GOVERNMENT VERSUS
PRIVATE RAILROADS
JOURNAL
OF
The National institute
of social sciences
founded in i9i2 under the charter of the
AMERICAN SOCIAL SCIENCE ASSOCIATION
incorporated by act of congress, january 28, i899
VOLUME V. , JUNE x, 1919.
This Volume Also Represents No. 51 of the
Journal of the American Social Science Association
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Copyrighted 1919, by the
National Institute op Social Sciences
Press of
J, J. Little & Ives Co.
New York
OFFICERS OF THE INSTITUTE
President
Emory R. Johnson
Honorary President
William H. Taft
Vice-Presidents
Jane Addams, LL.D.
Mrs. George C. Avery
Hon. Robert Bacon
Hon. Simeon E. Baldwin
Hon. James M. Beck
Mabel T. Boardman, LL.D.
Marston T. Bogert, LL.D.
Nicholas Murray Butler, LL.D.
Hon. William H. Crocker
H. Holbrook Curtis, M.D.
Chas. B. Davenport, Ph.D.
Mrs. Henry P. Davison
Mrs. Henry F. Dimock
Tyson S. Dines, Esq.
Charles W. Eliot, LL.D.
John H. Finley, LL.D.
Prof. Irving Fisher
Re ar-Admiral B. A. Fiske
Harry A. Garfield, LL.D.
Virginia C. Gildersleeve, LL.D.
S. S. Goldwater, M.D.
Frank J. Goodnow, LL.D.
Hon. Madison Grant
Mrs. E. H. Harriman
Mrs. J. Borden Harriman
Hon. Myron T. Herrick
Hon. David Jayne Hill
Mrs. Ripley Hitchcock
Archer M. Huntington, Litt.D.
Mrs. H. Hartley Jenkins
Hon. James G. Jenkins
Mrs. St. Clair McKelway
A. L. Metz, M.D.
Harris P. Mosher, M.D.
Mrs. Frederick Nathan
Henry Fairfield Osborn, LL.D.
Cornelia B. S. Quinton, Litt.D.
Hon. Elihu Root
Leo S. Rowe, LL.D.
Herbert L. Satterlee, Ph.D.
Mrs. C. Lorillard Spencer
Hon. Oscar S. Straus
Roland G. Usher, Ph.D.
Miss Lillian D. Wald
Talcot T. Williams
T reasurer
Henry P. Davison, LL.D.
c/o J. p. Morgan & Co., N. Y. City.
Secretary
Miss Lillie Hamilton French
225 Fifth Avenue, N. Y. City.
ill
MEDAL OF THE INSTITUTE
DICf KVS
V '
OBVERSE REVERSE
MEDALS AWARDED BY THE INSTITUTE
GOLD MEDALS
1913
Archer M. Huntington, Litt.D.
William H. Taft
Samuel L. Parrish
1914
Charles W. Eliot, LL.D.
Major-Gen. Geo. W. Goethals
Henry Fairfield Osborn, LL.D.
Abraham Jacobi, M.D.
1915
Luther Burbank, Esq.
Hon. Andrew Carnegie
1916
Hon. Adolph Lewisohn
Mrs. H. Hartley Jenkins
Hon. Robert Bacon
1917
Surgeon-Gen. Wm. C. Gorgas
Hon. John Purroy Mitchel
Michael Idvorsky Pupin, Sc.D.
George W. Crile, M.D.
1918
Henry P. Davison, LL.D.
Hon. Herbert C. Hoover
William J. Mayo, M.D.
1919
Samuel Gompers
William Henry Welch, M.D.
PRESENTATION MEDALS
1913
Capt.Clement Greatorex,M.V.O.
Marquis de la Vega Inclan
Jane Addams, LL.D.
Prof. Russell H. Chittenden
Miss Malvina Hoffman
Mrs. Frederick Nathan
Viscount Bryce
Mabel T. Boardman, LL.D.
Miss Lillian D. Wald
Sir Rickman J. Godlee
1914
Hon. Brand Whitlock
General Leonard Wood
Wm. Thomas Councilman, M.D.
Mrs. Rose Hawthorne Lathrop
Emory R. Johnson, Sc.D.
J. J. Albright
Edward L. Trudeau, M.D.
Mrs. Anne Douglas (Sedgwick)
De Sèlincourt
A. L. Metz, M.D,
Charles H. Duval, M.D.
Charles C. Bass, M.D.
John H. Finley, LL.D.
Cornelia B. S. Quinton, Litt.D.
Miss Winifred Holt
1915
Möns. Eugène Brieux
Miss Anne Morgan
Hon. Myron T. Herrick
Louisa Lee Schuyler, LL.D.
1916
Madame Marcella Sembrich
Henry M. Leipziger, LL.D.
John Seely Ward
Samuel Mather • '•
Peter Cooper Hewitt, Sc.D.
1917
Hon. Madison Grant
Miss Jane A. Delano
Edward H. Sothern
1918
Francis Gano Benedict, Sc.D.
Hon. John A. Kingsbury
Leo S. Rowe, LL.D.
Thomas W. Salmon, M.D.
Prof. Charles-E. A. Winslow
1919
Right Rev. Charles H. Brent
Raymond B. Fosdick *; ,
Harry A. Garfield, LL.D.
Carl Koller, M.D.
Frederick Layton
Hon. Robert Scott Lovett
Charles M. Schwab
Harry A. Wheeler, LL.D,
V
LIBERTY SERVICE MEDALS
1918-1919
Edwin G. Baetger
Col. Joseph A. Blake
Lieut.-Col. George E. Brewer
Mrs. James Stewart Cushman
Livingston Farrand, LL.D^
Edward W. Hines
Governor Marcus H. Holcomb
Lieut.-Col. James P. Hutchinson
Major-Gen. M. W. Ireland
Major Alexander Lambert
Lieut.-Col. Henry H. M. Lyle
Henry Noble MacCracken, LL.D.
Major Clarence A. McWilliams
Governor Richard I. Manning
Governor Samuel W. McCall
Henry C. McEldowney
Prof. John C. Merriam
John R. Mott, LL.D.
Major Grayson M. P. Murphy
Miss M. Adeline Nutting
Charles L. Pack, LL.D.
Hon. John M. Parker
W. Prank Persons
. Mrs. Whitelaw Reid
Henry Davis Sleeper
Horatio R. Storer, M.D.
Magnus Swenson
Mrs. W. K. Vanderbilt
Frederick Vogel, Jr.
Daniel Willard
President Woodrow Wilson
Mrs. H. Otto Wittpenn
PATRIOTIC SERVICE MEDALS
1918-1919
Mrs. Robert Bacon
Cornelius N. Bliss, Jr.
^Hon. Frank W. Carpenter
William D. Cochran
William F. Cochran
Mrs. Nina L. Duryea
Mrs. Robert A. Franks
Mrs. Charles D. Freeman
Miss Raymonde Glaenzer
John H. Goss
Mrs. Arthur Curtiss James
Miss Beatrice MacDonald
Mrs. Stanley Mortimer
Mrs. Henry R. Rea
John D. Rockefeller, Jr.
Frederic M. Sackett
Dr. Paul H. Saunders
Mrs. Cornelius Stevenson
Mrs. E. T. Stotesbury
Mrs. French Vanderbilt
Miss Mary VanKLeeck
Charles Weinberger
VI
TABLE OF CONTENTS
Arguments For and Against Government Ownership and
Operation of Railroads. E. R. A. Seligman i
Objections to Government Ownership of Railroads.
Samuel O. Dunn i8
Coordinated Development of Waterways and Railroads.
Walker D. Hines 36
Private Ownership, Operation and Financing of the Rail¬
roads. Thomas DeWitt Cuyler 41
Program of Railroad Legislation. Theodore E. Burton 46
A Railroad Policy Briefly Outlined. George A. Post 54
Competition and Private Initiative in Railroad Develop¬
ment and Management. Robert Scott Lovett 59
Nationalizing Railroad Corporations by Statute.
Alexander W. Smith 67
Stabilizing Railroad Investments. Paul M. Warburg 74
Objections to Government Guarantee of Return on Railroad
Capital. Samuel Rea • 86
The Greater Efficiency of Private Operation of Railroads.
A. J. County 96
Effects of Government Ownership on Development and
Efficiency of Railroads. John J. Esch 114
Adjustment of Wages and Conditions of Service Under
Government and Corporate Ownership of Railroads.
W. N. Doak 122
Public Control of Railroad Wages. William Church Osborn. 129
COMMUNICATION
The Work of the Public Health Service During the War.
Rupert Blue, Surgeon-General, U. S. A 136
ANNUAL DINNER
The League of Nations and Labor. Geo. W. Wickersham. .. 143..
Address. Samuel Gompers 160
Address. Charles M. Schwab 169
Address. Harry A. Garfield 175
Reports of Meetings 189
Report of the Liberty Service Medal Committee 190
Activities of Members 191
Index 241
vn
ARGUMENTS FOR AND AGAINST GOVERNMENT
OWNERSHIP AND OPERATION OF RAILROADS
BY PROFESSOR EDWIN R. A. SELIGMAN
COLUMBIA UNIVERSITY, NEW YORK '
In approaching the subject, it is important to bear in mind
that, taking a broad view of the history of the railroads
throughout the world, there have been three stages in the devel¬
opment. Not all countries have gone through all of the three
stages, but all have gone through some of the stages, and some
have gone through all the stages. "^At the beginning railways
were regarded as the private business of the owners. i Espe¬
cially in England and in this country as well as in Canada,
railways were placed under the regime of competition between
the private corporations owning the railways. For in these
nations, almost every part of the country was so anxious to
secure railways that they fairly vied with each'other in their
efforts to grant inducements to the railways. There was no
thought of restriction; there was thought only of persuasion.
After a time, for reasons that are obvious to all to-day,
the disadvantages of various forms of competition between
these private companies showed themselves and the small lines
began to amalgamate and form larger groups, until before
long in many countries, instead of private competition between
separate railways, a condition supervened more and more
approaching a series of private monopolies.
When that second stage developed, the evils of private
monopoly began to disclose themselves and the demand for
some form of government control became ever more insistent.
We, therefore, find during this stage a growing and more
drastic regulation of these private monopolies by government.
Some countries indeed started out with the second stage, as
they never entertained the idea of competition between private
railways. In such countries we find from the very outset a
system of private monopolies, carefully regulated by the goy-
etnment.
2 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
After the lapse of several more decades, the inadequacy
of this system came gradually to be recognized and certain
countries changed from the plan of government control of
private monopolies to that of government ownership or ojier-
ation. Thus the third and final stage was reached.
Some countries, again, started in with this third stage
from the very beginning. Australia, for instance, never had
any private railways, either competitive or monopolistic, but
began with government railways; and a number of other
countries followed the same plan.
Most countries, however, have gone through all of these
three stages. Germany, for instance, started out with private
railways, more or less uncontrolled; then changed to private
monopolies, controlled by government and finally went over
to government ownership. Italy also went through the three
stages. Italy started out with private competition between a
number of railways; then resorted to combination between
two large monopolistic systems, and finally in 1907 accepted
government ownership. France, which began with controlled
private monopolies, has entered partly upon the last phase,
having taken over with the last few decades two of the lines
and having arranged to take over all the remainder within
three or four decades.
Finally in federal countries, as in Switzerland, a still more
interesting development has occurred. Switzerland, as is well
known, is a federal state composed of separate common¬
wealths like our own. They started out with private railways,
more or less uncontrolled, save by competition. Later on,
when combinations developed, each state began to regulate
her own railways. When that was found to interfere with
interstate commerce, they reached the stage which we are
beginning to attain, and the entire regulation was taken over
by the central government, none being left to the separate
states. Finally even that turned out to be inadequate, and
over a decade ago the last of the railway systems was taken
over by the federal government, so that there is now complete
government ownership and operation.
It is clear then from this comparative survey that the
generalization described above is applicable also to us. We
also are in a definite stage of the same development, in that we
GOVERNMENT VS. CORPORATE OWNERSHIP OF RAILROADS 3
have transcended the early stage of competition between pri¬
vate railways, and that our large railway combinations or
groups which were first regulated by the separate states are
now in part subject also to federal regulation. The question
before us now is: shall we enter upon the third stage as
reached by Switzerland, that of private monopolies controlled
entirely by the central government, or shall we go over to the
fourth and final stage of government ownership and opera¬
tion?
In order to prepare the way for an answer to this ques¬
tion, let us analyze the reasons why this development has
taken place, why almost all countries have proceeded from one
stage to another, and why some have even ended with gov¬
ernment ownership.
I
The first query then is: Why did private competitive
lines give way to government regulated monopolies? Here
the history of England is enlightening. Im England all kinds
of competition have been tried. First, as is well known, Eng¬
land attempted what is called competition of carriers on the
line. It was supposed that the railways, like the canals and
turnpikes, would be used by individuals owning not only their
own cars but their own locomotives. Everybody was permit¬
ted to employ his own motor power and the tolls charged were
fixed primarily for use of the way. This so-called competition
of carriers on the line was, however, soon realized to be tech¬
nically impossible and by the end of the thirties, not only were
private locomotives abandoned, but even private cars now soon
became the exception, rather than the rule.
Next came the idea of competition among the carriers
themselves; that is to say, competition in rates.and fares. For
a long time everybody believed in this form of competition and
thought that it would secure as adequate protection for the
public, as was the case in private business through the opera¬
tion of the general principle of competition. This, however,
turned out to be completely unavailing by 1870, when the great
amalgamations had been completed and when it was seen that
competition between private railways could not be relied upon
4 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
to assure either moderate or stable charges, and that competi¬
tion inevitably gave way to combination. For competition in
charges involved the dangers of what we call to-day "cut¬
throat" competition as well as the instability of rates so dis¬
tasteful to the shipper.
There still remained, however, the idea of competition of
service or competition in facilities. In 1871 the English insti¬
tuted a great commission which sat for some time and made a
special study of this topic. When they brought in their report
in 1872 they stated that no reliance was to be placed upon
competition. We quote the following paragraph from the re¬
port, because it is so germane to our present situation :
"The Commission and Commissioners carefully chosen
for the last thirty years have clung to one form of competition
after another. It has, nevertheless, become more and more
evident that competition of all kinds must fail to do for rail¬
ways what it does for ordinary trade, and that no means have
yet been devised by which competition can be permanently
maintained."
Furthermore, this Commission went carefully into the
question not only of competition in general, but of competi¬
tion in facilities or service, a point of which we hear so much
to-day in this country. For although most of us have aban¬
doned our earlier belief in competition in rates, many still
cling to the idea that the solution of the problem lies in com¬
petition in facilities. As to this, let the Commission speak ;
"It is impossible to say how far the facilities of modern
England are due to competition. Still less is it possible to say
whether greater facilities are not produced by amalgamation
or monopoly and, above all, past experience leads to the
inevitable conclusion that wherever competition is found to
be adverse to the interests of the companies, it will in the long
run be succeeded by combination. Competition cannot be
relied upon to secure either fair prices or proper service."
We quote this in order to show that this particular conten¬
tion was settled in England fifty years ago. Neither in Eng¬
land nor anywhere else except in this country has any further
reliance since then been placed on the idea of competition in
facilities, as the solution of the problem.
In England, therefore, as on the European continent, pri-
GOVERNMENT VS. CORPORATE OWNERSHIP ÓF RAILROADS 5
vate competition gave way to combination. One form of com¬
petition followed the other into oblivion until there supervened
monopoly, legal or actual. But with each weakening of the
fact of competition, came a strengthening of government con¬
trol and finally the control of private monopoly was succeeded
by public monopoly or government ownership. Let us now
proceed to discuss the causes of this final transition.
First, there was what may be termed the constructional
argument. In many countries the needed capital was not
available. That is the reason, for instance, why Australia
started in with government ownership ; and why we find gov¬
ernment lines in some of the American dependencies and the
British colonies. It explains the existence of the early gov¬
ernment railways in some of the American states like Penn¬
sylvania "and North Carolina. If you cannot get people to
invest their own capital, the government must step into the
breach. With the evident profitableness, however, of the
newer means of communication, this particular argument
proved to be of slight consequence in the United States.
In the second place we find the military argument. This
explains the construction of the trans-Siberian railway in Rus¬
sia and the assumption of no small part of the Indian railway
system by the government. The military argument has fortu¬
nately been unknown in this country; and let us hope that
when the League of Nations comes to be realized, it will no
longer play a rôle anywhere else.
The third is the political argument. When certain coun¬
tries, for instance, adopted a definite trade policy, like protec¬
tion, they found it desirable to nationalize the railway system
as an adjunct to the new policy. This played a considerable
rôle in the taking over of the Prussian railways by the gov¬
ernment.
The fourth is the financial argument, based on the hope
that the government will derive a clear profit from railway
operation. In many of the smaller German states, for instance,
the government railways have yielded large surpluses, which
have operated to reduce taxation. This argument, however,
would not apply in Anglo-Saxon countries. For if we ever
take over the railways there is no doubt that we shall adopt
the same principle as Australia and which we actually follow
6 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
in the case of the post ofSce ; that is, the principle of fees, or
the covering of cost, rather than the principle of profits. If
the rates and fares were ever high enough to yield a net sur¬
plus, we should without doubt give the public the benefit of
lower charges rather than the taxpayer the advantage of
lighter burdens.
In the fifth place, we find the labor argument. The gov¬
ernment, it has been claimed, is, on the whole, more apt to be
a model employer, so that the workmen will fare better under
government operation than under private management. This
consideration played a not insignificant, although indeed not
the unique, rôle in Italy, when government control was suc¬
ceeded by government ownership in 1907.
The sixth and most important argument may be termed
the economic argument. This is really a composite argument,
consisting of several elements. í A prominent place, for in¬
stance, has been ocoipied by the feeling that the abolition of
private monopolies would lessen discrimination, both personal
and local, i In the next place came the expectation that charges
would be reduced through the elimination of the profits of the
stockholders. It was conceded, indeed, that there is often a
coincidence between the private and the public interest; as
when the private railway finds it profitable to build up the
country, and thus increase both its own earnings and the pub¬
lic welfare. But when there is a divergence between private
interests and public welfare, when there is danger that the
interests of the stockholders will gain precedency over those
of the public, the feeling was engendered that it might be better
to eliminate the hazard once and for all. This has played no
small rôle in some European countries.
There is another phase of this argument which is acquir¬
ing considerable importance here as elsewhere. This is the
feeling that public utilities should not be utilized to create
large profits for private individuals. We know that in this
country many huge fortunes have been amassed out of rail¬
ways. Entirely irrespective of the fact whether they were
honestly or dishonestly acquired, there is a growing conviction
among many who believe in private property and even in the
social advantages of large fortunes, that railways ought not to
be utilized for this end and that no opportunity ought to be
GOVERNMENT VS. CORPORATE OWNERSHIP OF RAILROADS 7
given to heap up immense fortunes out of what is primarily a
public enterprise, even though it may be delegated for a time
to private management.
Finally, we may advert to the last phase of the economic
argument which plays a considerable rôle at present, vis., that
private management is inevitably attended by certain wastes
of competition. For even though there may be a distinct ten¬
dency toward monopoly, there is apt to be, as at present in
this country, a certain amount of competition at the fringes of
the monopolies. It is difficult to achieve under private man¬
agement unified control, standardized equipment, direct rout¬
ing, joint use of terminals, and all these other results of
which we have heard so much during the last few months
under government operation. In other words, government
ownership, it is claimed, is the one best calculated to bring
about the economies of unity of operation.
While the above are the chief Teasons that explain the
strong trend in many countries toward government owner¬
ship, it is necessary to point out why the major part of the
railways of the world are, nevertheless, still in private hands.
What, in other words, are the chief arguments that may be
advanced against government ownership?
II
These opposing arguments may be reduced to three in
number: the political, the economic, and the fiscal.
The political argument may be approached from several
angles. In the first place, it is pertinent to consider railway
construction—an important matter in this country which does
not yet begin to possess all the railway mileage which it will
ultimately need. Will it be easy to keep politics out of the
construction of new railways ? Does not the picture presented
to us every few years by the river-and-harbor bill show us the
kind of interests that will be at work in the endeavor of each
section to secure for itself new construction which may per¬
haps not be in the public interest? This is not lightly to be
overlooked.
Secondly, when we come to deal with the operation of
existing lines, will it be feasible in a country like this to elimi-
8 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
nate politics from the management of the railways? Entirely
irrespective of the possibility, to be discussed later, of securing
an efficient directing force, will it not be difficult to prevent
the sectional interests of the country from influencing the cen¬
tral board? We all know what happens every time a new
tariff bill is discussed, and how one section is played off
against another. Yet the importance of railway tariffs to
various industries and different sections is immensely greater
than that of any customs tariff. Would there not be a serious
danger of a reproduction on a great scale of the unseemly con¬
tests and the log rolling which are even now inseparable from
the adoption of a new tariff?
Furthermore, consider the political aspect of the labor sit¬
uation. We are all agreed that labor constitutes the first
charge upon the railways ; and that, whatever may be the solu¬
tion of the problem, we must so arrange it that the laborers on
the railways shall secure an adequate wage. But let us not
minimize the difficulties that will be created by the addition
of millions of men in the employ of the government. We shall
either be compelled to take away from them the vote, which
is unthinkable in this country, or we shall incur the risk of con¬
verting the railway employees into upholders of that party
which is most lavish in promises. Until we settle the problem
of trade unionism among government employees, with the gen¬
eral strike as the ultimate resource, will it not be hazardous to
multiply government employees in enterprises which deal with
primary necessities ? We know how they attempt to solve this
problem abroad. In Italy they were compelled, in the case of
strikes of the railway employees against the government, to
call every man to the colors and to shoot every one who did
not respond. Would that method be practicable here? Are
we really far enough along in our settlement of the labor prob¬
lem to look forward with complacency to having millions of
government employees? Have our friends on the labor side
adequately considered this matter in the report which they
have submitted in favor of government ownership? Is it
not a fact they have succumbed to the danger of regarding
the problem only from the point of view of their own par¬
ticular interest. The railway executives have brought in a
report which, although not designed primarily to do so, yet
GOVERNMENT VS. CORPORATE OWNERSHIP OF RAILROADS 9
creates the impression of manifesting regard chiefly for the
financial interests of the stockholders. The railway operatives
have brought in a report which is frankly designed primarily
to look after the interests of the laborers. They are both
wrong because the real problem in this country is primarily to
consider the interests of the public, and to give adequate
service.
The political aspect of the problem therefore is a serious
one. In a democracy like ours, where so many political prob¬
lems have not even yet been approached, much less settled, it
is a fair question whether government ownership may not
involve, politically speaking, a jump from the frying pan into
the fire. Are we ready for the jump at this time?
The second argument is the economic argument. This
again has two aspects, that of discrimination and that of
efficiency.
Personal discrimination may be passed over because it is
now to a very large extent a thing of the past. We have been
able virtually to get rid of personal discrimination through our
system of government control. We hear nowadays but little
complaint on that score.
As regards local discrimination, is it not a vain hope to
expect that government operation will eliminate this? Is it
not true that many forms of local discrimination must continue
to exist under government ownership, because they are in¬
herent in the very nature of the case ? The question, e. g., as
to whether the rates to Reno, Nevada, should be lower than
to San Francisco, is one which neither the government nor
private individuals can answer jn the affirmative, because it is
settled by water competition. Again, export and import rates
must continue, whether we have government railways or pri¬
vate railways. New York will continue to be a rival of Balti¬
more, the Twin Cities and of Omaha and Council Bluffs,
government railways or private railways. We must not ex¬
pect to get rid of local discriminations altogether; and we may
diminish them as easily by government control as by govern¬
ment management.
Far more important, however, is the question of efficiency.
It is notorious that in New York there has supervened a very
perceptible decrease in the efficiency of the telephone service
lO THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
since the telephone has been operated by the government.
Yet the telephone service is an exceedingly simple business
compared with the railway. The railway is the most complex,
the most subtle, the most delicate of all modern forms of en¬
terprise. We can readily understand why some of our rail¬
way presidents receive more than the President of the United
States. It is a difficult task—almost, I might be tempted to
say, a more difficult task to run a big railway than it is, or at
all events, than it was before the war, to run the government
of the United States. We do not pay railway presidents those
sums as mere gratuities. They are paid the market rate for
their services because the sums in question are needed to secure
the requisite ability.
*How are we going to get the big brains of the country to
remain in the service of the government railways?/ Do we
find them to-day in our Interstate Commerce Commission?
Do we find them in our Federal Trade Commission? Do we
find them in our Tariff Commission? Do we find them in the
management of the Post Office ? Is it not more than probable,
especially in a country like ours where huge salaries are most
unlikely in government service, that the best brains will leave
the government railways to enter private industry? And if
they do, what will be the result upon the efficiency of the
management ?
But even if we could secure good men at the top, what is
going to be the result of turning over to a government bureau,
with its red tape and with its interminable delays, the man¬
agement of a most complex enterprise, where immediate and
decisive action is frequently necessary? Any one who is
familiar with the way business affairs were handled at Wash¬
ington before the war in almost every department knows the
record of almost unbelievable slackness, of interminable delay,
of outrageous duplication, of perpetual outside interference,
of working at cross purposes, in short, of waste and ineffi¬
ciency.
When we realize that the railway business is the most
important of all our enterprises, that the present twenty bil¬
lions of capital will before long be forty billions of capital and
even ultimately fifty billions, can we contemplate with equa¬
nimity its control by a government board or by a secretary
GOVERNMENT VS. CORPORATE OWNERSHIP OF RAILROADS II
of railways? The only example we have had in this country
in recent years of anything comparable to government opera¬
tion, of the railway business is the gas business in Philadelphia.
When it was managed by the city we had poor gas, high
charges and a large operating deficit. When the government
turned it over to a private company, the result was good gas,
lower charges, and profits to the government and private com¬
pany alike.
Can we hope to do, under present political conditions, with
this most complicated of all industries, what we were unable
to do with a single industry in the city of Philadelphia? Have
we yet reached the stage of political development when we
can hope to eliminate all suspicion of politics from the gov¬
ernment administration of business? And if not, will not
government operation mean poor service, higher charges, and
operating deficits to boot, which must ultimately be met by
the taxpayer? Will not the profits of private management be
dissipated into the losses of government inefficiency of opera¬
tion? Will not, in short, the economic result be unsatisfac¬
tory?
We come finally to the fiscal argument.
The railway revenues last year were about five billions,
or about five times as much as the government revenues be¬
fore the war. In good years the railway revenues will con¬
tinue to be large. But in poor years, whether due to bad crops
or to business depression or to other emergencies, the revenues
will fall off by the hundreds of millions of dollars. If the
railways are run by the government, how will it be possible to
provide for these sudden changes?
If we had, as in England, either an elastic revenue system
or a budget which enables the Chancellor of the Exchequer
every year to make his calculations within a few hundred
thousand pounds and to balance his revenues and his expen¬
ditures, well and good. But how much chance have we of
securing, in the immediate future, a real budget system at
Washington, and how much prospect have we of introducing
an elastic revenue system such as that which exists abroad?
We know that this country has always been marked either by
deficit financiering or by surplus financiering, and that the
difficulties of our surpluses have often been greater than those
12 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
of our deficits. Would not the taking over of the railways by
the government with these billions of revenues and with these
hundreds of millions of changes from year to year, constitute
a hazardous fiscal policy? Are we ready for it yet? Is it not
true, that government assumption of the railways must be
preceded, as it was in Prussia, in Japan, and in Italy, by a
reform in the fiscal policy which includes budgetary reform
and elasticity of revenues ? Shall we not otherwise be prepar¬
ing for ourselves a fiscal chaos?
We have discussed the Federal fiscal problem. It remains
to say a word about the state and local fiscal situation in rela¬
tion to the railways. Almost everywhere at present there is
a growing discontent with our system of state and local
finance. In Ohio, in California, in New York, in the South,
and in the West, our system of general property taxes is
arousing increasing dissatisfaction. There is much unrest.
There are demands for change. The coming of prohibition
will make the situation still worse in those states and cities
which depend upon high license for a substantial part of their
revenue. In New York we shall lose some twenty millions of
dollars. Yet how much thought have we given to the problem
as to what is to be done by our states and cities if the Federal
government takes over the railways? Much of our local rev¬
enues and a very substantial part of our state revenues almost
everywhere in this country come from the public utilities and
notably from the railways. Yet if the government should take
over the railways, the states could no longer tax them, for
they would then be an agency of the government and as such
exempt from taxation. But if the states and localities should
lose all the taxes that are paid by the railroads of this country
to-day, the possible consequences are unpleasant to contem¬
plate. Unless some comprehensive plan of tax reform, to¬
gether with a really workable budget system, had been pre¬
viously effected in all of our states and cities, would not the
assumption of the railways by the Federal government en¬
gender untold difficulties and complications? This phase of
the fiscal aspect of government ownership has not received
the attention which it deserves.
If, then, we consider the political, the economic, and the
fiscal arguments, is it not true that we have a combination of
GOVERNMENT VS. CORPORATE OWNERSHIP OF RAILROADS Iß
considerations which would impel us at the present time to
go slow in adopting the program of government ownership?
Government ownership may be ultimately tmavoidable and
even perhaps desirable, but the problem now before us is as
to whether we have in this country yet reached the stage when
this eventuality is to be welcomed. If there is any force in
the above arguments, the time for that fiscal step is not yet
at hand.
Ill : i '
If, then, we decide for the present adversely to the project
of government ownership, what conditions should be attached
to their retention in private hands?
We should in the .first place all agree that there must be
at least a fourfold control, and that too of a more rigid char¬
acter than we have yet had. This fourfold control would in¬
clude the control first of rates and fares; second, of facilities
and the mechanical side of operation; third, of railway ac¬
counts; and fourth, of railway securities. Some of these we
have; others we must have. About this there is virtually no
diflference of opinion to-day. But assuming that we have se¬
cured them all, there still remain four additional objects which
must be attained if the railways should be permitted to con¬
tinue in private hands. What are these four objects?
The first point, I think, is that we must have assured, but
limited, profits. We must have an assurance of an adequate
return to the investors, or otherwise we shall not secure the
capital. This assurance may take the form either of a direct
government guarantee, or of a speedy and satisfactory adjust¬
ment of rates by the rate-fixing authority. On the other hand,
we must have a limitation upon the profits in order to meet
the argument adverted to above, that the profits which indi¬
viduals can be allowed to make out of public utilities ought to
be limited to the irreducible minimum.
Second, we must have an automatic adjustment of wages.
There is no reason why the labor adjustment boards which
have been such a pronounced success under our government
operation should not be continued under private operation,
provided it is recognized that any increase of wages granted
14 the national institute of social sciences
by the adjustment board will at once be transferred to the
public and not remain a charge on the railways. There is
no conceivable reason why the private railway would then
object to a satisfaction of all the legitimate demands of labor.
What the railways formerly feared was that high wages would
mean low profits. Remove this fear and you remove the great
cause of friction.
Thirdly, we must seek to have regional operation with
central control. Central control means the abandonment of
state control. That is bound to come. We cannot have any
adequate control of interstate commerce if there is a confiict
between the state and the central authorities. We may indeed
decide to grant to Caesar the things that belong to Caesar and
leave a certain amount of control of strictly local matters to the
state commissions. But in the essentials the nation must be
supreme. Let us not forget the history of Switzerland.
When we come, however, to discuss the question of
regional arrangement, there is room perhaps for more doubt.
The question here at issue is as to whether there should be a
complete monopoly within each region, or whether there
should be competition between two or more railway groups
in the same region. Here has emerged a decided difference
of opinion. Not a few experts at present concede that com¬
petition in rates is undesirable, but pin their faith on competi¬
tion in facilities. Is this a reasonable position? That compe¬
tition in facilities has accomplished good results is indeed true.
But so has competition in rates. Why then abandon reliance
on competition in rates, and seek to retain competition in
facilities ?
The first has done good, but has also done evil, and we
have discarded it. The second has done good, but has also
done evil, and we are in process of discarding it. Has not the
experience of England shown the futility of reliance on com¬
petition of any kind? If competition in facilities is good, why
is it not equally good in the case of small lines? And yet the
railway advocates quite properly demand the abolition of the
anti-pooling law or the Sherman law as applied to railways.
Why should competition be a bad thing between small lines
and a good thing between large groups? If combination,
which is the opposite of competition, is desirable in railways
GOVERNMENT W. CORPORATE OWNERSHIP OF RAILROADS I5
of hundreds of miles in length, why is it not desirable in
railway systems of thousands of miles in length? There is
obviously no logical halting place in the evolution from primi¬
tive competition to ultimate monopoly in the railway business.
The sooner we recognize this fact, the better. As the experi¬
ence of France has shown, competition within the regional
groups is unnecessary. Perhaps the principal achievement of
our present government operation is the proof of the wastes of
competition—even of competition in facilities—as disclosed by
the great relief afforded by the joint terminals, joint ticket
offices and the abolition of indirect routing. Whatever may
have been the benefits derived in the past from competition in
facilities, it is questionable whether the benefits have not been
outweighed by the defects. And why, it may be asked, may
we be expected to remain the only country which does not
discard this form of competition, as it has in common with the
other countries discarded all other forms of competition—
except, indeed, the two forms of competition which must con¬
tinue to exist everywhere—namely, water competition and
market competition or competition for the markets which may
be reached directly or indirectly by the monopoly enterprises?
Above all, let us remember that the chief advantage sup¬
posed to be effected by competition of facilities may be at¬
tained equally well in another way. The argument of those
who assert that we must still have competition of facilities is
that without such competition we shall not have efficiency.
What, however, is the real lure, the real stimulus to efficiency
under private ownership? It obviously is profits; it is the
money which we expect to make out of it. In private business
competition brings about this result, because the successful
competitor who puts his antagonist out of business makes the
money. But if you have a system of monopoly and if you
enable the monopolist to retain a part of the results of his
good management, if you allow him to retain a substantial part
of the profits due to efficiency, why should you weaken the
desire to secure efficiency? And if this is true, cannot effi¬
ciency be predicated as well of monopoly as of competition?
May we not in this way secure all the advantages of compe¬
tition without any of its unquestioned evils?
This brings us to the fourth point, namely, that there
l6 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
must be a division of the profits of operation. If we allow
the railways to keep all the surplus profits, we shall again
arouse the antagonism which is now in process of being
allayed. The rates which would be sufficient for a poorly
managed railway would obviously yield immense profits to the
well-managed railway ; and immense profits will inevitably give
rise to suspicion. Furthermore, the division ought not—and
we say this with all due deference to our friends the labor peo¬
ple—go to the laborers. The laborers in general have always
consistently expressed their opposition to the idea of profit
sharing as a solution of the labor problem. The American
Federation of Labor and most of the workmen in this country
do not believe in profit sharing. What they contend for is a
wage adequate for decent living conditions, and one that will
rise with the standard of life. They do not believe in profit
sharing. Why then should we introduce profit sharing on the
railways? In fact we do not need it. If we secure the auto¬
matic adjustment of wages to which we have referred above,
the workman will get all the wages to which he is entitled.
Moreover, if there is to be a division of profits, why should it
go to the laborers rather than to the public ? After all, it is the
general public which creates these profits by paying the rates
and fares. If we are to adopt the principle of a division of
profits between the owners and some other party, ought not
that other party to be the public?
But, you will ask, why then give any part of the profits
to the owners of the railways? Because that is the only way
of securing efficiency unless we have competition. And if we
no longer believe in competition, if we believe that the best
interests of the country demand unified management, joint use
of the terminals, direct routing and all these other achieve¬
ments which have been brought about under government
operation—if, in short, we are to get on not only without
competition of rates, but also without competition of facili¬
ties we must secure the efficiency of which we all desire to
secure the advantage in some other way—and that other way
is not only to safeguard reasonable private profits, but to give
a stimulus to efficiency through the lure of greater profits.
Summing up the discussion, it seems clear then that the
solution of the problem at present is to be sought neither in
GOVERNMENT VS. CORPORATE OWNERSHIP OF RAILROADS 17
goverament operation nor in private competition, but in the
strict government control of private monopoly, so devised as
to safeguard primarily not the interest of the railroads, not
primarily the interests of the employees, but primarily the
interests of the community as a whole, that is, of the entire
country.
OBJECTIONS TO GOVERNMENT OWNERSHIP OF
RAILROADS
BY SAMUEL O. DUNN, EDITOR OF THE "RAILWAY AGE"
For many years we have had in this country much aca¬
demic discussion of government ownership and operation of
railroads. The question has now been transferred from the
field of academic discussion to that of practical statesmanship.
We have had a year of government operation. Therefore we
need no longer base our consideration of its advantages and
disadvantages solely on theoretical grounds and on the experi¬
ence of other countries. Peace will be signed within a few
months. Therefore, under the railroad control law, we must
speedily decide whether government operation shall be con¬
tinued or the railways shall be restored to private operation.
The former director general of the railroads, Mr. McAdoo,
has proposed that the railways shall be retained by the gov¬
ernment for five years, in order to make a thorough test of
the existing system. But to propose five years more of the
present system of government operation is almost equivalent
to proposing permanent government ownership and operation.
After five years more of the present system, the organiza¬
tions of the individual railways would be so destroyed, and the
financial relations of the government and companies would
be so entangled, that to return the railways to private operation
would be impracticable. Therefore, no matter what attempts
may be made to camouflage it, the question actually confront¬
ing the people of the United States is whether they will soon
return the railways to private operation, or adopt government
ownership.
IS IT PRACTICABLE TO RETURN THE RAILWAYS TO PRIVATE
OPERATION ?
Increases of operating expenses are coming so fast that
the large advances in rates which have been made within the
i8
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS I9
past year are proving insufficient to cover them. The net
earnings of many important railroads are such that if they
should be immediately restored to their owners without guar¬
antees of net income, they would be bankrupted. Some con¬
tend that this produces a condition which renders it imprac¬
ticable to return the railways to private operation. But all
that is needed to remedy this situation is to change the rela¬
tion between the expenses and the earnings. This may be done
by reductions of expenses or by advances of rates. If return
to private operation is desirable, then obviously it is desirable
to make such readjustments in expenses or rates as will render
it possible for the railway companies to live. If there is not
statesmanship enough in the country to devise means of safely
returning the railways to their owners soon, it can hardly
be assumed that there is statesmanship enough to devise meas¬
ures under which government ownership and operation could
be made a success.
Now, what are the principal questions to be settled in
determining whether, from the standpoint of the public, gov¬
ernment ownership is desirable ? I think they are as follows :
First : Will government or private development and opera¬
tion of the railways be more economical?
Second: Under which system will rates be lower?
Third : Under which system will the freight and passenger
service rendered be better?
Fourth: Under which system will labor be treated more
fairly, in respect of wages and working conditions?
Fifth: What are the comparative effects which the two
alternative policies would have on the politics of the
country ?
The arguments which may be presented regarding these
points are somewhat the same in the United States as in other
countries. In one very important respect, however, our posi¬
tion is different from that of any other country. Our railway
system, in point of mileage, is more than five times as large
as that of any other country and, in fact, includes one-third
of the entire mileage of the globe. Another important fact
which must be borne in mind is that the country in which gov¬
ernment operation has been most successful—that is, Germany
20 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
—has had a highly autocratic government, while we have a
highly democratic government. Whether the results gained in
Germany in future will be equally good, remains to be de¬
termined. In the study of the problem, we should give great
weight to our own special conditions, or the conclusions we
reach probably will prove far from correct.
COMPARATIVE CONSTRUCTION COST OF GOVERNMENT AND
PRIVATE RAILWAYS
With respect to the cost of furnishing transportation, it is
always contended that the government would have a great
advantage because it can raise capital at a lower rate of inter¬
est than private companies. But it is doubtful whether there
is a difference of more than one per cent between the rate
which the government would have to pay and the average rate
which private railway companies have to pay. Government
bonds issued to carry on the war already are selling at prices
which yield a return of 5 per cent, and purchase of the rail¬
ways would almost double the government's debt. Besides, the
total amount of return which must be paid upon the investment
in railways is determined, not only by the rate of interest
or dividends paid, but also by the amount of capital invested
to provide any given amount of transportation capacity.
Now, the statistics of the world's railways demonstrate
that under comparable conditions, governments almost in¬
variably spend more in proportion to build and develop rail¬
roads than do private companies. It often has been charged
that our railways are over-capitalized. As to some of them,
this is undoubtedly true. But, whether measured by their
book cost of road and equipment or their capitalization, our
railways as a whole have cost less in proportion to their
capacity for handling traffic and to the character of their
facilities than any system of railways which has been built
and developed under government ownership. It is possible
in a brief paper to set forth only a very small part of the
evidence which may be presented in proof of this statement.
The wages paid by the railways in New South Wales, Aus¬
tralia, always have been substantially lower and in Canada
slightly lower than in the United States. These, like the
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS ¿1
United States, are new countries. In 1916, the cost of con¬
struction of the state railways of New South Wales was re¬
ported as $80,000 a mile, and that of the government-owned
Intercolonial Railway of Canada as $76,000 a mile. The gov¬
ernment of Canada recently built the National Transconti¬
nental Railway at a cost, without equipment, exceeding $80,-
000 a mile. The average capitalization of the railways of the
United States on June 30, 1916, was only $66,366 per mile.
It need hardly be added that none of the government railways
mentioned has facilities and capacity for handling traffic equal
to those of the railways of the United States.
Interest of per cent on the cost of construction of the
railways of New South Wales would be $3,600 per mile.
Interest at per cent on the smaller capitalization of the
railways of the United States would be only $3,650 per mile,
and our railways never actually paid out this much in interest
and dividends on their securities in any year in their history.
The large savings which it is contended would be effected by
the use of the credit of the government under government
ownership are mainly fanciful.
COMPARATIVE EXPENSE OF OPERATION OF STATE AND PRIVATE
RAILWAYS
A far more important question is that of the relative ex¬
penses which would be incurred in operating the railways. The
cost of operation of our railways is now about four times as
great as the total return which it would be necessary under
private operation to pay upon their capital in order to cause
prosperity and expansion in the railroad industry. Now, it
has been the almost uniform experience of the world that,
with comparable operating conditions and volumes of traffic,
the operating expenses of state-managed railways have been
greater than those of privately-managed railroads. The advo¬
cates of government ownership always have had much to say
of the efficiency with which the German railways have been
operated. No fairer comparison can be made than between
them and the five large privately-owned railways of France.
1 have had experience with the service of both, and in most
respects the service of the French railways before the war
22 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
was superior to that of the German railways. Nevertheless,
with lower average rates and a smaller volume of traffic,
the expenses of the French railways were lower in proportion
to their earnings than those of the German railways. The
operating expenses of the private railways of Canada always
have been relatively lower than either those of the state rail¬
ways of Australia or those of the state-owned Intercolonial
Railway of Canada. As to the railways of the United States,
in spite of the fact that they have paid the highest wages in
the world, their operating expenses have been lower in pro¬
portion to their volume of traffic than those of any other
railways in the world.
INCREASE OF EXPENSES UNDER GOVERNMENT OPERATION
It is an even more significant fact that in almost every in¬
stance when railways have been transferred from private
to government management, there has immediately been a large
increase of operating expenses. In 1908 the French govern¬
ment assumed operation of the Western Railway, and in four
years, while its earnings increased only 12 per cent, its oper¬
ating expenses increased 50 per cent. Under private manage¬
ment the ratio of expenses of the Italian Railways to their
earnings in the five years 1900-1905 inclusive was 67^^ per
cent, while after two years of government operation the ratio
had increased to 83 per cent. Within three years after the
government of the United States had acquired the Panama
Railroad, its earnings increased 84 per cent, while its ex¬
penses increased iio per cent.
We have recently had a year's experience with government
operation of railroads closer to home. In the year 1917, when
the railways of the United States were under private opera¬
tion, the operating expenses of large roads having a mileage
of 233,000 miles was $2,858,000,000. In the year 1918, under
government operation, the expenses of the same roads were
$4,007,000,000, an increase of $1,149,000,000, or over 40 per
cent.
It may be said this increase in expenses was due princi¬
pally to advances in wages made necessary by war conditions.
But according to the latest statistics, the advances in wages
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS 23
actually charged into the year's accounts amounted to only
$583,500,000. This leaves approximately $566,000,000 of the
increase in expenses to be accounted for. In 1917 the increase
in traffic handled was much larger than in 1918, and there
were large advances in the prices of fuel and materials, as
well as substantial advances in wages. And yet in 1917, under
private operation, the total increase in operating expenses was
less than $475,000,000. Furthermore, the increase in expenses
in 1917 was much the largest that ever had occurred in one
year under private operation; and I especially call atten¬
tion to the fact that it occurred in a year during nine months
of which the railways were operated under war conditions,
while there were only ten months of war in 1918. The ad¬
vances in wages I have referred to are not all that have been
made, but merely those that were charged to expenses in 1918.
It is estimated that the advances in wages made under gov¬
ernment operation are now running at the rate of $1,000,000,-
000 a year.
Are all the advances in wages which have been made
justified? Owing to the policy which has been followed under
government operation, the data for intelligently discussing
that question have not been made available. Under private
operation, when large bodies of railway employees made
demands for advances in wages, the managements usually
declined their demands. The controversies which resulted
usually were aired in the press. They usually resulted in arbi¬
tration; and the public hearings held before, and the reports
made by, the arbitration boards afforded information for judg¬
ing of the merits of the points at issue. These matters, for
the most part, have been handled differently under govern¬
ment operation. Last spring the director general of railroads
appointed a Railroad Wage Commission to pass upon the
claims of all classes of employees. It conducted investiga¬
tions and public hearings and presented a report recommend¬
ing advances in wages aggregating $300,000,000 a year. These
were made. Many employees complained that the advances
they received were not sufficient. Another board was con¬
stituted, composed of equal numbers of officers of the Rail¬
road Administration and of the employees. The railway com¬
panies were not directly or indirectly represented. No public
1
24 the national institute of social sciences
hearings have been held, so far as I know. No reports have
been made setting forth fully for the information of the public
the reasons for the findings made. And yet, on the recom¬
mendations of this board, additional advances in wages aggre¬
gating $700,000,000 a year have been made.
Now, we all know that large advances in wages should have
been made. What I especially wish to call to your attention
is the way in which these things have been done. The public
must pay in freight and passenger rates these advances in
wages. Under government operation the railways are sup¬
posed to be managed solely in the interest of the public.
Nevertheless, while under private operation affairs were so
managed that the public, to a large extent, knew what ad¬
vances in wages were demanded and the arguments made for
and against them ; under government operation, it has not had
this information, and has had no opportunity to bring its senti¬
ment to bear in the determination of questions of such tre¬
mendous importance to it.
It may be said that matters of this kind would be handled
differently under government operation in time of peace. But
in order to get questions of importance settled intelligently
and in the interest of the public, you must get the issues in¬
volved presented fully to the public. Under private manage¬
ment, this is done in railway wage controversies because the
companies have an incentive to present one side of the case,
while the employees have an incentive to present the other
side. Under government operation it must always be vastly
more difficult to get questions of this kind settled with due
publicity and on their merits, because while there will be
those who will have an incentive to present and press the
claims of labor, there will be no one who will have the selfish
incentive that the railway companies have had to oppose the
claims of labor. The officers of the railways under govern¬
ment operation have not and never would have any such in¬
centive. Obviously, public men who may be dependent upon
the votes of railway labor for réélection will not have it.
Nobody will have it. Government operation renders it prac¬
tically impossible to secure discussion and settlement of these
important railway labor questions upon their merits.
Why was there a relatively larger increase in operating
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS
expenses during the past year, in addition to advances in
wages, than there was in 1917? The increase in the prices of
fuel and materials has been relatively little greater. The ex¬
planation is that government operation has reduced the effi¬
ciency of officers and employees. This is not said in any
spirit of criticism of the former director general of railroads,
or of the railway officers who have composed his staff and
have been directly in charge of the operation of the various
lines. Director General McAdoo honestly adopted the system
of consolidation and unification which the advocates of gov¬
ernment ownership always have favored. He believed, as they
did, that under it greatly improved results would be obtained.
He did not estimate, as did an advocate of government owner¬
ship who testified before the Newlands Congressional Com¬
mittee two weeks before government operation was adopted,
that it would produce economies in operation amounting to
$400,000,000 a year. Mr. McAdoo did, however, believe it
would result in large economies. Testifying before the Sen¬
ate Committee on Interstate Commerce on January 19, 1918,
he said : "So I hope that large economies may be practised.
How far they will be offset by increased cost of material and
increased cost of labor, I do not know; but perhaps one hand
will wash the other. ... I hope that such economies can be
effected as will prevent deficiencies, and I even hope that a
surplus may result from government operation." He carried
out his plan of unification with great energy and ability. He
got most of the able railway men in the country to stay in his
organization and render loyal support.
In spite of these things, almost every statistical unit which
can be employed as a measure indieates that the railways were
operated less efficiently in 1918 than in 1917. There was prac¬
tically no increase in the amount of freight traffic handled.
There was an increase in the ratio of empty car mileage to
total car mileage. There was a reduction in the number of
miles each locomotive and each car traveled daily. There was
an increase in the number of tons per train but the increase
was no larger than that which had taken place in previous
years, and it was entirely due to heavier loading of cars.
There was a decrease in the number of freight cars handled
per train, although in the preceding five years, the railway
26 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
companies had increased the average number of cars per train
from 30 to 35. There was no improvement, but actual deteri¬
oration, in the general condition of,track and equipment. It is
a notable fact that this decline in efficiency occurred in spite
of the fact that the Railroad Administration was not hampered
by any of the restrictions by which the railway companies had
been embarrassed. It was not subject to the laws empowering
the shipper to route his own freight and prohibiting consoli¬
dations or agreements between parallel roads, or by govern¬
ment freight preference and priority orders. In order to
expedite the loading and unloading of cars by shippers, it was
able to and did make much higher demurrage charges than
ever had been made before. It was able to, and did, appeal to
the officers and employees, on the grounds of patriotism, to
put forth their utmost efforts in order to help win the war.
A GOVERNMENT MANAGER ON GOVERNMENT OPERATION
Why, under these conditions, was there a decline of effi¬
ciency ? It was due mainly to causes which always are present
and the effects of which never can be avoided under govern¬
ment operation. You may say that is merely the conclusion
of one who is biased against government operation. Permit
me, then, to give to you some views expressed by a man with
long experience as general manager of a system of state rail¬
ways. The railways of South Africa are owned and operated
by the government. Two years ago, a State Mining Com¬
mission was created to consider the question of the nationaliza¬
tion of the mines of that country. It called as its principal
expert witness Sir William Wilson Hoy, General Manager
of Railways and Harbors. Sir William presented an elaborate
statement in which he reviewed the results of government
operation of railways throughout the world. The following
are some quotations from his testimony:
"There is undoubtedly a tendency toward over-centraliza¬
tion and rigid uniformity on state railways. . . . Over-cen¬
tralization destroys initiative and resource, and if carried to
excess, tends to cripple a large organization. . . . Staff con¬
trol and discipline in a state concern are so bound up by
regulations as to create greater difficulties in handling the
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS 27
staff (employees) than are experienced under private man¬
agement. In state concerns, it is not easy to deal with the
man who, while not doing an honest day's work, carefully
steers a course which keeps him within the regulations.
There is not in state concerns the same elasticity in the control
of staff (employees) as in private organizations. . . , With
regard to promotion and regard for good work, considerations
of seniority play a greater part in a state than in a private
concern. If seniority be made the sol^ factor in determining
promotion, one of the main incentives to efficiency disap¬
pears, and the service suffers accordingly. . . . Where a large
body of men, such as a railway staff, is employed directly
by the state, there is a danger of their enlisting the efforts of
legislators to secure better wages, shorter hours, improved
conditions, etc. The enforcement on the management by par¬
liamentary interference of changes in staff conditions de¬
moralizes the entire railway service, impairs discipline, pre¬
vents good relations between the staff and the management,
destroys economical operation and in every way is to be greatly
deplored."
It would be difficult for anybody to give a better enumera¬
tion of the specific reasons for the decline of efficiency on our
railroads than is contained in this summary of Sir William
Hoy's several conclusions. We have had the very over-
centralization of management and the consequent destruction
of the initiative and resource of those in direct charge of the
operation of the various lines which he mentions as being
characteristic of government operation. How could the offi¬
cers of the various railways engage in intense emulation with
each other in getting good results when they were kept busy
carrying out orders from Washington and when the incentive
to put forth their best efforts had been largely destroyed by
the knowledge that the good work they did would not inure
to the advantage of the company that owned the property on
which they were employed, and that therefore they would
probably receive no substantial recognition or promotion
for it?
Government operation has had the very effect of breaking
down discipline among the employees to which Sir William
Hoy refers. The federal manager of an individual railway
28 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
under government operation is charged with the responsibility
of getting results on it, but the effect of over-centralization
is to cause all of the favors granted to employees to be be¬
stowed at Washington. Furthermore, it has caused numerous
inspectors to be sent out from Washington who have gone over
the heads of the federal managers and the other high officers
of the railways direct to subordinate officers and employees.
These things undermine the respect of the men for their
superiors and, as Sir William Hoy says of parliamentary in¬
terference with staff conditions, they demoralize the entire
railway service, impair discipline, prevent good relations be¬
tween the staff (employees) and the management, and destroy
economical operation. There has been thus far almost none
of the political interference on the part of the lawmakers
that Sir William Hoy deprecates, but there is very good rea¬
son to believe that there would be under government operation
in time of peace. If legislative political interference were
added to the other influences which, even in time of war,
have undermined efficiency, what would the operating condi¬
tions on our railways become in time of peace, and to what
heights would their expenses increase?
