STATISTICS OF AMERICAN RAILWAYS

STATISTICS OF AMERICAN RAILWAYS

FOR THE YEAR ENDING JUNE 30 1909

PREPARED BY

SLASON THOMPSON Manager of the Bureau of Railway News and Statistics

INTRODUCTION

"The function of accounts is to record facts. True accounting is nothing more, nor nothing less, than the correct statement of what in fact has taken place, and the measurement of that fact in an appropriate figure."—Prof Henry C. Adams.

To be of the highest value, statistics must be accurate, uniform and continuous.

Nothing in the nature of statistics under official authority more confusing and misleading has ever been issued from the government printing office than those portions of the Twenty-third Annual Report of the Interstate Commerce Commission for the year ending June 30, 1909, purporting to deal with the financial results of the railways of the United States for the fiscal years 1908 and 1909.

On the first page of the Report the financial results of the last two fiscal years are set down thus:

Operating Revenues Operating Expenses Taxes Operating Income

1908 $2,461,521,345 $1,721,327,155 $83,775,869 $655,418,321

1909 2,494,115,589 1,662,102,172 89,026,226 742,987,191

The mileage operated in 1908 is stated as 228,164.80 and in 1909 as 233,002.67 miles.

On page 54 of the report the summary compiled from the monthly reports gives the following comparative figures for the same years:

Total Operating Revenues Total Operating Expenses Net Revenue Taxes

1908 $2,421,542,004 $1,687,144,975 $734,397,029 $83,775,869

1909 2,443,312,232 1,615,497,233 827,814,998 89,026,226

The mileage is the same as above, with the added information that the mileage operated at the end of the fiscal year 1908 was 229,952.36; and at the end of 1909, 234,182.70.

It will be observed that the taxes in both summaries are identical, but in one they are subtracted from net revenues and in the other they are not.

An insert facing page 54, giving the details of the monthly reports from which the table on that page is compiled, reveals the common source of both sets of returns and gives the key to the discrepancy between them. This is no less than the inclusion in the former of the revenues and expenses from "outside operations," which are excluded from the summary on page 54, in which the "net revenue" only from such outside source is mentioned and added to the net revenue from rail operations.

The impropriety and inaccuracy of such accounting becomes manifest when its effect is seen to vary the ratio of operating expenses to earnings from 69.67% to 69.93% in 1908, and from 66.12% to 66.64% in 1909.

On pages 64 and 65 appears another set of income figures for the year ending June 30, 1908. This is compiled from the annual reports of the carriers operating 230,494 miles of line, from which the mileage of switching and terminal companies is excluded. It supplies the following summary:

Year Ending June 30, 1908.

Rail operations:

Operating revenues $2,393,805,989

Operating expenses 1,669,547,876

Net operating revenue 724,258,113

Taxes 78,673,794

Net revenue from outside operations 5,977,268

Operating income 651,561,587

Ratio of operating expenses to earnings 69.72

As these figures are compiled from the only returns which furnish data respecting all the various phases of railway operation in the United States, they will be accepted in subsequent pages as the official returns for 1908.

The above figures are exclusive of returns from switching and terminal companies, whose earnings, according to the monthly reports in 1908, were $23,028,773; expenses, $16,383,481, and taxes, $1,245,261.

Grossly Exaggerated Dividends.

But these are venial variations compared to the deliberate misrepresentation as to dividends on page 62 of the report, where it is stated:

"The amount of dividends declared during the year was $386,879,362, being equivalent to 7.99 per cent on dividend-paying stock. For the year ending June 30, 1907, the amount of dividends declared was $308,088,627."

This statement is the more reprehensible because the inaccuracy of the reference to dividends in 1907 was exposed a year ago, and $115,550,909 of the 1908 total is proved to be fictitious by the line in the condensed income statement of the report (page 65) reading: "Dividends declared from current income, $271,388,453." It takes dividends from surplus, dividends by leased companies, and dividends from surplus of leased companies to make up that gross deception as to the dividends declared in 1908. And all these "several dividends" are only made statistically possible by including in current income $274,450,192 "other income" NOT derived from transportation.

It is impossible to overestimate the harmful popular effect of exaggerating the dividends paid by the railways by $80,693,665 in 1907 and $115,550,909 in 1908. The public mind does not stop to distinguish between dividends "declared," dividends paid out of "income" and net dividends actually paid out of net earnings of railway traffic.

This whole statistical structure of fictitious dividends has been built up in successive reports upon the false premise of including intercorporate payments on both sides of the income account. What the public is entitled to know is the disposition of the gross sum paid by it for transportation services—those services which the Act to Regulate Commerce was passed to regulate.

Bewildering Changes in Nomenclature.

Scattered through the official reports for 1908 the student is confronted with numerous changes in terminology, many of which are for the better, but nearly all impair that continuity of names and phrases which is so desirable in comparative statistics. For instance, the public has been taught, by official practice, to speak of the revenues of the railways derived from the transportation of passengers, freight, mail and express, as "Gross earnings from operation." The phrase is descriptive, definite and clear. For this the Commission has substituted "Rail operations, operating revenues." Former reports spoke of "Income from operation," which now gives place to "Net operating revenue." To this is added the "net revenue from outside operations," making a "Total net revenue," from which "Taxes accrued" are deducted, the remainder being "Operating income."

It will be perceived that this last phrase, which covers revenues from which operating expenses and taxes have been deducted and to which the net revenues from outside operations (sometimes they involve a deficit) have been added, comes perilously near the "Income from operation" of preceding reports.

The exclusion of the reports from switching and terminal companies in some instances, while they are included in others, introduces an element of perplexing uncertainty at every turn and really vitiates all comparisons with former reports.

The Commission itself seems to realize the bog into which the official statistician has plunged its accounts, when it says:

"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 in previous statistical reports."

And now it is proposed to throw all the accumulated statistics of twenty-two years out of consecutive gear by substituting the calendar for the fiscal year.

The writer has deemed the foregoing comments necessary to clear the atmosphere before proceeding to the introductory summary showing the salient features of the railway industry in 1909 compared with similar items in 1899 and 1889. The data for 1909 is compiled from the annual reports to this Bureau covering 221,132 miles of operated line, together with the monthly reports to the Commission of earnings and expenses of all classes of roads for that year, covering an average operated mileage of 233,002.

Summary of Railway Results in 1909, 1899 and 1889, with Percentages of Increase for each Item by Decades.

(m = 1,000; d = decrease.)

Item 1889 1899 1909 Increase over 1889 Increase over 1899

% %

Miles of line 153,385 187,534 234,182 52.7 24.9

Miles of all track 195,958 250,784 340,000 73.5 35.5

Net capitalization (m) $7,366,745 $9,432,041 $13,508,711 83.3 43.2

Net capitalization per mile of line 48,021 51,764 57,962 20.7 11.9

Net capitalization per mile of track 37,593 38,527 39,730 5.6 3.1

Gross earnings from operation (m) 964,816 1,313,610 2,443,312 153.2 86.0

Gross earnings per mile of line 6,290 7,005 10,486 66.7 49.7

Expenses of operation (m) 644,706 856,968 1,615,497 150.5 88.4

Expenses of operation per mile of line 4,204 4,570 6,933 64.9 51.7

Net earnings from operation (m) 320,101 456,642 827,814 157.9 81.2

Net earnings per mile of line (m) 2,086 2,435 3,552 70.2 45.8

Ratio of expenses to earnings 66.81 65.24 66.12 d 2.3 1.0

Receipts from passengers (m) $254,041 $291,113 $564,302 122.1 93.8

Receipts from freight (m) 642,662 913,737 1,682,919 161.8 84.1

Receipts from mail (m) 21,901 35,999 50,935 132.6 41.5

Receipts from express (m) 19,778 26,756 63,669 221.9 137.9

Passengers carried (m) 472,171 523,176 880,764 86.5 68.3

Passengers carried one mile (m) 11,553,820 14,591,327 29,452,000 154.8 101.8

Receipts per passenger per mile (cents) 2.165 1.978 1.916 d 11.5 d 3.1

Freight tons carried (m) 539,639 959,763 1,486,000 175.3 54.8

Freight tons carried one mile (m) 68,727,223 123,667,257 222,900,000 224.3 80.2

Receipts per ton per mile (mills) 9.22 7.24 7.55 d 17.0 4.2

Locomotives, number 29,036 36,703 57,220 97.0 55.9

Locomotives, weight (tons) 1,161,440 1,945,259 4,158,000 258.0 113.7

Passenger cars (number) 24,586 33,850 46,026 87.2 35.9

Freight cars, number 829,885 1,295,510 2,113,450 154.6 63.1

Freight cars, capacity (tons) 16,597,700 34,978,770 73,126,370 340.5 109.0

Average tons in train 179 243 388 116.9 59.6

Employes, number 704,743 928,924 1,524,000 116.2 64.0

Employes, compensation $389,785,664 $522,967,896 $1,003,270,000 157.4 91.8

Proportion of gross earnings 40.40 39.80 41.00 1.4 3.0

Proportion of operating expenses 60.46 61.02 62.10 2.7 1.7

Taxes $27,590,394 $46,337,632 $91,280,000 230.8 96.9

Per mile of line 180 247 390 116.6 57.9

Proportion of gross earnings 2.86 3.53 3.73 30.4 5.6

There is not a line or figure of this table, with its percentages of increase, that does not testify at once to the amazing growth of American railways and to the equally amazing economical basis upon which they render incalculable services to the American people on terms that challenge the admiration of less favored peoples.

Review of the Last Three Calendar Years.

Where the Twenty-second Annual Report of the Interstate Commerce Commission minimized the loss inflicted on the railways by the business depression of 1908, the Twenty-third Annual Report naturally, and by reason of the same cause, minimizes the substantial recovery of 1909. Where the former showed a loss in gross earnings of only $164,464,941 below the preceding year, when the actual result of the depression was nearly $300,000,000 ($298,457,576), the latter shows a recovery of only $21,770,228, when it was approximately $282,000,000 ($281,934,932).

The explanation of this discrepancy is, of course, the Commission's adherence to its own fiscal periods of statistics, which do not happen, in this instance, to coincide with the ebb and flow of adversity and prosperity. The true movement of railway traffic before, during and after the recent business depression is more nearly reflected in the following figures for the calendar years 1907, 1908 and 1909, compiled from the monthly returns to the Interstate Commerce Commission, divided into periods of six months:

Summary of Gross Earnings of the Railways During the Calendar Years 1907, 1908 and 1909, by Months and Half-Yearly Divisions.

1907 1908 1909

January $199,000,000 $173,611,809 $183,139,419

February 178,300,000 161,085,493 174,425,832

March 211,700,000 183,509,935 205,700,012

April 214,800,000 175,071,604 196,993,104

May 224,800,000 174,527,138 201,572,072

June 223,000,000 184,047,216 210,356,965

Half year $1,251,600,000 $1,051,853,195 $1,172,185,404

July $228,672,250 $195,245,655 $219,964,739

August 241,303,469 206,877,014 236,559,877

September 234,386,899 219,013,703 246,065,955

October 250,575,757 233,105,042 260,613,053

November 220,445,465 211,281,504 247,370,954

December 194,304,969 205,455,170 222,006,183

Half year $1,369,688,809 $1,270,978,038 $1,432,580,761

Total 2,621,288,809 2,322,831,233 2,604,766,165

Average mileage 227,000 231,584 234,950

Earnings per mile $11,548 $10,030 $11,086

Summary of Operating Expenses of the Railways During the Calendar Years 1907, 1908 and 1909, by Months and Half-Yearly Periods, with Ratios to Gross Earnings.

