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B. Merrick. 1913 For many centuries , business of one kind and another has been the subject of some sort of control by the governing powers . In the early days in England , the law took some hand in the regulating of the business of the community . Parliament took it upon itself to regulate the necessaries of life by direct legislation . Not, only was the price of food and wool regulated in this way , but the labor laws of the day contained provision for the reciation of the employment, end the price of labor . As early as 1266, Henry III issued orders regulating the price of ale and bread to correspond to the price of wheat and barley . He also forbade cornering the market in any commod- ity , and justified his acts by citing the authority of former statutes . In 1344 , the law fixing the export price of wool was repealed , after having been in force for some years . In 1349 , all laborers were compelled to work for customary wages , and all sellers of victuals were compelled to sell for a reasonable price . These statutes remained in force until after the settlement of America . The overshadowing importance of the rate question was early recognized . Webster wrote , - "The administration of justice is the chiefest concern of man upon earth ", and there can be no doubt that the reasonableness of a rate charged for transportation is eminently a question for judicial investigation . It is small wonder that the subject, is a live one . The developement of the railway in this country has taken place with almost marvelous rapidity . No other business of such magnitude has paralleled it . Time and distance no longer prevent the products of the toil of men in widely scattered places from reaching the markets in successful competition . It is a matter of history that the Baltimore and Ohio Rail- road was the first one of note in this country , fourteen miles of this line having been in operation in 1830 . The South Carolina Railroad was begun the same year, and in 1833 , it was the longest railroad in the world , having one hundred and thirty-six miles in operation . This was the first road to carry the United States Mail . Pennsylvania had a continuous line of railroads and canals from Philadelphia to Pittsburg in 1834 . The Boston and Albany Railroad completed its line from Boston westward in 1841 , and with a connecting link which was built the next year , gave a continuous line from Boston to Buffalo . This was the first great railroad line , and its opening marked the beginning of interstate commerce • From that time the railroad mileage increased until , in 1910 , this country possessed nearly half that of the world • At that time it. represented a capital equal to one- sixth of the wealth of the entire country , and five times the amount of the circulating currency . The gross income and other income of the roads were considerably more than the revenue of the government. . . Nearly 900,000,000 persons were transported annually , and the freight traffic amounted each year to l, 500,000,000 tons . Some idea of this amount can be gained from the fact that this quantity of freight would load a train reaching more than nine times around the earth . For many years little thought was given to the immense influence which the railway as an institution was to wield in this country . The aid which the railway would be able to render in the developement of the resources of the nation was yet to be conceived . As late as 1850 it was thought that it could not successfully compete with the canal and other waterways . One of the first guns fired in the war between water and rail was the making of a rate of $2.60 per ton of coal by rail from Pittsburg to New Orleans . This was lower than the rate formerly charged by vessel owners • As the railway system developed , rates were established which were based on those in force on the earlier forms of transportation . It was necessary to modify many of these rates, but for some time there was little uniformity through- out the country . When the system expanded by the building of branch lines , the same charges were made on them , and so each small system had a schedule determined in its own way. These methods of forming schedules were adhered to long after competition began to make itself felt as a factor in rate making . The cost of the service was greatly reduced as a result, of the improvements made necessary by competition , but the local traffic received no benefit from this reduction . The local tariffs were maintained in every possible case to help recoup in some measure the losses due to the competitive struggle for traffic . As the system continued to grow , the conditions at com- petitive points led to a complete disregard of the local taroff's . This brought about such a confusion of rates . entirely unre- lated to those in force at other points , that there was well grounded cause for the dissatisfaction which resulted in the demand for relief by legislation . When the attention of the best men in the business was given to the settling of the question , it became apparent that, the task was a tremendously difficult one , and one which could only be accomplished after long years of experiment and travail . . The need for uniformity was recognized at once , but what was this uniformity to be based upon . Many theories were put forth . The two leading considerations in fixing upon a rate are , the value of the service to the shipper , and the cost of the service to the carrier . There are many 5. things which must be considered in connection with both of these . The length of haul , the character of the shipment , and also the amount of shipment. , have a bearing on the rates . The conditions of competition affect the situation in many places . The attempt to control the rates by legislation was made as soon as railroads were begun in this country . The early charters contained provisions naming maximum rates . Those prescribed by a charter granted by Georgia in 1837 are , 25 ø per hundred pounds on heavy articles , and 10 & per cubic foot on articles of measurements, for every hundred miles ; and five cents per mile for every passenger . This would be con- sidered a very liberal maximum today . In a Connecticut charter granted in 1829 , the provision was made that, , - "It shall be lawful for them (board of directors) to charge for every hundred pounds transported sixty miles or upwards , 2# mills per hundred pounds weight for each mile ; for every hundred pounds transported over twenty miles and under sixty miles , 3 