Sir William Hoy said : "There is nothing inherent in state
organization to prevent adequate decentralization, but the
tendency certainly is toward over-centralization." Personally,
I believe over-centralization is inevitable under government
ownership. Under any system of management, differences
will arise between the railways and their patrons and em¬
ployees. When the railways are owned by several or numer¬
ous private companies, most of these differences will be settled
locally. They may not be settled altogether satisfactorily,
but they will be settled. On the other hand, when the rail¬
ways are all operated by the government, every difference
between them and their patrons or employees, however small,
which is not settled entirely satisfactorily, will be appealed to
the central governmental authority. If there were no central
governmental authority to which to appeal, there would be
an irresistible demand for one to be created. The central
authority will pass upon most of these appeals. The more
of them it hears and passes upon, the more appeals to it
there will be ; and every action it takes in an effort to remedy
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS 29
the conditions which cause the appeals will tend to cause
centralization. The tendency toward over-centralization will,
under government operation, always be irresistible ; and over-
centralization will always tend to produce inefficiency because,
as Sir William Hoy says, it destroys the incentive and oppor¬
tunity of those in direct charge of the operation of the various
lines to exercise initiative and enterprise. The exercise of
initiative and enterprise by tbe officers of the various lines is
essential to efficient management, especially on a railway sys¬
tem so vast as ours.
Some advantage was derived during the past year from
centralized control of operation. It rendered it possible to
direct traffic over the lines and through the terminals best
able to handle it. In consequence, it made it possible to move
the freight in an orderly way, considering the volume of traffic.
But even last year, when the roads were operated chiefly for
war purposes, the advantages of centralized control were offset
by disadvantages resulting from the destruction of the initia¬
tive and freedom of action of the officers of the various lines.
The effects of these disadvantages would be much greater and
more apparent under normal conditions in time of peace.
The conclusion from all the evidence must be that the
operation and needed development of the railways would be
much more expensive to the public under government owner¬
ship than under a policy of operation by a sufficient number
of companies to maintain competition in service and emulation
in efficiency of management. This additional burden of ex¬
pense would have to be borne by the public either as relatively
high freight and passenger rates, or as taxes levied to pay rail¬
way deficits.
DOES GOVERNMENT OWNERSHIP RESULT IN LQWER RATES?
Any fair comparison of the rates charged by the state
and private railways of the world before the war must lead
to the conclusion that under comparable conditions, the rates
of private railways were, as a whole, lower than those of state
railways. This was a direct result of their lower cost of oper¬
ation. The average passenger rates of state railroads often
have been lower than those of private railways; but these
30 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
averages do not allow for differences in density of traffic
and in the character of the service. The average passenger
rate of the German state railways was much lower than that
of the railways of the United States. But their average pas¬
senger rate was so low, first, because the density of passenger
traffic was over five times as great as in the United States;
and, second, because over 85 per cent of the passengers trav¬
eled third or fourth class in very poor cars in which many
of them could not get seats, and in which there were only
wooden benches for those who did sit. The average first-
class passenger rate in Germany before the war was 2.9 cents.
This was higher than the average passenger rate in this coun¬
try, with the cost of a berth in a sleeping car or a seat in
a parlor car added. The rates for all three classes of service
on the private railways of France were lower than for the
corresponding classes of service in Germany.
As to freight rates, it is indisputable that, under com¬
parable conditions, they have almost invariably been lower on
private railways than on state railways, and prior to the ad¬
vances made last year, the average freight rate per mile in
the United States, in spite of the higher wages paid here, was
lower than in any other country in the world except India.
I do not criticise the advances in rates which have been
made under government operation in this country. They were
necessitated by increases in expenses and, in fact, are being
found insufficient to cover the increases in expenses. Ad¬
vances in rates would have been necessary under private opera¬
tion. It is, however, proper and fair to emphasize the facts,
that advocates of government operation have contended it
would result in large reductions of railway expenses and rates ;
that these large advances in rates were made necessary by
increases of expenses which occurred during government op¬
eration, in spite of the large economies which it has been
claimed could be practised under that system ; and that there¬
fore it may be wise to look askance upon claims and predic¬
tions now being and which in future will be made, regarding
the economies which could and would be effected and the
reductions in rates which could and would be made under
permanent operation. There never has been, and is not now,
any basis in experience or reason for these claims and pre-
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS 31
dictions. They are now, they always have been, and they
always will be the baseless fabric of a vision.
DEFICITS UNDER GOVERNMENT OPERATION
As I have remarked, the advances in rates which have been
made have not proved sufficient to cover the increase in ex¬
penses. The government incurred a deficit of $236,000,000 on
the operation of the railroads in 1918. In the first four months
of 1919 it incurred a further deficit of $250,000,000. The ad¬
vocates of government ownership have contended that, under
that policy, the profits earned by the railroads would go into
the public treasury. Opponents of that policy have pointed out
that, although rates usually have been higher under state than
under private operation, government ownership in most coun¬
tries has resulted in deficits that the public has had to pay
in taxes ; and it has been predicted that this would be the result
in the United States. The very first year of government oper¬
ation vindicated this prediction, in spite of larger advances in
rates than the railway companies had ever asked for. The
former director general recently estimated that, on the basis
of present expenses and rates, a surplus should be earned in
1919. After having carefully studied the statistics of earnings
and expenses for the last year, and especially the last six
months, I confess I am unable even to conjecture upon what
information he based this conclusion. In my opinion, there
is a far greater probability of a deficit of $500,000,000 being
incurred in 1919, than of any surplus being earned. In other
words, with respect to deficits, the United States is having the
same experience with state management that most countries do.
EFFECTS ON RAILWAY SERVICE y '
Is there any good ground for believing that, under govern¬
ment operation, the passenger and freight service rendered to
the public would be better than under private operation?
Certainly experience affords no grounds for any such belief.
Our passenger service under private operation has had short¬
comings, some of them serious; but, considering the condi¬
tions under which it has been rendered, it has been, on the
whole, the best in the world. The density of our passenger
32 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
traffic has been only one-third to one-fifth as great as that of
the railways of the leading countries of Europe; but you will
seek in vain in Europe or elsewhere for comforts and luxuries
equal to those our passenger service affords. As to freight
service, how can anybody expect that a centralized govern¬
ment system, which would get all the business available, re¬
gardless of the kind of service it rendered, would try as hard
to satisfy its customers as would a large number of privately-
managed railways, each dependent for the amount of money
it made upon the kind of satisfaction it gave its customers?
EFFECTS UPON RAILWAY EMPLOYEES
It may be contended that recent experience at least shows
that railway employees will be better off under government
than under private operation. The interest of the public as
well as the employees must be considered, however. The
developments of the last year have forcibly brought home
to the public the fact that it is not the large capitalists that
are mistakenly supposed to own the railways who bear most of
the increased expenses caused by advances in railway wages.
The average net operating income per year of the railway
companies in the three years ended June 30, 1917, from which
interest and dividends had to be paid, was only about $950,-
000,000. The advances in wages made to railway labor under
government operation now amount to $1,000,000,000 a year,
or to over 5 per cent upon a sum equal to the total
capitalization of the railways. Now, obviously, the bulk of
the advances in wages are and must be paid by the "common
people" of the United States. It is plainly to the interest of
the public, not only that the employees shall be paid all they
are entitled to, but that they shall not be paid more than they
are entitled to. For reasons I have clearly indicated, it is
easier to have the determination of what they are entitled
to receive made in an orderly, public and fair way that will
adequately safeguard the interests of the public, under private
than under government operation.
Looking at the matter from the standpoint of the em¬
ployees, it is very far from certain that they have more to
hope from government than from private operation. They
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS 33
have received larger advances in wages within the last year,
under war conditions, than ever before. But if we revert to
the period before the war, we find the evidence shows that,
while the state railways of the world usually employed more
men to handle a given amount of traffic than did the private
railways under comparable conditions, it was not true that
state railways ordinarily paid higher wages than private rail¬
ways. In respect of both wages and working conditions, the
employees of our railways were better off than those of almost
any system of state railways.
Looking to the future, if our railroads are to be returned
to private operation, there should be, and probably will be,
established some system for the adjudication of differences
between railways and their employees under which the merits
will be fully considered, and public opinion and representatives
of the public will have the deciding voice. On the other hand,
if government operation is continued, the entire subject of
wages and working conditions is likely to be thrown into the
maelstrom of political struggles. Now, as American citizens,
would railway employees like to see their wages and working
conditions become the subject of incessant political squabbling
and fighting? Regarding the matter from the standpoint of
their selfish interests, can they feel any confidence that in the
long run they would gain more by having their wages and
working conditions settled in this way than by having them
settled by conferences with the managements of the railways,
and, if the conferences failed, by orderly arbitration? The
efficiency of railway labor and of railway operation under
government operation undoubtedly would be lower than under
private operation, and in consequence, expenses would be
higher. Therefore, the resistance of the public to advances
in wages might be greater in the long run under government
than under private operation. Railway employees under gov¬
ernment operation would be a strong political force, and they
might be able to hold the balance of power between the great
political parties. But if they carried matters with a high hand,
they probably would find they would array a large majority
of the public against them. In that event, they might find
that, instead of government operation working to their ad¬
vantage, it would be used to repress and even oppress them.
34 the national institute of social sciences
effects of government management upon politics
These considerations bring us to what is probably the most
important point to be determined in passing on the question of
government ownership. What would be its effects upon our
politics and government? No one familiar with our railway
history needs to be reminded that the railway corporations
once exercised a potent and malignant influence upon our
state and national politics. But the political influence of the
railway corporations has been almost completely destroyed.
This is demonstrated by the many restrictive laws which
have been enacted for their regulation. Under government
ownership, not only would the question of the wages and
working conditions of the employees be thrown into politics,
but also questions affecting appointments and promotions to
official positions, and expenditures for operation, maintenance,
and improvements. Under the existing railroad control law,
the President of the United States. has autocratic authority
over the operation of the railways. He delegates this to the
director general. The President would not and probably
should not be allowed to exercise such autocratic authority
in time of peace. Congress could hardly be expected to go
on indefinitely voting large railway appropriations over whose
use, in spite of its responsibility to the public. Congress would
have almost no control. Even though the director general
should nominally be allowed to continue to possess his present
autocratic authority, it would be but a short time until
he would be subjected to enormous pressure to make appoint¬
ments and expenditures for political rather than business rea¬
sons. This would be inevitable under our form of govern¬
ment. If part of his authority were tranferred to some other
officer or body, there would result a division of responsibility
for results, with the evil consequences to which this would
lead. If Congress should begin to take more of a hand in
railway affairs, the temptation of many of its members to use
their power over the Railroad Administration to further local
and sectional political purposes would be irresistible. Mem¬
bers of Congress might not wish to yield to this temptation,
but they almost certainly would be forced to by the demands
of constituencies which would think rather of the advantages
OBJECTIONS TO GOVERNMENT OWNERSHIP OF RAILROADS 35
that might accrue to their local or sectional interests from
having certain things done than of the interests of the nation
as a whole. In short, under government operation in time of
peace, it would be impracticable to keep the railways out of
politics or politics out of the railways; and it is impossible
to exaggerate the seriousness of the effects upon our national
life which might be produced.
The alternative policies which are available are not un¬
regulated and uncontrolled private ownership and manage¬
ment, or government ownership and management. The alter¬
natives are regulated private ownership and management, or
government ownership and operation; for so long as we have
private operation, we shall have government regulation. Let
us hope that if private operation is restored, we shall have
wise and fair regulation. If we do have, the results of private
operation will be far more beneficial to the public than the
results of government operation would be. If we cannot feel a
reasonable confidence in our ability to devise and carry out a
wise, constructive and successful policy of government regu¬
lation, on what basis of experience or reason can we found
even a hope, much less an expectation, that we could and
would perform the much more difficult task of devising and
carrying out an intelligent and efficient policy of government
management ?
COORDINATED DEVELOPMENT OF WATERWAYS
AND RAILROADS»
BY WALKER D. HINES, DIRECTOR GENERAL OF RAILROADS
The war has brought about some very unexpected changes
to this country. I believe one of the highly important changes
which the war has brought about is a change which is full of
meaning for this city, and that change is that it has created an
opportunity for the first time in the history of this country to
make a really effective experiment in determining the value
of our inland waterways. I take it you are all aware that the
Railroad Administration has entered seriously upon the under¬
taking of establishing a transportation service on the Missis¬
sippi River between St. Louis and New Orleans. The service
was entered upon last fall through the acquisition of the boats
then available and a limited service has since been maintained.
We are planning to spend approximately $7,000,000 in the
aggregate through the addition to the existing equipment of
about forty modern barges and six modem tug boats, so as to
make a really effective test of the utility of the Mississippi
River as a channel of commerce. Personally, I am a firm
believer in the view that there are great possibilities in the
development of the river. I shall count it as one of the most
gratifying achievements of the Railroad Administration if we
are able to realize the hopes that I have in that direction. I
think in the nature of things a waterway of such extent and
such capacity must have an important economic value in the
development of the country. In addition to that the fact that
the government has expended so much money in the improve¬
ment of the river makes it only common business sense to
undertake to use what has been prepared and as long as the
Railroad Administration continues I want to assure you that
that use will be made in the most effective possible way.
Without any reflection upon the motives of the railroad
companies, it is only natural to say and to perceive that any
• yrom an address before the St. Louis Chamber of Commerce, April 30, 1919.
36
COORDINATION OF WATERWAYS AND RAILROADS 37
one railroad company has no especial interest in developing the
waterway. Each railroad company of course looked at its
transportation problem from its own standpoint. It wanted
to develop its own lines, it wanted to create feeders that would
be exclusively feeders for its own lines and the Mississippi
River, of course, could not be put into that class, and conse¬
quently under private management and under separate man¬
agement of the railroad companies the motive never existed to
develop the waterway. Temporarily the government has taken
control of the railroads and has placed them in a unified sys¬
tem, and this great waterway is just as much a matter of
national concern, it is just as much a matter for national de¬
velopment, as are any of the railroads which are under govern¬
ment control. So that the war, which brought about this
unexpected result of government control of the railroads, has
likewise brought about this unexpected opportunity for the de¬
velopment of the Mississippi.
I don't think there is any serious concern on the part of
the people of this city and on the part of the people of the
Mississippi Valley as to what will be the outcome of this ex¬
periment during federal control of the railroads. We all,
however, have to recognize the strong probability that at a
date in the not distant future some provision will be made for
turning the railroads back to private management and when
that times comes a very serious question will arise and per¬
haps that question is in your minds at the present time, as to
what will become of this transportation system which the
government has created upon the Mississippi River. As I see
it, and I can speak only my personal view, because after all it
is a matter upon which Congress will have to act, the thing
that will be obviously in the public interest will be to retain
this government transportation system on the Mississippi as
a government transportation system after the railroads go
back to private management, at least during an adequate ex¬
perimental stage. My thought is that if, immediately upon the
return of the railroads to private management, the government
should sell its equipment on the Mississippi River, the strong
probability is that the motive to make a success of that trans¬
portation system in the national interest might speedily dis¬
appear. At any rate I think it would be a serious risk to run.
38 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES '
My own judgment is that, however soon the railroads may be
turned back to private management, this transportation system
on the Mississippi ought to be retained, and earnestly pressed
forward by the government so as to make a complete and
lasting demonstration of the utility of the Mississippi as a
channel of transportation. I suppose there is no community
in the United States to which such a course will mean more
than it will to the community of St. Louis. It will result
in giving St. Louis in a lasting way the benefit of its magnifi¬
cent geographical location. So long as the river was not used
as it can be used St. Louis had little if any advantage over
any other point which was a railroad center, but when the river
shall be used as I believe we can use it, St. Louis, in addition to
having this wonderful advantage as an exceptional railroad
center, will have the benefit of the geographical advantage
of its location on the Mississippi.
There are one or two points I wanted to impress upon
all of you, because the success of this important experiment
will be absolutely dependent upon the cooperation of the peo¬
ple for whose benefit the experiment is primarily made. In
the first place, one of the great difficulties which has always
existed in the satisfactory development of the inland water¬
ways has been the lack of the necessary terminal facilities
to effect the transfer of traffic from the river to factories
and from the river to the railroads. The cost of making the
transfer in many instances has been prohibitive. The situ¬
ation existed where traffic could be loaded into a freight car
and that freight car could be placed on the private track
of the particular industry, or could be turned over to an¬
other railroad for further transportation with practically no
additional cost for the transfer. But when we have a con¬
dition where the factories are not alongside of the wharves
on the river, where the railroads which must carry the
traffic the rest of its journey have not a track connection
right on the wharf, there is an important transfer service to
be performed at very large cost which would go far towards
absorbing and offsetting any possible economy in the use of
the river, and if that situation continues we cannot hope for
the success which ought to be realized in carrying out our
present endeavors.
COORDINATION OF WATERWAYS AND RAILROADS 39
This matter of providing the necessary terminals is in
the nature of things to a large extent a matter for local
initiative, and I want to urge all of you as far as it
comes in your power to exercise any influence in the matter
to bring about the proper development of the river ter¬
minals so that these boats, which are being operated by
the government, can effect their transfers of freight as be¬
tween factories and the river, as between the river and the
railroads, so as to eliminate this prohibitive transfer cost
which has existed in the past, and so as to put the waterway
upon a reasonable parity with the advantages which are en¬
joyed by the all-rail lines. The effect of uncertainty as to the
future of the waterway system may have a tendency to dis¬
courage immediate development of these terminals, but I want
to impress on you that if you want the waterway transporta¬
tion, and I am sure you do, the way to diminish to the vanish¬
ing point all uncertainty in regard to the matter is to improve
these terminals as rapidly as possible. I believe if the local
communities interested properly develop their terminals so
that we can speedily demonstrate the economic value of the
waterway there will not be any question whatever, but that
Congress will see to it that adequate provision is made for the
preservation of this national transportation system, and as
a part of any legislation dealing with that subject it must, of
course, be understood that Congress will provide for compel¬
ling the establishment of reasonable and proper through routes
and through rates between the railroads and the transporta¬
tion lines on the river, and in that way will require as a matter
of law the interchange of traffic which perhaps is not in the
separate interest of the railroads under private management.
If you will only provide the terminals my judgment is that
Congress will do the rest and that you will get in the com-
pletest measure the demonstration and the benefit of the great
value of the waterway as a permanent part of the economic
forces of this country.
In conclusion I want to say that in addition to doing all
you can to bring about the proper development of these ter¬
minals along the river I want to ask all of you who have
any interest in the matter of traffic to give your hearty sup¬
port to this water line. You can feel that in doing so you are
THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
not only promoting your own interest for the time being but
you are participating in an important national movement, be¬
cause I cannot believe that a great waterway like the Missis¬
sippi can be left, consistently with the public interest, to prac¬
tically the negligible amount of navigation that has taken place
upon it in the past. I want to see this experiment succeed.
I believe it is in the national interest that it should succeed and
I appeal to you for your active support in the development of
terminals and for your active support in the supplying of the
traffic necessary.
PRIVATE OWNERSHIP, OPERATION AND FINANC¬
ING OF THE RAILROADS
BY THOMAS DE WITT CUYLER, CHAIRMAN, ASSOCIATION OF
RAILWAY EXECUTIVES
No more important question is before the American people
to-day than the final settlement of the railroad situation. By
that is meant the ownership of the roads, the method of opera¬
tion and the financing.
Four methods have been suggested:
First: Government ownership and operation.
Second: The continuation of government operation for a
certain number of years under the present law.
Third : Government ownership and private operation.
Fourth: Private ownership and operation.
As to the first method :—
It may be regarded as settled for the present that the
country is averse to public ownership. It has seen enough
under government control to leam how impossible it is that
efficient and proper management can be given to the railroads
through such a method. The operation of private plants by
public bodies generally tends to inefficiency, and especially
when the operation is so vast in its character as is the opera¬
tion of the railroads of this country. Aside from the inef¬
ficiency, there is also to be taken into consideration the political
degeneracy that is sure to ensue from government operation
of the railroads. There are many indications that the Ameri¬
can people have drawn some shrewd conclusions from their
experience of the past year and a half and I think it may
therefore be assumed that when we come to settle the railroad
question through legislation at the next Congress, government
ownership and operation will not have to be seriously dealt
with.
Second. It has been suggested by the late director general,
and endorsed by the present director general, that for the pur¬
pose of testing the efficiency of government ownership and
41
42 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
operation, the present government control should be extended,
say for a period of five years from January i, 1920.
It is difficult to understand upon what theory this sug¬
gestion is made. At best, it would be a test of simply one
method of operation, namely, through government control,
and the only question determined at the end of the period
would be whether this had or had not been an efficient way
of operating the roads. There is nothing to show in the
period that has elapsed since the government took possession
of the roads that the efficiency of the management will be
improved or that all the ills that attend public ownership
would be not only fostered but increased during the continu¬
ance of this control. The proposition has met with no real
public support.
Third. Government ownership and private operation.
This has been suggested by Senator Cummins, who has
given to the railroad question much study for many years,
but it must be confessed that in the final analysis, the plan
would seem to be impracticable. It is hard to believe that the
American people would ever consent to own the properties
and then lease them out to private capital for operation. If
the ownership by the public were a good thing in itself, there
is no reason why the people of the country should not receive
the resultant benefits that would come from their operation.
It is hard to conceive, on the other hand, that private capital
would be willing to enlist in the organization of companies
purely for operating purposes that must necessarily be strictly
limited as to the return on their capital and also as to the
tenure of private operation. Such a joint proposition would
be sure to lead in the end to public operation as well as own¬
ership, and there can be no question in my judgment that the
public at the very outset, if such a proposition was made,
would either reject it in toto or insist on public operation
as well as ownership.
Fourth. Private ownership and operation.
This has been a tried method in the past and the results
from the standpoint of the shipper and the people at large
of the country have been satisfactory. There has been an
unfortunate theory prevalent that the roads broke down at
the beginning of the war and were unable from a physical
TRÍVATE OWNERSHIP, OPERATION AND FINANCING 43
and financial standpoint to render satisfactory service. It is
true that great congestion ensued and that capital was wanting
to provide necessary additions and betterments. But this came
from no fault of the roads, no want of proper organization
or ability to operate, but simply from the laws of the country
as then existing, preventing combinations or the use of the
roads as a whole. Therefore when the roads were taken over
for war purposes, every existing law was set aside and the
roads operated simply and wholly irrespective of law, from
the standpoint of the country's needs. If the roads had been
permitted to do that which the government has done, there can
be no question but that the emergency would have been met
and the operation been altogether more satisfactory from the
standpoint of the public and the owners of the properties.
Now as to the future.
If the roads are to be returned to their owners, there must
be sane and reasonable legislation enacted for the benefit
of the public at large and the owners of the property. The
public needs transportation. It is vital to the existence and
success of the country. The owners must have a return
upon their property which is fair and just if they are to ad¬
vance the necessary capital to meet the demands of transporta¬
tion. Additions and betterments must be provided for, wages
must be protected and the return on the property investment
must be safeguarded. In the past, the attitude of a shipper
and to some extent of the public at large has been to get as
much as possible out of the roads for the least possible pay¬
ment. The shipper has not realized that his prosperity was
dependent upon the proper maintenance and operation of
the roads. The case is a good deal similar to the opposition
of the farmer at first to the good roads movement. He could
not see that the increased taxation brought better facilities for
transportation of his goods and products, which more than
overcame the increased cost. Where good roads have been
built through rural communities, the farmer has at once rec¬
ognized their benefit and no stronger or warmer supporters
of good roads exist to-day than among the farming classes of
the country. The shipper must come to realize that he must
not only have the best of transportation but must be willing
44 the national institute of social sciences
that there should be a return upon that transportation that
will induce capital to provide for it.
The Association of Railway Executives, which I represent,
believe in private ownership and private operation, but they
are convinced that unless a fair return is assured upon the
capital invested, the outlook for the country is extremely
unsatisfactory. But they further believe that when the ques¬
tion is thoroughly understood by the country, the people at
large will be willing that constructive legislation should be
enacted. Such legislation would have for its basic foundation
the recognized principle that the roads must be maintained
at the very highest standard ; must be ready to meet every de¬
mand for increased facilities and extensions; that the em¬
ployees must receive a fair return for work performed; and
that capital must receive a return that will make it feel safe
not only in its present investment, but in all future financing
that will be demanded from the roads.
As to the method of carrying out such a basic proposition
there have been many suggestions. We do not believe that
the country will consent either directly or indirectly to a guar¬
antee by the government. That will savor too much of the
people's bearing the cost. Nor do we think it desirable, if
obtainable. The free operation of the roads under private
ownership, with those safeguards that are essential, will, in
the judgment of the executives, protect all parties in interest
and preserve that independent spirit of private ownership
that is so well recognized in this country. Whether these
fundamental principles shall be carried out through the me¬
dium of the existing Interstate Commerce Commission or
whether a body should be created who shall be empowered to
see that the Interstate Commerce Commission carries out the
rate basis in the spirit and letter of the Act is a question for
consideration. But we cannot help but feel that, in view
of the large burdens now resting upon the Interstate Com¬
merce Commission, an independent body of men, say pos¬
sibly three in number, who should enjoy a salary commensu¬
rate with the importance of their office, could better act in
carrying out the law than a body that has already more than
it can possibly carry on its shoulders. We believe that the
fixing of all rates should be absolutely in this body or whatever
PRIVATE OWNERSHIP, OPERATION AND FINANCING 4$
other Federal agency may be provided, and that the state
commissions should perform such proper police duties as are
necessary for the safeguarding of the people of the states in
which they operate.
It is believed that the coming Congress will approach this
whole subject in a constructive and unbiased attitude and we
are hopeful that out of all the confusion and distress that now
exists sane and reasonable legislation will be enacted.
A PROGRAM OF RAILROAD LEGISLATION
BY THEODORE E. BURTON, FORMER U. S. SENATOR IrROM OHIO
The primary need in solving problems relating to the rail¬
roads is a more intelligent comprehension of certain elemen¬
tary facts and principles. We must abandon the idea that
competition is helpful in the control of monopolies, like rail¬
ways.
For many years it was the cherished policy of both state
and national legislatures to do everything to promote the
sharpest competition between the different agencies of trans¬
portation. In cases where sufficient facilities already existed,
or could readily be furnished by additions to existing lines,
new railways were encouraged and chartiired. That resulted
in much waste of capital in construction, and in very largely
increased expenses of operation.
So long ago as the year 1842, there was a discussion on
this subject in the House of Commons, in which Mr. Glad¬
stone expressed himself. There was an existing line to the
northwest of London, and it was proposed to charter another
line paralleling it. Mr. Gladstone said he did not believe the
public would be benefited thereby; that there was very much
capital to invest, but that the principles applicable to industrial
enterprise and to ordinary commercial operations would not
apply to railroads ; that after a brief period of competition,
a combination would be the result ; and he quoted as applicable
to the management of railways a saying which he ascribed to
Mr. Charles J. Fox: Breves inimicitiae, amicitiae sempiternae
(animosities brief, friendships lasting).
When the Inter-State Commerce Act was under consid¬
eration in the eighties, there was a proposition to authorize
pooling. It was rejected by an overwhelming majority.
Nevertheless, I think it is the conviction of those who have
given the closest attention to this subject, that it would have
been well had pooling been authorized at that time, because
it would have prevented ruinous competition. One result of
46
A PROGRAM OF RAILROAD LEGISLATION
47
the paralleling of lines was disastrous rate wars, which di¬
minished very much the revenue of the railways, but did not
confer any substantial or at least any general benefit upon
the public. It was only the most wealthy and powerful ship¬
pers of freight who reaped advantages. They were able to
mobilize their commodities and send them at a time when
those freight wars were in vogue; not, however, passing on
the cheapened cost to their customers, because with the res¬
toration of normal charges the gain that they had acquired
from the cutting of rates was credited to profit.
I do not say that competition will be entirely done away
with, or should be. There at least will be competition in
service. Railroad managers endeavor in every way to secure
promptness, and the accommodation of the public, and these
motives should have the fostering care of those officials who
have to do with public regulation.
Nevertheless, it must be said that all this tendency to com¬
bination is not so much the result of a desire for monopoly as
of developments which make for efficiency, for economy, and
for the larger purposes which are necessary for the benefit
of the public.
Every railway has certain duties and obligations to per¬
form to the public. Reasonable facilities must be provided.
Constant operation is required. In order that its work may
be properly done, certain privileges must be granted, such as
the right of eminent domain. Then again, there is a dis¬
tinctive feature in the nature of railway property. Unlike
banking capital, unlike merchandise, you cannot pick one up
and carry it away somewhere else, it is fixed in a defined
location.
These facts all lead to the conclusion that in their relation
to the public railways are altogether different from other
forms of property and that they should be accorded excep¬
tional treatment, also that they should be subjected to an ex¬
ceptional degree of supervision and regulation.
Twenty years ago, or more, there seemed to be danger
that these powerful aggregations of capital would over¬
shadow the government itself. They were influential in
legislative halls; there was an opinion which was very wide¬
spread that their success and their possession of power were
48 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
very desirable for the upbuilding and development of the
country. But now the pendulum has swung the other way,
and it is very difficult for the railways to maintain rates with
public permission sufficient for their reasonable maintenance.
The people are very loath to accept those higher charges
which are necessary in order that the railways may meet their
obligations.
On the question of the relation of the railway to the public,
there have been three distinct phases or tendencies sharply
defined. The first was one of favor to the roads. This was
illustrated by numerous land grants, by an earnest desire for
the development of transportation facilities in the country,
and by the willingness of communities and states to grant
subventions to railways and to give them various substantial
concessions. The next, or second phase, was in favor of the
shippers. This was in a measure contemporaneous with the
Granger movement, beginning some five years after the Civil
War, and had its initiative, as far as legislation is concerned,
in state legislatures, but afterwards was manifested in the
national Congress as well.
Perhaps the most notable illustration of this change in the
popular attitude was in the apparent disposition of the Inter¬
state Commerce Commission, in many of its rulings, to guard
the interests of the shippers, without adequate regard for the
requirements of the railways, or the necessary development of
transportation facilities. The third tendency or phase has
been one favorable to the railway employees. This com¬
menced in humanitarian movements, in provisions relating to
safety appliances, in the lessening of hours, and then recently
—quite recently—in very substantial increases in wages. It
is very evident that each of these three tendencies, or phases,
has, and is likely to, run to serious excess. Indeed, there
is a considerable number of very intelligent observers, made
up of men who now believe in government ownership—^not
that they are naturally believers in the principle—who think
the Federal government is the only body which has the au¬
thority and the prestige to stand in the way of excessive de¬
mands for wages and for taxes, and is the only institution
A PROGRAM OF RAILROAD LEGISLATION
49
that can gain popular support for such increases of charges
as may be necessary.
It is maintained by them that so long as there is merely
a controversy between private owners and the employees
there will be an overwhelming sympathy for the employees;
but if the weight of increased wages and higher taxation is
felt in added rates and the payment of deficiencies from the
public treasury, there will then be a popular movement, potent
in its nature, against demands which are excessive.
If we can correctly interpret expressions of popular opin¬
ion, the people of the United States are by no means in favor
of government ownership. What will happen in the future,
no one can foretell. The considerations which will have great¬
est weight will be the convenience of the public, efficiency, and
economy. Questions of public policy and of the relations of
the state to business are too often mixed up with popular
appeals which befog the real question, and there is a peculiar
danger in that regard in the treatment of the railways. It must
be said that the experiment of temporary governmental opera¬
tion, though accepted as a necessity arising from the war, has
by no means given general satisfaction.
Now, what are the immediate measures required for the
solution of the railroad problem? In the first place, wipe off
the statute, divorce from the popular thought, the idea that
competition is a creative or helpful force in their management.
We have had an object lesson in this war. We have learned
that unified control and cooperation are essential. There were
many object lessons before. I remember very distinctly an
instance in northern Ohio. One of the best equipped trunk
lines in the country, known as the Lake Shore and Michigan
Southern, extended from Buffalo to Chicago. Some pro¬
moters came into the field and said : "We will build a parallel
road." They went to the farmer and said: "Now, my friend,
we will give you a competing line; you will have another way
of getting to Buffalo and to Cleveland ; we will charge cheaper
rates; we will accommodate you; anyway, you will have com¬
petition and you ought to give us the right of way through
your farm." The new railway was built so near that in some
places you could flip a copper from the rails of the one to those
of the other line.
50 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Inside of two years they were both under the same owner¬
ship and virtually the same management, and there was noth¬
ing accomplished by the building of that road which could not
have been accomplished by tripling or quadrupling the tracks
of the other.
There have been many similar instances in the improve¬
ment of waterways. That delusion (for it is nothing less)
has led to the expenditure of tens, even hundreds, of mil¬
lions of dollars for the improvement of streams, which it was
never intended should be used for navigation. Some years
ago the most frequent argument for these improvements at
Washington was, "Why, it will lower freight rates on the
railroads." If a railway was built alongside a river that re¬
quired locks and dams and expensive improvement to render
it navigable and that railroad cost ten millions of dollars, the
argument was, "Improve the waterway at an expense of an¬
other ten millions of dollars." For what? To make the rail¬
way behave itself and charge reasonable rates.
There was an instance in one of the Gulf states of a rail¬
way with very limited traffic paralleling a river of which you
could say, "Nowhere such a devious stream, save in fancy or
in dream," and there was no pretense that the stream would
be used for navigation; but an official computation was made
of how much the competing railway would have to abate from
its charges because the potentiality of navigation could be af¬
forded in the river. There were numerous recommendations
for improvements in waterways, with no expectation that they
would ever be utilized. So they went on, as it were, singing
a song, "One million for this, one million for that, regulating
freight rates, regulating freight rates." That delusion still has
a strong hold on the popular mind, and is not absent in its
influence on even members of Congress, and of Senators.
The next thing to be secured is an early readjustment
of rates, so as to meet the additional cost of operation. Up
till the beginning of this war, and the higher charges imposed
by the government, there had been a very notable increase
in the price of commodities and in the cost of living. That
increase had not manifested itself in railway freight rates.
The general average per ton per mile had kept down to the
figure, and in some cases was less than, it had been when
A PROGRAM OF RAILROAD LEGISLATION 5^
prices were at the very low level of 1890 to 1900. Indeed,
while the average charges per mile for passenger traffic were
a trifle less in 1916 than in 1896, and for freight substantially
less, the index numbers show that the cost of food, clothing
and the ordinary necessaries of life had increased 77 per cent.
Again in 1917, while passenger and freight rates remained
substantially the same as before, the cost of living went soar¬
ing. It was impossible that so great a disparity could con¬
tinue. When we take into account the higher cost of wages,
about $1,265,000,000 per annum more than it was in 1917,
and the greater cost of material, there is an absolute necessity
for increase, not that rates should soar to a point where they
do not belong, but there should be a reasonable increase, and
that now, with the assurance that it is to be permanent unless
conditions very greatly change.
There have been arguments for a fixed minimum and
maximum rate of return. I am not quite ready to give ap¬
proval to that. Some propositions are to the effect that the
return shall not fall below 4 per cent or rise above 7 per cent.
The general objection to that is that at least if there is a
government guaranty, it is in substance, if not in form, gov¬
ernment ownership and if government ownership is to be
adopted, let us adopt it purely and simply as an independent
proposition. But there is the further argument that it takes
away that initiative, that desire for skill and ability in man¬
agement which is the very life-blood and the mainspring of
all enterprises!
It might be a better plan to provide that the income over
a fixed maximum shall be divided, say, one-half to the gov¬
ernment and one-half to the owner, to be paid out in divi¬
dends, or let the employees share the surplus. But to say
to the railroad managers, "Your income shall not go above a
rigidly established percentage, no more than that" is to place
discouragement on good management. Of course, the natural
thing to be done when the return is unusually large, is to lower
the rates and give the public the benefit. And it must be
always borne in mind in the relations of the public to the
railways, that these great means of transportation require
constant betterment and increase in facilities. Population in¬
creases with a certain rate of rapidity; fortunately wealth
52 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
increases more rapidly than population; the volume of com¬
modities consumed increases more rapidly than either, but
transportation is at the head of the list. The general rate
of increase in transportation is about two to three times—it
is rather difficult to make an exact estimate—as great as the
increase in population. That important fact means a great
deal; it means that there is an unusual, sometimes excessive
demand upon all the agencies of transportation for increasing
their facilities.
There is another thing that must be done—consider this
question as a national question. I should favor government
incorporation of railways, or at least make it optional for
them to incorporate with Federal charters. Why they do
business—of course, I mean interstate railways—^between the
different states, and from one end of the country to the
other in such manner that state lines are mere vanishing
traces on the map. There may be a sign "Maryland Line,"
"Pennsylvania Line," but it is a mere gratification of the curi¬
osity of the tourist. Unified control, unified operation, with
as little recognition of state lines as possible, and with as
little subjection as possible to the varying and sometimes in¬
consistent regulations of the different states, makes for the best
adjustment of the railroad problem.
Again, in the matter of intrastate rates, some states have
provided rates so low that if they were adopted as the general
scale all along the line, they would be confiscatory. The
Supreme Court has held, in a very able decision by Justice
Hughes, that the Federal government, through its agencies, can
control these intrastate rates, that is upon trunk lines. Loui¬
siana should not make one set of rates and Texas or Okla¬
homa another.
It would be evidently disastrous to return the railways to
the owners before a settlement of these great questions. I
think, if I can judge the disposition in Congress, that it is much
more appreciative of the requirements of the railways than
it was five, ten, or fifteen years ago. There is a more intelli¬
gent comprehension of the general subject. I do not mean that
careful consideration is not required. Do not leave the inves¬
tigation to the railway magnates, or to the security holders
alone, nor yet to unfriendly agitators, but let us in this country
A PROGRAM OF RAILROAD LEGISLATION
53
of ours do something new in this era for which we hope after
the war, let all of us take an interest in matters of general
concern and seek to make our influence felt, whether in or
out of public life, outside the narrow sphere of our own per¬
sonal interest.
I may say that the absence of that general interest on the
part of the public is the most trying obstacle to the public
man who seeks to do his duty. He comes to leam that the
favor of a very limited number, who have obtained personal
aid through his intervention, is far more valuable as a per¬
sonal asset in politics than the good will of a multitude who
pay little attention to public affairs. Such associations as this
should do their part. If you don't do anything more, Dr.
Johnson, make a well-considered report.*
Some of those who have to do with the decision of the
question will read it. What is needed down at Washington
and in the state legislatures is a careful and impartial presen¬
tation of intelligent views on these great questions from peo¬
ple whose interests are in the general welfare.
Thus I have hope that this problem will be settled, and I
say again, settled properly; that the railroads will not be
turned back to their owners until it is. It would be like send¬
ing them out on an uncharted and stormy sea if anything else
were done. To my mind, it is in a measure immaterial
whether the interval is one year, or three or five years, pro¬
vided a definite policy is conclusively agreed upon under which
the railroads after a fixed date shall be returned to their
owners, and shall have such rights, in the way of charges, that
they can live a profitable existence and perform their duties
to the public. If this is done, the railroads will be able to
respond to the demands upon them; they can safeguard the
interests of investors ; they can give fair, yet liberal compen¬
sation to their employees; they can keep pace with the ever
growing requirements of commerce and of industry.
* This paper is the report of an address at a meeting of the National Institute
of Social Sciences. The president of the Institute was in the chair.
A RAILROAD POLICY BRIEFLY OUTLINED*
BY GEORGE A. POST, CHAIRMAN OF THE RAILROAD COMMITTEE
OF THE CHAMBER OF COMMERCE OF THE UNITED" STATES
As Chairman of the Railroad Committee of the Chamber
of Commerce of the United States, I am charged, with my
associates, with a responsibility which is very great, and which
has called for an expenditure of time and energy and thought
far beyond that which I could afford from my own business.
But I have been impelled by the idea that somebody must try
to make some contribution toward a sane and safe solution
of this great question, of such vital importance to the people
of our land. Therefore, for months, the days and the nights
have been spent freely in listening to the proposals of many
minds upon this subject, and there has been a great variety of
opinion. All of the men and women are earnest in thought,
possessed of different kinds of experiences, and all wanting
to be helpful.
The Railroad Committee of the Chamber of Commerce,
and also another body, of which I have had the honor to be
a member, and of which your honored President has been a
member (and I see in the audience that distinguished financier
and student of public problems, Mr. Paul M. Warburg, who
has been our associate), have come to certain conclusions as to
what must be done by the Congress which is about to convene,
toward the settlement of this railroad question. In framing
up the recommendations to be made to those to whom we must
report, and for the consideration of those whose attention we
would attract, we have felt that it was necessary for us to take
cognizance of certain outstanding facts, that need to be grap¬
pled with at the start, and which seem to be immediately re¬
sponsible for public opinion as it is now formed. There is a
very wide difference between public opinion as it exists to-day
and public opinion as it existed before the railroads were
taken over by the Government.
My associates have directed me, as their spokesman, to
• Report of an address at a meeting of the National Institute.
54
A KAILROAD POLICY BRIEFLY OUTLINED 55
report to the body whose representatives we are, that public
opinion requires that the railroads now under Federal control
and operation shall be returned to their owners for operation
just as quickly as such remedial legislation by Congress can
be passed, as a necessary preliminary to their safe transfer
from Federal to private control.
Many things which were matters of contention between the
public and the carriers but a few short years ago are no longer
matters of dispute. Railroad executives are now yearning for
legislation which will bring about a situation which they ear¬
nestly and strenuously opposed before Federal control of rail¬
roads; which simply shows that the railroad executives, like
all the rest of us, have learned a lot during this war period.
We all agree now that the Government, through some agency
established by it, must have a comprehensive supervision over
the operations of the railroads, in order that there shall be
estopped any possibility of the exploitation of the public by
those who might plot against the public weal.
It is understood and agreed, again, that there should be
brought about, as quickly as possible, a unification of our
transportation facilities—steam and electric roads, inland
waterways, hard surface highways, motor trucks—everything
that is a means of transportation, so that they shall serve the
public in the most economical way.
It was only a short time ago that railroad executives
deemed it to be their duty to their stockholders and the owners
of their securities to baffle any and all attempts that were made
to build electric lines, or to establish waterway communica¬
tions because of their supposed deleterious effects upon the
railroads themselves. They were earnestly of the opinion that
that was their duty at that time so to oppose, but they have
changed their minds about that. In a recent conference upon
the transportation question, Mr. Daniel Willard, President of
the Baltimore and Ohio Railroad, who is recognized as a very
distinguished railroad executive, a very thoughtful, fair-mind¬
ed man, with vision, said upon this subject of the nationaliza¬
tion of our transportation systems : "We ought, for the de¬
velopment of transportation in this country of ours, with its
magnificent distances, to so connect our steam railroads and
our electric railroads and our waterways and our motor trucks.
56 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
that a shipment may start anywhere, on any one of these
agencies, and go to any place in the United States, over any or
all of these agencies, or to any other place reached by any of
these agencies. I should want it fixed, and believe it should
be fixed, so that through rates and through arrangements for
shipments should be permissible from any place to any other
place, over any and all agencies that may occur in between.
There should be no putting up of a bar between any of the
transportation agencies." Thus we see how far we have
moved in that direction.
We have also come to a conclusion—and there is no dis¬
pute about it any more—about the joint use of terminals and
the pooling of equipment in facilitating the movement of
freight and passengers. That was forbidden by law before
the war. The Director-General of Railroads of the United
States proceeded to do it regardless of the law, because we
couldn't win the war unless it was done. Because it was done
during the war, the people find that it was well that it was
done and that there is no reason on earth why it shouldn't
continue to be done in the future, under any plan of reorgani¬
zation. Legislation to efifectuate that policy will be acquiesced
in by everybody, and, in fact, is desired by everybody.
There seems to be a marked trend of public opinion also
in the direction of providing for the consolidation of rail¬
roads into a limited number of strong, competing systems,
such consolidation to be permitted, advised, or required by
Federal authority, when it is deemed in the public interest.
Think of it ! We have now had our minds clarified to the
extent that |we can see that in the consolidation of public
service, there is the best service to the public.) There is still
ringing in our ears the denunciation by strident orators, seek¬
ing office, a little while ago, of all proposed consolidations—
who thought the public welfare could be best served by com¬
pelling everybody to fight everybody. An office-hungry man
who would face an audience in this day, and, under the devel¬
opments of the war period, undertake to harangue a crowd
with an appeal to send him to Congress upon that issue,
would never draw a cent of mileage from the Federal Treas¬
ury as a public servant.
It is also pretty generally understood and agreed now that
A RAILROAD POLICY BRIEFLY OUTLIJSTED
57
State Commissions shall no longer interfere with rates that
affect interstate commerce. They are making a strong fight
for the preservation of the powers they have, and they are
a fine lot of men, but they are obsessed with a frenzied thirst
for power they should not have, because they have not yet
become sufficiently animated by the real purpose and desire
of the people at large. They will come to it gradually, as the
people at large have come to it conclusively.
I might go on and elaborate several more of the things
that are now perfectly clear to us, about which we have fought
in the past, to emphasize and effectuate which statutes have
been piled up mountain high in the legislative tomes all over
our country. Under the light of experience they are bound
to melt and gradually fade away, and when reference shall
be made to them in the future, it will only be to wonder in
what state of mind the public were when they advocated, or
acquiesced in the enactment of such legislation.
With all the millions, and hundreds of millions of dollars
that have been ordained to be the right of the employees of
the railroads to get more than they got on the first day of
January, 1918, and the increased cost of railroad living for
all the things which it is necessary to consume in the service
of the public, there has not yet been a commensurate advance
of that which the public pays for the service given. If such
advance is not provided for before the roads go back to their
owners, the government ought not to return them. The dis¬
bursements made necessary by governmental order must be
not only equaled, but exceeded by the same government that
ordered them, as an absolute condition precedent to ending
Federal control.
What is the use of public sentiment saying: "Oh, put
back the railroads into the hands of their owners ! We thought
them wicked and inefficient before the war, but now that we
have had Federal control for fifteen months and suffered so
seriously from poor service, give them back!" unless we are
willing to pay the bill? The wages of the railroad employees
cannot be kept up where they are, unless we are willing to
pay over the funds that will meet them, in the shape of rates
and fares. When the workmen have gotten all they want, or
can get, with public approval, and ever3dhing else has been
58 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
paid for, including coal, engines, cars, rails, taxes, and thou¬
sands of other necessities at high prices, the railroads must
still have large sums of money so that they can constantly
keep expanding their facilities. They must have a surplus
SO that if a devastating flood like that of Dayton, or an earth¬
quake, like that on the Pacific Coast, or any other kind of
disaster overtakes them, they can repair the havoc wrought
and the public must have paid into their treasuries, or estab¬
lished their credit so that such extraordinary expenditures may
be met.
What are we to do with the railroads? In the public
interest we are, if we are wise and regardful of our own
interest, going to give them a chance to live. If they are to be
strong and adequate in service, not weak and impotent, more
money will go out of our pockets for the service they render
than ever before, because their living expenses are greater
than ever.
COMPETITION AND PRIVATE INITIATIVE IN
RAILROAD DEVELOPMENT AND
MANAGEMENT
BY ROBERT SCOTT LOVETT, PRESIDENT UNION PACIFIC
RAILROAD CO.
There is nothing so essential to the financial peace and the
commercial and industrial welfare of this country as a definite
governmental railroad policy. The time has arrived when
Congress must grapple and effectually deal with the problem.
It can no longer be evaded. Nor will it do to "pass the buck"
from Federal to state governments, or to railroad managers
or owners. That will not provide the transportation facilities
which the people must have. The responsibility rests upon
Congress, and happily there are indications that Congress in¬
tends to meet it.
The failure of the present dual and conflicting state and
interstate commission system has been demonstrated. It
satisfied neither investors nor shippers, and failed to provide
the requisite transportation at the time of greatest need. To
return to it inevitably means a renewal of the strife between
shippers and carriers over rates; between employers and em¬
ployees over wages; and between different communities over
preferential rate adjustments, with each backed more or less
by local regulating authorities; and failure finally to meet
the growing needs of the country for transportation facilities,
since the necessary capital will not be forthcoming. The ne¬
cessity for exclusive national control as against conflicting
state regulation seems now too obvious for serious discussion;
and the debatable question is whether such control shall be
through government ownership or by exclusive Federal regu¬
lation of private ownership.
It was the system of regulation and not private manage¬
ment of railroads that caused the breakdown in our trans¬
portation facilities during the war. The creation within the
last ten years in the territory north of the Potomac and Ohio
59
6o THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Rivers and east of Chicago of state railroad commissions with
power to fix rates and regulate the borrowing of railroad com¬
panies, and the power granted about the same time to the
Interstate Commerce Commission to suspend rate increases
hampered the financial operations and impaired the credit of
the railroads to such an extent that railroad executives hesi¬
tated to increase fixed charges and investors were slow to pro¬
vide the money necessary to continue the policy of improve¬
ment and expansion necessary to meet the great industrial and
commercial development of this populous territory.
The breakdown of 1917 afforded an opportunity to con¬
trast the non-competitive with the competitive system of rail¬
road transportation. The prime object, and, indeed, the only
legitimate object of government control during the war, was
to provide the transportation necessary for the war; and this
object was accomplished with very great success. Barring the
first few months of the year, during extraordinarily severe
winter weather, the traffic was moved and with a degree of
order, regularity and efficiency that met every requirement
of the war; and, in the matter of foodstuffs especially, prob¬
ably prevented an Allied collapse. The object was accom¬
plished in a manner that would not have been possible under
the restrictive legislation resting upon the railroad companies.
The non-war transportation was secondary and got only the
service available after war needs were supplied. This service
was necessarily inadequate for lack of facilities due to the
previous lack of capital expenditures, and was of course un¬
satisfactory to the public. It was not, during the war, and
has not since been, a fair test of non-competitive transporta¬
tion. But it has been sufficient at least to give the public a
greater appreciation than it ever had before of competition
in transportation, and to suggest some of the evils that would
attend government ownership, and has impressed Congress
with the necessity of bravely meeting and endeavoring to solve
the problem.
Consideration of any solution of the railroad problem
involves the fundamental question whether there shall or
shall not be competition. Answer to this determines very
largely the kind of plan to be adopted.
All must realize that competition in railroad rates is un-
RAILROAD COMPETITION AND PRIVATE INITIATIVE 6l
wise and practically impossible. Competition in rates cannot
exist without rebates, secret rates and other kindred evils
that make it intolerable. But competition in service and
facilities always existed until the beginning of Federal con¬
trol, and has really been responsible for the great advance
in the quality of railroad service in this country, particularly
in recent years. I believe strongly in competition in service
and facilities as the dominant principle to govern our railroad
policy. It means constant and persistent progress in im¬
provements of roadway and equipment, in the comforts and
convenience of transportation, in considerate treatment of the
public, in the quantity and quality of service ; and progress in
every feature of transportation. Its elimination would mean
comparative stagnation, would check enterprise and initiative,
and would remove the inspiration for many of the conven¬
iences and facilities which are most appreciated by our people.
It would be a national misfortune to eliminate competition
in service and facilities that exists between the trunk lines—
the New York Central and the Pennsylvania Lines, for ex¬
ample—the great Middle West systems, the principal lines
through the south, and the transcontinental systems. Where
they run to extremes, as in duplicating passenger train service
for instance, a government hand may and should be laid upon
them. But this item of waste has been exaggerated. Of
course, I am not advocating unregulated competition, but in¬
stead an enlarged regulation. Nearly everything characterized
as "waste" in competition is for the benefit of the public.
Therefore is it waste? Undoubtedly there is some actual
waste. The unification of lines so as to send traffic along the
lines of least resistance, the shifting of traffic according to
the conditions for the time being on different lines, the shifting
of engines from one line to another to serve the exigencies
of the moment, and the consolidation of certain station facili¬
ties, etc. undoubtedly result in a saving of some expense and
the freer movement of freight traffic during exceptional pe¬
riods of extraordinary business. But the amount of expense
thus saved is not relatively a great item, and the diversion of
traffic from a line having more than it can handle to a line
having less, in times of congestion, could be easily provided
for through the creation of a proper governmental officer and
02 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
agency, such, for example, as a Secretary of Transportation
in the President's Cabinet. The unification of certain termi¬
nals would also result in some saving, but the government
ought to take in hand this matter of terminals in the larger
cities, whether competition or unified control be adopted.
It has grown entirely beyond municipal control and is national
in importance in many places. Some saving, also, could be
effected by the abolition of competitive traffic soliciting agen¬
cies, but the public would suffer great inconvenience thereby.
Moreover, the rigid economies enforced by keen supervision of
details under private management as against the lax habits
inherent in public management and the greater freedom and
extravagance in methods of spending government money
would much more than offset every year any possible saving
from the elimination of expenses incident to competition.
Competition compels and enforces economies—requires atten¬
tion to details for saving, obtainable in no other way. While
the government may save expense in conducting certain kinds
of business through its freedom in choosing methods and its
non-accountability, no one claims that a government can con¬
duct a business in the same way as a private corporation at
the same expense. Cost in every department would mount and
the savings would soon vanish.
But granting very large saving from the suppression of
competition in service and facilities, what is the relative value
and importance of it? Does it not mostly represent conven¬
iences to the public, which railroad owners cheerfully furnish ?
And is the saving of expense the most important object to be
attained? Where would that leave civilization? Are we not
as a nation quite as much or even more interested in develop¬
ing conveniences and service of our transportation facilities
than we are in merely holding down transportation rates to
the lowest possible level? Is this not more important as
public policy than a few cents per hundred more or less in
the freight rate? As for the greater efficiency resulting from
unified control, there again arises the question of the relative
importance of such efficiency as may thus be obtainable
against the conveniences resulting from competition. Ger¬
many probably had the most efficient government in the world,
but there are other things more desirable even than efficiency,
RAILROAD COMPETITION AND PRIVATE INITIATIVE 63
and this is true in transportation. If we carefully analyze
the relative merits of efficiency from unification and the ad¬
vantages from competition in service and facilities, we will
find that the latter will be very much better as a national
policy.
These are only some of the reasons for the preservation
of competition in service and ^facilities. Of course there
should be thorough regulation by the national government
of all such competition, with power to check it where it
amounts to an evil. Consolidations subject to government
approval should be permitted where the public benefit would
plainly be promoted, particularly the absorption of financially
weak lines of minor importance where by so doing the com¬
munities dependent thereon could be better served. But the
government should steadily preserve competition between the
large systems and pursue a policy of widening the competitive
area between such large systems wherever practicable.
It follows that the advantages of competition in service
and facilities would be sufficient reasons if there were no
others for opposing the principle of government ownership
of railroads. But another and perhaps the strongest reason
against government ownership is because the opportunity it
would afford to exploit railroads for promoting political ambi¬
tions would be a perpetual national scandal and expose the
government to serious financial burdens. This danger in such
circumstances is inherent in our government and in every
other democracy. Autocratic governments which had no elec¬
toral constituency to propitiate could avoid the pressure.