1907 1908 1909

January $134,225,000 $132,502,830 $132,659,037

February 121,500,000 123,773,906 125,229,071

March 142,425,000 128,200,065 136,086,299

April 144,990,000 124,284,164 134,612,576

May 151,740,000 123,932,568 135,846,301

June 150,525,000 124,208,561 136,160,775

Half year $845,405,000 $756,902,094 $800,594,059

Ratio 67.7% 72% 68.3%

July $152,992,445 $127,978,304 $141,613,967

August 156,837,914 131,557,475 146,175,338

September 156,631,780 137,155,143 150,621,999

October 166,999,266 144,195,330 156,628,513

November 154,150,468 136,809,421 153,043,599

December 142,631,008 136,867,622 153,699,578

Half year $930,242,881 $814,563,295 $901,782,994

Ratio 68% 64.1% 62.9%

Total $1,775,647,881 $1,571,465,389 $1,702,377,053

Ratio 67.8% 67.7% 65.4%

Net operating revenue $845,640,928 $751,365,844 $902,389,113

Taxes 83,156,188 86,872,885 92,964,510

Net operating income $762,484,740 $664,492,959 $809,424,603

Through these tables the reader is able to trace the upward course of railway receipts in 1907 to their culmination in October of that year; their rapid drop to February, 1908; through the hard summer following to the gradual recovery of 1909, until in October last they reached the highest monthly total on record.

Concurrently with this story of the depression of 1908, the tale of railway distress and of the drastic measures adopted to meet the emergency can be read in the half-yearly ratios. The ratio for the fiscal year 1906-'07 was 67.53%, and the shadow of approaching trouble was shown in an increase of this ratio to 67.7% for the first six months in the table. By December this ratio had risen to 73.40%. The enormous receipts of the autumn months held the ratio for the six months down to 68%. In February, 1908, it marked the high and ruinous figure of 76.84, and from that point the trend, due to severe retrenchments, was steadily downward until it touched 60.10% in October, 1909.

The ratio of 64.1% for the second half of 1908 is the true measure of the ability of the railways to cut their expenditures to fit the times. But they were on bed rock, as the succeeding months of small receipts proved, when the ratio went up to 72.43% in January, and averaged the high figure of 68.3% for the first six months of 1909. The heavy receipts of October and November without a corresponding expansion of expenditures resulted in the phenomenally low ratios of these months. But the severity and necessities of operating conditions in December, 1909, ran the ratio of expenses up to 69.23%.

The net earnings for the three years under consideration are apt to lead to erroneous conclusions as to the effect of the depression. Neither the loss in 1908 nor the recovery in 1909 reflects the true swing of the pendulum. The one minimizes the loss, because it conceals the cessation of all constructive work, the curtailment of betterments and improvements, and the postponement of all purchases for replacements except of the most immediate and imperative nature; the other exaggerates the recovery because of heavy receipts without the resumption of the concurrent expenditures that should attend them. The railways in the fall of 1909 were simply doing business on the margin of facilities provided during the fat months of 1907 in anticipation of a continuation of prosperous times. Some idea of the extent of this margin may be gained from the parking of 400,000 freight cars in the yards with 200,000 in the shops in April, 1908. At no time since has this margin been wholly exhausted.

But a continuation of traffic on the scale of the past six months will necessitate an immediate expenditure of $100,000,000 to $150,000,000 for the replacement of freight cars alone.

Income Account for the Calendar Year 1909.

The monthly summaries issued by the Interstate Commerce Commission from time to time afford the details for the construction of the following statement of the transportation revenues and expenses of the railways for the calendar year 1909, from which the averages per mile and the ratios have been computed on the basis of 234,950 miles of operated line.

Statement of Operating Receipts and Expenses of the Railways of the United States for the Calendar Year Ending December 31, 1909, with Amounts per Mile and Ratios.

(Average miles of line operated, 234,950.)(a)

Amount Per Mile Ratio to Gross Earnings

Receipts from:

Freight $1,796,258,314 $ 7,645 68.96

Passengers 601,722,959 2,561 23.10

Other transportation revenues 182,706,090 777 7.01

Non-transportation sources 24,080,802 103 .93

Total revenues $2,604,766,165 $11,086 100.00

Expenses:

Maintenance of way and structures $ 339,167,666 $ 1,448 13.06

Maintenance of equipment 387,155,080 1,644 14.83

Traffic expenses 53,257,408 223 2.01

Transportation 857,339,037 3,650 32.92

General expenses 65,441,053 280 2.52

Unclassified 16,809 — —

Total expenses $1,702,377,052 $ 7,245 65.35

Net operating revenues 902,389,112 3,841 34.65

Profit from outside operations 3,367,713 14 —

Net revenues $ 905,756,825 — —

Taxes 92,964,510 395 3.56

Net income $ 812,792,315 $ 3,460

(a) At the close of the year the reports covered 236,166 miles of operated line.

Unfortunately there are no similar figures for the calendar year 1907 with which comparisons may be made, but the official returns for the year ending June 30, 1907, when railway earnings reached their maximum before the panic of that year, afford the following instructive comparisons:

Year to Year to

June 30, 1907 Dec. 31, 1909

Gross earnings $2,589,105,578 $2,604,766,165

Per mile 11,383 11,086

Operating expenses 1,748,515,814 1,702,377,053

Per mile 7,687 7,245

Ratio 67.53 65.35

Net revenues 840,589,764 902,389,112

Per mile 3,696 3,841

Taxes 80,108,006 92,964,510

Per mile 367 395

It will be perceived that while the earnings in 1909 exceeded those of 1907 by over 15½ millions they were almost $300 less per mile, while the operating expenses were actually $442 less per mile. The decreased operating ratio in 1909 bears unmistakable testimony as to where the increase in net revenues came from.

With an increase of nearly 9,000 miles of line only $339,167,665 was spent on maintenance of way and structures in 1909 against $343,544,907 in 1907, and the urgent demands of returning activity made the expenditures on this account liberal in comparison with those for the year ending June 30, 1909, i. e. $311,368,083, or $1,336 per mile. It will be years before the railways recover from the economies forced on them by the loss of $300,000,000 in revenues in 1908.

Unregulated Regulation of American Railways.

Today the railways of the United States are "cribb'd, cabin'd and confined" in their services to the American people, not so much by the laws for their regulation as by the spirit in which those laws are administered. To the general tenor and purposes of statutory regulation the railways have become largely reconciled; but from the spirit in which the laws are sought to be enforced, there has to be continuous appeal to the courts and to the public sense of justice.

Regulation of railways has been persistently interpreted by political Commissions to spell reduction of rates and exacting conditions that would drain the purse of Fortunatus. Between 1889, when the Interstate Commerce Commission's statistics first became a valuable index of railway operation, and 1909, the average rate per ton mile has fallen from 9.22 to 7.55 mills. On the freight tonnage of 1909 this meant a reduction of over $372,000,000 in the yearly revenues of the railways. The railways suffered that loss from their income when they needed every cent of it to maintain the people's highway in a condition to transport the people's ever-growing traffic.

The railways lost it, but who got it? The people? Search the market reports of the land, from Eastport to San Diego, and you will find incontestable proof that not one cent of these millions reached the pockets of the people, in whose name all regulation of railways is demanded and for whose benefit all reductions are claimed. The average rate on all commodities has gone down, the price of every commodity transported by the railways has gone up. Who has pocketed the difference?

There can be only one answer—the producers, the shippers and the traders. Today nine-tenths of the increased cost of living in the United States is chargeable to this ever vigilant and aggressive coalition. For everything the railways must buy—labor, supplies, money—they have to pay the advanced prices of the day. But the protests of the shippers and the rulings of the Commission forbid their raising a rate or adopting a money-saving economy. They attempted to readjust freight rates in 1900 one-fiftieth of a cent per ton mile above a ruinously low average and the outraged shippers secured the passage of the Hepburn Act!

How the federal Commission and shippers work together for the so-called regulation of the railways is evidenced in the unbroken tenor of the decisions handed down by the Commission. Out of 357 decisions printed during the year 1908-09, no less than 219, or 61.3%, were orders granting reductions of rates or reparation for charges found comparatively excessive or unreasonable. In not one case in a score was the rate found excessive or unreasonable per se. In only one case out of the 357 was an increased rate ordered, and this was done reluctantly and as unavoidable.

Although the decisions are for the most part the unanimous finding of the Commission, the following table distributes the opinions of the year among its members into dismissals and reductions or reparations among the Commissioners writing them:

Opinion by Dismissing Complaints Granting Reductions or Reparation

Chairman Knapp 21 20

Commissioner Clement 16 29

" Prouty 13 40

" Cockerill 20 20

" Lane 20 42

" Clark 29 28

" Harlan 19 40

Total 138 219

Per cent 39.7 61.3

Some of the cases upon which the Commission is called on to pass are so trivial as to be beneath the notice of a justice's court, while others involve issues so momentous as to threaten the whole structure of railway rates by which the unparalleled prosperity of the country has been made possible.

But the number of cases reaching the Commission for adjudication is insignificant compared with the grist of informal reparation orders that runs an endless stream through its regulating rollers. In the twelve months from December 1, 1908, to November 30, 1909, these aggregated no less than 2,223 separate orders involving amounts all the way from 47 cents to $14,717.64, as seen in the following orders:

7100. Larabee Flour Mills Company v. Atchison, Topeka & Santa Fe Railway Company. September 11, 1909. Refund of $0.47 on shipment of cotton bags from Kansas City, Mo., to Hutchinson, Kas., on account of excessive rate.

3629. Lackawanna Steel Company v. Central Railroad Company of New Jersey. June 26, 1909. Refund of $14,717.64 on shipments of spiegeleisen from Newark, N. J., and Hazard, Pa., to Buffalo, N. Y., on account of excessive rates.

Multiplying these awards by the number of orders enables the reader to imagine the range of their respective pettiness or portentous possibilities.

It is doubtful if the American people, or even the Interstate Commerce Commissioners themselves, realize how the formal decisions and informal orders of the Commission are slowly but surely whittling away the safe margin of American railway profits. At the rate of two decisions every three days and forty informal orders per week, the work of incipient confiscation proceeds with remorseless enthusiasm.

With the best intentions in the world the present Interstate Commerce Commission is so enmeshed in its own anti-railway traditions, so enamored of the administrative control theories of its statistician, so covetous of unbridled, irresponsible authority to tear down where it has no constructive capacity, that anything like co-operation between the Commission and the railway management for the public good seems out of the question.

To the writer it appears that only blind rejection of facts can find any conserving element in the regulation of railways as at present administered. Signs of a helpful disposition in official acts are entirely lacking. The Senate and House calendars groan under bills for the further regulation and restriction of the railways, but not one contains a promise of relief. For not one is there a genuine public demand.

And what is the situation as this is written? It can be stated in a few lines. As a consequence of the drop of $300,000,000 in gross earnings in 1908, the railways in 1908 and 1909 cut $277,000,000 out of their expenditures. This was done mainly at the expense of maintenance of way and structures and in a cessation in the purchase of equipment, but the so-called economies of postponed expenditures permeated every line of railway extension, operation and replacement. In 1908, with 6,000 more miles of track to maintain, $18,788,217 less was spent for maintenance than in 1907, and in 1909 with 12,000 more miles of track $32,176,824 less was expended.

Between 1897 and 1907 the expenditures for maintenance of way increased from $159,434,403 to $343,544,907, or over 115%. This means an increase of approximately 8% a year, or at least $25,000,000 on present plant. Therefore at least $43,000,000 was withheld from this essential line of railway maintenance in 1908 and fully $82,000,000 in 1909, a total of $125,000,000. The saving on equipment was nearly as great and is dealt with in the body of the report.

A comparison of the income accounts for the month of October, 1907 and 1908, corroborates the foregoing statement as to the economies forced on the railways by the adverse winds of regulation and business depression.

