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Author: 
 
 Board of arbitration in the 
 controversy between the. 
 
 Title: 
 
 Report of the Board of 
 arbitration in the matter... 
 
 Place: 
 
 [Washington, D.C.] 
 
 Date: 
 
 [1912] 
 
MASTER NEGATIVE # 
 
 COLUMBIA UNIVERSITY LIBRARIES 
 PRESERVATION DIVISION 
 
 BIBLIOGRAPHIC MICROFORM TARGET 
 
 ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 
 
 530766 
 B63 
 
 Board of arbitration in the controversy between the eastern 
 railroads and the Brotherhood of locomotive enrineers, 
 
 1912. 
 
 Report of the Board of arbitration in the matter of the con- 
 troversy between the eastern railroads and the Brotherhood of 
 locomotive engineers, appointed in conformity with an agree- 
 ment of the parties made at New York city under date of April 
 30th, 1912. Charles R. Van Hise, chairman ... r Washington ? 
 D. C, 1912i 
 
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 FILMED BY PRESERVATION RESOURCES, BETHLEHEM, PA. 
 

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 Report in the matter ^^ ^hf- nontrovers^r 
 
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 REPORT 
 
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 BOARD OF ARBITRATION 
 
 In the matter of the controversy 
 between the Eastern Railroads and the 
 Brotherhood of Locomotive Engineers 
 
 NOVEMBER 2, 1912 
 
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 Charles R. Van Hise, Chairman 
 Oscar Straus Otto M. Eidlitz 
 
 Frederick N. Judson Daniel Willard 
 
 Albert Shaw P. H. Morrissey 
 
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 TABLE OF CONTENTS 
 
 PAQB 
 
 Historical i 
 
 Appointment of arbitrators 3 
 
 Memorandum of agreement 4 
 
 Railroads parties to the agreement 5 
 
 Requests of engineers submitted for arbitration 6 
 
 Presentation of the case 9 
 
 Magnitude of the problem 12 
 
 Statement of the problem 14 
 
 The position of the engineers 14 
 
 The position of the railroads 15 
 
 Difficulty of the problem before the board 17 
 
 Responsibility, skill, and mental strain of engineers 19 
 
 Standardization 2I 
 
 The problem of compensation to capital 25 
 
 Intercorporate relationships 28 
 
 Ability of the roads to pay increased compensation 36 
 
 Additions and betterments 41 
 
 The question of surplus 43 
 
 Conclusions 43 
 
 *The basis of a fair wage 47 
 
 Compensation now received 43 
 
 Average daily compensation of engineers and other classes of 
 
 railroad employes from 1897 to 1911 53 
 
 The principle of a minimum wage 77 
 
 The awards 79 
 
 Passenger rates 79 
 
 Electric service 79 
 
 Freight rates go 
 
 Held away from home terminal 80 
 
 Switching service gl 
 
 Belt line and transfer service 81 
 
 Beginning and ending of a day 81 
 
 Initial terminal delay 81 
 
 Final terminal delay 82 
 
 Hours of service law 82 
 
 General regulations 82 
 
 Supplementary explanation 83 
 
 General considerations 83 
 
 Commission control of public utilities 86 
 
 Labor organizations and wages 87 
 
 The serious nature of a concerted strike 89 
 
 The general railway strike of France 92 
 
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 CONTENTS 
 
 
 \ 
 
 PAGB 
 
 General Considerations — Continued 
 
 The Eastern District and France compared 94 
 
 The public interest paramount 95 
 
 The increased power of organized labor 96 
 
 Limitations of present board 98 
 
 The Erdman and Canadian Industrial Disputes Acts 99 
 
 Wage commissions the remedy 104 
 
 Limitation of right of free contract 106 
 
 Conclusion 108 
 
 Explanatory statement by Mr. Willard 110 
 
 Minority report by P. H. Morrissey, representing the Brotherhood 
 
 of Locomotive Engineers Ill 
 
 Standardization 115 
 
 Additions and betterments and the question of surplus in relation 
 
 to wages 117 
 
 The French railway strike and assumed conditions in the Eastern 
 
 District of the United States 118 
 
 Wage Commissions and compulsory arbitration 121 
 
 H' 
 
 I 
 
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 I 
 
 c, 
 
 / 
 
 HISTORICAL 
 
 Earlyinthe year 1912, the Brotherhood of Locomotive Engineers, 
 on behalf of the engineers employed on fifty-two railroads in the 
 eastern section of the United States, presented a concerted request 
 to the management of these railroads for a general increase in 
 wages and for certain modifications in the rules governing their 
 employment. This concerted movement resulted in conferences 
 held m New York City on March 14, 15 and 25, between represen- 
 tatives of the Brotherhood of Locomotive Engineers, and a Confer- 
 ence Committee of Managers representing the railroads. At the 
 last of these conferences the representatives of the railroads de- 
 chned to grant the requests of the engineers either in whole or 
 m part. 
 
 At these conferences the engineers were represented by Warren 
 S. Stone, Grand Chief Engineer, and F. A. Burgess, Ash Kennedy 
 and M. W. Cadle, Assistant Grand Chiefs, of the Brotherhood of 
 Locomotive Engineers. 
 
 The railroads were represented by J. C. Stuart, Chairman of 
 the Conference Committee of Managers, and Vice-President of 
 the Erie Railroad; A. W. Thompson, General Manager of the 
 Baltimore & Ohio Railroad; C. S. Sims, Vice-President of the Dela- 
 ware & Hudson Railroad; H. J. Horn, Vice-President of the New 
 York, New Haven & Hartford Railroad; A. H. Smith, Vice-Presi- 
 dent of the New York Central Lines East; C. E. Schaff Vice- 
 President of the New York Central Lines West; S. C. Long 
 General Manager of the Pennsylvania Lines East; G L Peck' 
 General Manager of the Pennsylvania Lines West; J. A. McCrea' 
 General Manager of the Long Island Railroad; A. T. Dice General 
 Manager of the Philadelphia & Reading Railway; J. A. Shepherd 
 General Manager of the Western Maryland Railway; and B a' 
 Worthmgton, Receiver, Wheeling & Lake Erie Railroad. (Mr. 
 
 1 
 

 2 RAILWAY ENGINEERS ARBITRATION 
 
 C. E. Schaff, absent, was represented by J. J. Bemet, Assistant 
 to the Vice-President.) 
 
 The refusal of the railroads to grant the requests of the engineers 
 or any part of them, led to a strike vote among the engineers 
 upon the roads concerned; 93.3 per cent of the engineers voted 
 in favor of a strike provided a satisfactory settlement could not 
 otherwise be made. Had the Grand Chief and his Committee 
 decided that the situation justified so doing, it would have been 
 in their power to have approved a strike and the strike would 
 have taken place. 
 
 ReaHzing the gravity of this situation which threatened most 
 serious consequences to the public, and in the hope that some means 
 might be found to adjust the matters in dispute without the calam- 
 ity of a general strike, the Hon. Martin A. Knapp, Presiding Judge 
 of the United States Commerce Court, and the Hon. Charles P. 
 Neill, United States Commissioner of Labor, tendered their friendly 
 offices to the contending parties. They were impelled to do this 
 by a sense of duty, although the terms of the Federal law commonly 
 known as the Erdman Act, which provides a means for the media- 
 tion and arbitration of controversies affecting railways and their 
 employes engaged in railroad train service, did not contemplate 
 their taking the initiative in matters of this sort. Their attempt, 
 however, to settle the difficulty by mediation failed. Thereupon 
 they undertook to bring about an adjustment by arbitration. 
 
 The parties in the case agreed to the principle of arbitration^ 
 but they would not accept arbitration under the provisions of the 
 Erdman Act. In consultation with Judge Knapp and Commis- 
 sioner Neill, it was arranged that the questions at issue be sub- 
 mitted to a Board of Arbitration consisting of seven members, one 
 to be named by the railroads, one by the engineers, and these two 
 to agree upon five others. It was furthermore arranged that if 
 the first two arbitrators should not be able to agree upon the five 
 others within a period of fifteen days after their own appointment, 
 these five were to be selected by a committee consisting of the 
 
 
 a 
 
 RAILWAY ENGINEERS ARBITRATION 3 
 
 Chief Justice of the United States, the Presiding Judge of the 
 Commerce Court, and the United States Commissioner of Labor. 
 The railroads selected as their representative Mr. Daniel Willard, 
 President of the Baltimore & Ohio Railroad, and the Brotherhood 
 of Locomotive Engineers selected as their representative Mr. P. H. 
 Morrissey, former Grand Master of the Brotherhood of Railroad 
 Trainmen. These two failed to reach an agreement within the 
 allotted time. They agreed, however, to a list of names from 
 which they were willing that the other arbitrators should be 
 selected. From this list the committee named appointed the 
 other five members of the Board named in the communication 
 below. 
 
 These five members of the Board thus appointed were notified 
 of the appointment by letter. To this letter was attached a mem- 
 orandum giving the terms under which the arbitration was to be 
 carried on and the parties concerned therein. The letter and 
 memorandum are as follows: 
 
 tt 
 
 IN THE MATTER OF THE CONTROVERSY BETWEEN THE EASTERN 
 RAILROADS AND THE BROTHERHOOD OF LOCOMOTIVE 
 
 ENGINEERS 
 
 APPOINTMENT OF ARBITRATORS 
 
 "A controversy having arisen between the Eastern Railroads, 
 so described, and the Brotherhood of Locomotive Engineers; 
 
 ''And the contending parties having agreed to submit the 
 matters in dispute to a Board of Arbitrators of seven members, 
 as appears by their written agreement of April 30, 1912, a copy 
 of which is hereto annexed; 
 
 "And the Eastern Railroads having named as their arbitrator 
 Mr. Daniel Willard, President of the Baltimore & Ohio Railroad 
 Company, and the Brotherhood of Locomotive Engineers having 
 named as its arbitrator Mr. P. H. Morrissey, President of the 
 American Railroad Employes and Investors' Association; 
 
 "And the two arbitrators thus named having failed to agree 
 upon the other five members of said Board, or any of them, within 
 the fifteen days allowed therefor, but having so far harmonized 
 
 '^.v, 
 
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 \ 
 
 4 RAILWAY ENGINEERS ARBITRATION 
 
 their differences as to submit a list of names of persons deemed 
 eligible and indicate that appointments from such list would be 
 acceptable to them; 
 
 "Now, therefore, the undersigned, by virtue of the request 
 made and authority conferred by said agreement, have selected 
 and appointed and do hereby appoint as the other five arbitrators 
 the following persons, viz.: Hon. Oscar S. Straus of New York, 
 Dr. Charles R. Van Hise of Madison, Wisconsin, Mr. Frederick 
 N. Judson of St. Louis, Dr. Albert Shaw of New York, and Mr. 
 Otto M. Eidlitz of New York, who together with the two arbitra- 
 tors named by the respective parties will constitute the Board 
 of Arbitration provided for in said agreement. 
 
 "Witness our hands at the City of Washington, D. C, this 8th 
 day of June, 1912. 
 
 (Signed) Edward D. White, 
 
 Chief Justice of the United States. 
 
 (Signed) Martin A. Knapp, 
 
 Presiding Judge Commerce Court. 
 
 (Signed) Chas. P. Neill, 
 
 U. S. Commissioner of Labor.'' 
 
 MEMORANDUM OF AGREEMENT 
 
 "The parties to the pending controversy between the Eastern 
 Railroads, a list of which is hereto annexed, and the Brotherhood 
 of Locomotive Engineers hereby mutually agree as follows: 
 
 "That the matters in dispute be submitted to a Board of Arbi- 
 tration of seven members to be selected and appointed in the 
 following manner: Each of said parties shall promptly name one 
 member of said Board and notify the other party accordingly. 
 The two thus chosen shall meet without delay, and at such time 
 and place as they may arrange, and endeavor in good faith to 
 agree upon the remaining members of said Board. But in case 
 they shall fail to agree upon all or any of such other members within 
 fifteen days after their first meeting for that purpose, then such 
 other members, or so many of them as have not been agreed upon, 
 shall be named and appointed by the Chief Justice of the United 
 States, the Presiding Judge of the Commerce Court and the United 
 States Commissioner of Labor, acting together. 
 
 "The Board so constituted shall meet as soon as practicable 
 after the membership thereof has been completed, and at such 
 time and place as they may agree upon, and take up and conclude 
 the hearing of the parties and make their decision or award with- 
 out unnecessary delay. 
 
 "The matters in dispute to be submitted to said Board for deter- 
 mination are the requests of the Engineers, which have heretofore 
 
 ii 
 
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 '> i 
 
 RAILWAY ENGINEERS ARBITRATION 5 
 
 been submitted to said roads and refused by them, and a copv of 
 which IS annexed hereto and made a part hereof 
 
 "A majority of the members of said Board shall be competent 
 to make a vahd and bmdmg decision or award, and each of said 
 parties hereby pledges itself to accept and abide by the decision 
 or award made, according to its terms and intent, for the period of 
 one year from its effective date; and thereafter subject to the 
 usual thirty days' notice. 
 
 . r'^^i Board shall fix the date when its decision or award shall 
 take ettect, and may make the same retroactive if it shall seem 
 just and proper. 
 
 "The necessary expenses of the Board, including the compensa- 
 tion and expenses of its members, stenographers' fees, and other 
 joint expenses shall be divided equally between the parties and 
 one-half thereof paid by each of them. 
 
 '^ Signed at the City of New York, this 30th day of April, 1912 
 For the Engineers: For the Railroads- 
 
 1 
 
 ] 
 
 I 
 
 Warren S. Stone, 
 W. M. Cadle, 
 J. M. Watson, 
 H. A. Kelly, 
 C. K. Mitchell, 
 
 J. C. Stuart, Chairman, 
 H. J. Horn, 
 G. L. Peck, 
 A. H. Smith, 
 
 B. A. WORTHINGTON, 
 
 Sub-Committee.'* 
 
 RAILROADS PARTIES TO THE AGREEMENT! 
 
 Baltimore & Ohio, 
 
 Bessemer & Lake Erie, 
 
 Boston & Albany, 
 
 Boston & Maine, 
 
 Buffalo, Rochester & Pittsburgh, 
 
 Buffalo & Susquehanna, 
 
 Central New England, 
 
 Chicago, Indianapolis & Louisville, 
 
 Chicago, Terre Haute & Southeastern, 
 
 Chicago, Indiana & Southern, 
 
 Cincinnati Northern, 
 
 Cincinnati, Hamilton & Dayton, 
 
 Cleveland, Cincinnati, Chicago & St. Louis, 
 Coal & Coke, 
 
 Delaware & Hudson, 
 
 Delaware, Lackawanna & Western 
 
 Detroit, Toledo & Ironton, ' 
 
 Dayton & Union, 
 
 Dunkirk, Allegheny Valley & Pittsburgh, 
 
 S. 
 
/ 
 
 I 
 
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 ^ RAILWAY ENGINEERS ARBITRATION 
 
 Erie, 
 
 Grand Rapids & Indiana, 
 
 Hocking Valley, 
 
 Indiana Harbor Belt, 
 
 Indianapolis Union, 
 
 Kanawha & IVIichigan, 
 
 Lake Erie & Western, 
 
 Lake Erie, Alliance & Wheeling, 
 
 Lake Shore & Michigan Southern, 
 
 Lehigh Valley, 
 
 Long Island, 
 
 Maine Central, 
 
 Michigan Central, 
 
 New York Central & Hudson River, 
 
 New York, Chicago & St. Louis, 
 
 New York, New Haven & Hartford, 
 
 New York, Ontario & Western, 
 
 New York, Philadelphia & Norfolk, 
 
 New York, Susquehanna & Western, 
 
 New Jersey & New York, 
 
 Pennsylvania Lines, East, 
 
 Pennsylvania Lines, West, 
 
 Pere Marquette, 
 
 Pittsburgh & Lake Erie, 
 
 Reading System, 
 
 Toledo & Ohio Central, 
 
 Toledo, St. Louis & Western, 
 
 Vandalia Lines, 
 
 Western Maryland, 
 
 Wheeling & Lake Erie, 
 
 West Side Belt Line, 
 
 Wabash Pittsburgh Terminal. 
 
 REQUESTS OF ENGINEERS SUBMITTED FOR ARBITRATION 
 
 Passenger rates 
 
 Engines with cylinders of 20 inches or less in diameter, $4.40 
 peflOO miles or less. Engines with cylinders over 20 inches m 
 diameter, $4.60 per 100 miles or less. Miles made m excess of 
 
 OveTtime^in through passenger service to be computed on a 
 basis of 20 miles per hour. 
 
 Overtime will be paid for at 70 cents per hour. 
 
 Ill 
 
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 ► :i' 
 
 RAILWAY ENGINEERS ARBITRATION 7 
 
 Electric service 
 
 Whenever electric service is installed or now in operation loco- 
 motive engineers will take the positions on electric locomotives 
 or multiple unit trains under the prevailing schedules governing 
 rates of pay and conditions in steam service. Any change from 
 steam to electricity or other motive power in any form at any point 
 on the system such power will be maimed by engineers and paid 
 according to the service for the territory affected, or where electric 
 or multiple unit trains enter upon steam tracks or tracks formerly 
 operated by steam or where trackage rights are leased to holding 
 companies they shall be operated by engineers operating steam 
 trains on said tracks. 
 
 Freight rates 
 
 Engines with cylinders of 20 inches in diameter or less, $5.25. 
 Engines with cylinders over 20 inches in diameter and less than 
 24 inches in diameter, $5.50. 
 
 Engines with cylinders 24 inches in diameter and over, except 
 Mallets, $5.75. 
 
 Mallet type of engine, $7.00. 
 
 One hundred (100) miles or less, ten (10) hours or less to constitute 
 a day's work. All over one hundred (100) miles to be paid pro 
 rata. Overtime to be computed on a basis of ten (10) miles per 
 hour, and paid for pro rata. Through freight rates to apply to all 
 mine runs, work, wreck, pusher or helper, milk, roustabout and 
 circus trains, according to class of engines. Overtime to be com- 
 puted on minute basis. 
 
 Engineers will be paid at overtime rate for all time over 15 hours 
 held at other than their home terminal. 
 
 Twenty-five (25) cents per 100 miles or less additional to be 
 added to through freight rates for local freight service according 
 to class of engines. 
 
 Switching service 
 
 Rates for engines in switching service, $4.50 per day. Ten (10) 
 hours or less to constitute a day's work. All over ten (10) hours 
 to be paid for pro rata. Overtime to be computed on minute basis. 
 
 Belt line service 
 
 Engineers in belt line service will be paid $5.00 per day, ten 
 (10) hours or less to constitute a day. All over ten (10) hours, 
 50 cents per hour. Overtime to be computed on minute basis! 
 
 Engineers of single-crewed yard and belt line engines will report 
 for duty at the appointed time and will receive one-half hour's 
 pay in addition to the regular day's pay for reporting 30 minutes 
 m advance of the commencement of the day's work. In case of 
 
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.■1 
 
 f 
 
 8 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 double-crewed engines, if engineers do not relieve each other at 
 the appointed time and the engineer of the next crew is required to 
 prepare his engine, 30 minutes pay will be allowed for same. 
 
 Beginning and ending of a day 
 
 In all classes of road service an engineer's time will commence 
 30 minutes before leaving round-house or designated track and will 
 conclude at the time the engine is placed on the designated track 
 or relieved by hostler at terminal. 
 
 Initial terminal delay 
 
 When delayed within the terminal as much as 1 hour beyond the 
 time set to leave, engineers will be paid 1 hour's overtime at over- 
 time rates, according to class of engine. One (1) hour and thirty 
 (30) minutes to constitute 2 hours, etc. 
 
 If road overtime is made on same trip initial overtime will be 
 deducted. 
 
 Final terminal delay 
 
 Final terminal delay will be paid for at the end of the trip when 
 delayed more than 30 minutes between yard limit boards governing 
 yard to which train is to be deUvered and the point of final relief, 
 and to be paid for at the overtime rate according to class of engine 
 on the minute basis. 
 
 Hours of service law 
 
 Amendment of Section E of the Application of the Sixteen Hour 
 Law. 
 
 Engineers in train service tied up under the law will be paid con- 
 tinuous time from initial pomt to tie-up point. When they resume 
 duty on continuous trip they will be paid from the tie-up point to 
 the next tie-up point, or to the terminal on the basis of a minimum 
 day. It is understood that this does not permit running engines 
 through terminals or around other crews at terminals unless such 
 practice is permitted under the pay schedule. 
 
 It is imderstood that existing rates of pay or better working 
 conditions shall not be reduced by the rates or rules hereby agreed 
 upon, nor shall General Committees of Adjustment be debarred 
 from taking up with their respective managers matters not decided 
 at this conference. 
 
 PRESENTATION OF THE CASE 
 
 The Board constituted as above described held its first meeting 
 in New York on Friday, July 12. At this meeting the Board 
 organized and elected Hon. Oscar S. Straus Chairman. It was 
 agreed that the hearings should be held at the Oriental Hotel, 
 Manhattan Beach, New York, beginning July 15. The hearings 
 occupied the following days: July 15, 16, 17, 18, 19, 22, 23, 24, 25, 
 26 and 27. With the exception of one day, sessions were held 
 both in the morning and in the afternoon. 
 
 At these hearings the engineers were represented by Warren S. 
 Stone and M. W. Cadle. The railroads were represented by Wil- 
 liam M. Duncan, B. A. Worthington, 0. E. Butterfield, Francis I. 
 Oowen, George F. Brownell and T. M. Kirby. 
 
 The hearings were opened by a general statement of the case 
 for the engineers by Mr. Stone; and for the railroads, by Mr. 
 Worthington. 
 
 Following these general statements Mr. Stone called before the 
 Board, for the engineers, the following twenty-five witnesses: 
 Dean R. Woods, C. B. Galleher, Charles D. Moore, MelviUe K. 
 Packer, F. J. Hughes, F. L. Carr, Arthur J. Fero, Robert F. Jack- 
 son, R. E. Reed, F. A. Hallett, George E. Hanley, J. W. Smith, 
 William H. Muir, F. I. Singleton, Henry C. Case, George Ludlam, 
 Joseph F. Garland, D. J. Keleher, F. A. Edwards, John F. Fagan, 
 William Daniels, T. F. Walpole, Thomas Hurley, J. W. Moyer, and 
 J. C. Shreve. 
 
 The witnesses called by the railroads were: B. A. Worthington, 
 President, Chicago & Alton Railroad; S. A. Bickford, Road Fore- 
 man Electric Equipment, New York Central & Hudson River 
 Railroad ; Lewis N. Armstrong, Assistant Road Foreman of Engines, 
 West Jersey & Seashore Division of the Pennsylvania Railroad; 
 Hoag Gilliam, Electrical Superintendent, New York, New Haven 
 
 9 
 
10 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 > 
 
 ^L 
 
 and Hartford Railroad; B. R. Pollock, General Superintendent 
 in charge of transportation, New York, New Haven & Hart- 
 ford Railroad; S. S. Haff, Assistant Road Foreman of Engines, 
 Long Island Railroad; John R. Alexander, Chief Road Foreman of 
 Engines, East Pennsylvania Division, Pennsylvania Railroad; 
 W. W. Atterbury, Vice-President in charge of operation, Pennsyl- 
 vania Lines East; A. M. Schoyer, General Superintendent, North- 
 west system of Pennsylvania Lines West; H. J. Horn, Vice-Presi- 
 dent in charge of operation. New York, New Haven and Hartford 
 Railroad (New Haven, Boston & Maine, and Central New Eng- 
 land); A. H. Smith, Vice-President in charge of operation. New 
 York Central Lines; A. M. Smith, General Manager, Coal & Coke 
 Railway; J. C. Stuart, Vice-President, Erie Railroad; J. A.McCrea, 
 General Manager, Long Island Railroad; James McCrea, Presi- 
 dent, Pennsylvania Railroad; W. L. Hudson, Road Foreman of 
 Engines, Pittsburgh Division, Pennsylvania Railroad. 
 
 In connection with the presentation of the engineers' case, over 
 eighty exhibits were offered by Mr. Stone. These consisted of 
 statements and statistical tables relating to wages, rates, accidents, 
 etc.; copies of the prevailing wage-schedules of engineers on cer- 
 tain western, southern and eastern railways; blue prints and dia- 
 grams of locomotives; application blanks; books of questions and 
 instructions for engineers and firemen; copies of rules governing 
 railway employes; descriptive lists of signals; copies of time-tables 
 and official bulletins with which engineers are required to be 
 
 familiar; etc. 
 
 On behalf of the railroads, over 130 exhibits were submitted to 
 the Board. These consisted of statistical tables, diagrams and 
 explanatory statements relating to the earnings and rates of pay 
 of engineers and other railway employes; the estimated increases, 
 both direct and ^'collateral," in the payrolls of the railroads, that 
 would result from granting the requests of the engineers; the 
 financial status of the several roads involved— their earnmgs and 
 expenditures, etc. 
 
 1/ 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 11 
 
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 ft 
 
 >i 
 
 At the close of the testimony, the case of the engineers was 
 summed up by Mr. Stone, and that of the railroads by Mr. Robbins 
 and Mr. Duncan. 
 
 Following the oral presentation, briefs were submitted on behalf 
 of the engineers by Mr. Stone; and on behalf of the railroads by 
 Mr. Duncan and Mr. Worthington. 
 