mills for each mile ; for every hundred below twenty miles , # mills per mile ." Passengers were to pay 4 & per mile . In a Maryland charter granted in 1827 , different rates were prescribed for freight moving in different directions . The charges for toll and transportation were separated in this case . The rates from north to south were not to exceed l ; per ton- mile for toll and 3 g per ton-mile for transportation . From 6. south to north, charges to exceed 3 g per ton-mile for toll and 3 g for transportation might not be asked . The maximum rate for passengers was fixed as 3 g per mile . The same state in 1831 , ganted a charter fixing the maximum freight rate at 3 g for both toll and transportation , and for passengers 2 a maximum rate of 3 ¢ per mile . provided the passenger did not have baggage exceeding fifty pounds in weight nor occupy- ing more than two cubic feet . The following rates in effect in 1837 are of interest . Railroad Rates per ton-mile in cents l Baltimore and Ohio º Baltimore and Washington Winchester and Potomac Portsmouth and Roanoke Boston and Providence l Boston and Lowell Mohawk and Hudson Petersburg l These rates seem large when compared with those in force on the average road of today o It is probable that competition and consolidation have been the most potent factors in securing this great reduction , as well as in providing much swifter service . Before the Declaration of Independence the commerce between states was controlled , if at all , by Parliament , and under the Articles of Confederation , by the legislatures of thirteen separate and distinct sovereignties • Under the conditions 7. prevalent at that time it is not to be wondered at that the different states had different ideas in regard to the conduct of commerce across their borders . Discriminations were in- dulged in which very naturally led to confusion and discord among the parts of the Confederacy . In the Constitutional Convention a resolution was presented which provided , - "Congress shall have power . . . . . . . . to regulate commerce . . . . . . among the several States " . This provoked much serious discussion , the text of which shows that, even at that date , the grave importance of the subject was recognized . General Washington wrote to a friend , - "We have abundant reason to be convinced that the spirit of trade which pervades these States is not to be repressed . It behooves us then, to establish just principles , and this cannot , any more than other matters of national concern , be done by thirteen heads differently constructed and organized . The necessity , therefore , of a controlling power is obvious , and why it should be witheld is beyond my comprehension ." In the debates in the Constitutional Convention the clause regarding the regulation of commerce was agreed to with no op- position . Little attempt was made to exercise this power on land for some time , although laws were very promptly passed for the regulation of ocean commerce , as well as for that on other navigable waters . 8. Even when Congress provided for the construction of the Cumberland Road it was not deemed advisable to have the commerce on it subject to federal supervision . That was left to the states through which it ran . The application of steam as a propelling power changed conditions somewhat , but even then the first improved high- ways were turnpikes and the next in grade were canals . It was not felt that there was any need for government control . After the advent of the railroad , this control was exercised negatively in the shape of restraint of excessive State power , rather than in the line of affirmative federal power . In the period preceeding the Civil War , sometimes called the period of laissez faire , everyone was too busy with his own affairs to pay much attention to the railroads . They consequently pursued their own sweet will in regard to the rates charged for the transportation of both freight and passengers . With the close of the war , however, the country entered upon a new era, as distinct industrially as it was socially and politically . Money and labor were abundant , and capital- ists were eager to convert their money into something substantial . The returning soldiers had to be supplied with homes and labor , and with the restoring of the political situation to quiet , immigration set in with a strong tide . Under these influences the railroads took a new lease of life and extended its lines westward across the valley of the Mississippi . Following them came the stream of homeseekers who quickly provided traffic for he roads which carried them west, . Previous to this time the roads had endeavored to connect, the navigable streams , now they began to parallel them and to compete with them for traffic . The traffic on the Great Lakes was the only water borne traffic traffic to be aided by the remarkable extension of the railroads . . During these times competition had full sway . Wherever the lines of the railroads crossed eachother rates were cut to a ruinous extent, , which would have thrown the competing roads into bankruptcy at once , if such rates had been in force over the whole line . Conditions in the West were of such a nature that the farmers became dissatisfied and formed themselves into lodges of secret orders . The object of these lodges was to compel the railroads to reduce the rates in force in that part of the country . This provided the best soil possible for the propagation of political crops . The lodges soon became little else than political clubs , which tried to win at the polls some sort of relief from the traffic conditions complained of . This was the beginning of the so-called Granger legislation • The panic of 1873 was not due to the collapse of any fraud- ulent scheme of speculation , nor to excessive speculation 10. in fival railroad propositions , as was the case in the English panic in 1849 . It was the result of overconfidence of the American people who had invested borrowed money with the idea that immediate and large returns were inevitable . The ex - pectations of the people outran their realization . As the roads began to recover from the effects of the finan- cial depression , the need for some sort of control of the railway situation became apparent to the more thoughtful minds , and the formation of State Railroad Commissions resulted . These commissions exerted some power over the railways , but it was found that they lacked authority to control interstate commerce , in which there still existed many elements of trouble . Prior to the crises of 1873 