( Originally Published 1918 )
WHEN America entered the war there was a very great increase in the volume of business of the railroads of the country. The roads were already so crowded by what the Allies had done in purchasing war supplies, that a great deal of confusion had resulted. The Allies had expended more than three billion dollars in the United States and as nearly all of their purchases had to be sent to a few definite points for shipment to Europe, the congestion at those points had become a serious difficulty. Thousands of loaded cars had to stand for long periods awaiting the transfer of their contents to ships. This meant that thousands of cars which had been taken from lines in other parts of the country would be in a traffic blockade for weeks at a time. The main difficulty appeared to be that of getting trains unloaded promptly.
The declaration of war by the United States made the situation very much worse. Not only did the railroads have to handle the freight destined for the Allies, but there was a very large addition to the passenger movement on account of the thousands of men that were being sent to the various training camps, and the immense masses of supplies that had to be sent to these camps. This included not only the ordinary supplies to the men but thou-sands of carloads of lumber. Moreover, all over the country mills and factories were now being handed over to the government for war work; and to them, too, great quantities of raw material had to be sent, and the finished product removed to its destination.
A vigorous endeavor to meet the new difficulties was instituted by the railroads themselves. They themselves named a war board, which was to cooperate with the government and which was to have absolute authority. But this arrangement soon proved unsatisfactory. Each government official would do his best to obtain preference for what his department required, and to obtain that preference a system of priority tags was established which became a great abuse. The result was that priority freight soon began to crowd out the freight which the railroads could handle ac-cording to their own discretion, thus seriously interfering with business all over the country.
Naturally, the railroad executives and the government authorities studied the question with the greatest care, but they could not reach an understanding among themselves, nor with the Administration. At last the President settled the matter by announcing his decision to have the government take over complete control of the roads. The President derived his power from an Act of Congress dated August 29, 1916, which reads as follows:
The President in time of war is empowered, through the Secretary of War, to take possession and assume control of any system or systems of transportation, or any part thereof, and to utilize the same to the exclusion, as far as may be necessary, of all other traffic thereon, for the transfer or transportation of troops, war material and equipment, or for such other purposes connected with the emergency as may be needful or desirable.
The proclamation went into effect on December 28, 1917, and the President declared that it applied to "each and every system of transportation and the appurtenances thereof, located, wholly or in part, within the boundaries of the Continental United States, and consisting of railroads and owned or controlled systems of coastwise and inland transportation, engaged in general transportation, whether operated by steam, or by electric power, including also terminals, terminal companies, and terminal associations, sleeping and parlor cars, private cars, and private car lines, elevators, warehouses, telegraph and telephone lines, and all other equipment and appurtenances commonly used upon or operated as a part of such rail or combined rail and water systems of transportation. . That the possession, control, operation, and utilization of such transportation systems shall be exercised by and through William G. McAdoo, who is hereby appointed, and designated Director General of Railroads. Said Director may perform the duties imposed upon him so long and to such an extent as he shall determine through the boards of directors, receivers, officers and employees, of said system of transportation." President Wilson issued an explanation with this proclamation in which he said :
This is a war of resources no less than of men, perhaps even more than of men, and it is necessary for the complete mobilization of our resources that the transportation systems of the county should be organized and employed under a single authority and to simplify methods for co-ordination which have not proved possible under private management and control. A committee of railway executives who have been co-operating with the government in this all-important matter, have done the utmost that it was possible for them to do, but there were differences that they could neither escape nor neutralize. Complete unity of administration in the present circumstances involves upon occasion, and at many points, a serious dislocation of earnings, and the committee was, of course, without power or authority to rearrange charges or effect proper compensations in adjustments of earnings. Several roads which were willingly and with admirable public spirit accepting the orders of the committee, have already suffered from these circumstances, and should not be required to suffer further. In mere fairness to them, the full authority of the government must be substituted. The public interest must be first served, and in addition the financial interests of the government, and the financial interests of the railways must be brought under a common direction. The financial operations of the railway need not, then, interfere with the borrowings of the government, and they themselves can be conducted at a great ad-vantage. Investors in railway securities may rest assured that their rights and interests will be as scrupulously looked after by the government as they could be by the directors of the several railway systems. Immediately upon the reassembling of Congress I shall recommend that these different guarantees be given. The Secretary of War and I are agreed that, all the circumstances being taken into consideration, the best results can be obtained under the immediate executive direction of the Honorable William G. McAdoo, whose practical experience peculiarly fits him for the service, and whose authority as Secretary of the Treasurer will enable him to co-ordinate, as no other man could, the many financial interests which will be involved, and which might, unless systematically directed, suffer very embarrassing entanglements.
President Wilson's proclamation stirred up great excitement on the stock market. Speculators rushed to buy back railroad stocks which they had previously sold short, and the market value of such stocks was raised more than three hundred and fifty million dollars as a result. The Federal Government's assumption of control of the railroads was generally recognized as the proper act under existing circumstances, and the guarantee of pre-war earnings made them a good investment.
