STATISTICS OF AMERICAN RAILWAYS (continued 2)

IV CAPITALIZATION

According to the Twenty-third Annual Report of the Interstate Commerce Commission the amount of railway capital, including stocks and bonds "outstanding in the hands of the public on June 30, 1908, was $12,840,091,462, which, if assigned on a mileage basis, shows a capitalization of $57,230 per mile of line."

In the face of all the fustian about over-capitalization of American railways, this is a most remarkable admission, not only of their moderate, but of their decreasing capitalization per mile.

In its report on the Intercorporate Relationships of Railways, dated March 10, 1908, the Commission found that as the result of its investigation the figure for railway capital outstanding in the hands of the public, "Measuring the claim of railway securities on railway revenues," reduced the amount "from $67,936 per mile of line (1906) to $58,050 per mile of line."

Of course there was never any justification for using the larger sum as a true measure of railway capitalization, for it was known to contain at least 15% duplicated capital.

In its Statistics of Railways for the year ending June 30, 1907, the Commission gave the net amount of railway capital outstanding in the hands of the public at that date, "assigned on a mileage basis as $58,298 per mile of line," or $1,068 more than the figure reported for 1908.

As the computation for 1908 was made on a basis of 224,363 miles of line, this would indicate a shrinkage of no less than $239,616,480 in the par value of railway capital. It is needless to say there was no such shrinkage.

Net Capitalization in 1909.

Following the earlier judgment of the Official Statistician, this Bureau seeks to arrive at a fair approximation of the capitalization of the railways of the United States through the reports of operating roads and the capitalization of the rentals paid for leased roads. This, in the more recent language of the Statistician, furnishes the only capitalization that "measures the claim of railway securities on railway revenues."

Applied to the returns received by this Bureau from 221,132 miles of operated line, this formula yields the following result for the year ending June 30, 1909:

Summary Showing Capitalization of 368 Companies Operating 221,132 Miles of Line for the Year Ending June 30, 1909.

Capitalization

1909

(182,046 Miles Owned)

Capital stock $6,199,919,551

Funded debt 8,015,841,805

Receivers' certificates 20,497,447

$14,236,258,803

Rental of 39,086 miles, $120,784,982, capitalized at 5%. 2,415,699,640

Total $16,651,958,443

Deduct:(a)

Railway stocks owned (actual value) $1,889,157,214

Other stocks owned (actual value) 206,461,423

Railway bonds owned (actual value) 1,054,095,905

Other bonds owned (actual value) 140,282,728

3,289,997,270

Net capitalization, 1909 $13,361,961,173

Net capitalization per mile operated 60,425

(a) The par value of these stocks and bonds owned is given as $4,739,231,832.

An estimate of $25,000 per mile for the 11,870 miles of line not reporting to this Bureau would add $296,750,000 to the above total. From this should be deducted $150,000,000 for the sum assigned by the Official Statistician "to other properties," and we arrive at the following close approximation of the true measure of the capital employed in the transportation industry of the United States:

Net capitalization, 233,002 miles operated line, 1909 $13,508,711,173

Net capitalization per mile of line 57,962

Net capitalization per mile of track 39,730

In computing the average capital per mile last given, no allowance has been made for the 8,927 miles operated under trackage rights for the sufficient reason that the rental paid therefor is represented in the total capitalization just as fully as if so much capital had been expended in the construction of that many miles of line.

It is worthy of note that the net capitalization thus arrived at through a straightforward analysis of the returns of the operating companies is in substantial agreement with the Commission's report on the Intercorporate Relationship of Railways in 1908. The construction of 11,000 miles of line since 1906 would undoubtedly account for the difference between $58,050 and $57,962 per mile of line.

Summary Showing Net Capitalization of the Railways of the United States, 1909-1904.

Year Net Capital Per Mile of Line

1909 $13,508,711,173 $57,962

1908 13,007,012,563 58,864

1907 13,064,279,303 59,600

1906 12,628,000,000 57,966

1905 11,167,105,992 53,328

1904 10,711,794,278 52,099

Owing to the intercorporate ownership of stocks and bonds and the consequent intercorporate payments of interest and dividends, it is no easy matter to make an entirely satisfactory estimate of the return paid to capital out of the purely transportation revenues of the railways. But the persistent reiteration by the Official Statistician of the fictitious aggregate of all the dividends paid by operating and non-operating companies, covering in 1908, by his own admission, $3,927,453,365 duplicated capital, justifies the attempt.

The operating income of the roads reporting to this Bureau for the year 1909 is arrived at thus:

Gross earnings (221,132 miles operated) $2,375,141,766

Operating expenses 1,568,008,389

Net earnings from operation $ 807,133,377

Less taxes 82,650,214

Net operating income $ 724,483,163

This $724,483,163 is the balance in the hands of the 368 companies of the moneys received by them from transportation, or, as the Official Statistician now calls it, "rail operations," for the payment of interest, rent, other deductions, dividends, additions and betterments, reserves, surplus and deficits. But before proceeding to this distribution these companies received $200,725,696 income from other sources, principally interest and dividends on stocks and bonds owned and for rent of track, and a net balance of $5,410,338 from outside operations. The total of these two sums, $206,136,034, may be arbitrarily applied first to offset the item of rent, $120,784,982, paid for leased lines and track, and the balance in payment of interest and dividends in proportion to the value of bonds and stocks owned as above, viz.: 36% and 64%, respectively.

This enables us to make the following distribution of the net operating income of the railways reporting to this Bureau, as follows:

Net operating income, as above $724,483,163

Disposition of same:

Interest on funded debt $324,181,521

Less paid from "other income" 30,843,416 $293,338,105

Interest on current liabilities 22,546,779

Other deductions 70,174,473

Dividends preferred stock 50,183,739

Dividends common stock 176,607,550

$226,791,289

Less paid from "other income" 54,832,742 171,958,547

Dividends on other securities 769,222

Additions and betterments charged to income 24,807,546

Appropriations to reserves 16,984,447

Miscellaneous 5,602,761

Deficits of weak lines 4,996,195

Surplus available for adjustments and improvements 113,205,088 $724,483,163

This table shows the actual disposition made of the net income from operation of the roads reporting to this Bureau, representing 97% of the railway business of the United States, except that $120,784,982 of the income from other sources has been eliminated from the account and applied to offset the rental paid by the reporting roads.

It will be observed that the gross dividends declared were only $226,791,289, which is 3.64% on the par value of the stock of the 368 reporting companies.

Misrepresentations as to Dividends.

The discrepancy between this condition and the official statement as to dividends declared in 1908 calls for an analysis of the latter. This reads, "The amount of dividends declared during the year (1908) was $386,879,362, being equivalent to 7.99% on dividend-paying stock. For the year ending June 30, 1907, the amount of dividends declared was $308,088,027."

Two income accounts—one of operating roads and the other of leased roads—for the year ending June 30, 1908, give a clew as to how the Official Statistician more than doubles the dividends actually paid out of transportation revenues. The gross total is made up of these four items:

Operating roads:

Dividends declared from current income $271,328,453

Dividends declared out of surplus 57,733,808

Leased roads:

Dividends declared from current income 33,843,577

Dividends declared out of surplus 27,550,596

Total $390,456,434

As these income accounts show that the operating companies received $280,427,460 "other income" from outside operations and sources other than transportation, and the leased roads received $111,153,013 "income from lease of road," the source of the major part of this fictitious dividend is revealed. The $280,427,460 from other sources would pay the entire income of the leased roads and leave nearly $170,000,000 to extinguish so much of the dividends declared by the operating roads.

Modified as to details, this is what actually occurs every year. In the year 1908 the total amount paid out of transportation revenues on account of capital of the 97% of the railways of the United States reporting to this Bureau was represented in the sums:

Net interest on funded debt $282,354,000

Interest on current liabilities 31,835,708

Rent paid for lease of roads 113,529,261

Net dividends 104,074,006

Total $531,792,975

This total was equivalent to 4.15% on the net capitalization of the roads represented. The rental paid the lessor roads constituted the fund from which those roads paid their interest and dividends. Further remark on the misleading and harmful statement of the Official Statistician as to dividends declared in 1908 is unnecessary.

V COST OF CONSTRUCTION

Incomplete as are the figures of the cost of the railways of the United States, and exclusive as they are of the millions put back into the properties out of income for additions, betterments and reconstruction in the process of operation, yet the statistics of the cost of construction and equipment afford a complete answer to all charges that American railways are over-capitalized.

Upon the question of the cost of road and equipment in 1909, the returns of the 368 roads reporting to this Bureau furnish the following data:

Summary of Cost of Road and Equipment Covering 221,132 Miles of Operated Line for 1909.

Item Amount

Cost of road (182,046 miles owned) $6,603,504,463

Cost of equipment 1,122,409,813

Undistributed cost of road and equipment 3,080,064,960

Cost of 39,086 miles leased lines rental capitalized 2,415,699,876

Total $13,220,678,876

Adding to this $290,750,000 to represent the 11,870 miles of road not reporting to this Bureau at $25,000 per mile, we obtain

$13,417,438,876

as the cost of road and equipment of the 233,002 miles of line employed in the transportation industry of the United States in 1909, or

$58,031 per mile of line.

This is an underestimate by reason of the failure of a few lines to furnish even approximate figures on the accumulated cost of their properties. Averaging the cost of locomotives at $15,000, of passenger cars at $6,000, of freight cars at $800, and of company's cars at $500 apiece—their present cost rates much higher—the equipment of American railways represents an investment of over $3,000,000,000, and its bare maintenance alone involves an expenditure of nearly $400,000,000 annually.

Physical Valuation of the Railways.

It is worthy of passing note that just as the railway companies have shown their indifference to a physical valuation of their property, the clamor of regulators and agitators in its favor has subsided. The proposal lost its attractiveness to them the moment they became convinced that such an investigation would put a valuation on the roads so high as to take not only the wind out of their sails but the last drop of water out of their mouths. To-day the only insistent demand for this futile undertaking comes from quarters interested in the distribution of the appropriation of several millions it would cost.

Credit for the reversal in the popular and political attitude on this subject is largely due to the valuations attempted by the states of Minnesota, Washington and Wisconsin. The results in these states may be briefly summarized as follows:

Miles of Line Capitalization per Mile Valuation by State, per Mile

Minnesota, 1907 7,596 $44,206 $54,201

Washington, 1908:

Great Northern 806 44,078 73,900

Northern Pacific 942 70,278 106,500

Oregon R. R. & Navigation Co 501 43,012 38,900

Wisconsin, 1906 7,135 33,424 34,630

Even Senator Albert B. Cummins of Iowa has seen such a bright light on this subject that in his speech before the Traffic Club of Chicago last February he said that he would not be willing to make a present valuation of railroad property a basis for determining rates, "for the reason that it was more than probable that the present capitalization of between fifteen and sixteen billions would be increased to twenty billions."

In the Bureau's Statistics for 1908 it was said:

"If the valuations in Minnesota and Washington, made by none too friendly commissions, are any criterions of what a national valuation made under presumably unbiased federal authority would be, the present cost to reproduce the railways of the United States would be nearer $20,000,000,000 than any sum within the anticipations of those agitating for such valuation."

Capitalization of Foreign Railways.

With both sides of the balance sheet testifying to a capital investment in American railways of under $60,000, and official valuation abandoned because it would demonstrate that they could not be reproduced for less than $80,000 per mile, the reader is asked to compare the American figures with those of the capitalization, or cost of construction, of the principal foreign countries set forth below. These have been compiled from the latest available official returns.

