in the United States it was 0.716 of 1 cent. Or, calling the earnings on the British roads 100, the earnings on the American roads were 31. In other words, it was 69 per cent less.

Mr. STEPHENS. The British roads were the only ones in the list that were privately owned roads? All the others were Gevernment owned?

Mr. KRUTTSCHNITT. No, the British roads are privately owned. The German roads are publicly owned. They are simply an arm of the military service.

Mr. STEPHENS. How about the Swiss roads?

Mr. KRUTTSCHNITT. The French roads are largely privately owned. There is only one very important system owned and operated by the Government in France. The Swiss roads are Government roads, and the United States' roads are of course privately owned.

Mr. PARKER of New Jersey. You gave the ton-mile charge in England and the United States. Have you the ton-mile charge in Europe?

Mr. KRUTTSCHNITT. I have the other roads here. As I intended to file this, I didn't read that. The average gross earnings per tonmile of freight in the United Kingdom were 2.28 cents; in Germany, 1.37 cents: in France, 1.30 cents; in Switzerland, 2.54 cents; and in the United States, 0.71 cent; or 7 mills in the United States, 25 mills in Switzerland, 13 mills in France, 14 mills in Germany, and 23 mills in Great Britain.

(The diagram referred to is here inserted :)

Relative efficiency of capital and public service of the railroads of the United States, United Kingdom, Germany, France, and Switzerland.

Relative efficiency of capital and public service of the railroads of the United States, United Kingdom, Germany, France, and Switzerland-Continued.

NOTE.-United States, year 1916; United Kingdom and Germany, 1913; France, 1912; Switzerland, 1915

The CHAIRMAN. Mr. Kruttschnitt, I only had one object in asking you, because you are a practical railroad man, and that was if the service performed by the railroads as a unit could not be to some extent performed at less expense than it could when they were competing systems, fighting each other-I don't mean in a destructive way, but having necessarily to incur expense due to the very fact that they were competitors; if that expense might not be, if not altogether eliminated, considerably reduced by reason of the unification of operations, and if you railroad gentlemen who are going to be in charge of it, if it is not your intention to try to operate these roads while they are being under Government control as economically as possible?

Mr. KRUTTSCHNITT. There is only one sentiment that I have ever heard expressed among railroad managers in the United States, and that was that they considered themselves helping to win the war, and there wasn't any effort that they would leave unmade to do everything possible under the new condition of things, as they did in the past, to increase efficiency and provide greater transportation service for the country. We must remember, however, that the enviable position that the United States roads have attained has been through competition as to service. In other words, each man running his railroad was interested in showing better results than his competitor was showing, and if you, through pooling all of the roads and abolishing corporation lines, throw them all into a general system, the question to ask ourselves is whether a large part of this spirit of emulation would not be lost.

I believe that we should maintain our organization just as intact as ever, barring such men whose services are absolutely not required. The CHAIRMAN. Well, I had supposed that that was to be the program under the director general, but if the present organizations already have their minds made up that all the facilities that they needed as competing properties will be necessary to be continued at the same expense during this unified control-if that is their view about it, they wouldn't do, I wouldn't think, very much to bring about any economies along that line.

Mr. KRUTTSCHNITT. Please don't understand me, Mr. Chairman, as advancing that view. The way you enunciate the matter now is a little different from the way you did before, when you said "to a certain extent," that the expenses could be reduced.

The CHAIRMAN. I agree with you altogether, but I mean to an extent. I wouldn't want it to be of such an extent as to be of material damage to the country, the business of the country, but I can't see any use in keeping up absolutely useless expense in the way of employment of people that were useful before the railroads were taken over and now can not be of any use whatever to the railroads. I don't see why, during the war, we can't waive some of the conveniences of services that we demand and pay for in time of peace. I don't think any argument is possible on that view, and it is only to that extent that I am speaking.

Mr. KRUTTSCHNITT. You are entirely right, and, as I say, argument is impossible.

Mr. COADY. Don't you think the right sort of competition is constructive and helpful among railroads?

Mr. KRUTTSCHNITT. I do; competition in service. I don't think the old-fashioned competition was.

Mr. COADY. NO; I wasn't referring to the old-fashioned competi‣ tion.

Mr. KRUTTSCHNITT. As I say, I thank the Lord and Congress that that has gone and was gone long before I had anything to do with the general operations of a railroad.

Mr. DILLON. To put a concrete case to the witness, I want to state this: I have heard it said that there were 21 passenger trains running each way from Omaha to Chicago, and that one-half of those passenger trains on the five roads that operate them could be taken

off, and thereby save that much expense. Now, don't you think the Government could do that, or order it done, and thereby reduce the amount of indemnity that the Government would have to pay?

