Q. It was the same principle which you have in the present basing-point system, but not developed to so extreme a degree?-A. The same general principle, yes. Subsequently, during my administration as commissioner, it became desirable to have uniform rates to what are known as the Georgia and Carolina points. I was coming to that as a modification of what I have stated before. And the commissioner made up and issued a tariff of rates from all points West to what are known as Georgia and Carolina points, taking in all the principal stations, which were to be the same, and agreed upon as the same, whether via the Western lines coming across the Ohio, by the Chesapeake and Ohio, coming through Richmond, or by any other route that could be made available, such as the Norfolk and Western, running down into Virginia, and then shipping south in connection with other lines. That was the basis that was adopted a few months before I dissolved my connection with the association, and it remains in effect: or at least so I have understood. I heard from our traffic manager the other day that these rates are practically in effect now, with some modifications.

Q. Are you aware that the long and short haul clause of the interstate-commerce act is inoperative in a large part of the Southern territory?-A. Yes; it always has been to some extent. For instance, the rates from Chicago to Atlanta are higher than the rates from Chicago to Savannah or Charleston, although the freight goes through Atlanta to reach those points.

Q. Is that condition caused by actual water competition down the river to the ocean?-A. By actual competition. The whole question of discrimination was raised by the merchants of Atlanta, who demanded lower rates, and was argued before the Interstate Cominerce Commission when I was commissioner of the association; and I suppose, if I had known it was a matter of any interest, I could have brought the record up here. It is easily accessible.

Q. Does it seem to you that the conditions, competitive and others, in the Southein States justify the setting aside of this long and short haul clause as it is at present?-A. I do not know to what extent it is set aside at present. I will say, however, what my own judgment in that matter has been. Long before the interstate commerce law was passed my own practice was in every way possible to do away with such discrimination.

Q. Would you describe it as a discrimination?-A. I do not say that it is necessarily an unjust discrimination, but it is a discrimination; and I did away with it at that time on the ground that the losses in revenue were not large enough to justify my company in putting itself in a position to be attacked all the time for discriminating, believing that it was better to forego some little extra earnings than to be put in the position of having to defend such rates as just and reasonable. Q. You would acknowledge, then, that distance is an element in making rates?— A. Yes; I do.

Q. Will you specify in what way it becomes a factor or to what degree?-A. In my early experience in making rates I was called upon to make local tariffs very largely, and the question of what the relative charge should be in proportion to distance necessarily had to be considered. I informed myself. Fortunately I was helped by some publication in a magazine where somebody had done a great deal of work which I would have had to do myself: that there was a general concensus of opinion apparently among railroads that the charges per ton per mile for short hauls should be higher than for long hauls; and I endeavored to find out some scale which would be convenient for use. As an engineer and mathematician I wanted some mathematical scale, and I discovered that the nearest scale to it-that is the nearest scale to fit the actual conditions of tariffs-was not in proportion to the distance, but in proportion to the square root of the distance; that is to say, double the charge for four times the haul. The rate for 25 miles would be just one-half of that for 100 miles. That, you can see, was a very easily remembered rule, and I have used it a great deal. Mr. Markham alluded to the Mobile and Ohio tariffs, which were made on that basis, this morning in conversation with me; he remembered them. I had occasion to examine the official tariff of the present commissioners of the State of North Carolina, and I discovered that it was based on the same scale, taken from one of my own old tariffs. It was in connection with my report that I made to the court on the Cape Fear and Yadkin Valley road for the receiver of the road. It became necessary under an order of the court to divide the earnings between different sections of the road that were covered by different mortgages, and give each section of road proper credit for gross earnings and to make this division for 5 years. I was called on as an expert to divide between the long and short hauls-where it was 10 miles on one section of the road and 50 miles on another to say how the earnings should be divided between them. I thought the proper way to do would be to make the divisions on the scale of the approved tariff of the North Carolina commission, which was done, and subsequently, in the examination before the master, the

chairman of the commission was put on the witness stand and stated that the division was, in his opinion, just and fair, for he had found by comparing that it fitted exactly the scale on which their tariffs were made. So that it is in evidence that my scale is in use to-day.

