traffic in dressed beef would immediately be turned away to other railroads. If the railways were allowed to pool and divide their traffic they could agree in refusing to haul such private cars, and would then be able to furnish cars themselves. The railways pay to one another six mills mileage for the use of cars, and they calculate that this is a fair payment for interest and repairs. In view of the enormous distances which are covered by the dressed-beef cars the profits from their mileage are very high. The cars are carried back practically empty, but this would still be the case if the railways owned refrigerator cars. It would be much cheaper, however, for the railways to operate their own cars. Most of the beef shipped for Eastern consumption is already dressed. The witness does not think that individual discriminations are made in the shipment of dressed beef. The rates are open to all shippers. But it requires large capital to establish a refrigerator-car system, and practically only three or four establishments control the business.

The railways do not especially object to the use of private cars for iron, steel, oil, and similar shipments, where the rate of mileage is usually only 6 mills. (230-232.)

Mr. INGALLS, of the Chesapeake and Ohio, also believes that the use of private cars benefits large shippers at the expense of small shippers. He thinks that the owners may get 15 or 20 per cent on the investment in these cars. Up to five years ago the trunk lines largely refused to run private cars, but the restrictions have gradually been dropped, and although the railways would like to refuse to haul them and to substitute their own cars, they are unable to do so, since they can not make pooling agreements. (301,302.)

Mr. KENNARD, a commission merchant, of Chicago, declares that there is discrimination in favor of a few large fruit shippers in shipments from California to the East. These concerns apparently own the refrigerator cars for the most part. They can, accordingly, get cars in any number for their own use at the time wanted, while private growers or small shippers must pay to them a considerable premium to get cars-$60 to $90. This arrangement often practically shuts out the smaller shipper. (363,364.)

Mr. Kennard declares that owners of private cars often load them in part with commodities bearing a high class of freight, but have them billed at rates applicable only to the lower class, of which part of the load consists. (365.)

Mr. MALLORY states that no cattle shippers engaged exclusively in the live-cattle business, so far as he knows, own cars. Very few concerns devoted exclusively to shipping live stock would handle business enough to warrant their keeping a line of cars. The great packing houses, such as Armour & Co. and Swift & Co., do have cattle cars of their own, though they also ship cattle in the railroad cars. These concerns have an advantage to the extent of whatever profit their cars bring them, and it would seem to be more proper that the railroad company should conduct its business with its own cars. (589.)

Mr. BIRD, of the Chicago, Milwaukee and St. Paul Railway, says that until recently the railroads had not enough cars to meet emergencies in busy seasons, and were glad to use cars belonging to private owners. Many classes of manufacturers wish cars having a special capacity or character. Finally the development of the packing business made the use of refrigerator cars necessary on a large scale. While the railways would be glad to furnish all the cars for ordinary business, and in fact do so for the most part, the witness doubts whether it would be to their advantage to attempt to furnish refrigerator cars. The number of cars actually used under private ownership is much less than would be necessary if every company solicited the business and had a sufficient number to carry all that it could possibly get at any time. The packers bear their own risks as regards the preservation of the meat shipped, in the absence of special delay on the part of the railroad. It requires technical knowledge to be sure that the car is in proper condition for shipping meat, and the railways would not like to be responsible. The payment of mileage to the owners of private cars is not an injustice to other shippers. The owner has his money invested and is entitled to something for the use of cars, just as any other manufacturer having superior facilities is entitled to the benefit of his investment. Railroads ordinarily pay one another six mills per mile for the use of common cars costing perhaps $400 or $425. Refrigerator cars cost $900 to $1,000, and the mileage of one cent is therefore not to be considered excessive. (475,476.)

Mr. FISH, of the Illinois Central, while recognizing the abuses of the private-car system, thinks that they are less serious than formerly, and that, as the cost of constructing and repairing cars is tending to increase on account of the larger size and the greater complexity, the time will come when the undue profit of the owners from mileage will be reduced to a reasonable amount. The railways are

becoming better able to buy their own equipment, and can resist demands for higher mileage rates. (336.)

