the railroads, as well as the public. We believe that by increasing the membership, and in this way, providing for further division of duties, the commission will be enabled to handle promptly and successfully the new duties which it should be called upon to assume. EMPLOYEES ON DIRECTORATES. The employees of the railroads are entitled to fair wages and good working conditions. In arriving at the proper basis, the cost of living, the nature of the work, and rates current in other similar employment should be considered. To insure just consideration of all factors, we feel that the employees should have direct and permanent representation on the boards of directors of the various roads; but this direct participation in the management should carry with it a corresponding responsibility to their employers and the public, and serious differences between the roads and the employees should, in consequence, be largely reduced. BOARD OF APPEAL. To take care of the possible differences that can not be satisfactorily adjusted by negotiation between the parties, we recommend a permanent tribunal to be composed of representatives of the railroads, of employees and of the publicthese latter, at least, to be appointed by the President of the United States and confirmed by the Senate; and to this tribunal should be referred all questions of wages and working conditions which can not be otherwise settled with the usual and necessary provision that their finding shall be final. By this method, substantial justice would be assured, the excuse for an arbitrary attitude on either side would be done away with, and strikes, coercion, and interruption of service prevented. PROTECTION OF PUBLIC. The paramount interest of the public in the proper settlement of the differences between the common carriers and their employees has come to be fully recognized. The feeling that the people at large should not be forced to endure inconvenience and serious loss through interrupted service is now finding acceptance more generally than ever before. Under the new conditions and heavier charges which we are approaching, it seems wise that the railroad companies should not lightly assume excessive burdens simply to bring about an easy settlement of wage controversies, with the idea of promptly transferring the entire charge to the shoulders of the people through increased rates. These considerations point very strongly toward representation of the public interest on the directorates of the companies. If these suggestions are adopted and the employees and the public both have such representation, we feel sure that the directorates of the railroads in future will have less the character of trustees of large financial institutions, but will represent and promote the real transportation interests of the country far more effectively than they have done in the past. We recommend that the opinion of the members of the chamber be obtained upon the principal feature which should underlie future railroad legislation. We submit herewith nine questions embodying what seem to your committee to be the fundamental features involved; and recommend that these questions be submitted to the members of the chamber for a referendum-mail vote. Respectfully submitted. 'CHARLES F. WEED, Chairman, ALBERT L. SCOTT, Vice Chairman, B. PRESTON CLARK, EDWARD J. FROST, CHARLES H. JONES, WILLIAM E. JONES, EVERETT MORSS, GEORGE R. NUTTER, ROBERT L. STUDLEY, Special Committee on Government Relations to Commerce and Transportation. During the preparation of this report, Ex-President Charles F. Weed has been in Australia and other eastern countries, and therefore has not participated in the drafting of the report or arriving at the conclusions embodied therein." COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, HOUSE OF REPRESENTATIVES, STATEMENT OF MR. ALBA B. JOHNSON, PRESIDENT OF THE RAILWAY BUSINESS ASSOCIATION, PHILADELPHIA, PA. The CHAIRMAN. The committee will now hear Mr. Johnson. Give your name and address and whom you represent. Mr. JOHNSON. Alba B. Johnson, 605 Morris Building, Philadelphia, Pa.; president of the Railway Business Association of New York, and up to within a few weeks, 42 years connected with the Baldwin Locomotive Works, Philadelphia, for the last nine years of which I was the president of that concern. The Railway Business Association, of which I am president, is composed of manufacturing, commercial, and engineering concerns the whole or a considerable part of whose business is selling goods or services to steam railroads. Our roster will be handed to the clerk. Our members have plants, offices, or operations in nearly every State. It is believed that the companies engaged in this kind of business employ when running moderately full time about as many men as the railways themselves or something like a million and three-quarters. In many large towns these industries are the reason for the community-its life. In most of the larger centers from coast to coast they form a very large proportion of the whole. The most extensive centers are Chicago first and New York second. Representations of these business men to your honorable body are those of a special element speaking from its own point of view. They believe they desire nothing that is not in the public interest. National prosperity is their prosperity. Nevertheless those for whom I speak offer testimony only about matters which concern or afflict them in their occupation. Nor have we any detailed