Congress had had its attention called to the need for some regulation of this class of traffic . A Senate committee had investigated the situation and in its report recommended the adoption of certain measures for the prevention of unjust discriminations and combinations , and the establishment of a bureau of commerce . Other political issues absorbed the public attention at that time and nothing came of it. . When the subject was again taken up , popular sentiment secured the passage of the Reagan Bill through the House of Representatives in 1878 . This bill fortunately failed of adoption in the Senate . The measure was not well thought out and would probably have operated as a deterrent to the inflow of foreign capital so badly needed just then . ll. For nine years the subject was before the people and received much sober consideration . The investigations and agitation carried on unceasingly culminated in 1887 in the passage of the Interstate Commerce Act . The foundation of this act was the English Railway and Canal Bill . It was, of course , modified to a considera- ble extent, as was made necessary by the regulations already in force in the different states . Under this act, the Inter- state Commerce Commission was given power to investigate alleged violations of the provisions of the Act, , and to make orders based thereon . The courts were given the necessary power to enforce them , but it was sometime before the courts were at all free in dispensing this power . Railways were forbidden to discriminate between persons , places or varieties of traffic . One or two other abuses were also particularly forbidden • The Act was ammended in 1889 and again in 1891 . As ammended the Act extends the power of the federal courts , and supports the Commission by giving it, the right to summon and compel test- imony • The passage of the Elkins Act in 1903 , was a step in the right direction , as it made the corporation commerce carriers criminally responsible for the violations of the Act . Provision was also made for a speedy trial - The Commission has from the first maintained its right l2. to fix the maximum rate . It has been suggested that the rates have been practically fixed for so long that a better term for present use would be"mending" rates . The last important legislation along this line has been the authorizing , during the present year , of the appoint- ment of a Board of Valuation to appraise the railroads of the country . It is expected that the information thus gained will be of value in aiding the Interstate Commerce Commission to fix the maximum rate . During the first years of the existence of the Interstate Commerce Commission , the railroad managements opposed its operations upon every opportunity . As the Commission then had no power to enforce its orders , but little attention was paid to them , and they were ignored whenever possible . The officials seemed to think that the Commission was working in opposition to the best interests of the roads . This feeling has been quite generally changed , and now we find the manage- ments quite willing to accept and act upon the advice and sug- gestions of the Commission . In the absence of any agreement to the contrary , when a common carrier takes goods for transportation , the carrier is entitled to hire . As there is more than one part to an agreement in regard to the amount of the rate of hire , the matter is a more or less complex one - On the carriers side , 13. justice demands that it be great enough as a whole to reimburse him for his outlay and labor . The shipper cares for no other rate than that on his particular goods . What appears reason- able to one , may not appear at all so to the other . The public cannot require the corporation to use its plant, its money , and its credit , without remuneration . Neither may the corporation force the public to pay dividends on in - - vestments unwisely made • It may be said that the carrier , in the absence of competition , pays more attention to the reasonableness of a rate from his own point of view than from that of the shipper . It is possible that the interests of Both parties will not be served to the fullest extent . In every case , however , both tests should be applied if justice to each is to be had . To quote from one judge , of many who have expressed them- selves in similar terms , - "We do not underestimate the gravity and importance of the interests involved in this controversy . The record has been given that careful and deliberate consider- ation , seemingly appropriate , and which besides was made ºr , necessary by its volume and complexity - The railways of our country have been said to be the arteries of our national life . The public official who would begrudge them the large measure of prosperity which their inestimable service to the country deserves , is as short-sighted as unpatriotic , as narrow as l4. unjust . While this is true , the mistakes or excesses of zeal or judgement on the part of the railway officials may , at times , make these vast enterprises , ordinarily bene- volent , instrumentalities of grave private wrong and communal injury . The framers of the constitution , though unconscious of the indescribable developement in the intercommunication of the people , yet 'prophetic and prescient of all the future had in store ' , provided for every contingency when it bestowed upon Congress the tersely expressed but elastic power to regu- late commerce with foreign nations and among the several States . Congress has exercised this power , and the righteous orders of the great commission it has primarily entrusted with the tremendous duty should in all proper cases be respected and enforced by the courts of the country . . . . . . . . While on occasion , the railway company , other corporation , may suffer a temporary diminution of revenues from an order of this character , the interest of the public , and in the end , the interest of the corporation itself , is conserved . In all cases the public welfare should control ". Several bases for the determination of the reasonableness of a schedule as a whole have been suggested , and in many cases made use of . . Among them are , cost of reproduction of the plant , capital invested , outstanding capitalization , present value , cost of service and value of service . The old plan of charging "what the traffic will bear"will hardly find a place in this list - 15. In almost every case coming before the Interstate Commerce Commission , in which an attempt has been made to increase the rates , the plea has been made that more