regards grain coming into the city and dishonestly lax as regards that going out. He refers to specific instances in which grain shipped to Chicago has been reduced in grade and grain from Chicago found inferior to the grade fixed. He thinks that State inspection is apt to be irregular in quality, owing to political influences in appointments. The witness thinks, however, that national inspection is impracticable, on the whole. (440.)

Mr. DOUSMAN thinks that the temptations to grade grain unfairly under the existing system of inspection are undoubtedly great. The inspectors in Chicago are fairly well experienced and doubtless have the ability to grade grain rightly if they perform their duties faithfully. (356.)

I. Grain markets and prices (see also pp. 74, 81).-Mr. BOOKWALTER states that since 1895, when there was a shortage in the corn crop and 100,000,000 bushels of wheat was fed to stock, wiping out the immense visible supply, Chicago rather than Liverpool has controlled the price of wheat. It is true that it is often said that low cables from Liverpool put down the price in Chicago and high cables put it up; but Mr. Bookwalter thinks such statements are made chiefly to influence the speculative markets. The foreign cable of to-day is based on our market of yesterday. This is because the Liverpool market of a given date comes earlier; it closes very soon after the Chicago market begins. The influence of the markets of Chicago and Liverpool is mutual, but that of Chicago is the greater. (576,577.) Mr. GALLAGHER also thinks that the Chicago market exercises the principal influence upon the price of grain. The foreign markets control, of course, just so far as they are buyers. If there is a good demand in Liverpool, the foreign market is likely to influence our markets for the time being. St. Louis buys much more wheat than Chicago, on account of its large milling interests. (541.)

Mr. BOOKWALTER states that Kansas City is a higher market for grain than any other in the country, simply because it gets so little. The receipts of oats are only 4, 5, or 6 cars a day-merely what is consumed there. The wheat the city received last year was about 30,000,000 bushels from a territory that raised 240,000,000 bushels. Mr. Bookwalter recently made some investigation on the amount of grain shipped from various stations to Kansas City and to other markets. From Inman, a small station on the Rock Island, a shipper sent about 400 cars; 54 came to Kansas City; 227 stopped at a mill on the way to Kansas City. From Table Rock, 272 cars of corn were shipped; only 3 to Kansas City. "These were not shipped by dealers; they were shipped by farmers, who did not know any better." In 90 days preceding Mr. Bookwalter's testimony, 3 cars of corn a day, on the average, had been received at Kansas City from the Burlington system. He thinks the receipts ought to have been 150 cars. (572, 574.) Compare Mr. Webster's statement that Kansas City stands close to Chicago as a grain market (p. 81). Mr. Bookwalter states that out of 500 cars, three days' receipts at Kansas City, less than 2 per cent was what is known as graded wheat; it ran from "rejected to "4" and "3." This inferior wheat is sent to Kansas City, because that is the nearest market, and the wheat is not, as a rule, in a condition for long shipment; it is desirable to get it out of the car as soon as possible. Kansas City is the nearest place where it can be put into an elevator, scoured, dried, and stored. (572.)

Mr. GALLAGHER says that whenever the world has an overproduction it affects the price of wheat disastrously for the time being, but that overproduction can not have a depressing influence for any great length of time. (543, 544.)

VII. RAILWAY POOLS, ASSOCIATIONS, AND AGREEMENTS.

A. Forms and methods of pools. (See also Effect on discriminations, p. 97.) 1. Enforcement.-Mr. BLANCHARD, late commissioner of the Joint Traffic Association, suggests the following as a form which, without legal technicalities, indicates the significance of pooling agreements: "The following railroads (naming them) operating from and through to and through -, hereby agree that to observe and give due effect to the tariffs from time to time legally issued, they will, from - for a period of years from said date, divide their tonnage therefrom and thereto and the earnings produced thereby at the published rates substantially in the proportions in which the shippers have delivered it to them heretofore. The proportions in which the said business shall be carried by the several parties hereto shall be as follows: (Specifying the percentage due to each.) If any company carries more than its said proportion, it shall in the next month transfer such excess of tonnage, computed at the gross rates shown by said established tariffs, to the company or companies in deficit, or, failing to so transfer the tonnage, it shall pay money in an equal or agreed amount within 30 days thereafter." (677.)

