,note3 ,images of the original pages are available through ,internet ,archive_/,american ,libraries4 ,see https3_/_/archive4org_/details_/countrys needofgr#jj;hillrich ,,the ,,country',s ,,need ,,of ,,greater ,,railway ,,facilities ,,and ,,terminals ,address ,delivered by ,mr4 ,,james ,j4 ,,hill ,at the ,annual ,dinner of the ,railway ,business ,association1 ,new ,york ,city ,december #ai1 #aiab ,the subject of national transportation is many-sided4 ,one aspect of it takes precedence in one community or in the opinion of one interest1 while for others some different phase ranks all the rest4 ,but every interest and every community should understand that the main need today of transportation and of the many activities connected with and dependent upon it is an increase of terminal facilities4 ,it is no exaggeration to say that the commerce of the country1 its manufacturing and agricultural industry1 its prosperity as a whole and the welfare of every man in it who engages in any gainful occupation can escape threatened disaster only by such additions to and enlargements of existing terminals at our great central markets and our principal points of export as will relieve the congestion which now paralyzes traffic when any unusual demand is made upon them4 ,our natural material growth will make this their chronic condition in the near future unless quick action is taken4 ,if you increase the size of a bottle without enlarging the neck1 more time and work are required to fill and empty it4 ,that is what has happened to the transportation business4 ,in #aijg traffic was blocked on nearly all the principal ,eastern railway lines4 ,it took months to convey an ordinary shipment of goods from one domestic market to another4 ,the dead-lock was broken partly by a panic that lessened the volume of business and partly by the efforts of railway managements to add1 by increased efficiency1 to the moving power of facilities at command4 ,we neither anticipate nor desire perpetual business depression4 ,while the limits of efficiency have not been reached1 we know that it cannot be made to cover the demands of our growth in population and production4 ,the records of any large city will prove this4 ,the tonnage of the ,pittsburgh ,district1 for example1 by railroad alone1 grew from #fd1abe1jjj to #aeb1jjj1jjj in the ten years between #aija and #aiaa4 ,it is both practical and patriotic to ask what is to be done4 ,first1 let us examine the following table1 compiled from the reports of the ,interstate ,commerce ,commission1 showing the recent growth of the transportation business in the ,united ,states3 ,increases ,per ,cent4 #ahie to #aije4 #aije to #aiaj4 #aiji to #aiaj ,mileage #ba #aa #a4e ,locomotives #ce #bb #c4 ,passenger ,cars #bc #af #c4c ,freight ,service ,cars #de #bc #c4 ,passenger ,mileage #ie #cf #aa4 ,freight ,ton ,mileage #aah #cg #af4f ,business is beginning to feel the swell of a revival4 ,the freight ton mileage of the country was less by seventeen and a half billions in #aiji than in #aijg1 and very little more than in #aijf4 ,contrast this with the growth of the single year between #aiji and #aiaj4 ,the freight ton mileage grew in that year eleven times as fast as trackage1 and five times as fast as equipment4 ,this ratio will be subject to increase rather than decrease4 ,it will be much greater in this year of large crops and added tonnage4 ,if any manufacturer were confronted with such conditions1 it would be clear to him that he must either refuse business or more than double his plant4 ,the railroad cannot refuse business4 ,if it could do so legally1 that policy would still mean national panic and individual ruin4 ,it must enlarge its plant4 ,just what this means in the expenditure of billions of dollars on new track and rolling stock ,i demonstrated more than five years ago1 and the facts have now been accepted by all authorities4 ,but even the existing plant cannot be worked to its capacity without larger terminals4 ,hence the supreme importance at the very outset of this factor of the transportation problem4 ,this matter is vital not only to the railroads1 but to every business man4 ,it is the immediate concern of every large city4 ,cities can grow1 they can escape decline1 only as the movement of business between and through them is kept free4 ,when the people find that their business cannot be handled1 they must either move away or cease producing and consuming4 ,they will decentralize their traffic1 so far as that can be done2 and the inability of the railroads to prevent this1 by reason of conditions imposed on them from without1 will work injury to all the great markets which have arisen through the free play of economic forces and the wise judgment of the builders of our prosperity4 ,no city can afford to place its trade1 which is its life1 on a false basis4 ,when the commerce naturally tributary to it is handicapped by poor terminals1 or overloaded with too heavy charges on account of the excessive cost of enlargement1 it will go elsewhere4 ,there are a dozen places between the ,maine coast and ,norfolk that could be made available for relief4 ,a city can never grow great enough to defy safely the demands of the laws of trade and its proper accommodation4 ,should the decentralization plan be forced on traffic1 some of our greatest cities would not merely forfeit their natural share in national growth1 but they would surely decline in business1 wealth and