Railroad Rates.

The railroads have never operated so efficiently as in the past year and they will go ahead giving the people of the United States adequate transportation if they are only permitted a rest from restrictive and adverse legislation, our President, Wm. Sproule, told the western regional conference of the Chamber of Commerce of the United States in an address at San Francisco, January 29. He showed that railroad costs have increased more than railroad rates and that rates cannot be lowered until the railroads' cost of operation can be lowered. He reviewed the Transportation Act of 1920 and its safeguards of the public interest, urging that this law be allowed to stand in its present form. Mr. Sproule said in part:

T

and which was the year in which railroad rates were low,-in that year the Class One railroads of the country paid their stockholders dividends amounting to $322,000,000. In 1922, on the contrary, the dividends paid fell to $271,500,000. Surely the high cost of living has hit the pockets of the railroad owners. The stockholders have received $50,000,000 less dividends in 1922 than in 1913, although in 1922 the railroads earned $5,673,000,000 as against $3,119,000,000 gross in 1913. In 1922 the railroads earned more gross money and carried more passengers and more freight than in 1913 by very large figures, but the stockholders got out of it in 1922 less money than in 1913. The high cost of living hit the stockholders. It hit them both ways, for in their own expenses they had to pay the high living costs and from their money put into railroad business, as stockholders, they got less income out of which to pay their living costs. Notwithstanding this, we are confronted with the fallacy that whenever the price of a commodity is low because of reasons controlled by the law of supply and demand, attempt is often made to meet that condition by proposal to reduce the railroad rates. They forget that the railroads should not be asked to sell transportation at a loss because some other industry is not prospering. The fact is that there is not an industry in the country which could be made prosperous by a general reduction of railroad

rates upon that industry, while the rate reductions themselves might at the same time total such amounts as to deprive the railroads of the means necessary to serve the public at large, the railroads already having to pay out for their necessities almost all the money that comes to them from fares and freights. In 1923, the year just closed, they had but five cents left out of the dollar after paying their taxes and before they paid interest on money borrowed, generally known as fixed charges.

But we look for improvement. That improvement is coming through the public gaining better knowledge of what the railroad business is and its intimate relation to the public welfare.

Employes Helping

Improvement is coming too, in the better understanding between the railroad managements and the employes. The difference is very great when managements and men work together in goodwill and loyalty that the job may be well done and the public well served, as compared with indifference or distrust on the part of either toward the other. When every man in the service takes a pride in doing the best work he is capable of doing and desires that his output shall represent both quality and quantity, that attitude of hearty goodwill means more than mere reduction of wages, for it means larger output per man and his output in public service. In general it

HERE never was a period in which the railroads gave such good service or handled so much business for the public as in the year just closed. In every aspect of their business the railroads operated more effectively than at any time in their history. They not only functioned fully, but they did the work at a cost that was a smaller increase over prewar prices than the costs they had to pay for everything which entered into the cost of transportation. Yet it is said railroad rates are high, but it is forgotten that the cost of everything the railroad buys is high. The cost of railroad living is intimately related to the human cost of living. When everything the individual buys for use on the farm or in the home is high, everything the railroad buys for use in its transportation business is also high. There is no patent nostrum to relieve the railroads from the high cost of living. It is this high cost of living that is flected in the charges for the carriage of freight and passengers at this time. It is higher costs that make higher rates, and even then the railroads are doing their business for less than represented by these higher costs.

re

Do you know that in 1913, which was the year before the German War broke out

T

can be said that railroad costs can come down only as general living costs come down. These living corts include prices of materials and supplies and labor.

There remains one direction in which railroad costs can come down. It is in the item of taxes. Again referring to 1913 before Europe broke into war, the taxes of Class One railroads in that year were $118,000,000. In 1922 they had risen from $118,000.000 to $301.000,000. There you see part of the high cost of living. Nor are the direct taxes the worst of it. The system of

taxation enters into everything the railroads buy, and at every turn and in every transaction the railroads are paying some of the taxes in every purchase they make. Their payments even go farther than that. They are taxed heavily to pay for the highways built alongside their right of way to compete with them; they are taxed for the development of the inland waterways of the country, and they compete with them; they are taxed for the maintenance of steamship lines between the Atlantic and Pacific coasts, and in coastwise shipping, all of which compete with them. And these are taxes which have to be met as regularly as the payrolls, and are part of the cost of doing business. Reduction in taxation would not be a panacea, but it is one step in which every person who pays freight or fares has an interest, whether the reduction be federal, state, county or municipal.

