of cars then used. The shipments of flour are quite steady throughout the year and can be counted upon.

The real reason, Mr. Barry thinks, why favoring rates have been made on export wheat shipments rather than on flour shipments is that the railways have been largely interested in elevators and have found it to their interest to secure a foreign market for their product. Moreover, the small number of important wheat exporters and the large business which each controls enables these to a considerable degree to dictate to the railways. He admits that these large firms, of which there are practically only five in Chicago, are often able to furnish full train loads of wheat for shipment, which is more than the millers can do. Mr. Barry believes that some of these large export dealers have discriminating rates lower than those published, and it is possible there may be discriminations between the different large dealers themselves. See on this point p. 79. (241-244, 249.)

Mr. VANLANDINGHAM does not admit the claim of the railways that these differences in charges are justified by the greater cost of handling flour. As much of flour for export is shipped in a car as of wheat. The shipper in each case loads the car, while the railway company usually loads the flour on the steamer, and at some of the Gulf and south Atlantic ports also pays the elevator charges for loading the wheat on the steamer. Flour for domestic use is hauled at the same rate as grain, although cars are not loaded to their full capacity. Mr. Vanlandingham thinks that the real basis for the difference on export shipments is that the railroads can get large quantities of wheat at almost any time when they happen to have empty cars to go East, and that this is not true of flour. There are only about twenty firms engaged in the export grain business, and these often have large stocks on hand. The millers are distributed over a large territory, and there are, perhaps, 5,000 firms. The matter of by-products does not justify higher rates on flour, since the miller in Europe gets better prices for his by-products than the American miller. (204, 205.)

Mr. BACON does not think that the difference between the rates on flour and grain is justifiable. There never was any such difference until very recently, when export rates have been introduced for the first time as regards wheat, but have not been applied to flour. Before this change about equal quantities of American wheat and flour went abroad, but American millers have since been at a disadvantage. (424.)

Even a difference of 2 cents per 100 pounds in favor of grain as compared with milled products, according to Mr. EVANS, is a serious injury to domestic millers, and the witness thinks that it is not justified by any of the arguments presented Cars can be by the railways. It has not been shown that it costs more to handle flour. There is a considerable loss in quantity in shipping unground wheat. loaded as heavily with flour as with grain. The witness has found that 16 cars taken consecutively from the books of his mill have averaged a weight of 63,000 Numerous railway officers have told the witness personally pounds to the car. that they did not approve of the discrimination. Mr. Ingalls, president of the Chesapeake and Ohio and Cleveland, Cincinnati, Chicago and St. Louis railroads, in a letter to the witness, has expressed himself as opposed to the reduction in the The discrimination has been in wheat rate which caused this discrimination. existence only since February 1, 1899, and no new reasons have come into existence since that time for maintaining it. (435–438.)

Mr. SAGER also denies that there is any justification for the difference in rates between grain and flour. Millers can load 60,000 pounds of export flour on a 60,000ound car, although the custom in the domestic trade has been to put 150 barrelsThe millers load the flour themSomewhat less than the total capacity-in a car. selves. The witness thinks that the probable explanation of the difference in charges is that certain officers of the railroads are interested in elevators and other terminal facilities for handling wheat. It is for the interest of the railroad stockholders to give the millers favorable rates. The mills become centers of population, and give the railroads business in hauling milling supplies as well as hauling the goods used by the operatives. (449, 450.)

Mr. GALLAGHER says the millers are ready to comply with any reasonable demand of the railroads in respect to the loading of cars, but they claim that the largest and best cars are furnished for shipping wheat and older and smaller cars for shipping flour. If proper equipment is furnished the millers will furnish carloads of flour of any size that the railroads desire. Mr. Gallagher states, however, that when railroads are specially desirous of business they can get train loads of grain more readily than they can get train loads of flour, and this leads to special cuts. (540, 541.)