 From the date of adjournment following the hearings, to Septem- 
 ber 9, the members of the Board spent such time as they were able 
 to give, in studying the evidence and the statistics, in examining the 
 arguments submitted, and in making independent investigations. 
 
 On September 9, the Board met to take up the question of find- 
 ings. They were engaged in this work from September 9 to 14 
 inclusive. After tentative findings were made a report was drawn 
 up and submitted to all the members for their revision. After 
 such revision the Board met again on October 28, to consider this 
 report as a whole for final action, and continued in session upon this 
 work until November 2 inclusive. 
 
 During the hearings before the Board, Mr. Straus acted as its 
 chairman; during the subsequent consideration of the case, Mr. 
 Van Hise acted as chairman at Mr. Straus's request. 
 
 Mr. C. W. A. Veditz was the Secretary to the Board, and 
 Messrs. Frank H. Dixon and Frank J. Wame were the statisticians. 
 
 
MAGNITUDE OF THE PROBLEM 
 
 The territory covered by the fifty-two* railroads concerned in 
 this arbitration comprises the northeastern part of the United 
 States. It coincides nearly with Groups I, II and III of the terri- 
 torial classification adopted some years ago by the Interstate 
 Commerce Commission. These three groups are bounded on the 
 west by Lake Michigan and the Illinois-Indiana state line; on the 
 north by Canada, Lakes Ontario, Erie and Huron; on the south by 
 the Ohio and Potomac Rivers; and on the east by the Atlantic 
 Ocean. The roads concerned extend, however, somewhat beyond 
 Group III to the west, and include a part of lUinois reaching to 
 Chicago. In this report the region covered by the fifty-two 
 roads will be referred to as the Eastern District. Groups IV and 
 V under the classification of the Interstate Commerce Commission 
 will be referred to as the Southern District. This district lies 
 south of the Potomac and Ohio Rivers and east of the Mississippi 
 River. The remainder of the country, west of the Mississippi and 
 Wabash Rivers and Lake Michigan, which is comprised in Groups 
 VI, VII, VIII, IX and X of the classification of the Interstate 
 Commerce Commission, will be referred to as the Western District, t 
 
 • Only fifty-one roads signed the agreement, but the statistical tables 
 submitted by the railroads generally included the Central Railroad of New 
 Jersey, which did not sign, but which is controlled by the Reading system. 
 
 t The Interstate Commerce Commission has recently adopted a modifica- 
 tion of its former territorial grouping, and now recognizes three "districts" 
 called respectively the Eastern, Southern and Western Districts. The new 
 Eastern District coincides mainly with former Groups I, II, and III, save 
 that it comprises about half of Illinois that formerly lay west of Group III; 
 this portion of Illinois, formerly in Group VI, is no longer a part of the West- 
 ern District. 
 
 The three districts may now be defined substantially as follows: The 
 Eastern District comprises that portion of the United States bounded on 
 the west by the northern and western shores of Lake Michigan to Chicago, 
 thence by a line to Peoria, thence to East St. Louis, thence down the Missis- 
 sippi River to the mouth of the Ohio River, and on the south by the Ohio 
 River from its mouth to Parkersburg, West Virginia, thence by a line to the 
 southwestern corner of Maryland, thence by the Potomac River to its mouth. 
 The Southern District comprises that portion of the United States bounded 
 
 12 
 
 r'^ 
 
 / 
 
 \ 
 
 / I 
 
 4 I ^ 
 
 1 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 13 
 
 In 1910 the fifty-two railroads concerned in this arbitration had 
 (according to Exhibit 5 submitted by the railroads) 66,876 miles 
 of main track, as compared with 266,185 for the United States as 
 a whole, or 25. 1 per cent of the total. Their operating revenues and 
 operating expenses (amounting respectively to $1,088,968,087 and 
 $726,994,658) were each nearly 40 per cent of the total for all 
 railroads in the United States, and their net operating revenue 
 ($361,973,429) was 39 per cent of the total for all the railroads of 
 the country. These fifty-two railroads, however, according to the 
 same authority, carried 47.3 per cent of the ton miles, and 42.8 per 
 cent of the passenger miles, of all railroads of the United States. 
 Their employes, excluding general officers, numbered 40.8 per cent 
 of the total; and the aggregate compensation to employes, exclud- 
 ing general officers, constituted 41.5 per cent of the total for the 
 United States. 
 
 The number of engineers employed on the 52 Eastern roads, 
 as reported by the railroads themselves in July, 1912 (Railroad 
 Exhibit 4) was 31,840. The aggregate compensation of the 
 engineers in the employ of the 52 railroads during the fiscal year 
 ending June 30, 1911, as reported by the railroads in their Exhibit 
 67A, was $41,874,282, or 43.1 per cent of the total engineers' wages 
 for the United States. 
 
 <" 
 
 on the north by the Eastern District, and on tHe west by the Mississippi 
 Kiver. The remainder of the United States, exclusive of Alaska and of 
 island possessions, is included in the Western District. 
 
 ; 
 
STATEMENT OF THE PROBLEM 
 
 THE POSITION OF THE ENGINEERS 
 
 1. The engineers ask for certain uniform rates of pay and rules, 
 the application of which would mean varying increases in compen- 
 sation. 
 
 2. The engineers ask that these proposed rates and rules be put 
 into effect regardless of 
 
 a. The varying financial abihty of the roads to pay more wages. 
 
 h. The variations in the service on different roads, and on differ- 
 ent divisions of the same road. They do not ask that the same 
 rate be paid for all engineers engaged, but for all engineers running 
 the same class of engines in the same class of service. For exam- 
 ple: In through freight service, they ask that all engineers running 
 the same class of engine shall receive the same rate, whatever the 
 road, and without regard to the part of the road. 
 
 3. The engineers ask the adoption of the principle that they be 
 given exclusive right to operate the motive power on the railroads, 
 whether that power be steam or electricity. 
 
 4. The engineers ask for the introduction of new rules, and the 
 modification of certain important existing rules of service, in such 
 a manner as to standardize them for all roads and incidentally 
 to increase the pay in certain instances. 
 
 Of the arguments presented in favor of the engineers' claims, 
 the following are the more important: 
 
 1. The nature of the calling, which involves: 
 
 a. Heavy and increasing responsibility. 
 
 b. Skill and efliciency, as indicated by length and severity of 
 apprenticeship required. 
 
 c. Acute mental strain. 
 
 d. An unusual degree of hazard. 
 
 14 
 
 I 
 
 \ 
 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 15 
 
 e. Relatively limited period of earning power, fixed by age limi- 
 tations and by numerous efficiency requirements. 
 /. Increasing productivity of the engineers' services. 
 
 2. The wages of engineers have not kept pace with the wages of 
 other classes of employes in train service. 
 
 3. It is claimed that the existing rates of pay in the Southern 
 and Western Districts are higher, and the rules of service better, 
 than in the Eastern District. 
 
 4. It is argued that in the Southern and Western Districts the 
 wages and rules of service are standardized to a much greater 
 extent than in the Eastern District; and that because in the East- 
 ern District the conductors and other trainmen receive a standard 
 wage on all roads, the same principle should apply to the engineers. 
 
 THE POSITION OF THE RAILROADS 
 
 The railroads hold that the engineers now receive not only fair 
 but liberal compensation for work performed; that the hours of 
 duty are so limited, and other conditions of service so arranged, 
 as to relieve the engineers, in the normal course of their work, of 
 excessive strain; and that there has been no change in working 
 conditions since the last wage-adjustment now requiring a readjust- 
 ment. The position of the railroad companies is summarized in 
 the following points as set forth in their brief: 
 
 1. Railroad employes are as well, if not better paid than labor 
 in other employments. 
 
 2. Engineers constitute the highest-paid class of employes in 
 the railroad service. 
 
 3. The 1910 adjustment of the engineers' wages was made sub- 
 sequent to the adjustment with the conductors and trainmen, and 
 practically the same differential continued in favor of the engineers 
 that had existed for a number of years. The existing differential 
 between the engineers and other employes is as wide, if not wider, 
 than is warranted by the character of the service, the responsibili- 
 ties imposed, the risks assumed, or the actual labor required. 
 
 / 
 
16 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 4. At the time the engineers' wages were increased in 1910, full 
 consideration was given to all the conditions of service then pre- 
 vailing. 
 
 5. Since that time there has been no increase in the physical 
 labor, responsibility or risk of the engineers; but, on the contrary, 
 all have been reduced through labor-saving devices or safety 
 appliances, reheving the engineers of duties formerly performed 
 and of risks formerly incurred. 
 
 6. The services of the engineers are not of greater value today 
 than in 1910, measured by any of the units suggested by any of 
 the parties. 
 
 7. The vitality and working period of the engineers compare 
 favorably with that of other wage earners. 
 
 8. The railroads are financially unable to pay increased wages 
 in view of their revenues. 
 
 -( 
 
 ^ 
 
 y 
 
 I s 
 
 -f 
 
 -t 
 
 V 
 
 DIFFICULTY OF THE PROBLEM BEFORE THE BOARD 
 
 The Board have before them on one side a request for an in- 
 crease in wages for engineers, including standardization to a cer- 
 tain extent, with a number of regulations that tend to increase 
 wages,— this request being made because of the alleged inadequacy 
 of the present compensation and the lack of uniformity in existing 
 rates. On the other side the broad assertions are that existing 
 compensation is adequate for the service, and that the roads 
 are unable to pay the increases asked. In making these asser- 
 tions no changes are proposed in existing schedules upon the part 
 of any railroad. 
 
 No principle has been presented by either side upon which the 
 questions at issue can be settled. One side holds that the pay 
 is inadequate; the other side asserts that the pay is fair and liberal. 
 Neither gives a clear principle upon which this point can be 
 determined. The question before the Board, moreover, is not 
 one of a simple advance, but of many different advances, involv- 
 ing classifications m which a standard wage is proposed for each 
 class of service. 
 
 That for different sizes of engines the rates should differ is 
 agreed by both parties, but there is no agreement regarding the 
 basis of classification of engines. The engineers propose a classi- 
 fication based on the size of cylinders. To this the roads object, 
 although upon a large number of roads this is the prevailing basis 
 for differences in rates. The engineers contend that the pay 
 should be the same for electric and steam service, but the roads 
 hold differently; and the evidence presented to the Board on this 
 subject is limited and contradictory. 
 
 The questions that confront the Board are not those alone as 
 to whether or not the pay in any given case should be raised; 
 
 17 
 
18 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 but they must also decide, if the present rate is found inade- 
 quate, by what margin it should be increased. 
 
 Even if the arbitrators accepted the principle of standard- 
 ization to the extent of treating all the roads alike, they still 
 would have before them, not one question to decide, but a score 
 or more. If each road is to be considered separately, the arbi- 
 trators have before them these same questions for each of the 
 52 roads, making not scores but hundreds of questions to decide. 
 Only when these points are appreciated is it possible to grasp 
 fully the extraordinary complexity of the problems before the 
 Board. 
 
 It will not be practicable in this report to discuss in detail each 
 of the many points raised by the parties to the arbitration. To 
 do this would expand the report into a treatise. Only those 
 points in the case will be discussed which have had an impor- 
 tant bearing upon the findings of the Board. 
 
 n 
 
 '< 
 
 -( 
 
 RESPONSIBILITY, SKILL AND MENTAL STRAIN 
 
 OF ENGINEERS 
 
 The heavy responsibility of engineers, greater than that of 
 any other class of employes in train service, the skill and effici- 
 ency required, the mental strain to which the men are subjected, 
 and the hazard of the calling are all unanimously recognized by 
 the Board of Arbitration. Therefore the Board accepts these 
 points, brought forward by the engineers, at their full value. 
 
 In this connection, only a single point needs further comment. 
 The mental strain which the engineer undergoes in fast passenger 
 service is recognized by the generally accepted principle that a 
 hundred miles' run entitles the engineer to a day's wage. To 
 illustrate: The man who runs a locomotive a hundred miles, even 
 if this be done in two hours (as occurs in some cases) receives a 
 day's pay. If a man does his duty there is no question that 
 during these two hours he must be in his best trim, and that his 
 mental faculties must be on the alert every minute. A common 
 method of handling passenger traffic in the case of trips approxi- 
 mately a hundred miles long is for the engineer to run from his 
 home terminal and return within twenty-four hours. The next 
 day he "lays off" and thus has a full day of rest before another 
 day of service. For the round trip he receives two day's pay; 
 but he is in actual service only every other day. 
 
 While the man on the exceptionally fast passenger train may 
 make his hundred miles in two hours on the road, the man with 
 the heavy freight engine, and a full train, may require ten hours 
 for the run, although under normal conditions he would not usu- 
 ally take this length of time. In each case the hundred miles 
 is recognized as a day's work. Therefore, it seems to the Board 
 that the exceptional strain emphasized regarding certain runs of 
 
 19 
 
 i 
 
20 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 the fast passenger trains may be eliminated, since both for pas- 
 senger and for freight service one hundred miles is the basis for a 
 day's pay according to schedule. As clearly pointed out by Grand 
 Chief Stone, the engineer does piece work; when he works more 
 intensely, less time is required. 
 
 In conclusion of this heading, the Board agree that the com- 
 pensation of the engineers should be adequate to cover their 
 recognized responsibility, skill, efficiency, and the mental strain 
 to which they are subjected. 
 
 ■< 
 
 V 
 
 \ 
 
 \ 
 
 F 
 
 / 
 
 STANDARDIZATION 
 
 While the word '^ standardization" is not used in the articles 
 submitted for arbitration, the requests of the engineers involve 
 standardization as a fundamental principle. 
 
 In much of the discussion regarding standardization, the argu- 
 ments on the opposing sides have not fully met, since the two 
 parties have meant by standardization somewhat different things. 
 It is evident that the engineers in their requests for standard- 
 ization do not mean the same pay for all kinds of service. Their 
 requests involve classifications of service — such as freight and 
 passenger service — and sub-classifications based on the size of 
 the engines. Hence, the request of the engineers for standard- 
 ization means that one road shall pay the same as another road 
 for each class of service and each class of engine. Their requests 
 also include a reclassification of service and engines, and uni- 
 formity in the rules of service. The engineers ask furthermore, 
 as they have in other cases of this kind, that wherever com- 
 pensation is now higher than is proposed by the standard rate, 
 such higher rates shall be maintained. 
 
 Using the above meaning for the standardization requested 
 rather than an absolute definition, the railroads hold that such 
 standardization would take no account of the ability of the 
 roads to pay; nor of the difficulty of the work on certain runs 
 (for instance, the contrast between a plain and mountain divi- 
 sion) ; nor of the difference between work upon roads which have 
 a heavy traffic, where exceptional care must be exercised, and 
 roads upon which the traffic is light. 
 
 The wage schedules now in force in the Eastern, Southern and 
 
 Western Districts show that the principle of uniformity, with 
 
 respect to certain points, has been recognized by all American 
 
 railroads. 
 
 21 
 
 . ^t^'"^w; li wi^elrfS'* N^™ 
 
22 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Among these uniform practices is the recognition of one hun- 
 dred miles or less as a day^s work. An engineer whose run ex- 
 ceeds one hundred miles receives extra compensation. More- 
 over, if the run of a hundred miles requires more than a fixed 
 number of hours, overtime is allowed. Overtime begins in through 
 freight service, for the greater part of the country, after ten 
 hours, and in some parts after eight or nine hours. Thus, with 
 some variations, we have the principle, for the entire district 
 concerned in the arbitration, that a run of a hundred miles or 
 less constitutes a day's work, and all distance beyond one hun- 
 dred miles, or time beyond a fixed number of hours, entitles the 
 engineer to additional compensation. 
 
 For classes of service in which it is not easy to compute mile- 
 age—principally switching service— the minimum ten-hour day is 
 the usual basis of compensation, which, if exceeded, carries com- 
 pensation as overtime. 
 
 Another uniform principle which is very important, and which 
 is recognized throughout the country, is that of seniority. On 
 any given division the rule is followed that the choice for '^open 
 runs'' in either freight or passenger service is on the basis of 
 seniority, qualifications being regarded. This rule is adhered to 
 rather strictly unless there is some very good reason why it should 
 not apply. The older and more experienced men may gain in- 
 crease in compensation with years of service through securing the 
 better runs under the principle of seniority. 
 
 While thus in certain matters uniformity has been reached, 
 the facts presented regardin- existing rates of compensation and 
 rules of service show that the different roads vary widely in 
 many of their practices. 
 
 The facts available show that the claims of the engineers for 
 introducing uniformity into the Eastern District are not fully con- 
 firmed. In many respects uniformity does not exist in the Southern 
 and Western districts, and this is particularly true of the Western 
 District. Therefore, the experience of no section of the country 
 
 ■■■ 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 23 
 
 can be adduced in favor of granting fully the uniformity asked 
 for by the engineers. There is, however, a much closer ap- 
 proach to uniformity in practice in the Southern District than 
 in the Eastern District, and the Western District is interme- 
 diate. In the Southern District particularly, there is very close 
 approach to uniform rules for the beginning and ending of a 
 day, for overtime allowances, and in the classification of en- 
 gines. Experience seems to show that in the rules regarding the 
 beginning and ending of a day and allowances for overtime, there 
 is no necessity for the great diversity existing in the Eastern 
 District, and therefore the Board have decided to take this into 
 consideration in making their award. 
 
 The Board can find no adequate reason why there should be 
 complicated differences in the rates of compensation for services 
 so nearly alike as slow freight service and certain other classes 
 of freight service, with the exception that the additional work 
 involved in local freight service appears to justify a somewhat 
 higher rate. Therefore the Board in their award have simplified 
 the classification of rates of pay by granting the same rates for 
 several different kinds of freight service. They group into one 
 class, so far as compensation is concerned, through freight, work, 
 wreck, pusher and helper, mine run or roustabout, and circus 
 trains, and part of the milk train service. 
 
 Again the Board can find no reason why the rules of service 
 that apply when men are held away from their home terminal 
 or tied up under the sixteen-hour law should not be the same on 
 different roads. 
 
 When, however, it comes to the important question of deciding 
 that the rate of compensation shall be the same for a particular 
 kind of service without respect to road or division, the Board 
 find no warrant for imposing such a regulation. In no part of 
 the country can it be said that all roads without respect to terri- 
 tory and without respect to traffic are paying precisely the same 
 rate of compensation for the same class of service. In the 
 
 < 
 
24 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Western District the pay is generally liigher for the mountainous 
 country than on the plains. Running a locomotive upon a road 
 which has very light traffic is less exacting and requires less con- 
 stant alertness than on roads having heavy traffic. These facts 
 lead the Board to hold that local variations in the character 
 of the service should be reflected, to a reasonable extent, in the 
 rates of pay. 
 
 Accepting the idea that it is impracticable to make the same 
 rules of compensation for all the roads and for all parts of the 
 same road, when there are differences in these respects between 
 the different roads, as well as between other roads throughout 
 the country, the question then arises whether the Board should 
 attempt to adjust the compensation for each class of service and 
 each kind of engine for each of the roads. Manifestly, to do this 
 would be beyond the ability of the Board, even if its members 
 took many months for this adjudication. This statement in re- 
 gard to the difficulties of taking up the adjustment of wages for 
 each class of service on each of the roads does not imply any- 
 thing regarding the adequacy or inadequacy of existing rates of 
 compensation. This is a matter that is discussed later under the 
 heading, "The Basis of a Fair Wage." (See page 47.) 
 
 
 Y 
 
 y 
 
 
 THE PROBLEM OF COMPENSATION TO CAPITAL 
 
 Quite as difficult to solve as the problem of determining what 
 constitutes a fair wage, is the companion problem of determining 
 what constitutes a proper return upon capital invested. For- 
 tunately, however, the latter problem as it affects the railroads, 
 has received the attention of the Interstate Commerce Commis- 
 sion on several occasions; and Bulletin No. 21 of the Census 
 Bureau on "Commercial Valuation of Railway Operating Prop- 
 erty, 1904,'' contains suggestive information regarding the rates 
 of return that have in fact been obtained for the securities of 
 American railroads. In Spokane v. Northern Pacific Railway 
 Company, 15 Interstate Commerce Commission Report 376, 
 dated February 9, 1909, while the Commission do not state what 
 they consider a just rate of return, they indicate that it 
 should be considerably more than 4 per cent in order that "rail- 
 road development keep pace with industrial and commercial 
 requirements." 
 
 While it is not clear that the compensation which goes to capi- 
 tal is adequate for each of the 52 roads in question, it appears 
 at the present time that the stronger roads are able to pay the 
 interest on their bonds, and to give an adequate return on the 
 capital stock. They have been able also to put back into the 
 property large sums for additions and betterments. In some 
 cases the amount put back into the roads has been very large. 
 The President of the Pennsylvania Railroad, for instance, testified 
 before the Commission in the recent eastern rate advance case, 
 that since 1887 this company had expended upon its property from 
 its earnings $262,000,000, and that during the last ten years these 
 expenditures had been approximately $110,000,000. As Com- 
 missioner Prouty added, in his opinion (No. 1508) in that case: 
 "The company has recently provided passenger terminal facilities 
 
 25 
 
28 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 in New York City at the expense of something over $100,000,- 
 000; but we do not understand that any considerable part of the 
 above expenditures from income has gone into this item. During 
 this time dividends averaging at least 6 per cent per annum have 
 been paid. The annual average market price of the stock has been 
 from 153 to 119 per cent of par. It is plain that in the past the 
 returns to this property .... have been munificent." 
 
 Regarding the New York Central Railroad, this company owns 
 all or nearly all of the stock of many other companies. Among 
 these perhaps the more important are the Lake Shore and Michi- 
 gan Southern and the Michigan Central Railroad companies. 
 Commissioner Prouty, in discussing the income of this road, 
 makes the following statement: 
 
 ''The capital stock contains $57,000,000 par value for which 
 nothing was ever paid. The dividends paid upon this capital 
 stock for the last forty years will probably average 6 per cent. 
 During that time there has been actually paid in dividends to 
 the holders of this $57,000,000 of stock at least $120,000,000. 
 Had the New York Central and Hudson River Company invested 
 them in its property, the funded debt of that company might 
 have been reduced by $120,000,000, not having reference to in- 
 terest. If account be taken of interest, the amount would be 
 much larger. 
 
 "The company has, therefore, as a result of this transaction, 
 a capital stock of $57,000,000, in excess of what it would be and 
 either a funded debt or a capital stock at least $120,000,000 
 greater than would be the case if the original issue of stock had 
 never been made. 
 
 "This commission, in determining what the New York Central 
 system shall earn, must take that system as it finds it. It can- 
 not reduce its capital stock by $57,000,000, nor can it take from 
 the holders of its present capital securities $120,000,000, which 
 have been paid in the way of dividends upon this stock."* 
 
 * Interstate Commerce Commission, no. 3400, page 302. 
 
 
 f 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 27 
 
 / 
 
 Regarding the Baltimore and Ohio Railroad, the Interstate 
 Commerce Commission, — while expressing no opinion concerning 
 the relation between the value and the capitalization of the Com- 
 pany — states that this Company "has in the last eleven years 
 paid the interest upon its funded debt, the dividend of 4 per 
 cent upon its preferred stock, and the following dividends upon 
 its common stock: 
 
 1900,4 per cent; 1901, 2 per cent; 1902, 4 percent; 
 1903, 4 per cent; 1904, 4 per cent; 1905, 4f per cent; 
 1906, 5i per cent; 1907, 6 per cent; 1908, 6 per cent; 
 1909, 6 per cent; 1910, 6 per cent." 
 
 The Company also paid 6 per cent on its common stock in 
 1911 and 1912. 
 
 The complexity of the problem of determining whether the 
 railroads are able or unable to devote an increased share of their 
 income to higher wages for their employes is illustrated by the 
 question: What rate of return should be allowed on capital? 
 It seems plain that no fixed percentage can be named. If this 
 were done, there would be no strong incentive, when a road once 
 reached the degree of efficiency requisite to give this percentage 
 of interest, to a further increase of efficiency and economy. But 
 competition in this respect should not be eliminated; and if it is 
 to be encouraged, great care will have to be taken not to limit 
 too closely the dividends on the stocks of roads which are man- 
 aged with exceptional efficiency. Commissioner Lane in the 
 Western rate advance case, decided February 22, 1911, gave it 
 as his opinion that "Some method must be found under which 
 a carrier by its own efficiency of management shall profit. A 
 premium must be put upon efficiency in the operation of the 
 
 American railroad Society should not take from 
 
 the wisely managed railroad the benefits which flow from the 
 foresight, skill, and planned cooperation of its working force."* 
 
 Accepting the soundness of this view, the Board do not feel 
 warranted in passing an opinion regarding the limit to a rea- 
 ♦ Interstate Commerce Commission, no. 3500, page 334. 
 
mmm 
 
 28 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 29 
 
 sonable dividend which should be paid upon capital, as a matter 
 of determined principle. The consideration by the Interstate 
 Commerce Commission of the general cases for the advance of 
 rates east and west, make it clear that they regard as reasonable 
 an income sufficient to pay interest on the bonds at the current 
 rate, a fair dividend upon the stock which represents substance, 
 and to provide a proper surplus.* 
 
 Furthermore, it appears from the facts presented to the Inter- 
 state Commerce Commission that the larger systems in the East- 
 ern District especially discussed by them were receiving incomes 
 adequate to pay these amounts and to allow considerable sums 
 for additions and betterments and for surplus. Even if this 
 be true of the stronger and more prosperous roads, it gives no 
 information regarding the financial condition of the other roads 
 in the district. 
 