revenue was need- ed to make possible the payment of dividends on the capital in- vested in the business , and that this increase in revenue must come from an increase in the rates charged . In almost every case the Commission has steadfastly refused to accede to the demands for such an increase , and has on this account been subjected to much adverse criticism on the part of the railroad managements . A careful study of the following data and diagrams will show that the contention of the railroads with regard to the necessity of an increase in revenue by raising the rates is not well sustained by the facts in the case . On the con - trary , the railroads have been able not only to pay dividends , but to increase the dividends already paid , pay higher wages to their employees , more for materials and supplies , and furnish better , safer , and faster service . The total mileage of railroads in the United States has increased rapidly . The diagram shows this increase to have been more rapid during some years than others , but always increasing at a good rate , thus giving evidence of general prosperity among the existing roads - The digram showing the yearly increase presents many interesting features . The l6. increase for some years at the beginning was rather slow , but following lă48 it began to grow larger . This was just at a time when the English railroads were involved in finan- cial difficulties . During the decade following 1855 , the diagram shows a falling off of new mileage , due no doubt to the unsettled conditions preceeding the Civil War , foreign capital being slow to undertake large enterprises in a country where political conditions were unstable . Immediately follow- ing this period and after the war , we find the curve rising rapidly , indicative of the period of enthusiastic speculation in railroad enterprises then indulged in . As the most common form for the absorption of capital in the United States, from 1840 to l890 , was said to be railroad building , it naturally follows that , with the rapid increase in mileage from the close of the war to 1872 , the available supply of capital for this pastime was appreciably diminished . Then , too , after a period during which the mileage is in- creased to an unusual extent. , there follows a time during which a portion of the available capital must be expended in the building of stations , terminal facilities , water supply stations , etc . The money spent in all of this work prior to 1873 , had its share in bringing about the extreme finan- cial stringency which existed that year and for some time after • It took time to readjust affairs on a more substantial basis - 17. About l880 , began what is called the railroad reconstruction period . The depression of 1884 and 1885 hindered operations for these two years , but recovery from this was rapid , and in 1887 the largest increase in railroad mileage ever recorded in one year was realized . The increase amounted to over l2,000 miles , - a thousand miles a month , - enough to build four lines from New York to San Fransi sco . From that date the increase lessened , until in 1895 , following the panic of l893 , it reached the lowest mark in twenty years . Since then the increase has been more constant than at any other period since the close of the war . On February 23rd , 1911 , the Interstate Commerce Com- mission announced its decision in a case in which an advance in rates had been proposed by the Eastern and Western railroad companies . In this case , as in others , the plea was made that the companies needed greater revenues . To quote the decision in part , - "At no time in the history of the American railroads have they yielded such profits , or was their pros- pect more fair than in the fiscal year which ended June 30th, 1910 . The primary impression of the Commission was that these increased rates ...... were merely the outgrowth of the increased cost of supplies , fuel and labor ; but no sooner was the investigation under way than these matters were entire- ly subordinated . It became manifest that the purpose of the ： |- 20. Tables Giving the Increase in Mileage per Year and the Total Mileage of the Railroads of the United States From 1830 to 1910 . Year . Increase Total in Miles Mileage 1830 40 40 1831 99 139 1832 191 330 1833 l3l 461 1834 199 660 1835 138 798 1836 351 1129 1837 298 1427 1838 453 1880 1839 386 2266 1840 491 2752 184l - 606 3363 1842 505 3868 1843 288 4156 1844 180 4336 1845 277 4613 1846 333 4946 1847 263 5209 1848 1056 62.65 1849 1048 73.13 1850 1261 8574 1851 1310 9884 1852 2200 12084 1853 2248 14332 l854 34.17 17749 1856 2421 20170 1857 1503 21673 1858 2O77 23.750 1859 1837 25587 1860 1707 27294 1861 1498 28792 1862 1016 2.9808 1863 720 30528 1864 574 31.102 1865 974 32O76 1866 819 32895 1867 1404 342.99 1868 2541 36840 1869 2468 39.308 1870 4103 434ll 21. Tables Giving the Increase in Mileage per Year and the Total Mileage of the Railroads of the United States From 1830 to 1910 . Concluded . Year Increase Total -º in Miles Mileage 1871 6660 55729} 1872 7439 631683 1873 5217 68385 1874 2584 7.0969 1875 1606 72575 1876 2575 75.150 1877 2280 77430 1878 2428 79858 1879 5006 84864 1880 72O2 92066 1881 9787 101855 1882 11596 ll345l 1883 6819 12O270 1884 3935 1242.05 1885 3131 1273.36 1886 8400 135736 1887 12984 14872O 1888 7070 155790 1889 56.96 161486 1890 5670 167156 1891 4620 171776 1892 4648 176424 1893 2789 1792.13 1894 2264 181477 1895. 1939 l83416 1896 2013 185429 1897 2161 187590 1898 31.99 l2O789 1899 4529 195318 1900 4158 199476 1901 4906 204387 l902 5O76 2094.85 1903 4675 214133 1904 4506 218639 1905 4440 22.3079 1906 4614 227693 1907 5588 233,281 1908 3517 236798 1909 3366 24O164 1910 3605 243769 22. carriers was not so much to secure approval of these specific rates , as to discover the minds of the members of the Com - mission with respect to the policy which the carriers might in the future pursue , and to secure , if possible , some com- mitment on our part as to a nation-wide policy which would give the carriers a loose rein ." "Whatever of doubt has arisen in the public mind respect- ing the value of our railroad securities has come , we are convinced , from the too reckless policy of stock manipulators , parading under the title of financiers , rather than from any course of governmental policy on the part of the American people . The railroads make complaint that they have no long- er a free hand ; yet the fact is that they have fared much better under such control as that to which they are now subject- ed than under the preceding regime of laissez