Mr. GALLAGHER argues that the railroads themselves can not afford to destroy the export business of the American mills because of the large incidental traffic

which mills give the railroads. He estimates the amount of freight, in the shape of coal, lumber, machinery, bags, cooperage, and other supplies for which the mills are responsible, at 88,000 tons more than the annual exports of grain. On a large part of this material the railroads receive high rates of freight. Further, both this traffic and the mill freights of grain and flour come regularly to the railroads throughout the year. (543.)

Mr. NEALL, a shipping merchant of Philadelphia, believes that some higher charge on flour shipments than on grain shipments is justified by the greater ease of handling the grain through elevators, etc. But he has estimated rather carefully that the difference should not exceed 2 or 3 cents per hundred, whereas the actual difference in freight rates has been at times as high as 7 cents. A difference of 2 or 24 cents, moreover, is all that the traffic will stand. The by-products of the miller should enable him to pay that much more on his flour. The witness believes that at present competition is keeping the margin between wheat and flour down to about the figure named. (164-166.)

Ocean freight rates on flour and wheat.-Mr. NEALL also points out that a lower ocean freight rate on grain than on flour is justified. It costs about 8 cents per ton to load grain upon a ship and 374 cents to load flour. A ton of grain will stow in about 50 cubic feet, while 60 to 65 cubic feet is required for flour on account of the use of bags.

Some higher charge upon oats than upon wheat is justifiable in ocean transportation on account of the necessity of tramping down the oats. Flour bears the lowest rate among mill products on account of its condensed weight. (164-166.) Mr. BARRY does not think that the difference between the ocean freight rates on flour and wheat is any element in the present difficulty regarding export flour shipments. Some difference in ocean transportation is justifiable by the greater cost of handling and carrying flour. The flour shipments are not usually made on through rates to foreign markets, but the rates of ocean transportation vary frequently, and the price of the American product in Europe is changed accordingly. The witness thinks that the ocean steamships seldom have any difficulty in securing full loads of flour promptly. (244, 245, 249, 251.)

Mr. GALLAGHER says that the difference between the ocean rates on grain and flour may sometimes run as high as 5 cents, though if there is no grain available, and flour can be got, the flour may be taken low. As a general thing he thinks the difference would range from 1 to 3 cents. (539.)

E. Milling-in-transit rates.-Mr. BARRY states that the railways usually make it a practice in sections of the country where milling is a prominent industry to haul grain on through rates from West to East, allowing it to be stopped off and milled at any point between by payment of an additional rate of about 2 cents, simply to cover the cost of stopping and unloading and loading the car. Small millers as well as large ones have the advantage of this practice where it exists at all. (243.)

Mr. GALLAGHER states that milling-in-transit rates do not exist generally, but only in certain territories. There are no such rates which are of great value to St. Louis. Wheat can be shipped from western Kansas and stopped for milling anywhere. This wheat, however, is hard wheat and is not suitable for the St. Louis mills, which are almost exclusively soft-wheat mills. The Minneapolis mills profit largely by the milling-in-transit privilege. Their wheat generally comes from the North and the West. One cent per 100 is the general charge for milling in transit. (546.)

Mr. BOOKWALTER states that grain from the West can be stopped at any station on the roads running into Kansas City, such as Topeka, ground, and forwarded, for instance, to New York without any charge above the through rate from the original point. But if the grain is billed to Kansas City, although it is never removed from the car, an additional charge of from 1 cent to 7 cents per 100 is imposed. This places Kansas City at a fatal disadvantage. (571.)

VI. GRAIN ELEVATORS AND GRAIN BUYING.

A. Alleged monopoly of elevator owners.-Mr. CARTER, a commission merchant, states that the railroad people have built large elevators in Chicago, and formerly had them managed by men who were simply managers of the elevators and custodians of other people's property. Now each of these elevators has been turned over to some one large concern, which undoubtedly has the use of it at a merely nominal rent, while any other grain shipper or receiver must pay three-fourths of a cent for having grain handled through the elevator and held 10 days. Mr. Carter does not think that any of the public elevators are now managed by men who are not engaged in the grain business. Efforts have been made to correct

this evil by the action of the board of trade, and also to put greater safeguards by legislation about the handling of public property. Elections in the board of trade have turned upon this issue, and the board has never failed to elect officers who have stood for the handling of public property by disinterested parties. But the efforts to bring about a better condition have not yet succeeded. As a rule, a single operator, to whom the terminal facilities of a road in Chicago have been turned over, controls the grain business along that line of road and does no considerable business on any other line. (583, 584.)

