Railroading in Germany

CHARLES EDWARD RUSSELL IN EVERYBODY’S MAGAZINE. March 1 1906

Railroading in Germany

CHARLES EDWARD RUSSELL IN EVERYBODY’S MAGAZINE. March 1 1906

In Germany the Government owns the railroads, and, according to Mr. Russell, the Government operates them with the utmost success. The serious problem of changing from private-owned to state-owned lines was accomplished by a statesman called Von Maybach, with far less difficulty than was anticipated. Today the Government owns twenty-nine out of every thirty miles of railroad in its territory.

THE station-master of Bomburg-Pomburg, standing erect in approved military attitude at the end of the platform that bounds his dominion, is one of the grandest sights in nature. His magnificent uniform of blue and gold shines conspicuous in the sun. His red cap of office is adorned with much gilt, and the occasion, let us say, being festival, he wears with pomp and circumstance a massive sword. As Napoleon upon the field of battle, he from his coign of vantage surveys the scene of action—calm, imperturbable, majestic, full of thought and command. A long train is drawn up at the station, and he stands where all the passengers can derive pleasure and edification from gazing upon him. He looks down the platform and observes that his adjutants are properly herding and shoving about the low, degraded third-class passengers, but he gives no sign.

After a time three or four guards from the train run excitedly down the track shouting "Einsteigen!" Presently they return still more excited. The first shouts "Fertig!” the second shouts "Fertig!” the third shouts "Fertig!"—each in a different key. The conductor of the train looks carefully up and down to see that the guards are not deceiving him, that all is indeed ready for the ceremony. Then the first assistant station-master rings an electric bell. The conductor, his face full of concern and doubt, again scrutinizes the train.

Then slowly and with caution he takes a whistle that hangs by a cord about his neck and looks at both sides of it to be sure it is in good working order. Then he puts it to his lips with the air of a man deciding the fate of nations and blows a blast. Slowly and sadly the engineer answers from the locomotive. The conductor whistles again, and presently you may perceive that the train is simulating motion. And then comes the climax of the day. There stands the station-master of Bomburg-Pomburg, representing the Kaiser, the Imperial power of Germany, the state and majesty of the Grand Duchy. As the train moves by him the engineer, the conductor, and all the guards stand respectfully at attention. Before this august figure each in turn salutes and receives the curt acknowledgment due from a superior to an inferior officer of the Imperial Government. And with that the ceremony is ended, the Schnellzug is launched upon its way.

This is the invariable performance at every railroad station in Germany and is typical of what is certainly the most remarkable transportation system in the world. In Germany, the Government owns the railroads and operates them through miles and miles of red tape. In England railroad travel seems to be a form of devotion to be undertaken alone, if possible, and always in sad silence and meditation. In Germany it is a state function; you ride by the permission of the Kaiser and the Government, and care is taken that you shall not forget your obligations. The cars, the stations, and the platforms are adorned with innumerable notices and warnings forbidding you to do one thing and commanding you to do another. You must walk here and must not walk there; you must show your ticket at the gate and again to the conductor before the train starts. You must not enter into disputes with the ticket agents or trainmen, because they are Government officers and to quarrel with them is a form of lese majeste. If you travel third-class you must be content to be herded as cattle are herded at western shipping stations, and with as little courtesy. You will see the class lines drawn very clearly before you in behavior of employees, who uniformly hold that persons of rank and consideration travel first-class, men and women second-class, beasts third-class. You will see very curious exhibitions of autocratic authority and of objectionable servility from the same officers, and you will sometimes feel your blood tingle at the difference.

And yet, in all the essentials of getting about with ease and despatch the service is so good that your democratic and American soul will surely be tempted to disregard everything but the comfort, the cheapness, and the convenience. The German Government may regard its third-class passengers as of little esteem in the social scale, but It carries them where, ever and whenever they wish to go and for wonderfully little money. In some parts of Germany where fourth-class cars are used the peasants travel for less than 1c. a mile. As the first object of the German railway organization is not to make money, but to provide public service the time-tables are arranged solely with the idea of meeting the general demand. Hence trains are frequent in all directions. As nothing need be scrimped or stolen to make up dividends on watered stock and fraudulent bonds, the outfit is uniformly good, the road-beds and track are in excellent condition, and the stations great roomy places, often of elaborate and handsome design. The Government takes a reasonable pride in architecture; the frightful and ramshackle sheds to which in small American towns we must resort for stations are unknown in Germany; the smallest village has at least a tolerable Bahnhof. The through German trains make fairly good speed. The express from Berlin to Hamburg is scheduled at fifty-one and a half miles an hour, including stops. No long-distance train in Germany equals in speed such trains as the Empire State express and the fastest Chicago-New York trains, but the Cologne-Berlin and Frankfort-Berlin expresses do forty-five miles per hour. The local trains seem slower than the mills of the gods, but they are fast enough for the people who use them. Accidents are almost unknown. Trains are seldom late. The whole vast system works with the precision of a perfect machine, for all its cheapness it returns every year great profits to the national treasury, and after many years of experience the people of Germany would regard as something straight from Bedlam a proposal to return to the private ownership of their railroads.

