C. J. Austin, Traffic Manager, New York Produce Exchange R. S. French, General Manager and Secretary, National League of Commission Merchants

E. J. Tarof, Traffic Manager, The Brunswick-Balke-Collender Co., Chairman of the Transportation Committee of the New York Board of Trade and Transportation

P. M. Ripley, Traffic Manager, American Sugar Refining Co. T. T. Harkrader, Traffic Manager, The American Tobacco Co. Allan Wallace, Traffic Manager, The H, W. Johns-Manville Co. This committee protested to the Railroad Administration against the closing of the off-line offices, and receiving no encouragement, it formulated suggestions and recommendations for the establishment in New York City of four Central Bureaus in order that the shipping public be fully advised of the necessary information regarding general movement and freight rates covering off-line shipments. The Central Bureaus recommended by this Committee were as follows:

No. 1. The establishment of a Central Freight Tariff Bureau. No. 2. The establishment of a Central Bureau for the issuance of Trans-Pacific Export Bills of Lading.

No. 3. The establishment of a Central Bureau to furnish passing records.

No. 4. The establishment of a Central Bureau for the issuance of Embargo Notices and Embargo Information.

These recommendations were made in May, 1918, to the Railroad Administration through its Director of the Division of Traffic. They were received favorably at first, but after long negotiation nothing whatever was done except that almost a year later a Bureau was established for the issuance of TransPacific Export Bills of Lading. No explanation has ever been given by the Railroad Administration as to why some arrangement was not made to take care of the public necessities so ruthlessly ignored.

In the "Statement of Hon. W. G. McAdoo, Director General of Railroads, before the Interstate Commerce Committee of the United States Senate," issued January 3rd, 1919, appears the following:

PUBLIC SERVICE FREIGHT BUREAUS

Under private control of railroads, and for competitive reasons, practically

all railroads maintain so-called off-line agencies, the original function of which was solicitation of traffic. These off-line agencies were abandoned by the Railroad Administration for the reason that the competitive causes which gave rise to their establishment no longer existed. It was found, however, that in some measure these agencies had performed real service to the public, and therefore the establishment of public-service freight bureaus has been begun with a force trained to handle for shippers matters which were formerly handled by the off-line agencies. I submit that it must have been embarrassing to the Railroad Administration to have to admit, after seven or eight months, a fact which should have been within the knowledge of the experienced traffic men who were responsible for the order at the time it was given, and especially when it is well known that the closing of the offices was protested by commercial bodies and individual shippers all over the United States. It will be noted particularly that the Director General states that the establishment of public-service freight bureaus has begun (after almost a year of neglect) and then is to be added the indisputable fact that such public-service freight bureaus have never to this day been established. It is true that a shadow of an attempt was made to do so by establishing a representative at the information desk located in the consolidated ticket offices to answer inquiries as to freight transportation, but this so little met the requirements that it was farcical. In addition, in Eastern territory, the trunk line general offices were "ordered" to provide themselves with tariffs and information to serve the public as to certain designated lines. This was no less farcical than the other plan, and it cannot be successfully denied that it proved to be so. These initial lines were already overburdened, with the impossibility, on account of the draft, of getting competent help. It was a failure also because freight rate information can be supplied only by those familiar with the tariffs they are handling, and such skill can only be acquired by years of training. Other information, such as suitable locations for plants, tunnel and bridge clearances, terminal facilities and train schedules can be supplied only by those who have made a special study of the parent line. Car passing reports, one of the greatest advances in modern transportation, were absolutely abandoned, leaving the helpless shipper to the mercy of kind Providence as to the arrival or ultimate disposition of his property. The quagmire of embargo notices was impenetrable.

No blacker spot appears on the government operation of the railroads than this unjustifiable action, for the saving of a small fraction of one per cent of the cost of operation, and for this destruction of the vital necessities to the conduct of legitimate business. I am confident that the use of this strong language will be approved by many if not all shippers, and the only reason for submission was the war necessity and the well known futility of continued protest.

