The Prejudice Against the Railways An Address Before the Chamber of Commerce, Lynchburg, Virginia April 30, 1914. By FAIRFAX HARRISON President, Southern Railway Company Digitized by the Internet Archive in 2015 https://archive.org/details/prejudiceagainstOOharr 6 1932 [ T? £v- 0 \ „ THE PREJUDICE AGAINST THE RAILWAYS. One who has been engaged in the railway industry practically all of his business life, who, relying on the candor of his intentions, has striven earnestly and laboriously to achieve progressive improvement in the efficiency of personnel and materiel of the service, who has always been actuated by a determination to adjust his business practice to what he understands to be the public expectation, who believes that fair dealing and frank discussion are the surest means of success, but who has not for a moment lost sight of the fact that a railway is not an eleemosynary institution : that its purpose is the reward of those who have adventured their capital as well as to serve the public; such an one, I say (and I know that there are many), must sometimes pause to take account of the undoubted fact that for some years there has been a steady growth of public disapprobation of his profession. I venture to claim that no American boy begins life criticising and contemning the railways. On the contrary, most inland boys have their imagination and ambition first stirred by the physical aspect of life on the rail. They see the train crews at work, they admire the demonstration of mighty power and the shining beauty of the locomotives : they hear tales of manly hardship and derring-do such as quicken the heart beats of every one with red blood in his veins and so they make heroes of those men of the throttle and the lantern who come periodically out of the great unknown into the narrow confines of their young lives to go again like migrating birds to mysterious “points South,” which are only names to the untraveled lad. The railroad is to the inland boy what the ship is to the boy bom at a seaport — the outward and visible sign of a world of adventure. So it is that many boys cherish an ambition some day to work on the railway and they believe it to be an honorable plan for an honorable and useful life. It is only later when the germs of an endemic social malady invade the system that that blind and, at times, apparently unre- lenting hatred of the railway corporation, of which for years we have had frequent demonstration, feeds itself in the average man upon all the temptations of personal selfishness, upon the cant phrases of the ambi- tious demagogue, upon the poisoned political economy of the muck- raking magazine, to blaze, with orgiastic fury, in laws and regulations such as no virile man would ever accept for the conduct of his own private business. When he thinks of such things and his conscience works, as it sometimes does, the average man justifies himself with belief that a “great” corporation can submit to oppression and injus- tice, or can adjust its business practices to methods which an individual could not brook. He finds his justification then somewhat in mere size of the sacrificial victim. But there are two more potent causes of his discontent, viz.: a latent inherited class prejudice, and the remoteness of management. Of these causes of current misunderstanding, the last named — re- moteness of management — is the one which, in my judgment, best justi- fies much of the criticism of the railways. There are few American men who would lend themselves to the despoiling of their immediate neighbors. We all know how public opinion regards those who do that thing. I know, too, that where com- munities are acquainted with the men who manage the railways and respect them in their personal lives and bearing, the pressure of hatred of what they represent is less. The psychology of this is not, however, as simple as it would seem to be. Most railway managers have experi- enced a curious differentiation in the public mind between the individual reputation of the officer and opinion of his official acts. That which is hated is not the man who exercises the power and who makes the deter- mination which the public considers unreasonable, but the impalpable thing known as “the Company,” which somehow is distinguished from the officers and even from the stockholders, who choose the officers. This seems to be the explanation of the reluctance of juries to impose criminal responsibility upon officers for their corporate proceedings. We must here recognize a prejudice, for the character of a corporation is neither better nor worse than that of its responsible manager, and it must follow that, as the character of the manager is understood, opinion of him will more and more displace preconceived opinion of the corporation. I deem it, therefore, an obvious duty upon those who have the re- sponsibility of the management of our railways to spend as much of their time as they can in cultivating friendly and human relations with the communities they serve. They can do, and for several years the best of the American railway managers have done, much to plant the seeds of understanding and mutual forbearance by studying at first hand the point of view of the shipper and by revealing themselves as human men seeking to do their duty under difficulties. So far as railway managers are concerned, it is not necessary to o look into the past. If they were once arrogant and arbitrary and aloof, as a class, all the world knows that they were chastened by an outraged public opinion and the heavy hand of the law. Those who typified the sins of the past have mostly passed away. Few of them reaped the crop of tares which grew on the fields they cultivated. They have been suc- ceeded by another generation — men who have been from boyhood in the railway service, as distinguished from the control of the railways, who have been all their lives in contact with the people, who are actuated by principles of service rather than oppressive exploitation of opportunity: but they find themselves in an environment of prejudice which was en- gendered not by themselves but by their predecessors. They are under the awful curse of Yahweh, “The sins of the fathers shall be visited upon the children.” It is conceivable that the American