 INTERCORPORATE RELATIONSHIPS 
 
 Connected with the very important matter of dividends is 
 that of the intercorporate relations of the roads involved. While 
 there are listed in this arbitration 52 separately named roads, 
 a large number are controlled by a comparatively small number 
 of "systems.*' This control is exercised most largely through 
 the ownership of a majority of stock, but also through lease, 
 capital advanced, and voting trust. Of the 52 roads, the New 
 York Central and Hudson River controls 13, directly and indi- 
 
 * See Report Interstate Commerce Commission, no. 3400, February 22 
 1911, pages 271-2 as follows: , ua y ^^, 
 
 "Then, too, a railroad must be allowed to accumulate a surplus in good 
 years which will offset bad years, and if its financial position is to be a 
 reasonably strong one, that surplus must be large enough to remove doubt 
 from the mind of the investing public. We think that a railroad in ordi- 
 nary years should be permitted to show a substantial surplus, over and 
 above the payment of a reasonable dividend. This is necessary to provide 
 for interest on capital invested in improvements which will not yield an 
 immediate return, to take care of the element of obsolescence, and to tide 
 over years of depression. The amount of this surplus, if estimated in 
 comparison with the dividend to stockholders, must depend upon the rela- 
 tion between stock and bonds and between value and capitalization." 
 
 ' w ► 
 
 rectly, and has joint control (that is, the ownership of a majority 
 of the stock or of the capital advanced is shared with another 
 road or other roads) over three others. The New York Central 
 controls directly, through lease, the Boston and Albany, and 
 through the ownership of at least a majority of their stock, the 
 Dunkirk, Allegheny Valley and Pittsburgh; the Michigan Central; 
 and the Lake Shore and Michigan Southern. The Michigan 
 Central and the Lake Shore and Michigan Southern jointly con- 
 trol the Chicago, Indiana and Southern, and the Indiana Harbor 
 Belt. Through ownership of a majority of the stock, the Lake 
 Shore and Michigan Southern controls directly the Cleveland, 
 Cincinnati, Chicago and St. Louis; the Lake Erie, Alliance and 
 Wheeling; the Lake Erie and Western; the Toledo and Ohio 
 Central; the New York, Chicago and St. Louis; and the Pitts- 
 burgh and Lake Erie. In addition, the Lake Shore and Michigan 
 Southern owns 44.7 per cent of the stock of the Kanawha and 
 Michigan (an equal amount being owned by the Chesapeake and 
 Ohio) and 21.7 per cent of the stock of the Reading Company. 
 The Cleveland, Cincinnati, Chicago and St. Louis owns a majority 
 of the stock of the Cincinnati Northern; it exercises joint control, 
 with the Cincinnati, Hamilton and Dayton, over the Dayton 
 and Union; with the Pittsburgh, Cincinnati, Chicago and St. Louis, 
 and the Vandalia, it controls the Indianapolis Union through the 
 advance of capital. 
 
 The Pennsylvania Railroad heads another "system." It con- 
 trols, directly and indirectly, 6 others of the 52 roads. Those 
 directly controlled are the Pennsylvania Company; the New York, 
 Philadelphia and Norfolk; and the Long Island. The Pennsyl- 
 vania Company owns a majority of the stock of the Vandalia 
 and the Grand Rapids and Indiana. The Pittsburgh, Cincinnati, 
 Chicago and St. Louis, which is also controlled by the Pennsyl- 
 vania, but which is not specifically mentioned as one of the roads 
 in this arbitration, has a claim to 40 per cent and the Vandalia 
 to 20 per cent of the capital advances to the Indianapolis Union. 
 
:s^SSH^SW 
 
 naiiiMj g ju 
 
 1 
 
 30 
 
 KAILWAY ENGINEERS ARBITRATION 
 
 In addition, the Pennsylvania Company owns 2.3 per cent of the 
 stock of the New York, New Haven and Hartford, and 8.7 per 
 cent of the stock of the Baltimore and Ohio Railroad. The Penn- 
 sylvania Railroad itself owns 9.4 per cent of the Baltimore and 
 Ohio stock. 
 
 The New York, New Haven and Hartford "system'* controls 
 4 others of the 52 roads, 2 of them directly— the Central New 
 England and the New York, Ontario and Western. Through the 
 Boston Railroad Holding Company, a majority of whose stock 
 it owns, the New Haven controls the Boston and Maine, and 
 through the Boston and Maine indirectly also the Maine Central. 
 The Baltimore and Ohio "system'' controls, through a voting 
 trust, the Cincinnati, Hamilton and Dayton, and through the 
 latter the Da>i:on and Union. 
 
 The Erie "system" controls the New Jersey and New York 
 and the New York, Susquehanna and Western. 
 
 The Reading "system" controls the Philadelphia and Reading 
 Railway and the Central Railroad of New Jersey. 
 
 Others of the 52 roads involved in the arbitration that are 
 controlled by roads or systems are the Hocking Valley, controlled 
 by the Chesapeake and Ohio, which latter, we have seen, also 
 controls 44.7 per cent of the Kanawha and Michigan; and the 
 Chicago, Indianapolis and Louisville, which is controlled jointly 
 by the Southern Railway and the Louisville and Nashville. 
 
 This intercorporate relationship among the 52 roads is still 
 further extended by the so-called "systems" owning stock of 
 other "systems." The most conspicuous illustration of this is 
 the case of the Reading. This company owns 100 per cent of 
 the stock of the Philadelphia and Reading Railway and 52.8 per 
 cent of the stock of the Central Railroad of New Jersey. Of 
 the stock of the Reading Company, 2L7 per cent is owned by the 
 Baltimore and Ohio and an equal amount, 2L7 per cent, by the 
 Lake Shore and Michigan Southern, 90.6 per cent of whose stock 
 is in turn owned by the New York Central. Thus two "systems" 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 ' I 
 
 '< 
 
 
 i 
 
 J 
 
 A 
 
 31 
 
 —the New York Central and the Baltimore and Ohio— control 
 43.4 per cent of the stock of the Reading "system." The Balti- 
 more and Ohio "system," in turn, has 8.7 per cent of its stock 
 owned by the Pennsylvania Company and 9.4 per cent by the 
 Pennsylvania Railroad, thus giving to the Pennsylvania "sys- 
 tem" control over 18.1 per cent of the stock of the Baltimore 
 and Ohio "system." The Pennsylvania Company owns 2.3 per 
 cent and the New York Central, 0.09 per cent, of the stock of 
 the New York, New Haven and Hartford. There are also in- 
 stances of these "systems" owning stock, although only to a 
 very slight degree, in the so-called "independent" roads involved 
 in this arbitration, such as the Central Railroad of New Jersey 
 owning 0.06 per cent of the stock of the Lehigh Valley. 
 
 Thus, leaving out of consideration the Wabash Pittsburgh Ter- 
 minal, the Wheeling and Lake Erie, and the West Side Belt, 
 which are in the hands of receivers, only 12 of the 52 roads are 
 without the control of other roads or systems— are what might 
 be called "independent." These twelve roads are: The Bessemer 
 and Lake Erie; the Delaware and Hudson; the Delaware, Lacka- 
 wanna and Western; the Lehigh Valley; the Western Maryland; 
 the Coal and Coke; the Buffalo, Rochester and Pittsburgh; the 
 Buffalo and Susquehanna; the Chicago, Terre Haute and South- 
 eastern; the Detroit, Toledo and Ironton; the Pere Marquette; 
 and the Toledo, St. Louis and Western. 
 
 The roads controlled by other roads operate 22,700 miles, or 
 46 per cent of the total mileage of 49,286. 
 
 The New York Central "system" controls 12,402 miles, or 25 
 per cent of the total concerned, including its own mileage of 
 3,299 miles. 
 
 The New Haven "system" controls 6,328 miles, or 13 per cent 
 including its own mileage of 2,040 miles. 
 
 The Pennsylvania "system" controls 10,361 miles, or 21 per 
 cent, including its own mileage of 5,323 miles. 
 
 The Baltimore and Ohio controls 5,481 miles, or 11 per cent, 
 including its own mileage of 4,434 miles. 
 
^ 
 
 32 RAILWAY ENGINEERS ARBITRATION 
 
 .The Reading System controls 2,079 miles, or 4 per cent. 
 
 The Erie Railroad controls 2,399 miles, or 5 per cent including 
 its own mileage of 2,128 miles. 
 
 The large railroad "systems" therefore control lines aggregating 
 39,050 miles, or 79 per cent of the 49,286 miles concerned in the 
 present controversy. 
 
 Smnmarizing the above facts regarding the intercorporate rela- 
 tions of the 52 railroads involved in the arbitration proceedings, 
 it appears that of the total mileage concerned, the percentage 
 owned and controlled by the different systems is as follows: 
 
 Per cent 
 
 The New York Central [ 25 
 
 The New Haven 13 
 
 The Pennsylvania 21 
 
 The Baltimore & Ohio H 
 
 The Reading 4 
 
 The Erie ][[[[ 5 
 
 These six systems control 79 
 
 The mileage of the "independent" roads is as follows: 
 
 Miles 
 
 Bessemer & Lake Erie 209 
 
 Buffalo & Susquehanna 356 
 
 Buffalo, Rochester & Pittsburgh 573 
 
 Chicago, Terre Haute & Southeastern 320 
 
 Coal & Coke igg 
 
 Delaware, Lackawanna & Western 957 
 
 Delaware & Hudson 1,030 
 
 Detroit, Toledo & Ironton 441 
 
 Lehigh Valley 1,381 
 
 Pere Marquette 2,328 
 
 Toledo, St. Louis & Western 451 
 
 Western ^Maryland 575 
 
 Total 8,819 
 
 The prosperous "independent" roads own 8 per cent of the total 
 mileage involved. These are: The Bessemer and Lake Erie, the 
 Buffalo, Rochester and Pittsburgh, the Delaware and Hudson, the 
 Lackawanna, and the Lehigh Valley. The three independent 
 
 '< 
 
 -( 
 
 -( 
 
 -< 
 
 RAILWAY ENGINEERS ARBITRATION 33 
 
 roads that are bankrupt or in a receivership own 6 per cent. The 
 remaining roads own approximately 6 per cent. 
 
 The "systems" and the roads controlled by them, together with 
 their minority holdings in other roads and "systems," are pre- 
 sented in the following table. Where the per cent of stock owned 
 is less than 50 per cent it is to be assumed that no control is exer- 
 cised. 
 
 PcT cent of 
 Name of Road control 
 
 New York Central & Hudson River 
 
 Boston & Albany* 
 
 Dunkirk, Allegheny Valley & Pittsburgh 90 . 7 
 
 Michigan Central 89 . 8 
 
 Chicago, Indiana & Southern 15.0 
 
 Indiana Harbor Belt (a) 30. 
 
 Lake Shore & Michigan Southern 90. 6 
 
 Chicago, Indiana & Southern 85 . 
 
 Indiana Harbor Belt (a) 30 . 
 
 Lake Erie, Alliance & Wheeling 100 . 
 
 Toledo & Ohio Central lOO . 
 
 New York, Chicago & St. Louis, [ 5o" 1 
 
 Pittsburgh & Lake Erie 50 . 
 
 Kanawha & Michigan 44 . 7 
 
 Lake Erie & Western 50 . 
 
 Chicago, Terre Haute & Southeastern 00 . 1 
 
 Cleveland, Cincinnati, Chicago & St. Louis. . . 52.5 
 
 Cincinnati Northern 56 . 9 
 
 Dayton & Union 45 . Q 
 
 Indianapolis Union (b) 40 . 
 
 Reading Company 21.7 
 
 New York, New Haven & Hartford 00 ! 9 
 
 Pennsylvania Railroad 
 
 New York, Philadelphia & Norfolk 99 . 7 
 
 Long Island 55 g 
 
 Pennsylvania Company loO . 
 
 Grand Rapids & Indiana 51.2 
 
 Vandalia 79 . 6 
 
 Indianapolis Union (6) 20 . 
 
 Baltimore & Ohio g ' 7 
 
 New York, New Haven & Hartford .......... 2.3 
 
 Baltimore & Ohio 9,4 
 
 * Control is through lease. 
 
 (c) Twenty per cent of the stock of the Indiana Harbor Belt is also 
 controlled by the Chicago, Milwaukee & St. Paul and 20 per cent by the 
 Chicago & Northwestern, neither of which roads are parties to the arbi- 
 tration. 
 
 -H 
 
 -^ 
 
'I 
 
 34 RAILWAY ENGINEERS ARBITRATION 
 
 Per cent of 
 Name of Road control 
 
 New York, New Haven & Hartford 
 
 Central New England 98 . 7 
 
 New York, Ontario & Western 50. 1 
 
 Boston Railroad Holding Company 90 . 7 
 
 Boston & Maine 53 . 6 
 
 Maine Central 50 . 5 
 
 Baltimore & Ohio 
 
 Cincinnati, Hamilton & Daytonf 
 
 Dayton & Union 53 . 
 
 Reading Company 21.7 
 
 Erie 
 
 New Jersey & New York (c) 82 . 5 
 
 New York, Susquehanna & Western 98 . 4 
 
 Reading Company 
 
 Philadelphia & Reading Railway 100.0 
 
 Central Railroad of New Jersey 52 . 8 
 
 Lehigh Valley 00.06 
 
 Chesapeake & Ohio (d) 
 
 Hocking Valley 80 . 3 
 
 Kanawha & Michigan 44 . 7 
 
 Southern Railway (e) 
 Louisville & Nashville (e) 
 Chicago, Indianapolis & Louisville 87 . 
 
 In addition to the intercorporate relationships as determined 
 by stock ownership, lease, capital advanced, and voting trust 
 there is a system of interlocking directorates. The same men, 
 by acting as directors upon more than one road, may thus establish 
 a close relationship among many of the roads in the Eastern 
 District. 
 
 t Voting trust control. 
 
 (6) Capital advanced. The Pittsburgh, Cincinnati, Chicago & St. 
 Louis, one of the Pennsylvania Railroad's lines, has 40 per cent of the 
 capital advanced to the Indianapolis Union. 
 
 (c) One-half per cent of the stock of the New Jersey & New York is 
 owned by the Delaware & Hudson. 
 
 (d) Not a party to the arbitration and not in the "Eastern" District. 
 
 (e) Not a party to the arbitration. The two control jointly the 87 
 per cent. 
 
 ( 
 
 < 
 
 i 
 
 •f 
 
 J 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 35 
 
 As illustrating the extent of these interlocking directorships, it 
 is known that fourteen prominent individuals hold sixty-seven 
 directorships in twenty-seven different roads in the Eastern Dis- 
 trict. 
 
 While the twelve roads listed as independent are nominally so, 
 the officials and directors of some of them are identified in simi- 
 lar capacities with some of the great "systems" already named. 
 
 It is clear to the Board that from the point of view of the pres- 
 ent arbitration, ''systems" should be considered rather than the 
 individual elements of the system, for their relations and busi- 
 ness are so interwoven that even if a unit of the system considered 
 by itself is unprofitable, taken in connection with the whole sys- 
 tem it might be profitable, since it may be a valuable feeder 
 to a large road and furnish business which has a long haul over 
 such a system. 
 
 This being the case, any award should clearly apply to these 
 systems, — about 80 per cent of the mileage of the roads concerned; 
 and if exceptions are made they should be limited to roads 
 included in the remaining 20 per cent. If these roads, some of 
 which are weak, were parts of a larger system, or the mileage of 
 the Eastern District were operated as a unit, the question would 
 not arise regarding exceptional consideration of these roads, since 
 they would act as valuable feeders to the larger roads. Further, 
 while these independent roads do not have official corporate 
 relationships to the larger systems, as a matter of fact the stock 
 in them is to a considerable extent owned by the same group of 
 financial interests which control the larger roads in the region. 
 
 The courts have declared in various cases, in administering 
 the receivership of railroads, that the public safety is the para- 
 mount consideration, and that a railroad's financial embarrass- 
 ments not only do not warrant reducing the pay of employes 
 below what was paid before the receivership, but have ordered 
 the receivers to pay the "going" rate of wages for the different 
 classes of employes. 
 
 W 
 
 M 
 
36 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Therefore, considering all the facts, the Board cannot recog- 
 nize the smallness and weakness of the roads as a controlling 
 factor in fixing wages. The Board believe that the proper policy 
 is rather to consider the character of the service without respect 
 to ownership, and regardless of whether we have to do with strong 
 roads, with minor branches of a large system, or with small inde- 
 pendent roads. If because of the meager traffic at any place the 
 work of the engineer is either physically or mentally easier than it 
 is upon the trunk lines, there is adequate reason for considering this 
 factor, but not on account of the smallness of the road. In short, 
 the Board hold to the view that the nature of the service rendered 
 is the paramount factor, and that if any standardization takes 
 place, the fact must be recognized that where there is greater 
 responsibihty or greater strain there should be larger pay, and 
 this without respect to whether the division operated belongs 
 to a large system, or is controlled by a large system, or is inde- 
 pendent. 
 
 Indeed, both the railroads and engineers recognize this prin- 
 ciple by providing for a greater compensation on Mallet engines 
 than on consolidation engines, and greater on the consolidation 
 than on the lighter locomotives. If this principle be recognized 
 with reference to the size of the engines, the Board can see no 
 reason why it should not be recognized as between mountainous 
 and level country, or should not be recognized regarding differ- 
 ences in the lightness and ease of service. Whatever standardi- 
 zation is attempted by the Board will therefore be by classifica- 
 tion of service rather than by classification of roads. 
 
 The Board have therefore decided to make their awards apply 
 generally without reference to individual roads. 
 
 ABILITY OF THE ROADS TO PAY INCREASED COMPENSATION 
 
 While the foregoing statement indicates that under existino- 
 conditions and wages, the majority of the roads are able to pay 
 a fair return on the capital invested, this does not answer the 
 
 'C 
 
 K 
 
 -r 
 
 K 
 
 k 
 
 i} 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 37 
 
 question whether the roads would be able to continue doing so 
 if the proposed increase of compensation were granted. Even 
 under existing rates of wages, the railroads have raised the ques- 
 tion of a general increase in rates, both in the east and in the 
 west. (See Interstate Commerce Commission, Cases 3400 and 
 3500; Opinions 1508 and 1509.) The Interstate Commerce Com- 
 mission did not allow the increases asked. This being the situ- 
 ation, the railroads cannot expect materially to increase their income 
 except by an increase in traffic. 
 
 It is fully understood that upon the average, there will be an 
 increase in traffic; but in judging of such increase through the 
 coming years, it is necessary to consider a series of years, since 
 there are great variations in income from year to year. 
 
 The extent to which the operating revenues of the Eastern 
 Railroads (in Groups I, II, and III of the Interstate Commerce 
 Commission) have varied from 1897 to 1911 is shown on page 38. 
 
 This table shows that for the Eastern District as a whole there 
 has been an increase in the net operating revenue. The increase 
 for 1911 as compared with 1897 was 68 per cent. 
 
 In calculating the increases in income that will result from 
 increases in traffic, a period of several years should be considered. 
 The roads assert that their present income is no more than is 
 necessary to meet fixed charges, including therein the main- 
 tenance and transportation accounts, compensation of employes 
 during the year, interest on funded debt, fair dividends upon 
 the stock, and a reasonable surplus. 
 
 To what extent the transportation and maintenance accounts 
 may be diminished by increased economies, illustrated by reduced 
 costs of transportation and equipment, is a very important factor 
 regarding which the Board are unable to reach any conclusion. 
 
 Regarding the contention of the roads that only a fair rate of 
 dividend is paid upon their stocks, and that 24.5 per cent of the 
 stocks of the Eastern roads did not pay any dividends at all in 
 1911 (a point upon which the arbitrators express no opinion), 
 it may be remarked (1) that the percentage of American rail- 
 
 i 
 
38 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Table 1— Variations in Revenue of Operating Railroads in Groups I, II 
 and III (Rail Operations) for the Years 1897 to 1911 
 
 TEAR 
 
 OPKRATINQ 
 
 OPERATING 
 
 NET OPERATING 
 
 NET OPERATING 
 
 
 BEVENCE8 
 
 EXPENSES 
 
 REVENUE 
 
 REVENUE PER MILE* 
 
 1897 
 
 $531,738,780 
 
 $362,945,269 
 
 $168,793,511 
 
 $3,252 
 
 1898 
 
 570,357,302 
 
 386,874,820 
 
 183,482,482 
 
 3,496 
 
 1899 
 
 593,261,427 
 
 400,476,614 
 
 192,784,813 
 
 3,643 
 
 1900 
 
 677,892,142 
 
 452,197,832 
 
 225,694,310 
 
 4,217 
 
 1901 
 
 709,990,356 
 
 476,433,048 
 
 233,557,308 
 
 4,343 
 
 1902 
 
 763,029,037 
 
 513,700,642 
 
 249,328,395 
 
 4,597 
 
 1903 
 
 847,313,435 
 
 583,653,693 
 
 263,659,742 
 
 4,790 
 
 1904 
 
 873,678,276 
 
 615,980,209 
 
 257,698,067 
 
 4,598 
 
 1905 
 
 915,240,636 
 
 635,054,801 
 
 280,185,835 
 
 4,952 
 
 1906 
 
 1,013,949,012 
 
 691,445,885 
 
 322,503,127 
 
 5,607 
 
 1907 
 
 1,107,437,169 
 
 769,661,507 
 
 337,775,662 
 
 5,818 
 
 1908t 
 
 1,040,494,592 
 
 741,727,284 
 
 298,765,648 
 
 5,173 
 
 1909t 
 
 1,030,268,495 
 
 704,521,412 
 
 325,747,083 
 
 5,624 
 
 1910t 
 
 1,175,253,326 
 
 795,162,236 
 
 380,091,090 
 
 6,541 
 
 191 It 
 
 1,213,660,256 
 
 863,211,897 
 
 350,448,359 
 
 5,472 
 
 * Includes only single track mileage. 
 
 t Includes outside operations and excludes switching and terminal 
 companies. 
 
 Explanatory Note: Operating revenues include revenue from freight 
 and passenger traffic, from carrying mail and express, and from miscel- 
 laneous sources. Operating expenses include all the costs of maintaining 
 track and equipment, operating trains, securing traffic, and of adminis- 
 tration. Net operating revenue is the balance of total operating revenues 
 after the payment of operating expenses. The above table does not include 
 income or charges other than those included under the word "operating" as 
 above defined. 
 
 way stocks upon which dividends have been paid is steadily 
 increasing; and (2) that the average rate of interest paid on the 
 dividend-paying stocks has been higher each year since 1903 than 
 in any previous year during the existence of the Interstate Com- 
 merce Commission. 
 
 This is clearly indicated by Table II, from the "Statistics 
 of Railways in the United States" published by the Interstate 
 Commerce Commission. 
 
 Upon the facts here disclosed, Commissioner Lane, of the Inter- 
 state Commerce Commission, in reporting for the Commission 
 in the Western Advanced Rate Case (Opinion No. 1509, dated 
 February 22, 1911) commented as follows: 
 
 
 RAILWAY ENGINEEBS ARBITRATION 
 
 Table 11.— Dividends on American Railroad Stocks 
 
 39 
 
 TEAB 
 
 PER CENT OF STOCK 
 
 AMOUNT OF STOCK 
 
 AMOUNT PAID 
 
 AVERAGE PAID ON 
 
 
 PATINQ DIVIDENDS 
 
 FATING DIVIDENDS 
 
 IN DIVIDENDS 
 
 DIVIDEND PATINC 
 STOCK 
 
 1911* 
 
 67.65 
 
 $5,730,250,326 
 
 $460,195,376 
 
 8.03 
 
 1910* 
 
 66.71 
 
 5,412,578,457 
 
 405,771,416 
 
 7.50 
 
 1909* 
 
 64.01 
 
 4,920,174,118 
 
 321,071,626 
 
 6.53 
 
 1908* 
 
 65.69 
 
 4,843,370,740 
 
 390,695,351 
 
 8.07 
 
 1907 
 
 67.27 
 
 4,948,756,203 
 
 308,088,627 
 
 6.23 
 
 1906 
 
 66.54 
 
 4,526,958,760 
 
 272,795,974 
 
 6.03 
 
 1905 
 
 62.84 
 
 4,119,086.714 
 
 237,964,482 
 
 5.78 
 
 1904 
 
 57.47 
 
 3,643,427,319 
 
 221,941,049 
 
 6.09 
 
 1903 
 
 56.06 
 
 3,450,737,869 
 
 196,728,176 
 
 5.70 
 
 1902 
 
 55.40 
 
 3,337,644,681 
 
 185,391,655 
 
 5.55 
 
 1901 
 
 51.27 
 
 2,977,575,179 
 
 156,735,784 
 
 5.26 
 
 1900 
 
 45.66 
 
 2,668,969,895 
 
 139,597,972 
 
 5.23 
 
 1899 
 
 40.61 
 
 2,239,502,545 
 
 111,009,822 
 
 4.96 
 
 1898 
 
 33.74 
 
 1,818,113,082 
 
 96,152,889 
 
 5.29 
 
 1897 
 
 29.90 
 
 1,603,549,978 
 
 87,110,599 
 
 5.43 
 
 1896 
 
 29.83 
 
 1,559,024,075 
 
 87,603,371 
 
 5.62 
 
 1895 
 
 29.94 
 
 1,485,618,453 
 
 85,287,543 
 
 5.74 
 
 1894 
 
 36.57 
 
 1,767,925,565 
 
 95,515,226 
 
 5.40 
 
 1893 
 
 38.76 
 
 1,809,600,846 
 
 100,929,885 
 
 5.58 
 
 1892 
 
 39.40 
 
 1,825,705,437 
 
 97,614,745 
 
 5.35 
 
 1891 
 
 40.36 
 
 1,796,390,636 
 
 91,117,913 
 
 5.07 
 
 1890 
 
 36.24 
 
 1,598,131,933 
 
 87,071,613 
 
 5.45 
 
 1889 
 
 38.33 
 
 1,629,750,927 
 
 82,110,198 
 
 5.04 
 
 1888 
 
 38.56 
 
 1,490,267,149 
 
 80,238,065 
 
 5.38 
 
 * Does not include returns for switching and terminal companies. 
 
