THE RAILROADS
THE RAILROADS IN PASSING judgment on government operation of the railroads there are a number of things to be remembered. 1. Congress authorized the President to pay, and the President agreed to...
...New laws are particularly needed for the guidance of men in public office...
...There is no room in this country for any man or any organization of men who seek to substitute for the law the methods of force and to establish mob rule in America...
...They have invariably carried the original fraud in their capital account from that date to this...
...The military dictatorship of Diaz was maintained by foreign influence in violation of the Mexican Constitution of 1857...
...The end was in sight...
...No business can overload itself with a fictitious capital account and maintain its property in a sound healthy condition...
...These men toook the oath to defend the Constitution...
...He has established the Constitution in every state capital in Mexico and in every city of more than 5,000 population...
...The failure of private ownership and operation had plainly b^en inevitable for years...
...Oiled Intervention In Mexican Affairs IS relief from the high cost of living to be offered to the American people in the form of a war with Mexico...
...Tax Payer — the Pennsylvania Railroad pulls down a neat little 8.92 per cent...
...How do you like it, Mr...
...They are, by their own admission, operating their mines and oil wells without permits and they are paying large sums of money annually to rebels against the Carranza Government, for "protection" in their violation of the law...
...The first duty of the Government is to protect every citizen in the exercise of the fundamental rights guaranteed under the Constitution...
...When the Carranza Government pro-' claimed the restoration to the Mexican people of the ownership of the natural wealth of Mexico, a new organization sprang up in the United States...
...And it appears that they have found a Republican Congress and a Democratic President willing to put this scheme through...
...the Michigan Central 18.48...
...The Constitution provides: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof...
...But it is idle to speculate .on what the cost of private operation of the railroads would have been in 1918 and 1919...
...How many billions "armed intervention" would cost must be left to conjecture...
...People could not obtain fuel and yet the railroad yards in all the great cities were literally jammed with loaded coal cars...
...Complaints of the inadequacy of transportation crowded the calendars of the Interstate Commerce and all State Commissions...
...We need legislation in this country making it a crime for any individual or any organization to interfere with the exercise of the rights of free speech, free press and free assemblage...
...All other expenses of operation increased with the constantly increase ing cost of materials and labor...
...Whom the gods would destroy they first make mad...
...During these years the railroads had engaged in war profiteering to such an extent, that the average net income for the three war-years amounted to a, clear profit of from 6 per cent to 647 per cent—not upon actual investment— but upon PRESENT CAPITAL STOCK, WATER, SOAP-BUBBLES AND ALL...
...The extravagance and dishonesty of railroad officials and managers in conducting the business, juggling accounts, destroying records and defrauding both the public and the companies have all contributed to wreck railroad credit...
...This was fine for the railroads but it was a raw deal to give the people...
...In the southern region there was a saving of approximately 41,452,216 car miles...
...Carranza signed the new Mexican mining law June 27, 1919: It separated the ownership of the land from the ownership of mineral deposits—oil, copper, etc...
...4. The consolidation of terminal stations, eliminated interchange switching to a large extent and large quantities of traffic were assigned directly to the consumer from point of shipment, reducing charges for cross hauling between terminal lines...
...Mayors, governors and-iederal officials who took a solemn oath to "preserve, protect and defend the Constitution" have violated that oath by denying to the people their fundamental liberties...
...AH of these expenses eat into their earnings...
...These powerful men have refused to apply for permits to exploit the land, under the mining laws of Mexico...
...Tens of thousands of these employees are necessarily obligated to pay for extra meals and lodgings daily when absent from home...
...Train loads of grain, provisions and general supplies blockaded the side tracks from the Atlantic seaboard to the Rocky mountains...
...To hold them in the service the government increased their wages to date from January 1, 1918 an average of $31.67 per month per man or a total of $874,000,000 in round numbers...
...It would cost us the friendship of every Republic of South America and, finally, it would lower us to the sordid level of the great powers which have soiled their hands in Egypt, India, Morocco, and Turkey...
...No administration can justify "armed intervention" in Mexico at this time...
...The saving effected by this reform is shown by the reports of regional directors to aggregate more than 20 million dollars for the year 1918...
...None of these reforms would have been possible under private operation as theretofore conducted...
...or abridging the freedom of speech, or of the press...
...These men ajje a unit against intervention...
...This Association has subsidized the newspapers and is bringing pressure to bear upon Congress to force this country into "war with Mexico...
...Of course the President was not justified in exercising the option which Congress gave him, to pay the roads such a grossly extravagant sum for the use of their property, but he did...
...They have "acquired" land and mineral rights by every conceivable method of fraud and corruption...
...the Philadelphia and Reading 25.70...
...5. Shortening freight routes resulted in a saying of 16,863,633 car-miles in eastern .and north western regions alone...