Mr. Blanchard also says that pooling agreements do not themselves fix rates, but that rates may change frequently on all or a part of the roads during the agreement. (643,665.)

Mr. Blanchard points out further that the pools which formerly existed affected only a comparatively limited traffic. Thus the Eastern pools related only to freight from Chicago, Peoria, Louisville, Cincinnati, Indianapolis, St. Louis, to Eastern points. The traffic from Buffalo and Albany, Washington, and other points— Rochester and Boston, for example was outside the pool, and the same was true of traffic from Cleveland, Detroit, Toledo, Columbus, and other cities. (681, 682.) Mr. RIPLEY, president of the Atchison, Topeka and Santa Fe Railroad, thinks that if pools are formed they should be formed for terms as long as 5 years. The longer they are the more stable they are likely to be. An agreement for 1 year has an element of temporariness which is unsettling. Mr. BLANCHARD and Mr. WOFFINDIN express the same opinion. (565,566, 695.)

2. Outside lines.-Mr. BLANCHARD says that in the case of the two leading pools which existed before the interstate-commerce act, that between the Eastern lines and that between those west of Chicago, there were a considerable number of lines outside. No threats were made against outside companies who refused to do joint business with them. Nevertheless, the actions of these outside roads finally demoralized business. It appears that the outside roads were largely those connecting points not actually reached by the pooled roads, but nevertheless competing with them as to certain through traffic. În case pools should be permitted in the future, Mr. Blanchard thinks that the only means of influencing outside roads to enter the pool or maintain rates would be by refusing to receive their traffic on the same conditions existing between the concurring companies, or by collectively cutting rates against the outside lines. (681, 682.)

Mr. RIPLEY, president of the Atchison, Topeka and Santa Fe Railroad, would not object to the forcing of all the roads in a competitive district into a pool, but he thinks there are some reasons against it, and he does not think it necessary. If the law permitted the roads which desire united action to combine against the one which would not unite, they could fight it jointly and by legal means, and could effectually regulate it. The trouble now is that when one party "thinks that he can flock by himself," the law forbids the rest to combine against him. A pool among 4 or 5 competing lines would have a very steadying effect even if 1 line remained out, especially if deviations from public rates were punished by fines, and the law were well enforced. (595, 597.)

B. Advocates of pooling.-1. General authorities.-Messrs. KNAPP, PROUTY, and CLEMENTS, of the Interstate Commerce Commission, agree in favoring pooling on the part of the railways, but only in case much more effective control than at present over rates generally, and especially over_pooling contracts, be given to the commission or some other authority. Mr. CLEMENTS especially fears the effect of pooling in raising rates generally. (138, 150, 157.)

Mr. NEWCOMB, of the division of statistics, Department of Agriculture, says that competition in railway rates tends to cause discriminations, and in many instances results in rates below the cost of service. The only remedies are Government ownership or pooling arrangements between railways under Government supervision. Pools are of two kinds, those which simply divide tonnage, and those which divide receipts, letting tonnage take care of itself, such division of profits being guaranteed by a deposit. When such pools were formerly made, before they were prohibited by the interstate-commerce act, they usually broke up soon, because they could not be enforced in the courts. It is now advocated that pools be legalized by an amendment of the interstate-commerce act so that they can be enforced by the ordinary procedure of securing damages for violation of contract. The majority of the railways favor this amendment, as well as a majority of the Interstate Commerce Commission, and many others. The opposition comes from a small part of the people who are ignorant concerning the effect of competition, from certain railway officers who object to the increased power which it is proposed to give to the Interstate Commerce Commission in connection with the change, and from trusts and combinations of shippers which are now able to dictate rates to their own advantage. The witness does not believe that pools would result in higher charges, except where rates are now unjustly low. The rates can never be much increased without shutting out a large amount of traffic which is on the margin of profitable shipment. Such pools should be, however, subject to the approval of the Interstate Commerce Commission, a thing which the railways themselves desire, and should be entirely public. In England pools have been found necessary; in France traffic is divided territorially, and in Belgium even the State-owned roads have been compelled to pool with private roads. (96-98, 103.)

