railroad service into hostile camps. The executive committees of the labor organizations practically can not save the members of those organizations from being got rid of, though they do in many cases protect them against summary discharge, and, on the other hand, the official, in the face of the executive committee, enjoys only in theory the power of summary discharge. The situation is accordingly false and bad. It provokes hostility. The one party boasts of a protection which he does not enjoy, the other insists upon a power which he dares not exercise. The remedy is manifest. A system should be devised based upon recognized facts-a system which would secure reasonable protection to the employee, and at the same time enable the official to enforce all necessary discipline. This a permanent service, with a properly organized tribunal to appeal to, would bring about. Meanwhile the winnowing process would be provided for in the temporary service. Over that the official would have complete control, and the idle, the worthless, and the insulordinate would be kept off. The wheat would there be separated from the chaff. "Not only should permanent employees be entitled to retain their position during good behavior, but they should also look forward to the continual bettering of their condition. That is, apart from promotion, seniority in the service should carry with it certain rights and privileges. Take the case of conductors, brakemen, engineers, machinists, and the like; there seems to be no reason why length of faithril service should not carry with it a stipulated increase of pay. If conductors, for example, have a regular pay of $100 a month, there seems no good reason why the pay should not increase by steps of $5 with each 5 years' service, so that when the conductor has been 25 years in the service his pay should be increased by one-quarter, or $25 a month. The increase might be more or less. The figures suggested merely illustrate. So also with the engineer, the brakeman, the section man, the machinist. A certain prospect of increased pay, if a man demeans himself faithfully, is a great incentive to faithful demeanor.

"How is the employee to be assured a voice in the management of these joint interests without bringing about demoralization? No one has yet had the courage to face this question; and yet it is a question which must be faced if a solution of existing difficulties is to be found. If the employees contribute to the insurance and other funds, it is right that they should have a voice in the management of those funds. If an employee holds his situation during good behavior, he has a right to be heard in the organization of the board which, in case of his suspension for alleged cause, is to pass upon his behavior. No system will succeed which does not recognize these rights. In other words, it will be impossible to establish perfectly good faith and the highest morale in the service of the companies until the problem of giving this voice to employees, and giving it effectively, is solved. It can be solved in but one way; that is, by representation. To solve it may mean industrial peace.

"It is, of course, impossible to dispose of these difficult matters in town meeting. Nevertheless, the town meeting must be at the base of any successful plan for disposing of them. The end in view is to bring the employer-who in this case is the company, represented by its president and board of directors-and the employees into direct and immediate contact through a representative system. When thu brought into direct and immediate contact, the parties must arrive at results through the usual method; that is, by discussion and rational agreement. It has already been noticed that the operating department of a great railroad company naturally subdivides itself into those concerned in the train movement, those concerned in the care of the permanent way, and those concerned in the work of the mechanical department. It would seem proper, therefore, that a council of employees should be formed, of such a number as might be agreed on, containing representatives from each of these departments. In order to make an effective representation the council would have to be a large body. For present purposes, and for the sake of illustration merely, it might be supposed that, in the case of the Union Pacific, each department in a division of the road would elect its own members of the employees' council. There are 5 of these divisions and 3 departments in every division. The operatingmen, the yard and section men, and the machinists of the division would, therefore, under this arrangement, choose a given number of representatives. If 1 such representive was chosen to each 100 employees in the permanent service, those thus selected would constitute a division council. To perfect the organization, without disturbing the necessary work of the company, each of these division councils would then select certain (say, for example, 3) of their number, representing the mechanical, the operating, and the permanent way departments, and these delegates from each of the departments would, at certain periods of the year, to be provided for by the articles of organization, all meet together at the headquarters of the company at Omaha. The central council, under the system here suggested, would consist of 15 men; that is, 1 representing each of the 3 departments of the 5 several divisions. These 15

men would represent the employees. It would be for them to select a board of delegates, or small executive committee, to confer directly with the president and board of directors. Here would be found the organization through which the voice of the employees would make itself heard and felt in matters which directly affect the rights of employees, including the appointment of a tribunal to pass upon cases of misdemeanor, and the management of all institutions, whether financial or educational, to which the employees had contributed and in which they had a consequent interest."

The discussion of the work of the insurance, superannuation, and pension features of the various railroad companies, as presented in another section of this report, gives much important material bearing on the relations of railroad employees and their employers. One other important aspect of the interest which railroad employers take in their employees remains to be discussed. Several roads have of late attempted to interest their employees as holders of investments in the property of the road. Chief among such experiments have been those of the Illinois Central Railroad Company, which is presented in the following circular sent out from the president's office May 25, 1896:

ILLINOIS CENTRAL RAILROAD COMPANY,

PRESIDENT'S OFFICE,
Chicago, May 25, 1896.