Month of October 1907 1909

Earnings from operation $250,575,757 $260,613,053

Operating expenses 166,999,266 156,628,513

Net earnings $ 83,576,491 $113,984,540

Operating ratio 66.64 60.10

The canker worm in this, the most promising flower of returning prosperity, is revealed in the abnormal ratio of 60.10 for October, 1909, or nearly 7% below the American average. Now this 7% on the revenues of last October means that in some way over $16,000,000 less than normal was expended on American railways in that month alone. And October, 1909, was only a sample of how railways had cut expenses for 24 consecutive months.

That this should be so, with no reduction in the scale of wages or the price of supplies, is, in the view of the writer, a situation of serious national concern. Happily he is not charged with any commission to suggest how or where the deferred debt of nearly $300,000,000 to efficient railway road and equipment is to be met. But that it must be met, to place the railways in as good condition as they were before the panic of 1907, when the cry was for more, not less facilities, does not admit of question. If it, together with the advance in wages now being adjusted, is to be met out of income, only an advance in freight rates can take care of it. If out of fresh capital, it can only be coaxed from the pockets of shrewd investors by rates of interest that discount the risk attendant on the unregulated and irresponsible regulation of railway revenues, resources and responsibilities. And it is proposed to make an irresponsible Commission, unfamiliar with the necessities of the situation and unversed in the ways and means of raising capital arbiters of these necessities, ways and means.

All attempts to meet such a situation by legislation, unless it be directed to a reform of the instrumentalities of regulation, must prove ineffectual. In a broader, saner, more helpful administration of the laws already on the federal and state statute books lies the hope for the future of the great American transportation industry. "Whate'er is best administered is best."

The Bureau's Statistics for 1909.

Thus far what has been written has related almost wholly to the financial aspect of the transportation industry as presented through the monthly reports of the railways. While these in their way serve as an admirable barometer in keeping the public informed as to general business conditions throughout the Union, they throw little light upon the railway operations behind the financial results. They are absolutely dumb on the main question upon which all railway legislation and regulation should hinge—adequate and efficient public service.

In the following pages the Bureau attempts to remedy this omission, in the essential particulars for the year ending June 30, 1909. The reports from which its summaries have been compiled were received almost a month earlier this year than last, but the publication of the Bureau's statistics has been delayed in order to make the usual comparisons with the Official Statistics for 1908. The writer is advised from Washington that the fault for this unusual delay rests with the Government printer—whose office is overwhelmed with Congressional and departmental work—and not with the Interstate Commerce Commission or its Bureau of Statistics and Accounts.

For the first time, the reports to this Bureau cover the division of freight movement into the seven chief commodities; the separation of revenues from Mail and Express; the distribution of expenses for injuries and damages, and the summaries of expenses for maintenance of way and equipment, traffic expenses, transportation expenses and general expenses. It is believed that with the addition of these accounts the annual report of the Bureau has become so comprehensive as to warrant its publication hereafter at an earlier date, without waiting on the publication of the official statistics for the preceding year.

This year the Bureau has received reports from 368 roads operating 221,132 miles of line or approximately 94.4% of the mileage and carrying over 97% of the traffic of the country. Last year reports were received covering 216,460 miles. The increase of 4,672 miles fairly represents the actual increase of railway mileage in the United States for the twelve months.

In presenting these statistics, the writer has endeavored to make them as colorless summaries of facts as an earnest desire to arrive at the truth permits. Such comment as accompanies them will be confined to comparisons and elucidation and not to the furtherance of any personal theories.

For the sake of brevity, the Interstate Commerce Commission will be referred to herein as the "Commission"; the Commission's "Statistics of Railways in the United States" as "Official Statistics" and "the year ending June 30th" will be implied before the year named unless otherwise specified.

The statements as to foreign railways are compiled from the latest official sources available.

Here the writer wishes to record his personal appreciation of the assistance rendered by the executives and accounting officials of the railways, whose co-operation has made this report possible. In the midst of increasing burdens imposed on them in reporting to federal and state commissions and legislatures, the requests for information from this Bureau might have seemed excusably negligible. The completeness of the report itself testifies to the cordiality with which the Bureau's work is viewed.

Acknowledgments are also due to Federal and State officials for their uniform courtesy in responding to the many requests from this Bureau, and the writer has been much gratified to receive from the chief government railway official of one foreign country the assurance that he considers its Annual Report "one of the most comprehensive and useful compilations of statistical matter relating to railways that has come into his hands."

Slason Thompson.

Chicago, April 30, 1910.

I MILEAGE IN 1909

According to the preliminary income report of the Interstate Commerce Commission for the year ending June 30, 1909, compiled from the monthly returns, the average railway mileage operated in the United States during the year was 233,002.67 miles; and the total mileage operated at the end of the year was 234,182.70.

The former total is made up of:

Large roads operating 251 miles or more 214,916.86 miles

Small roads " 250 " or less 16,801.52 "

Switching or terminal companies 1,284.29 "

Total 233,002.67 miles

The returns to this Bureau, compiled from the annual reports for the same year, cover 221,132 miles, against 216,460 in 1908, an increase of 4,672 miles. Reports to the Commission for December, 1909, showed a total operated mileage of 236,166 miles.

In its report dated December 21, 1909, the Commission stated that for the year ending June 30, 1908, substantially complete returns had been received for 230,494 miles of line operated, including 8,661.34 miles used under trackage rights. These are the official figures of mileage for 1908, which will be used in all subsequent comparisons with the Bureau's figures for 1909—the latter, however, may include some switching and terminal mileage excluded from the former.

Of the mileage reporting to this Bureau, 8,927 miles were operated under trackage rights, leaving a net of 212,205 miles of line covered by capitalization and rental.

Assuming that the total operated mileage in the United States at the close of the fiscal year 1909 was 234,182, the complete returns to this Bureau cover approximately 94.4% of the mileage and 97% of the traffic of all the railways in the United States. No attempt has been made, or will be made, to segregate the returns of switching and terminal companies from the Bureau's figures, of which they are an integral part.

The first summary under this table presents the operated mileage reported to this Bureau in 1909 and 1908, classified by states and territories in comparison with the official figures of mileage owned in 1908, with relation to area and population of the respective territorial divisions:

Summary of Railway Mileage in the United States by States and Territories in 1909, 1908 and 1907 and its Relation to Area and Population.

Bureau's Figures 1907(a) Miles of Inhabitants

1909 1908 Owned Line per 100 per

Operated Operated (Official) Sq. Miles of Mile of

Miles Miles Miles Territory Line

Alabama 4,917 4,644 4,840 9.77 406

Arkansas 3,996 3,758 4,861 9.21 301

California 6,376 6,251 6,664 4.38 243

Colorado 5,229 5,096 5,295 5.11 114

Connecticut 930 936 1,016 20.96 999

Delaware 342 343 336 17.14 615

Florida 3,117 2,960 3,970 7.39 148

Georgia 6,485 6,293 6,783 11.65 361

Idaho 1,651 1,568 1,731 2.09 102

Illinois 13,216 12,796 12,137 21.80 442

Indiana 7,774 7,326 7,259 20.24 388

Iowa 9,923 9,865 9,867 17.87 252

Kansas 9,125 9,175 8,936 10.94 184

Kentucky 3,229 3,205 3,441 8.71 690

Louisiana 3,860 3,805 4,558 10.43 326

Maine 1,984 1,750 2,093 7.19 361

Maryland 1,325 1,278 1,432 14.90 906

Massachusetts 2,079 2,079 2,112 26.45 1,492

Michigan 8,384 8,312 8,941 15.63 302

Minnesota 8,258 8,100 8,246 10.46 236

Mississippi 3,545 3,281 4,081 9.00 416

Missouri 8,200 8,141 8,039 11.79 429

Montana 3,537 3,406 3,307 2.28 91

Nebraska 6,099 6,083 5,932 7.76 200

Nevada 1,621 1,540 1,700 1.55 28

New Hampshire 1,211 1,211 1,248 13.86 369

New Jersey 2,046 2,046 2,250 30.59 917

New York 8,106 7,989 8,472 17.86 957

North Carolina 3,567 3,332 4,385 9.21 473

North Dakota 4,026 4,025 3,906 5.56 118

Ohio 8,951 9,041 9,261 22.75 502

Oklahoma 5,572 5,532 2,821 7.84 202

Oregon 1,687 1,600 1,939 2.07 237

Pennsylvania 10,532 10,224 11,259 25.25 621

Rhode Island 192 190 208 20.11 2,262

South Carolina 2,892 2,975 3,271 11.02 451

South Dakota 3,646 3,568 3,703 4.82 122

Tennessee 3,283 3,528 3,725 9.01 600

Texas 12,847 12,932 12,932 4.95 263

Utah 1,820 1,772 1,957 2.42 156

Vermont 941 926 1,071 11.98 351

Virginia 4,099 3,900 4,056 10.43 495

Washington 3,353 3,207 3,767 5.69 152

West Virginia 2,846 2,777 3,264 13.62 320

Wisconsin 7,039 6,900 7,459 14.01 304

Wyoming 1,429 1,414 1,526 1.56 70

Arizona 1,705 1,684 1,928 1.71 71

New Mexico 2,782 2,521 2,965 2.42 74

District of Columbia 51 42 31 53.53 9,709

Canada(b) 1,343 1,273

United States 221,132 216,460 227,671 7.74 370

(a) Official mileage by States not available for 1908.

(b) Mileage operated in Canada by American roads.

Summary of Railway Mileage in the United States by States and Territories in 1909 and 1908 and its Relation to Area and Population—Continued.

1908 Owned (Official) Miles Miles of Line per 100 Sq. Miles of Territory Inhabitants per Mile of Line

United States, 1909 234,182 7.88 379

" " 1908 230,494 7.76 378

" " 1907 227,671 7.74 370

" " 1906 222,575 7.55 373

" " 1905 217,018 7.34 378

" " 1904 212,577 7.20 379

" " 1903 207,187 7.00 384

" " 1902 201,673 6.82 388

" " 1901 196,075 6.64 391

" " 1900 192,941 6.51 393

" " 1899 188,277 6.37 395

" " 1898 185,371 6.28 394

" " 1897 182,920 6.21 390

" " 1896 181,154 6.15 384

" " 1895 179,176 6.08 382

" " 1894 176,603 6.02 379

" " 1893 170,332 5.94 377

" " 1892 165,691 5.78 380

" " 1891 164,603 5.67 380

" " 1890 159,272 5.51 384

The column of operated mileage in 1909 testifies to the comprehensive character of the reports to this Bureau, while the last two columns demonstrate how railway extension has kept pace with the growth of the country. Territorially the United States now has 43% more railway mileage than it had in 1890, and the last column proves that the mileage is greater proportionately to the population than it was twenty years ago. The contrast in the density of population per mile of line between Rhode Island and Nevada is illustrative of the startling diversity of conditions under which railways are operated in the United States.

Railways Built in 1909.

The new mileage reported as constructed in 1909 tallies more nearly than usual with the increase in mileage for which operating reports are received. As reported in the Railway and Engineering Review, February 19, 1910, the new mileage by states was as follows:

Miles of Line Constructed During the Calendar Year 1909 by States and Territories.