 "This table, it will be observed, begins with the first year 
 after the act to regulate commerce took effect. At that time 
 but 38 per cent of the stock of American railroads was paying 
 dividends. The amount paid was, in round figures, $80,000,000 
 per year. Passing over the years of industrial panic and coming 
 to he year 1900 we find 45 per cent of the stock paying dividends 
 amounting to $139,600,000. These dividends were paid upon 
 stock having a par value of $2,669,000,000 upon which the aver- 
 age rate paid was 5.23 per cent. In 1910, however, the amount 
 of stock paying dividends had increased to neariy $5,500,000 000 
 or more than double what it was in 1900; the actual amount paid 
 m dividends had increased to $405,000,000 or neariy three times 
 the amount paid in 1900, and the average rate had increased 
 over 42 per cent." 
 
 Also the question arises regarding the proportion of non-dividend 
 paying stock which is "water." If a satisfactory history of each 
 of the roads were obtainable, it would be possible to ascertain 
 
 -( 
 
 — * 
 
40 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 just how much money had actually gone into each enterprise. 
 But no such history is obtainable. Nor are the facts available, 
 in all probability, by which, as a result of any amount of investi- 
 gation, such a history could be written. 
 
 Consequently, the railroads were questioned with regard to 
 the physical valuation of their properties. Only one road was 
 prepared to answer this question — the New York, New Haven 
 and Hartford. This road, an old one, in a settled part of the 
 country, with a business well established, and having many 
 important terminals is favorably situated as regards physical 
 valuation as compared with the selHng price of its stocks 
 and bonds. Doubtless some other roads are in an equally favor- 
 able position. If the physical valuation of all the railroads 
 concerned were known, it is not asserted that such valuation 
 would represent the true amount upon which interest should be 
 paid. Nor is it asserted that a growing business should not have 
 consideration. But only when we have the physical valuations 
 of the various roads concerned, and can compare them with the 
 funded debt and the bonds and stock, shall we know the rela- 
 tive amounts which are claimed for ''values as going concerns." 
 
 It is often stated that the value of a railroad is determined by 
 the market price of its securities. But obviously this method 
 may be misleading. The market price of the railroad stocks 
 and bonds in 1907, when they reached a very high level, amounted 
 to a much larger total than their present market value, notwith- 
 standing the fact that during the succeeding years large amounts 
 have been spent for additions and betterments. We all know 
 that the railroads of the country are now more valuable, at least 
 by such additions and betterments, than they were four or five 
 years ago. Manifestly, therefore, any plan that determines the 
 value of the railroad properties by the accident of the market 
 price will seldom lead to correct conclusions.* 
 
 * Take, for example, the Erie Railroad. The par value of its stock was 
 $176,271,300 in 1907, as well as 1912. Yet in 1907, the market value of this 
 
 I 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 ADDITIONS AND BETTERMENTS 
 
 41 
 
 For the year ending June 30, 1911, the fifty-two roads con- 
 cerned in this arbitration reported the investment, out of income, 
 of $30,937,459 (Railroad Exhibit 67A) in additions and better- 
 ments. It is safe to say that this is a conservative estimate, for 
 it is well known that when the railroads replace rails and bridges 
 out of operating expenses, they at least make the roads as good 
 as they were before; and it is fair to assume that they improve 
 them. The money used from income for additions and better- 
 ments may be spent for exactly the same purposes for which 
 new capital is used, namely, lowering the grades, bujdng larger 
 engines, and making other improvements of this class. By so 
 doing, the expense of operation per ton mile or passenger mile 
 is reduced, and thus results in increased earnings. However, a 
 considerable portion of the funds taken out of income and used 
 for additions and betterments are spent in ways that enhance 
 safety and convenience. Some of these expenditures are for the 
 elevation of tracks through cities, the elimination of grade cross- 
 ings, the introduction of safety appliances, the electrification 
 of roads entering the larger cities, and the construction of elabo- 
 rate, sometimes monumental, terminals. While the elevation of 
 tracks, the elimination of grade crossings, the introduction of 
 safety devices, etc., do somewhat increase the net earning power 
 of a road, in that the traffic is more easily and more rapidly 
 handled, it cannot be said that this increase is anything like pro- 
 portionate to the additional investment; yet the public demands 
 these additions and betterments for their safety, comfort and 
 convenience. It cannot be doubted that as a result of using 
 income for additions and betterments the value of a property 
 is increased, although not always in the ratio of the cost. 
 
 stock was $98,786,022, while in July 1912, it was $73,758,371. The bonds, 
 at their highest in 1907, were worth $207,503,732, and in July, 1912, $195, 
 796,429, despite the fact that there had been an increase of $4,712,000 in 
 the aggregate par value of the bonds. This represents a shrinkage of 
 about 11 per cent in the value of the road as measured by the market value 
 of its securities. 
 
'■ 
 
 ^!^^^^S^^S! 
 
 42 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 The policy of withholding a considerable amount out of in- 
 come for additions and betterments is not criticised. Indeed, 
 it is believed to be wise. But in so far as money is expended for 
 additions and betterments, the stockholders should either be con- 
 tent, for the time being, to receive lower dividends on their stock, 
 or, upon the other hand, they should not expect that in the future 
 the increased value of the property should be capitalized and 
 their dividends thereby increased. Either alternative can logi- 
 cally be taken. If the dividends are decreased below a reason- 
 able amount, for the sake of additions and betterments, the 
 stockholders are justified in regarding the amount put in as their 
 property, and therefore a basis for further dividends. If, on 
 the other hand, the dividends now paid are reasonable, and the 
 additions and betterments are taken out of the income, such 
 expenditures should not be the basis upon which new securities 
 are issued. This matter has a bearing on the present discussion, 
 because so far as money goes into additions and betterments, 
 it makes the railroads for the time being less able to pay increased 
 wages. 
 
 While with reference to the future it is believed that the above 
 position regarding additions and betterments will become a settled 
 policy, it is realized that this has not been true in the past. It 
 was only a few years ago that the Interstate Commerce Com- 
 mission and some of the State Commissions gained the right 
 to regulate rates. Prior to that time, the position above advo- 
 cated could not logically be maintained. During the history of 
 many of the railroads in question, large amounts of stocks have 
 been put upon the market which represented nothing but "water"; 
 but which, during subsequent years, have been made substance 
 by putting back from the income, in additions and betterments, 
 large sums of money annually. In many cases the "water" 
 thus put on the market has been made substance altogether 
 by the above process, by the increasing value of real estate, es- 
 pecially in cities, and other factors; in other cases this has been 
 
 I 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 43 
 
 Y 
 
 A 
 
 accomplished in part. In still other cases much of the common 
 stock does not yet represent substance. 
 
 THE QUESTION OF SURPLUS 
 
 During the year ending June 30, 1911, the fifty-two railroads 
 reported a surplus of $32,129,676.* There can be no objection 
 to the accumulation of a surplus, provided it is definitely under- 
 stood what the uses are to which a surplus can legitimately be 
 put. Additional surplus is not accumulated to add to the stock, 
 nor to add to the dividends; it is accumulated as a reserve against 
 disasters — such as floods, which may amount to millions of dol- 
 lars for a single system in a year — and as a provision for interest 
 on bonds, fair wages and dividends, and other expenses during 
 years when, for some unforeseen reason, the traffic falls below the 
 normal. When for a given road a surplus has been accumulated 
 sufficient to protect the property adequately in these respects, 
 (and, of course, for a large road the sum must be much greater 
 than for a small one) there is no longer any justification for 
 the increase of surplus from the income. When it is reduced in 
 disastrous years, it should, in prosperous years, be again built 
 up to a safe margin; but it should not be accumulated to an 
 amount which will serve for the issuance of stocks and bonds, 
 as has been done in the past. In the future the public utilities 
 of the country should not be permitted to cut "melons" from 
 surplus. 
 
 CONCLUSIONS 
 
 The above features regarding the railroad situation are dwelt 
 upon to show how unable the Board are, within any reasonable 
 time, to gauge accurately the assertion of the railroads that they 
 are financially unable to pay an increased wage. To answer the 
 questions raised regarding decreased expenses for maintenance 
 
 ♦ Railroad Exhibit 67 A. 
 
44 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 and transportation, to ascertain the amount of money which 
 should fairly go to stocks and bonds, to interpret correctly the 
 investment of income for additions and betterments — would re- 
 quire the work of a staff of experts for years; and even then this 
 might not be accomplished with regard to the past. For the 
 future, however, methods of accounting can no doubt be worked 
 out and the roads required to keep their books so as to furnish 
 this information. 
 
 Having made the above reservation, the figures furnished by 
 the railroads mentioned above indicate upon their face that 
 the roads are on the average not in a position to make large 
 increases in expenditures. This view of the situation presented 
 by the railroads is confirmed by the investigations made by 
 the Interstate Commerce Commission in the recent rate ad- 
 vance cases. This Commission reached the conclusion that 
 while the railroads were not justified in making a general increase 
 of rates, it was intimated that if hereafter there were large 
 increases in expenditures there might be justification for rate 
 increases. 
 
 It is claimed by the railroads that if the requests of the engi- 
 neers were granted in their entirety, the increased expenditure 
 would amount to $7,172,546; and it is estimated by the railroads 
 that if they should grant the same percentage of increase to 
 other railway employes, this would involve an additional expendi- 
 ture of $60,233,232. If these figures are correct — that is, if 
 the wage account of the railroads were increased by a total of 
 over $67,000,000 — this would amount to more than the total 
 appropriations for additions and betterments ($30,937,459) and 
 the total surplus ($32,129,676) for the year ending June 30, 1911. 
 However, the Board have grave doubts regarding the correctness of 
 these figures, especially regarding the amount of the so-called "col- 
 lateral" increases. It is probable that the estimated amount of 
 increase for the engineers, in case all their demands were granted^ 
 is approximately correct. The amount probably should not be 
 
 1 
 
 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 45 
 
 largely discounted. The Board do not feel the same regarding the 
 estimated collateral increases. It is improbable that the collateral 
 increases would amount to more than $60,000,000, as claimed by 
 the railroads. 
 
 The method of calculating collateral increases was investigated 
 by the statisticians of the Board, and it was ascertained that 
 each road applied the same percentage of increase to all other 
 classes of employes that was estimated for the engineers in case 
 the latter's requests were granted. These estimated collateral 
 increases varied on the different roads from 10.4 per cent in the 
 case of the Bessemer and Lake Erie to 56.35 per cent for the 
 Coal and Coke Railway. This shows how uncertain is the 
 calculation submitted by the railroads regarding collateral 
 increases. In the opinion of the Board, the sum of $60,000,- 
 000 is far too large an estimate for all the resultant collateral 
 increases. But the Board believe that if the requests of the 
 engineers were fully granted, some collateral increases would 
 inevitably follow. 
 
 Reports of the fifty-two railroads to the Interstate Commerce 
 Commission for the fiscal year ending June 30, 1912 show an 
 increase over the fiscal year 1911 of $32,810,495 in their operating 
 revenues, and an increase of $21,324,198 in operating expenses, 
 leaving an increase of $11,486,297 in net operating revenue for the 
 year. 
 
 There is every reason to believe, moreover, that the earnings 
 of the railroads for the fiscal year beginning July 1, 1912 will be 
 larger than they have been for several years. Especially since 
 June, 1912, the railroads have had a very large business and prob- 
 ably for the ensuing months of the year the freight business will 
 be as great as they can handle. 
 
 In many lines of industry orders are so far ahead that manu- 
 facturers will not take additional ones except for delivery in several 
 months and in some cases even a year or more in the future. 
 This being the situation, it is practically certain that during the 
 
46 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 fiscal year 1912-13 the gross income of the railroads will be larger 
 than in 1911-12. 
 
 The foregoing consideration of the question of compensation to 
 capital, and of the ability of the roads to pay an increased wage, 
 leads to so uncertain conclusions that the Board feel that these 
 should not be controlling factors in the award. 
 
 Therefore, considering the uncertainty of many of the factors 
 involved, the arbitrators feel that they should not deny an increase 
 of compensation to the engineers merely on the ground that the 
 roads are unable to pay. They feel that the engineers should 
 be granted a fair compensation. They furthermore believe it prob- 
 able that a great majority of the railroads in the district concerned 
 are able to pay a fair compensation. If they are not able to pay 
 such compensation with existing rates, there is just cause for 
 them to open again the question of an increase of rates with the 
 Interstate Commerce Commission. In making their award they 
 therefore eliminate the claim of the railroads that they are unable 
 to pay an increased compensation. 
 
 -< 
 
 
 
 V 
 
 THE BASIS OF A FAIR WAGE 
 
 Possibly there should be some theoretical relation, for a given 
 branch of industry, between the amount of the income that should 
 go to labor and the amount that should go to capital; and if this 
 question were decided, a scale of wages might be devised, for the 
 different classes of employes, which would determine the amount 
 rightly absorbed by labor. It may be that in the future some such 
 solution will be worked out for the various industries; and if so, 
 the income of the railroads could be so apportioned. Thus far. 
 However, political economy is unable to furnish such a principle 
 as that suggested. There is no generally accepted theory of the 
 division of income between capital and labor. It is certain that 
 the arbitrators cannot make their findings uppn the basis of some 
 future system. Their findings must be based upon existing prac- 
 tices. While the members of the Board sympathize with the 
 demands of labor, and feel that in the past, labor has not always 
 received its full share of the joint income, this fact should not 
 control the findings of the Board. 
 
 What, then, is the basis upon which a judgment may be passed 
 as to whether the existing wage scale of the engineers in the 
 Eastern District is fair and reasonable? It seems to the Board 
 that the only practicable basis is to compare the rates and 
 earnings of engineers in the Eastern district with those of en- 
 gineers in the Western and Southern districts and with those of 
 other classes of railway employes. In doing the latter it is not 
 meant to assume that the compensation of the engineers should 
 not be higher than that of other skilled labor in railroad service, 
 but in order to ascertain the difference which has actually existed 
 between the engineers and other classes of railroad employes in 
 the same and in different districts. 
 
 47 
 
48 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Each side to the arbitration has recognized the bearing of 
 such comparisons on the questions involved, by submitting com- 
 parisons between the wages received by engineers and by other 
 railway employes. 
 
 The Board feel compelled to base their award upon existing 
 facts, rather than upon a theory regarding the division of the 
 fruits of industry. 
 
 COMPENSATION NOW RECEIVED 
 
 The railroads submitted an exhibit showing the maximum 
 monthly earnings of different classes of engineers. The following 
 are illustrations from some of the more important roads. 
 
 Baltimore & Ohio — Earnings of highest-paid engineer for Janu- 
 ary, 1912: 
 
 Passenger: Regular time, 5,910 miles @ $3.90, $230.50; 
 
 overtime, 31 hours @ 45 cents, $13.95 $244.45 
 
 Average for seven months 181 .85 
 
 Freight: Regular time, 3,487 miles @ $4.70 and $4.85; 
 1 day @ $5.40, $174.35; overtime, 102 hours @ 47 
 cents, 54 cents and 48 J cents, $49.50 $223 . 85 
 
 Average for seven months 179 .48 
 
 Bessemer & Lake Erie — Earnings of highest-paid engineer for 
 September, 1911: 
 
 Passenger: Regular time, mileage 3,823 @ $4.20 and 
 $4.60; hours on duty, 150.37, straight time allow- 
 ance 3,978 miles; no overtime $167.56 
 
 Average for seven months 162.71 
 
 Freight: Regular time, mileage 3,634 @ $5.00, hours 
 on duty 337.40, straight time 3,725 miles; over- 
 time, 230 miles $198.00 
 
 Average for seven months 168 . 50 
 
 '''««i.' 
 
 -f 
 
 s 
 
 V 
 
 RAILWAY ENGINEERS ARBITRATION 49 
 
 Central of New Jersey — Earnings of highest-paid engineer for 
 January, 1912: 
 
 Passenger: Worked 26 days, 26 trips; Jersey City to 
 Philadelphia and return, 4,814 miles @ $4.25, time 
 in service 191.15 hours $204 .60 
 
 Average for seven months 192.59 
 
 Freight: Worlced 23 days, 23 trips; mileage, 4,120 regu- 
 lar time; 42 miles overtime; total miles, 4,162 @ 
 $4.85; time in service 337.15 hours $201 .86 
 
 Average for seven months 186 .20 
 
 Cleveland, Cincinnati, Chicago, & St. Louis — Earnings of high- 
 est-paid engineer for January, 1912: 
 
 Passenger: Regular time, 5,350 miles @ $3.90 $208.65 
 
 Average for seven months 199 . 10 
 
 Freight: 14^ turn-around trips, 292 miles per trip; 11 
 additional miles; total, 4,245 miles @ $4.75; over- 
 time, 1 hour @ 47^ cents $202.10 
 
 Average for seven months 164 . 10 
 
 Delaware, Lackawanna & Western — Earnings of highest-paid 
 engineer for January, 1912: 
 
 Passenger: Regular time, 29 trips of 152 miles each 4,408 
 miles @ $4.10; 3 trips of 141 miles each, 423 miles 
 @ $4.50. — Terminal delays, 14.24 hours; 144 miles 
 @ $4.10; total time on duty, 195.46 hours $205.67 
 
 Average for seven months 189 .34 
 
 Freight: Regular time, 31 trips, 141 miles each, 6 miles 
 overtime, 1 trip 176 miles, total 1,531 miles @ $4.80, 
 2,996 miles @ $4.65, and 6 miles @ $4.65; total time 
 on duty, 251.59 hours, including 36 minutes over- 
 time $214.05 
 
 Average for seven months. 181 .62 
 
 ; 
 
 V 
 
I 
 
 50 RAILWAY ENGINEERS ARBITRATION 
 
 Lake Shore & Michigan Southern — Earnings of highest-paid 
 engineer for January, 1912: 
 
 Passenger: Regular time, 6,252 miles @ $4.15; 180 miles 
 
 @ $2.07|; overtime, 70 miles @ $4.20, 35 trips. . . . $266.15 
 
 Average for seven months 169 .80 
 
 Freight: Regular time, 945 miles @ $4.15; 3,490 miles 
 @ $4.85; overtime, 10 miles @ $4.20; 110 miles @ 
 $4.85, 39 trips $214.25 
 
 Average for seven months 116 .06 
 
 Michigan Central — Earnings of highest-paid engineer for Janu- 
 ary, 1912: 
 
 Passenger: Straight time, 55.43 days; overtime, 13 hours; 
 
 56.7 days @$4.15 $235.30 
 
 Average for seven months 47 . 07 
 
 (Handles through passenger trains between Wind- 
 sor and Buffalo) 
 
 Freight: Straight time, 34.5 days, overtime 14.4 days, 
 total 48.54 days @ $5.45; overtime figured @ 12.8 
 miles per hour; overtime after 10.50 hours on duty . . $264 .30 
 
 Average for seven months 235 . 75 
 
 (Operates a train from Kalamazoo to Jackson and 
 turn-around.) 
 
 New York, Chicago & St. Louis — Earnings of highest-paid engi- 
 neer, month not given: 
 
 Passenger: 29 trips @ $5.85; 4 hours overtime @ 46 
 
 cents $171 .50 
 
 Freight: 30 trips @ $5.80: 34 hours overtime, @ 46 
 
 cents $189 . 65 
 
 New York, New Haven & Hartford — Earnings of highest-paid 
 engineer for August, 1911: 
 
 IT^^B 
 
 -/ 
 
 V 
 
 -( 
 
 -/ 
 
 -( 
 
 ♦ 
 
 "- ., . 
 
 RAILWAY ENGINEERS ARBITRATION 51 
 
 Passenger: 5,208 miles ® $4.10; 63 hours overtime ©41 
 
 cents $239.45 
 
 Average for seven months 194 .40 
 
 Freight: December, 1911, 3,810 miles @ $4.65; 131 hours 
 overtime @ 46| cents; 8 doubling miles @ $0.0465, 
 i day switching @ $3.50 $240.29 
 
 Average for seven months 203 . 25 
 
 Pennsylvania Lines-East — Earnings of highest-paid engineer for 
 
 January, 1912: 
 
 Passenger: 27 trips @ $7.22; 108 hours overtime ® 41J 
 
 cents; 99 terminal miles @ $0.0415; 3 trips @ $5.27 $259.68 
 
 Average for seven months 237 . 37 
 
 Freight: (Slow). Time on duty, 400.5 hours; 43 trips 
 @ $3.89; 2 trips @ $4.85; 1 trip @ $5.33; total, 
 $182.30; overtime, $41.80 $224 . 10 
 
 Average for seven months 187 .86 
 
 Pennsylvania Lines-West — Earnings of highest-paid engineer for 
 October, 1911: 
 
 Passenger: January, 1912. Total hours on duty 257.17; 
 miles run, 5,783; trips 43; regular time 247.4 hours; 
 overtime 10.13 hours; wage paid per hour on duty 
 98.8 cents $253 .90 
 
 Average for seven months 185 .82 
 
 Freight: October, 1911. Total hours on duty 444.19; 
 miles run 3,570; trips 30; regular time 355.44 hours; 
 overtime 88.35 hours; wages paid per hour on duty 
 48i cents; leave of absence, 1 day $215 .60 
 
 Average for seven months 201 .38 
 
 Vandalia — Earnings of highest-paid engineer, January, 1912: 
 Passenger: 26 trips @ $7.26; 6 trips @ $6.89; 2 hours 
 
 18 minutes overtime @ 50 cents $231 .25 
 
 Average for seven months 203 . 55 
 
k 
 
 V 
 
 52 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Freight: 19 trips @ $8.10; 4 trips @ $4.85; 2 hours 13 
 minutes overtime @ 48^ cents; 1 trip @ S6.89; 4 
 trips @ $7.26 ^210 30 
 
 Average for seven months 165 63 
 
 The actual earnings of the twenty-five engineers who testified 
 before the Board were also ascertained. The names of these 
 men, the roads and divisions upon which they worked, the char- 
 acter of the service, the average earnings per month, and the 
 estimated earnings for the year, are given in Table III on pa-^es 
 54-56. 
 
 From this table it appears that the lowest annual compensation 
 for any of these 25 men was $1,200 and the highest $2,386.80; the 
 average being approximately $1660.00. 
 
 The men named in this table are to a certain extent a selected 
 group and their average compensation is therefore probably 
 greater than for most engineers in the Eastern District. As 
 shown by the report of the Interstate Commerce Commission 
 the average "daily" compensation of the engineers in this territory 
 in 1911 was $4.71. It should be remembered that the basis of 
 the calculation giving this figure is what is regarded as a normal 
 day's work. If a man makes more than an average number of 
 runs, or puts in much overtime, he may make more than thirty 
 days' pay in a month. 
 
 If due allowance be made for overtime on the one hand and 
 "lay offs" allowed for on the other hand, the Board estimates that 
 an engineer who does 300 normal days work in a year would receive 
 an annual compensation of about $1,400. This sum probably 
 approximates the average earnings of the engineers in the ter- 
 ritory concerned. 
 
 The higher sums above named are significant to the extent that 
 they show the compensation of some of the men who by seniority 
 have the better runs. In an exceptional month a man having a 
 good run may earn somewhere from $200 to $250. In a year 
 the men having the more favorable runs may earn from $1,600 
 
 -i 
 
 4 
 
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 I 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 53 
 
 to $2,300; and men receiving compensation between these ranges 
 are rather numerous. However, the average annual earnings of 
 all engineers for the territory cannot certainly be assumed to be 
 more than $1,400. 
 
 AVERAGE DAILY COMPENSATION OF ENGINEERS AND OTHER CLASSES 
 OF RAILROAD EMPLOYES FROM 1897 TO 1911 
 
 Among the arguments presented by the engineers for an increase 
 of compensation is that the engineers in the Western and Southern 
 districts are receiving a higher compensation than those in the 
 Eastern District. The Board, so far as they were able to enter 
 into an investigation of this subject, gained the general impression 
 that these statements were justified; but they have been unable 
 to answer to their own satisfaction the question of how much higher 
 the wages are in the West and South than they are in the East. 
 To investigate this subject fully would require more time than has 
 been available to the Board before it has been necessary to make 
 an award. They have therefore been obliged to turn to the only 
 source of information available on the subject— the figures of the 
 Interstate Commerce Commission. They recognize that these 
 figures have been made up in a manner which may render them 
 unsatisfactory for comparative purposes. It appears that the 
 wage statistics published by the Commission are prepared from 
 reports made by the individual roads. The total amount of com- 
 pensation paid by a road to a given class of employes is divided 
 by the number of days worked by men in that class to determine 
 the average daily wage. Reports are compiled for the several 
 groups used by the Commission for statistical purposes. The 
 total compensation to a class is not distributed among the differ- 
 ent lines of work. For example: all engineers, passenger, freight 
 and switching, are included under the head ''engineers" and all 
 compensation paid them, whether for mileage, overtime or dead- 
 heading, is included in the lump sum. Neither the maximum nor 
 minimum earnings are shown. 
 
