Miscellaneous discriminations between places.1—Several witnesses also discuss other alleged discriminations between particular places. Reference should be made to the digest, pages cvII-cxx, for a fuller summary of this testimony. The principal alleged discriminations which are discussed are those in favor of Savannah as against Atlanta, in favor of Birmingham as against Atlanta, and in favor of Norfolk on through traffic over the Southern Railway through Asheville as against Charleston on traffic through the same city. Reference is also made to the differentials established by the trunk lines as between the Eastern seaboard cities. This subject is, however, more fully discussed in the previous report of the Industrial Commission on transportation. The commissioner of the Memphis freight bureau thinks that the Southern railroads make an unjust discrimination against the cotton mills in North and South Carolina and in favor of those in Massachusetts and the North. The freight rate on cotton from Memphis to cotton mills in New England was stated to be based on a rate of 55 cents to Boston, while the rate to Carolina mill points was stated at 59 cents. The rates from Memphis to Liverpool are sometimes lower than those to Carolina points. This witness does not believe that the railroads should be forced to reduce their rates to the Southern mills unduly, but thinks that there should he some change. Mr. Markham, of the Illinois Central Railroad, says that the rates made by the railroad companies on cotton from Southern centers to the seaports for export shipment are practically determined by the ocean rates, the port which secures the lowest ocean rate to Liverpool fixing the rail rate to all the ports.

3

GOVERNMENT REGULATION OF RAILROADS.

Powers of Interstate Commerce Commission.-Several witnesses, especially representing shippers, but including two or three railroad officers, the railroad editor of the Wall Street Journal, and one or two others, think that the Interstate Commerce Commission has comparatively little power at present to regulate railroad rates. They are inclined to hold that the commission has exercised a somewhat beneficial influence through public opinion and the publicity which it has given to railroad questions. Two or three railroad officers especially declare that the commission has accomplished all that Congress expected it to accomplish, or that it is wise for the country that it should accomplish. Several other witnesses, however, believe that the powers of the commission should be increased in various directions, and assert that it is now not able to correct numerous abuses which exist, especially discriminations in rates as between different localities. Mr. Jackson sees no reason why the Interstate Commerce Commission should not have all the powers which the Massachusetts Railroad Commission possesses as regards State railroads.5

The more general thought of shippers and disinterested witnesses is that, while the commission should not be permitted to prescribe all rates in the first instance, because of the complexity of the problem involved, it should have the power to revise rates, either directly when tariffs are submitted by the railroads, or on complaint, and to put its decisions into immediate effect, pending an appeal to the courts. The long delays resulting from the present system of appeals to the courts are held to work great hardship and injustice to shippers, who are compelled to continue for months or years paying the rates against which complaint is made. These witnesses believe that the burden of appeal should rest upon the railroads rather than upon shippers."

1 McGovern, pp. 680-686; Markham, p. 441; Langley, pp. 874-876.

Vol. IV, p. 62 of Digest.

3 Davant, pp. 5-8.

+ Page 442.

Jackson, p. 848.

Ripley, p. 290; Wilson, p. 690; Bacon, p. 76; Teisberg, p. 372; Haddock, p. 535; Langley, pp. 877-882; Wheeler, p. 735; Davant, p. 6.

Several representatives of railroad companies, together with one or two other witnesses, vigorously oppose the idea, proposed in some quarters, of giving the Interstate Commerce Commission power to fix rates generally, asserting that the commission has not the necessary expert knowledge, especially in view of the wide difference in conditions and localities. They hold that the railroads have many most difficult elements to consider, but that it is to their own interest to make reasonable rates and to build up the country which they reach. It is asserted also that to give the commission general power of revision amounts to giving power to fix all rates. These witnesses, moreover, oppose the suggestion that the decisions of the commission should be enforced pending appeal, declaring that there is much less possibility of recovering damages against shippers because of losses from unduly low rates, if the judgment of the courts is ultimately in favor of the railroad, than there is of recovery against the railroad if the decision is in favor of the shippers. They hold that such an important power as that to decide as to the justice of a rate ought not to be left to any authority less final or less conservative than the Supreme Court.1

