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She, however, will make no suggestions to the Allies, as to the amount of indemnity they shall demand of Germany. Do not construe this to mean that the United States intends to withdraw from a participation in the settlement of world affairs, because she is not at present a member of the League. In fact, the State Department will insist that she is entitled to a voice in their settlement. Under Hughes there will be a growing participation of the United States in determining all international questions.

Soviet Russia

Any hope that the radicals may have of recognition by the State Department of Soviet Russia may as well be abandoned. Mr. Hughes is unalterably opposed to any government that is not based on the will of the people, and that does not assure stability, economic tranquillity, and the recognition of property rights. If a government should be formed in Russia that filled these requirements, that had a sound economic basis, recognized the rights of the Russian peoples, and offered protection to the interests of foreigners, Mr. Hughes would gladly welcome Russia's return to the society of nations.

Disarmament

Disarmament would save the Government an immense amount of money. It would reduce taxation that has become a burden to most of the world, and would restore to economic uses a vast amount of labor and material, which would tend to lessen the present economic crisis, but in order to accomplish this much-desired result we must not fail to fully protect ourselves. We have not reached the millennial age, where the lion and the lamb will lie down together. A universal peace and brotherhood has not been established and it is absolutely necessary for our peace and protection that the United States shall continue to build battleships, and to keep our Navy equal to that of the great powers of the earth. If they all disarm-and the United States would be willing to meet them more than half way— well and good; but it is neither the part of wisdom nor prudence for the United States alone to begin disarmament.

Mexico

There is a strong probability that Mexico will be recognized as soon as the Obregon

Government has given concrete evidence that they have a stable government which will recognize the rights of American citizens, and has uprooted the seeds of Bolshevism that have been prevalent in Mexico for some time. Transfer Between Diplomatic and Consular Service It is highly probable that positions in the diplomatic and consular services will be made interchangeable. Young men in one branch of the State Department who have shown particular adaptability for the other branch will be transferred to it. An effort will be made to draw the work of these two departments more closely together, to synchronize and harmonize their endeavors, to make the consuls more or less diplomats, and the members of the missions valuable adjuncts to our foreign trade.

Restrictions on Foreign Travel

The State Department has been much maligned and misunderstood concerning the issuance of passports. During the war it was necessary to have them strictly regulated to avoid allowing alien enemies to return to their native land. Since the removal of the wartime restrictions of travel, the difficulty of securing passports has been largely eliminated. Some of the foreign governments, however, demand passports before allowing any one to enter their territory, consequently, the inconvenience to the traveler is not rightly attributed to the State Department, but, it has determined to make the burdens as light as possible. The rapidity and ease of securing passports under the new system will remove much of the criticism that has heretofore attached to this department, one of the most common points of contact between it and the average citizen.

South America

The State Department is particularly anxious to have a better understanding between the United States Government and the South American Republics; to draw more closely the ties that bind North and South America, and to increase our trade relations with our southern neighbors. In order to accomplish this end, it desires to remove all cause for suspicion regarding the intentions of the United States concerning them, and to assure them, by our attitude, of our desire for their friendship. One of the things already done has been the

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passage of the Colombian Treaty, which calls for the payment to Colombia of her demands for the loss of Panama.

Unity of English-Speaking Races

The State Department is in accord with the sentiment expressed by President Harding in his letter to John A. Stewart, chairman of the Board of Governors of the Sulgrave Institution, in which he said in part: "Destiny has made it a historical fact that the English-speaking peoples have been the instrument through which civilization has been flung to the far corners of the globe. I am impressed not so much by the glory that English-speaking peoples may take to themselves as by the profound duties that God has thrust upon them-duties of being restrained, tolerant, and just. These duties will find their greatest recognition in a united, unshakable friendship and understanding and oneness of purpose, not for the exclusion from brotherhood of others, but for a better brotherhood flowing toward others."

I

THE CHARACTER OF MR. HUGHES

BELIEVE that the wishes and aspirations of Secretary Hughes concerning the State Department will be realized. Mr. Hughes is a driving force, a veritable dynamo of action. He will get results. He is a strong man. He will impress his energy and aims for the Department in Washington, on the diplomatic corps in the field, and on the consular service, so that you may certainly expect a great increase in the efficiency, availability, and importance of the work accomplished by the State Department.

He is a clear thinker and a cogent reasoner. His plans will be practical, easily applied, and will improve the work of the State Department and make it of more service to the country. His intention of giving the service men a chance for rapid advancement and an assurance of an opportunity for a career will put new life into the men in the foreign field and will result in our being more ably represented abroad.

American trade will be benefited by a reenergized consular service.

America's position abroad will be strengthened by its determination to protect America and America's trade. Unfortunately the time was when American citizenship was not a valuable asset in some countries. Mr. Hughes will inaugurate a strong foreign policy that will assure respect for America. During his administration no American need be ashamed of his nationality. The American Flag will be his shield and buckler wherever he may wander over the globe.

