General W. W. Atterbury,

     It is not necessary, I hope, for me to tell you that I am happy to be with you. I wish it were possible for me to accept this kind of invitation more frequently. Being a motive power man originally, you and I can talk the same language.

     At the outset let me congratulate you sincerely and earnestly for your co-operation in helping us to do a really big job in the year just ended. A year or so ago, when we foresaw the demands that would be made upon us for cars and locomotives to move a record amount of freight, I said the burden would fall largely upon the maintenance of equipment forces. The response was generous and whole-hearted and I want you to know that your efforts played no small part in the results that were accomplished.

     At the same time, I would not be frank and honest with you if I did not tell you that as foremen and therefore as part of the management you share with me the responsibility for getting other results besides a good output of transportation service to the public.

     I mean, particularly, financial results. That is what I want to talk to you about tonight.

     Last year was the best year we ever had as far as the amount of business we handled was concerned. No other railroad in the country was ever called upon to move the volume of freight that the Pennsylvania Railroad System successfully moved in 1923.

     Yet, when you put the job to a very practical test--and one which you, as well as I, must apply--a great deal remains to be desired. That test is net income. I do not speak by way of criticism but because I want your help in meeting this test in the future.

     A short time ago I read an editorial in the "Pennsylvania News" in the Northwestern Region, which you may not have seen. It was headed, "They Work for Themselves" and this is what it said:

     "Pulling into Helena, Ohio, the other morning on 118, we stepped off the train to meet the smiling countenances of R. R. Gillispie, the agent, and C. A. Lindsay, section foreman at that point. Then along came Lindsay's track gang and, ladies and gentlemen, allow us to present as fine a bunch of men as the Pennsylvania boasts anywhere. The only trouble, humorously declares about half the gang, is that 'it's h----- working for these stockholders', for nearly half of Lindsay's gang is buying Pennsylvania Railroad stock through the Employes' Provident and Loan association.

     "And the whole gang, stockholders and the others alike, are proud of their section, take an interest in their road and have a real pride in their work. That's not all. Besides buying stock as an investment, this gang has 100 per cent membership in the V. R. D. They don't miss a thing.

     "So you will not be surprised to know that Foreman Lindsay's outfit of stockholders and the others who good naturedly declare 'it's h---- to work to 'em' have one of the best sections of track on the Toledo division.

     "They aren't going to own any shoddy piece of railroad, these Helena stockholders. They have more than Pennsylvania spirit--they have a real, live, concrete interest in their road, financial as well as human."

     Now let me give you a little different slant on the same idea.

     Not quite two months ago, and since then, it became necessary to reduce forces materially. You probably know more about the immediate effects of that than I do; but there is not a man on the railroad who regrets more than I the fact that such action was necessary. One of our train dispatchers in the West wrote to Mr. Rea about it and I would like to read you part of Mr. Rea's reply:

     "I want you to know that we fully appreciate the hardships of cutting down the force in times of stress and we have given the matter close study for some years, endeavoring to work out a plan providing steady employment for all. So far, however, we have not hit on anything practicable, but are still going into the subject. One of the reasons is that the railroads must move the business offered. If large, they must expand; if small, they must restrict; and when restriction comes, reductions must take place where the surplus of men, materials and equipment exists. These reductions are a source of keenest regret and disappointment to the management; but so long as railroad returns are kept so low by restrictive Federal and State regulation, so long will it be necessary to make severe reductions with every fall in business because money is not earned to pay the wages."

     In other words, we are up against the simple necessity of keeping our expenses within our income.

     Many of you know that years ago when railroads were not so restricted in their earnings they could lay aside a little surplus which acted as a sort of reservoir and on which they could draw to keep men employed when the business actually moving over the road did not require their services. For instance, we could do some painting of cars and other equipment, we could fix up our stations, we could put men to work on improvements and on new work when times were slack.

     It would be a real pleasure to every officer on the railroad if that were possible now. But when the business drops off we have to reduce forces accordingly. None of us, from the President down, none of the employes can escape the obligation resting upon everyone of us to operate this railroad so that we shall not only do our job for the public but also earn a fair return to the one hundred and forty odd thousand people who employ us to do the job.

     As I see it, therefore, every man who enters the employ of this railroad, or any other corporation for that matter, assumes a moral obligation to do that. Looking over a period of years, as you know, our stockholders received no increase of dividends and, in addition, also suffered by reason of the reduced purchasing power of money.

     Since the war, while wages, taxes, rents, etc., continued high, the stockholders had to stand reduced dividends although many of them are dependent upon the dividends for their maintenance. Furthermore, savings banks and insurance companies are also investors in our property and if we do not earn and pay a return on these investments regularly, then the people could not receive interest on their savings nor get proper payment of their life and fire insurance policies.

     We are all closely knit together in this life and no one can be hurt without affecting the rest in large or small degree.

     You know very intimately perhaps that we have gone through three pretty hard years and as I said before, you have helped nobly to carry the load.

     First of all these was the aftermath of Federal control which seriously affected the earning power of the railroads and the morale of their employes. We are gradually overcoming that handicap.

     Then we have had to fight hard for our right to deal with each other around a friendly table and there is no doubt now about the outcome of that situation.

     Then we come face to face with public requirements for the greatest transportation service ever demanded of American railroads. We have come out on top there and it is gratifying to know that the public is beginning to realize that fact.

     Undoubtedly, therefore, we have good reason for a great deal of satisfaction. But there is another side of the picture that must give us pause.

     The Pennsylvania Railroad System represents roughly about one-tenth of the railroad industry in the United States. You know what that means. The whole country looks to our railroad to set the pace not only in performance, in service, in courtesy, but also in financial results. It is up to us to make good. We have done it in the past in spite of difficulties, and I believe we are in better shape now to do it again and to maintain our leadership than we have ever been before.

     It is no secret that we have been the target for very bitter and altogether unwarranted attacks. Some of the Labor Unions have singled us out for unjust and unfounded misrepresentation. The effect of this campaign is countrywide. We hear it in the South, in the West and in the Northwest. Freight is being routed against our lines and persistent attempts are being made to interfere with the successful operation of the Pennsylvania Railroad.

     It is probably well known to you that, for public consumption, misleading comparisons are being made between our railroad and some of our competitors. The only possible purpose of this can be an attempt to discredit the relationship that we have built up here between officers and employes. Labor leaders on the New York Central and the Baltimore and Ohio are out actively urging employes on those railroads to make extraordinary efforts. Labor papers are missing no opportunities to say that these railroads, because of their methods of dealing with their employes are getting better financial results than we are.

     I mention these things to you not because I am doubtful about what we can and will do, but because I want you to know that we all still have a mighty big task ahead of us and that I am counting on you men to help put it over.

     Our force is getting down no to bed-rock. This year we are going to work on a budget that will require careful scrutiny of every expenditure. A lot of money has been put into property and equipment in the last few years.

     Our physical machine and our organization are in better shape today than they have been for many years. We are paying out in wages a larger part of every dollar we take in than many other railroads. It is only reasonable, therefore, that those who look to us for results in net income should begin to expect them immediately. And when this system turns itself earnestly to getting results we can always get them because on our railroad ability, intelligence and loyalty have always been outstanding characteristics right down the line of our officers and employes.