At all events, when Saturday came there was a printed slip in John's envelope saying that, owing to the slack season, the shop force was to be reduced and his services were to be dispensed with during this period when there are not sufficient orders to warrant the operation of all machines.

"I guess I must have slowed up,' said John. "They wouldn't have let me go if I hadn't. They kept me through lots of slack seasons before.'"'

The writer in referring to the hopeless search for work very properly said:

"He didn't get work. Of the hundreds of similar cases from which this one was selected, the genesis of misfortune is just that -'didn't get work.' It was no accident; it was the remorseless working of a system. John's discharge and the slack season had all been arranged years before. To keep pace with its competitors, the company must get a certain high standard of efficiency from its shop-people. To get it, it must watch the individual closely. It is as if an engineer were constantly testing the cogs on an important machine.

"John had slowed up. For ten years he had bent over machines that ground particles from metals, had breathed the metal dust, and had worked at a speed that used up all that was in him. Such a regime does strange things to the insides of a man. There is nothing apparent to the inexperienced observer. The man looks sound. But, after some years, the foreman's eye begins to detect a failing, and when the first slack season comes it is a good time to discard a wearing-out man. This is not theory; it is business.

These are the effects of scientific management as applied to production. If they are supposed to have increased the prosperity of the employe it is not at all out of place to say he would have been better off without prosperity of the kind that sends his family to the gutter and himself to the pen. It is the story of every day life, of unrecompensed toil, of a young man, old before his time, scrapped and done for and his family down to the slums. And, in the face of it, the employer demands greater efficiency.

Railroad employes are interested in the theory of scientific efficiency, because the railway companies have been advised to observe strict economy in the payment of wages, in the operation of their properties, and so far as we can observe, "scientific" man

agement simply means to add that much more to the tasks of the employe without meaning to in the end add one single cent to his day's earnings. Questions of this kind appeal to gathering of employers who try to make themselves believe that they include their employes in whatever advantages come through scientific management, but they do not appeal to the employe who knows that capital preys upon labor, and that if it discovers or develops a further reservoir of productiveness in labor it will appropriate it and leave labor no better off than before. The railway transportation employes might take some comfort at this time in the statement of the most important witness produced by Mr. Brandeis, who said: "The efficiency of the traffic by my standards is very high, that is, efficiency of expense in the traffic department." The wonder is that anything could have been even imagined to the contrary and, yet, the railroads are now figuring on additional tonnage without additional men to handle it. When one considers the increased efficiency of train operation today, the increase in the number of tons hauled, the decrease in the number of men employed, and everything else taken into consideration, it would have been peculiar for the scientific efficiency expert to have declared to the contrary. The word has gone down the line to many of the shop employes that scientific efficiency is to be the plan of operation in the future, and it is safe to say that it speaks true in very many instances. The reward is promised and doubtless will induce many who have heretofore been regarded as fair employers of labor to take a chance on increasing the productiveness of their employes, not with any hope of bettering the conditions. of the employe or of giving the advantage of cheaper production to the consumer, but for the purpose, as always, of adding to their own revenues without considering the physical and mental deterioration of the men, which now seems to have reached the limit of sacrifice demanded by industry.

That there is danger of "rushing" the plan, already killed in the house of its friends, is admitted by American Industries, an employers' publication, which said:

"It is no detriment to the real value of scientific management to utter a word of warning against ill considered attempts to adopt its principles. Like all newly discovered, or newly exploited industrial panaceas, many crimes may be committed in its name. There are today undoubtedly scores upon scores of civil engineers

out of a job, or shop foremen seeking other jobs, who are about to set themselves up as efficiency engineers, prepared to reduce costs and increase profits at a moment's notice. In that lies the danger of the new movement. The system itself as promulgated by Frederick W. Taylor, after thirty years of arduous, painstaking and costly experimentation, stands on its own bottom as a revolution in practical shop management. Mr. Taylor himself has no faith in the wholesale possibilities of the system, and most earnestly condemns any effort made to achieve results with 'short cuts.' To him there is no royal road to success in the application of scientific management to any plant."

THE NECESSITY FOR HIGHER RATES

BY JAMES MCCREA,

President the Pennsylvania Railroad Company.

STATEMENT BEFORE THE INTERSRATE COMMERCE COMMISSION, WASHINGTON, D. C., OCTOBER 12, 1910.

Anticipating that I would have to appear before this Commission, I have endeavored to put my conclusions and thoughts down on paper to the end that I might state as clearly as possible and in proper sequence what I had to say. In putting it on paper it was done entirely by myself and the lines of thought are my own. The figures to which I will refer in a general way were furnished me by the Comptroller of the company, who is the proper officer to do that, and while I have not entered into detail at all in connection with them, he will be prepared to submit any statement in detail on which these figures were based. If it please the Commission, I would like to be allowed to read those conclusions, because I think in that way I can more clearly give my views on the subject that I am testifying to.

The testimony that I want to give is that the Pennsylvania system east of Pittsburg has cost very much more than the capitalization represents. On that capitalization it has never paid more than a fair return, less, in fact, than most other characters of investment, such as manufacturing, mining and agriculture. The results of constant increases in its business have been distributed either through reductions in rates, increases in amounts paid for wages and material, or by reinvestments in the property not capitalized. It has always been typical of good and constantly improved service-in fact, the character of service which, if I understand the American people, they desire perpetuated and improved. When a railroad system of this character so capitalized, renders a service. which is not only of the highest character, but satisfactory to the public and to its patrons, deriving as it did in the year 1909, net earnings to the amount of but 5.01 per cent of the amount actually invested in the property, it is difficult for me to understand how a system of rates which secures such results can be regarded as on too high a basis.

The Pennsylvania Railroad Company has for many years past, as a result of its operations, realized a substantial surplus in each year over and above the amount required to enable it to meet its

interest charges and pay moderate dividends to its stockholders. This surplus has varied in amount from year to year. For the last ten years the average has been about $12,000,000 a year, practically all of which has been expended on the property for the purpose of enabling the company to conduct its operations more safely, more efficiently and more cheaply.

Since the passage of the interstate commerce act in 1887 the amount expended on the property of the lines east of Pittsburg out of the surplus earnings and from other sources than the proceeds of the sale of issues of bonds or stock or other securities, agregates $262,000,000, and the company was enabled to provide almost all of this large sum out of surplus earnings derived from the operation of its property. The Pennsylvania Railroad and many of the roads embraced in its system were built at a time when it was difficult to secure capital for such enterprises. The country through which the roads were built was at that time comparatively thinly settled and the business light. The character of the construction, which was suitable for the time and the existing conditions, was, to a large extent, unsuited to later conditions. The safety of the public and of employes required elimination of grade crossings of highways, the use of safety appliances and the use of improved material and equipment, all of which in themselvs do not yield much, if any, net return, and it was to meet these conditions and to adopt its road and equipment to modern requirements that the uncapitalized earnings in the form of surplus have been so freely spent. Had these earnings not been available, and had they not been expended for the purposes indicated, the Pennsylvania Railroad would today be a very different railroad, and would have been wholly unable to render the service to the public which it is today rendering. The accumulation of these surplus earnings which have been thus expended has only been possible because the rates of freight in force since the passage of the interstate commerce act have been sufficient to realize for the company amounts in excess of its expenses, taxes, interest and dividends.

The fact that these surplus earnings were being earned in each year has not been a matter that has been concealed from the public, but, on the contrary, the existence of the surplus and the disposition made of it have not only been public property, but the method or practice pursued by the company in providing in part, at least, for the necessary additions to and improvement of its property in this manner has been generally and publicly commended and approved.