Every politician would be almost compelled to exert any politi¬
cal influence possessed by him to provide places for his sup¬
porters or improvements and facilities or rate adjustments
desired by them. Each Congressman would be pressed by
all the ambitious towns in his district for ornate passenger
stations or other improvements, as he is now pressed for post
offices, court houses and other public buildings; for additional
and unnecessary trains to please particular communities, and
for the construction of new railroads, extensions and branches
to various ambitious towns and localities not fairly entitled
to them. If the executive agents operating the railroads for
the government should be strong enough not to respond to
64 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
these calls, the Congressmen could and possibly might combine
and "log roll" for these political projects, just as they are said
to have combined in time past for the construction of public
buildings, for river and harbor improvements, etc., etc. This
is a very grave objection to permanent government ownership.
It has not been apparent during the present system of govern¬
ment control, and therefore it may be underestimated. But
that is because the present control was created during the
war and for war purposes, and requests for special favors
in the way of new construction, new stations, etc., etc. could
be met by pointing out the necessity of conserving capital,
labor and material for war purposes. In times of peace,
however, the pressure would be enormous, and the railroad
"pork barrel" would in time make the other "pork barrels"
appear insignificant in comparison. What seems also a serious
objection to government ownership is the very large financial
undertaking that would be involved. On December 31, 1916,
which is the latest date for which the Interstate Commerce
Commission has complete figures, the total outstanding capi¬
talization of all the railroads in the United States amounted
to $20,679,350,501, of which $8,958,815,811 was stock and
$11,720,534,690 was bonds. Many of these securities are
worth less than par, and many, on the other hand, are worth
more than par. The capitalization of the Class i roads in¬
cluded in the above total of $20,679,350,501 amounted to
$16,523,449,283. The "standard return" of these same Class i
roads and the switching and terminal companies under Federal
control aggregates $905,202,388, which capitalized on a 5 per
cent basis represents $18,104,045,706. Of course it would not
be necessary for the government to provide the entire amount
of this huge investment at once, if the government should be
willing to acquire the property subject to existing mortgages,
but this would undoubtedly add enormously to the value of the
bonds outstanding, since buying subject to the mortgages, the
bonds would in effect be guaranteed by the government.
There are other objections to government ownership, such
as the political power of the employees to organize and control
the railroads, the probable deterioration in the ability and
efficiency of executive and administrative officers under the
RAILROAD COMPETITION AND PRIVATE INITIATIVE 65
scale of government salaries in competition with private busi¬
ness, etc.
The present method of Federal control is the most efficient
of any unified control because it puts complete power in the
hands of one man, whereby direct and immediate and complete
action is obtainable, but obviously it cannot be made per¬
manent; and I am discussing only a permanent policy. An¬
other plan is to divide the country into regions or zones and
consolidate all the railroads in each region or zone into a single
company. France has some such system as that, except that in
some zones the roads are owned by the government and in
others by private companies, there being a monopoly, however,
in each zone or region. This has the fundamental objection,
however, of eliminating all competition in service or facili¬
ties; and for reasons already pointed out, that objection is
to my mind conclusive. Then of course there is in the United
States the present system of dual and conflicting national and
state regulation by various agencies, mostly commissions quasi-
judicial in form and procedure, but legislative and adminis¬
trative in functions; and this system has already proven a
failure.
As stated at the outset, the fundamental question is whether
the policy shall be regulated monopoly or regulated competi¬
tion in service and facilities. If the decision should be in
favor of the monopoly, then it should be through government
ownership. If, however, the decision should be in favor of
regulated competition, it should be under exclusive Federal
control and regulation of private ownership. The choice lies
between the two. The people of this country will not be satis¬
fied with the private ownership of railroads with every vestige
of competition eliminated through the zone system or other¬
wise. If private ownership is to be maintained, there must
be the initiative and enterprise inspired by competition to the
extent that competition is beneficial to the public: namely, in
service and facilities.
But private management of railroads cannot be maintained
if the new legislation is to require railroad investors and
owners to take the risks and forego the profits of the business.
If the return upon railroad capital is to be limited at best to a
low, fixed return, even by the most successful and best man-
66 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
aged roads, with no hope of any increase for wise selection,
good Judgment, successful management and other considera¬
tions ordinarily influencing values, while all misfortunes are
to be borne by the investors, I fear the necessary capital will
not be obtained. Hope must not be shut out from the railroad
investor. If he has or is able to provide a transportation ma¬
chine that will furnish the service the public requires at reor
sonable rates, and by good service and facilities and good
management gets more business and makes more profit than
his competitors, he should be allowed to enjoy the results of
his effort. A "reasonable" rate to be fixed by a governmental
agency in the light of all the circumstances, however multi¬
tudinous, is all that the public is constitutionally entitled to
and is all that the vast majority of the public want, and any
profits which the investor can realize under such a rate from
good management and good business judgment and by attract¬
ing business through good service and adequate facilities, he
should be allowed to enjoy. No legislation or system of regu¬
lation designed merely to discover what will be a confiscatory
rate and then aim sufficiently above that rate to avoid diffi¬
culties with the Constitution will ever solve the railroad prob¬
lem ; and such unfortunately seems to be the character of some
of the legislation recently proposed. If there is to be compe¬
tition, the rewards of competitive effort must be allowed stock¬
holders, since otherwise there is no inducement to compete;
if the returns to successful stockholders are to be limited,
then such returns must be guaranteed, since investors will not
take all the risk with no hope of profit; and if the returns
are guaranteed, then the incentive to competition is largely
diminished. Therefore, unless stockholders of well located,
well managed, successful railroads with established business
are allowed tbe returns which they are able to earn under
rates fixed by the government in the light of all the circum¬
stances entering into the establishment of a "reasonable" rate,
we might as well adopt government ownership at once, for
that is the end to which any other scheme will lead.
NATIONALIZING RAILROAD CORPORATIONS BY
STATUTE *
BY ALEXANDER W. SMITH
ATLANTA, GA.
Having no interest in any railroad corporation and no pro¬
fessional railroad connection, my viewpoint, as regards the
questions before the conference, is that of an American citizen
who is vitally interested, as all good Americans are, in the
prosperity of his country. There are no other interests in
the whole country so completely bound up with our peace
and prosperity as are adequate transportation facilities. Trans¬
portation is related to the body politic as the circulation of the
blood is related to the natural body, and anything that ob¬
structs the flow of pure blood through the veins no more
certainly interferes with the good health of the individual
than does like interference with the flow of commerce through
the arteries of transportation have a deleterious effect on the
commercial and business health of the whole country.
Being a lawyer I have viewed the general subject from
the legal angle. I have heard various suggestions made that
we should do sundry things to improve the transportation
systems of the United States. For instance, it is proposed that
the United States government shall, under one plan, guaran¬
tee an income upon the securities of these corporations based
upon the value of their property arrived at in some way not
yet definitely fixed. It is proposed that the government shall
authorize the consolidation of individual railroads into large
systems, which necessarily involves interference with com¬
petition in local territory between lines that were previously
competitive. If that is undertaken in some states, under the
present corporate organization of railroads, it will run counter
to constitutional inhibitions. Has the Federal government
power to override the constitution of a state by undertaking
* Notes ef a statement made at the Third Meeting of the National Trans¬
portation Conference, Washington. D. C., March aSth, 1919.
67
68 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
to authorize such railroads to consolidate, so long as they
are creatures of the state and subject to the provisions of its
constitution ?
A corporation is a fictitious person. It has many attributes
of a living being. It contracts, incurs obligations, owes duties
to the government that creates it, and is subject to the con¬
stitutional control of that government. When we consider
things desirable to be done in connection with our transporta¬
tion systems it is well to investigate some of the legal aspects
involved ; take a view of the range lights and shoal-stakes, so
to speak, that mark out the legal channels through which we
can safely travel, else we may run on the rocks.
The National Association of Owners of Railroad Securities
and their counsel appear to have considered the subject of
Federal incorporation solely on the basis of creating new Fed¬
eral corporations, and undertaking to transfer into them exist¬
ing state corporations, and their assets and liabilities. That is
practically impossible. Take the Southern Railway Company
as a concrete example. It is a system made up of more
than one hundred separate railroad corporations. It owns
some of them ; it controls others under long leases, and others
by majority stockholding. It has effected their merger by all
the known methods of putting one railroad under the operative
control of another. Their obligations under the kaleidoscopic
arrangements it has made in bringing the system together
could not be transformed and lifted out of the several state
corporations and set down in a new Federal corporation. As
a business proposition, it would be impractical.
In view of these difficulties, the railroad executives have
thus far turned away from the proposition of Federal in¬
corporation. But there lies right on the surface a method
to accomplish the same result in a perfectly simple way, viz:
the passage by Congress of a general Federal incorporation
act along lines parallel to the laws for incorporating national
banks, and nationalizing state banks. If a state bank desires
to become a national bank, it makes application to the Comp¬
troller of the Currency on certain forms supported by proper
vote of its stockholders and directors, and a certificate is issued
authorizing it to be thereafter a national bank. The Supreme
Court of the United States has decided that when a state
NATIONALIZING RAILROAD CORPORATIONS BY STATUTE 69
bank is thus converted into a national bank, there is no change
in its identity or corporate existence, and no interruption of
the continuity of its business. Its allegiance by that act is
transferred from the state to the nation, but the corporation
is the same; its assets and liabilities are the same; and no
transfer is necessary from the one to the other, because there
never is but one corporate creature. (Metropolitan Bank v.
Claggett, 141 U. S. 520.)
What a simple plan that would be if it is deemed necessary
for the interstate railroad systems to become national cor¬
porations !
While Congress has no power to compel a state bank to
become a national bank, because a state bank is no part of
the fiscal machinery of the nation, it is submitted that it does
have the power to compel a railroad system that is now en¬
gaged in interstate commerce to become a Federal corpora¬
tion.
The power of Congress to create a bank at all was con¬
tested until it was settled by the Supreme Court that such
power was implicit in the power delegated to Congress to
issue money and handle its finances. Jurisdiction of Congress
over a railroad engaged in interstate commerce is delegated
in a specific, plain, explicit, all-inclusive, and plenary para¬
graph of the Constitution committing to it control over inter¬
state commerce and all its instrumentalities.
If it be true that Congress has only implied power to
charter a bank as a piece of machinery in its fiscal system it
must be true that if Congress finds in the development of
transportation that state lines have been wiped out, and that
commerce disregards artificial obstructions, and that necessary
machinery in carrying on interstate commerce is a railroad
corporation, the express grant of exclusive jurisdiction over
such commerce carries with it the power to create such a cor¬
poration.
If that is true, can it compel a state railroad company en¬
gaged in interstate commerce to become a Federal corpora¬
tion ? No one questions its power to create such corporations,
ab initio.
It has been decided by the Supreme Court of the United
States that no single state can create a railroad company
70 THE NATIONAL INSTITUTE OP SOCIAL SCIENCES
and endow it, as a matter of law, with the right to operate its
lines in any other state. Indiana and Ohio tried to do this con¬
jointly. The legislatures of those two states, respectively,
created a railroad company, endowing each with the same
name, and their identity, so far as natural persons were con¬
cerned, was complete, the one created by the state of Ohio
and the other created by the state of Indiana. Their tracks
were located so they came together at the line between the
states. Every effort was made to create a single corporation
with the dual right to do business in both states. The Su¬
preme Court held that there were two separate and distinct
corporations and that, in the very nature of the case, one
state could not give the power to its creature to go into the
domain of another sovereignty of equal dignity and do busi¬
ness there, except by permission of the other state. Hence
it is that all roads that cross state lines do business outside
their native state by comity between the states. Comity is a
privilege merely and not a legal right. (O. & M. R. R. Co.
V. Wheeler, ist Black 286.)
The Southern Railway Company was able to merge its
constituent lines running through eleven states by reason of
the voluntary, but not necessarily concurrent, action of the
several states and their corporate creatures. First, the states
either by special acts or by general laws, gave statutory per¬
mission for the railroad corporations to combine. Second, all
constituent corporations had to take appropriate corporate
action, through stockholders and directors according to by¬
laws and charter provisions, authorizing the particular step
necessary to a merger. So that each one of the constituent cor¬
porations was put into the combination by virtue of its own
action taken by permission of its creator. Thus, by virtue
of the express consent of the several corporations and of the
express legislative sanction of the eleven states in which
the Southern Railway system operates, something was created
different from the aggregate of corporate powers previously
vested in the subsidiary companies. The Virginia corpora¬
tion known as the Southern Railway Company became an in¬
strumentality of interstate commerce, not by virtue of comity
among these eleven states, but it crosses the lines of said
states and hauls interstate commerce through them as a single
NATIONALIZING RAILROAD CORPORATIONS BY STATUTE 'JX
entity by virtue of the action of each of the states, and of
the concurrent or supplemental action of the owners of each
of the properties. Whether they intended it or not, it is a
fact that every one of those states, and every one of those
corporations, by such action, voluntarily submitted themselves
to the jurisdiction of Congress through its exclusive control of
interstate commerce, whenever it sees fit to act.
Congress has never exercised that power, but with all due
respect to the eminent counsel who have raised legal objection
to compulsory Federal incorporation, no satisfactory reply
has yet been made to the legal conclusion involved, viz : that
Congress has the power, if it chooses to exercise it, to say
that every system of railroads engaged in interstate commerce
by virtue of consolidating constituent lines (and no other such
system can legally exist unless originally created by Con¬
gress) : "You are now an instrumentality of interstate com¬
merce, and in the development of the commerce of this coun¬
try it has become necessary that full jurisdiction of your
functions shall be vested in the Federal government. There¬
fore, you are required to transfer your allegiance from the
state of your incorporation to the United States of America,
in order that the Federal government may take such steps
hereafter in the control of your business and in the promotion
of the interests of interstate commerce as from time to time
it sees fit." Congress could then establish consistent and uni¬
form control of all systems of interstate carriers.
If Federal incorporation is made permissive only it is
questionable whether Congress will not be embarrassed by
some of the lines declining to accept Federal charters. Many
of them have tax exemptions and special charter privileges
which they would hesitate to imperil. Voluntary action would
certainly destroy these privileges, while, under compulsory
action, these property rights might be preserved under other
provisions of the constitution not necessary to be here elabo¬
rated.
It should be repeated that this argument is confined to
those lines which, by voluntary action, have been consolidated
into interstate systems. They have thereby waived the right
(if it exists) to object to Congress doing anything with them
72 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
that it may desire to do if they expect to continue in interstate
commerce.
As to the necessity of Federal incorporation, there does
not seem to be any room for argument. If the Federal gov¬
ernment is to visé and control the issuance of railroad securi¬
ties, upon what principle, without the voluntary cooperation
of the state corporation, can Congress interfere with its issue
of stocks and bonds expressly authorized under its state char¬
ter? They may be not necessarily connected with its inter¬
state commerce. Their proceeds may be needed for other
purposes. Many railroad corporations engage in business
other than transportation. The exercise of control over the
securities of a state corporation by Congress is much harder
to justify under existing law than the power to compel Fed¬
eral incorporation by interstate systems. The basis of the
securities, especially the original issues, is the charter of the
constituent companies, and not of the holding or operating
company. Rights in these are vested and protected by the
Federal Constitution itself. But when the corporation oper¬
ating the interstate system is compelled to transfer its al¬
legiance to the Federal government, subsequent issues of its
capital stock and bonds may be regulated as Congress directs.
The contractual relation between a state and its corporate
creature presents no obstacle to compulsory Federal incor¬
poration of interstate systems hereinbefore described, be¬
cause the state has consented in advance that that may happen.
When the state gave permission to its corporation to become
a part of the instrumentalities of interstate commerce by vir¬
tue of its legal merger into an interstate system, it relinquished
its right to object to any sort of control over that corporation
which Congress might choose to exercise. Of course, until
Congress exercises control the allegiance of the corporation
remains with the state that created it. The argument is that
both the states and the corporations, by virtue of the necessi¬
ties of the consolidation that produced the interstate system,
have contracted in advance that Congress may exercise juris¬
diction over this legally established instrumentality of inter¬
state commerce if, in its discretion, such action will promote
the interests of interstate commerce. Such jurisdiction has
been exercised in numberless ways. If, without destroying
NATIONALIZING RAILROAD CORPORATIONS BY STATUTE 73
the corporation itself, it may be converted from a state cor¬
poration to a Federal corporation, there is no legal reason,
why Congress may not constitutionally require it to make
the change.
STABILIZING RAILROAD INVESTMENTS
BY PAUL M. WARBURG
FORMER VICE-CHAIRMAN OF THE FEDERAL RESERVE BOARD
A government assurance of a reasonable return upon a fair
value of the railroad property devoted to the public service
forms a very important and much controverted phase of the
railroad problem. In discussing it in a short and separate ar¬
ticle, we must be permitted to presuppose a common accord
with regard to the desirability of conserving private operation
of railroads under strict government control, because it is for
the very purpose of avoiding the two extremes of complete
government operation, and unrestricted private operation, and
in order to bring into a necessary union two incompatible
partners, viz: private capital and drastic government control,
that the assurance of return is being advocated. We must take,
then, as conceded the following assumptions:
A. Unrestricted private operation must be dismissed as
being incompatible with the public interest.
B. Government operation must be avoided:
ist—Because it is bound to pollute our political and social
life, and
2nd—Because it makes for stagnation and inefficiency; it
would mean unprogressive and costly operation, resulting
in poor service to the public and high rates.
3rd—Because experience in foreign countries shows that
the saving to be derived from the use of the government's
credit is not likely to be sufficient to make up for the loss
resulting from the higher cost of government operation,
while the excessive use of the government's credit is hurtful
to its standing and bound to increase the rate at which the
government generally borrows.
C. Such advantages as the greater unification of operation
produced under the U. S. Railroad Administration can be se¬
cured by proper amendment of the Sherman Act and the
74
STABILIZING RAILROAD INVESTMENTS
75
grant of a Federal franchise, without subjecting the country
to the dangers and disadvantages of government operation.
The question before us is, then, why is it necessary for a
minimum guarantee of return by the government to assure
a reasonable return upon a fair value of railroad property
in order to preserve private operation of railroads under
government regulation?
Railroads have ceased to be purely private concerns.
They are public utilities, and long before the war began the
government to all intents and purposes had undertaken through
its authorized agencies to fix the rates they may charge, the
wages they must pay, and the service they must render. As
a consequence, the net return upon railroad investments of
to-day in effect is determined by the government. If private
capital is to continue to finance the railroads and to provide
the means necessary for their future growth, it must be as¬
sured of an "adequate return." If we can define what is an
"adequate return" and if we can devise means to assure the
railroad investor of an "adequate return" and if we can com¬
bine this assurance with a like assurance that private initiative
and business methods will not thereby be destroyed, we shall
have solved the real difficulty of the problem. If we fail in
this, we must give up as hopeless our search for a thorough
and permanent solution of private railroad operation.
The history of our railroads, with few exceptions, abounds
with illustrations of excessive capitalization and of ill-advised
construction or purchase of properties at exorbitant prices.
In most cases the security owners have since paid the penalty
for the errors of omission and commission of their directors,
and through the process of painful reorganization, the "water"
has been squeezed out. The present average capitalization of
all railroads cannot be considered as excessive ; but the process
has been an uneven one, nor has it quite run its course. The
Interstate and State Commissions, faced with the task of
approving rates which affect alike the weak and the strong
road, the looted property and the well conserved, the under¬
capitalized company and the one with a grossly watered capi¬
talization, have therefore never been in a position to define
what constitutes an "adequate return" because they never
76 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
were able to lay down what was the true investment or the
fairly accurate value upon which the return should be based.
On the other hand, both shipper and labor have constantly
rested their respective claims for lower rates and higher
wages upon the contention that it was the avidity of the
railroads to earn a return on an excessive capitalization that
stood in the way of a compliance with their just requests. Be¬
ing uncertain of its ground, the Interstate Commerce Com¬
mission was unprepared or unwilling to grant prompt increases
in rates corresponding to the added cost of operation. While
wages and the cost of material were mounting rapidly, while
the war emergency called for prompt and bold treatment, they
refused to act, even though it was borne in on them from all
sides that to ruin the credit of the railroads would involve an
irretrievable national loss, and that, even in case they expected
the government ultimately to step in, its burdens in guarantee¬
ing or financing would be greatly lightened if it had to deal
with solvent railroads earning a reasonable return. It was
pointed out to the Commissioners that it was easier to destroy
the credit of the railroads than to resurrect it, and that when
railroad stocks could no more be placed at par or above, the
inability of the railroads to finance further extensions and im¬
provements was dangerously near at hand. The majority of
the Interstate Commerce Commission remained deaf to these
warnings. Speaking by and large, we must regretfully admit
the fact that railroad credit has now practically been de¬
stroyed. Only a few companies may feel confident of their
ability to sell their obligations in sufficiently large amounts
and on good enough terms to provide for a liberal further
development of their plants. Only about ten carriers of im¬
portance remain in a position to sell their stock at par or above.
With only a small margin of earnings no railroad can safely
finance indefinitely by a continuous addition to its fixed obliga¬
tions. Conditions now prevailing mean, therefore, that, unless
something drastic be done, the end of private railroading is in
sight. Even though net earnings be temporarily improved—
by an increase in rates or decrease in expenses—the investor's
confidence that he may safely count upon an "adequate return"
has been shaken so seriously that a temporary improvement
would not restore the power of the railroads as a body to
STABILIZING RAILROAD INVESTMENTS
77
finance themselves by the sale of stock upon favorable terms.
It is absolutely necessary, therefore, that both the Congress
and the regulating bodies reach a clear understanding as to
what is a fair and adequate return. In other words, we must
reach a definite determination, once and for all, as to what
shall be considered the uncontested intrinsic value of each
railroad.
The interests of the shipper, the consumer and labor are
so important, and at times so much opposed to one another,
that no private corporation can assume the responsibility of
acting as umpire between them. Government, in the circum¬
stances, must shoulder the full responsibility for fixing
transportation rates, for furnishing adequate service and
for avoiding strikes, and, whether we like it or not, it must,
therefore, be vested with practically plenary powers. But
where these safeguards of government administration are to
be combined with the advantages of private operation, the
government's responsibility towards private capital must be
considered as sacred as that towards shipper, consumer and
labor. In other words, while the country must enjoy the full
protection of practically unlimited government control of rail¬
roads, private capital is entitled to protection against confisca¬
tory over-control ; viz. : It must enjoy an unequivocal assurance
that, in disregard of the law providing that the railways are
entitled to earn a fair return on their invested capital, it shall
not be deprived of a reasonably adequate return. Without
such definite assurance, it is inconceivable to expect that pri¬
vate capital will show itself reckless enough to plunge into the
further development of our transportation system. If history
had created a tradition that such reasonableness could be as¬
sumed as a matter of course, or that it could be adequately
defined by the courts, no such statutory assurance might have
become necessary, but in the face of actual experience, I do
not see how it can now be avoided.
Our governments, state and national, were negligent or
shortsighted when they gave their first railroad charters with¬
out including a provision establishing a definite method of
accounting and of maintaining a property account upon which
both the net return to the owners and an eventual purchase
by the government could be predicated. Unless we now pro-
/'S THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
vide such a basis, the old sore will be but superficially healed,
bound to spring wide open afresh on the occasion of every
new clash between the interests of the shipper and labor. The
carriers would remain "the goat," sandwiched between these
two contending forces, in the hands of helpless regulating
bodies who would continue to flounder about without a
solid ground under their feet upon which to rest their de¬
cisions.
There is no denying that the question of valuation offers
grave difliculties. Original cost can hardly ever be ascer¬
tained ; moreover, in some cases it would be far below to-day's
reproduction value, while in others it might seem obscured
in consequence of acquisitions, either by direct purchase or
through stock control, of properties previously constructed by
other corporations.
The replacement value, on the other hand, might offer a
fair basis in case of a well-planned and well-maintained prop¬
erty ; it would be unreasonable in the case of a poorly planned
road such as no prudent business man or engineer would
reproduce on its original basis. Moreover, the cost of re¬
placement is subject to the drastic fluctuations of prices of
real estate, raw materials and labor.
The average market price of securities has been urged
by some, but bonds and stocks of recently reorganized prop¬
erties would not offer any record of average prices over a
number of years, and there are many other reasons why
market prices would not offer a reliable basis.
A capitalization of net earnings has been suggested as a
better test; but readjustments would have to be made in order
to bring about a fairly equal basis of maintenance. Rules for
establishing a fair standard return could, however, probably be
laid down in a law, and the true average standard return when
capitalized is likely in many cases to offer the most serviceable
basis of valuation. Resulting from rates determined by Fed¬
eral and state commissions, it could not in any case be con¬
sidered excessive.
An enumeration of these difficulties leads us to the con¬
clusion that no mathematical or technical rule could probably
be devised that, if fair to one railroad, might not be doing vio¬
lence, or be too favorable, to another. Shall we then throw
STABILIZING RAILROAD INVESTMENTS
79
up our hands and surrender to government operation because
of our inability to agree upon a fair value of the railroads?
Before we reach that conclusion let us remember that govern¬
ment operation cannot be brought about without condemna¬
tion proceedings, which again must be based upon a valuation.
It is obvious then that we meet that difficulty in either case,
and, instead of shirking it, we ought to face it squarely and
overcome it as best we can. In order to cut the knot—as in¬
evitably we must—it will be advisable, I believe, to place the
duty of determining the fair value of the railroads in the
hands of some expert and impartial body, laying down in the
law the broad rules of approach, but leaving it within the
discretion of the men to be appointed how to apply the tests ;
whether one or two of them, or all. It would be their duty
not to attempt to drive the hardest possible bargain but, like a
court of justice, to determine the fair value of the properties
without the red tape or delays incidental to judicial proceed¬
ings and having due regard for all circumstances affecting the
property and its prospective earning capacity, for which in
some cases considerable sacriffces have been brought without
as yet showing a visible return. I could imagine a "Valua¬
tion Board" of five, composed of members representing law,
finance, business, labor and the railroads.
In order to have our thoughts travel along the same lines
in our search for the guiding principles to be established, it
is necessary to agree on some tentative means of approach.
Let us assume, then, that a net return (available for interest
charges and dividends after making ample provision for re¬
newals and depreciation) of 6 per cent on the aggregate of
the Federal valuations of the railroads constituting a traffic
section shall be considered as the basis guiding the rate-making
bodies; that, on the other hand, the railroads shall contribute
to a general railroad contingent fund (to be drawn upon in
lean years by all railroads on a pro rata basis) any earnings
in excess of, say, 6 per cent on said valuation. Let us sup¬
pose that railroads signing such an agreement shall be freed
from the restrictions of the Sherman Act with respect to the
acquisition of parallel and competing lines, pooling, etc., which
they may carry on under the supervision of a Federal regu¬
lating body. Such plan, if applied, would result in establish-
80 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
ing the securities of the railroads as a whole upon a basis
to which their actual intrinsic value entitles them.
There is no thought of guaranteeing dividends on existing
stocks or even interest on existing obligations, but only an as¬
surance of a reasonable return on the actual value of the prop¬
erty of the railroad as a whole in each traffic section as deter¬
mined by the Federal valuation: the "legitimized capital," as
it has been termed by a prominent financial writer.
No gift to the strong roads is contemplated, but the simple
and just application of the principle that a net return of 6
per cent (the excess to be divided) on what has been found
to be the real rock-bottom value of an industrial enterprise
is considered as fair and not excessive. The reëstablishment
of arbitrarily destroyed values would in some instances enable
certain companies to sell their stocks above par, but inciden¬
tally, in such cases it would add to our national strength and
taxable wealth, just as it would be to our national advantage
to have the Liberty Loan bonds go back to par.
On the other hand, the overcapitalized roads would find
themselves in a position where, in order to finance their future
growth, they would either have to revamp and scale down
their capitalization, so as to bring it well within the limits of
the Federal valuation (that is, bring it within the sound
limits of actual valuation) ; or they would have to enter into
negotiation with stronger railroads, operating under Federal
franchise, particularly those whose stocks would sell above
par, in order to merge their property on the basis of an ex¬
change of securities to be approved by the Valuation Board.
This would lead to a consolidation of railroads—eliminating
some uneconomic duplication and operation of too many small
units—and would work towards greater unification, a de¬
velopment, apparently, generally desired by the country. Com¬
petition would, however, be preserved between the large sys¬
tems.
In our eagerness to secure greater unification, let us remain
ever conscious, however, of the fact that it is most important
that unification does not go too far. The advantages of a
unified system can be secured through proper cooperation
under the direction of governmental regulating agencies, even
though a reasonable number of strong and competing lines be
preserved. For the continued intensive and free development
STABILIZING RAILROAD INVESTMENTS 8l
of a country whose resources we have only begun to unfold,
we need an aggressive spirit of enterprise—not the lazy and
arbitrary bureaucratic and autocratic atmosphere that with us
would be certain to follow if one great regional railroad com¬
pany should cover each section of the country as has been pro¬
posed by others. A business spirit of rivalry must be kept
alive by the preservation of a number of large units oi rail¬
roads competing on broad lines—not in rates, but in service.
If, for the sake of an illustration, we agreed to accept as
the temporary Federal valuation the average "standard re¬
turn" capitalized on a 6 per cent basis, which we might term
the "earning valuation," that, in effect, would mean that car¬
riers as a whole and by natural traffic sections in fixing their
transportation rates, and in pleading with the rate-making
bodies or with the courts, from now on would have a definite
basis upon which to rest their claims for schedules producing
6 per cent net on these aggregate "earning valuations." The
railroads, under the law, are entitled to an adequate return
on their property. It may be advisable, therefore, to let the
physical valuations proceed and let the aggregate of the final
valuations, plus future additions, serve as the basis for rate-
making purposes, and as the limit for the issue of securities.
If legislation as here proposed were enacted, the return of
6 per cent on the aggregate valuation of the carriers as a
whole would constitute a clear and, for the first time, well-
defined right which the carriers could enforce before the
courts, while heretofore no such definite basis existed. There
would be ample room for the stronger roads, by energetic
efforts in promoting new business or greater efficiency, to
increase to 6 per cent or more the net earnings accruing to
their security holders. Moreover, with the absorption of the
smaller or unprofitable roads by the stronger ones, the rate-
making problem would be greatly simplified.
It is claimed that statutory government assurance of a
reasonable return on a fair value of railroad property as a
whole would prove to be a step towards government owner¬
ship and operation. If we are correct in assuming that the
assurance here contemplated would have the effect of sustain¬
ing railroad credit, and if ample government supervision and
control is likely to secure for the country substantially all the
THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
advantages that complete government ownership and operation
might be expected to bring about, there would hardly be any
inducement left for the country to take the disastrous plunge
into government ownership and operation, with all its well
known dangers, while no equivalent advantages might still
remain to be secured by such a step. The surrender to
government operation would appear much more likely if rail¬
road credit should remain insufficiently protected, and if the
proponents of government operation were left in a position
to press the argument that greater economy and cheaper rates
might be secured by the direct and free use of the govern¬
ment's credit.
Some writers contend that it would be cowardly and un¬
wise to barter away private initiative and freedom of action
and earnings for a statutory assurance of a limited return.
It is not in order to obtain the government assurance here rec¬
ommended that I am in favor of submission to far-reaching
government control. It is because I consider far-reaching
government control an unavoidable element of any future
plan of private operation that I deem it necessary to insist
on assuring the railroads as a whole a reasonable return that
unrestricted government control will by law be bound to ob¬
serve. I deem this protection necessary like a war risk insur¬
ance policy, without which private capital would not have
ventured to brave the dangers of mines and submarines.
A profit-sharing arrangement upon a definite understand¬
ing as to what is to constitute an "adequate" return, would
appear to offer for those in charge of railroad operations a
more attractive basis, and, therefore, would develop more
readily a spirit of enterprise, than what they have had in the
past.
I strongly believe in the idea that capital and labor must
consider themselves partners, a conception which is bound
more and more to lead to the full recognition on the part of
labor that, in return for the enjoyment of short hours and
the highest possible wages, labor must give its maximum
in work, not the minimum, in order to enable the country suc¬
cessfully to compete and to maintain these high standards.
Where government regulates business I strongly believe in
creating a basis that establishes a common interest between
STABILIZING RAILROAD INVESTMENTS
83
them. It brings about a fair and constructive spirit of pro¬
gressive development on the part of the regulating bodies in¬
stead of the pernicious attitude of commissions that merely
seek to restrict, prosecute, punish, and destroy. Any regulat¬
ing body that does not perceive that it has constructive func¬
tions as well as restrictive duties is doomed to fail and to
become more of a curse than a blessing.
To require the railroads to turn over to a general fund a
share of their profits in excess of 6 per cent on a fair value
of their property would, to my mind, not only offer a great
protection for the railroads themselves, but, if proper provi¬
sions are inserted, they might greatly benefit the country at
large.
The work of the Federal Reserve Board was greatly facili¬
tated by the provision in the Federal Reserve Act restricting
the member banks' net return from their holdings of Federal
Reserve bank stocks to 6 per cent per annum, the balance going
half to the government, and half, with certain limitations, to
the surplus or reserve accounts, ultimately reverting to the
government. The Federal Reserve banks in 1918 earned about
75 per cent net on their stock. If this profit had accrued to
the benefit of the member banks it would have been considered
a public scandal. It is safe to expect that in that case the
present attorney for the shippers, appearing on behalf of the
farmers and business men of the country, would have raised
a protest against such extortion, urging the Federal Reserve
Board to reduce interest rates. If these vast profits had gone
to the member banks, it is doubtful whether the Board could
have withstood such a demand, even though it might have
entailed further disastrous inflation and increased burdens to
the whole country. Inasmuch as anything earned in excess of
6 per cent, directly or indirectly, belonged to the United States
government, any such pressure or misconstruction was, how¬
ever, excluded, and it was readily understood, and willingly
admitted by all, that the enormous profits were not due to
extortionate interest charges, but to the vast quantity of serv¬
ices rendered at very moderate rates. In consequence of this
limitation of profits the Federal Reserve Board, when deciding
what are the interest rates best serving the whole country,
finds itself free from the uncertainties which have so fatally
84 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
affected the deliberations of the Interstate Commerce Commis¬
sion in this respect. The Federal Reserve Board knows that
the country has decided once and for all that 6 per cent is the
fair return to the Federal Reserve bank stockholder, and that
the balance belongs to the government.*
If the Interstate Commerce Commission, or whoever may
fix transportation rates in the future, were certain that no
serious harm or abuse could result from permitting "adequate
rates," they would find their task greatly facilitated. They
could no more be alarmed by the possibility of excessive rail¬
road profits and, on the other hand, they would be less apt to
overreach themselves in imposing excessive burdens upon the
carriers.
It would lead too far to discuss in detail how to organize
and render effective these contingent funds. It may not be
amiss, however, to touch upon the very important question of
granting directors and officers a certain share in the net returns
of the railroads. I do not believe in fixed executive salaries,
or directors' fees, without a definite relation to the success of
their work. In this respect I am wedded to a system that has
directors and officers find their main remuneration in a certain
share of the profits earned in excess of a given minimum re¬
turn to the stockholders. In our case it is obvious that such
a provision would have the effect of preserving in the manage¬
ment of the roads a genuine live and active spirit of business
efficiency, enterprise, and rivalry. Incidentally it would indi¬
cate the way to solve the puzzling problem of dealing with
negligent or dummy directors, or securing "directors that
direct," and protect the stockholders. If the pocketbook of
every director (and officer) would be vitally affected by any
mistaken action on the part of the company (instead of his
collecting a fee, no matter how poorly the stockholders fare)
they would be bound to keep their eyes wide open; and the
simple device here proposed would go further in remedying
what shortcomings still may exist in this respect than the
clumsy and ill-advised Clayton Act. Incidentally, we might
consider whether the Federal Reserve Act in having the regu-
* It must be borne in mind, however, that the Federal Reserve System is
dealing with a large number of involuntary stockholders, and only with a capital
stock of about $80,000,000. If it had to raise billions of dollars in the open
market a maximum of 6 per cent would be considered too narrow ^ liniit io?
a return upon an industrial venture.
STABILIZING RAILROAD INVESTMENTS
85
lating body appoint one-third of the directors of the Federal
Reserve banks does not possibly offer a useful analogy for rail¬
roads taking out a Federal franchise.
May I emphasize as strongly as I can that in presenting
these views I do not wish to appear dogmatic with respect to
any particular detail. It is the end that I hold dear, not the
means of approaching it. If the end can be achieved in any
better or simpler way, I shall welcome that other method, pro¬
vided it reaches our aim finally and conclusively and does not
bridge the problem by a palliative bringing only temporary
relief. The principles that, in planning for future private
operation of railroads under government control, I deem essen¬
tial are :
That practically plenary powers of regulation must be given
to the government's regulating agencies, but that a clear and
definite basis must be established upon which regulating boards
will base their rates;
That this basis must give an unqualified assurance to
the railroad industry as a whole of a minimum return ;
That there must be an honest and substantial chance for
private capital to earn more than a minimum, so as to pre¬
serve a spirit of enterprise which should permeate the entire
staff from top to bottom;
That the owners of the railroads should share profits above
a reasonable minimum with the country at large ;
That consolidation should be encouraged so as to bring
about a smaller number of railway systems, of which the
strongest existing roads would form the natural backbone,
but that this unification should not go far enough to destroy
a healthy and reasonable competition in efficiency, in service,
and in opening new fields of enterprise;'
And, finally, that preference should be given to a plan
which at this time would disturb as little as possible outstand¬
ing well-established and well-protected railroad securities, and
which would avoid to the largest possible degree the direct use
of the government's credit.
OBJECTIONS TO GOVERNMENT GUARANTEE OF
RETURN ON RAILROAD CAPITAL*
BY SAMUEL REA, PRESIDENT OF THE PENNSYLVANIA RAILROAD
COMPANY
While the trend of public opinion is now unmistakably op¬
posed to government ownership as a solution of the railroad
problem, there is much discussion of the possibilities of a
government guarantee of railroad income, and if the income
is guaranteed in substance, the principal of bonds must be paid
at maturity, if not previously scaled down through government
valuation. The railroad investor—so badly frightened by
punitive laws and regulations and small profits—is willing to
listen to any reasonable plan, whereby he can have a guarantee,
hoping that he will have no more serious fluctuations in the
price of his securities, and will be assured of a fixed income.
He is not given the value to be placed on his individual invest¬
ment on which the guarantee is to be based, nor the income
to be guaranteed. He knows nothing of the division that is
to be made between the various classes of securities of his
railroad, nor the standing that is to be given to the various
liens on his railroad property, and consequently does not know
what is to be the final value of his securities, or whether he
will finally get any return thereon at all. That knowledge,
if it had to be conveyed beforehand, would be a serious eye-
opener to the railroad investor. He should know it before¬
hand or he is taking a step in the dark. A governmental guar¬
antee would plunge the country into a wholesale financial
reorganization of the railroads extending over a period of
years, and would ultimately mean government ownership. But
to temporarily palliate the situation, the guarantee is to be
coupled with private operation. What is to be the capitaliza¬
tion of these private operating corporations? Are they to
be mere shells with no large financial stake in the properties
• From an address before the Chamber of Commerce of the United States,
St. Louis, Mo., April 30, 1919-
86
OBJECTIONS TO GOVERNMENT GUARANTEE TO RAILROADS 87
they operate and administer? Is there any business man
present who would recommend the government to guarantee
returns on property having a value of about eighteen billion
of dollars and turn it over to six, or even eighteen, private
operating companies without demanding the power to there¬
after define its financial and operating policy ? Can any stock
or bondholder imagine that our government will guarantee
railroad stocks and bonds, and charge nothing for that guar¬
antee? Should capital improvements thereafter be made ac¬
cording to the business necessities or on the political judgment
of each administration ? Would political favoritism as to new
improvements, branches and extensions, and orders for sup¬
plies be inevitable in the government guarantee plan? Should
we then employ officers and men who have political influ¬
ence? Should we impose this guarantee plan on the country
in the midst of the great struggle she must meet to recon¬
struct her industries and put national affairs and taxation on
a peace basis? What period do you think it would take to
work out the financial reconstruction of all the railroad sys¬
tems of the country, and all their leaseholds, guarantees and
other obligations, and what is to occur meanwhile? These
questions open up some of the problems of a guarantee. Why
even the Railroad Administration's Federal Control contracts,
that deal only with the parent companies, and are based on the
earnings for the three years ending June 30th, 1917, remain
in large part still unexecuted, and many vital questions and
settlements thereunder, are still untouched, although it is the
ardent wish of the administration to dispose of them.
Now, selfishly, the investor might take a per cent guar¬
antee for his railroad security, and let the country take over
his problem, but he must look further and realize that as a
citizen and taxpayer he would be called upon to pay, in taxes
and in the greater transportation costs upon production, his
share of the extra cost of the government guarantee and ad¬
ministration, so that the net result to him of the guarantee
plan would not better his condition.
What is the advantage of the guarantee plan to the private
citizen who is not a railroad security holder? Those who
support it admit that private ownership and initiative under
equitable regulation produce the most efficient and economical
88 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
operating results. The contrary obtains under governmental
direction, and the citizen pays the cost in higher rates and
higher taxes.
On top of that annual guarantee on about eighteen billions
of dollars of existing railroad property, from six hundred
million to one billion dollars more would be required annually
for additions and betterments to the roadbed and equipment.
Now the chief advantage emphasized for the guarantee
plan is that the government could raise new capital cheaper
than private corporations, and that by various schemes of
regional unification the weak roads could be tied to the strong,
further economies effected, and some element of competition
left. Now we know that reasonable competition as to service
and attracting traffic is the best method of keeping up the
standards and accommodating the public and enforcing econo¬
mies, but there must be some appealing force to assure such
reasonable competition, and the guarantee plan on its face
does not seem to possess that force. I agree that the govern¬
ment could probably raise new capital much cheaper for a
time than the majority of the railroads, but the savings ob¬
tained in that way would be easily obliterated by extravagance
and lack of concentrated and continued responsibility under
the government guarantee plan with our form of government.
Under the Federal Control Contracts the government al¬
lows 5 per cent on deferred rental payments, and 6 per cent
on new capital expenditures. This, in substance, shows that
the government financing can become just as costly as that
of the conservative corporations. We have also seen the
strongest nations selling bonds at rates as high as those allowed
by private corporations. Mr. Paul M. Warburg has this to
say upon the subject as the result of his long experience, both
in private and government finance:
"It has been argued that through the use of the Govern¬
ment's credit, railroads would procure the necessary funds
at a lower rate of interest. As against that, we must remember
that the excessive use of the Government's credit tends to in¬
crease the rate at which a Government borrows. With us it
would not only affect the rate of the Government bonds to be
issued in re-financing the outstanding railroad securities, esti¬
mated at $17,000,000,000, but it would add to the rate to be
paid by our Government when some of our Liberty Bonds in
OBJECTIONS TO GOVERNMENT GUARANTEE TO RAILROADS 89
due course will mature and come up for renewal. Moreover,
the incessant use of Government bonds, in order to finance the
annual requirements for future railroad developments and im¬
provements, would have a disastrous effect upon the price
and standing of our Government securities. Granting, how¬
ever, that some economy could be secured by substituting the
Government borrowing power for that of the railroads, it
would be insignificant when compared with the increase in
cost of operation and waste and inefficiency that inevitably
would follow Government operation."
Shall we, therefore, in order to save some small difference
between the rate which the railroads would pay and the rate
the government would pay on new capital, incur the risks of a
guarantee plan ? Shall we try to effect a saving in that part of
the railroad dollar used to pay interest and dividends that
represents less than 20 per cent of the whole dollar and at the
outset admit that expenses of operating and other expenses
(already requiring 80 per cent of that railroad dollar) when
subject to government dictation, would increase rapidly?
Let us try to depict the situation in any year when the
income earned was less thañ the guarantee, how would the
deficit be made up? Congress would have to appropriate the
money out of the public treasury and raise the funds by public
taxation. If the deficiency ran through several years Con¬
gress would be obliged to make repeated appropriations from
the public funds to the railroad companies. Instead of getting
the railroads out of politics we would probably be making
them the major issue in national politics. It is difficult now
for the Government Railroad Administration to get from
Congress the funds needed to meet the government obliga¬
tions to the roads when the government is in complete charge of
operations and is collecting and disbursing the revenues. What
would be the situation with eighteen railroad companies in
full charge of the operations and the revenues, and the govern¬
ment called upon to make good their operating deficit ? Bitter
partisan attacks would be made on the corporate management
for their failure to earn their minimum standard income, and
demands in Congress for investigation of alleged extrava¬
gance and inefficient management and waste of the peoples'
money given to the railroad bondholders and stockholders.
The French railways have had a guarantee of income by
po THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
the government for many years, and the French experience
has been by no means a happy one, and it is acknowledged
that it is ultimate government ownership. But in France the
government keeps a string on every dollar advanced to the
private companies on account of the guarantees. When the
French treasury advances funds to a railway to enable it to
meet its capital charges, it is in the form of a loan at interest,
and the loan must be repaid. When a French company be¬
comes hopelessly in debt to the government on account of
advances on the guarantee, the government is obliged to pro¬
tect its interest by buying in the property, and that would occur
promptly with our weak roads. This is what happened to the
Western Railway of France that was taken by the government
in 1908, after years of continuous appeals to the treasury
to make up the annual deficit. But those who have suggested
a government guarantee for American ràilroads want an out
and out guarantee—a payment of government funds to the
private companies whenever they fail to earn their standard
return. Such an arrangement might work out fairly well
with roads not in need of a guarantee, but I think it is plain
to see what would happen to roads or regions that did not
earn their guarantee.
To my mind the guarantee of railroad income by the gov¬
ernment would inevitably lead to government ownership—first
of the weak lines, and later of all the lines. It might be
argued that the government, instead of paying funds out of
the treasury to the less prosperous companies, would advance
the rates. But this again, it seems to me, would lead to the
same sort of bitter political debate and attacks on the corporate
management. It would probably be alleged that these weaker
roads, knowing that their income would be provided by the
government in any event, were purposely failing to do their
best.
American industry has made its wonderful progress be¬
cause the industries, and the men conducting them, have been
rewarded for efficiency and penalized for inefficiency. It
is the fear of failure as well as the hope of reward or com¬
mendation that incites men to do their best. A government
guarantee on private capital invested in transportation would
to a large extent remove the fear of failure, but would it
OBJECTIONS TO GOVERNMENT GUARANTEE TO RAILROADS ÇI
be for the public welfare, or be helpful to our industries, which
pay freight rates? If the government could keep rates at a
level that would provide sufficient revenues for all roads to
earn their guaranteed income and operating expenses, why
can we not equally assume that the government will allow
such adequate rates under a system of government regulation,
stimulated to economy and efficiency by private ownership
and initiative, and without the blight of a government guar¬
antee ?
The guarantee is not a solution of this great economic
question, but a patch upon it.
But we are told that weak roads are one of the barriers
to a constructive policy, and some are near bankruptcy. They
are to be regionalized and, ignoring trade routes or com¬
mercial necessities, are to be attached to the strong roads
under a guarantee plan; but the basis no man has worked
out even for a single large railroad system. What is the bene¬
fit of this experiment in furnishing a more efficient transpor¬
tation service? We are testing regionalization under Federal
control. The total estimated rental guaranteed the railroads
in the first class was $900,904,000 and the net railway operat¬
ing income in the calendar year 1917 was $974,778,937. This
existing margin of over $73,000,000 in excess of the guar¬
anteed rental to be allowed the railroads was in favor of
Federal control, and later the expense of corporate officers
and their staffs, and the extra war taxes, were thrust upon
the corporations and the government was relieved. But that
was not all, regionalization and unification, with savings of
advertising, use of short routes, permit system of moving
traffic, mobilization and pooling of equipment, elimination of
outside agencies, ticket and freight offices, elimination of selfish
competition, full train loads, and no empty cars, were to save
hundreds of millions more, and all of this was further assisted
by higher rates. You all know the result. I don't criticise it ;
I appreciate that we have had abnormal business conditions
since the war began, but these are facts. The result could not
have been prevented under government control of policies and
management. Maybe the experiment was worth paying the
price, although I doubt whether the full price is yet realized.
Don't let us get frightened about the task of rehabilitating
92 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
railroad credit or imagine that it is an impossible task. It
is entirely possible if we approach it with the proper methods
and with equitable legislation. We had a Civil War—its cost
was heavy. Compared with the aggregate wealth and position
of our country, each citizen had more national debt per capita
than we now face. We met the cost and it was our pride
to steadily reduce our national debt. Following the war period
the railroads and the country expanded, and laid the founda¬
tion for the greatest progress the world ever saw. It had
some pains and sacrifices, and we cannot escape similar experi¬
ences. It is the price of liberty and progress. We had weak
railroads after the Civil War, but we had a fair chance to
conduct the railroad business and other industries. The
Pennsylvania Railroad had ton mile revenues of about 2^
cents, so that it could pay its taxes, expand its property, and
lease or acquire weak roads even in the war period. It did
this, and gradually reduced the rates as its business justified,
and its solvency was assured. If the roads are allowed reason¬
able rates to properly support the railroad investment and serv¬
ice, and these rates are accompanied by constructive regula¬
tion, the credit of weak roads will like so many weak roads
in the past, be built up gradually by the growth of the country
without taxing the public treasury or breaking down the few
fairly strong roads. They will also be helped by ability to co¬
operate in the use of service and facilities with the strong
roads, and adapt their capital and operating outlays to their
necessities.
The root of our difficulty lies in weak railroad credit, and
Congress must by legislation place the welfare of the public,
which is so intimately intertwined with the transportation sys¬
tems, beyond the powers of any state or Federal commission
to disrupt the entire transportation system and investment.
The way to do this is by a statutory rule that will insure ade¬
quate rates, and responsible regulation. Without such action
there can be no railroad financial rehabilitation.
I suggest that the first step in the program of having the
roads produce an adequate return upon the investment should
be taken by the government itself which now has control of
the railroads. There is no justification in throwing the rail¬
road deficiencies on the backs of the taxpayers through a
OBJECTIONS TO GOVERNMENT GUARANTEE TO RAILROADS 93
congressional appropriation, and if the government itself, in
the control of the properties, has not sufficient courage to deal
with the rate situation as it has dealt with wages and material
costs, then from what source can we expect the requisite
courage to deal with this great business and financial question ?
While wages and material costs are high, that adjustment of
the rate structure to existing conditions should be the first
constructive step in railroad financial rehabilitation, and con¬
stitutes a necessary preparation for the return of the railroads
to their owners after appropriate legislation. The railroads
of most countries face huge rate increases compared with the
ante-war period, and our necessary increases being smaller
than theirs will not place our industries at any disadvantage
compared with those of other war-burdened countries. That
the United States Railroad Administration, and Congress, had
determined to deal equitably with one of the largest invest¬
ments, and probably the greatest consumer of supplies and
one of the greatest employers of labor, would invoke wide¬
spread confidence in our war reconstruction plans.
CONCLUSION
Politics and business have not mixed so far in any country,
and even in the countries under autocratic institutions, gov¬
ernment guarantees or direct government ownership have not
brought initiative, low rates, or anything to commend them
to us here. That is why the railway executives held fast to
the essentials requisite to continue public regulation and make
it effective. I conclude that the immediate remedy for the
railroad situation is
1. Adequate revenues on which the railroad credit may
be strengthened and the new capital attracted ;
2. Concentrated, responsible national regulation, separated
as between its executive and administrative functions, and its
judicial functions, and founded on equitable legislation, that
will require our regulators to insure strong transportation sys¬
tems, and not weak railroads;
3. All railroads under public regulation to be authorized to
lease, acquire or consolidate with any other railroad corpora-
94 the national institute of social sciences
tiens, and reasonable cooperation permitted in facilities, equip¬
ment, and train service;
4. Regulation of security issues;
5. Regulation of wages, with the employee, the employer
and the consumer represented;
6. Funding of the capital debts incurred during govern¬
ment control;
7. Rehabilitation of revenues of the existing railroads
should begin immediately while they are under government
control.
Neither government ownership nor a government guar¬
antee confronts us unless we have reached the conclusion that
the American people so undervalue the public service of their
railroads, and are so determined not to allow fair returns on
the railroad investment, that their legislators, their regulators,
and their courts, expressing their will, can no longer be trusted
to deal equitably with the railroad investment, which affects
the welfare of fully one-half of our citizens by direct owner¬
ship, or ownership through their participation in the savings,
insurance, trust, educational and charitable corporations and
institutions: that the states will continue to increase taxation
on railroad gross and net results and will not concede adequate
railroad rates : that labor will demand the highest wages, and
give the least return and take no interest in the success or
failure of their employers : that the producers will insist upon
their prices and profits, and with the consumers will decide
that transportation results concern no one but railroad inves¬
tors. Then I am willing to admit that private ownership and
initiative cannot exist. Then let the railroads go to a guaran¬
tee plan to be consistent with the rest of the country, but call
it by its real name, gradual but sure government ownership
and operation. I cannot accept the proposition that the public
interests will be so well served or so continuously guarded
under government ownership or government guarantee. Our
history, and the experience here and abroad, is conclusive that
bureaucracy, increased expenses, lack of enterprise and failure
of initiative will inevitably follow either government owner¬
ship or guarantee. Nobody has a deeper financial interest in
the proper solution of this question than the men conducting
the industries represented in the United States Chamber of
OBJECTIONS TO GOVERNMENT GUARANTEE TO RAILROADS 95
Commerce, and they should decide for themselves whether
rates or service will be better under a system of private own¬
ership and initiative, or under governmental ownership or
guarantees. I have faith in the ability and integrity of our
business men, financiers and wage earners; but the country
wants protection against those imported, costly, so-called so¬
cializing experiments, that breed uncertainty and timidity, that
paralyze private initiative, and endanger liberty in our per¬
sonal, business and political life. Convinced that the Ameri¬
can people, when they know the real situation, will deal fairly
with the railroads, let us hold fast to the well tried experience
of individual initiative and management of the railroad lines
owned, not by the government, but by the people and their
institutions, subject to equitable, responsible regulation.
