RECONSTRUCTION
of
TRANSPORTATION
BY
ALFRED P. THOM
OF
WASHINGTON, D. C.
An Address before the Annual Meeting of Massachusetts
Chamber of Commerce^ Boston, October i^th, 1^20
RECONSTRUCTION OF
TRANSPORTATION
Government by democracy has its tragedies as well
as its triumphs. Its triumphs are for the most part in
the realm of human liberty. Its tragedies are generally
in the field of business and economics.
In popular government the popular will, right or
wrong, calm or passionate, must, within the limits of
the Constitution, be supreme. It is easy for it to be tem¬
porarily mistaken in matters relating to business or
property. Jealousy of liberty creates distrust of power
and prepares a soil which, under the interested and
industrious husbandry of the designing demagogue, can
readily be made productive of class misunderstandings
and animosities. It is diificnlt to establish and preserve
a just balance of judgment and of political action in
dealing with matters of property.
This is especially difficult in respect to the facilities
of transportation, which in order to be useful, must, in
a sense, be powerful, and must touch the individual in
all his social and business activities. Naturally an indi¬
vidual forms his estimate of the motives and of the
efficiency of a railroad corporation by what he sees, and
what he sees is, for the most part, confined to his own
point of contact or to his own business transactions with
the company, and cannot, in the nature of things, em¬
brace the entire transportation problem or field of duty
and responsibility whiih the management of the com¬
pany must consider. lie sees the impoliteness and in¬
attention of an individual local employee, or he does
not receive promi>t payment of a claim which he believes
3
to be just, or be is not furnisbed a ear witb the prompt¬
ness required by the exigencies of bis business and be¬
lieved by bim to be possible, or a fire is set out by a
passing engine, or there is delay in installing an indus¬
trial sidetrack.
Things Which Critics DoljNot See
Under the smart of such occurrences be cannot realize
the number of men the management must obtain and
train into a proper conception of the rights of the pub¬
lic; the limitation imposed by inadequate financial
capacity to create an ideal situation ; the demands upon
the carrier in other directions, and the consequent
necessity on it to balance the demands for the means
and facilities at its disposal, so as to produce the best
general result, and, where all things cannot be perfect,
to promote in the highest possible degree, the general,
interest and welfare.
In the multitude of a carrier's transactions, there will
of necessity be created many critics, and these critics are
easily aroused and organized into a hostile attitude to
it by any designing political agitator who may see in
such dissatisfaction an easy road to the promotion of
his own political fortunes and ambitions.
The condition so far referred to is a condition without
fault on the side of the honest individual patron or on
the side of the carrier which is making an honest effort
to do its best. Unfortunately, however, this does not
state the whole case.
In the creation and development of these great
agencies of transportation, human natvire and financial
ambition have in the past, as was inevitable, played a
large part. At the beginning, the public were dazzled
by the advantage promised and the increased oppor¬
tunities offered by the steam engine and the railroad,
as compared with the slow and inefficient agencies of
transportation then in use. In eveiy community there
4
was a demand for railroads. It was only a question of
getting them, not of the terms on which they could be
secured. Every inducement was justified in public
opinion and was offered by the governments of counties,
of cities, of states and of the nation, which would induce
the investment of capital in railroad enterprises, and
there was no thought of limitations or conditions, or of
regulation or restriction—onlj' of inducement and en¬
couragement.
The Old Idea of Railroad Owners
Under these circumstances, investors entered the rail¬
road field and came to look upon tiie properties which
their means and enterprise had created as private prop¬
erty, subject to no limitation or qualification that did
not apply to other ¡»rivate property. They came to tliink
that legitimately and properly tluiy could treat the rail¬
road which they owned as tlieir own private business,
and could seek to make money out of it, by speculative
and other devices, to the same extent and in the same
manner that was lawful in respect to any other species
of property. Some of them accordingly began to use
their property to favor tliose who favored them, to dis¬
criminate, whenever they thought it to their advantage,
between those needing transportation, to select persons,
communities and places which they would build up, to
exploit their properties in the financial markets for their
private emolument, and to ])ut their interests as specu¬
lators and money makers ahead of any duty incumbent
on them as controlling the means of transportation, and
hence the social and business opportunities of men,
communities and localities.