Q. Is it in use in any other States, so far as you know?-A. I do not know; I have had no occasion to investigate. It is used on the Southern Railway, I know. In other words, the scale that I established as the general manager of the old part of the Southern is still maintained there and probably on the Mobile and Ohio. Whether anybody else has adopted it or not I can not say. I have frequently had requests for a little diagram that I made to show it so that you could see by the lines what the relative rates would be.

Q. Will you submit one of those diagrams for us?-A. I will do it with pleasure. It simply shows the rate line as a curve. Others have also used the scale I introduced a good many years ago. The first was Mr. Henry Fink, now president of the Norfolk and Western road, when he was first on that road; but it was not then the Norfolk and Western-it was the Atlantic, Mississippi and Ohio before it was reorganized. Under the law it was required that the cities of Richmond and Petersburg should have the same rates to points on our two roads, which crossed at Burkeville, 53 or 54 miles from the two cities of Richmond and Petersburg. In making tariffs to local stations beyond the question came up of the proper division for the relative hauls, and my scale was adopted as fair by Mr. Fink for the Atlantic, Mississippi and Ohio. Of course I thought that if it was a proper scale at all it would be fair for the division of rates, and subsequently I got out a table of percentages known as "Talcott's Table of Percentages for Division of Rates. I have been called on by Mr. Culp, of the Southern road, and others time and again for copies of it. Mr. Fink adopted it also for the division of rates between the Shenandoah Valley and the Norfolk and Western, which I think is another indorsement of the scale as a fair one.

Q. What other basis of making the local tariffs by State commissions would be adopted usually-the proportion of mileage directly?—A. No; never directly; but the allowance for long and short hauls does not agree with my scale. Sometimes it does not differ very much from it on one class, while on another class it would be entirely different.

Q. Is the long and short haul clause enforced, or was it enforced by the State commissions within the several Southern States?-A. Generally, yes; I think. It was not enforced in Virginia. I ought to amend that. I happened to be on a road the charter of which exempted it for a long time during my management from any State interference with the rates. There was only one condition upon which the State could interfere, and that was that we should not pay more than 15 per cent in dividends; but as they had kindly increased the capital stock we had no show of paying 15 per cent dividends, and we did not come under that law at all. Although I did not study very closely the requirement of the law. I do not recollect any enforcement in Virginia whatever of the long and short haul provision. We adopted it in Virginia, and all our tariffs on the Richmond and Danville road were made on that basis-no more for a shorter than a longer haul. For instance, starting out I would make rates in classes on my scale from Richmond to Burkeville-about 50 miles south of Richmond, where we were crossed by the Norfolk and Western-with lower rates from Petersburg, and as the law required they should be the same to that station my rates would drop there, and with the lower rate I would just simply go back to a station nearer Richmond and carry that on. After passing this competitive point we could gradually work up to the scale again. In other words, in one class I recollect there used to be two intermediate stations that would have the same rate as Burkeville.

Q. It would not seem to you justifiable that there should be a direct drop?—A. No: not on the Richmond and Danville. There was one direct drop there; but I preferred to do away with it and reduced the rate to the stations between the competitive point and the terminal point so as to do away with it-so as to make rates equal but not have a higher rate for the shorter haul.

Q. In your judgment, then, the long and short haul clause is a proper and reasonable regulation in the making of rates?-A. Provided it does not exclude competition by forcing a reduction of rates at the intermediate points that the railroad can not submit to. For instance, I do not think it makes so much difference whether it is a water competition or a competition from any other source, if it is legitimate and proper and revenue can be made by meeting competition. On account of the highly competitive conditions at some points I do not think it is always just to forbid the meeting of that competition, even if it does make a discrimination at intermediate points.

