advanced very much so far, although a tentative plan of grouping has been issued to serve as a basis for investigation, and hearings have been begun. When the permissible consolidations are once enunciated it is possible that some railways can arrange terms amongst themselves for such consolidations.

How far such voluntary action would solve the problem is uncertain, but compulsory consolidation leads into many untenable premises. It might be that there could be invented some inducements to consolidate into the proposed systems, or to lease for consolidated operation, or some form of cooperative operation. If the recaptured profits principle is to be maintained and if it can be enforced by the Interstate Commerce Commission, the assured application of such recaptured profits within such enunciated groups in some form might at least be worth discussion as an inducement to consolidate.

The alternative of repealing the miscalled guaranty clauses of the act does not fundamentally assist the expansion of the weaker roads, for so long as rates are controlled by 49 different commissions, it is unlikely that the rates would or could be made discriminatory in favor of the weaker roads, and thus the basis for the financing of betterments by these roads would not be materially improved. The suggestion that all rate control should be repealed except control against discrimination or preference would not meet the situation of the weaker roads, because the restoration of competitive rates would enable the stronger roads to again drive the weaker roads nearer to the wall.

Another vivid question in this connection is that of the rates themselves. In an era of wide disparity between farmers' income and that in and of industry, the transportation rates have proven to be a heavy burden on agriculture. On the other hand, under present conditions railway earnings are obviously not large enough to assure railway expansion. Some relief both to the railways and the farmer may be obtained by thorough reorganization of the rate structure. Some classes and areas of traffic are carried at actual loss; others are carried at lower rates than the relative value of the commodities warrant; and a series of scientific upward readjustments should be made in some cases in order to give the railways and the shippers of primary commodities and agricultural produce some relief. The recent reduction of 10 per cent in rates on luxuries as well as on primary goods contributed nothing to commerce and impoverished the railways just that much. The tangled skein of rates seems a mesh in which there is so persistent a resistance against every constructive proposal, that we are incapable of rescue except by some complete departure in courage.

Another phase of present regulation is the machinery of wage control and strike prevention, which is unsatisfactory. The legislation embraces the important principle of the public's right to secure continuity of service and it carries the obligation of the public to secure just wages to the employees. The Railway Labor Board has performed large services to the employees, to the railways, and to the public. The difficulties arise from the tripartite structure of the board under the act, from its detachment from the rate-making body, and especially from the fact that the act did not originally contemplate that the Government would be a universal wage fixer. It was the assumption that the Labor Board would only function in case of a major threat of stoppage in service. The failure of the local adjustment boards for direct contact between employees and employers has thrust all disputes on the Labor Board; and in result we have practically governmental fixing of all wages and conditions of labor with a large destruction of personal contacts.

There can be no question that action in some direction is imperative, if industry and commerce are not to be further strangled by a shortage in transportation. Whatever may have been the sins of railway finance in the last generation, we are not only suffering from them, but we have maintained an attitude of bitterness in our public relationship to our railways for which we pay thrice over in prevention of their proper development.

We must have increased transportation, if we are to maintain our growing productivity. We must therefore find a way out of the cycle of systematic starvation of a large part of our mileage and the denudation of our railway managers of their responsibilities and initiative.

BITUMINOUS COAL.

The highly unstable functioning of the bituminous industry finally resulted in the worst strike in its history, and the strike closed with even a more unstable situation than before. There can be no remedy until primary causes have been fully analyzed and treated.

Our bituminous coal fields are of enormous extent and the capital required to open new mines is comparatively small. There are apparently over 8,000 bituminous mines with an annual capacity of about 850,000,000 tons, or about 300,000,000 tons beyond our present normal national needs. The normal demand, if spread evenly over the year, would be about 10,000,000 tons per week. It varies actually from 7,500,000 tons to 12,000,

11569°--22-3

000 tons per week at different seasons of the year. The total capacity of about 16,000,000 tons per week is 4,000,000 over the maximum demand. We need a reserve capacity for the ebb and flow of business tides, but 12,000,000 per week would give 620,000,000 tons per annum, an ample supply.

The overexpansion of the industry is to a considerable degree due to

(a) Annual shortage of cars and consequent scarcity, with temporary high price levels and large profits; periodic strikes and threats of strikes creating congested demand with consonant periodic high prices and profits. These high-profit periods induce speculative expansion of the industry.

(b) War demand and profits.

(c) Two-thirds of the industry is unionized and one-third is nonunion. The frozen wage over long periods in the union field enables the nonunion field to undercut wages in competitive periods and thus secure more continuous operation. There is, therefore, a constant expansion in nonunion fields with increasing intermittency in union fields.

