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money from its revolving fund. The depletion of that fund early in 1919 made it necessary for the Administration to require that subsequent expenditures on capital account should come from the treasuries of the companies as the work was undertaken.

The total authorizations for the capital accounts proportion of betterment work in 1919 were less than one-third of those authorized in 1918. A substantial part of the work begun in 1918, however, was continued (including new freight cars and locomotives ordered in that year but not received until 1919) so that the actual charges against capital accounts in 1919 were about $571,000,000, or substantially as much as in 1918. Including similar expenditures made in January and February, 1919, which were about $37,000,000, the total charges to capital account for additions and betterments made during the entire two years and two months of federal control were about $1,200,000,000. The details are listed below:

Two years



1919 Roadway and track.... $294,000,000 $247,000,000 $ 541,000,000 Improvements to exist

ing equipment... 19,000,000 21,000,000 40,000,000 New equipment pur.

chased by R. R..... 161,000,000 64,000,000 225,000,000 New equipment pur. chased by R.R. Admin. 118,000,000 239,000,000 357,000,000

Total 1918 and 1919 $592,000,000 $571,000,000 $1,163,000,000 Estimated expenditures in January and February, 1920..


Grand total.

$1,200,000,000 *Included 200 Russian locomotives leased from the war department.

An analysis of the details in the annual report of the division of capital expenditures, 1919, shows that among the items grouped above as “Roadway and track," the following items, in the order in which they appear, called for the greatest expenditures: (a) Additional yard tracks, sidings and industrial

tracks. (b) Shop buildings, enginehouses, and appurtenances. (c) Additional main tracks. (d) Bridges, trestles, and culverts (renewals). (e) Rails and other track materials (renewals). (f) Freight and passenger stations, office buildings,

and other station facilities. (g) Shop machinery and tools.

The expenditure of over $582,000,000 for new equipment was distributed as follows:

Type of Equipment

Purchased Constructed Purchased

by in Railroad by Railroad Railroads Shops Administration 1,910




2,114* 4,417 Freight-train cars 25,600 12,909 95,704 134,213 Passenger-train cars.... 700 107

807 The improvements to existing equipment consisted mainly of the application of superheaters and mechanical stokers to locomotives.

Director General Hines, in his final report to the President, February 25, 1920, covering the 14 months ended March 31, 1920, made the following comment with respect to new equipment:

“The equipment ordered by the Railroad Administration was allocated to the various railroads according to its judgment as to their needs. The locomotives were accepted as a rule without much protest. The allocation of the cars, however, raised great protest. Emphatic claim was made that the cars ought to be regarded as a war burden and paid for by the Government, also claims were made that the cars were not needed in the number or of the character allocated. Upon receipt of any such protest each case was considered on its merits and such modifications made in the allocation as seemed to be just. When it became clear that the prices of equipment at the end of federal control promised to be higher than the Government paid for the equipment in question, the objections to the allocations disappeared in many cases and, in fact, some companies which had objected to the allocations, because too large, sought and received additional equipment.out of the amounts not allocated.' This comment has a bearing upon the standardi

a zation of equipment. The subject is treated extensively in Chapter VII.

In the saine report Mr. Hines concludes his discussion of capital expenditures with the following pertinent observations on the pressing need for further investments in additions and betterments:

“During a considerable period immediately preceding federal control, the railroad companies had cut down the amount of their expenditures for additions and betterments and equipment because of the high prices, difficulty in obtaining deliveries, absence of funds, and so forth. The Railroad Administration was, of course, not able to make any plans whatever with respect to a program of capital expenditures for either way and structures or equipment for the calendar year 1920; and it is understood that comparatively little has been done in that direction up to the present time by the railroad companies. The result is that at this time very large expenditures are called for on the railroads in the public interests to increase their efficiency and

enable them to meet the growing demands for transportation. Unless the railroad companies shall be able to adopt and enforce the important unifications of facilities and equipment and control in the common interest of the handling of the business in times of stress, the available facilities and equipment will turn out to be wholly unequal to the requirements of the public. Even with substantial continuance of all the important methods of unification and common control, the necessity for very large capital expenditures, both of way and structures and for new equipment, will be very






HE second year of federal control was marked by acute dissatisfaction on the part

of labor and by many strikes. A substantial part of the time of the Director General and the Director of Operation, as well as the entire time of the Director of Labor, was spent in labor negotiations. At one time it was necessary for President Wilson to take an active part in a controversy with the shop crafts.

The labor situation in 1918, and the policies of Director General McAdoo in dealing with employees, are discussed in Chapter XI. In that year, during 11 months of which the United States was engaged in the war, Mr. McAdoo adopted a fairly liberal policy in advancing wages and in conceding principles favorable to labor. When Mr. McAdoo assumed the duties of Director General he found that the classified employees, whose extreme demands in 1917 for greater compensation had not been met by the railroad managers, were in the mood to force the issue even by attempting to paralyze railroad service by a general strike when the nation was at war. Prompt assurance that the demands of the employees would have immediate and sympathetic attention by the


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