State Miles Built 1909 State Miles Built 1909

Alaska 48 Montana 125.08

Alabama 35.62 Nebraska 13.15

Arkansas 155.20 Nevada 304.50

Arizona 48.02 New Hampshire 1.55

California 248.60 New Jersey 33.95

Colorado 98.13 New Mexico 35.00

District of Columbia 3.81 New York 52.20

Florida 102.81 North Carolina 111.92

Georgia 138.70 Ohio 18.41

Idaho 50.49 Oklahoma 163.20

Illinois 23.45 Oregon 158.38

Indiana 10.82 Pennsylvania 106.66

Kansas 87.21 South Carolina 66.14

Kentucky 101.52 Tennessee 94.26

Louisiana 131.57 Texas 650.61

Maine 87.00 Utah 28.00

Maryland 4.68 Virginia 85.75

Michigan 77.58 Washington 209.84

Minnesota 164.70 West Virginia 131.78

Mississippi 36.60 Wisconsin 68.30

Missouri 11.84 Wyoming 15.57

Total 4,040.60

Second track, sidings, etc. 1,515.07

Total all tracks 5,555.67

Railway Mileage of Foreign Countries.

The ratios of railway mileage to area and population in the table on page 19 may be compared with those of foreign countries for 1907 in the following statement:

Summary of the World's Railways and Ratio of the Mileage to the Area and Population of each Country in 1907.

From Archiv fur Eisenbahnwesen, May-June, 1909.

Countries Miles 1907 Miles of Line per 100 Square Miles Inhabitants per Mile of Line

Europe:

Germany 36,065 17.2 1,563

Austria-Hungary 25,852 10.0 1,818

Great Britain and Ireland 23,084 19.0 1,785

France 29,716 14.2 1,316

Russia in Europe and Finland (2,057 miles) 36,279 1.8 2,941

Italy 10,312 9.3 3,125

Belgium 4,874 42.8 1,370

Netherlands and Luxemburg 2,230 15.0 2,564

Switzerland 2,763 12.2 1,205

Spain 9,227 4.8 1,923

Portugal 1,689 4.7 3,226

Denmark 2,141 14.3 1,150

Norway 1,606 1.3 1,390

Sweden 8,321 4.8 617

Servia 379 2.1 6,666

Roumania 1,994 3.2 2,941

Greece 771 3.1 3,125

Turkey in Europe, Bulgaria and Rumelia 1,967 1.9 5,000

Malta, Jersey and Isle of Man 68 16.1 5,273

Total for Europe, 1907 199,345 5.3 1,887

" " " 1906 196,437 5.2 1,993

" " " 1905 192,507 5.1 2,084

" " " 1904 189,806 5.0 2,084

" " " 1903 186,685 5.0 2,084

" " " 1902 183,989 4.9 2,127

" " " 1901 180,817 4.8 2,174

" " " 1900 176,396 4.7 2,220

" " " 1899 172,953 4.6 2,220

" " " 1898 167,614 4.4

" " " 1897 163,550 4.3

" " " 1896 160,030 4.2

Increase in eleven years 39,315

Other Foreign Countries in 1907:

Canada 22,447 0.6 373

Mexico 13,612 1.8 321

Brazil 10,713 .32 1,408

Argentine Republic 13,673 1.3 356

Peru 1,332 .32 3,449

Uruguay 1,210 1.8 769

Chili 2,939 1.0 1.123

Central Russia in Asia 2,808 1.3 2,777

Siberia and Manchuria 5,664 .11 1,020

Japan 5,012 3.1 9,090

China 4,162 0.1 85,820

British India 29,892 1.4 10,000

New Zealand 2,570 2.4 324

Victoria 3,428 3.9 351

New South Wales 3,471 1.1 394

South Australia 1,924 0.16 188

Queensland 3,404 0.5 142

Egypt 3,445 1.0 2,860

Cape Colony 3,804 1.3 463

Natal 976 3.5 793

Transvaal 1,361 1.1 636

Recapitulation:

Total for Europe 199,345 5.3 1,889

" " America 302,927 2.3 524

" " Asia 56,283 0.38 15,540

" " Africa 18,516 0.16 8,014

" " Australia 17,766 0.6 279

" " the whole world 594,837 — —

Of the above total railway mileage for the whole world, no less than 332,360 miles, or nearly 56%, is operated in English speaking countries, the mileage of the United States alone being over 35% of the whole.

To the most casual student the disparity between the density of population to railway mileage in the United States and Europe of one to five, is as apparent as it is significant of our necessity for so much greater provision of transportation facilities per capita. If our per capita mileage were relatively the same as that of Europe, the United States would be set back to the transportation facilities of 1869, when the completion of the Union Pacific raised its total mileage to 47,254 miles. But even then it had a ratio of one mile of railway to 810 inhabitants, which was higher than Europe's ratio today.

Clearly there is nothing in the statistics of the railway mileage of the world to account for the epidemic of railway phobia that periodically convulses the people and legislatures of the United States of America.

Mileage of All Tracks in 1909.

Of almost equal importance to the mileage of American railways are the auxiliary tracks upon which the extent and efficiency of their public service so largely depends. As the next statement shows, these continue to increase more rapidly than the miles of line.

Summary of Mileage of Single Track, Second Track, Third Track, Fourth Track and Yard Track and Sidings, in the United States, 1897 to 1909.

Year Single Track Second Track Third Track Fourth Track Yard Track and Sidings Total Mileage Operated (all tracks)

1909 (94.4%) Bureau 221,132 20,637 2,186 1,491 80,669 326,115

1908 Official (a)230,494 20,209 2,081 1,409 79,452 333,646

1907 227,455 19,421 1,960 1,390 77,749 327,975

1906 222,340 17,396 1,766 1,279 73,760 317,083

1905 216,973 17,056 1,609 1,215 69,941 306,796

1904 212,243 15,824 1,467 1,046 66,492 297,073

1903 205,313 14,681 1,303 963 61,560 283,821

1902 200,154 13,720 1,204 895 58,220 274,195

1901 195,561 12,845 1,153 876 54,914 265,352

1900 192,556 12,151 1,094 829 52,153 258,784

1899 187,543 11,546 1,047 790 49,223 250,142

1898 184,648 11,293 1,009 793 47,589 245,333

1897 183,284 11,018 995 780 45,934 242,013

(a) To the figures for 1908 should be added the 1,626 miles of main track and 2,085 of yard track and sidings of switching and terminal companies, excluded by the Official Statistician, raising the total of all tracks to 337,357.

By adding the auxiliary trackage reported to this Bureau for 1909 to the 234,182 miles of operated line reported to the Interstate Commerce Commission for June 30 of that year, it appears that the total of all tracks on that date was upwards of 340,000 miles.

It will be observed that in every instance the mileage of second, third and fourth track and yard track and sidings reported to this Bureau in 1909, the year of comparative stagnation in railway construction, exceeded the complete mileage of these tracks in 1908 reported to the Commission.

The above table (with the Commission's figures for single track) shows that where there has been an increase of only 50,798 miles of single track, or 27.7%, in twelve years, all trackage has increased over 98,000, or 42%, during the same period. It also shows that during the same twelve years second track has increased 87%; third track 120%; fourth track 91%, and yard track and sidings 76%.

Mileage and Track of British Railways.

As English railways are so often brought into comparison with American railways, it is well to know the total of all tracks in the United Kingdom as well as the mileage. Both are given in the following statement, compiled from returns to the British Board of Trade for the years ending December 31, 1904 to 1908:

Description of Track 1908 1907 1906 1905 1904

Single track (miles) 23,209 23,112 23,063 22,870 22,601

Second track 13,048 12,963 12,934 12,819 12,692

Third track 1,435 1,385 1,363 1,324 1,271

Fourth track 1,141 1,103 1,091 1,067 1,030

Fifth track 208 195 186 170 153

Sixth track 122 117 111 97 85

Seventh track 59 51 47 40 35

Eighth to twentieth tracks 94 87 75 44 34

Sidings 14,353 14,145 14,032 13,891 13,733

Total trackage 53,669 53,189 52,904 52,322 51,634

Here it will be perceived the mileage of British roads increased only 608 miles and the trackage only 2,035 miles in four years. During the same period, as shown in the preceding table, the mileage of American railways increased 18,251 miles and their total trackage 36,543. It is this continuous demand for increased mileage and trackage in the United States, to say nothing of equipment, that differentiates the problem confronting American railway management from British. In the United States we need more railways and still more railways, and the problem is to get the capital on reasonable terms to provide the facilities.

In railroad mileage alone we have over ten times that of the United Kingdom and we have more than six times as many miles of track. We have enough trackage in our yards and sidings to double track all the British railways, with enough over to put four tracks where they have only two tracks now.

II EQUIPMENT

An Object Lesson in Equipment.

No car shortage occurred to interrupt the orderly movement of railway traffic during the fiscal year 1908-09. On the contrary, there was an unprofitable surplus of cars throughout the year, ranging from 110,912 in September, 1908, to 333,019 in January, 1909. From this high figure the surplus was slowly reduced by the demands of traffic until subsequent to the close of the fiscal year, in September last, it reached a practical level of shortages and surpluses. During the year there was an average of 150,000 freight cars in the shops, where in times of ordinary activity the mean would be in the neighborhood of 100,000.

These conditions, which prevailed since November, 1907, account for the greatly reduced purchases of rolling stock during the years 1908 and 1909 shown in the following record of locomotives and cars built in the United States during the past eleven years:

Eleven Years' Output of Cars and Locomotives.

From the Railroad Age-Gazette.

Year Locomotives Number Passenger Cars Freight Cars

1909(a) 2,887 2,849 96,419

1908(a) 2,342 1,716 76,555

1907(a) 7,362 5,457 284,188

1906(a) 6,952 3,167 243,670

1905(a) 5,491 2,551 168,006

1904 3,441 2,144 60,806

1903 5,152 2,007 153,195

1902 4,070 1,948 162,599

1901 3,384 2,055 136,950

1900 3,153 1,636 115,631

1899 2,475 1,305 119,886

Total 46,709 26,835 1,617,905

(a) Includes Canadian output.

Between 1898 and 1908 the Interstate Commerce Commission reported an increase of 21,464 locomotives, 11,697 passenger cars, and 856,999 freight and company cars. Allowing for the Canadian output in the above table, this would show 22,742 more locomotives, 13,821 more passenger cars, and 674,023 more freight cars built in ten years than are accounted for in the official returns. Roughly speaking, these last figures represent the number of locomotives and cars worn out beyond repair or destroyed that have to be replaced annually. It means that provision has to be made every year for the purchase of new equipment amounting to approximately 5% of locomotives and passenger cars and 4% of freight cars in order to maintain the equipment numerically, irrespective of the sums spent on maintaining the remainder in serviceable condition.

On the equipment reported by the Commission for 1908 this would necessitate the following outlay for replacement alone:

Number Needed for Replacement Average Cost Total Cost

Locomotives 57,698 5% = 2,884 $15,000 $43,260,000

Passenger cars 45,292 5% = 2,214 6,000 13,284,000

Freight cars 2,100,784 4% = 84,031 1,000 84,000,000

Company cars 98,281 3,931 500 1,965,500

Total cost for replacing equipment $142,509,500

It is probable that the computed percentage for the replacement of locomotives and passenger cars is too high and that for freight cars too low. This is the opinion of operating officials. If so, it would amount to a set off and the aggregate would still be approximately $142,000,000 to be expended annually for new equipment to take the place of old, worn out and discarded rolling stock. Conditions forbade the expenditure of any such sum in 1908 and 1909.

Number and Capacity of Locomotives for Eight Years, 1909 to 1902.