All this was well enough so long as the i)ublic anxiety
to obtain this improved metliod of transportation Avas
greater than the need to consider the terms on wliich it
was furnished, or to reckon with competitive conditions
as controlling the question of commercial success or
failure.
But when the existence of the facilities was in the
public mind assured, the tremendous power over the des¬
tinies of men and of localities possessed by those who
controlled transportation, became apparent, and the
demand became insistent for equality of treatment of
all users of transportation and for the eradication of
the entire system of favors and discriminations which
had grown up and which had assumed formidable
proportions.
The Need of Public Regulation
Tills demand, seeking a legal basis, found it in the con¬
ception that property devoted to a use in which the en¬
tire public has a vital interest and so related to every
social and business activity as practically to direct and
control them, must not be accorded an unqualified free¬
dom of use which might be employed to the detriment
and oppression of the iiublic, and, consequently, to the
extent of the public interest, must be subject to reason¬
able governmental control and regulation.
As may be easily imagined, this qualification on the
right of private property was fiercely resented by those
who had been encouraged to invest in this class of prop¬
erty and had been encouraged to believe that they owned
and could use it for their own private advantage without
any qualifications except those applicable to all classes
of property.
The struggle was long continued and full of bitter¬
ness, but ended, as was right, in the acceptance of the
view insisted on by those who contended for a power of
reasonable regulation by public authority of property
devoted to this public use, and so intimately and influ-
entially related to the public welfare.
Unfortunately, however, this victory, won in bitter¬
ness and anger, left in tlie public mind a spirit of resent¬
ment and distrust towards the antagonists they had
vanquished, and the system of regulation which was
6
adopted reflected this reseutment in providing only for
restraint, and in omitting entirely the provisions which
would have been wise and appropriate for protecting
and developing this essential agency of commerce and
intercourse. It was assumed that these agencies of
transportation were sufficiently powerful to protect
themselves and that the public had no interests and no
duty except to eradicate evil practices and to restrain
evil conduct.
Business Must Have Public Support
The public was right in its purposes, but, in the hour
of its victory and for more than a generation thereafter,
it failed to realize the vdse limitations it must volun¬
tarily put upon its own power. There was no apprecia¬
tion of the fact that, under harsh and uusymi>athetic
regulation, conceived and administered only with the
purpose of restraint and punishment, the time would
ultimately come when men would hesitate to put their
means into a business which had been made a pariah by
law and public opinion, and thus that the supply of
transportation facilities might become endangered and
inadequate for the public needs. And yet a calm fore¬
cast, which unfortunately was impossible in a state of
public mind smarting under a sense of wrong, could
easily have perceived the inevitable and hurtful result
of continued distrust and hostility. No business can
permanently survive and prosper under the continued
and unrelenting hostility of the public.
On looking back we can plainly see, what a calm fore¬
cast would also have revealed, that, if the development
of the country and of commerce were to continue, the
facilities of transportation must not only keep pace
with, but must anticipate this growth, and that the in¬
vestment of new capital must continually be made; that
this investment, under a system of private ownership,
must be attracted and could not be coerced, and Avould
not be attracted unless it was protected. But this calm
7
forecast was not made, and, indeed, was not possible, in
the then existing state of the public mind.
It was necessary that the system which liad been deter¬
mined on, of limitation and restraint without encourage¬
ment or protection, should go relentlessly on until its
results should become ap])arent and should either justify
or condemn it.
Limitations on Railroad Management
For more than a generation this process has been
working itself out. In its progress the logical resultant
of the forces at work has been revealed and the investor
has come to realize, when considering investments in
railroads, that, if he should invest, he would be embark¬
ing his means in a business in which :
1. He could not control his income, for that is regu¬
lated for liirn by public authority;
2. He could not control his expenses, for these were
affected by the requirements of many regulating bodies
and by the exactions of labor which, in the case of the
railroads, was especially powerful ;
3. That the regulation to which he must subject his
investment was political in its origin, and thus in danger
of being controlled by iiolitical rather tliau by business
considerations ;
4. That there was not a single co-ordinated and har¬
monious system or policy of regulation applicable
throughout the whole extent of his property, but many
regulating authorities—one Federal and many state—■
with diverse economic and political views and policies;
5. That the policies of regulation were not stable,
but largely dependent upon the capacity for agitation of
individuals who, at the time and in certain localities,
were dominant in public affairs ; and
G. That the rewards of success in other industrial
enterprises were greater than in thi.s, that the security
8
was no greater here than in other avenues of investment,
and that in this industry all hope of speculative reward
must be abandoned.