Summary of Railway Capitalization of the Principal Foreign Railways from Latest Data.

Year Country Miles of Line Capital or Cost of Construction Per Mile

Europe:

1908 United Kingdom 23,205 $6,382,296,742 $275,040

1908 Germany 35,558 3,903,848,400 109,788

1907 Russia in Europe (exclusive of Finland) 32,900 (a)3,170,876,360 80,985

1907 France (b)24,730 3,447,366,000 139,390

1907 Austria 13,427 1,515,576,885 112,879

1907 Hungary 11,769 741,586,391 63,010

1907-08 Italy (State roads only) 8,699 1,086,000,000 124,730

1905 Spain (13 roads) 6,840 583,632,000 85,327

1906 Sweden 7,938 257,408,450 32,427

1907 Belgium (State only) 2,537 430,800,000 169,806

1907 Switzerland 2,740 298,709,210 109,000

Other Countries:

1909 Canada 24,104 1,608,990,656 66,752

1908 British India 30,576 1,364,669,375 44,632

1907 Argentine Republic 13,690 820,433,796 59,930

1908 Japan 4,444 190,173,728 42,800

1909 United States of America 233,002 13,508,711,173 57,976

(a) Russian capitalization, including railways in Asia, covers a total of 39,277 miles, from which the capital per mile is computed.

(b) This is exclusive of 4,259 miles of local interest.

The most striking feature in this table is the steady advance it shows in the capital cost of German railways. In ten years this has increased from 251,597 marks per kilometer in 1898 to 283,608 in 1908, i. e. 31,731 marks per kilometer or $12,282 per mile. This means an increase of $991,687,440 in capital cost for an increase of only 5,525 miles of line.

VI OWNERSHIP OF AMERICAN RAILWAYS

Returns to this Bureau place the number of stockholders of record at the date of the last election of directors prior to June 30, 1909, of the 368 roads reporting at 320,696. As only 182,046 of the 221,132 miles operated by these roads was covered by the capital stock, this would show 1¾ stockholders for each mile of road and would indicate that there are at least 415,000 stockholders in all the railways of the United States. Owing to the incompleteness of the returns on this subject and the fact that large blocks of stock are held in the names of associations and trustees, it is safe to estimate that the actual ownership of railway stock is distributed among at least 440,000 persons.

In 1905 the Commission reported the number of stockholders of record prior to June 30, 1904, as 327,851, but has given no later figures. It may be of interest to compare these figures with the partial reports to this Bureau since then.

Year Number Reporting Number of Stockholders

1904 1,182 roads 327,851

1906 284 " 226,986

1907 317 " 240,554

1908 315 " 315,727

1909 340 " 320,696

If the ownership of railway bonds, which is even more widely distributed than that of stocks, could be traced, it would be found that over a million investors are interested in the financial welfare of the railways. This would give to each an interest of $13,000, from which the average income is not over $520 a year.

The attempt of the Commission in 1908 to secure evidence that the control of the railways was concentrated in a few hands by calling for a statement of the "ten largest holders of voting securities" of the reporting companies having established that nowhere did they own a majority or an approach to a majority of the controlling stock, inquiry along that line was dropped in 1909.

In railways, as in any republic, the latent power is widely distributed among the many, while the administrative responsibility is necessarily entrusted to the few.

VII PUBLIC SERVICE OF THE RAILWAYS

It is the reproach of our system of government statistics of railways that their first concern is financial results, which the government takes no thought to improve, and the harrowing roll of accidents, and not the adequacy of the service and the steady development of the means of transportation. Every month, almost every week, the public is informed of the volume of traffic, and every quarter the record of casualties is told in sensational head lines. It is left for belated annual reports to record the public service of this great industry upon whose progressive efficiency every other industry in the United States depends.

It is not upon what the railways earn, but upon what they DO that the whole industrial fabric of the republic rests. It is not upon the dividends they pay but upon the traffic they carry, the net income withheld from dividends and put into improvements, that their success as carriers depends.

The Passenger Traffic.

In considering the public service of the railways it is customary to give first attention to the passenger traffic. This is not because it is the most important branch of the service but because passengers are numbered by millions, where thousands suffice in the enumeration of the shippers, who frequently mistake themselves for the entire American people.

In twenty years between June 1, 1889, and June 1, 1909, the population of the United States increased from 61,289,000 to 88,806,000, or nearly 45%. In the meantime the passenger cars provided by the railways increased from 24,586 to 46,026, or over 87%. But this does not measure the liberal provision made by the railway for the travelling public, which is more fully and accurately expressed by the amazing growth of the number of passengers carried one mile from 11,553,820,445 in 1889 to approximately 29,452,000,000 in 1909, or nearly 155%.

Here is shown an increase of cars not far short of double the increase in population and an increase in passengers carried proportionately greater than the numerical increase in cars.

In the meantime the average receipts of the traffic have declined from 2.165 cents per passenger mile in 1889 to 1.916 in 1909—a decline of over 11%, although every item involved in the service, locomotives, cars, track, stations, labor, etc., cost more. The passenger service, except as precursor to the freight service, and in certain densely populated sections, was unremunerative in 1889 and is more so now. It is maintained at the expense of the freight service by what the Railroad Commission of Wisconsin has characterized as "a species of piracy practiced upon the shippers of freight."

The salient features of the passenger service reported to this Bureau for the year 1909, as compared with the final official returns for the preceding year, are shown in the following statement:

Item Bureau Figures 1909 Official Figures 1908

Miles of line represented 221,132 230,494

Passengers carried. 854,255,337 890,009,574

Passengers carried 1 mile 28,788,855,000 29,082,836,944

Passenger revenue $551,634,278 $566,832,746

Mileage of passenger trains 491,903,107 505,945,582

Average number of passengers in train 58 54

Average cars to a train 5.3 —

Passenger car miles 2,594,508,987 2,705,659,994

Average passenger journey (miles) 33.71 32.66

Average receipts per passenger mile (cents) 1.916 1.937

According to the monthly reports to the Interstate Commerce Commission covering an average of 233,002 miles of line, the passenger revenues in 1909 were $564,302,580, or $1,943,077 less than the above revenues for only 228,164 miles of line in 1908.

The average receipts per passenger mile in 1909 are the lowest ever reported for American railways.

Taken in connection with the official returns covering the period since 1900, the above figures afford evidence of the confiscatory effect of the 2-cent passenger laws on railway revenues, as appears from the following statement:

Summary of Passenger Mileage, Revenue and Receipts per Passenger Mile, 1900 to 1909.

Year Passengers Carried One Mile Increase Over Preceding Year (Per Cent) Passenger Revenue Receipts per Passenger Mile

1900 16,038,076,200 — $323,715,639 2.003

1901 17,353,588,444 8.2 351,356,265 2.013

1902 19,689,937,620 13.4 392,963,248 1.986

1903 20,915,763,881 6.2 421,704,592 2.006

1904 21,923,213,536 4.8 444,326,991 2.006

1905 23,800,149,436 8.6 472,694,732 1.962

1906 25,167,240,831 5.7 510,032,583 2.003

1907 27,718,554,030 10.1 564,606,343 2.014

1908 29,082,836,944 4.9 566,245,657 1.937

1909 29,452,000,000 1.3 564,302,580 1.916

Increase, per cent 83.7 — 74.6 —

Here it is shown that the passenger service rendered has increased 12% more than the passenger revenues. But more significant than this is the column of yearly increases in service by percentages. This utterly explodes the theory that passenger travel is greatly stimulated by low fares—aside from some positive incentive to increased travel, such as periodical expositions, the Louisiana Purchase Exposition for instance, the effect of which is clearly traceable in the increased service in 1905, which includes the heavy travel during the months of heavy attendance, July 1 to December 1, 1904.

The 2-cent passenger laws were passed so as to become generally effective July 1, 1907, and their effect on passenger receipts during the following year was such that these receipts were actually less in 1909 than in 1907, although the service performed by the railways was over 6% greater. Had the railways received the same rate in 1909 that they did in 1907 their revenue from passengers would have been nearly $29,000,000 more than it was.

Passenger Traffic 1909-1888.

In the next statement the salient facts in regard to the passenger traffic since the Commission began collecting the data is passed under review.

Year Passengers Carried (Millions) Passengers Carried One Mile (Millions) Mileage Passenger Trains (Millions) Average Passengers in Train Average Journey Miles Passenger Revenue (Millions) Average Receipts per Passenger Mile (Cents)

1909 888 29,452 507 58 33 504 1.916

1908 890 29,082 500 59 33 566 1.937

1907 873 27,718 509 51 32 564 2.014

1906 797 25,167 479 49 31 510 2.003

1905 738 23,800 459 48 32 472 1.962

1904 715 21,923 440 46 31 444 2.006

1903 694 20,915 425 46 30 421 2.006

1902 649 19,689 405 45 30 392 1.986

1901 607 17,353 385 42 29 351 2.013

1900 576 16,038 363 41 28 323 2.003

1899 523 14,591 347 41 28 291 1.978

1898 501 13,379 334 39 27 267 1.973

1897 489 12,256 335 37 25 251 2.022

1896 511 13,049 332 39 26 266 2.019

1895 507 12,188 317 38 24 252 2.040

1894 540 14,289 326 44 26 285 1.986

1893 593 14,229 335 42 24 301 2.108

1892 560 13,362 317 42 24 286 2.126

1891 531 12,844 308 42 24 281 2.142

1890 492 11,847 285 41 24 260 2.167

1889 472 11,553 277 42 25 254 2.199

1888 412 10,101 252 40 24 237 2.349

Increase 115% 191% 101% 45% 38% 138%

1888 to 1907

Decrease 18.4

The several increases shown in the first, second, third and sixth columns of the table reflect the general advancement in passenger traffic. That of 45% in the average passengers to a train marks the progress in density of that traffic which may eventually place it on a profitable basis. In Massachusetts, where this density yields an average of 79 passengers to a train there is no demand for a two-cent rate statute, for the conditions have made a rate of 1.64 cents profitable. In the group of states consisting of Ohio, Indiana, Michigan, Illinois, Iowa, Wisconsin and Minnesota, where the density of traffic yields only 46 passengers by train, a statutory two-cent fare becomes confiscatory because it costs at least one dollar to operate a passenger train one mile and 46 times two cents is only 92 cents. Moreover the 46 passengers per train is only an average and there are as many trains that average less as more. The average has to be raised above 50 to yield any margin of profit on passenger traffic. If it were not for the density of traffic in the New England and North Atlantic group of states the average for the entire United States would be well below 46 passengers per train.

The steady increase in the distance traveled per passenger reflects the effect of trolley competition in diverting the short haul passenger traffic.

The most noteworthy feature of the seventh column is the decline of 98/1000ths of a cent in the average receipts per passenger mile between 1907 and 1909, making a new low record after hovering around the two cent mark for fourteen years. As noted above, this reduction in the average cost the railways nearly $29,000,000 on the passenger traffic of 1909.

In this connection it is interesting to recall that between 1888 and 1893 the Official Statistician, then as now Professor Adams, made the following computation of the average cost of carrying one passenger one mile for the whole United States:

1888 1889 1890 1891 1892 1893

Average cost of carrying a passenger one mile, cents 2.042 1.993 1.917 1.910 1.939 1.955

It will be observed that the average receipts per passenger mile in 1909 are below the computed cost in every one of the years above named, except 1891. When the advance in the cost of everything necessary to the service—track, labor, equipment, conveniences, speed, terminal facilities—is considered, the practical coincidence of average cost and receipts leaves no margin for legitimate profits.