Like the man that commended honesty to his son, they have tried both. We have in America a pleasing way of assuming that the Government of Germany operates the German railroads because the spirit of enterprise and achievement is lacking among the German people; the Government, we Americans think, must needs do these things because private individuals don’t know how; and this in spite of the fact that German enerprise has conceived and carried on commercial undertakings as great and daring as anything we ever dreamed of. The truth is that in the beginning all the German railroads were privately owned, and until thirty-five years ago nobody in Germany supposed there would ever be any other kind of ownership. The Government woke up in 1871 to recognize two facts— first, that whoever owns a country’s transportation service owns the country; and second, that it needed the national highways for national use. The war with France first jolted the private ownership idea, for the Government had found the railroad companies exorbitant, unreasonable, and given to grafting when it came to transporting troops and supplies, but we also had our share in effecting the transformation. It was the time of Tom Scott, the Pennsylvania monopoly, Jay Gould, the wrecking of Erie, the beginning of legislative bribery as a fine art. No important development or manifestation around the world escapes the hawk-like watching of the German Government. Tom Scott’s performances were known and understood in Berlin as thoroughly as ever they were known in New York. The appearance of a new factor in Government able to control legislatures, nullify laws, and operate illimitable schemes of public plunder made a strong impression on the German mind. Moreover, much German capital had gone into American railroads about that time and very little had come out, and following its dizzy revolutions through debenture bonds, consolidated mortgages, equipment bonds, common, preferred and hocus-pocus issues, and the vast and sailless ocean of watered stock, showed the Germans some highly disagreeable possibilities of the private system. So the Government determined as a matter of safety to run the railroads on its own account.

Under the German system the thing had to be done through the states of the Empire for the reason that while all these states stand as one against the foreigner they are still peculiarly jealous and sensitive about their local prerogatives. Prussia, the laboring steam-engine of the Empire, took the lead. And here comes in the inevitable one man mighty that dominates the scene and with his two hands drags down the castle. What the obscure laborer Alexander McLeod was to co-operation in Woolwich, Minister von Maybach was to public ownership in Germany. He was the man with the iron will, the unbeatable and unturnable, who kept hammering away until he got what he wanted. In America von Maybach would have been a boss of Tammany Hall, or a railroad magnate, or a trust builder. In Prussia he was the man that wrested the railroad system from the hands of individuals and did it without splitting hairs over the means employed.

The air was filled with a million objections to every proposal. ,

“How are you going to compensate the owners?”

“And what about the stocks and bonds?”

“And there are the widows and orphans that really own the railroads —what about them?”

“And you can’t take private property for public uses, you know.”

And so on, a dismal chorus.

“No ” said von Maybach one day.

“You watch me.” He had a jaw like a snow-plow and eyes as cold as glass. He went quietly into the stock market and bought the control of one or two railroads. On these he instantly slashed all rates and reached out for all the business. It was knife for knife in brutal fashion on the tariff sheets, but in the end the private competing company found that von Maybach had the stronger weapon and the better nerve. He did not care for any protests about vested rights or the sanctity of dividends, but thrust his good blade right and left. The stockholders took fright at the vanishing of their dividends; with a hard, brutal person like that to deal with the widows and orphans seemed to have no chance in the world, and in the end the private competitor was glad to make the best terms it could with the Minister and get out with Prussian consols at three and one-half per cent, in exchange for stock. As fast as he added a new line to his system von Maybach extended his rate-cutting until he was practically master of the situation. Then the rest of the companies surrendered at discretion.

The other states meanwhile had taken heart from the bold von Maybach and followed his example—more or less. The private ownership of railroads all over Germany gradually passed away. In 1904 there were in the Empire 32,090 miles of railroad trackage, of which 29,375 miles were owned by the Government and 2,715 miles were owned by private companies. Most of the privately owned railroads were small branch lines, or lumbering or factory roads. For reasons of convenience the state managed 140 kilometers (eighty-five miles) of privately owned railroads and allowed twelve miles of state railroad to be managed by private interests.

