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REVIEW OF EVIDENCE.

INTRODUCTION. The Industrial Commission has taken the testimony of many witnesses on the subject of transportation, especially railway transportation. These witnesses include representatives of all the important organizations of railway employees, representatives of many organizations of shippers and commercial bodies, as well as other shippers, officers of railways and of railway associations, members of the Interstate Commerce Commission, and special students of transportation questions college professors and others. Several witnesses have also testified as to lake, canal, and ocean transportation. While detailed and specific statements as to the conditions of labor and traffic have not usually been sought, many general statements as to these conditions have been obtained, and although there is, of course, not a little difference of opinion, certain conclusions as to facts emerge with fair clearness from the testimony. Naturally, there is even greater difference of judgment as to needed legislation; but here again it is possible to gather some fair conclusions concerning the preponderance of opinion among those most interested, as to some of the important problems now before the people. The Commission has not, however, completed its investigation of transportation. It is expected that additional testimony will be taken as to all phases of the subject, but more especially as to certain topics which have been investigated least fully, such as ticket brokerage, capitalization of railways, consolidation of railways, state railway commissions, taxation, conditions of water transportation, etc.

The wide-reaching social and economic influence of the means of transportation is indicated by the fact that questions relating to them have been discussed to a greater or less extent by the witnesses in connection with almost all the other investigations of the Commission-notably those on agriculture, trusts and industrial combinations, and capital and labor. The evidence in these investigations should be consulted in connection with the present volume.

FREIGHT DISCRIMINATIONS BETWEEN INDIVIDUALS. There is a general consensus of opinion among practically all witnesses, including members of the Interstate Commerce Commission, representatives of shippers, and railway officers, that the railways still make discriminations between individuals, and perhaps to as great an extent as ever before. In fact, it is stated by numerous witnesses that discriminations were probably worse during the year 1898 than at any previous time. It is admitted that there is great difficulty in proving individual cases where shippers have been given special rates or other favors, but the witnesses declare that it is common knowledge among all familiar with the subject that such concessions are largely granted. The arguments pre

1 Knapp, pp. 129, 132, 139, 142; Prouty, pp. 150–152; Clements, p. 159; Cowen, pp. 313-316; Blanchard, pp. 683, 684; Ingalls, pp. 286, 297; Spencer, pp. 273, 279; Ripley, pp. 594, 596; Stickney, pp. 460-462; Bird, pp. 470, 471; Morton, pp. 490, 493, 494; Kelley, pp. 185, 186; Vanlandingham, pp. 194, 207; Dousman, pp. 353, 359; Neall, pp. 173, 174.

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that the business of handling grain on commission has been very greatly reduced by this practice. The elt vator owners admit that they are very large buyers of grain. It is claimed by their opponents also, although the evidence is less definite, that these same owners of terminal elevators own or control most of the country elevators and warehouses; that in fact practically all the elevators along the lines and at the terminals of each railway system are in the hands of a single organization.'

The opponents of these large dealers admit that the elevator owners pay more for grain to the local dealers and farmers than the commission merchants and small dealers can pay, but they declare that this is due to various unfair advantages. Thus, the elevator owners themselves are exempt from the terminal storage and transfer charges which must be paid by other persons—three-fourths of a cent for transfer and the first 10 days storage which is alleged to be much more than the actual cost. It is further declared that the elevator owners receive great advantages from the railways in the forms of allowances for handling grain and of direct freight discriminations. In fact, it is held by many witnesses that the railway companies or their officers are largely interested in the elevators and in grain buying. The evidence as to discriminations in favor of the elevators is chiefly indirect, based either on general belief or on the known fact that the elevator owners often pay more for grain at country stations than the price at Chicago, Kansas City, or Milwaukee, minus the full freight rate, would warrant. The excess in the price offered was shown to be sometimes as high as 2 or 21 cents on both wheat and corn. It was also stated that in 1890 a rebate of 5 cents per hundred was proved before the Interstate Commerce Commission to have been granted to certain elevator owners.”

It is also alleged that the Eastern railways have largely leased their transfer elevators, for transferring grain from Western to Eastern cars, to private companies which also deal in grain, and that the charges made by these companies are excessive, so that they have an advantage over competitors.

