Director General MCADOO. No; I would not say that. Numerically, yes: as effective units, no. In other words, under the unification of equipment and of motive power we really have increased the effective capacity of each unit to such an extent that less equipment is demanded than would be demanded under the competitive system or diversified control.

The CHAIRMAN. May I ask right here, Mr. Secretary, is there any very great complaint as to lack of rolling stock for moving commerce now?

Director General McADOO. Not as to freight cars.

There is a very serious lack of passenger equipment because of the undue demands which are being made upon it for handling troops.

The CHAIRMAN. There is no complaint with reference to commerce the movement of commerce?

Director General MCADOO. We have an easier car supply at the present than we have had at any previous time during the year. The CHAIRMAN. Is it adequate now; so far as you know?

Director General McADOO. It is adequate at the moment. Of course, replacements are necessary for obsolete equipment.

The CHAIRMAN. The reason I asked this question-I will want to ask some further questions when you get through, Senator-is that I wanted to bring out at this point this information, because I consider it very germane.

Senator KELLOGG. I have one or two other questions which I desire to ask and then I will have concluded.

Senator CUMMINS. You say there is no serious complaint now in regard to the movement of freight?

Director General MCADOO. As to car shortage, yes.

Senator CUMMINS. The movement of freight promptly and speedily?

Director General MCADOO. I think so. Mr. Tyler, who is Assistant Director of the Division of Operations, can tell you more about that than I can.

(The following statement was furnished later by Director General McAdoo:)

The movement of certain commodities, raw materials which move in considerable bulk, has been systematized to the end that general improvement in the handling of such commodities is given. This particularly refers to lake coal; ore from lake docks to the furnaces; lumber from the Northwest; copper, lead, and zinc from the West and Southwest to eastern consuming points; cotton to northeastern mills; oil from the Mid-Continent, Wyoming, and Texas fields to eastern and Gulf ports; phosphate rock from Florida and Tennessee to chemical and fertilizer plants in the Northeast, and sundry other commodities moving in less volume.

The Pennsylvania lines west have maintained data indicating that their hopper cars which included movement of coal to the Lakes maintained during the month of September, 1918, an increased average mileage per car per day of 15.3 per cent over the corresponding period, 1917. The mill gondolas of the Pennsylvania Railroad maintained during the month of September, 1918, an average of 64.8 per cent greater mileage per car per day than during the same period of 1917. This would indicate that the volume of Lake coal and ore and to a certain extent, steel products must have been given better handling than during the previous year.

The movement of lumber from the Pacific northwest to eastern markets, both for Government and commercial use, was organized into train-lot movements and information coming from various sources indicates that this movement was regular and prompt, giving much satisfaction to the trade generally. It is also a fact that some progress was made in systematizing the movement of lumber from the South.

Definite routings have been fixed for the handling of metals from the West and Southwest, such products being shipped daily up to production capacity, and advice from the trade as to the results obtained is most satisfactory.

Movements of sulphur from the Texas fields to the consuming points have larzely been arranged in train units with favorable results which are definitely known.

One of the principai commo ity movements to which attention can be drawn az an example of improvement in service is that of oil. This also was systematized into train-lot movement. Improvement noted by the oil division of the Fuel Administration, which was particularly interested, was remarkably good and most favorably commente l upon on different occasio s.

In the handling of less-than-carload freight the figures for October 1918 and 1917 may be cited and which represent about the normal improvement shown over corresponding periods of previous year. In October, 1918, for instance, the pounds of less-than-carload freight per car were 16,176, while for corresponding period in 1917 the figure was 14,874, percentage of increase 8.75 per cent. This means that a much greater volume of merchandise freight was han lle 1 (total pounds in October, 1918, was nearly 13,000,000,000) in much less equipment, reflecting fewer cars to be handled at transfers, more freedom from congestion at transfers, and hence much less delay to the average individual shipment.

It is definitely known that under the shipping day plan, which is now wel! started, less-than-carload shipments are actually moving in greater volume in direct-destination cars, avoiding transfer, and hence eliminating much delay heretofore experienced. New England, for instance, is making straight cars for San Francisco where heretofore this freight has been handled through various transfers. Test was made showing that cars arrived in 19 days, whereas less-than-carload freight previously might take one to two months under favorable conditions in traveling this distance.