power4 ,interest in this question should be not local only1 but national4 ,a railroad terminal performs the same function as a harbor4 ,it is actually the largest and most valuable harbor used by the nation's commerce4 ,probably no greater volume of rail and water traffic is transferred in any city anywhere than in ,duluth-,superior4 ,on the land side almost the whole of this is carried by three railroads4 ,it is received1 transferred and discharged without congestion in the busiest seasons and with expedition because the terminals there have been specially created for the work they have to do4 ,the nation has properly made the provision of adequate harbors its care1 and expended millions of dollars on our seaboards and the ,great ,lakes to ensure ample facilities for loading and unloading cargoes4 ,it is not to be supposed or desired that the nation should furnish the money to provide those great harbors known as railroad terminals1 although they are vastly more essential to the free movement of trade4 ,but it should smooth the way and make easy the task of those whose business it is to provide them4 ,when traffic is blocked and the railroad yards of the principal cities are filled with cars that cannot be moved1 the railroad suffers the loss of a portion of its earnings2 but the business man loses a larger share of his trade1 and the workingman his employment4 ,no industry can do more than protract a starved existence when the currents of transportation cease moving freely4 ,when the commerce of an industrial empire whose magnitude is partly indicated by the clearing house exchanges of #ajb1jjj1jjj1jjj in ,new ,york ,city alone during the past year is blocked1 the whole nation suffers4 ,whenever we have a big crop or a general revival of business1 the country hears most of the danger of a car shortage4 ,the public assumes that if enough cars are provided they can be moved on schedule time from point of origin to destination1 wherever these may be4 ,this is not the real trouble4 ,what is really needed is the greater movement of cars4 ,the average movement of a freight car is about #bd miles1 or two hours1 per day4 ,delays in loading and unloading by shippers are partly responsible1 but much of the lost time is consumed in getting into1 out of or through terminal points where there is not room to handle the cars4 ,more cars intensify instead of reducing the trouble4 ,no other business could endure the loss of the use of its machine plant for twenty-two hours out of the twenty-four4 ,one thousand cars will cover nearly eight miles of track4 ,each car must be switched1 loaded or unloaded1 or all three4 ,this multiplies the trackage requirement4 ,a thousand cars are a fleabite compared with the daily movement in the busy season4 ,the railroads of the ,united ,states carried #a1hdi1ijj1aja tons of revenue freight in #aiaj4 ,at the average load of #ba4e tons per car1 it would take #hf1jda1hfe cars to move it4 ,nearly all of these pass through some large terminal1 most of them several times in the year4 ,there are about thirty important traffic centers2 and if the total movement were divided equally between them1 supposing each car to pass through but one market1 and that only once a year1 #g1heh cars would have to pass through each terminal every day in the year4 ,five thousand cars a day are enough to create a blockade in many of the large terminals of the country4 ,our worst troubles have come not from insufficient rolling stock or lack of efficiency in handling it1 but from congested terminals4 ,water routes give little assistance3 first1 because the largest streams of traffic in the ,united ,states are not in a direction where either natural or artificial waterways can be used2 second1 because a waterway less than twenty feet deep cannot compete as a carrier4 ,the waterway1 too1 may and often does increase rather than lessen the pressure on terminal facilities4 ,there is but one possible remedy--enlarged terminals4 ,the main question back of that is financial4 ,where and on what terms is the money to be had for an improvement become as necessary as the removal of a freight wreck from a main traffic line4 ,the two obstacles to be overcome in this readjustment of the transportation agency to the growing needs of the country are the physical difficulty and the cost4 ,the railroads could not have foreseen and guarded against this need thirty or forty years ago4 ,they could not then know where the greatest markets were to grow4 ,they could not tell in what portion of any city it would be most convenient to have railroad yards placed a generation later4 ,if they had secured land1 changes in business districts would in many cases have made their forethought useless4 ,even if gifted with prophetic knowledge1 they could not then have commanded the resources for such an undertaking1 any more than the country town of today can put in all the improvements that its future as a city will require and justify4 ,it is a natural and inevitable condition that we face4 ,upon the railroads rests the responsibility of performing the work now to be done4 ,will they be left free to attempt it under such conditions as will make the performance of it a feasible thing and not a miracle8 ,in some places it will be physically impossible to secure the land area for proper terminals4 ,the space that must be used is generally in or near the business heart of the city2 often along the waterways1 