...Why bleed them to bolster up railroad finance...
...Under private operation in 1917, more than 50 per cent of the 2,000,000 railway employees were receiving 75 dollars per month or less...
...Meanwhile, the "Association for the Protection of American Rights in Mexico" is active in this country...
...The Director General reduced the m cost of operation and effected a vast number of economies by conducting the entire transportation system as a unit...
...Mob Rule In America IF Democracy means anything, it means the freedom of the people peaceably to assemble and to discuss without restraint any subject upon which they choose to deliberate...
...One of the most important groups in the national association is that made up of the petroleum interests...
...The official list of Americans killed in Mexico, submitted by Secretary Lansing a few months ago, was another blow to the interventionists...
...A New York financial paper, the "Annalist", under date of February 10, 1919, described this organization: 'Among the banks which are members of the association there are J. P. Morgan and Co., the National City Bank, the Guaranty Trust Company, and the National Bank of Commerce...
...There was a shortage of engines and cars, on every road in the country...
...the New York Central 12.96...
...For six weeks the press has engaged in a campaign to whip up sentiment for immediate "armed intervention" south of the Rio Grande...
...By the close of the year 1917 the increased burden of war traffic and the impaired condition of engines and cars culminated in a general breakdown of the service...
...Who destroyed railroad credit ? It was not the people...
...For example the cost of coal for Io* comotives was some $170,000,000 more in 1918 than in 1917...
...T. P. ? Of course there was no jurisdiction for Congress authorizing the payment of such an exorbitant sum for the use of the railroads, but it did...
...Eighteen months ago he secured appointment as consular agent at Puebla, and was preparing to remove to Los Angeles, when he was "kidnapped" by anti-Carran-zista rebels...
...They are> 3triking at the roots of democracy an4 over-turning the Constitution...
...What was true of engines was likewise practically true of cars and tracks...
...By December, 1917, the paralysis of the system was so extreme that the Government took possession and conducted operation to avert complete collapse of transportation and total disaster in the war...
...and provided that corporations exploiting the sub-soil should be required to operate under permits from the Republic of Mexico, and to pay royalties or rentals to the Mexican Government for all mineral deposits taken from the land...
...Later the name was changed to the "Association for the Protection of American Rights in Mexico...
...If the roads had been privately operated in 1918 this increase wordd have been likewise necessary to enable the men to continue in the service...
...But it is enough...
...Drunk with greed for war profits railway managers would permit neither engines nor cars to be laid up for necessary repairs as long as they would turn a wheel...
...None of the deaths of American civilians in Mexico reported during this period can be traced to the-Carranza Government...
...The country has of late been treated with the spectacle of small mobs of returned soldiers breaking up lawful meetings of their fellow citizens...
...Article 27 of the new Mexican Constitution, based upon the old Constitution of 1857, declares that "in the Nation is vested direct ownership of all minerals,— solid, liquid or gaseous...
...The foregoing is but a suggestion of what might be said in fixing the responsibility for the destruction of railroad credit...
...At the same time the privately owned and privately operated railroads were serving private monopolies in which the railroads had a community of interests...
...Samuel G. Inman, former head of the People's Institute at Piedras Negras, declares that "living expenses are less in Mexico than in the United States...
...The American people are not ready to pay this price in order to protect the selfish interests of Morgan and Rockefeller in Mexico...
...And now it is proposed by the pending measures dealing with this vital problem,—the Cummins Bill and the Esch Bill,—to perpetuate all the wrongs and oppression of this private monopoly under a scheme of guarantees to watered capital, that must inevitably burden the traffic of the country with increased rates, running into untold billions...
...The real enemies of the Government are the men who are attempting to prevent exercise of these rights...
...No wonder J. Pierpont Morgan, on his return from Europe a few days ago, expressed a hope for intervention in Mexico...
...This means that "intervention" will be, in fact, a long and bloody war of conquest...
...the Pennsylvania Company 11.92...
...Jenkins had built up a fortune during a residence of eighteen years in Mexico...
...The testimony of this is overwhelming...
...For a decade shippers had been demanding more cars, better management, better service...
...It only required the increased demands of war traffic to reveal the inherent weakness and hasten the failure'of the entire transportation system under private ownership and operation...
...the Delaware, Lackawanna and Western 32.90...
...After eight years of revolution, commencing in 1911, Carranza has emerged as the recognized head of the Republic of Mexico...
...Under wise leadership, the rank and file of patriotic service men will discourage this lawless element who are destroying democracy in their own land...
...The whole railroad transportation system has from the beginning carried the enormous burden of a double capitalization...
...From time to time during the thirty years of rate regulation by commissions the people have been temporarily and partially protected by Interstate and State Commissions...
...The Jenkins' case has proven a disappointment to the interventionists...
...This is the price which the public must pay to "re-establish railroad credit...
