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Railroads and Government by Frank Haigh Dixon Hard Cover
Railroads and Government by Frank Haigh Dixon
Their relations in the United States 1910--1921
Hard Cover
384 pages
Copyright 1922
CONTENTS
I. INTRODUCTION
Conditions under which the Interstate Commerce Commission developed-Reasons for its lack of accomplishment in its early years-Amendments of 1906-The plan of this volume.
FEDERAL REGULATION, 1910 TO 1916
II. RATE REGULATION 7
Power to suspend rates-Reasoning upon which the amendment was based-Burden of proof thrown on the carrier-English v. American practice-Attempt to require advance approval of rate increases-Railroad co-operation in rate procedure-Rate cases, 1910 to 1916-Disagreement in the Commission concerning its function in rate-making-Financial situation of roads, 1908 to 1916-Causes for decline in railroad credit-Forwarding Case-New York Harbor Case-North Dakota Coal Case and Norfolk and Western Passenger Case.
III. THE LONG AND SHORT HAUL 28
History of the long and short haul clause to 1910-Amendment of r910-The problem in the South concerning both passenger and freight traffic-The trans-continental situation-Establishment of the zone principle and the differential-History of trans-continental rates to 1921-Commissioner Lane on rate policy-Supreme Court on the water-competition clause.
IV. THE COMMERCE COURT 43
Its functions-Defense by Attorney-General-Illinois Central Coal-Car Distribution Case-Goodrich Transit Co. Case-Pacific Coast Switching Cases-Procter & Gamble Case-The Lemon Case-Summary of the controversy between court and Commission-Reasons for the abolition of the court.
V. ADMINISTRATIVE ACTIVITIES 52
General increase in powers-The pipe-line amendment. 1. Discrimination-Tap-lines. 2. Commodities clause-Judicial history-The Reading Case-The policy of the Commission-3. Express rates-Zone system of rate-making. 4. Mail pay-History of the controversy-Commission's decision of 1919. 5. Accounting-His-tory of Section 20 and development of accounting regulations following amendment of 1906-Inspection of accounts-Violations of accounting regulations-Court cases-Depreciation-Separation of operating expenses. 6. Valuation-The Act of 1914-Work of the Bureau of Valuation-Valuation theories of the Commission-Importance of the valuation. 7. Safety measures-Jurisdiction of the Commission-Block-signals-Failure of the human element-Trespassing-The automatic stop-Hours of Service Law.
VI. RELATIONS OF RAIL AND WATER LINES . . . . 81
Unreality of water competition-Statutory power of Commission over water traffic-Panama Canal Act-Intercorporate relationships of water and rail carriers-Commission's interpretation of the Panama Canal Act and its consequences-Regulation of physical connections at ports and docks.
VII. THE LABOR PROBLEM 89
Development of "concerted" movements-National legislation, the Erdman Act-The Newlands Act-Wage controversies, 1910 to 1916-Weaknesses of the arbitration method-The movement for the eight-hour day in train-service-Passage of the Eight-hour Law -Its constitutionality tested-Report of the Eight-hour Commission-Estimate of wage increases.
THE WAR PERIOD
VIII. THE RAILROADS' WAR BOARD 107
Railroad organization for Mexican border troubles-Functions of Council of National Defense-Creation of Railroads' War Board-Existing legislation applicable to the emergency-Car-service organization-Esch Car-Service Act-Priority Act-Distribution and allocation of equipment-Heavier loading and more rapid movement-The troop movement-Statistics of operating efficiency-Failure of complete achievement by the War Board.
IX. FEDERAL CONTROL 119
Operating conditions at the time the Government took possession-The reasons for action by the President-The presidential proclamation-The Federal Control Act-The standard contract-The provision for maintenance of property-Controverted questions-Contracts signed-Was the compensation a fair one ?-The "short-line" situation and contract.
X. FEDERAL OPERATION 133
Administrative organization-Economies in service-Elimination of passenger service-The desirability of such methods in normal times-Unification of terminal facilities-The terminal problem-The permit system-Administration of marine terminals-Reduction of salaries of executives-Short-routing of freight-"Sailing- day"-plan-Solid train-loads-Administration of the-car-supply--Results of the pooling system-Miscellaneous contributions to efficient operation-The consolidated ticket office-Its future-Its legality-Advertising and soliciting-Operating Statistics Section Accounting-Standardized maintenance-Standardization in manufacture of locomotives and cars-Controversy over the allocation of cars-Unification of express companies-The express contract-Government operation of coastwise, canal, and river lines-Experience with the New York Barge Canal-The two purposes of the federal administration-Summary of operating results-The situation after the armistice.
XI. RATE REGULATION 158
Rate increases-Effect of the increases contrasted with Administration predictions-Should the increase have been greater and more frequent 2-Uniform classification.