Mr. GREELEY, a commission merchant of Chicago, declares that the original purpose of the public warehouses was that they should be simply custodians of grain for the public. After the interstate-commerce act was passed the railroads, in order to cover up the granting of rebates, saw fit to make arrangements with the owners of public elevators by which favors could be granted in an indirect manner to them and to others, and this led the warehousemen to become dealers in grain. At least 75 per cent of the grain in public elevators sooner or later becomes the property of the warehousemen. The charges to private persons for handling and storing grain are excessive. The transfer charge is three-fourths of a cent per bushel, and the storage charge three-fourths of a cent per bushel for the first 10 days and one-fourth of a cent for each succeeding 10 days. The witness understands that certain transfer elevators connected with Eastern railroad lines receive from railroad companies $1.50 per car for transferring grain and make a profit, while the charge to shippers is about $12 per car. The owners of a warehouse avoid this high storage and transfer charge, having to pay only the actual cost, which is much less. The witness thinks that the capital invested by them in the elevators is usually practically nothing, since they are "presented with the elevators by the railroad companies." Owing to these advantages the warehousemen can pay more for grain than others and consequently secure the largest proportion of it. One result of this practice is that the large elevator companies are driving the small country elevators and grain merchants out of business. Sooner or later this process will be completed, and the one buyer will fix the price to the producer. (370–377.)

Mr. DOUSMAN, a grain shipper, says that in earlier days most grain was consigned to Chicago from the West and reshipped there, without through rates. Soon after the interstate-commerce act was passed it became the custom for elevator proprietors at Chicago to become grain buyers in that city and also along the railroads. These elevators arrange to secure through rates on grain from the Mississippi River to New York. Apparently, they are sometimes allowed a certain amount by the railways for transferring the grain in the elevators. As a matter of fact, a large proportion of the elevators in Chicago are now owned or controlled by the railroads, and the witness is inclined to think that the railroads should consider elevator charges as a part of their through rates.

It was also formerly the custom that the elevator owners acted simply as agents, their elevators being public storehouses. But at present the owners of elevators buy most of the grain. The fact that they charge three-fourths of a cent per bushel to those using the elevator, which apparently is more than the actual cost warrants, gives them an advantage over other buyers. The country buyer of grain, who is frequently a merchant, sells to the elevator company; or the company itself often has elevators along the road and buys directly. The witness implies that in many cases there is practically only one such general buyer on a particular line of railroad, although he refers also to the fact that in some cases country grain merchants receive daily offers from 5 to 25 different dealers. He thinks that small concerns can handle grain business more economically than large ones. (354–356.) Mr. CLARK, secretary of the Grainers' National Association, disapproves of the practice of the elevator owners in buying grain themselves. The Illinois Grainers' Association, which is chiefly made up of commission men and country grain shippers, opposed the enactment of the law permitting public warehousemen to buy grain, as against the best interests of the trade. Most of the public elevators in Chicago are owned by the railroads, although operated by individuals. (434.)

Mr. WEBSTER points out that the act passed by the legislature of Illinois in 1897 permitting public warehousemen to buy grain, was passed after very free discussion in that body and in the press. The vote showed a very large majority in its favor in each house, and an attempt to repeal the law in 1899 was defeated by an even more decisive vote. (409.)

In reply to a question as to the alleged control of the barley trade of the United States by Mr. P. D. Armour, Mr. GREELEY said that although Mr. Armour is a very important factor in the market, other elevators also hold large quantities of

barley. (380.) Mr. Counselman declares that the claim that Mr. Armour controls the barley trade is ridiculous. The witness himself handles eight or nine million bushels of barley a year. (390.)