THË GREATER EFFICIENCY OF PRIVATE OPERA¬
TION OF RAILROADS
by a. j. county, vice-president, pennsylvania railroad
company
governmental vs. private operation
Without a doubt the welfare of the country demands that
the government should permanently operate the railroads (and
that means it should own them as well), provided it can be
demonstrated from experience here or abroad that they could
be operated more efficiently by the government than under
our "so-called" private ownership. That legal term, largely
of English origin, is used to indicate that ownership is not
concentrated in the state or municipality but in the private
citizen. At the threshold of this paper I would point out
that such legal designation is frequently misunderstood, be¬
cause it does not state the facts of the present situation re¬
specting railroad ownership. Gur type of ownership is a
genuine public ownership, i.e., ownership by millions of our
citizens and through their savings, insurance, educational, phil¬
anthropic, and other institutions, contra-distinguished from
government ownership by the nation or by a state, municipal
ownership by a city or a county, or private ownership where
one or a few individuals often own an industrial or recrea¬
tional railroad in the operation of, and profits from, which they
are practically solely concerned. But let me return to the
subject. England probably faces the same question of gov¬
ernmental operation, but with the disadvantage that wages
were adjusted to war conditions, while the freight rates were
not, although compared to our average ton mile revenue they
already seem fairly high.* Therefore, it is difficult to escape
some governmental guarantee, or regional plan of operation in
England to insure a fair return on the railroad investment.
* Since 1915 it is estimated that the average annual earnings of English
Railroad workers were increased from $350 to about $900, and in the United
States from $800 to about $1,400.
96
THE GREATER EFFICIENCY OF PRIVATE OPERATION 97
Indeed, as England has a much smaller country thickly popu¬
lated, already well developed with numerous railroads, and
many of them parallel or serving the same general territory,
and having duplicate competitive service, amalgamation and
merger of railroad corporations of England seems a more
simple proposition than the one which would face the United
States, which still requires much more new mileage to develop
its large area. It can scarcely be done even in England without
the loss of much traditional pride and competition in service
that in all might seriously outweigh the estimated benefit of
any unification scheme, and the better course may still be for
Parliament to authorize the companies to effect such corporate
amalgamations and unify such service and facilities as the
Board of Trade may deem to be in the public interest, and
grant adequate rates to sustain the investment under the
changed conditions.
GOVERNMENTAL OPERATION IN I918
Fortunately in our own country, as well as in foreign
countries, we have the results of government operation as a
guide to our conclusions in considering the important question
of governmental vs. private operation. We should not hesitate
to utilize the experience of Federal operation in our own
country for the year 1918, if beneficial. The roads were then
formed into non-competing operating regions, directed by
regional directors, acting with and for the Director General
and his staff of departmental directors covering every depart¬
ment of railroad activities. There existed a unification of
roads, routes, offices, agencies, facilities and equipment, in¬
cluding cooperation with the waterways, and a similar unifica¬
tion of accounting, finance and purchases. The powers of
the Director General over rates and traffic were practically
without limitation, and the approved capital budget for addi¬
tions and betterments to the roadbed and equipment was for
items which would increase operating efficiency, and help carry
a larger volume of business. The government had the most
sympathetic help from the entire nation, and the officers and
employees of the railroads, and the citizens had the impetus
of war and patriotism to stir them to the best endeavors. The
98 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
luxuries of traveling were eliminated, and the anti-trust and
Other restrictive Federal and state measures were held in
abeyance. Hire of equipment and insurance and other charges
were also eliminated, and other accounting short-cuts, applica¬
ble only to a unified system, were used to save expenses. Rail¬
road administration expenses were further saved by requir¬
ing the railroad corporations to appoint and compensate their
own officers and employees, pay for their own offices and main¬
tain their own fiscal, accounting, inspection and executive or¬
ganizations without any allowance from the government, al¬
though the corporate organizations were essential to assist the
administration to carry on railroad affairs, make financial and
accounting settlements, and carry out the terms of the Federal
control contract and see that their property and equipment
were suitably maintained. Even the hundreds of millions of
working capital consisting of materials and supplies on hand
and in the possession of the railroads were taken over by the
government as a feature of Federal control. Every working
element was adapted and unified by Federal orders to obtain
the best results as a single railroad system, and the public
rarely winced. There was one serious obstacle to achieving
the greatest transportation record the country has ever known,
and that was the increased number of inexperienced men in the
railroad service compared with preceding years.
The final operating results for the year 1918 and the ac¬
companying costs and statistics are not yet available, but the
year 1918 closed with expenses increased $1,148,000,000 over
1917, or 40 per cent, and a deficit of over $200,000,000 to the
Railroad Administration in earning the standard compensation
required to be paid to the railroads. That compensation being
based on the three-year test period ending June 30, 1917, was
regarded as moderate for it amounted to only about 5.2 per
cent on the total investment on December 31, 1917, of the
railroads in their roadbed and equipment provided for public
use. Questions of cost and efficiency cannot be swept aside in
deciding a permanent railroad policy, and will continue basic to
the citizens of the country who wish to preserve its commercial
and financial standing, and buy and sell in the markets of other
countries, unless we are to have a national policy like many of
the foreign nations which, for military or other national pur-
THE GREATER EFFICIENCY OF PRIVATE OPERATION ÇÇ
poses, own and operate their railroads largely to effectuate that
policy and throw higher costs into general taxation. One seri¬
ous element of cost in 1918 was the increase in wages author¬
ized by the Federal government. An increase was equitably
due the railroad men, but that granted equalled the total annual
compensation to be paid by the government to all of the rail¬
roads for the possession and use of twenty billion dollars of
property and equipment. That railroad employees should be
adequately paid is beyond question, but the annual wage
increase was equal to about 150 per cent of the total
capital expenditures for additions and betterments to the rail¬
roads and their equipment in 1918, and it was equal to about
4^4 per cent on the total railroad investment of the country.
Quite a notable wage increase was made without much ref¬
erence to whether living costs in New York City exceeded
Maine or Alabama. But increased wages were not the only
increased costs over 1917, the employment on the railroads of
larger numbers of employees to produce the same amount of
transportation service, and, I think, the transfer of administra¬
tive and operating questions in large part from the local rail¬
road officers to the central administration at Washington, or
to the regional officers, and the creation of numerous bureaus
requiring service and information of all kinds to the great
detriment of the regular work, proved a large factor. All
things considered, with a new and different organization, it is
a wonder things went as well as they did. A trained and
disciplined organization and final responsibility directly cen¬
tered on the home ground are great factors in retaining rail¬
road efficiency, and these were lacking.
As I have friends on both the corporate and Federal side
of the railroad question, I must be rather circumspect but I
judge from the recent testimony by the users of railroads be¬
fore the Senate Committee on Interstate Commerce and ex¬
pressions in the public press, and from those who ship and
travel, that neither the railroad men, the shippers nor the gen¬
eral public were satisfied, and the little additional traffic
carried, compared to the performance by the individual com¬
panies with all legal restrictions and confusion, did not ap¬
parently Justify the taking over of the railroads from an eco¬
nomic standpoint. However, the government in a war period
loo THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
required a free hand to deal with labor and material prices, and
with financing, as it proposed to monopolize the markets for
liberty bonds and other government financing. Summed up
for one year it did not justify itself as a permanent railroad
policy on the score of either service, low costs, or political
benefits. Compromise and delay could not be kept out of the
situation, notwithstanding the good intentions and patriotism
of all concerned ; and the concentration of a large number of
railroads into non-competitive operating regions did not point
any royal road to great savings or efficiency. Instead, it to a
large extent disrupted the trained organizations and orderly
traffic movement and use of facilities already existing on the
various roads, and left open many questions and settlements
as to the maintenance and improvement of the properties that
it will take years to adjust. Fifteen months following the ef¬
fective date of Federal control finds the larger number of con¬
tracts for the possession and use of the railroads still incom¬
plete, and the government is largely indebted to the railroad
owners and to those furnishing railroad supplies and carrying
on contract work. This operating experience does not differ
very much from the government control of other industries,
but the railroads probably fared better because so many expe¬
rienced men were asked to assist in the conduct of their affairs,
although others directed the policy they were to carry out.
Congress adjourned without making the appropriation essen¬
tial for carrying on the work of the railroads. We saw the
humiliating spectacle of the United States failing in the punc¬
tual performance of its financial and other obligations, and the
railroad question became the football of party expediency.
Similarly in five months' operation by the government of the
American telephone service a deficit of $4,000,000 is reported,
and something like a general increase in wire rates will be es¬
sential to wipe out the deficit, and hide future deficits by that
process, but the public pays the deficit just the same.
The truth is that many of the programs and policies of
1918 now appear to have been too novel and too ambitious
compared with the means and organization available to carry
them to success, and such ordinary features as upkeep of
properties and output of service, show the results. Many of
the men who started them have resigned, and the results must
tHE GREATER EFFICIENCY OF PRIVATE OPERATION lOl
be assumed by their successors who may, or may not, have a
different policy. But would these results change in peace con¬
ditions under government operation? Would the changing
party officers and conditions be able to formulate and adhere
to a continuous constructive policy covering the whole coun¬
try? If the government were supreme as an owner or guaran¬
tor, could we change the effects of the war period into effi¬
ciency as great as that of the privately operated companies
subject to reasonable governmental regulation? We have
reached practically a peace condition now, and we are sup¬
posed to keep politics out of the railroads, yet, as above stated.
Congress adjourned without providing the appropriation to
pay administration debts and railroad rental already overdue,
and unless the railroad corporations had assisted the govern¬
ment by the use of their individual credit, or the War Finance
Corporation had come to the rescue, it would have been hu¬
miliated by inability to pay its railroad debts and must have
economized at the expense of the road and equipment, if not
of the workers, and have relied on the railroad corporations
assisting themselves instead of the government carrying out
its obligations written and implied as features of Federal con¬
trol.
STATE AND MUNICIPAL OPERATIONS
A negative answer comes to the foregoing questions from
our own state railroads and public improvements in the past.
Political management, political capital expenditures to favorite
districts and favorite schemes were prevalent, political ap¬
pointments, and political purchasing and pass favors were the
records that the privately operated roads inherited from these
past experiences. The story of the Federal government's own¬
ership and control of the Union Pacific furnishes another rec¬
ord, with representatives of the political parties serving on its
board, and the long period during which the United States
dictated its management, while the great fertile empire west
of the Mississippi languished for transportation facilities and
enterprise. Private ownership, initiative and enterprise
changed this. Governmental operations on Canadian roads
versus the privately operated roads in that country confirm the
inefficiency and higher costs of the governmental roads. Even
I02 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
to-day with all of our progress the present experiment in
Massachusetts of "transportation at cost" by state regulated
transit in Boston tells the tale of poor service with costs ex¬
ceeding the seven cent fare and still rising; and in New York
City the subway municipal ownership still retains the five
cent fare, but the city must force the taxpayers to sustain its
rapid transit investment of probably two hundred millions or
more through general taxation.
FOREIGN EXPERIENCE
Appreciating that while the railroads of almost every coun¬
try, except England and the United States, are operated as
government owned roads (although only one-third of the total
world mileage is government owned), we must refer to the
experience of other countries in recent years for proof as to
the inefficiency of government owned vs. privately owned
roads, and we must use 1913, before the war, largely, as the
most trustworthy comparative basis. French lines although
worked under the guarantee plan, have in many features be¬
come government operated roads, and in 40 years all lines will
be government owned roads.
HIGHER RATES ON FOREIGN ROADS
From reliable sources we find that in 1913 the ton mile
revenue of Germany was 1.24 cents; France 1.16 cents, and the
United States only 0.72 cents, notwithstanding higher wages
and other costs and the heavy tax payments the railroads of
the United States made to the national, state and municipal
governments. Attempts are made to explain away these low
freight rates in the United States as against the most efficient
of government owned or government guaranteed roads of
Europe. At the request of the Senate Committee on Interstate
and Foreign Commerce, Professor Adams, then in charge of
the railroad accounts of the Interstate Commerce Commission,
prepared in 1905 a table of specific freight rates on chief com¬
modities for each country—bituminous coal for 300 to 600
miles the American rate was .33 of a cent to .52 of a cent per
ton mile as against the Prussian rate of .72 of a cent to .82 of
THE GREATER EFFICIENCY OF PRIVATE OPERATION IO3
a cent per ton mile ; woolen and cotton yarns, coffee, tobacco,
etc., showed a marked difference in favor of American rail¬
road rates. Later the Bureau of Railway Economics made
studies of average ton mile rates on bituminous coal, iron ore,
lumber, grain, stone, fertilizer, etc., with those charged in
England, France and Germany, which verified the very rea¬
sonable freight rates we enjoyed under private operation in
this country. Whether the country can have such low rates
in the future depends on the enterprise of our railroad men
in cooperating with our business men, and on the efficiency
and loyalty of our labor, and also upon the freedom of the
railroads from conflicting and meddlesome regulation, and
seriously growing taxation, often the product of wild appro¬
priations for useless waterways and other projects intended to
compete with the railroads.
Government ownership and operation can promise no re¬
duction in rates. Have we been able to obtain lower rates
permanently on any government operated public utility that is
charged with the necessity of earning a return on the invest¬
ment? From Panama to Alaska the answer is "No."
HIGHER CONSTRUCTION COSTS ON FOREIGN ROADS
Can we gain anything from employing the construction
and capitalizing methods of government-owned lines of
Europe? Our cost per mile of main track is about $56,000;
France, $104,000; and Germany, $86,000. Some persons at¬
tempt to explain away this substantial difference by claiming
higher real estate cost for Europe, but they ignore the higher
labor costs here, and also that American railroad capitalization
has been shaken down by successive reorganizations, fore¬
closures, etc., so that the charge of watered capital has little
or no foundation any longer, and American construction
methods have been more effective than those of Europe.
LOWER WAGES ON FOREIGN ROADS
Is there any working man that can claim he can benefit
in wages by the government-owned and operated system?
The average yearly compensation of railway employees in the
I04 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
United States and foreign countries whose railway systems
were owned and operated by the government were, in the
year 1913 : United States, $756.83; Austria, $335.90; Germany,
$408.97; Hungary, $300.41 ; and Italy, $376.81. On this wage
basis railroad charges in the United States would, of necessity,
have to be much higher except for the greater efficiency.
TAXES
If the roads are operated by the government the general
taxation must be increased to raise about $200,000,000 to
$225,000,000 per annum for our state, municipal and Federal
governments, heretofore paid by our privately owned railroads.
Generally the government owned and operated roads in foreign
countries escape the necessity of paying taxes and earning
interest on the cost, and the capital accounts are used liberally
for all betterments, and yet they are compared with our rail¬
roads. There is no comparison that should convince us to
adopt government operation or ownership.
EFFICIENCY
Shall we go to the government operated railroads to learn
efficiency? "No" is the answer if Vi^e look keenly into the
situation. So far as passengers are concerned there are
many countries with much lower fares, but the accommoda¬
tions are also much lower, and when we reach equality of ac¬
commodations and convenience with the standard of this coun¬
try there is nothing to attract us. In the matter of freight
train loading, the average load on our roads, taking the country
as a whole, is more than twice that of a country like Germany.
The German railroad system before the war was regarded as
practically free from changing political control, but in actual
experience, leaving aside construction costs, higher rates, free¬
dom from state taxes, and other charges imposed on our roads,
the system is not adapted to America. The charge for baggage
is very much more excessive. Often to the freight rates are
added special charges for loading and unloading. Less than
carload lots are at practically prohibitive rates compared with
carload lots, and in fact collection agencies to obtain full car¬
loads are a necessity of the situation, to obtain rates upon
THE GREATER EFFICIENCY OF PRIVATE OPERATION 10$
which smaller quantities may move, and the collecting agencies
are compensated by charging the shipper a rate ranging be¬
tween the rates on carload and less than carload lots. Ger¬
many has not been free from increased rates when the needs
of the government treasury require them. Fast freight service
is generally charged double rates. Notwithstanding the use of
autocratic powers the complaints of car congestion, high rates,
high operating ratios, and low wages are made. American
railroads have revolutionized their equipment and methods of
operation but Prussia clings to old equipment and old methods.
Mr. Acworth, the English authority, stated this and added: "It
would be difficult to point to a single important invention or
improvement, the introduction of which the world owes to the
state railway." Austria, France, Belgium, Italy and Australia,
tell pretty much the same story of unification but with in¬
creased offices, increased personnel and increased cost and
often bad service. They do not differ much in experience from
our own roads when operated by the states. If this were an
extensive economic treatise I could fill it with figures that
would abundantly demonstrate that the United States under
ownership by its citizens, and operation under competitive con¬
ditions and individual initiative, has provided the most efficient
as well as the most economical transportation system of the
world. That position was not achieved by magic, but by an
ownership individually by millions of our citizens and through
their savings, insurance and other institutions; by individual
initiative and enterprise to reach the natural resources of
mines, forests, and agriculture, and, unlike other countries,
opened up the country to be populated rather than to follow
the population; and they also spread out to and from the
important ports, cities and commercial routes. They risked
their capital and gave a service that could prosper only by
accommodating the public, and by improving tracks, equip¬
ment, and facilities that increased the train loads and freight
traffic volume above any other country of the world. What
our railroad system may do in the future when returned to
their owners depends largely upon the effects of Federal con¬
trol and future governmental regulation of rates, and the
condition of their working organizations and the property and
equipment.
I06 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
SUMMARY OF FOREIGN EXPERIENCE
The men on whose shoulders the commercial and social
prosperity of the country rests, no matter what political party
is in power, should study these results. Their enterprise would
be compelled to carry the burden of governmental operating
costs. For their benefit I add that W. M. Acworth, Esq., Eng¬
lish economist above referred to, concluded his testimony be¬
fore our joint sub-coftimittee of the House and Senate on In¬
terstate and Foreign Commerce in May, 1917, as to the experi¬
ence in foreign countries with government-owned and oper¬
ated roads, in this way:
"President Hadley (of Yale) has summed up the conclu¬
sions of the Italian railway commission, based on the railway
experience of the world as it existed 35 years ago, as follows:
"(i) Most of the pleas for State management are based
upon the idea that the State would perform many services
much cheaper than they are performed by private companies.
This is a mistake. The tendency is decidedly the other way.
. . . The State is much more likely to attempt to tax in¬
dustry than to foster it.
"(2) State management is more costly than private man¬
agement. . . .
"(3) The political dangers would be very great. Politics
would corrupt the railroad management, and the railroad man¬
agement would corrupt politics.
"The essential lesson of the history may be said to be this :
It is impossible to obtain satisfactory results on Government
railways in a democratic State unless the management is cut
loose from direct political control. Neither Australia nor any
other country with a democratic constitution—perhaps an ex¬
ception ought to be made of Switzerland—has succeeded in
maintaining a permanent severance. The Australian Parlia¬
ments have loosened their hold for a few years, but only for
a few years. In France, in Belgium, in Italy parliamentary
interference has never been abandoned for a moment. With¬
out imputing a double dose of original sin to politicians, it is
easy to see why this happens. The railways belong to the peo¬
ple. It seems therefore to the ordinary citizen only right and
natural that parliament should control the management of the
people's railways. And yet facts are stubborn things ; and the
facts show that parliamentary interference has meant running
the railways, not for the benefit of the people at large, but to
satisfy local and sectional or even personal interests. They
show further tliat, under parliamentary management, it is
THE GREATER EFFICIENCY OF PRIVATE OPERATION lO^
easier to get money for big schemes of new construction than
for inconspicuous day-to-day betterments and improvements
which probably would produce much greater public benefit.
Some day, perhaps, having learned wisdom by experience, a
parliament and a people may recognize that management for
the people is not necessarily management by the people."
His experience is supported by the views of other eminent
foreign economists.
IS GOVERNMENT FINANCING A SUFFICIENT OFFSET TO HIGHER
OPERATING COSTS?
The policy of government ownership and operation has
received a rude shock in the United States, but its advocates
are by no means asleep. They still cling to the idea that in
some fashion even if the government could not permanently
operate as cheaply as the private management it could finance
the roads cheaper. They are very solicitous about our weak
roads, and urge unification with the strong roads and a gov¬
ernment guaranty of about 4 per cent. Our present and past
experiences should be enough to bury these ideas. Anything
providing an opening wedge for governmental interference and
control tends to an ultimate ownership. It is frequently stated
that the United States could finance the roads on a 4 per cent
or 4)4 per cent basis, whereas the private companies would
average about 6 per cent for new capital money. Now as to
this, the war has proven, first, that most of the financing con¬
nected with the railroad control both for the corporations and
the government will cost 6 per cent in interest charges, that is,
for the large addition and betterment program of capital ex¬
penditures, the government charged 6 per cent to the corpora¬
tions until the work was finished and then it allowed the com¬
panies 6 per cent on the total capital cost of such improve¬
ments; second, the war period demonstrated that when any
country undertakes a financial responsibility of twenty bil¬
lions, to be increased probably three-quarters of a billion to one
billion per annum for capital improvements and investments,
it naturally creates such increased obligations as to materially
affect the interest rates and market prices of its own securities.
Citizens bought many Liberty Bonds on the basis that a dollar
Io8 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
invested in our government securities would be worth its face
value only to leam by experience that government bond prices
were affected by supply and demand, and sold for several dol¬
lars below par. Governmental cost of financing in England
during the war was not, I believe, any cheaper than that of
its best railroads. Even if the government could finance some¬
what cheaper the new railroad capital requirements, they are
small compared with the annual operating expenses. But it
is clear from past experience that whatever saving might be
effected through lower interest rates would be easily wiped
out by loss of operating initiative, costly political operation,
by increased number of bureaus and employees, and log-rolling
improvements that in time would arise in our form of demo¬
cratic and changing party government.
WEAK AND STRONG RAILROADS
Further, even a guarantee by the government increases its
fixed charges, and with the loss of taxes now paid to the gov¬
ernment—state and Federal—by the railroads would mean a
resort to higher taxation of business. Higher transportation
rates would be, in part, the cure. We must never expect to
have all roads equally strong financially and physically, and we
must not expect the government to underwrite the bad policy
of poor location or inefficient management. The best way to
strengthen weak roads in time is to allow all roads in each
traffic territory rates that as a whole are adequate and will
produce fair returns on the investment in that territory. That,
and the prevention of the construction of unnecessary lines and
facilities, will improve weak roads, and also make the better
established roads in the same territory able to have sound
credit, and in time probably purchase and merge these weaker
lines. Heretofore neither weak nor strong roads have been
equitably dealt with in the rate situation for many years, and
the result has been lack of development ; our railroad investors
in either weak or strong roads cannot expect a government
guarantee without paying for such a guarantee by reducing the
value of their properties or the volume of their securities,
or the return thereon. A guarantee in substance means an all
around reorganization which the country should not be com-
THE GREATER EFFICIENCY OF PRIVATE OPERATION IO9
pelled to face in the war reconstruction period. Instead, the
business necessity of adequate rates should be faced, so that
those who got the benefits of the railroads should pay reason¬
ably to support them. In addition, the multiplicity of detailed
regulation should be modified—it is costly and saps the vitality
of individual initiative, because the regulators have assumed
the position of general managers without any corresponding
financial or other responsibility for future results.
CAN THE FEDERAL RESERVE SYSTEM BE APPLIED TO RAILROADS?
The Federal Reserve System, with its regional banks, has
made our banking so sound and elastic that it is often referred
to as applicable to adjust the railroad situation. I think there
is some force in that suggestion, but my estimate of the success
of our banking system is this—it has had the benefit of con¬
centrated Federal control, and state banks often take out Fed¬
eral charters to carry on state and interstate banking business.
Each bank has its local management, and the government al¬
lows it the right of private initiative and management to carry
on a most active banking business in competition with other
institutions of the same and other territory, so long as its
methods are honest and legal. The regulatory powers exer¬
cised through the Federal Reserve Boards and the District
Federal Reserve Banks are so constituted that they cannot
become purely political. The boards are required to be di¬
rected by representatives of the banking business, commerce,
agricultural, or other industrial pursuits, in addition to repre¬
sentatives of the government, and in the case of the Federal
Reserve banks the stockholders are also represented. Theo¬
retically we have enough machinery for railroad regulation
but we need the mandate of constructive railroad laws. We
need the concentration of responsibility on some central regu¬
latory body for not only revenues, but outgo and final railroad
results and credits, and we need to add to the railroad regula¬
tory bodies experienced business men with interests strong
enough to enforce a national policy to insure the development
of the transportation facilities and the credit of the railroads.
This can be done without placing the burden of financing and
management upon the government, and if it is done we can
no THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
avoid the politicalization of railroad ownership, management,
employees, railroad capital expenditures and service. It is a
time to speak plainly and act promptly, for in a reconstruction
period, such as we are now facing, it would be a great impetus
to steady employment and industrial and commercial condi¬
tions if a stable constructive railroad policy that would keep
alive individual initiative could be promptly enacted by the
Federal government.
CONCLUSION
In conclusion, we have large territory and extensive natural
resources still requiring development by the railroads, the ex¬
isting railroads must be regularly improved and expanded,
terminals, yards, warehouses, shops, etc., must be improved
and kept modernized, and in many places electrification should
be undertaken to cheapen and increase the transportation out¬
put. Initiative, enterprise and finance must have free play
under constructive public regulation, or these necessities will
not be forthcoming. I cannot gather from our experience at
home or abroad anything that justifies the substitution of a
government owned or operated railroad system, or even gov¬
ernmental regional non-competitive systems worked by private
railroads with government guarantee, unless we are convinced
that the railroads cannot expect adequate rates and a fair
return on the investment from the regulatory and judicial
authorities, and that American business men are willing to
bury personal initiative and competition in railroad service,
and that America's working men have determined that all rail¬
road profits shall go to them and little or none to the capital
of their fellow citizens on which the whole railroad enterprise
of the past is based and who must provide the capital for
future expansion. If we have reached that deplorable condi¬
tion then government ownership and operation with all its
economic and political evils and waste is the only refuge.
I am convinced that American citizens have not reached that
state of mind; there was no evidence in the recent Senate com¬
mittee inquiry on the railroad situation to indicate that any
large part of the citizens who depend on railroad service de¬
manded government operation or ownership, but rather, as a
THE GREATER EFFICIENCY OF PRIVATE OPERATION III
whole, they desired private initiative and operation continued,
with the railroads owned by the public and their institutions.
The quicker we get back to that condition under reasonable
and not punitive regulation, and allow adequate returns to be
earned, will we terminate a very artificial situation, and hasten
readjustment to normal conditions without jolting business,
finance or the wage earner. What is now required to restore
confidence in Federal control of railroads and remove some
financial uncertainty, is for the government to promptly con¬
clude the contracts for the possession and use of the railroads
since January i, 1918, make regular quarterly payments of the
standard compensation, provide a means to finance capital
expenditures, and by all means to pay its own railroad current
supply bills, and provide working capital essential to carry on
such a widespread national instrument as the railroads.
ADDENDA—CONDITIONS IN JUNE, I9I9
Since the foregoing paper was prepared several important
events have taken place which seem to strengthen the position
outlined.
1. The War Finance Corporation has been utilized to assist
in financing the railroads since the failure of Congress to pass
an appropriation in the last session.
2. The President of the United States has convened Con¬
gress by a special message from France in which he advocates :
(a) The return of the wire system to private operation,
and that has now been accomplished in part.
(b) Preparation for the return of the railroads to the
owners not later than January ist, 1920.
3. The Director General requested Congress to approve an
appropriation of $1,200,000,000 for railroad purposes. Con¬
gress declined to make any appropriation at present of a figure
beyond $750,000,000, although there is no doubt that the
$1,200,000,000 is necessary.
The Director General's statement to Congress indicates that
for requirements of 1918, including improvements, etc., over
$941,000,000 was required, less $500,000,000 heretofore appro¬
priated by Congress, leaving a balance of $441,000,000. This
with $758,000,000 estimated requirements for 1919 made up
THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
the total appropriation of $1,200,000,000 desired from Con¬
gress. The Federal control estimated requirements for 1919
include an operating deficit for the first four months of that
year of $250,000,000, while the similar deficit for the year 1918
was over $236,000,000.
The question of an increase of rates to place the railroads
on a self-sustaining basis is recognized as imperative, but the
Director General has taken no action in the matter because he
believes it would tend to increase the cost of living, and that if
the government should undertake to raise three or four hun¬
dred million dollars through increased rates to take care of
the situation, it would probably be found that the increase in
prices resulting from railroad rates would cause the ultimate
consumer to pay three or four times that amount in the last
analysis. Legislation has also been introduced which would
take from the Director General power to increase rates, and
restore these powers to the Interstate Commerce Commission.
The suggestion that fewer systems of railroads should be
evolved, and that the strong roads are getting enough to sup¬
port the weak has had a rather bad shock by the discovery that
out of eighty-six systems, which have about 94% of the total
railroad revenues of the country, only eighteen of them during
the test period of three years ending June 30th, 1917, had
earnings equivalent to over 6% on their property investment,
representing 35^2% of the total operating revenues of the en¬
tire eighty-six systems, thus leaving about sixty-eight of the
systems with returns of less than 6%, and these sixty-eight
systems had 64^2% of the operating revenues of the eighty-six
systems. To attach the weak to the strong systems without
an increase of rates would mean that both would break down.
There is also an insistent public demand that the railroads be
returned to private ownership at the earliest possible date.
Unless the public are content to continue to make up railroad
deficits from the public treasury, this raises the practical ques¬
tion of how the railroads are going to be rehabilitated unless
the rates are first increased to meet increased costs and re¬
store railroad credit, and unless the properties and equipment
are returned in first-class operating condition. So far no al¬
lowance has been made in the railroad accounts for deferred
maintenance due to the lack of men and materials in 1918, and
THE GREATER EFFICIENCY OF PRIVATE OPERATION II3
the policy is apparently being practised of cutting maintenance
to the bare bone so as to enforce economies. Provision must
also be made for the funding of amounts due to the govern¬
ment by the various railroads on account of capital expendi¬
tures made during the period of government control in 1918
and 1919. The necessity for the closest cooperation between
the Railroad Administration and the Railroad Corporations is,
therefore, evident to avoid future claims and controversies,
and to insure the return of the railroads in a condition to
properly serve the public and possess the ability to finance
themselves without government support.
EFFECTS OF GOVERNMENT OWNERSHIP ON DE¬
VELOPMENT AND EFFICIENCY OF RAILROADS
BY JOHN J. ESCH, CHAIRMAN, COMMITTEE ON INTERSTATE AND
FOREIGN COMMERCE OF THE HOUSE OF REPRESENTATIVES
As a premise to the consideration of this subject the finan¬
cial burden which could be imposed upon the government were
it to acquire ownership of the railroads ought to be first con¬
sidered.
On December 31, 1918, the outstanding obligations of the
government amounted to $21,000,000,000 with an annual in¬
terest charge of about $1,000,000,000. About $18,000,000,000
will be required for the fiscal year of 1919, and possibly $10,-
000,000,000 for the fiscal year of 1920. Notwithstanding
many of these billions will be raised by heavy taxes the re¬
mainder must be raised by sale of bonds, the interest on which
will be added to the interest charges we must already pay.
The total capitalization of the railroads is about $20,000,-
000,000, of which $8,755,000,000 is stock. If, as many pre¬
dict, the physical valuation of the roads should equal their cap¬
italization the government to acquire title and possession would
have to pay the $8,755,000,000 for the stock and assume the
bonded indebtedness and interest thereon or on its own bonds
issued in exchange. This would mean more debt and more
interest and raise the total to staggering proportions.
Government ownership following upon the heels of a
world's war and adding to the billions of indebtedness which
that war has entailed, billions more, would have a deterrent
effect upon transportation development for a time at least.
After the Saturnalia of these last two years Congress would be
influenced by the demand for lower tax burdens and a greater
economy in the expenditure of money. With the railroads
restored to private ownership and control with the prompt
recuperation of the nation's business attendant upon peace
there would return to the railroads that initiative, that enter¬
prise and spirit of development which have characterized them
114
EFFECTS OF GOVERNMENT OWNERSHIP ON EFFICIENCY II5
from the beginning and made of them the greatest system in
the world.
The motive for government ownership in some countries
like Germany is military necessity, in others like Canada po¬
litical necessity, in others like Australia financial necessity,
and in still others a combination of these. In small countries
like Belgium, Switzerland and Japan the fear of domination
of business interests by foreign capital was the impelling mo¬
tive. In the United States none of these reasons can be
claimed as sufficient justification. Relief from burdensome
regulations, strikes, excessive rates, Wall Street control it is
urged will result from government ownership. Government
ownership will not obviate the necessity of government control.
On the contrary, as in the case of Germany, it will enlarge it.
Strikes have occurred on the government-owned roads in
Australia, New Zealand, Italy and Canada. As to rates no
country, prior to the war, enjoyed such low rates as the United
States. Wall Street, or the so-called bankers' control, can and
ought to be eliminated by giving to the Interstate Commerce
Commission authority to regulate stock and bond issues.
In the matter of development the government cannot secure
as good results as its citizens who are actuated by the laudable
desire to secure a fair return upon a fair investment even when
rigidly regulated by the government. If our railroad construc¬
tion had been the function of the government from the be¬
ginning the roads might have been better and more strategically
located, but there would have been fewer of them and we
would not to-day have a population of over 100,000,000. If
the experience of some of our own states and of Canada be
recalled we may even doubt the superior wisdom of govern¬
ments in locating and constructing their own lines. When in
the fifties North Carolina started her state railroad she built
it in the shape of the letter U, yielding to political pressure and
the wishes of high state officials. The Intercolonial of Can¬
ada, which for the fifty years of its operation has netted a loss
of many millions to the taxpayers, is government owned and
operated and so located as to make it impossible to compete
with its privately owned competitors, the Grand Trunk and the
Canadian Pacific.
Railroads exercised a baneful influence in politics for many
Il6 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
years but due to state and Federal laws this influence has been
largely eliminated. With government ownership and the ne¬
cessity of submitting an annual budget to Congress to provide
for new lines, additions, extensions and betterments would not
all manner of political pressure be brought to bear upon Con¬
gress to secure an apportionment of the appropriations for
such purposes by districts and states as now obtains in the
matter of public buildings and river and harbor improvements?
No matter what agency might be created by law to expend
money for such purposes Congress, by controlling the purse
strings, could have its way. Transportation development under
such circumstances would be sectional, uneconomical, and
often not in the public interest. In many states large sections
are still without railroads, in others it would be claimed that
existing lines should be double tracked, in others costly termi¬
nals should be suppfied. To attain these ends log-rolling and
other questionable legislative practices might be resorted to.
Even an enormous war debt and the debt imposed by govern¬
ment ownership might be insufficient to suppress the voting of
many questionable appropriations. Under private ownership
these evil temptations would be impossible. France through
political pressure a few years ago was forced to take over the
Western, a weak and struggling road, and has found it a
burden ever since. In Germany members of the Reichstag
have clamored for the construction of costly depots on lines
in their several districts. The same is true as to members of
the Canadian Parliament through whose districts the Inter¬
colonial runs.
Under government ownership transportation of commodi¬
ties from place to place, from point of production to point of
consumption, on one road or another road might become
aggravated political issues in comparison with which the mak¬
ing of a tariff bill would be the task of an infant class. Under
the existing order such far reaching problems as the ship¬
ment of grain from the mid-west to the Atlantic or Gulf ports,
or the proper differential on shipments from Chicago to the
ports of Boston, New York, Philadelphia and Baltimore are
left to the untrammeled judgment of the Interstate Commerce
Commission. Ownership in such matters would incite a de¬
sire to control through Congressional action and lead to sec-
EFFECTS OF GOVERNMENT OWNERSHIP ON EFFICIENCY II7
tional controversies. What a temptation there would be to
win favor by securing a reduction of rates to one's constit¬
uents by Joining with others having a like purpose! En¬
forcement of rates sufficiently high to meet all expenditures
on the part of the commission might be rendered difficult
because of the attitude, which long has been maintained as
to the Post Office Department, that being owned and operated
by the government it was not to be run for profit but for the
general good.
Government control under the existing Federal Control
Act would be the control in all essentials under government
ownership. Has such control met expectations and promoted
the demand for government ownership? We believe it has not.
The few economies that have been effected do not compensate
for lessened freight and passenger service. Notwithstanding
the zeal and the ability of the Director General and his staff
and the great difficulties arising out of the exigencies of the
war the character of the Federal control and the extent and
manner of its exercise have caused many former advocates to
doubt the efficacy of government ownership. There has been
no transportation development during the fifteen months of
Federal control and there of course has been no construction
of new lines. Nor has there been the normal increase of
rolling stock, nor, in many instances, the proper maintenance
of way and equipment.
A state of war and the prime necessity of subordinating
everything to the movement of men and munitions may be
urged in extenuation and yet our people had hoped that under
unified control with limitless power and financial resources
a better showing might and ought to have been made. With
full control under government ownership in time of peace
we are not sanguine that there would be better results. Delay,
higher costs and greater waste and extravagance which seem
to inhere in all government activities would inevitably follow.
The bureaucracy, which ownership would result in, deadens
initiative, dulls ambition and retards development. An apt
illustration is at hand in the building of the Alaskan Railroad.
Under the act approved March 12, 1914, $35,000,000 was
authorized for the construction of the main line at an esti¬
mated cost of $50,000 per mile. Although five years have
Il8 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
elapsed only 228 miles have been constructed and at a cost of
$141,441 per mile. The appropriation authorized has already
been expended with over 100 miles uncompleted. The over¬
head expenses, as is characteristic of all government work,
were excessively high. The National Transcontinental of
Canada, estimated to cost $34,083 per mile, was constructed
by government commissioners at a final cost of $99,000 per
mile, competing private roads being capitalized at from one-
third to one-half that amount. Such examples would make
Congress hesitate to vote appropriations for any extended de¬
velopment or if, yielding to pressure, it made the appropriation,
the development would be at too great a price to insure even
operating expenses.
THE EFFECT ON EFFICIENCY
It has been a fundamental doctrine in the two greatest
democracies in the world, England and the United States, to
leave to the individual fullest scope for his activities without
encroachment by the government. Hope for reward stimulates
inventive genius; the certainty of tenure in office at a fixed
salary deadens it. Herbert Spencer says :
"We did not get from the State the multitudinous useful
inventions from the spade to the telephone; it was not the
State which made possible extended navigation by a developed
astronomy ; it was not the State which made the dis¬
coveries in physics, chemistry, and the rest which
guide modem manufacturers; it was not the State
which devised the machinery for producing fabrics of
every kind, for transferring men and things from place to
place, and for ministering in a thousand ways to our com¬
forts. The world-wide transactions conducted in merchants'
offices, the rush of traffic filling our streets, the retail distribut¬
ing system which brings everything within easy reach and
delivers the necessaries of life daily at our doors, are not of
governmental origin."
Our most successful railroad managers and presidents have
come from the ranks with promotion based on merit and not
merely length of service. Their skill, fitness and executive
capacity met with prompt recognition and suitable recompense.
They were not handicapped by the dull monotony and hopeless
EFFECTS OF GOVERNMENT OWNERSHIP ON EFFICIENCY II9
state of employees in the classified service. It was because
our railroads were developed under private initiative, the spur
of reward with an open field, that they have become the most
efficient in the world. This is true of whatever test may be
applied. If financial, our capitalization is less per mile than
that of any other country having the same standard gauge
and with passenger rates first class and freight rates the lowest.
If economical, our average freight train load is the greatest
and more units of traffic are moved per employee while at the
same time paying the highest wages. We have the best pas¬
senger service open to all on equal terms. We have not as
yet felt inclined to demand second, third and fourth class
accommodations with correspondingly lower rates although
this may be necessary with the increase in population and
desire for travel.
As a rule, higher efficiency in both administration and op¬
eration is found in private industry than under government.
The necessity of making expenses and a reasonable profit com¬
pel strictest economy and avoidance of waste. Government in
industry, whether it be transportation or otherwise, is not
embarrassed by fear of a deficit. Salaries and number of
employees are not made to bear so close a relationship to out¬
put. In Germany, where efficiency in the operation of rail¬
roads is higher than in other countries having government
ownership, there are 2,077 employees to each 100 miles of road
as compared with only 624 in the United States.
President Elliott of the Northern Pacific in a recent address
stated :
"The Pennsylvania system furnishes 12.2 per cent of the
total ton mileage and 14^^ per cent of the total passenger
mileage of the steam roads of this country. On Dec. 31, 1917,
that system had 233,600 employees, and on Dec. 31, 1918, it
had 273,101 employees. Although the ton mileage handled in
1918 was less than in 1917 (the railways being in the year 1917
under private control) nearly 40,000 more employees were re¬
quired to handle the smaller volume of business."
While this result is doubtless due in some measure to war
conditions, it is suggestive of an inevitable tendency to increase
costs of transportation under government control and owner¬
ship. Such increased costs must be paid out of increased rates
120 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
or out of the public treasury. The organization of the two mil¬
lion railroad employees of the country into an efñcient, work¬
able force is an tmdertaking of such great magnitude and
fraught with such possibilities of failure as to give us pause.
Secretary Lane in 1912, while a member of the Interstate
Commerce Commission, declared:
"No one who has had experience in Government affairs
would be bold enough to say that the Government of the
United States could now operate the 250,000 miles of railway
with as much satisfaction to the people as the railways them¬
selves are now being administered."
The late James J. Hill has stated :
"Paternalism and extravagance have lived in conjugal
union since governments began. No decree of divorce can
ever be pronounced between them, and their offspring, inef¬
ficiency, is the perpetual disturber of wholesome business life."
Under the Federal Control Act, approved March 21, 1918,
authority was given to the President to initiate rates, fares and
charges. The Director General, Mr. McAdoo, under this au¬
thority, ordered an increase of 25 per cent on freight and 50
per cent on passenger rates, resulting in an increased trans¬
portation cost for the calendar year 1918 of approximately
$800,000,000. In addition to this vast increase of revenue
the above mentioned act appropriated $500,000,000 as a re¬
volving fund "for the purpose of paying the expenses of the
Federal control, and so far as necessary the amount of just
compensation, and to provide terminals, motive power, cars,
and other necessary equipment." Mr. McAdoo, in his testi¬
mony given a year ago before the House Committee on Inter¬
state and Foreign Commerce, stated that because of the econo¬
mies he hoped to effect, the amount of this revolving fund
would be sufficient. Owing to the vastly increased cost of
operation, due mainly to increase of wages, his successor, Mr.
Eines, has been compelled to apply to Congress for a deficiency
appropriation of $750,000,000 to pay the debts of the last
calendar year and provide funds for the current year. In
other words, notwithstanding the fact that the government
collected from the people $800,000,000 more for transportation
than was collected in 1917, the net operating income of the
EFFECTS OF GOVERNMENT OWNERSHIP ON EFFICIENCY 121
railroad properties was more than $200,000,000 less than in
the year 1917.
These results of a year's experience with Federal control
and operation are not such as to encourage the hope that with
further control and operation under government ownership
there will be any marked increase in efficiency and certainly
no reduction in rates.
ADJUSTMENT OF WAGES AND CONDITIONS OF
SERVICE UNDER GOVERNMENT AND COR¬
PORATE OWNERSHIP OF RAILROADS
BY W. N. DOAK, VICE-PRESIDENT, BROTHERHOOD OF RAILROAD
TRAINMEN
In approaching this subject we necessarily must do so from
a purely American viewpoint which, on account of the nature
of our transportation lines and the varied conditions under
which they operate, precludes comparison with other coun¬
tries. No country can be compared with ours, neither can the
transportation conditions of other countries be measured by
ours. We, then, must be guided by our experience and our
conditions, which again present problems in making an estimate
as to advantages, either one over the other, of corporate owner¬
ship or public ownership, because we have had corporate own¬
ership only in the past with no experience with public owner¬
ship, except a brief period of government control. This period
of control was under such extraordinary conditions that it
precludes a fair estimate of the advantages or disadvantages
under normal conditions. We are accordingly brought to the
point of having to weigh possibilities and circumstances for a
balance of our past experiences.
Of the many plans tentatively suggested as a solution of
the transportation problems, I am of the opinion that some
form of public ownership, independent of partisan politics,
operated as a strictly business proposition is the best. My
reasons are based upon past experience and observations.
We have tried unrestricted private or corporate operation,
governmental regulation as to rates and service and govern¬
ment control, also for a brief period an experiment in unifi¬
cation under corporate ownership. Now all seem to be agreed
that some other plan must be resorted to and the question
is before the people in a most serious aspect. Finances must
be had, rates must be adjusted and the service must be brought
up to the highest efficiency.
122
ADJUSTMENT OF WAGES AND SERVICE CONDITIONS I23
In order to stabilize the finances we certainly must remove
the element of doubt and uncertainty and capital must be
furnished in such amounts that extensions and betterments
may be made, adequate wages paid and prompt service ren¬
dered. Government ownership surely would overcome this
obstacle more promptly and effectively than any other plan.
Rates could, in my opinion, be adjusted more promptly under
a system of public ownership than under any form of private
or corporate ownership by treating the transportation systems
as a unit, providing a more uniform rate for the country as a
whole. By a combined unified system, I believe more prompt
and efficient service could be had under normal conditions.
As to the adjustment of wages and conditions of employ¬
ment, we have reached the point where it has been recognized
that there should be a uniform wage rate and that fair condi¬
tions of employment should alike be applied to the employees
on the small lines as well as on the large ones. This principle
is recognized by our laws and likewise a general tendency has
been to standardize wages by sections, and now it has become
nation wide or shortly will be. Why should not tlie man
employed on the small line receive for the same service as
much pay as the man on the large line, and the same is true
of the man on the Pacific Coast as the one on the Atlantic
Coast. Also this is the fact as to safeguards in his employ¬
ment and his general conditions of service. This feature,
therefore, is easy of accomplishment under government owner¬
ship.
The adjustment of disputes is no longer a question of
speculation as to methods on the railroads, as a real solution
has been found, and while it can be handled under any form of
operation of the railroads, it unquestionably can be handled
effectively under public ownership. Probably this plan can
be worked more effectively and with fewer elements of doubt
under public ownership than under any other plan. Govern¬
ment control has made it possible to demonstrate to a greater
degree the practicability of a plan of adjustments of wage and
other disputes between transportation lines and transportation
employees.
We have had comparatively few minor strikes on the rail¬
roads in many years, and no major strikes. However, there
124 the national institute of social sciences
always has been and probably always will be more public
alarm over threatened suspension of transportation than over
any other one question that may come up, because under
our transportation system and the dependency of the people
on these arteries of commerce rests to the greatest degree the
national life. This has caused considerable agitation and un¬
easiness in the past. However, under our past and present laws
we have really had more accommodations than have been se¬
cured under any other law in any other country in the civilized
world, and far less suspension of traffic on the American
railroads than probably in any other country in the civilized
world. But each time this question has come up it has caused
great concern and has been widely and generally discussed.
In the year of 1916 in a general movement by the transporta¬
tion men for a shorter work day, the question of a method of
adjusting disputes became a national topic, with the result that
it was more or less one of the leading questions in a presiden¬
tial election. Compulsory investigation, mediation, conciliation
and arbitration in their various phases were discussed by the
American public, and there was almost a demand for some
form of compulsory legislation ; but no such legislation has as
yet been passed. The reason that some action has not been
taken is due to the fact that after a careful study of this
question from a fair and impartial standpoint one is in¬
variably led to believe that no plan of this kind is feasible,
and the history of experiments in other countries clearly dem¬
onstrates that our past plans of voluntary arbitration have
been more effective than any plan in any other country has
been, so far as is known. There is a reason for this conclu¬
sion, it being based upon observation and experience in the
application of the so-called compulsory methods resorted to
in other countries, when the constitutions, laws and customs
of other countries are compared with the constitution, laws
and customs of this country. As every individual in the
United States is guaranteed his freedom of speech and action,
accordingly the individual could not be restrained from leav¬
ing his employment ; and such being the case, there is no power
that could compel him to remain with his employer if his con¬
ditions were not satisfactory to him. Therefore, if an indi-
ADJUSTMENT OF WAGES AND SERVICE CONDITIONS 125
vidual could not be estopped, it is equally true of all the indi¬
viduals employed in a given occupation.
Following the passage of the so-called Adamson Law,
which had for its purpose the granting of a basic eight-hour
day for transportation employees, it was found that the law
was not applied and eventually the employees in order to make
effective the principle were compelled to adopt other methods,
with the result that a settlement was reached independent of
the Act, to be applied in one way if the Act was declared con¬
stitutional and in another way if declared unconstitutional. The
application of the basic principle having been agreed to, it was
found, however, even with the basic principle disposed of, that
the method of application and interpretation had to be de¬
termined upon in another manner. Accordingly it was agreed
that a commission would b¿ appointed equal in number from
each side, and such commission immediately began functioning
and continued in existence for a period of more than a year,
during which time they handled more than 30,000 questions
arising under the basic principles agreed upon. It is singularly
strange and worthy of note that in all these questions handled
by the commission, composed as it was of an equal number of
representatives of the employers and employees, the conclu¬
sions were unanimously arrived at. This demonstrated the
practicability of a plan for the settlement of disputes by a
commission of practical men.
Commencing with the period of government control, the
question arose as to how disputes on the railroads could be
disposed of, which finally resulted in the creation of a board
consisting of eight men, four from the operating officials of
the railroads and four from representatives of the employees,
to which board all disputes must be referred and its decisions
to be final. This board has been in existence for nearly a
year and has handled all kinds of disputes between the trans¬
portation employees and the railroads, and up to the present
time has handled more than 600 disputes without a single dis¬
senting vote in the decisions on these questions. This demon¬
strates that this is the real solution of the labor question on
the railroads. Following the creation of the board to deal
with disputes arising among those engaged in conducting trans¬
portation, other boards have been created to handle the shop
126 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
men's disputes, and a third board to handle all the other
classes employed on the railroads, and the net results have
been that these boards have likewise been able to agree.
These boards were created by voluntary arrangements, and
are functioning to-day under voluntary agreements. Their
decisions are final and binding upon the parties concerned, and
there are no labor disputes on the railroads at the present
time. During the period of the war there has been no alarm
or uneasiness caused by the railroad employees arising out of
labor disputes, it being the one industry that has been free
from trouble during the war. It is therefore fair to assume
that such can be as effectively handled in peace times and
under normal conditions.
The transportation employees are not adverse to the prin¬
ciple of arbitration, but they are adverse to having their
matters handled by men who are not familiar with the real
question involved. And it argues that there is a reason
why they are adverse to the past practice in arbitration mat¬
ters, as we have found in a great many instances, due to un-
familiarity with the question at issue, that instead of settling
the dispute the award has tended to create more controversies
arising therefrom than were involved in the original question.
I believe the present plan in effect is the real solution of the
question, and when once a matter is settled by practical men it
eliminates the possibility of subsequent controversies arising
from the settlement.
As to the operation of a plan of this kind, it could be
worked under government control, corporate ownership or
public ownership, but there will be certain drawbacks, prob¬
ably, that could be more easily overcome under some form
of government ownership. But in no instance will compulsory
investigation, conciliation or arbitration effectively settle dis¬
putes on the railroads, and if this plan is carried out under
any form of government control, private control or otherwise,
it must be done as a purely voluntary method; and the board
created to handle these disputes must not be hampered by
restrictions of any nature. It should be required to settle these
controversies only on the basis of equity and in accordance
with the knowledge gained through the experience in handling
these questions as an employer or an employee.
ADJUSTMENT OF WAGES AND SERVICE CONDITIONS I27
I have always been opposed to government ownership of
railroads, and would still be adverse to such a plan if it were to
be conducted as a governmental, political system. It would be
bad if the transportation systems of our country were to
become a part of the partisan, political organizations. But
if the government will handle the transportation question as a
business proposition, providing means for financing the roads,
making provision for extensions and improvements, adjust¬
ments of rates and service on a high plane with a view of ac¬
commodating the public and at the same time developing the
transportation lines to the needs of the country, as well as
providing for fair and reasonable wages and working condi¬
tions of employment to the employees by affording fair tribu¬
nals for the adjustment of complaints and grievances and the
settlement of a fair basis of wages and hours of service,
government ownership will be the real solution of the many
complex questions that have seriously confronted the transpor¬
tation lines and likewise the American public for a number
of years. This is not only possible, but is reasonable and can
be accomplished if this subject is approached from the stand¬
point of the good of the American public and without regard
to any one particular interest, but with due regard to all inter¬
ests involved. The operating officials of the railroads and the
railroad employees will make a success out of the transporta¬
tion lines if they are given a fair opportunity to do so, and
the question of disputes will eventually disappear if this sub¬
ject is approached in a fair and reasonable manner. All ele¬
ments of doubt and suspicion will be removed and we will
enter upon an era of prosperity the like of which has never
been seen. On the other hand, if the railroad question is to
become a partisan matter and is not approached with a view
of the solution of these problems, or is viewed from a financial
or money making viewpoint, we may be confronted with a
disastrous situation on our railroads. I therefore hope that
while this opportunity is presented, when this question is
before the people, the situation will be viewed from the stand¬
point of what is the best for the people as a whole, and in so
doing I am led to believe that the time has come when we
should take some steps looking to some form of public owner-
î28 the national institute of social sciences
ship in the interest of the American public ; and, if so, it is fair
to assume that the wages and conditions of service of the em¬
ployees will be adjusted in the end without the slightest dif¬
ficulty.
PUBLIC CONTROL OF RAILROAD WAGES
BY WM. CHURCH OSBORN
It is generally believed that the government took control of
the transportation organization of the United States on the
ist of January, 1918. Such is not the case. The Control Bill
gave the government real control of only a part of the organi¬
zation. It is true that the government assumed control of the
physical property and the money of the railroads ; the right to
change rates, etc., at its pleasure. The government freed itself
completely from the restrictions of the Sherman Act and the
Hepburn Bill as to pooling, consolidations, etc., including the
regulations of the Interstate Commerce Commission, all of
which had for years been the accepted policy of the country
in managing the transportation interests, but the government
did not assume control of railroad labor.
A transportation system is a living organism. It gets its
life from the men who run it and it works well or ill according
as the men constituting the organization conduct themselves.