In general, it seems a fair statement that the service is more regular and dependable now than heretofore under the heavy strain which the roads have been called upon to bear.

Senator CUMMINS. I understand in some parts of the country there is a very serious complaint at this time.

Director General MCADOO. Can you tell me from what part of the country it comes and what it is about?

Senator CUMMINS. I think particularly with reference to the movement of live stock.

Let me

Director General MCADOO. I do not think it exists now. say with reference to this live-stock business, that that matter came to our attention last fall. The price of sheep was very high. For that and other reasons, everybody wanted to ship their sheep at once. I can give you statistics to show that we made a larger movement of live stock

Senator CUMMINS. I am in receipt of some very serious complaints in my own State in regard to the speed of freight trains in getting live stock to Chicago.

Director General McADOO. I should be very glad to give you some illuminating information on that, Senator, and I think you will find that the situation was handled very much better than heretofore. Mr. Tyler, will you prepare some data on that live-stock movement? Mr. TYLER. Yes, sir.

Director General MCADOO. We have the figures, and I think the figures will tell the story.

The following statement was furnished later by Mr. McAdoo: Indicative of the greater movement of live stock, I quote below the combined livestock receipts at Kansas City, St. Joseph. St. Louis, South St. Paul, Chicago, Omaha, and Sioux City for the year 1918, compared with 1917:

The effect of the zoning system and the regulated or specified handling of live stock has resulted generally in a better and more satisfactory movement.

The annual report of the regional director for the southwestern region, just submitted, shows that the maintenance of live-stock train schedules has been closely supervised and a general improvement effected notwithstanding the principal livestock market points in this region (Kansas City, St. Louis, and Fort Worth) have enjoyed very substantial increases in receipts, ranging from 7 to 62 per cent monthly. The annual report of the regional director for the eastern region, just submitted, shows that arrangements were inaugurated in June, with the concurrence and cooperation of the shippers, for assembling live stock, fresh meat, live and dressed poultry, and perishable freight in solid trains and forwarding from Chicago, St. Louis, Cincinnati. Buffalo. and other western points on specific days of the week via roads best fitted to handle them. resulting in a reduction of the feeding requirements for live stock and in the number of fast trains required to handle them. The decrease from Chicago alone has been 11 trains per day. and the average cars per train of high-class and perishable freight has increased from 23 to 36.

Senator CUMMINS. This is not a comparative complaint. It has existed heretofore at times, but I am given to understand that it is pretty serious now.

Director General MCADOO. My point is this, Senator, that I think the unified control has met that situation better than it has ever been met before.

Senator KELLOGG. There is one other question I would like to ask you. You have stated that certain economies have been brought about by Government management. The specific items are as follows:

"The specific items which produce this saving include the unification of terminals and stations, the elimination of passenger service, reductions in organizations, and miscellaneous economies.

Now, during this time you have had the benefit of the absolute power to route freight over the shortest lines, to fill the trains, to carry large trainloads, without regard to the wishes of the shipper. Have you not made an elimination of a lot of passenger trains and used that motive power thus saved, to some extent for freight? You have had all those powers, have you not?

Director General McADOO. We have had the opportunities, yes. That is one of the advantages, I think, of unified control.

Senator KELLOGG. Of course that can be worked out through private ownership with the proper Government supervision, can it

not?

Director General McADOO. I am not so sure of that. It is a difficult matter.

Senator KELLOGG. Now, in spite of these economies, in spite of the fact that the rates have been increased from 25 to 50 per cent that you have been able to concentrate traffic and take essentials in large train loads and large carloads, and control not only the shippers, but the traffic, I notice that, for 10 months, the operating expenses to gross earnings have increased over last year from 69. 87 per cent to 80.53 per cent. Can you explain that?

Director General MCADOO. I can. That is very simple. In the first place, we were running the railroads to meet a war emergency which necessitated an excessive cost of operation frequently.

Senator KELLOGG. Last year-a good deal of the year-they were being run to meet a necessity brought about by the war?

Director General MCADOO. We did not get into the war until the 6th of April.

Senator KELLOGG. 1917.