Professor JOHNSON favors trying the practice of allowing the railways to make pools. The chief objection now raised comes from strong railways which are already getting satisfactory rates. Exorbitant rates are not likely to result, especially if proper Government supervision be maintained. (62.)

Mr. REAGAN thinks that in the absence of complete control over railway rates by the Interstate Commerce Commission, the next best method is to permit railways to make pooling contracts, subject to the approval of the commission, with an enforceable penalty for violation. This would go far toward preventing ratecutting and discriminations. (345.)

2. Representatives of railways.-Mr. BLANCHARD believes that the only way to secure uniformity and stability of transportation charges is by association among the railways, by which it shall be made to their interest to secure that result. Every association of railways in the past has had for its primary object the same ends as those sought by the interstate-commerce act. Association and organization among railways is necessary in the same way that association and organization are necessary in any great business or interest having common purposes. Thus, the nation must have its Congress representing the separate States; the President must have his Cabinet bringing together the different Departments. The rates of transportation must be predetermined in order to be announced in accordance with the law. (640, 641, 683.)

According to Mr. Blanchard, the interests of railway investors and employees especially demand protection by permission to secure reasonable profits through a pooling system. The Eastern trunk lines reported in 1894 that their shareholders numbered 99,826; in proportion to mileage the total number of shareholders of all railways would be over 950,000, besides bondholders. There are nearly 1,000,000 railway employees. Since each adult may be supposed to represent five persons, the total number thus directly affected by railway earnings would be fully 10,000,000, aside from those interested in manufacturing railroad supplies. American railway wages are higher than those abroad, and no measure should be taken to force them down. (642.)

Mr. WOFFINDIN, chairman of the Chicago East-bound Freight Committee, favors legalized pooling, and supposes that if pools were legalized they would be under some governmental supervision. He would have pools formed for at least 5 years. The difficulties of creating pools are such that he does not think it would be practicable to readjust the basis of them annually. He thinks that a pool could be so formed that it would do away with discriminations and rebates. To make it operative, penalties for violation of the agreement would have to be provided. He does not wish to express an opinion upon the question whether these penalties should be fines or imprisonment. Fines would be more effective if they were severe enough and were enforced. The enforcement of any penalty seems to be, in the witness's opinion, a matter of some difficulty. (565, 566.)

Mr. CALLAWAY, president of the New York Central, advocates legalizing pooling, so that contracts shall be enforceable at law. Pooling has in the past been especially advantageous in enabling railways to resist the unjust demands of large shippers, especially of private car owners. Discriminations would be lessened and freight rates would not be increased, because of water competition and worldwide competition in regard to commodities. The difficulty with pooling hitherto has been that the various lines were not satisfied with their percentages of business, and there was no way of enforcing agreements and preventing cutting. Mr. Callaway would be willing to give the Interstate Commerce Commission supervisory veto power over pooling contracts. A further advantage of pooling would be the reduction of expenses of various kinds; for example, saving in the maintenance of city offices. Railways which are opposed to pooling are mostly such as connect with the various competing roads, so that they are practically in the position of large shippers. (235-238.)

Mr. INGALLS, president of the Chesapeake and Ohio, believes that the only remedy for excessive competition is to be found in pooling. Unrestrained competition injures railway, shipper, and general public. It is almost sure to result in bankruptcies and to increase speculation in railway securities. Discriminations, also, are due to excessive competition. Agreements between railways, including more than mere pools of traffic or of earnings, should be made legal and enforceable at law. The witness does not think there would be any danger of undue increase of rates if such agreements were permitted, particularly on account of competition of products. (286, 296–300.)

In the opinion of Mr. SPENCER, of the Southern Railway, the legalization of pooling contracts would diminish discriminations, though it would not necessarily do away with them. If pooling were allowed, some authority would have to be provided to prevent unreasonable rates under the pool. The witness does not think

rates would for the most part be materially affected, although in the trunk-line territory some exceedingly low rates might be raised. (280.)

