In my opinion, railroad business, which really means all business, will recover its former proportions when the influences and forces at work during the last two or three years shall have ceased doing the things that have contributed so largely towards bringing about the depression which we all deplore. Perhaps that is not quite clear. I do not mean that laws already made must necessarily be unmade, that wages raised must be reduced, but we must have a rest. We must be given time and opportunity to work out the new problems that have been forced upon us during the last two years. We must be given a chance to find out what it is going to cost to meet the new requirements, and also how much our revenues are going to be reduced by reduction of rates. Perhaps it will be found that by new methods growing out of the exigencies of the case we will still be able to earn a surplus sufficient to justify the resumption of extraordinary expenditures as formerly. If not, then, either rates must be advanced, or wages be reduced, or improvements must wait or be carried on with borrowed money and railroads will be slow to increase their interest-bearing debt under such circumstances.
As I have said, two years ago during the legislative period, 800 bills affecting railroads were introduced in states reached by the Burlington System, including those proposed at Washington. So far this season, 272 such bills have been presented. It is too early now to venture even a guess as to how many of them will become laws, but until we know just what to expect, you can clearly see, I am sure, that we will not feel like incurring any new or unnecessary obligations.
Among the bills so far introduced are two in Illinois, called the full-crew bills. These two bills, if passed, will increase the cost of operation on the Burlington Road alone $96,000.00 a year, on basis of present business. In Nebraska a similar bill is under consideration. It is true that the two Illinois bills if they become laws will not necessarily make our operations in Illinois unprofitable, but that class of legislation will do much to discourage new developments, by making such developments more difficult, or rather, less profitable; and besides, in my opinion, such laws are not necessary.
As Burlington employes, you may be interested in what I am now going to tell you about the development of the coal business north through Galesburg. I need not tell you how much it has increased during the last four years, for you have seen it grow from practically nothing up to its present proportions. Some six or seven years ago the Burlington officers gave careful consideration to the problem of increasing the Company's business, and you must bear in mind that freight shipments do not just happen to go this way or that. Well, they finally decided that the most promising opening was to try and develop a coal movement from Southern Illinois to the cities of St. Paul and Minneapolis, and the Northwest generally, where the winters are severe and fuel supply limited. It was found that if coal from Illinois was taken to the Twin Cities it would have to be sold in competition with coal from Pennsylvania and other eastern states shipped by water to Duluth. It was also found that the coal from Franklin and Williamson Counties in the southern part of the state, while of very good quality, would not bring the same price on the market in St. Paul as the eastern coal. It was also found that in order to be sold at a sufficient profit to the dealer, in competition with the eastern coal, the railroad would have to carry it from Herrin, Ill., to St. Paul, 648 miles, for not more than $2.10 per ton, or 3.2 mills per ton mile. It was also found that it was impossible to do this at a profit to the railroad, as conditions then were; that is to say, we could not haul coal at that rate and make money on a road full of one per cent grades. The engineers were put to work, however, and an estimate was prepared showing what it would cost to put the line from Savanna to Herrin all to a standard grade not exceeding sixteen feet per mile, the line above Savanna being all right. It was believed that it would pay to make the improvement—and you know the rest. The line was built from Centralia to Herrin, the Fenton-Thompson cut-off was built, grades were cut, and, altogether, more than $5,000,000 were spent to put the road in shape to haul coal to St. Paul in 3,000-ton trains. Of course, many new engines were bought, as well as new and high capacity cars suitable for the coal trade. It is a low rate business, and as you know, the cars as a rule return empty, but handled over low grades and in full trains it pays a fair profit; but every additional item of cost, of course, reduces the profit.
Now to show the effect of proposed legislation. In Nebraska a bill has been introduced placing the limit of cars that can be legally handled in one train at fifty. If this bill becomes a law, how long will it be before somebody will want a similar one in Illinois, and if you are going to fix a limit so as to make it necessary to run more trains, and consequently employ more men, and that is the undoubted purpose of the bill, how long will it be before the limit will be reduced to forty, or even twenty-five? Where will the thing end, and when? With the mere possibility of such legislation looming up in the future, can you expect improvements such as I have just described to continue? Would you recommend them if in my place?
How long will such legislation find favor in our halls of Congress? Just as long as your representatives think you want it—by you I mean the majority of their constituents—and no longer. Your representatives and senators are human. They seek to obtain political preferment at the polls, and desire to remain in office. They must have a majority of the votes to be elected, and naturally they will shape their course so as to meet your wishes, as they understand them, because by so doing they hope to retain your support.
No one today questions the right of the properly constituted authorities to supervise the railroads. No one defends the rebate, or discrimination of any kind, but, as the Supreme Court of the United States has recently well said, "It must be remembered that railroads are the private property of their owners; that, while from the public character of the work in which they are engaged, the public has the power to prescribe rules for securing faithful and efficient service and equality between shippers and communities, yet in no proper sense is the public a general manager."
No doubt there may be much in connection with railway management in the past (and for that matter at the present time as well) to criticise; but please tell me what line of human undertaking since the world began, be it industrial, educational or religious, has been free from criticism; and, granting all that is said against the railroads, then what? This is what we find: That the railroad rates in this country are the lowest in the world, with few minor exceptions not worth considering; that the wages paid railroad employes in the United States are higher than anywhere else in the world, and that the capitalization of American railroads per mile, as reported by the Interstate Commerce Commission, is but one-fourth as much as that of English railroads, and one-half that of the railroads of Germany and France, and one-third that of Belgium; and this has all been accomplished in a country where a high protective tariff obtains, and where everything the railroad uses costs more on that account. It is claimed that our manufacturers must have the protection of a high tariff in order to enable them to meet the prices of their foreign competitors and pay American wages; but the American railroad sells its product, that is, transportation, for less than any other nation and still pays higher wages. A locomotive engineer, for instance, receives $4.01 per day here as against $1.62 per day in England, and $1.01 per day in Belgium.
It is sometimes said that railroads have received great help from the people in the shape of land grants, and on that account should give much in return. Let me give one instance of how this has worked with the Burlington Company. In order to induce the original projectors of this line to extend the road through Iowa, this Company was given 359,000 acres of government land in that state, selling at that time at $1.25 per acre, amounting to less than $450,000 cash value. By an act of Congress, passed over thirty-two years ago, a reduction is made of 20 per cent from the mail pay on all land grant roads. At the present time the amount so deducted from the Burlington, because of the Iowa grant, amounts to over $65,000 a year, and since the law was passed has amounted in the aggregate to over $1,500,000, or more than three times the original value of the entire grant. Not only that, but it goes on without end. Do you think that is fair?