THEORY OF PRODUCTIVE EFFICIENCY 183 
chanical officials and by reason of the fact that rates of pay 
of employees were inadequate, working standards were bad, 
and hours on duty excessive. 
We do not think there is any need of attempting to prove 
what would be conceded, that the labor costs of operation 
measured in ton miles or traffic units prior to the war, say, 
from 1900 to 1917 or 1890 to 1917, due to the development of 
operating efficiency in train loading and the carrying of more 
ton miles per each unit of tractive power, that there was a 
steady, remarkable decline in the labor costs of operation per 
anit of traffic handled, extending up to 1910, after 1910 prob- 
ably a loss in the decrease or an increase over 1910, but, as a 
whole, for the pre-war period a steady decline in the labor 
costs of operation as compared with the increasing costs re- 
sulting from the financial mismanagement on the other side 
and the hampering of the operating efficiency of the rail- 
roads from a physical standpoint. 
From the foregoing presentation of data, we believe the 
following conclusions may now be drawn: 
I. Railroad management, due to an improper financial con- 
trol, has been productively inefficient, and the existing high 
operating costs of the railroads are directly traceable to this 
financial control and resultant inadequacies of management. 
2. Railroad employees have constantly grown in produc- 
tive efficiency. 
3. If management had been as efficient as labor, labor and 
other costs of operation would be verv much below their 
present levels. 
4. Those in financial control of the railroads are now at- 
tempting to take advantage of a temporary depression to 
reduce rates of pay of railway employees or to deflate railroad 
labor, and thus add to their future gains and conceal their 
present inadequacies. 
By way of explanation, at this time, we might say that in 
speaking of the inadequacies of management, we do not wish 
to be construed as charging the operating and mechanical