where enterprise has been busy and land values have reached their highest point4 ,therefore the space for such terminals is either not available on any terms or will cost sums that sound fabulous4 ,the financing of new terminals presents a far more serious problem than the financing of a new railroad4 ,large sums of money must be raised4 ,the owners of capital will not supply them unless they are satisfied with the security and with the prospect for a sure and adequate return on their money4 ,what security can the railroads offer for such a loan8 ,already1 merely for constructing and operating their existing machine1 many of them have not only pledged their credit to the limit but have absorbed a large share of their surplus earnings that in other countries would have been paid out in dividends4 ,the ability of the ,pennsylvania system to handle its big business is due in no small degree to its past policy of diverting profits legally the property of the stockholders to the construction of betterments4 ,there is not a well-managed railway of any size in the country of which the same is not true to some extent4 ,and1 with the increase of their expenses and the limitation of their income by public authority1 there is coming to be little or no surplus revenue that may be so employed4 ,net income1 not gross1 is the index of prosperity and the foundation of credit4 ,gross revenues grow1 but expense grows faster4 ,returns to the ,bureau of ,railway ,economics1 covering #ij per cent of all the steam railway mileage in the ,united ,states1 show that during the first seven months of #aiab operating revenues increased #c4c per cent per mile as compared with the same period in #aiaa1 operating expenses increased #d4i per cent1 and net operating revenue decreased 4#e per cent4 ,the additions to taxes and other incidental expenses will raise this figure4 ,the progressive decline of net earnings per mile under the existing method of rate regulation is assured4 ,the properties of many systems are already encumbered to the limit of credit and solvency4 ,securities have been consolidated1 equipment trusts have placed what are practically chattel mortgages on rolling stock1 and money cannot be raised except for a short term and at high rates4 ,ten or fifteen years ago #d per cent would bring in capital for railroad improvements4 ,strong properties sold their bonds bearing #c per cent interest4 ,now some of the strongest roads are paying #d per cent for new capital4 ,properties less well known for stability and earning power pay more4 ,the rate has advanced by from #a to #b per cent in little more than ten years4 ,the great sums required to extend our terminals to meet the actual business of the country can be had only on condition that the payment of principal and interest is absolutely secured4 ,the railroads can pay money only as they are permitted to earn it4 ,in the last resort it is up to the people to say whether or not these terminals and other facilities shall be supplied2 just as it is up to them to suffer the severest of the consequences if they are not4 ,two questions arise immediately and naturally from the situation as it discloses itself to any one who chooses to look at the facts4 ,the first is1 8,why are the railways not now in a position to borrow the money and build the terminals at once802 the second is1 8,what have the railways done to entitle them to confidence1 to relief and to a more fair and generous treatment by the public804 ,each of them can be answered by an examination of facts officially vouched for4 ,the impairment of credit has already been partly set forth in presenting the difficulty of making loans for improvement purposes1 and noting the higher rate that must be paid4 ,how has this happened8 ,the limitation has come1 of course1 from two directions2 decreased earning power and increased expenses4 ,a railroad has no other source of income1 generally speaking1 than receipts from rates4 ,these have steadily declined4 ,while the price of everything else rises1 the price of transportation falls4 ,the average freight rate per ton per mile received by the railroads of the ,united ,states fell from #i4bg mills in #ahij to #g4ec mills in #aiaj4 ,this is partly the effect of legislative regulations and the orders of public commissions1 and partly due to voluntary reductions made possible by increased efficiency and increase in the density of traffic4 ,on the whole1 railroad rates in the ,united ,states are the lowest in the world4 ,but they cannot continue to grow less forever4 ,rates must be such as will bring in1 above operating expenses1 a reasonable return on the investment as measured by the value of the property4 ,so much the courts will uphold4 ,but that is not enough1 if the railroads are to go into the money markets of the world as borrowers of billions of dollars4 ,a man must do better than graze the sharp edge of bankruptcy if he is to find himself welcomed as a prospective creditor by the investor4 ,so the railways1 if they are to carry this new burden1 must not only be protected against the further destruction of their credit involved in an unending succession of attacks upon their existing revenue4 ,they must also be permitted to earn enough to assure capital that they can pay interest and principal of the heavy additional loans asked4 ,by the light of this practical1 unchangeable fact the railway regulation of the future must be guided4 ,if it