The Railroad Problem. Edward Hungerford
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is the big man in the American business family, the very head of the house, you may say. Sick or well, he dominates his brothers—even that cool, calculating fellow whom we delight to call “the Banking Interests.” All America pays toll to transportation. And, inasmuch as the steam railroads are its dominating form of transportation, the entire country hangs upon them. In the long run this country can prosper only when its railroads prosper.
Do you wish to dispute them? Before the facts your contention will not hold very long. According to the last census more than 1,700,000 persons were directly employed upon the steam railroads of the United States; some 2,400,000 in industries bearing directly upon the railroads—lumber, car and locomotive building, iron and steel production, and the mining of coal. It is a goodly number of folk whose livelihood, or a large portion of it, comes from an indirect relation to the railroad. It has been said, with a large degree of statistical accuracy, that one person in every ten in the United States derives his or her living from the railroad.
Perhaps you are not one of this great family of 10,500,000 persons—more folk than dwell in the great state of New York, including the second largest city upon the face of the world. Granted this—then probably you are one of the 10,000,000 savings-bank depositors in the United States. If you are, you are an indirect holder of railroad securities. The savings-banks of this country have many, many million dollars of their savings invested in railroad bonds. If you have not even a savings-bank account let me assume that you have a life-insurance policy; there are three life-insurance policy-holders for every savings-bank depositor. The value of every one of those 34,000,000 policies depends on the wealth that is locked up within the strong boxes of the life-insurance companies. And a very great proportion of that wealth is expressed in the stocks and bonds of railroad companies.
Try as you may, you cannot escape the dominance of the railroad in financial and industrial America. You might have neither savings-bank account nor insurance policy of any sort, yet the railroad would touch you constantly, through both your income and your outgo. If you were a city man, it would touch you not only in the prices that you pay for milk and meat and vegetables, but for the rent of your house or apartment. As I write, the entire East is panic-stricken for fear of a coal famine, faces steadily rising prices. The production at the mines, despite a scarcity of labor, has not been far from normal. But the railroad has failed in its part of the problem—the providing of sufficient cars to transport the coal from the mines to the consumer. It has been hard put to find cars to move the munitions of war from the interior to the seaboard towns. And the coal mines, because of the lack of railroad cars, have been unable to relieve the situation. So panic has resulted. Upon its heels have come similar, if somewhat lesser panics over the congestion and lack of delivery of foodstuffs—conditions which have been reflected in rises in the prices, if not in the value of most foods. These prices already have reached higher figures than at any time since the Civil War. Today they are nearly even with those which prevailed during the dark days of the sixties. And even if they are due directly to crop shortages and abnormal exports they still are a reflex of the railroad’s intimate touch with every man, woman, and child all the way across the land.
Sitting on the porch of his home at dusk, the farmer looks out over his broad acres, sees the great industrial aids that American invention has given him for the growing and the harvesting of his crops and forgets, perhaps, that on each of these mechanical devices he has paid a toll to the railroad. But when he looks to his wheatlands he must recall that it is the railroad that carries forth their crops—not only to the cities and towns of the United States, but to the bread-hungry land, far overseas. In those markets he competes with the wheat from lands so far distant that they seem like mere names wrenched from the pages of the geography book—Argentina, India, Australia. Because of this alone, it is nationally important that the steel highways which lead from our seaport gateways inland to the wheat and corn fields be kept healthy and efficient. They have become integral parts of that broad national policy which says that the United States is no longer isolated or insular but one of the mighty company of world nations.
Will you permit me for a moment to enlarge upon this point—this competition between our farmer of the West and the farmer of the Argentine Republic, of India, of Australia, and of the nations of the Baltic Sea in the market of the consuming nations of the world? As the wheat fields of each of these nations are nearer tidewater than the wheat fields of the United States, it long ago became necessary for our railroads to lower the transportation rate for grain in order that the American farmer might not become submerged in this great international competition. That this has been done, a single illustration will show:
A bushel of wheat today is transported from the center of the great granary country of our Northwest or Southwest to tidewater—an average distance of 1,700 miles—for 27 cents. This is at the rate of .53 of a cent—a minute fraction over half a cent—per ton-mile. The average ton-mile rate in Great Britain, 2.30 cents, as applied to our average grain haul in the United States of 1,700 miles, would make the transportation cost of American wheat four and one-half times as much, or $1.21. The American farmer owes a far greater debt to the railroad than he sometimes may believe. He may have suffered under the oppressions and injustices of badly managed roads—may yet be smarting from these oppressions and injustices. But how much greater would be the oppression and injustice of a high grain rate such as I have just shown? And if such a rate were imposed upon him, would he be able in an average year to grow wheat at a profit, to say nothing of being able to compete with it in the broad markets of the entire world?
A minute ago and we were speaking of the abnormal prosperity of the railroads. The flood first descended in October, 1915. It rapidly mounted in volume. The railroads declared embargoes, first against this class of freight and then against that. Solicitation ceased. The bright young men of their traffic forces were set to work helping the overworked operating departments, tracing lost cars and the like. The backs of their operating departments were all but broken. I myself saw last winter on the railroads for a hundred miles out of Pittsburgh long lines of freight cars laden with war munitions and other freight making their slow and tedious ways toward tidewater. I saw Bridgeport a nightmare, the railroad yards of every other Connecticut town, congested almost overnight, it seemed. The New York terminals were even worse. For a long time it seemed as if relief might never reach them.
It seemed wonderful, but it was not. It seemed like millions in railroad earnings, but it was not. Translated into the unfeeling barometage of percentages it all represented but five and one-half per cent on the actual value of the railroads of the United States. And that, compared with the long season of lean years that had gone before, was as nothing.
Take the season of years from 1907 to 1914—a season for which the statistical records are now complete. Despite the great financial panic of 1907, these were, in some lines of business, mighty prosperous years. The output of automobiles was to be measured not in hours but in the very fractions of minutes. You might figure the earnings of the “movies” well into the millions each twelvemonth; they were building new theaters in all the cities and the bigger towns, almost overnight it seemed. Manufacturing and selling, nationally speaking, were up to the average. Yet in those very years, it was necessary for some of our very best railroads—the best operated and the best financed, if you please—to dip into their previously accumulated assets to pay the dividends which they had promised to their stockholders, in several cases to either lower or omit dividends. And some of the best of these were also compelled to pinch their maintenance expenses to a point that brought them close to the safety line in operation, or even beyond it.
And what of the weaker roads—the roads upon which whole communities, whole states, if you please, are frequently absolutely dependent? What did these roads do in such an emergency? The record speaks for itself. The best of these second-class railroads made no secret of the fact that they were cutting down on maintenance in order to pay their dividends or the interest upon their mortgage bonds. The worst of them simply marched down the highway to bankruptcy. At no time in the history of this country has as much of its railroad mileage been in the hands of receivers as today.
If you are in that glorious company of self-appointed patriots who violently proclaim themselves at every possible opportunity “anti-railroad,” you may be asking me now why so many of our roads have entered bankruptcy. You may be asking me if it is not