Next follows a summary giving the number and capacity of locomotives for the seven years since the Commission has included capacity in the published returns:

Year Number Tractive Power (Pounds) Weight without Tender (Tons) Average Weight (Tons)

1909 (94.4% represented) 55,495 1,421,114,798 4,033,309 72.7

1908 Final returns 57,698 1,519,568,551 4,071,554 71.5

1907 55,388 1,429,626,658 3,828,045 69.1

1906 51,672 1,277,865,673 3,459,052 66.9

1905 48,357 1,141,330,082 3,079,673 63.6

1904 46,743 1,063,651,261 2,889,492 62.1

1903 43,871 953,799,540 2,606,587 59.4

1902 41,225 839,073,779 2,323,877 56.3

Increase seven years to 1909 34.6% 69.4% 73.6% 29.1

Complete returns will raise the totals for 1909 approximately to 57,704 locomotives of 1,465,070,000 pounds tractive power and 4,158,000 tons weight, exclusive of tenders. These figures bear out the conclusion expressed above that the purchase of new locomotives in 1909 was barely sufficient to replace those abandoned or destroyed during the year. The loss, however, was in a measure made good by the greater weight of the new engines. As the average weight of locomotives in 1899 was approximately 53 tons, the figures just given indicate an increase of nearly 114% in the weight of all locomotives during the decade.

In connection with the estimate of $15,000 put on locomotives in this report, it is of interest to reproduce the return to the legislature of New South Wales of the cost of engines built in the railway shops at Sydney recently. The figures refer to 6-wheel-coupled heavy mail and express engines weighing, with tender, 163,128 pounds, as published in the Railway Age-Gazette, December 3, 1909:

Details of Locomotive Costs.

10 Engines Cost Per Engine Per Ton(a)

Direct charges:

Materials $117,462.77 $11,746.28 $161.29

Wages 76,484.23 7,648.42 104.99

Total $193,947.00 $19,394.70 $266.28

Indirect charges:

Percentage of shop charges (exclusive of superintendence) on wage basis in each shop, 37.84% 28,943.79 2,894.38 39.74

Superintendence, on wage basis, 3% 2,294.51 229.45 3.10

Interest on capital cost of new shop and machinery, including land 4,850.52 485.05 6.63

Proportion of interest on capital cost of old shops on locomotive work produced for new engines 5,449.53 544.95 7.45

Depreciation of machinery and plant, 2% on capital cost 5,149.99 515.00 7.03

Total indirect charges $46,688.34 $ 4,668.83 $ 63.95

Total charges $240,635.34 $24,063.53 $330.23

(a) Ton of 2,240 lbs.

Applied to a Mallet articulated compound locomotive, such as that built for the Erie weighing 410,000 pounds on the drivers, the rate per ton paid by the government of New South Wales would make it cost over $60,000. It did not cost any such sum, but the Australian experience is a straw which shows how the cost of locomotives is soaring. American railways find it necessary economy to build engines whose average weight is well above that built in the government shops at Sydney.

Passenger and Freight Cars.

During the same period, 1902 to 1909, covered in the table relating to locomotives, for which alone full data is available, the increase in the number of passenger cars and freight cars, and in the capacity of the latter, is shown in the following statement:

Year Passenger Service Freight Service Average tons Company's Service Number

Number Capacity (tons)

1909 (97% represented) 44,665 2,050,049 71,028,266 34.6 96,739

1908 (Final returns) 45,292 2,100,784 73,526,440 35 98,281

1907 43,973 1,991,557 67,216,144 34 91,064

1906 42,282 1,837,914 59,196,230 32 78,736

1905 40,713 1,731,409 53,372,552 31 70,749

1904 39,752 1,692,194 50,874,723 30 66,615

1903 38,140 1,653,782 48,622,125 29 61,467

1902 36,987 1,546,101 43,416,977 28 57,097

Seven years' increase(a) 20.8% 35.9% 64.0% 23.5% 69.6%

(a) Final returns for 1909 will raise these percentages materially.

It is in the increased capacity of locomotives and cars rather than in their numbers that the seeker after truth will find the explanation of how American railways have been able to handle freight traffic that has increased in volume over 80% in ten years where numerically the increase of equipment has been less than 60%. During that period the average capacity of the freight car has increased from 27 to nearly 35 tons, accounting for an aggregate increase of 109.6%.

Between 1899 and 1909 the population of the United States increased from 74,318,000 to 88,806,000, or 19.5%. (On April 1, 1910, the treasury estimate was an even 90,000,000.) In the same ten years the number of passenger cars increased over 36%, accompanied by a steady advance in their size, strength and conveniences.

Between 1902 and 1907 the Official Statistics furnish the following information showing the gradual transformation taking place in the number and capacity of freight cars:

Number and Capacity of Different Sizes of Freight Cars, 1902-1907.

Class Capacity Pounds 1902 1907 Increase or Decrease Per Cent

I 10,000 5,122 4,277 Dec. 16.5

II 20,000 15,615 7,244 " 53.5

III 30,000 46,353 10,132 " 78.1

IV 40,000 327,342 204,583 " 37.5

V 50,000 246,684 178,827 " 27.5

VI 60,000 634,626 802,187 Inc. 26.4

VII 70,000 22,493 34,652 " 53.6

VIII 80,000 158,179 452,070 " 185.9

IX 90,000 310 5,054 " 1,527.1

X 100,000 48,834 285,241 " 484.3

XI 110,000 389 1,476 " 279.4

XII 120,000 43 60 " 39.5

All over 120,000 2 214 —

The line of cleavage between former and modern railway methods of handling freight is clearly shown in the above table to lie between cars of 25 and 30 ton capacity. The former and all of less capacity are on the decline, whereas the latter and all of greater capacity are on the increase. Numerically the 30-ton cars still exceed those of 40 and 50 tons, but already they are exceeded by the combined capacity of the latter.

The Surplus of Freight Cars.

For two years (28 months as this is written) the reports of the Committee on Car Efficiency of the American Railway Association show that the supply of freight cars has been in excess of the demand. In other words, the railways during that period were paying interest on a considerable percentage of unremunerative equipment, besides the cost of its maintenance. The rise and fall of this surplus of freight cars is set forth below:

Freight Car Shortages and Surplus by Months from January, 1907, to April, 1910.

Month 1907 1908 1909 1910

Shortage Surplus Surplus Surplus

January 110,000 342,580 333,019 52,309

February 150,000 322,513 301,571 45,513

March No data 297,042 291,418 45,672

April 100,000 413,605 282,328 84,887

May 60,000 404,534 273,890

June 40,000 349,994 262,944

July(a) 20,000 308,680 243,354

August(a) 15,000 253,003 159,424

September 60,000 133,792 78,798

October 90,757 110,912 35,977

November 57,003 132,829 39,528

December (surplus) 209,310 222,077 58,354

(a) In July and August, 1907, there was a net surplus.

At the date of one report in October, 1909, a surplus of cars in one territory was practically offset by a shortage in another territory.

Freight Car Performance.

According to Statistical Bulletin No. 58 of the Committee on Relations between Railroads of the American Railway Association, the average performance of the freight cars of American and Canadian railways during the year ending June 30, 1909, including and excluding surplus cars, was as follows:

Average Miles per Day Average Ton Miles per Car per Day

Month Including Surplus Cars Excluding Surplus Cars Including Surplus Cars Excluding Surplus Cars

July, 1908 20.0 24.8 275 342

August, " 20.8 25.1 292 354

September, " 22.0 25.2 320 367

October, " 23.8 25.9 346 376

November, " 23.5 25.8 341 375

December, " 22.3 25.2 332 376

January, 1909 20.9 25.3 293 354

February, " 21.7 25.9 306 365

March, " 22.7 27.2 330 393

April, " 22.4 26.8 310 371

May, " 22.5 26.8 304 362

June, " 22.4 26.5 314 371

These figures of the average miles per day of freight cars are the delight of demagogues and other detractors of American railways who ignore, or have never been able to comprehend, that the average performance of a car per day depends from six to nine times more on the time allowed for shippers to load and unload cars than on its speed in transit. This speed runs all the way from ten to forty miles and over an hour. But if freight trains averaged 40 miles an hour it would make little impression on the per day average of cars so long as 48 hours has to be allowed as a minimum at either end for loading and unloading and almost as much more for placing notices and disposing of cars, to say nothing of time consumed in making up trains.

The salient and significant feature of this table is the proof it affords that each car of those in commission averages the movement of one ton 367 miles per day. This means an average load of 14 tons per car. It would take at least three English or European freight cars to average such a load.

Safety Appliances.

Of all the locomotives and cars in railway service in 1908, aggregating 2,302,055, less than 4% were not fitted with train brakes, and less than three quarters of 1% were unprovided with automatic couplers.

Block Signals.

While the gain in mileage protected by some form of block signals in 1909 is only slightly more than half the increase in 1907, it shows a healthy revival of this most important constructive work. At the close of the last calendar year, according to the Railroad Age-Gazette, the mileage on which some system of block signals had been installed was as follows:

System Single Track Two or More Tracks Total 1909 Total 1908

Automatic block signals (miles) 6,436 7,983 14,419 11,932

Non-automatic block signals (miles) 40,323 8,593 48,916 48,777

Total miles 46,759 16,576 63,335 60,709

Miles of line operated by the companies, 1909 158,938

The second annual report of the government Block Signal and Train Control Board shows that little advance has been made in the search after the perfect system of automatic mechanical operation. Since the organization of the board in 1907 no less than 835 plans and descriptions of inventions designed to enhance the safety of railway operation have been submitted for its consideration. Of these 184 were examined and reported upon in 1908 and 12 were found worthy of further investigation. During the past year 327 others have been reviewed with a net result that again 12 have been found to possess enough merit to warrant the Board in conducting further tests. It finds that the vast majority of the proposed devices are unsound either in principle or design.

With regard to some form of automatic stop, the Board says that it is not yet prepared to make a definite and positive recommendation, but it thinks it reasonable to expect that several forms of automatic train controlling devices will be found available for use. In this connection it very sensibly concludes:

"It is not to be expected that trials or tests conducted by the government will, independently of extended use by railways, result in the production of devices or systems fully developed to meet all the exacting conditions of railway operation."

III EMPLOYES AND THEIR COMPENSATION

NUMBER 1,524,400

COMPENSATION $1,008,270,000

The 368 railway companies reporting to this Bureau had 1,463,429 persons in their employ June 30, 1909, and their pay roll for the twelve months to that date amounted to $973,172,497. Experience has shown that these roads employ over 96% of the labor and pay 97% of the compensation earned by railway employes. From which it appears that the employes of all the railways in 1909 numbered 1,524,400, whose compensation for that year was approximately $1,003,270,000. This would show an increase of 66,756 men employed and a decrease of $48,362,225 in compensation—a discrepancy accounted for by the fact that the pay roll in June, 1908, was numerically at low tide while the aggregate compensation was swelled by the large pay rolls of the first six months of the fiscal year. The conditions were nearly reversed in 1909, for the pay roll was at the ebb during the first half of the year whereas the number on it did not begin to show the demands of increasing traffic until the very close of the fiscal year.

These statistics would be more enlightening if the number of employes was determined by the average from the monthly pay rolls throughout the year and not as at present "from the pay rolls on June 30." The discrepancies noted are liable to increase if the Commission succeeds in getting the permission of Congress to substitute December 31st for June 30th as the end of its statistical year. Under the present practice, the summary which follows reflects the improvement of business in the increase of employes, while their aggregate compensation continues to show the effect of the depression that prevailed throughout the greater part of the year. When, however, that compensation comes to be divided by the "Aggregate number of days worked by all employes" during the year, the daily average which results is found to be within a fraction of a cent the same as for the preceding year.

The aggregate number of days worked by the employes of the roads reporting to this Bureau was 434,328,026 days in 1909 against 453,002,228 for the preceding year.

The first summary under this title gives the number, compensation and average pay of the several classes of employes of the roads reporting for the year 1909, together with the aggregates as reported to the Interstate Commerce Commission for the preceding years:

Summary of Railway Employes, Compensation and Rates of Pay by Classes in 1909 and Aggregates from 1889 to 1909.