The Transportation Act

The Transportation Act of 1920 is the first great piece of constructive legislation in which the public interest is the paramount principle.

You will remember that the railroads were returned to their owners in 1920 and you realize that 1923 has been the first full year in which the railroads were in position to show the American people what they could do and the way they have done it has met with general approval. The railroads believe they have the support of the public in asking that they be permitted to proceed for a further period of years to work out their destiny on a business basis.

The railroads are now controlled by Government as to the rates they may charge, as to the rates of wages they may pay, as to the amounts of money they may borrow and the way in which they may borrow it, including the rates of interest they may pay. Their methods of accounting and the very forms they use for it are determined not by the railroads, but by the governmental authorities. Against this the railroads are not complaining, but have long since accepted public regulation as a policy of government. It is this policy of regulation that has been enlarged and developed into the Transportation Act of 1920, which treats the railroads as a whole in the general public interest in furtherance of the transportation needs of the country and the necessity of enlarging railway facilities to provide the people of the United States with adequate transportation. It is designed to make competition more potent, regulation more equally distributed, and the amount a railroad may earn, if it prospers, is restricted.

Even the section of the law, which by some has been supposed to be a guarantee, restricts the earnings, requiring that any amount earned by the railroad above a percentage determined by the Interstate Commerce Commission has to be turned back, one half to the Government and the other half into a reserve fund for future contingencies.

But the point is, the Transportation

A

Ruby Promoted

R. L. RUBY

SSISTANT Superintendent of Transportation R. L. Ruby, who has has held that position since July 1, 1900. on February 1, 1924, was appointed superintendent of transportation, vice G. F. Richardson, retired.

Until April, 1917, Mr. Ruby had charge of the freight protection department. Since that date, in the capacity of assistant superintendent, he has had active charge of transportation work.

Mr. Ruby's railroad experience consists of 32 years in the mechanical, accounting, operating and transportation departments. He started his railroad career as a clerk and in his steady upward course through the railroad ranks he has gained an intimate knowledge of many phases of the railroad busi

ness.

Mr. Richardson, to whose position Mr. Ruby succeeds, concludes a long record of service with the company, during which he has made a host of friends.

Act of 1920 is a step forward. The railroads had been subjected to so much agitation and misrepresentation that now they simply ask that they be let alone, and allow the statutes on the books to remain there. The railroads ask that the rules of the game shall not be changed on them from year to year. They ask to be allowed to give a good account of themselves under the existing statutes. They ask the good will and support of the American people in continuing build up what is the greatest transportation system in the world into one that will be still greater and more useful in enlarging railway facilities. in increasing railroad mileage and in valuable service, all of which can be achieved if only the railroads are al

to

lowed to pursue their business on a business basis.

Railroad transportation is the largest and most important business of the United States.

Let the Railroads Alone

We ask that, as the public interest is safeguarded by public supervision and regulation, the public interest be further served by seeing to it that the railroads are permitted to pursue their calling without being harassed by any more legislation. Let the railroads devote themselves to the railroad business. The railroad business is entitled to the same consideration that is cheerfully given all other business, namely, selling the transportation it produces at a fair price that will yield a fair and reasonable return to justify the business. To improve and extend its facilities the railroad competes with every other business which seeks money for its improvements. It is a common money market open to the world. Make it possible for the railroads of your country to compete for that money upon fairly equal terms, that they may get it in your interest for the purpose of increasing, improving and extending the railroads and railroad equipment of the country and a new prosperity will open before the people.

Such a public policy extending over a period of years in contrast with past policies of agitation and uncertainty will change the position of this Nation from one of shrinking railroad mileage into one of expansion and new vigor.