It is a mistake to think of a railroad as the right of way, the
rail, the engines, the cars, the terminals and the financial man¬
agement with the bonds, stocks and balances in bank. As a
fact, these things are less than half of a railroad. The other
half is the working organization of men—from the president
to the gate tender, from the traffic manager to the advertising
agent—which runs the road. The flight of the Twentieth Cen¬
tury from New York to Chicago is made possible because each
one of some thousand men performs his appointed duties at the
stated minute. The people of the country will get good or bad
transportation ; will pay more or less for it, as the two million
or more of ordinary railroad employees perform their duties
well or ill.
The total operating revenues of the railroads for 1918 were
$4,800,000,000; of this $2,400,000,000 was paid to labor, the
rest went in materials, taxes and the rental. The dominating
fact of government operation is therefore, that although the
129
130 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
government took actual control of about 50 per cent cost
value of the transportation organization of the country it re¬
mained in the position of a private employer with reference to
the remaining 50 per cent of the transportation business, i. e.,
the human organization of the system. Mr. Kruttschnitt,
president of the Southern Pacific lines, is reported to have
said that if he had to choose between the return of a railroad
without an organization, or of an organization without a rail¬
road, he would take the organization. The Control Bill granted
to the government no special powers of arbitration of differ¬
ences with the railroad employees. It made no prohibition
upon leaving the government railroad service without notice
and without cause; it granted no coercive authority such as
enlistment or the fixing of a penalty for failure in duties.
It left the "right to strike" in full effect. It is, therefore, a
misstatement to say that we have had government control of
the railroads since January i, 1918.
The cost of materials and supplies, the maintenance of the
organization and the necessary payments for capital and taxes
absorb to-day about 50 per cent of the gross annual revenues.
The remaining 50 per cent is paid directly to labor. We have,
therefore, about 50 per cent of the railroad business under
regulation and control and about 50 per cent free. The ques¬
tion is whether an organization half regulated and half un¬
regulated can endure.
The problem before the American people in settling our
transportation question is no longer to check the rapacity of
capital, or to control the autocratic tendencies of the oper¬
ating officials, or to fix the nature of the facilities to be given
to the public. Capital no longer regards a railroad invest¬
ment as a profit maker and will be thankful if its existing
investments shall return a moderate income. The once haugh¬
ty managers of railroads now know their masters and agree
to requests of national and state commissions on all sorts of
details, from placing unnecessary brakemen on a train, down
to the character of drinking cups permitted in the cars. They
are ready to install steel equipment, terminals, block signals and
any other desirable railroad facilities, provided they can obtain
the money to pay for them. The great body of financial senti¬
ment approves government supervision of the issues of railroad
PUBLIC CONTROL OF RAILROAD WAGES I3I
securities and is prepared fully to endorse the government
making of rates, provided they will make a return upon the
existing investment. The people may therefore feel that as
to 50 per cent of their transportation no serious obstacle stands
in the way of a full control ; as to the remaining 50 per cent
of transportation the situation is different. From the passage
of the Adamson Law, raising wages by Congress, under threat
of a nation-wide strike, in the month of January, 1917, down
to the settlement of the harbor strike in New York City in
1919 by the acceptance of the strikers' terms by the railroad
administration, there has not been an instance where the de¬
mand for increased pay and reduced hours by the railroad em¬
ployees has not been granted.
Since the passage of the Adamson Law, viz. : the period
from January i, 1917, to date, the pay of railroad men has
been increased by successive stages so that the actual increase
in pay in the year 1918 over the year 1916 would amount to
over $900,000,000 and the estimated increase in 1919 over 1916
would be approximately $1,000,000,000. In order to under¬
stand these figures they may be contrasted with various other
railroad items; for instance, the increase in freight and pas¬
senger rates in 1918 produced the sum of approximately
$800,000,000. It is estimated that these excess rates, 25 per
cent on freight and 50 per cent on passenger, will produce in
the fiscal year from July i, 1918, to June 30, 1919, the sum of
$1,000,000,000. In other words, practically all of the increase
in rates has been absorbed by the increased labor charges on
the roads. Contrast again the payments to labor with the
payments on account of capital and we find that the increase
alone in labor is equal to the entire annual rental of the prop¬
erties. That rental is fixed under the Control Bill at approxi¬
mately $920,000,000 a year.
There is no mystery about who pays the railroad freight
rates. They are paid first by the farmers, the manufacturers
and the dealers, but they are passed on to the consumers and
make part of the cost of living. The people pay the freight.
The people pay excess labor charges just as they pay excess
capital charges. A general railroad strike is therefore a strike
to make the people pay more or grant easier conditions. A
132 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
railroad strike stops industry and the food supply. Hence we
are all afraid of it.
One great result of government operation has been to make
it clear to the public that they have not to deal with an ordi¬
nary conflict between capital and labor. Capital is not at
present involved or interested in the subject. It is probable
that the readjustment will give capital little or no voice in
rates or management. The question before the country is a
larger one, viz., whether the 50 per cent of railroad earnings
going to labor shall be subject to regulation and control as is
the remaining 50 per cent, or whether it shall be left to the
laws of supply and demand and subject to the "right to strike."
The government management has shown itself to be helpless
in the face of an organized demand by a large number of
voters and that tendency of government, being equally appar¬
ent both in England and France, may be taken to be a general
characteristic and we must consider any plans for the future
management of transportation with that feature in mind.
It is the general statement in Washington by Senators and
others in interest, that the roads may be turned back to
private management but under far greater control than has
existed heretofore. The labor question is an inconvenient
question, certain to stir up trouble and arouse anger, but if
the people are to have satisfactory transportation conditions,
they must face the problem of the control of railroad labor
as well as that of the control of railroad capital and opera¬
tion. This is not a question for capital. As I have pointed
out, capital for railroad enterprise has ceased to be speculative
and profit making and is merely interest bearing. New capital
can be had at market rates by making it secure. The subject
of future capital requirements is not germane to this paper.
There is a common assumption that the roads will be turned
back to private owners without action upon the labor prob¬
lem. As the roads are operated at a heavy loss under the ex¬
isting conditions that proposal would mean placing upon pri¬
vate management the burden of exacting efficient service from
labor and reducing payrolls to a point at least of transporta¬
tion solvency. The result would be uncoordinated efforts of
a great number of different railroad managers, some strong,
some weak, some vindictive, some easy, each considering his
PUBLIC CONTROL OF RAILROAD WAGES
133
business as a separate problem and solving it as a special
railroad problem without reference to the general labor re¬
quirements and conditions of the country. Doubtless, such a
readjustment would be accompanied by costly and exasperating
strikes. The public would be inflamed against the railroad
management and much injustice and suffering would result
to the men and to their families. A more ideal way, and one
more consonant with the views of an idealistic administration,
would be to require the Interstate Commerce Commission to
inquire into and regulate the surroundings and proper compen¬
sation of railroad labor, both wages and hours, as compared
with the general labor conditions in the country. Upon that
commission should sit men familiar with the conditions of
railroad labor and also men familiar with the interests of the
shippers using the railroads, such as members of Chambers
of Commerce and the agricultural industry of the country. If
possible, some members should be found who really repre¬
sented the consuming public upon whose broad shoulders ulti¬
mately rests the burden of supporting the transportation of
the country. Indeed, the balance of power on the commission
should rest with those who have no interest except to second
the general welfare, who can carry a just proportion between
the special interest of the railroad employees and the general
interest of the farmers, the laboring classes and the salaried
people throughout the country. If the public desires to con¬
trol its transportation interests, and has determined through
the Commission what is a fair return for railroad labor in
its different classes, and has made provision for a just re¬
vision of the scale from time to time as may be required by
general conditions in the country and in the industry, the pub¬
lic must then face the question of how the award of the Com¬
mission shall be enforced.
Shall railroad labor be considered to be "affected with a
public interest" as is railroad capital? Shall entry into the
service be made subject to certain fixed conditions with regard
to leaving the service, such as thirty days' notice, the refusal
of réengagement in case service is terminated without ade¬
quate cause? Shall compulsory arbitration be adopted ? Shall
it be a misdemeanor to leave the service in a strike against
an award adopted fairly and after due consideration? How
134 the national institute of social sciences
can the railroad service be made attractive by way of old age
pensions, better facilities for living, etc.? Such are the prob¬
lems which the American people face in settling their trans¬
portation question. If we attempt to turn over the manage¬
ment of the so per cent of the problem to private control, we
must face difficulties of a character far more serious since the
changes brought about by the war, than those which existed
previously. The owners of the railroads do not wish to take
them back under existing conditions. There are many who
think that the proposal to leave the readjustment of these
matters to private control would bring about a general bank¬
ruptcy of the transportation systems of the country. As a
matter of fact, the government control is bankrupt to-day. In
spite of the fact that it has raised railroad receipts a billion dol¬
lars, its management is a half billion dollars behind its obliga¬
tions. Government operation will require a billion appropria¬
tion by July. About a quarter of the war tax levy for this
year besides another billion in transportation tax are thus due
to government operation. Were it not for the taxing power,
the government administration would have to seek refuge in
a receivership. This condition is largely caused by the im
creased cost and the growing inefficiency of labor under gov¬
ernment control, and makes plain the necessity of attacking
with moderation and fairness but determinedly the problem
of securing effective regjulation of railroad labor in the United
States.
The problem is not one of labor and capital. It is one of
the relation of one branch of labor to the other labor, indus¬
tries and interests of the country, for railroad rates touch
everyone in the United States. There is no work in which
men take such an intense and loyal interest as the railroad
men take in their jobs. There is no class from whom loyal
service is so essential to the public interest, because of their
direct touch with the public both in passenger and freight
transportation. There is no class of labor for which the strike
is so tempting and so potent a weapon. A transportation strike
is a blow at the food supply of the country and paralyzes all
industry by withholding material and shipments. It would
be an indictment of our courage and our collective intelligence
to leave this desperate remedy of a transportation strike as a
PUBLIC CONTROL OF RAILROAD WAGES
135
temptation to the railroad workers and as a menace to the
general public.
The discussions in Congress and in the press have avoided
the subject of railroad labor. There is a general readiness to
let some one else bell the cat.
Railroad operatives are a very fine body of men. Their
work takes them away from home and involves some risk.
They are well entitled to good pay and good hours. But in
the interest of the public they must submit to steady discipline
and be held to it. The same interest requires that its food and
material supply be not interrupted, and that its freight charges
be not unduly raised.
Surely some method can be found, fair alike to the rail¬
road employees and to the general public, which will solve the
question indicated in the foregoing pages, upon the grounds of
absolute justice and equitable treatment relatively to other
industries and interests in the country.
COMMUNICATION
THE WORK OF THE PUBLIC HEALTH SERVICE
DURING THE WAR
BY RUPERT BLUE, SURGEON GENERAL, U. S. A.,
PUBLIC HEALTH SERVICE
The following résumé of the activities of the United
States Public Health Service during the European War of
necessity can only sketch the prominent activities of the service
during that period.
To fully appreciate the present-day activities of the service
it is highly desirable that a short historical outline of its growth
be set forth as a preliminary to any discussion of its work
during the war.
The Public Health Service of to-day is the growth of a
series of legal enactments extending as far back as 1798.
Numerous laws passed by Congress from time to time in the
years intervening have increased its powers and functions, per¬
fected its organization, and changed its name, to keep pace
with the progress of the medical and sanitary sciences and to
afford better protection to the public health of the nation under
changing conditions.
The primary function of the service in the early days of
its existence consisted chiefly in affording medical relief to
seamen of the merchant marine and other designated benefi¬
ciaries. In the proper administration of this function, how¬
ever, the field of endeavor of the service was gradually wid¬
ened into activities of a strictly public health character. In
fact, by later enactment of Congress the service was specifi¬
cally charged with certain public health duties. Although the
service had thus engaged in public health work for many years
with legal sanction, it was not until 1902 that Congress changed
its name by incorporating in it the words "public health."
The act of July ist of that year changed the name of the Ma¬
rine Hospital Service to the "Public Health and Marine Hos-
136
THE WORK OF THE PUBLIC HEALTH SERVICE 1^7
pital Service." By the terms of this same enactment the Presi¬
dent was authorized in his discretion to "utilize the Public
Health and Marine Hospital Service in times of threatened
or actual war to such extent and in such manner as shall in
his judgment promote the public interest without, however,
in anywise impairing the efficiency of the service for the pur¬
poses for which the same was created and is maintained."
In 1912 the name of the service was changed to the "Public
Health Service" and broad authority conferred upon it to
"study and investigate diseases of man and conditions influenc¬
ing the propagation and spread thereof, including sanitation
and sewage and the pollution either directly or indirectly of
the navigable streams and lakes of the United States."
WAR ACTIVITIES OF THE PUBLIC HEALTH SERVICE
With the declaration of war the activities of the Public
Health Service, like those of other Federal establishments,
were immediately directed toward the successful prosecution
of the war. Its peace-time activities, beneficial though they
were to the nation, were perforce curtailed in order that its
personnel and facilities might be thrown into the war-time
balance. Accordingly the first step taken toward directing
its energies to the work at hand was the promulgation by the
President on April 3, 1917, of an executive order constituting
the Public Health Service "a part of the military forces of
the United States" and making available all stations of the
service "for the reception of sick and wounded officers and
men."
With the mobilization of large bodies of troops in training
camps and other concentration points, which followed the dec¬
laration of war with gratifying rapidity, it became immediately
necessary to enforce strict measures for the protection of the
health of the soldier and the sailor. The military authorities
fully realized the necessity of this protection within the camp
and cantonment and adequate provision was immediately made
to reduce disease to the minimum. But it was just as essen¬
tial to establish and maintain proper sanitary conditions in the
areas surrounding the camps as within the reservation itself.
The soldier and sailor had access to this territory, and if his
138 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
body was to be kept fit to fight democracy's battle this con¬
tiguous territory had also to be sanitated. The obligation to
protect the health of the military forces in this civilian terri¬
tory was therefore placed upon the Public Health Service.
To secure the reduction of disease hazards which menaced
the uniformed man involved the establishment of an efficient
health department or organization around almost every camp
and cantonment. A brief description of the extent of the work
required to achieve what might be called a sanitated area will
suffice to show the enormity of the task and the great sanitary
good actually achieved by the work performed. In each can¬
tonment area the work involved the proper supervision over
water, food, and milk supplies ; the proper disposal of human
excreta, and the elimination of breeding places of flies and
mosquitoes. In fact, the operations of the service, expressed
in a sentence, had for their object the control and reduction
to a minimum of all communicable diseases. In carrying for¬
ward this great work, the Public Health Service never failed
to utilize to the fullest possible extent the existing local and
state organizations. In some instances, however, in order that
prompt protection be afforded it was necesary to perform
much work which the state and local authorities were eventu¬
ally able to perform themselves.
Of all the problems encountered in sanitating these extra-
cantonment areas, the elimination of malaria presented the
most troublesome. Theoretically the control of malaria pre¬
sents no difficulties from the standpoint of public health offi¬
cials. In perhaps no other disease is so much exact scientific
knowledge available. Practically, however, the problem of
malaria control often presents great difficulties because of the
financial outlay involved, the extensiveness of the operations
necessary and the time taken to eliminate the mosquito and its
breeding place. This is what is meant when it is said that the
service encountered difficulties in eradicating this disease.
Nevertheless these seemingly insurmountable obstacles were
overcome.
In those cantonment areas whose normal growth had been
seriously retarded by malaria, the community witnessed thou¬
sands of American soldiers living among them with practically
no malaria. The total amount of malaria contracted by our
THE WORK OF THE PUBLIC HEALTH SERVICE 139
troops at southern cantonment cities during the recent war was
practically nil as compared to that of our previous war period
in 1898.
It is not to be thought, however, that malaria and its eradi¬
cation constituted the sole problem in disease prevention en¬
countered by the service in its extra-cantonment sanitation.
As stated above, every communicable disease was brought
within the range of the operations of the service.
This was particularly true of venereal infections. Statis¬
tics showed that a far greater number of men are infected be¬
fore joining the military forces than contract the disease after
entering the camp, and it soon became apparent that the reduc¬
tion of this disease was largely a civilian problem. Accord¬
ingly Congress, on July 9, 1918, gave legal recognition to the
need for controlling this disease in civilian areas by enacting
legislation which created in the Bureau of the Public Health
Service a Division of Venereal Diseases.
In addition there were established in and near the can¬
tonment areas some 46 clinics for the free diagnosis and treat¬
ment of venereally infected persons. These clinics were op¬
erated in conjunction with the American Red Cross and local
authorities. Remarkable advances in the control of social
diseases have been made during the past year as a result of
the work performed along this line.
In concluding this necessarily brief account of the extra-
cantonment work of the Public Health Service during the war,
it must be remembered that although these areas are desig¬
nated for convenience as "extra-cantonment," the area often
also comprised many war industries of vast importance in the
war program of the government. It was the aim of the Public
Health Service to protect the workers of these factories as
well as the soldiers and an equal degree of success has followed
its operations within these establishments.
The extra-cantonment work of the Public Health Service
during the war may well be considered the greatest sanitary
achievement or demonstration ever undertaken by any govern¬
ment.
The lack of coordination of Federal public health activities
especially concerned in the prosecution of the existing war
resulted in the signing by the President on July i, 1918, of an
140 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
executive order which placed under the supervision and con¬
trol of the Treasury Department, to be administered through
the Public Health Service, of all civil public health activities
of the character above mentioned. As a result of this execu¬
tive order the Public Health Service assumed charge of the
work connected with the sanitation of the 170 shipyards of
the country, which work had been previously under the direc¬
tion of the United States Shipping Board. Medical supervi¬
sion was also exercised over various government nitrate plants
located at various points within the United States.
A long step forward in national public health administra¬
tion was taken on October 27, when the President signed the
act of Congress establishing in the Public Health Service a
sanitary reserve corps.
With this enactment on the statute books the public health
activities of the country can be properly expanded to meet
acute situations and coordinated under the direction of the
Federal government in meeting national emergencies.
Any statement of the duties devolving on the Public Health
Service because of the war would be incomplete without men¬
tion of the highly important work recently imposed upon the
service by Congress when it authorized the construction of
a number of hospitals for the institutional care of returning
soldiers and sailors, beneficiaries of the government under the
provisions of the War Risk Insurance Act.
ANNUAL DINNER
The annual dinner of the Institute, followed by an address,
"The League of Nations and Labor," which was delivered by
the Honorable George W. Wickersham, LL.D., and the award¬
ing of medals, was held on the evening of April 25, 1919, at
the Hotel Astor, New York City. The president, Emory R.
Johnson, Sc.D., presided.
Gold medals were awarded to Mr. Samuel Gompers and
William Henry Welch, M.D.
Presentation medals were awarded to Right Rev. Charles
H. Brent, Mr. Raymond B. Fosdick, Harry A. Garfield, LL.D.,
Carl Koller, M.D., Mr. Frederick Layton, Honorable Robert
Scott Lovett, Mr. Charles M. Schwab, and Harry A. Wheeler,
LL.D.
OPENING REMARKS BY DR. EMORY R. JOHNSON
Members and guests of the National Institute; You are
representatives of approximately one thousand men and
women, members of the Institute. Each member of the In¬
stitute is a person who has accomplished some important work.
At the head of our list of members stands William Howard
Taft, the Honorary President of the Society.
It seemed to the officers of the Institute that the President
of the United States should also be an Honorary Member of
the National Institute. I was therefore authorized by the
officers, this winter, to notify President Wilson of his election
as an Honorary Member of the Institute, and I was also au¬
thorized by the appropriate committee of the Institute to
confer upon the President a special gold medal, in recognition
of the work he was doing to bring about enduring international
peace. The President accepted membership and the special
medal that was struck in his honor. In accepting the medal he
wrote :
"May I not beg you to express to the members of the Na¬
tional Institute of Social Sciences the deep appreciation with
which I have received the Liberty Service Medal, which they
141
142 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
were generous enough to confer upon me? I consider this a
very delightful evidence of their support."
It happens that one of my courses at the University of
Pennsylvania deals with the subject of the regulation of cor¬
porations under the Anti-Trust Law. I remember looking
up, some few years ago, the number of cases against the trusts
that had been settled in Mr. Roosevelt's administration. We,
of course, recognize Mr. Roosevelt to have been some trust
"buster," but during the seven and a half years that he was
President, there were only 44 cases against the trusts brought
to final determination, an average of less than six per annum;
whereas during the four years of President Taft's adminis¬
tration, under the leadership of the Attorney General of the
United States, who is to be our principal speaker this evening,
there were 80 cases against the trusts brought to final determi¬
nation, an average of twenty per year.
I have often wondered how it was that Mr. Wickersham
was so successful in dealing with the trusts. I recall that as I
looked out of his office windows one day, I looked down upon
Wall Street, and possibly the fact that Mr. Wickersham looks
down upon Wall Street more or less frequently may account
for his knowing what the trusts are and how to deal with
them.
I shall not, however, introduce Mr. Wickersham to talk
about the trusts to-night—he is to speak upon one phase of the
question of The League of Nations. Fortunately, he has se¬
lected for his topic, "The League of Nations and Labor."
I am seated between Mr. Wickersham and the representa¬
tive of the largest number of organized laborers that any man
in the history of the world has ever represented; and it will
interest you to know that just beyond him sits the largest in¬
dividual employer of labor in the history of the world. So Mr.
Wickersham will speak to men who are able to check him up.
I do not need to tell people of New York, or people of,
this country of Mr. Wickersham's work as Attorney General
or in connection with labor questions and the international
problems associated with the Panama Canal. He occupies an
envied position as one of the leaders of the American bar.
I shall content myself with presenting the Honorable George
W. Wickersham as the principal speaker of the evening.
THE LEAGUE OF NATIONS AND LABOR
BY GEORGE W. WICKERSHAM
FORMER ATTORNEY GENERAL OF THE UNITED STATES
I am to speak to you to-night on one phase of the League
of Nations which has not been so much discussed as many
other phases, namely: the provisions affecting labor.
Almost exactly a century ago, in October, 1818, Robert
Owen, an idealistic and practical Scotch manufacturer, ad¬
dressed a memorial to the representatives of the powers which
had united in the overthrow of Napoleon, then sitting at Aix-
la-Chapelle, in which he said:
"That the period is arrived when the means are become
obvious by which, without force or fraud, or disorder of any
kind, riches may be created in such abundance and so ad¬
vantageously for all, that the wants and desires of every
human being may be satisfied."
And, he added:
"It is the grand interest of society to adopt practical
measures by which the largest amount of useful and valuable
productions may be obtained at the least expense of manual
labor and with the most comfort to the producers."
Strange to relate, that invitation not only was declined by
the statesmen gathered at Aix-la-Chapelle, but it received no
recognition whatever from them. Yet, despite the Utopian
nature of this alluring picture, Owen was no mere visionary.
He was able to point to a very practical success in the applica¬
tion of his theories in his model establishment at New Lamark.
What he had there accomplished well justified his confidence in
the practical benefits to the world which the extension of his
system would have secured. But the time for its favorable re¬
ception by the governments of Europe had not yet arrived.
The Czar Alexander's dream of a world league of nations
already was fading away; the treaty of Chaumont, with its
idealism, had been merged into the practical Alliance of 1815,
143
144 the national institute of social sciences
between the sovereigns of Russia, Austria, Prussia and Eng¬
land. Castlereagh's distrust of a general union of large and
small powers had found expression in a memorandum stating:
"The problem of a universal alliance for the peace and
happiness of the world has always been one of speculation
and hope. But it has never yet been reduced to practice, and
if an opinion may be hazarded from its difficulty it never can."
The conferees at Aix-la-Chapelle were absorbed in the
consideration of political problems of a dynastic nature. They
were not in the least interested in the conditions under which
men, women and children in the different countries were com¬
pelled to toil for their daily bread. They displayed even less
interest in the proposals of Robert Owen than did the British
Parliament when, in June, 1815, he caused a bill to be intro¬
duced providing
"for the preservation of the health and morals of apprentices
and others in cotton mills."
This measure was to be applicable to all mills in which twenty
or more persons were employed. It forbade the employment
of children under ten years of age, limited the period of work
for all persons under eighteen to ten and one-half hours per
day, exclusive of one-half hour's instruction in reading, writ¬
ing and arithmetic, and forbade all such persons working be¬
tween the hours of nine p. m. and eight a. m. During the
first four years of their service, employees under eighteen
years of age were also to be instructed in the elementary
subjects mentioned for half an hour every day, at the expense
of the employer.
The proposed measure was dismissed by the Committee
of the House of Commons as revolutionary, impracticable and
utterly wanting in common sense. But the inherent social
justice embodied in its moderate provisions slowly but surely
won aid and progress in England and it proved to be the
precursor of an ever widening program of governmental regu¬
lations for the protection and betterment of the working peo¬
ples of Great Britain.
It would far exceed the limitations of this occasion to
attempt to trace the history of international efforts in the
THE LEAGUE OF NATIONS AND LABOR
145
same direction. Every measure adopted for the benefit of
the workers in one country more or less has affected conditions
in other countries. High wages and opportunity for advance¬
ment in America served to stimulate immigration from coun¬
tries where conditions were less favorable, and the great influx
of cheap labor from Europe operated to keep down wages and
retard improvements in conditions under which men, women
and children were employed in industry in the new world.
These conditions stimulated the formation of organizations of
workers, and the resultant struggle for improved conditions
developed and intensified a class consciousness both here and
abroad. Meantime, various international associations were
formed for the consideration of questions especially affecting
industrial workers, which held meetings and congresses for
the exchange of views and the formation of opinions which
should influence governmental action. The Socialist Inter¬
nationale was one type of such organization, the Trades
Unions another. International conferences on social insurance
and on unemployment also were held, and in 1900, the Inter¬
national Association for Labor Legislation was organized in
Paris by a group of statesmen, economists and professional
men, which now has a membership representing twenty-five
countries. In 1901, that association set up an International La¬
bor Office at Basle, towards the support of which fourteen gov¬
ernments have contributed. It was through the labors of this
organization in studying and ascertaining the effect upon the
health of women and children of the use of white phosphorus
in the manufacture of matches, and the conference to con¬
sider that subject, held by it at Basle in 1904, that a treaty
was secured among the principal European nations, and legis¬
lation by the Congress of the United States, which, in effect,
prohibited the use of that deleterious substance. International
governmental conferences respecting labor questions practically
began with the conference held at the instance of William H
at Berlin in 1890, at which fourteen governments were repre¬
sented—a conference which, however, took no action beyond
the adoption of a few resolutions. Between 1882 and 1914,
some thirty agreements between governments were made, some
of them extending to alien workmen the advantages and safe¬
guards of industrial legislation in the countries where they
146 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
were employed, and some providing for the adoption of a
common labor standard in two or more countries. Just before
the war, in 1912, the conference held at Zurich, under the
auspices of the International Association for Labor Legisla¬
tion, called attention to the necessity for international action
in dealing with such subjects as the administration of inter¬
national labor treaties and labor laws, child labor, relations
between employers and workmen, the regulation of home
work, hours of labor in continuous industries, the protection
of workmen from accident and industrial disease, workmen's
holidays, and the length of the working day.
A few months after the outbreak of the war (February
14, 1915), an interallied labor and socialist conference was
held in London, at which resolutions were adopted dealing
with the conditions of peace, including the recommendation of
a league or association of nations for its preservation. Similar
meetings for like purposes were held in May and July, 1916,
in February and August, 1917, and in February, 1918. At
almost all of these conferences, resolutions were adopted
recommending specific provisions in the peace treaty, when
it should be made, including particularly the right of small
nations to self-determination, limitation of armaments and the
abolition of secret diplomacy. The labor standards recom¬
mended for all nations by these various conferences, almost
uniformly included such subjects as the protection of women
and children, social insurance, prohibition of night work, the
eight-hour day, and safe and sanitary working conditions.
Some of those provisions which Mr. Wilson embodied in his
fourteen points, were formulated and recommended by one
or the other of these conferences months before the delivery
of his address to the Congress of January 8, 1918.
The most detailed and specific statement of the Allied war
aims was embodied in a memorandum originally presented to
the Interallied Labor and Socialist Conference in London in
August, 1917, and, after revision, approved by the National
Committees of the Labor Party in January, and by the labor
representatives of the Allied nations in February, 1918, and
presented to the Prime Minister as the opinion of the organ¬
ized workers of Great Britain.
THE LEAGUE OF NATIONS AND LABOR
147
"Whatever may have been the objects for which the war
was begun," sets forth this memorandum, "the fundamental
purpose of the interallied conference in supporting the con¬
tinuance of the struggle is that the world may henceforth be
made safe for democracy. . . . Whoever triumphs, the
peoples will have lost, unless an international system is estab¬
lished which will prevent war."
This end was proposed to be secured through the authority
of a League of Nations. The memorandum contemplates the
creation of a supersovereignty over the existing nations, inter¬
national legislation, compulsory arbitration, the abolition of
compulsory military service, disarmament, governmental con¬
trol of private munitions manufactories, and it declares that
the League of Nations must be included in the peace treaty. It
further urges an agreement
"for the enforcement in all countries of legislation on factory
conditions, a maximum eight-hour day, and prevention of
sweating and unhealthy trades necessary to protect the workers
against exploitation and oppression and the prohibition of
night work for women and children."
It further emphasizes the duty of the governments to pro¬
vide against unemployment resulting from the discharge of the
very large number of men which would follow after the treaty
of peace.
Almost all of these plans proposed by the various labor
conferences advocate a League of Nations for the purpose of
securing the application to all the countries uniting in the
treaty, of the program of international and industrial labor
standards and conditions recommended.
The League of Nations proposed to be organized under the
Paris Covenant does not, however, follow the lines of these
recommendations. It provides, not for a supernational state,
but for an alliance of separate sovereignties for the preserva¬
tion of the peace of the world. The Covenant recommended
grew out of the fourteenth point in the President's peace pro¬
gram of January 8, 1918. That point was an essential part of
the program which embraced the evacuation by the enemy
powers of occupied territory, the restoration of Alsace-Lor¬
raine to France, a readjustment of the frontiers of Italy, the
opening of the Dardanelles to the commerce of all nations,
148 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
and the erection of a new and independent Polish State. These
territorial readjustments naturally required security for their
preservation. The fourteenth point provided for this in the
following language:
"A general association of nations must be formed under
specific covenants for the purpose of affording mutual guaran¬
tees of political independence and territorial integrity to great
and small states alike."
In his Mt. Vernon speech of July 4, 1918, the President's
thought found a somewhat broader expression in the inclusion
of the following among the statement of peace aims :
"The establishment of an organization of peace, which shall
make it certain that the combined power of free nations will
check every invasion of right and serve to make peace and
justice the more secure by affording a definite tribunal of
opinion to which all must submit and by which every inter¬
national readjustment that cannot be amicably agreed upon by
the peoples directly concerned shall be sanctioned."
The Peace Conference, on January 25, 1919, adopted reso¬
lutions declaring it to be essential to the maintenance of the
world settlement which the associated nations were met to
establish,
"that a League of Nations be created to promote international
obligations and to provide safeguards against war,"—
a league which should be an integral part of the general treaty
of peace and should be open to every civilized nation which
could be relied upon to promote its objects.
Speaking in support of those resolutions, Mr. Wilson said
that the United States should feel that its part in the war
would be played in vain if there ensued upon it abortive Euro¬
pean settlements.
"It would feel that it could not take part in guaranteeing
those European settlements unless that guarantee involved the
continuous superintendence of the peace of the world by the
associated nations of the world."
The dominant thought in both the resolutions and the ad¬
dress was, that the territorial settlements about to be made
The league of nations and labor 14^
must be protected by àn association o£ the powers. A few
days later (February 3d) in the French Chamber of Deputies,
the President thus referred to the proposed League :
"The nations of the world are about to consummate a
brotherhood which will make it unnecessary in the future to
maintain those crushing armaments which make the people
suffer almost as much in peace as they did in war."
Quite logically, therefore, the preamble to the Covenant
reported to the Conference on February 14th, recited the pur¬
poses of the Constitution of the League to be
"to promote international cooperation and to secure interna¬
tional peace and security. . .
These objects, it was recited, were to be accomplished by
open dealings among the nations, by the establishment of inter¬
national law as the actual rule of conduct among governments,
and by the maintenance of justice and a scrupulous respect for
all treaty obligations in international dealings.
But a place was found in the body of the agreement for
certain provisions regarding labor, and provisions concerning
commerce. These provisions are not directly requisite to the
attainment of the objects recited in the preamble, but they
have a material bearing upon the purposes of a world league
as advocated by the various conferences of representatives of
labor.
Mr. Wilson, in reporting the draft covenant to the Con¬
ference, said;
"It is not in contemplation that this should be merely a
league to secure the peace of the world. It is a league which
can be used for cooperation in any international matter. That
is the significance of the provision introduced concerning
labor. There are many ameliorations of labor conditions which
can be effected by conference and discussion."
The provision thus referred to is Article XX of the Cove¬
nant, which reads as follows:
"The high contracting parties will endeavor to secure and
maintain fair and humane conditions of labor for men, women
and children, both in their own countries and in all countries to
which their industrial and commercial relations extend; and
150 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
to that end agree to establish as part of the organization of the
League a permanent Bureau of Labor." *
Lord Robert Cecil, after stating that the problem before
the Conference was to devise some really effective means of
preserving the peace of the world consistent with the least
possible interference with national sovereignty, said :
"I do not regard the clause which deals with labor as any
such interference, for it is quite certain that no real progress
in ameliorating the condition of labor can be hoped for except
by international agreement. Therefore, although the condi¬
tions of labor in a country are a matter of internal concern,
yet, under the conditions under which we now live that is not
so in truth, and bad conditions of labor in one country operate
with fatal effect in depressing conditions of labor in another."
Mr. Barnes' interpretation of the article ran beyond the
limitations of its language to an expression of his hope of
what might be accomplished under it.
"I gladly note the insertion of a clause providing for the
formation of international charters of labor," he said. "Hith¬
erto, nations have endeavored to protect themselves against
low-paid labor by the imposition of tariff barriers. I hope we
shall, in the future, under the authority of the League of Na¬
tions, seek and find a better way of abolishing low-paid labor
altogether. We hope to raise life and labor from the mere
struggle for bread on to higher levels of justice and human¬
ity." t
In its general form and scope. Article XX of the Peace
Covenant as originally reported was more in accord with the
• In the amended Covenant adopted April aSth this Article is revised and ampli¬
fied to read as follows:
ARTICLE XXIII.
Subject to and in accordance with the provisions of international conventions
existing or hereafter to be agreed upon, the members of the League (a) will en¬
deavor to secure and maintain fair and humane conditions of labor for men,
women and children, both in their own countries and in all countries to which
their commercial and industrial relations extend, and for that purpose will estab¬
lish and maintain the necessary international organizations; (h) undertake to
secure just treatment of the native inhabitants of territories under their control;
(c) will entrust the League with the general supervision over the execution of
agreements with regard to the traffic in women and children, and the traffic in
opium and other dangerous drugs; (d) will entrust the League with the general
supervision of the trade in arms and ammunition with the countries in which the
control of this traffic is necessary in the common interest; (e) will make pro¬
vision to secure and maintain freedom of communication and of transit and
equitable treatment for the commerce of all members of the League. In this
connection the special necessities of the regions devastated during the war of
1914-1918 shall be in mind; (f) will endeavor to take steps in matters of inter¬
national concern for the prevention and control of disease.
t Article XXIII of the revised Covenant seeks to give practical effect to the
sentiments expressed by Mr. Barnes, and, adopted after the report of the Cora-
mission on Labor Conditions, pledges the powers to furnish the machinery for
putting into practical application the recommendations made in that report.
THE LEAGUE OF NATIONS AND LABOR I5I
organization of the International Association for Labor Legis¬
lation than any of the other forms of league or association
suggested for the consideration of the conferees. That asso¬
ciation was formed in 1900, to serve as a means of communi¬
cation between those who in different industrial countries con¬
sidered protective labor legislation necessary, and to organize
an international labor bureau whose mission should be to pub¬
lish in French, German and English a periodical collection of
labor legislation in all countries or to lend its aid to a similar
publication.
But while the labor provision in the Constitution of the
League of Nations was limited to the simple outlines above
quoted, another far more complicated and more far-reaching
plan of international machinery has been in the making by
a different, but associated, official agency.*
On January 25, 1919, the Peace Conference at Paris,
among other subsidiary committees and commissions, created a
Commission on International Labor Legislation, consisting of
two representatives of each of the five great powers and five
representatives of the other powers, charged with the duty
"to inquire into the conditions of employment from an interna¬
tional aspect and to consider the international means necessary
to secure common action on matters affecting conditions of
employment, and to recommend the form of a permanent
agency to continue such inquiry and consideration in co¬
operation with and under the direction of the League of
Nations."
The representatives of the United States on that Commission
were Mr. Hurley, Chairman of the United States Shipping
Board, and Mr. Samuel Gompers, President of the American
Federation of Labor (with two substitutes, viz.: Mr. H. M.
Robinson and Dr. J. T. Shotwell). Mr. Gompers was later
elected Chairman of the Commission. The report recently sub¬
mitted by the Commision and unanimously adopted by the
Peace Conference, recommends the adoption of a proposed
treaty between all the powers members of the League of Na-
* The adoption of the report of the Commission on International Labor Legis¬
lation made necessary a change in the Labor Article of the Covenant which was
expanded into Article XXIII, quoted in note (t) above. That report provided
for the establishment of a Labor Bureau, and other machinery to carry out the
mutual agreements of the revised Article, so it was unnecessary to include a
provision for it in the Covenant.
152 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
tions, creating a permanent organization for the promotion of
the international regulation of labor conditions. It proposes to
make participation in this organization a condition of mem¬
bership in the League. It proposes conferences to be held at
least annually, consisting of delegates nominated by each of
the powers ; but in order to insure the character of representa¬
tion, it is provided that each government shall send four dele¬
gates, two of whom shall be directly appointed by the govern¬
ment and the other two chosen in agreement with the indus¬
trial organizations representative of their employers and work¬
people, respectively. Each delegate may be accompanied by
advisers, not exceeding two in number for each item on the
•agenda of the meeting, and when questions especially affecting
women are to be considered by the conference, one at least of
the advisers should be a woman. Each of the delegates is to
vote individually, the theory being that if the conferences are
really to be representative of all concerned with industry and
to command their confidence, the employers and work-people
must be allowed to express their views with complete frank¬
ness and freedom, and that the employers' and work-people's
delegates should be entitled to speak and vote independently
of their governments. The organization is to function prin¬
cipally through an International Labor Office, under the con¬
trol of a governing body of twenty-four members, to be con¬
stituted as follows:
Twelve representatives of the governments, six members
elected by the delegates to the conferences representing the
employers, and six members elected by the delegates represent¬
ing the work-people. Of the twelve members representing the
governments, eight shall be nominated by the powers which
are of chief industrial importance, and four by the powers
selected for that purpose by the government delegates to the
conference, excluding the delegates of the eight states above
mentioned; the question as to which are the powers of chief
industrial importance to be decided by the Executive Council
of the League of Nations. The members of the governing
board are to hold office for three years.
The functions of the International Labor Office include
the collection and distribution of information on all subjects
relating to the adjustment of international conditions of indus-
THE LEAGUE OF NATIONS AND LABOR
153
trial life and labor, and particularly the examination of sub¬
jects which it is proposed to bring before the conference with
a view to the conclusion of international conventions, and the
conduct of such special investigations as may be ordered by
the conference. It is to prepare the agenda or program for all
meetings of the conference ; and to edit and publish a periodi¬
cal paper in the French and English languages and in such
other languages as the governing body may think desirable,
dealing with problems of industrial employment of interna¬
tional interest. The expenses of maintaining this international
labor organization are to come from the general funds of the
League of Nations. There are elaborate provisions as to what
shall or shall not be included in the agenda to be discussed at
the periodical conferences. When the conference has decided
upon the adoption of proposals with regard to an item in the
agenda, it is to rest with that conference to determine whether
or not those proposals shall take the form; (a) of a recom¬
mendation to be submitted to the high contracting parties for
consideration with a view to their being given effect by na¬
tional legislation, or otherwise, or (¿) of a draft international
convention for ratification by the high contracting parties.
In either case, a majority of two-thirds of the votes cast by
the delegates present is required on the final vote for the
adoption of a recommendation or draft convention, as the case
may be, by the conference. Each of the contracting parties
agrees within the period of one year after the conference to
bring the recommendation or draft before the authority or
authorities within whose competence the matter lies, for the
enactment of legislation, or other action. It is also provided
that in the case of a federal state, the power of which to enter
into conventions on labor matters is subject to limitations, it
shall be in the discretion of the government of such state to
treat a draft convention to which such limitations apply as a
recommendation only. Machinery is provided whereby a state
which fails to carry out its obligations, or to enforce a con¬
vention which has been ratified, may be subjected to economic
measures, to compel it to do so. Thus, if a complaint be made
to the International Labor Office by an industrial organization
of employers or work-people, that any of the contracting
powers has failed to secure in any respect the effective observ-
154 the national institute of social sciences
anee within its jurisdiction of any convention to which it is
a party, the governing body may communicate this representa¬
tion to the state against which it is made, inviting such state¬
ment on the subject as that state may think fit. If none is
received within a reasonable time, or if, when received, it is not
deemed satisfactory by the governing body, the latter shall
have the right to publish the representation and the statement,
if any. Any of the powers party to the treaty also is to have
the right to file a complaint with the International Labor
Office, if it is not satisfied that any other party is securing the
effective observance of a ratified convention. The governing
body in its discretion may either communicate such complaint
to the state against which it is made, or apply for the appoint¬
ment of a commission of inquiry to consider the complaint and
report thereon. In the latter event, the commission of inquiry
is to be constituted as follows :
Each of the high contracting parties agrees to nominate,
within six months of the date on which the convention comes
into effect, three persons of industrial experience, one of whom
shall be the representative of employers, one of work-people,
and one a person of independent standing. These nominees
together shall form a panel from which the members of any
commission of inquiry shall be drawn. The qualifications of
the persons so nominated are to be subject to scrutiny by the
governing body, which, by two-thirds of the votes cast by the
members present, may refuse to accept the nomination of any
person whose qualifications, in its opinion, do not comply with
the requirements of the article. On application of the govern¬
ing body, the Secretary General of the League shall nominate
three persons, one from each section of the panel, to constitute
the commission of inquiry, designating one of them as presi¬
dent of the commission. The high contracting parties agree,
to place at the disposal of the commission all information in
their possession bearing upon the subject-matter of the com¬
plaint. The commission shall make a report embodying its
findings of fact and recommendations and shall indicate the
measures, if any, of an economic character against a defaulting
state which it considers to be appropriate and which the other
states would be justified in adopting, which report shall be
communicated by the Secretary General of the League of
THE LEAGUE OF NATIONS AND LABOR
155
Nations to each of the states concerned, and published. Every
state SO affected, within one month after the receipt of such
report, shall inform the Secretary General whether or not it
accepts the recommendations of the commission, and if not,
whether it proposes to refer the complaint to the permanent
court of international justice of the League of Nations. If any
state shall fail, within the specified time, to take action as
above mentioned, any other of the states parties to the com¬
pact shall be entitled to refer the matter to the permanent
court, and the decision of that court shall be final. The per¬
manent court may affirm, vary, or reverse any of the findings
or recommendations of the commission of inquiry, and shall
indicate in its decision the measures, if any, of an economic
character against a defaulting state which it considers to be
appropriate and which other states would be justified in adopt¬
ing, and in the event of any state failing to carry out, within
the time specified, the recommendations, if any, contained in
the report of the commission of inquiry, or the deci¬
sion of the permanent court, as the case may be, any
other state may take, as against that state, the economic meas¬
ures indicated in the report or decision. It is further provided
that in no case shall any nation be asked or required, as a re¬
sult of the adoption of any recommendation or draft conven¬
tion by the conference, to diminish the protection afforded by
its existing legislation to the workers concerned.
The proposed convention is made extraordinarily difficult
of amendment. Amendments must first be adopted by the con¬
ference by two-thirds of the votes cast by the delegates pres¬
ent, and then ratified by the states whose representatives com¬
pose the Executive Council of the League of Nations, and also
by three-fourths of the states whose representatives compose
the Body of Delegates of the League.
In view of the novelty of the entire scheme, it would seem
that it were wiser to make the plan more flexible by facilitating
râther than preventing amendment. Any question of dispute
relating to the interpretation of the convention, or any subse¬
quent convention concluded by the parties pursuant to the pro¬
visions of this convention, is to be referred for decision to the
permanent court of international justice. Pending the crea¬
tion of such a court, disputes which, in accordance with the
156 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
convention, should be submitted to it for decision, are to be
referred to a tribunal of three persons appointed by the Execu¬
tive Council of the League of Nations.
The first meeting of the conference is appointed to be held
at Washington, D. C., in October, 1919. The Commission
itself has prepared and published the agenda for that meeting.
The subjects thus determined upon for discussion are the fol¬
lowing ;
1. Application of the principle of an eight-hour day or forty-
eight-hour week.
2. Question of preventing or providing against unemploy¬
ment.
3. Women's employment.
a. Before and after childbirth, including question of ma¬
ternity benefit, b. During the night, c. In unhealthy
processes.
4. Employment of children.
a. Minimum age of employment, b. During the night,
c. In unhealthy processes.
5. Extension and application of the international conventions
adopted at Beme in 1906 on the prohibition of night work
for women employed in industry and the employment or
use of white phosphorus in the manufacture of matches.
Besides reporting the proposed treaty or convention, the
Commission adopted a resolution expressing the hope that
as soon as possible an agreement should be arrived at between
the high contracting parties with a view to endowing
"the international labor conference, under the auspices of the
League of Nations, with power to take, under conditions to be
determined, resolutions possessing the force of international
law."
The Commission further reported that its members are
unanimous in thinking that their work would not be completed
if it were simply confined to setting up permanent machinery
for international labor legislation. While it was not within
their province, or within their terms of reference, to deal with
specific questions relating to industrial conditions and to work
them out with the detail necessary for the framing of pro-
THE LEAGUE OF NATIONS AND LABOR 157
posais which could be accepted in binding form, nevertheless,
they were so impressed with the urgent need for recognizing
certain fundamental principles as necessary to social progress,
that they decided to submit a series of declarations for inser¬
tion in the peace treaty. These recommendations they have
made merely in general form, some recommended by a ma¬
jority, some unanimously, which are to be submitted to the
high contracting parties for their consideration. They do not
ask the high contracting parties to give immediate effect to
these principles, but only to endorse them generally. It will
be the duty of The International Labor Conference to examine
them thoroughly and to put them in the form of recommenda¬
tions or draft conventions elaborated with the detail necessary
for their practical application. The recommendations are as
follows :
"i. In right and in fact the labor of a human being should
not be treated as merchandise or an article of commerce.
"2. Employers and workers should be allowed the right of
association for all lawful purposes.
"3. No child should be permitted to be employed in in¬
dustry or commerce before the age of fourteen years. In
order that every child may be ensured reasonable opportunities
for mental and physical education, between the years of four¬
teen and eighteen, young persons of either sex may only be
employed on work which is not harmful to their physical de¬
velopment and on condition that the continuation of their tech¬
nical or general education is ensured.
"4. Every worker has a right to a wage adequate to main¬
tain a reasonable standard of life having regard to the civiliza¬
tion of his time and country.
"5. Equal pay should be given to women and to men for
work of equal value in quantity and quality.
"6. A weekly rest, including Sunday, or its equivalent for
all workers.
"7. Limitation of the hours of work in industry on the basis
of eight hours a day or forty-eight hours a week, subject to an
exception for countries in which climatic conditions, the im¬
perfect development of industrial development or industrial
organization or other special circumstances render the indus¬
trial efficiency of the workers substantially different.
"The International Labor Conference will recommend a
basis approximately equivalent to the above for adoption in
such countries.
"8. In all matters concerning their status as workers and
158 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
social insurance, foreign workmen lawfully admitted to any
country and their families, should be ensured the same treat¬
ment as the nationals of that country.
"9. All States should institute a system of inspection in
which women should take part, in order to ensure the enforce¬
ment of the laws and regulations for the protection of the
workers."
Very useful progress may be made by the acceptance of
this program for discussion at the Washington meeting. De¬
bate by delegates from all these countries of such subjects
as those suggested by the Commission must be of great value
in forming public opinion and inducing intelligent and wise
legislative action. As Mr. Mackenzie King, the Canadian
Minister of Labor, recently pointed out, there are four parties
to industry: Labor, capital, management and the community.
The problem of the right adjustment of the interests of neither
one of these can be determined without regard to the others.
It has seemed at times that the interests of the community at
large more sorely than any other need representation and pro¬
tection from the consequences of industrial disputes. If the
machinery devised by the Paris Conference shall accomplish
the end of creating a medium for the discussion and clarifying
of thought upon these vital subjects, which shall command the
confidence of all parties affected, it will have rendered a con¬
spicuous service to mankind.
It has not yet been announced from Paris whether it is
proposed to submit the convention recommended by the Com¬
mission on International Labor Legislation as a separate treaty,
or as a part of the Covenant establishing the League of Na¬
tions, or as a part of the general peace treaty. It should be
considered on its own merits, separately from both the general
peace treaty and the Covenant establishing the League of Na¬
tions, because, while it is intertwined with the provisions for
the League of Nations, it is susceptible of separate treatment,
and some of its provisions ought to receive most careful con¬
sideration on the part of Congress before it is adopted.
But on the whole, I think no one can read the proposed
convention without being struck with the care, the restraint
and the balance with which it has been prepared. The whole
scheme is a notable advance in the consideration of questions
the league of nations and labor
159
affecting working-men, women and children in all lands, and
promises, if carefully considered and wisely administered, a
very marked and very notable improvement in the civilization
of the world, so far as it affects those people upon whom fall
the greatest brunt of the world's burdens.
I have felt, personally, that if this war came to an end
and we returned to our pre-war occupations without having
accomplished some tangible, definite step forward, some step
which promises to secure the peace of the world as long as it
is possible to preserve it, every living man and woman in this
generation would be derelict to his sacred duty.
I also feel that unless something be done towards extending
the benefits of our civilization—the better protection of life,
liberty and property, to those who are most defenseless—again
we would fail to perform the duty which is laid upon this gen¬
eration. We must consecrate the victory that has been won
to the advancement of the interests of mankind, and we must
do it by sacrificing something of our own preconceived notions
and of our own selfish concerns, to the general welfare of
mankind.
President Johnson : General Wickersham's scholarly
and intensely interesting address has put us all under deep
obligations to him. There are, however, several speakers that
we desire to hear, and I shall not permit myself to make any
observations upon what others say.
I think most of you know that the National Institute of
Social Sciences, in addition to its aim of having meetings
and gatherings such as this and the publication annually of a
volume called the Journal, has also the purpose—and to many
of us it seems perhaps the most worthy purpose—of deciding
each year what men and women have made the most notable
contribution to the welfare of humanity and of their country,
and to recognize those so selected by the award of an appro¬
priate medal. In the past, men like President Taft and Presi¬
dent Wilson, to whom I referred at the opening of our pro¬
gram of addresses, have been recognized ; also men like Gen¬
eral Gorgas, General Goethals, Mr. Henry P. Davison, Mr.
Oscar S. Straus, and in the field of scholarship men like Dr.
Henry Fairfield Osborn. Sixty-two individuals have been
î6o THE NATIONAL iNsTiTÜtE Oí SOCIAL SCIENCES
recognized by appropriate gold and presentation medals during
the past six years.
This year it seemed clear to the Medal Committee of the
Institute that there were two fields in which achievement de¬
served first consideration. They were the fields of labor
leadership and of medical science. There could be no ques¬
tion as to the man who should receive the medal for achieve¬
ment on behalf of labor. The first gold medal was awarded
to Mr. Samuel Gompers.
THE MEDAL TO SAMUEL GOMPERS
PRESENTATION SPEECH BY GEORGE GORDON BATTLE, LL.D.
Mr. Chairman, Ladies and Gentlemen; Mr. Gompers:
This Institute esteems it a high privilege to be able to pre¬
sent this medal to you, Mr. Gompers, as one of the citizens
who have rendered valuable service to our country in these
past five critical years. During this time there is no name
that stands higher on that noble list—I say it advisedly-«—than
yours ! At the beginning of this epoch upon which so much
depended, at the very beginning of the cataclysm that has
rocked and is still rocking the world, it was evident that the
success of the cause of humanity and of justice depended
chiefly upon the attitude of labor, upon the attitude of the
wage workers of the world. To us in this, the greatest of all
industrial countries, it was especially vital that our wage
workers, the great element of labor upon which all the welfare
of the country depends, should take from the very beginning
the correct position upon this question.
You stood, sir, in the forefront of that movement, you had
already earned and enjoyed the respect and the confidence of
the wage workers of America, and, indeed, of the wage work¬
ers of the world. You had already earned the confidence of
the country, you had already earned the confidence of forward-
looking and honest men and women throughout the world.
And so, sir, you stood in a position to influence public opinion
and to guide and direct that great force of labor, organized
and unorganized, which you represented. From the first, there
was never a doubt as to your position. You had the keenness
of perception to apprehend and the intelligence to firmly com-
lîEPORT OF ANNUAL DINNER l6l
prehend the crucial fact that the cause of the Allies was the
cause of humanity, the cause of justice ; and you threw on the
side of that cause the weight of your great influence with the
cohorts of labor led by you.
And this determination you followed with unswerving
zeal, intelligence and energy, you labored in season and out
of season, you labored morning, noon and night, you labored
overseas and on this side of the sea, for the cause of our
country, for the cause of the Allies, for the cause of human¬
ity ! Your efforts have been crowned with a glorious success.
You have won an imperishable glory, and you have earned the
undying gratitude of your fellow citizens.
And so, sir, the Institute counts it an honor to present
to you this medal for those services. But let me say in closing
that there is another aspect to which I wish to call your atten¬
tion and the attention of those who are here to-night. Grati¬
tude has been said to be an appreciation of favors to come, and,
indeed, it is largely true that our sense of gratitude for the past
is rendered keener if we can look forward to a continuation
of the same benefits in the future. And in that sense, sir, this
country and the world still looks to you for a continuance of
your aid, your assistance, your counsel and your advice, be¬
cause we still stand on the eve of perilous times. We have not
yet passed from out of the era of danger; indeed, I may say
that we are just entering upon a period when questions no less
important, no less vital than those of the war are to be solved.
