In these hearings the Commission has accumulated a tremendous mass of data amounting, even before their close, to "nearly 50 volumes, containing over 11,000 pages of testimony and 630 exhibits, most of them voluminous." 1 At first the carriers seemed to believe that their sole function was to criticize the tentative plan offered or the principles upon which it rested. But it soon appeared that the Commission desired them to contribute much in the way of concrete information upon which a final decision might properly be based. To that end the carriers have furnished the Commission a great mass of material which will be of inestimable value in reaching a final decision. In these hearings opposition of various sorts to the plan as outlined has been apparent. In some instances the opposition has been to the nature of the plan itself, certain alignments proving 8. Chesapeake and Ohio-Virginian. 9. Norfolk and Western-Toledo and Ohio Central. 10. Southern and subsidiaries-Alabama and Vicksburg. 11. Atlantic Coast Line-Atlanta, Birmingham and Atlantic-Florida East Coast, and so forth. 12. Illinois Central-Seaboard Air Line-Tennessee Central, and so forth. 13. Union Pacific-Chicago and North Western-Wabash (west of Mississippi River), and so forth. 14. Chicago, Burlington and Quincy—Northern Pacific-Chicago Great Western-Minneapolis and St. Louis, and so forth. 15. Chicago, Milwaukee and St. Paul-Great Northern-Chicago, Terre Haute and Southeastern-Duluth, Missabe and Northern, and so forth. 16. Atchison, Topeka and Santa Fe-Colorado and Southern-Denver 17. Southern Pacific-Chicago, Rock Island and Pacific-El Paso and 19. Chicago and Eastern Illinois-Missouri Pacific-Kansas City Southern-Kansas City, Mexico and Orient-Texas and Pacific, and so forth. Called Chicago-Missouri Pacific System. Names in italics give title to the system. 1 Thirty-seventh Annual Report, Interstate Commerce Commission. 2 Ripley, W. Z., "Geographical Limitations of Consolidated Systems," American Economic Review, Vol. XIV, No. 1, Supplement, p. 52. unsatisfactory to both parties concerned; in other instances the opposition has grown out of the unwillingness of certain existing groups to face the disruption which the Commission plan would involve—such is the objection of the Hill roads. A third objection, not so much against the specific groupings suggested by the Commission as against the whole principle of consolidation, comes from business interests at intermediate terminals which would lose much of their importance if connecting lines were merged. In the course of these hearings the diversity of judgments concerning the question of consolidation has been clearly in evidence. On the whole, the railways have supported the principle of voluntary consolidation and in most instances prefer such consolidation to take place in accordance with no fixed plan; they wish, rather, to consolidate along lines of their own choosing, subject only to the approval of the Commission. Others, however, are quite willing to accede to the principle of a set plan, always provided, of course, that such plan be a suitable one. The public, on the contrary, seems to feel that voluntary consolidation will fail to serve its purpose and that compulsion should therefore be employed. Prophecy is uncertain, yet it appears that the probable policy will be consolidation in accordance with a set plan, with the patient use of voluntary action. As an incentive to consolidate, the application of the Recapture clause should prove effective-it is obvious that excess earnings from one property may as well be utilized in the development of another, as paid to the government. Yet, though the voluntary principle is likely to rule, compulsion will lurk closely in the background: if public support of the principle of consolidation continues, the railways must choose between compliance with the law and a strengthened movement toward government ownership. NOTE: References will be found at the close of Chapter XXXV. XXXV THE OPERATION OF THE TRANSPORTATION ACT OF 1920: LABOR AND MINOR PROVISIONS The wage increase of 1920. Abrogation of the national agreements. Decreases in wages ordered. Basis of determination of a "reasonable wage." The shopmen's strike: early action; "Daugherty injunction"; shopmen defeated. Trend of wages since 1922. Important problems faced by the Labor Board. Evaluation of the work of the Board. Regulation of security issues and construction and abandonment. The Recapture clause. Division of joint rates: New England and "Orient" cases. Regulation of service. Ungrounded criticisms of the Transportation Act: guaranteed return; validation of "watered stock"; railways escape the burden of deflation; unreasonable level of rates. Considered criticism relative to jurisdiction, machinery for settling labor disputes, and