PRE-WAR PRINCIPLES AND METHODS 37

during this period served to absorb and conceal the increases
 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 movement
 progressed so rapidly that at the present time a
comparatively few independent Railroads control the
entire Western transportation industry. Of the ninetyeight
 Railroads engaged in the present Arbitration, practically
 eighty are controlled by thirteen independent, proprietary
 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 certain
 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 distinct
 financial groups—the Morgan group and the Rockefeller
 group. It truly may be said, therefore, the Morgan
and Rockefeller interests dominate the entire matter of
financial control over the economic interest and advancement
 of locomotive Engineers and Firemen and other
employees. This has a two-fold aspect: the potential
control of working conditions and compensation. of employees,
 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