The railroad system in the United States consists of 260,000 miles of railroad, owned by 41 distinct corporations, with about 650,000 shareholders. It employs 1,600,000 men and represents a property investment of $17,500,000,000. The outstanding capital in round numbers is $16,000,000,000, $9,000,000,000 of which is represented by a funded debt. The rolling stock comprises 61,000 locomotives, 2,250,000 freight cars, 52,000 passenger cars and 95,000 service cars. All this was now under the charge of William G. McAdoo. On January 4, 1918, President Wilson explained his plan to Congress, and recommended legislation to put the new system of control into effect, and to guarantee to the holders of rail-road stocks and bonds a net annual income equal to the average net income for the three years ending June 30, 1917.
The wise recommendations of President Wilson were at once approved by Congress; provision was made for guaranteeing the rail-roads the income which he recommended, and for financing the roads. The railroads' war board was abolished and Mr. McAdoo appointed an advisory board to assist him. This board consisted of John Skelton Williams, Controller of the Currency; Hale Holden, President of the Chicago, Burlington and Quincy Railroad; Henry Walters, Chairman of the Board of Directors of the Atlantic Coast Line; Edward Chambers, Vice-President of the Santa Fé Railroad and head of the transportation division of the United States Food Administration; Walter D. Hines, Chairman of the Executive Committee of the Santa Fé. Specific duties were assigned to the various members of this committee. Mr. Williams was to deal with the financial problem ; Mr. Holden to assume direction of committees and sub-committees, and other phases of the work were allotted to other members. Mr. Walter D. Hines was made assistant to the Director General.
Mr. McAdoo's first order was to pool all terminals, ports, locomotives, rolling stock and other transportation facilities. Another or-der had as its object to end the congestion of traffic in New York City and Chicago. It gave all lines entering these centers equal rights in trackage and water terminal facilities. This wiped out the identity of the great Pennsylvania Terminal Station in New York, and gave all railroads the use of the Pennsylvania tubes under the Hudson River.
The effect of government control of the railroads was felt from the very first. Coal was given the right of way, giving great relief to such sections as were suffering from fuel shortage. Many passenger trains were taken off, more than two hundred and fifty of such trains being dropped from the schedules of the eastern roads. This permitted a great increase in the freight traffic. Orders were also given that all empty box cars were to be sent to wheat-producing centers, so that wheat could be moved to the Atlantic sea coasts for shipment to England and France. These orders preceded the adoption of the railroad control bill, which was not passed by Congress until March 14th. A feature of the bill is the proviso that government control of the railroads shall not continue more than twenty-one months after the war. After the passing of the bill plans were made to make contracts with each railroad company for government compensation on the basis provided in the bill.
The action of the government in thus assuming control of the railroads very naturally led to wide differences of opinion, some of which were sharply expressed in the Congress of the United States. On the whole, however, public opinion decided that the government acted wisely. Certain inconveniences to the traveling public were easily excused when it was realized that the movement of troops through-out the country to the camps, or from the camps to the ports which were to take them across the sea, from "Texas to Toul," was being accomplished with great success; that the movement of war material was now possible, and that the gigantic railroad system was working without a hitch.
Many details, in connection with the railroad management, were not at once worked out, and many months passed without complete agreements regarding the railway operating contracts. But this was a matter of greater interest to the owners than it was to patriotic citizens, anxious for the winning of the war. Governmental control of the railroads was only a beginning. On July 18th President Wilson took control, for the period of the war, of all telegraph, telephone, -cable and radio lines, signing a bill on that day passed by Congress authorizing such action.
The transportation of the American army across the ocean was the greatest military feat of its kind ever accomplished in history. The transportation of English troops during the Boer War meant a longer journey, but the number of troops sent on that journey was but a small fraction of America's army.
The railroads in existence were not sufficient. The ships that were necessary could not be found in America's navy. It was necessary to build new roads, new docks, new terminals,, new bases of supplies in America, and to send abroad thousands of trained workmen and experienced railroad engineers to build similar necessities in France. To convey the millions of men across the water England had to come to the rescue, and though hundreds of American ships were built with a speed that was almost miraculous, they were in constant need of the assistance of the Allies. But wonderful men were put in charge of the work, wonderful organizers with wonderful assistants, and the great task was accomplished.
As soon as the army was trained it was sent across—first by thousands, then by tens of thousands, then by hundreds of thousands, until before the war was over more than two million men had made the great trip "over there." And throughout that whole trip they were watched over as carefully as if they were at home. Every want was supplied; food, clothing, munitions were all where they were needed. Even their leisure hours were looked after, their health attended to. Books, games, theaters, study classes, all were there.
It was a wonderful performance, and the whole movement was conducted with clock-like precision. On such a day at such an hour the trained soldier would start. At such an hour he would report in some Atlantic port. At such an hour and such a minute he would board ship, and with equal precision that ship would sail upon the appointed moment. Perhaps on the journey over some submarine might de-lay the ship, but the destroyers were there on the alert, and the submarine was but an amusing episode. On the other side the process was carried on with equal efficiency. Before the American doughboy could realize that he was in France he was in his quarters, just like home, in the base camps behind the fighting line, and it was this miracle of transportation that won the war.