XII. RELATION OF THE RAILROAD ADMINISTRATION TO OTHER REGULATING AGENCIES 67
Effect of federal control upon the statutory rights of railroads-Interstate Commerce Commission deprived of its powers-Development of traffic conferences-Attempt to restore Commission's authority-Division of Public Service-Willamette Valley Lumber-men's Association Case-Long and short haul cases-Relation of federal administration to state authorities-North Dakota Case.
XIII. THE GOVERNMENT AND LABOR 177
Labor conditions at the outbreak of the war-The President and the Brotherhoods-Award of the Railroad Wage Commission-Adjustment boards-Statistics of wage increases-Dilatoriness of the Government in handling the wage problem-Success of the bipartisan adjustment boards-Development of standard rules and working conditions-The eight-hour day-The national agreements-Gains to labor from the Government policy-The question of labor efficiency during federal operation.
XIV. FINANCIAL RESULTS. SUMMARY OF FEDERAL OPERATION 191
Summary of contract terms-Funds available to Administration by Congressional grant-Operating deficit-The maintenance section of the contract-The controversy and its probable outcome-Physical condition of the properties-Government's policy concerning capital expenditures-Financial statement-Allocation of equipment-Miscellaneous investments-Statutory provisions relating to the guarantee period-Payments withheld by the Treasury-Congressional relief-The Funding Bill-Arguments pro and con-Use of the revolving fund-Summary of federal operation-The first year a necessity and on the whole a success-The second year one of waiting and hence unsatisfactory- Was the Administration wasteful and inefficient ?-Director-General Hines's opinion.
THE RETURN TO PRIVATE OPERATION
XV. THE PROBLEM OF RECONSTRUCTION AND THE ACT OF 1920 213
Necessity for Congressional action-Previous investigation by Congress-The President's message-Director-General McAdoo's plan-Proposals of the Interstate Commerce Commission-Plan of Association of Railway Executives-Controversy over the place of the bondholder in management-Summary of proposals for legislation-The Plumb Plan-Legislative history of the Transportation Act of 1920-The guarantee period-Continuation of the conditions of the war contract-Rates not to be reduced before September 1, 1920.
XVI. THE PROBLEM OF RATES 227
The rate section of the Act of 1920-Does not contain a guarantee-The return is on property, not securities-Elasticity to limitation on earnings-The problem of competing roads-Constitutionality of recapture plan-Obstacles to its practical working-Effect upon provision of new capital-Determination of property value-The rate decision of July, 1920-The New England rate situation-General results of the rate increases-Significant features of the rate section.
XVII. THE PROBLEM OF RATES (CONTINUED) 247
1. Rate suspension-Development in administrative efficiency of Commission-Reorganization of procedure-Shortened period of rate suspension-Economic objections to refunding provision-The legal status of the reparation process-Administrative objections to refunding process. 2. Long and short haul-The Commission's rulings made a part of the statute-Decline in river competition. 3. Minimum rates-Attitude of the public in the past-Economic consequences of lack of control of the minimum-Amendment of 1920.
XVIII. THE CONFLICT OF JURISDICTION, STATE AND INTERSTATE 258
History of the controversy-The safety-appliance decision-The Minnesota and Shreveport Cases-The Act of 1920-Interpretation by Commission in enforcing its rate decision-The New York and Illinois Cases-Method of procedure, the Arkansas Case-Significance of this position, if sustained.
XIX. RAILROAD CONSOLIDATION AND FEDERAL INCORPORATION 268
Compulsory v. voluntary consolidation-Partial and complete consolidation-The provisions of the statute-John E. Oldham's plan-It demonstrates the reasonableness of the statutory scheme-Earlier attempts at combination untimely-Purpose of consolidation-Competition in service v. competition in rates-Constitutionality Desirability of consolidation-Pooling permitted-Will this be of importance ?-Consolidation of the express companies and the new contract with the railroads-The express company a superfluous agency-Federal incorporation-Arguments for and against it-The federal holding company.
XX. FEDERAL REGULATION OF CAPITALIZATION 284
Earlier attempts at legislation-The Federal Securities Commission-Relation of capitalization to rates-Relation of capitalization to credit standing-Dishonest financial management-Recent examples-Weakness of state control of capitalization-Provisions of Act of 1920-Prohibition of intercorporate directors and officers-Relation of the bankers to the railroads-Holding companies-The Burlington and Lackawanna stock increases-Capitalization of surplus-Position of the Commission.
XXI. ADMINISTRATIVE POWERS 300
1. Service-Effect of competition upon service-Private-car problem-Amendments of 1920 concerning car-service-Emergency powers-Their exercise by the Commission-Certificate of public convenience. 2. Accounting and statistics-Depreciation rates to be prescribed by the Commission-Access to correspondence-Apportionment of expenses-Accumulation of commodity statistics-New classification of employees. 3. Cash payment of freight bills-Removal of discriminations.