is not1 then congestion and a general paralysis of trade1 costing the country more than double its whole bill for transportation cannot be avoided4 ,the ,railroad ,securities ,commission1 with ,president ,hadley at its head1 the ablest and most disinterested body which has ever investigated the subject in this country1 said in its report3 8,where the future is uncertain the investor demands1 and is justified in demanding1 a chance of added profit to compensate for his risk4 ,we cannot secure the immense amount of capital needed unless we make profits and risks commensurate4 ,if rates are going to be reduced whenever dividends exceed current rates of interest1 investors will seek other fields where the hazard is less or the opportunity greater4 ,in no event can we expect railroads to be developed merely to pay their owners such a return as they could have obtained by the purchase of investment securities which do not involve the hazards of construction or the risks of operation04 ,exactly what happens when this right rule is reversed1 and the railroads are forbidden by curtailment of their earning power to attract capital may be understood from the following extract from an editorial on the financial year which appeared in the ,new ,york ,times of ,october #c1 of this year3 8,railways have issued a total of stocks and bonds and notes smaller this year than last by #bc1hba1ajj1 while industrials have increased their issues by #cfb1bhh1fej4 ,the decrease of the railway bond issues was no less than #ii1hhi1djj1 and they were formerly the favorite investment4 ,the increase in industrials was mostly in stock1 the figures being #bei1daf1bej4 ,formerly industrials were unable to market stock in competition with the railways1 but this year they have been able to place between three and four times as much as the railways40 ,while revenue was shrinking1 the obligatory expenses of the railways of the country have increased enormously4 ,their equipment alone is valued at nearly three and a half billion dollars2 the increase during the last nine years being #de4c per cent in locomotives and #ci4g per cent in freight cars4 ,for the mere maintenance of equipment they spent over #dac1jjj1jjj in #aiaj4 ,when we come to consider operation1 the figures mount as rapidly as those on a pressure gauge when the needle is racing toward the danger point4 ,the wages of the railroad employes in this country have reached the stupendous total of over #a1bjj1jjj1jjj a year4 ,according to the advance summary of the report of the ,interstate ,commerce ,commission for #aiaa1 the total number of employes in the ,united ,states decreased in that year by #bi1faa as compared with #aiaj1 while the total wages paid increased by #fd1gda1afd4 ,in no other occupation has such a showing ever been made4 ,if the wage scale of #ahii had been in effect1 the item of labor cost would have been some #cjj1jjj1jjj less4 ,against liberal wages the railways do not protest1 because they know that they can render safe1 adequate and satisfactory service in proportion as their employes are well fitted and well paid for their work4 ,but new outlay must be balanced by new income unless operation is to cease4 ,public sentiment almost always supports the demand of employes for higher wages4 ,public sentiment cannot1 from the point of view of either justice or safety1 continue to prohibit or prevent the levying of such rates as alone will enable the employer to pay the wage rate in many cases practically imposed from without as authoritatively as are the traffic rates that a commission orders into effect4 ,another item of expense which grows out of all proportion to railway revenue or national development is taxation4 ,in #ahij the taxes paid by all the railroads aggregated #ca1bjg1dfi2 in #aiaj they had risen to #ajc1gie1gja2 for #aiaa they are estimated at #aji1jjj1jjj and may be a couple of millions more4 ,the increase in twenty years up to #aiaj is #bcc per cent4 ,this is by direct act of the people4 ,the extravagance of all modern legislative bodies1 the doubling of state and national expenses within a few years and the continuous issue of bonds for all sorts of public purposes formerly met by general taxation have drained the ordinary sources of revenue4 ,the railroad treasury has come to be looked upon as the public milch cow1 from which a new supply of nourishment may always be obtained4 ,so railway taxes have risen by leaps and bounds4 ,each mile of line in the country paid #aii in taxes in #ahij1 and #dca in #aiaj4 ,the owner of capital will not be over-anxious to lend it to concerns which1 if the present tendency is not checked or reversed1 will presently see all receipts beyond a bare living income diverted by taxation to the public treasury4 ,when the state appropriates out of the earnings of the railways1 as it did in #aiaj1 more than one-fourth as much as was paid in dividends to all the stockholders1 the interest rate naturally rises and the possible supply of new capital for railway investment threatens to vanish altogether4 ,if you take two dollars out of your purse each time you put a dollar in1 bankruptcy will happen in time4 ,the railroads are not yet reduced to the point of collapse1 because most of them are still permitted to earn and retain dividends4 ,but their borrowing power has been cut down until it suffices only for hand-to-mouth improvement4 ,their credit must be so far restored as to make it equal