since the introduction of the 8-hour day, as shown by the following table:

Percentage relation that hours of overtime bore to total service hours

The progressive increase in the average freight-train speed (including delays en route) has been as follows:

As in the case of the train-service employees, changes in methods and practices since the establishment of the basic 8-hour day for other employees have tended to absorb or minimize the additional cost which it initially imposed. Machines of greater capacity were installed in shops which made possible greater production with less labor. Some of the roadway work was mechanized. Improved methods of shop administration were introduced, including budgeting, greater stabilization of employment, and the scheduling of repairs. In 1923, the carriers generally entered upon an extensive program of capital expenditures to provide improved facilities and to increase the efficiency of operation and, consequently, to reduce transportation costs. According to reports for the period 1923-1929 made to the American Railway Association, the carriers put in service 894,264 new freight cars and retired 1,070,566 old cars; they also put in service 15,431 new locomotives and retired 26,336 old locomotives. These additions and retirements resulted in immediate reduction of the amount of necessary repair work, which, coupled with the installation of modern shop machinery, made possible a very large reduction in the number of employees even before the effect of the present depression was felt.

Notwithstanding the reduction in the measure of a basic day's work in most cases from 10 to 8 hours, the productivity as measured by

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equated revenue ton-miles per man-hour increased 45.4 per cent from 1916 to 1930, as shown by the following table:

The foregoing considerations suggest that present estimates of increased cost which would result from a future transition to a 6-hour day, even though carefully and honestly made, may exaggerate the burden of the change in actual practice. Carrier witnesses deny that this would be a reasonable inference, because, they say, there is now less room for improvement than there was at the time of the introduction of the 8-hour day. There is some force in this contention, because the railroads in the period 1916-1920 were less adequately equipped to handle the traffic offered than they are now; but it is hazardous to set limits to the future possibilities in the introduction of labor-saving devices which would serve to lighten the cost involved in shortening the work-day, and which the introduction of the shorter day, especially with punitive overtime, would tend to stimulate.

It should not be overlooked, however, that the economies in operation which tended to offset the additional cost of the establishment of the basic 8-hour day were largely economies resulting in a reduction in the number of employees, and that they were obtained by increased capital investment.

CLASS I STEAM RAILWAYS

As a means of determining by actual practice the effect upon operation, service, and expenses, we proposed that representative railroads or typical divisions thereof be selected and the principle of a 6-hour day be applied thereon for a test period. Our proposal contemplated compensation at the existing hourly rates. The railroads advised us that they were unwilling to make such tests, but offered to cooperate in any field studies that we might desire to make. Counsel for the employee organizations represented at the hearings agreed to cooperate in any field studies we might make, and also

stated their willingness to negotiate with the carriers looking to an actual test of the principle of a 6-hour day, but did not commit themselves to compensation at the existing rates. We considered the institution of a field investigation by our own staff for the purpose of observing operations and determining the methods of applying the 6-hour day principle which would increase employment the most and also the methods which would increase cost the least; but this was found to be impracticable owing to the large reduction in the amount of our current appropriations and the apparent impossibility, under such circumstances, of completing the study in time for use in a report to be submitted by December 15, 1932. A large part of the information and data upon which this report is based was, therefore, as previously indicated, adduced at public hearings. The witnesses representing both the carriers and employees were, in general, persons having an intimate knowledge of the various phases of railroad operation and of the practical application of the numerous rules governing wages and working conditions of railway employees. Some, at least, of these rules, which are more fully discussed in the sections dealing with the five principal employee groups, would obviously require adjustment to accommodate them to a shorter work-day. These various rules, usually known as pay schedules, are complicated and frequently difficult of construction and application. Gen ally they are the result of negotiations between carriers and their employees, awards of boards of arbitration, or orders promulgated by the Director General of Railroads during the period of Federal control and by the Railroad Labor Board. Whatever their origin, these pay schedules are now extant and for the purposes of this inquiry we shall assume that they will continue in force without change, except so far as necessary to adapt them to the principle of a 6-hour day or to reduce the expense of applying that principle in ways which the employees seem willing to accept.

Representatives of both the carriers and the employees testified substantially that, leaving financial questions out of consideration, forces could be so reorganized and operations so conducted that neither operation nor service would be adversely affected by the application of the principle of a 6-hour day. Practically all exhibits and testimony of record relate to the subject of expenses.

Preliminary to the preparation of data to show what effect the 6-hour day principle would have upon expenses, committees assigned to make studies were appointed by the carriers for each of three territorial districts, i. e., eastern, southeastern, and western. These committees in joint conference selected for study roads which in their judgment were representative of the respective districts. In order to complete the work in the time allotted, the detailed studies were limited to certain divisions, shops, and yards which they deemed representative of the road selected. The year 1930 was selected as one of fairly normal conditions, and August as a month representative of that year.10 Witnesses for the carriers stated that in conducting the studies a careful survey was made of the operations of the various departments, and in determining what the effect of applying the

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• Railway operating revenues for 1930 amounted to $5,281,196,870. The average for the 10 years 1922-1931 was $5,827,271,490.