faire . " A reference to the diagram showing the cost of operation per mile would seem to support, the plea of the railroad compan- ies that more revenue was needed to pay the increased cost there shown . since the establishment of the Interstate Commerce Commission this cost has steadily increased , with the excep- tion of a few years immediately following the panic of 1893 , from $4347 per mile to $7958 , an increase of 84%. This increase in cost is due in part to the increased cost of supplies , fuel and labor , and in part to the demand for better service and facilities . And this is a demand which each road feels bound to meet in order to retain its share of the traffic . During the period in which this increase has taken place , an opposite change has been brought about in the cost of haul— ing one passenger one mile , and a greater change , also in the opposite direction , in the rate charged per passenger- mile . This latter decreased from 2.349 £ in 1888 , to 1.986 g in 1894 . As the statistics are made up from June of one year to June of the next year , the low rates shown in the latter year may have been due in part to the low fares in force at the time of the World's Fair in Chicago . Follow- ing this the decline was more gradual , but steady , until , in 1909 , it had reached 1.928 & , a total decrease since 1895 of a little over 5 % . During the same time the cost, per passenger-mile had decreased something over 7 % . The profit per passenger-mile also decreased during this time some- thing over 1 % . If it were not for the fact that the number of passengers per mile , per mile of line increased rapidly at this same time the passenger traffic , at least , would be a losing proposition . The situation with regard to the freight traffic is similar . The decline in the freight rates continued for five years longer than that of the passenger rates, but rose again from 1899 to 1909 . The curve showing the cost per ton-mile follows much the same course - 24. The condition would indeed be serious if it were not for the fact that along with the decline in rates , and partly because of that decline , there existed an increase in the density of traffic, in regard to both the freight, and passen- ger business . The rapid and remarkable increase in the pass- enger-miles and ton-miles , per mile of line , is shown in the next diagrams . The increase continued from the years following the panic of 1893 , with scarcely a break until 1908– 1909 , when there was a slight downward tendency . This down- Ward tendency caused considerable anxiety among the railroad managements , especially among those in the territory cov- ered by the Official Classification , in which over one- half of the tonnage of the entire national system originates . Apparently their fears were groundiº, as the next year showed a return to the former rate of increase in both the ton- mileage and the passenger-mileage º From 1899 a to 1910 the average rate paid on dividend paying stock rose from 5 % to 7# 7% . Some fluctuations are noticeable in the last three years , but the tendency is up- ward • The net operating revenue has risen during the ten years last mentioned , from $2729 to $3895 , an increase of nearly 43 × e During this time the ratio of operating expenses to operating revenue has remained nearly stationary , increasing . . |- ： ſae |- . | 26. Table Showing Cost of Operation per Mile From 1888 to 1911. Year Cost of Operation per Mile 1888 $4347 1889 42O3 1890 4.425 1891 4538 1892 4809 1893 4876 1894 4163 1895 4017 1896 4229 1897 4106 1898 4430 1899 4570 1900 4993 1901 5269 1902 5577 1903 61.25 1904 6308 1905 6409 1906 6912 1907 7687 1908 7346 1909 6921 1910 77.ll. 1911 7958 |- -- - - - - - 28. Year 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 Rate per Passenger - mile in Cents 2. 349 2,165 2, 167 2.142 2. 126 2.108 l, 986 2.040 2. O19 2.022 1,973 1,978 2,003 2.013 le.986 2,006 2,006 1.962 2.003 2,014 1.937 1.928 Cost per Passenger-mile in Cents 2.042 l. 993 1.425 1. 430 1.420 l. 431 1. 361 1. 393 l. 356 l. 357 1.287 l. 304 1. 307 l. 312 1. 281 ſér ſe |- ſ. |№. |- --> -- ~~~~ º ºs ºº - † = sº- Hae.| ！|-|-| ： | ſ. ſſſſſſſſ|||- 30. Table Showing Receipts per Ton-mile and Cost per Ton-mile in Cents . Year 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1967 1908 1909 Receipts per Ton-mile in Cents l,001 .922 .94l • 895 . 893 • 878 • 860 . 839 . 806 .798 • 753 . 724 , 729 • 750 • 757 . 763 . 780 • 766 • 748 • 759 • 754 • 763 Cost per Ton-mile in Cents O. 630 • 593 • 618 . 583 • 582 • 579 . 595 . 577 • 540 • 535 • 494 . 48l. . 478 • 486 • 489 . 505 • 535 • 514 . 502 • 520 • 528 . 512 №.== №. №. №№. № ſ. ſ. № ºn cºlº tº ººz - c = - 32. Table Showing Ton-miles of Freight per Mile of Operated Line • Year - Ton-miles of Freight per Mile of Line Operated 1889 448069 1890 487245 1891 5O2705 1892 543365 1893 551232 1894 457252 1895 #479490 1896 523832 1897 519079 1898 - 617810 1899 659565 1900 735.366 1901 76O414 1902 793,351 1903 855442 1904 829,476 1905 861396 1906 982401 1907 10521.19 1908 974.654 - … ººº-ºº º ºsº is T |-· |- ： |- ： |- ： T ： |- |× |× 35. Table Showing Passenger-miles and Ton-miles per Mile of Line Operated . Year Passenger-miles Ton-miles per Mile per Mile 1889 75325 448069 1890 75751 487.245 1891 796.42 5O2705 1892 82.285 543365 1893 83.809 551232 1894 81333 457.252 1895 68572 - 479490 1896 71705 523832 1897 66874 519079 1898 72464 617810 1899 77821 659565 1900 83295 736366 1901 897.21 760414 lso: 993.14 7.9335]. 1903 103291 8554.42 1904 104.198 82.94.76 1905 1099.49 861396 1906 114529 982401 1907 123259 10521.19 1908 1300.73 97.4654 1909 127299 953986 1910 138169 1071086 | i. i. | | | º º | ------ | ſ.ſ. ſae - |- №. ſ. |ſſſſſſſſſſſ №№. |ſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſſ | Hºº | | º ſae. i. --- |- ├№. | || || … . . . . . . .|-|- ：： ſae. ， ， ， ， ， ， , №.- ſſſſſſſſſſſſſſſſſ ſ. │ ├─ſ. №. º ==== -- - i. - - iii. º º º ºg sº tºº | | - i. º == -- 37. Table Showing Operating Revenues and Expenses per Mile , Net. Operating Revenue per Mile , and Ratio of Operating Expenses to Operating Revenue . Year Operating Operating Net Operating Ratio of Operating Revenues Expenses Revenue Expenses to Oper - per Mile per Mile per Mile ating Revenue 1900 $7722 $4993 $2729 64s 65 1901 81.23 5269 2854 64's 86 1902 86.25 5577 3048 64. 66 1903 92.58 6125 3133 66. 16 1904 9306 6308 2998 67.79 1905 9598 6409 31.89 66, 78 1906 10460 6912 3548 66.08 1907 ll383 7687 3696 67. 53 1908 10491 7320 3171 69, 75 1909 10356 6851 3505 66. 