to carrying forward the creative and constructive work which we have seen to be a condition of continued national growth4 ,how does their record for trustworthiness stand8 ,what have they done to show themselves fit for that larger liberty of action which is indispensable if they are to perform all the functions belonging to the proper conduct of their business8 ,the railroads of the ,united ,states are entitled to both confidence and relief because they have not abused their trust in the matter of capitalization4 ,while1 to make possible the raising of money1 stock-bonuses undoubtedly were given in their earlier history1 it is true of them as a whole today that they have by far the smallest capitalization per mile in the world2 and that they have kept their capitalization low by using for betterments millions of earnings which anywhere in ,europe would have been handed over to stockholders1 leaving the cost of improvements to be charged to capital account4 ,this is one of the best-established facts in railroad history1 though few people yet realize how great is the difference in our favor4 ,the statistics of railway capitalization1 as given by the ,interstate ,commerce ,commission1 are1 unfortunately1 not always computed according to the same rules4 ,this weakens or destroys their value for comparison4 ,a change of statisticians may involve a change of method4 ,however conscientious the motive1 the result alters relations which should be constant4 ,thus the official railway capitalization in #aiji was #ei1bei4 ,in #aiaj it is returned at #fb1feg4 ,but the increase is chargeable mostly to changes in the assignment of capital stock to one account instead of another2 and one such change alone operates to increase the average capitalization #gjj per mile for the entire ,united ,states4 8,manifestly01 says the ,statistician of the ,commission in his report1 8a figure so constructed should not be subjected to the burden of sustaining any very weighty conclusions04 ,the ,bureau of ,railway ,news and ,statistics estimates the capitalization of #aiaa at #ei1cde per mile2 probably #fj1jjj1 in round numbers1 represents about the average actual capitalization today4 ,this figure is to be compared with the capitalization per mile in other countries1 as shown in the following table3 ,united ,kingdom #bge1jdj ,england alone #cad1jjj ,germany #aji1ghh ,france #aci1bcg ,the increase of capitalization per mile of railroad in ,england and ,wales for the nineteen years between #ahij and #aiji was from #bee1jgc to #cbh1gfa1 or #gc1fhh2 against a total capitalization for all the roads in the ,united ,states in #aiji of #ei1bei4 ,it exceeded our total capitalization by #ad1dbi per mile4 ,the average annual increase for the nineteen years has been #c1hgc per mile1 exceeding the entire annual net earnings per mile of railways in this country during the corresponding period4 ,our capitalization per mile is from one-half to one-fifth that of ,european countries2 partly because the initial cost of construction was greater there1 but largely because of a fixed difference in policy4 ,the ,american railway makes improvements so far as possible out of earnings or surplus1 leaving capital account to carry only new construction4 ,the ,european road distributes earnings among its stockholders1 and issues new capital to provide necessary betterments4 ,the difference accounts for the sharp contrasts of the figures presented above4 ,the ,american policy is in the public interest1 because it tends to keep fixed charges down4 ,a management can take its own time about replacing a surplus used for improvements4 ,when the money has been procured by issuing new bonds1 the interest on these is a mandatory charge and must be added to the total to be raised annually from rates4 ,so far as the public is concerned1 the ,american policy is far better4 ,and it should be remembered that it became the ,american policy by choice1 not of legal compulsion1 at a time when managements had a liberty of action denied to them now4 ,it would be an ironic turn of affairs if this policy1 deliberately followed of their own option by railroad managements through the whole history of ,american railroading1 at the expense of the stockholders and because it favors the rate-paying public1 should be reversed1 and the burden transferred to the people's shoulders as a consequence of regulations prescribed by the people themselves4 ,at present it seems not improbable that this will come true to some extent4 ,a capitalization of #fj1jjj per mile will not transact the business of the country4 ,on all trunk lines and wherever population becomes dense and traffic heavy1 capitalization will have to be made larger for new facilities and double tracking4 ,the heavy amounts required to provide terminals must also be charged to capital account4 ,with wages and material as high as they are now1 billions will be required4 ,if additional money must be borrowed for the less permanent improvement of which ,i shall speak presently1 the country will eventually have to carry a capitalization more nearly approaching that of ,europe2 and1 as a necessary corollary1 rates will rise to a corresponding level4 ,the railways are entitled to confidence and relief because they have displayed efficiency in the conduct of their business4 ,this is just as marked as their relatively low capitalization4 ,the figures already given show an increase of traffic in a year