Q. An elastic prohibition allowing for modification in intermediate cases would seem to you to be justifiable?-A. Yes; I have always thought so, and I think

so now.

Q. And does it seem to you that the evasion of this provision of the interstate commerce law through the Southern States that exists is detrimental to the interests of that section? A. I can not say without knowing more in detail where those discriminations exist and the causes for them. Of those facts I am absolutely ignorant at this time.

Q. (By Mr. FARQUHAR.) Does the practical carrying out of the long and short haul raise the long haul rate?-A. At some points, yes; at many, no.

Q. Is not what you lose in handling short haul freight-and all roads must, I presume, lose-put on to the long haul?-A. It ought not to be and never was in my knowledge on my own road.

Q. Do you say that the principle contained in the interstate commerce bill of the long and short haul is a practical principle of railroading, or is it a theoretical principle of the politicians?-A. I think it is a theoretical principle in part, but I think that there is a measure of justice at any rate in it. I took it as a measure of policy that, unless I could positively demonstrate to the satisfaction of people who are not capable of taking a demonstration always-the public-that we were not unjustly discriminating, we would better make some sacrifice of revenue than to be constantly at war with our patrons upon whom we depended, and therefore that this discrimination should be wiped out as far as possible. I mean, of course, the discrimination of the higher charge for the short haul than the longer one. do not think it is just and reasonable to require it to be an absolutely fixed castiron rule.

I

Q. Is it not practically true that within the last ten years the rates on the long and the short haul, if they have been divergent from the principle announced in the bill, have really come nearer equalization than they ever did, and are all the time coming nearer equalization?-A. I must qualify my answer to that, as I do everything that relates to the time within the last ten years. I believe such to be the case, but I have not the means of demonstrating the fact at my command now. If I had known that question would come up I would have made some comparisons to show you that it is the case. I think I could have done so.

Q. Do you know a single road in the country that strictly observes the rating of the long and short haul, provision? Do you know of a single railroad in the United States since the passage of that act that has observed it?-A. I did not up to the time that I ceased to have the means of knowing what they were doing. We were, of course, called upon to defend our course. I acted for the association to defend it before the Interstate Commerce Commission in one case. I think we were always prepared to defend it. I should say that I was called upon myself to defend the roads against the charge that it was an unjust discrimination.

Q. (By Mr. A. L. HARRIS.) Was not the provision put into the law to correct the abuse of charging so much more arbitrarily for the short hauls than for the long hauls? A. Yes; I think it grew out of the fact that the disproportion in charge for short hauls and long was in many cases extreme.

Q. Then, was it not really a question of business and not of politics?—A. Perhaps I answered that question a little hastily. I do not know much about politics. I would like to amend that answer.

Q. (By Mr. KENNEDY.) You did not use the word politics.-A. No; it was in the question, and I answered the question generally; but I did not think about the word politics in it.

Q. (By Mr. FARQUHAR.) You would answer that it was a remedial measure so far as the disproportions had existed before the passage of the act in 1887?— A. Yes.

Q. And has been beneficial?—A. It has been beneficial; yes.
Q. If not carried out to the letter?-A. Yes.

Q. We only want to get at the facts. The other statement is so broad it might be taken up. I know some railroad men have said that no railroad can carry out the law.

The WITNESS. I think they have all tried to carry out the law. Those that were under my jurisdiction as commissioner of the Southern Railway and Steamship Association did, but they claimed they could not carry it out in every respect, and would defend themselves against the charge of failure to comply literally with the law.

Q. (By Mr. FARQUHAR.) What experience did you have in making your freight tariffs on commodity rates?-A. Originally the Southern classification was a compromise measure between all the roads in that territory, where they all had different classifications; and it was brought about by competition with the Western lines, the Green Line, as it was known, coming into that territory. In the very outset, in making that new classification, they were met with conditions in the Western business that had to be provided for. There were certain Western products that could not be put in the classes at all, that must be treated as commodities.