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 4 
 
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 67 
 
 The manner in which the Interstate Commerce Commission's 
 figures have been compiled makes it plain that they do not give a 
 basis for accurate comparison. The differences may be greater 
 or less than those shown by the figures of the Interstate Commerce 
 Commission. Nevertheless, since these statistics are the only 
 ones available to the Board to guide them regarding the claim that 
 wages are higher in the West and South than in the East, compar- 
 isons of the compensation in these districts and with the United 
 States as a whole, are inserted upon the basis of the available data. 
 The comparisons cover the years 1897 to 1911 inclusive. The 
 year 1897 is chosen for beginning the statistics since in that year 
 wages were at a low ebb. 
 
 Also, tables have been prepared showing differentials between 
 the engineers, firemen, conductors and other trainmen for the dif- 
 ferent districts and the country as a whole from 1897 to 1911. 
 
 Before discussing these tables it should be recalled that the 
 Interstate Commerce Commission in its report for 1911 abandons 
 the former grouping of states and substitutes therefor a three- 
 group-system— called the Eastern, Southern and Western districts. 
 
 This Eastern District embraces the former Groups I, II and III, 
 with the addition of half the state of Illinois. Groups IV and V 
 under the old system, now form the "Southern district,'' and the 
 remaining states form the ''Western district," except for the por- 
 tion of Illinois that has been added to the Eastern District. 
 
 While this modification in the territorial groups makes impos- 
 sible a comparison of single groups in 1911 with the same groups 
 in previous years, it does not seriously affect the accuracy of com- 
 parisons of the several regions designated as Eastern, Southern 
 and Western. 
 
 Table IV indicates the average daily compensation of thirteen 
 different classes of railroad employes for the years 1897 to 1911, 
 inclusive. The classes of employes included are engineers, fire- 
 men, conductors, other trainmen, station agents, other station 
 men, section foremen, other trackmen, machinists, carpenters, 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 other shopmen, telegraph operators and dispatchers, switch tenders, 
 crossing tenders and watchmen. Each class of employes is again 
 divided according to the geographical divisions of the United States 
 recognized by the Interstate Commerce Commission. 
 
 Table IV also indicates the average daily compensation of each 
 class of railway employes, from 1897 to 1911, inclusive, for the 
 United States as a whole. It shows that in all parts of the United 
 States engineers are the highest-paid class of railway operatives, 
 and that their average daily compensation for the country as a 
 whole has risen from $3.65 in 1897 to $4.79 in 1911. It shows 
 further, for every year here considered, that the daily compensa- 
 tion of engineers has averaged higher in the Western groups 
 than in the Southern groups, while the same relation is true of the 
 Southern States compared with the Eastern States. 
 
 Therefore, the existing situation under which the engineers of 
 the East receive a compensation somewhat lower than those in the 
 South and West is not new. 
 
 Table IV indicates that the average daily compensation of the 
 engineers for the United States as a whole is almost double that of 
 the telegraphers and dispatchers, $2.44, and more than double 
 that of the station agents, $2.17. The difference is not so great 
 for the skilled artisans in the railway service. It is 52 per cent 
 greater than machinists, $3.14, and 88 per cent greater than car- 
 penters, $2.54. For unskilled labor a higher ratio of course 
 obtains, but comparisons with unskilled labor can have little 
 bearing upon the questions involved in this arbitration. 
 
 Table V gives the compensation of each class of employes for 
 the years 1897 and 1911 in the Eastern, Southern, and Western 
 districts, and in the United States as a whole, and the percentage 
 of increase for each class of operatives. While in 1911, the average 
 daily compensation of the engineers in the Eastern District ($4.71) 
 was lower by 14 cents than in the Southern District ($4.85), and 
 lower by 19 cents than in the Western District ($4.90), in 1897 
 the average daily compensation in the East ($3.53) was 11 cents 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
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 lower than in the South ($3.64). and 29 cents lower than in the 
 West (S3.82). Therefore, the absolute gap between the eastern 
 and western engineers' daily compensation has been decreased by 
 one-third during the years from 1897 to 1911, and the gap between 
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 fourth. 
 
 Table V also shows that for other classes of employes a similar 
 relation exists between the East and West as for engineers. With- 
 out exception, the conductors, firemen, other trainmen, etc., 
 receive a higher average daily compensation in the West than in 
 the East. The table brings out one other important point. We 
 have already seen that the gap between the average compensation 
 of engineers in the Eastern and Western Districts has lessened 
 through the years. The closing of the gap thus illustrated between 
 the West and the East applies to the four classes above mentioned; 
 that is to say, the difference in the level of average daily compen- 
 sation between the West and the East was greater in 1897 than 
 this difference in 1911. 
 
 Table VI indicates the average daily compensation of engineers, 
 firemen, conductors and other trainmen in the Eastern, Southern, 
 and Western Districts and in the United States as a whole, for the 
 years 1897 to 1911. Charts A, B, C and D present the same in- 
 formation graphically. 
 
 Next to the engineers, the conductors are the highest paid rail- 
 way operatives. Their average daily compensation in the United 
 States as a whole rose from $3.07 in 1897 to $4.16 in 1911; 
 while the average daily compensation of the engineers rose from 
 $3.65 to S4.79. Thus the average daily compensation of the 
 conductors during these years increased $1.09, whereas the aver- 
 age daily compensation of the engineers increased $1.14. For the 
 Eastern District, the average daily compensation of the engineers 
 rose from $3.53 to $4.71, an increase of $1.18, whereas the aver- 
 age daily compensation of conductors in this District increased 
 from $2.92 to $4.03, an increase of $1.11. It thus appears that 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 69 
 
 
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 70 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 both for the United States as a whole and for the Eastern District, 
 the absolute increase in the average daily compensation of the 
 engineers and the conductors has been substantially parallel. 
 
 In the matter of average daily compensation of trainmen, 
 the firemen come next to the conductors. For the United States 
 as a whole, from 1897 to 1911, their average daily compensation 
 increased from $2.05 to $2.94, an increase of 89 cents. As we have 
 just seen, the average daily compensation of the engineers during 
 that time increased by $1.14. In the Eastern District the average 
 daily compensation of the firemen increased from $1.97 to $2.88, 
 an increase of 91 cents, whereas the increase in the average daily 
 compensation of the engineers in the same territory was $1.18. 
 
 Therefore, during these fourteen years, the absolute increase in 
 the average daily compensation of the engineers, in the United 
 States as a whole, and of the engineers in the East, has been some- 
 what greater than the increase for the firemen; the difference in 
 the increase being, for the United States as a whole, 25 cents in 
 favor of the engineers, and for the Eastern District, 27 cents in 
 favor of the engineers. 
 
 For other trainmen, the average daily compensation rose for 
 the United States as a whole from $1.90 in 1897 to $2.88 in 1911, 
 an increase of 98 cents, whereas during the same period the average 
 daily compensation of the engineers increased $1.14. For the 
 Eastern District, the average daily compensation of other train- 
 men rose from $1.88 in 1897 to $2.94 in 1911, an increase of $1.06, 
 whereas the increase in average daily compensation of the engineers 
 in the same district was $1.18. 
 
 Upon the whole there has been a noticeable parallelism during 
 these fourteen years in the absolute increases in the average daily 
 compensation of engineers, conductors, firemen and other trainmen 
 for the Um'ted States as a whole and for the Eastern District. 
 This is indicated graphically by Charts A and D. 
 
 Another way in which the average daily compensation of differ- 
 ent classes of railway employes may be compared is by ratios rather 
 
 ' 
 
 y 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 71 
 
 than absolute amount. Have the ratios of increase of engineers, 
 conductors, firemen and other trainmen remained the same since 
 1897, and if not, what are the facts in this regard? To answer 
 this question Table VII and chart E have been prepared. They 
 indicate the ratio that the average daily compensation of firemen, 
 conductors and other trainmen, bore to the average daily com- 
 pensation of the engineers in the years 1897 to 1911 inclusive. 
 
 The average daily compensation of the other classes of trainmen 
 (firemen, conductors and other trainmen) are expressed in per- 
 centages of the engineers' average daily compensation. Thus, for 
 example, the average daily compensation of firemen in the Eastern 
 District in 1904 was 57.83 per cent of the average daily compensa- 
 tion of the engineers in that District; whereas the average daily 
 compensation of conductors in 1904 was 84.34 per cent of the 
 average daily compensation of the engineers in that District. 
 
 Table VII — Part 1: Average Daily Compensation of Firemen, Conductors, 
 and Other Trainmen, Eastern District, in Percentages of Average Daily 
 Compensation of Engineers. 
 
 TEAR 
 
 FIREMEN 
 
 CONDUCTORS 
 
 OTHER TRAINMEN 
 
 1897 
 
 55.81 
 
 82.72 
 
 53.26 
 
 1898 
 
 56.15 
 
 83.52 
 
 53.35 
 
 1899 
 
 56.02 
 
 83.47 
 
 53.50 
 
 1900 
 
 56.63 
 
 83.70 
 
 53.59 
 
 1901 
 
 57.02 
 
 83.47 
 
 54.55 
 
 1902 
 
 57.14 
 
 83.56 
 
 54.72 
 
 1903 
 
 57.03 
 
 84.14 
 
 55.75 
 
 1904 
 
 57.83 
 
 84.34 
 
 56.57 
 
 1905 
 
 58.44 
 
 84.13 
 
 57.43 
 
 1906 
 
 59.70 
 
 83.63 
 
 59.45 
 
 1907 
 
 59.52 
 
 83.86 
 
 60.96 
 
 1908 
 
 59.53 
 
 83.49 
 
 60.23 
 
 1909 
 
 60.14 
 
 83.45 
 
 59.91 
 
 1910 
 
 59.91 
 
 84.51 
 
 61.05 
 
 1911 
 
 61.15 
 
 85.56 
 
 62.42 
 
 Note: This Table shows how many cents the Firemen, Conductors 
 and Other Trainmen received for every Dollar received by the Engineers, 
 as their Average Daily Compensation; computed from information reported 
 by the Railroads to the Interstate Commerce Commission. 
 
 •**ia^i 
 
72 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 Table VII— Pari 2: Average Daily Compensation of Firemen, Conductors 
 and Other Trainmen, Southern District, in Percentages of Average Daily 
 Compensation of Engineers. 
 
 TEAB 
 
 FIREMEN 
 
 CONDUCTORS 
 
 OTHER TRAINMEN 
 
 1897 
 
 48.35 
 
 79.67 
 
 43.13 
 
 1898 
 
 48.54 
 
 78.25 
 
 44.03 
 
 1899 
 
 49.36 
 
 78.66 
 
 42.16 
 
 1900 
 
 48.96 
 
 79.94 
 
 42.45 
 
 1901 
 
 48.98 
 
 78.06 
 
 42.60 
 
 1902 
 
 48.15 
 
 76.05 
 
 41.48 
 
 1903 
 
 47.36 
 
 77.64 
 
 40.63 
 
 1904 
 
 48.23 
 
 76.12 
 
 41.61 
 
 1905 
 
 46.84 
 
 75.41 
 
 42.39 
 
 1906 
 
 48.04 
 
 76.91 
 
 43.42 
 
 1907 
 
 49.45 
 
 80.31 
 
 45.51 
 
 1908 
 
 49.56 
 
 80.97 
 
 45.58 
 
 1909 
 
 50.34 
 
 80.00 
 
 45.62 
 
 1910 
 
 50.11 
 
 78.40 
 
 44.71 
 
 1911 
 
 52.99 
 
 82.47 
 
 50.10 
 
 Table VII— Pari 5; Average Daily Compensation of Firemen, Conductors 
 and Other Trainmen, Western District, in Percentages of Average Daily 
 Compensation of Engineers. 
 
 ' tt 
 
 TEAR 
 
 FIREMEN 
 
 CONDUCTORS 
 
 OTHER TRAINMEN 
 
 1897 
 
 58.64 
 
 87.17 
 
 54.71 
 
 1898 
 
 58.35 
 
 86.89 
 
 54.24 
 
 1899 
 
 59.22 
 
 87.01 
 
 54.81 
 
 1900 
 
 60.05 
 
 87.63 
 
 54.38 
 
 1901 
 
 60.10 
 
 86.70 
 
 55.24 
 
 1902 
 
 60.15 
 
 86.04 
 
 55.33 
 
 1903 
 
 60.00 
 
 86.83 
 
 56.83 
 
 1904 
 
 60.19 
 
 90.28 
 
 58.77 
 
 1905 
 
 60.56 
 
 89.67 
 
 59.15 
 
 1906 
 
 61.23 
 
 90.78 
 
 59.15 
 
 1907 
 
 61.93 
 
 91.28 
 
 62.39 
 
 1908 
 
 62.39 
 
 90.00 
 
 60.65 
 
 1909 
 
 62.91 
 
 90.89 
 
 60.74 
 
 1910 
 
 63.40 
 
 90.85 
 
 61.06 
 
 1911 
 
 65.71 
 
 91.02 
 
 61.22 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 73 
 
 i 
 
 i 
 
 V 
 
 / 
 
 Table VII — Part 4: Average Daily Compensation of Firemen, Conductors 
 and Other Trainmen in the United States, in Percentages of Average Daily 
 Compensation of Engineers. 
 
 TEAR 
 
 FIREMEN 
 
 CONDUCTORS 
 
 OTHER TRAINMEN 
 
 1897 
 
 56.16 
 
 84.11 
 
 52.05 
 
 1898 
 
 56.18 
 
 84.14 
 
 52.42 
 
 1899 
 
 56.45 
 
 84.14 
 
 52.15 
 
 1900 
 
 57.07 
 
 84.53 
 
 52.27 
 
 1901 
 
 57.14 
 
 83.86 
 
 52.91 
 
 1902 
 
 57.29 
 
 83.59 
 
 53.13 
 
 1903 
 
 56.86 
 
 84.29 
 
 54.11 
 
 1904 
 
 57.32 
 
 85.37 
 
 55.37 
 
 1905 
 
 57.77 
 
 84.95 
 
 56.07 
 
 1906 
 
 58.74 
 
 85.19 
 
 57.04 
 
 1907 
 
 59.07 
 
 85.81 
 
 59.07 
 
 1908 
 
 59.33 
 
 85.62 
 
 58.43 
 
 1909 
 
 60.14 
 
 85.81 
 
 58.33 
 
 1910 
 
 60.22 
 
 85.93 
 
 59.12 
 
 1911 
 
 61.38 
 
 86.85 
 
 60.13 
 
 The figures show that the total decUne in the "differentials" 
 during the fourteen years amounts to 5.34 cents per dollar in the 
 case of the firemen in the Eastern District compared with the 
 engineers; 2.84 cents per dollar in the case of the conductors; and 
 9.16 cents in the case of other trainmen. For firemen this is 
 slightly more than the decline for the country as a whole; for 
 conductors slightly less; and for other trainmen considerably 
 more. 
 
 Table VII shows for the United States as a whole a slight but 
 fairly steady decline in the differential between the average daily 
 compensation of the firemen and of the engineers, and a somewhat 
 greater decline in the differential between the average daily com- 
 pensation of the other trainmen and of the engineers. For the 
 country as a whole the difference between the average daily com- 
 pensation of the conductors and that of the engineers, per dollar 
 of compensation paid the engineers, has decreased from 15.89 
 cents to 13.15 cents — a decrease of 2.74 cents. For the Eastern 
 District, this difference has decreased from 17.28 cents to 14.44 
 
74 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 IfVi 
 
 cents, a decline of 2.84 cents. For firemen, in the United States as 
 a whole, the difference has declined from 43.84 cents to 38.62 cents 
 a decrease of 5.22 cents; whereas for the Eastern District the differ- 
 ence has declined from 44.19 cents to 38.85 cents, a decrease of 
 6.34 cents; for other trainmen in the United States as a whole, 
 the difference has dechned from 47.95 cents to 39.87 cents— a 
 decrease of 8.08 cents; whereas for the Eastern District the differ- 
 ence has declined from 46.74 cents to 37.58 cents,— a decrease of 
 9.16 cents. 
 
 It appears from these figures, considering the average daily com- 
 pensation of engineers, conductors, firemen and other trainmen in 
 terms of ratios, the engineer's average daily compensation being 
 used as the base, that there has been a very slight gain of the 
 conductors upon the engineers, in the United States as a whole; a 
 somewhat greater gain of the firemen upon the engineers; and a 
 still greater gain of other trainmen on the engineers: — also that in 
 the East the gain has been less than 3 cents per dollar for con- 
 ductors, somewhat more than 5 cents in the case of the firemen, 
 and over 9 cents in the case of other trainmen. This is the gain 
 of fourteen years. It is also notable that the gain in these differ- 
 entials in the Eastern District is substantially the same as in the 
 United States as a whole— for the conductors in the United States 
 as a whole it was 2.74 cents, and in the Eastern District 2.84 cents; 
 for firemen in the United States as a whole it was 5.22 cents; and 
 in the Eastern District 5.34 cents. For other trainmen in the 
 United States as a whole it was 8.08 cents; and in the Eastern 
 District 9.16 cents. 
 
 Table VII shows that the differential between the engineers 
 and conductors for the Southern District is greater than in either of 
 the other districts, and that this has been the situation from 1897 to 
 1911;— 20.33 cents at the former date and 17.53 cents at the latter. 
 
 Table VII further shows that the differential between engineers 
 and conductors in the Western District is considerably less than 
 for the United States as a whole or for any other district. As 
 
 4| 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 75 
 
 compared with the Eastern District it was a little more than two- 
 thirds as much in 1897; 12.83 cents in the West, for each dollar 
 paid the engineers, as compared with 17.28 cents in the East; in 
 1911 it was less than two-thirds as much, 8.98 cents in the West as 
 compared with 14.44 cents in the East. 
 
 The differentials, in the Eastern District, between the engineers, 
 on the one hand, and firemen, conductors and other trainmen, 
 on the other hand (expressing the average daily compensation 
 of the latter classes in percentages of that of the engineers), is in- 
 dicated graphically by Chart E. 
 
 < 
 
 
 A third way in which the figures regarding average daily com- 
 pensation may be considered is on a percentage basis in which 
 the compensation of conductors, firemen and other trainmen are 
 taken as 100 per cent and the compensation of the engineers for 
 the years 1897 to 1911 thus compared with them. The facts 
 under this method of comparison are shown by Table VIII. 
 
 Table VIII — Per Cent Engineers' Compensation is Greater than that of Fire- 
 men, Conductors, and other Trainmen, in the Eastern District 
 
 TEAK 
 
 FIREMEX 
 
 CONDUCTORS 
 
 OTHER TRAINMEN 
 
 1897 
 
 79.19 
 
 20.80 
 
 87.77 
 
 1898 
 
 78.11 
 
 19.73 
 
 87.43 
 
 1899 
 
 78.50 
 
 19.80 
 
 86.91 
 
 1900 
 
 76.59 
 
 19.47 
 
 86.60 
 
 1901 
 
 75.36 
 
 19.80 
 
 83.33 
 
 1902 
 
 75.00 
 
 19.68 
 
 82.76 
 
 1903 
 
 75.34 
 
 18.84 
 
 79.36 
 
 1904 
 
 72.93 
 
 18.56 
 
 76.79 
 
 1905 
 
 71.12 
 
 18.86 
 
 74.12 
 
 1906 
 
 67.51 
 
 19.58 
 
 68.22 
 
 1907 
 
 68.02 
 
 19.25 
 
 64.03 
 
 1908 
 
 67.97 
 
 19.78 
 
 66.02 
 
 1909 
 
 66.28 
 
 19.83 
 
 66.93 
 
 1910 
 
 66.92 
 
 18.33 
 
 63.81 
 
 1911 
 
 63.54 
 
 16.87 
 
 60.20 
 
 From this table it appears that for the Eastern District the 
 difference between the compensation of engineers and other train- 
 
.» 
 
 f>} 
 
 76 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 men, for illustration, was 87.77 per cent of the daily compensation 
 of other trainmen in 1897— that is, the daily compensation of 
 engineers in 1897 was 87.77 per cent greater than the daily com- 
 pensation of other trainmen; in 1911 the percentage by which the 
 engineers' earnings was greater than those of other trainmen had 
 fallen to 60.20 per cent. Similarly, the earnings of engineers in 
 1897 were 79.19 per cent greater than those of firemen, and in 
 1911 only 63.54 per cent greater; those of engineers in 1897 were 
 20.89 per cent greater than those of conductors, and in 1911, 
 16.87 per cent. 
 
 These facts are shown graphically by Charts F, G and H. 
 
 Whichever wage is used as the divisor— whether that of the 
 engineers for all three differential comparisons or that of each of 
 the other groups of employes separately— the same result follows: 
 that is, that over a period of fifteen years from 1897 to 1911 the 
 engineers in the Eastern District have lost in relation to the other 
 groups. In other words, the other groups have gained upon the 
 engineers. This method of measuring the differential shows that 
 the engineers over the period of years in question have not 
 maintained the proportional difference in wages. In comparison 
 with the other trainmen, the engineers have lost 27.57 per cent; 
 with firemen, 15.65 per cent, and with conductors 4.02 per cent. 
 In other words, these groups have each gained upon the engineers' 
 compensation to the extent represented by the respective per- 
 centages. Similar relations obtain in the Southern and Western 
 districts and for the United States as a whole. 
 
 In the preceding pages, three different points of view have 
 been presented regarding average daily compensation based upon 
 figures given by the Interstate Commerce Commission, for the 
 engineers, conductors, firemen and other trainmen for the Eastern, 
 Western and Southern districts and for the United States as a 
 whole. In presenting these points of view it is not the intention 
 of the Board to subscribe to any theory concerning them. Differ- 
 ent persons will attach different values to the different points of 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 77 
 
 view. Some may hold that one should be selected to the exclusion 
 of the others. Some members of the Board in reaching their 
 conclusions have had in mind all three points of view. This 
 they considered legitimate since there is no accepted theory regard- 
 ing the relations which should obtain in the wages of the different 
 classes of labor. 
 
 In summary the following facts appear: The difference in the 
 average daily compensation of engineers in the east on the one 
 hand, and in the south and west upon the other hand, as given by 
 the Interstate Commerce Commission figures, is not great. In the 
 Eastern District the absolute differences between the engineers and 
 the conductors and firemen have been maintained. There has, 
 however, been decline in the relative differentials. In both of these 
 respects, the engineers in the east are in the same position as they 
 are in the west and south. The Board holding to the principle 
 that available information, rather than a theory, must largely 
 control their decision, have reached the conclusion that a case has 
 not been made for an advance all along the line in the compensa- 
 tion of the engineers. 
 
 They believe that in view of all the facts presented with regard 
 to the compensation of engineers, many of the rates in existence 
 give reasonable compensation for the service performed. With 
 regard to future adjustments of the wages of railway employes, 
 the Board give their judgment in a later part of this report. (See 
 pages 86 to 108). 
 
 THE PRINCIPLE OF A MINIMUM WAGE 
 
 While the Board have reached the above conclusion, the evidence 
 presented shows that for some roads and for certain classes of 
 service on other roads the compensation is too small, and they 
 have therefore taken into account the question of the minimum 
 wage which should be paid in the territory concerned. 
 
 Many trade unions have succeeded In getting the principle 
 recognized that for any class of service there should be a mini- 
 
;»_ --^v^j'^^s*«»>*=^'1r ^ 
 
 78 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 mum compensation. Throughout the United States a minimum 
 day's work is recognized for railway engineers. If the general 
 principle which has been worked out for many trades be adopted 
 for engineers, this would lead to fixing a minimum compensation 
 for each class of service. While the minimum rates established by 
 different trade unions often apply only to a city, a number of 
 them are sectional; and a few, national in their scope. There 
 are important cases of the minimum rate applying to a com- 
 petitive area.* The Eastern District of the United States may 
 be regarded as a competitive area in railroad business, and the 
 Board can see no reason why a minimum rate for engineers should 
 not obtain throughout this entire district ; especially as the district 
 has been treated as a unit in negotiating with the conductors and 
 other trainmen. 
 
 It is recognized by the Board that upon certain roads and for cer- 
 tain classes of runs, engineers' wages have undoubtedly lagged 
 behind the average compensation for the district. They have 
 therefore adopted the principle of imposing a minimum. It is 
 believed by the Board that the principle of a minimum is sound, 
 but that to say that every engineer in every class of service should 
 have the same compensation cannot be defended. Indeed, the en- 
 gineers already recognize this, since they ask that they be paid in 
 accordance with the class of service in which they are engaged. In 
 other words, the engineers recognize that the character of the 
 service should be considered in fixing the compensation. In the 
 opinion of the Board it is desirable that all of the factors which 
 enter into the nature of the service should be taken into account, 
 and that the more arduous and difficult service should have greater 
 compensation. With this point of view, the Board feel that at 
 the present time they have gone as far toward establishing uniform-" 
 ity of rates of pay as is practicable, by introducing a minimum 
 wage for each of the more important classes of service. 
 