people, ingrained though it may be with Hebrew traditions, will not apply this lash of serpents forever and without relenting. I believe that it is only necessary for them to become convinced that the present generation of railway managers is seeking simply to do their duty and to serve efficiently, to reinstate them in the high place in public esteem to which the nature and the importance of their service entitles such of them as do well. I have had opportunity to know the fellowship of the railway managers iii the United States today, and, considering them as a class, I challenge any other class of the community to match them for courage, for unre- mitting labor, for high ambition and for good intention : and I believe that, as the public knows them, it will grant them the reward of good opinion and respect which I myself have for my colleagues in the service. They are men in the way literally to realize Ruskin’s definition of an artist as “a person who has submitted to a law which it was painful to obey, that he may bestow a delight which it is gracious to bestow.” If, then, the American people and those who are charged with the active responsibility of management of our railways are in a fair way to do what the Knights in the Faery Queen did after a soul searching combat — the poet says they usually “affriended” — I recognize a greater difficulty in solving that other factor in the problem of the railways, to which I have referred, namely: class hatred. In speaking to a body of men engaged in those manifestations of industry known as manufacturing and distribution, I am speaking to men who in their own business experience are trained to understand the problem of management of a railroad. They have seen the railroads regulated : they have contributed for their own advantage to the creation of the public opinion which accomplished that regulation, and they have largely harvested the fruits of that regulation : but they are now begin- ning to realize that they have unloosened a beast which is likely to raven at their own doors before it is chained, if ever again it is to be chained. The principle of the interference of government in private industry is not likely to be applied forever merely to railways, or even to those ag- gregations of other forms of industry known as trusts. We all feel every year more and more the hand of the government in our private affairs, and, unless the public conscience is diverted to something else, as it might be by a great and cruel war, which God forbid !, we are likely to see a steady expansion of the domain of the sovereign (who, in our civiliza- tion, is evidenced by the representative legislature) on social questions affecting every man engaged in the management of industry, or the ownership of the tools of industry. That means the small manufacturer as well as the large manufacturer: the small employer of labor as well as the large employer of labor. At the moment this tendency, so far as it has been diverted from its earliest hostages — the managers of the railways — is directed towards that class of the community which is dim, mysterious and distant — the Capitalist and his agent, the Banker. In a purely agricultural civilization, such as we find in large parts of the United States today, and such as persisted, until the beginning of the last century, practically all over the world, there is an inherited tradi- tion of hostility to the banker. We find expression of it in our earliest records. When the Hebrew people lived exclusively upon agriculture, their law (Exodus 22:25) prohibited the taking of interest on a loan — what has been translated usury. The farmer could find no justification for such a practice, for he was then, as he is today, in the habit of lending what he has — his seed, his cattle, his tools — to a neighbor in tem- porary need, freely and without expectation of reward. He made his living in Biblical times, as he makes it today, by selling, not by lending, what he produced. This also was the sentiment of the primitive Romans, when they too were a purely agricultural people. In one of the earliest Latin books which has come down to us this same thought is expressed by old Cato the Censor, who, two thousand years ago, had felt the stir- rings of what we call modern industry, of a far conducted commerce, but still apologized for the ancient prejudice of the farmer. “The pursuits of commerce,” says Cato, “would be as admirable as they are profitable if they were not subject to so great risks: and so likewise of banking, if it was always honestly conducted. For our 4 ancestors considered, and so ordained in their laws, that, while the thief should be cast in double damages, the usurer should make fourfold resti- tution. From this we may judge how much less desirable a citizen they esteemed the banker than the thief.” At every session of Congress, at every meeting of a State legisla- ture, we hear vocal expression of distrust and suspicion of the banking community, specifically what the popular imagination terms generically Wall Street. One who has been constantly on the go, as I have in recent months, meeting people in many communities, realizes that this is a deep seated sentiment of the American people today. I do not intend to hold any brief for the bankers as a class. In the railway industry we have our own troubles, and the bankers are amply able to defend themselves, but I am glad of an opportunity to remind business men of what the banker means to us all under existing conditions. Time was when it was generally believed that the railroads were making vast profits because they handled millions of revenues. Many there were who purported to disbelieve the statements of the published accounts : comparatively few there were who ever read them. It was enough to know that the figures dealt in millions to believe they were unholy. Then came the regulation of the system of railroad accounts, and with it an appreciation by most intelligent men that accounts kept under the supervision of a government commission were probably rea- sonably correct, and if they showed, as they did show, that the profits were not large when reduced to the unit of investment represented, or of service performed, then resort must be had elsewhere to find the "nigger