Mr. Hughes has been very fortunate in his selection of Under Secretary of State Fletcher as his assistant. Mr. Fletcher is heart and soul with his Chief in furthering improvement and reform in the State Department. He is a brilliant diplomat who, through long years of service, is thoroughly conversant with diplomatic customs, and he has a level head on his shoulders. These two men working together will make a great team. America will be proud of its Department of State and of the greatly increased service that it will render to the American people.

THE RAILROADS ON A SOUND BASIS

What the Esch-Cummins Law Has Provided. Some Facts that Encourage Optimism

BY DANIEL WILLARD
President of the Baltimore & Ohio Railroad Company

ROM 1827 when the first charter was issued until December 28, 1917, American railroads were run under private management. From December 28, 1917, for twenty-six months they were operated by the Government. Since the 1st of March, 1920, they have again been under private management.

I shall not refer to the first ninety years, ending with the period of Federal control except to point out that until the very end of that period there was no such thing as a unified American railroad system. By 1917 there were 1,800 independent railroad companies.

But I want to emphasize that when the war came the railroads on their own initiative inaugurated a unified control.

I want to call particular attention to the formation and accomplishment of the "Railroad War Board," as it was called, because in my opinion the work of that Board has never been fully understood or properly appreciated.

On the eleventh day of April, 1917, only five days after our country entered the war, executive representatives of all the more important railroads in the United States met in conference in the city of Washington, and after giving consideration to the situation as it was put before them, promptly and unanimously passed the following resolution:

Resolved, that the railroads of the United States, acting through their chief executive officers here and now assembled, and stirred by a high sense of their opportunity to be of the greatest service to their country in the present national crisis, do hereby pledge themselves, with the Government of the United States, and with the Governments of the several states, and one with another, that during the present war they will coördinate their operations in a continental railway system, merging, during such period, all their merely individual competitive

activities in the effort to produce a maximum of national transportation efficiency. To this end they hereby agree to create an organization which shall have general authority to formulate in detail and from time to time a policy of operation of

all or any of the railways, which policy, when and as announced by such temporary organization, shall be accepted and earnestly made effective by the several managements of the individual railroad companies here represented.

In harmony with the above resolution an executive committee of five railroad presidents was immediately appointed, and this committee came to be known afterward as the Railroad War Board. Offices were opened in Washington and the committee remained practically in daily session until the roads were taken over by the Government under authority of the President. The Railroad War Board created and built up a car service commission to act as their agency, which commission or agency was afterward taken over by the Director-General and used by him during the period of Federal control, and it is still in existence and still functioning as it did under the War Board in 1917.

of the members of Mr. Julius Kruttschnitt, who was one the War Board, activities in which he stated that the prepared a very illuminating report of its American railroads as a whole during 1917 carried 121,000,000,000 more ton miles than they carried during 1915, two years previous. A statement dealing with billions of anything is not likely to create a very definite impression in one's mind, but Mr. Kruttschnitt also pointed out that the increased ton mileage handled by the American railroads in 1917 over and above the amount which they handled in 1915 was of itself greater than all of the ton mileage handled by all of the railroads in England, Germany, Russia, Austria, and France during the last year officially reported at that time. Stated in that manner the increased burden carried by the railroads in 1917 has to me a most distinct significance. Mr. Kruttschnitt further stated that during the period of the War Board's activities orders were given by them for the movement of more than 200,000 empty cars, regardless of owner

ship, from one part of the country to another, where they could be used best to promote the winning of the war. Nothing of the kind had ever been done before or even contemplated in this country.

Again, during the summer of 1917, when it was necessary to build as quickly as possible the several large cantonments required for housing the new army then in process of development, it was necessary for the railroads to furnish empty cars at the hundreds of places where needed on main lines, branch lines, and side lines, for all the different kinds of materials necessary for construction purposes, and during the period of about eight weeks, while construction was most active, the railroads moved more than 140,000 carloads of material required for cantonment and for shipyard purposes, and this large tonnage was moved so promptly and so satisfactorily that the Secretary of War himself is authority for the statement that the construction programme of the Government, unprecedented as it was, was not delayed in the slightest waiting for transportation. The doing of this thing itself, if nothing else had been done (and much else was done), was sufficient to justify the existence of the War Board, and it should be remembered that when this great movement was being made the railroads were at the same time carrying a larger volume of other business than ever carried before in the history of the country.

It has been said by some that the railroads broke down as transportation agencies in 1917. I think you will agree, however, that if the figures I have quoted from Mr. Kruttschnitt's report have any significance at all, they show clearly that the railroads did not break down, but on the contrary they made an unprecedented and remarkable performance.

It is true that in the fall of 1917 there began to be an excessive accumulation of cars on the eastern seaboard, and the transportation movement began to slow down, but there is no earthly reason for ascribing the situation to a breakdown of the railroads. On the contrary it might better and more truthfully be said that it was due to the fact that the railroads were able to carry and did carry more tonnage than could be absorbed by ships for export and by mills for manufacture. The trouble was due to an excess rather than to a shortage of transportation. Commerce which at one time moved to the west from large productive

centres, we will say, all at once turned toward the east and there were no established agencies for properly controlling and coördinating activities and movements of that kind. It was because we had no machinery immediately available to control our industrial development and activities in an economical and efficient manner, together with the restrictions placed upon the railroads by laws, that the congestions referred to came about, and decidedly not because the railroads as transportation agencies had broken down. So much for the first epoch.