Under this punitive and restrictive governmental
policy of regulation, the owners of these properties and
the business public saw this great transportation giant
carried bound and helpless before legislative and regu¬
lating bodies everywhere, and laid upon the operating
table. The diagnosis was that the patient was pos¬
sessed of a demon which must be exorcised. Those
called to perform the operation were not trained experts
charged with the duty and responsibility of restoring
the patient to health and strength. Instead of a calm
and scientific search for the truth, every ambitious ex¬
perimenter, totally irrespective of his knowledge or his
ignorance of economic laws and conditions, of his inter¬
ested or disinterested attitude to the subject and of his
lack of responsibility for the success of transportation,
was invited and permitted to participate in the capital
operation.
A Check Upon Railroadpnvestment
The result was inevitable. Under such an immoderate
and ill-considered exercise of public power, new invest¬
ment in railroads became hesitant, the building of new
lines practically ceased, and the elficiency and capacity
of those already in existence were in many and impor¬
tant respects poorly maintained and inadequate. The
transportation of the nation was threatened, because of
the hostile attitude and hostile policies of Government.
Heretofore railroads have been the pioneers of prog¬
ress and of the expansion of civilization.
In America they have preceded population and busi¬
ness into undeveloped regions, and have carried hardy
and bold adventurers to the virgin lands, the untouched
forests and the unopened mines of the imperial domain
which now constitutes the wealth and reliance of the
greatest and most prosperous nation of the earth.
9
The fundamental characteristic of this pioneer of
progress was to anticipate the development of business,
to have transportation capacity ready in advance of act¬
ual need. In no other way could it promote industry.
Before production must come the facilities of distribu¬
tion, the means of making nseful the fruit of the pro¬
ducer's toil.
In the evidence in a recent case it appeared that, until
1913, the transportation capacity of the railroads was
in advance of, or had reasonably kept pace with, the
increase of production.
Railroad Growth Not Adequate
Since that time the situation has been substantially
different.
Since 1913 the country's annual production of steel
has increased from 31 million tons to 45 million tons
and its producing capacity to more than 50 million tons;
and the farms under cultivation from 258 million to 288
million acres.
Since 191G the annual production of bituminous coal
has increased from 443 million tons to 580 million tons,
and the xjroductive capacity of the industry to 700 mil¬
lion tons.
Turning to the railroads, during the last three years,
the number of miles abandoned has been greater than
the number of miles constructed. The number of loco¬
motives and freight cars added during the two years
and two months of Federal control were barely sufficient
to replace the number ordinarily retired in a single
year, and complaint was made that there were one hun¬
dred and fifty million bushels of wheat still on the farms
or in the country elevators ; that live stock had fattened,
become over-matured and had declined in value because
there was no way to market ; that the distribution of coal
was inadequate to the extent of threatening national
10
suffei-ing and disaster; that lumber was not moving to
market; that mills and otiier industries were halting in
production and were shutting down for want of trans-
imrtatioip and that highway road building had virtually
stopped.
This condition of transportation constitutes one of the
economic tragedies of history.
The ho¡)e of democracy is the fact that the people can¬
not be mistaken or deceived all the time, and that in
heart and purpose they are fundamentally sound. When
they realize that they have been acting on false i)reniiscs
and have been misled, tlay tlirow aside their false
leaders and demand that the mistakes Avhich have been
made shall be corrected.
Transportation Act Marks New Era
No more notable instance can be found of this than
the recent cliange which has taken place in the attitude
of the public toward.s the instruirientalities of trans¬
portation.
Tills change is reflected in the Transportation Act
which became a law on the 28th day of February, 1920.
Only a little Avliile ago, tlie public regarded every
application made by the carriers, for protection and for
constructive changes in the system of regulation, as a
matter involving only the private interests and designed
to jiromote only the private fortunes of tlie owners of
these properties. TJiere was tlien no realization of the
fact tliat the jiublic iiad ev<;n a greater and more vital
interest than the private owners in tlie policies of regu¬
lation being sound, helpful and jinitective. The be¬
lief had been sedulously cultivated in the iiublic mind
that the transportation companies wiire in fact most
])ro.sperous, that railroad corporations were abounding
in wealth, and that the application of the carriers must
be considered and determined as a matter affecting only
the private interests of the owners. The wai-ning of the
11
carriers that the adequacy and efficiency of the instru¬
mentalities of transportation to handle the commerce of
the country were at stake, was regarded as the insidious
effort of private greed, and went unheeded.
