Part 38
(a) Russian capitalization, including railways in Asia, covers a total of 39,277 miles, from which the capital per mile is computed.
(b) This is exclusive of 4,259 miles of local interest.
The most striking feature in this table is the steady advance it shows in the capital cost of German railways. In ten years this has increased from 251,597 marks per kilometer in 1898 to 283,608 in 1908, _i. e._ 31,731 marks per kilometer or $12,282 per mile. This means an increase of $991,687,440 in capital cost for an increase of only 5,525 miles of line.
VI
OWNERSHIP OF AMERICAN RAILWAYS
Returns to this Bureau place the number of stockholders of record at the date of the last election of directors prior to June 30, 1909, of the 368 roads reporting at 320,696. As only 182,046 of the 221,132 miles operated by these roads was covered by the capital stock, this would show 1¾ stockholders for each mile of road and would indicate that there are at least 415,000 stockholders in all the railways of the United States. Owing to the incompleteness of the returns on this subject and the fact that large blocks of stock are held in the names of associations and trustees, it is safe to estimate that the actual ownership of railway stock is distributed among at least 440,000 persons.
In 1905 the Commission reported the number of stockholders of record prior to June 30, 1904, as 327,851, but has given no later figures. It may be of interest to compare these figures with the partial reports to this Bureau since then.
===================+=================+============== Year | Number | Number of | Reporting | Stockholders -------------------+-----------------+-------------- 1904 | 1,182 roads | 327,851 1906 | 284 " | 226,986 1907 | 317 " | 240,554 1908 | 315 " | 315,727 1909 | 340 " | 320,696 -------------------+-----------------+--------------
If the ownership of railway bonds, which is even more widely distributed than that of stocks, could be traced, it would be found that over a million investors are interested in the financial welfare of the railways. This would give to each an interest of $13,000, from which the average income is not over $520 a year.
The attempt of the Commission in 1908 to secure evidence that the control of the railways was concentrated in a few hands by calling for a statement of the "ten largest holders of voting securities" of the reporting companies having established that nowhere did they _own_ a majority or an approach to a majority of the controlling stock, inquiry along that line was dropped in 1909.
In railways, as in any republic, the latent power is widely distributed among the many, while the administrative responsibility is necessarily entrusted to the few.
VII
PUBLIC SERVICE OF THE RAILWAYS
It is the reproach of our system of government statistics of railways that their first concern is financial results, which the government takes no thought to improve, and the harrowing roll of accidents, and not the adequacy of the service and the steady development of the means of transportation. Every month, almost every week, the public is informed of the volume of traffic, and every quarter the record of casualties is told in sensational head lines. It is left for belated annual reports to record the public service of this great industry upon whose progressive efficiency every other industry in the United States depends.
It is not upon what the railways earn, but upon what they DO that the whole industrial fabric of the republic rests. It is not upon the dividends they pay but upon the traffic they carry, the net income withheld from dividends and put into improvements, that their success as carriers depends.
THE PASSENGER TRAFFIC.
In considering the public service of the railways it is customary to give first attention to the passenger traffic. This is not because it is the most important branch of the service but because passengers are numbered by millions, where thousands suffice in the enumeration of the shippers, who frequently mistake themselves for the entire American people.
In twenty years between June 1, 1889, and June 1, 1909, the population of the United States increased from 61,289,000 to 88,806,000, or nearly 45%. In the meantime the passenger cars provided by the railways increased from 24,586 to 46,026, or over 87%. But this does not measure the liberal provision made by the railway for the travelling public, which is more fully and accurately expressed by the amazing growth of the number of passengers carried one mile from 11,553,820,445 in 1889 to approximately 29,452,000,000 in 1909, or nearly 155%.
Here is shown an increase of cars not far short of double the increase in population and an increase in passengers carried proportionately greater than the numerical increase in cars.
In the meantime the average receipts of the traffic have declined from 2.165 cents per passenger mile in 1889 to 1.916 in 1909--a decline of over 11%, although every item involved in the service, locomotives, cars, track, stations, labor, etc., cost more. The passenger service, except as precursor to the freight service, and in certain densely populated sections, was unremunerative in 1889 and is more so now. It is maintained at the expense of the freight service by what the Railroad Commission of Wisconsin has characterized as "a species of piracy practiced upon the shippers of freight."