 •The Standard Rate in American Trade Unions, by David A. McCabe, 
 Johns Hopkins Press, 1912, p. 10. 
 
 
 a f 
 
 i 
 
 H 
 
 
 j 
 
 -i 
 
 THE AWARDS 
 
 In view of the foregoing facts and considerations, the following 
 awards are made by the Board regarding the various matters 
 submitted for arbitration. 
 
 PASSENGER RATES 
 
 The minimum passenger rate for engineers shall be $4.25 for 
 100 miles or less; miles made in excess of 100, pro rata. 
 
 Overtime in through passenger service is to be computed on the 
 basis of 20 miles per hour. 
 
 All passenger overtime will be paid for at the rate of 50 cents 
 per hour and will be computed on the minute basis. 
 
 This award is without prejudice to existing higher rates on differ- 
 ent classes of engines. 
 
 ELECTRIC SERVICE 
 
 Wherever electric service is installed as a substitute for steam, 
 or is now in operation on any of the railroads parties to this arbitra- 
 tion, or on any of the tracks operated or controlled by any of them 
 as part of their system, the locomotive engineers shall have the 
 preference for the positions of engineers or motormen on electric 
 locomotives or multiple unit trains; but this right of the engineers 
 shall not operate to displace any man operating electric power on 
 any of the railroads parties to the agreement on May 1, 1912. 
 
 Since the use of electric locomotives or multiple unit trains upon 
 steam railways is in so early a stage of development, and there is as 
 yet no approximation to stable conditions, but a wide variation in 
 existing practices, the Board found themselves unable, from the 
 evidence before them, to make any uniform rules regulating rates 
 of pay and conditions of service for engineers or motormen em- 
 
 79 
 
 y 
 
^;^^1S5>>« 
 
 80 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 ployed on such trains. The minimum day's wage of $4.25 in 
 passenger service is, however, awarded ; but the day's work covered 
 by the same, both as regards hours of service and mileage covered 
 is that which now exists in the electric service on the various roads, 
 not that covered under the preceding heading ''Passenger Service." 
 This award is without prejudice to existing contracts for such 
 service. 
 
 FREIGHT RATES 
 
 The minimum freight rate for engineers shall be $4.75 for ten 
 hours or less, or 100 miles or less; miles made in excess of 100, 
 pro rata. 
 
 Overtime in freight service is to be computed on the basis of 
 10 miles per hour, and paid for pro rata on the minute basis. 
 
 Twenty-five cents per 100 miles or less is to be added for local 
 freight service, to through freight rates, according to class of engines. 
 Miles over 100 to be paid for pro rata. 
 
 Through freight rates will apply on all work, wreck, pusher or 
 helper, mine runs or roustabout, circus trains, and to trains estab- 
 lished for the exclusive purpose of handling milk; all according to 
 class of engines; overtime is to be computed on minute basis. 
 
 These awards are without prejudice to existing higher rates on 
 different classes of engines. 
 
 HELD AWAY FROM HOME TERMINAL 
 
 Engineers in unassigned freight service held 28 hours at other 
 than designated home terminals without performing service, are 
 to be paid overtime rates as follows: — 10 hours for the first 28 
 hours so held, and 10 hours additional overtime for each complete 
 24 hours so held thereafter, provided that this regulation does 
 not apply to engineers delayed by reason of compliance with the 
 law, or obstruction of the line through act of Providence. 
 
 \ 
 
 -! 
 
 -/ 
 
 »( 
 
 -/ 
 
 I 
 
 > 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 SWITCHING SERVICE 
 
 81 
 
 Engineers in switching service shall be paid at a minimum 
 rate of $4.10 per day, 10 hours or less to constitute a day's work; 
 all time over 10 hours to be paid for pro rata; overtime to be 
 computed on minute basis; time to begin when required to report 
 for duty, and to end at the time engine is placed on designated 
 track, or engineer is relieved at terminal. 
 
 BELT LINE OR TRANSFER SERVICE 
 
 The Board recognize that in Belt Line or Transfer service the 
 grade of work is clearly different from ordinary switching service, 
 and may therefore properly be entitled to a higher rate of pay; 
 but the information before the Board shows that conditions over 
 the Eastern territory vary so widely in this service, that they are 
 unable to reach an agreement regarding a fair rate for such 
 service. The Board, therefore, refer the question of Belt Line or 
 Transfer service back to the engineers and the managements of the 
 different roads for local settlements, which shall take into consid- 
 eration the difference between Belt Line or Transfer service and 
 Switching service, in fixing the rates of pay. 
 
 BEGINNING AND ENDING OP A DAY 
 
 In all classes of road service, an engineer's time will commence 
 at the time he is required to report for duty, and will conclude at 
 the time the engine is placed on the designated track or relieved 
 by hostler at terminal. 
 
 INITIAL TERMINAL DELAY 
 
 Compensation for Initial Terminal Delay is not allowed beyond 
 that involved in the rule, that pay shall begin in all cases at the 
 time an engineer is required to report for duty. 
 
 Ci t 
 
71 
 
 82 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 FINAL TERMINAL DELAY 
 
 For freight service, final terminal delay shall be computed from 
 the time the engine reaches designated main track switch connec- 
 tion with the yard track. 
 
 For passenger service, final terminal delay shall be computed 
 from time train reaches terminal station. 
 
 Final terminal delay, after the lapse of one hour, will be paid 
 for at the end of the trip, at the overtime rate, according to class 
 of engine, on the minute basis. 
 
 If road overtime has commenced, terminal overtime shall not 
 apply, and road overtime will be paid to point of final relief. 
 
 HOURS OF SERVICE LAW 
 
 Amendment of Section E of the Application of the Sixteen Hour 
 Law. 
 
 Engineers in train service tied up under the law will be paid 
 continuous time from initial point to tie-up point. When they 
 resume duty on continuous trip, they will be paid from tie-up 
 point to terminal on the follo^ving basis: For fifty (50) miles or 
 less, or five (5) hours or less, fifty (50) miles pay; for more than 
 fifty (50) miles and up to one hundred (100) miles, or over five 
 (5) hours and up to ten (10) hours, one hundred (100) miles pay; 
 over one hundred (100) miles, or over ten (10) hours, at schedule 
 rates. It is understood that this does not permit running engines 
 through terminals or around other crews at terminals unless such 
 practice is permitted under the pay schedule. 
 
 GENERAL REGULATIONS 
 
 1. Existing rates of compensation, terms of pay, and rules of 
 service, submitted to arbitration, except as modified by the above 
 awards, are to remain in force until the end of the period of award. 
 
 2. It is understood that existing rates of pay or better working 
 conditions shall not be reduced by the rates or rules hereby agreed 
 
 < 
 
 -f 
 
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 ^ 
 
 4 
 
 M^ 
 
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 ^ 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 83 
 
 upon; nor shall General Committees of Adjustment be debarred 
 from taking up with their respective managers matters not decided 
 by the Board of Arbitration. 
 
 3. The awards shall be effective as of May 1, 1912, except 
 the award regarding "Held Away from Home Terminal" and the 
 award regarding ''Final Terminal Delay/^ which awards are to 
 take effect November 1, 1912. 
 
 SUPPLEMENTARY EXPLANATION 
 
 The awards need little further explanation beyond that already 
 given. In general they may be summarized under the principle 
 that a minimum wage should obtain, and that the rules of service 
 should be as fair and uniform as practicable. 
 
 In fixing the minimum wage in passenger service at $4.25 per 
 day in the Eastern District, a higher minimum rate is established 
 than that which now exists upon all but a few of the roads. 
 
 In adopting the principle that in through passenger service over- 
 time shall be computed on the basis of 20 miles per hour a distinct 
 advance is made. While this rule is rather general in the south, 
 this is not true of the west. But since it seems a reasonable 
 basis upon which to calculate overtime in through passenger 
 service, this award is made. 
 
 In awarding a minimum through freight rate of $4.75 per day, 
 a rate is established that measurably approaches the current 
 minima on roads now paying the better rates. 
 
 The awards carry further increases of compensation to engi- 
 neers in that they classify as through freight, for the purpose of 
 pay, work trains, wreck trains, pusher or helper service, mine run 
 or roustabout, circus trains and some milk trains, — the pay for each 
 being according to class of engines. 
 
 The request of the engineers for an increase of 25 cents for 100 
 miles or less, ten hours or less, for local freight service is granted, 
 since this service involves additional work, as compared with other 
 freight service. 
 
 i 
 
 y 
 
84 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 In regard to the beginning and ending of a day^s work, it 
 seemed to the Board that there could be no possible reason why 
 an engineer's compensation should not begin at the time he is 
 required to report for duty, and continue to the time he is relieved 
 from duty. Therefore, the principle has been applied that an 
 engineer should be paid for the entire time he is on duty. 
 
 The same principle which leads the Board to make their award 
 regarding the beginning and ending of the day applies to over- 
 time. It should be given on the basis of actual time required; and 
 hence the award is made that overtime be computed upon the 
 minute basis. 
 
 In regard to Final Terminal Delay: — It has been suggested upon 
 one side that the engineer has done his duty when he reaches 
 the yard limits, and upon the other side that before he is paid 
 for any delay at the terminal he should have completed his full 
 minimum day's work in hours. It seems to the Board, however, 
 that if an engineer has made a good run and reached the entrance 
 to his terminal, the road should not be allowed to hold him 
 there indefinitely. It is clear that the duty of an engineer is not 
 complete when he reaches the switch to the terminal; he has the 
 duty of placing his train at the designated place in the terminal, 
 and the additional duty, after this, of taking his engine to the 
 roundhouse. Under favorable conditions this work would occupy 
 a portion of an hour. The Board realizes that often, during times 
 of congested business, it is not possible to get a train to its place 
 in the yard, and the engine to the roundhouse promptly. If the 
 roads do not make it possible for the engineers to complete their 
 work within the hour after reaching the yard, it is the opinion of 
 the Board that time beyond this hour should be paid for as 
 overtime. 
 
 Regarding Initial Terminal Delay : — Having made the award that 
 time should begin as soon as a man is required to report for duty, 
 the arbitrators do not in addition to this recognize that there 
 should be payment for initial terminal delay, since this time will 
 
 -I 
 
 4 
 
 1 y 
 
 » 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 85 
 
 be regularly paid for as a part of a minimum day's work; and 
 if men are held at the initial terminal for a considerable period, 
 this may result in extending the time beyond the minimum of ten 
 hours, or five hours in the case of through passenger service, and in 
 giving compensation for overtime at the end of the trip in those 
 cases in which the initial terminal delay is unreasonably long. 
 
 The award regarding the allowances made when men are held 
 away from their home terminal is in general accord with the 
 principle now in force on several of the important roads in the 
 Southern District. 
 
 y 
 
 T 
 
GENERAL CONSIDERATIONS 
 
 The Board of Arbitration might be regarded as having per- 
 formed their assigned task in making the preceding awards. But 
 the investigations of the Board have necessarily led them to 
 consider the broader aspects of the problems before them; and 
 because of this they present certain general considerations to 
 the railroad managers, to the engineers, and to the general public. 
 
 Mil 
 
 COMMISSION CONTKOL OF PUBLIC UTILITIES 
 
 Until within a few years the holders of railroad bonds and 
 stocks regarded the railroads as exclusively their private property, 
 with which they were free to do substantially as they pleased. 
 The roads were operated precisely in the same spirit as industrial 
 enterprises. The controlling idea was to give the largest return 
 to the owners of the stocks. It is of course true that many 
 railroad managers realized that they had certain public responsi- 
 bilities, but the latter were often regarded as secondary con- 
 siderations. 
 
 Only slowly and reluctantly did the majority of railroad men 
 yield to public control; and even now, some of the operators hold 
 the older attitude to be correct, although admitting that it can 
 no longer be followed in practice. The railroads, being common 
 carriers, require public franchises, and therefore have all of the 
 obligations of pubhc utilities. But the public has only gradually 
 asserted its authority over them. As early as 1869 the state of 
 Massachusetts established a railroad commission. California did 
 the same in 1876, New York in 1882. But these early com- 
 missions, and those of other states, did not attempt any large 
 control. Indeed, they did not have authority to do so. Their 
 power was usually limited to that of recommendations to the 
 attorney-general. Illinois created a railroad commission in 1871, 
 
 86 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 87 
 
 i 
 
 y 
 
 which in 1873 was given power to prescribe rates; but little in the 
 way of effective regulation was accomplished during this decade. 
 
 While in Iowa there was early legislation looking toward the 
 control of railroads, in 1897 a law was passed which went a long 
 way towards assuming control within that state. The rates were 
 to be ''reasonable,^' and the findings of the commission were to 
 be prima facie evidence of the reasonableness of the rates. The 
 state of Wisconsin in 1905 enacted an even more comprehensive 
 and effective law under which the commission was given ample 
 power to control the rates charged wathin the state. The example 
 of Iowa and Wisconsin has been followed by many other states. 
 
 The Interstate Commerce Commission, when it was created in 
 1887, had the power of investigation; but it could go no further 
 than to recommend reparation in case of just complaint. It 
 was, in fact, a purely advisory body. Not until 1906 was the 
 law so amended by Congress as to give to the Interstate Com- 
 merce Commission the power to fix maximum rates. In 1910 
 the Commission was given the further power to suspend any 
 increase of rates pending investigation. Thus, it is only six 
 years ago that the national government has asserted its broad 
 authority to control the rates which railroads may charge in 
 interstate commerce. 
 
 LABOR ORGANIZATIONS AND WAGES 
 
 Under the old regime, in which the railroad operators scarcely 
 recognized the fact that the railroads were public utilities, rail- 
 way labor controversies were usually conducted like those of the 
 great industrial corporations. Each side made the best bargain 
 that was practicable. So long as railroad labor was unorganized, 
 the advantage in wage bargaining was strongly with the railroad 
 operators; and this is still the situation in regard to those classes 
 of labor that are unorganized or poorly organized. Gradually, 
 however, the different classes of railroad employes began form- 
 ing organizations. One of the earliest of these was the Brother- 
 
88 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 I 
 
 hood of Locomotive Engineers, founded in 1863, now numbering 
 some 72,000 members, and having more than two hundred wage 
 arrangements or contracts with the railroads in North America. 
 Early in its history this organization included among its members 
 a large proportion of the locomotive engineers of the United 
 States, and ultimately acquired a strength in wage bargaining 
 comparable with that of the operators. The latter, however, 
 did not recognize this fact until after a number of serious strikes. 
 The last of these great strikes was that upon the Burlington road 
 in 1888. This strike, according to the present Grand Chief of 
 the Brotherhood, cost the engineers two millions of dollars and 
 the railroads several times that amount. 
 
 There have also been conductors' strikes, firemen's strikes, 
 trainmen's strikes, etc. While the Burlington strike was lost 
 by the engineers, the enormous cost both to the road and to the 
 men was such as to make each side reluctant to resort to the 
 settlement of labor controversies by means of industrial war- 
 fare. 
 
 At the present time, when the railroads as public utilities are 
 subject to the Interstate Commerce Commission and to the State 
 Commissions in so many respects that some of the railroads feel 
 that the power of the government over their property is greater 
 than that of the operators themselves; and when the railroads 
 are subject to the dominant pressure of public opinion, the oper- 
 ators generally feel that they can no longer justify the settle- 
 ment of a labor controversy by a strike. The strongly organized 
 employes have from time to time asked and obtained higher 
 wages. The facts presented to the Board show that the loco- 
 motive engineers have had several increases in wages since 1900, 
 especially in 1903, 1907, and 1910. It is not to be understood, 
 however, that the advances were the same on each of the rail- 
 roads, nor that they took effect at precisely the same time, nor 
 on all the railroads; but that in certain years during this period 
 there has been a general advance in wages, the particular adjust- 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 89 
 
 ment being made in each case by conferences between the rail- 
 way officials and local committees of the engineers. 
 
 In the opinion of the Board, the balance of power in the con- 
 trol of wages, which was first with the railroads has now passed 
 to organized railway labor. The railroad operators, under the 
 control of national and state commissions, and under the control 
 of public opinion, are weaker than strongly organized unions. The 
 latter, without any control through commissions, are of course 
 also affected by public opinion, but not so directly. 
 
 -^ 
 
 THE SERIOUS NATURE OF A CONCERTED STRIKE 
 
 Never in the history of the United States has there been a 
 concerted strike on all the railroads of a great section of the coun- 
 try. The strikes have usually been upon individual roads, al- 
 though in some cases strikes have taken place upon a number 
 of roads at the same time. The present arbitration, involving 
 as it does a concerted movement affecting fifty-two railroads, 
 is therefore a new phase of development. 
 
 On January 27, 1912, the locomotive engineers made uniform 
 requests upon all the railroads in the Eastern District. The 
 railroads affected by these demands had in 1910 an aggregate 
 of 66,876 miles of main track, as compared with 266,185 for the 
 whole United States, or 25.1 per cent of the total mileage. These 
 railways represent nearly 40 per cent of the aggregate revenues 
 and expenses of all the railways of the United States; from 42 to 
 47 per cent of the traffic; something over 40 per cent of the total 
 number of employes, of the number of engineers, and of the com- 
 pensation of these employes. The population of the great region 
 immediately affected by this movement is over 38,000,000, as 
 compared with approximately 54,000,000 for the remainder of the 
 country — or about 42 per cent of the total population. If we 
 assume that the wealth of the region is in proportion to the amount 
 of railroad traffic and to the density of population, it may be 
 fairly concluded that the territory affected by this demand repre- 
 
 i- r » 
 
 < 
 
wmmt. 
 
 tkmnfiM'B'^VMIg^^M 
 
 mssm 
 
 ■MiJllU i 
 
 90 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 sents at least four-tenths of the wealth of the country. As we 
 have seen, the managers, after several conferences with the loco- 
 motive engineers, refused to accede to the requests of the engineers. 
 The question of a strike was then submitted to the men. The 
 vote showed 93.3 per cent of the men in favor of a strike, provided 
 a satisfactory settlement could not be made. All that was nec- 
 essary^ for a strike to take place was the assent of the Grand 
 Chief Engineer in conjunction with the general committees of 
 the different railroads. This assent is necessary, for if a strike 
 is voted by the members of the Brotherhood, the Grand Chief 
 has the veto power. 
 
 At the hearings of the arbitration it seemed to be the opinion 
 of the parties concerned that if the engineers had declared a 
 strike, it would have effectively tied up the railroads in the East- 
 ern District. 
 
 An effective strike on these railroads, extending through an area 
 that includes all of New England, New York, New Jersey, Penn- 
 sylvania, Delaware, Maryland, Ohio, Indiana, the lower Peninsula 
 of Michigan, much of lUinois, and a small part of West Virginia, 
 would have had most disastrous effects upon the commerce and in- 
 dustry of this entire region, to say nothing of its effects upon the 
 remainder of the country. Indeed, it would be difficult to exag- 
 gerate the seriousness of such a calamity. While no statistics on the 
 subject are available it is safe to say that the large cities of the 
 East, if the strike had taken place, would have found their supply 
 of many articles of food exhausted within a week. Of so impor- 
 tant a commodity as milk the cities have not usually more than 
 a day's supply. Many of the people in the cities would therefore 
 have been short of food if the strike had taken place. Assuming 
 that no damage were done to their property, the loss of the 
 railroads through cessation of business would have been enormous. 
 The total operating revenues of the fifty-two railroads concerned 
 amount to over twenty million dollars a week, and the net operat- 
 ing revenue to nearly seven million dollars a week. The loss to 
 
 -i 
 
 < ; y 
 
 4 
 
 5 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 91 
 
 the engineers would likewise have probably run into the millions. 
 Their present payroll amounts to over $800,000 per week. (Rail- 
 road Exhibit 67 A.) 
 
 But the loss to the public would have been vastly larger than 
 that of both parties to the conflict. Of necessity, building oper- 
 ations and many other lines of employment would have ceased 
 in whole or in part; for not only are the people of the great cities 
 dependent upon the railroads for their daily food-supply, but the 
 great industries depend on the railroads daily for their materials, 
 and a week's failure on the part of the railroads to deliver mate- 
 rials to the manufacturers would have made it necessary for many 
 to shut down even if the owners had wished to continue them in 
 operation. But in any case many of the owners would have been 
 compelled to shut down their plants, inasmuch as they could not 
 afford to continue manufacturing articles of commerce which they 
 had no means of transporting to the places of sale. 
 
 It thus appears if a strike of railway employes were successful 
 in stopping traffic, its effects upon the industry of the country 
 would be analogous to those of a general strike, simply because 
 a great number of other industries could not continue if the rail- 
 roads ceased to operate. Such a strike would have at least the 
 partial effect of a universal strike, forced upon the public, and 
 even the willing workers in other branches of industry. In cer- 
 tain general strikes of some foreign countries there have been 
 exceptions made of certain employments necessary to human exis- 
 tence; but in a suspension of business through stoppage of all 
 transportation there would be no exception. 
 
 A case in the United States somewhat analogous to a railway 
 strike for an entire region was the anthracite coal strike in 1902, 
 where the stoppage of coal supply to a great commercial and man- 
 ufacturing interest was deemed a calamity which compelled the 
 intervention of the President of the United States. However 
 the stoppage of the anthracite coal supply was not nearly so seri- 
 ous as would be the stoppage of railway traflSc, for bituminous 
 
 Ci ^ 
 
 i 
 
92 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 93 
 
 coal can in an emergency in large measure take the place of anthra- 
 cite; but there is nothing under modem conditions that can take 
 the place of the railroads for transportation. 
 
 In short, a general strike on the railroads for a great section 
 of the country would have paralyzed the industries of that section; 
 and, even if food were obtainable, millions of laboring people would 
 have felt the pinch of want. If a strike of the character indi- 
 cated lasted only for a single week, the suffering would have been 
 beyond our power of description; and if it had continued for a 
 month, the loss, not only in property, but in life, would have 
 been enormous. Also, as usual in such cases, the disaster would 
 have fallen most heavily upon those least able to bear it. While 
 the rich might have felt themselves poorer because of depleted 
 bank accounts, they would have had sufficient for the necessities 
 of life. The middle classes would have been injured financially; 
 but still they could have subsisted. The working classes would 
 have suffered acutely. They would have been the ones to feel 
 soonest, longest, and most intensely the unspeakable calamity of 
 a general railroad strike. 
 
 At first thought it may appear that this picture is overdrawn. 
 But it should be remembered that never has a railroad strike 
 affected an entire region of the United States. There have been 
 strikes on particular railroad systems. In such cases the neigh- 
 boring roads took care of the more pressing necessities of the 
 great terminal centers, and there was no acute suffering except 
 at minor points served exclusively by one railroad system. 
 
 THE GENERAL RAILWAY STRIKE IN FRANCE 
 
 A general strike for the eastern territory would put the eastern 
 states in much the same situation as France was placed two 
 years ago, when there was a general strike on the railroads of 
 that country. 
 
 On October 12, 1910, the National Federation of Railway Em- 
 ployes of France and the Federation of Unions of Railway Engi- 
 
 -( 
 
 v 
 
 neers and Firemen of France called a general strike on all the rail- 
 ways of the country. Immediately afterwards work came nearly 
 to a standstill on the northern and western lines and the next day 
 the strike extended to a number of other lines. In ordering this 
 strike the men asserted it was their legal right to cease work. 
 
 At various places during the strike there were acts of violence, 
 " trains were held up, signals destroyed, rails ripped from the ties, 
 telephone and telegraph wires cut." Many cities and towns were 
 threatened with famine. There was immediately a large increase 
 in the price of food. In this respect Paris fared better than some 
 of the smaller towns, because of the prompt use of the Seine in 
 bringing in food from the sea. 
 
 The government appreciated at once that if this general railway 
 strike were allowed to continue, the nation would be paralyzed. 
 Therefore upon the very day that the general strike was declared, 
 the Ministers, using their full authority under military laws, 
 called for the mobilization of the strikers, commanding them the 
 following day to join the colors for three weeks* military training. 
 The military duty to which the employes were summoned con- 
 sisted in the maintenance of the railways in normal working order 
 and in obeying the orders of their official superiors. Disobedience 
 would entail the punishment provided for by military law. The 
 government announced that the roads would be operated and 
 the people of Paris would be fed. 
 
 So effective was the action of the government that J)y the day 
 following the strike a sufficient number of men had obeyed orders 
 so that many passenger trains were running into Paris. 
 
 The strike of the railway men was regarded by the public in 
 general as an act of criminal violence; indeed the Ministry stated 
 that the strike put the country in a condition of civil war. The 
 action of the government with the prompt support of public opin- 
 ion, led the railway labor organizations on the 18th of October 
 to declare the strike terminated. Thus the total duration of the 
 attempt for a general railway strike was six days. 
 