Mr. CowEN, president of the Baltimore and Ohio, thinks that if laws and court decisions had not interfered the railways, under the stress of necessity, would by this time have evolved a system of traffic associations and of pooling which would substantially have prevented discriminations. It was not the thought of the framers of the Sherman antitrust act that it should apply to railways as the courts have interpreted it. The witness favors granting permission to the railways to agree as to rates, including division of traffic, if necessary. He would be willing to have the Interstate Commerce Commission given the power to set aside such agreements without appeal if contrary to the public welfare.

Even if such agreements were permitted, true competition would not be destroyed. Properly there can be no such thing as different rates on different railroads for the same traffic; but with uniform rates competition occurs in furnishing facilities, handling traffic, and presenting inducements to the public. (314,315.)

Mr. BIRD, general traffic manager of the Chicago, Milwaukee and St. Paul Railway, is very much in favor of pooling. The only persons who could object, provided the Interstate Commerce Commission had proper power to regulate pools, would be those who hope to get discriminating rates. The requirement of the interstate-commerce act that rates shall be reasonable is defeated by the prohibition of agreements concerning rates. Fluctuating rates can not be of advantage to anyone. (474.)

Mr. MORTON, vice-president of the Atchison, Topeka and Santa Fe Railway, declares that rate wars are always injurious to the general public, to the employees, and to the carrier. Stability in freight rates is as essential as in import duties. Uniformity of freights as between individuals is especially important to all classes. The witness accordingly advocates the legalization of pooling. This would tend greatly to prevent unjust discriminations between shippers and between places, to create stable rates, check disastrous competition, prevent the reduction of wages, and afford protection to the railroad investors. It is not in restraint of trade in the sense that ordinary combinations would be, since the Government undertakes to regulate railway charges. Unless pooling is permitted concentration of ownership will increase. Even with greater concentration pooling would still be advantageous. If a certain group of railways should be combined there is yet always a tendency toward competition between different markets. (491, 495, 499.)

Mr. FISH, of the Illinois Central, says that his own railway, since fully 85 per cent of its traffic is local, is not especially interested in pooling. It has not sought for competitive business, since there is not much profit in it. Nevertheless, the witness thinks pooling would be advantageous to many railways, although it will not be a panacea or prevent rate cutting and discriminations. (337.)

3. Representatives of shippers.-Most representatives of shippers favor pooling only on condition that effective public control be exercised. See Paragraph F.

Mr. KELLEY, freight commissioner of the Trades League of Philadelphia, thinks that unless pooling among railways is allowed they will be driven more and more into consolidated systems. The weaker railroads will be unable to compete and will be controlled by the stronger. All the railroads east of the Mississippi are likely in a few years to come into the hands of a very few men, who can fix rates to suit themselves. (190,191.)

Mr. BACON, of the Milwaukee Board of Trade, favors permitting the railways to pool their earnings or traffic. This would be the most effective remedy for rate cutting and discriminations between persons and places.

The witness read from a letter of the secretary of the Chamber of Commerce of Milwaukee, declaring that that body has repeatedly advocated pooling. He also submitted a letter from Mr. Robert Eliot, a member of the Milwaukee Board of Trade, upholding the views just presented. (420,426.)

Mr. COUNSELMAN, a grain dealer of Chicago, thinks that the only remedy for railroad discriminations and rate cutting is pooling. Even where some railroads are willing and able to do a satisfactory business at fair rates another road with inferior equipment and facilities will come in and try to get business by lower rates. It is true that railroads might try to increase their percentage under a pool by rate cutting, but in general this attempt would be made by the weaker roads, and the strong roads, which felt satisfied, would be likely quietly to buy control of them. The witness would favor giving the Interstate Commerce Commission absolute authority to limit the maximum rates to be charged under pools. Shippers should be allowed the privilege of sending freight over any line they preferred; the railroads would not care if this were permitted. (390, 391.)