16 1910 llā53 7658 3.895 66, 29 . |- |（ ： |- №. |- |ſſſſſſſſſſſſſſſſſſſſſſſſſſ i. 39. Table Showing the Average Rate Paid on Dividend Paying Stock . Year 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 Average Rate Paid on Dividend Paying Stock º e 5. 70 6.09 5, 78 6.03 6.23 8.07 6.53 7. 50 from 64.65 to 66.29 . It may be remarked in passing , that the ton-mile and the passenger-mile are used as units of comparison for want of something better . Where the data is used merely for comparison perhaps they will serve the purpose , but for really definite results something better is needed - In this connec- tion , what is known as the "drawbar pull" has been suggested . A committee of experts appointed by the American Railway Asso- ciation reached the conclusion that the "basic unit, of traction was to be derived from the power exerted by the locomotive at the drawbar by which it was connected to the train ; in other words , that the 'draw bar pull' afforded what may be called the common denominator in the discussion of any problem relat- ing to train service". This drawbar pull may be determined by a dynamometer test under any condition of circumstances , and taken in connection with statistical information as to the cost of operating the locomotive , its consumption of fuel , and other supplies , properly conducted experiments should enable us to arrive at the average cost of any train service , whether of passenger or freight . The diagram showing the gross earnings per mile follows almost the same course as the ones showing the density of traffic , illustrating the close relation between volume of business and gross earnings . Along the same line is the information to be gained from an examination of the diagrams 4l. and tables of the total and net income per mile . The net income has increased from $661.00 per mile in 1889 , soon after the beginning of regulation by the Interstate Commerce Commission , to $2157.00 per mile in 1910 . This is an in- crease of over 226 % in twenty-one years , a good indication that regulation is not a menace to the prosperity of the rail- roads . From the diagrams and tables pertaining to profit per ton-mile and per passenger-mile it can be seen that the profit per ton-mile fell off nearly 22 % during the nineteen years ending in 1909 , and the profit per passenger-mile decreased 14 % . Taking up the diagram showing the number of roads in the receivers hands , it is easy to point out the periods of financial depression . During the financial struggles in 1884-5 the number of roads which had their affairs administered by recievers increased to forty-four . Then followed a season of prosperity during which many of the roads redeemed them- selves , but in the panic of 1893 , the number of unfortunates rose again , this time to seventy-four . Since that time the number of roads for which recievers have been appointed has steadily decreased . From 1900 to 1910 there was but one year , 1908 , when the number was above ten . An investi- gation of the percentage of total mileage in the hands of the receivers makes an even better showing . Owing to the fact 42. that it is the smaller and weaker roads which have been over- taken by misfortune , or have not been able to withstand the ills of railroad infancy , that go to make up the total oper- ated by the receiver , the mileage of these roads is compara- tively small , and at times has amounted to an almost negli- gible quantity . The diagram showing the number of roads sold under fore- closure discloses what at first sight looks to be a more serious state of affairs . But upon comparing the mileage sold under foreclosure with the total mileage we find , again , that the amount is inconsiderable , there being practically none from 1900 to 1910 . This speaks well for the wisdom of regulation by commission . During the whole time since the appointment of the Commission , with the exception of three years during the panic of 1893 , the amount of money per mile paid in dividends has rapidly increased . From $724.00 in 1900 , it has grown to $1694.00 in 1910 , an increase of 120 % . Simultaneous with this has been the increase in the percentage of stocks paying dividends , and not since the appointment of the Commission has the percentage of bonds paying dividends been below 80 . For nearly ten years , from 1900 to l910 , it has averaged 94 . The argument has been advanced by some that the gratifying increase in the amount of dividends paid by the railroads has been at the expense of maintenance . In other words , it is | |№. |- |- | | |- |- T |- ： |- ： |- |- *#7 1,912 6297 OT6T. 299T 2TO% 606T 9TLI 8TO7 906. I 91,6T. ggóź L06T 22LT 2OL? 906T 809T 8327 G06T 2T2T IOOf 7O6T 9951 O2.If 2O6T OOFT 62O7 2O6T. G22T 31,1,2 TO6T O8TT 91.92 OO61 91.8 9922 668T O91, - 21,02 968t 2.7% OOLZ 1,68T ogy 0/11.3 969T TT2 9992 G68T 2T2 2TA, 2 768T #99 OO22 268T 7TL 1, 1,22 269T 289 26O2 T68T O99 TTT2 O68T T99 2062 698"I eITN red enoou I q9N eTTW Ted emoou I Taqol, Jø9X. • aut"I Jo eITN red semoou I he N pue TBq ol etiq 3uTAoûS eTaal, · |- ： ， | L T ： T |- ： |- ： |- ſae |- ： L ： |- |- iſſ ſ. ſſſſſſſſſſſſſſ: 46. Table Showing Gross Earnings per Mile of Line • Year Gross Earnings per Mile 1888 $6652 1889 6290 1890 6725 1891 6801 1892 7213 1893 7190 1894 6109 1895 5947 1896 6293 1897 6122 1898 6755 1899 7OO5 1900 7722 1901 81.28 1902 86.25 1903 92.58 1904 9306 1905 9.598 1906 10460 1907 11383 1908 10533 1909 10466 | |-№. |-· ├. - | - - - - - - - № |-ſ. │ ├─ |× ſ.| i. | | º | | º º i. | |- №. №.ſ. ſiiſ，№ſſae . |- № ſ. º º H Hiii. | ----- 49. Table Showing Profit per Ton-mile and per Passenger-mile in Cebts . Year Profit per Profit per Ton-mile Passenger - mile Cents Cents 1890 • 323 . 742 1891 • 298 . 712 1892 • 300 • 706 1893 .283 .677 1894 . 265 . 625 1895 . 262 ... 647 1896 . 266 . 663 1897 . 263 • 665 1898 ... 259 . 686 1899 . 243 .62.l 1900 . 25l. , 696 1901 . 264 , 701 1902 . 268 . 705 1903 • 258 . 684 1904 • 245 . 632 1905 • 252 . 641 1906 • 246 . 670 1907 . 239 • 639 1908 . 226 . 577 1909 • 25l. • 637 ） .│ │ │ ├ | ， ، ، ، ، ، ، ſ. H. | H Hiii. - i №. ſae |- № º tº cººl № ） | № |- ： º ºr 54. Table Showing Number of Roads , Mileage , and Percentage of Total Mileage for Which Receivers Were Appointed . Year Number Mileage % of Total of Roads Mileage 1883 ll 1990 • Ol6 1884 37 ll.038 . O89 1885 44 8386 .065 1886 13 1799 .013 1887 9 1046 . OO7 1888 22 3270 .021 1889 22 3803 .023 1890 26 2963 .018 1891 26 2159 .012 1892 36 10508 • O59 1893 74 29.340 . 