D. Effects of discrimination on combinations, etc.-Mr. KNAPP, chairman of the Inter state Commerce Commission, believes that railway discriminations of all kinds tend, generally speaking, to benefit great shippers and manufacturers, men of wealth, at the expense of the masses of the people. Farmers and small producers get no favors. He believes that trusts and monopolies would not be dangerous to the social welfare if they had no advantage from the railways. Almost the only unfair advantage which can come between the producer and the consumer of staple commodities comes through transportation. Under ordinary circumstances anyone can buy wheat or corn, can build a mill and grind it, or establish a store and sell it; but the opportunities for the transportation of wheat and corn are limited, and through them discriminations may be made. A few years ago anyone could buy grain west of Chicago, and there were many buyers; but at present, through the action of railways, one buyer takes all the grain on one line of railroad, and there is practically no competition. (147, 148.)

Mr. BLANCHARD, of the former Joint Traffic Association, admits that discriminations are chiefly in favor of large shippers and that they tend to destroy small producers and dealers. He does not say directly that discriminations have fostered trusts or that the railways are the parents of trusts, but he admits that if present tendencies continue trusts will undoubtedly be placed at an advantage. The witness denies that the railroads have any desire to favor large shippers or trusts. They know that to strengthen shippers will enable them to make yet greater demands from the railways. In every city the aggregate of freight from small shippers is greater than that from the principal large shippers. There is no rail road company which would not desire to see fewer favors granted to trusts and combinations. (683, 684.)

Mr. RIPLEY, president of the Atchison, Topeka and Santa Fe Railroad Com pany, says that the railroads want equal rates, but the large shippers do not. All the large shippers, however they may theorize about the desirability of equal rates, believe in their hearts, and act upon the belief, that their large business entitles them to concessions. Believing this, they are actively engaged in finding ways to evade the law. Comparatively few of the railroads are strong enough to resist the pressure which such men can bring to bear. There are so many ways in which concessions may be made without violating the letter of the law that it is impossible to prevent discriminations by statute. It is very difficult to obtain evidence of evasions of the law, made by indirect methods. Discriminations will continue until it becomes the interest of the carriers, as it is not now, to maintain equal rates. Discrimination between individuals has been much more rife since the attempt was made to prevent it by law than it ever was before. (594,596.)

Mr. REAGAN, of the Texas railway commission, declares that railway discriminations not only injure shippers, increasing the cost to the smaller and poorer shippers for the benefit of the few, but that they generally injure the revenues of the railroads. They should be prohibited under penalties which would make them a felony. (342.)

Mr. COWEN does not think that the railway discriminations are more generally in favor of so-called trusts than of other large shippers. This is certainly true about the great combinations in the steel industry. The rates to all iron and steel producers have been unjustly low during 1899 in view of the high prices of those products. (317.)

E. Remedies for discriminations. Most representatives of the railways think pool ing the only effective remedy for discriminations. See pp. 97, 98.

Mr. DICKINSON says that it is not so much a question what the absolute rates are which he pays, provided they are equitable as compared with those which his competitors pay. He himself pays the full tariff rates. He has no personal knowledge of rebates, but no intelligent man can say that he does not hear a good deal in regard to them. He believes that rates ought to be alike to all, and that the railroad companies should not favor any industry or any individual as against another, or monopolize any industry through its control of transportation. The witness formerly feit that the best service ought to come from unrestricted competition; but he is convinced that the only remedy for the troubles that exist is Congressional control of the railroads, and he has reached the conclusion that the railroads themselves, as well as the public, would be benefited by a control outside of themselves. (551, 552.)

Mr. TUCKER, chairman of the Central Freight Association, does not consider it right that the men best able to pay the tariff rate should get rebates and special favors. He would approve of a system of regulation to stop all rebates and discriminations, and he believes that the reliable roads would approve of it. (561.)