EPOCH II: GOVERNMENT CONTROL

HE second epoch began with the taking

over of the roads by the President. The Director-General, acting for the President, had full authority to consolidate, coördinate, and operate the railroads regardless of all laws, and he also assumed and exercised autocratic control over the movement of all traffic, and properly so under the circumstances.

The ton mileage carried by all the railroads under the Director-General in 1918, he having full authority and no restrictions, was barely 2 per cent. greater than it was under the unified direction of the War Board, with no control over priorities or tonnage movement and with all the restrictions imposed by a long series of restrictive laws. If the railroads had indeed broken down in 1917, then I submit that a breakdown plus 2 per cent. would not of itself be a very big accomplishment in 1918. At the same time we do know that during the year 1918 the railroads rendered a splendid transportation service and thereby contributed much toward winning the war, but even so we must remember that the service rendered only reflected an increase of 2 per cent. above what had been accomplished the previous year.

During the period of Federal control the statement was frequently heard that the advantages of unified control and operation were so great that they should be retained in the interests of the people. It was also said that they could only be realized in connection with the policy of Government ownership, or at least with Federal control and operation. The fallacy of that statement, I think, has now been established; that is to say, the fallacy of that part of the statement which claims that the benefits of unified operation can only be realized in connection with governmental control. In justice to the railroads it should

be remembered that the railroad presidents themselves were the first to visualize the supreme importance of unified control of the railroads in times of emergency, and not only did they visualize its value, but also they gave definite expression to their vision through the operations of the War Board.

I shall not discuss further the second epoch, not, however, because it does not afford a basis for further discussion, but simply because it represents a wholly illogical development, from my point of view-brought about by war conditions and not by normal economic influences or requirements.

EPOCH III: THE PRESENT

WE NOW come to the consideration of the

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that unified operation can only be had at any time at the expense of competition of service, and such a price is too much to pay even for unified control except in times of emergency. Congress evidently believed, having knowledge of what the railroads had accomplished under the War Board, that with suitable legislation the benefits of unified control and direction could be fully realized under private ownership when necessary, and they wrote an important portion of the law to cover that point.

In short, they gave to their agent, the Interstate Commerce Commission, full power in times of emergency to control and direct the movements of all the cars and all the engines of all the railroads regardless of ownership. Congress also said that in the exercise of this great

third or present epoch, which I hope power, the Commission could make use of and believe will be an enduring and successful

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1919.

1920.

REVENUE TON MILES

273,913,006,569

339,870,323,675

362,444,397,129

394,465,400,493

405,379,284,206

364,236,957,761

409,970,656,000

*Figures compiled for year ending June 30th

THE AMOUNT OF FREIGHT CARRIED BY THE
RAILROADS

These figures show the number of tons of paid freight
carried one mile in the years shown. On January 1,
1918, the Government began its operation of the rail-
roads. This lasted for twenty-six months, and was
followed by a six months' period during which the
roads were operated privately but had their earnings
guaranteed by the Government. Since September 1,
1920, private ownership without Government guarantee
has been in effect

A careful reading of the debates which took place in Congress during the consideration of the new Transportation Act clearly establishes the fact that it was the belief of Congress at that time that private ownership and operation of the railroads ought to be continued in this country, and it was just as clearly the intention of Congress to make private ownership possible by suitable legislation, and the new Transportation Act of 1920 was framed with that end in view. While there is much that is new in the act of 1920, I will refer only to some of its outstanding features, which I consider of fundamental importance.

Of first importance, as I view the matter, is the question of unified control, to which I have already made reference, because the advantages to be derived from unified control of the railroads are so important that unless they can be realized under private ownership in times of emergency, that fact of itself might compel the acceptance of some other policy. It should be clearly understood, however,

Commission for the

such agencies as it might select.

In harmony with and shortly after the passage of the law, the railroads appointed an Advisory Committee, consisting of eleven executives geographically selected, to take over the direction of the Car Service Commission in Washington, which had been created by the War Board and continued by the Director-General.

The Advisory Committee was instructed to coöperate with the Interstate Commerce purpose of carrying out and accomplishing the real intent of the law. When the railroads were turned back to their owners on the first of last March, they were inadequately equipped, and much of their equipment was in an impaired condition. The freight cars of the carriers had been pooled during the period of Federal control, and they were badly distributed at the end of that period. The labor situation upon the railroads as a whole, was perhaps never more disturbed than it was during the first three or four months following the termination of Federal control. There was a general shortage of fuel over the country. The soft coal miners' strike in the fall of 1919 had largely depleted the accumulated stocks of soft coal on hand

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