To Officers and Employees of the Illinois Central Railroad Company: Referring to my circular letter of May 18, 1893, outlining the plan for assisting employees of the company to purchase shares of its stock it is with much gratification that I note their increasing desire to thus identify their interests with those of the company.

In order that the plan may be more clearly understood, I present it herewith in greater detail. On the first day of each month the company will quote to employees, through the heads of their departments, a price at which their applications will be accepted for the purchase of Illinois Central shares during that month. An employee is offered the privilege of subscribing for one share at a time, payable by installments in sums of $5, or any multiple of $5, on the completion of which the company will deliver to him a certificate of the share registered in his name on the books of the company. He can then, if he wishes, begin the purchase of another share on the installment plan. The certificate of stock is transferable on the company's books, and entitles the owner to such dividends as may be declared by the board of directors, and to a vote in their election.

Any officer or employee making payments on this plan will be entitled to receive interest on his deposits, at the rate of 4 per cent per annum, during the time he is paying for his share of stock, provided he does not allow 12 consecutive months to elapse without making any payment, at the expiration of which period interest will cease to accrue, and the sum at his credit will be returned to him on his application therefor.

Any officer or employee making payments on the foregoing plan, and for any reason desiring to discontinue them, can have his money returned to him with accrued interest by making application to the head of the department in which he is employed.

An employee who has made application for a share of stock on the installment plan is expected to make the first payment from the first wages which may be due him. Forms are provided for the purpose, on which the subscribing employee authorizes the local treasurer in Chicago, or the local treasurer in New Orleans, or the paymaster, or the assistant paymaster, to retain from his wages the amount of installment to be credited monthly to the employee for the purchase of a share of stock. In case an employee leaves the service of the company from any cause, he must then either pay in full for the share for which he has subscribed and received a certificate therefor or take his money with the interest which has accrued.

The foregoing does not preclude the purchase of shares of stock for cash. An employee who has not already an outstanding application for a share of stock on the installment plan, which is not fully paid for, can in any given month make application for a share of stock for cash at the price quoted to employees for that month, and he can in the same month, if he so desires, make application for another share on the installment plan.

Employees who want to purchase more than one share at a time for cash should address the vicepresident in Chicago, who will obtain for them from the New York office a price at which the stock can be purchased.

Any employee desiring to purchase stock (except in special purchase of more than one share for cash) should apply to his immediate superior officer or to one of the local treasurers. STUYVESANT FISH, President.

Under date of

The efforts of the company in this direction began in May, 1893. October 29, 1900, the president of the company informed your expert agent that 211 employees had made partial payments on account of one share each of stock; those payments aggregating $7,951.80, an average of $37.69 on each share. So long as the shares were below par the men bought steadily, but since the shares advanced to a premium some have sold and taken the profit and comparatively few have bought. Up to June 30, 1900, 3,090 shares of the company's stock had been purchased and paid for under the plan outlined in the circular just quoted, the average cost to the purchaser having been $98.13 per share. The present market price of the stock is about $116 per share. When the stock went above par, the employees seemed to confuse shares of $100 with a promise to pay that sum and were naturally unwilling to pay more than they expected to get. The company's officials are very well satisfied with the results of the plan. It has induced others not employed by the company but resident on or near the line to buy shares, a feature that has been stimulated by the company's offer to carry registered holders of stock to Chicago and back free once a year at the time of the annual meeting. The distribution of the capital stock of the I C-VOL XVII-01-55

Illinois Central Railroad Company, as announced at the time of the annual meeting, September 26, 1900, was as follows:

The capital stock is $60,000,000, divided into 600,000 shares of $100 each.

This is represented by certificates for 599,949 full shares and scrip for fractions aggregating 51 shares. The certificates are registered in the names of 6,931 different holders. One of these, the adminis tration office, in Amsterdam, has held large blocks of stock for nearly forty years, against which it has outstanding its own receipts or due bills, good to bearer, which are held by a very large but unknown number of individual proprietors in Holland. There are registered in the name of the administration office 39,577 shares This leaves 560,372 shares in the name of the remaining 6,940 stockholders as registered on the company's books, the average holding being 80.74 shares, or $8,074.

There are in America 4,350 stockholders owning 355,227 shares, being 59.21 per cent of the whole. In each one of the twelve States in which the company runs its trains we have a number of proprietors, ranging from 6 in Nebraska, who own 149 shares, to 879 in Illinois, who own 38,117 shares, or $3,811,700.