XXII. REGULATION OF WAGES AND WORKING CONDITIONS 310
Condition of labor at the close of federal operation-Two legislative proposals, the anti-strike provision and the bipartisan mediation boards-Labor provisions of the Act of 1920-Wage increases of 1920-Bases of the decision-Reduction of wages in 1921-Violations of the Act-The Erie Railroad Case-National agreements-Their character and origin-The issue before the Labor Board-Decision of the Board-Labor code promulgated-Its significance-Failure of adjustment boards-The issue on the Pennsylvania-Relation of the Labor Board to the Interstate Commerce Commission.
XXIII. REGULATION OF WATER TRAFFIC 335
Procedure at the end of federal control-New York Barge Canal experience-Withdrawal of Government craft from the New York Barge Canal-Congressional declaration concerning water transportation-Jurisdiction of Commission over domestic portion of export commerce-Conflict of jurisdiction between Commission and Shipping Board-Criticism of our water-transportation policy.
XXIV. THE FUTURE 340
The railroad problem not solved-A line of development suggested-Government ownership-Government operation-Economic and political objections-Co-operative economies in operation-The terminal problem-Terminal costs-Allocation of equipment-Proposals of Association of Owners of Railroad Securities-The labor problem-National organization and local negotiation-Participation of employees in management-Compulsory arbitration a desirable goal-Competition of the motor-truck and necessity for cooperation-Water competition and co-operation-Railroad policy-A programme of co-operation supervised by the Commission-The Commission's administrative independence must be maintained.
APPENDICES
I. BIBLIOGRAPHICAL NOTE 367
II. TENTATIVE PLAN FOR RAILROAD CONSOLIDATION ' 369
INDEX 379
PREFACE
THE purpose of this book is to take up the story of the federal regulation of railroads in the United States where most of the treatises on transportation have dropped it, at lip 0, and bring the history down to the present year. There is no intention to trace from the beginning the development of the fundamental principles of rate regulation upon which present administration relies. This has been admirably done by others. Professor Ripley's two scholarly and exhaustive volumes-Railroads : Rates and Regulation and Railroads : Finance and Organization-leave little to be said on the period that he covers. And this period will be recalled only so far as is necessary to create a background for the later history. This volume is written by a teacher, with teachers primarily in mind, and it is hoped that it may serve as a supplement to existing texts, in spite of its obvious departure at times from that nice balancing of conflicting points of view which is commonly supposed to be the outstanding characteristic of the academic mind.
But the book has quite another and an equally important object. Effort has been made to relieve the discussion so far as possible of technical features in order to beguile the general reader into at least a hasty perusal. For we have been passing through an extraordinary decade in the relations of railroads and government. More experience and experiment have been crowded into these ten years than into all the remainder of our railroad history of nearly a century.
We have employed our transportation machine as a war agency to an extent never before experienced, and for the first time in our history we have ventured upon government operation. Whether or not this experiment may legitimately be employed as an argument for or against nationalization of railroads as a permanent policy, the twenty-six months of federal control demonstrated the soundness and practicability of many projects for more efficient operation under private auspices-projects that will be a subject of lively discussion until they are realized in actual practice.
And again the war experiment shook us out of a lethargic state into which we seemed to have fallen, and started us with renewed vigor on the task of solving this perennial railroad problem. Many of the features of the Transportation Act of 192o had been long advocated, but their advocacy had fallen on deaf ears. And suddenly without ostentation and almost naturally they became a part of our regulating statute.
More than this, the railroads are now officially placed in a new relation to the public, and the regulating body is imposed with a mandate that requires it to recognize this relationship. Congress has formally declared that it is the business of the Government to provide the public with adequate and efficient transportation service and to assure to private capital the revenue needed to accomplish the purpose. A new responsibility is placed upon the Interstate Commerce Commission. But this very fact emphasizes and enforces the public nature of the industry with which we are dealing. Railroad executives and railroad labor are warned as never before that they are administering a public trust, and that the future policy of the nation will be influenced by the character of their stewardship.
We are entering then upon a new phase of the railroad problem, in which knowledge and sound wisdom is called for from the electorate. It has been the wish of the author to contribute his mite to an intelligent understanding of the issue.
It is desired to acknowledge the courtesy of the respective editors of the Quarterly Journal of Economics, the publications of the American Economic Association, and the Carnegie Economic Studies of the War for permission to use in condensed form portions of articles that have appeared under their auspices. The author rests under especial obligation to Dr. Julius H. Parmelee, Director, and Mr. Richard H. Johnston, Librarian, of the Bureau of Railway Economics, in Washington, who have placed unreservedly at his disposal their advice and services, and their unrivalled collection of printed and manuscript material on railroad problems.
FRANK HAIGH DIXON.
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