In accordance with the terms of President Wilson's proclamation, the possession of all the transportation systems therein described passed to the government of the United States at noon on December 28, 1917, and they are now being operated under the control of the federal government acting through Director McAdoo.

RESULTS FROM GOVERNMENT OPERATION

It is too early to predict and it may be indelicate to suggest the details of the plan of government operation which must be worked out by Director McAdoo. The broad outlines, however, of what may be accomplished by government operation of the railroads during the war seem well marked. The government can (1) disregard absolutely all previous traffic conditions and can operate the railroads as a single system with an eye solely to the maximum efficiency to meet the nation's war needs; (2) divert all or a part of the traffic, passenger or freight or both, of one railroad and give it to another, which can transport it more economically or efficiently; (3) eliminate all property and employes used and all expenditures incurred in the purely competitive activities of the various railroads, effect tremendous savings in construction and operating expenses, and utilize the man power thus saved for necessary railroad work or for other useful and necessary activities; (4) secure on reasonable terms the funds necessary for additional terminal facilities, equipment and other additions and betterments; (5) secure the labor necessary to keep railway properties in safe and serviceable operating condition and can expedite the manufacture for the railroads of necessary cars, locomotives and other equipment.

That Director McAdoo will be successful in accomplishing these results and will thereby greatly increase this nation's efficiency during the war is the earnest hope of every patriotic citizen.

What the effect of government operation of the railroads will be on the movement for government ownership is a question which will be much discussed. If government operation is a success, a powerful stimulus will undoubtedly be given to government ownership. In the meantime, every effort of the nation should be concentrated on making government operation an unqualified success. Whether government ownership will follow government operation is a question which we can answer when we have won the war.

PRINCIPLES AND PRACTICES OF CAR SERVICE

REGULATION

By H. E. BYRAM

The problem of car service may be stated briefly as the formulation of a plan whereby freight car equipment may be made to perform the maximum of service in a unified system of transportation with the minimum of sacrifice of the rights of the owner of the Under this definition the subject presents two distinct phases, one economic, the other financial.

cars.

In what manner shall car service be regulated in the public interest so that each unit shall furnish the greatest amount of transportation?

How shall it be regulated so that rights of possession and compensation for use will be equitably adjusted as between the owner and the user of the equipment?

The managers of the railroads and of other concerns which own the cars must consider the problem from the standpoint of the interests of their own concerns; but they must also consider it from the standpoint of the public welfare. The governmental regulating authorities are apt to consider the problem primarily from the standpoint of the public; but they should not ignore the interests and the rights of the companies which have invested capital in cars. Therefore, while regulating authorities may put more emphasis on the interests and rights of the public, and the railway managers may put more emphasis on the interests and rights of the individual companies, there really is no fundamental difference between the problem of car service as it presents itself to the railway manager and to the regulating body; and there can be no substantial difference between their solutions of it, if each gives due weight to both the private and the public rights and interests involved. It will be desirable to review the methods the railways themselves have used in dealing with the problem of car service before discussing the problem presented by regulation of car service.

Even under the system of car interchange in force before normal conditions were disturbed by the entrance of the country into the Great War, the railway industry of the United States, in its han

dling of car equipment, bore some of the aspects of a single system. The complexity of the problem of car service, even under normal conditions, had constantly grown greater. It had been influenced by the number of conflicting interests involved, which had increased in number through the advent of new and the dissolution of previously consolidated organizations; by the great extent of territory through which car equipment was handled; by the development of specialization in the adoption of equipment for the handling of particular commodities; but more than all by the aggregate increase in the demands of industry for adequate equipment facilities, the occasional scarcity of equipment, and a recognition of the economic necessity, under any condition, of securing the best possible utilization of existing equipment. However important the problem may be under normal conditions, its importance is greatly magnified when, as now, it is essential that every item of transportation equipment be made to perform its full part in carrying out the purposes for which we are engaged in the war.