10 In some cases the study covered only a part of August and in others it covered periods other than

principle of a 6-hour day would be, allowance was made for such changes in methods and practices as would, in the committee's judgment, be practicable for the purpose of holding the increase in expense to a minimum.

Exhibits introduced by the carriers were prepared on the two bases, (1) then-existing pay for 8 hours' work to be paid for 6 hours' work, and (2) pay for 6 hours' work on a pro rata basis, i. e., six-eighths of the then-existing daily rate.

Effect upon operating expenses of applying the principle of a 6-hour day without change in the daily rate, Class I railways. In making the test studies, the carriers dealt separately with the three territorial districts. As stated above, the studies were limited in extent, but they were assumed to be representative and the results were extended to cover operations in the district as a whole. The district results were then consolidated to show the effect upon the expenses of all Class I railways. The methods followed in the district studies varied in some respects. For example, some roads omitted certain supervisory officers from their calculations, while others included them. The effect of these differences upon the final results, however, is inconsequential. Most of the exhibits were prepared on the basis of the volume of traffic and the operations in 1930, but in some instances other periods were used. In all instances the effect was initially computed on the assumption that the pay for a 6-hour day would be the same as was then paid for 8 hours.

In addition to the studies above described, three independent studies were submitted by individual carriers. One of these covered an entire system in the Southwest, but was in other respects like the general studies. Another covered one operating division and one terminal division of an eastern railroad for the month of March, 1932, and still another covered one operating division of an eastern railroad for the first 14 days of April, 1932. These last two studies, being based on divisional activities, excluded many employees in Group I, executives, officials, and staff assistants, and also many in Group II professional, clerical, and general. The results of these studies in 1932 are consistent with those based on the year 1930.

Appendix I shows the numbered reporting divisions of employees in our wage statistics, and for each such division (1) the average number of employees of Class I railways and large switching and terminal companies in 1930, and (2) the increase in number which the carriers estimate would result from the application of the principle of a 6hour day. This increase would not be affected by the basis of compensation. The additional number of men which would be required for road, train, and engine service is not included in the grand total, as the nature of that service makes impracticable an actual 6-hour day. The increase in number in that service would depend upon agreements between the carriers and the employees as to the hours or miles that may be worked by an employee in a specified period.

The carriers predicated their estimates upon the assumption that such changes, and only such changes, would be made in rules contained in their agreements with their employees as would be appropriate and necessary to the application of the principle of a 6-hour day. It was assumed, for example, that the rules governing rates of pay for overtime would remain unchanged. The estimates indicate that

rates of pay for 8 hours would have increased the payroll of Class I railways, including large switching and terminal roads, $669,152,909 in 1930. The detailed computations are shown in Appendix II. In 1930, 92.72 per cent of the pay roll, or $2,402,069,558, was charged to operating expenses and the remainder to capital account. Applying this percentage to the amount stated above, the operating expenses in 1930 would have been increased by $620,438,577, or 15.6 per cent. Operating expenses include, of course, not only pay-roll payments but also expenditures for material, fuel, and other supplies.

Appendix II shows for each of the 148 classes of employees the increase in the pay-roll expenses of Class I railways and large switching and terminal roads, as determined by the carriers on the basis of 1930 operations, which would have resulted from the application of the principle of a 6-hour day with daily pay at the then-existing 8-hour rate.

Appendixes III and IV show, by districts and for the country as a whole, the per cent increase in pay-roll expenses and number of employees, respectively, for each class of employees.

It is not certain that absolute uniformity exists in the allocation of employees under our classification, so as to insure that all employees performing the same class of work are placed in the same reporting division. However, these possible discrepancies are not of importance for present purposes.

Effect upon operating expenses of applying the principle of a 6-hour day with compensation computed on the basis of six-eighths of the thenexisting daily rate, Class I Railways.-The carriers, at our request, prepared exhibits purporting to show what the effect upon expenses of applying the principle of a 6-hour day would be with compensation computed on the pro rata basis, i. e., six-eighths of existing daily rate. The same methods were followed as in the case of the original exhibits. No change was, therefore, made in number of hours worked or in number of employees required. As is shown by Appendix V, the carriers estimate that under this alternative basis of compensation pay-roll costs would, on the basis of 1930 operations, have been reduced by $76,673,605. By applying 92.72 per cont, which represents the proportion of the pay-roll expense chargeable to operating expenses in 1930, the decrease in operating expenses would be $71,091,767, or 1.79 per cent.

Approximately 57 per cent of this computed decrease rests on the assumption that payment of road train and engine service employees would be on the basis of six-eighths of present compensation. In the case of most railroad employees, this basis produces the same rate of pay per hour as was then being paid. It involves a reduction in pay per hour of service, however, if applied to train and engine employees who are paid on a mileage basis. For example, assume a through freight conductor running 100 miles in six hours (time called until time relieved) at a rate of 6.56 cents per mile. Under the present schedule his compensation per day would be $6.56. If such an employee should be paid on the basis of six-eighths of present compensation, he would receive only $4.92 per day, although performing the same quantity and quality of work as before the change. It may well be questioned whether this is a consistent application of the alternative basis of compensation. The remainder of the decrease is due largely to the assumption that certain employees could perform