The certificates of stock are registered as follows:

In 6 names, 5,000 shares or over, 12.01 per cent of the whole..

In 75 names, from 1,000 to 4,999 shares each, 24.03 per cent of the whole..

In 98 names, from 500 to 999 shares each, 9.73 per cent of the whole

In 731 names, from 100 to 499 shares cach, 25.78 per cent of the whole
In 493 names, precisely 100 shares each, 8.22 per cent of the whole.
In 5,538 names, less than 100 shares apiece, 19.96 per cent of the whole.
Total

Shares.

72.057

145,771

58.406

154,667

49,300

119,748

599,949

The above statement shows that a decided and growing majority of the stock is held in America, and of all the holdings the majority is held in lots of less than 500 shares ($50,000). The actual number of proprietors is even greater than the statement shows, because each account is treated on the books of the company as one holding, although many such accounts represent executors, trustees, and corporations acting for many individuals. The Great Northern Railway has a similar plan to provide for the investments of employees. It is not a gift of stock nor a sale to employees, as under the Illinois Central plan. Ten thousand shares ($1,000,000) were set aside by the directors to be handled by a company known as The Great Northern Employees' Investment Association, Limited. Certificates were issued against these shares in multiples of $10, the certificates drawing 7 per cent interest in dividends paid quarterly. Any employee may buy $10 worth and upward of these certificates, provided he has been in the employ of the company years and does not receive over $3,000 pay. He may also withdraw at any time, receiving the full amount and dividends accrued at that date. The average market rate of the stock at the time this plan was put in operation was $155, thus affording ample security for a 7 per cent investment of savings.

Both the Illinois Central Railroad and the Union Pacific have a plan by which the company has made arrangements to secure accident insurance policies at specially advantageous rates to their employees. In the case of the Union Pacific, the com pany offers to bear one-third of the cost of the insurance for all employees engaged in the more hazardous occupations and to bear one-fourth of the premium in all other cases. The Union Pacific plan went into operation January 1, 1901. All insurance, beneficiary, and pension schemes, however viewed, indicate one phase of the attitude of corporations toward their employees, and are discussed in the specific section of this report relating to that subject.1

1 See section 14.

PART IV. THE RELATIONS OF RAILWAY CORPORATIONS AND THEIR

EMPLOYEES.

§ 14. RAILWAY EMPLOYEES' HOSPITALS, INSURANCE, AND

PENSIONS.

The American workman is accustomed to provide for his own necessities and personally to look after those things which guarantee his general welfare and that of his family. With the growth of industries which bring together great numbers of men in the employ of a single company we may expect as a natural outcome an increase in the number of services or wants provided for on some mutual plan. With the better organization of the labor force of large employing concerns we may also expect more to be done by the companies for their employees. The present movement toward what is called "industrial betterment" is an illustration of this. The railroads have already made some progress in this direction. With over 1,000,000 railroad employees, and at least 3,000,000 persons dependent upon their earnings, they have to do with the economic welfare of over onetwentieth of our population. Public sentiment will, therefore, justify any welldirected effort looking to the improvement of this class, in the efficiency of which the public is also directly interested. Railroad corporations see very clearly the economic advantage of performing for their employees and in aiding them to do for themselves many things that make for their greater safety and protection in an employment at best beset with peculiar dangers and difficulties. The following methods or agencies for relief in which the railroad companies participate may be mentioned: (1) The securing of accident insurance. (2) Hospital relief. (3) Insurance providing for sick and death benefits. (4) Pensions and superannuation funds. (5) Saving institutions.

The replies to the inquiry concerning what the railroads are doing in these directions at the present time came in response to the question, "What forms of company relief and insurance or beneficial associations are supported in part or in whole by the company?" This inquiry, addressed to 62 railways, brought replies from 40, which operate 112,353 miles of line and employ 633,023 employees. On 27 of these 40 roads, representing 64,158 miles of line and 323,359 employees, it would seem that nothing had been done directly by the companies, although some relief organizations had been established on at least 4 of these roads, but were supported entirely by the contributions of the employees. The replies from these 4 roads are as follows:

(1) The Kansas City, Fort Scott and Memphis Railroad.-For the care of sick and injured employees The Employees' Hospital Association" was formed, and is supported by contributions from the employees, those receiving $50 per month or more paying 50 cents per month, and those receiving less than $50 and over $4.99 per month, 35 cents.