in the woodpile.” The American people are not yet entirely convinced that a railroad is a precarious industry subject to general economic laws, though they are rapidly coming to that appreciation. Because it has been demon- strated that there are thieves and buccaneers in the railway industry, as well as in most other forms of human activity, the popular search has always been to find whither have gone the vast “profits” which are believed by many to be a necessary incident of control of a system of railways. It now seems likely that publicity will demonstrate that this suspicion of all railroad bankers, like the suspicion of unlawful profits of the rail- roads themselves, is a delusion. The recent publication by a great bank- ing house in New York of the details of its accounts with the New Haven Railroad revealed to an astonished world that over many years of the largest financial transactions the bankers’ profits averaged seven- 5 teen thousand dollars per annum. This may well give us all pause in our preconceived opinions, and, in further aid of clear thinking as to your and my relations to the bankers, I venture to say in conclusion a word as to what these bankers do for you and for me. Every one of you has a large personal interest in the perfection of the Southern Railway as an instrument of commerce. I myself have a personal ambition and a steady determination to accomplish every year a step towards the realization of your interest in this respect. To do that will require bringing into the South many millions of new money. We cannot hope to earn from our service to the Southern people all that we need to spend on these railroads as fast as we must spend it. Even if we devoted all of our income to that end, and for many years we have so devoted most of it, the agricultural and industrial South is growing so fast that we could not keep up with it, much less keep ahead of it and so help it to grow. Neither is the South itself yet ready to provide the capital by buying our securities. Under the operation of the new income tax law we have had an opportunity, never before possible, to ascertain where and by whom, many of our railway securities are held. In this way we have identified a certain representative block of one hundred and ten million dollars of Southern Railway bonds and find that they are held not only in New York but in most of the States of the United States and in many foreign countries and by nearly eleven thousand individuals. Of this total, less than three and a half million dollars is held by seven hundred individuals resident in the States the Southern Railway serves, and sixty per cent of these holdings in the South are in the two cities of Richmond and Louisville. This demonstrates that the money we have secured for the improvement of the Southern Railway in the past has been drawn not from a few rich men, but from an army of investors having at stake an average of not much more than $10,000 apiece, and that the South itself, which has had the benefit of the expenditure of the money in the promotion of an unexampled growth of prosperity, has as yet contributed only three per cent of the capital. Until the South is prepared to support our capital requirements on a larger scale, we must then look to those who have established channels for the facile distribution of large blocks of securities among a multitude of investors all over the world, and this necessity brings us inevitably to the banking community, to the hated Wall Street, for access to the money we need to spend in the South. I am glad to be assured that these bankers have realized that the 6 South is the coming part of the United States, and so are confident that they can safely venture their reputation in distributing the securities of Southern Railway Company under present day conditions. I am glad, too, to believe that I have their personal confidence and that they will listen to my recommendations. They have already supplied fifteen million dollars of absolutely new money on such recommendation since the first of January last, and they are ready to supply more for further* improvement of the Southern Railway plant. All of this is to be spent for the South, most of it in the South, in such ways that eventually it will seep into the accounts of many Southern merchants, just as the pro- ceeds of a large crop eventually reach the merchants. Every one whom I now address has an interest in the disbursement of this money and in what will result in the way of personal convenience and facility for doing business from its expenditure. It is as if a new crop worth fifteen million dollars had been produced in the South this winter. Think what the rejoicing would have been if it had been a crop ! It is, then, of great importance to you and to me and to all the people of the South to have and to hold the confidence of these bankers. The way to accomplish that is simple. I do not propose an investigation of the bankers’ business. I do not even propose a new statute to compel them to supply us with money: that might be the simplest way, but it appears that no investigation nor any statute has yet been devised to make a banker invest where he does not want to invest: such a miracle is apparently one of the few things which neither an investigation nor a statute can be made to perform. The bankers do not ask any gratitude, any lip service, for they expect to get their reward in the form of a commission : that is their business. They do . not expect to control the railways as the popular imagination pictures them as doing: to make rates and initiate policies affecting the welfare of thousands of people. Never in my personal experience with them, and it has been an intense experience over many years, have I heard a suggestion of that kind of interference, nor have I experienced an attempt to exercise such power through the control of the sources of money: In a prosperous community there is only one condition of the bankers’ co-operation, but it is an essential one — that the public shall be as fair in the treatment of invested capital as it has demanded that those who control invested capital shall be fair to the public. Personally, I have no doubt that we in the South shall meet the con- dition and get all the money we need. 7