consolidation. Evaluation of the Transportation Act. A THIRD important and novel feature of the Transportation Act is that dealing with the settlement of labor disputes, and the history of the operation of that portion of the Act justifies careful study. Though a detailed description of its operation cannot be given, the principal developments during the past four years will be indicated. THE WAGE INCREASE OF 1920 Scarcely had the railways been returned to private operation when the outbreak of numerous local and outlaw strikes brought home to the carriers the extent of labor unrest. Of these labor outbreaks the most widespread and important was the "outlaw" switchmen's strike in April, 1920, which spread rapidly from Chicago, where it first broke out, and seriously embarrassed the movement of traffic for a considerable period. Urged by the impatience of labor, as evidenced by these strikes, and by the insistent demand of those remaining at their posts, the Railroad Labor Board, organized about the middle of April, immediately set about an investigation of the wage situation. That railway labor might be somewhat reassured in the face of the necessary delay incident to an ascertainment of sufficient facts upon which to base a decision, promise was made that all increases granted should be retroactive to May 1. But once the investigation was instituted, the Board found the carriers urging upon them the abrogation or thoroughgoing revision of the national agreements, which had been signed by the Railroad Administration toward the close of the period of federal control. The new body thus found itself facing demands from the two groups directly concerned for action along quite different lines. However, because of the greater pressure for an upward revision of wages and the long delay which labor had already endured none too patiently, the Board refused to consider at that time any modification of the national agreements and confined its decision to matters involving wages. In its effort to arrive at some formula by which a just and reasonable wage, might be determined, the Railroad Labor Board was no more successful than many other agencies have been. After giving weight to the conditions laid down by the Act, among which hazard, skill, and responsibility were most heavily stressed, the Board gave consideration primarily to the cost of living, which had advanced sharply since previous wage increases. Wherever such comparisons could be secured, wages of railway workers were compared with those in the commercial field, too, though the Commission also gave weight to the greater steadiness of employment of railway workers. But, all in all, it appears that the increase was urged by the workers largely upon the basis of higher living costs and was granted by the Board upon proof of such an increase, though the economist clearly recognizes that the reasonableness of an existing wage cannot be settled upon such a basis: changes alone can be predicated with any degree of accuracy upon price movements. The increase granted by the Board in its decision of July 20, 1920, approximated 22% above the wages authorized by the Railroad Administration, and increased the labor cost of rendering transportation service by approximately $600,000,000, according to Board estimates. This large increase, effective throughout four months of the six months' guarantee period while increased rates were effective for but one month of that time, accounts in no small measure for the heavy deficits incurred by the government under that guarantee. ABROGATION OF THE NATIONAL AGREEMENTS The promise given by the Labor Board that it would examine the national agreements when wage questions had been answered was redeemed by the institution of hearings early in January, 1921. In mid-April of that year, a decision was published under which it ordered that all national agreements should terminate July 1, following, and that, in the meantime, conferences should be held between the carriers and their employees for the negotiation of new and reasonable systems of rules. Should the employees occasion undue delay, these agreements were to terminate for the guilty groups on July 1, while if the carriers offended, they might be continued until such date as fixed by the Board; in case of disagreement, the Board would formulate rules to control after July 1. To govern the negotiation of these new rules the Board laid down certain definite principles which gave, in considerable detail, the conditions with which those rules should accord, DECREASES IN WAGES ORDERED When traffic and revenues dwindled late in 1920, the carriers immediately opened negotiations with their employees looking toward a reduction of wages. Failing to reach agreements, however, appeals were made by the railways generally to the Labor Board, asking that reductions |