principle that it was the duty of the carrier to provide itself with rolling stock for the normal business which it proposed to carry. It was contended in the Chicago Hearings in 1906, that the Interstate Commerce Commission should be given power to compel a railroad to buy its proper share of equipment. One line ought not find it necessary to buy so much equipment that it would not have room on its own rails to store its own cars during periods of slack business. But such inequalities between different systems would not necessarily indicate the insufficiency of the total supply.

Examination of Table I shows that the supply of rolling stock in this country has been ample except in certain seasons of certain years. From 1907 to 1916 it appears that there were five years in which there was no net shortage at all, and two other years in which the shortage was only nominal. In fact, only three years in this period show any marked lack of cars. According to facts presented by the American Railway Association, there were 423,183,191 idle car days on the railroads of the United States from 1906 to 1916; and counting the average earnings of a car as $2.50 a day, this would mean $1,057,957,977.50 as the loss to the railroads on account of dull times and hence idle cars during the ten years. There were 31,543,316 car shortage days in the ten years and, on the same basis, the loss to the railroads because they could not furnish cars was $78,858,290. If these figures are to be relied upon, it is clear that it is not to the interest of the railways as a whole to increase materially the supply of cars. It is a fact, how

• Commissioner Hall testified before the House Committee on Interstate Commerce in 1916 that instances had come to the attention of the Interstate Commerce Commission of roads that did not have room on their own rails for their own cars during periods of slack business, and were obliged to store them on the ground. Esch Hearings, p. 15. ♦ The American Railway Association Bulletin No. 6, February 6, 1917.

ever, that there were actually fewer cars in service in the United States in 1915 than in 1914, and fewer in 1916 than in 1915;1 and this lack of equipment combined with an enormous war traffic has of course caused much embarrassment. In 1914 and 1915, the railroads did not buy the usual number of cars. In 1916, they were unable to secure them. Much railway equipment has been made in the United States for our allies, and some car manufacturers ceased to engage in the prosaic business of manufacturing railway equipment because of better opportunities in other lines.

Without attempting to minimize the importance of a shortage of rolling stock, which at times causes much embarrassment, it must be pointed out that the problem is one which involves much more than a mere deficiency of equipment. As Commissioner Lane indicated more than ten years ago, the problem of car shortage is one which is connected with every factor of railroading — the construction, operation, maintenance and financing. He rightly maintained that the problem of transportation is so closely interwoven with the fabric of our commercial organization that one may not lightly say what are the multitudinous considerations which necessarily enter into so simple a question as the reason why a car is not at once forthcoming when ordered. As he pointed out, the inability of the shipper to secure a car may be but a symptom of a deep seated and organic trouble." Examination of Table I indicates that much attention which has been given to the subject of car supply might better have been given to the conditions which affect car operation. In fact, at times when there has been

1 The numbers were as follows: 1914, 2,325,647; 1915, 2,318,305; 1916, 2,298,263; Annual Report I. C. C., 1916, table facing p. 74; I. C. C. Abstract of Statistics of Steam Railways in the United States, 1916, p. 3.

12 I. C. C. R. 574–575.

See statement of J. J. Hill, Minneapolis Hearings, p. 298; Proceedings National Association Railway Commissioners, 1912, pp. 246–247.

most embarrassment because of the insufficiency of transportation facilities, it has resulted more from congestion in terminals and on side tracks than from car shortage. At such times more cars would have made conditions worse instead of better, for additional equipment would merely have added to the congestion.

The problem of car operation has been increasing in significance as our commerce has become more interstate in character, and as the relation of the railways to each other in the handling of traffic has become more complex. When our railways were first built, the question of exchange and interchange of railway equipment was not an important one. The lines were then short and disconnected. They served a local community only, and as a rule equipment did not go beyond the termini of the home road. Indeed, railroads were built on different gauge in order to keep cars on the home track, and some states framed charters designed to prevent through routes so as to keep the business within their borders. In view of these primitive conceptions and conditions, it is not surprising to learn that an early decision of the Interstate Commerce Commission upheld a railroad which refused to furnish cars for points beyond its own line. This decision was based upon the theory that local traffic enjoyed rights superior to through traffic. The Commission observed in this case that "if this company (Pittsburgh and Lake Erie Railroad) should send its cars . . . to Buffalo, .. this

