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The Commoner
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20
VOL. 17, NO. 9
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1 1
Why
Railroads Demand Federal
Incorporation
(Continued on Pago 10.)
'por cont. This road has 14 masters;
It 'runs through 13 states and tho
District of Columbia.
This list could bo multiplied in
definitely showing tho enormous
surplus availablo for dividends
earnod by tho railroads of tho coun
try under "tho d)ial systom of reg
ulation," concerning which they
complain.
A recent daily paper publishing
tho business outlook of tho country
received a telegram from New York
containing tho following letter:
'Considering tho tremendous
gross and not earnings of tho rail
roads it seems littlo short q mali
cious towards tho stockholders the
way railroad managers, backed up
by somo newspapers, try to destroy
tho market for railroad securities
In order to influence by outward
Bhow tho interstate commerce com
mission into giving higher rates to
tho roads.
"Judged not by any off month,
but by earnings over several months,
tho railroads are making more net
profits than many other lines of
business."
THE FULL CREW LAW
While many generalities are in
dulged in by tho representatives of
carriers alleging disaster to railroad
companies as a result of state con
trol; but one state law lias been
specified and criticised as contrib
uting to this alleged condition. We
lift an extract from the second page
of Bulletin No. 3, issued November
25, 1916 by tho railway executives'
advisory committee, which contains
tho following statement from Col
onel Thorn:
" 'Extra Grow laws cost $1,700,
000 a year.
"The action of the states of Penn
sylvania and New Jersey in passing
'extra crew' laws was mentioned as
a further example of burdens im
posed by state legislation upon tle
commerce of other states.
"The results of tho action of Now
Jersey and Pennsylvania," said Mr.
Thorn," is to impose an annual
charge upon tho railroads amount
ing to $1,700,000 a year, which is
interesjt at 5 per cent on $34,000,
000. Tho commerce of those states
does not pay that charge. It pays
only their proportion of it. The
coYnmerco of Ohio, Indiana and
Illinois and of Delawaro, Maryland
and West Virginia is called upon to
contribute."
It must be kept in mind that this
criticism of the authority of tho
states to pass a full-crew law, as. it
relates to tho plans of the railroaas,
carries with it the presumption that
by a federal incorporation act either
the federal commission or congress
will repeal such laws; and that the
carriers will be privileged to operate
trains with whatever crews they
please.
When the President was governor
of New Jersey in 1912 he urged the
legislature to pass a full-crew law in
the following message:
v "I recommend, moreover, the
passage at an early date of an act
requiring railroads operating in this
state to provide their trains with
adequate crews. Our sister state of
Pennsylvania has adopted legislation
of this kind an-1 the railways whose
lines cross Pennsylvania into New
Jersey actually carry full crows to
tho border of this state and then
send their trains on through Now
Jorsoy with diminished crews to
tho jeopardy, as I believe, of life
and property, requiring more of tho
small crew than it can safely and
thoroughly do."
In tho state of Pennsylvania tho
railroads succeeded in having the
legislature repeal the ful-crew law.
Governor Martin G. Brumbaugh
gave tho following reasons for
vetoing "tho repealer:"
"There has been much discussion
of this bill. An extensive and sys
tematic publicity campaign was In
augurated to secure its passage. Tho
members of tho legislature, so they
Inform me, were subjected to the
pleadings of a large and persistent
lobby until tho bill had passed.
Thousands of letters and other lit
erature came to them and to thoex
ecutive. Employees in the offices of
one corporation stated to me frankly
that they were very anxiously work
ing for the repealer because as one
their spokesman put it, 'If we
help tho company get this repealer
we will get an increase of salary
"All tho discussion of this ques
tion seemed to indicate to the pub
lic mind that there are -now under
law a great army of unnecessary em
ployees carried on tho trains. As a
matter of fact there is only one ad
ditional employee required by tho
present law above the number neces
sarily and willingly carried by the
company. This one extra man has
caused all this discussion and legis
lation. To this statement the com
panies assent quite as freely as do
tho employees. This one man is
then tho significant factor. The
companies assert that he is not
needed; the employees assert that
he Js.
"Within one year the railroaa
companies secured an increased
freight rate by action of the inter
state commerce commission. A po
tential argument of the companies
for this increase was the fact that
the fulV-crew law added to tho ex
pense of operating their service.
They had scarcely secured tho in
creased rate until steps were taken
to repeal the law requiring this full
crew."
Arkansas, Arizona, California,
Indiana, Maine, Maryland, Massa
chusetts, Nebraska, New Jersey,
Ttfew York, North Dakota, Ohio, Ore
gon, Pennsylvania, South Carolina,
Texas, Washington and Wisconsin
havo passed laws providing for a
sufficiency o2 crews.
FULL-CREW LAW AN ASSET, NOT
A LIABILITY
In New York the full-crew'" law
uecame operative in 1914. The
number of accidents in the year
1913, prior to the enactment of "the
full-crew law amounted to 7,626. In
1915, the accidents were reduced to
4,981. In 1913, 51 passengers were
killed; in 1915, 9. In 1913, there
were 1,748 passengers injured; in
1915, only 833. The number of em
ployees killed in 1913 were 250; in
1915, 142. The number of 'em
ployees injured in 1913, were 3.760
in 1915, 2,114.
If the average damage paid to
each passenger injured amounted to
5 n,Va!? th0 number was reduced
by 915, the sum saved would amount
to $457,500. If the employees killed
wero reduced by 108, and $4,000
are allowed in each case on th
basis of tho Workingman's Compen
sation law as damages for the death
of each employee, the amount saved
would amount to $432,000. Injured
employees were reduced by tho num
ber of 1616; allowing $500 for each
injured employee, tho sum saved
would amount to $808,800, making
a total saving in the items men
tioned of $1,897,500, not counting
tho amount of property saved by
eliminating railroad accidents.