In its total railroad operations from first to last the state (that is, all the governments of Germany collectively) has invested so far $3,129,943,965, or about $75,000 a mile of trackage. But this, of course, includes everything. The annual earnings are about two billion marks, or $500,000,000; the annual expenditures are about $332,000,000, and the gross profits about $167,000,000. A compilation from the railroad reports of all the German states made for 1901 showed for the full-gage lines a total income of 1,972,879,586 marks, expenditures 1,310,092,257 marks, profit 662,786,829 marks, or a profit of 33.59 per cent. Besides the full-gage railroads there are 1,183 miles of narrow-gage lines. Gross profits are figured at about thirty-three and one-half per cent. For the whole of Germany the net annual profits on all state railroad lines, after charging off most liberally for depreciation, renewals, improvements, and interest, have for ten years been between 5.14 and 6.06 per cent. The tendency is steadily upward. Every year shows a slight gain in the net earnings, which are now a great item in the national budget. It is really the railroad earnings that save the Government. German national expenses, like all others, mourn year by year with the increased cost of armaments, ships, and military supplies, but as these items increase the railroad receipts keep pace and the burden of taxation falls no more heavily upon the people. In Germany the foreigner does truly help to pay the taxes, for every alien traveler contributes mile by mile to the national treasury.

The plan whereon the German railroad system is built seems at first glance something to guarantee a hopeless confusion. Theoretically every state and province in the Empire contributes to the general service a certain quota of equipment over which it has sole jurisdiction. As a matter of fact there is no confusion at all, but practical harmony. An Imperial Railroad Department at Berlin smooths out the difficulties, sees that the equipments are up to standard, arranges for the distribution of supplies, and keeps the system working as a coherent whole. The tendency is toward greater powers for this central body; naturally, because the state divisions grow weaker, the central Government grows stronger, and Berlin is soon to rule all Germany. Some of the smaller provinces now unite with others in the furnishing of equipment (as Hesse has gone into partnership with Prussia), and some furnish money instead of rolling stock.

The annual passenger traffic on the German railroad is about 900,000,000 persons. More than half of these travel third-class and 33 per cent, travel fourth-class; 88 per cent, of the passenger traffic is represented in these two classes and less than one per cent, in the first-class, so essentially is the railroad a thing for poor people. The average distance traveled is twenty miles for each person. The annual freight tonnage of the German railroads is about 400,000,000 tons. The railroads employ 550,000 persons, pay $187,500,000 a year in wages, $700,000 a year in pensions to old employees, $350,000 a year to the widows of employees, and $15,000 a year for the burial of employees. So far as any outsider can discover there is no grafting— and assuredly there is no stock juggling, bond juggling, rate juggling, rebates, discriminations, thefts, underbilling, wrong classifications, skin games, and frauds on shippers. Every shipper knows exactly what he pays and what his competitors pay, and the chief plaint of the American shipper is absolutely unknown in Germany.

On the whole, though comparisons are difficult, freight rates seem somewhat higher in Germany than in America, varying from one cent a mile for a ton to two and one-half cents, whereas the bulk of American freight traffic goes at from .61 cents to 2.08 cents a mile for a ton. But the differences in classification tend to equalize all this. The German tariff is very much simpler than ours. There are not one thousand items in the German classification list, and with us the western classification alone has 8,044 items, the southern 3,664, and the American official 9,370.

Moreover, the German shipper has three great advantages over the American. In the first place, the German rates never change; the American rates go up and down with the exigencies of the only American rule for rate-making, which in railroad parlance is “the lest cent the people will stand without rioting.” In the next place the rates are absolutely the same to everybody, rich and poor, trust or no trust, campaign subscriber or peasant, Ogden Armour or Hans Schmidt—the rates are the same. In the next place there is nobody in Germany sneaking about at night with money under his hat lining, dealing out rebates—as there is in every American shipping centre. I used to know a man in Chicago whose sole occupation for years was to hand out rebates for one railroad company to favored firms. Sometimes he used to go up dark alleys and push the money in at side doors and sometimes he used to meet a firm’s agent in a saloon and change hats with him, a roll of bills being deftly concealed behind the lining of my friend’s hat. I was told that he had given $60,000 in one month to the favored shippers of Chicago. For the greater part of the time he was engaged in this industry his operations were likely to land himself, his employers, and the firms he dealt with in the penitentiary, and for all of the time his work was utterly illegal and strictly prohibited. When Senator Elkins, justly famed in Washington as “the Guardian of the Passes,” succeeded in getting his railroad bill enacted two years ago he removed imprisonment as a punishment for rebate-giving; but the act is still a crime and still punishable by heavy fines. Yet the Chicago firms that year after year violated the law and accepted these rebates are composed of the most eminent, respectable, and virtuous gentlemen in the city, strenuous champions of law and order, and not one of them would pick a pocket or rob a till. I suppose they have their own definitions of morality, but it is hard to imagine what the definition can be. Once my friend in a fit of vinous exultation passed the hat to the wrong man and there came near being an explosion that would have echoed through our best circles. I am told that the Interstate Commerce Commission has never inquired into these matters, though it is employed for that purpose, nor into the famous “dark rooms” maintained in the railroad offices of Chicago, to which favored shippers find their way by a mysterious instinct and pick up fat rolls of bills. There are no “dark rooms” in the German railroad offices.

