A short time ago, in a report issued by the New York, New Haven and Hartford Railroad, President Mellen stated that so far as his system of roads was concerned, increase of pay had invariably been followed by decreased efficiency. Mr. Mellen, of course, has the reports and the figures to substantiate his opinion. The statement is plain enough, although its meaning is somewhat obscure. That decrease in efficiency has been the natural sequence and effect of higher wages, or that men lose interest in their callings or grow more careless in their habits with every addition to their material prosperity, is manifestly absurd. Mr. Mellen has not informed us that he looks upon the matter in this light, although his words may reasonably be considered to bear some such interpretation. Be this as it may, he certainly calls attention to a very uncomfortable coincidence. In effect Mr. Mellen’s words may be taken as a direct challenge to railroad men to come forward and explain a state of affairs that has the appearance of being very much to their discredit. The implied challenge can be immediately and concisely replied to in this way. The efficiency of the service rendered by employees to the New Haven road has by no means been impaired or decreased by any consideration of wages whatsoever. Nevertheless, the power or pressure that induced Mr. Mellen and other railroad managers to add large sums to their pay-rolls is also responsible, by the exercise of its influence in other directions, for the decreased efficiency. _Increase of pay and decrease of efficiency are both indications of loss of grip by the management._ Hidden away in this simple statement there is a whole world of significance. Here are fundamental facts, from a fearless consideration of which we shall be able to derive a logical and clean-cut explanation of the present situation on American railroads.