this character as efficiently and economically as private individuals can. Government ownership, management and development of the railways would become a matter for the politicians to trade upon. Just recently, in Austria, there has been considerable discussion because the railways were taken over by the State on the theory that better service and lower rates would be given to the public. Now, there is agitation to put them back into private hands for, instead of proving profitable, there is a heavy annual deficit, which the general taxpayer has to make up. The service has deteriorated and railway expansion has ceased.

Or he can continue the present system of rigid governmental control and supervision, and interference with the judgment and management of the owner, which is rapidly having a deadening and discouarging effect on the development of the business, and is preventing those additions and improvements so much needed in a growing country like the United States. Or, he can continue the present system of government regulation and control, but guarantee to the railway owner some minimum return upon his investment, so he will be willing to put money into the business. Such a plan; however, means that the non-user of the railway will be taxed for the benefit of the user.

To my mind the first course, of more commercial freedom, is by far the better for a growing and expanding country like the United States. We have not yet reached the state of perfection, politically or socially, where government ownership and bureaucratic management of the large, complicated and delicately adjusted railway system of the country will be a success. Putting a government uniform on a railway employe does not at once endow him with a new kind of intelligence and supernatural powers, and it will reduce his feeling of responsibility.

If the Railway User and the Railway Employe are not careful to see that justice is done to the Railway Owner, and if he is not protected and encouraged a little, the time is rapidly coming when the Railway User will go to buy some transportation for his wheat, his coal, his cattle, his manufactured articles, and he will be confronted with the statement from the Railway Owner that all the transportation he has has been sold, and furthermore, that he cannot produce any more transportation because he cannot get any more money, and if the Railway User desires an increased quantity or quality of transportation he must organize and produce it for

himself. The Railway Employe will find that the monthly pay day is not so regular and certain as it used to be, and that the wages paid are lower than they now are.

The ultimate good sense of the American people and their belief in the rights of property will, in the long run, I believe, prevail over the misstatements and misrepresentations of some public men, who, without careful study and full knowledge of the situation, and without due regard to the effect of their extravagant language, make indiscriminate attacks upon the railway system of the United States, and upon the men who are giving the best that is in them to the work of advancing that system.

RECAPITULATION.

This wonderful American railway system has been created by the Railway Owner and capitalized at from one-half to one-fifth of the European railways. It does twice as much work at rates from one-half to one-third of, and pays wages from two to five times as much as are paid by European railways. The size of the United States and the wide distribution of the products are such that it is necessary to have a large use of the railways and low rates. To accomplish this, there must be an expansion of facilities; the Railway Owner has done his part; further expansion can only be brought about through the help of the Railway Employe and the Railway User.

The Railway Owner, the Railway Employe, and the Railway User form an "association of persons who should act for their common benefit;" not for the benifit of one and the injury of the other, but for the common benefit of all. There has just been a meeting in St. Paul where there was much discussion about the Conservation of Natural Resources. It is high time for the Railway User to consider carefully the Conservation of the Railway System of the United States. Common sense, publicity, plain statements of the facts, and justice to all interests, whether individual or corporate, will help to settle this question properly.

HALF SLAVE AND HALF FREE

By H. U. MUDGE,

President of the Chicago, Rock Island and Pacific Railway.

AN ADDRESS DELIVERED BEFORE THE COMMERCIAL CLUB OF TOPEKA, KANSAS, APRIL 11, 1911.

I have given some thought as to what it would please you to have me talk about. I am sure you do not want me to talk politics as you have a sufficiency of that by those skilled in the art. I assume that you would prefer that I say something about the railroads, as that seems to be a topic on which almost anyone can talk, and yet, who can talk railroading without at once getting into politics. While I am speaking of the railroads, I wish it understood that I do not speak for them.

The politician tells us that the railroads must be kept out of politics and the railroad men tell us that politicians should be kept out of the railroads. I am convinced that the railroad owner would hail with delight the day on which both are accomplished. But the millennium is not yet here; the politician will find the railroads a fruitful subject for exploitation long after we here tonight have ceased to have an interest in the matter, and I predict that the railroads will be in politics long after the question ceases to be of interest to private capital. If this is a reasonable view, then does it not follow that railroad men ought also to be politicians?