4. Public opinion concerning pooling.-Mr. BLANCHARD quotes from a number of important authorities indorsing pooling. He says that practically all of the witnesses who appeared before the Cullom committee in 1886 favored pooling, although some desired certain restrictions. That committee reported in its bill a provision that the Interstate Commerce Commission should inquire further as to the wisdom of pooling and report to Congress. Judge Reagan, who was then chairman of House Committee on Commerce, was the most influential in amending the bill so as to prohibit pooling, and he has since changed his opinion and advocates permitting railroads to enter into traffic arrangements. The Interstate Commerce Commission has several times advocated pooling. Judge Cooley, its first chairman, has repeatedly defended the system. Very large numbers of commercial organizations and trade bodies have at different times declared in its favor, including the National Board of Trade. The national convention of State railway commissioners in 1894 and 1896 took a similar position. The minority of the Supreme Court of the United States in the case of the Trans-Missouri Freight Association declared that agreements as to reasonable rates conformed exactly to the purpose of the antitrust act. (641, 642, 648, 649.)

Mr. RIPLEY, president of the Atchison, Topeka and Santa Fe Railroad Company, thinks that the sentiment of nearly all the members of the mercantile community that have had the largest dealings with railroad companies is in favor of pooling. The chairman and the majority of the Interstate Commerce Commission, and, Mr. Ripley thinks, a majority of the State commissioners and a majority of the shippers of the country, are in favor of it. For every opinion against it, ten can be produced in favor of it, from merchants and shippers, State and interstate commissioners, students of political economy, and almost all who have dispassionately studied the transportation problem. (593.)

Mr. BOOKWALTER does not think the views of business men in his section of the country are well defined upon legalized pooling. (576.)

C. Opponents of pooling.-Mr. STONE, Secretary of the Chicago Board of Trade, objects to railway pools, because they are in restraint of trade, they prevent competition, they are monopolistic in purpose and effect, they are odious in law, they are subversive of the very interest which railways were created to conserve, viz, the general welfare, in so far as that welfare relates to the functions and obligations of a common carrier." The pools which formerly existed, "although ostensibly for the equalization of traffic compensation, for the encouragement of feeble lines, and opposed to any unfair and unjust proportion of remuneration received by great and controlling trunk lines, degenerated into a reckless and unscrupulous abandonment of the terms of such agreement, creating confusion, distrust, an unsettling of freight rates, antagonism, and a general warfare, resulting in disaster to many of the parties to the pools, as well as to the business Mr. Stone does not believe, in view of the enormous extent interests generally.' of the business and the vast number of rates to be fixed, that it is practicable to place pooling under the control of the Interstate Commerce Commission in any sense that would protect the vast business interests of the country. (532-535.) Mr. HYLAND, traffic manager of the freight bureau of the Chicago Board of Trade, believes that a large majority of the members of that board and of the general public oppose legalization of railroad pooling as contrary to public policy and not calculated to secure the results claimed for it. In would, in fact, result in minimum service at maximum cost. Railroads would still continue to make special concessions in rates in order to establish their claim to an increased allotment in the pool, as has been especially demonstrated by the work of the Southwestern Railway Association. The witness thinks that the so-called strong lines, more than the weak ones, lead in violating traffic agreements.

On the other hand, Mr. Hyland would favor granting permission to railways to make agreements concerning rates, giving the Interstate Commerce Commission full power to regulate and control the rates. (351-353.)

Mr. VANLANDINGHAM, commissioner of the St. Louis Traffic Bureau, does not think that pooling is desirable either from the standpoint of the carriers or of the general public. It would not remove the incentive to reduce rates or to make discriminations. Mr. Vanlandingham, however, favors agreements as to rates. The witness thinks that consolidation of railways is more advantageous than legalized pooling. He does not so much oppose pools themselves as the proposition to make the pooling contracts enforceable at law. (214, 216.)

Mr. STICKNEY, president of the Chicago Great Western Railway, does not think that pooling would realize the expectations of its advocates. If a pool should be formed on the lines between Chicago and St. Paul for the purpose of maintaining rates, St. Paul would be injured, unless pools were also formed on the roads from Chicago to Kansas City and other points. When it was possible to repudiate a pooling contract if it proved unfair, railroads were willing to pool; but if the