The salient features of the passenger service reported to this Bureau for the year 1909, as compared with the final official returns for the preceding year, are shown in the following statement:
======================================+================+================ Item | Bureau Figures |Official Figures | 1909 | 1908 --------------------------------------+----------------+---------------- Miles of line represented | 221,132 | 230,494 Passengers carried. | 854,255,337 | 890,009,574 Passengers carried 1 mile | 28,788,855,000 | 29,082,836,944 Passenger revenue | $551,634,278 | $566,832,746 Mileage of passenger trains | 491,903,107 | 505,945,582 Average number of passengers in train | 58 | 54 Average cars to a train | 5.3 | Passenger car miles | 2,594,508,987 | 2,705,659,994 Average passenger journey (miles) | 33.71 | 32.66 Average receipts per passenger mile | | (cents) | 1.916 | 1.937 --------------------------------------+----------------+----------------
According to the monthly reports to the Interstate Commerce Commission covering an average of 233,002 miles of line, the passenger revenues in 1909 were $564,302,580, or $1,943,077 less than the above revenues for only 228,164 miles of line in 1908.
The average receipts per passenger mile in 1909 are the lowest ever reported for American railways.
Taken in connection with the official returns covering the period since 1900, the above figures afford evidence of the confiscatory effect of the 2-cent passenger laws on railway revenues, as appears from the following statement:
SUMMARY OF PASSENGER MILEAGE, REVENUE AND RECEIPTS PER PASSENGER MILE, 1900 TO 1909.
============+================+===========+==============+========== | | Increase | | | Passengers | Over | | Receipts Year | Carried | Preceding | Passenger | per | One Mile | Year | Revenue | Passenger | |(Per Cent) | | Mile ------------+----------------+-----------+--------------+---------- 1900 | 16,038,076,200 | | $323,715,639 | 2.003 1901 | 17,353,588,444 | 8.2 | 351,356,265 | 2.013 1902 | 19,689,937,620 | 13.4 | 392,963,248 | 1.986 1903 | 20,915,763,881 | 6.2 | 421,704,592 | 2.006 1904 | 21,923,213,536 | 4.8 | 444,326,991 | 2.006 1905 | 23,800,149,436 | 8.6 | 472,694,732 | 1.962 1906 | 25,167,240,831 | 5.7 | 510,032,583 | 2.003 1907 | 27,718,554,030 | 10.1 | 564,606,343 | 2.014 1908 | 29,082,836,944 | 4.9 | 566,245,657 | 1.937 1909 | 29,452,000,000 | 1.3 | 564,302,580 | 1.916 | | | | Increase, | | | | per cent | 83.7 | -- | 74.6 | -- ------------+----------------+-----------+--------------+----------
Here it is shown that the passenger service rendered has increased 12% more than the passenger revenues. But more significant than this is the column of yearly increases in service by percentages. This utterly explodes the theory that passenger travel is greatly stimulated by low fares--aside from some positive incentive to increased travel, such as periodical expositions, the Louisiana Purchase Exposition for instance, the effect of which is clearly traceable in the increased service in 1905, which includes the heavy travel during the months of heavy attendance, July 1 to December 1, 1904.
The 2-cent passenger laws were passed so as to become generally effective July 1, 1907, and their effect on passenger receipts during the following year was such that these receipts were actually less in 1909 than in 1907, although the service performed by the railways was over 6% greater. Had the railways received the same rate in 1909 that they did in 1907 their revenue from passengers would have been nearly $29,000,000 more than it was.
PASSENGER TRAFFIC 1909-1888.
In the next statement the salient facts in regard to the passenger traffic since the Commission began collecting the data is passed under review.
======+==========+==========+=======+========+=======+=======+======== | | | | | | |Average |Passengers|Passengers|Mileage|Average |Average|Pass. |Receipts Year | Carried | Carried | Pass. | Pass. |Journey|Revenue| per |(Millions)| One Mile | Trains|in Train| Miles |(Mill.)|Pass. | |(Millions)|(Mill.)| | | |Mile | | | | | | |(Cents) ------+----------+----------+-------+--------+-------+-------+------- 1909 | 888 | 29,452 | 507 | 58 | 33 | 504 | 1.916 1908 | 890 | 29,082 | 500 | 59 | 33 | 566 | 1.937 1907 | 873 | 27,718 | 509 | 51 | 32 | 564 | 2.014 1906 | 797 | 25,167 | 479 | 49 | 31 | 510 | 2.003 1905 | 738 | 23,800 | 459 | 48 | 32 | 472 | 1.962 1904 | 715 | 21,923 | 440 | 46 | 31 | 444 | 2.006 1903 | 694 | 20,915 | 425 | 46 | 30 | 421 | 2.006 1902 | 649 | 19,689 | 405 | 45 | 30 | 392 | 1.986 1901 | 607 | 17,353 | 385 | 42 | 29 | 351 | 2.013 1900 | 576 | 16,038 | 363 | 41 | 28 | 323 | 2.003 1899 | 523 | 14,591 | 347 | 41 | 28 | 291 | 1.978 1898 | 501 | 13,379 | 334 | 39 | 27 | 267 | 1.973 1897 | 489 | 12,256 | 335 | 37 | 25 | 251 | 2.022 1896 | 511 | 13,049 | 332 | 39 | 26 | 266 | 2.019 1895 | 507 | 12,188 | 317 | 38 | 24 | 252 | 2.040 1894 | 540 | 14,289 | 326 | 44 | 26 | 285 | 1.986 1893 | 593 | 14,229 | 335 | 42 | 24 | 301 | 2.108 