The German railroad system is not complicated by any rebate issues, nor by lobbies, pools, combinations, dark lantern deals, secret compacts, crooked Congressmen, purchased senators, bribed district attorneys. No part of the railroad earnings in Germany need to be set apart for the expenses of gentlemen engaged in manipulating political conventions, or in electing certain candidates and defeating certain others. That makes a wonderful difference in the practical operations of the system and a wonderful advantage to the public pocketbook. In Germany railroad rates are based on the cost of transportation, the interest on the outstanding bonds, and a fair profit on the service performed. In America they are based on the traffic manager’s nerve. That makes some difference.

In the next place the German shipper is never bothered about his damage claims. If goods are injured or delayed in transit the German Government pays for the damage out of hand and without hesitation. For a trifling sum you can insure the arrival of any shipment at any point within a stated time, and for every hour of delay the Government pays a heavy penalty. In America, except to favored firms and as a disguise for the illegal rebates, the damage claim belongs to the realm of humor; it is a jest. The railroads never pay it short of the pistol point. Not long ago I was shipping a carload from Brooklyn, New York, to a place in New Hampshire.

“Owner’s risk or railroad’s risk?” said the warehouseman, making out the bill.

“Railroad’s risk,” said I.

“Foolish,” said the agent. “The rate is lower if you ship at owner’s risk, and you couldn’t get a damage claim anyway. If your whole carload was destroyed you couldn’t get a cent in less than three years and your lawyer would cost more than the claim."

In Germany there is no quibbling about the responsibility of the railroad and no resort to the courts. The Government undertakes the full responsibility when it accepts a shipment of any kind. If the goods are lost the Government promptly pays the invoice value, and for leakage, shrinkage or injury it pays proportionately. When delivery is delayed the greater part of the freight charges are returned. In 1902 the German Government paid $325,000 on such claims and in 1903, $305,000, and it was not necessary for any claimant to sue, threaten, bully, complain, wheedle, or swear over the telephone to get justice. American shippers will appreciate the difference.

There was one occasion in Germany when the Government did change the rates, and very suddenly. The Summer of 1904 was exceedingly dry and the water in all the rivers was very low. Such German rivers as are navigable at all carry a commerce wholly disproportionate to their size. The upper Elbe, for instance, with about a cupful of water, is busy with steamers, barges, and rafts. The drought of 1904 left a great fleet of these high and dry. Many were loaded with goods the delay of which was causing great distress and loss to merchants, when the Government suddenly stepped in and earned all the delayed goods to their destination at lowwater rates.

As to the passenger business, the advantage is distinctly with the Germans. In Germany the regular firstclass fares are about three and onefifth cents a mile; second-class, two and one-fifth cents; third-class, one and three-fifth cents, and fourthclass, four-fifths of a cent a mile. An additional charge of three-sixteenths of a cent a mile is made for first-class tickets on the fast through trains and of about one-seventh of a cent a mile for second and thirdclass. A liberal system of round-trip reductions, workmen’s tickets, circular tour reductions, and tourists’ c;ou'pons bring these moderate charges down to even lower levels. Travel in Germany is cheap. In America the prevailing rate is three cents a mile except on some through runs between large cities. In some part» of tbe

country it is four cents a mile. One can go from New York to Chicago, 950 miles, for $18, but this is over the “differential lines,” the regular charge being from $20 to $29. If we add the Pullman charge for accommodations, equal to “first-class” in Germany, it will be seen at once that the Germans have far and away the best of it. At one time private companies supplied ail the sleeping car accommodations on the German roads. The Government is now operating sleeping-cars of its own at rates calculated to make the American traveler weary. All the German sleeping cars are of the compartment order, the idea of undressing in public and going to bed on a shelf not appealing strongly to the continental mind. One can have on a German sleeping car a room to himself with two berths and complete toilet accessories. for $2.50 from Frankfort to Berlin. For the same accommodations on a Pullman car from Rochester to New York, a journey occupying about the same time as that from Frankfort to Berlin, the charge is $7.00, and about this, difference between German and American sleepers prevails everywhere. But, of course, the American sleeping car system is one of the most monstrous grafts in the world, and the Germans have the advantage of earning no dividends, of supporting no watered stocks, fictitious bonds or inflated securities, and of having no bribes to pay legislators.