The elevator owners deny that the charge of # of a cent for handling grain is excessive; the law permits 14 cents to be charged, while the actual charge is the lowest known anywhere. They deny also that the railways operate elevators directly, or, in the cases where they own them, have given special favors in leasing them to the present operators; though no very detailed evidence is presented. Mr.Webster, of the Armour Elevator Company, claims that that company actually owns most of its numerous elevators and pays high rentals for the remainder, while Mr. Counselman declares that the elevators on the Rock Island were built and paid for by his own firm. Mr. Webster also denies that the elevator owners receive discriminating rates from the railways.3

In view of the quite general acknowledgment among railway men that discriminations in favor of large shippers are still conspicuous, there seems to be a considerable probability that the claim that these large elevators receive favors from the railways, in one way or another, has some basis.

The elevator men explain further the reasons for their buying grain and for their advantages over competitors. They claim that the establishment of through rates on grain from the Mississippi River and other Western points to the seaboard lower, than the sum of the local rates from those points to Chicago and from Chicago east, gave an advantage to Eastern commission merchants and buyers, and Chicago elevator owners found it necessary to buy grain on a large scale and handle it in the same way, on through rates, in order to keep their ware

Vanlandingham, p. 199; Carter, pp. 583, 584; Greeley, pp. 371, 373; Dousman, p. 354.

2 Barry, p. 250; Bookwalter, pp.573-576; Gallagher, p. 545; Vanlandingham, pp. 198–200; Greeley, p. 373; Dousman, p. 355; Carter. p.584; Bacon, p. 497.

3 Webster, pp. 413-416; Counselman': pp. 385-388.

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houses from standing idle. Moreover, the competition of the newer markets of Minneapolis, Duluth, Kansas City, and elsewhere forced these men to buy grain to protect Chicago as a market. The advantages which have made it possible for them to compete successfully with other markets, and largely to take business away from commission merchants, arise from their large capital, which enables them to carry large quantities of grain in anticipation of favorable markets, from the elimination of commission and other intermediate charges, and from the ability to forego a part or all of the normal charge for actual elevator service. The elevator owners have the same advantage over commission merchants that any business man has who furnishes himself with all accessory materials and facilities, instead of obtaining them from others, especially from his competitors.' One or two witnesses, however, claim that, as regards local buying, the small dealer, who has perhaps other business during the season when there is little grain buying, can handle the grain business more cheaply than a great concern.

Effect on prices.—The opponents of the elevator owners declare that there is a growing monopoly of the local elevators, those on each line of railway being largely controlled by a single firm. While there is still sometimes competition and while in such cases the large buyers pay the higher prices, sooner or later all competitors will be driven out and the farmer will be at the mercy of the great elevator owners. It is maintained, moreover, that where different elevator owners operate along the same line of railway they do not actively compete. On the contrary they meet daily on the Chicago Board of Trade and agree as to the prices which they will pay, at least as to certain territory. No evidence is presented to show specific cases where prices have been depressed by elevator owners.”

To these charges the elevator owners · reply that, at least along many railroads, they do not control any large proportion of the local elevators. They buy largely from the local dealers, who compete among themselves; and there is nothing to check the competition of the different elevator concerns. There are few railroad stations which do not have two or more buyers. No agreement exists for limiting competition or fixing prices, except that certain leading Chicago elevator men do discuss daily the prices which they will pay in Kansas and other parts of the West, where the Chicago market comes into severe competition with other grain markets. The purpose is to agree upon a price high enough to bring the grain to Chicago. At practically all stations local dealers receive daily bids for their grain from a large number of buyers-often from 5 to 20. The existence of these competing bids is admitted by some of the opponents of the elevators.

Two country grain dealers from Iowa and Nebraska also testify that in their towns there are competing grain buyers, and that each of the local dealers receives bids directly from various elevator owners at Chicago and also from other markets, there being often a considerable range in the prices offered.