Receipts from Mail and Express.

Closely associated with the passenger traffic of the railways are the mail and express services. Although principally carried by passenger trains, each has a special service of its own by mail and express trains. But all are included under the passenger service. The receipts from these two branches of the service during the last decade are shown in the following statement:

Summary of Receipts from Mail and Express, 1899 to 1908.

Mail Express

Year Revenues Percentage of Earnings Revenues Percentage of Earnings

1899 $35,999,011 2.74 $26,756,054 2.04

1900 37,752,474 2.54 28,416,150 1.91

1901 38,453,602 2.42 31,121,613 1.96

1902 39,963,248 2.31 34,253,459 2.07

1903 41,709,396 2.19 38,331,964 1.98

1904 44,499,732 2.25 41,875,636 2.12

1905 45,426,125 2.18 45,149,155 2.17

1906 47,371,453 2.04 51,010,930 2.19

1907 50,378,964 1.94 57,332,931 2.21

1908 48,517,563 2.03 58,602,091 2.45

1909 50,935,000 2.08 63,669,000 2.60

Increase, per cent 41.5 — 138.0 —

Aside from the striking contrast in the percentages of increase of revenues from these two sources, the most significant feature of this table is the reversal it shows in their respective importance from the railway revenue point of view. Prior to 1905, carrying the mails brought larger, if not more profitable, returns to the railways. Since then the returns from express have increased so much more rapidly that they are now nearly 23% more than those from mails.

If proof were needed of the absolute falsity of the charge that the railways are receiving an exorbitant rate for carrying mail, the above table of their receipts from the service in connection with the following statement of mail handled and revenues in view of the finding of the Joint Commission of Congress in 1899 would furnish it. After a thorough investigation of the subject lasting from August, 1898, to July, 1900, the Commission came to the following conclusion:

"Upon a careful consideration of all the evidence and the statements and arguments submitted, and in view of all the services rendered by the railroads, we are of the opinion that the prices now paid to the railroad companies for the transportation of the mails are not excessive, and recommend that no reduction thereof be made at this time."

The increase in the railroad service since this report was made is shown in the following statement of miles of mail transportation by railroads, the postal revenues and the number of clerks in the railway mail service since 1899:

Annual Transportation of Mail by Railroads (Miles) Postal Revenues Number of Railway Mail Clerks

1899 287,591,269 $95,021,384 8,388

1900 297,256,303 102,354,579 8,695

1901 302,613,325 111,631,193 9,105

1902 312,521,478 121,848,047 9,627

1903 333,491,684 134,224,443 10,418

1904 353,038,397 143,582,624 11,621

1905 362,645,731 152,826,585 12,474

1906 371,661,071 167,932,783 13,598

1907 387,557,165 183,585,006 14,357

1908 407,799,039 191,478,663 15,295

1909 — 203,562,383 15,866

Increase in 10 years, per cent 50.5 124.7 89.1

Compared with the increase of only 41.5% in the revenues from mail received by the railways during the same period, each one of the above percentages testifies to a positive reduction in the rate received by the railways for the service. And if the increase in weight of mail carried in 1909 were known, the contrast between the service and the pay would be more striking. In 1899 the total weight of all mail was reported as 635,180,362 pounds. In 1907 the estimates made from the special weighing placed the weight of mail carried that year at 1,290,358,284 pounds, or an increase of nearly 105% in eight years. By reference to the above table it will be seen that the railway revenues from mail between 1899 and 1907 increased only 40%. The contrast is illuminating. In its light the charge that the railways are in any way responsible for the postal deficit is grotesque.

Freight Traffic

According to the monthly returns to the Interstate Commerce Commission, the proportion of revenues from freight of the railways of the United States to total earnings from operation, for the years 1908 and 1909, receded to the unusually low figures of 68.51% and 68.88% respectively. The official summary for 1908, based on the annual returns, shows a proportion of 69.17% for that year, which probably is nearer the mark.

The annual reports to this Bureau for 1909 yield a proportion of 69.18% for last year.

Accepting this proportion taken from the annual returns as being based on the same character of reports as those from which former ratios were derived, the preponderance of freight traffic is shown in bold relief in the following statement of the ratio of its revenues to total earnings from operation, 1899 to 1909:

Year Proportion of Freight Revenues to Total Earnings Year Proportion of Freight Revenues to Total Earnings

1899 69.55% 1905 69.67%

1900 70.56% 1906 70.54%

1901 70.41% 1907 70.44%

1902 69.93% 1908 69.17%

1903 70.39% 1909 69.18%

1904 69.82%

The average proportion for the nine years preceding 1908 is seen to be slightly above 70%, and the fact that it was almost one point below 70% in 1908 and 1909 indicates that it was the freight traffic that bore the brunt of the business depression which curtailed railway revenues during those years.

In no other of the leading countries of the world does the freight traffic assume the overwhelming relative proportion that it does in the United States. In the United Kingdom it amounts to 50.35%; in France to 53.64%; and in Germany, including express and mail, to 65%. If these were classed with freight in the United States, it would raise the proportion for that traffic here to over 74%.

Freight Traffic 1909 and 1908.

The next statement presents the significant items of the freight traffic in 1909 for the roads reporting to this Bureau compared with those of the final official returns for the preceding year.

Item 1909 Bureau Figures 1908 Official Figures

Miles operated 221,132 230,494

Number of tons carried 1,441,012,426 1,532,981,790

Tons carried 1 mile 217,756,776,000 218,381,554,802

Freight revenue $1,643,028,564 $1,655,419,108

Mileage of freight trains 560,602,557 587,218,454

Number of cars in train 29.7 28.3

Average number of tons in train 388 351.80

Average haul per ton (miles) 151.1 143.83

Average receipts per ton mile (mills) 7.54 7.54

Experience has shown that in comparing these statements of averages for passenger and freight traffic, allowance has to be made for the fact that the Bureau's figures include all the great systems and are exclusive of some 13,000 miles of minor lines. It is difficult to estimate the effect of these discrepancies with anything like exactness. But complete returns invariably show a shorter mean haul and journey for the entire country than the Bureau's figures indicate and also a less train load of passengers and freight, the result being a slightly higher average for passenger and freight ton receipts per mile.

Last year from its returns the Bureau computed the passenger mile receipts at 1.933 cents and the ton mile receipts at 7.53 mills. The Commission's final figures were 1.937 cents and 7.54 mills respectively.

Freight Traffic 1909 to 1888.

In the next summary is presented a condensed statement of the significant data relating to the freight traffic for the twenty-two years that the Commission has been compiling statistics.

Summary of Tons Carried, Ton Mileage, Mileage of Freight Trains, Average Tons in Train, Freight Revenues and Average Receipts per Ton Mile.

Year Tons Carried (Millions) Tons Carried One Mile (Millions) Mileage Freight Trains (Millions) Average Tons in Train Average Haul per Ton (Miles) Freight Revenue (Millions) Receipts per Ton Mile (Cents)

1909 (a)1,486 222,900 579 388 151 $1,682 .755

1908 1,532 218,381 597 360 143 1,655 .754

1907 1,796 236,601 629 357 131 1,823 .759

1906 1,631 215,877 594 344 132 1,640 .748

1905 1,427 186,463 546 322 130 1,450 .766

1904 1,309 174,522 535 307 133 1,379 .780

1903 1,304 173,221 526 310 132 1,338 .763

1902 1,200 157,289 499 296 131 1,207 .757

1901 1,089 147,077 491 281 135 1,118 .750

1900 1,081 141,596 492 270 130 1,049 .729

1899 943 123,667 (b)507 243 131 913 .724

1898 863 114,077 503 226 132 876 .753

1897 728 95,139 464 204 130 772 .798

1896 765 95,328 479 198 124 786 .806

1895 696 85,227 449 189 122 729 .839

1894 638 80,335 446 179 125 699 .860

1893 745 93,588 508 183 125 829 .878

1892 706 88,241 485 181 124 799 .898

1891 675 81,073 446 181 120 736 .895

1890 636 76,207 435 175 119 714 .941

1889 539 68,727 383 179 127 644 .922

1888 480 61,329 348 176 128 613 1.001

Increase 209% 263% 66% 120% 18% 174%

1888 to 1909

Decrease 24.0%

(a) Figures for 1909 computed on basis of returns to this Bureau.

(b) Includes 75% of mixed train mileage, that being the practice prior to 1900.

Mark the one column which shows a decrease. This means a remission of almost exactly a quarter of a cent per ton mile in the average receipts from freight. On the tonnage carried in 1909 it meant a saving of over $540,000,000 to the shippers. In the presence of the present high price of everything carried by the railways, there is no ground for assuming that any portion of this half billion dollars withheld from the railways ever reached the ultimate consumer. On the contrary the presumption is unavoidable that it has been absorbed by the shippers and consignors, whose profits are greater than ever.

Proportion of Commodities Moved 1899-1909.

Referring to the movement of different classes of commodities in his report for 1904, the Official Statistician said: "A slight change in the ratio of freight carried for any one of the classes named may have decided results, not only upon the earnings of the roads, but upon the average rate per ton mile." But without knowing the length of the haul of the respective classes, any estimate of the effect of such variation must be largely speculative.

In 1909, for the first time the Bureau undertook to collect the information as to the tonnage of the main divisions of commodities carried. Its inquiries were limited to the tonnage originating on the several roads, and the next statement presents the results in comparison with the official figures for 1907, which are the last available:

Tonnage and Proportion of Different Classes of Commodities Moved 1909 and 1907.

1909 1907

Class of Commodity Tonnage Reported as Originating on Line Per Cent of Aggregate Tonnage Reported as Originating on Line Per Cent of Aggregate

Products of agriculture 76,955,131 9.49 77,030,071 8.62

Products of animals 21,807,486 2.69 20,473,486 2.29

Products of mines 449,938,248 55.50 476,899,638 53.39

Products of forests 83,679,179 10.33 101,617,724 11.38

Manufactures 109,625,669 13.52 137,621,443 15.41

Merchandise 35,500,833 4.38 34,718,487 3.89

Miscellaneous 33,318,272 4.09 44,824,123 5.02

Total 810,784,818 100.00 893,184,972 100.00

NOTE.—These tables fail to include nearly 200,000,000 tons unassigned.

The most significant feature of this statement is the marked decrease, absolutely and relatively, in the tonnage of manufactures carried. Great as was the decrease in the tonnage of animals carried there was an increase relatively.

The next statement shows the percentages of commodity tonnage moved since the Commission has compiled the information divided between low and high rate freight.

Summary Showing Percentage of Freight Traffic Movement by Classes of Commodities, 1907 to 1899.