The Prussian railroads are very much the biggest and on the whole the best part of the German system. The railroads of Saxony, Wurtemburg and Hanover do well enough, but everything in Germany is overshadowed by Prussia. In 1903 the Prussian railroads (Prussia and Hesse combined), covering 31,697 kilometers (18,810 miles) of track, earned $350,140,000,

with a gross profit of $147,000,000, which, after deducting the interest on the railroad debt and the usual charges for deterioration and construction accounts, left a clear net profit of $23,000,000, against a net profit of $20,000,000 in 1901. In Prussia the Railroad Department covers all the expenses of construction, extensions, improvements of whatever kind, out of its surplus instead of issuing new bonds, and in spite of all that its net profits in 1901 were 6.41 per cent, on its investment; in 1902, 6.56 per cent., and in 1903, more than seven per cent. Moreover, it should be remembered that these percentages are calculated upon the total investment to date, including all improvements paid for from the surplus as well as the original purchase price. Hence it will be seen that Prussia has a good thing in her railroads. As the receipts increase at the rate of about eleven per cent, a year and the operating expenses do not keep pace with the increase of receipts, it appears that she, has a still better thing for the future. Thus:

In 1879 the receipts were $40,000,000

In 1882 “ “ “ 120,000,000

In 1891 “ “ “ 250,000,000

In 1904 “ “ “ 375,000,000

whereas the operating expenses were : In 1901, 61.75 per cent, of the receipts In 1902, 61.34 “ “ “

In 1903,60.55 “ “ “

and the working surplus increased from $125,000,000 in 1896 to $150,000,000 in 1904.

On the human side of these matters, the German railways carry nine hundred million passengers a year and kill and maim almost none of them. Every week we kill more peor pie on our railroads than are killed on the entire German railroad sys-

tem in a year. But the German people object to being killed and we do not. That again makes some difference.

Nothing done by man shall escape fault and flaw. The German railroad system has its merits and defects, and its worst and most glaring defect is that all the men that wobk for it, half a million in number, are disfranchised and have no share in the Government. The ruling powers were determined that the ¡railroad should never be a factor in national polities, so they took the shortest and most radical way to that end. No political party in Germany can utilize the railroad vote, for there is no such thing. The fact is not so important in Germany as it would be with us, because Germany does not have equal and universal suffrage anyway, but it is important enough to keep alive a perpetual and well-grounded agitation. To the Socialists, naturally, the restriction is an incessant goad. It does not seem quite necessary. Switzerland has both-national ownership of railroads and political parties, but has not found any reason to deprive its railroad employees of their rights. But it must be remembered that politically Germany is living in the sixteenth century.

Also the red tape tangles the railroad machine. Everything must be done in the manner of starting that train at Bomburg Pomburg, with salutes and formalities, addresses to this bureau and that chief, and improvements are not to be had in a day. And yet the comfort and the speed of the trains do increase from

year to year. The German people do not seem to mind the herding at the stations nor the overbearing arrogance of the men in official position, but they do complain that the Government does not extend the system so rapidly as it should and that many important towns still remain without railroad connections. The official answer to this is that the railroad profits are now a great item in the budget, and in the present state of warlike preparation the budget cannot Jre tampered with. )The Government tries to meet the demand for extensions by building and encouraging otheis to build what are called “Light, Railroads”; that is, short narrow-gage lines connecting at trunk line points. But the progress of this development is slow.

What seems to many a better founded complaint is about the German coal rate. To help the German collieries to compete in Baltic ports with English coal a special rate, very low, is made on coal from Silesia and Westphalia. As the first object of the German Government is to push German commerce, the thing is defensible from a certain point of view, but it really taxes the rest of the country to help the collieries.

Not all the German state railroads show balance sheets equal to that of the Prussian. In Baden, for instance, the working expenses are 81.20 per cent, of the receipts and the net profits are only 2.39 per cent. But this is an exceptional case and Baden is a small province. In the larger kingdoms, Saxony, Bavaria, Wurtemburg, the results are good enough.