RED BLUFF, ONTARIO CALL PORTERVILLE'S CLAIM

Porterville station laid claim last month to having the highest average seniority of any station on the Pacific System employing over five men to the station. But Chas. P. Cusick, agent at Red Bluff, comes forward with a statement that Porterville with an average of 10 years, 10 months for eleven employes, is composed of a "bunch of youngsters in the service." Red Bluff station force consists of eight men with an average length of service of 14 years, 6 months and they are "still going strong." This does not include the Agent's colt, "Spark Plug." which has 10 years seniority.

Ontario station force also goes the Porterville station one better, according to claim for recognition made by Agent E. J. Ritter. "We have six men employed at this station," writes Mr. Ritter, "whose record can easily beat that of Porterville. Our average seniority per man is thirteen and onehalf years, and our actual service on the Pacific System, including time shown on seniority list of this division. and previous service, is sixteen and one-third years. In addition we claim the record for the largest percentage of bald heads, which is 66 2-3 per cent. The saying still holds that 'grass will not grow on a busy street. "

"Before he was given the baton, the leader of the orchestra learned how to play second fiddle "--Forbes

URING the era of maximum

D productivity of the great grain

ranches of the San Joaquin and Sacramento Valleys the coal supply of California was furnished by a large fleet of tramp ships that plied between Great Britain, Australia, Japan, and San Francisco, bringing cargoes of coal in ballast and returning laden with grain from our great interior valleys. A large amount of coal was also received from Wyoming and Utah coal fields, but it was the competition of the foreign coal that brought a cheap fuel to California railroads and industries.

In the early 90's, however, it became evident that the time was approaching when California and the whole Pacific Coast would have to develop a fuel supply of its own, because the yearly production of grain was decreasing. Large holdings planted to grain were being broken into smaller ranches growing diversified crops, including fruits, melons, nuts, etc. Also the great increase in population of the Pacific coast states had begun and these three factors soon made California become a wheat importing instead of a wheat exporting

state.

Without a return cargo of wheat the tramp ship could not operate at a profit and the day of cheap foreign coal for California was past. The Puget Sound coal fields of Washington, with an annual production of 2,500,000 tons, disposed of 89 per cent of their output within that state, leaving but 11 per cent for shipment to the States of Idaho, Oregon, and California. Without the foreign coal, and with very little coming from Washington, California had to look to the Rocky Mountain fields for its principal supply of coal.

Seek Coal Supply

With competition eliminated it was expected that this coal would cost more than formerly, and it was to provide another and cheaper source of supply that Collis P. Huntington, then President of the Southern Pacific Company, in 1897 appointed Professor E. T. Dumble, Consulting Geologist, and commissioned him to investigate the coal deposits of the Pacific Coast. The next three years were devoted to the examination of the coal deposits of Oregon and others in the State of Sonora, Mexico, without satisfactory results.

But our fuel problem was to be solved in another and more satisfactory manner. Oil was discovered in Kern County, California, and its suitabality as fuel for locomotives was soon proved. Some of the locomo

By C. M. REDFERN Assistant to Consulting Geologist

E. T. DUMBLE

Consulting Geologist, S. P. Company

tives of the Pacific System were converted into oil burners, and the Company began to develop oil from its own lands at Kern River.

A geological examination of the Company's lands in the San Joaquin Valley showed that there was a very considerable acreage that could be classed as probable oil land, and the comparison of the cost of coal and oil as fuel for the locomotives, which was submitted with this report, proved the possibility of such a great saving that the management immediately authorized the substitution and the development of the lands.

In 1903 the Kern Trading & Oil Company was formed to carry on the oil business for the Company, and until 1911 it was operated under the management of the Geological Department, after which year only matters of a geological nature were handled by the Geological Department and the management of oil operations turned over to the Fuel Oil Department.

was

Contemporaneous with the development of an oil supply for the Company, field parties of geologists were maintained for the examination of the land grants of the Southern Pacific and Central Pacific Companies, which work is still in progress.

