PRE-WAR PRINCIPLES AND METHODS 37 
during this period served to absorb and conceal the in- 
creases in operating revenues, and not only constitute 
a present drain upon the operating performance of the 
transportation companies, but will continue in the future 
to absorb revenue. 
(c) After the panic of 1893, and the reorganization of 
a number of Western Railroads which had been forced 
into the hands of receivers by that financial catastrophe, 
a tendency toward the consolidation of independent lines 
into large systems became very pronounced. The move- 
ment progressed so rapidly that at the present time a 
comparatively few independent Railroads control the 
entire Western transportation industry. Of the ninety- 
eight Railroads engaged in the present Arbitration, prac- 
tically eighty are controlled by thirteen independent, pro- 
prietary systems. A few bankers, by their control of 
the avenues of credit and the market for the sale of 
securities, by becoming reorganization managers of cer- 
tain Railroads and forming voting trusts, by acting as 
fiscal agents, and by the purchase of stock, have finally 
secured control of the Western Railroad situation. These 
banking institutions are, in turn, through interlocking 
directorates and stock ownership, controlled by two dis- 
tinct financial groups—the Morgan group and the Rocke- 
feller group. It truly may be said, therefore, the Morgan 
and Rockefeller interests dominate the entire matter of 
financial control over the economic interest and advance- 
ment of locomotive Engineers and Firemen and other 
employees. This has a two-fold aspect: the potential 
control of working conditions and compensation. of em- 
ployees, as well as their general economic welfare and 
progress, is in the hands of these two groups of affiliated 
banking interests; and railway presidents are made and 
unmade by these dominating financial interests, and the 
fundamental policy required of them is to develop as 
large an earning power as possible in order to produce 
market value for securities and to pay dividends on