The elevator owners maintain that the farmers are not only not injured by the existence of these large buyers, but that they are benefited by the elimination of various commissions and profits which were formerly paid by grain in its progress from the producer to the consumer, and by the many economies which elevator owners are able to effect. The elevator owner is satisfied with a little profit on a large business. •

The two local grain dealers referred to above also declare that the farmer benefits by the elimination of middlemen under the present practice. Moreover

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Webster, pp. 400-411; Counselman, pp. 382-389; Bartlett, p. 393. 2 Dousman, p. 355; Greeley, pp. 371-376; Bookwalter, p. 576; Gallagher, p. 545; Vanlandingham p. 200; Sager, p. 451; Carter, p. 586.

3 Counselman, pp. 384, 387; Bartlett, pp. 393-395; Webster, p. 416. * Burke, pp. 465-467; Hulbert, pp. 486-489.

- Counselman, p. 384; Bartlett, pp. 393, 395; Snydacker, p. 396; Webster, pp. 405-415; Bookwalter, p. 674.

the reduction of the risk borne by the local dealer, from the fact that he receives bids for his grain on the track every day, enables him to work on a narrower margin.

Quality of grain.-It is claimed by certain witnesses that the owners of public warehouses have an unjust advantage over competing grain dealers from the fact that they are able to deliver to those who hold storage certificates the poorest quality of grain which will meet the official grade, while the owners themselves can take the best quality, for which they are able to obtain a higher price. The representative of a prominent milling company especially declares that millers are forced to disregard official inspections in order to prevent the warehousemen from giving them inferior qualities. The elevator owners, on the other hand, declare that their practice of mixing and cleaning grain for the purpose of improving the grades is beneficial to all concerned; that there are no instances proved where unjust discriminations as to the quality of grain have been made, and that it is absurd to expect them to furnish to the public grain better than the official inspection requires.” There seems little doubt, however, that opportunities do exist for the warehousemen who store grain for the public and who are also grain owners to get an advantage in the way suggested. This seems the more probable from the fact, brought out in the testimony of one or two witnesses who are especially familiar with grain inspection, that the official grading of grain is necessarily imperfect.3

EXPORT GRAIN RATES AND FLOUR SHIPMENTS. It appears clearly from the evidence that the railways have of late made specially low rates on grain hauled to the seaboard for export, while higher rates have been maintained on grain intended for domestic use and on flour, whether for domestic use or export. The chief complaint as to this practice comes from the American millers. Although the evidence is not entirely clear on this point, it is stated that these special export rates have been granted for the most part only since February 1, 1899. The discriminations were so great at times during 1899 that, while the Chicago miller would have to pay 21 cents per 100 pounds to get his flour to New York, the English miller could take wheat from Chicago to New York for 13 cents. The discrimination on shipments from points on the Mississippi and Missouri rivers to the Eastern seaboard and to the Gulf ports was even greater. The Interstate Commerce Commission investigated this subject, and issued an order on August 9, 1899, that the difference between export rates on wheat and on flour should not exceed 2 cents per hundred from Chicago, although the commission admits that it doubts its power in the matter.

It appears that some slight changes in rates were made soon after this order, and that on November 1, 1899, the export rates on grain were raised so that the difference from Chicago to the seaboard was 2 cents, as suggested by the Commission. The through grain rates from the Mississippi River, however, were changed to a less extent, so that it would still cost from 3 to 7 cents more for a miller at Chicago, Milwaukee, or Indianapolis to carry grain from the West to his mill and flour from the mill to the seaboard than it would cost the English miller to take grain from the Mississippi River to the coast, while there were differences of about the same amount between export wheat and domestic wheat, putting the miller on the seacoast at a like disadvantage as compared with the English miller.

The evidence seems conclusive that the effect of this discrimination has already been disastrous to our milling interests, and that probably, even with the dif

* Carter, pp. 582, 583; Sager, pp. 450-452; Dousman, p. 356; Greeley, p. 371.

Webster. pp. 411,413; Vanlandingham, pp. 200,201. 3 Clark, pp. 431-433; Evans, p. 440.

* Knapp, pp. 134, 142; Prouty, p. 146; Vanlandingham, p. 195; Barry, p. 249; Bacon, pp. 422-425; Sager, pp. 446, 447; Evans, pp. 435, 436; Gallagher, pp. 539, 540.

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