The awakening of the country to the truth had to come
in the travail and hardship of adversity. The strain of
the war came, and productive industry found itself
slowed up and hampered by the limited capacity of
transportation instrumentalities which had been held
back and held down by the restrictive and unsympa¬
thetic policies of governmental regulation.
The public then began to realize that the maximum
productive capacity of a people is measured by the car¬
rying capacity of its instrumentalities of transportation
and distribution and that the support and protection of
these agencies is not by any means only, and is not by
any means first, a private question. It came to be appre¬
ciated that, in order that production may be assured, in
order that the comforts of life and the means of living
may be brought within the reach of the masses of the
people at reasonable prices and on reasonable terms, in
order that the public welfare may be provided for and
properly safeguarded, there must be strong, efficient
and adequate agencies of transportation, that the exist¬
ing standard of revenues had served to starve instead of
strengthen them and must be increased, and that this
was a public and not simply a private question. This
conception of the relationship of transportation to the
welfare of the people having been once accepted, and the
real fact as to the financial condition of the carriers
having come to be understood, many truths therefore
obscured became manifest.
Common Interest'of Railroads and Public
It became apparent that the highest interest of the
public was in adequate and efficient transportation, and
that, as compared with this, the rates paid were only
12
secondary and were comparatively unimportant. The
public transferred its interest and anxiety from the
question of the cost to the question of the existence of
adequate transportation capacity.
It came to appreciate that the producer who had his
capital invested in productive property must let it lie
idle to the extent he could not get his products to mar¬
ket j that if, as had in fact occurred throughout the en¬
tire producing industries of the country, production had
already taken place, the producer must face the loss of
his product to the extent he could not get it moved, and
that the banks which had loaned upon it must lose or
must carry the loan while the marketing of the product
was retarded, with the consequent congestion every¬
where of banking accommodation, and consequently that
the most expensive and most costly service to the public
is inadequate service.
As a result of these considerations, the recent legisla¬
tion by Congress has been enacted into law.
It undertakes to deal with two periods, first, the
period of transition back from governmental to private
control and operation, and, second, tbe period thereafter
for which a i)ermanent system of regulation must be
provided.
How the Problem Was Met
In obedience to an aroused and enlightened public
opinion, it undertook to deal constructively with both
periods.
As to the first :
The legislation, in the interest of promptness and cer¬
tainty, provides a plan for the adjustment with the car¬
riers of matters growing out of Federal control; as a
means of stabilizing conditions, continues in effect, until
thereafter changed by competent authority, the rates,
state and interstate, in force at the end of Federal con¬
trol, and, as a measure of support and protection for
13
tliese agencies of transportation during the period of
transition back from the system of government opera¬
tion to tlie system of private operation, provides a guar¬
antee of a return for six mouths equal to half tlie annual
compensation paid them respectively by the Government
for the use of their properties during Federal control,
and for loans, to a iimited amount and at a reasonable
rate of interest, to assist in meeting maturing obliga¬
tions, wldch otherwise could not be met, and in adding
to the facilities of transportation which otlierwise could
not be made.
These tilings were done, not alone as a measure of
justice to tlie owners of these properties, v hich for war
and public purposes liad been summarily taken by the
Government, rearranged, disorganized and used by it
for a period of twenty-six montlis, but even more largely
out of consideration for the public itself, as a means of
averting from the people disaster to their transportation
facilities during the period of transition and of especial
unrest, and to assure them during that period of the
means of the distribution of the products of their toil,
so that production might not halt or industry be para¬
lyzed or the cost of living, already burdensoinely high,
be further increased, as a consequence of the disturbance
and disorganization incident to government seizure and
operation which had been thought best in time of A\-ar.
