Chapter X: Introduction

The ten years or more which have elapsed since the resumption of industrial activity that began some time in 1897 have been characterized by changes in rates of wages for substantially all kinds of labor, and in the prices of most commodities which amount to a profound and material alteration in the value of money. Wages of railway labor, prices of railway materials and supplies and prices of commodities carried by railways and of those produced by the purchasers of railway transportation have rapidly increased. This is equivalent to a decrease in the value of the money in which railway charges are paid _for the appreciation of commodities is the depreciation of money_. Commodities cannot have generally augmented value without money having diminished value. Railway rates have not been adjusted to this diminished value of money. The involuntary and unsolicited reduction in railway rates has gone so far as seriously to threaten the stability of railway wages and that of the whole railway industry. Some adjustment through compensatory advances in money rates (_i. e._, nominal rates) is, therefore, absolutely necessary. The extent of the changes which have taken place, their relation to the problem of railway rates and the adjustments which they have made necessary are set forth in the following pages.

TYPICAL UNCHANGED RATES.

A fifteen-ton car-load of fourth class freight carried all-rail between Chicago and New York at any time during the year 1897 would have brought the railways transporting it $105.00 in gross receipts.

There has been no change in the class-rates between Chicago and New York since 1897 and the same quantity of freight, classified in the same way, produces the same gross receipts now that it did in 1897.[E]

The rates between Chicago and New York, as is very well known, are the basis of all rates in the region north of the James, Potomac and Ohio Rivers, and east of the Mississippi River and of a large proportion of the rates applicable to traffic originating or destined to any point in that region. Without a change in rates between Chicago and New York there could have been, during the continuance of the system of rate adjustment that has been in force since long prior to the year 1897, no general change in the rates based upon those in force between those cities.

WAGES OF RAILWAY EMPLOYEES.

More than forty per cent. of the gross receipts of the railways of the United States are expended in the payment of employees, the sums annually paid out for that purpose since 1897 being as follows:

Amount paid to
Year. employees.

1897 $465,601,581
1898 495,055,618
1899 522,967,896
1900 577,264,841
1901 610,713,701
1902 676,028,592
1903 (a)776,321,415
1904 817,598,810
1905 839,944,680
1906 (a)927,801,653
1907 1,072,386,427
---------------
Total $7,781,685,214

(a) Includes $19,000,000 estimated for Chicago, Milwaukee & St. Paul
in 1903 and $27,000,000 for the Southern Pacific in 1906.

It is a matter of common knowledge and of frequent comment that a given sum of money will now buy very much less in labor or commodities than it would in 1897. The change has been gradual but substantially continuous and the aggregate result has been enormous. The consequence of this change has worked great hardship to those whose incomes have not been adjusted to the changed purchasing power of money but fortunately the rates of wages of nearly all workmen and the prices of practically all products of labor expended upon farms or in factories or otherwise have been raised sufficiently to more or less completely offset it. The principal sufferers are those salaried employees whose salaries have not been readjusted and those whose incomes are received under contracts covering long periods of time or are derived from the marketing of commodities or services at prices more or less effectively controlled by custom or statute. Many of the owners of railway bonds are in the second class and all interstate railways are, as to the disposal of their services, in the third class.

As already noted, the gross revenue derivable by the railways from the transportation of a carload consisting of fifteen tons of fourth class freight between Chicago and New York is the same now that it was in 1897--_i. e._, $105.00. But $105.00 is worth much less to any railway now than it was in 1897 for money is worth at any time what it will buy at that time. The reports of the Interstate Commerce Commission show the following increases in rates of average daily wages paid to railway employees:

Wages per day.
Class of Employees. -------------------------
Increase,
1897. 1907. per cent.

Station agents $1.73 $2.05 18.50
Other stationmen 1.62 1.78 9.88
Enginemen 3.65 4.30 17.81
Firemen 2.05 2.54 23.90
Conductors 3.07 3.69 20.20
Other trainmen 1.90 2.54 33.68
Machinists 2.23 2.87 28.70
Carpenters 2.01 2.40 19.40
Other shopmen 1.71 2.06 20.47
Section foreman 1.70 1.90 11.76
Other trackmen 1.16 1.46 25.86
Switchmen, flagmen and watchmen 1.72 1.87 8.72
Telegraph operators and despatchers 1.90 2.26 18.95
Employees, account floating equipment 1.86 2.27 22.04
All other employees and laborers 1.64 1.92 17.07

The foregoing affords a means of ascertaining the real value of $105.00 of railway gross receipts in 1897 and 1907 and the decrease from the earlier to the later year. The following table shows the number of days labor of each of the different classes of railway labor which $105.00 would buy in each of the years indicated:

Number of days labor
purchasable for $105.00.
Class of Employees. ------------------------
Decrease,
1897. 1907. per cent.

Station agents 60.7 51.2 15.65
Other station men 64.8 59.0 8.95
Enginemen 28.8 24.4 15.28
Firemen 51.2 41.3 19.34
Conductors 34.2 28.5 16.67
Other trainmen 55.3 41.3 25.32
Machinists 47.1 36.6 22.29
Carpenters 52.2 43.8 16.09
Other shopmen 61.4 51.0 16.94