vored the Southern ports at the expense of North Atlantic ports; but the consensus of opinion of disinterested traffic experts is that the Administration's action in that and in other cases was justified from the national viewpoint. On the whole, it is the writer's opinion that an honest effort was made in all adjustments and changes to treat individuals and localities fairly without regard to political effect.

Finally, we may ask ourselves whether the recent experiment in federal control affords an adequate test of the desirability of a permanent policy of public ownership and management. The answer is plainly in the negative. The results in 1918 were favorable. In 1919 they were unfavorable. They were favorable in 1918 because at that time we were actively engaged in war, every influence of patriotism supported the Railroad Administration, and the organization was held at concert pitch by the critical military needs. The unfavorable results in 1919 may be attributed in greater part to the pronounced reaction from war-time strain, to the serious decline in traffic, and to the disintegration of the organization in a too prolonged closing period. No one should question the expediency of the Government's action in taking the railroads in the emergency. The centralization of power and the more effective coordination with other branches of the Government in the crisis made possible results in the effective utilization of equipment and facilities which would have been much more difficult under private management. But it is not proper to treat that part

of the period as the test of what might be expected under normal conditions. As regards the unfavorable year 1919, it would be as unfair to make that a test of Government operation as it would be to take the present period of subnormal traffic and disturbed economic conditions as the final test of private management.

Those who advocate nationalization and look upon the results of both years as favorable to Government operation must concede that they are to be credited to railroad men who rose to the emergency. The proponents of nationalization who are disappointed in the results of the two years attribute the failures to the fact that the real management during the greater part of federal control was in the hands of men who were brought up under private management and who, therefore (from the viewpoint of nationalization), could not or would not avail themselves of the advantages of unification.

It is plain, therefore, that nothing definite can be proved from the results of 1918-19. A real test of Government operation is possible only if carried on over a longer period-one in which business conditions are normal and in which political expediency would have normal play. The period under review was so abnormal that the results are valueless as guides to what might be expected from similar control or complete Government ownership when normal conditions return. As it is not the purpose of this book to discuss the broad question of railway nationalization, the subject will not be pursued further here.

T

CHAPTER XXI

THE TRANSPORTATION ACT OF 1920

HE main purpose of this book is to record the reasons for and the results of federal control of railroads during the war period. With that record, however, should go a brief review of the more important and outstanding features of the reconstruction period.

Federal control of railroads terminated at 12:01 a. m., on March 1, 1920. The return of the roads to private management was accomplished under the terms of the Transportation Act. That Act was the final result of more than one year's active consideration by Congress of the whole railroad problem. The hearings before the appropriate committees began early in 1919, but the Act was not approved by the President until February 28, 1920, a day before it became effective. Many plans were proposed for adoption by Congress, and the discussion before the committees and on the floors of Congress attracted wide public attention.

*

*The Cummins bill was reported to the Senate on October 23 and was passed on December 20. The Esch bill was reported to the House on November 10 and was passed on November 17. The conference bill was reported on February 18, passed by the House on February 21, and by the Senate on February 23. President Wilson approved the Act on February 28.

The bills first passed by the two branches of Congress differed in many important respects, but these differences were finally harmonized in joint conference. Strong opposition to the joint bill was voiced in Congress, particularly by the representatives of labor and by the proponents of nationalization. The former advocated the Plumb Plan which contemplated Government ownership combined with operation by a joint board composed of representatives of railroad management, the employees and the public. The latter vigorously opposed a return to private operation in any form and urged Government ownership as the ultimate solution.

In the effort to defeat the joint bill, great pressure, in threats of political punishment, was exerted by the labor unions upon individual senators and congressmen. When the bill was finally passed by both branches of Congress, that pressure was brought to bear upon President Wilson. But public opinion, in its reaction against Government rule during the war period, overwhelmingly insisted upon the termination of federal operation of railroads, unmistakably opposed any form of Government ownership, and demanded an early return of the railroads to their owners for private operation with its free play of competition. In these circumstances Congress and the President responded to public opinion at large, and the Transportation Act became law over the protests of organized labor and other advocates of nationalization.

The Act amended in some respects nearly every section of the existing Act to Regulate Commerce.

It gave the Interstate Commerce Commission greater control over rates and service, routing of freight, extensions, abandonments and consolidations of lines, and joint use of terminals and equipment. It also vested the Commission with greater powers in determining the divisions of through rates on interline traffic between the carriers participating in the haul.

It is not necessary here to go into the details of these amendments.* This review will be confined to the four outstanding features, viz.:

(1) The provisions for the orderly transition from federal to private control;

(2) The new rule of rate-making;

(3) The provisions for railroad consolidations;

(4) The creation of the Railroad Labor Board.

During the 26 months of federal control there were serious dislocations in the normal flow of traffic and much disturbance in operating and financial features from the viewpoint of the individual companies. Serious doubts were entertained whether many carriers could successfully stand the shock of the change, and there were fears that general financial embarrassment might follow the cessation of payment of the Government rentals which the companies had received during federal control. To avoid disaster of that kind the Act provided for a six months' transition period (commonly referred to as the guarantee period) in which the properties would be operated

*An excellent review will be found in "Railroads and Government," by Professor Frank Haigh Dixon, 1922.