As to the second or permanent period :
The legislation undertakes to provide a means of
peaceful adjustment of labor controversies; to make
needed amendments, some in minor and some in essen¬
tial particulars, of the existing system of regulation ; to
provide a system of lawful and supervised consolidation
of carrier properties, so that facilities may be improved
and competitive conditions measurably equalized to the
end that the system of regulatory law may deal more
equitably and helpfully with them all ; to create a single
and exclusive system of supervision and regulation of
14
tlie issue by carriers engaged in interstate commerce of
securities, so that the public interest in the financial
condition of these carriers may be properly considered
and safeguarded and that the financial proposals of tlie
carriers may be promptly passed on and treated accord¬
ing to a single, harmonious policy, and thus protected
from the delays and the diversified policies of many
regulating authorities; to vest authority in the Inter¬
state Commerce Commission, in the interest of all the
people and of the states themselves, to supervise state
rates and practices applicable to interstate carriers, for
the purijose of preventing discrimination against inter¬
state commerce and the indirect imposition, through the
unwise or niggardly action of a single state, of undue
and unequal burdens on interstate commerce and on the
people of other states ; to establish a system under which
the revenues derived from the service of transportation
shall be sufficient, under honest, efficient and economical
management, and reasonable expenditures for mainte¬
nance of way, structures and equipment, to provide a
fair return upon the aggregate value, in such groups as
the Commission may establish, of the railway properties
of the carriers held for, and used in, the service of trans¬
portation thus giving assurance to the people of the
United States of adequate transportation and means of
distribution of the x>roducts of their toil; and basically,
from the standpoint of credit, to introduce the elements
of financial stability and security as a means of making
up for tlie lack of large and speculative rewards.
Insjiired by these motives and embodying these con¬
structive principles, the altered system of national regu¬
lation has been adopted and put into effect.
Fundamental Ideas in the Transportation Act
It has its foundation in a new and larger view of the
relationship of government to the instrumentalities of
transportation which it undertakes to regulate.
15
It recognizes :
1. That transportation is a business in which the
public is vitally interested ;
2. That the system of private ownership and oper¬
ation, invigorated and vitalized by individual
initiative and enterprise, is in the public in¬
terest to be preferred to government ownership
and operation, and that it is more equitable to
distribute the cost of supporting it among the
persons who use it in proportion to their use,
than to impose it on all the people—on those
who do not use it as well as on those who do—■
irrespective of their use, by levying it as a uni¬
versal tax and paying it out of the public
treasury ;
3. That the business of transportation must be
treated as a business and that unless so treated
it cannot survive and perform its useful and
essential public purpose;
4. That the Government cannot, in conscience or
with due regard for the public welfare, exercise
the power of regulation, which involves the re¬
striction of business opportunities, without at
the same time accepting the responsibility of
seeing that justice is done, proper encourage¬
ment and support afforded, and that the charges
for transportation, while limited so as to pre¬
vent injustice to and extortion on its users, are
reasonably sufficient to attract the capital
needed to make and keep the facilities of trans¬
portation adequate to the public needs.
5. That, therefore, the proper financial credit of
these carriers is primarily and principally a
matter of public, and only in a minor degree of
private, concern; for on the adequacy of such
credit, the supply of transportation is, under
the system of private ownership, dependent, and
16
the system cannot be abandoned for any other
without profound influence on, and grave con¬
sequences to, our chosen and established govern¬
mental institutions.
An Economic Triumph of Popular Government
The abandonment of the old and mistaken view that
the responsibility of government, when it undertakes to
regulate the business of transportation, is fully per¬
formed when it punishes its misdeeds and restricts its
activities and opportunities, and the adoption of the
new conception that the Government's responsibility in
regulation must extend to and embrace proper encour¬
agement and protection, makes a new era in our legisla¬
tive history and rises to the dignity of an economic tri¬
umph of popular government. It furnishes new assur¬
ance and gives fresh courage and hope to those Avho be¬
lieve in the good sen.se and the spirit of wisdom and
statesmanshi]) whicli reside in the masses of the i)eoplo
and Avhich will ultimately manifest itself in the system
of laws evolved out of public opinion.
IMen may still debate as to the adequacy of tlie legisla¬
tion which has been adopted, but there can he no rea¬
sonable difference of opinion as to the soundness or
value to the nation of the new conception that has been
accepted of the responsibility of government to the sub¬
jects Avhich it undertakes to regulate and of tlie recogni¬
tion of the fact that the credit of these carriers, on Avhich
their ability to perform their essential public seiwice de¬
pends, is a matter of profound and vital public concern,
and must, out of regard for the public welfare, be dealt
with on reasonable and sound business x)rinciple.s.