1. Publicity.—Mr. Spencer believes that complete publicity of railway affairs and accounts is the most effective remedy for discriminations, although the prevention of illegal actions is, in any case, difficult. (273, 279.)

See also pp. 117, 118.

2. Enforcement of existing laws.-Mr. KNAPP, chairman of the Interstate Commerce Commission, sees no effective way to enforce the provisions of the laws against railway discriminations, except by making violations criminal misdemeanors. No suit for damages is sufficient. The corporations themselves, rather than some agent who is not the real offender, should be indictable. At the same time the law should be made somewhat specific as to what is required, and the penalties should be also more accurately prescribed. Thus the present requirement as to publishing rates is very vague and should be made more specific. (137.) Mr. CLEMENTS, a member of the commission, sees no reason why courts should not be empowered to enjoin officers or agents of railways from continuing any practice in violation of law. He believes, also, that the seizure of goods in transit, where they are carried in violation of the law, would be desirable. (160.)

Mr. NEWCOMB, of the division of statistics, Department of Agriculture, says that the burden of excessive or discriminating rates is shifted in varying degrees upon consumers and others, so that it is impossible for the courts justly to determine the amount of damages to aggrieved parties. (99.)

Mr. FISH does not think that the inspection of railway books by Government officers would result in the discovery of many abuses or in securing evidence for prosecution. He believes that sufficient remedies exist under the present law if it is vigorously enforced and if the offenders are actually punished by fines and imprisonment. The difficulty at present is largely in the failure of the persons injured to make complaint. (338.)

Mr. CARTER knows no better method of preventing discriminations than to enlarge the powers of the Interstate Commerce Commission and to enforce the law. (584.)

3. Shall punishment be by fine or imprisonment?-Mr. RIPLEY, of the Atchison, Topeka and Santa Fe, thinks that fines upon the corporation offending would check discriminations much more effectively than the threat of imprisonment. Railroad managers meet their competitors from time to time, and very few men would be willing to inform the authorities of anything that would criminate their acquaintances. The existing law is an absolute failure. There has never been a conviction under it, or if there has been a conviction it has been nominal. (595.)

Mr. MORTON also disapproves of the imprisonment clause, thinking that it prevents effective enforcement. He favors a very heavy fine, both on the shipper receiving the cut rate and on the railroad. Shippers practically always know when they are receiving cut rates, and are as much at fault as the railroads. (495.) Mr. INGALLS, of the Chesapeake and Ohio, agrees in thinking that the imprisonment feature of the interstate-commerce law prevents it from being effective. People do not consider the making of different prices to different individuals a crime in ordinary business, and public opinion is not prepared to enforce the penalty of imprisonment upon railway officers for making discriminations. The violation of the law should be made punishable by fines, and the witness thinks it possible by putting a fine upon every bill of lading to make this an effective punishment. (286, 297.)

Mr. HYLAND, of the Chicago Board of Trade, thinks that violation of the interstate-commerce law should be punished by fines against the railway companies rather than penalties upon individuals. Each carload or part carload shipped in violation of law should constitute a separate offense; the penalty should be double the gross earnings for the service performed, and should be divided equally between the informant and the Government. Some one official of each railroad should be held accountable for the strict maintenance of rates. (351, 352.)

Mr. VANLANDINGHAM, of the St. Louis Traffic Bureau, takes practically the same position as Mr. Hyland. (214.)

Mr. CARTER thinks it likely that evidence of discriminations could be got more easily if the penalty were a fine than it can be while the penalty is imprisonment. (585.)

Mr. DOUSMAN, a grain shipper of Chicago, believes that a fine is a more effective penalty than imprisonment, especially because railway officers will not testify against one another so long as the imprisonment penalty exists. (361.)