Class 1909 (221,132 Miles Represented) Number Per 100 Miles of Line Compensation Average Pay per Day Per Cent of Gross Receipts

General officers 3,312 1.6 $15,484,008 14.82 0.6

Other officers 7,415 3.3 16,847,754 6.53 0.7

General office clerks 67,222 30 51,945,231 2.31 2.2

Station agents 34,765 15 24,944,100 2.10 1.0

Other station men 135,056 61 78,289,039 1.81 3.3

Enginemen 55,747 25 77,762,158 4.46 3.3

Firemen 58,927 27 47,591,953 2.67 2.0

Conductors 42,325 19 50,269,581 3.76 2.1

Other trainmen 112,398 51 88,751,753 2.60 3.7

Machinists 47,629 22 41,381,054 2.98 1.7

Carpenters 59,477 27 42,954,993 2.43 1.8

Other shopmen 192,784 87 118,891,679 2.13 5.0

Section foremen 39,953 18 26,377,380 1.96 1.2

Other trackmen 308,369 140 107,734,419 1.38 4.5

Switch tenders, crossing tenders and watchmen 44,155 20 26,019,105 1.78 1.1

Telegraph operators and dispatchers 38,656 17 29,655,916 2.30 1.3

Employes, account floating equipment 8,632 4 6,537,196 2.32 0.3

All other employes and laborers 206,607 93 121,735,178 1.98 5.2

Total (94.4% mileage represented) 1,463,429 661 $973,172,497 2.24 41.00

1908 Official figures 1,458,244 632 $1,051,632,225 (b)2.25 43.38

1907 1,672,074 735 1,072,386,427 2.20 41.42

1906 1,521,355 684 (a)930,801,653 2.09 40.02

1905 1,382,196 637 839,944,680 2.07 40.34

1904 1,296,121 611 817,598,810 No data 41.36

1903 1,312,537 639 775,321,415 No data 40.78

1902 1,189,315 594 676,028,592 No data 39.28

1901 1,071,169 548 610,713,701 No data 38.39

1900 1,017,653 529 577,264,841 No data 38.82

1899 928,924 495 522,967,896 No data 39.81

1898 874,558 474 495,055,618 No data 39.70

1897 823,476 449 465,601,581 No data 41.50

1896 826,620 454 468,824,531 No data 40.77

1895 785,034 441 445,508,261 No data 41.44

1894 779,608 444 No data No data —

1893 873,602 515 No data No data —

1892 821,415 506 No data No data —

1891 784,285 486 No data No data —

1890 749,301 479 No data No data —

1889 704,743 459 No data No data —

(a) Includes $30,000,000 estimate pay-roll of Southern Pacific, whose records were destroyed in the San Francisco disaster.

(b) Bureau computations.

This table brings out clearly the effect of the depression of 1908 on railway labor. While there was a decrease in numbers employed in 1908 of 213,830 or nearly 13%, coincident with a proportionate decrease in gross revenues, the reduction in compensation amounted to less than 2%. This anomaly was due to the fact that the increased scale of pay adopted in the winter of 1906-07 was only effective during six months of the fiscal year 1907, whereas it was in full operation throughout 1908, as it still is, with demands, negotiations and arbitrations regarding wages all tending upward.

Unremunerative Expenditures.

Last year attention was called to the unremunerative burdens imposed on the railways by the multiplying demands of legislatures and commissions for reports on every conceivable feature of their multifarious affairs. This year with the compensation of every other class showing the effects of the enforced retrenchments of the period, that of the several classes especially affected by these requirements and the enactments relating to the hours and conditions of employment continue to be the only ones marked by advances over the record figures of 1907, as appears from the following comparison:

Compensation of Classes Especially Affected by Multiplying Demands of Commissions and Legislatures in 1907 and 1909.

Class 1907 227,455 Miles Represented 1909 221,132 Miles Represented

Other officers $15,012,226 $16,847,754

General office clerks 48,340,123 51,945,231

Station agents 24,831,066 24,944,100

Telegraph operators and dispatchers 29,058,251 29,655,916

Employes, account floating equipment 6,035,415 6,537,196

Total $123,277,081 $129,930,197

Add 4% for unreported mileage, 1909 5,197,207

Total $135,127,404

Increase over 1907 11,850,323

Moreover, had the aggregate compensation of these five classes followed the general trend of all other railway compensation, the expenditure on this account would have been at least $22,000,000 less than it was. This sum represents only a part of what the railways have to pay for a system of accounting and reporting out of all proportion to its published results. The public has no idea of the onerous and unprofitable burdens imposed on the railways by the impractical theory of administering railways through the medium of arbitrary and theoretical accounts.

Average Daily Compensation 1909-1892.

Where the data in regard to total compensation of railway employes has been kept since 1895, that of their daily average pay runs back to 1892, thus covering the period of the last preceding severe panic. Under instructions of the Official Statistician, these averages are computed by dividing the compensation paid by the actual days worked throughout the year in the several classes as nearly as it has been practicable to do so. Although the formula is more or less arbitrary, the system has been continuous and so the results are reliable for comparative purposes.

In the statement following, figures for 1895, 1896 and 1905 have been omitted to economize space, and because they present no significant variations from the years preceding them.

Comparative Summary of Average Daily Compensation of Railway Employes for the Years Ending June 30, 1908 to 1892.

Class 1909(a) 1908(a) 1907 1906 1904 1903 1902 1901 1900 1899 1898 1897 1894 1893 1892

General officers 14.82 15.18 11.93 11.81 11.61 11.27 11.17 10.97 10.45 10.03 9.73 9.54 9.71 7.84 7.62

Other officers 6.53 6.42 5.99 5.82 6.07 5.76 5.60 5.56 5.22 5.18 5.21 5.12 5.75 — —

General office clerks 2.31 2.35 2.30 2.24 2.22 2.21 2.18 2.19 2.19 2.20 2.25 2.18 2.34 2.23 2.20

Station agents 2.10 2.10 2.05 1.94 1.93 1.87 1.80 1.77 1.75 1.74 1.73 1.73 1.75 1.83 1.81

Other station men 1.81 1.82 1.78 1.69 1.69 1.64 1.61 1.59 1.60 1.60 1.61 1.62 1.63 1.65 1.68

Enginemen 4.46 4.46 4.30 4.12 4.10 4.01 3.84 3.78 3.75 3.72 3.72 3.65 3.61 3.66 3.68

Firemen 2.67 2.65 2.54 2.42 2.35 2.28 2.20 2.16 2.14 2.10 2.09 2.05 2.03 2.04 2.07

Conductors 3.76 3.83 3.69 3.51 3.50 3.38 3.21 3.17 3.17 3.13 3.13 3.07 3.04 3.08 3.07

Other trainmen 2.60 2.64 2.54 2.35 2.27 2.17 2.04 2.00 1.96 1.94 1.95 1.90 1.89 1.91 1.89

Machinists 2.98 2.95 2.87 2.69 2.61 2.50 2.36 2.32 2.30 2.29 2.28 2.23 2.21 2.33 2.29

Carpenters 2.43 2.40 2.40 2.28 2.26 2.19 2.08 2.06 2.04 2.03 2.02 2.01 2.02 2.11 2.08

Other shopmen 2.13 2.13 2.06 1.92 1.91 1.86 1.78 1.75 1.73 1.72 1.70 1.71 1.69 1.75 1.71

Section foremen 1.96 1.96 1.90 1.80 1.78 1.78 1.72 1.71 1.68 1.68 1.69 1.70 1.71 1.75 1.76

Other trackmen 1.38 1.45 1.46 1.36 1.33 1.31 1.25 1.23 1.22 1.18 1.16 1.16 1.18 1.22 1.22

Switchmen, flagmen and watchmen 1.78 1.82 1.87 1.80 1.77 1.76 1.77 1.74 1.80 1.77 1.74 1.72 1.75 1.80 1.78

Telegraph operators and dispatchers 2.30 2.30 2.26 2.13 2.15 2.08 2.01 1.98 1.96 1.93 1.92 1.90 1.93 1.97 1.93

Employes account floating equipment 2.32 2.37 2.27 2.10 2.17 2.11 2.00 1.97 1.92 1.89 1.89 1.86 1.97 1.96 2.07

All other employes and laborers 1.98 1.98 1.92 1.83 1.82 1.77 1.71 1.69 1.71 1.68 1.67 1.64 1.65 1.70 1.67

(a) Averages for 1909 and 1908 are calculated from the returns to the Bureau of days worked and compensation of the several classes of roads representing 97% of the traffic.

The average pay of general officers for 1909 and 1908 in this summary is out of proportion, for the reason that the returns to the Bureau cover only 60% of the class numerically and include all the larger systems. Before 1894, this class included "Other officers," so the returns for 1893 and 1892 are not comparable with those for this class in subsequent years.

Comparing the average daily compensation of the four great classes most intimately associated in the public mind with railway operations in 1899 and 1909, it appears that during the decade the average wages of enginemen increased approximately 20%; of firemen 27%; of conductors 20%; and of other trainmen, including switchmen, brakemen and baggagemen—the most numerous body—34%.

An estimate based on the number employed and their aggregate compensation in 1899, allowing 310 working days to the year, would place the increase for all employes during the decade at 23%.

The relation of the compensation of railway employes to the gross earnings of the railways, which furnish the fund from which they are paid, and also to the sum of the expenses incurred in producing those earnings for the past ten years, is shown in the next summary, in conjunction with the operating ratio:

Summary Showing Proportion of Compensation of Employes to Gross Earnings and Operating Expenses, and of Operating Ratio Ten Years, 1899 to 1909.

Ratio Compensation of Labor to Gross Earnings Ratio Compensation of Labor to Operating Expenses Ratio of Operating Expenses to Gross Earnings

1909 41.00% 62.06% 66.12%

1908 43.38% 62.33% 69.67%

1907 41.42% 61.41% 67.53%

1906 40.02% 60.79% 66.08%

1905 40.34% 60.40% 66.78%

1904 41.36% 61.07% 67.79%

1903 40.78% 61.65% 66.16%

1902 39.28% 60.58% 64.66%

1901 38.39% 59.27% 64.86%

1900 38.82% 60.04% 64.65%

1899 39.81% 61.04% 65.24%

Increase 1899 to 1909 3.00% 1.65% 1.35%

The significance of this statement is that in spite of all the labor saving devices and economies of operation—reduced grades, modified curves and more efficient equipment—adopted by the railways during the past decade, the proportionate cost of labor to earnings and to expenses has increased. It reached an abnormally high ratio in 1908 because of the unprecedented recession in revenues during the second half of the year. The fact that it has been above 40% persistently since 1902 proves that labor continues to receive its full proportion of the receipts of American railways.

Pay of Employes on British Railways.

Although the statistics of British railways are singularly barren of details respecting the compensation of British railway "servants," as they are termed, the reports of Boards of Conciliation afford data as to the rates of pay of several classes as follows:

Scale of Wages of Drivers and Firemen on North British Railway, 1909.

Rate per Day of 12 Hours

Drivers Firemen

Passenger engines, main line, long road $1.56 $0.88

Passenger engines running into chief terminal station 1.44 .84

Passenger engines, branch lines 1.32 .80

Goods engines, main line, long road, trip men 1.44 .88

Goods engines, main line, other than long road 1.32 .84

Goods and mineral engines running into depots and terminal stations 1.20 .80

Goods and mineral engines working branch lines and collieries 1.14 .76

Mineral pilot, pilot and shunting engines 1.04 .72

In his award in the case of the North Eastern Railway, Sir James Woodhouse fixed the following scales:

Firemen.—First year, 84 cents per day; 2d year, 90 cents; 3d year, 96 cents; 4th and 5th years, $1.02; 6th year, $1.08; 7th year, $1.14; 8th year, and subsequent years, $1.20. Firemen to pass for drivers during the 8th year.