...Two of the most important companies identified with this group are the Standard Oil of New Jersey and the Mexican Petroleum Company...
...Raft-way employees would have been forced to quit the service in 1916 and seek more remunerative employment in order to maintain their families...
...The press is filled with praise for these men...
...It cost $100,000,000 to send 40,000 men into Mexico to capture Villa...
...Jenkins' recent efforts to "break into jail", after another American had put up his bond, raises grave question as to the motive of the man in whose behalf the Department of State brought this country to the verge of war with Mexico...
...Under this contract authorized and executed by your Congress and your President, — Mr...
...The government found that there was not a single serviceable locomotive in reserve to meet any emergency...
...Jenkins paid $175,000 for his release from the outlaws but refused to put up a bond of $500 to effect his release when detained by Government officials...
...They buy engines, cars and all manner of railroad supplies of an inferior grade at "graft" prices, from construction companies owned and officered by the rail-Way managers and officials themselves...
...It was called the "Association of the Producers of Oil in Mexico...
...who have betrayed their public trust, but the people in good time will demand an accounting...
...They will repudiate any political party in 1920 which shows subservience to these insidious influences...
...The entire list offers an interesting study in Representative Government...
...the Chicago and Erie 70.45...
...All of this increase in the cost of labor and material would have imposed the same additional charge upon operation, if the private owners had continued their management and control of the railroads down to the present time...
...They cheated in the capitalization of every railroad at its organization...
...And the cost of cross ties and lumber for 1918 was nearly $80,000,000 more than the same materials cost in 1917...
...Private ownership and operation of the railroads was a demonstrated failure soon after we entered the European war...
...Let no one marvel if another election shall prove a veritable earthquake and hurl faithless public officials from their high places and decadent political parties into the limbo of everlasting obscurity...
...They were sent abroad to "make the world safe for democracy...
...But woe be unto him who today dares question the merit or the magnitude of any raid on the Treasury at the behest of the masters of private monopoly...
...In the face of it all, the railroads, and the owners and speculators in railroad securities have organized a scheme to force tfre American people to furnish the billions necessary to "re-establish railroad Credit...
...The big outstanding fact is that private operation of transportation broke down, failed, utterly collapsed, when the demands for a prompt, efficient and adequate service became imperative...
...The primary cause of it all is as plain as a pike-staff: You cannot successfully yoke private monopoly with an honest, impartial public service...
...No wonder the Wall Street Journal carries a headline to the effect that the "oil men are watching the Jenkins' case hopefully P' What American "rights" in Mexico are Morgan, Rockefeller and Guggenheim anxious to protect...
...Employees must pay the expense of heavy dues and fees for sick benefits and death losses...
...They have added enormously to the primary overcapitalization by reorganization, consolidation, merger and every form of manipulation known to high finance, year by year, for nearly three-quarters of a century...
...It has been proven to exist in every case where there has been a thorough-going investigation of the affairs of a railroad company...
...Every dollar of the expense of this battle for business between the owners of various roads was paid for by the public which derived no benefit from the struggle between the roads for a monopoly of the business...
...1. The Director General consolidated 564 of these ticket offices located in large cities and reduced the number to 101...
...3. The reorganization of operating forces under Federal Control reduced the number of high salaried officers and effected a saving nearly 5 million dollars...
...So long as the roads were operated by private owners no such unification was possible...
...2. Not only was the Government "roped in," to paying annually some three hundred million dollars more than a reasonabe charge for the use of the railroads, but when it came to put the transportation system into operation, the ENTIRE PLANT WAS FOUND TO BE ON THE VERGE OF COLLAPSE for WANT of REPAIR, Engines in need of overhauling were kept in service until they "died on the run...
...Throughout our own country there was great suffering because of the failure of the railroads to move the traffic...
...The Anaconda Copper Mining Company is one of the strongest of the mining companies interested, and the Rockefellers are identified with the project through holdings in one of the large rubber companies there...
...It sent a delegation of bankers, mining magnates and lawyers to the Paris Peace Conference to complain of the Mexican mining laws, and Mexico was excluded from the league of nations...
...We need go no further than the Mexican Constitution of January 1, 1917, and the new mining law of June 27, 1919, to find the cause of the present agitation for "armed intervention...
...And private operation of the railroads in handling the transportation system in 1918 when the war burdens were the heaviest and dispatch and efficiency were imperative, would have taxed the country hundreds of millions msjre than it actually cost under government operation...
...This list „ showed that more American citizens have been killed in the past two years in this country in lynching bees and race riots than have been killed from all causes during eight years of revolution in Mexico...
...80 per cent of the 2,000,000 employees were receiving $100 per month or less...