Mr. BIRD, general traffic manager of the Chicago, Milwaukee and St. Paul Railway, declares that the penalties against discriminations are so severe as practically to make it impossible to learn the truth. They encourage great ingenuity

in covering up discriminations. The way to prevent discriminations is to remove the possibility of gain by placing heavy fines upon the railroad companies themselves, which would then see to it that their employees complied with the law. It would require great provocation or influence to induce a railroad officer to testify against another railroad officer if it might result in sending him to jail, while he would feel no such reluctance if the penalty were a fine. (471.) Mr. SPENCER, president of the Southern Railway, on the other hand, believes that the penalty of imprisonment for violations of the interstate commerce act should be retained. Fines of the amount of $5,000 could be paid repeatedly by many railways out of the profits of illegal business. It is not a hardship to imprison subordinates for knowingly violating the law under direction of their superiors, and, furthermore, the persons really responsible can usually be ascertained if sufficient effort is made. (274.)

Mr. REAGAN believes that the penalty of imprisonment as for felony should be imposed in cases of violation of the interstate-commerce act, and believes that it would be possible to enforce such a penalty, although he knows of no instances where it has yet been done under the Texas railway commission statute. (342,350.) IV. DISCRIMINATIONS BETWEEN PLACES-LONG AND SHORT

HAUL.

A. Existence and causes of place discriminations generally.-The members of the Interstate Commerce Commission who testified before the Industrial Commission agree in believing that inequalities in rates between different places, including especially discriminations in favor of terminal points having a longer haul, but also other differences, are exceedingly numerous, and constitute perhaps the most injurious feature of railway discriminations. Place discriminations are made, not by departure from published tariffs, but by unfair tariffs themselves.

Differences in rates over the same road, according to the direction of shipment, are also common, and are claimed to be justifiable often to prevent cars from being returned empty. (See also Southern States, p. 63)

All of the Interstate Commerce Commissioners called attention to the fact that these place discriminations, like long and short haul discriminations, are often defended by railroads as being necessary to meet water competition.

Mr. KNAPP and Mr. CLEMENTS pointed out what great effects upon the prosperity of individuals, towns, and sections of the country would result from apparently slight differences in railway rates. Thus a difference of $2 in the terminal charges on each car of live stock at Chicago, which a certain court considered insignificant, amounts to half a million dollars during the year. A difference of 2 or 3 cents in the freight rate on wheat from a certain section in Iowa was estimated to represent a difference of $5 per acre in the value of land. The margin on which many lines of business are done is so slight that small differences may completely change the location of a manufacture or the profits of a business. An increase in the average rate of freight per ton per mile of 1 mills would represent an added revenue of about $100,000,000 to the railroads and corresponding outlay by the public. Mr. Knapp calls attention to the inequality in the conditions of competition between different producers brought about by such differences in rates, whether these differences be over the same railroads or over different ones, and whether the favored shipper be a small producer or a combination. The margin of profit in most lines of business is so small that a slight adjustment of rates will exclude one shipper from a particular_consuming territory, while benefiting another shipper. (KNAPP, 133-135, 142; PROUTY, 148, 149; CLEMENTS, 154, 157.) Mr. BIRD, of the Chicago, Milwaukee and St. Paul Railway, declares that fully 75 per cent of the rate disturbances in the West and Northwest originate primarily in the question as to what is a fair relation of rates between competing markets. There is nothing in the interstate-commerce act by which such a fair relation can be determined. Thus, one road may make the rate on some heavy class of goods, such as iron, but little more from St. Louis to St. Paul than the rates on another road from Chicago to St. Paul or from Milwaukee to St. Paul, although the difference in distance is very considerable. It will be impossible to remedy these injustices unless the Interstate Commerce Commission is given power to prescribe minimum rates as well as maximum rates. If it orders that one railroad shall not make more than a certain difference between different places, there is nothing at present to keep another railroad from reducing its rates in the same proportion. There is no doubt that towns are created or destroyed by the mere matter of the relation of railway rates. (472.)