There can be no discussion of the treatment of labor in this article, but it would seem to be a travesty upon justice that organized labor should be so well taken care of while so little thought was given to men who had spent their lives in the service of the railroads and who were equipped by experience and knowledge to give the public the service it so insistently demanded and needed. In some cases such employes, sixty years of age and over, and of thirty years and more of continuous service, were abandoned to drift from pillar to post seeking any employment which would save them and their families from actual want and starvation. Men who were almost entitled to retirement were thrown out in their old age and forced to attempt to begin life over again. Truly there was no necessity of winning the war which compelled any such hardships or warranted any such mistake of judgment on the part of men entrusted with government operation of the railroads. To the credit of the managers of the railroads they attempted to do what they could to temper the hardships, but the task was difficult and in many instances did not succeed. The policy was not generally carried out in the case of the aged employes who had a right to expect that they would have consideration for the many years of faithful service. The attempt to show that government operation and ownership was the panacea for all ills has met the fate it deserves. The only class that now wants it or will tolerate it is the class which has received the only profits from it.

The Case for Government Operation and

Ownership

By WILBER L. STONEX
Philadelphia, Pa.

UNTIL comparatively recently the theory of those favoring

the private management of public institutions was that a few were wiser and more capable than the many and that every such institution, whether operated for profit or not, should be kept out of the control of the general public. Accordingly the schools, libraries, hospitals and all charitable institutions were at first controlled by the church acting through its ecclesiastics and later to a considerable extent through corporations usually self-perpetuating. Little by little such institutions have come with increasing number under public control, and this fact itself sufficiently proves that the people as a whole are satisfied with the result; and very few can deny that the result has been an enormous gain both in the quality of the service rendered by these institutions and in the efficiency of their administration.

The same is true of transportation facilities. In the early days of this country the poverty of the people and their inability to pay taxes forced them in many cases to grant to private individuals and to quasi-public corporations the right to construct and operate the more costly of these facilities and to collect fees from those using them for their reimbursement. It was in this way that the toll-roads and toll-bridges came into existence. This, however, was recognized to be a temporary expedient only; and gradually the people have taken over and given free service of these facilities, the private control of which in every case had come to be recognized as detrimental to the public interest. In acquiring them the public authorities generally borrowed money for the purpose and then paid off the indebtedness incurred by levying taxes on the property of those benefited. The levy of such taxes was in all material respects identical with the assessment of stockholders in private corporations, the benefits accruing from the free use of the utility being the equivalent of a dividend. These general propositions apply as well to ferries, street rail

ways and all other public utilities which require operation as well as maintenance and for which it is necessary to charge fares or rates. In these cases the fundamental difference between private and public operation is that under public management the primary purpose is to provide efficient service at the minimum cost, while under private management the primary purpose is to pay the largest possible dividends to the relatively small number who are in possession of the utility and for that purpose to charge the public all that the traffic will bear.

The temptation to private owners to exploit the public is irresistible and the results invariably are detrimental to the public, not only in a material way but by corrupting the public morals, as it almost always leads to the perversion of public officials and to the undue enriching of a few by reprehensible methods. This is especially true where the utility is a monopoly.

The largest single monopolistic public utility now under private control is that part of the national transportation service consisting of the railroads. In applying to it the principles I have laid down it is necessary to consider the railroads as a unit, for that is the relation they sustain to the public. That the railroads are public highways and that "the function performed is that of the state" is not open to question. This was settled long ago by the Supreme Court of the United States,1 and the right of the government to acquire and operate them is as well settled as the right of a state to acquire a toll-road, or of a city to acquire and operate a street railway or a ferry. The only question to consider is whether the interests of the public can be better served if the service is rendered directly by the public through its own employes or indirectly through the agency of a public service corporation privately administered.

In considering this question it is necessary to bear in mind that for nearly three-quarters of a century the railroads have been privately operated under regulations of the state and federal government, and that they have never been operated by the government, except for less than two years and then under abnormal conditions which the private managers had been unable to meet, and that the carrying out of the details of this operation remained with those who were operating the roads when they Olcott vs. Supervisors, 83 U. S, 678.