Mr. KRUTTSCHNITT. Absolutely they should. I don't know whether the number as quoted by you is right, but the principle does not admit of argument. And when we were attempting here through our committee to get unified operation of roads, we attacked that problem and we could have solved it long ago but for the fact that whatever road was ordered-to whatever road we suggested that they take off trains, they would say, "Well, that is going to affect our earnings." The answer would have been, "Well, run the necessary number of trains between Omaha and Chicago and we will divide the proceeds among all the roads interested." But the law forbade us to do that. The Government now can do it and they will save all of that money, just as you say.

Mr. DILLON. And thereby protect us in the damages that we propose to give you?

Mr. KRUTTSCHNITT. Unquestionably. And the men relieved from that service will be not discharged but they will be transferred to the freight service and they will be used in moving freight.

Mr. DILLON. You understand that the railroads are willing to cooperate to reach those results, do you?

Mr. KRUTTSCHNITT. The railroads are not only willing to cooperate, but they were eager to do it and would have done it but that the law forbade them from doing it.

Mr. DILLON. Likewise I understand that from Chicago to Milwaukee nearly every train carries a dining car and a buffet car. They can very easily be eliminated and thus save expense?

Mr. KRUTTSCHNITT. Well, you could enumerate a great many instances over the country where that unnecessary number of passenger trains is run, but the principle is the same in all, that they should certainly be taken off and there should be no trains left except sufficient to meet the reasonable demands of the public. Now, all of the other employees and locomotives should be used for the purpose of moving freight.

Mr. ESCH. Mr. Kruttschnitt, in the article that was referred to by Mr. McKenzie, in relation to the war conditions, he elaborates this proposition, that there should not be increases of pay to the employees of the roads because of increased cost of living due to war conditions, but that that increase in cost of living should be met to the employees by way of what the Government terms "bonuses." You remember his discussion of that phase of it?

Mr. KRUTTSCHNITT. Yes; I read the article when it came up perhaps a month or six weeks ago, and so many things have happened since that I am not over familiar with the details of the paper, but it struck me at the time as the best thing I had read up to that time. Mr. Esc. And he stated in the last report the bonuses to men over 18 had now amounted to 15 shillings a week, and those under that were 7 shillings a week; that the philosophy back of this bonus system was the fear or inability of the carriers to go back to the normal wages after war conditions, if the labor enjoyed higher wages during the war. Now, we are not contemplating adopting the bonus system

in America, I judge, from the fact that the Director General has appointed a labor board. That being the case, there would have to be considered increases of wages as such, would there not?

Mr. KRUTTSCHNITT. Yes.

Mr. ESCH. What do you think of that fear expressed on the part of the English carriers that if during the period of war the employees on railroads in the United States enjoy war wages, it may be difficult if not impossible to go down to the normal after peace should come? Mr. KRUTTSCHNITT. I think it would be absolutely as hard for the English to abolish their bonuses as it will be for the Americans to reduce their wages. I want to explain my meaning. A bonus paid regularly and for any protracted period of time is an increase in wages. You can't make it anything else.

Mr. BARKLEY. And it soon becomes habitually regarded as a part. of the permanent compensation.

Mr. KRUTTSCHNITT. Certainly.

Mr. MONTAGUE. It is a system of wages.

Mr. KRUTTSCHNITT. Exactly. The question came up in the directory of our own roads. We paid a bonus to employees about two years ago, and the question came at the expiration of the bonus year whether we should pay it again, and the directors reached the conclusion unanimously, as the war seemed to be on for a good long while, that if they paid bonuses for any lengthy period every employee who received a bonus would adjust his method of living to the bonus. In other words, he would come to expect it; he would treat it just as it actually was-that is, a raise in his pay. He couldn't possibly look at it any other way, and if we undertook after paying it one or two or three years to cut it off, it was tantamount to a reduction of that man's pay, and we couldn't make him look at it in any other way; it wasn't reasonable to expect him to look at it in any other way. So we concluded that we would deal with the employees on the basis of their fair demands. That is, if a class of employees was underpaid we would consider all the circumstances and adjust the pay to suit, and do away with the bonus. We did so, and I think we were right, and I think those who deceive themselves into believing that immediately the war ceases they can stop paying bonuses are going to be very rudely awakened when the time comes.

Mr. THOм. Mr. Chairman, if the members of the committee will refer to page 103 of the publication that I have put before them I think they will see that these bonuses have already been transmuted into war wages, and they are no longer bonuses in England.

Mr. KRUTTSCHNITT. Well, I didn't know they had reached that already.

Mr. THOM. Yes; they have.

Mr. ESCH. One other question that I would like to ask Mr. Kruttschnitt-under this proposed bill the Government guarantees compensation to the carriers on a standard return, based upon a certain period. Might not that lead to an increase of rates in order to lessen the Government's possible responsibility for that compensation?

Mr. KRUTTSCHNITT. Quite possibly. I assume that the Government will use its influence. I suppose it could only use its influence with the commission, which is an independent body, but would use its

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