Mr. DICKINSON, manufacturer, La Crosse, Wis., states that a railroad general manager said to him that the rates are made on a basis which is not calculated to

favor the Western manufacturers in shipping East. It has been the practice of certain railroads to try to build up certain trade centers. Some people are very much dissatisfied with this, but others, perhaps, feel as well satisfied to have a center built up where they can get their materials on short notice without a great difference in freight. Ön general principles it would seem that business should be built up where there are natural advantages for it. Any discrimination on the part of the railroad diverts the development from a place where it is natural to one where it is unnatural. The witness considers, however, that the question must now be considered in the light of existing conditions. The business of the West to-day, especially the manufacturing business, has been largely built up by what may be called favors in the way of commodity rates, particularly where the roads may have united upon some one town against another where the natural advantages are greater. Whatever the injustice of this course may have been in the first place, the proposition to change it must now be considered in the light of the fact that large and prosperous communities so built up are in actual existence. Towns which have continuously received such privileges may be considered to have acquired a certain vested right in them, and the witness does not consider that there has been any such continuous protest on the part of other communities as might have interfered with the valid establishment of such a vested right. He mentions particularly the iron and steel manufacture, which is not natural to the West, as an instance of businesses built up by such discriminations. (550, 551.)

Mr. TUCKER says that the rates from all points on the east bank of the Mississippi River to the Eastern seaboard are the same, and that the Western roads haul at the same rate to all points on the east bank of the Mississippi. By this means equal through rates through all gateways are obtained. __ (562.)

Mr. RIPLEY, president of the Atchison, Topeka and Santa Fe Railroad Company, says that the adjustment of rates between different localities can never be made satisfactory to everybody. Every road is interested in a particular locality, and the result must always be a compromise, which generally is not satisfactory to anybody, and is very unsatisfactory to a great many. The endeavor has been to do the fair thing. There have been so many opposing interests that it has been impossible to do anything very unfair, although it is not an exact science. There have been many cases in which Mr. Ripley would have been glad to place the entire responsibility on an outside body, such as the Interstate Commerce Commission, and have them say what should be done. (597, 598.)

Mr. BLANCHARD declares that the practice of granting discriminating rates to individuals often results in considerable discriminations between places. Shippers at one place who believe that their rivals are getting special discriminating rates are apt to combine and obtain special rates for their own market. Thus sometimes departures from tariffs become the rule as to certain shipping points. Individual discriminations are granted more in favor of shippers at central points than at local stations. Aside from discriminations of this class, there are differential rates and apparent discriminations between localities which are often justifiable. Each railway is inclined to build up its own important towns by specially favorable rates. Many influences combine to complicate the problem of a fair adjustment of rates between different places. (626, 627.)

Mr. DOUSMAN, a grain shipper of Chicago, believes that in the same general section of the country railroad freight rates should be made strictly uniform, so much per ton per mile, regardless of the character of the roads. The railroad that carries goods cheapest in this country is the Chesapeake and Ohio, which runs over mountains and through tunnels. "Differentials are inventions of the devil." Practically 75 per cent of the business of every railroad is its own natural business, which it can do better than any other. If the remaining 25 per cent of competitive business be allowed to distribute itself naturally, on the basis of open and stable rates, the railroads and the general community will be benefited. (361.)

Percentage rates.-Mr. TUCKER, chairman of the Central Freight Association, states that the system of fixing rates to the seaboard from large portions of the country upon the basis of certain percentages of the Chicago rates was established some 15 or 20 years ago, through what was called the joint rate committee. The east bank of the Mississippi pays 116 per cent of the Chicago rate, and the percentage system extends as far east as Buffalo. Buffalo pays, he thinks, twothirds of the Chicago rate. The 100 per cent territory runs up into Michigan, and the percentage gradually decreases as one advances toward the East. The decrease is not exactly proportional to the distance. The rate per ton per mile is somewhat higher for the shorter distance. This is proper, because the terminal expense is the same for a haul of 50 miles as for a haul of 500. There have been some changes in the percentage basis for certain towns since the arrangement