ELEMENTS OF THE PROBLEM

The general term "car service" is commonly used to designate all that concerns the handling of the car as a vehicle of transportation, not only as between one railway and another, but also as between railways and the shipper or consignee. On June 30, 1916, according to the statistics of railways compiled by the Interstate Commerce Commission, there were in service in this country approximately two and one-half millions of freight cars. Of these, about 2,300,000 were owned by railway companies, and the rest by private car line companies, mining companies, etc. The number of the different classes of cars owned by the railways were as follows:

The mileage of all railways in the United States on the same date was 259,210 miles. There are then on the railways of the

United States approximately 9 freight cars per mile of railway. The ownership of these cars, excluding those of private ownership, is in the hands of about 1,000 railway companies. The number owned by each company varies from a few cars to upwards of 250,000.

JOINT USE OF CAR EQUIPMENT

The plan under which railways have for many years used equipment interchangeably is the result of voluntary action on the part of railways themselves to the end of securing greater facility of operation and hence more efficient service. The Interstate Commerce Commission has always recognized the commercial necessity of through shipments, and consequently the movement of cars over other than the owning roads; and, indeed, the original Act to Regulate Commerce seems to recognize it, though in a negative way. The Act, approved on February 4, 1887, provides that

to prevent

the carriage of freight from being continuous from place of shipment to place of destination by carriage in different

cars, unless

such interruption was made for some necessary purpose and without intent to interrupt continuous carriage, etc.

In a decision1 rendered November 13, 1911, the Commission affirmatively defined the duties of the carriers with reference to a unified service:

The railroads of the country are called upon to so unite themselves that they will constitute one national system; they must establish through routes, keep these routes open and in operation, furnish all the necessary facilities for transportation, make reasonable and proper rules of practice as between themselves and the shippers, and as between each other.

WHY THERE IS A PROBLEM

If cars performed service only upon the road by which they are owned, there would be no problem of car service regulation in the sense in which it now exists. Between railways, as distinguished from those phases of the problem that arise between railways on the one hand and shippers and consignees on the other, the questions to be settled are predicated upon the ownership of the cars and their service upon other than the owning line. For this reason, the problem of car service is of chief importance in times of scarcity 1 Missouri & Illinois Coal Co. v. Illinois Central, 22 I. C. C. 39.

of equipment to meet the requirements of shippers-" car shortage. Since "car shortage" does not always mean a deficiency of equipment upon all the railways considered as one transportation system, but frequently means only that cars wanted in the West are detained in the East, or vice versa, it is clear that some definite plan of distribution should be determined upon for securing the maximum of service from each car with the minimum of infringement upon the rights of ownership.

A fundamental principle has been laid down by the American Railway Association that every railroad is entitled to the use of cars equal to its ownership. As a financial proposition it would seem that a road is entitled either to the service of its owned cars, in which case it would be expected that their earnings would pay interest on the investment and a fair average yearly earning plus an amount sufficient to keep them in repair and to provide for depreciation; or, if the cars are in the service of or detained on other roads, to receive from the holding road compensation sufficient to cover these several items. This is, in its simple form, the end to be attained.

It would seem, perhaps, that the application of a fixed mileage or per diem charge for the service or detention of a car upon a foreign road should afford an equitable basis for settlement between roads in all cases. Both systems have been tried. Neither has proved wholly satisfactory. Up to 1902, except in a few experimental instances, the only basis upon which a road received payment for the use of its cars on a foreign road was at a rate varying in different years from one and one-half cents to three-fourths of a cent per mile. The main objection to the plan was that charges did not accrue when a car was not moving. It might conveniently be used as a warehouse while cars belonging to the road holding it were engaged in more profitable service. It is not necessary to mention the possibility of error in reporting mileage. However, it is much easier to check up the service of a car by days than by miles; and in 1902 the railways constituting the American Railway Association adopted per diem rules, by which the owning road is paid at a fixed daily rental while its cars are in possession of other roads, which with numerous changes in rate and conditions of application have since remained the basis of settlement of car service between railways.