1892 | 560 | 13,362 | 317 | 42 | 24 | 286 | 2.126 1891 | 531 | 12,844 | 308 | 42 | 24 | 281 | 2.142 1890 | 492 | 11,847 | 285 | 41 | 24 | 260 | 2.167 1889 | 472 | 11,553 | 277 | 42 | 25 | 254 | 2.199 1888 | 412 | 10,101 | 252 | 40 | 24 | 237 | 2.349 ------+----------+----------+-------+--------+-------+-------+------- Increase 1888 to | | | | | | 1907 115% | 191% | 101% | 45% | 38% | 138% | Decrease | | | | | | 18.4 ------+----------+----------+-------+--------+-------+-------+------- The several increases shown in the first, second, third and sixth columns of the table reflect the general advancement in passenger traffic. That of 45% in the average passengers to a train marks the progress in density of that traffic which may eventually place it on a profitable basis. In Massachusetts, where this density yields an average of 79 passengers to a train there is no demand for a two-cent rate statute, for the conditions have made a rate of 1.64 cents profitable. In the group of states consisting of Ohio, Indiana, Michigan, Illinois, Iowa, Wisconsin and Minnesota, where the density of traffic yields only 46 passengers by train, a statutory two-cent fare becomes confiscatory because it costs at least one dollar to operate a passenger train one mile and 46 times two cents is only 92 cents. Moreover the 46 passengers per train is only an average and there are as many trains that average less as more. The average has to be raised above 50 to yield any margin of profit on passenger traffic. If it were not for the density of traffic in the New England and North Atlantic group of states the average for the entire United States would be well below 46 passengers per train.
The steady increase in the distance traveled per passenger reflects the effect of trolley competition in diverting the short haul passenger traffic.
The most noteworthy feature of the seventh column is the decline of 98/1000ths of a cent in the average receipts per passenger mile between 1907 and 1909, making a new low record after hovering around the two cent mark for fourteen years. As noted above, this reduction in the average cost the railways nearly $29,000,000 on the passenger traffic of 1909.
In this connection it is interesting to recall that between 1888 and 1893 the Official Statistician, then as now Professor Adams, made the following computation of the average cost of carrying one passenger one mile for the whole United States:
============================+======+======+======+======+======+====== | 1888 | 1889 | 1890 | 1891 | 1892 | 1893 ----------------------------+------+------+------+------+------+------ Average cost of carrying a | | | | | | passenger one mile, cents | 2.042| 1.993| 1.917| 1.910| 1.939| 1.955 ----------------------------+------+------+------+------+------+------
It will be observed that the average receipts per passenger mile in 1909 are below the computed cost in every one of the years above named, except 1891. When the advance in the cost of everything necessary to the service--track, labor, equipment, conveniences, speed, terminal facilities--is considered, the practical coincidence of average cost and receipts leaves no margin for legitimate profits.
RECEIPTS FROM MAIL AND EXPRESS.
Closely associated with the passenger traffic of the railways are the mail and express services. Although principally carried by passenger trains, each has a special service of its own by mail and express trains. But all are included under the passenger service. The receipts from these two branches of the service during the last decade are shown in the following statement:
SUMMARY OF RECEIPTS FROM MAIL AND EXPRESS, 1899 TO 1908.
====================+=====================+===================== | Mail | Express +------------+--------+--------------------- Year | Revenues |Percent-| Revenues |Percent- | | age of | |age of | |Earnings| |Earnings --------------------+------------+--------+------------+-------- 1899 |$35,999,011 | 2.74 |$26,756,054 | 2.04 1900 | 37,752,474 | 2.54 | 28,416,150 | 1.91 1901 | 38,453,602 | 2.42 | 31,121,613 | 1.96 1902 | 39,963,248 | 2.31 | 34,253,459 | 2.07 1903 | 41,709,396 | 2.19 | 38,331,964 | 1.98 1904 | 44,499,732 | 2.25 | 41,875,636 | 2.12 1905 | 45,426,125 | 2.18 | 45,149,155 | 2.17 1906 | 47,371,453 | 2.04 | 51,010,930 | 2.19 1907 | 50,378,964 | 1.94 | 57,332,931 | 2.21 1908 | 48,517,563 | 2.03 | 58,602,091 | 2.45 1909 | 50,935,000 | 2.08 | 63,669,000 | 2.60 | | | | Increase, per cent | 41.5 | -- | 138.0 | -- --------------------+------------+--------+------------+--------
Aside from the striking contrast in the percentages of increase of revenues from these two sources, the most significant feature of this table is the reversal it shows in their respective importance from the railway revenue point of view. Prior to 1905, carrying the mails brought larger, if not more profitable, returns to the railways. Since then the returns from express have increased so much more rapidly that they are now nearly 23% more than those from mails.
