should have been replaced by units of modern and more efficient type.

It is plain, therefore, that the 1921 showing would have been more discouraging if the year had been called upon to assume its normal proportion of maintenance and renewal costs, and if the normal amount of additions and betterments, which usually carry substantial charges to operating expenses, had been undertaken. This being true, it follows that 1922 and subsequent years will be called upon to bear burdens which should have been spread over the preceding five or six years. These burdens, too, will be much greater than if the work had been done at the proper time.

CHAPTER XXIII

THE RAILROAD SITUATION IN JULY, 1922

A

MONG the problems of railroad administration at the close of the first half of 1922, four groups stood out prominently. They were: (1) finance, (2) labor relations, (3) supervising organization, and (4) public relations. The problems of finance were of greatest importance, but as each of the other three groups of problems were closely related to finance, the four will be discussed in reverse order.

During the concluding months of the period of federal control public opinion toward private management of railroads was more favorable than at any time since the beginnings of anti-railroad agitation in the early 70's. The more liberal ratemaking principles of the Transportation Act, the willingness of the Government to recognize the fact that reasonably adequate earnings were necessary, not only for the railroad companies, but also for the public which depended upon railroad service, were the reflex of that favorable attitude. The public had not been pleased with the experiment in governmental control, particularly during the period following the signing of the armistice, and there was a general disposition to encourage and support the railroad executives in their efforts to restore normal service when pri

vate operation was resumed. The friendly attitude continued throughout the greater part of 1920, but a change set in after the effects of the business depression began to be felt early in 1921. Shippers and travelers began to regard transportation charges as unreasonably high. The quality of railroad service was not of the standard demanded. The railroads were charged with responsibility for holding back a revival of business by excessive freight rates. The public in general could not understand why the railroads had not been able to convince the Railroad Labor Board that wages in the period of post-war deflation should be reduced as they were being reduced by other employers. Nor could the general public understand why the railroads continued to plead poverty when they were enjoying rates which had been increased 25% in 1918 and about 35% in 1920.

The spokesmen for the agricultural organizations sought to blame the railroads for the sorry plight of the farmers, and the agricultural bloc in Congress attempted to cut the heart out of the Transportation Act by repealing its rate-making rule. The spokesmen for the individual states advocated an effective limitation on the right of the federal commission to regulate rates within the states. The labor leaders and their statistical experts, in an effort to discredit private management, and to influence the Labor Board in considering the pending petitions from the railroads for reductions in wages and elimination or modification of restrictive rules, made serious charges

against the honesty and efficiency of management.* Propaganda on a large scale was used to poison the minds of the employees against the companies and to promote a sentiment favorable to the Plumb Plan for the "democratization of industry." In short, public opinion, which for a time had been sympathetic toward private management, began to be critical, and in some sections actually hostile. Added to their problems of labor relations, deferred maintenance, diminished traffic and depleted income, the railroad executives had the problem of strained public relations.

Unfortunately this was not generally well handled. The Association of Railroad Executives, through its publicity department, and a few individual roads, endeavored to put the facts before the public, but the information actually reached but a small proportion of the public influenced by anti-railroad agitation. Qualitatively, the publicity of the Association could not be criticized; quantitatively it fell short, and it should have been backed up by the local officers of the individual railroads in their day-to-day contact with the public.

There were wide differences in opinion among the managements of the individual companies as to what should be done in the field of publicity. One group of executives held the view that it was their duty to do all that reasonably could be

*The Interstate Commerce Commission in its rate decision of May 16, 1922 (68 I. C. C. 676) found that railroad management as a whole was reasonably efficient.

done to meet all charges and to state the facts fully and frankly. Distasteful though it might be personally, they felt obliged on the one hand to make an earnest effort to inform that part of the public which welcomes light on both sides of a controversy, and on the other hand aggressively to expose the motives of unfair critics who made false or misleading statements.

Another group of railroad executives took the ground that no good could come from individual or large-scale efforts to meet unfair or misleading charges. They held that the function of a railroad manager was to operate the railroad efficiently so as to give good service and that his mind should not be distracted in that difficult task by irresponsible and selfish criticism, a large part of which, at least in the minds of thinking people, carried its own answer.

Between these two groups was a large number of managers who adopted a middle-of-the-road policy. While not aggressive in their defense, and while not seeking opportunities to press their views, they took favorable occasion to give publicity to the facts as they saw them and were ready to meet a challenge when directly given. Ordinarily such publicity was local in scope and was a defense of the individual road rather than of railroad management as a whole. Such was the policy of the Pennsylvania and the Illinois Central systems. Other roads adopted it on a somewhat smaller scale.

Yet, on the whole, notwithstanding the efforts of the first and the third group of individual