The public service commission of
the Second District of New York in
their ninth annual report, state in
connection with this reduction of
deaths and accidents, "that a small
part of this reduction is not attri
butable to the decreased train mile
age but rather to increased efficiency
and watchfulness of employees."
Thus we have overwhelming evi
dence that the one state policy
which Is most criticised is essential.
That the President has advocated it
and that it results in economy to the
carriers and saves many lives.
THE PRESS
The facts about railroads do not
reach the public. Through a well
organized press bureau only such in
formation as tho carriers wish re
ceives general circulation. On April
1st, 1914, Hon. A. H. Smith, pres
ident of the New York Central Rail
way Company testified before the
interstate commerce commission in
behalf of the eastern roads favoring
a 5 per cent increase in.freight rates.
The carriers were endeavoring to
create the belief in the minds of the
public that the. railroads were sorely
pressed for revenues. The transcript
of tho record shows tho following
questions and answers.
Q. Can you name ones year when
your corporate income above all
fixed charges and above all operating
expenses was as great as in the year
1913 aside from tho single year
1910?
Mr. Smith: No.
Q. Is your net operating revenue
average during the past five years
higher or lower than the average
for tho preceding five years?
Mr. Smith: 55 and 72. The first
was 55 millions and the second 72
millions.
Q. Was your average net corpor
ate income greater in tho latter five
year period or tho former?
Mr. Smith; 23 millions and 33(
millions in round figures.
Q. Greater in the latter Ave year
period?
Mr. Smith: Yes, -Ul'.i
Q. Was not theerjsentage of
your return on yourapital during
the latter five yearp'eriod greater
than during the former, five year
period? "3
Mr. Smith: Yes, si?.
Q. This commission; the inter
state commerce commission, baa
unanimously held in the 1910 hear
ing that if a company -was able to
pay all of its fixed charges, all of
its operating expenses and all of its
taxes and then have 7 per cent
above all these charges on its out
standing capital, that ought to be
adequate. Your attention is called
to the fact that your average 7.93
is higher than the commission held
to be adequate. Second, that the
next five year average from 1908 to
1912 shows there was an increase of
30 per cent, the average being 9.3
per cent and lastly I call your at
tention to the fact that the profit on
the outstanding capital stock in
1913 was 11.8?
Mr. Smith: Yes, I think it would
be fair to take tho average.
Notwithstanding this testimony,
on April 2nd, 1914, the public re
ceived the impression of Mr. Smith's
testimony created by tho following
riewspaper notices:
New York World, April 2 (head-
a mm m m
;;;rus io m
--.? uu ui ANew YorV
fast,'
President Smith Asserta t Centra,
Road nnra.-J rrssertsIncomo of
1913 DetTliTevenS;
in
Special to Tho Wnriri xtr 1'.. .
April 1-...A. j see uVraro .ni'
to the devil as fast as wl can? B
was the statement made to mGmw
of the interstate commerce ZlT
ton today by A. H. Smith pSd'8;
of the New York Central." 8nt
New York Times, April 2 thnA
line) -"Bate DecislonlS
Month. Rapid Progress by into
state Board in Hearings n
.Percent Increase Plea. New York
tho Devil as Fast As We Can iw
ident Smith Asserts."
To the same effect are telegrams
from Washington published in Phil
adelphia, Baltimore and many other'
newspapers in the cities of the coun
try. Thus wo see the press of tho
nation giving widespread publicity
to a statement of the president of
the New York Central railway com
pany that "we are going to tho
devil"; but not mentioning the fact
that his company had earned more
tnan 11 per cent upon its capital
stock after paying 'all outstanding
charges. f
Now, while the statement of
President Smith might havo been
literally true, the news items cre
ated the impression that the pres
ident of the New York Central wag
speaking figuratively of the rail
roads. THE REAL MOTIVE BEHIND FED
ERAL INCORPORATION
The Boston News Bureau of Sep
tember 14, 1915, carried an articlo
dated Washington, which indicates
the gigantic efforts put forth by the
carriers to influence the congres
sional committee to favor a federal
incorporation act:
"Every class of citizen doing busi
ness with the railroads of tho coun
try will be represented beforo tho
joint congressional committee
charged with investigation of rail
road legislation. Representatives of
the railroads today began a system
atic round up of prospective witness
es. Agents of the road, under di
rection of the legal advisers of tho
railway executives' advisory com
mittee, started to comb tho country
for representative bankers, shippers,
commercial organization officials and
railroad men. J. P. Morgan will
head" the bankers who will submit
their views to the committee and ho
Will be accompanied by half a dozen
of Wall street's biggest men who
deal in the securities of the roads.
The railroads likewise expect to
produce bankers from various small
towns throughout the country w
give their views on railroad finance.
Thus we see that it is Wall
street's interest in the securities oi
railroads that is the paramount is
sue. It becomes acute at this partic
ular Jime, in view of the fact that
the interstate commerce commission
is about to establish certain pro
ciples in fixing the value of the ran
.. , t t Mio nation, l
roaa conipamea ul "- pa
-..ur, 4.ov f,nv nrfl now engage"
t 4.t, .niiKAoiia firfi successful
contending for an "unearned Jnafr
ment value." then their outatandWJ
i.i, n-nA rntn mav not
HlUUllD UMU. wuw -
in
exceed
such an estimated value of the ca
riers' property; but such .
attack has been made f in ' ts 10
an absurd element of .value that
fictitious securities which nave w
issued by common carriers are
gerously threatened.
There are at least tliirwea
with constitution and laws tvu
.