Cleaners.—Age 16 to 17 years, $2.40 per week; 17 to 18 years, $2.64; 18 to 19 years, $3.12; 19 to 20 years, $3.60; 20 to 21 years, $4.08; and an advance of 24 cents per week for each subsequent year up to a maximum of $4.80 per week.

"That the wages of all goods and mineral guards be increased as follows:

"(a) The wages of those who have been in receipt of $7.20 (the maximum of the existing scale) for not less than two years shall be increased to $7.44 per week.

"(b) The wages of those who have been in receipt of the said maximum for not less than five years shall be increased to $7.68 per week.

"The bonus for working with large engines on freight trains discontinued when any guard becomes entitled to the maximum wages of $7.68 per week."

Men working in the London district get from 6 to 12 cents more per day than those in outside districts.

The award in the case of the Great Northern made an addition of 24 cents to the weekly scale of the following grades: Signalmen $4.32, $4.56, $4.80 and $5.04; passenger guards and brakemen $5.28 up to $6.00; goods guards and brakemen $5.04 up to $6.24; ticket collectors $5.04 up to $5.52; horse shunters $4.56 up to $5.04; parcels porters $4.32 to $5.04; carriage cleaners $4.08 to $4.32; plate layers, second men and under men $4.32 and less up to $5.04; ballast train guards, flagmen and greasers rates less than $5.04 per week.

An additional allowance of 24 cents per week is made to men stationed in the London district.

From these figures a fair idea is gained of the average pay of British railway labor. They support the statement that there are over 100,000 railway men in the United Kingdom working for less than one pound ($4.87) a week. The total compensation paid British railway employes in 1908 was $150,248,000 against $162,440,000 for the preceding year. But whether the decrease was due to a reduction in pay or in numbers employed cannot be told, as there has been no census of railway "servants" since 1907. The average pay may be safely approximated at $260 per year per man, boy and porter, who two years ago numbered 621,341.

In 1907, Special Agent Ames, of the Interstate Commerce Commission, reported wages on the railways of the United Kingdom as follows:

Enginemen $9.32 per week

Firemen 5.76 " "

Conductors 6.26 " "

Brakemen 6.44 " "

Shunters 5.80 " "

Examiners 5.80 " "

Signalmen 5.66 " "

Trackmen 5.58 " "

Pay of Railway Employes in Other Countries.

The contrast between the wages of American and European railway employes is emphasized by those paid on the continent. The official statistics of the empire show an increase of 5% in the average yearly compensation of German railway employes in 1908. Their number and pay for that year to December 31st in the four main classes into which they are divided were as follows:

Number and Pay of German Railway Employes by Principal Divisions for the Year Ending December 31, 1908.

Division Employes Number Compensation (Total) Average per year Increase over 1907

General administration 31,996 $25,167,240 $787 $34

Maintenance and guarding road 177,633 42,891,753 241 5

Station service and train crews 302,343 116,219,657 384 24

Switching crews and shops 187,183 75,328,084 402 18

Total 699,155 $259,606,734 $371 $19

Increase over 1907 3,598 14,216,875 — —

Combined with a falling off in revenues and an increase in the cost of materials this increase in the compensation of employes had the effect of raising the operating ratio of German railways from 69.01 in 1907 to 73.56 in 1908. It also increased the proportion of wages to gross earnings from 37.25 to 40.1% and had the effect of reducing the net revenues from 5.60% to 4.51% on the cost of construction.

How railway labor fares under government ownership in a republic as compared with its pay in an empire may be judged from a comparison of the following statement as to the number and pay of the railways of Switzerland with the like classes in the preceding table for Germany.

Number and Pay of Swiss Railway Employes by Principal Divisions in 1907.

Division Employes Number Compensation (Total) Average per Year

General administration 1,631 $ 780,715 $478

Maintenance and inspection of way 10,308 1,459,977 142

Transportation and train service 17,815 6,829,426 383

Porters and laborers 12,219 3,209,810 262

Total 41,973 $12,279,928 $292

The wages paid the employes of Swiss railways in 1907 amounted to only 31.9 per cent. of the gross earnings, and yet they added enough to the cost of operation to help increase the telltale ratio of expenses to revenues from 64.99 in 1906 to 67.29 in 1907. The result was increased operating expenses per mile and a decrease in the amount available for interest in dividends from 3.26% in 1906 to 3.23% in 1907.

As the Swiss republic has to pay 3½% on government loans its investment in railways does not appear to be a very profitable one.

Employes of French Railways.

The employes of the railways of France are divided into the following classes:

General administration 3,119

Transportation and traffic 128,823

Traction and material 80,732

Way and structures 81,897

Auxiliaries 82,809

Female employes 29,178

Total 406,558

The official statistics only give the compensation of employes in the division of traction and material, where the 80,732 men employed get an average of $187 per year.

On the state railways of Belgium, firemen receive from $15.20 to $22.80 per month, the higher wage only after 15 years' service; enginemen begin at $22.50 per month and at the end of 24 years' service work up to $38.00 per month; conductors earn from $15.97 per month up to a maximum of $34.70; brakemen, beginning as shunters (switchmen) at 45 cents a day, when promoted get a minimum of $17.10 per month, from which they are slowly advanced to a maximum of $22.00. The average railway worker in Belgium gets 2.22 francs (43 cents) a day.

Whole classes of American railway employes get more in a month than Belgian railway employes average in a year.

The Cost of Living.

Not because it has any legitimate place in fixing the standard of railway wages, which should be relative to the part capacity, intelligence, industry, loyalty and experience play in railway service, but because in recent years the steady increase in the cost of living has been made the fulcrum on which every lever to advance wages works, is it proper to refer to the subject in this report.

Now there is nothing in the whole wilderness of economics so utterly illusive and misleading as this same cost of living. It is as incapable of statistical expression as the airy imaginings of a dream and yet it broods over the domestic happiness of nations with all the disquieting effects of a nightmare—and like every nightmare it comes from eating too much and wanting to eat more.

In economics, beyond the barest subsistence, the cost of living is not ruled by necessity but by individual choice. Each person and family settles it along the lines of abstinence or indulgence. It ranges from the "dinner of herbs where love is" and the virtues of self-denial are nourished, to the feasts of Lucullus and Pompeian profligacy in whose indulgence whole peoples have perished.

In every discussion of the subject first consideration is given to the price of food. This amounts to measuring the cost of living with an elastic string. The proportion of the cost of food to the cost of living varies in every land, in every occupation and in every household. It amounts to less than 40% in an average American family, but each family fixes it for itself. Following certain well recognized economic laws the percentage for subsistence increases as the income decreases. For instance, in France families with an income of under $4.80 per week spend 63% of it for food alone, whereas those with $9.60 a week spend 53%. In England, families averaging $5.12 a week spend 67% on food, while those of $9.60 spend 57% or less. In Germany, a similar inquiry showed that families with an average income of $4.23 per week spent 68.7% on food (excluding beer), or 69.5% (with beer); whereas families with an income of $9.60 per week spent less than 57% on food "excluding beer."

The exhaustive investigation made by Commissioner Carroll D. Wright when head of the Bureau of Labor in 1903 anticipated for the United States these results of more recent European inquiries, as appears from the following table showing the per cent of total expenditure made for various purposes in normal families according to classified incomes:

Per Cent of Expenditure for Various Purposes in 11,156 Normal Families, by Classified Incomes, 1901.

Classified income Rent Fuel Lighting Food Clothing Sundries

Under $200 16.93 6.69 1.27 50.85 8.68 15.58

$200 or under $300 18.02 6.09 1.13 47.33 8.66 18.77

$300 or under $400 18.69 5.97 1.14 48.09 10.02 16.09

$400 or under $500 18.57 5.54 1.12 46.88 11.39 16.50

$500 or under $600 18.43 5.09 1.12 46.16 11.98 17.22

$600 or under $700 18.48 4.65 1.12 43.48 12.88 19.39

$700 or under $800 18.17 4.14 1.12 41.44 13.50 21.63

$800 or under $900 17.07 3.87 1.10 41.37 13.57 23.02

$900 or under $1000 17.58 3.85 1.11 39.90 14.35 23.21

$1000 or under $1100 17.53 3.77 1.16 38.79 15.06 23.69

$1100 or under $1200 16.59 3.63 1.08 37.68 14.89 26.13

$1200 or over 17.40 3.85 1.18 36.45 15.72 25.40

All classes 18.12 4.57 1.12 43.13 12.95 20.11

While it is scarcely believable that many American families with incomes under $200 spent less than $100 a year on food—the European percentage in such cases being more credible—there is no reason to question the general economic law reflected in this table, that "the proportion of income spent on food diminishes as the income increases." But it is governed more by individual tendencies, character and taste than by any rule or principle. Each family works out the problem on its own account.

According to the evidence presented at recent arbitration hearings in this city, American switchmen, as a body, belong in the classes whose family expenditures are $1,000 or over. Irrespective of the incomes of other members of their families, the arbitrators found "that the actual monthly earnings of switchmen in the Chicago district, for those who worked full time runs from about $80 to $100 per month." This means over $1,000 yearly compensation. Therefore they are in the class which spends less than 39% of its income on food.

The average income for all railway employes engaged in train service, that is, enginemen, firemen, conductors and other trainmen, is probably above the highest figure in the foregoing table and therefore the proportion of their income spent for food would be approximately 36%.

But accepting 40% as approximately the proportion of the pay of all railway employes spent on food, it follows that it takes only two-fifths of one per cent increase in wages to take care of an increase of one per cent in the price of food.

With this in mind it becomes instructive to follow the retail prices of the various articles of food as selected by Mr. Wright in his inquiry into the cost of living in 1901 and adopted by the Bureau of Labor in subsequent Bulletins. These for thirty articles of food for the eighteen years 1890 to 1907, as given in Bulletin No. 77 of the Bureau of Labor, and for the two years 1908-1909 as computed from Bradstreet's index and other sources of commodity prices, are given in the following statement relatively to the average price for 1890 to 1899 == 100:

Relative Retail Prices of the Principal Articles of Food in the United States, 1890 to 1909. (Average price for 1890-1899 == 100.0.)