The worst effect of overexpansion is its by-product of labor waste and partial underpayment of labor and its necessary unrest, because the overcapacity of the industry results not in the permanent closing of some mines but in the operation of all of them more or less intermittently. Thus the working personnel is held attached to each mine in daily hopes of employment. Entirely outside of strike suspensions, our preliminary investigation shows that in the best of recent years the bituminous mines operated only about 249 days out of a possible 308; whereas in most years the average is about 210, as against about 295 days in England and over 300 days in Germany. If we subtract the mines which are operating regularly for certain metallurgical and railway supplies, we will find that the situation is even worse, for the remainder of the bituminous mines are probably operating an average of less than 180 days (more than 120 days' lost time out of the year), and this entirely outside of the loss of time due to national strikes. Nor is this all of the situation, for some mines operate less than 100 days. The perpetual labor difficulties are in large degree the result of a constant struggle for such remuneration, based upon day's pay and piece rates, as will give a standard of living to that portion of the men who are employed from 40 to 60 per cent of their time. A large minority of workers are thus honeycombed with the discontent that arises from the worst stimulant to unrest-insecurity of employment and part-time employment.

Another factor is the somewhat seasonal character of the industry, which can only be cured by storage. Heating requirements are responsible for a considerable part of this seasonal demand, but storage by heating consumers is impracticable. The most constructive storage would come from public utilities and railways, which would result in giving a larger proportion of production to the heating consumption during cold weather.

Minor vicious cycles originate from the periodic shortage in transportation. The more favorable prices to railways than to the public follow from the railways' ability to assure cars. The necessary regulations for equal car distribution and the consequent division of business, between high cost and unsystematic mines, result at once in prices that keep the high-cost mines alive. The industrial community bears the major part of the cost of maintaining an industry 30 per cent overexpanded and overmanned. And it bears even a larger cost from the dangers of interruption, due to national strikes and to the uncertainty of coal prices that vary as much as 300 per cent annually. Fully one-third of the national coal bill would be eliminated by a stable industry.

Owing to the stoppage of immigration, the ranks of miners will soon be difficult to recruit, unless there can be an economy in labor through less lost time. Beyond all this, the very real human suffering due to part-time employment and strikes is a national price that in itself warrants the most earnest effort to secure stability.

The primary cure for overexpansion and intermittent operation is to secure full continuous competition and thus the freezing out of high cost and uneconomic producers. This cure could be secured at once: (a) If there were ample transportation at all times; (b) if there were greater freedom from strikes by better development of employment relations; (c) if there were storage to overcome some part of the seasonal character of the industry.

AGRICULTURE.

The fall in the prices of agricultural produce during the recent depression was the most violent of all commodity liquidations. The fall was to lower levels in relation to pre-war than that of other commodities, and it was also relatively greater than the fall in wages in the other industries. The consequence was that the buying power of the agricultural community was at times even lower than pre-war. There has been, however, a definite recovery from the worst. Incidentally it may be observed that those special varieties of produce which have been under the

most efficient cooperative organization have been better able to resist undue liquidation in the same manner that our tradesunion organizations have been able to effect resistance for their groups to the generally falling wage. In a general way agricultural prices are upon a basis of about 124 (as against 103 at the worst), compared to pre-war 100, while industrial wages and public services and manufactured commodities are upon a basis somewhere between 160 and 180, compared to pre-war 100. This is by far the most serious element of instability that remains of our domestic dislocations due to the war. As the agricultural industry is thus still out of line, there must be further readjustments favorable to the farmer, either by increases in prices of farm produce or decreases in the income of the other groups.

No doubt this readjustment will inevitably take place in time by one of two processes: Either through such an amount of migration from the farm into other industry as will overcrowd the industries and reduce wage levels, and at the same time increase agricultural prices, through the restriction of production; or through so great an increase in the efficiency in management and in effort of industrial labor that the cost of manufactured commodities and the public services to the farmer will decrease. Such processes are slow of accomplishment at best. statesmanship on the part of organized labor would give serious consideration to the whole problem of increased industrial efficiency and the prevention of such tremendous additions to national expenditure as have been involved in recent strikes, if labor is not to suffer greatly some time because of an undue swing of the pendulum the other way.

Wise

It must not be overlooked that the agricultural industry has gained greatly in efficiency during the past eight years. The growth of agricultural population has been relatively less than the increase in its total production. There has been a measurable expansion of mechanical equipment and a consequent increase in production per capita.

Some relief could be given to the farmer by readjustment of railway rates in such a fashion as to impose larger burdens upon high-priced commodities and lower rates on primary produce. A greater relief would be given if he were provided with adequate transportation. Further relief could be given by the provision of an adequate credit system to meet his needs of loans for periods in excess of Federal reserve facilities and at nearer the commercial rates of interest.