“Every railroad man, every banker, every investor, every student of transportation knows that rates should be increased because the roads can no longer stand the drain of deferred obsolescence, or unremunerative investments, especially in terminals.
“Rates ought to be based on four elements and probably a fifth added. The four basic elements are. (1) Cost of collecting the traffic; (2) Cost of transporting the traffic; (3) Cost of insurance or classification; (4) Cost of delivering the traffic.
“Only (2) and (3) now enter into rates. It is as cheap to arrive at New York at the Pennsylvania, or New York Central Station, as to drop the train in Newark or Tarrytown. It is as cheap to ship freight to a New York dock as to unload it from the car at a country siding.
“In the New York Subway the cost of (1), (3) and (4) sinks to a vanishing point, and nothing is left but the flat cost of running trains and a flat revenue per passenger.
“In steam railroads operation costs of both (1) and (2) are very great, but not made up by revenue. The fifth element that ought to govern charges is a principle that even frogs know all about, but which human beings operating railroads have not yet learned, namely, to put on flat and expand when prices are high so as to accumulate a surplus to tide over the lean years. This fifth element is really included in (3) classification. Railroads now have different rates for different commodities, but $1.80 a bushel wheat and $0.20 cotton are not the same as $0.50 wheat and $0.05 cotton. The wheat raised and the cotton grown, and the iron made into pig iron at $30.00 a ton can afford to pay rates that vary with the price.
“Piece rates applied to traffic is the tuberculosis that is gradually but surely consuming our railroads.”—Harrington Emerson.
[16] As an evidence of the fact that the sick man of American business has by no means lost his ability to render service, consider what might have seemed to travelers a minor detail of ordinary service, and yet was in reality a tremendous task. On a certain snowy morning in January, 1917, traffic into New York was unusually heavy. The great automobile show was just opening, folk were flocking to it from all corners of the country. The facilities of even as great a railroad as the New York Central were severely taxed. Its Twentieth Century Limited was in three sections, the Detroiter in two, Train Six in three. On these and two other trains due into the Grand Central Station between 8 and 9:40 a. m., 1,200 persons were served with breakfast. This breakfast required sixteen dining-cars, eighty-two stewards, cooks, and assistants, and 105 waiters. Advance advice was received of the requirements, the cars assembled, the crews brought together, and everything made ready to attach the cars to the train at Albany in the early morning. And this was all in addition to the regular dining-car service of the road.
[17] And now Congress has adjourned without passing the supplementary feature of the Adamson bill—the all important requirement of arbitration in labor disputes.
[18] “Fifteen States have laws designed to secure preferential treatment for their freight by prescribing a minimum movement for freight cars. Several of these require a minimum movement of fifty miles a day, though the average daily movement throughout the nation is only twenty-six miles. One state imposes a penalty of ten dollars an hour for the forbidden delay. Though under the Federal law there is no demurrage penalty for failure to furnish cars to a shipper, several states have penalties running from one dollar to five dollars per car per day. The result is that the railroads are compelled to discriminate against Interstate Commerce and against commerce in the states that have no demurrage penalties.
“One by-product of all this chaotic regulation has been an increase in ten years of eighty-seven per cent in the number of general office clerks employed by the railroads, and an increase of nearly 120 per cent (over $40,000,000) in the annual wages paid to them. During this period the gross earnings of the roads increased only fifty per cent. In the fiscal year of 1915 the railroads were compelled to furnish to the national and state commission and other bodies over two million separate reports.”—Harold Kellock in The Century Magazine.