not charged with any commission to suggest how or where the deferred debt of nearly 0,000,000 to efficient railway road and equipment is to be met. But that it must be met, to place the railways in as good condition as they were before the panic of 1907, when the cry was for more, not less facilities, does not admit of question. If it, together with the advance in wages now being adjusted, is to be met out of income, only an advance in freight rates can take care of it. If out of fresh capital, it can only be coaxed from the pockets of shrewd investors by rates of interest that discount the risk attendant on the unregulated and irresponsible regulation of railway revenues, resources and responsibilities. And it is proposed to make an irresponsible Commission, unfamiliar with the necessities of the situation and unversed in the ways and means of raising capital arbiters of these necessities, ways and means.

All attempts to meet such a situation by legislation, unless it be directed to a reform of the instrumentalities of regulation, must prove ineffectual. In a broader, saner, more helpful administration of the laws already on the federal and state statute books lies the hope for the future of the great American transportation industry. "Whate'er is best administered is best."

THE BUREAU'S STATISTICS FOR 1909.

Thus far what has been written has related almost wholly to the financial aspect of the transportation industry as presented through the monthly reports of the railways. While these in their way serve as an admirable barometer in keeping the public informed as to general business conditions throughout the Union, they throw little light upon the railway operations behind the financial results. They are absolutely dumb on the main question upon which all railway legislation and regulation should hinge--adequate and efficient public service.

In the following pages the Bureau attempts to remedy this omission, in the essential particulars for the year ending June 30, 1909. The reports from which its summaries have been compiled were received almost a month earlier this year than last, but the publication of the Bureau's statistics has been delayed in order to make the usual comparisons with the Official Statistics for 1908. The writer is advised from Washington that the fault for this unusual delay rests with the Government printer--whose office is overwhelmed with Congressional and departmental work--and not with the Interstate Commerce Commission or its Bureau of Statistics and Accounts.

For the first time, the reports to this Bureau cover the division of freight movement into the seven chief commodities; the separation of revenues from Mail and Express; the distribution of expenses for injuries and damages, and the summaries of expenses for maintenance of way and equipment, traffic expenses, transportation expenses and general expenses. It is believed that with the addition of these accounts the annual report of the Bureau has become so comprehensive as to warrant its publication hereafter at an earlier date, without waiting on the publication of the official statistics for the preceding year.

This year the Bureau has received reports from 368 roads operating 221,132 miles of line or approximately 94.4% of the mileage and carrying over 97% of the traffic of the country. Last year reports were received covering 216,460 miles. The increase of 4,672 miles fairly represents the actual increase of railway mileage in the United States for the twelve months.

In presenting these statistics, the writer has endeavored to make them as colorless summaries of facts as an earnest desire to arrive at the truth permits. Such comment as accompanies them will be confined to comparisons and elucidation and not to the furtherance of any personal theories.

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