It remains now to give the new system a fair trial.
The Responsibility of the Carriers
The cari-iers tliemselves must he keenly alive to their
own responsibilities. Trusted to furnisli transportation
to the people, they must rise to the level of their eiilarged
17
opportunities and view their obligations from the stand¬
point of the public right and public welfare to whicli
they bear so important a relationship. They must see to
it that the best quality and the largest quantity of ser¬
vice in their power to give is' furnished to the country
and the public which they serve, and that no narrow or
individual view of their special competitive interests be
permitted to dominate or control their policies to the
hurt of the rights of the public.
The public, on its part, must be patient while this
effort is being made. It must realize the difdculties and
embarrassments which confront the carriers in resuming
the possession of their properties and the performance
of their transportation duties. For more than two years
they have been out of the possession and control of their
properties. During this period the identity of individ¬
ual properties had been merged into others ; the rolling
stock—engines as well as cars—-had been taken from the
system to which it belonged and scattered elsewhere and
everywhere as an immediate need appeared to justify
until not more than 21% of the cars remained on home
lines; repairs on this vagrant and homeless equipment
had been inadequate and without uniformity; the work¬
ing forces had become imbued with the idea that they
were working for the government and consequently un¬
der a different and reduced system of discipline and re¬
sponsibility ; the management itself had been deprived
of the intimate touch with, and knowledge of, their
property and its conditions essential to effective and
successful administration; and the current revenues
from their properties had been taken by the Government
and no final adjustment or accounting made, leaving
their financial situation difficult and uncertain.
The Task Which the Railroads Face
They came back into their duties and responsibilities
of management in the aftermath of the greatest war in
history.
18
The earth on which we stand is still trembling from
the convulsions which for four years shook it to its
foundations and left in devastation and ruin the conti¬
nent furthest advanced in the arts and in the achieve¬
ments of civilization.
As one of the results of this upheaval there has come
throughout the world, including our own land, an in¬
crease of class consciousness, class rivalries and class
aspirations and demands. Large bodies and groups of
men are surging with impatience and resentment against
the restraints of society and of law and are fiercely de¬
manding a new and radically altered order in the
economy of life.
"The equilibrium between the city and the country in
the world's economics has been profoundly disturbed,"
the number of farm-workers, according to an eminent
authority, having in two years decreased 28 per cent.
The country boy, whose horizon was formerly limited
by the farm on which he worked and the cross-roads
store where he spent his rare hours of leisure and recrea¬
tion, has now seen the wonders, enchantments and op¬
portunities of our great American cities and of London
and Paris, and is slow to return to the farm, with all
that his failure to return implies in the way of inade¬
quate farm labor, reduced production of agricultural
products and higher wages and costs.
Turning to other lines of industry, labor everywhere
is in a condition of phenomenal unrest and discontent—
at war with its own leaders, in rebellion against its
economic status and insistent in its demands for a larger
share of the rewards of productive effort.
This condition of restlessness is not confined to labor.
On all sides and among all classes the restraints of
social and even of religious law are seriously questioned
and resented.
The world is in disorder and its social, its economic.
19
its institutional and its religious life must be built
a gain.
It ^^■as in these disturbed conditions and in the midst
of these embarrassments and complexities that the car¬
riers came again into the possession of their properties
and resumed the performance of their duties. ■
What the Railroads Are Accomplishing
Aided by the new conception of the relationship of
government to their own interests and responsibilities,
they are facing the future with courage and with confi¬
dence. Notwithstanding the difficulties, they are
already performing with their impaired and inadequate
facilities a better and larger transportation service than
ever has been furnished under normal conditions to the
American public. Cy voluntary action they are estab¬
lishing the degree of co-operation with eacli other and
of co-ordination of their facilities needed in the public
interest and are manifesting a spirit, a purpose and an
efficiency in keeping with the new trust which has been
imposed upon them.
There have been, there still are and there inevitably
will be, failures to meet fulh' the needs of the people,
but it is fair to say that these failures will not be due to
a lack of effort and that the public may rest assured that
a recognized failure or imperfection will result in re¬
newed and conscientious effort to furnish better and
more adequate public service. The effect will be to make
each failure a point of departure for a new success, and
the improvement, we are justified in hoping and in
thinking, will be continuous and progressive.