2

Inspection of accounts.-Professor Adams, statistician of the Interstate Commerce Commission, thinks that that commission ought to be empowered to require uniformity in the financial accounts, as well as in the operating accounts, of railroads, and to inspect their books directly. There will be some objection, on the ground that the secrets of the railroad might be ascertained, but the last convention of State railroad commissioners approved the proposition, and it is necessary for the State and national commissions to have such supervision of railroad accounts if they would properly perform the duties of regulation imposed upon them. Mr. Greene, of the Audit Company of New York, believes that a greater degree of publicity of railroad accounts is desirable, but he thinks it would be better, instead of having direct inspection by Government officers, to require the examination and auditing of accounts by expert private auditors, under bond, only the results of whose investigations should be made known. Mr. Rice, who was connected with an investigation of the Reading Railroad Company several years ago, holds that there are many ways in which the accounts of railroads, though correct on their face, may be deceptive to investors and stockholders. Railroads which have other companies subordinate to them are especially able, if they wish, to make the accounts misleading. This witness, therefore, believes in inspection of railroad accounts by the Interstate Commerce Commission.*

Two or three other witnesses, however, do not favor an extension of the powers of the Interstate Commerce Commission in regard to the accounts of railroads. Mr. Schiff, a banker, especially declares that railroad corporations seldom deceive the public in regard to their true earnings and the state of their finances.5

State railroad commissions.-Mr. Jackson, of the Massachusetts board of railroad commissioners, says that this board has general supervision over both railroads and street railroads within the State. It has absolute control in reference to questions of grade crossings and all safety appliances. It has control over the issue of securities, and the law requires that they shall be issued only for actual value. It has also power to pass on the construction of new railroads. The board does not audit the books of the railroad companies, but requires detailed reports. Its powers regarding passenger and freight rates are nominally only advisory, but in practice the recommendations of the board are nearly always carried out by the railroads, especially through the influence of public opinion, while in a few instances the board has appealed to the legislature, which has usually passed laws sustaining its position.

1 Woodlock, pp. 464, 465; Thomas, pp. 557, 558; Griswold, p. 620; Stubbs, p. 766; McGovern, pp. 665–668. 2 Pages 384, 385.

3 Pages 479-481.

• Pages 739-741.

5 Nicholson, pp. 727, 730; Woodlock, p. 464; Schiff, p. 773.

Pp. 842-843.

Reference is also made to the powers of the Minnesota railroad commission. The secretary of this commission says that the law permits it to fix rates within the State. Formerly it could act only on complaint, but by an act of 1897 it can proceed on its own motion. Under a decision of the United States Supreme Court it is held that the orders of the commission are subject to review by the courts. The commission has recently made an order regarding the rates on hard coal from Duluth to New Ulm, from which appeal has been taken to the United States Supreme Court, and this appeal was still pending at the time of the witness' testimony. This commission also has power regarding the inspection of grain and the regulation of elevators.1

WATER TRANSPORTATION.

3

General importance and influence.-Two or three witnesses point out the great importance of coastwise, lake, and river transportation, both in itself and in its influence on railway rates. Mr. Markham, of the Illinois Central Railway, declares that railway rates throughout the country are influenced by the transportation on the oceans and the Gulf, on the Mississippi and other large rivers, and on the Great Lakes, the tendency in all cases being to bring down rates even between points far removed from actual water routes. The secretary of the Chamber of Commerce of Pittsburg maintains that transportation by water is not to be considered as an injury to railroads, but that the two classes of transportation are complementary to one another, water carriers being especially adapted to the heavy commodities which require less rapidity of transportation. The general development of industry which water transportation makes possible is a benefit to the railways. The influence of water transportation in causing the reduction of rates for long hauls by the railroads, as compared with the short hauls, is especially discussed in another place. (See pp. xv-xvii.) Coastvise transportation.—Mr. Guillaudeu, president of the Old Dominion Steamship Company, and Mr. Hayne, solicitor of the Merchants and Miners' Transportation Company, two of the leading Atlantic coastwise steamship lines, give testimony regarding the conditions of coastwise transportation, and representatives of railroads, particularly in the South, also discuss this subject. These witnesses agree in stating that the various railroads operating from the Atlantic coast cities, particularly those south of Baltimore, are to a considerable extent financially interested in the coastwise steamship lines. Nearly all of the steamship lines are either owned altogether by the railroads or are to a certain extent controlled by them. Nevertheless it is asserted by most of these witnesses that there is a very material degree of competition still existing between the Atlantic water lines and the rail lines, and that the water lines largely determine the rail rates as regards certain commodities in certain territory. Mr. Langley, of the New York Merchants' Association, and Mr. Wilson, of the Cincinnati Board of Trade, however, hold that the relations of the water and rail lines are so close that there is practically no competition as regards rates.5