...2. The elimination of unnecessary trains with extravagant service, run largely at a loss, constituting a burden upon the service for which the general public was obliged to pay, effected a saving on the mileage run of this class of trains amounting for the trains traveling west of Chicago and the Mississippi River to 21 million miles and in the eastern district to 26 million miles...
...This reform was extended to freight as well as passenger offices, and in rent, advertising, salaries and incidentals effected a saving in expenses the first six months of nearly §17,000,000...
...But the great corporations which for years have violated the laws of this country are now defying the laws of Mexico, and they demand that the American people send an army to Mexico to protect .their "rights" in that country...
...Before we joined in a crusade with Great Britain to make Egypt and India and China and Ireland and the good old United States unsafe for democracy, before -Senators and Representatives acquired the habit of voting the people's money out of their Treasury like drunken sailors, these same public officials would have regarded support of the Cummins or the Esch Bills as a bargain with political suicide...
...Indeed the loss would have been much greater under private operation than it was under government operation...
...The railway business Is an extra hazardous -calling...
...3. The cost of railway operation was necessarily increased as the war progressed...
...Under this dictatorship, the Morgan-Rockefeller-Guggenheim interests held the Mexican people in serfdom, and wrung from the oil wells, the copper mines and the rubber plantations profits aggregating many times over the amount of their original investment...
...The transportation of food was war munitions to sustain our own and the Allied armies could not be longer delayed and escape utter disaster...
...Stalled trains were the rule rather than the exception...
...For a generation* these powerful finan» cial interests—fattened by plunder extorted from the American people—have been despoiling Mexico of her natural wealth...
...The whole system was eaten up with inside graft...
...They maintained expensive organizations and conducted costly advertising campaigns both for freight and passenger traffic under private control...
...The General Staff of the War Department recently served notice that 450,000 American boys, enlisted for a term of three years, would be required to "pacify" the 15,000,000 citizens of our sister republic...
...He has taken over and now operates the railroads, the telegrap^ and telephone lines...
...These same officials and managers systematically rob the railroads from the inside and then impudently, demand that the public pay higher rates to replace the stealings...
...Paying the railroads $300,000,000 a year more than a reasonable rental for the use of their property, for the two years during which the government has operated them, totals $600,-000,000, which is just about the amount of loss which the government sustained for that period...
...It maintains head-quarters in Washington...
...Here you have the source of the agitation for "armed intervention" in Mexico...
...Transportation was stalled...
...The system of looting the roads from the inside is general and widespread...
...American educators and missionaries '—who are in Mexico not to exploit her resources but to help her people—appeared before a Senate committee a few weeks ago to testify that Mexico enjoys niore stable government today than at any time since 1911...
...They are innocent of any wrong...
...While there existed no competition in rates there was under private ownership a sharp competition for business...
...1. Congress authorized the President to pay, and the President agreed to pay and did pay, a sum for the use of the railroad property amounting to the average net income of the roads for the three years from June 30, 1914, to June 30, 1917...
...or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances...
...It cost $1,250,000,000 and took four years for Great Britain to "pacify" half a million Boers...
...The records conclusively prove the truth of this statement...
...Finally, Carranza has asserted the right of the Mexican people to exact a royalty from the foreign corporations which are exploiting Mexico's incomparable resources...
...This would have been true whether under government operation or private operation...
...This was not only the achievement of a substantial economy but proved a great convenience to the public...
...Shortly before the President seized the roads, England, France and Italy had notified him that by December first, owing to our failure to supply food to the Allies, the Italian and French armies were short-rationed and would certainly revolt if further reduction in rations were made...
...He has annihilated the revolutionary-forces led by Blanquet, Zapata, Diaz, Villa and Angeles...
...Chicago and Northwestern 10.18...
...And so between Congress and the President, and the railroads, the poor old government was stuck for a rental for the use of the railroads that Senator Cummins, who cannot at the present time be charged with hostility to the railroads—admits was TWO HUNDRED AND FIFTY TO THREE HUNDRED MILLION DOLLARS, more, per year, than could be justified on any fair business basis...
...The government was forced to act and to act at once...
...Who did in fact destroy railroad credit ? The gentlemen who organized the railroads in the beginning, and their successors down to this very hour, are responsible for the debauched credit of the railroads...
...Intervention" would mean the continuance of war measures, the curtailment of individual rights, higher taxes, higher prices, possibly conscription...
...The railroads would have broken down and gone into receiverships decades ago but for the fact that they have been permitted to force from the public a return in exorbitant rates, sufficient to float their watered capitalization...
...1 This ultimately became so notorious that books were written by foreign bankers and experts in railroad accounting, Warning investors to beware of American railway securities...
...the Chicago, Burlington and Quincy 22.05...
...But sooner or later the railroads have captured the commissions and through them exacted enough from the public to sustain their unjust system, and pay interest and dividends on a fraudulent capitalization...
Vol. 12 • January 1920 • No. 1