1 See statement of Commissioner Clark before the Chicago Traffic Club, Railway Age, November 1, 1907, pp. 614-616; statement of J. J. Hill, Minneapolis Hearings, p. 295; see also ibid., pp. 311, 318; Proceedings National Association Railway Commissioners, 1912, pp. 246–247; 12 I. C. C. R. 564; Annual Report I. C. C., 1916, p. 68; address of Howard Elliott, Proceedings Railway Development Association, November, 1915, pp. 25-32; St. Louis Hearings, p. 15; Kansas City Hearings, p. 216. Space does not permit of a discussion of the vital problems of railway service in terminals, and of the coordination of rail and water carriers. These subjects must be left for future consideration.

McPherson, Railroad Freight Rates, pp. 161-162.

would have stripped this railroad of its equipment, leaving the other business along its line to go to ruin.

"" The Commission contended further that the railroad's "first and most paramount legal duty to the shipping public was to make its entire freight equipment do its utmost in serving the shippers along its own line. With the growth of the country, it has been necessary to develop standard gauge and to consider railroad equipment something like a negotiable instrument. It is now imperative that cars be sent freely from one system to another, hence the vital importance of equitable car service rules and their honest observance.

When carriers began to interchange equipment in through traffic, they paid for it on a mileage basis. This led to great abuses. The method of computing mileage often made it impossible for a railroad to get any pay for the use of its cars in the local service of another railroad, and such local usage was widely practiced. There was much dishonesty in making reports, and foreign equipment was much used for storage purposes under the mileage plan. Finally in 1902, this basis gave way to the per diem method of payment. As soon as this system went into effect, the committee on car service of the American Railway Association was able to report improvement in the return of cars to their owners, which resulted in an increase in the available car supply." The

1 Riddle, Dean & Co. v. Pittsburgh & Lake Erie R. R. Co.; 1 I. C. C. R. 688 (693). Altho the standardization of the gauge of American railroads was carried out principally between 1860 and 1870, the standing resolution of the American Railway Association that the standard gauge should be 4 ft. 8 in. was not adopted until April 7, 1897. Proceedings, vol. vii, p. 1220.

Ibid., vol. i, p. 183.

Ibid., loc. cit.; for summary of objections against the mileage basis, see ibid., vol. ii, p. 748; history of per diem from its proposal, April 25, 1900, to its final adoption is given in ibid., vol. iii, pp. 160-168, 198-215, 251-263, 279, 280, 292, 410-415, 434, 435, 552-595, 1019-1024.

Ibid., vol. iii, p. 1039.

per diem was twenty cents per day in the beginning, but it has been modified from time to time in an attempt to make it to the interest of carriers to return equipment promptly. But even increased per diem charges do not return cars when there is a great demand for them and when it is profitable to use foreign cars in local service. Statistics of car location (Maps I and II) show that cars accumulate in certain sections of the country in certain months of the year. As has been suggested, this is the result in part of traffic taking its normal channels, but it is also due to the fact that car service rules are honored more in the breach than in the observance when there is much demand for equipment. The railroads frankly confessed this fact before Commissioner McChord in the Hearing at Louisville, Kentucky, in November, 1916.1 The record in this hearing shows that the Car Service Commission of the American Railway Association found over 40,000 violations of car service rules in the month of June, 1916, and that the evidence was so overwhelming that further inspection was abandoned. Such a practice on the part of the railroads places a great burden on those sections of the country which, as has been indicated, produce mainly raw materials, the sections which normally load much freight out but receive little inbound freight. Whenever there is a heavy demand for cars, such sections suffer much from car shortage, for they cannot provide themselves with empties like sections that are receiving a constant stream of cars under load. It is evident that the "oneway" shippers are dependent upon a fair observance of car service rules for a supply of equipment.

The effect upon the railways in such regions is equally apparent. Railway systems in the West suffer severely

1 Car Supply Investigation, House Doc. 2116, 64th Congress, 2nd Session, p. 8. 2 See testimony of Commissioner Hall, Esch Hearings, pp. 36-37; also Traffic World, November 11, 1916, p. 956.