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it was inevitable that discipline should be impaired and that the morale of the service should suffer.

During the year 1919 the three boards of adjustment handed down 3,100 decisions. The output of board No. 1 was 102 decisions per month, or about 4 per working day. In addition the Division of Labor made decisions in over 600 cases affecting employees whose cases were not referred to the boards. Then, too, there were the numerous cases investigated and adjusted locally by the field agents of the Division of Labor. The 1919 annual report of the Director of Labor contains a list of over 300 cases of the kind.

An examination of the decisions of the boards of adjustment indicates a wide variation in the number of the cases presented to the boards by the employees or the managements of individual roads. Some roads had but few cases; others had many. It is not possible without an intimate knowledge of the facts to say whether in the first set of cases the freedom from dispute was the result of exceptionally harmonious conditions and disinclination on the part of the employees to appeal, or whether it was the result of weakness on the part of the management in avoiding trouble by conceding practically all claims. In the second set it is not possible to state with assurance whether the many disputes were caused by an exceptional lack of harmony and a disposition on the part of employees to seek for cases to appeal, or to a narrow or unbending attitude on the part of the management to concede nothing of a controversial nature and to play safe by shifting the responsibility to Washington.





HE financial results of the year 1919 were much more unfavorable than those of 1918.

The deficit in 1918 was approximately $245,000,000. For the entire period of federal control, January 1, 1918 to March 1, 1920, the deficit was at least $1,200,000,000. This was the estimate given by Director General Davis* in his letter of May 5, 1921, to the Chairman of the Committee on Appropriations of the House of Representatives. In April, 1920, shortly after the close of federal control, Director General Hines stated that the deficit would be about $900,000,000. This figure, however, failed to include many items which Director General Davis had taken into account in his higher estimate. It is quite probable that the final sum will be substantially in excess of Mr. Davis' estimate of $1,200,000,000, if the railroad companies are successful in obtaining recognition of even a small part of the claims which are now pending. In his letter above referred to, Mr. Davis estimated that the claims for undermaintenance alone would probably run from $700,000,000 to $800,000,000 and he added that “the Railroad Administration records fail to support claims for overmaintenance sufficient in amount to offset these amounts, and it is quite evident that some allowance must be made on account of undermaintenance." Up to December 10, 1921, final settlements had been made with railroad companies owning 44% of the mileage (excluding "short lines”) under federal control. The delay in settlement was mainly the result of differences in viewpoint on the one factor of maintenance, and the time taken to prepare the vast amount of accounting detail required by the Administration, or furnished by the railroad companies on their own initiative, in support of their claims. These settlements included compromises on claims for undermaintenance, but that item, in each case, was lumped with other disputed claims and no itemized statements which furnish an indication of the relation between the amounts claimed and the amounts allowed for undermaintenance have been made public.

*Mr. Hines was succeeded as Director General on May 15, 1920, by John Barton Payne. Mr. Payne, who combined his duties as Secretary of the Interior with those of Director General, resigned when the Democratic administration went out in March, 1921. As his successor, President Harding appointed James C. Davis, general counsel for the Railroad Administration. Prior to his connection with the Railroad Administration Mr. Davis was general solicitor of the Chicago & Northwestern Railway.

Director General Davis, in a report to the Senate, under date of December 10, 1921, in response to a resolution asking for information on the status of the accounts of the Railroad Administration, with particular reference to claims, refused to itemize the details of the final settlements made with individual carriers. His refusal, which he stated had the approval of President Harding, was based on the ground that to make such detail public would embarrass him and delay progress in the settlement of pending claims of other carriers. *

The details of the estimated deficit of $1,200,000,000 are not available to the writer, but some light on individual items may be had from the final report of the Division of Finance, which gave the estimated deficit as $900,478,757. The difference is mainly in claims of various kinds not then taken into account. The report is dated May 10, 1920, and gives the following analysis of the Profit and Loss account as of February 29, 1920, when the roads were returned to private operation:

ANALYSIS OF PROFIT AND Loss ACCOUNT Estimated excess of operating expenses

and rentals over operating revenues : Class 1 railroads..

$677,513,152 Other privately owned properties... 43,011,129 Inland waterways.




Expense of central and regional organization...

13,954,980 Deficit, American Railway Express Company.

38,111,742 Adjustment of materials and supplies.. 85,204,618 Net interest accruals.

37,558,162 Non-operating income..

$ 12,336,855 Deductions from gross income.

10,118,034 Miscellaneous profit and loss items. 4,894,056 Profit and logs debit balance..



. $912,815,612 $912,815,612

In analyzing the causes of the deficit under federal control, Director General Hines in his final

*Railway Age, Dec. 17, 1921, p. 1213.

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