If proof were needed of the absolute falsity of the charge that the railways are receiving an exorbitant rate for carrying mail, the above table of their receipts from the service in connection with the following statement of mail handled and revenues in view of the finding of the Joint Commission of Congress in 1899 would furnish it. After a thorough investigation of the subject lasting from August, 1898, to July, 1900, the Commission came to the following conclusion:
"Upon a careful consideration of all the evidence and the statements and arguments submitted, and in view of all the services rendered by the railroads, we are of the opinion that the prices now paid to the railroad companies for the transportation of the mails are not excessive, and recommend that no reduction thereof be made at this time."
The increase in the railroad service since this report was made is shown in the following statement of miles of mail transportation by railroads, the postal revenues and the number of clerks in the railway mail service since 1899:
===============================+==============+=============+========= | Annual | | |Transportation| |Number of | of Mail | Postal | Railway | by Railroads | Revenues | Mail | (Miles) | | Clerks -------------------------------+--------------+-------------+--------- 1899 | 287,591,269 | $95,021,384 | 8,388 1900 | 297,256,303 | 102,354,579 | 8,695 1901 | 302,613,325 | 111,631,193 | 9,105 1902 | 312,521,478 | 121,848,047 | 9,627 1903 | 333,491,684 | 134,224,443 | 10,418 1904 | 353,038,397 | 143,582,624 | 11,621 1905 | 362,645,731 | 152,826,585 | 12,474 1906 | 371,661,071 | 167,932,783 | 13,598 1907 | 387,557,165 | 183,585,006 | 14,357 1908 | 407,799,039 | 191,478,663 | 15,295 1909 | | 203,562,383 | 15,866 | | | Increase in 10 years, per cent | 50.5 | 124.7 | 89.1 -------------------------------+--------------+-------------+---------
Compared with the increase of only 41.5% in the revenues from mail received by the railways during the same period, each one of the above percentages testifies to a positive reduction in the rate received by the railways for the service. And if the increase in weight of mail carried in 1909 were known, the contrast between the service and the pay would be more striking. In 1899 the total weight of all mail was reported as 635,180,362 pounds. In 1907 the estimates made from the special weighing placed the weight of mail carried that year at 1,290,358,284 pounds, or an increase of nearly 105% in eight years. By reference to the above table it will be seen that the railway revenues from mail between 1899 and 1907 increased only 40%. The contrast is illuminating. In its light the charge that the railways are in any way responsible for the postal deficit is grotesque.
FREIGHT TRAFFIC
According to the monthly returns to the Interstate Commerce Commission, the proportion of revenues from freight of the railways of the United States to total earnings from operation, for the years 1908 and 1909, receded to the unusually low figures of 68.51% and 68.88% respectively. The official summary for 1908, based on the annual returns, shows a proportion of 69.17% for that year, which probably is nearer the mark.
The annual reports to this Bureau for 1909 yield a proportion of 69.18% for last year.
Accepting this proportion taken from the annual returns as being based on the same character of reports as those from which former ratios were derived, the preponderance of freight traffic is shown in bold relief in the following statement of the ratio of its revenues to total earnings from operation, 1899 to 1909:
===========+================= | Proportion of | Freight Revenues Year | to Total | Earnings -----------+----------------- 1899 | 69.55% 1900 | 70.56% 1901 | 70.41% 1902 | 69.93% 1903 | 70.39% 1904 | 69.82% 1905 | 69.67% 1906 | 70.54% 1907 | 70.44% 1908 | 69.17% 1909 | 69.18% -----------+-----------------
The average proportion for the nine years preceding 1908 is seen to be slightly above 70%, and the fact that it was almost one point below 70% in 1908 and 1909 indicates that it was the freight traffic that bore the brunt of the business depression which curtailed railway revenues during those years.
In no other of the leading countries of the world does the freight traffic assume the overwhelming relative proportion that it does in the United States. In the United Kingdom it amounts to 50.35%; in France to 53.64%; and in Germany, including express and mail, to 65%. If these were classed with freight in the United States, it would raise the proportion for that traffic here to over 74%.
FREIGHT TRAFFIC 1909 AND 1908.
The next statement presents the significant items of the freight traffic in 1909 for the roads reporting to this Bureau compared with those of the final official returns for the preceding year.