amounting to only a little over $3,000,000,000. And as to what it would have meant to industrial America, poured out through many channels, raw materials, manufactured goods, labor—it takes no stimulated mind to imagine. The flush period into which the war has suddenly plunged us can give a fair indication.

Now consider for a moment not the possible expansion that the railroad might have made in the last decade and did not, and see how it has failed in the ordinary upkeep of its property. This last phase of its plight bears directly upon the great railroad financial problem as it exists in this year of grace, 1916—the epochal year in which the roads need to replenish their equipment; the year in which they find the doors of the money markets, open to almost all other forms of industrial investment, all but closed in their faces. By equipment, I now speak in the broad sense of the word not merely of cars and locomotives but tracks and bridges and terminals as well—the entire physical aspect of the properties. Yet take, if you will, the word “equipment” in its narrow and technical sense. The sense of railroad necessity is not lessened.

The other day the Massachusetts Public Service Commission complained that the largest of the railroads operating out of Boston was using in its suburban service some 700 wooden passenger coaches, varying in age from twenty-five to forty years. The railroad did not deny that allegation. It merely said that it had no money with which to buy modern coaches.

Its condition is typical. Week after week in the glorious autumn of the year of grace 1916, the news columns of the commercial pages of our morning newspapers were telling with unvarying monotony of the shortage of freight cars as bulletined by the American Railway Association—100,000 this week, 75,000 last, 150,000 next—who knows? The merchant and the manufacturer know. They know in shipments of every sort delayed; in the delays running into sizable money losses week upon week and month upon month.

It may not be able to convince them that at the close of the fiscal year 1914—the period upon which we are working—there were upon the roads of the United States 2,325,647 freight cars, a number which, although greatly added to since that date, has not yet been made adequate for the normal traffic demands of the country.[3] And a large proportion of these cars are both obsolete and inadequate. In 1914, out of the 2,325,647 freight cars some 347,000 were of a capacity of but 60,000 pounds or under—a type today considered obsolete by the most efficient operating man. A great majority of this latter number of cars was of all-wood construction. If the financial condition of the railroads had permitted, they doubtless would have been replaced long since with all-steel cars of far greater carrying capacity. This situation in the freight-car equipment is reflected in larger measure in the passenger-car and locomotive situation. There are railroads in the United States that today are compelled by the exigencies of a really serious situation to operate locomotives whose very condition is a menace not only to the men who must ride and operate them but also to the passengers in the trains they haul. The annual number of serious delays that may be charged to “engine failure” is appalling.[4]

Now consider “equipment” in its broader sense. Expert railroaders will tell you that save in the case of the larger and more prosperous roads, there has been, in the course of the past seven or eight years, a serious depreciation in the maintenance of the way and structure of the railroad. In the prosperous years from 1901 to 1907 a very great improvement was made in this physical feature of the railroad. In the last of these years the American railroad reached the highest standard of physical perfection that it has ever known.

In 1907 came the great panic. It made drastic economies immediately necessary. The railroads in their anxiety to meet, first, their dividends, and second, their interest obligations, pinched maintenance to the extreme limit. This was effective in two ways: In the first place the great preponderance of roads did not have earnings to make ordinary improvements, nor credit to provide the capital charge that would apply for improved rights of way, bridges, stations, freight houses, shops, and the like. Expert track engineers say that the loss in the maintenance of line during these lean years in Egypt that have just passed will average at least $2,000 a mile. Multiplied by a total of 245,000 miles of railroad line in the United States this means that the railroads are “back” in the upkeep of their lines alone some $491,788,000.[5]

An expert railroader of my acquaintance takes this great figure—considerably exceeding the cost of the Panama Canal—adds to it as representing a carefully ascertained deficiency in the replacement of rolling stock an almost equal sum—$445,940,586. To these he further adds the dividends paid by the solvent roads out of their surpluses during the seven hard years—$784,563,406—and the depreciation of the value of the securities of the roads in bankruptcy during the same period—$719,528,328. The total of these four great items is $2,441,820,320—a sum instantly comparable with that of the national debt.

There is, however, from a bookkeeping standpoint, at least, an offset against these losses in the equipment account of $394,736,506 which has, under a wise ruling of the Interstate Commerce Commission, been charged to expenses during the seven years and set up as a reserve to meet the accruing deficiency of equipment. However, there have been no restrictions as to the maintenance of this fund, or how it should be handled. The very prosperous lines—representing some 100,000 miles, or less than half the total mileage of the country—probably have their contribution to this depreciation fund as an asset. In the case of the poorer roads—speaking financially—it doubtless has been applied to other purposes, in order to help them maintain their bare existence. It has come home to these, and with great force, that the governing conditions which make their income fixed take little cognizance of the vast annual increases in material, in tax, and in labor costs. In rough figures—decidedly rough, it seems to me—it has been estimated that the losses of our railroads during the past ten years alone have amounted to approximately one-half the entire cost of the Civil War. That figure is impressive—it is little less than appalling.

Even with the depreciation accounts of the American railroads deducted as an asset, we still have this awe-inspiring total of $2,000,000,000 confronting us. Some of this—the unpaid dividends of more than seven attenuated years—is water that will never come to the mill again. But the neglected rights of way, the ancient buildings, and the bridges needing rehabilitation on some of our railroads, the locomotives and the cars travel-racked and fairly shrieking for repairs, are all of them physical matters that must be set right before the sick man of American business can