 S' 
 
4 
 
 ifrfBri 
 
 94 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 95 
 
 In the later discussions in Parliament the principle advocated 
 by M. Aristide Briand and the Ministry was accepted, "that 
 public servants must be required to discharge their duties regu- 
 larly and without interruption." Indeed, so imperative was it 
 considered for the welfare of France that the railways be oper- 
 ated that in the discussion in the Chamber, October 28, M. Briand, 
 declared that "if the government had not found in the law that 
 which enabled it to remain master of the frontiers of France, and 
 master of its railways, which are indispensable instruments of 
 the national defense, if, in a word, the government had found 
 it necessary to resort to illegality, it would have done so."* This 
 he regarded as defensible under the doctrine Salus publica su- 
 prema lex. 
 
 THE EASTERN DISTRICT AND FRANCE COMPARED 
 
 In connection with this arbitration it should be remembered 
 that the population in 1910 of the territory concerned was 
 more than 38,000,000, whereas the population of France in 1911 
 was 39,601,509. The great congested centers of the Eastern 
 District are much larger and more numerous than those of 
 France. The figures in the United States as given by the census 
 of 1910, and in France for 1911, are as follows: New York City, 
 population 4,766,883, is larger than Paris, 2,888,110; Philadelphia, 
 1,549,008, is nearly three times as large as Marseilles, 550,619; 
 Boston, 670,585, is considerably larger than Lyons, 523,796. In 
 France the only other two cities which exceed 200,000 in popula- 
 tion are Bordeaux, 261,678, and Lille, 217,807; whereas in the 
 eastern part of the United States, there are three other cities 
 that exceed 500,000 — Cleveland, Baltimore, and Pittsburgh; two 
 that exceed 400,000 — Detroit and Buffalo; three that exceed 300, 
 000 — Cincinnati, Newark and Washington; and four that exceed 
 200,000, — Jersey City, Indianapolis, Providence and Rochester. 
 
 The area of the country involved in this arbitration is one and 
 
 ♦ The New International Year Book, 1910, pp. 269-271. 
 
 s- 
 
 one-half times as great as that of France. The main track mileage 
 of the Eastern District is 66,876 miles, whereas that of France 
 is only about 36,000. 
 
 Thus the comparison of a strike on the railroads of the Eastern 
 District with a general railroad strike in France is justifiable from 
 every point of view, — that of the mileage of the railroads concerned, 
 that of population as a whole, the size of the cities, and the terri- 
 tory involved. 
 
 THE PUBLIC INTEREST PARAMOUNT 
 
 It is evident therefore that for a great section of the United 
 States a railroad strike can no longer be considered as a matter 
 which primarily affects the railroad operators and employes. 
 It does affect them and affects them seriously; but the public 
 is far more deeply concerned. Indeed, the interests of the public 
 so far exceed those of the parties to a controversy as to render 
 the former paramount. To this paramount interest, both the 
 railroad operators and employes should submit. It is therefore 
 imperative that some other way be found to settle differences 
 between railroads and their employes than by strikes. 
 
 If in the United States there were a general strike for the eastern 
 territory comprising as we have seen two-fifths of the population 
 and approximately half the wealth of the country, every effort 
 would undoubtedly be made to terminate the strike promptly 
 and to operate the railroads, even though it became necessary 
 for the President of the United States and the governors of the 
 states to act in concert to the extreme limits of the laws and their 
 reserve powers, which at times of national emergency are large. 
 The military forces, both state and national, would undoubtedly 
 be available if necessary to prevent any interference with the men 
 who desired to work; but it is not easy to see how more than a 
 fraction of the number of engineers necessary to run the railroads 
 could be secured promptly. Hence the probable consequences 
 of an effective engineers' strike would be those already described. 
 
 **-( 
 
h^mmri^c-i^^s !r::2i^ 
 
 --r'-i=,..^ .>*.- yy-;t'^-j ^"v.^lJ<f'M-^-'^-<; *^'-'^-r^V'"''^V^'^ 
 
 96 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 THE INCREASING POWER OF ORGANIZED LABOR 
 
 It appears clear, therefore, to the Board that in the future a 
 controversy between the railroads of a great region of the United 
 States and organized labor should be settled in some other way 
 than by strike. If this position be sound, and the railroad opera- 
 tors accept it, they are manifestly helpless when labor organiza- 
 tions ask for higher wages and threaten that if their requests are 
 not granted they will proceed to strike. If the above is a correct 
 diagnosis of the situation, the Board doubt whether the railroad 
 employes fully realize their power. But if they have not realized 
 it fully, they have realized it sufficiently to take advantage of the 
 situation, and to vote a strike for the Eastern District. 
 
 The recent progress of the concerted movement very clearly 
 shows the developing sense of power of the railway employes. 
 Until 1902, in the settlement of difficulties between the employes 
 and the railroads, usually no larger unit than a railroad system was 
 concerned. If a settlement could not be made for a railway system 
 there might be a strike, and while some of such strikes led to great 
 disasters, they did not result in national calamities. The con- 
 certed movement was first used by the conductors, trainmen, and 
 yardmen. These employes have taken part in four concerted 
 movements, — two of them in the West (in 1902 and in 1907); 
 in the East there was a concerted movement of the same classes 
 of employes in 1910; a concerted movement in the South has 
 just been terminated. For the engineers in the West, there have 
 been two concerted movements, — the first in 1906, the second 
 in 1910. In the Southern District there have also been two con- 
 certed movements of engineers, one in 1907 and another in 1911. 
 The present arbitration represents the result of the first concerted 
 movement of the engineers in the East. The firemen of the 
 West made concerted movements in 1907 and 1909, and a third 
 concerted movement has now been begun by the firemen in the 
 Eastern District. Early in 1908 there was a concerted movement 
 
 4 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 97 
 
 of engineers, firemen, conductors, and trainmen on all the West- 
 em roads, with reference exclusively to rules covering compensa- 
 tion of men tied up under federal and state laws. 
 
 It thus appears that the first concerted movement was made 
 in 1902; that until 1906 no other concerted movement was made; 
 and that twelve important concerted movements have been made 
 between 1906 and the present time by various classes of railway 
 employes in the United States. An advantage of the concerted 
 movement is that, affecting as it does an entire section of the coun- 
 try, the employes find that the railroad officials will settle either 
 directly through mediation, or by arbitration, rather than permit 
 a strike; in short, the operators in such cases have not taken the 
 responsibility of forcing a wage settlement by strike. 
 
 In the case under arbitration, as already indicated, the only requi- 
 site still lacking for a strike, sanctioned by a vote of 93.3 per cent of 
 the engineers, was the approval of the Grand Chief of the Brother- 
 hood of Locomotive Engineers in conjunction with the committee 
 having the matter in charge. It lay within the power of this group 
 of men to decide whether or not a strike should take place. 
 It is true that the power was not exercised, and that steps were 
 taken which resulted in arbitration; but the threat of this power 
 clearly appeared. From the view point of the public it is an intol- 
 erable situation when any group of men, whether employes or 
 employers, whether large or small, have the power to decide that 
 a great section of the country as populous as all of France shall 
 undergo great loss of life, unspeakable suffering, and loss of prop- 
 erty beyond the power of description, through the stoppage of a 
 necessary public service. This, however, is the situation which 
 confronts us as a nation. It certainly is sufficiently grave to justify 
 the Board in giving most serious consideration to the solution of 
 the problem of determining what shall be the obligations of all of 
 those upon whom devolves the continuous operation of our public 
 utilities, and particularly the railroads. 
 
'nur-r^S-y 
 
 "n-vtiWW^!^ 
 
 98 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 LIMITATIONS OF THE PRESENT BOARD 
 
 As we have already pointed out in the body of our report, a 
 Board constituted like the present one has limitations. They 
 have not the machinery for convenient consideration of the mat> 
 ters at issue. Without delays which would have appeared unreas- 
 onable — which, indeed, would have postponed the awards far 
 beyond the time at which the Board were expected to announce 
 their findings — it would have been impossible to give the study that 
 might have led to the formation of a complete and unqualified 
 judgment on all points. Under the circumstances, therefore, 
 which afifect the present extremely complex case, the Board have 
 made all reasonable expedition in reaching conclusions upon the 
 facts available and the arguments presented. 
 
 The members of the Board are fully conscious of the grave impor- 
 tance of the case before them, whether it be measured in terms of 
 the amount of money involved or determined by the far-reaching 
 effects that a general railroad strike on the Eastern railroads would 
 have upon the well-being of the people in a large section of the 
 country. The amount directly at issue is estimated at several 
 millions of dollars; and indirectly much more. This amount of 
 money, while very large, is far less important in the eyes of 
 the Board than the public interests involved. 
 
 The Board have resolved that their award shall take effect on 
 the first of May, 1912. By virtue of the agreement under which 
 the parties accepted arbitration, the award will continue for one 
 year from that date, subject thereafter to thirty days' notice of 
 discontinuance by either party. If the work of the Board leads 
 merely to a truce for a year, its members will feel that they have 
 accomplished comparatively little; if, on the other hand, their 
 work points the way to a permanent solution of controversies 
 between capital and labor engaged in the operation of our public 
 utilities, they will feel that their efforts have been abundantly 
 repaid. 
 
 V 
 
 -f 
 
 t^ 
 
 ■J 
 
 \ 
 
 I 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 THE ERDMAN AND CANADIAN INDUSTRIAL DISPUTES ACT^ 
 
 99 
 
 Already there is a growing realization that labor difficulties 
 upon railroads should not be settled by war. The first great step 
 toward the settlement of railway disputes in some other way than 
 by strikes was made when the Erdman Act, already referred to, was 
 passed in June, 1898, having been actively supported by the rail- 
 way brotherhoods. Under the provisions of this act, as amended, 
 when there is a dispute between the employes and the railway 
 companies which is likely to lead to a strike or which has already 
 led to a strike, upon the application of either party it becomes the 
 duty of the Presiding Judge of the United States Commerce Court 
 and the Commissioner of Labor to put themselves in communi- 
 cation with the contending parties and use their best efforts 
 through mediation and conciliation amicably to settle the con- 
 troversy. If efforts at mediation are unsuccessful, they shall 
 at once endeavor to bring about an arbitration of the controversy, 
 in accordance with the provisions of the act. If this be agreed to, 
 the arbitrators shall be three in number, one to be named by each 
 of the parties concerned and the third by the other two within 
 five days. When they are unable to agree upon a third arbitrator 
 within this time, he is designated by the before-named officers 
 of the government. Arbitration proceedings are to begin within 
 ten days of the time of the completion of the board and their 
 findings must be made within thirty days from the appointment 
 of the third arbitrator. Pending the arbitration the status quo 
 is maintained. No employe shall quit service within three months 
 because of dissatisfaction with the award, nor shall an employer 
 discharge an employe for the same reason during a like period. 
 An award continues in force for one year after the same has gone 
 into operation, and no new arbitration upon the same subject 
 
 *The facts concerning the Erdman Act and the Canadian Industrial Dis- 
 putes Act, contained herein, are derived mainly from an article by Charles 
 P. Neill, on Mediation and Arbitration of Railway Labor Disputes, in 
 Bulletin No. 98 of the United States Bureau of Labor, Washington, 1912, 
 pages 1-81. 
 
 J 
 
r.-'Y- 
 
 .AiwtaMaiaaad«BiM«dH 
 
 100 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 can take place within that year. The only escape from accepting 
 the award of the arbitrators is an appeal to the courts, which 
 appeal must be made upon matters of law within ten days from 
 the time the award is made. 
 
 That the Erdman Act marks a great advance in the settlement 
 of railroad labor disputes is shown by the increased frequency 
 with which the Act has been invoked. Within a year after the 
 passage of the Act a fruitless attempt was made to utilize its pro- 
 visions, but nearly eight years elapsed before another case occurred. 
 In contrast with this, during the past five years the act has been 
 invoked in forty-six cases, of which only eleven were arbitrations. 
 Thus the method of mediation has been much more frequently used. 
 
 Since the law was passed there has been no case of a great rail- 
 road strike; and although the merits of the Erdman Act are great 
 indeed, certain defects in it have become apparent. 
 
 In the cases of mediation there is no attempt on the part of 
 the mediators to make a judicial decision wholly upon the basis 
 of equity and justice. The primary purpose is to bring the parties 
 together and avert a strike. This is accomplished by getting the 
 parties sufficiently near together that suggestions may be made 
 to which both agree. While whenever mediation is successful a 
 strike is averted, the adjustments cannot always be regarded 
 as based solely upon the merits of the case. Where the case 
 is one of arbitration under the Erdman Act the results in 
 the above respects are usually very similar to those of media- 
 tion. The arbitrators are three in number. Each side is repre- 
 sented by one arbitrator. It rests therefore upon the third arbi- 
 trator to bring the other two arbitrators as nearly as possible 
 together, and if he cannot do so he must decide between them. 
 This is accomplished by spfitting differences, and the case may 
 be adjusted without adequate investigation of the facts involved, 
 in consequence of which the award may not rest upon a basis of 
 equity. 
 
 This method of splitting differences is very unsatisfactory, but 
 
 -.A 
 f 
 
 < 
 
 A 
 
 -I 
 
 I 
 
 fv 
 
 ^ 
 
 i 
 
 i 
 
 f * 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 101 
 
 it is an inevitable result of mediation or arbitration under the 
 Erdman Act. Feefing in advance that a mediation or arbitration 
 will result in giving only a part of what they ask, the men make 
 maximum demands regarding compensation, rules of service, etc., 
 with the expectation that these demands will not be fully awarded. 
 Upon the other hand, the railroad officers, appreciating the tend- 
 ency of mediators and arbitrators to spfit differences, make only 
 minimum concessions or none at all. 
 
 By the above statements it is not meant to assert that the awards 
 that have been made under the Erdman Act have not been reason- 
 ably fair, but that in regard to this matter the Board do not have, 
 nor is it possible for them to obtain, adequate knowledge upon 
 which to formulate a judgment. Cases before the Interstate 
 Commerce Commission, no more complicated than those which 
 have come before the mediators or arbitrators under the Erdman 
 Act, have required a year or more before a decision was made; 
 while the Erdman arbitrators are compelled to make a finding in 
 thirty days; and this notwithstanding the fact that the Interstate 
 Commerce Commissioners have a large expert staff, including a 
 number of examiners who act for them in taking evidence. 
 
 The Canadian Industrial Disputes Act, passed in 1907, ia 
 broader than the Erdman Act in that it provides for the settlement 
 of disputes affecting not only railroads, but industries in general. 
 This act is a distinct advance over the Erdman Act in that no 
 strike or lockout can be made by a party to a controversy until 
 the difficulties have been investigated and recommendations made. 
 For each case of arbitration a separate board is appointed. Of 
 these, there had been 109 to the end of 1911. During the five 
 years of the existence of the law, from 1907 to 1911 inclusive, 
 there have been only twelve industrial disputes in which strikes 
 have not been averted or ended; and this for all of Canada for 
 all industries. In a given case the board consists of three members 
 appointed by the Minister of Labor, one from each of the parties 
 to the controversy and the third upon the recommendation of 
 
 i r 
 
102 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 
 the two members; or if they fail to agree upon a recommendation 
 within five days, the Minister is free to appoint the third member, 
 who shall be the chairman of the board. Boards are appointed 
 upon the application of either side when a lockout or strike is 
 likely to be declared. Thus the Canadian Industrial Disputes 
 Act has several features which are like those of the Erdman Act. 
 Some of its defects are also identical with those of the Erdman Act. 
 These are the constitution of the board of three members, only 
 one of whom is in a non-partisan position, and the creation of a 
 separate board for each controversy. 
 
 It was an appreciation of these defects of the Erdman Act that 
 led to the method adopted in the appointment of this board of 
 arbitration. The questions involved were so many and so impor- 
 tant that it was wholly impossible for any board to make an adjudi- 
 cation of them in thirty days. Moreover, the responsibility which 
 ultimately would have rested upon a third member of an Erdman 
 arbitration board was too great to impose upon any one man. 
 These difficulties were avoided by an agreement of the contending 
 parties for arbitration by a board of seven members, outside of 
 the Erdman Act, two of whom were to represent the railroads 
 and the employes respectively. This left five who were in no 
 sense representatives of either side. Also there was no limit 
 placed upon the time which the board might take for its work. 
 Thus the responsibility of making the award on questions where 
 all could not be brought into agreement was shared by five men. 
 A large amount of time was taken for hearings, investigations, 
 and findings. At the outset the Board had no scientific machinery. 
 This defect it remedied as best it could by the immediate appoint- 
 ment of a secretary and statisticians. The Board is composed 
 of men who have other important duties, and therefore have 
 been able to give only a part of their time to the work of arbitration. 
 Finally, since the award is to be effective only for one year, it 
 was felt that all possible expedition should be used even if the 
 awards were less satisfactory than they might have been, had the 
 
 
 I 
 
 f 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 103 
 
 Board been composed of men giving their entire time to this work, 
 with the assistance of a permanent expert staff. 
 
 In summary, regarding the Erdman Act, the following may 
 
 be said. 
 
 The clause of the Act which provides that employes shall not 
 withdraw or be dismissed within three months on account of dis- 
 satisfaction with an award is admirable, giving reasonable free- 
 dom to both sides, yet preventing concerted action which would 
 nullify the award. 
 
 The provision of the Act which requires an award to be made 
 within thirty days from the time that the third arbitrator is 
 appointed makes it impossible for any adequate investigation 
 to be made regarding all the facts in any complicated case, such 
 as that before this Board for arbitration. 
 
 The danger of a strike in the case of the public utilities has 
 been greatly lessened by the Erdman Act, but has not ceased to 
 exist. The operation of the Act is to settle a dispute rather than 
 to adjudicate a controversy. 
 
 But the most fundamental defect of the Erdman Act is that 
 the interests of the public are not guarded by it. In the Eastern 
 and Western railway cases* the claims for an advance of freight 
 tariffs were not only presented by the railroads but supported 
 by the employes. Manifestly it is advantageous to both employ- 
 ers and employes to have the railroads get a sufficient income so 
 that they will be able to meet the requests of the employes for 
 increased compensation. For the public utilities, however, there 
 are not only two parties to the controversy — the railroads and 
 the employes, — ^but a third, the public. As we have already men- 
 tioned, the railroads, one of the parties to the controversy, are 
 subject to national and state commissions, which commissions 
 are entrusted with the special duty of protecting the public inter- 
 ests. Advances in rates cannot be made without the consent 
 
 ♦ Interstate Commerce Commissions Opinion, 1508 and 1509. 
 
104 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 of the proper commissions. The railroads are not only subject 
 to the commissions in rates, but are subject to them in regard 
 to maintaining adequate service. The employes of the railroads are 
 not subject to control through commissions; although in common 
 with all organizations they are influenced by public opinion. 
 
 9 
 
 I 
 
 
 WAGE COMMISSIONS THE REMEDY 
 
 The above-mentioned disparity of status suggests the creation of 
 national and state wage commissions or labor commissions, which 
 should exercise functions regarding labor, engaged at work in 
 public utilities, analogous to those now exercised with regard to 
 capital by the public service commissions already in existence. 
 If wage commissions were established, doubtless there would have 
 to be some degree of cooperation between the two kinds of 
 commissions. Much of the statistical information useful to the 
 public service commissions would be valuable to the suggested 
 wage or labor commissions. Many investigations might be car- 
 ried on jointly by both. But some of the questions to be dealt with 
 are so different that it would probably be better to have separate 
 wage conamissions or labor commissions, than to impose upon 
 existing public service commissions, already over-burdened with 
 important duties, the additional heavy task of adjusting labor 
 controversies and determining what constitutes a fair wage for 
 each class of railway employes. 
 
 If such commissions as are suggested should be created, they 
 must be provided with expert and statistical aid to enable them 
 to undertake elaborate investigat'ons of the facts bearing upon 
 the economic condition of railway employes. When such com- 
 missions have been in existence for several years, they will have 
 in their possession the necessary facts upon which to make awards 
 in individual cases; or, at all events, they will have the machinery 
 and equipment necessary for gathering the facts promptly and 
 interpreting them accurately. There is no reason why such a 
 
 
 lasai 
 
 1^1 
 
 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 105 
 
 commission could not proceed in the case of a labor difference with 
 the same promptness that existing commissions exercise in the 
 matter of railway rates. 
 
 If the suggestion for wage commissions be adopted, many excel- 
 lent features and provisions of the Erdman Act, the Canadian 
 Industrial Disputes Act, and acts for conciliation and arbitration 
 in other countries, might be embodied in the law creating them. 
 The discussion of the details of such a law would not be in place 
 here. But it seems to the Board that the proposal made would 
 meet the fundamental defects which have been noted in connection 
 with the Erdman Act. 
 
 Instead of having a board for each case, whose members have 
 other duties and wholly inadequate time in which to perform the 
 work, there would be a continuous board, the members of which 
 give their entire time to the adjustment of wages. This board 
 would have a corps of experts and statisticians; it would be allowed 
 sufficient time to investigate a case fully. Thus an award would 
 be made upon the basis of merit instead of the basis of securing 
 a settlement. If desirable, that feature of the Erdman Act and 
 Canadian Industrial Disputes Act might be added, which provides 
 for one representative from each party to the controversy. If this 
 were done, and the board consisted of five or more members, it 
 would have a permanent majority and a shifting minority. It 
 can be urged in favor of this feature that each representative 
 would intimately know the facts regarding his side of the case 
 and the point of view of those represented. A board thus con- 
 stituted would have a permanent controlling center interested ia 
 securing equity, which might be assisted in its work by repre- 
 sentatives of each of the parties to the controversy. 
 
 Above all, the wage commissions proposed would represent the 
 public. They would work in cooperation with the Interstate 
 Commerce Commission and thus secure to railway employes just 
 wages; and this without regard to whether the employes are fully 
 organized. Under the existing situation, well organized railway 
 
i 
 
 106 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 labor, illustrated by engineers, firemen, conductors, trainmen, etc. 
 receive consideration from railroads not accorded to the classes 
 of labor that are not so well organized. 
 
 It does not follow from the above that advances in pay to 
 organized labor have been too frequent or too large, but merely 
 that the question of an advance for a given class of labor engaged 
 in work upon the public utilities should not depend upon organi- 
 zation, but upon justice. Especially for the public utilities is 
 it important that labor should have a just wage, and if the exist- 
 ing wages are not adequate they should be increased. If a just 
 increase in wages places the public utilities in a position that does 
 not enable them to secure a fair return upon capital invested and 
 maintain a proper reserve they should be allowed to increase their 
 rates until they are in that position. In short, the public utilities 
 should not impose an undue burden upon the public by paying 
 higher wages than are reasonable, nor should the public receive 
 services from the railroads at a rate so low that labor does not 
 receive fair compensation and capital its fair return. How impor- 
 tant this statement is will be understood when it is appreciated 
 that, of the gross earnings of the railroads of the United States 
 as a whole, over 42 per cent goes to labor (excluding officials) and 
 on the fifty-two railroads involved in this controversy, over 45 
 per cent. 
 
 If the arguments above presented are sound, there seems to 
 be no way to obtain justice for the three parties concerned, — the 
 railway companies, the railway employes, and the public, — except 
 through a permanent board which shall have continually before 
 them the problem of the adjustment of wages. 
 
 LIMITATION OF RIGHT OF FREE CONTRACT 
 
 It is believed that if the plan of wage commissions were adopted, 
 it is probable that railway employes would not have a just ground 
 for a strike ; and this fact combined with the power of the law and 
 
 < 
 
 i 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 107 
 
 public opinion would render a strike extremely unlikely in the 
 future. If, notwithstanding the existence of a wage commission, 
 the men engaged in train service struck, the question would arise 
 regarding the legal authority of the government to compel employes 
 to remain at work. Is it unreasonable to ask that men in the 
 service of public utilities shall partially surrender their liberty in 
 the matter of quitting employment, so that the nation as a whole 
 may not suffer disproportionally? 
 
 While the courts have uniformly recognized the principle of 
 free contract and have always refused to compel continuance of 
 employment on the demand of either party, several states have 
 enacted laws prohibiting engineers from leaving their trains at 
 any other place than at the end of their regular runs.* 
 
 The courts have also discussed the position of employes and 
 carriers in some of the so-called boycott cases, and it has been 
 held that the cars must continue to move and traffic must con- 
 tinue to flow. Any interference with traffic, except that which 
 is the incidental result of the exercise of a lawful right, as the ceas- 
 ing of employment for the betterment of one's own condition, is 
 unlawful; and therefore sympathetic strikes and boycotts in the 
 case of railroad carriers have been condemned. This, however, 
 does not reach the present difficulty, where the pubhc is so depend- 
 ent on the continuous service of a certain class of railroad em- 
 ployes that the concerted abandonment of their work would bring 
 about a paralysis of all industrial life. 
 
 While it is clear from the pubhc point of view that a concerted 
 strike of railway employes for a great region would be as intoler- 
 able as a strike of the postal clerks; on the other hand, the position of 
 the employes is a very natural one. They feel under existing 
 conditions that the power to strike is their only weapon of defense 
 against employers and the only means by which they can enforce 
 a betterment of their conditions of service. They realize too, 
 
 * Report of the Industrial Commission, vol. 5, pp. 132-135. 
 
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 108 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 109 
 
 that the principle of concerted action, for all the railroads in a 
 great section of the country, gives them a most effective weapon^ 
 and they are naturally loath to relinquish or impair it. 
 
 While this is the situation under the present conditions, and 
 the railway employes feel that they cannot surrender their right 
 to strike; the necessity would no longer exist for the exercise of 
 this power, if there were a wage commission which would secure 
 them just wages. 
 
