RAILROAD REVENUES AND EXPENSES HEARINGS BEFORE THE COMMITTEE ON INTERSTATE COMMERCE SIXTY-SEVENTH CONGRESS SECOND SESSION PURSUANT TO Senate Resolution 23 DIRECTING THE COMMITTEE ON INTERSTATE COMMERCE 71942 Volume V Printed for the use of the Committee on Interstate Commerce WASHINGTON 1922 RAILROAD REVENUES AND EXPENSES. TUESDAY, APRIL 4, 1922. UNITED STATES SENATE, COMMITTEE OF INTERSTATE COMMERCE, The committee met, at 10 o'clock a. m., pursuant to call of the chairman, in the committee room, Senator Albert B. Cummins presiding. Present: Senators Cummins (chairman), Townsend, Poindexter, Fernald, and Pomerene. The CHAIRMAN. The committee will come to order. Mr. Willard has already been sworn in this investigation, and he will now proceed if he is ready to do so. Mr. WILLARD. I am ready to proceed, Mr. Chairman. TESTIMONY OF MR. DANIEL WILLARD, PRESIDENT OF THE BALTIMORE & OHIO RAILROAD CO.-Resumed. Mr. WILLARD. Mr. Chairman, I have prepared a statement which, with your permission, I shall read. I might say in the beginning that while it has chief reference to statements made by Mr. McAdoo when he was before your committee, a short time since, I have not endeavored to take up in detail each specific statement made in his rather long presentation, but on the contrary I have sought to cover the subject in a broad way. Mr. McAdoo dealt with the situation in three periods so far as the railroads are concerned: 1. Before Federal control. 2. During Federal control. 3. After Federal control. It seems to me that some of the statements he made might leave a misleading impression concerning each of these periods if they were not amplified a little, as I hope to do; and the statement which I will now read has been prepared with that purpose in mind. Since I had the privilege of appearing before this committee in May, 1921, Mr. Walker D. Hines and Mr. William G. McAdoo, among others, have also appeared and presented carefully prepared statements concerning the operation of the railroads, particularly while under Federal control, and they have also commented concerning the operation of the carriers previous to Federal control and subsequent to the termination thereof. The matters discussed by both Mr. Hines and Mr. McAdoo were in large part the same. I will relate my comments chiefly, however, to the statements made by Mr. McAdoo, although what I say will be largely applicable to the testimony submitted by both of these witnesses. I wish to say also that I shall not discuss Federal control of the railroads as a critic.." THE WAR-1917-RAILROAD WAR BOARD. It so happened that during the year 1917 I was chairman of the advisory commission of the Council of National Defense, and from the middle of November in that year until some time in the following January, 1918, I was also chairman of the War Industries Board, holding both appointments from the President. My duties in connection with these appointments made it necessary for me to spend the greater portion of my time during 1917 in the city of Washington, and during the last six months of the year practically all of my time was spent in this city. The Baltimore & Ohio board of directors, appreciating the imperative duty which devolved upon all men and institutions to loyally support the Government while we were at war. promptly approved of my accepting the appointments above referred to and authorized me to arrange the organization so as to relieve myself as much as possible from the direct details of the management of the Baltimore & Ohio Co. Because of my position as chairman of the advisory commission, and also, for a period, of the War Industries Board, I was able to see and understand more clearly than might otherwise have been the case, the extent to which the war program of the Government depended upon an efficient transportation system. It was in recognition of this fact that the Council of National Defense, three days after this country entered the war with Germany, requested me as chairman of the advisory commission, to take up with the railroads the matter of coordinating their efforts so as to render the fullest measure of transportation. In response to this request of the Council of National Defense, telegrams were sent to the chief executives of all the more important railroads, asking them to meet in conference in the city of Washington on the 11th of April, 1917. A well-attended conference was held. The situation was laid before the railroad presidents who were present and they promptly and unanimously adopted a resolution which I now present in connection with my statement. The resolution reads as follows: Resolved, That the railroads of the United States, acting through their chief executive officers here and now assembled, and stirred by a high sense of their opportunity to be of the greatest service to their country in the present national crisis, do hereby pledge themselves, with the Government of the United States, that during the present war they will coordinate their operations in a continental railway system, merging during such period all their merely individual and competitive activities in the effort to produce a maximum of national transportation efficiency. To this end they hereby agree to create an organization which shall have general authority to formulate in detail and from time to time a policy of operation of all or any of the railroads, which policy, when and where announced by such temporary organization, shall be accepted and earnestly made effective by the several arrangements of the individual railroad companies here represented. After the adoption of the foregoing resolution, a committee of five railroad executives was immediately created, the following men being selected in that connection: Mr. Fairfax Harrison, president, Southern Railway Co., chairman; Mr. Samuel Rea, president, Pennsylvania Railroad Co.; Mr. Howard Elliott, president, New York, New Haven & Hartford Railroad Co.; Mr. Julius Kruttschnitt, chairman executive committee, Southern Pacific Co.; Mr. Hale Holden, president, Chicago, Burlington & Quincy Railroad Co. I might add that Mr. Clarke, subsequently chairman of the Interstate Commerce Commission, and I myself as chairman of the advisory commission of the Council of National Defense, were also ex officio members, but we took very little active part in that work. This committee was given power of attorney by board action of 631 separate railroad companies. I desire to file a copy of the resolution and power of attorney to which I have just referred, marked "Exhibit A.” I have included these exhibits in my compilation simply for the purpose of showing that the action which was taken by the railroads. at that time was a bona fide action and in no sense looked upon in a Pickwickian sense as has been suggested here. The committee so created, which came to be known as the Railroad War Board, at once established headquarters in Washington, and they continued to hold practically daily sessions in this city until the control of the railroads was taken over by the Government. In order to deal effectively with the situation they found it necessary to create a number of subcommittees and one of the committees so created was known as the car-service committee, and it was chiefly through this car-service committee that they exercised their authority concerning the movement of cars and trains. The car-service organization which they built up was largely taken over by the director general at the beginning of Federal control. It was used by him as his agency during the entire period of Federal management, and at the termination of Federal control continued in existence as the agency of the railroads, and is in existence to-day, functioning in the same capacity here in Washington. The headquarters of the car-service committee are now located in a building leased by the railroads in this city, across the street from the Interstate Commerce Commission. Since the termination of Federal control this agency has been made use of by the Interstate Commerce Commission in various ways in connection with the duties imposed upon that body by the terms of the Esch-Cummins Act. In a report submitted to the Hon. Francis G. Newlands, then chairman of this committee, by Mr. Fairfax Harrison, chairman of the Railroad War Board, on December 24, 1917, the following language was used: The additional expense of this organization to the carriers is $800,000 per year. The Government assumes no expense or obligation whatever. A large part of the work of the committee has been to stimulate the American railroads to greater efficiency and to cut out unnecessary competitive practices. This has been done in various ways, very largely through the agencies of the commission on car service and its 33 subcommittees covering the entire United States, whereby the most cordial and cooperative relations have been established with the public. I mention all this simply for the purpose of showing that the railroads did not look upon the resolution which they passed on the 11th of April, 1917, in a Pickwickian sense, as Mr. McAdoo would seem to wish you to understand; but that they did look upon the matter se |