Webster gives two definitions of a politician:

"1. One versed or experienced in the science of government; one devoted to politics; a statesman. 2. One primarily devoted to his own advancement in public office or to the success of a political party."

I do not suggest that railroad men should aspire to the second estate. I believe the field is already fairly well cultivated.

I believe that many of the differences that now exist, or are said to exist, betwen the public and the railroads would have been avoided if railroad men and other business men had been better politicians. The men who operate the railroads have been good soldiers, and in this they are not much different from other business men. They have not been good politicians under either definition.

The country began its transportation career under a competitive system. The enormous natural resources of the country were valueless without transportation facilities. Private capital was much needed, with which to build railroads. The people gave very little thought as to the terms on which this capital was secured, so that it came quickly. They were quite willing to grant franchises, unrestricted as to rates for service, and to donate some portion of their land in order that the remainder might be of value. They were willing to bond the community because the interest on such bonds was a very small matter compared with the increase in the value of the land, and the increase in their earning power, by reason of these transportation facilities.

Competition was depended upon to regulate the charges for transportation, and so far did we carry this idea of competition that, having bonded ourselves to secure a railroad, we proceeded to bond ourselves to secure other railroads to come in and cut the life out of the first one. Under this fierce competition, we built up the greatest transportation system, with the lowest freight rates anywhere in the world; a transportation system that furnishes employment to more than one and one-half million of people, at the highest rate of wages in the world, but, as is always the case with unrestricted competition, it bred many discriminations,—discriminations between individuals and between communities.

The sale of transportation was, under this system, handled much the same as the sale of any other commodity, i. e., on the wholesale and retail plan. The shipper who purchased transportation in large quantities was able to practically name his own price. Some of them were not very modest in their demands.

After about forty years it dawned upon the American people that, in order to do away with these discriminations, some form of regulation of rates and effective competition in rates could not travel together. The abolition of the secret rate meant the abolition of rate cutting. There can be no competition in rates when you are required to give your competitor thirty days' notice of your intention to cut the rates.

In its first effort at rate regulation, Congress apparently had no intention of going farther than to prevent discriminations between communities and individuals. The measure was altogether a very weak effort, but even in this law it was thought that Congress had

exceeded its right under the Constitution; that the mere right to regulate commerce among the states did not give it the right to prescribe rates for service, and the gentlemen on both sides of the controversy, who were "well versed in the lawlessness of the law," took many years in which to settle this question, and some of them are not yet convinced.

I believe most railroad men now think that it would have been better for the railroads if the federal government had claimed the right to regulate all freight rates and that the railroads had conceded this from the start, but corporations and governments, as well as individuals, must learn by experience. We are not usually willing to accept, as conclusive, the experience of others.

Amendments have been made to the law until it would seem that we now have in the Commission a regulating body that ought to be effective, but there seems to be still a very weak point, and that is, that the only method provided for leveling rates between communities is to level them down, regardless of whether the rates are of themselves too high; in other words, the physician is limited to "bleeding" as a remedy.

We have now provided machinery for abolishing discriminations, rebates, etc., but we are now confronted with a new theory, viz., that even if rates are uniform and fair within themselves, they ought to be reduced so that the income of the roads shall be only sufficient to pay a fixed return on the physical value of the property, in other words, that railroad stocks shall be taken out of the field of speculation. This, I think, would mean that investors would demand bonds instead of stock. If the return is to be limited, they will insist upon some security, and we will be dependent entirely upon borrowed money for our improvements with the result that our fixed charges will increase very fast, and finally there will come a time when we cannot meet them.

I do not object to the physical valuation of railroads. I know that in the aggregate, the rates would have to be increased to pay a fair return, but I doubt the wisdom of limiting the earnings of the roads in this way. I think if it is done we will soon awake to the fact that having already eliminated competition in rates, we would by this method also eliminate competition in service.

There is now no difference of opinion as to the necessity for regulation; there is still a serious question as to the extent to