(2) The Missouri Pacific Railway.—The only relief association connected with the company is that of the hospital department, which is, however, entirely supported by the employees.

(3) The Northern Pacific Railway Company.-Officers and employees have an organization called "The Northern Pacific Beneficial Association," a self-supporting institution, having hospitals at Brainerd, Minn., and Missoula, Mont., with a large staff of physicians and surgeons at all important points.

(4) The Oregon Railroad and Navigation Company.-Free medical and surgical attendance and hospital privileges furnished to all employees in consideration of a deduction of 40 cents each from their monthly pay. These four roads operate 12,704 miles of line and employ 45,992 men. Another road, the Boston and Maine, has organized a relief association, but the company does not contribute to its support.

The thirteen railroad companies reporting some form of relief association in which the company participates are as follows:

(1) The Atchison, Topeka and Santa Fé Railway System.-The company operates a hospital association which is maintained by and operated for the benefit of its employees, who subscribe monthly to its support on a basis fixed by the amount of salary which they receive. The railway company has furnished ground and erected hospitals located at various convenient points along the line which have been donated to the hospital association, and which association is just about selfsupporting. Aside from this there are no relief or insurance organizations.

(2) The Atlantic Coast Line Railroad Company has organized as a department of the service "The Atlantic Coast Line Relief Department."

(3) The Chesapeake and Ohio Railway Company.-The railway company has furnished for the use of its employees 2 hospital buildings and grounds which cost $40,000, and bears the cost of maintenance of the same. The railway company has also furnished for the use of its employees 6 Y. M. C. A. buildings and grounds, and bears the cost of maintenance of same.

(4) The Chicago and Eastern Illinois Railroad Company.-This company supports in part an accident insurance department. The amount of the support can not be definitely stated for any time. The company issues a policy providing certain benefits to employees in case of accident or to their families in case of death. Premiums are collected for this insurance on a regular schedule. This department was put in operation June 1, 1893, and is not self-sustaining, but the company pays all deficits. The company has also distributed $1,000 during each of the past 2 years among deserving employees who needed pecuniary assistance, and contrib utes to the support of railroad Y. M. C. A.'s. The company also has a corps of local surgeons at different points on the road, who render free service to employees in case of accident.

(5) The Chicago, Burlington and Quincy Railroad Company assists in providing insurance for its employees, and has organized what is known as " The Burlington Voluntary Relief Department" as a department of the service.

(6) The Cleveland, Cincinnati, Chicago and St. Louis Railway.-There is a mutual insurance company known as The Big Four Mutual Insurance Company," and such employees of the company as desire may become members, but it is not compulsory. The railroad company contributes to its support by making up the annual deficit should there be any.

(7) The Illinois Central Railway Company.—The company has had under consideration for some years past the question of providing relief for its employees in case of sickness and support in old age, but up to the present time has not established a general system to meet these conditions. It has, however, on its Louisville division, at Paducah, Ky., a hospital founded by the cooperation of the employees of that division and the company which formerly owned the line that is self-supporting, is of much benefit to the employees of that division, and is an institution in which they take pride. The company has also made arrangements with a strong accident-insurance company whereby the most favorable rates are obtained for its employees on the entire system. Since May, 1893, the company has put prominently before its employees a practical plan whereby they can save small sums of money from their wages and buy shares of the company's stock, the company allowing them all the time they may want to pay for the stock by the payment of interest at the rate of 4 per cent per annum on the deferred payments, and with the option of withdrawing on demand the money so deposited, with accrued interest thereon. This opportunity to become part owners in the property of the company has been availed of by all classes of employees. On June 30, 1900, 3,090 shares of the company's stock had been purchased and paid for under this plan, the average cost to the purchaser having been $98.13 per share. The present market price of the stock is about $116 per share.

(8) The Southern Pacific Company.-The company maintains a hospital department. Its members contribute 50 cents a month, the company managing the department, furnishing office room free, transportation, and collecting and accounting for the funds free of charge.

(9) The Texas and Pacific Railway Company.-This company has hospitals for the benefit and use of sick and injured employees, which are partly supported by deductions from wages of employees, the balance being made up by the company; also, it has arrangements with various accident companies whereby the employees are insured at reasonable rates and under as favorable terms as possible.

(10) The Pennsylvania Railroad Company.-The company has established and contributes to the maintenance and support of a relief, insurance, and beneficial department for employees, known as The Pennsylvania Railroad voluntary relief department," and also entirely maintains a pension department and has in operation an employees' saving fund.

(11) The Denver and Rio Grande Railroad Company.-The Denver and Rio