Peace has its victories no less renowned nor less important
than war; it may also have its defeats, even more disastrous.
We must look forward, and do look forward, to an immediate
future, in which these problems must be met and must be
solved. We must look to your assistance, to your advice, as
well as to the advice of other leaders, to guard us against the
dangers of reaction, unthinking reaction on the one hand, and
of violence and disorder on the other. We must look to your
safe and sane intelligence, to your patriotism, to your honesty
of purpose, to your zeal and to your splendid and indomitable
courage, to guide us in the future, as you have guided us in
the past, by the compass of justice and of truth; so that the
gratitude which we owe you for the past may be redoubled
for your services in the future.
102 the national institute of social sciences
And now, sir, with thanks, with deep and sincere, gratitude
for what you have done for your country and the world in
the past, and in the confident anticipation that we can look for¬
ward to your assistance in the future, I beg to present to you,
on behalf of the Institute, this medal.
President Johnson : Mr. Gompers, before handing you
the medal which has been conferred, I wish to read a few
words which Mr. John Mitchell would have added to Mr.
Battle's appreciation, had Mr. Mitchell been able to be here
to-night. Mr. Mitchell says:
"Few men in America have rendered greater service in the
cause of all our people, few men have contributed more to the
success of the war and to the enthusiasm of our people in the
prosecution of the war than has Mr. Gompers. His whole
life has been consecrated to the constructive advancement of
humanity. His name will live in the hearts of the American
people ; his achievements will be recorded in history."
Mr. Gompers, I have the honor to confer upon you the
gold medal of the National Institute of Social Sciences.
the reply by mr. gompers
Mr. President, Ladies and Gentlemen : I doubt if any one
can experience the conflicting emotions which come over one
in such a trying hour as this, except the one who is the recip¬
ient of so great an honor. If it hadn't been for the fact that
General Wickersham had anticipated me in my speech, I might
have been better prepared to say something. Just before sit¬
ting down to dinner this evening he related to me—and I think
within the hearing of the President—that quite recently he
was invited to a dinner where he was given a theme upon
which he was to address the assembled guests. He had made
some little preparation for that address and upon that theme,
and then at the dinner he was politely informed that for want
of time they had cut out that theme and assigned to him an¬
other.
May I say this? That I was deeply impressed with the
address of General Wickersham this evening. He has done
for you and for me, and for our country, and for the world,
a great service. The succinct review of the work of that In-
REPORT OF ANNUAL DINNER
163
ternational Conference held in Paris will be of great historic
value for the future. It will be a ready reference, even to
those who were intimately connected with the work, and
surely it will help the students of history in understanding this
great achievement in the interest of the working people of the
whole world, and in the interest of common humanity.
I find myself in the same position that General Wicker-
sham found himself in at that dinner, only he has done it very
much better than I could even have hoped to have done it.
First, may I say, Mr. President and members of this Insti¬
tute, a few words of the deep gratitude I feel for this honor
which you have conferred upon me? This medal, expressive
of your appreciation of that which I have tried to do, is some¬
thing that touches my very soul. You will observe that I have
emphasized the words "tried to do," for, after all, it isn't
given to everybody to have the opportunities of doing, of
achieving, and the man or the woman who tries to do the right
is as deserving of honor and recognition as the one who has
had the better opportunity and who has achieved.
May I interpret this honor as not alone conferred upon
me, but upon the men in the Labor Movement of America, who
have stood one hundred per cent in cooperation with me, and in
loyal service to our country and its cause?
I have been honored in the past; marks of recognition
have been given me, but I venture to say that none has touched
me quite so deeply as the presentation of this medal and all
that it implies. For there are quite a number of the officers
and directors and Medal Committee, men and women with
whom I have scarcely any acquaintance, and to have this rec¬
ognition coming so voluntarily touches me so closely and so
deeply that I cannot find words to adequately express my
gratitude.
And so I accept it, with all that I would like to say, and
which I find myself incapable of saying, but I trust that you
may take the will for the deed and understand that which is
in my heart and in my mind to say.
May I take your time to say this? That in the splendid
presentation of the work of the International Commission for
Labor Legislation, two items, perhaps, ought to be added:
One, that no international convention or treaty can be adopted
164 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
by the international labor conferences at their annual sessions
unless it is approved by at least two-thirds of the delegates to
the conference; and the other, that for the protection of Amer¬
ica and for the protection of the countries in which the higher
standards prevail, standards of life and work, a protocol was
adopted by the International Commission and approved by
the Plenary Peace Council sitting at Paris, that no country
may be asked, or requested, to enforce any standard adopted
by an Internationa! Conference, when the standards existing
within the country are higher than those which are provided
in the convention.
Now, a little personal reference, if I may indulge myself.
At the opening meeting of the International Conference I was
elected its president, as the Dean of the Labor Movement of
the World, and as one who has given more years of continued
service than any other living man. It was a great honor, and
one which I deeply appreciated. But very soon I found myself
in a hopeless minority of one; and that procedure continued
for more than nine weeks. It wasn't all easy going. It was
contest and conflict from the opening session until within a day
of the final session.
Senator Burton is on the platform, and he has presided
in that great, honorable position of President of the Senate,
either pro tem., or at various times. He, as well as every
other man or woman who has presided at any legislative gath¬
ering, will understand the rather peculiar position of the pre¬
siding officer being in an absolute minority of one.
However, it was on the last day of the session; that is,
legislative day, when unanimity was accomplished by means
of the protocol to which I have just made brief reference. It
was impossible for my associate and myself to stand as Amer¬
ica's representatives in that International Commission, when
it might be possible that an International Labor Conference,
as provided in the convention, might impose conditions upon
the American workers inferior to those which have been
achieved by and for the American workers. Nor could we tol¬
erate, or permit to be enacted in that convention any provision
that aimed a blow at the Constitution of the United States of
America !
There may come a new concept of our form of government
' ~ " REPORT OF ANNUAL ßiNNER 165
—I have reference to the exaggerated notion of state rights—
and yet the maintenance of the principle of state rights, and
particularly in reference to international legislation affecting
the powers of the several states of our Union. It was a very
great shock and a cause for general discussion and criticism,
that the Supreme Court of the United States had swept aside
as unconstitutional the Child Labor Law, enacted by the Con¬
gress of the United States; but the situation was as it was,
and we had to do the best we could with the organization of
the government of the United States, and even though there
may have been, in the judgment of my associate and myself,
the thought that there was too great an emphasis placed upon
state rights, when it came to legislation of the character with
which our commission had to deal. Yet the Constitution was
as it was, and we were not going to be parties to the violation,
of the principles of the Constitution of our country.
But the work was done. It was a hard piece of work
to construct a machine, an organism which could functioir
aptly, effectively, and yet do no violence to any law, consti¬
tution or right of any country. The languages of the Con¬
ference were English and French, and every word uttered
in one language was interpreted into another, until my lin¬
guistic ability in the French language was quite notable, par¬
ticularly for the merriment of my associates.
If you have put in about nine weeks, nearly every day,
in sessions from three to seven hours, in which a language
with which you are fairly familiar and another of which you
know little are spoken, you have found a task I would not
wish upon everybody—and there was contending for every
feature and point in order that justice might prevail.
I know this will interest you, when I say that the first point
which the International Commission recommended for adop¬
tion in the Peace Treaty was that declaration contained in the
Clayton Law, that the labor of a human being is not a com¬
modity or article of commerce; and that humane declaration
of the Congress of the United States is now recognized as an
international principle !
I know that General Wickersham will appreciate this fact:
that when the Clayton Law was enacted, Mr. Wickersham
wrote an opinion as to the effect of that law, and he said that
l66 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
under its provisions no case could again be brought in the courts
of the United States as was brought in the Hatter's case ; and
I assure you that his review of the Clayton Law, and particu¬
larly the labor provisions of that law, confirmed me that we
were on the right track. It was a great source of comfort
that the General sustained the principle of that law.
Now, just a word—I shall not detain you much longer. We
have won the war ; that is all there is to it : we have won the
war ! We entered the war not alone because of the murder of
our innocent men and women and children, hut because the
spirit of America was aroused! It was not only a menace to
the democracies and the civilization of the peoples of Europe,
hut it was a menace and a challenge to the Republic and the
Spirit of Freedom of the American people!
We entered the war high-spirited, and maintained that spirit
all through. Labor, before the war was declared (three weeks
before), held a conference in the city of Washington, and
there declared that come what may, whether in peace or in
war, the American workers would stand faithfully behind our
Republic to the end ! And, better than all of the declarations,
they stood true to their faith to the end.
We have all done our share, as time and opportunity gave
it to us, and with that same spirit of high-mindedness, of
courage, of the sense of justice, the duty to make it possible
tbat we might live our own lives and work out our own sal¬
vation as a free people, and to give the people of the world the
same opportunities, there has been a merging of men and
women, there has been a merging of spirit, a better understand¬
ing and a better concept of the rights of all.
And now that the war is practically over—and God grant
that it may not be renewed for any cause—and the cloud that
is now hovering above the Peace Commissioners in Paris may
soon be dispelled and entire agreement reached—the war is
practically at an end; technically it is not, but it is at an end
for all practical purposes, and now we are confronted with
the trying hours and times of peace, the problems of peace.
We must understand that the world is in the remaking; the
relations between man and man must take on a new concept,
we must deal fairly by each other and have the consideration
among our own people, that the men who have sacrificed their
REPORT OF ANNUAL DINNER
167
all, the men who have returned from the fighting fronts, the
men of labor, must have the opportunity to live, and to live
rightly, as becomes the sovereign citizenship of our country.
Only within quite a few hours I learned that in one great
establishment, in one of our cities, there are 60,000 men who
are unemployed in one industry and under one management.
To the men who come back from France and find that their
employment is gone, that they have not the means of self-
support and the maintenance of those dependent upon them ;
to try and make them understand that we have had a triumph¬
ant, glorious victory will mean nothing to them! We can un¬
derstand that in a militarist country, where their government
and their armies have been depleted, that discontent, a feeling
of humiliation and resentment may take possession of the peo¬
ple. But in a country with the wealth and the genius of our
people and our land, tell the man, or the group of men who
are unemployed, through no fault of their own, that they have
won a glorious victory for humanity, and it will be meaningless
to them. We must find the way out. It devolves upon em¬
ployers, it devolves upon workers, it devolves upon publicists,
it devolves upon the government, the Congress and the Legisla¬
tures of our country, to see to it that the era of peace and re¬
construction shall have a new meaning in the affairs of the
people of our Republic! Nothing can be more harmful than
a situation where men, after having returned from a victorious
struggle, find that the spirit of industrial autocracy has taken
the place of political autocracy. There must be better under¬
standings, a mutual recognition of each other's rights, and a
fair and honest effort to reach a conclusion beneficial to in¬
dustry and commerce, and particularly to humanity.
I appeal to you, ladies and gentlemen, and through you,
to whom it may concern, to understand this fact : That the
American Labor Movement, as represented by the American
Federation of Labor, is a movement for the protection and the
promotion of the rights and interests of all the people of our
country. It aims to destroy nothing worthy of its existence.
It aims to make to-day a better day than yesterday ; to-morrow
a better day than to-day, and each recurring to-morrow a better
day than the one that has gone before. It aims at a construc¬
tive policy. It aims to help, it understands its rightful position
l68 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
in the affairs of our nation ; it asks that it be accorded rights
and freedom for justice and for democracy, and for a right
life.
Gentlemen, if the attitude of employers of labor shall be
one of relentless antagonism to the voluntary system of organi¬
zation of the workers for the constructive and normal and
rational development of the interests of the working people of
our country ; if that antagonism finds its repetition in relentless,
bitter antagonism and policies, you may possibly destroy our
movement—it is just likely that that can be done. I have very
grave doubt that it is possible to do that, but if it be possible
to do it, if our movement can be either destroyed or weakened,
you will have another element to deal with. It is not a wish,
but it is a forecast—as the weather man at Washington pre¬
dicts, from the reports which come to him, the likelihood of
the weather in the next twenty-four or forty-eight hours, so
in the industrial and the sociological world I receive reports
from all over the country, and I am no more responsible for
what may follow, because I forecast it, than is the weather
man for a snowstorm or a blizzard.
The men of labor in America, organized in the trade unions,
and the women organized, are the militant body who are con¬
tributing their time and their means for the purpose of pro¬
moting the rights and interests of all the workers, and while
it may be true that primarily they may have their own member¬
ship in view, there isn't a thing that they can do, either in the
way of an advance or a check of retreat, but what must have
its beneficial influence upon the unorganized.
A country does not send all its men to war. It organizes
an army of a number of its men, and these men must bear
the brunt in order to protect the men and the women who are
left at home. And so with the organized labor movement, they
bear the brunt of cost, of time and heartache, for the great
mass of labor. There isn't a law passed by the Congress, or by
the legislatures, or by any municipality, for the working peo¬
ple that can affect the men and women in the organized labor
movement alone—it affects all who work! There isn't any¬
thing that can be done by organized labor that does not find
its reflex in the home and the life and the work of all the
toilers of our land.
report of annual dinner
169
I am pleading for this common action among all our people.
I speak to my fellow workers in plain terms, so that there can
be no misinterpretation placed upon what I say. I speak to
you, ladies and gentlemen, and I speak to employers of labor
wherever I may be, in terms that leave no room for misunder¬
standing. It is a common duty that devolves upon all of us
to see to it that this great time and opportunity which has
come to us shall not be lost or frittered away.
It is a great privilege to have lived and to have been of
some service to the cause of justice and freedom and democ¬
racy ! It was a great privilege to work in order that our fighting
boys on land and sea might be sustained. It was a great work
to help in stabilizing the good will and the energy of the peo¬
ples of the various countries, our own included. The glamor
of war and the enthusiasm which war arouses does not exist
to-day, and it is difficult to arouse men and women to under¬
stand and to act in this trying time of peace.
It is the purpose that I have to prevail upon my fellow
citizens, men and women, employers and workers, men in
public life, men of influence, to mold the judgment and action
of our people, men and women of labor, to do their all, to per¬
form their full duty in order that the tranquillity of our nation
may be maintained ; that this Republic of ours shall be not only
the political but the industrial leader of the world, the land
which gives to the whole world a better concept of right life
and right living, and the relations between man and man, and
between nation and nation. In that hope, in that thought, and
with the best utterance that I can give forth—if we fail, the
light of hope will go out all over our land. Men and women,
don't let that occur!
the medal to mr. charles m. schwab
presentation speech by honorable de lancey nicole
Mr. President, I consider myself very fortunate on this
delightful occasion, where there are assembled so many intel¬
lectual men and so many intellectual and beautiful women,
to have been chosen by the Institute to make one of the pres¬
entation addresses.
Ever since the armistice there have been many honors and
170 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
decorations conferred upon many persons who contributed
to the great victory, but I think I may venture to say that no one
is more deserving of the honor which the Society confers to¬
night than the distinguished gentleman to whom I am asked to
present a medal.
Before the war our friend, Mr. Schwab, was known
throughout America, and indeed throughout the world, as one
of the greatest captains of industry, one of the master builders,
one of the men who had accomplished great things. At the
early age of thirty-six, I think, he was the president of the Car¬
negie Steel Company. At the age of thirty-nine he was the
president of the United States Steel Corporation, which was
really the product of his own genius. Later on he rescued
the moribund Bethlehem Steel Company, and made it as it is
to-day, one of the greatest manufacturing concerns in the
world I
When the war in Europe came on, he deemed it to be his
duty to devote himself to the manufacture of munitions for the
Allies. He was consulted by the representatives of England
and Erance. They have testified in writings, which you have
all seen, what he was able to do for them. I think it is no
exaggeration to say that the assistance which the Bethlehem
Steel Company gave to the Allies, before we came into the
war, was one of the greatest contributions to the victory which
ultimately came about.
When our war came on, in April, 1917, he devoted himself
with patriotic fervor and redoubled energies to the manufac¬
ture of munitions for the United States. He converted the
great Bethlehem Steel Company into a munitions plant, and
devoted himself entirely to the manufacture of articles of war.
I have read somewhere the extraordinary results which he
accomplished. The figures are so astounding that I find it
difficult to carry them in my mind, but some of them I have,
and I may briefly state them. I believe the Bethlehem Steel
Company produced, in finished guns, from the 14-inch gun
down to the 2-inch gun, something like 3,319 guns. In addi¬
tion to that, the company produced 55,000,000 pounds of steel
forgings, which represented uncompleted guns ; and when those
guns were completed the Bethlehem Steel Company had pro¬
vided for the Allies and the United States something like 13,-
REPORT OF ANNUAL DINNER
171
000 guns, with all the accessories accompanying them. And
after our war, out of the total number of 55)'-*'^''^®® pounds
of forgings, the Bethlehem Steel Company completed 35,000,-
000 pounds of steel forgings. Indeed, the company actually
produced over 65 per cent of all the American guns which
went to the Allies and the United States during the war !
The company furnished 18,000,000 or 19,000,000 rounds
of ammunition for these guns, and 1,500,000 of projectiles.
And not only that, but it added three great plants and two or
three great testing grounds, for the different kinds of am¬
munition that it produced. And not only that, but it produced
58 merchant vessels, 25 destroyers, and when the war came
to an end it had 35 more destroyers, and any number of ships
in course of construction.
Now, ladies and gentlemen, that was an extraordinary
achievement in itself, and if our distinguished friend whom
we are honoring to-night had done nothing more, he certainly
had done enough to entitle him to the honor medal of this
Society. But there came a time in the history of the war
when he was called upon to do something more. He was
called upon to speed up the belated program of ship construc¬
tion. You all recollect the critical situation in which we found
ourselves when Mr. Schwab was called to Washington and
was asked to give up for the time, the management of the
Bethlehem Steel Company and become the Director General
of the Emergency Fleet Corporation. No doubt it was a great
sacrifice for him to make, but he did it cheerfully and accepted
the office which the President conferred upon him, and devoted
his extraordinary energy and unrivaled executive ability to
the great and necessary business of speeding up the ship con¬
struction ; and as we now see it, indeed, as all the world sees it,
that was the real thing which helped to win the war! The
problem was ships and more ships, and ships in the quickest
possible time. Who was the man to get the ships ? What man
in the United States could be found who could produce the
ships—for ships were necessary to win the war. And the
undertaking fell to Mr. Schwab, and you know how he dis¬
charged it ; you know that in an incredibly short space of time
he produced the results which were necessary to win the wan
We all recollect how he did it, how he went around to all of
172 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
the shipyards in the country, and in a series of eloquent
speeches aroused the men who were working in the yards
to a sense of their duty ; how he was able to call more men to
the shipyards, and keep them working at the very top of their
ability.
There are a great many different views about what won
the war, but I say that the man who built the ships, more than
anybody else, won the war I
I have the greatest admiration and gratitude for the
achievements of our heroes who went to France and fought
the battles which brought about the final result. No one has
a greater admiration for them than I have. My bosom swells
with pride when I think of what they did. At Cantigny and
Château-Thierry, at San Mihiel, in the Argonne Forest,
through the Hindenburg line, across the Meuse and at Sedan
they took the German beast by the throat and drove him
to his lair! Thousands of them gave up their lives for
the safety of the world and the welfare of mankind. The
plains of Flanders and France are watered with their precious
blood and their bodies lie in the gory fields, where they fought
so valiantly and so well. But of what avail all this matchless
valor, this wonderful bravery, this unsurpassed fighting, unless
we had the ships to take them to France, the ships to give
them the munitions of war, the ships to give them the neces¬
sary supplies. The man who contributed to the establishment
of the Great Armada, who took our heroes and their munitions
and supplies to France, is one of the men who made the great¬
est contribution to the war.
We have a great many other reasons for giving the medal
to our friend Mr. Schwab. He has many other qualities be¬
sides his wonderful executive ability, his great breadth of
vision, his unparalleled energy and his powers of concentra¬
tion, and all the other elements of greatness. Those of us
who know him well know him as a man who loves nature, a
man who loves art, a man who loves his country, and, greater
than all, a man who loves his fellowmen.
It is for all these qualities, in addition to his great achieve¬
ments, that we honor him and honor ourselves to-night by con¬
ferring this medal upon him. I thought it was going to be
my privilege to give him the medal, and I was prepared to
REPORT OF ANNUAL DINNER
173
kiss him on both cheeks, but I see that is coming to the Presi¬
dent.
THE REPLY OF MR. SCHWAB
Mr. President, Ladies and Gentlemen : The hour is late ; I
shall occupy little of your time. I accept this splendid medal
of your appreciation with all the eloquent words, repeated,
with which my friend, Mr. Gompers, so splendidly responded a
few moments ago. I want to say that I accept it in the same
spirit with which the great Marshal Foch, when I first met
him in Paris, replied to me. As every true-hearted citizen
would have done, I complimented and thanked him for the
splendid contribution he had made to the war. His reply was
that the great staff conducting the war was like an orchestra,
that it was necessary for each instrument to play its part in
complete harmony with the entire orchestra ; and that the baton
that fell to his hand was but chance and good fortune, and
that he had only done his duty to the extent that every other
member of that great orchestra had done his duty.
And so, Mr. President, in accepting this honor at your
hands, I do so with the feeling that I am accepting the honor
for myself and the staff which assisted and cooperated with
me as harmoniously as the orchestra of the great Marshal,
in the accomplishment of the task that was before us, and not
in the personal sense, so flatteringly stated by the gentleman
who made the address of presentation to me.
I have been a fortunate man in life—fortunate in many
things—health, family, wealth, all that—but the one piece of
good, great fortune that came to me at the beginning of this
war was to have owned and controlled the one great munition
works, free of the war, that I could turn over to my country
for its protection.
And, above all, to feel what was of still greater pride, the
sensation that comes to every true American citizen, that no
sum of money, however great, could ever divert his patriotic
thought for one moment from opportunity offered to do good
for his country.
This works and the staff which operated it (the Ship
Works) have done their share, but we did it under the spur
of approval of the people and the citizens of the United States.
174 the national institute of social sciences
Such action as yours, Mr. President and gentlemen of the
Society, has been my own ideal of how the great and suc¬
cessful things in life may always be accomplished; never under
the spur of carping criticism, but always under the stimulus
of encouragement and approval; and whatever may come to
one in life, to the man that is worth while there is nothing
which will live in his soul and memory so long, so lastingly
and with such effect as the approval of his fellowmen.
I would like to make acknowledgment of something in the
second article of Mr. Gompers' reply, which to me is the most
important of all, and which I heard with much interest : "Em¬
ployers and workers should be allowed the right of association
for lawful purposes."
I have known my friend, Mr. Gompers, for a great many
years ; we have differed materially in our opinions at times, but
I am obliged to say that I think that second paragraph of more
importance than all the rest of the document together. The
time has arrived when employers and employees must be one.
In our great establishment we adopted a year ago the plan of
having our workmen elect their own representatives to confer
and sit at boards with our management, to discuss all phases
of pay and employment of labor, and, although I had opposed
it in principle for many years, I am now obliged to say pub¬
licly that under no condition would I go back to the old system •
of labor employment.
Mr. President, there is much that I might say on this
subject, but there is one thing I would urge upon this great
country of ours, in corroboration of all Mr. Gompers has
said, and that is, while we can spend billions for war, in this
great social change that is about to come over our country this
government should be prepared, if necessary, to spend billions
for all sorts of internal improvements and extensions to the
industries, railroads and public utilities of our country, if for
no other good purpose than that of keeping our work people
during this period fully employed.
I thank you, Mr. President; I thank the Society; I thank
you, Mr. Nicoll, for your prejudiced eulogy, the eulogy of a
friend who speaks what is in his heart—perhaps not always
the truth. I thank you all for your kindly reception, and,
above all, for the honor which you have conferred upon me.
REPORT OF ANNUAL DINNER
175
And so, in that spirit of gratefulness, with the humility
that comes to one who feels he has not done as well as he
might have done, but who under all the circumstances did his
best, I accept the medal from your Society with the deepest
possible appreciation.
THE MEDAL TO HARRY A. GARFIELD, LL.D.
PRESENTATION SPEECH BY PROFESSOR SAMUEL MCCUNE LINDSAY
Mr. President, Ladies and Gentlemen: The distinguished
and genial President of Williams College will appreciate, I am
sure, our difficulties amid the warmth and plenty of this festive
occasion, in bringing back a very vivid recollection of the
meatless days, the wheatless days, the fuelless days, the light-
less nights, and the gasless Sundays of a year or more ago.
It was a great and difficult task to which Dr. Garfield was
called by the government during the war emergency, and I
think that in this country we have two examples, the only two
examples in the world, of men who were called to perform the
duties of Food Administrator and Fuel Administrator, and sur¬
vived many months of administration. We have still the two
men in office who began that work and performed it to the
satisfaction of their fellow citizens until the end of the war.
Dr. Garfield's great success as Fuel Administrator, of
course, is well known to us all. It may not be, perhaps, so
vividly in our minds that before he was Fuel Administrator
he was equally distinguished as a practical business man, as a
coal operator, as a lawyer and as a Professor of Law and of
Political Science. He brought a great many qualities and
much valuable experience from the Food Administration with
him when he organized the Fuel Administration.
There are three things that distinguished Dr. Garfield's ser¬
vice which have already, I think, received widespread recogni¬
tion and will be permanently recorded in the history of the war.
First, the public interest was supreme in the plans of the Fuel
Administration. Tireless energy and an eye single to the pub¬
lic interest with never the slightest suspicion that political in¬
fluence affected any of his acts, were characteristic of Dr. Gar¬
field's daily routine. He faced every problem—and they were
extremely difficult problems that he had to face—with calm-
176 the national institute of social sciences
ness, with clearness of vision and with absolute impartiality.
Second, a social spirit dominated the task which was so clearly
stated by him in the very first official document he issued, name¬
ly, to secure the maximum coal production, with reasonable
profit to the producer and the lowest possible cost to the con¬
sumer. I am inclined to think from what I have heard of the
record of the Fuel Administration of other countries that we
had by far the best record of any country in the world, in the
accomplishment of those purposes. We got the maximum pro¬
duction of fuel in this country during the war, with reasonable
profit to the producer and at a lower cost to the consumer, I be¬
lieve, than in any other country in the world. Third, the co¬
operation of the public with the Fuel Administration was its
best achievement. Dr. Garfield's administration was character¬
ized not only by the calm social spirit in which the somewhat
arbitrary and necessarily dictatorial orders of the Fuel Admin¬
istrator were executed, but by a high degree of voluntary co¬
operation on the part of those affected by those orders.
Throughout it all Dr. Garfield always appealed to the sense of
obligation and opportunity to serve a common cause on the part
of all groups in the community. His regulations in the case of
the gasless Sundays, as they were called, furnish the best illus¬
tration of what I mean. His orders were often not commands
at all; they were appeals to the social spirit of America, they
were appeals to the patriotism of America, and in some of
those appeals he set a very high standard of government
achievement in the difficult science and art of public adminis¬
tration.
Especially during the period of the war we have had to
undertake great and new tasks of government, and it looks,
from what has been said here this evening as well as from
many other indications, that we shall have to look forward in
the future to undertaking many more new tasks of govern¬
ment. One thing is sure, we do not want the spirit of the bu¬
reaucrat in America—we do want a great deal more of the
spirit of the administrator of the type of Dr. Garfield, the ad¬
ministrator who doesn't rely solely upon the authority that he
possesses—great as that authority may be—^but realizes that
something far more effective than the authority of law is the
appeal to the conscience and the sense of right in the people
REPORT OF ANNUAL DINNER
177
over whom he exercises authority. It is in this third respect
that Dr. Garfield seems to me to have rendered the greatest
and most lasting service to the nation as Fuel Administrator.
I take great pleasure, Dr. Garfield, on behalf of the Na¬
tional Institute of Social Sciences, in telling you that the medal
of the Institute has been awarded to you as a mark of esteem
and the high regard of your fellow citizens for you personally
and appreciation of the great value of your public service.
THE REPLY OF DR. GARFIELD
Dr. Johnson, Ladies and Gentlemen; We have been en¬
gaged in the delectable task of making one another's speeches
to-night. You will observe that each speaker has made the
same point by way of introduction, and I certainly wish to
follow the same course.
It had occurred to me, as I entered the room, that we who
were to receive medals would be expected to make the best
bow we knew how to make, and that that would be all that
would be required of us ; and when I was told by our President
that a few words of appropriate thanks would be expected, I
framed in my mind what I thought to be a happy expression
of appreciation, only to find it taken out of my mouth first by
Mr. Gompers and then by my friend, Mr. Schwab.
What I had in mind to say, however, I am going to say like
the boy who has learned his speech and must get it off, for lack
of anything else; namely, that I accept the medal not for my¬
self, but for those whom I represent.
And, in very truth it is so ; not only do I represent the Fuel
Administration, for without the many thousands who cooper¬
ated with me in the task I was called upon to perform, it would
have been impossible to have achieved even the measure of
success which Dr. Lindsay has indicated was achieved, but also
the great body of men outside the Fuel Administration, with
whom we were called upon to deal, and without whose co¬
operation achievement would likewise have been impossible.
From the very outset it was my task to bring together, to
attempt to reconcile the operators and the mine workers. I
felt a good deal as the judge on the bench feels who seeks to
bring together husband and wife. He takes them into his pri¬
vate room and says to them, "My friends, you must find a way
178 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
to get on together." And the wonderful thing about it to me
was that capital and labor engaged in the fuel industry got
together; they sank their differences. The question of union
or non-union, which was uppermost in the minds of the men
and of the operators, was adjourned as soon as the men and
the operators found that the government insisted that we had
one great task to perform and that was to produce the coal,
all the coal that could be taken out of the ground and carried
to the factories.
There was one, almost only one, failure in cooperation. I
have never told the name of the individual until to-night, but
I am going to tell it now. On one occasion a gentleman came
to my office—I am telling this because he is here to-night—and
said to me, "Mr. Garfield, I ordered a few tons of coal the
other day, and when it was put down on the sidewalk and car¬
ried into my cellar, I discovered more rock than I did coal."
I said, "You are exactly the man I am looking for. We have
established our regulation against dirty coal ; we have set up
the penalty, but we haven't been able to prosecute anybody for
violating the regulation because nobody has been willing to
come forward and stand as the prosecuting witness." "Oh,
no," he said, "no, no, I will not do that, because I realize that
I must have more coal after this is gone." I said, "But, Mr.
Gompers, how can you expect me under those circumstances
to secure clean coal?"
Mr. Gompers was so good a coöperator in all other re¬
spects that I must at once exculpate him from the charge I
have laid at his door.
But I wish to say just this in conclusion, that cooperation
is no longer a theory to my mind; we have practiced it and
lived it for two years. It was cooperation not only between
capital and labor brought together by the Fuel Administration,
but it was cooperation between capital and labor combined on
the one side and government on the other—government repre¬
senting the great consumers of this country. And the experi¬
ences of these two years have convinced me that nothing will
solve the problems of peace which have been commented upon
here to-night until the three necessary parties in interest—the
public represented by government and capital and labor—
learn to sit down together and discuss freely and openly every
report of annual dinner
179
question that is involved in any industry. That is the way of
accomplishment, I believe. The experience not only of the
Fuel Administration, but of many another administration dur¬
ing this period of stress and strain has taught us the lesson,
and I believe we will profit by it, that in this new era procedure
will in some form or other be adopted in the great attempt to
solve the problems that are before us.
Mr. President, as representative of the Fuel Administra¬
tion, I accept with appreciation and with great pleasure the
medal which you have presented to me to-night.
President Johnson : Medals as announced on the pro¬
gram have been awarded in addition to those conferred to¬
night to Dr. William Henry Welch, to Mr. Robert Scott Lov-
ett, to Mr. Harry A. Wheeler, to the Right Rev. Charles H.
Brent, to Mr. Raymond B. Fosdick, to Dr. Carl Koller and to
Mr. Frederick Layton. These medals must necessarily be con¬
ferred in absentia.
the medal to right rev. charles h. brent conferred in
absentia
presentation statement by right rev. james h. darlington
President Johnson and associates of the National Institute of
Social Sciences:
I consider it an honor and a privilege to present to-night in
your name as well as in my own the Institute Presentation
Medal to my friend and brother. Bishop Charles Henry Brent,
for his many and distinguished services both in the United
States and abroad.
I regret that as he is now on the sea, returning to this
country, he cannot be with us to-night.
Charles Henry Brent was born in Newcastle, Ontario, Can¬
ada, on the 9th day of April, 1862. He is the son of the Rev¬
erend Canon Henry and Sophia Frances Cumings Brent. After
being graduated from Trinity College, Toronto, with classical
honors, in 1884, he was ordained by Bishop Sweatman in 1887,
and became assistant in St. Paul's, Buffalo. Subsequently he
held several positions in Boston until he was elected Bishop of
the Philippine Islands in 1901. He has also been elected twice
as Bishop of Washington, once as Bishop of New Jersey and
l8o THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
finally Bishop of Western New York, which position he has
recently accepted.
Bishop Brent is most distinguished as an author and his
devotional books are widely read and much quoted. In addi¬
tion to his works as Missionary Bishop at the time when the
United States was not only changing the government, but the
educational and social life of the Philippines as well, he acted
as Chief Commissioner for the United States, as President of
the International Opium Commission in 1908-9. At the ses¬
sion of The Hague Conference in 1911-12 he was honored by
being elected as its president.
General Pershing, who had formerly been in command in
the Philippines and knew the ability of Bishop Brent, and de¬
siring his war help, asked him to leave the Philippines and
assist him by acting on his staff as head of all the Chaplains.
Bishop Brent accepted the position as a patriotic duty, and has
been at the fighting front with General Pershing continuously
until the present time.
It is therefore in grateful and fitting acknowledgment of
Bishop Brent's many sided life and on account of his mul¬
tiplied and successful services to the Church, to Literature and
to Society, and to the State, that this medal is awarded by the
National Institute of Social Sciences to-night.
Honor virtutis prasmium. Palmam qui meruit ferat.
THE MEDAL TO MR. RAYMONDE. FOSDICK CONFERRED IN ABSENTIA
PRESENTATION STATEMENT BY MR. LEO ARNSTEIN
Of the several factors which played an important part in
bringing the war to a successful conclusion none was more im¬
portant than the maintenance of morale in our army. Morale
is to the spiritual being what physical vigor and condition is to
the body, and it was no mean task to maintain this morale in
an army composed of four million men who had been suddenly
torn from their normal environments, separated from their
customary associations and placed in surroundings which were
strange and often unsympathetic. Half of these four million
men were in foreign lands, where the language was strange
and communication with those at home more than casual.
In the very first month of the war, in April, 1917, the im-
REPORT OF ANNUAL DINNER l8x
portance of this aspect of the work was recognized and there
was created by the War Department a "Commission on Train¬
ing Camp Activities," and with admirable judgment the man
chosen to head this activity was Raymond B. Fosdick, who
had won the respect of this community by his splendid work
while associated with our late beloved Mayor, John Purroy
Mitchel.
The new commission undertook two main functions ; First,
to furnish to the army, composed largely of young men, many
of them mere boys, a substitute for the recreational and relaxa-
tional opportunities to which they had been accustomed, and
second, to prevent and suppress certain vicious conditions tra¬
ditionally associated with army and training camps.
Through coordinating the efforts of existing organizations
within the camps, and by organizing the social communities
adjacent to the camps, the commission succeeded in reëstab-
lishing some of the old social ties, and, in a sense, rationalized
the bewildering environments of the war camp.
The splendid accomplishment of this commission is too well
known to require any detailed description of its specific activi¬
ties, and we are gathered here to-night to pay tribute, among
others, to Raymond B. Fosdick, the guiding spirit of this work,
who, modestly keeping out of the limelight, directed its every
move and is responsible for its success. Surely no one could
better have served his fellow men than by keeping this great
body of soldiers happy and contented, and by guarding their
health so that disease not only did not flourish, as was its wont
in military camps, but actually was materially reduced. His
work required imagination of a high degree, coupled with true
human sympathy and a rare executive talent; possessed of all
of this, he gave of himself unsparingly for the sake of his
country, and by awarding this medal to him the National Insti¬
tute of Social Sciences is honoring itself as well as Raymond
B. Fosdick.
THE MEDAL TO CARL KOLLER, M. D., CONFERRED IN ABSENTIA
PRESENTATION STATEMENT BY WENDELL C. PHILLIPS, M. D.
The privilege of presenting the medal of the National
Institute of Social Sciences to you. Dr. Koller, is keenly
i82 the national institute of social sciences
appreciated. A man who contributes a remedy or appliance
which ameliorates human suffering or prolongs human life
becomes not only a benefactor to his generation, but is a bene¬
factor to the future generations for all time. Jenner, Lister,
Pasteur and discoverers of general anesthesia stand out as the
world's greatest benefactors along this line. The medical his¬
tory of the world war wherein smallpox, typhoid fever and
sepsis were almost unknown speaks louder than any words of
mine for the strides which preventive medicine has made.
Strange as it may seem, these great achievements have largely
appeared within the last one hundred years. For the purpose
of contradistinction, may I for a moment place in comparison
a type of individuals, prominent representatives of which are
the notoriety seeking neurotic opponents of animal experimen¬
tation who well-nigh wrecked the work of the American Red
Cross in France in its efforts along the lines of preventive
medicine. Your discovery of the anesthetic properties of co¬
caine has been one of the marked contributions to surgery and
especially the surgeiy of the eye, nose and throat. I well
remember in '83 when your first article appeared and with what
pleasure I made use of it in minor operations on the nose. This
discovery has entirely revolutionized surgery of the nose and
throat, for it permits operations of considerable magnitude
without the necessity of general anesthesia. In the business
world your discovery would have brought not only the fame
which is yours, but also a great fortune ; but with true altruism
and loyalty to the sacred oath you have made this contribution
to mankind without financial gain.
the medal to mr. frederick layton, conferred in absentia
statement submitted by honorable james g. jenkins,
milwaukee, wis.
In 1888 Mr. Layton founded the Layton Art Gallery,
located at Milwaukee, expending for the lot and building the
sum of $125,000. He also gave to the trustees of the corpora¬
tion controlling it the sum of $100,000, as an endowment fund
for the maintenance of the gallery, and has expended in paint¬
ings and works of art which are contained in the gallery a sum
approximating $200,000. He has given to the upbuilding of
REPORT OF ANNUAL DINNER iSß
this gallery constant attention and care, purchasing many of
the pictures in Europe. The gallery is one of the monuments
of which Milwaukee is proud. It is designed to cultivate a
taste for art, and for four days in the week, including Sunday,
is open to the public free of charge. It contains many choice
paintings and has a fine reputation, both at home and abroad.
Mr. Layton has always evinced great interest in the Mil¬
waukee (Passavant) Hospital, founded by the Reverend Wil¬
liam A. Passavant, D. D., of Pittsburgh, in 1863. He has been
not only a large contributor to its maintenance by annual sub¬
scription, but at his private expense, in 1904, made a park out
of the Milwaukee Hospital grounds and erected an ornamental
fence, involving an expenditure of over $20,000. He has also
endowed three free beds in the hospital for deserving poor pa¬
tients, at an expense of $15,000. In 1907-1908 he constructed
upon the hospital grounds at his own expense a home for incur¬
ables, at an expense of over $61,000, and for the first years
subsequent to its opening contributed annually $4,000 towards
the current expenses. In 1913 he transferred to the authori¬
ties of the Milwaukee Hospital as an endowment fund for the
maintenance of the Home for Incurables securities to the
amount of $100,000. This home will accommodate thirty-two
patients besides the attendants and help. Those patients unable
to bear in whole or in part the cost of their maintenance are
supported there without cost to them. Since 1908 there have
been one hundred and fifty-five patients supported in the home.
He also erected in his native village a home for the support
of the aged and endowed it with a sum sufficient for its upkeep
and the support of the inmates.
These are, briefly stated, the public charities which have
distinguished Mr. Layton, and which have made him known
and beloved by the public of Wisconsin, but, in addition, his
life has been marked by constant private charities of which
the world knows nothing.
His life has been unassuming, retiring, seeking no notoriety,
contented to perform good works for the benefit of humanity,
without thought of recognition; his home is like himself, mod¬
est and unpretentious, such as would be maintained by a com¬
paratively poor man, or one of quite moderate resources. At
the age of ninety-one he still retains his mental faculties, and
184 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
employs himself in going about doing good. He is universally
beloved because he is one who loves his fellowmen.
THE MEDAL TO HONORABLE ROBERT SCOTT LOVETT, CONFERRED
IN ABSENTIA
PRESENTATION STATEMENT BY MR. A. J. COUNTY
I deeply regret that Judge Lovett could not be present this
evening to receive some tangible evidence of the public appre¬
ciation of his railroad and governmental service. It is a pleas¬
ant duty and an honor for me to be selected to present to him
the medal awarded by the National Institute of Social Sciences
in recognition of his long and distinguished public service. His
name is inseparably connected with the great Union Pacific
System, as legal adviser and later as chief executive. Under
his direction the program for its physical and financial rehabili¬
tation was continued, until the system reached a high physical
standard, securely founded on well established credit. During
the great European war he rendered constructive service to
our country, especially as Priorities Commissioner of the War
Industries Board, and later as Director of the Division of Cap¬
ital Expenditures under the United States Railroad Adminis¬
tration. With the war ended he resumed the presidency of
the Union Pacific System, and as a railroad executive and a
railroad statesman the public and his associates will rely upon
his sound judgment and leadership to aid in solving the prob¬
lems that still confront our transportation systems. His career
is an inspiration, and is one of the best exemplifications of the
achievements possible in a country whose laws and institu¬
tions depend upon the loyalty of its citizens and which allow of
private initiative and ownership by those citizens of those great
enterprises which have added so much to its prosperity and
none more so than our railroads. I congratulate the Institute
upon its wisdom in selecting Robert Scott Lovett to be the
recipient of this honor which he so justly deserves for a life¬
time spent in public service, and which the Institute now asks
him to kindly accept.
REPORT OF ANNUAL DINNER
185
THE MEDAL TO WILLIAM HENRY WELCH, M. D., CONFERRED IN
ABSENTIA
PRESENTATION STATEMENT BY HONORABLE THEODORE MARBURG
Centralization is not always a gain. In certain spheres,
unless c;ontrolled, it may be deadening. But there is one activ¬
ity which lends itself preëminently to centralization—the gath¬
ering and subsequent dissemination of knowledge. And here
the process of centralization is wholly beneficial. A central
bureau, by keeping in touch with parallel endeavors of indi¬
viduals or groups who may be ignorant each of the other's
work, spells economy of effort. It likewise heightens the value
of all progress by making it generally and immediately avail¬
able not only for the public, but also for the investigator who
may continually readjust his effort to the progress already
made. Gathering the waters of knowledge in a great central
reservoir to be distributed through innumerable channels and
tapped at will for countless needs—^to this beneficent process
none object.
It was to such work of organizing knowledge in the fields
of medicine and sanitation for the purposes of the war that
Dr. William H. Welch was summoned when America respond¬
ed to the call of outraged justice. And seldom has a task been
better performed.
Throughout the period of the war Dr. Welch's services to
the government has been recognized as of exceptional value.
His knowledge of scientific medicine, sanitation, public health
and medical education, derived both from wide reading and
experience, was of material aid to the medical profession both
in the army and outside. When the National Academy of
Sciences was asked by President Wilson in 1916 to name a
committee to inquire into and define the scientific needs of the
country in peace and war. Dr. Welch, who was the president
of the Academy, forthwith began the organization of the Na¬
tional Research Council. In company with Professor George
Hale, he visited France and England in the summer of 1916
and acquired a knowledge of the latest practices in medicine
and in sanitation in time of war. The organization of the
National Research Council was then effected and before the
United States entered the war this council had laid out the
l86 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
work to be done and mobilized the workers, assigning to each
task the men best qualified for it. The National Research
Council became officially the body to which all scientific mat¬
ters were referred, and it is to Dr. Welch and Professor Hale
that its effective organization is due. Dr. Welch's wide ac¬
quaintance with the best men in the medical profession ^nd his
accurate knowledge likewise gave especial value to his services
as a member of the executive board of the Medical Section of
the Council of National Defense. It was the urgent duties in
connection with this latter service that drew Dr. Welch's atten¬
tion away from the side of research to be devoted to organizing
methods for caring for the health of the army. In this con¬
nection he became a member of the executive staff of the Sur¬
geon General. He was constantly consulted in all matters per¬
taining to the equipment and personnel of laboratories in the
camps. With General Gorgas he visited most of the larger
camps and made a detailed study of the efficiency and needs of
each laboratory. His opinion was sought not only in regard
to laboratory matters, but in the broader subjects of the control
of communicable diseases. And there was no one connected
with the government whose opinion on such matters was more
valued. Aside from the influenza epidemic, which defeated all
efforts to analyze and control it, the death rate in our camps
and cantonments was without parallel in the history of the
mobilization of armies, and this result was due largely to Dr.
Welch's advice. Even with the great havoc wrought by the
influenza, the death rate from disease in our army was lower
by far than that recorded for any army in previous wars.
Passing tribute must be paid, in this connection, to Dr.
Victor G. Vaughan, who was associated with Dr. Welch during
the entire period of the war and whose services were of very
great value to the country.
Dr. Welch was also a member of the Medical Advisory
Board of the Red Gross. By reason of his acquaintance with
scientific men in Europe and because of the knowledge ac¬
quired during his trip abroad. Dr. Welch was able to render
to this board a service which no one else could have rendered.
He likewise served on various subcommittees, such as the
Pneumonia Board. His advice was constantly sought, freely
given and always valuable.
REPORT OF ANNUAL DINNER
187
Dr. Welch has long been known as the father of scientific
medicine in this country. No man has done more than he to
raise the standards of medical education and to place the best
medical schools of this country on their present high level.
Not the least of Dr. Welch's claims to our gratitude is his
splendid example of patriotic service. More than that of any
other man it stimulated the medical profession to such service.
By common consent he is worthy of every honor that can be
bestowed upon him and the National Institute of Social
Sciences honors itself in honoring him with this medal.
THE MEDAL TO HARRY A. WHEELER, LL. D., CONFERRED IN
ABSENTIA
PRESENTATION STATEMENT BY EMORY R. JOHNSON, SC. D.
It was seven years ago that Harry A. Wheeler realized the
need for the establishment of a national organization that
would really represent the business sentiment of the country.
Previous efforts to build up a national society for this purpose
had failed, but Mr. Wheeler in bringing about the establish¬
ment and development of the Chamber of Commerce of the
United States has created an organization which has been com¬
pletely successful. During the first two years of the life of the
Chamber of Commerce Mr. Wheeler was its president. He
retired at the end of the second year and started a precedent
which was followed subsequently by the Chamber, a president
being elected every two years. When, in 1918, the time came
for the selection of a president to guide the work of the Cham¬
ber during the period of the war, Mr. Wheeler was again
drafted to the presidency and during the past year has given
the larger part of his time to the work of the Chamber. Since
the armistice was signed, the Chamber of Commerce, under
the leadership of Mr. Wheeler, has been specially active in
developing plans for the revival of business and for the enact¬
ment of legislation made necessary by the period of recon¬
struction through which business is passing.
In addition to his other duties, Mr. Wheeler has acted as
Food Administrator for the State of Illinois and during the
war he gave a portion of each day to that work. Without
thought of the business sacrifice made necessary by his devo-
l88 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
tion to public services and without considering the heavy
strain which his many duties placed upon him, Mr. Wheeler
devoted himself unreservedly to the needs of the country. Few
men have rendered more valuable wartime services than he
has performed.
It is in recognition of these services and of the high stan¬
dard of devotion to public duties which Mr. Wheeler has main¬
tained that the National Institute of Social Sciences has
awarded him its medal.
REPORTS OF MEETINGS
Annual Meeting
The Sixth Annual Meeting of the National Institute of
Social Sciences was held at the office of the Institute, 225 Fifth
Avenue, New York, January 17, 1919, at 4:30 o'clock, Presi¬
dent Emoiy R. Johnson presiding.
President Johnson read the Minutes of the Annual Meeting
held January 18, 1918.
Miss Alice Lakey, chairman of the New Jersey State Lib¬
erty Medal Committee, read the report of the Liberty Service
Medal Committee for Miss French, secretary of the Liberty-
Medal Committee.
In the absence of Henry P. Davison, treasurer. Dr. John¬
son read the treasurer's report, showing a balance of $3,808.75.
Miss Lillie Hamilton French was nominated assistant treas¬
urer for 1919.
The President reported the ballot returns received from
the members regarding the officers for 1919, signed by the
Nominating Committee.
The President was authorized to appoint an Executive
Committee, Medal Committee, Finance Committee and Liberty
Service Medal Committee.
The President was authorized to employ and fix the com¬
pensation or salary of the clerical force of the Institute.
Spring Meeting
The Spring Meeting of the National Institute of Social
Sciences was held at the Hotel Astor, April 25, at 3 o'clock.
The subject under discussion was, "What Shall Be Done With
the Railroads?" Professor Emory R. Johnson presided.
Speakers : Honorable Theodore F. Burton, formerly United
States Senator from Ohio; Honorable William Church Os-
born, Mr. George A. Post, chairman of the Railroad Commit¬
tee, Chamber of Commerce of the United States ; Mr. Paul M.
Warburg and Mr. A. J. County, vice-president of the Pennsyl¬
vania Railroad Company.
189
REPORT OF THE LIBERTY SERVICE MEDAL
COMMITTEE
A report of the Liberty Service Medal Committee was pub¬
lished in April, 1918, and sent to the members of the National
Institute. In this report the citations and replies for the year
were given.
Eighteen State Committees were formed.
CHAIRMEN OF STATE COMMITTEES
California
Hon. Curtis H. Lindley
Colorado . . t.;
i.; Tyson S. Dines
Connecticut .
Arthur R. Kimball
District of Columbia .
Hon. Harry A. Garfield
Illinois ....
Franklin H. Martin, M. D.
Kentucky
Mrs. Geo. C. Avery
Louisiana . . .
A. L. Metz, M. D.
Maryland
Hon. Theodore Marburg
Minnesota
Mrs. Chas. P. Noyes
Missouri
Percival Chubb
New Jersey
Miss Alice Lakey
Ohio .
Marshall Sheppey
Pennsylvania
Hon. Joseph Buffington
Rhode Island
Mrs. C. Lorillard Spencer
Texas ....
Hon. Geo. E. Barstow
Virginia
Edwin A. Alderman, LL. D.
Washington
Prof. F. M. Padelford
Wisconsin
Hon. James G. Jenkins
190
ACTIVITIES OF MEMBERS
In March, 1918, Ephraim Douglass Adams, Ph.D., con¬
ducted for the National Security League the campaign of the
New England District against premature peace with head¬
quarters at Cambridge. Becoming interested in the need of
patriotic education, he succeeded in bringing together the
Lowell Normal School, the public schools of the city of Law¬
rence, and the National Security League, organizing them into
one body, the aim of which is to discover in what ways Amer¬
ican public schools may best help to make and keep its chil¬
dren genuine patriots and good citizens. The Lawrence Plan
Leaflets issued by the National Security League are a devel¬
opment of this activity.
At Stanford University, in July, he organized, with the
approval of the Security League, a similar experiment under
the direction of the Los Angeles State Normal School and
known as "The Los Angeles School for Patriotic Education."
These experiments he believes to be the "first attempts
made to determine by what may be called laboratory methods
the means of patriotic education in our common schools." Dr.
Adams wrote a series of papers for the Third Liberty Loan
and distributed 110,000 along the Pacific Coast.
President Edwin A. Alderman, University of Virginia,
made public addresses in various cities and communities dur¬
ing 1918 and wrote many papers intended to "stimulate pa¬
triotism, to strengthen the national will to win a just war, and
to teach young men the deeper meaning of their country."
"Seminaries of learning," says President Alderman, "have
been the scenes of great difficulty during this period. It was
a vital thing to keep alive the spirit and agencies of sound
learning, and yet not to deny to the nation the services of its
best youth. , . , Perhaps the finest proof of the strivings of
American teachers is contained in the proud record of the
American college and university in this great crisis."
191
192 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Mrs. Fannie Fern Andrews sailed for France December,
1918, at the request of the United States Commissioner of
Education, authorized by the Secretary of the Interior, to rep¬
resent the United States Bureau of Education at the Peace
Conference. Mrs. Andrews is secretary of the executive com¬
mittee of the National Conference on Education, which is aim¬
ing to secure the educational codes and laws promulgated in
all the states of the world since 1900, with special reference
to those since 1914. The object of this investigation is to dis¬
cover to what extent states use their educational systems to
further the national ideal.
Mrs. Andrews is secretary of the American School Peace
League, which since the war has concentrated on supporting
President Wilson and his policies.
In October, 1918, Leo Arnstein was commissioned as Lieu¬
tenant-Colonel in the army and assigned successively to the
Bureau of Commissioned Personnel and Division of Opera¬
tions of the General Staff. On December 20, 1918, Colonel
Arnstein was honorably discharged.
Before receiving his commission he had, for nine months,
served as chairman of the Executive Committee of the New
York Chapter of the American Red Cross, in active charge of
the chapter work.
Dr. Raymond E. Bacon, Director Mellon Institute of In¬
dustrial Research of Pittsburgh, Pa., was commissioned Lieu¬
tenant-Colonel in the Chemical Service Section of the National
Army on December i, 1917. He left for France on January 9,
1918, to assume charge of the Research Laboratory of the
American Expeditionary Forces at Puteaux, near Paris. Upon
the organization of the Chemical Warfare Service, A. E. F.,
Dr. Bacon was advanced to the grade of Colonel and was
appointed Chief of the Technical Division of the Chemical
Warfare Service. In that positional capacity he had super¬
visory charge of the experimental field near Chaumont, as
well as of the Research Laboratory at Puteaux. A full ac¬
count of Dr. Bacon's activities is presented in the January
number of the Journal of Industrial and Engineering Chemis-
ACTIVITIES OF MEMBERS
193
try. Dr. Bacon returned to this country on November 17,
1918, and was honorably discharged from the Chemical War¬
fare Service on December 16, 1918, at which time he resumed
the directorship of the Mellon Institute.