plan. We rather emphasize certain objects which we hope Congress will seek to accomplish through whatever plan it may adopt. With your permission I shall first state the purposes which we urge you to embody in the statute; second, set forth an industrial condition which requires remedy, and third, discuss from our point of view a very few of the particular current proposals as they would affect the railway supply industries. The purposes of which we ask your consideration can be stated in one sentence. We favor a prescription by Congress that rates and fares shall be such as will yield revenue sufficient for adequate maintenance and development of transportation, and a lodgment of the authority and the duty to promote such adequate maintenance and development in Federal agencies each adapted to its respective task. Railway buying for nearly a decade has shown two distinct changes from conditions previously existing. On the one hand the total amount of material consumed in additions and betterments during a given period has decreased rather than increased. It would be superfluous to repeat here the familiar figures as to provision of track, motive power, and car capacity. The slow-down in development of terminal facilities other than track is also well known. In the long run this has had the effect of restrain ing the growth of railway-supply industries, limiting the opportunities of employment in them and retaring the progress of communities where railway goods are made. On the other hand, at the same time that the aggregate quantity of industrial output for transportation purposes in a given period has exhibited this backward tendency, there has been a marked drift in the direction of instability in the business of railway manufacture. Large purchasing has come to be concentrated in periods of general business activity, whereas in times of general depression the railroads have drawn their purse strings tight and waited for resumption of traffic and earnings. Now, if there is one thing that the Railway Business Association has endeavored year after year to make clear it is this: That we would not desire and would not favor superflous or excessive railway purchases for the purpose of keeping these supply industries busy. Again and again we have declared that waste benefits nobody. Waste retards national prosperity and, I may say again, national prosperity is our prosperity. What we ask you to consider in regard to the volume of purchases through a given period is that their amount measures our national growth; that during many years down to about 1910 the inventors and developers of railway appliances proceeded on the assumption that the United States would continue to develop its natural resources and to open up territory not yet accessible. They calculated future railway needs by the yardstick of past consumption. This was regarded as a warrantable basis of forecast because the undeveloped regions within our continental domain comprised still a vast empire containing untold riches-agricultural, forest, and mineral. They hoped and believed that the time when a halt would be called on internal development of this wonderful new country was far beyond their lifetime. What warning had they to the contrary! Was there any decision, either formal or informal, to stop opening up new areas and to slow down the development of older regions? If there had been a formal decision, where was it made and who made it? Had Congress ever enacted legislation of which the declared purpose was to arrest railway improvement and extension? Had any committee of Congress or any President recommended or even considered such a course? You gentlemen well know that no such policy of pessimism and despair ever was proclaimed in any official quarter. Had there been any consensus of public opinion that the time had come to withdraw encouragement for capital to go on giving the American people closer communication with one another and new access to the wilderness? On the contrary. Farmers were clamoring to be brought nearer to market. Consumers of food, clothing, and fuel, users of dwellings and furniture were shouting from the housetops their demands that new sources of supply be created and reduction made in the cost of living. The voice of labor was beseeching that measures be found for that stabilization of employment in industry which results from the creation of new centers of population where the products of labor might find new markets. Chambers of commerce by the hundred were establishing bureaus with expert personnel to attract new factories and enlarge old ones, and calling upon the railroads for improved terminals and other facilities. There was nothing on any hand to indicate that the American people were content with the national development thus far accomplished, but there were innumerable signs that they desired and expected a continuation of pioneering and settlement of the rich regions still awaiting communication. Railway supply men, therefore, 10 years ago went ahead equipping themselves to perform what they supposed was the highly important and universally desired function of getting the railroads ready for future traffic needs and equipping themselves on a scale proportioned to the continuance of past ratios of railroad growth. Without formal or informal notice or declaration railroad construction all but ceased, and we had our plants and our business organizations on our hands. What is done is done. Our thoughts are of