Table headings:

Col A: Products of Agriculture

Col B: Animals

Col C: Mines

Col D: Forest

Col E: Total

Col F: Manufactures

Col G: Merchandise

Col H: Miscellaneous

Col I: Total

Year Low Rate Freight Percentage of Aggregate High Rate Freight Percentage of Aggregate

A B C D E F G H I

1899 11.33 3.12 51.47 10.89 76.81 13.45 4.49 5.25 23.19

1900 10.35 2.87 52.59 11.61 77.42 13.41 4.26 4.91 22.58

1901 10.76 2.91 51.67 11.67 77.01 13.75 4.16 5.08 22.99

1902 9.23 2.64 52.36 11.64 75.87 14.49 4.37 5.27 24.13

1903 9.56 2.63 51.56 11.67 75.42 14.39 4.69 5.50 24.58

1904 9.59 2.74 51.56 12.53 76.42 13.41 4.83 5.34 23.58

1905 9.03 2.54 53.59 11.24 76.40 13.60 4.32 5.68 23.60

1906 8.56 2.32 53.09 11.24 75.21 14.81 4.06 5.92 24.79

1907 8.62 2.29 53.39 11.38 75.68 15.41 3.89 5.02 24.32

1908 8.74 2.46 55.72 11.35 78.27 13.15 4.04 4.54 21.73

1909 9.49 2.69 55.50 10.33 78.01 13.52 4.38 4.09 21.99

It will be observed that the percentage of low rate freight carried in 1909 was greater than for any other year covered by these statistics. This was due more to the falling off in manufactures and miscellaneous freight than to any increased movement of low class freight.

Car Service Operations.

What the Department of Commerce and Labor calls "a convenient index to the traffic activities of the country" is found in the following comparative statement of cars handled by the various car service associations and demurrage bureaus, 1905-1909.

Number of Cars Handled by 36 Car Service Associations and Demurrage Bureaus during Twelve Months ending December, 1905-1909.

Names of Associations and Bureaus Twelve Months Ending December

1905 1906 1907 1908 1909

Alabama 752,982 744,548 779,402 631,487 700,393

Central New York 611,601 654,861 753,269 738,054 804,419

Central (St. Louis) 863,788 908,096 919,130 838,017 1,001,136

Chicago 2,166,910 2,251,763 2,282,191 2,161,767 2,790,801

Cincinnati 675,117 748,763 771,990 635,365 712,145

Cleveland (a) 640,364 796,687 1,016,003 715,764 843,609

Colorado 425,140 455,540 445,900 385,260 428,760

Columbus 394,152 443,638 469,773 363,130 401,696

East Tennessee 320,855 358,733 388,066 293,597 330,055

Indiana 912,827 962,941 1,104,855 1,077,786 1,211,793

Intermountain 116,533 158,231 184,577 153,885 201,077

Lake Superior 332,633 371,312 415,642 338,109 370,490

Louisville Car 495,095 541,945 506,528 518,955 565,748

Memphis 235,569 258,316 255,169 239,156 224,648

Michigan 687,428 766,950 838,928 696,926 859,812

Missabe Range 30,241 37,613 42,786 42,930 54,934

Missouri Valley 1,538,087 1,665,882 1,910,139 1,606,758 1,863,052

Nashville 300,602 336,110 351,572 326,385 337,234

New York and New Jersey 997,304 1,100,067 1,409,161 1,248,609 1,416,831

North Carolina 357,474 374,710 407,257 404,334 445,398

Northeastern Pennsylvania 802,072 836,443 917,936 633,655 594,231

Northern 1,467,041 1,722,345 1,736,981 1,515,706 1,636,588

Pacific 761,382 972,398 1,166,886 1,147,345 1,390,948

Pacific Northwest 647,726 727,474 888,093 845,405 987,115

Philadelphia 2,056,744 2,218,755 2,326,723 1,921,142 2,508,204

Pittsburg 3,375,530 3,295,463 2,935,299 1,977,891 2,807,256

Southeastern 813,444 862,379 853,720 823,948 981,737

Southern 273,273 301,273 492,914 513,437 649,384

Texas 932,992 977,630 986,475 1,118,622 1,302,211

Toledo 262,875 312,329 530,617 383,870 492,127

Virginia and West Virginia 818,915 866,861 893,905 778,940 942,231

Western New York 812,409 881,640 986,962 806,488 931,185

Western (Omaha) 622,868 718,872 770,470 733,346 775,828

Wisconsin 1,157,036 1,119,326 1,118,720 1,022,270 1,006,050

Total reported by 34 associations and bureaus (b) 27,659,009 29,749,894 31,858,039 27,638,339 32,569,156

Baltimore and Washington Demurrage Bureau (c)721,428 (c)740,903 (c)735,103 588,930 672,954

Illinois and Iowa Demurrage Bureau (d) 3,054,315 3,258,770 (d) 3,561,740

(a) Cleveland reported 10,016 lake coal cars for December, 1909.

(b) The Butte Terminal Association was superseded by the Montana Demurrage Bureau in May, 1908. The returns of the new bureau for the twelve months ending December, is 448,381 cars.

(c) Figures apply to larger territory; change and revision of 1907, 1908 and 1909 figures made October 1, 1909.

(d) Not reported.

VIII EARNINGS AND EXPENSES

Having in the preceding pages given the facts as to the provision made by the railways for fulfilling their obligations as common carriers, it is now in order to present a brief review of their receipts and expenditures in relation to their public service.

For the second successive year the Bureau has to warn the reader that innovations in the forms of keeping railway accounts prescribed by the Commission preclude the making of strictly accurate comparisons of the returns for 1909 with those of any preceding year. In submitting its report for 1908 the Commission made the following explanation:

"A number of important changes have been made in the annual report forms for 1908, particularly in the grouping of certain items in connection with the Income Account and the Profit and Loss Account. The figures which follow do not include returns applying to carriers classed as switching and terminal. The changes in the income account submitted in the report under consideration are so far reaching in their results, in a number of instances, as to impair direct or close comparison with figures for similar items contained in previous statistical reports."

In the comparative Income Account below, which aims to present the situation as it would result from the actual operations had such operations been conducted by a single corporation, the Bureau has sought to make the returns for 1908 and 1909 conform as nearly as possible to "previous statistical reports." It should be premised, however, that the official figures for 1908 exclude the returns from switching and terminal companies, whereas the Bureau's figures for 1909 include some portion of these returns, which are as much an integral part of the transportation service of American railways as any they perform. The official figures for 1908 do not correspond absolutely to the preliminary figures for the same year compiled from the monthly reports as reviewed in the Introduction to this report.

With this by way of explanation, the comparative Income Account for the years 1909 and 1908 is submitted:

Comparative Income Account of the Railways in the United States Considered as a System for the Years ending June 30, 1909 and 1908.

Item Amount

1909 (221,132 miles operated) 1908 (230,002 miles operated)

Passenger revenue $ 551,634,278 $ 566,832,746

Mail revenue 49,508,972 48,517,563

Express revenue 61,883,695 58,692,091

Freight revenue 1,643,028,564 1,655,419,108

Other earnings from operation 69,086,257 64,344,481

Gross earnings from operation $2,375,141,766 $2,393,805,989

Operating expenses $1,568,111,272 $1,669,547,876

Taxes 82,650,214 78,673,794

Total $1,650,761,486 $1,650,761,486 $1,748,221,670 $1,748,221,670

Net earnings from operation 724,380,280 645,584,310

Net revenue from outside operations 5,410,338 5,977,268

Operating income $ 729,790,618 $ 651,561,587

Disposition:

Net interest on funded debt $ 293,338,105 $ 282,354,001

Interest on current liabilities 22,546,779 31,835,708

Rent paid for lease of road 120,784,982 111,153,013

Additions and betterments charged to income 24,807,546 28,086,454

Appropriations to reserves and miscellaneous items 22,587,208 21,636,182

Other deductions 70,174,473 64,669,546

Total deductions $ 554,239,093 $ 539,734,904

Surplus available for dividends, adjustments and improvements 175,551,525 111,826,683

Net dividends 171,607,550 104,074,006

Balance to profit and loss $ 3,943,975 $ 7,752,677

In 1909 the "Income Account" of the railways was swelled and confused by including therein $200,725,696 of intercorporate payments, while that for 1908 includes $274,450,192 "Other Income" which, as has been formerly noted by the Official Statistician, swells the totals to a fictitious figure. It is out of this fictitious income that fictitious interest and dividends are paid, fictitious deductions made, and fictitious surpluses accumulated. If "Other deductions" in the above statement had been charged against "Other income" instead of being deducted from earnings from operation the balance to Profit and Loss for each year would have been so much larger.

What becomes of the rent paid by operating roads for leased roads is well shown in the statement included in the Commission's preliminary report of statistics for 1908 in which the amount received by the latter mentioned in the table just submitted is disposed of.

Condensed Income Account and Profit and Loss Account of Leased Roads for the Year ending June 30, 1908.

Income Account

Gross income from lease of road $111,153,013

Salaries and maintenance of organization 390,841

Taxes accrued 5,881,352

Net income from lease of road $104,880,820

Other income 5,436,129

Gross corporate income $110,316,949

Deductions from gross corporate income 62,232,508

Net corporate income $ 48,084,441

Disposition of net corporate income:

Dividends declared from current income $ 33,843,577

Additions and betterments charged to income 1,088,002

Appropriations to reserves and miscellaneous items 258,580

Total $ 35,190,159

Balance carried forward to credit of profit and loss 12,894,282

Profit and Loss Account

Credit balance in Profit and Loss Account, June 30, 1907 $ 45,852,031

Credit balance brought from Income Account, June 30, 1908 12,894,282

Total $ 58,746,313

Dividends declared out of surplus 27,550,596

Other profit and loss items—debit balance 2,006,573

Balance credit June 30, 1908, carried to balance sheet $ 29,189,144

Included under the blind item of "Deductions from gross corporate income, $62,232,508" in this statement may be mentioned rents of other roads and facilities of which these leased roads are the lessees, interest on funded debt and other interest, sinking funds chargeable to income and other deductions not specifically provided for elsewhere. In case of operating roads this item also includes the balance of hire of equipment, to which, of course, there is a credit with other operating roads.

The significant feature in this statement is the decrease in the profit and loss credit balance of $16,662,887. But this does not alter the fact that what becomes of rent paid for lease of road is no more a concern of interstate commerce than what becomes of the rent paid for warehouses or office space in any terminal. The operating roads pay all the cost of maintenance of way and equipment. The leased roads are not common carriers in any sense. They are simply distributing mediums of the rents paid them—this rent being the equivalent of interest on so much capital. As appears from the foregoing table, the expense of maintaining the organization of these leased properties amounted in 1908 to 35/100ths of 1 per cent.

Distribution of Gross Earnings.

How the gross earnings of the railways reporting to this Bureau in 1909 ($2,375,141,766) were distributed is shown in the next statement in comparison with a similar division of earnings in 1908 and 1907.

Statement of Distribution of Gross Earnings of 221,132 Miles of Line in 1909 Compared with the Percentages for 1908 and 1907.

(Gross Earnings 1909, $2,375,141,766.)

Item Amount 1909 Per Cent 1909 Per Cent 1908 Per Cent 1907

Operating expenses:

Maintenance of way and structures $ 299,757,077 12.62 13.41 13.27

Maintenance of equipment 358,747,371 15.10 15.42 14.22

Traffic expenses 48,453,707 2.08 2.00 —

Transportation expenses 799,690,194 33.67 36.24 37.50

General expenses 61,462,923 2.58 2.58 2.54

Total $1,568,111,272 66.03 69.67 67.53

Disposition of same:

Pay of employes $ 973,174,419 41.00 43.43 41.42

Fuel for locomotives 184,359,112 7.76 — 7.74

Oil and water for locomotives 19,951,184 .84 — .88

Material and supplies 219,463,028 9.24 — 11.81

Hire and rent of equipment and facilities 54,638,243 2.30 — 2.46

Loss and damage 56,379,042 2.37 — 1.83

Miscellaneous(a) 60,146,242 2.52 — 1.39

Total expenses $1,568,111,272 66.03 69.67 67.53

Taxes(b) 88,531,566 3.72 3.53 3.10

Rentals of leased roads 114,903,630 4.84 4.64 4.69

Interest on funded debt and current liabilities 315,884,884 13.30 13.34 13.14

Dividends 171,607,550 7.23 4.42 8.78

Deficits of weak companies 20,223,246 .85 1.24 .19

Betterments, reserves and sundries 47,494,754 2.00 2.07 1.50

Surplus 48,384,864 2.03 1.09 1.07

Total (gross earnings) $2,375,141,766 100.00 100.00 100.00

Gross earnings 1908 2,393,805,989

Gross earnings 1907 2,589,105,578

(a) Legal expenses, advertising and insurance are included under "Miscellaneous"; stationery and printing under "Material and Supplies."