Harlan H. Ballard, Librarian and Curator Berkshire Athe¬
naeum and Museum, Pittsfield, Mass., under the title of "Ad¬
ventures of a Librarian," has revealed himself as "detective,
psychologist, raconteur, scholar, lover of mankind, all in one."
Dr. W. H. Ballon regards as his greatest accomplishment
in 1918 the capture on rod and reel of two ten-pound weak-
fish and one six and three-quarters pound bluefish in Barnegat
Bay, N. J. Incidentally, he conducted an "eat more fish"
propaganda for the National Food Administration and has
begun a new propaganda under the head of "Everybody go
fishing." "If you catch fish you eat 'em," he states, "and save
other foods to ship to starving peoples abroad." Also, he
wants people to either collect and eat more wild mushrooms
for the same purpose, or else propagate and eat more of the
cellar mushroom. The despised "toadstool," he demonstrates,
is an all-around food, containing the elements within its cap
of meats, fish and vegetables. Those who find the mushroom
or fish hard to digest can readily correct the difficulty by taking
a tablet of pepsin after eating. "A little pepsin," he declares,
"either in form of powder, essense or tablet, is a perfect de¬
fense against indigestion and offsets possible poisons and pto¬
maines in foods. Pepsin also destroys toxic bacteria and toxic
flagellated worms in food, since it has no part in the digestive
apparatus of any known parasite."
Miss Jessie H. Bancroft, founder and first president of
The American Posture League," founded and served as first
president of the "American Cooked Food Service"—that boon
to tired housekeepers and to households without servants.
This organization, which delivered from 50 to 100 hot
meals to homes, was organized as a war measure. It released
women for war work, cooperated with the Food and Fuel
Administrations in all conservation measures, and placed at
194 the national institute of social sciences
the service of the public the skill of trained dietitians, buyers
and cooks.
The meals are cooked at central stations planned to feed
each a maximum of 500 persons (about 150 families) per
day. The cooked food is packed in a series of bowl-shaped
aluminum insets that stack, one on another, so that each forms
the cover of the one below. These insets are then clamped
together and inserted in a cylindrical shell that is insulated.
In these containers the food will keep steaming hot, without
change in condition or flavor, for over two hours.
These containers are delivered to the homes by motor
service and called for the following day. With each is re¬
turned the next menu checked to indicate the choice for the
next day's dinner. Luncheons are also served. In opening
the container the food is found in the order of courses. Cold
dishes and breads are carried in a separate container. As a
health measure the balanced menus have been very effective,
though the dishes do not differ from those of refined tables.
Special dietary of various kinds can also be had.
The first station of the American Cooked Food Service
was opened February, 1918, on West Seventy-ninth Street,
New York City; a second one in Princeton, N. J., toward the
close of that year, and plans are under way for others. This
service in the original stations is designed to reach the great
middle-class homes of the salaried or professional type—the
independent homes that can neither accept charity nor pay for
luxuries, and that suffer keenly but silently in times of finan¬
cial stress. When the main features of this type of service
have been standardized it is hoped the special problem of an
industrial service may be worked out that will go a step far¬
ther than the usual community kitchen and deliver to the
home of the working man or the shop girl, or its immediate
vicinity, suitable meals, hot, well cooked and reasonable in
price.
Financially the service has been organized as a self sus¬
taining welfare movement, ranking in that way with the City
and Suburban Homes Company, the Provident Loan Society,
the Morris Plan, and the National Employment Exchange. It
is incorporated under the business laws of the State of New
York, but the preferred stock is limited to 6 per cent divi-
ACTIVITIES OF MEMBERS
195
dends, so that the prices may be kept within reasonable limits
for moderate incomes. The amazing demand for this service
from all parts of the country indicates that labor and other
conditions make it a greatly needed part of the social recon¬
struction following the war, indicated, indeed, for a long time
before that catastrophe. This phase of the movement appealed
equally with the war service to the group of pèrsons who
financed the Cooked Food Service, or who, on the consulting
or other honorary boards, have given a large volunteer service
to start the movement. The need of dietetic guidance for the
masses of the people, during times of high food prices espe¬
cially, has presented an urgent phase of public health that has
enlisted the physicians associated with the movement. And
all realize that the enormous increase of the "mealing out"
habit in this country has made a serious inroad on home life,
and shows that a new era in household economy must come
to the rescue of family life.
Mrs. Clarice M. Baright has been engaged in working out
a bill to be presented to the Legislature having for its object
the creation of a great State farm for mental derelicts who
to-day are sent to prison, but who instead of punishment should
receive hospital attention and be given a chance to work out
their own salvation.
Mrs. Baright was the first woman to be admitted to the
State Bar Association; to defend a man before a court-mar¬
tial, and to sit as a member of a lunacy commission.
The Honorable George E. Barstow has been devoting the
major part of his time to addresses and writings in connection
with the Liberty Loans and those of the Red Cross and the
Y. M. C. A. Ward County, of which Barstow is the county
seat, went "over the top" in every quota assigned her, and so
far over in one loan that to this county the Federal Govern¬
ment assigned the naming of a battleship.
Mr. Barstow's "Carry On—Whither" has been published
in pamphlet form and distributed throughout the country.
Lieutenant-Colonel Vilray P. Blair remained in the office
of the Surgeon-General until March 30, 1918, and then went
196 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
to France as Senior Consultant for the Maxillo-Facial Sur¬
gical Service for the American Expeditionary Force and was
stationed at Neuf château. On completion of the organization
of this service he returned to America, December, 1918, and
took up the work for the cases returning to the United States
and was appointed, in addition to other duties, the Consultant
in Maxillo-Facial Surgery for this country.
For two years past Cornelius N. Bliss, Jr., has given prac¬
tically all of his time to the work of the American Red Cross.
Marston Taylor Bogert, LL. D., from April, 1917, to Janu¬
ary, 1919, served on thirteen different boards: (i) as member
Executive Board of National Research Council; organizer and
first chairman of its Division of Chemistry and Chemical
Technology, with thirty-two subcommittees; also member of
various other of its committees; (2) member. Raw Materials
Division War Industries Board, and of its predecessor. Gen¬
eral Munitions Board; (3) member U. S. Board on Gas War¬
fare from its organization to its disbanding; (4) Consulting
Chemist, U. S. Bureau of Mines; (5) member Scientific Staff,
U. S. Bureau of Standards; (6) member Advisory Committee,
U. S. War Trade Board; (7) member Advisory Board, Ma¬
terials Production Division, Signal Corps, War Department;
(8) in consulting capacity U. S. Federal Trade Commission;
Military Intelligence Division of General Staff, War Depart¬
ment; Bureau of Investigation, Department of Justice; Postal
Censorship, U. S. Post Office Department, and less frequently
with other branches of the Government. Commissioned Lieu¬
tenant-Colonel and appointed Chief, Chemical Service Section,
National Army, and Assistant Director, Gas Service, March
9, 1918; (9) upon consolidation of the Chemical Service
Section with other units into the Chemical Warfare Service,
under Major-General Wm. L. Sibert as Director, promoted to
full Colonel July 13, 1918. Served as Chief of its Relations
Section, and of its Intelligence Section; member of its Board
of Review, its Claims Board, and of its Headquarters Staff.
( 10) Chairman, Army Commodity Committee on Chlorine and
Chlorine Products, and Chairman of Army Chemical Com-
ACTIVITIES OF MEMBERS
197
modity Committee Chiefs; Purchase, Storage and Traffic
Division, General Staff, U. S. A. (n) Liaison Officer for
Chemical Warfare Service with Committee on Education and
Special Training, General Staff, U. S. A. (12) Member Stan¬
dardization Section, Purchase Branch, General Staff, U. S. A.
In 1916, Bishop Brent went to England as special emis¬
sary, representing his Church. This gave him an opportunity
to visit all the fronts, where he was granted every courtesy
and did much to interpret the true feeling of America to the
warring nations. On the entrance of America into the war
he preached before the King at St. Paul's Cathedral in London,
outlining the true position of America and her ideals in re¬
spect to the world war. Returning to America, he spent some
time in reasserting his impressions before Americans, and then
left for the Philippine Islands, arriving in August, 1917. After
two months devoted to his work among the Moros, he was
called to the American Expeditionary Forces in France as a
special agent of the Y. M. C. A.
On his arrival in France, General Pershing, a close friend,
requested him to prepare a scheme for organizing the various
welfare agencies operating in France with special attention to
army chaplains, who until then had occupied regimental posi¬
tions without corps or organization. The Bishop's scheme
proving satisfactory, the Commanding General asked him to
work it out, and appointed him Senior Chaplain of the Ameri¬
can Forces at General Headquarters. The complete unity of
purpose in the Chaplain's Corps and the absence of denomina¬
tional distinction were due to Bishop Brent's leadership.
His work took him to all parts of France, with constant
visits to England. In July, 1918, he carried a message from
the American Expeditionary Forces to the Grand Fleet in
Scapa Flow. He was one of the first three American officers
to enter Germany after the signing of the armistice, passing
ahead of the advance troops to arrange for hospitalization in
the territory to be occupied. After arranging the Chaplains'
organization in the Army of Occupation, he returned here in
February, 1919, for two weeks, bearing special messages from
the Commander-in-Chief to the Secretary of War. After a
short visit to Buffalo, the seat of his future activities as Bishop
198 the national institute of social sciences
of Western New York, he returned to France in February to
close his work.
The Bishop's plans for the American Expeditionary Forces
include, first, the "Chaplains' Fellowship," an organization
comprised of all the chaplains in the service; and, second,
"Comrades in Service," comprised of those who have served
in the American army during the world war, whether in
foreign service or at home. As soon as this task is completed
he will take up his work in Western New York. By virtue of
his dual citizenship, as he is an American citizen of Canadian
birth, his presence in Buffalo will give him an opportunity to
bind strongly together the English-speaking peoples in this
continent.
Christian Brinton, M. A., Litt. D., prepared from original
sources an illustrated lecture on Contemporary Russian Paint¬
ing, and during 1918 delivered it before the Washington So¬
ciety of Fine Arts, at the National Museum, Washington, D. C.,
and the Haverford Union, Haverford College, Pa. He
prepared the Official Illustrated Catalogue of the works of the
Russian decorative painter, Boris Anisfeld, first exhibited in
America at the Brooklyn Museum, October, 1918. He also
prepared for the Ministry of Information, London, and the
Worcester Art Museum, the Official Illustrated Catalogue of
War Paintings and Drawings by British Artists, first exhib¬
ited in America at the Corcoran Art Gallery, Washington,
D. C., January, 1919.
Mrs. William Adams Brown has been active as first vice-
president of the National War Work Council of the Y. W.
C. A., which since the beginning of the war has raised and
expended more than sixteen million dollars for the benefit of
women replacing men in industry, for the women relatives of
men in service and for girls and women whose lives have been
affected by changed living conditions in time of war, in the
United States and overseas. The work done for the women
in the service of the United States Government abroad and for
the munition workers of France has won the commendation
of General Pershing and of the French Government.
Mrs. Brown has also served as the national president of
ACTIVITIES OF MEMBERS
199
the Woman's Land Army of America, a war emergency or¬
ganization created in 1918, in response to the demand of the
government for increased food production. Groups or "units"
of women were formed to aid the farmer, supplying his need
for seasonal labor at a moderate price. Land Army units
were in operation in more than twenty States in the summer
of 1918, with an enrollment of 15,000 "farmerettes." More
girls applied, both college and industrial, than it was possible
to place. While much prejudice had to be overcome, the farm¬
ers at the close of the season were found to be so favorable
to this new type of labor that the United States Department
of Labor proposed an affiliation between the Woman's Land
Army and the United States Employment Service which still
exists. It was also found that the "units" tended to become
community centers in the rural districts where they were
established.
F. Kingsbury Bull served from June to December, 1918,
as secretary of Region No. 2, Resources and Conversion Sec¬
tion, War Industries Board, with headquarters at Bridgeport,
Conn.
Luella Clay Carson, LL. D., since September, 1917, has
been Dean of Women in Drury College, Springfield, Mo.,
founded in 1873 by Congregationalists and occupying a re¬
mote territory (no other college of its rank being within two
hundred miles). Drury College claims to reach a population
more purely American than any other in the country—earnest,
single-minded, "and ready for the best that modern ideals
can give them."
In the big drives for the Red Cross Fund and the Liberty
Loans, Enrico Caruso set aside a sheaf of tempting offers and
devoted his time to singing for patriotic purposes. The result
of his actual sales for the Third Liberty Loan totalled $3,060,-
000; for the Fourth Liberty Loan, $4,300,000. He sang for
the Italian Reservists, the Italian War Relief in Washington,
D. C. ; at the Metropolitan Opera House, for three benefit
performances—the Italian Red Cross, the American Red
Cross, U. S. Navy Benefit. At Sheepshead Bay he sang for
200 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
the Police Reserves. In recognition of this work, Commis¬
sioner Enright presented Caruso with an illuminated parch¬
ment in the name of the city, and Mr. Wanamaker appointed
him Captain in the Police Reserve. He sang also for the
Lafayette Day at the Waldorf-Astoria ; for the people of New
York—Mayor Hylan's popular concerts—in the open air in
Central Park ; before President and Mrs. Wilson for the Ital¬
ian Blind in the Metropolitan Opera House; for the United
War Work campaign in Madison Square Garden, and the
U. S. Navy Benefit at the New York Hippodrome. In recog¬
nition of his work for the sailors. Admiral Usher presented
Caruso with a medal, accompanied by a letter of thanks
from Secretary Daniels.
Because of the many and continued generosities of Signor
Caruso, the City of New York, on his twenty-fifth jubilee in
the Metropolitan Opera House, presented him with a flag of
the city.
Mrs. Catherine R. Chenoweth in 1918 served as member
in public city work on War Camp Community Service. In
February, 1919, she went as delegate to the convention of the
League to Enforce Peace, which is now conducting an edu¬
cational campaign on the subject.
During 1918 Russell H. Chittenden, LL. D., Yale Uni¬
versity, represented the U. S. Government on the Inter-Allied
Scientific Food Commission, which met in Paris, London and
Rome during the spring and early summer of 1918.
Mr. Percival Chubb, president of the Drama League of
America, is making every effort to perpetuate the recreational
features of the training camps by establishing peoples' the¬
atres in every community. The camp theatres, as he points
out, have opened the way to a people's drama and an era of
Peoples Theatres. He says in his appeal :
Camp achievements have revealed new potentialities in
popular education and recreation; they have set new levels,
opened new doors and liberated new resources. The camps
have put the schools to the blush. Just as they have hopefully
ACTIVITIES OF MEMBERS
201
started to convert a songless into a singing America—which
the schools had failed to do—so they may develop a new
dramatically minded America out of the evening diversions of
our soldiery. Rude beginnings in song have evoked here and
there a higher kind of lyrical folkcraft. Academicians may
squirm at "Good Morning, Mr. Zip," but just as a wincing
musician confessed to me that he had become tolerant of this
effervescent jingle because it leads on to "Joan of Arc," "Land
of Mine," the "Marseillaise"—and beyond; so a stiff-jointed
advocate of the "legitimate" may see in a vogue of soldiers'
minstrel shows the promise and potency of a new national
drama.
This is part of a great issue—that of the changes in our
civilization which war-time effort may effectuate. . . . The sit¬
uation in the large is this : Hundreds of thousands of our boys
have been living in camp a kind of life that is cleaner, comelier
and richer than the life they knew before. . . . Are these lads
to return to their old life, lacking in the resources and oppor¬
tunities they have enjoyed in camp? ... Or are we to catch
these new nascent interests and connections, provide for them
and carry them forward ?... Here, for example, is a division
that leaves camp, after skillful handling by a dramatic spe¬
cialist, ready to supply itself for a year ahead with a never-end¬
ing variety of entertainment—vaudeville, comic operas, plays :
is that to lead nowhere after they get back? . . .
The Drama League of America . . . must bring every in¬
fluence to bear to get the Heroes' Funds which are beginning
to be raised for war "monuments" applied to this end.
Isaac M. Cline, M. D., during 1918 continued the issue of
forecasts and warnings for the agricultural, live stock and
commercial interests of the southwest, embracing Louisiana,
Arkansas, Oklahoma and Texas. It was Dr. Qine who, in
1895, introduced into the United States Weather Bureau the
issue of forecasts, stating the expected degrees of tempera¬
ture for the next succeeding twenty-four to thirty-six hours
in connection with warnings of coming freezes, for use of
sugar cane and truck growers in protecting their crops. Sim¬
ilar warnings are now being issued by the bureau for use in
protecting nearly all interests.
202 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
In emphasizing the value of these warnings the New Or¬
leans Times-Picayune in an editorial says;
"Our ability to presage a freeze has minimized the possi¬
bility of injury to crops and has cut down the losses of the
farmers millions of dollars. There was a time when a sudden
and unexpected freeze in the sugar district of Louisiana meant
a half crop or less. ... It is not possible to ward off freezes
altogether, but by windrowing the cane, which can be done if
sufficient notice of the approach of Boreas is given, and pro¬
tecting of orange groves by smudges and other means of pro¬
tecting the fruit from the cold, the saving will be a hundred
times the cost of the Weather Bureau. The farmers have
learned this lesson and are profiting by it."
Harold J. Cook, F. A. A. S., writes : "We maintain and op¬
erate a free private museum and laboratory devoted to verte¬
brate paleontology here, and also include certain types of min¬
erals and archaeological specimens. This is visited by numer¬
ous people from all parts of the country, and lectures are given
to nearly all parties who desire it on the geological history and
life record of the earth, and with special reference to the
phases represented by the tertiary deposits of the west. Fa¬
cilities for examining the Agate Springs fossil quarries, where
the skeletons of prehistoric creatures lie imbedded in the rock,
are provided." Mr. Cook has discovered new and undescribed
forms of vertebrate life during the past year, as during many
years past. These are studied and results are published from
time to time. He also is interested in general phases of geol¬
ogy and oil development work, vocation, ranching and stock
farming.
Donald J. Cowling, president of Carleton College and of
the Association of American Colleges, served in 1918 as presi¬
dent of the American Council on Education, Washington, D.
C. When the armistice was signed, preliminary courses for
the training of nurses were being organized by the Council at
the request of the Surgeon-General. The Council entertained
the British Educational Mission, headed by the Vice-Chancel¬
lor of Cambridge University, and had charge of the French
ACTIVITIES OF MEMBERS
203
Educational Mission. One hundred and twenty French girls
and twenty-five invalided student soldiers were brought to this
country on scholarships.
Among his many other activities, President Cowling served
as a member of the executive committee, Pilgrim Memorial
Fund, a foundation of five million dollars to provide retiring
allowances for Congregational ministers.
Henry F. Cutler, principal of Mount Hermon School since
1890, reports that 1,350 of their students have been in military
service, and 45 names are marked with the gold star. "The
war has interrupted our work in some ways," he says, "but we
are glad our boys could do their part to help in bringing in
peace."
Bishop James Henry Darlington of Pennsylvania served
in 1918 on the following committees: To dispose of the Ver¬
dun medals ; to receive the Alsace and Lorraine delegates, and
to welcome the Archbishop of Greece to New York City.
He acted as chairman for the Serbian Relief Fund and pre¬
pared the Sons of the Revolution Memorial cabled to Lloyd
George.
France gave him the Legion of Honor; Greece and Serbia
have awarded him decorations.
Charles B. Davenport, Ph. D., Department of Experimen¬
tal Evolution, Cold Spring Harbor, L. I., was for the latter
two-thirds of 1918 in the Surgeon-General's Office, Wash¬
ington, D. C., engaged in statistical studies on the results of
the selective draft, with especial reference to defects found
in the American population by race and the variation of dimen¬
sions of recruits drawn from different sections of the United
States inhabited by representatives of different European
races.
Henry P. Davison, LL. D., was requested by President
Wilson to represent the United States at an international con¬
ference of the Red Cross Societies of the Allied nations, to
be held after the signing of the treaty of peace. The confer-
204 the national institute of social sciences
ence has as its purpose the coordinating and cooperating of
civilian relief work.
General Charles G. Dawes, Chief of the American Pur¬
chasing Service, was made Commander of the Legion of
Honor.
For two years Miss Elsie De Wolfe served with the Third
and Tenth French Armies, as a member of the Ambrine Mis¬
sion on the Western front. For this she was given the "Mé¬
daille des Épidemiés" and the "Croix de Guerre" with the
bronze star, awarded only to women who have been under fire.
The presentation was made by General Humbert of the Third
Army.
Besides helping to equip a hospital in Versailles, known
as the American Women's Hospital, Miss De Wolfe raised a
flotilla of eighteen ambulances, presenting them to the Service
de Santé. Some of these ambulances were destroyed by bom¬
bardment. So active was the service they performed that
two of the chauffeurs received the "Fourragère."
Miss Nina Larrey Duryea, president of the Duryea War
Relief, was the first American civilian to cross the battlefield
at Ardennes and Argonne, thirteen days after the German
retreat in October, 1918. The French Government had given
her three motor vans filled with food and clothing for distribu¬
tion among the blasted villages. Hers was the first organiza¬
tion to carry help to Arras. Again in November, 1918, she
crossed the Somme battlefield with Mrs. Seth Barton French,
carrying supplies to Lille, where a depot of distribution was
established, and where, with the aid of the famous Mayor of
Lille, they distributed a carload of garments entrusted to them
by the French Government. Milk was also shipped to all the
tuberculosis stations of France.
The Duryea War Relief, while in sympathy with the Red
Cross, has remained independent for two reasons ; first, be¬
cause the French Government has honored it by replacing the
suspended War Relief Clearing House, transporting its cases
free, directly and quickly from New York to their Paris depot;
ACTIVITIES OF MEMBERS
205
and, second, because its work goes straight from its own
hands to those of the poor waiting in France.
The activities of the late Samuel T. Dutton, LL. D., during
the past year, in spite of failing health, have been directed to
the interests of the World's Court League and its magazine,
the Constantinople College for Women, of which he was treas¬
urer, and the work of the American Committee for Relief in
the Near East, of which he was chairman of the executive
committee.
The World's Court League continued to publish a maga¬
zine, to keep its readers informed concerning a League of
Nations, and sent it to leaders of international thought in all
Allied countries and South America, as well as to statesmen
in Washington. As it was finally deemed best to merge sev¬
eral organizations interested in establishing a permanent peace,
the name of the "League of Nations Union" was adopted. The
first organizations to combine were the World's Court League
and the New York Peace Society.
As treasurer and American director of the Constantinople
College, Dr. Dutton did much work in keeping the college in
funds during a trying period, when the prices of necessities
were from five to twenty times greater than in normal times.
A new staflf of professors and instructors was necessary to
replace those disabled by hard work. Classes have been begun
in medical training and nursing, the training of teachers and
teaching of such practical arts as agriculture and fruit raising.
As an officer of the American Committee for Relief in the
Near East, several results were attained meaning much for the
suffering peoples involved. The committee, in cooperation
with the Red Cross, in the spring of 1918 sent a commission
to Palestine under the general direction of John H. Finley.
Substantial contributions for the relief of sufferers by this
commission were made. Later it sent a distinguished group
of medical men and missionaries to Persia, the Caucasus and
Mesopotamia, to organize industries and various forms of
relief.
Under its auspices, early in January, 1919, a commission of
six gentlemen went to Great Britain and France to prepare
for extensive relief operations in what has been known as the
2o6 the national institute of social sciences
Turkish Empire. Three naval ships laden with all kinds of
medical and food supplies, vehicles, tractors, etc., to the value
of $3,000,000 were dispatched to Constantinople and a care¬
fully selected group of workers numbering 300, including
doctors, nurses, sanitary engineers, mechanics and general
workers, conveyed by American and British transports.
George W. Elkins is one of the main supporters of the
Philadelphia Orchestra, which has won for itself such eulogies
from both the critic and the public.
Professor Charles A. Ellwood, University of Missouri,
contributes the opening chapter, "The War and Social Evo¬
lution," to a new book on reconstruction, entitled "America
and the New Era," and edited by Mr. Elisha M. Friedman of
the War Finance Corporation. Among Professor Ellwood's
contributions to various publications are "The Reconstruction
of Education Upon a Social Basis" (The Educational Review
for February, 1919), and "Making the World Safe For
Democracy" (The Scientific Monthly for December, 1918).
Since we entered the war. Professor Henry W. Farnam,
Yale University, has served as chairman of the New Haven
Branch of the National Security League; as member of the
Publicity Committee of the State Council of Defense, and of
the War Bureau of New Haven. During the summer of 1918
he accepted the chairmanship of the Community Labor Board,
connected with the United States Employment Service, and
also of the executive committee for the Relief of the Near
East.
James L. Fieser, during 1918, served as Director, Depart¬
ment of Civilian Relief of the Lake Division of the Red Cross,
which also includes Ohio. To Mr. Fieser belonged the respon¬
sibility of caring for families of enlisted men, returning sol¬
diers, and victims of disaster. He was chairman of the Com¬
mittee on Influenza directing the distribution of nurses ; presi¬
dent of the Ohio State Conference of Social Work, and mem¬
ber of the Ohio State Council of Defense.
ACTIVITIES OF MEMBERS
207
Eugene L. Fisk, M.D., Medical Director of the Life Exten¬
sion Institute, reports that during 1918 the Institute made over
110,000 periodic health examinations, these examinations be¬
ing included in services rendered to life insurance policyhold¬
ers, to individual members of the Institute and to employees of
industrial and commercial organizations. In addition to these,
many thousands of individuals were examined for the Red
Cross, Y. M. C. A., Knights of Columbus, Salvation Army,
War Camp Community Service and similar organizations prior
to qualifying for overseas service. Interest in tbe principle
of periodic health examinations has been manifested in France,
England, Australia, South Africa and even in Japan and
China. The book, "How to Live," by Irving Fisher, former
president of the National Institute of Social Sciences, has been
translated into Japanese, Chinese, Spanish and French. Tbe
royalties from this book were used for printing one million
pamphlets prepared by Dr. Fisk on the results of the draft
examinations and in devising and publishing methods by which
those rejected in the draft should receive proper instruction
and guidance as to the nature of their troubles and to possible
remedial measures. Many life insurance companies and cor¬
porations responded to the Institute's appeal, and nearly two
hundred important concerns have taken its service.
A community program has been arranged in Grand Mere,
Canada, whereby an entire community is to receive the bene¬
fits of the health program outlined and supervised by the Life
Extension Institute dealing with the fundamental preventive
measures, periodic examinations, health inspection, community
welfare work, recreation facilities, hospital facilities, etc.
The Institute's book, "Health for the Soldier and Sailor,"
has been approved by the Secretary of the Navy and placed
in all the naval libraries. That 38 per cent of our young men
were declined for military service has startled the nation and
the work of the Institute has been directed quite as much
toward arousing the public mind on these matters as to the
reclamation of men for the army.
Mrs. Paul Fitzsimmons (Mrs. French Vanderbilt), since
the opening of the Y. W. C. A. Naval Training Station at
Newport, has been serving as chairman, a position bringing
2o8 the national institute of social sciences
her into touch with the women enlisted as yeomen and the
families of sailors in training at the station. The presence
of this important station in Newport has of necessity created
various and vital problems, which are not to be solved by the
signing of peace. The work therefore will still go on.
Mrs. Fitzsimmons also served as vice-chairman of the
Newport Chapter of the Red Cross and head of the Depart¬
ment of Military and Naval Relief.
Professor Henry Jones Ford, Princeton University, has
since our entrance into the war published in the Atlantic
Monthly "Rights and Wrongs of Pacifism," "The War and
the Constitution," "The Growth of Dictatorship," all strongly
upholding national authority and the subordination of the
rights of the individual to those of the community. "Wash¬
ington and His Colleagues," covering the first two administra¬
tions under the Constitution has been published. "The Cleve¬
land Era," 1880-1896, and a new biography of Alexander
Hamilton are nearing completion as we go to press.
Lee K. Frankel, Ph.D., was elected in 1918 Commissioner
of the State Board of Charities of New York State and Presi¬
dent of the American Public Health Association.
Mrs. Robert A. Franks has, during the past four years,
devoted herself to formulating for the "busy woman a simple
workable plan for the administering of her household upon
the same principles which her husband has found successful
in business." Her first book, "Efficiency in the Household,"
began a nation-wide movement, and since its publication every
domestic science school teaches business administration in the
household. Mrs. Franks organized in Orange, N. J., a class of
fifty-three women who were taught by a local science teacher,
Mrs. Franks herself prefacing each lesson with a fifteen min¬
ute talk on some question of domestic economy, afterward
published in book form. Diplomas were given to the gradu¬
ating classes at the end of two winters' work. Her "Daily
Menus for War Service" were made out for three classes of
income—liberal, medium and economical—each and all giving
a balanced ration, with calories for every dish and substitutes
ACTIVITIES OF MEMBERS
209
for meats, butter, sugar and wheat flour which war conditions
made needful.
C. Stuart Gager, Director of the Brooklyn Botanic Garden,
reports that Volume I. of the Brooklyn Botanic Garden Mem¬
oirs was published in 1918. This volume of 521 pages con¬
tained 33 papers which were presented at the dedication of the
Botanic Garden buildings in April, 1917. The endowment of
the Botanic Garden was increased during 1918 by $12,500 in
two funds—one of $10,000, to be known for the Benjamin
Stuart Gager Memorial Fund, and the one of $2,500 for the
Martha Woodward Stutzer Memorial Fund. The Botanic Gar¬
den has been active in conducting and supervising war gar¬
dens throughout the Borough of Brooklyn, and giving lec¬
tures at the Garden and other centers on subjects pertaining
to gardening.
During the first part of 1918 Virginia C. Gildersleeve,
LL.D., Dean of Barnard College, served as chairman of the
Columbia University Committee on Women's War Work; as
chairman of the Advisory Committee on the Y. M. C. A. Con¬
ferences for Women Overseas Workers (a training school
conducted at Barnard College for the women who were going
over to work in the "Y" huts abroad), and as a member of the
Committer on War Service Training for Women College Stu¬
dents of the American Council on Education. Dean Gilder¬
sleeve is now the chairman of the Committee on International
Relations of the Association of Collegiate Alumnse, which is
undertaking to aid in bringing about closer educational rela¬
tions between the United States and our Allies.
Armistead C. Cordon, LL.D., published in 1918 a "Life of
Jefferson Davis" as one in a series of "Figures of American
History." (Scribners.)
In June, 1919, Dr. Cordon retired from the office of Rector
of the University of Virginia, after a longer service than that
of any other incumbent of the position since the founding of
the University by Thomas Jefferson, its first Rector.
2IO THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
John W. Green, in writing present-day differences of opin¬
ion, says: "Let us not be unfair to those who differ from us
upon government policies. The Union Veterans, and we Con¬
federate Veterans, are both now solidly for the Union and the
Constitution, and those who have carefully studied the struggle
between us realize that the large majority of both North and
South in those dark days were anxious that the Constitution
and the Union should be preserved."
Captain Selskar M. Cunn has been in France since July,
1917, working with the International Health Board, the Red
Cross and French government in introducing American meth¬
ods adapted to the psychology of the country in the interests
of anti-tuberculosis work and the lessening of infant mortality.
On January 2, 1919, he was decorated by the French Govern¬
ment with the Cross of the Legion d'honneur.
Dr. Samuel H. Halley served as chairman of the Commit¬
tee on Agriculture, Kentucky Council of Defense. As Ken¬
tucky is an agricultural state, the work of Dr. Halley's Com¬
mittee assumed unusual importance. "When scarcity of labor
and the demand of farm hands for unprecedented remunera¬
tion in the wheat harvest threatened the good feeling between
the farmers and the harvest hands this committee, in conjunc¬
tion with the County Councils of Defense, fixed the price to be
paid wherever dissatisfaction arose and in this way serious
trouble was obviated and the crops were saved."
Mrs. William Pierson Hamilton opened a camp at her coun¬
try place. Table Rock Farms, Sterlington, New York, near
Tuxedo, for the New York State Land Army workers. As
vice-president of the Woman's Land Army of America she
was appointed its delegate and sailed for England and France
to study conditions of women as an aid to agricultural work.
Hastings H. Hart, LL.D., of the Russell Sage Foundation,
at the request of Governor Charles Henderson of Alabama,
made in 1918 a study of the Social Institutions and Agencies
of Alabama, as related to War Activities. Dr. Hart had previ-
ACTIVITIES OF MEMBERS
211
ously made similar studies of West Virginia, South Carolina
and Florida. His method has been to visit the charitable and
correctional institutions and to talk to people informed on such
subjects, including convicts and paupers, in this way making
a thorough and exhaustive study of the subject. His con¬
clusions after his visit to Alabama are embodied in a report
published by the Russell Sage Foundation, and appear as let¬
ters to the Governor and to the people. In his letter to the peo¬
ple he says: "When you open any page of a volume of na¬
tional statistics, the first name you see is Alabama. . . .
"But when you come to the record of her social develop¬
ment, you find Alabama second or third in the profit derived
from the labor of her convicts, but far down the list in her
efforts for their reformation; high in illiteracy, but low in
public school education; high in the quality of care for the
insane, but absolutely without care for the feeble-minded who
are even more in need of it; high in her receipts of donations
from northern states for the support of educational institu¬
tions for the negroes, but low in appropriations for the state
university ; high in protection of the health of hogs and cattle,
but low in protection of the health of the people."
In this report his endeavor has been to secure a complete
change of the financial administration of the State.
George A. Hastings was for some months during 1918 the
executive of the war work department of the National Com¬
mittee for Mental Hygiene cooperating with the Surgeon Gen¬
eral's office in providing facilities for the mental examination
of soldiers and for the treatment of nervous and mental dis¬
orders developing in the U. S. military forces here and abroad.
As executive secretary of the New York Committee on Feeble¬
mindedness and the Mental Hygiene Committee of the State
Charities Aid Association, he has helped direct public and legis¬
lative attention to the further needs of the insane and feeble¬
minded in New York State, and helped to promote the state¬
wide campaign for prevention of mental disorders.
The Honorable David Jayne Hill was elected president of
the National Association for Constitutional Government, the
purpose of which is as follows:
212 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
"It shall be the object of the Association to propagate a
wider and more accurate knowledge of the Constitution of
the United States, and of the distinctive features of constitu¬
tional government as conceived by the founders of the Repub¬
lic ; to inculcate an intelligent and genuine respect for the or¬
ganic law of the land; to bring the minds of the people to a
realization of the vital necessity of preserving it unimpaired,
and particularly in respect to its broad limitations upon the
legislative power and its guarantees of the fundamental rights
of life, liberty, and property; to oppose attempted changes in
it which tend to destroy or impair the efficacy of those guaran¬
tees, or which are not founded upon the mature consideration
and deliberate choice of the people as a whole ; and to this end,
to publish and circulate appropriate literature, to hold pub¬
lic and corporate meetings, to institute lectures and other public
addresses, to establish local centers or branches, and generally
to promote the foregoing objects by such means as shall from
time to time be agreed upon by the Association or by its gov¬
erning bodies."
The Honorable Edward W. Hines, in October, 1917, was
appointed chairman of the Kentucky Council of Defense and,
according to his report of January i, 1919, made the following
committee assignments: on Agriculture, Finance, Health and
Education, Industry, Labor, Military Affairs, Public Safety
and Publicity. One of the first activities of the Council was
to coordinate its efforts with those of the Woman's Committee,
which" had for some time been in active existence. Regular
meetings of the Council were held twice a month ; the Execu¬
tive Committee met twice each week or oftener as emergencies
arose. The late William D. Cochran, chairman of the Com¬
mittee on Health and Education, died under the strain, his
latest work having been "the organization of the 'Back to
School' drive for the purpose of returning to the schools those
who, during the war, attracted by the high wages of war work
or for other reasons, had left such institutions."
Mrs. Ripley Hitchcock, in 1918, organized the Art War
Relief, serving as its chairman. Under its initiative over five
hundred landscape targets were painted by eminent artists for
machine gun instruction in our training camps. Mrs. Hitch¬
cock, under the Surgeon General, also assisted in organizing
fhç War Service Classes, from which one hundred students
ACTIVITIES OF MEMBERS
213
were graduated as hospital aids in craft work for the recon¬
struction of disabled soldiers and sailors.
She was asked to organize the National Committee of One
Hundred on Memorial Buildings, having as its object the
creation of living tributes to those who served in the Great
War. The erection of useful community buildings was advo¬
cated, and in two months the cooperation of some 400 towns
was secured. As a member of the Woman's Roosevelt Memo¬
rial Association, Mrs. Hitchcock has been active in organizing
plans for the purchase and restoration of Theodore Roosevelt's
birthplace at 28 East 20th Street, New York. At her sugges¬
tion it was agreed to purchase the adjoining dwelling, making
it a center for civic, historic and patriotic Americanization,
thus making the memorial a vital factor in national develop¬
ment.
The Honorable Charles B. Hubbell, on August i, 1918, was
appointed by Governor Whitman as Public Service Commis¬
sioner, ist District, State of New York, to succeed the Hon¬
orable Oscar S. Straus.
During the summer of 1918 George W. Hunter, Ph.D.,
served as Educational Director in the Washington District,
an area covering at one time twenty-one camps and about
100,000 men.
"The work, before the signing of the armistice," says Dr.
Hunter, "was directed mainly to making our men better
fighters, much emphasis being placed on French and on the
teaching of English. Since the signing of the armistice, morale
work has superseded the class work and a definite program of
vocational guidance, vocational education, better citizenship
and general morale lectures. While the work is given to fewer
men the problem becomes an increasingly difficult one now be¬
cause of the rapid movement of troops."
Ellsworth Huntington, Ph.D., Yale University, prepared
in 1918 a volume entitled, "World Power and Evolution." The
book is primarily a study of the effect of varying conditions
of health upon fluctuations in business, in history, and in evo-
214 the national institute of social sciences
lution. A detailed examination of about 9,000,000 deaths in
the United States, France and Italy from 1899 to 1915, a still
more detailed study of 400,000 deaths in New York City
from 1877 to 1884, and a more general study of 50,000,000
other deaths all over the world show that health is affected by
daily, weekly and seasonal variations in the weather far more
than by any other cause. "Incredible as it may seem," Dr.
Huntington says, "the ebb and flow of business seems to fol¬
low the march of health to a most extraordinary degree. A
comparison of bank clearings, prices, immigration and other
conditions with fluctuations in health from year to year sug¬
gests that as a factor in sociology health has an importance
which has only begun to be realized."
In addition to writing "World Power and Evolution," Dr.
Huntington served in the Army as captain in the Military
Intelligence Division, where he is still stationed.
William Mann Irvine, Ph.D., LL.D., celebrated, April,
1918, the 25th anniversary of his installation as Head Master
of the Mercersburg Academy, Mercersburg, Pennsylvania.
During that time the school, known to all the great educators
of the world, has grown from an entry of forty boys and four
instructors, to one of four hundred boys and forty-four instruc¬
tors, representing every state in the Union and eighteen for¬
eign countries. Among the philanthropic activities cultivated
among these boys, is the support of a Medical Missionary in
China ; educational work among the negroes of the South, and
the education of six Chinese boys at an American college in
China. During the Great War 760 Mercersburg boys were in
active military service, one being the first American to win
the Italian War Cross, while another, who landed with Gen¬
eral Pershing, won the Croix de Guerre.
At the suggestion of LeRoy Jeffers, who is Manager of
the Book Order Office of the New York Public Library and
Librarian of the American Alpine Club, an association was
formed in 1916, of which he is the secretary. Under the
title of the Bureau of Associated Mountaineering Clubs of
North America, it now comprises 24 organizations with an
ACTIVITIES OF MEMBERS
215
individual membership of about 24,000. The distinctively
mountaineering and outdoor clubs are the American Alpine,
Adirondack Camp and Trail, Appalachian Mountain, British
Columbia Mountaineering, Colorado Mountain, Field and For¬
est, Fresh Air, Green Mountain, Hawaiian Trail and Moun¬
tain, Klahhane, Mazamas, Mountaineers, Prairie, Rocky
Mountain Climbers, Sagebrush and Fine, and Sierra. Asso¬
ciated with these, and having many aims in common, are the
American Game Protective Association, American Museum of
Natural History, Boone and Crockett Club, Geographic So¬
ciety of Chicago, Geographical Society of Philadelphia, Na¬
tional Association of Audubon Societies, National Park Serv¬
ice, and the New York Zoological Society.
Apart from mountaineering activities and the exploration
of mountain regions, the Association is cooperating with the
National Park Service in creating, protecting, and developing
our national parks and monuments. The common aim is the
protection of tree and flower, of bird and animal, in their
natural environment.
The secretary issues an annual bulletin of information
giving the officers and activities of these members. He is also
lecturing on National Wonders of the United States and Can¬
ada, and is publishing a series of articles of exploration and
travel in little known regions of North America.
Mr. Jeflfers has gathered a large collection of mountaineer¬
ing literature and photographs in the New York Public Li¬
brary, to which the American Alpine Club has added its col¬
lection; and he has compiled a bibliography of the literature.
Miss Content Johnson, vice-president of the Pen and
Brush Club, organized in 1918 an Art Club, the purpose of
which is educational and aimed at stimulating an understand¬
ing of art in the vicinity of Washington Square, New York
City. Miss Johnson is chairman of the Art Committee, Miss
Cecilia Beaux its honorary chairman. The first exhibition was
arranged by Mrs. Philip Lydig, Dr. Christian Brinton and Miss
Johnson. Exhibitions are to be held semi-annually. Miss
Johnson exhibited thirty of her paintings at the Majestic Art^
Salon.
2i6 the national institute of social sciences
Emory R. Johnson, Ph.D., Sc.D., president of the National
Institute, served as Assistant Director of the Bureau of Trans¬
portation of the War Trade Board until the first of June, 1918,
when he began an investigation of ocean rates and terminal
charges for the United States Shipping Board. That investi¬
gation lasted through 1918 and until June first, 1919.
At the time this investigation was authorized, the Shipping
Board was especially interested in ascertaining what rates
would meet the costs of services during war-time conditions.
With the signing of the armistice and with the approach of
normal peace-time conditions, the Shipping Board's interest in
rates has become primarily that of regulating the services and
charges of ocean carriers and terminal companies. The report
by Dr. Johnson upon ocean rates and terminal charges dis¬
cusses the problems of regulation, and recommends a rate
policy for consideration by the Shipping Board. The subject
of port terminal services and charges is dealt with at length
in a special report prepared by Dr. C. O. Ruggles, of the Uni¬
versity of Ohio, under the supervision of Dr. Johnson. These
reports have been published by the Shipping Board for public
distribution.
In addition to these government services. Dr. Johnson has
continued his work at the University of Pennsylvania, and has
taken an active interest in the work of the Railroad Committee
of the Chamber of Commerce of the United States. This
committee has organized a series of conferences on the railroad
question for the purpose of assisting in the formulation of a
program of legislation to be enacted for the future government
regulation of the railroads.
The literary activities of Miss Elizabeth Jordan in 1918
consisted of the serial and book publication of a new novel,
"The Wings of Youth," together with the writing of numerous
short stories. Her newspaper syndicate work included three
articles weekly, published simultaneously in leading news¬
papers throughout the country. She was able to include much
war propaganda and work for liberty bonds and thrift stamps.
As a gratuitous work for the suffrage cause she collected and
edited the suffrage novel, "The Sturdy Oak," published serially
ACTIVITiES OF MEMBERS
2Í7
by Collier's Weekly and in book form by Henry Holt. All the
proceeds of this book went to the suffrage cause.
At St. Dunstan's, Regent's Park, London, the residence
of Mr. and Mrs. Otto H. Kahn, given by them to the English
government for the care of blinded soldiers, one of the first
things taught is dancing, "since dancing gives a sense of bal¬
ance and a feeling of security in getting about." The blind
learn to play checkers, dominoes and chess, and to read the
Braille type. Writing on the typewriter is taught as a matter
of course. "Our stenographers," Sir Arthur Pearson says,
"leave with a speed of one hundred words a minute and can
probably do one hundred and twenty-five. There are forty-
two of our men working in offices in London, and are getting
normal wages, or higher wages than they did before in
their old positions. Our telephone operators do the work
just as well as seeing persons. In a competitive examination
of masseurs in which 342 contestants from all parts of England
took part, one of our men took second place."
Robert L. Kelly, LL.D., served from July to December,
1918, as Executive Secretary of the American Council on
Education of the National Publicity Campaign in behalf of the
Students' Army Training Corps and of American education in
general.
Under the joint auspices of the Association of American
Colleges and the American Council on Education 114 French
girls and over 30 disabled French soldiers were placed in
American colleges and universities, on scholarships, carrying
the cost of board and room, tuition and fees. This plan of
international scholarships is now being extended to include
representatives from other allied governments.
The American Council on Education had charge of the
tours across the continent of the British Educational Mission
and of the French Mission of Scholars sent by their respective
governments to study educational conditions in the United
States and to strengthen international sympathies.
William Kirk, Ph.D., professor of Economics and Sociology
in the University of Rochester, has been associated with the
2i8 the national institute of social sciences
American Red Cross as Director of Education in the Bureau
of Civilian Relief for the Western New York District.
John C. Kirtland, L.H.D., is chairman of a committee
which, at the Phillips Exeter Academy, has planned a summer
session of the school, designed to help solve the problem of
wastage in American education, by putting the equipment of
the school in use for a considerable part of the time in which
it now stands idle, thereby "giving in larger measure the serv¬
ice for which it is intended." Dr. Kirtland is chairman of the
summer session faculty.
Miss Mary Lois Kissell, A.M., formerly Associate Profes¬
sor of Home Economics at the University of California, says
that the great waste to the poor in the matter of poor fabrics
manufactured into clothes, which go to pieces almost before
they are worn, led to the production of her "Yarn and Cloth
Making," an economic study prepared as a college and normal
school text-book, as a preliminary to fabric study and as a
reference for teachers. "It is an intensive study of a narrow
but fundamental field with a focus upon the economic gain
achieved as spindle and loom became more efficient in pro¬
ducing improved yarn and cloth. The plan was tested out
at one of our universities, and the results of the experiment
far exceeded expectation. For, as the student followed the
expanding science step by step and traced the definite gain
in each progressive type, she gained two important things :
a clear knowledge of good yam and cloth, together with a rich
appreciation of economic values."
Strickland L. Kneass, C.E., has been assisting in the de¬
sign and construction of appliances for large naval rifles used
on the American front and has been awarded two additional
patents for safety devices for railroad motive power operating
devices.
Miss Alice Lakey was chairman of the Women's Com¬
mittee of Cranford for the Third and Fourth Liberty Loans,
and was credited with sales amounting, respectively, to $75,850
and $218,000. In 1918 she was appointed a member of the
ACTIVITIES OF MEMBERS
219
Advisory Council of the Women's College of New Jersey and
was also elected president of the Cranford Village Improve¬
ment Association. As a charter member of the New York
Milk Committee, Miss Lakey was elected chairman of
Women's Day at the National Milk and Dairy Farm Exposi¬
tion held in New York May, 1918, and again in 1919. Miss
Lakey is chairman of the Liberty Service Medal Committee
for the State of New Jersey.
In October, 1918, Professor Frederic S. Lee of Columbia
University was sent to England and France by the United
States Public Health Service to investigate certain matters
pertaining to war industries. These included the poisoning
of munition makers by T.N.T. and other high explosives,
and the methods that had been found useful to protect the
workers; industrial fatigue and the status of its investigation
in Europe ; and the industrial work of women. Professor Lee
was given unusual opportunities by scientific men and govern¬
ment officials to study these subjects, and since his return he
has submitted a report upon them to the government. He has
recently published a book, "The Human Machine and Indus¬
trial Efficiency."
Miss Luisita Leland, chairman of the New York Com¬
mittee and vice-president of the National Executive of the
Fatherless Children of France, a society which aims to rebuild
France through the home, reports that during 1918, 150,000
orphans have been helped. The plan of the society has been
to add to the small pensions given by the French Government
to orphans of soldiers killed in the Great War, and so to enable
the remaining parent or guardian to keep those children at
home instead of sending them as waifs to an institution.
Miss Leland has the highest official authority for denying
the widely spread report in this country as to the present
wealth of France and the comfort and affluence of her people.
"There are now," she says, "over 2,000,000 orphans of
France, over 1,000,000 of whom are in great need." The so¬
ciety, therefore, of which she is chairman, has made a nation¬
wide effort to interest the school children of the United States
in their little allies, and has met with the greatest success.
220 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Groups of children were formed, of a class or division, and
by subscribing only a few cents a week or a month, each group
was able to adopt a child and together they wrote to it, worked
for it and sent it little gifts, such as children love to exchange.
This has been found tO' have an excellent effect in stimulating
interest in our school children in their lessons and outlook,
and it is drawing them very close to the French children whose
childish letters they receive."
Miss Leland has made many public addresses on the sub¬
ject. Two hundred committees have been formed. Many of
the orphans adopted by our own soldiers in France are being
cared for through the Fatherless Children of France.
Mr. Adolph Lewisohn was president of the National Com¬
mittee on Prisons and Prison Labor which devoted practically
all its energies in 1917 and 1918 to war activities. This or¬
ganization was the first to suggest the application of the "work
or fight" principle. It placed at the disposal of the Federal
Government its entire staff and was frequently consulted by
the government on matters relating to interned enemy aliens,
prisoners of war and military prisoners.
Mr. Lewisohn was a member of the War Industries Board,
and of the Waste-Reclamation Section which inaugurated a
system for the saving and salvage of waste materials by the
use of prison and other labor. He was chairman of the Thrift
Committee of the Industrial Department of the Y. M. C. A.
and of the Home Gardens Committee of the International
Child Welfare League. He made numerous addresses and ap¬
peals in behalf of the various liberty loans.
Miss Sophie Irene Loeb has been reëlected to the presi¬
dency of the New York City Board of Child Welfare, which
in 1918 cared for 15,000 children and 5,000 widows at a cost
of $1,750,000. This has been done "at a cost of 3 per cent,
that is administration expenses of but three cents on the dol¬
lar, the lowest of any city or state in the United States."
Miss Loeb was also elected president of the National
Union of Public Officers of Child Welfare Boards, which held
a meeting in the City Hall of New York City in February,
1919, where it was agreed to promote the principle of home life
ACTIVITIES OF MEMBERS
221
for the child wherever possible, and further agreed to promote
the widows' pension law in all sections of the country.
In 1918, Miss Loeb, having proved that the poorest people
had to pay the highest price for coal, made a tour of the
Pennsylvania coal mines. After a series of articles on the
subject she laid the subject before the Coal Committee in
Washington, where hearings were conducted. In January,
1919, she accompanied the Senate Committee to Pottsville,
where her own previous findings were substantiated, the
monopoly disclosed being so apparent as to demand govern¬
ment interference in fixing prices of coal.
George E. MacLean, LL.D., reports as his activities during
the year beginning May, 1918: "By invitation I lectured in
the University of Cambridge in the course of Local Lectures
Summer Meeting, 1918, devoted to the United States of Amer¬
ica, my topic being 'American State Universities, Colleges and
School Systems'; in the autumn in Bedford College, Univer¬
sity of London, in a course of public lectures entitled : 'Aspects
of the History of Life and Thought in the United States of
America.' I gave several lectures under the auspices of the
Victoria League at British Hospitals in London. I became
secretary of the British Branch of the American University
Union in Europe and recently the Acting Director, and served
under the Army Educational Commission, A. E. F., Y. M.
C. A., as Director for Universities and Colleges in Great
Britain and Ireland. I am on the Executive Committee of the
British American Fellowship of which the Rt. Hon. the Earl
Beauchamp, K.G., is president and Arthur Carlton, Esq., J.P.,
Mayor of Worcester, is chairman.
"I am also member of the Executive Committee of the
English Speaking Union of which Rt. Hon. A. J. Balfour
is president in Great Britain and Ex-Pres. Taft in the United
States. I am a member of the editorial board of the 'Land¬
mark,' the magazine of the English Speaking Union."
Mrs. Howard C. Mansfield in 1918 organized with the ap¬
proval of the Surgeon General, U. S. Army, a series of War
Service Classes for Training Reconstruction Aides for Mili-
222 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
tary Hospitals. One hundred and two Reconstruction Aides
were graduated, all of whom have appointments overseas or
in the military hospitals in this country. The classes closed
on January 30, 1918.
Dr. Franklin H. Martin, Chairman of the Committee on
Medicine of the Advisory Commission and Chairman of the
General Medical Board of the Council of National Defense,
Colonel in the Medical Corps of the U. S. Army, was one of
the leaders in the great work of coordinating the civilian medi¬
cal resources of the country with the official governmental pro¬
grams of the Army, Navy, Public Health Service and Red
Cross. On the General Medical Board have served seventy-
five of the leading physicians and surgeons of the country,
formally appointed by the Secretary of War, and through the
patriotic work of the more than 2,000 state and county com¬
mittees appointed by the Chairman of the General Medical
Board, practically the entire medical profession of the country
was enrolled for war service in the Army, Navy, Public Health
Service, Provost Marshal General's Department and Volunteer
Medical Service Corps. Committees of the Board—other than
the state and county committees in the field, have enlisted the
services of 234 individual medical men in activities which the
following committee titles will connote: Civilian cooperation
in combating venereal diseases, dentistry, editorial (publication
of medical manuals), hospitals, hygiene and sanitation, indus¬
trial medicine and surgery, legislation, medical advisory boards,
medical schools, nursing, states activities, surgery, women
physicians, child welfare and Volunteer Medical Service
Corps. The last named body, a great civilian medical reserve
of which Dr. Edward P. Davis was chairman, the organization
of which President Wilson emphatically endorsed, gave notable
evidence of its value during the recent influenza epidemic, its
members answering successive calls from Surgeon General
Blue of the Public Health Service as to elicit from him the
tribute that he found it "most gratifying to certify to the
prompt response." Information concerning the qualifications
of about 70,000 doctors, additional to approximately 40,000
commissioned in governmental service, has been transferred
to code cards and will be placed in the Library of the Surgeon
ACTIVITIES OF MEMBERS
223
General of the Army where it will be maintained as a per¬
manent record of the medical profession.
Dr. Martin visited England, France and Italy in Novem¬
ber and December, 1918, on a special mission for the Council
of National Defense.
Since the outbreak of hostilities in 1914, Miss Anna C.