the future. Industrial managers in this field are trustees for their employees and for their stockholders. As such they feel that they ought now to come to Congress and seek a frank understanding. Their course from now on must be shaped by their impression of the Federal purpose. They await decision one way or the other. They inquire whether or not the country intends to continue internal development; whether it looks to them for trustworthy provision of railway appliances and for progress in the introduction of economical and efficient devices. They think they ought to ascertain if possible what is their responsibility and their opportunity. They believe they should receive authoritative assurance whether their cooperation is desired and whether they may prudently go forward with projects. Consider next, if you please, the instability of purchases. A large part of the time those who have plants and organizations established to serve railway needs have had either feast or famine. Our employees have tended to be either driven with protracted overtime or limited to working short days, short weeks, alternate weeks, or not at all. We have not the slightest doubt that financial panics have been obviated by the Federal reserve bank system. Warrant for such faith is to be found in our immunity from them during the last five years of exceptional strain, as contrasted with the prior experience of our own country and in the experience for many years of most of the civilized countries of the world. But Germany had mobile reserves, and in 1914 Germany was plunged in an industrial and commercial depression, the approach of which had led some observers to predict some months before that Germany would have to go to war in order to prevent a social and political cataclysm. England, France, and Japan have mobile banking resources, but they have had depressions. There was no panic in 1914, yet in that year commerce and industry in the United States were in dire distress, destined to be relieved only by war contracts, because the railroads were confining their purchases to the barest necessities. A common remark is that distress in the railway supply field is merely an incident in a general depression, and that at a time when everybody else is suffering it is unreasonable for the makers of railway accessories to complain of unemployment. Unemployment is only tolerable when it is unavoidable. For unemployment in these particular industries there is, in these days, very little valid excuse. What grinds us is the needlessness of it. General depression is not a time in which to stop building railroad track and equipment, to leave off repairing railroad plant, but a time to begin. Can anybody suggest a juncture when labor and material will be cheaper than when nobody else wants them except the railroad and the railroad supply maker? Is it difficult to grasp the fact that by keeping those industries going steadily year after year the total output for all the years can be produced with a smaller investment in plant, a smaller overhead for interest and organization, less waste, through idleness? Is it not clear that the very railway plant itself has to be substantially larger to carry the peak-of-load when that load is further burdened with the vast, heavy, and bulky tonnage required for the fabrication of track, cars, and locomotives, and their maintenance? That is what has been happening. The first inkling of a slump in earnings brought curtailment of buying. When in the next active period general merchandise was crying for cars, power, and tracks, the railroads would come into the market frantically bidding against one another for deliveries, demanding that factories work overtime for them and crowding with their own consignments the facilities whose very insufficiency this avalanche of company freight was hysterically intended to relieve. The greatest railroad genius America produced, the late E. H. Harriman, pursued the well-settled policy of liberal buying in depressions with the two-fold motive of relieving the depression and of obtaining goods at bargain prices. A similar policy has been characteristic of the Pennsylvania system. The principle was coming to be understood and gradually brought into application in the period before 1906. In an appendix, which I shall not take your time to read, details are given of the blighting effect of instability of railway purchasing upon the sober, industrious, and skillful mechanic who is thrust into unemployment not only for a reason unknown to himself but for no valid reason whatever since the public interest and the interest of the railroad corporation would be best served if purchasing was only moderately large in times of great general business activity and largest when general business is in a state of depression. Why do not the railroads buy steadily instead of spasmodically? The answer is that the railroads generally speaking since 1908 have lived from hand-to-mouth, not knowing one year where the next year's bond interest was coming from. Net income was of such proportions that investors declined stock and took bonds, but even these in reduced quantities. The manager saw the mortgage advancing across the disk of the property like the shadow of the moon across the face of the sun. Dividends can be passed. Interest can not be passed. With interest staring him out of countenance, he refrained from purchases involving future commitments. Sufficient unto the day was the evil thereof. |