(b) Includes taxes paid by leased lines and deducted from rent.

Owing to the fact that interest on funded debt and dividends are paid out of the common fund derived from operation and investments, the amounts devoted to these items in the above statement are necessarily computations. That they are not underestimates is proved by the fact that the surplus would not permit of larger charges for interest and dividends paid out of net earnings. Any interest or dividends materially greater than the amounts stated above, not paid out of the rents accruing to leased roads as given, must necessarily be derived from other sources than transportation revenues, and has no place in railway accounts coming under the provisions of the Act to Regulate Commerce among the several states.

IX TAXES

So far as taxes are concerned, seasons of prosperity, depression and marking time are alike to American railways. The burden of their taxation knows no recession but mounts steadily, absolutely, per mile and in proportion to gross earnings.

The 368 roads reporting to this Bureau owning 182,046 miles of line and operating 221,132 miles, of which 39,086 miles were leased, paid $82,650,214 taxes in 1909. The Commission's report for 1908 shows that the leased roads paid $5,881,352 taxes out of their rents. Putting a conservative estimate of $200 a mile on the 11,870 miles of line not represented in this report would add $2,374,000 to the above figures and bring the aggregate taxes paid by the railways of the United States in 1909 up to the striking total of $90,905,566.

How railway taxation has increased absolutely and relatively to earnings and mileage during the past twenty-one years is shown in the following statement:

Taxes Annually and Relatively, 1889 to 1909.

Year Taxes Paid Per Mile Percentage of Earnings

1909 (Official figures) $89,026,226 $382 3.73

1908 84,555,146 367 3.53

1907 80,312,375 353 3.10

1906 74,785,615 336 3.21

1905 63,474,679 292 3.04

1904 61,696,354 290 3.12

1903 57,849,569 281 3.04

1902 54,465,437 272 3.15

1901 50,944,372 260 3.20

1900 48,332,273 250 3.24

1899 46,337,632 247 3.53

1898 43,828,224 237 3.51

1897 43,137,844 235 3.84

1896 39,970,791 219 3.48

1895 39,832,433 224 3.70

1894 38,125,274 216 3.56

1893 36,514,689 215 2.99

1892 34,053,495 209 2.90

1891 33,280,095 206 3.04

1890 31,207,469 199 2.96

1889 27,590,394 179 2.86

In this table the figures for 1909 are based on the monthly reports to the Commission and are subject to revision, but they are in substantial agreement with the estimate on the returns to the Bureau.

Observe that the highest ratio of taxes to gross earnings shown in this table was 3.84 per cent in 1897, when everything relating to railways, except taxes, was prostrated under the reign of receiverships that followed the panic of 1893. It was of 1897 that the Official Statistician recorded the fact that "70.10 per cent of outstanding stock paid no dividends, and 16.59 per cent of outstanding bonds, exclusive of equipment trust obligations, paid no interest."

There is instruction and warning behind the remarkable increase in the ratio of taxation shown in the figures for 1894 to 1897. There is the reflection of similar conditions in the rising ratios of 1908 and 1909.

X DAMAGES AND INJURIES TO PERSONS

There are two items in railway accounts connected with the expense of operation that give the management most serious concern, because no means has been devised to limit or control them. In a leaflet issued by this Bureau in September last, it was estimated that the payments of American railways on account of "Injuries to Persons" and "Loss and Damage" for the year 1908 would approximate $56,700,000, or more than 2.3 per cent of their gross earnings. The Commission has not yet made public the final figures for 1908, but the returns on these accounts of the 368 roads reporting to this Bureau for the year 1909, aggregate $56,379,024, or 2.37 per cent of their gross earnings.

Divided according to the new system of accounting adopted by the Commission, these returns show the following figures:

Summary of Payments on Account of Injuries to Persons and Loss and Damage During the Year 1909.

Account Amount Per Cent of Earnings

Injuries to persons $23,456,038 .99

Maintenance of way $ 2,702,066

Maintenance of equipment 2,315,119

Transportation 18,438,853

Loss and damage 32,922,986 1.38

To freight $24,768,453

To baggage 300,869

To property 4,469,496

To live stock, etc. 3,384,168

Total $56,379,024 2.37

Unlike many of the other expenses of American railways, the burden of this "cost of operation" does not fall heaviest on the large systems. In the case of one road of moderate importance payments on these two accounts amounting to 4.8 per cent of gross earnings were enough to tip the balance into a deficit after paying interest on funded debt; one minor but prosperous road, after paying 14 per cent of gross receipts to meet these two accounts, had nothing left for dividends after paying interest, which amounted to less than 10 per cent of its earnings; and a small third road after being called on to pay 21.5 per cent of its earnings for injuries and damages had only 6 per cent of its operating revenue left to pay interest on funded debt, which called for 20 per cent of the earnings, and taxes reduced the net operating revenue to less than 4 per cent.

These are extreme cases but they illustrate how the "Injury and Damage" claims strike roads that can ill afford to pay them as well as the great systems which are the common prey of every claimant with enough of a grievance to interest an attorney who scents a contingent fee.

That the claims behind these expenses are largely meretricious is indicated, if not proved, by their disproportionate increase in the past ten years, during which the railways have expended millions in providing safeguards for their trains and employes. This increase absolutely and relatively to gross earnings is shown in the following statement:

Payments on Account or "Loss and Damage" and "Injuries to Persons" During the Decade 1899 to 1909 and Proportion to Gross Earnings.

Year Loss and Damage Injuries to Persons

Amount Per Cent of Earnings Amount Per Cent of Earnings

1899 $ 5,976,082 .455 $ 7,116,212 .541

1900 7,055,622 .474 8,405,980 .565

1901 8,109,637 .510 9,014,144 .567

1902 11,034,686 .639 11,682,756 .676

1903 13,726,508 .722 14,052,123 .739

1904 17,002,602 .861 15,838,179 .802

1905 19,782,692 .946 16,034,727 .770

1906 21,086,219 .907 17,466,864 .751

1907 25,796,083 .996 21,462,504 .829

1908 — — — —

1909 32,922,986 1.386 23,456,038 .988

Increase in 10 years, per cent 450.5 204.6 229.6 82.6

Startling as are these increases absolutely, those relatively to earnings present a condition truly alarming, for which there is no apparent relief except through a revulsion in the popular tolerance of blackmail at the expense of the railways.

In no other country in the world are the railways held up on bogus claims for damages to the extent they are in the United States. Under the strict laws of the United Kingdom, as to compensation for damages and injuries, the British railways paid less than 7/10ths of 1 per cent of their earnings for all damages, losses and injuries, or less than one-third the proportion paid by American railways on the same account.

XI LOCOMOTIVE FUEL

Despite the continuous improvements in the steam-producing capacity of railway locomotives per ton of coal, the steady advance in the cost of coal during the past ten years has more than offset the economies of locomotive construction. This is shown in the next statement, which gives the cost of locomotive fuel and its relative proportion to gross earnings and operating expenses, and also the average price per short ton of coal in the United States since 1899:

Summary of Cost of Locomotive Fuel and Proportion to Earnings and Expenses of American Railways, 1909 to 1899, with Price of Bituminous Coal per Ton During the Same Period.

Year Miles of Line Cost of Locomotive Fuel Proportion to Operating Expenses Proportion to Gross Earnings Price of Coal at Mines per Ton(a)

1909 221,132 $184,359,112 11.757 7.77 —

1908 230,494 197,385,513 12.098 8.25 1.12

1907 227,454 200,261,975 11.471 7.74 1.14

1906 222,340 170,499,133 11.119 7.34 1.11

1905 216,973 156,429,245 11.278 7.51 1.06

1904 212,243 158,948,886 11.893 8.05 1.10

1903 205,313 116,509,031 11.675 7.70 1.24

1902 200,154 120,074,192 10.776 6.96 1.12

1901 195,561 104,926,568 10.602 6.61 1.05

1900 192,556 90,593,965 9.809 6.09 1.04

1899 187,534 77,187,344 9.478 5.88 .87

(a) These figures are from the latest report of the United States Geological Survey.

The significance of this table is that it cost the railways almost one-third more for fuel per dollar earned in 1909 than it did in 1899, the increase in the proportion of fuel cost to gross earnings having been 32%, due to the advance of 31% in the price of coal at the mines during that period.

The effect of the anthracite coal strike and the Commission's award of date March 18, 1903, upon the cost of bituminous coal is seen in the sharp advances in 1902 and 1903.

The railways have not escaped the advance in their cost of living due to the increased price of fuel any more than the public at large, and so far they have not been able to shift any portion of that cost, as manufacturers and shippers have done.

XII THE SAFETY OF AMERICAN RAILWAYS

Never before in the history of railways has such a record for comparative safety been made as that recorded of American railways during the year ending June 30, 1909. Following its custom the Interstate Commerce Commission has published the report of accidents. It remains to set forth here the more remarkable record of safety.

Of the 368 companies reporting to this Bureau, no less than 347, operating 159,657 miles of line and carrying 570,617,563 passengers, went through the year without a single fatality to a passenger in a train accident.

Of the remaining 21 companies, no less than 10, operating 27,681 miles and carrying 185,447,507 passengers, only missed such perfect immunity by a single fatality each in accidents to trains. This leaves 11 roads whose misfortune it was to bear the burden of train accident fatalities to passengers during the year.

The invariable rule of the Bureau precludes the publication of the honor roll of safety. And it is well so, for it would lead to invidious comparisons, where, in such matters as accidents, all comparisons are as irrelevant as they are invidious.

But it may be stated that the roll of immunity includes roads in every section of the union, from Maine to California, several great systems operating over 7,000 miles of line each, as well as little branch lines of below ten miles of single track; lines operated with all the safety appliances known to twentieth century progress and lines operated under as primitive conditions as prevailed on this continent more than half a century ago.

This record of complete immunity, stretching over 159,657 miles of operated line, represents a mileage nearly seven times that of all British roads, and equals the aggregate of all Europe, excluding Russia but including the British Isles.

What immunity to fatalities to passengers over such a vast mileage means may be partly realized from the fact that only twice in half a century has it occurred on the 23,000 miles of British railways, and never, to the writer's knowledge, so far as statistics reveal, on the railways of any of the great divisions of Europe. Certainly it has never occurred on the aggregate railways of Europe.

It would take seven consecutive years of immunity from fatalities to passengers in train accidents on British railways to equal this phenomenal record of American roads.

In presenting similar returns for 1908, it was said that "considering the myriad units of risk involved, the record for immunity from fatal accidents to passengers is without parallel in the history of railway operation." How that record has been not only equalled but surpassed is shown in the following statement for the last two years:

Summary of Mileage and Traffic of Roads on which NO Passenger was Killed in a TRAIN ACCIDENT During the Years 1908 and 1909.