about five times as great as the increase of equipment and eleven times the increase of mileage4 ,yet the machine has been hauling its load1 because efficiency has been developed4 ,heavier rails1 larger engines1 cars of greater capacity1 increased train movement and the full utilization of equipment have kept business moving4 ,the density of traffic in ,england1 ,france and ,germany should be as much greater than in the ,united ,states as the density in the ,middle exceeds that in the far ,western states4 ,yet here are the facts3 ,ton ,miles ,per ,mile of ,road ,france #dif1ici ,united ,kingdom #ebi1fbb ,germany #hbg1djj ,united ,states 7#aiaj7 #a1jga1jhf ,it is clear that our railroads have been capably managed1 and that the resources and powers entrusted to them are being used to the highest business advantage4 ,how the money they spend is being employed is shown by the fact that our railroads move #bgb ton miles of freight per dollar of net revenue1 where the ,united ,kingdom shows only #eh1 ,germany #agb and ,france #hh4 ,for honest and efficient conduct our railways have no equals in the world4 ,by this supreme test they declare their fitness for the gigantic work that still remains to be undertaken4 ,not only1 as ,i have shown1 have they not charged to capital the cost of improvements covered by stock and bond issues in other countries1 but they have shared their gains liberally with the people through rate reductions4 ,it has become common to think of the progressive lowering of rates1 while all other charges are rising1 as the work of legislative compulsion4 ,on the contrary1 many of the most important reductions made in the past were voluntary4 ,these are the lowering of charges on the great staple products of the soil4 ,this has made settlement possible4 ,it has made it possible for the farmer to realize the benefit of high prices for his crops4 ,it has doubled production again and again4 ,it has made possible the movement of lumber from the ,pacific ,coast to the ,middle ,west and even the ,eastern markets4 ,it has become a definite policy4 ,and it has left in the pockets of the people an enormous amount of money that would have gone to the carriers or at least been shared by them if they had fought against cheap transportation for the farm instead of fostering it4 ,if the freight and passenger rates in force on the ,great ,northern system in #ahha had remained unchanged until #aiaj1 there would have been collected from the public #a1bfg1daa1ied additional4 ,this amounts to more than eight times the average par value of its outstanding stock and bonds in the hands of the public during the same period4 ,that is to say1 if there had been no rate reductions on that system during the past thirty years1 it could have paid off its entire capitalization every three and three-quarters years4 ,if railroad rates in the ,united ,states had increased as much in proportion as the prices of commodities and the wages of labor between #ahid and #aiji1 the country's bill for transportation for those fifteen years would have been over seven billion dollars more than it was4 ,the railroads1 then1 have proved themselves competent and trustworthy4 ,but if they are to furnish the necessary additions and provide new terminals1 without which the traffic of the country can no more continue to move than a derelict can voyage from port to port1 the money will not come1 as a magician catches coins1 out of the air4 ,it must be either earned or borrowed4 ,it seems clear to any one familiar with the conditions and requirements that both resources must be drawn upon4 ,first capitalization must be materially enlarged4 ,but the railroads must be able to show that they can earn a fair return before they can add to the principal of their debt4 ,the very fact of additional capitalization involves additional fixed charges4 ,the investor must be assured that such earnings will not be prohibited by the law before a loan can be placed at a bearable rate of interest4 ,and the higher the rate1 the greater must be the future charge on traffic to meet it4 ,the country comes to a stop before a financial 8no thoroughfare01 from which no exit can be found save through a relaxation of the rigid and hostile prohibition of all rate advances that now absolutely negates the proper and necessary expansion of traffic agencies in this country4 ,the theory of encouraging home industry has prevailed in this country during the greater part of our national existence4 ,import duties averaging #da4bb per cent were levied in #aiaa4 ,the advocates of the system claim this is done to protect ,american ,labor4 ,our manufactures are protected as a matter of national policy4 ,transportation costs the public from one-third to one-half as much here as in ,europe4 ,this cheapness is not purchased at the cost of the workingman4 ,in #aiaj the average daily earnings of railway employes in the ,united ,states were more than twice as great as in the ,united ,kingdom1 and two and three-quarters times as much as on the ,prussian-,hesse system in ,germany4 ,as employers of labor and also as producers of a commodity that everybody uses directly or indirectly1 paying that labor more than it receives anywhere else in the world and supplying that service for less than is charged anywhere else in the world1 the railroads deserve a public consideration not extended to them now4 ,second1 the railroads should be permitted to earn and hold