It has also been within the province of the Geological Department's activities to study the Company's water supply problems, as good water in sufficient quantity is second in importance only to fuel supply in the matter of operating trains. The marked success of the work, especially in the arid region between El Paso

and Los Angeles, has been of great value. Then, too, study of the underground water supply possibilities in localities of little rainfall has led to the development of a domestic water supply and encouraged the growth of farming communities, and in several instances has "made the desert to bloom like the rose." The result of such investigations, where favorable, leads to increased passenger and freight traffic as communities develop and the product of the soil is given to the railroad for shipment.

The Geological Department is consulted in the matter of ballast for roadbeds. All rock is not suited for ballast purposes and the technical training and knowledge of the railroad geologist is of value to the Engineering and Maintenance of Way Departments in this as well as in other matters, such as correcting the slipping of masses of rock and soil onto the right of way at some points along our lines.

Transportation is the only commodity that a railroad has to sell, and, on first consideration, it is not readily seen where a Geological Department can contribute much, if anything, in the way of increased traffic. That it does enter largely into the scheme of increasing traffic, however, will be clear when more is known of its activities.

Helps Increase Traffic

If

It is the the geologist who generally runs upon a deposit of some mineral that is required in the industries. he does not happen to be the discoverer, sooner or later he is delegated by industrial promoters, or by the railroad itself, to examine as to the deposit's extent, quality of the material, and accessibility to transportation facilities. Where his report is favorable, development ensues, sometimes a community grows up, raw materials are shipped out, freight, such as machinery, mine supplies, food, building materials, etc. are shipped in, and passenger business develops. All this at the deposit. The raw materials arrive at the factory, are manufactured into finished products, and become outgoing freight carrying the higher rates of higher priced commodities. More industries in the industrial centers require more employes, and so it is easily seen that the work of the geologist does contribute a great deal to the prosperity of the country and particularly to the railroad.

As examples of the prominent part plaved by the railroad geologist in traffic production I will mention two instances.

Less than a year ago a company exploiting deposits of magnesium, sodi

um, and allied saline deposits approached one of our executives with the request that the Company assist them in securing transportation for their materials.

The matter was referred to the Geological Department with the request that one of our geologists be sent to examine thoroughly into the extent and character of the deposits, and to study all the conditions that might affect their commercial value. The idea was, of course, to find out if possible whether the deposits existed in large enough quantity and value, and if conditions for operating were sufficiently favorable to make it worth while from a traffic standpoint for the railroad to accede to their request.

Our report was favorable and the project is now proceeding toward completion. A million and a half feet of lumber is being freighted in and it is estimated that 300,000 tons of the salts will be brought out.

Recently the Traffic Department requested us to ascertain the character of a gypsum deposit in the southern part of the state. Our geologist visited the deposit and his report was so

favorable that a branch line is being built to the deposit. There are almost ninety million tons of good gypsum in sight. Much machinery will be shipped in and this one plant alone will be a big producer of traffic for the railroad for years to come.

Assists Traffic Department The Geological Department renders much assistance to the Traffic Department, through the Industrial Agents, by furnishing them with information about deposits of industrial minerals and metals. This information aids the Industrial Agents to induce industries to locate upon our lines, and the information they can often give to promoters as to location and character of deposits is of great value to these industries.

Not all requests for information directed to the Geological Department are of the earth earthy.

During the recent unpleasantness with the Central Empires the table delicacy saurkraut fell under patriotic disapproval and several California growers of cabbages on a large scale faced big losses as there seemed to be

no demand for their output. Even the new name "Liberty Cabbage" failed to attract customers. To one of them the thought occurred: "Why not make alcohol out of cabbage?" He approached our Industrial Agent and asked what percentage of alcohol cabbage contained. The matter was passed on to the Geological Department for a full, or I should probably say complete, report on the alcoholic possibilities of the cabbage. The matter was taken up, but before we had completed our work the Volsteadian Law settled down upon the country and the matter was dropped.

Even when the investigation of one of our geologists results in an unfavorable report the best interests of the Company are served, as such a negative report acts as a check to any further expenditure on the part of the Company.

That the wide world is the workroom of the geologist will be seen by the group of photographs accompanying this article. From the highest wind-swept peaks of the Sierras to the hot sands of Death Valley the Southern Pacific Company's geologists go