1909 1908

Number of operating companies 347 316

Mileage of these companies 159,657 124,050

Passengers carried 570,617,563 455,365,447

Passengers carried 1 mile 18,953,025,000 14,776,368,000

Tons of freight carried 1,116,877,052 916,123,410

Tons of freight carried 1 mile 151,974,495,000 121,589,399,000

Passengers killed in train accidents None None

Passengers injured in train accidents 2,585 2,695

This table proves that the area of perfect safety, so to speak, was extended over from 22% to 26% more units of risk in 1909 than in 1908, which already held the palm for immunity in train accident fatalities to passengers.

The figures given above as to passengers injured in train accidents are equally illuminating as to the safety of American railways, for they demonstrate that with the multiplication of risks in 1909 the number of injured was less by 4%. The fact that no passenger is killed in train accidents is more or less adventitious, but a reduction in the number injured testifies to a reduction in the opportunities for fatalities.

During the past ten years the average of passengers injured in train accidents on British railroads has been 580, which, considering the difference in the units of risk, is 100% higher than the above record for 159,657 miles of American railway in 1909.

The following table, which includes no less than six great systems of over 2,000 miles each, presents similar data in respect to the ten roads whose record for safety to passengers in train accidents is marred by a single fatality:

Summary of Mileage and Traffic of Roads on which ONLY ONE Passenger was Killed in a Train Accident During the Year 1909.

1909

Number of operating companies 10

Mileage of these companies 27,681

Passengers carried 185,447,507

Passengers carried 1 mile 5,778,621,000

Tons of freight carried 213,086,612

Tons of freight carried 1 mile 40,177,881,000

Passengers killed in train accidents 10

Passengers injured in train accidents 778

These figures show a mileage of 4,481 miles greater than all the railways of the United Kingdom, approximately one-half the passenger mileage, and over three times the ton mileage, with only 10 passengers killed in train accidents, to an average of 20 on British railways during the past ten years.

Further analysis of the returns to the Bureau, since data along this line has been compiled, affords the following statement of the number of roads and their mileage that have records of entire immunity from fatalities to passengers in train accidents of from one up to six years:

Statement Showing Number of Railways and Mileage on Which No Passenger Has Been Killed in a Train Accident, 1904 to 1909.

Number of Companies Miles of Line

Six consecutive years, 1904-1909 17 9,641

Five " " 1905-1909 95 44,894

Four " " 1906-1909 177 57,331

Three " " 1907-1909 228 69,713

Two " " 1908-1909 287 108,710

One year, 1909 347 159,657

Gratifying and remarkable as was the immunity from fatalities of the class under consideration in 1909, the fact that for a period of five years 95 American roads with a mileage practically double that of all British railways have carried hundreds of millions of passengers without a fatality to one of them is so at variance with the popular impression regarding the dangers of American railway travel as to seem little short of marvelous.

The impressive character of this showing will be better appreciated when it is understood that the immunity from fatalities in train accidents represents consecutive years counting back from 1909. No road has been admitted to the list where the immunity has been interrupted by a single accident. With this fact in mind, the clean slate of the 17 roads for six years challenges admiration, especially as the Bureau's reports in 1904 covered less than two-fifths of the operated mileage of the United States.

Railway Accidents in 1909.

Having thus shown the gratifying immunity from fatalities to passengers in train accidents during the year 1909, and on 9,641 miles of line since 1904, it remains to present the reverse side of the picture, which is so invariably thrust forward in official documents. Accident Bulletin No. 32 of the Interstate Commerce Commission furnishes the following data as to the number killed and injured on the railroads of the United States during the last two fiscal years:

Summary of Casualties to Persons in Railway Accidents for the Years Ending June 30, 1909 and 1908.

Class of Accident 1909 1908

Passengers Employes Passengers Employes

Killed Injured Killed Injured Killed Injured Killed Injured

Collisions 94 3,033 248 2,362 111 4,284 303 3,428

Derailments 37 2,717 227 1,448 54 3,057 260 2,065

Miscellaneous train accidents, including locomotive boiler explosions — 115 45 1,067 — 89 79 1,325

Total train accidents 131 5,865 520 4,877 165 7,430 642 6,818

Coupling or uncoupling — — 161 2,353 — — 239 3,121

While doing other work about trains or while attending switches — — 93 14,315 — — 206 15,991

Coming in contact with overhead bridges, structures at side of track, etc 2 36 76 1,229 4 37 110 1,353

Falling from cars or engines or while getting on or off 137 3,076 481 10,259 159 2,501 668 11,735

Other causes 65 3,139 1,125 18,771 78 2,677 1,493 17,326

Total (other than train accidents) 204 6,251 1,936 46,927 241 5,215 2,716 49,526

Total (all classes) 335 12,116 2,456 51,804 406 12,645 3,358 56,344

Totals in 1907:

In train accidents 410 9,070 1,011 8,924 — — — —

In other than train accidents 237 4,527 3,342 53,765 — — — —

All classes of accidents 647 13,597 4,353 62,689 — — — —

The same cause which accounted for the remarkable recession of railway casualties in 1908 was still operative in a more marked degree throughout 1909, as evidenced in the above table. Here is shown a reduction from 1907 of 68% in fatalities to passengers in train accidents and of nearly 50% in those to employes. Even in all classes of accidents the decrease is almost as striking. A drop from 647 to 335 in fatalities to passengers and from 4,353 to 2,456 in fatalities to employes, resulting from whatever cause, should be a matter for national congratulation and thanksgiving.

That the facts herein set forth should have no lesson for national authorities beyond moving them to appeal for additional control of safety appliances is nothing short of a national scandal. As for safety devices, the railways in 1907 were practically as well equipped as in 1909. The percentage operated under the protection of block signals was 27.1% in 1909 against 26.2% in 1907, a difference inappreciable as compared with the recorded difference in fatalities. The government inspectors reported the equipment in better condition in 1907 than for any previous year by fully 30%, and yet that was the worst year in the annals of railway accidents.

An English writer (H. Raynor Wilson), his vision unobscured by the propinquity of patent devices, has placed his finger on the true cause of the reduction in railway accidents in the United States in 1908 and 1909 when writing in "The Safety of British Railways" he says:

"Experience in America during the period of depression that has prevailed since the summer of 1907 shows that fewer accidents occur during such times. There are not so many goods trains, the men are less 'pushed,' they work fewer hours, and the careless and indifferent are weeded out."

But we do not have to go to England for a convincing analysis of the causes of the remarkable decrease in accidents on American railways in 1908 and 1909. In the presence of similar conditions Statistician Adams in his official report for 1894 penned the following:

"Another explanation may be suggested for this decrease in casualties to railway employes. The character of equipment used during the year covered by this report was undoubtedly of a higher grade than in previous years. A large number of old cars of abandoned type were destroyed during the year, while there was an increase in the better grades of cars equipped with train brakes and automatic couplers. This, however, is a suggestion merely, there being no statistical proof of any relation between a higher grade equipment and the decrease of accidents to employes. It is also probable, in view of the fact that liability to accident is increased by the employment of the shiftless and unskilled, that the grade of labor was raised through the discharge of so large a number of employes. This latter suggestion finds support in the fact that the ratio of casualties in the Southern States, where the grade of labor is somewhat inferior, has for a series of years been higher than in the Northern and Eastern States."

With a continuation of similar conditions as to traffic and labor throughout 1895, the Official Statistician, having not yet accepted the theory that violation of rules, carelessness and negligence are amenable to patent appliances, emphasized the concluding suggestion of his 1894 report in these terms:

"From the above comparative statement it is clear that the year ending June 30, 1895, is more satisfactory, so far as accidents are concerned, than any previous year. Reference was made in last year's report to the fact that the marked reduction in the pay roll of the railways, by which the incompetent and inefficient were dropped from the railway service, and the consignment to the scrap heap of equipment worn out or out of date, were largely responsible for the greater safety in railway travel and railway employment shown by the statistics of the year. The result of raising the character of the railway service and grade of railway equipment is yet more marked during the present year, and to this must be added the fact that the demands upon the passenger service during the present year have been somewhat decreased. It is also worthy of suggestion, although the facts yet at command are not adequate for confident assertion, that the fitting of equipment with automatic devices is beginning to show beneficial results."

From that year to this the fitting of equipment with automatic devices has proceeded with uninterrupted despatch. Where in 1895 only 27.7% of it was equipped with train brakes and 31.3% with automatic couplers, in 1907 the Commission reported 94.4% equipped with train brakes and 99% with automatic couplers. In every form of mechanical safety device the railway equipment of 1907 was incomparably better than in 1895, and yet the number of fatal accidents to employes in 1907 exceeded those in 1895 seven to three and to passengers three and four-fifths to one. In the matter of deaths in coupling accidents alone are "beneficial results" traceable to automatic safety devices. The character of the men in the service, their automatic observance of regulations, intelligence and alert devotion to duty are the best preventives of railway accidents, and the conditions prevalent after the panics of 1893 and 1907 are conducive to these conditions.

It is not likely, however, that the American people will welcome experiences, even in homeopathic doses, such as we knew in 1904, as the cure for railway accidents. But from the lessons of every depression, as read in the statistics of railway fatalities, the American people have a right to expect their representatives in federal and state legislatures to learn that the prevention of railway accidents rests on the intelligence, vigilance and experience of the man and not with the multiplication of devices. Automatic obedience to rules will prevent more accidents than all the safety devices that cumber the shelves of the Patent Office at Washington. Invention, however, is easier to the average American than plain everyday observance of rules. Besides the selling of devices to railways is a profitable business.

Accidents Increase in 1909-10.

Accident Bulletin No. 33 for the first quarter of the current fiscal year shows the unfavorable turn in casualties always attendant on reviving business. Given in brief the figures are as follows:

Casualties to Persons, July, August and September, 1909.

Class Killed Injured

To passengers:

From accidents to trains 56 2,325

By accidents from other causes 48 2,088

To employes:

From accidents to trains 137 1,427

By accidents from other causes 611 13,401

Total classes 852 19,241

Corresponding quarter 1908 734 16,545

As this report goes to press, the Commission, through the Associated Press, has issued a summary of Accident Bulletin No. 34 which states that there were 1,073 persons (105 passengers and 969 employes) killed and 21,849 injured on the steam railways of the United States during the three months ending December 31, 1909.

This shows an increase over the corresponding quarter last year of 275 killed and 5,003 injured. For the same quarter in 1907 the killed were 1,092; in 1906, 1,430; and in 1905, 1,109. As the quarter ending December 31, 1909, saw railway traffic at its highest pressure, it shows an improvement over the records of 1907, '06 and '05.

The number injured is the highest ever recorded for three months, surpassing the quarter ending September 30, 1907, however, by only 126. But as explained elsewhere, "injuries" is too elastic a term for comparative statistics.

Accidents to Other Persons.

Where the quarterly Bulletins of the Commission make no mention of the accidents to persons other than passengers and employes, the annual reports of the carriers supply the missing data as to "Other Persons." These include casualties at highway crossings, to trespassers, persons walking, standing or sleeping on the track, workmen in railway shops and all other accidents directly or indirectly connected with the transportation industry. Accidents to "Other Persons" cover over 60% of all fatalities charged to the railways and of these over 80% are to trespassers.