163 1894 38 7025 .038 1895 31 4089 .022 1896 34 5441 .029 1897 18 1537 • OO8 1898 18 2069 • Oll 1899 10 1019 .005 1900 16 1165 • OO5 1901 4 73 - .0004 1902 5 278 .00l 1903 9 229 .00l 1904 8 744 .003 1905 10 3593 . Olć 1906 6 204 .00l 1907 7 317 .001 1908 24 8009 •034 1909 5 859 • OO4 1910 7 735 .003 55. Table Showing Number of Roads , Mileage , and Percentage of Total Mileage Sold Under Foreclosure . Year Number Mileage % of Total of Roads Mileage 1883 18 1354 •0ll 1884 15 710 • OO5 1885 22 3156 .025 1886 45 7687 • O56 l887 31 5478 . O37 1888 19 1596 . O10 1889 25 2930 .018 1890 29 38.25 . 023 1891 21 3.223 .018 1892 28 1922 • Oll 1893 25 1613 • OO9 1894 42 5643 .031 1895 52 12831 • O69 1896 58 13730 • O74 1897 42 6675 . O35 1898 47 6054 •032 1899 32 4294 .022 1900 24 3477 . O17 1901 18 1159 • 005 1902 18 693 • O03 1903 13 555 .002 1904 13 524 .002 1905 6 6.79 .003 1906 8 262 .001 1907 6 ll.4 • O005 1908 3 138 • OOO6 1909 12 26290 • Oll 1910 l7 1100 , 005 56 . charged that the railroads have witheld the money that should have gone into maintenance , and have paid it out in dividends . A glance at the diagrams showing the expense of maintenance , both of equipment and of way and structure , per mile , will show that the amount expended for maintenance has increased wonderfully . From an average of about $700.00 per mile during 1888 to 1898 , the amount expended for the maintenance of equip- ment grew to over $1700.00 per mile . The range for the main- tenance of way and structure has been from $900.00 to $1500.00 per mile , within practically the same time limits . The expense of conducting transportation has grown in a similar manner . A large share of this increase is due to the added care which the passengers receive now in comparison with that formerly accorded him . This pertains both to their safety and their comfort . The higher standard now demanded and maintained requires the employment of more men • The average number per mile of line has increased more than 50 % since 1889 . Since 1898 , the Commissioner of Labor and the Interstate Commerce Commission have been empowered by Congress to act joint- ly as a conciliation board between the railroad managements and their employees whenever controvercies migh arise . Since that time also the average daily rate of wage of all classes of railroad employees has risen steadily , being in 1910 , $3.28 . |- - ſiſ H №. ſ. | | ſ. Ëſ|… № |- ） ： ： |- L |- （） |（~~~~）; ſ.№.ſae ſiſ H - - - - - ºc, ſº tº Cº. ººººº- tº º - º H. № 60. Table Showing the Percentage of Stocks Paying Dividends , the Percentage of Bonds Paying Dividends , and the Amount of Dividends per Mile . Year Dividends Percentage Percentage - per Mile of Stock of Bonds Paying Paying Dividends Dividends 1888 $ 585 38, 56 78. 31 1889 535 38. 33 81.8l 1890 558 36.24 1891 565 40.36 90. 10 1892 599 39.04 84.44 1893 612 38, 76 85. 61 1894 535 36. 57 82.71 1895 482 29.94 83. 29 1896 480 29.83 83. 74 1897 476 29.90 83. 41 1898 521 33, 74 84.18 1899 592 40.6l 89, 55 1900 724 45.66 93. 22 190l. 798 51. 27 - 93. 77 1902 926 55.40 95. 11 1903 953 56,06 95.67 1904 1046 57, 47 95, 51 1905 1095 62.84 93. 64 1906 1225 66.54 96.18 1907 1356 67. 27 96.24 1908 1696 65. 69 92, 76 1909 1375 64. Ol 92.43 1910 1694 66. 71 92.06 | ſſſſſſſſſſſſſſſ H Hi- … ºr ºvº º cº - E - - - - a ºn T | |- |- |- - - - - - ſ. ſ. - - - - - - * 29 TTLT 22g T OT6T GTGT #82T 606T G99T T62T 906T 1, 1.9l 21,71 J.O6T 97%T OL2T 906T 262T 222T 306T 222T G6TT #O6T 22TT ##2T 2O6T 6TOT 99TT 206T T26 O2TT TO6T 806 99 OT O06T 2.1.1, #26 668T Djºl, 906 868T #799 098 1,68T 021, O98 9681 O29 Tll G68T 229 T6A, #68T #91, 096 268T O2/. T26 268T T68T 901, 2O6 O68T. T99 969 688T 299 $ 999 $ 888T eITN red eTTW red queudgmbºl seanqon.14S pue ÁaM Jºe R. • queudºnbºi pue * seanqon.14S pue ÁeM go souguequgeW go eTTW zed estiedza 3UTAoûg eTaeJ. . |-.- - . №-------|-. .ſae №ae,| .-. ſae│ │ │ │ │| _│ ├─ ----------, --- - - - - - - - - - - H 65. Table Showing the Expense per Mile of Conducting Transportation. Year Expense of Conducting Transportation per Mile 1888 $1919 1889 - 2043 1890 2120 1891 1892 2300 1893 2430 1894 2118 1895 2350 1896 2384 1897 2305 1898 2435 1899 2490 1900 2652 1901 2765 1902 2912 1903 3280 l904 3468 1905 3458 1906 3672 1907 4.162 1908 3870 1909 3568 1910 4050 66. In regard to the service which is rendered to the public , we may study the diagrams showing the number of cars and loco- motives used per hundred miles of line . These indicate the increased facilities for transporting the public and its goods . The smaller increase in the number of passenger cars and loco- motives shows that it is in the handling of freight that the financial success of the average railroad is assured . The diagrams show that the the weight and tractive force of some of the heaviest locomotives built during the years from 1895 to 1904 has increased . The average weight of all locomo- tives in the United States in 1910 was seventy-three tons , and the average tractive force was 27, 282 pounds . The Chicago and Northwestern Railroad found that in thirty years the tractive force in pounds of the locomotives on its lines had increased 150 % , which would indicate a corresponding increase in the train load . As a matter of fact we find that in ten years the train load has increased nearly 200 % . This indicates that it is not due to the increased size of the lo- comotive alone that heavier train loads are hauled . Double- heading has been responsible for some of it , but there is - little doubt that the system of tonnage rating has had much to do with the increased service now rendered by our locomotives . The average train load in 1899 was 243.52 tons . In 1910 it was 380.38 tons , an increase of nearly 57 % . №.ſ. ſ. -- ~~~~ "º º | º º i. №. |- L ： |- 69. Table Showing the Number of Employees of all Railways in the United States per Mile , and the Average Rate of Daily Wage of all Employees • Year Number of Average Rate of Employees Daily Wage per Mile 1889 4.59 1890 4. 79 1891 4.86 1892 5. O6 $2.70 1893 5.15 2, 73 1894 4. 44 2, 66 1895 4. 41 2, 62 1896 4.54 - 2. 64 1897 4. 49 2. 60 1898 4, 74 2.64 1899 4. 45 2, 66 1900 5, 29 2. TO 190l 5.48 2. T6 1902 5.94 2,80 1903 6. 39 2.88 1904 6. ll 2.97 1905 6, 37 2.99 1906 6.84 2.98 1907 7.35 3.12 1908 6.23 3.24 1909 6, 38 3.22 1910 7, O6 3. 28 ºc ºf a … ºver -- ~~ ） ： ： . | （）ſae 71. Table Showing Numbers of Locomotives in Use . Year Passenger Others Passenger Others Total Total Total per 100 per 100 per 100 Miles Miles Miles 1898 9956 26278 5.22 13.77 18.99 1899 98.94 26809 5, O6 13, T3 18, 79 1900 98.63 27800 4.95 13.93 18, 88 190l 10184 29.400 4.98 l4. 28 19, 26 1902 10318 30907 4.92 14. 75 19.67 1903 10570 333Ol 4.94 15.56 20, 50 lso ll.252 3549]. 5.15 16.23 21. 38 1905 11618 36739 5.2.1 16. 51 21. 72 1906 12249 39423 5. 