THE ANTHRACITE-CARRYING RAILWAYS.

BY H. T. NEWCOMB.

The anthracite region of Pennsylvania is traversed by nine railways, all of which are controlled by corporations that are engaged, either directly or otherwise, in the business of mining and selling hard coal. The present constitution of the State prohibits grants of mining and transporting privileges to the same corporation; but the conditions of the supply and those under which it is mined and marketed render substantial identity of interest between the operators and the carriers necessary in order to prevent wasteful duplication of facilities, and to secure the conservation of the product. The result has been the progressive extension of the activities of the railways and their allied corporations and the steady disappearance of the independent operators. Those railways whose charters do- not antedate the constitutional prohibition have successfully evaded it by the creation of coal companies which they control, or are themselves subject to the direction of security holding corporations that are also owners of the control of mining property. Thus the Lehigh Valley Railway owns all of the stock of the Lehigh Valley Coal Company, while the capital stock of the Philadelphia & Reading Railway is owned by the Reading Company, which also controls, in a similar manner, the Philadelphia & Reading Coal & Iron Company. The superficial observer rarely has any difficulty in condemning this union of interest between the producers of utilities of form and those of utilities of place; but the fact is, beyond question, that the development of railway mining has been marked by the abolition of many of the wasteful practices of former years and the introduction of machinery and methods which permit a much more complete utilization of the total supply.

The following statement shows the names of the companies that control anthracite mining and transportation, their present mileage and capitalization, the proportion of anthracite tonnage to their total traffic, as shown by the census of 1890 (the latest date for which such data are available for all companies), and the amount of anthracite marketed by each in l90l:

The figures traffic in 1890, of course, can but roughly indicate the present importance of their anthracite tonnage to the carriers named. It is certain, in fact, that most of them have greatly increased their miscellaneous traffic, and that the latter is now relatively much more important than it was a decade ago.

The increase in hard coal shipments from the mines, from 1890 to 1900, was from 35,865,174 tons in the earlier to 45,107,484 in the later year, or 25.77 per cent; while during the same years the number of tons of all freight carried by the railways in the group of States to which Pennsylvania belongs increased 55.10 per cent., from 240,576,704 to 373,139,488, and the aggregate freight transportation from 23,236,827,478 to 41,275,547,319 ton miles, or 77.63 per cent. Among the anthracite lines are several of the most important in this group, - and they operate approximately 50 per cent. of its mileage.

The history of anthracite transportation has been characterized by successive efforts to restrict the competition of the producers. The capacity of the collieries is considerably beyond that necessary to meet the demand at a profitable price 1-ever, and experience has taught that unrestrained rivalry in mining and selling is always the preliminary to inevitable disaster. Dr. Peter Roberts, an authority on this subject, calls attention to the fact that the four bankruptcies of the Reading Railway have each followed very soon after periods of strenuous competition. Yet the conditions which render harmonious action - necessary make it very difficult to secure the observance of agreements when they can be effected, and many statutory obstacles make additionally laborious the path toward reasonable profits and industrial order.

During the year 1901 prices were exceptionally stable, and there was a good deal of evidence that some-of the worst difficulties of former years had been neutralized. This was undoubtedly brought about, in part at least, by the establishment of very close relations between companies that had previously been, in a greater or less degree, competitors. There was unquestionably some progress toward a real consolidation of interests, but its extent has been exaggerated by the daily press. The principal recent changes were the purchase of a majority of the stock of the Central of New Jersey by the Reading, the distribution of a considerable interest in the Lehigh Valley among several other companies, including some that are not anthracite carriers, and the establishment of relations with the Lackawanna which have made that company less of a disturbing factor in the situation. The Pennsylvania Railroad occupies an absolutely independent position, the Delaware, Susquehanna & Schuylkill is merely an adjunct to the business of Coxe Brothers & Company, large independent operators, while the position of the New York, Ontario & Western and Delaware & Hudson companies is one of relative independence. Corporations are governed by boards of directors, and a glance at the membership of those of the nine anthracite carriers will show how far there is associated management. The total membership of the nine boards is 107, and these places are filled by 88 individuals, 77 of whom serve in but one board each. Of the remaining eleven, one is a member of four directorates, six belong to three, and four to two. The following table presents the facts regarding common membership in these boards:

The foregoing shows that of the nine members of the directorate of the Central of New Jersey three serve on the board of the Lackawanna three on that of the Erie, four on that of the Reading, and five are directors of the Lehigh Valley. It will be noted that the directorates of the Pennsylvania and the Delaware, Susquenanna & Schuylkill have no members in common with those of the other companies, while in but one case is there a majority of a board consisting of members of that of another. The names of those who belong to more than one board and the companies which they serve as directors follow:

The financial condition of these corporations is indicated by the following table which shows facts for the year that ended with June 30, 1900:

Since the fiscal year 1900 some of the companies that paid no dividends during that year have begun to make payments to their shareholders. The following statement shows the dividend record of each of these companies for the last seven years, and the highest and lowest prices obtained for their shares in each year from 1898 to 1901 inclusive:

Obviously, it would be necessary to look beyond the foregoing for evidence of excessive profits. The shares of four of the eight companies for which price quotations are available have never sold for their par value, while two have never paid dividends under their present organization, and two more have only paid on a relatively small portion of their shares. The Pennsylvania Railroad is scarcely to be considered in this connection, because of the comparatively small proportion of its total business borne by its anthracite traffic. The Reading and Erie companies have but recently emerged from insolvency and receiverships; while the Lehigh Valley had, during the recent depression of business, a notoriously narrow escape. A recurrence of the conditions which brought about these financial difficulties is probably nowhere desired, but it should be understood that the only certain safeguard against them is harmonious and united action. So far as this has been achieved, those in control have not only well served the business and investing public, but society in general as well. The anthracite supply is limited in extent; and the period of its exhaustion, if the most conservative methods are followed, is easily calculable. Separate action on the part of the operators and carriers means wasteful methods of mining, the production of a quantity in excess of that which will sell for prices equal to the real cost of production, and the consequent failure to secure from this wonderful fuel supply the greatest usefulness of which it is capable.

FROM THE REPORT OF THE UNITED STATES INDUSTRIAL COMMISSION, 1902.