4

The steamship companies are in most instances members of the various traffic associations of the Southern States, and thus have an influence in determining the general basis of freight rates. Differentials are regularly allowed in favor of the coastwise lines, on the ground that the transportation is slower and more subject to risk and that goods must be rehandled in many cases before reaching their destination. Through rates are made by the steamship lines in connection with railroads, the division of receipts being usually on the principle that water lines shall receive

1 Teisberg, pp. 361-363.

* Pp. 428-430.

* Anderson, pp. 637, 642, 645.

4 Guillaudeu, pp. 442-451; Hayne, 413-425; McGovern, pp. 663-665; Talcott, p. 628.

5 Wilson, p. 689; Langley, p. 874, 875.

as much for carrying freight 2 miles as the rail lines receive for carrying it 1 mile, on account of the greater cheapness of water carriage. Witnesses especially assert that there are some classes of traffic, especially in very bulky goods, which belong naturally to the steamship lines, while there are other classes of traffic, especially in perishable commodities, from which they are largely excluded. It is also stated that there is a growing tendency on the part of the coastwise steamers to adopt the same classification for freight, based on value largely, as the railroads, although there are certain conditions of water transportation which make departures from the ordinary methods of classification necessary. Mr. Stubbs, of the Southern Pacific Company, says that in transportation between the Atlantic and Pacific coasts by water the basis is largely that of space occupied, the result being that there are wide differences in the rates on different classes of goods as proportioned to their value, and that transcontinental rail lines are forced to make commodity rates on a somewhat similar basis in order to meet water competition.'

American merchant marine and ship subsidies.—Mr. Howes, a member of the Boston Chamber of Commerce, who has also been largely interested in ocean transportation, makes an argument against the proposed policy of granting subsidies for the construction and operation of American ocean steamships. He traces the history of the rise and decline of the American merchant marine. The decline, which was brought about in the first place by the civil war, continued on account of the early expensiveness of constructing iron vessels in this country. The witness believes that at present, by virtue of the great reduction in the cost of producing iron in this country, American shipyards can build most classes of vessels nearly, if not quite, as cheaply as foreign shipyards. He charges especially that American iron and steel manufacturers have sold plates and other materials for vessels to English shipbuilders at much lower rates than they make to American shipbuilders. He also holds that American shipyards are relatively better able to compete with those abroad in the construction of high-class vessels, in which a large amount of labor is required' than in the construction of tramp steamers and other less expensive vessels, where the raw material is the chief cost. Mr. Howes lays great emphasis on the superior economy of American labor, despite the higher rates of wages.

Finally, this witness asserts that the policy of ship subsidies, as practiced in the United States in the early days, was by no means successful, and that no European country except France makes any attempt to subsidize freight steamers. In England the subsidies are altogether in favor of fast passenger and mail steamers. France has undertaken to subsidize vessels, but her merchant marine is declining relatively to that of other countries. Mr. Howes thinks it especially desirable that Americans should be permitted to buy vessels abroad and operate them under the American flag; and he points to the great development of the Norwegian shipping trade, much of which is carried in vessels bought abroad, as showing the possibilities of this practice.

Representatives of the coastwise steamship lines seem to doubt whether the granting of ship subsidies would be of any advantage to them. A representative of the Mississippi River transportation interests at New Orleans also is disposed to doubt the desirability of ship subsidies. The secretary of the Pittsburg Chamber of Commerce, however, expresses himself as strongly in their favor.