a surplus equal to fifty per cent of the amount they pay out in dividends1 to be held for emergencies and applied to improved facilities4 ,there are many expenses1 and new ones constantly arising1 that must not be added to capital charge unless rates are to be made that the public cannot and ought not to be asked to bear4 ,in addition to the heavy demands of the ordinary growth of traffic1 there are many extraordinary expenses4 ,public authorities do not hesitate to order the railroads to provide additional equipment4 ,this1 being only partially under the owner's control1 is soon scattered over the country4 ,the weaker roads prefer paying a per diem charge to buying for themselves4 ,this compels the stronger roads practically to provide new equipment for the whole country and pay the cost of it from their own resources4 ,grade crossings must be eliminated both in the cities and in the country4 ,the ordering of these is held to be a legitimate part of the police power of the state1 whose exercise is unlimited4 ,to raise or lower tracks at a single city may cost millions of dollars4 ,this class of expenses grows very rapidly in the ,united ,states as population becomes denser4 ,shall we capitalize them also1 as has been done abroad8 ,safety appliances must be adopted4 ,ingenuity is adding yearly to the number of these2 and the public demands rightly that they be put into use as soon as their value is demonstrated4 ,but all these things take money--and a lot of it4 ,steel cars are a good illustration of this kind of expense4 ,they are coming into general use1 and it has been proposed to make their purchase and employment compulsory even before their benefits have been fully proved4 ,to buy them is a big expense1 but that is only the beginning4 ,a train made up of them is sixty-five per cent4 heavier than one composed of old style cars4 ,more trains must be run to render the same service4 ,tracks and bridges must be strengthened4 ,so the cost of service is increasing all the time through improvements that the railroads are just as anxious as the public to adopt4 ,every one of these improvements costs money4 ,very few of them produce one dollar of additional revenue4 ,yet the railroads must pay their bills or go into the hands of a receiver4 ,such an increase of rates as will cover these expenses2 the accumulation of at least such a surplus as will furnish funds for these daily demands in the domestic economy of the railroads1 must be authorized1 unless traffic is to decrease1 transportation facilities to grow worse instead of better1 or capitalization to be increased until any rates that the people can pay will fail to cover the fixed charges of the common carriers4 ,an extraordinary doctrine is now being propounded in many quarters4 ,it is held that the accumulation of a surplus is evidence that rates are too high and ought to be lowered2 just as if the man who earns1 saves and puts a dollar in bank to meet future contingencies thereby admitted himself guilty of either dishonesty or extortion4 ,it is held that a railroad has no right to receive or enjoy income derived from any other source than the operation of its plant4 ,it is asserted that a railroad has no right to the natural increment in the value of its property1 though this is not denied to any other corporation or to any individual under like circumstances4 ,it has been attempted to apply these principles to the regulation of railway property1 stripping it of privileges enjoyed by citizens and other corporate entities under the constitution4 ,but how about the other side of the shield8 ,does the state recognize and abide by this same doctrine when its own revenue is at stake8 ,all the earnings of the railroad1 from whatever source derived2 all the property to which it holds title1 no matter how acquired or held1 is taxed by the state as the property of the railroad2 either indirectly by a tax on gross earnings or directly on assessed valuation4 ,the state has taxed surplus and all improvements made from it just the same as those made from the proceeds of stock and bond sales4 ,can it do this--can it tax all earnings1 improvements made from earnings and surplus without confessing that the holders are entitled to the property and the income from it as truly as the state is entitled to the tax8 ,the rule of fairness and the equal hand of the law should make the obligations and the privileges of the railroad co-extensive4 ,the taxes paid by the railways of the ,united ,states in #aiaj were about #ac per cent of the total interest and dividends4 ,they were over #be per cent of dividends alone4 ,that is1 the state received from the property one-fourth as much as all the owners of it put together4 ,in the face of facts like these1 no just man and no court that regards either law or equity should question the right of the railways to enjoy the natural increase and to earn the normal rate of profit on all the property they hold1 no matter how invested or employed4 ,it is not a political but an economic question that the country has to consider and solve4 ,the adjustment of tariff taxation1 the regulation of railroads and all other similar matters over which the legislative power has control and which are essentially economic and non-political are held deliberately within the range of current controversy for the advantage of party politics4 ,so long as they can be kept from a fair and permanent settlement on the basis