 Finally, it is the belief of the Board that in the last analysis 
 the only solution, — unless we are to rely solely upon the restraining 
 power of public opinion, — is to qualify the principle of free con- 
 tract in the railroad service. A strike in the army or navy is 
 mutiny and universally punished as such. The same principle 
 is applied to seamen because of the public necessity involved. A 
 strike among postal clerks, as among the teachers of our public 
 schools, would be unthinkable. In all these cases, the employ- 
 ment, to borrow a legal phrase, is affected with a public use ; and 
 this of necessity qualifies the right of free concerted action which 
 exists in private employments. 
 
 However, if the principle be accepted that there are certain 
 classes of service thus affected with a pubhc interest and men 
 who enter them are not free concertedly to quit the service, then 
 these men must be guarded in the matter of wages and conditions 
 by public protection; and this it is believed can best be done 
 through an interstate wage commission. 
 
 CONCLUSION 
 
 It is well understood by the Board that the problem for which 
 the above plan is a suggested solution is a complex and difficult 
 one. The suggestion, however, grows out of a profound convic- 
 tion that the food and clothing of our people, the industries and 
 the general welfare of the nation, cannot be permitted to depend 
 upon the policies and the dictates of any particular group of men, 
 whether employers or employes, nor upon the determination of 
 
 
 / 
 
 < 
 
 a group of employers and employes combined. The pubhc utili- 
 ties of the nation are of such fundamental importance to the 
 whole people that their operation must not be interrupted, and 
 means must be worked out which will guarantee this result. 
 
 The above report is unanimously agreed to by the five members 
 of the board appointed by the Chief Justice of the United States, 
 the Presiding Judge of the Commerce Court and the Commissioner 
 of Labor; it is signed by Mr. Willard, with an explanatory state- 
 ment; Mr. Morrissey files a dissenting opinion. 
 
 A 
 
 I 
 
 V 
 
 (Signed) 
 
 Charles R. Van Hise, 
 
 
 Chairman, 
 
 (Signed) 
 
 Oscar S. Straus, 
 
 (Signed) 
 
 F. N. JUDSON, 
 
 (Signed) 
 
 Otto IVI. Eidlitz, 
 
 (Signed) 
 
 Albert Shaw, 
 
 (Signed) 
 
 D. Willard. 
 
 < 
 
 ^ 
 
 ^ 
 
EXPLANATORY STATEMENT BY MR. WILLARD 
 
 Inasmuch as the findings and conclusions of the Board are not 
 unanimous, I think it is proper that I should briefly state my posi- 
 tion as representing the railroads in this matter. 
 
 When requested by the railroads to serve as their representative, 
 it was imderstood that efforts would be made to secure as the 
 actual arbitrators in this case, five men of the highest character 
 and ability. It was recognized by all that the two members 
 named by the parties in interest, while given under the terms of 
 the agreement, equal standing with the other members of the 
 Board, would also necessarily occupy the position of advocates 
 representing the parties by whom they were selected. 
 
 I have felt from the first that it was desirable to secure, if possi- 
 ble, a unanimous report, and in view of the fact that the five mem- 
 bers appointed by the Chief Justice and his associates — as pro- 
 vided by the agreement of April 30 — have, after a most searching 
 investigation, reached a unanimous conclusion, it seems to me that 
 I ought also to sign the report in order that I may, by so doing, 
 plainly signify its acceptance by the parties I was chosen to repre- 
 sent. My acceptance of the award as a whole does not signify 
 my approval of all the findings in detail. It is intended, however, 
 to indicate clearly that although the award is not such as the 
 railroads had hoped for, nor is it such as they felt would be justi- 
 fied by a full consideration of all the facts, yet, having decided 
 to submit their case to arbitration, and having been given ample 
 opportunity to present the facts and arguments in support of 
 their position, they now accept without question the conclusion 
 which was reached by the Board appointed to pass upon the mat- 
 ters at issue. 
 
 (Signed) D. Willard. 
 
 110 
 
 
 t 
 
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 \> 
 
 t 
 
 MINORITY REPORT OF P. H. MORRISSEY, REPRESENT- 
 ING THE BROTHERHOOD OF LOCOMOTIVE ENGI- 
 NEERS 
 
 In expressing dissent from the award of the Board, I do not 
 underestimate the importance to the engineers of the effects of 
 such increases in wage rates and the establishing of such uni- 
 form rules of service as the Board have granted. There has 
 been a gain in essentials and a step forward has been taken in 
 the standardization of engineers' rates and of conditions for the 
 Eastern district. At the same time I cannot, from the labor 
 point of view, permit the majority report, its reasoning and its 
 recommendations in certain vital particulars to go unquestioned. 
 
 The award of the Board does not settle, it merely postpones 
 the settlement, of principles for which the engineers are contend- 
 ing. Any award based upon wage statistics such as the Board 
 have used in arriving at their decision, and upon the comparisons 
 they have employed in their argument to substantiate the award, 
 cannot be permanent because the very foundation itself is so 
 insecure. There is no question, however, that the engineers will 
 faithfully abide by the terms of the award during the period for 
 which it is operative — this they agreed to do before the board 
 of arbitration was selected. But when they consented to submit 
 their requests to such a board it was in the firm belief that an 
 award would be made which would recognize that changing con- 
 ditions in train operation must be met by new rules and regula- 
 tions of employment. This, the engineers will feel, has not been 
 done. 
 
 There is no such thing as absolute justice in the arbitration 
 of wage disputes. Those who agree to the principle cannot in 
 the nature of things hope always to be fully sustained. Arbi- 
 tration points to compromise of extreme views and this is par- 
 Ill 
 
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i 
 
 112 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 ticularly true when human welfare or social justice is a factor. 
 The principle of arbitration which many thoughtful and well- 
 meaning people are earnestly striving to establish as a part of 
 our industrial system will not be advanced by the Board's award. 
 On the contrary, the effect very likely will be to retard the prog- 
 ress of arbitration as a means of preventing strikes on railways. 
 In the majority report of the Board is presented a brief history 
 of the present arbitration proceedings, an analysis of the diffi- 
 culties of the problem before the Board for settlement, and a 
 discussion of standardization. Under the heading, *'The Problem 
 of Compensation to Capital," is discussed the intercorporate 
 relations of the fifty-two roads, their ability to pay increased 
 compensation, appropriations for additions and betterments, and 
 the question of surplus, the Board concluding that, "In making 
 our award we therefore eliminate the claim of the railroads that 
 they are unable to pay an increased compensation." Then the 
 majority report says: 
 
 What, then, is the basis upon which a judgment may be passed 
 as to whether the existing wage scale of the engineers in the 
 Eastern district is fair and reasonable? It seems to the Board 
 that the only practicable basis is to compare the rates and 
 earnings of engineers in the Eastern district with those of 
 engineers in the Western and Southern districts and with those 
 of other classes of railway employes. In doing the latter it is not 
 meant to assume that the compensation of the engineers should 
 not be higher than that of other skilled labor in railroad service 
 but in order to ascertain the difference which has actually existed 
 between the engineers and other classes of railroad employes in 
 the same and in different districts. 
 
 In answer to this question the Board make use of only the 
 average daily compensation statistics of the Interstate Commerce 
 Commission. The report, in considerable detail, gives warning that 
 these statistics are not to be relied upon for this purpose, and 
 then, in an effort to give reasons for or to substantiate the award, 
 it proceeds to use them in exactly the way it points out should 
 not be done. The engineers in the Eastern district have no 
 
 
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 'J > 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 113 
 
 objection to a fair comparison of their earnings with those of 
 other train employes in the same or different districts, nor to a 
 proper comparison of their earnings with those of engineers in the 
 Southern and Western districts. Indeed, it is upon these very 
 grounds that the engineers of the Eastern district have asked for 
 increased wages. Their earnings have not kept pace with those 
 of other train employes in the Eastern district, nor with those 
 of engineers in either the Southern or Western districts. Such 
 comparisons, therefore, would be welcomed by the engineers in 
 the Eastern district because they are convinced that if properly 
 made these comparisons would sustain their contention for an 
 increase in wages. 
 
 But, in view of the clear statement of the Interstate Commerce 
 Commission itself that their average daily compensation statistics 
 are not altogether satisfactory; in the face of my own contention 
 before the Board against a consideration of these figures; even 
 against the unanimous recommendation of the Board's own sta- 
 tisticians warning us of the danger of any such use of these sta- 
 tistics; in view of all this, and with full knowledge of their unre- 
 liability, these Interstate Commerce Commission average daily 
 compensation figures have been used by the Board in their report 
 as the basis for their award. 
 
 In the first place, these daily compensation figures of the Com- 
 mission purport to be only averages. They are averages, too, 
 that do not reflect the very important element of overtime. This 
 overtime, it is important to note, may in cases be paid for at a 
 higher rate than are the normal days worked, for which latter 
 the average daily compensation figures of the Commission are 
 taken to represent. Again, these compensation statistics of the 
 Commission are prepared from reports made by the several indi- 
 vidual roads, among which there exist varying methods of deter- 
 mining what is a day's work. Neither do they segregate engineers 
 in the different branches of service, such as passenger, freight, 
 switching, and so on. The total amount of compensation paid 
 
 
114 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 by a road to a given class of employes — say, engineers — is divided 
 by the total number of days worked by the men in that class — 
 in this case, the engineers — to determine the average daily com- 
 pensation. Neither the maximum nor the minimum compensa- 
 tion is shown. All compensation paid the engineers, whether 
 for mileage, overtime, deadheading, switching and other like 
 allowances within the individual schedules, is included in the 
 total amount. These different elements are so varying, even 
 within the same district, that no accurate idea of the actual 
 earnings of engineers can be secured from such average daily 
 compensation figures. Especially is it true that because of the 
 widely varying conditions in different districts, no adequate or 
 satisfactory comparisons can be made as between the compen- 
 sation of any particular class in one district with the same or 
 other classes in other districts. Most assuredly such compari- 
 sons will not accurately reflect the relative value of the working 
 agreements or wage schedules governing the compensation of 
 engineers of one district as against another. Not only is all this 
 true but the figures of the Interstate Commerce Commission as 
 regards compensation and upon which the award of the Board 
 is based, were compiled before the wage adjustment of 1911 was 
 made in the Southern district, and therefore do not record the very 
 important fact, known to the Board, that the wages of engineers 
 in the Southern district were still further increased in 1911, making 
 even more unreliable the statistical comparisons which the majority 
 report so laboriously strives to work out. 
 
 In brief, as representative of the engineers, I hold that the 
 statistical information upon which the Board bases its award is 
 insufficient, unreliable, inaccurate and misleading in all the ways 
 that the Board have made use of it. This information could 
 serve no useful purpose toward enabling the Board to arrive at 
 a just conclusion as to the relation, over a period of years, of 
 engineers^ earnings in the Eastern district as compared with 
 those of engineers in the Southern and in the Western districts, 
 
 -( 
 
 ■I 
 
 I* 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 115 
 
 and of the relation of engineers' earnings to those of other train 
 employes in the Eastern district. 
 
 Such use of these average daily compensation statistics as the 
 Board have made as a basis for determining earnings or wages 
 between employers and employes on the railroads, was never even 
 contemplated by the Commission. They were intended merely 
 to reflect a general situation and not particular conditions that 
 can be measured in dollars and cents in a comparison of the 
 earnings of the different classes of employes in the several districts 
 or territories over a period of years. Indeed, so unsatisfactory 
 are these statistics that the Commission has taken steps to change 
 the method of their collection and compilation. 
 
 Not only are the comparisons that the majority report of the 
 Board makes on the basis of these average daily compensation 
 figures unjustifiable but it is also even worse to use these figures 
 in a comparison of engineers' wages with those of telegraphers, 
 station agents, carpenters, and machinists — employments so dis- 
 similar and in which the basal facts for determining wages are 
 governed by entirely different elements. 
 
 STANDARDIZATION 
 
 The engineers ask for certain uniform rates of pay and rules, 
 the application of which to existing rates and rules would work 
 varying increases in compensation. The rates requested are gen- 
 erally somewhat higher than those in effect in the Southern dis- 
 trict and in that part of the Western district with which they 
 seek to compare. They contend that in the Eastern district 
 the conductors and trainmen already receive a standard wage for 
 all the roads. The rates and rules for conductors and trainmen 
 for both the Southern and Western districts more nearly approxi- 
 mate uniformity than do the rates and rules of the engineers in 
 any of the three territories. There is also a decided tendency 
 toward uniformity in the rates of conductors and trainmen for 
 
 
 ^ ' 
 
1l 
 
 \ 
 
 116 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 that part of the Western district with which comparison is made. 
 The majority report does not sufficiently take this into con- 
 sideration. 
 
 In my opinion all these should have had weight as precedent 
 in determining the question of standardization, for the reasons 
 used by the roads against standardization for engineers apply 
 with equal force against conductors and trainmen, to which 
 classes the principle of standardization has already been largely 
 conceded. The tendency is constantly toward standardization. 
 First, the rates and rules are standardized for the different divi- 
 sions of the same road. This once accomplished it is natural 
 for both managements and employes, when adjusting rates and 
 rules, to make comparisons with adjacent roads. But all stand- 
 ardization that has been effected thus far has recognized some 
 slight variations on account of peculiar or different conditions 
 on some particular road or at some point of a road. There has 
 never been a question as between so-called mountain and plain 
 service in the Eastern district to which the majority report 
 refers. Differentials for mountain service are confined wholly to 
 the far West, with which section the engineers of the Eastern 
 district do not undertake to compare. It does not necessarily 
 follow that a standard for a class fails to obtain in a given terri- 
 tory because there are minor local exceptions on some particular 
 road. It does not require 100 per cent of standardization to 
 establish the claim that standardization exists. 
 
 The statement in the report that the standard rate is a mini- 
 mum rate is in a general sense correct. But the standard rate 
 may also be the maximum rate. A road may have a standard 
 rate for all of its operations with the exception of a single light 
 branch run, which may be paid less than the standard rate, but 
 that single low rate is not the minimum rate or the standard 
 rate for the engineers of that road. The standardization which 
 has been accomplished and the extension of which s sought by the 
 engineers contemplates different rates for different classes of serv- 
 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 117 
 
 ice; and in the case of larger engines, different rates in the same 
 class of service. Any wage adjustment that merely treats these 
 conditions by the application of a so-called minimum rate, as in 
 the award of the Board, falls far short of settling the question 
 and merely postpones the issue for future determination. 
 
 While recognizing the gain to the engineers from the appli- 
 cation on the various roads of a minimum wage of $4.25 in pas- 
 senger service and $4.75 in through freight service, at the same 
 time the award of the Board does not settle the important ques- 
 tion submitted by the engineers of different rates of pay for differ- 
 ent classes of engines, and therefore it does not adequately treat 
 the situation. In its analysis the Board find that both parties 
 to the arbitration agree that different sizes of engines should have 
 different rates. Whether these rates be determined according to 
 size of cylinder, weight on drivers, draw-bar pull, or any other 
 basis, is not material. Whatever basis might be agreed upon 
 must necessarily be arbitrary; no one could hope that it would 
 be exact. Such bases have been established in other arbitrations 
 and in adjustments between the roads and their employes where 
 the difficulty and complexity have been as great as here pre- 
 sented. There are no scientific or other formulae to prove their 
 correctness. The rates decided upon by the Board are them- 
 selves arbitrary and by the same reasoning they employed these 
 rates could have been greater or less. 
 
 ADDITIONS AND BETTERMENTS AND THE QUESTION OF SURPLUS 
 
 IN RELATION TO WAGES 
 
 Whether the roads concerned in this arbitration were justified 
 in appropriating $30,973,459 out of income for additions and 
 betterments and in carrying $32,129,676 to surplus for the fiscal 
 year 1911, should not, it seems to me, have more than an aca- 
 demic bearing on the questions before the Board. Both sums 
 could have been distributed instead as dividends without doing 
 violence to the principle that investments in railways are entitled 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
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 to a reasonable return. It is quite possible for the roads to make 
 large appropriations for additions and betterments in any one 
 year, and for the following years to make little or no appropri- 
 ations for these purposes. 
 
 Railway labor does not begrudge, on the contrary it approves 
 of proper expenditures out of income for additions and better- 
 ments, because it knows that these are necessary to keep pace 
 with the growing demands of traffic, and in the end mean higher 
 pay, better conditions and greater safety for the employes. Be- 
 sides, these are matters that concern the stockholders and the 
 public after the employes' wages have been earned and paid. 
 The distribution of net earnings after the payment of proper 
 operating expenses, taxes and interest charges, can be left to 
 the owners of the properties, under the watchful supervision of 
 the Interstate Commerce Commission. 
 
 For these and other reasons it is not believed that the Board 
 are prepared to say whether the sums mentioned for additions 
 and betterments and for surplus are conservative or excessive. 
 If these amounts are necessary and if the solvency and efficiency 
 of the roads would be impaired by an advance in engineers' wages, 
 it would then give just cause for the Interstate Commerce Com- 
 mission to protect the roads by permitting a readjustment of 
 transportation rates. The determination of fair wages to the 
 employes is prior to and not dependent upon varying theories 
 as to how earnings are to be distributed. 
 
 THE FRENCH RAILWAY STRIKE AND ASSUMED CONDITIONS IN THE 
 EASTERN DISTRICT OF THE UNITED STATES 
 
 The majority report discusses the railway labor situation from 
 the public standpoint and suggests methods by which strikes in 
 the future may be prevented. The consequences of a strike of 
 engineers in the Eastern District are vividly portrayed— in fact, it 
 might be said that the picture is greatly overdrawn. The con- 
 ditions which have made necessary concerted action on the part 
 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 119 
 
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 of the engineers, like that of other classes of railway employes, 
 are not sufficiently explained. It is left to be inferred that con- 
 certed action is part of a program of the organizations to gain 
 power. Such inference does not represent the situation, for the 
 policy of the railroads in respect to labor matters has been a 
 contributing cause. The developing power of the organizations 
 through concerted methods carries with it increasing responsi- 
 bilities which the organizations and their leaders recognize. They 
 well know the value of pubUc approval of their activities and are 
 equally conscious of its disapproval. To intimate that the trans- 
 portation of the country can be brought to a standstill at the 
 whim or caprice of a small group of men is not a fair statement 
 of the manner by which the powers of these organizations are 
 exercised; on the contrary, their power is wisely safeguarded and 
 restricted. The leaders simply reflect and carry out the long- 
 considered and well-determined decisions of the rank and file. 
 
 The presumption that the balance of power in these contro- 
 versies now rests with the railway labor organizations is suscep- 
 tible of better proof than the mere statement to that effect. We 
 have never witnessed the combined resources of the railways of 
 a great section of the country in resistance to a strike of a single 
 class of their employes; we cannot even fairly estimate the reserve 
 force of a combination of railways such as those engaged in this 
 controversy with the engineers. 
 
 The 1910 railway strike in France is described as paralleling 
 a possible tie-up on the part of the engineers in the Eastern dis- 
 trict. From this is built up an assumed condition that would 
 result from a general strike of engineers in the Eastern district 
 as justification of the Board's recommendation of compulsory 
 arbitration and the limitation of the right of contract of the 
 railway employes. The comparison fails to note the difiference 
 between a general strike of engineers and that of all railway 
 employes, which latter was the case, or at least was attempted, 
 in France. Another phase with which there can be no compari- 
 
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 120 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 121 
 
 son of an assumed situation in this country is that the French 
 strike was a part of the program of European Syndicalism which 
 has probably reached its greatest strength in France. The gen- 
 eral strike is no part of the American railway employes' program. 
 Still another reason why it cannot be compared to American 
 conditions is that the immediate cause in the French strike was 
 the refusal of the railway officials to confer with the representa- 
 tives of their employes in order that there might be even a 
 discussion of the employes' demands. There is no such condition 
 in America. In brief, the analogy which the majority report 
 attempts to make would require all the men on all the railways 
 to quit work at the same time, a condition so improbable as to 
 question the propriety of any recommendation based upon it. 
 
 There has not been a railway strike of any serious consequence 
 since the Erdman Act has been made effective. The organiza- 
 tions have availed themselves of this Act as often as have the 
 companies, and there is but one instance where a strike occurred 
 after mediation had begun, and that strike resulted disastrously 
 to the organization responsible for it. In the controversy which 
 resulted in the present arbitration neither side showed a disposi- 
 tion to take advantage of the Act. The engineers were prepared 
 to strike and the railways were willing that they should strike, 
 or, if they felt differently about it, they at no time made this 
 known. Their position did not indicate any fear of the power 
 of the organization or any lack of ability to handle a situation 
 which might grow out of a strike. Fortunately for the public's 
 interest, the intervention of Judge Knapp and Commissioner 
 Neill, although without authority under the law, did that which 
 neither the railways nor the engineers appeared disposed to do, 
 and thus averted a test of strength. 
 
 Right here it might be said that in the light of experience the 
 Erdman Act is defective in not authorizing the government offi- 
 cials to invoke, on their own motion, the provisions of this Act. 
 The Act might also be amended so that the arbitration board 
 
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 might have three, five, seven, or nine members, depending upon 
 the magnitude and importance of the issue, with the neutral 
 representatives holding the balance of power. My experience in 
 this arbitration convinces me that the representatives of no class, 
 even that of the public, should have a majority of the members 
 of the board. 
 
 WAGE COMMISSIONS AND COMPULSORY ARBITRATION 
 
 There could be no serious objection on the part of the railway 
 employes to the creation of wage commissions, as suggested in 
 the majority report of the Board, for the purpose of collecting 
 information and data pertinent to wage and economic conditions 
 throughout the country. Such information would be useful in 
 determining a controversy such as this. It has already been 
 pointed out that the average daily compensation statistics re- 
 ported by the Interstate Commerce Commission are faulty and 
 that just conclusions cannot be reached in any railway wage con- 
 troversy by their use. Clothed with the authority of a govern- 
 ment report, their misuse in this arbitration has worked great 
 injury to the engineers. Certainly, the Interstate Commerce 
 Commission, or the Bureau of Labor (which handles statistics 
 of all other labor), or a wage commission created for this pur- 
 pose, should take the matter in hand and supply just such infor- 
 mation as has been lacking in the present arbitration. 
 
 But when it is contemplated that such wage commissions would 
 have all the powers of a court in determining a labor controversy, 
 or at least equal to the power of the Interstate Commerce Com- 
 mission in the determination of transportation rates, with which 
 it is here compared, we strike at a vital and fundamental prin- 
 ciple affecting the legal and economic rights of railway employes. 
 No fault can be found with the public's interest in keeping open 
 the arteries of commerce; indeed, the railway is an essential part 
 of our modern civilization. It is dedicated to the public use, 
 
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 RAILWAY ENGINEERS ARBITRATION 
 
 RAILWAY ENGINEERS ARBITRATION 
 
 123 
 
 and laws regulating it in the public interest are now an estab- 
 lished policy. But with all this, railways are privately owned, 
 and the relation of the railway employe to his employer is private 
 and not public. Whatever relation the railway employe may 
 have to the public is secondary and through his employer. The 
 railway hires, establishes the pay and regulations of employment* 
 and exercises its prerogative as a private employer by dismissing 
 the employe. In all this the public has no voice and very little 
 interest. What it expects is that the railway owners and employes 
 should work together peaceably, and it makes no discrimination 
 as to whether the employe is fairly paid or underpaid. The fact 
 that the railway employe is engaged in an employment affected 
 with public use confers upon him no benefits or advantages as 
 compared with employes engaged in other private industries; on 
 the contrary, he suffers disadvantages on account of the character 
 of the service he performs, with its hazards, great responsibilities 
 and many other exactions, such as age limits, physical exami- 
 nations, severity of discipline, and so on. 
 
 These conditions make necessary the organization of railway 
 employes for their own protection and advancement, just as if 
 they were engaged in any other industry. To take away from 
 them their present industrial defenses because of their relation 
 to the public service simply with the promise that they would 
 be treated fairly by a wage commission or other tribunal created 
 for the purpose, is wholly inadvisable. It is a change that no 
 person familiar with labor and economic conditions as between 
 the railways and their employes would recommend the employes 
 to accept. There can be no comparison between fixing a trans- 
 portation rate by a commission with the view of determining a 
 fair measure of justice between a railway and the public, and 
 fixing a wage rate between the railway and its employes. There 
 is a human element in every wage controversy that can never 
 be measured by statistics, averages, graphics, and so on, such as 
 abound in this arbitration and similar wage controversies. 
 
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 In conclusion, I wish to emphasize my dissent from that recom- 
 mendation of the Board which in effect virtually means compul- 
 sory arbitration for the railroads and their employes. Regardless 
 of any probable constitutional prohibitions which might oper- 
 ate against its being adopted, it is wholly impracticable. The 
 progress toward the settlement of disputes between the railways 
 and their employes without recourse to industrial warfare has 
 been marked. There is nothing under present conditions to pre- 
 vent its continuance. It will never be perfect, but even so, it 
 will be immeasurably better than it would be under conditions 
 such as the Board propose. The peace that would satisfy such 
 an ideal condition as that had in mind by those making the rec- 
 ommendation, would be too dearly bought even if it could be 
 attained. To insure the permanent industrial peace so much 
 desired will require a broader statesmanship than that which 
 would shackle the rights of a large group of our citizens. 
 
 (Signed) P. H. Morrissey. 
 
 November S, 1912. 
 
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