B. Interest of railways in elevators.—Mr. BARRY, secretary of the Millers' National Association, thinks that a large proportion of the elevators, not merely in the cities, but along the railway lines, are controlled by railways or their officers. These elevators doubtless have a considerable effect in controlling the prices of grain to the farmers. Millers are not especially injured by them, since the small millers buy grain largely at the mill from the farmers, and the large mills usually have elevators of their own. (250.)

Mr. BOOKWALTER says that eight railroad systems control the grain-producing territory, and every one of these systems is going into the grain business as fast as it can. When the business has been brought into the hands of eight roads, with storage capacity enough to take care of the crop, the local dealer will have to go out of business entirely, unless some remedy can be found. Mr. Bookwalter can not say that the grain is dealt in directly by the railroads, but certain persons can handle it on these roads when nobody else can. He thinks we are

rapidly approaching the condition in which a trust will absolutely control the handling, and thereby the price, of grain. He would require the railroads to attend strictly to the railroad business and go out of the grain business and any other; that is the only remedy. (576.)

Mr. GALLAGHER does not consider that companies chartered to operate railroads should be allowed to engage in the grain business. He believes that ownership of elevators by railroads inevitably results in the control of the grain business by the railroads, in the destruction of all competition, and in the establishment of a monopoly. Wherever the road controls the business one finds little elevators abandoned and run down. Where competition disappears the price of grain to the farmer is certain to go This shows the destruction of competition. down. (545.)

Mr. BOOKWALTER states that the Union Pacific has an elevator in Kansas City. The Burlington has none at present, but it is understood that it is going to build one. Mr. Counselman, who operates on the Rock Island, and Mr. Richardson, who operates on the Santa Fe, have elevators in Kansas City. The Peavey Elevator Company of Minneapolis operates on the Union Pacific, west of Kansas City, and is building a line of elevators. It tries, first, to buy out the local man at a station, if he will sell; if not, it builds an elevator beside him. There are two public elevators in Kansas City, with a capacity of 400,000 to 1,000,000 bushels. The total elevator capacity in Kansas City is about 6,000,000. The understanding is that the elevators are owned by the railroads, though they are operated by private parties. Mr. Bookwalter does not think that the railroads ought to be permitted to go into the grain business or any other business. (573-575.)

Mr. SNYDACKER says that his firm leases elevators along the line of the railways, and has one leased in Chicago. (397.)

Mr. WEBSTER says that Armour & Co. own practically no elevators along the lines of the railways, although they own all of those which they operate in Chicago except three, which are leased at a high rental. Mr. Armour is interested in various railroads, but receives no advantages from them in transportation rates or otherwise. (413, 416.)

C. Freight discriminations and allowances in favor of elevators.--Mr. VANLANDINGHAM, commissioner of the St. Louis Traffic Bureau, says that on each of the leading railways from grain-producing sections to Chicago, allowances, ranging from one-half to 14 cents per bushel, are made on grain to one or two favored firms having a large number of local grain elevators, nominally as compensation for gathering the grain, loading it, and shipping it at times when the railways can most conveniently care for it. The favored elevators are thus enabled to pay higher prices for grain. The average profit in handling grain is less than 14 cents per bushel, and smaller buyers can thus easily be driven out of business. Mr. Counselman, who controls one such system of elevators, testified before the Interstate Commerce Commission that his warehouses were paying three-fourths of a cent per bushel more than the market prices for August corn at the Mississippi River, being able to make a profit by so doing. The small shipper being driven out of business the large dealer is in a position to depress the price of grain to the producer, although the witness thinks that the prices can not be lowered much below the amount of this allowance without calling in new buyers or enabling the farmer to ship directly.

Many of these systems of elevators, especially those at terminal points, are owned by railways themselves, or by their officers, but the allowances are just as

likely to be granted to distinct companies. The practice described does not, Mr. Vanlandingham thinks, prevail at St. Louis or upon the railroads reaching that city, but he believes that it is general on the Chicago railroads. (198-200.)