The returns to this Bureau show the following casualties to persons other than passengers and employes during the year ending June 30, 1909:

Class Killed Injured

Trespassers (including suicides) 4,919 5,697

Not trespassing 820 3,069

Total other persons 5,739 8,766

These figures warrant the estimate that the total number of trespassers and other persons killed and injured in the United States in 1909 through the operation of railways was approximately 5,978 and 9,132 respectively. This marks a decrease from 1908, but not nearly so great as in the case of passengers and employes.

Fatalities in Railway Accidents Since 1888.

We are now enabled to present a complete statement of the fatalities connected with the transportation industry since the Commission began compiling casualty statistics in 1888. The figures in this summary are confined to fatalities, for the reason given by the Commission that it "is well known the term 'injury,' as used in statistics of this character, is elastic." As a matter of fact the terms injury and casualty are so individually or locally indefinite and variable as to have little or no statistical value.

Passengers, Employes and Other Persons Killed in Railway Accidents from 1888 to 1908.

Year Passengers Employes Other Persons Total

Trespassers Not Trespassing

1909 335 2,456 5,124 854 8,769

1908 406 3,358 5,560 940 10,264

1907 647 4,353 5,612 1,044 11,656

1906 359 3,929 5,381 949 10,618

1905 537 3,361 4,865 940 9,703

1904 441 3,632 5,105 868 10,046

1903 355 3,606 5,000 879 9,840

1902 345 2,969 4,403 871 8,588

1901 282 2,675 4,601 897 8,455

1900 249 2,550 4,346 660 7,865

1899 239 2,210 4,040 634 7,123

1898 221 1,958 4,063 617 6,859

1897 222 1,693 3,919 603 6,437

1896 181 1,861 3,811 595 6,448

1895 170 1,811 3,631 524 6,136

1894 324 1,823 3,720 580 6,447

1893 299 2,627 3,673 647 7,346

1892 376 2,554 3,603 614 7,147

1891 293 2,660 3,465 611 7,029

1890 286 2,451 3,062 536 6,335

1889 310 1,972 Not (a)3,541 5,823

1888 315 2,070 given (a)2,897 5,282

(a) Includes trespassers.

To the most casual student this table illustrates how railway accidents increase and decline with periods of business activity and recession. The effect of the panic of 1893-94 is seen in the decrease in accidents in 1895 and 1896. The temporary slowing up in 1904 is reflected in fewer fatalities in 1905, and a drop of 11% in the business of 1908 was followed by a decreased death roll of 12% for that year and 25% in 1909.

Relation of Accidents to Passenger Traffic.

The relation of railway accidents to passenger travel is most accurately measured in the following statement of the number of passengers carried one mile to one killed in train accidents during the years for which these statistics have been compiled:

Passengers Carried One Mile to One Killed.

Year Passengers Killed in Train Accidents Passengers Carried One Mile Passengers Carried One Mile to One Killed

1909 131(a) 29,452,000,000 288,745,100

1908 165(b) 29,082,836,944 196,505,648

1907 410 27,718,554,030 72,802,600

1906 182 25,167,240,831 183,702,488

1905 350 23,800,149,436 68,000,427

1904 270 21,923,213,536 81,197,087

1903 164 20,915,763,881 127,535,745

1902 170 19,689,937,620 115,823,162

1901 110 17,353,588,444 157,759,894

1900 93 16,038,076,200 172,463,183

1899 83 14,591,327,613 175,799,127

1898 74 13,379,930,004 180,809,864

1897 96 12,256,939,647 127,676,454

1896 41 13,049,007,233 318,268,469

1895 30 12,188,446,271 406,281,542

1894 162 14,289,445,893 88,206,456

1893 100 14,229,101,084 142,291,010

1892 195 13,362,898,299 68,522,555

1891 110 12,844,243,881 116,765,853

1890 113 11,847,785,617 104,847,660

1889 161 11,553,820,445 71,762,859

(a) Of these only 102 were passengers in the ordinary sense of the term.

(b) Of these only 148 were passengers in the ordinary sense of the term.

The student has to go back to the years of continued business paralysis, 1895 and 1896, to find any record of immunity to passengers from fatalities in train accidents at all comparable with the conditions that prevailed in 1909.

Decreased Hazard to Train Crews.

Never in the history of American railways has the occupation of the men directly engaged in the operation of trains been as free from fatalities as during the year 1909. This is proved by the following statement showing the number of trainmen killed in all descriptions of accidents since the figures have been compiled, with the ratio to the number employed:

Summary Showing Number of Trainmen Killed in Railway Accidents 1889 to 1909, with Ratio to Number Employed.

Trainmen Trainmen in Yards Yard Trainmen Switching Crews All Trainmen Number of Trainmen for One Killed

1889 1,179 — — 1,179 117

1890 1,459 — — 1,459 105

1891 1,533 — — 1,533 104

1892 1,503 — — 1,503 113

1893 1,567 — — 1,567 115

1894 1,029 — — 1,029 156

1895 1,017 — — 1,017 155

1896 1,073 — — 1,073 152

1897 976 — — 976 165

1898 1,141 — — 1,141 150

1899 1,155 — — 1,155 155

1900 1,396 — — 1,396 137

1901 1,537 — — 1,537 136

1902 1,507 — — 1,507 135

1903 2,021 — — 2,021 123

1904 1,181 487 488 2,156 120

1905 1,155 386 493 2,034 133

1906 1,360 400 575 2,335 124

1907 1,507 459 630 2,596 125

1908 1,097 362 496 1,955 150

1909 789 270 313 1,372 202

The figures of the Interstate Commerce Commission have only made the division of trainmen shown above since 1904. Here again the last column proves the relation of accidents to the ebb and flow of traffic.

Freight Traffic and Accidents.

The preponderating part played by the immense freight traffic of American railways as a cause of accidents is shown in the following analysis of the sixty "prominent collisions" described in the Commission's quarterly Accident Bulletins for the year 1909:

Kind of Train in Accident Number of Collisions Killed Injured

Passenger and passenger 8 30 225

Freight and passenger 18 68 374

Freight and freight 34 47 91

Total 60 145 690

Here it will be observed freight trains were involved in 86.6% of the prominent collisions of the year and shared in responsibility for 79.3% of the fatalities. The proportion of injured in accidents to freight trains is not so great for the obvious reason that the number of persons exposed in collisions involving only freight trains is generally limited to train crews.

Causes of Train Accidents.

An examination of the causes given for the prominent collisions and derailments in the Accident Bulletins of the Commission since the passage of the Act of March 3, 1901, requiring the railway companies to make full monthly reports of all accidents affords the following general statement:

Cause Number of Accidents

Negligence, error or forgetfulness of some member of train crew 241

Recklessness, carelessness, overlooking or disregarding orders or taking chances 233

Disobedience 53

Incompetence or inexperience 20

Defect of equipment, tires, wheels, etc. 64

Defect of roadway 24

Malicious acts 27

Misadventure, washouts, landslides, cyclones, etc. 91

Undiscovered 41

Total 794

Among the prominent derailments charged against the railways in the Bulletin for April, May and June, 1909, is the following, resulting in one killed and three injured.

"Automobile running on track, derailed by running over a dog, one guest killed."

Through the inclusion in these Bulletins of accidents on trolley lines, their value as records of railway accidents is being greatly impaired. Without any information as to the number of passengers carried by the electric cars it is impossible to arrive at an accurate idea of the relation of accidents to traffic, and without this the mere record of accidents has little information value.

Accidents on British Railways.

For a second time in their history, in the year ending December 31, 1908, British railways went through a twelvemonth without killing a single passenger in a train accident, thus paralleling their record of 1901 in this respect. In the matter of passengers injured, the year 1908 showed a remarkable improvement, not only over 1901 but over any other year in the history of British railways. When it comes to the totals of casualties, however, 1908 shows little variation from the average record.

The following table shows the total number of persons killed and injured in the working of British railways, as reported to the Board of Trade for the calendar year 1908 as compared with 1901:

Class 1908 1901

Killed Injured Killed Injured

Passengers:

In accidents to trains — 283 — 476

By accidents from other causes 107 3,105 135 2,269

Total passengers 107 3,388 135 2,745

Employes:

In accidents to trains 6 164 8 156

By accidents from other causes 426 24,017 568 14,522

Total employes 432 24,181 576 14,678

Other persons:

Accidents to trains — 7 3 5

While passing over railways at level crossings 51 44 55 26

While trespassing on line (including suicides) 479 118 426 171

Not coming under above classification 59 747 82 750

Total other persons 589 916 566 952

Grand total all classes, 1908 1,128 28,485 1,277 18,375

" " " " 1907 1,211 25,975 — —

" " " " 1906 1,252 20,444 — —

" " " " 1905 1,180 18,236 — —

" " " " 1904 1,158 18,802 — —

" " " " 1903 1,262 18,557 — —

" " " " 1902 1,171 17,814 — —

" " " " 1901 1,277 18,375 — —

" " " " 1900 1,325 19,572 — —

" " " " 1899 1,340 19,155 — —

Total, ten years 12,294 205,415 — —

As one year of traffic on American railways approximates ten years on British railways, the above totals for ten years on the latter may be compared with 8769 killed and 73,052 injured on the former last year, or with 11,839 killed and 111,016 injured in 1907, the darkest year in the annals of American railway accidents.

Attention is asked to the apparently startling increase in injuries on British railways since 1905. The increase is absolutely fictitious, having resulted from "a change in the definition of a reportable accident," and not from any greater hazard in the working of British roads. This confirms the objection, expressed in the report of the British Board of Trade in 1903, to any changes in the form of tables extending over a long series of years that "admit of comparisons, which any change of form would invalidate if not destroy."

It will be perceived that the mere change in the definition of what constitutes a reportable accident increased the number of injuries reported against British railways fully 50%. This justifies the writer's view that comparisons of injuries in railway accidents are of little value. Even the same injury does not affect two persons in the same degree. One "hollers" and cries for a doctor where the other whistles and goes on with his work.

The inquiries of the Board of Trade into the causes of British railway accidents in 1908 confirm former findings that, exclusive of train accidents, in the case of passengers "they mostly arise from carelessness of the passengers themselves," and the same is true of the vast majority of accidents to employes.

Overwork and Railway Accidents.

At last the statistics of the British Board of Trade furnish what well nigh amounts to demonstration that long hours play very little part as an actual cause of railway accidents. Under the statute the Board requires reports of all instances of periods of duty in excess of twelve hours worked on British railways. For the month of October, 1908, the returns show 31,052 excess hours worked out of 2,773,891; and for October, 1909, 24,486 out of 2,695,036, or an excess of 1.12% in 1908 and .92%, in 1909.

Now, out of 861 accidents investigated in 1908, only 16, or 1.85%, occurred to men working in excess of 12 hours; and out of 804 investigated in 1909 only 9, or 1.12%. This bears out the opinion of a high English official, that experience "does not show any close connection between long hours and accidents."

The following statement shows the relation of accidents to the hours the persons involved have been on duty on British railways for a period of five years:

Hours When British Accidents Occur.