Maxwell, R.N.M.A., has crossed the ocean twice in order to
visit the scene of action, personally inspecting over one hun¬
dred army hospitals. In speaking of the patriotic service ren¬
dered by the nurses of this country. Miss Maxwell refers to
the fact of their having been given neither rank nor status,
and that "in consequence they worked under a serious handi¬
cap, being rated below the non-commissioned officer, and se¬
curing only such authority as their own personalities com¬
manded. Their opportunity, however, for giving anaesthetics
and lending valuable and efficient aid in carrying out the treat¬
ment of wounds such as the world has never seen ; their satis¬
faction in the knowledge that they could bring to the soldier
in his extremity that atmosphere of home which only a de¬
voted woman can create, are their inestimable reward."
During the past year Dr. N. E. Mclndoo, Insect Physiol¬
ogist, Department of Agriculture, Washington, D. C., has pub¬
lished the following papers: (l) the olfactory organs of a
coleopterous larva and (2) the olfactory organs of Diptera;
and now has the following in press : (3) nicotine sulphate as an
ovicide and larvicide; (4) Derris (an East Indies fish poison)
as in insecticide; (5) the olfactory sense of lepidopterous
larvae; and (6) the olfactory organs of Orthoptera.
Douglas C. McMurtrie, in 1918, served as director. Red
Cross Institute for Crippled and Disabled Men ; and as presi¬
dent, Federation of Associations for Cripples. He was editor
of the American Journal of Care for Cripples, a member of the
Active Vocational Board, office of the Surgeon General, U. S.
A., and also of the National Commission on Standardization
of Artificial Limbs. His "The Disabled Soldier" was pub¬
lished by the Macmillan Company.
224 the national institute of social sciences
Hon. Cyrus C. Miller, during 1918, served as chairman for
the Borough of The Bronx of the Second Liberty Loan Cam¬
paign; chairman of the Condemnation Commission having in
charge the acquisition of land for the Bronx Parkway from
the Botanical Gardens to the City Line; Fuel Administrator
for Bronx County; Director of Transportation and Distribu¬
tion of the New York Federal Food Board; Director of
Transportation and Distribution on the New York State Food
Commission; member of the Commission to Investigate the
Surface Railroad Situation in the City of New York on the
West Side; Director, Bronx Union Branch Y. M. C. A.; Di¬
rector, Bronx Board of Trade; President, Boy Scouts of
America, Bronx Branch.
John F. Moore has for many years been at the head of the
Railroad Department of the Y. M. C. A., establishing welfare
work for a million railroad men in this country. He has also
initiated similar work in China, Japan, Philippines, etc.
Dave H. Morris served as Government Appeal Agent in
New York City for the State of New York Selective Service.
The Selective Service Organization of the United States in¬
dicated the names of 24,000,000 men from whom the United
States Army was selected. Mr. Morris states that "during the
whole time there was not one serious objection to the draft,J'
and he feels "it to be an achievement which stamps the people
as worthy of the ideals of our democracy." Concerning the
organization of Board 138, Mr. Morris makes the following
statement :
"This organization is still in existence and it seems almost
a crime that it must some day disband. It is very closely in
touch with the people everywhere and is one of the few times
when the Federal government has an agency to which the
people in their own districts can go. This contact with the
Federal power has advantages and possibilities and it is hoped
that the organization can in some way survive so that these
relations may continue.
"An interesting point in regard to Board No. 138 is that
the district it covered contained a population of more than
one third enemy aliens. Few realize what this means in the
ACTIVITIES OF MEMBERS
225
problems presented, not only in the raising of an army to fight
the nations to which this third owe their allegiance, but also,
in assimilating them to our national life and ideals. Every one
who has done any war work in any capacity must feel, above
all other considerations, that Americanization of our entire
population is our immediate and first duty to all who live in
our great country."
As chairman of the War Service Commission of the Medi¬
cal Women's National Association, and as chairman of the
Executive Committee of the American Women's Hospital,
Dr. Rosalie S. Morton established work which resulted in the
raising of $300,000 and the foundation of four hospitals in
France and two in Serbia, staffed by women who are caring
for men, women and children in devastated districts. Through
the above and other organizations. Dr. Morton was able to
aid and relieve the dependents of soldiers, sailors and marines
in the North Carolina mountains, the Middle West, and other
parts of the United States, besides sending supplies to Serbia,
to American and French army hospitals, and to the refugees,
prisoners of war, the sick and the wounded in Switzerland,
Halifax, Palestine, France and Serbia.
Dr. Morton began her war work in 1914. In 1915, at the
request of the New York secretary of the Grenfell Associa¬
tion, she spent the summer in Labrador to relieve the deficit
of doctors working in the mission hospitals. The summer and
autumn of 1916 she gave to a study of war hospitals in Eng¬
land and France and to service in Macedonia. On going to
and from Salónica, she served on French hospital boats. In
1917 she organized and helped get in readiness the Woman's
Army General Hospital, authorized by General William G.
Gorgas to receive wounded American soldiers.
Mrs. Frederick Nathan has accepted the chairmanship
of the Woman's Roosevelt Memorial Association, and is serv¬
ing as one of its executive committee. She is also a director
of the Women s Pan-American Board Table, vice-president
of the Association to Promote Better Housing Conditions and
has been elected one of the executive board of the Girls' Com¬
munity Club House at 109 Fast 30th Street, New York. Mrs.
226 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Nathan still retains her office in the National State and City
Consumers' Leagues, as vice-president in the National and
State Leagues, and as honorary president in the City League.
Mrs. Charles P. Noyes, president of the Y. W. C. A., St.
Paul, Minnesota, during 1918, served on the State Suffrage
Board, the N. W. Field Committee of the Y. W. C. A., the
City Americanization Committee, the Police Woman's Com¬
mittee, and the Social Service Committee of the federated
churches.
On August I, 1917, when Lieutenant-Commander Thomas
M. Osborne assumed command of the Portsmouth Naval Pris¬
on, there were 486 men confined in the prison. There were
30 or more armed guards on duty at all times. No man was
allowed to think for himself, being governed entirely by the
set rules as enforced by the armed guards. Few men were
permitted to return to the service. At the expiration of a
sentence a man usually got a dishonorable discharge and was
returned to civilian life, unprepared to meet the obstacles
created by his misfortune.
Since August i, 1917, owing to the increased enlistment in
the Navy, 5,133 men have been convicted by general court-
martial and confined in the prison, making the total number
of men under Mr. Osborne's command during the period he
has been in command of the prison 5,628. Of this number
1,905 have been restored to duty and thus far but 271 have
been reconfined by reason of breaking their probation. There
have been certain offenses which by reason of the regulations
would not permit of the offender returning to duty. Of these
men there have been 1,684 dishonorably discharged and many
of this number have immediately enlisted in the army and in
a few cases become officers, while others have entered im¬
portant civilian employment.
The prison, under Mr. Osborne, is run almost entirely by
prisoners, with but three guards stationed at the entrances
and eight sentries guarding the prison reservation. The sys¬
tem of the Mutual Welfare League, as instituted at Auburn
and Sing Sing prisons, is in full sway at the Naval Prison and
working satisfactorily. Trade schools have been established
ACTIVITIES OF MEMBERS
227
and a school of letters maintained, where instruction is given
by the most intelligent prisoners to the less fortunate. From
an educational point of view remarkable results have been ob¬
tained. The prison has supplied over a thousand men each
day for work in the Navy Yard.
Each individual is allowed to think for himself, talk with
his fellow prisoners or with any officer at the prison, and the
general atmosphere of the prison is that of striving for better
living, a higher sense of honor and justice to mankind. The
loss of liberty with the disgrace involved in a prison sentence
is sufficient punishment for errors committed, and the present
system is building up character instead of returning the men
to society broken in spirit and ready to commit crime at the
first opportunity.
Charles L. Pack, LL.D., is president of the National War
Garden Commission.
The 5,000,000 war gardens established by him raised in
1918 over $535,000,000 worth of food. Trinity College of
Hartford, Conn., conferred on him the honorary degree ol
LL.D., June, 1919, in recognition of these services.
As president of the American Forestry Association, he
commenced in 1918 to advocate the planting of memorial
trees in honor of the soldier dead.
He was made chairman of the French Agricultural Com¬
mittee of the American Society for Devastated France and is
a member of the Executive Board. He accepted in 1919 an
invitation from the French Government to attend a conference
in France relating to French reforestation, and as president
of the American Forestry Association, he has assumed the
work of aiding France, Belgium and England in their plans
for reforestation. The losses to their forests during the war
have been enormous, and help must come from America as
most of their mother, or seed-trees, were destroyed.
The Honorable John M. Parker, Federal Food Administra¬
tor for Louisiana, reports that the work in his state was
marked by "the highest degree of cooperation and patriotism
on the part of practically everyone in every walk of life," SO
228 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
that "in the final check on sugar, there was a report of less
than two per cent in the amount allotted and amounts issued
according to cards." That which made the work of the
Louisiana Food Administration of vital importance during the
war was the fact that "Louisiana is not only one of the greatest
sugar and rice producing states, but that the City of New Or¬
leans stands second in the United States in export."
Dr. Raymond Pearl was engaged throughout the year 1918
as Chief of the Statistical Division of the United States Food
Administration. At the request of Mr. Hoover, he spent the
months of October and November in Europe in connection
with the work of the Interallied Scientific Commission on Nu¬
trition. In July, 1918, Doctor Pearl began the organization
of the Department of Biometry and Vital Statistics, of which
he is in charge in the School of Hygiene and Public Health
of Johns Hopkins University. After March i, 1919, his entire
time will be devoted to this work at the Johns Hopkins Uni¬
versity.
During 1918 Professor William Lyon Phelps served as a
United States Four-Minute Man, speaking in Connecticut,
New York and Michigan. He also served as a delegate to Win
the War Convention in Philadelphia, and Limit Man in War
Savings Stamps.
Two books of his were published during this time: "The
Advance of English Poetry in the Twentieth Century Thea¬
tre" and "The Twentieth Century Theatre."
During the past year the members of the international so¬
ciety known as the Associated Observers of Mars, of which
Professor W. H. Pickering is the secretary, have continued
their investigations of this interesting planet. Thirty-six
drawings of its surface by nine of their leading observers
have been published in Popular Astronomy for January, 1919.
These give the most complete and recent views of its more
striking features. Other reports published in 1918 deal with
the latest theory of the canals and other matters of interest.
Twenty-one of these reports have now appeared, the last one
ACTIVITIES OF MEMBERS
229
dealing with the seasonal and other changes that are con¬
tinually occurring upon its surface, and also with the curious
doubling effect that has been noted by several observers.
Mrs. Cornelia B. Sage Quinton, Director of the Buffalo
Fine Arts Academy, arranged sixteen special exhibitions dur¬
ing 1918. Among these were exhibitions of war posters;
selected paintings by American artists ; paintings of the late
Henry Golden Dearth; paintings by soldiers of France and
arranged by Monsieur Ludovic Leblanc; "Carry On" by Ed¬
win Rowland Blashfield, and in December the work of the
Students of the Art School in the class of Occupational Ther¬
apy.
Fifteen life members were added to the list of the Academy
and the city of Buffalo appropriated $30,000 for its use for
the fiscal year, 1918-1919.
Joseph Edward Raycroft, A.B., M.D., Professor of Hy¬
giene and Physical Education, Director of the Department of
Physical Education, Princeton University, served in 1918 as
member of the War Department Commission on Training
Camp Activities, and chairman of the Committee on Athletics.
As chairman he formulated and put into operation a program
of physical and bayonet training for use in our army. A dem¬
onstration of its value in training recruits and of its group
games and mass athletics has influenced the plans now being
considered for physical and athletic games in our schools and
colleges.
William E. Ritter, Ph.D., Director, Scripps Institution for
Biological Research of the University of California, La Jolla,
gives as the basal ideas of his "War Science and Civilization":
(i) War is a primitive and usually ineffective attempt to solve
problems which only statesmanship, jurisprudence, science and
ethics are competent to solve; (2) The highest aim of science
in its application to practical affairs is to relieve all mankind
from the fear of physical want and disease; (3) Civilization
is organic evolution on the plane of man's spiritual nature.
230 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Dr. Ritter has made several contributions to the bulletins
published monthly by the Society to Eliminate Economic
Causes of War of Wellesley Hills, Massachusetts.
Mrs. Lucy H. Robertson, President Emeritus of Greens¬
boro College, was for a year chairman of the Child Welfare
Department of the North Carolina Division of the Council of
National Defense.
Hon. Simon W. Rosendale, former Attorney-General of
the State of New York, in a letter addressed to Congressman
B. Sanford, September, 1918, says regarding the Jewish move¬
ment known as "Zionism": "This project has not had and
does not have the general sympathy or approval of that large
religious organization of citizens known as Reform Jews of
America, nor of a representative body in Great Britain known
as the League of British Jews—headed by such prominent
Englishmen as Claude Montefiore and others.
"It should be stated at the outset that the great body of
Reform Jews in this country maintain that they are Jews by
religion only and Americans by nationality."
Speaking for the Reform Jewish Congregation of America,
of which the late Rabbi Isaac M. Wise was the leading spirit—
a union numerically in the majority until the great influx of
Jews from Russia, Galicia, Roumania—Mr. Rosendale claims
that there is no such thing as a Jewish flag, and that the Jews
of America recognize only the Stars and Stripes.
Leo S. Rowe, LL.D., has since April 17, 1917, been serving
as Assistant Secretary of the Treasury.
H. H. Rushy, Dean of the College of Pharmacy, Columbia
University, among his other activities in 1918 instructed a
Unit of the Students' Army Training Corps in the School
of Pharmacy at Columbia University.
Mr. and Mrs. William Salomon continued during 1918
the support of their hospital, St. Katherine's Lodge, Regent's
ACTIVITIES OF MEMBERS
231
Park, London, which was designed especially for reconstruc¬
tive or orthopedic work for wounded American officers.
S. J. Shwartz, in October, 1917, was appointed State Mer¬
chant Representative of the United States Food Administra¬
tion, Louisiana, working in conjunction with John M. Parker,
and having charge of all publicity matter for the state. He
was also appointed a member of the War Economy Committee
of the National Retail Dry Goods Association, which provided
ways and means for releasing men for war service and put¬
ting women in their places and originated the slogan "Carry
it home and keep it," thereby encouraging customers to carry
their bundles so as to save horsepower and gasoline. In
November, 1917, he was appointed Director, Bureau of Sup¬
plies, American Red Cross, handling all finished supplies to
Louisiana, Mississippi and Alabama. He installed a fumigat¬
ing plant for fumigating all knitted garments and a cutting
wheel for cutting gauze for bandages.
During the past year, and after leaving the hospital for
French wounded where they had worked for two years,
Madame Basil de Sélincourt (Anne Douglas Sedgwick) and
her husband have been with the A. R. C. in France, working
in the Department of Civil Relief. They have been especially
interested in the refugee problem at Evian and in the campaign
carried on by Dr. Lucas at Lyons. With her husband, Madame
de Sélincourt has also made a study of conditions of life in a
French commune for Lieut.-Col. Homer Folks. The report is
to be embodied in book form.
Mrs. Ernest Thompson Seton sailed for France early in
January, 1919, to operate the Women's Motor United, of Le
Bien-Etre du Blessé, which she organized for the French Gov¬
ernment in 1916.
Wilbur H. Siebert, A.M., Department of European His¬
tory, Ohio State University, was, during 1918, acting dean
of the Graduate School of the Ohio State University ; member
of the executive committee of the Historical Commission of
Ohio created by Governor Cox to collect and preserve the war
232 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
records o£ the state; contributor of articles on the independ¬
ence of Armenia and joint translator of a brief history of
modern Armenia ; teacher of some of the men who enlisted in
the Students' Army Training Corps; member of the War
Records Committee of the Ohio State University.
Frank H. Simonds has been made a Knight of the Legion
of Honor, in recognition of his incomparable articles on the
Great War with his estimates of French generalship.
Colonel Lorillard Spencer, 369th Infantry, A. E. F., re¬
ceived two French citations and the Distinguished Service
Cross of our Army. The French citation reads: "For show¬
ing the greatest bravery in leading his battalion the 26th of
September, 1918. Seriously wounded at the head of his men."
Mrs. James Speyer in 1918 perfected plans for looking
after the First Provisional Regiment, Aqueduct Guard, which
when war was declared was hurriedly summoned to protect
New York City's water supply. Several of the camps were
located near Scarborough, Mrs. Speyer's summer home, and
in driving among them she discovered that many of the men
were almost entirely destitute of even the proper comforts.
Those in her immediate neighborhood she provided for some
time with necessities for cold weather and provisions on holi¬
days. As, however, the guard was composed of more than
2,000 men stationed all along the Aqueduct and often in lonely
places, she appealed to one hundred prominent citizens from
the five counties in which the men were located, organized
committees and raised funds to supply the needs of the men.
Mrs. Speyer served as chairman of the Comforts Committee.
Mrs. Speyer is still treasurer of the St. Mary's Free Hospi¬
tal for Children, Board of Associate Members, and vice-presi¬
dent of the Girls' Branch of the Public School Athletic League,
organized by her thirteen years ago. She is also treasurer of
the Women's Auxiliary of the United Hospital Fund and in
1918 raised over $35,000 for this worthy charity.
Under her presidency of the New York Women's League
for Animals, thousands of animals belonging to the poor were
treated without charge at the League's Free Animal Hospital;
ACTIVITIES OF MEMBERS
233
drivers were helped with advice and instruction, and useful
garments distributed to the men and their families ; sixty car¬
loads of ashes were scattered on the streets in slippery weather
and chained shoes given to drivers. A number of watering
stations for horses were opened in the summer and light-weight
bridles and fly-nets distributed. One watering station was
kept open all night for the market men coming in from the
country.
After serving for thirty-five years as treasurer of the
Irene Club for Working Girls, Mrs. James Speyer, on the
death of the president, was elected in 1918 to that office.
Colonel Henry Lewis Stimson, A.M., Secretary of War
in the Cabinet of President Taft, was in May, 1917, appointed
Major Judge Advocate, promoted in August, 1917, to Lt.-
Colonel of Artillery and assigned to the 305th Field Artillery
at Camp Upton. In December, 1917, he sailed for general
staff instruction and duty abroad, and served with the 51st
Highland Division of the British Expeditionary Forces before
Cambrai in January and February, 1918. During the suc¬
ceeding months he was at the General Staff College of A. E. F.
at Longres ; in line with the 26th Division, A. E. F. ; in line
again with his own regiment, the 305th Field Artillery, in
Lorraine, his Battalion firing the first shot of the National
Army Artillery against the Germans. In August he was pro¬
moted to full colonelcy and assigned to the 31st Field Artil¬
lery then training at Camp Meade. The signing of the armis¬
tice brought to a close the activities of his regiment, mustered
out of service, December, 1918.
Guy B. St. John, Field Agent, United States Housing Cor¬
poration of the United States Department of Labor, has been
active in solving housing problems in towns and cities where
large numbers of industrial war workers were employed on
war contracts.
President Henry Suzzallo, University of Washington, Seat¬
tle, Washington, served during 1918 as chairman. First Red
Cross War Campaign, Seattle, 1917; chairman, Washington
234 the national institute of social sciences
State Council of National Defense, 1917 and 1918; one of ten
National Umpires for the National War Labor Board, 191B;
adviser to War Labor Policies Board, as chairman of a group
to prevent employment difficulties in the munitions industry,
1918. By a proclamation of Governor Lister be was made
Joint Adviser to the Governor, along with the Attorney Gen¬
eral, during the recent Revolutionary General Strike on Puget
Sound, 1919. As President of the University of Washington
be was in charge of cooperations with the U. S. Naval Train¬
ing Station—ten schools—and with the U. S. Shipping Board—
three schools—1917 and 1918.
Joseph M. Thomas, Ph.D., was elected president of the
National Council of Teachers of English for 1919.
Professor Edward L. Thomdike, Teachers College, Colum¬
bia University, has served as member of the Psychology Com¬
mittee of the National Research Council from its inception,
and also as member of the Committee on Classification of Per¬
sonnel in the Army, from its inception, in the Office of the
Adjutant General, and later in the general staff. He was a
member of the Advisory Board of the Division of Psychology,
Office of the Surgeon General, and of the board appointed by
the Director of Military Aeronautics to consider problems of
selection and training of officers and enlisted men in the air
service under peace conditions.
Professor William Trelease served as President of the
Botanical Society of America during 1918.
Mrs. George Montgomery Tuttle, chairman. Executive
Committee, American Friends of Musicians in France, reports
that by the end of March, 1919, $45,000 had been sent to France
where terrible conditions prevail among the musicians, espe¬
cially in districts evacuated by the Germans. Fifty per cent
of those returning to their old homes have died because it was
too late to save them.
Branches of this society have been formed in twelve cities
of this country.
ACTIVITIES OF MEMBERS
235
At the request of the Surgeon General of the Army and on
the recommendation of the Surgeon General of the Navy,
Professor Milton Updegraff, U. S. N., was, in July, 1918,
placed on duty at Prescott, Arizona, to supervise meterologi-
cal observations at Whipple Barracks. For climatic reasons
General Hospital No. 20 of the Army was located at Whipple
Barracks, and the meteorological observations are of great im¬
portance.
Situated on the southern edge of the elevated mountain
region of northern Arizona, Prescott has an elevation of 5>300
feet, with a semi-arid climate, but with sufficient rainfall to
maintain an abundant growth of native trees, and is ideal for
the recuperation of invalid soldiers of the war.
Miss Mary Van Kleeck, director of the Woman in Indus¬
try Service of the U. S. Department of Labor, was appointed
when the service was first organized in July, 1918. She came
to this position from the Ordnance Department where she had
been chief of the Woman's Division of the Industrial Service
Section. While with the Ordnance Department from January,
1918, to July, 1918, Miss Van Kleeck supervised the conditions
of employment of women in the government arsenals and
plants operating under government contract. She thus had the
opportunity of safeguarding the women who were being so
rapidly recruited into the government service by regulating
the conditions under which they were employed, at the same
time insuring the maximum output of munitions which were
so urgently needed by the Army.
As Director of the Woman in Industry Service she has
been in close touch with all government agencies and has as¬
sisted in the solution of their problems regarding the employ¬
ment of women. Her position as the only woman member of
the War Labor Policies Board gave her wide influence in
the forming of policies for the employment of women. The
standards for the employment of women in industry which
were formulated by the Woman in Industry Service and
adopted by the War Labor Policies Board are being widely
used as guides by employers and by organizations working for
the betterment of conditions for working women.
In addition to establishing standards for general conditions.
236 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
the employment of women under unusual circumstances has
been considered by this service. Special studies have been
made of women working in the chemical industries of one
city, of the women in the metal trades in one state, of women
candy makers in another city, and of the employment of negro
women in industry. Assistance has been given in several
states with a view towards recommending or furthering im¬
proved legislation. The service also has an advisory relation
with the War and Navy Departments regarding the conditions
affecting the employment of women in government arsenals
and navy yards.
T. Wayland Vaughan, Ph.D., after the entry of the United
States into the World War, was called upon as an officer of
the United States Geological Survey to furnish Army and
Navy officials information on water supplies, road building ma¬
terial, the nature of foundations for different kinds of struc¬
ture, and other information of military value. He was diverted
from his geologic and océanographie researches for the greater
part of two years.
Mrs. Henry Villard has during 1918 continued her activi¬
ties as president of the New York Diet Kitchen Association;
the Babies Welfare Association, and as vice-president of the
Armitage House Settlement and the Froebel Kindergarten
Association. She has continued her work for Woman's Suf¬
frage as one of its foremost leaders, and, having inherited
from her father, William Lloyd Garrison, her sympathies for
the colored race, she has championed the negro's cause on
every occasion.
Mrs. Antoinette Van H. Wakeman during 1918 devoted
herself to securing suitable employment for women, who, ac¬
customed to comfortable living, had been left destitute by the
misfortunes of war. The title of Mrs. Wakeman's new novel
is, "Where the World was New."
The Henry Street Settlement (sometimes called the Nurses
Settlement), founded by Miss Lillian D. Wald in 1893, made
with its present staff of 158 nurses during 1918, 302,543 visits
ACTIVITIES OF MEMBERS
237
and gave nursing care to 43,946 patients in their homes in
Manhattan, Bronx, Richmond, etc. When the epidemic o£
influenza and pneumonia struck New York City in October,
1918, Miss Wald, as chairman of the Nurses Emergency Coun¬
cil, coordinated within twenty-four hours the work of every
agency in the city, municipal and private, which could give
nursing care or relief in the home. When the epidemic was
controlled. Miss Wald drew up a plan for after-care stations
where influenza patients could receive physical examinations
and follow-up care. The plan was accepted by the Department
of Health which cooperated in the conduct of these stations
for a period of six weeks.
During the war Miss Wald served as chairman of the
Committee on Home Nursing of the Section on Sanitation of
the Committee on Welfare Work of the Committee on Labor
of the Council of National Defense—represented public health
on the Conference Board of the Council of Women's Organi¬
zation of Committee of Women on National Defense—and
was a member of the Committee on Nursing of the General
Medical Board of the Council of National Defense, New York
State Committee of the Committee of Women in Industry
of the Advisory Commission of the Council of National De¬
fense, Food Administration Campaign, New York City, etc.
Mr. Charles Sumner Ward, at the request of Mr. Henry
P. Davison, organized the first national campaign for the Red
Cross. In the second campaign he served as chairman of the
Advisory Committee for the national campaign and the cam¬
paign in New York City. He served also as chairman of the
Food Administration and was Field Organizer for the United
War Work Campaign last fall. The amount contributed in the
campaign for which Mr. Ward has been largely responsible is
$548,000,000.
F. W. Watkins, Executive Secretary of the Boy Conserva¬
tion Bureau, reports that in 1918 ninety-seven boys were res¬
cued and sent to Home Industrial Schools. When the United
States declared war, seventy of the boys saved from the streets
in other years by the Bureau enlisted in our Army and Navy.
238 THE NATIONAL INSTITUTE OF SOCIAL SCIENCES
Two were killed in action. During the seven years of its ex¬
istence 557 boys have been provided for by the Bureau.
Scores of these boys are now holding honorable positions in
banks, insurance and other offices in this city.
Miss Maude Wetmore is chairman of the Woman's De¬
partment of the National Civic Federation. Just prior to the
war she accepted the chairmanship of the National League
for Woman's Service, an organization formed for the training
of women to meet emergencies in national life.
In April, 1917, she was appointed a member of the Wom¬
an's Committee of the Council of National Defense, and served
until it was dissolved March, 1919.
She is third vice-president and director of the American
Committee for Devastated France.
In February, 1919, Miss Wetmore was made a member of
the Republican Woman's National Executive Committee acting
with the Republican National Committee.
Benjamin Ide Wheeler, LL.D., during the past year has
served as chairman of the Committee on Resources and Food
Supply, California State Council of Defense, and as chairman,
California Branch of The League to Enforce Peace. He was
the personal representative of Governor William Dennison
Stephens at the Food, Fuel, Price Conference, called by the
Federal Trade Commission, April 30, 1917, in Washington;
and again at the Conference of the states called by the Coun¬
cil of National Defense, May 2 and 3, in Washington.
He was a member of a committee to examine candidates
for the Reserve Officers' Training Corps; and also of the Ex¬
ecutive Committee, California State Council of Defense. He
was appointed by President Wilson as one of the Board of
Visitors to the U. S. Naval Academy at Annapolis.
Joseph A. White, M.D., having been past the age limit for
overseas service, was made civilian chief of the Aviation Unit,
in Richmond, Virginia, serving from January i to April i,
1918. He was then elected chairman of the Virginia Council
of Defense to enroll the doctors of Virginia for army and navy
ACTIVITIES OF MEMBERS
m
service. He also served as a member of the Selective Service
Board.
Harris P. Wilder, Ph.D., together with Mr. Bert Went-
worth, a private detective and finger-print expert, published
in August, 1918, a book on "Personal Identification." "The
science of individual identification through the various bodily
peculiarities has now," he claims, "quite outgrown the prison
walls, and is ready to fill the place which the growing needs
have made for it." The book lays before the reader all known
methods of personal identification, including, of course, the
system of measurements inaugurated by M. Bertillon, and
the now famous system of fingerprints devised by Sir Francis
Galton, and put into actual use by Sir E. R. Henry. It also
introduces two new methods, those based upon the friction-
skin configuration of the palm of the hand and the sole of the
foot, which, although their possibilities have been previously
exploited in technical journals, appear here for the first time
in practical form for general use.
At the December meeting of the American Society of
Zoologists Dr. Wilder was elected vice-president.
In addition to his official work at the Maine Agricultural
Experiment Station, Charles D. Woods, Director, was chair¬
man of the Local Public Safety Committee, having charge of
the fuel wood supply for the state, under the Fuel Administra¬
tion. He also served as a member of the State Public Safety
Committee on Food Production.
Mrs. Mary Schenck Woolman, formerly professor of Do¬
mestic Art in Teachers College, Columbia University, and first
Director of the Manhattan Trade School for Cirls, New York
City, gave up her regular work early in 1918 to accept service
on the War Emergency Bill of the United States Department
of Agriculture. Her duty has been to increase thrift in the
household, training consumers in a more intelligent purchase of
textiles and clothing. As her former training had been on
textiles, Mrs. Woolman could put her knowledge to use in
war service. Her headquarters are at Amherst, Mass., where
she has just completed a book on "Thrift in the Household"
240 THE NATIONAL INSTITUTE OE SOCIAL SCIENCES
for the use of social workers, leaders in clubs and home-
makers.
Miss Mary V. Young, Ph.D., Department of Romance
Languages, Mount Holyoke College, served with the commit¬
tee of the College Entrance Board in preparing entrance ex¬
aminations in French.
INDEX
Accounting, not provided for in
early charters, 77.
Acworth, W. M., on government
operation, 105-106.
Adams, Ephraim Douglass, pa¬
triotic education, 191.
Adams, Henry C., on specific
freight rates, 102.
Adamson Law, purpose of, 125,
131-
Alaskan Railroad, cost of, 117.
Alderman, Edwin A., 191.
American Federation of Labor,
objects of, 167.
American Industry, progress
of, 90.
Andrews, Fannie Fern, 192.
Annual Dinner, 141, 142, 161-188.
Annual Meeting, i^.
Appropriations under govern¬
ment operation, 120.
Arnstein, Leo, 192; presentation
statement regarding Mr. Fos-
dick, 180.
Association of Railway Execu¬
tives, 44.
Australia : cost of railway con¬
struction in, 20-21 ; government
ownership in, 5 ; government
railways in, 2.
.Bacon, Raymond F., Chemical
Warfare Service, 192.
Bancroft, Jessie H., American
Cooked Food Service, 193.
Ballard, Harlan H., 193.
Ballou, William H., 193.
Baright, Clarice M., 195.
Barstow, George F., 195.
Battle, George Gordon, presenta¬
tion speech to Samuel Gompers,
160-162.
Bethlehem Steel Company, war
supplies and equipment produced
by, 170.
Blair, Vilray P., 195.
Bliss, Jr., Cornelius N., ig6.
Blue, Rupert, The Work of the
Public Health Service During
the War, 136-140.
Bogert, Marston Taylor, war
service, 196.
Brent, Charles H., medal to,
presentation statement by James
H. Darlington, 179-180; organ¬
izes welfare agencies in France,
197-198.
Brinton, Christian, Contempor¬
ary Russian Painting, 198.
Brown, Mrs. William Adams,
Women's Land Army of Ameri¬
ca, 198.
Budget System, 12.
Bull, F. Kingsbury, 199.
Bureau of Railway Economics,
103.
Burton, Theodore F., A Pro¬
gram of Railroad Legislation,
4&-53-
Canada : construction cost under
government operation in, 21,118 ;
government operation in, lOl ;
operating expenses in, 22.
Cantonments, sanitation of, 138-
139. . ^
Capital; adequate return desired
for, 75, 77, 81, 92; and labor as
partners, 82; rate on, 20; objec¬
tions to government guarantee
on, 86-95.
Capitalization : adequate return
upon, 81 ; amount of, in United
States, 64-114; not now exces¬
sive, 75; per mile in the United
States, 21.
Carson, Luella Clay, 199.
Caruso, Enrico, patriotic war
services, 199.
Cecil, Lord Robert, 150.
Chamber of Commerce of The
United States, 187.
Chenoweth, Catherine R., 200.
Child Labor Law, decision of Su¬
preme Court on, 165.
Chittenden, Russell H., 200
Chubb, Percival, Drama League
of America, 200.
Cline, Isaac M., weather service,
201.
241
242 NATIONAL INSTITUTE OF SOCIAL SCIENCES
Competition : desirable for ser¬
vice and facilities, 63; disad¬
vantages of various forms of,
I ; economies effected by, 62 ;
failure of, for railways, 4; in
service, 4, 47, 61 ; not helpful in
control of monopolies, 46; of
facilities, 15; wastes of, 7, 15, 61.
Competition and Private Initi¬
ative in Railroad Develop¬
ment and Management, 5^66.
Congress ; railway appropriations
by, 34; abuse of power by, over
railroad administration, 34.
Construction : cost of, on foreign
roads, 103; comparative cost of,
7, 20.
Consolidation: favorable attitude
toward, 56; to be effected by
Federal Government, 68.
Cook, Harold J., 202.
County, A. J.; The Greater Ef¬
ficiency of Private Operation of
Railroads, 96-113; presentation
statement regarding Mr. Lovett,
184.
Corporation, attributes of, 68.
Cowling, Donald J., 202.
Cummins, Senator, on govern¬
ment ownership, 42.
Cutler, Henry F., 203
CuYLER, Thomas De Witt, Pri¬
vate Ownership, Operation and
Financing, 41-4^
Darlington, James H., presenta¬
tion statement regarding Bishop
Brent, 179-180, 203.
Davenport, Charles B., 203.
Davison, Henry P., International
Red Cross Conference, 203.
Dawes, Charles G., 204.
De Wolfe, Elsie, 204.
Discrimination in railway ser¬
vice, 9.
Doak, W. N., Adjustment of
Wages and Conditions of Ser¬
vice Under Government and
Corporate Ownership of Rail¬
roads, 122-128.
Dunn, Samuel O., Objections to
Government Ownership of Rail¬
roads, 18-35.
Duryea, Nina Larrey, Duryea
War Relief, 204.
Dutton, Samuel T., World's
Court League, 205.
Earnings, percentage of, 112.
Elkins, Geo. W., 206.
Ellwood, Chas. A., 206.
Eminent Domain, right of, 47.
England: amalgamation in, 3, 97;
appointment of railroad com¬
mission in, 4; competition of
railroads in, 3, 14; elastic reve¬
nue system in, 11; railroad
wages in, compared with United
States, 96 ; strengthening of
government control in, 5.
Equipment: deterioration in, 26;
pooling of, 56.
Esch, John J., Effects of Govern¬
ment Ownership on Develop¬
ment and Efficiency of Rail¬
roads, 114-121.
Farnum, Henry W., 206.
Federal Charters, desirable, 52.
Federal Control Contracts :
many still unexecuted, 87; rent¬
al payments under, 88.
Federal Incorporation of Rail¬
ways : 68, 71 ; necessity of, 72 ;
no state obstacle to, 72.
Federal Reserve Banks, earnings
of, in 1918, 83.
Federal Reserve Board, facilita¬
tion of work by, 83.
Federal Reserve System, as ap¬
plied to railroads, 109.
Fieser, James L., 206
Finances, uncertainty in should
be removed, 123.
Fisk, Eugene L., Life Extension
Institute, 207.
Fitzsimmons, Mrs. Paul, 207-208.
Ford, Henry Jones, 208.
Fosdick, Raymond B., medal to,
presentation statement by Leo
Arnstein, 180-181.
France: competition in, 15; effi¬
ciency of railways in, compared,
22; government operation in, 2,
116; guarantee plan in, 89, 102;
operation of Western Railway
in, 22; zone system in, 65.
Frankel, Lee K., 208.
Franks, Mrs. Robert A., house¬
hold economics, 208.
Freight Rates. See Rates.
Fuel Administration, 178.
Gager, C. Stuart, Brooklyn Bo¬
tanic Garden, 209.
Garfield, Harry A., medal to,
presentation speech by Samuel
McCune Lindsay, 175-177; reply
by Dr. Garfield, 177-179.
German Railways, efficiency of,
compared, 22.
INDEX
243
Germany: comparison of railroad
employees in, with United
States, 119; government opera¬
tion in, 19; private railways in,
2 ; railroad system of, not adapt¬
able to United States, 104.
Gildersleeve, Virginia C., 209.
Gompers, Samuel, medal to, pre¬
sentation speech by George Gor¬
don Battle, 160-162; reply by
Mr. Gompers, 162-169.
Good Roads Movement, early op¬
position to, 43.
Gordon, Armistead C., 209.
Government and Corporate
Ownership of Railroads, Ad¬
justment of Wages and Con¬
ditions of Service Under, 122-
128.
Government Guarantee of Re¬
turn on Railroad Capital, Ob¬
jections to, 86-95.
Government Guaranty for Rail¬
roads : 44, si ; chief advantage
under, 88; estimated rental un¬
der, 91 ; extra cost to taxpayer
by, 87.
Government Operation : appro¬
priations for. iii ; beginning of,
129; breaks down discipline, 27;
causes inefficiency of employees,
225 ; congressional approprations
under, 89; deficits of, 31, 134;
federal control contracts in, still
unexecuted, 87; financial status
of, 107 ; fiscal argument against,
11; foreign experience in, 102;
guarantee under, 108 ; heavy loss
under, 132; impetus of war and
patriotism under, 97 ; increase
of expenses under, 22; labor
question and, 24; no construc¬
tion under, 117; not justified as
a government policy, too; poli¬
cies not adaptable under, 100;
political degeneracy caused by,
41 ; reasons against, 74 ; reasons
for decline of efficiency in, 26;
removal of financial uncertainty
under, no; result of, 132; rental
under, 131 ; unification under,
97 ; waste and inefficiency in, 88.
Government Ownership: cbief
arguments against, 7; deterrent
effects of, 114; does it result in
lower rates, 29; economic argu¬
ment against, 9; guarantee of
railroad income leads to, 90;
motive for, in foreign countries,
lis; political arguments against,
7; political power of employees
under, 64; political system in,
127 ; principal questions involved
in, 19 ; public adverse to, 41 ;
results of, 94; serious financial
objections to, 64; three stages
in development of, i ; trend of
public opinion against, 86; un¬
favorable attitude toward, in
United States, 49.
Government Ownership and Op¬
eration of Railroads, Argu¬
ments for and Against, 1-17.
Government Ownership, Effects
of, on Development and Effi¬
ciency of Railroads, 114-121.
Government Ownership of Rail¬
roads, Objections to, 18-35.
Government Railways : treat¬
ment of a deficit under, 89;
inefficiency in management of,
10; loss of efficient men in, 10.
See also Government Ownership
and Government Operation.
Granger Movement, 48.
Green, John W., 210.
Gunn, Selskar, M., 210.
Halley, Samuel H., 210.
Hamilton, Mrs. Wm. Pierson,
210.
Hart, Hastings H., social insti¬
tutions and agencies of Alabama
as related to war activities, 210.
Hastings, Geo. A., 211.
Hepburn Act, 129.
Hill, David Jayne, 211.
Hill, James J., on paternalism,
120.
Hines, Edward W.
Hines, Walker D., Coordinated
Development of Waterways and
Railroads, 36-40.
Hitchcock, Mrs. Ripley, Art
War Relief, 212-213.
Hoy, Sir William Wilson, on
results of government opera¬
tion, 26.
Hubbell, Charles B., 213.
Hunter, George W., 213.
Huntington, Ellsworth, "World
Power and Evolution," 213-214.
India, railway system in, 5.
Interallied Labor and Socialist
Conference, 146.
Intercolonial Railway of Can¬
ada, loss on, by government op¬
eration, 115.
International Association for
Labor Legislation, organized,
14s. 163.
244 NATIONAL INSTITUTE OF SOCIAL SCIENCES
International Labor Conference,
topics for discussion at, 153, 156.
International Labor Legisla¬
tion, committee on, 151.
International Labor Office: es¬
tablished, 14s ; functions of, 152.
Interstate Commerce Commis¬
sion : disposition of, in rulings,
48; large burdens of, 44; sus¬
pension of rate increases by,
60.
Interstate Railways, decision of
Supreme Courts, in re, 69.
Investors, adequate return to rail¬
way, 13.
Irvine, William Mann, 2I4._
Italy: government ownership in,
2, 6; ratio of expense and earn¬
ings in, compared, 22; reform
in fiscal policy of, 12; treat¬
ment of railway strikes in, 8.
Japan, reform in fiscal policy of,
12.
Jeffers, LeRoy, mountaineering
literature, 214-215.
Jenkins, James G., presentation
statement regarding Mr. Lay-
ton, 182-184.
Johnson, Miss Content, 215.
Johnson, Emory R. : opening re¬
marks of, at annual dinner,
141-142, 159-160; presentation
statement by, regarding Mr.
Wheeler, 187-188; investiga¬
tion of ocean rates and ter¬
minal charges, 216.
Jordan, Elizabeth, "The Wings
of Youth," 216.
Kahn, Mr. and Mrs. Otto H.,
care of blinded soldiers in Eng¬
land, 217.
Kelly, Robert L., 217-218.
King, Mackenzie, Canadian Min¬
ister of Labor, 158.
Kirk, William, 217.
Kirtland, John C., 218.
Kissell, Mary Lois, yarn and
cloth making, 218.
Kneass, Strickland L., 218.
Koller, Carl, medal to, presenta¬
tion by Wendell C. Phillips, 181-
182.
Kruttschnitt, Julius, 130.
Labor: effects upon, under gov¬
ernment operation, 32; efficiency
of, lower under government op¬
eration, 33 ; Interstate Com¬
merce Commission's relation
to, 133 ; not in control by the
governmentj 12g; percentage of
revenue paid to, 130; political
aspect of, 8 ; profit sharing with,
16; regulation of, desirable, 134;
relation of, to government own¬
ership of railroads, 6.
Labor and Capital as Partners,
82.
Labor Problem : arbitration in,
126; must be solved, 132; solu¬
tion of, 123-125.
Labor Question, international
government conferences on, 145.
Labor Unions, formation of, 145.
Lake Shore and Michigan
Southern Railroad, early com¬
petition against, 49.
Lakey, Alice, 218-219.
Layton, Frederick, medal to,
presentation statement by James
G. Jenkins, 182-184.
League of Nations and Labor,
The, 143-159.
Lee, Frederick S., "The Human
Machine and Industrial Effici¬
ency," 2ig.
Legislation : A Program of, 46-
53; need of reasonable and con¬
structive, for railways, 43-44,
55, 109-110.
Leland, Luisita, fatherless chil¬
dren of France, 219.
Lewisohn, Adolph, National
Committee on Prisons and
Prison Labor, 220.
Liberty Service Medal Commit¬
tee; report of, 190.
Lindsay, Samuel McCune, pre¬
sentation speech to Harry A.
Garfield, 175-177.
Loeb, Sophie Irene, Board of
Child Welfare, 220.
Lovett, Robert Scott, Competi¬
tion and Private Initiative in
Railroad Development and Man¬
agement, 59-66; medal to, pre¬
sentation statement by A. J.
County, 184.
McAdoo, Director General, on
railway economies, 25,
McIndoo, N. f., 223.
MacLean, George f., Local Lec¬
tures Summer Meeting, 1918,
221.
McMurtrie, Douglas C., "The
Disabled Soldier," 223.
Malaria, control of, 138.
INDEX
245
Mansfield, Mrs. Howard C, 221-
222.
Marburg, Theodore, presentation
statement regarding Dr. W. H.
Welch, 185-187.
Market Competition, 15.
Martin, Franklin H., coordina¬
tion of civilian medical re¬
sources, 222-223.
Massachusetts, "transportation
at cost" in, 102.
Maxwell, Anna C, inspection of
army hospitals, 223.
Medals, awarding of, 160-188.
Meetings, reports of, 189.
Members, activities of, 191-240.
Mileage: government owned, 102;
in United States, 19.
Miller, Cyrus C., 224.
Mitchell, John, 162.
Mississippi River : possibilities
and development of, 36; trans¬
portation service on, 36.
Monopoly : evils of private, i ;
regulated, 65.
Moore, John F., 224.
Morris, Dave H., Selective Or¬
ganization of the United States,
224-225.
Morton, Rosalie S., war activities
abroad, 225.
Nathan, Mrs. Frederick, 225-226.
National Association of Own¬
ers of Railroad Securities, 68.
National Banks, decision of Su¬
preme Court regarding, 68
National Research Council, 186.
Nationalizing Railroad Corpora¬
tions by Statute, 67-73.
Nicoll, De Lancey, presentation
speech to Charles M. Schwab,
169-173.
North Carolina, state railroad
in, 115.
Noyes, Mrs Charles P., 226.
Operating Expenses : increases
in, 18; low in the United States,
22.
Operating Income: 1917, 91 ; 1918,
129; of railways in United
States, 32.
Operation: advantage of central¬
ized control of, 28; comparative
expense of, 21 ; economies of
unity of, 7; inefficiency of, in
1918, 25.
OsBORN, William Church, Public
Control of Railroad Wages, 129-
13s.
Osborne, Thomas M., Portsmouth
Naval Prison, 226-227.
Owen, Robert, proposals of, on
labor, 143.
Pack, Charles L., National War
Garden Commission, 227.
Parker, John M., Louisiana Food
Administration, 227-228.
Passenger Fares : average in Ger¬
many, 30; increase of, under
Federal Control Act, 120, 13k
Pearl, Raymond, Interallied
Scientific Commission on Nu¬
trition, 228
Pennsylvania Railroad : statis¬
tics of employees on, 119; ton-
mile revenues of, 92.
Phelps, William Lyon, 228.
Philadelphia, gas business in, 11.
Phillips, Wendell C, presenta¬
tion statement regarding Dr.
Koller, 181-182.
Pickering, W. H., Associated Ob¬
servers of Mars, 228.
Politics : as related to railroads,
loi ; effects of government
management upon, 34; exploit¬
ing of railroads for promotion
of, 63; influence of, in govern¬
ment operation of railroads,
115,-116; rate of increase in,
compared with transportation,
SI.
Pooling, rejection of, in Inter¬
state Commerce acts, 46.
Post. Geo. A., A Railroad Policy
Briefly Outlined, 54-58.
Post Office Department, 117.
Private Operation : beneficial re¬
sults of, 35; essential principles
of, 85; public demand for, 112;
return to, ill.
Private Operation of Railroads,
the Greater Efficiency of, 96-
I IS-
Private Ownership : beneficial
competition in, 65; defined, 96;
satisfactory results of, 42;
stimulus to efficiency under, 15.
Private Ownership, Operation
and Financing, 41-45.
Prussia, reform in fiscal policy
of, 12.
Prussian Railways, nationaliza¬
tion of, 5.
Public Health Service During
the War, The Work of the,
136-140.
Quinton, Cornelia B. Sage, Buf¬
falo Fine Arts Academy, 229.
246 NATIONAL INSTITUTE
Railroad: organization of, 129;
not a private concern, 75.
Railroad Committee of the
Chamber of Commerce of the
United States, 54.
Railroad Consolidation ; banks
and railways contrasted, 68 ; into
zones, 65.
Railroad Contracts, incomplete,
100.
Railroad Credit: practically de¬
stroyed, 76; rehabilitation of,
91 ; protection for, 82.
Railroad Investments, the Stabil¬
izing of, 74-85.
Railroad Investor: guarantee de¬
sired by, 86; rights of, 66.
Railroad Policy : a definite one
essential, 59 ; briefly outlined,
54-58; failure of present dual
system of, 59.
Railroad Problem : a fundament¬
al question in, 60; four methods
of settlement of, 41 ; immediate
measures required for solution
of, 49; immediate remedy for,
93; political aspect of, 9; solu¬
tion of, 16.
Railroad Valuation, bases for,
78-80.
Railroad Wage Commission: re¬
port by, 23; work of, 125.
Railway Business,, importance
of, 10.
Railway Revenues, 1917, 91 ;
1918, ii.
Railway Service, effects on, un¬
der government operation, 31.
Railways : control of, for private
operation, 13; revenues from,
12; state and local fiscal prob¬
lem of, 12; their relation to the
public, 47.
Rates: adjustment of, under pub¬
lic ownership, 123 ; advance in,
needed, 57; amount of increase
in, 131 ; comparison of, with cost
of living, 51 ; competition in,
unwise, 60; early readjustment
of, essential, 50; export and im¬
port, 9; foreign and United
States compared, 102; increase
of, 112; increase of, under Fed¬
eral Control Act, 120; low in
United States, 115; lower on
private than state railways, 30;
result of no increase in, 76;
Supreme Court decision on in¬
trastate, 52.
Rates and Fares : control of, 13 ;
OF SOCIAL SCIENCES
fallacy of lower, under govern¬
ment ownership, 30.
Raycroft, Joseph Edward, train¬
ing camp activities, 229.
Rea, Samuel, Objections to Gov¬
ernment Guarantee of Return
on Railroad Capital, 86-95.
Regional Operation, 14.
Ritter, William E., "War, Sci¬
ence and Civilization," 229-230.
Robertson, Lucy, H., 230.
Rosendale, Simon W., Zionism,
230.
Rowe, L. S., 230.
Rusby, H. H., 230.
Russia, construction of trans-Si¬
berian railway in, 5.
St. John, Guy B., 233.
St. Louis, geographical advant¬
age of, 38.
Salary, railway presidents, 10.
Salomon, Mr. and Mrs. William,
230-231.
Schwab, Charles M., medal to,
presentation speech by DeLan-
cey Nicoll, 169-173; reply by
Mr. Schwab, 173-175.
Securities, supervision of, 130.
Seligman, Edwin R. A., Argu¬
ments for and Against Govern¬
ment Ownership and Operation
of Railroads, 1-17.
sélincourt, Madame Basil de.
Department of Civil Relief, 231.
Seton, Mrs. Ernest Thompson,
231.
Shwartz, S. J., National Retail
Dry Goods Association, 231.
Sherman Law, as applied to rail¬
ways, 14, 129.
Shipyards, sanitation of, 140.
siebert, Wilbur H., Ohio war
records, 231-232.
simonds, Frank H., 232.
Smith, Alexander W., National¬
izing Railroad Corporations by
Statute, 67-73.
South Africa, government own¬
ership in, 26.
Southern Railway Company,
consolidations by, 68, 70.
Spencer, Herbert, on state versus
private efficiency, 118.
Spencer, Lorillard, 232.
Speyer, Mrs. James, Comforts
Committee for Aqueduct Guard,
232-233.
State Commissions, on interstate
rates, 57.
INDEX
247
Stimson, Henry Lewis, Major
Judge Advocate, 233.
Strike, harbor, in New York City,
131.
Strikes : evil results of, 134 ; gov¬
ernment control of, 130 meth¬
od of dealing with, 123 ; right to,
132; results of, 131.
SuzzALLO, Henry, Red Cross
Campaign, Seattle, 233-234.
Switzerland: regulation of rail¬
roads in, 2; government owner¬
ship and operation in, 2.
Taxation: increase in, 104; rail¬
way, 12.
Telephone Service: deficit in,
100; inefficiency of, in New
York, 9.
Terminals : improvement of, nec¬
essary, 39; joint use of, 56; lack
of, on waterways, 39; unifica¬
tion of, 62.
Thomas, Joseph M., 234.
Thorndike, Edward L., military
aeronautics, 234.
Trade Unionism, among govern¬
ment employees, 8.
Transportation Facilities: cause
of breakdown in, 42, 60; con¬
stant betterment in, required,
51; development of, 62; most
desirable, 67; nationalization of,
desirable, 55.
Transportation Problems, plans
for solution of, 122, 134.
Trelease, William, 234.
Tuttle, Mrs. George Montgom¬
ery, American Friends of Mu¬
sicians in France, 234.
Unification of Railroads, 80.
Union Pacific Railway, ioi.
United States, operating expense
of government operation in, 22.
Updegraff, Milton, meteorologi¬
cal observations, 235.
Van Kleeck, Mary, Woman in
Industry Service, 235-236.
Vaughan, T. Wayland, 236.
Villard, Mrs. Henry, New York
Diet Kitchen Association, 236.
Wages: adjustment of, 13; ad¬
vances in, during peace times,
24; advances in the United
States, 22; amount of increase
in, 131; comparison of, 20;
foreign countries and United
States compared, 103; increase
of, in 1917, 51 ; percentage of
increase in, 99 ; public control
of, 129-135 ; sectional standardi¬
zation of, 123 ; the public pay
increase in, 24.
Wages, Adjustment of, and Con¬
ditions of Service Under Gov¬
ernment and Corporate Own¬
ership of Railroads, 122-128.
Wakeman, Antoinette Van H.,
236.
Wald, Lillian D., Nurses, Emer¬
gency Council, 236-237.
War, object of government con¬
trol during, 60
Warburg, Paul M., Stabilizing
Railroad Investments, 74-85.
War Finance Corporation, assis¬
tance of, in railroad financing,
III.
Ward, Charles Summer, United
War Campaign, 237.
Water Competition, 15.
Waterways, improvement of, a
delusion, 50.
Waterways and Railroads, Co¬
ordinated Development of, 36-
40.
Watkins, E. W., Boy Conserva¬
tion Bureau, 237-238.
Welch, William Henry, medal
to, presentation statement by
Theodore Marburg, 185-186.
Wentworth, Bert, "Personal
Identification," 239.
Wetmore, Maude, National
League for Woman's Service,
238.
Wheeler, Benjamin Ide, Califor¬
nia Branch, The League to En¬
force Peace, 238.
Wheeler, Harry A., medal to,
presentation speech by Emory
R. Johnson, 187-188.
White, Joseph A., 238.
Wickersham, Geo. W., The
League of Nations and Labor,
143-159.
Wilder, Harris P., "Personal
Identification," 23g.
Willard, Daniel, on nationaliza¬
tion of transportation system,
55-
Wilson, President, peace pro¬
gram of, 148-149.
Woods, Charles D., 239.
w00lman, Mary Schenck,
"Thrift in the Household," 239.
Young, Mary V., 240.