The railway workers’ councils were not abolished at first, but were reduced to a nominal existence as “consultative bodies,” which in practice were not consulted. Here was the apotheosis of the state: the new policy could not be restricted to railways; nationalization of industry, under state direction, was to take the place of the direction of industry by autonomous workers’ councils. In May, 1918, Commissar of Finances Gukovsky, staggered by the enormous loss incurred upon every hand, in his report to the Congress of Soviets called attention to the situation. He said that the railway system, the arterial system of the industrial life of the nation, was completely disorganized and demoralized. Freight-tonnage capacity had decreased by 70 per cent., while operating expenses had increased 150 per cent. Whereas before the war operating expenses were 11,579 rubles per verst, in May, 1918, _wages alone_ amounted to 80,000 rubles per verst, the total working expenses being not less than 120,000 rubles per verst. A similar state of demoralization obtained, said Gukovsky, in the nationalized marine transportation service. In every department of industry, according to this highly competent authority, waste, inefficiency, idleness, and extravagance prevailed. He called attention to the swollen salary-list; the army of paid officials. Already the menace of what soon developed into a formidable bureaucracy was seen: “The machinery of the old régime has been preserved, the ministries remain, and parallel with them Soviets have arisen--provincial, district, volost, and so forth.” In June, 1918, after the railways had been nationalized for some time, Kobozev, Bolshevist Commissar of Communications, said: “The eight-hour workday and the payment per hour have definitely disorganized the whole politically ignorant masses, who understand these slogans, not as an appeal to the most productive efficiency of a free citizen, but as a right to idleness unjustified by any technical means. _Whole powerful railway workshops give a daily disgraceful exhibition of inactivity_ on the principle of ‘Why should I work when my neighbor is paid by time for doing no work at all?’”