of economic justice1 they will furnish rallying cries for the unthinking of one political party or the other4 ,the country cannot rise to the level of its duty or its opportunity until the scientific knowledge of the expert and the action of the just judge are applied to the settlement of such economic issues4 ,the ,american people must soon begin to realize how injuriously they are themselves affected by a game that has been played for so many years with their business prosperity and their future welfare4 ,meantime the practical questions that ,i have presented and that grow straight from the root of the present situation remain4 ,the wisdom1 the desire for justice1 the intelligent self-interest of the whole country should be concentrated upon the answer1 which is not really difficult to find4 ,the people must first realize that regulation must not be strangulation4 ,every restriction compatible with the public interest may be applied without impairing the position of the railways1 or their ability to continue serving the public2 because their interests at bottom are one4 ,it is high time that a rational perception of this identity should put an end to hostile discrimination against the railroad1 and a policy be shaped which will permit the railways of the country to lay a broad foundation for transacting the future business of the country1 by providing the machinery without which that business cannot be done4 ,since the greatest need is larger and better terminals1 the process of improvement will be costly4 ,since the sum to be raised must be reckoned in billions1 the railroads1 if they are to maintain their wage scales1 and their standards of efficiency1 must be permitted to charge such rates as will enable them to pay interest on the additions to capitalization representing the money invested in new terminals1 and also accumulate a surplus sufficient to take care of the constantly arising demands for additions to the existing plant4 ,courts and commissions will see that excessive rates are not collected4 ,on the other hand the courts have affirmed the right of the companies to earn a reasonable return on the total value of their property4 ,between these well-marked lines the railway rate should move1 according to the needs of traffic and the development of the business of the country4 ,rates either permanently unchanged at the present figure or lowered by compulsion mean1 in view of the existing emergency1 nothing but ruin4 ,that ruin will not be so immediate or complete for the railroads themselves as it will be for the business interests to which they will no longer be able to give a prompt and adequate service4 ,it will be far-reaching1 because its effects will touch every man1 however humble1 who is engaged in productive industry4 ,if it comes it will be the most disastrous catastrophe in all our business experience4 ,the whole question may be summed up in the simple fact that the business of this country has grown beyond the possibility of being handled by a railroad system costing on an average #fj1jjj a mile4 ,the experience of the whole world is against such a proposition4 ,i do not underrate the importance of other interests or issues1 ,i only give due place and emphasis to this question when ,i say that it dwarfs by comparison every other that bespeaks the attention of our people4 ,what1 in comparison are any of the innovations or interpretations of the national will which have recently formed the subject of a nation-wide and passionate discussion8 ,across every stream of commerce where it enters a distributing city an obstacle grows higher every day1 restraining the impatient tide of the nation's exchanges4 ,it is time for all of us to lay aside prepossessions1 hostilities1 differences in points of view1 and work together for an object infinitely more essential than most of the great enterprises deemed so national in their scope and benefits that they command not only the sympathy but the financial backing of the government itself4 ,it is the duty of every business organization1 of every business man1 of capital interested in safe investment and labor interested in sure and remunerative employment1 to help swing the country into line behind the only policy that can help and save them all4 ,no pledge of national credit1 no subsidy in cash1 no immunity or privilege is asked2 only freedom to raise on reasonable terms the capital without which the work cannot be done2 implying necessarily freedom to earn on that capital the return without which it will not be forthcoming1 and enough additional to make and keep railway equipment and service equal to the progress of invention and improvement and to the just expectations of the people4 ,no national or municipal campaign1 no moral crusade1 no commercial or financial adventure or assurance can demand or ought to receive from you and others like you the attention1 the study1 the energetic support claimed by the imminent and urgent issue which ,i have tried to present in outline4 ,in a day of big things it looms above them all4 ,the railways1 anxious to be active in the upbuilding of the country and the introduction of a coming era in transportation1 stand at attention4 ,will the country give the word of permission and remove the heavy cloud of doubt and depression which has steadily arrested the growth of the nation's commercial facilities8 99 99 99 99 99 99 ,transcriber's note3 --,obvious errors were corrected4