The Nicaraguan Canal.-Two or three witnesses declare incidentally that the construction of the Nicaraguan Canal would be of great advantage to the country.5 A representative of the San Francisco Board of Trade argues especially that the canal will be advantageous to California by permitting cheaper transportation of its products to Europe and to Eastern markets. He thinks that this advantage will offset

1 Stubbs, p. 763.

2 Pages 703-709.

3 Hayne, p. 421; Guillaudeu, p. 480.

4 Bryant, pp. 399-400; Anderson, pp. 644, 645.

5 Bryant, p. 397; Anderson, pp. 638, 644.

the fact that Eastern cities will be brought into more direct relation with the Orient, and will thus tend to deprive San Francisco of some of the trade which it now enjoys. Mr. Stubbs, of the Southern Pacific Company, however, believes that the injury from this latter cause to California's interests will more than offset any advantages that can come to the State from the construction of the canal.1

Oriental trade.-Mr. Wheeler, of the San Francisco Board of Trade, thinks that there is a great future for the trade of the United States in the Orient. He refers especially to the recent rapid increase in the amount of transportation between San Francisco and Asiatic ports. He says that the trade with the Philippine Islands, aside from that in army stores, is as yet comparatively unimportant, but thinks that as soon as the islands are completely pacified there will probably be a great development in commerce there.2

MISSISSIPPI RIVER TRANSPORTATION.

Amount of traffic-Difficulties encountered.-Mr. Bryant, a representative of the Steamboat Captains and Owners' Exchange of New Orleans, and Mr. Markham, of the Illinois Central Railroad Company, give somewhat extended testimony regarding Mississippi River commerce and its effect on rail transportation. These witnesses agree in stating that the amount of transportation by the river has decreased during the past 20 years as compared with rail transportation. Mr. Bryant asserts that there has been some absolute increase since 1890; the census of that year showed 6,401,000 tons of freight carried on the river and its tributaries, while statistics compiled by the witness in 1900 show 7,693,000 tons carried. Mr. Markham presents figures showing that the aggregate tonnage forwarded from St. Louis in 1880 was 1,037,000 tons, while in 1900 it was only 245,000 tons. Both these witnesses point out, however, that the statistics of Mississippi commerce are very unsatisfactory, there being no definite authority for collecting them and no systematic methods of keeping records on the part of the vessels.

The decline of traffic on the Mississippi and its tributaries is attributed chiefly to the great improvements in rail transportation. Mr. Bryant asserts also that the railroads have discriminated in their rates for the purpose of destroying the river traffic, charging extremely low rates between points on the railroad which are reached by the river, while making up the loss thus occasioned by high rates on intermediate traffic. Mr. Markham, on the other hand, while affirming the necessity of meeting river rates in rail transportation, holds that the influence of the river in lowering rates extends, though to a somewhat lower degree than in the case of points actually reached by the river, to practically all territory for a long distance on each side of the river. Mr. Bryant says also that the decline in river traffic is due in part to the greater shortness of the navigable season, which is occasioned by the denudation of the forests and by the confining of the river between strong levees; and that moreover the improvements of the river have not been effective in preventing danger to navigation, while especially the bridges over the river are, in many instances, a great hindrance. Both these witnesses point out that the trade of New Orleans with foreign countries, by way of the river and the ocean, is considerably hampered by the insufficient depth of water at the mouth of the Mississippi. The Eads system of jetties and improvements deepened the channel to 26 feet, but vessels drawing 30 feet or more would come to New Orleans if practicable, and these larger vessels could carry freight more cheaply than those which now enter the river. Mr. Bryant refers especially to the difficulty of navigating the Ohio River, and says that the large coal traffic coming down the river is carried only during very short periods. Two other witnesses speak of the system of dams, which is being established with a view to equalizing the flow of water in this river.1

1 Wheeler, p. 751; Stubbs, p. 768.
2 Wheeler, pp. 751, 752.

3 Bryant, pp. 387-400; Markham, pp. 425-440.

4 Anderson, pp. 643, 647; Wilson, p. 697.