Director General MCADOO. That is what I say; and the excessive cost of the war pressure did not assert itself industrially for some time after that, and in addition, the movement of soldiers to the cantonments did not begin until September of that year.

Senator KELLOGG. But the fact remains

Director General MCADO0. Let me answer. The wages of labor and the working conditions in 1917 during that time were lower than we had to make them under Federal control. There was an ascending scale of wages which had to be met, because fundamentally railroad labor was much underpaid and the working conditions were certainly not what they should have been.

Senator KELLOGG. We understand that.

Director General MCADOO. I beg your pardon. You asked me how I explained it, and I want to explain it again, because I think it is important that this should be kept in mind: There has been a constant effort to discredit the value of unified control by contending that it is a failure from the earning standpoint. I do not think that is the basis from which we should approach it. That is the reason I want to test it under peace conditions, under normal conditions, so that we can see what can be done. Now, under war conditions, after the Government took control of the railroads, we had to increase wages of labor and alter the conditions of service very materially, which added immensely to the cost. We also had to meet very greatly increased cost of fuel and supplies of all kinds, which does not appear in the statements for 1917. I think the deficit, for instance, this year, will be about $136,000,000; $140,000,000 represents increased cost of fuel alone, if we say nothing about wages. The increased rates did not go into effect until six months after Federal control had been in effect. Senator KELLOGG. I am speaking about after the rates did go into effect.

Director General McADOO. I thought you were speaking of the 10 months' period. You covered the 10 months' period in your question.

Senator KELLOGG. I mean after the rates went into effect. You evidently did not understand. If the wages of labor are raised, and I have no doubt that that raise was justified, and materials are raised, and the whole thing, we will say, costs $100,000,000 per annum, if you raised the rates enough to cover it, your percentage of operating expenses to gross earnings would be exactly the same as before, would it not, if the tonnage movement is the same?

Director General McADOO. If you make a proportionate raise all around; yes.

Senator KELLOGG. As a matter of fact, your tonnage, according to your statement, increased only 1.9 per cent, did it not? I think that was your statement.

Director General MCADOO. May I answer your question? You were speaking about the last four months, were you not?

Senator KELLOGG. Well, take any one of them.

Director General MCADOO. Since the increased rates went into effect is what I am talking about.

Senator CUMMINS. May I suggest you take the month of October! Director General McADOO. Why not take the month of September?

The CHAIRMAN. Why not take the four months after the increase went into effect? Then you will get a better average. . Senator GORE. That is a good idea.

Director General MCADOO. You really want to get the facts, I understand. One month will hardly state the facts.

Will

The CHAIRMAN. Mr. Secretary, may I make a suggestion? you give to the committee the period from the time you increased wages and increased rates, or take from the time you increased the rates, and give the committee the result?

Senator GORE. Take July, August, September, and October for both years.

Senator POINDEXTER. Put in the four months.

Senator KELLOGG. Take July.

Director General MCADOO. No; I said take September. But I prefer to take the four months.

Senator GORE. The broader your base the better.

Senator CUMMINS. Have you the figures showing that for the four months?

Director General MCADOO. I present a table that we hastily made up here

Senator KELLOGG. I was speaking about the percentage of in

crease.

Director General MCADOO. I am going to give it to you. In 1918, gentlemen, the revenues for the months of July, August, September, and October were $1,950,786,144.

Senator GORE. Please state that again, Mr. Secretary.

Director General McADOO. In 1918, for the months of July, August, September, and October-four months-the revenues were $1,950,786,144. In 1917, for the same four months, the revenues were $1,457,397,518. Now, deducting the back pay from the months of July, August, September, and October-deducting back pay, and simply charging against those months-the regular increased pay and expenses for that time, the operating costs in 1918 were $1,315,000,000 in round numbers, or 67.4 per cent, and in 1917, for the same months, $990,195,225, or 67.9 per cent.

Senator POINDEXTER. Is there any back pay to be deducted in 1917?

Director General McADOO. There was no back pay to be deducted in 1917. I am putting these figures on precisely the same basis as to wages and labor and everything else.

Senator GORE. Have you copies of that, Mr. Secretary?
Director General MCADOO. I will put this in the record.

117900-19-VOL 1-7