Mr. GREELEY is inclined to think that every one of these public warehousemen in Chicago receives special freight rates and considerations, and that they are also notified in advance of changes to be made in rates, so getting an advantage over their competitors.

Mr. Greeley says further that the Eastern railroads have arranged with certain favored elevator men to transfer grain from Western cars to Eastern cars, putting the transfer houses owned by the railroad in the charge of these favored individuals. These persons are themselves grain dealers and competitors of the men whose products they handle, which gives them an unjust advantage. (370, 377.)

Mr. DOUSMAN declares that one of the chief reasons why the elevator business has been largely centralized in a few companies is the discriminations in their favor by the railroads. In one instance brought before the Interstate Commerce Commission by the Chicago Board of Trade in 1890, it was shown that regular buyers of grain along Western railroads had found themselves forced to sell to certain individuals, and this was due to the receipt of a rebate of 5 cents per 100 by these favored individuals. The matter was not pushed to a final decision, because Mr. Counselman, the head of the elevator system on the Rock Island Railroad, declared that he could not testify without incriminating himself. (354-356.)

Mr. BOOKWALTER believes that the large elevators get favors from the railroads which enable them to pay more for grain than others can pay, and to drive others out of business. For instance, two days before his testimony there was bid for No. 3 corn, Chicago terms, on track at Humboldt, 120 miles from Kansas City, 25 cents. The rate to Chicago is 17 cents, or 9.8 cents a bushel; that would make the corn cost 35.3 cents at Chicago, if the tariff rate were paid. The best corn was worth that day in Chicago 33 cents. The Peavey Elevator Company, of Minneapolis, which is getting control of the grain business on the Union Pacific west of Kansas City, offered one-fourth of a cent more for corn along the Union Pacific road a few days before Mr. Bookwalter's testimony than the Kansas City price on the same day, less the freight to Kansas City. Again, in testimony before the Interstate Commerce Commission a year or two ago, it was stated by an elevator man that the railroad company paid him as much as 4 cents per 100 for running grain through the house, as an elevator charge. This was really a drawback on the freight and would give him the absolute control of the business on that road. (574-577.)

Mr. CARTER has no doubt that the large dealers in grain who control the business along several roads centering in Chicago have lower freight rates than the ordinary buyer. He believes that one reason why the roads would wish to concentrate business in the hands of one man is that rebates can be paid to one and kept secret; if they were paid to a dozen, the secret could not be kept. He instances a man who has done business with a line of road for not more than a year, and so has not had opportunity to become established and make friends there, and yet is getting perhaps nine-tenths of the grain that comes in over that road. He had done a grain business of a general character in years past, and had shown no great ability. He does not now do any considerable business except on the one line which he has a connection with. If his very large business there were due to his great skill this would have shown itself in former years and would now show itself in other districts. This particular man in not interested, Mr. Carter thinks, in the road which he is connected with; but he suggests that an arrangement could easily be made by which half a dozen silent partners could enjoy the profits. (583, 584.)

Mr. BACON, of the Milwaukee Board of Trade, thinks that the great elevator owners undoubtedly receive advantages from the railways. As evidence he submits an instance in connection with the Milwaukee Elevator Company, which is understood to be controlled largely by P. D. Armour. Postal cards sent out by this company to Kinbrae, Minn., and Flandreau, S. Dak., offered prices for wheat at Milwaukee ranging, if full freight rates were paid by the buyer, from 0.95 cent to 24 cents more than the price of wheat at Milwaukee on the particular day. Similarly, the price offered for oats, freight rates counted, would make the cost at Milwaukee from one-sixth to nearly one-half cent more than the price at Milwaukee, oats always being handled on a small margin. The inference is that the buyer must receive some advantage in freight rates. Mr. Armour is also a director in the Chicago, Milwaukee and St. Paul Railway, which extends from the points named to Milwaukee. The ownership of elevators by the buyer can not explain