The Interstate Commerce Commission is on trial, be¬
cause the powers conferred upon that body by this act
are so enormous and far-reaching, that it will become
largely responsible for the success or failure of the sys¬
tem of regulation. The admirable spirit with which it is
appi-oaching the performance of its duties has been de¬
scribed in an earlier part of this address.
20
NOTE
The last paragraph on page 20 and
all of page 21 should follow the
concluding paragraph on page 23.
The State Commissions on Trial
The State Commissions are on trial, because, if they
hold back and refuse to co-operate with the Interstate
Commerce Commission in establishing a harmonious
system of rates to apply to both the state and interetate
commerce of the same carrier, they will interpose an
obstacle in the way of the success of the system for which
public opinion will hold them to a rigid responsibility.
Many of the State Commissions have already exhibited
a fine appreciation of the situation, and have taken ac¬
tion to indicate their harmonious co-operation in the
national policy.
The labor unions are on trial, because the Govern¬
ment itself has created an official agency for the fair
and equitable adjustment of grievances and controver¬
sies as to wages and living conditions, and if, in defiance
of the conclusions thus officially reached, the labor or¬
ganizations, contrary to public opinion, interrupt the
orderly and continuous movement of interstate com¬
merce upon which the welfare of the whole public de¬
pends, they can not expect to be sustained by the peo¬
ple, to whose will at last all must bow.
The carriers are on trial, because an effort has been
made to extend to them help of a substantial character
in the performance of their public duties, and public
opinion will hold them to a strict accountability for the
fidelity and efficiency with which these duties are per¬
formed.
I thank you for this opportunity to give expression in
this place to the views I have now presented—here in
the city of Boston, famous for the part it has borne in
the struggle for human liberty and human progress ; in
the State of Massachusetts which has made so large a
contribution to the constructive thought which has de¬
veloped the American Republic, and on tlie soil of New
England whose sturdy and hardy sons Jiave ever been
pioneers and leaders in the economic policies of tlie
Nation.
21
Work of the Interstate Commerce Commission
In the effort that is being made both by the public and
the carriers to improve transportation, it is encouraging
to know that they have the sympathetic, intelligent and
able co-operation of the Commission created by Con¬
gress to administer the national system of regulation
and also of many, if not of all, the Commissions of the
states.
Eecently the first great step was taken in the adminis¬
tration of the new law. It became necessary to inte'ri^ret
and apply its provisions in regard to the amount of reve¬
nues which should, in the public interest, be provided for
the carriers as compensation for their transportation
service.
For more than five weeks it was my privilege as coun¬
sel to sit before the Commission at Washington, with
whom throughout the whole hearing sat thfee State
Commissioners, and witness its patient and painstaking
effort to develop the facts which should be its guide to a
wise decision.
The impression I carried away from that hearing and
that will abide with me always was that of a great tri¬
bunal of trained and able scientists, thoroughly in¬
formed and skilled in the economics of transportation,
and inspired by a lofty and conscientious purpose to
arrive at a wise and just solution of the extraordinary
problem which the nation had confided to its hands. It
attained an enviable degree of public confidence in the
administration of the old law. The country may rest
assured, I feel certain, that it will be eqnally faithfnl
and efficient in grasping and administering the spirit of
the new.
Congress has now declared the policy of our people.
It is, in express terms, "to foster and preserve in full
vigor both rail and water transportation."
The reconstruction of transportation is, accordingly,
the policy of the nation, and has begun in earnest.
22
It is now recognized by the great body of public
opinion that, under the system of private ownership,
adequate credit for the railroads is a condition prece¬
dent to their ability to furnish adequate and satisfactory
service and is fundamentally a matter of public concern.
The act of Congress, passed to provide for this recon¬
struction, has entered upon its "test period."
If, under the system which it establishes, the credit of
the carriers is made sufficient to enable them to furnish
to the American public the needed quantity and quality,
of transportation, the legislation will be a success.
If, on the other hand, such credit is not established,
it will be a failure.
In addition to the Act, the Interstate Commerce Com¬
mission, the several State Commissions, the Labor
Unions, and the Carriers themselves, are all on trial.
23