39 l'7. 31 22, 70 1907 12814 42574 5. O7 18.25 23. 32 1908 13205 44493 5.59 18, 79 24.38 --- -- --- №. │ │ │ ： |- | T |- |× ſae |- |- L |× |- |- ： - |- №. . | º |- |- |- ： |- | ： |- | . | | · |- 74. Table Showing Numbers of Cars in Use . Year 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 Passenger Total 33595 33850 34.713 35969 36987 38140 39752 40713 42262 43973 45292 Others Total 1292579 1342066 1416125 1514864 1603.198 1715249 1758809 isocoss 1916650 2O82621 2199065 Passenger per 100 Others per 100 Miles 17. 61 17. 17 17. 40 17. 60 17. 65 l'7. 81 l8. 19 18.25 18. 56 18.83 19. 13 Miles 677, 45 687, 17 709. 83 74l. 13 765. 25 80l. 14 804. 58 807. T3 841. 74 892. 69 915, 98 Total per 100 Miles 695. 16 704. 34 727. 23 758. 73 782,90 818.95 822. 27 825.98 860. 30 911. 52 935. 11 ſ. º ） │ │ │ │ │ │ │ │ │ │ │ │ │ │ │ │ ſae - - - - - - - 76. Table Showing the Weight and Tractive Force of Heaviest Locomotives . Year Weight in Tons of Tractive Force in 1000+ of Heaviest Locomotive Built, Heaviest Locomotive Built 1895 87, 5 38 1896 95.2 38 1897 86. O 26 1898 ll 5.0 53 l899 ll.0.0 50 1900 125.0 64 1901 105.0 49 1902 132.0 62 1903 142.0 63 1904 167. O 70 77. Another factor which tends to lower the cost of service is that of the interchange of cars between roads . This is effected wherever traffic demands it , if the physical and political conditions permit . There are various arrangements made between the owners , but the intention is always present to reimburse each for the use of his cars . Some of these arrangements are on a mileage basis and some on time , others , on a system which embraces both . The value and comparative scarcity of passen- ger cars has caused the different roads to be a little slow in their interchange . When it is done there is an attempt to equalize the mileage • The balance is generally settled on a mileage basis as follows ; Coaches . etc. 3 & per mile ; Baggage cars , etc. l; £ per mile • Freight cars are paid for at the rate of twenty cents per day for each car . If any road holds a car for more than thirty days the charge is increased to one dollar per day - In the matter of safety the data are very erratic , and the diagrams are very irregular . For the last few years for which data are available , however , the tendency seems to be in the direction of greater safety - For instance , in 1907 , one passenger in every one and one-half millions was killed in an accident , while in 1909 , only one in every three and one-half millions met with a similar fate . This latter year shows the smallest proportionate number of deaths | | - │ ├─ |- 80. Table Giving the Number of Fatalities Occurring as a Result of Railway Accidents . One Passenger Killed in Every Passengers Killed in R'y Accident 310 286 293 376 299 324 17O 181 222 221 239 249 282 345 355 441 537 359 610 381 253 Year 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1523,133 1727789 1811642 1491910 1985153 1668,791 2984832 2827,474 22O4708 226727O 2189023 2316591 2153469 18837O6 1957.441 1622167 1375856 2222691 1432631 2335983 352.3606 Passengers Killed per Billion Passenger-miles 25.8 23.8 22.5 28.9 21.3 23. 1 l4.2 l4.0 18.5 17.0 15.9 15. 6 16. 6 17, 2 l6.9 20.0 22.3 l4.3 21.8 l3. l 8. T 81. recorded in this country in one year as the result of railway accidents . Since 1910 the Interstate Commerce Commission has not asked the railroads to report accidents . The diagrams showing the deaths per billion miles present the matter in truer proportions perhaps . Here we see that in 1889 , some- thing over twenty-five deaths are recorded for every billion miles of passenger travel , while in 1909 , only seven lives were lost in the same amount of travel . It is safe to predict that in the füture the loss of life from this cause will be much less , as a result of the improved safety appliances now being perfected . Working under the conditions of reduced rates and the in- creased cost of materials , labor and supplies , the rail- roads have made a magnificent showing , taken either by them- selves or in comparison with those of other countries . In- creased density of traffic has contributed much to their success under these conditions , but in this connection it should be remembered that this increase is due in many cases , and in some instances wholly, tº to the efforts of the railroads them- selves • Not the least factors in the ability of the manage- ments to continue to pay , and to increase the rate of , div- idends , have been the increase in the skill of management , and in the efficiency of operation . There are many problems still to be solved in connection 82. with this work . In the solution of them are employed some of the flower of business talent and acumen of the country . The Interstate Commerce Commissión has , perhaps , done the s most , aside from the railroad managements , toward working out the final solution . To quote from a former secretary of the Commission , - " At the head of all the vast machinery employed in the moving of interstate commerce are men of integrity , and broad of ability rarely developed in other walks of life , gauged men , to whom the public is indebted for the efficiency with which they carry on their stupendous enterprises ." It is with suchameh has othese . working in conjunction with those of the Commission , problem lies . that the final solution of the ; RULES COVERING USE OF MANUSCRIPT THESES IN THE UNIVERSITY OF MICHIGAN LIBRARY AND THE GRADUATE SCHOOL OFFICE Unpublished theses submitted for the doctor's degrees and deposited in the University of Michigan Library and in the Office of the Graduate School are open for inspection, but are to be used only with due regard to the rights of the authors. For this reason it is necessary to require that a manuscript thesis be read within the Library or the Office of the Graduate School. If the thesis is borrowed by another Library, the same rules should be observed by it. Bibliographical refer- ences may be noted, but passages may be copied only with the permission of the authors, and proper credit must be given in subsequent written or published work. Extensive copying or publication of the thesis in whole or in part must have the consent of the author as well as of the Dean of the Graduate School. . This thesis by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . has been used by the following persons, whose signatures attest their acceptance of the above restrictions. A Library which borrows this thesis for use by its readers is expected to secure the signature of each user. 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