Three months to Off duty Hours on Duty when Accidents Occurred

1st 2d 3d 4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th

Sept. 30, 1908 1 20 18 19 17 15 23 19 11 11 17 14 17 3 0 0 1 0

Dec. 31, 1908 5 12 22 34 14 23 23 16 14 19 13 11 8 5 0 0 0 0

March 31, 1909 4 14 16 29 28 16 17 18 19 11 12 15 7 0 0 0 0 0

June 30, 1909 1 15 16 10 19 15 14 15 16 24 12 11 5 0 0 0 0 0

Year 1909 11 61 72 92 78 69 77 68 60 65 54 51 37 8 0 0 1 0

Year 1908 6 60 103 83 85 77 81 72 70 63 57 53 35 8 8 0 0 0

Year 1907 1 70 86 78 78 71 64 59 48 68 62 43 35 14 12 5 3 1

Year 1906 6 52 64 70 86 63 81 68 70 71 61 42 39 7 4 3 0 2

Year 1905 3 52 74 65 54 71 66 59 48 53 56 41 37 7 3 3 0 1

Five years 27 295 399 388 381 351 369 326 296 320 290 230 183 44 7 11 4 4

It will be observed that out of these 3,945 accidents investigated and reported on by British inspectors during the years 1905 to 1909, inclusive, a majority happened during the first half of the twelve hours for which the men were booked and 2.28% when they were working overtime. In no instance was the accident attributed to long hours.

Railway Accidents in Europe.

Excluding the returns of injured, for the reason that no two countries have a common definition of a reportable injury, the accidents on European railways, according to the latest reports, resulted in the following fatalities:

Killed in European Railway Accidents.

(Total mileage represented 182,459.)

Country Year Passengers Employes Other Persons Total Preceding Year

United Kingdom 1908 107 432 587 1,128 1,211

Germany 1908 105 604 644 1,353 1,558

Russia in Europe 1905 231 478 1,149 1,858 1,632

France 1907 (a)36 322 (b)301 659 627

Austria 1907 11 147 145 303 213

Hungary 1907 32 138 172 343 319

Italy 1907-8 (c)42 105 115 262 277

Spain 1907 25 64 213 302 219

Portugal 1904 — — — 55 —

Sweden 1906 10 45 57 112 105

Norway 1908 1 4 6 11 9

Denmark 1907-8 (c)1 20 9 30 22

Belgium 1907 4 72 70 146 125

Holland 1907 3 18 25 46 60

Switzerland 1907 14 45 36 95 78

Roumania 1907-8 8 42 50 100 103

Totals — 630 2,536 3,580 6,803 6,595

(a) Train accidents only; other accidents to passengers included under "Other Persons."

(b) Excluding suicides.

(c) Statistics cover State railways only.

These figures, representing a European mileage of 182,459, may be compared with those of the United States in 1897 when it had 183,284 miles of line and an accident record of 222 fatalities to passengers, 1,693 to employes and 4,522 to other persons; or even with the American record for 1909, when with a mileage 27% greater the record stood 335 fatalities to passengers, 2,456 to employes and 5,978 to other persons. The excess of fatalities to other persons in this country is due to the notorious indifference to danger and law of all classes of citizens in using railway right of way as a common thoroughfare for adults and playground for children. Despite the elevation of the tracks in Chicago, the writer has seen scores of youngsters scarcely able to walk playing on those raised tracks and laughing at the locomotives as they went shrieking by.

In all comparisons of accidents on American railways with those on foreign roads, it should be remembered that our excess of mileage and freight traffic more than balance their density of passenger traffic and that nowhere else on earth is railway right of way common to foolhardy pedestrians and creeping children.

The Railroad Commission of Indiana is to be commended for its efforts to enlist public sentiment against trespassing on railway tracks.

XIII RAILWAY RECEIVERSHIPS IN 1909

Only five railway companies, operating 859 miles of line, went into the hands of receivers during the calendar year 1909, as compared with 24 companies, operating 8,009 miles, for the preceding year. The capitalization of these five roads was $78,095,000, against $596,359,000 for those financially involved in 1908. The following statement gives the names, mileage, funded debt and capital stock of the roads for which receivers were appointed in 1909:

Mileage Funded Debt Stock

Atlanta, Birmingham & Atlantic 572 $18,533,000 $35,000,000

Alabama Terminal — 2,445,000 3,000,000

Georgia Terminal — 3,000,000 1,500,000

Yellowstone Park 32 696,000 696,000

Chicago, Peoria & St. Louis 255 5,875,000 7,350,000

Total 859 $30,549,000 $47,546,000

The number, mileage and capitalization of the railways that have failed since 1875 are as follows, the figures being from the Railroad Age Gazette:

Receiverships Since 1876.

Roads Miles Bonds and Stock Roads Miles Bonds and Stock

1876 42 6,662 $467,000 1893 74 29,340 1,781,046

1877 38 3,637 220,294 1894 38 7,025 395,791

1878 27 2,320 92,385 1895 31 4,089 369,075

1879 12 1,102 39,367 1896 34 5,441 275,597

1880 13 885 140,265 1897 18 1,537 92,909

1881 5 110 3,742 1898 18 2,069 138,701

1882 12 912 39,074 1899 10 1,019 52,285

1883 11 1,990 108,470 1900 16 1,165 78,234

1884 37 11,038 714,755 1901 4 73 1,627

1885 44 8,836 385,460 1902 5 278 5,835

1886 13 1,799 70,346 1903 9 229 18,823

1887 9 1,046 90,318 1904 8 744 36,069

1888 22 3,270 186,814 1905 10 3,593 176,321

1889 22 3,803 99,664 1906 6 204 55,042

1890 26 2,963 105,007 1907 7 317 13,585

1891 26 2,159 84,479 1908 24 8,009 596,359

1892 36 10,508 357,692 1909 5 859 78,095

Total, 34 years 712 128,498 $7,370,526

[Three figures omitted in bonds and stock column.]

XIV COST OF RAILWAY REGULATION

Nothing in the record of railway development in the United States has increased with the rapidity of the cost of their regulation under the act creating the Interstate Commerce Commission. Since the first Commission, composed of Judge Thomas M. Cooley, of Michigan, chairman, William R. Morrison, of Illinois, Augustus Schoonmaker, of New York, Aldace F. Walker of Vermont, and Walter L. Bragg, of Alabama, Commissioners, and Edward E. Moseley, Secretary, and Prof. Henry C. Adams, Statistician, to date the yearly expenditures on its account have been as follows:

1888 Five Commissioners $97,867

1889 " " 149,453

1890 " " 180,440

1891 " " 214,844

1892 " " 221,745

1893 " " 217,792

1894 " " 209,250

1895 " " 216,206

1896 " " 234,941

1897 " " 234,909

1898 " " 237,358

1899 " " 238,125

1900 " " 243,624

1901 " " 255,979

1902 " " 271,728

1903 " " 298,842

1904 " " 321,533

1905 " " 330,739

1906 " " 382,141

1907 Seven Commissioners 538,827

1908 " " 736,530

1909 " " 988,936

From this it appears that the cost of regulating American railways has increased tenfold in twenty years. Of this only $34,000 is chargeable to the increase in number and compensation for the Commission under the Hepburn Act. Of the balance it was charged by Representative Adair of Indiana in a speech in Congress last January that $450,000 annually was for "Interstate Commerce Detectives."

XV STATISTICS OF FOREIGN RAILWAYS

In the following review of the mileage and traffic statistics of the principal divisions of Europe and other countries, the information has been derived from the latest official sources wherever available, and where estimates have been resorted to as noted they have been computed from ascertained facts.

Country Year Miles Covered by Capital­ization Capitalization or Cost of Construction Passenger Revenues Freight Revenues Other Revenues Total Earnings

United Kingdom 1908 23,205 $6,382,296,742 $207,539,004 $286,786,249 $89,560,115 $583,885,371

German Empire 1908 35,558 3,903,848,400 178,100,400 412,635,760 56,715,200 647,451,360

France 1907 24,817 3,455,436,000 145,355,448 176,664,215 6,421,010 323,440,673

Russia in Europe 1905 31,545 (b)3,170,876,360 58,813,500 221,967,500 39,678,500 320,459,500

Austria 1907 13,427 1,515,576,800 41,716,800 122,214,200 5,692,800 169,628,800

Hungary 1907 11,769 741,586,200 20,836,800 54,650,400 3,327,000 78,814,200

Italy(a) 1907-8 8,762 (c)1,091,608,000 31,149,886 51,266,976 6,929,979 89,346,841

Spain 1905 8,432 649,919,610 16,215,866 34,694,555 6,190,271 57,100,692

Portugal 1905 1,425 162,385,280 4,014,196 5,322,875 423,936 9,761,000

Sweden 1906 7,938 267,408,450 10,665,270 21,051,360 815,670 32,572,300

Norway 1908 1,608 61,841,610 2,253,420 3,029,920 108,810 5,392,150

Denmark(a) 1907-8 1,191 59,806,620 5,111,910 5,266,350 680,400 11,058,660

Belgium 1907 2,871 (d)451,592,980 18,340,790 38,532,450 858,271 89,731,511

Holland 1907 2,225 191,821,000 10,978,400 10,664,400 1,300,000 22,942,800

Switzerland 1907 2,740 303,426,747 16,222,422 21,204,331 1,677,556 39,114,310

Roumania 1907-8 1,979 183,492,074 5,089,191 10,269,530 629,373 15,988,094

Canada 1909 24,104 1,608,963,337 39,073,488 95,714,783 10,268,065 145,056,336

Argentine 1907 13,690 820,433,280 19,853,760 56,597,760 7,578,240 83,029,760

Japan(a) 1908 3,982 190,173,728 18,786,895 14,651,808 1,448,881 34,887,584

British India 1908 30,809 1,336,005,760 55,132,160 84,225,280 4,088,640 143,446,080

New South Wales 1909 3,623 231,870,440 8,380,744 14,437,981 1,669,826 24,488,551

Total 255,700 $26,780,369,418 $913,630,350 $1,741,848,683 $246,062,543 $2,927,596,573

United States 1908 230,494 (e)12,840,091,462 566,832,746 1,665,419,108 171,554,135 2,393,805,989

(a) State only.

(b) Including Siberian.

(c) 1906-7.

(d) State only. 2,543 miles.

(e) Exclusive of switching and terminal companies (1,626 miles).

Operating Expenses Per Cent Expense to Revenue Passengers Carried Average Journey Miles Freight Tons Carried Average Haul (Miles) Per Cent Net Revenues to Capital Country.

$372,103,990 63.7 1,725,631,620 7.8 491,595,056 25.0 3.32 United Kingdom

476,290,080 73.6 1,361,655,150 14.1 461,296,759 61.6 4.51 German Empire

183,444,503 55.9 474,335,306 19.9 156,504,353 78.8 4.18 France

216,987,500 67.8 116,441,000 73.2 156,129,875 151.1 3.73 Russia in Europe

120,103,800 70.8 223,717,302 19.1 151,941,132 53.7 3.27 Austria

53,309,000 67.6 107,171,000 21.4 61,483,000 69.5 3.6 Hungary

73,735,071 82.6 64,276,501 25.0(f) 32,635,763 66.0(f) 1.4 (a)Italy

27,750,936 48.6 41,846,249 26.0(f) 22,662,548 69.4 4.5 Spain

4,426,236 45.3 13,446,043 20.0(f) 3,775,559 54.0(f) 3.3 Portugal

21,624,840 66.3 46,452,445 16.8 31,961,244 43.4 4.24 Sweden

3,727,620 69.1 10,679,732 15.5 4,501,455 35.4 2.55 Norway

9,344,430 84.5 20,818,639 21.7 4,726,757 55.1 2.92 (a)Denmark

38,428,809 64.4 181,216,314 14.0 72,494,073 43.5 4.72 Belgium

19,174,400 83.6 42,319,000 18.4 15,924,600 53.8 1.93 Holland