Year Apples, Evapo­rated Beans, Dry Beef, Fresh, Roasts Beef, Fresh, Roasts Beef, Salt Bread, Wheat Butter Cheese Chickens (year or more old), dressed Coffee

1890 109.0 103.3 99.5 98.8 97.5 100.3 99.2 98.8 101.3 105.4

1891 110.3 106.2 100.0 99.4 98.3 100.3 106.4 100.3 104.0 105.2

1892 99.3 102.4 99.6 99.3 99.5 100.3 106.8 101.5 103.8 103.8

1893 107.0 105.0 99.0 99.6 100.3 100.1 109.9 101.8 104.2 104.8

1894 105.8 102.8 98.3 98.2 98.9 99.9 101.7 101.6 98.6 103.3

1895 97.4 100.5 98.6 99.1 99.6 99.7 97.0 99.2 98.4 101.7

1896 88.6 92.7 99.1 99.5 99.8 99.9 92.7 97.9 97.1 99.6

1897 87.8 91.5 100.3 100.2 100.9 100.0 93.1 99.0 94.0 94.6

1898 95.4 95.9 101.7 102.0 102.1 99.8 95.1 97.5 96.8 91.1

1899 99.5 99.7 103.7 103.9 103.2 99.6 97.7 102.4 101.8 90.5

1900 95.2 110.0 106.5 106.4 103.7 99.7 101.4 103.9 100.8 91.1

1901 96.8 113.9 110.7 111.0 106.1 99.4 103.2 103.3 103.0 90.7

1902 104.4 116.8 118.6 118.5 116.0 99.4 111.5 107.3 113.2 89.6

1903 100.8 118.1 113.1 112.9 108.8 100.2 110.8 109.4 113.5 89.3

1904 99.2 116.8 112.8 113.4 108.3 103.9 109.0 107.4 120.7 91.8

1905 106.0 116.3 112.2 112.9 107.9 104.5 112.7 110.9 123.6 93.6

1906 115.6 115.2 115.7 116.5 110.8 102.3 118.2 115.5 129.1 94.7

1907 124.6 118.8 119.1 120.6 114.1 104.5 127.6 123.2 131.4 95.0

1908 126.4 138.9 126.2 131.5 116.4 124.5 123.5 121.3 128.6 94.7

1909 128.6 141.2 132.6 134.1 128.2 124.5 134.8 142.0 150.2 108.6

Year Corn Meal Eggs Fish, Fresh Fish, Salt Flour, Wheat Lard Milk, Fresh, unski­mmed Mola­sses Mutton Pork, Fresh

1890 100.0 100.6 99.3 100.7 109.7 98.2 100.5 104.7 100.7 97.0

1891 109.7 106.9 99.6 101.7 112.5 99.8 100.5 101.7 100.6 98.7

1892 105.2 106.8 100.1 102.2 105.1 103.6 100.6 101.2 101.0 100.5

1893 103.1 108.1 100.1 103.4 96.1 117.9 100.4 100.6 99.9 107.0

1894 102.2 96.3 100.4 101.5 88.7 106.9 100.2 100.3 97.8 101.8

1895 100.8 99.3 99.8 98.9 89.0 100.1 100.0 99.0 98.7 99.7

1896 95.0 92.8 100.2 97.5 92.7 92.5 99.9 98.7 98.7 97.4

1897 93.7 91.4 99.8 95.2 104.3 89.8 99.7 97.7 99.6 97.6

1898 95.0 96.2 100.5 98.8 107.4 93.9 99.4 97.9 100.4 98.6

1899 95.1 101.1 100.2 100.2 94.6 97.1 98.9 98.2 102.6 101.7

1900 97.4 99.9 100.4 99.1 94.3 104.4 99.9 102.2 105.6 107.7

1901 107.1 105.7 101.4 100.9 94.4 118.1 101.1 101.3 109.0 117.9

1902 118.8 119.1 105.0 102.8 94.9 134.3 103.3 102.1 114.7 128.3

1903 120.7 125.3 107.3 108.4 101.2 126.7 105.8 103.8 112.6 127.0

1904 121.5 130.9 107.9 111.7 119.9 117.3 106.3 104.0 114.1 124.0

1905 122.2 131.6 109.9 113.8 119.9 116.6 107.0 104.4 117.8 126.6

1906 123.2 134.2 116.2 116.8 180.1 128.0 108.9 105.3 124.1 137.7

1907 131.6 137.7 120.6 121.6 117.7 134.2 116.8 107.7 130.1 142.5

1908 154.0 140.2 116.2 118.4 140.0 132.1 115.4 102.2 126.4 141.6

1909 160 142.2 120.4 122.6 154.4 153.8 141.6 106.4 134.8 168.2

Year Pork, Salt, Bacon Pork, Salt, dry or pickled Pork, Salt, Ham Potat­oes, Irish Prunes Rice Sugar Tea Veal Vine­gar

1890 95.8 95.3 98.7 109.3 116.8 101.3 118.6 100.0 98.8 102.9

1891 96.6 98.9 99.3 116.6 116.5 102.5 102.7 100.4 99.6 105.5

1892 99.1 100.5 101.9 95.7 113.5 101.3 96.2 100.2 100.0 102.7

1893 109.0 108.7 109.3 112.3 115.6 98.4 101.5 100.1 100.0 99.5

1894 103.6 103.4 101.9 102.6 100.9 99.0 93.8 98.7 98.7 99.8

1895 99.4 99.2 98.8 91.8 94.2 98.8 91.8 98.5 98.5 98.9

1896 96.7 95.5 97.6 77.0 86.8 96.7 96.6 98.8 99.5 97.2

1897 97.4 97.3 98.2 93.0 84.3 97.9 95.7 98.5 99.9 97.4

1898 100.2 99.1 95.1 105.4 86.3 101.7 101.3 100.7 101.2 97.9

1899 102.9 101.8 99.2 96.1 85.1 102.4 101.7 104.4 103.7 98.3

1900 109.7 107.7 105.3 93.5 83.0 102.4 104.9 105.5 104.9 98.5

1901 121.0 117.5 110.2 116.8 82.6 103.5 103.0 106.7 108.8 98.9

1902 135.6 132.5 119.4 117.0 83.4 103.5 96.1 106.0 114.9 99.1

1904 137.9 125.8 118.4 121.3 79.6 101.6 101.9 105.8 115.5 98.9

1905 138.8 126.0 118.5 110.2 81.4 102.6 98.2 105.5 123.2 102.6

1907 157.3 141.2 130.7 120.6 88.4 108.5 99.6 105.3 125.0 104.5

1908 142.4 137.4 112.0 138.4 — 105.1 100.0 108.6 124.2 112.4

1909 180.0 151.2 145.0 120.0 — 103.3 105.0 109.0 130.2 113.0

No authority is claimed for the prices in these tables for the years 1908 and 1909. They merely represent the tendencies in those years, as found in official and unofficial wholesale prices of the several commodities, and there are often striking divergences between wholesale and retail prices over short periods. Eventually they follow the same course, although not always in the same proportion.

Now let us see how the average retail price of these 30 articles of food compares with the average daily pay of the four representative classes of railway employes in train service for the ten years 1899 to 1909.

Average Daily Compensation Relative Prices of Food, 1890-1899 ==100

Year Enginemen Firemen Conductors Other Trainmen

1899 $3.72 $2.10 $3.13 $1.94 99.6

1900 3.75 2.14 3.17 1.96 101.5

1901 3.78 2.16 3.17 2.00 105.5

1902 3.84 2.20 3.21 2.04 110.9

1903 4.01 2.28 3.50 2.27 111.6

1905 4.12 2.38 3.50 2.31 112.5

1906 4.12 2.42 3.51 2.35 116.2

1907 4.30 2.54 3.69 2.54 120.7

1908 4.46 2.65 3.83 2.64 117.7

1909 4.46 2.67 3.76 2.60 127.7

Per cent. increase 19.9 27.1 20.1 34.0 28.2

Here it will be observed the percentage of increase in the average daily compensation of "Other trainmen" exceeds the relative increase in the price of food, that of firemen almost equals it, while that of enginemen and conductors is below it by approximately 8 points. But, as demonstrated in the table from the Eighteenth Annual Report of the Commissioner of Labor (1903), a smaller percentage of the income of enginemen and conductors is spent on food than of those employes receiving lower pay.

Moreover as only two-fifths of all expenditures is spent on food an increase of 20% in wages would take care of a 50% advance in the average price of food—provided the increase in wages was not attended by a corresponding increase in every other item entering into the cost of living.

And right here's the rub with any attempt to measure wages by the cost of living. Which is the egg and which is the hen, in the matter of precedence. Does the cost of living lay the income or does the income hatch the cost of living?

Economically and theoretically it is not up to the railways to solve this world old conundrum. Practically they are called on to meet every advance in the cost of living of their employes to which in twenty years they have not added a nickel, and they are denied the privilege, enjoyed by every other employer of labor, to add its increased cost to the price of their only commodity or service—transportation.

Today the advances in the scale of railway wages awarded, proposed and demanded mean an increase of from $60,000,000 to $75,000,000 in the annual "cost of living" of the railways. The advance made in 1906-07 added $120,000,000 to the pay roll of 1908. Combined, these two advances within three years mean an increase of approximately $200,000,000 a year to the operating expenses of the railways without adding a single unit to efficiency of the labor factor in railway operation.

This is equal to an annual first charge of 5% on $4,000,000,000! Imagine the hue and cry from the press, the immediate injunctions from Washington, the despondent wail from Wall Street, if the railways proposed to pour that much "water" into their own cost of living without getting a mile of track, a single engine, car, or coach, a cubic yard of ballast, one untreated tie or any semblance of improvement or new facility to show for the vast expenditure!

And yet the railways have their increased cost of living to meet just as the rest of us. Nothing they need and must have can be purchased at the prices of a few years back. When you mention steel rails you have named about the only railway necessity that has not advanced its cost of living in recent years, and the railways have to buy 100-pound rails where five years ago 80-pound rails sufficed, and ten years ago 70 pounds was heavy enough for the lighter cars and engines of the time.

But at the first suggestion of advancing rates to meet advancing prices of commodities the Commissions were overwhelmed with protests from shippers and the paring of freight rates down went on as the prices of the goods they carried went up.

In ten years the price of lumber advanced nearly 50%. As a cheap bulky commodity it had enjoyed a low rate in order to move it and it was moved at the expense of other commodities. When it was able to pay a little more toward the cost of getting it to market the proposal of an advance was met with indignant protests from lumber shippers and dealers and reversed thumbs by the sympathetic commissions.

The railways pay more for their lumber and other material today than they did ten years ago but they will have to fight for any advance in rates to meet this part of their cost of living. It is said to be a poor rule that will not work both ways—but the cost of living seems to have only one way of working so far as railway economics are concerned.

Just as a straw to indicate that high prices of food are the result and not the basis of high wages the following table of comparative prices in London and New York from the New York Times of March 27, 1910, is instructive:

Comparative Retail Prices of Articles of Food in London and New York in March, 1910.

London. New York.

Cents. Cents.

Apples, 1 lb 4 to 6 10

Bread, 1 lb 4 5

Butter, 1 lb 24 to 32 30 to 35

Cheese, 1 lb 14 to 16 18 to 22

Cocoa, 1 lb 16 to 36 25 to 50

Coffee, 1 lb 16 to 30 20 to 50

Currants, 1 lb 4 to 8 8 to 12

Eggs, 12 to 16 25 6 to 12—25

Codfish, 1 lb 8 to 12 15 to 29

Fish (general), 1 lb 4 to 12 10 to 25

Flour, 3 lbs 9 to 10 12

Meats:

Bacon, 1 lb 16 to 24 25 to 30

Beef, 1 lb 16 to 20 22 to 30

Pork, 1 lb 12 to 16 20 to 24

Milk, 1 pint 4 4 to 5

Oatmeal, 1 lb 4 to 6 5 to 10

Onions, 1 lb 2 4

Oranges, 1 doz 10 to 12 18 to 50

Potatoes, 1 lb 1 to 2 3 to 4

Prunes, 1 lb 8 to 12 10 to 18

Raisins, 1 lb 6 to 10 10 to 16

Rice, 1 lb 4 6

Syrup, 1 lb 6 10

Sugar white, 1 lb 6 6

Sugar, yellow, 1 lb 4 5

Tapioca, 1 lb 8 10

Tea, 1 lb 20 to 60 30 to 1.50

Tomatoes, 1 lb 8 12

The amazing feature of this statement is that the United States produces and exports to the United Kingdom enormous quantities of breadstuffs, meat and provisions, which constitute the chief articles of food in London and which are sold there at prices from 20% to 25% lower than in New York. Clearly it is the high scale of wages that fosters the high cost of living in the United States and there can be little question but it breeds the high wages it feeds on.

It is humanly certain, though economically unsound, that wages will continue to advance with the cost of living and will not recede proportionately as prices of food fall. But both will decline together when for any considerable period there is a surplus of efficient labor for the requirements of American industry. Even railway labor in the most stable of all employments yielded to this influence in 1893 and 1894; and the prices of food receded to the low mark in the following years 1895, 1896 and 1897. Not until wages took their upward turn in 1898 did the cost of food begin to show above the index average of 1890-1899.