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Mr. DRAKE. No, sir; we would be glad to welcome them if they came, and to handle their business. If they came to us to make through billing arrangements we would be glad to welcome them; if they came with cargo to be transported over the Isthmus we would be glad to handle it. We have regular rates; we have local rates across the Isthmus, and regular wharfage rates for the steamer at Colon; and it would meet with the same treatment as any other.

Senator Morgan. These regular lines are necessarily in competition with the tramp lines, are they?

Mr. DRAKE. That is my answer, sir—I think they cover all the business. There is no inducement left for a tramp line to go there.

Senator Morgan. They still roam the ocean in thousands, do they not?

Mr. DRAKE. Yes, sir.
Senator Morgan. They do business somewhere?
Mr. DRAKE. Yes, sir.

Senator MORGAN. They do not do business at your terminals because you do not offer them any inducements, I suppose. They do business everywhere else. I was trying to find out why they did not do any business with you.

Mr. DRAKE. I can not answer, sir. My assumption is that there is no business for them.

Senator Morgan. I am trying to get at it. I have the supposition in my mind--the belief, I might say—that this traffic arrangement that you make with permanent lines runs off all of the other people.

Mr. DRAKE. I do not think so, sir. It is possible that in the case of an occasional steamer coming in there, that steamer might name a very low rate for its service. We have a regular rate across the Isthmus, a regular local rate, that has lately been reduced materially. It is possible that the sum of those two locals would be higher than the through rate.

Senator Morgan. You have mentioned through billing."
Mr. DRAKE. Yes, sir.
Senator MORGAN. Please describe that.

Mr. DRAKE. There is an agreed form of bill of lading in use by all the parties. If the Royal Mail Steamship Company is going to take a shipment at Southampton for Callao it uses that form of bill of lading. All of the provisions of the bill of lading are discussed and agreed upon. It provides all the protection for the carriers and for the cargo; and that is the form of bill of lading that is used to cover that shipment from the point of origin to the point of destination.

Senator MORGAN. If you come from Southampton and are destined to Callao, that bill of lading carries you right across the Isthmus?

Mr. DRAKE. It follows along with the cargo. Senator Morgan. Then you look to the company that gives that bill of lading for your percentage ?

Mr. DRAKE. Yes, sir.
Senator MORGAN. Of 25 per cent?
Mr. DRAKE. Yes, sir.
Senator MORGAN. For your part of the traffic?
Mr. DRAKE. Yes, sir.
Senator Morgan. That means 25 per cent of the whole bill?
Mr. DRAKI:. Yes, sir.
Senator MORGAN. Whatever they earn?

Mr. DRAKE. Yes, sir; except that almost all of the steamship lines have some little additional charges on the bill of lading for various services that they render that are distinct exceptions from the through rate. The through rate might be $10, and there might be a charge of 25 cents for some port service or for some bill of lading service that the initial carrier had rendered that we do not participate in. Those are local charges.

Senator Morgan. Those little extra charges, I suppose, relate

to

Mr. DRAKE. To services rendered.
Senator MORGAN. To work they do in crossing the Isthmus!
Mr. DRAKE. No, sir; not necessarily-at their own port.
Senator MORGAN. Not crossing the Isthmus?
Mr. DRAKE. No, sir.
Senator MORGAN. Have you one of the forms of bill of lading!
Mr. DRAKE. Here! No, sir.
Senator MORGAN. You can furnish it to the committee !
Mr. DRAKE. Every one of them, sir.

Senator MORGAN. I wish you would send it to us. Take a memorandum of it, please.

Mr. DRAKE. Yes, sir; I will do so.

Senator MORGAN. That form of bill of lading obtains in all the traffic arrangements that you have with all these different lines?

Mr. DRAKE. There are different forms, sir; there are different agreed forms for different branches of business. They differ in some minor details—that is, the bills of lading on the Pacific are not exactly the same as the bills of lading on the Atlantic. They cover the business between them.

Senator MORGAN. The bills of lading and all of the different forms applicable to different kinds of shipments are made under agreement with the railroad company?

Mr. DRAKE. Yes, sir.

Senator SIMMONS. Does that agreement include the freight rate also ?

Mr. DRAKE. The bill of lading states it, sir.

Senator SIMMONS. I know. But is there an agreement between these steamship companies and the railroad as to what shall be the rate or tariff charged upon specific articles to be transported ?

Mr. DRAKE. Yes, sir. I stated, I think before you came in, Senator, that the authority was vested in the initial carrier on both sides to name rates down to a point necessary to secure business on different classes of traffic, and the rate named is stated in the bill of lading,

Senator SIMMONS. Then if the traffic originates on the steamship company's route, they fix the rate ?

Mr. DRAKE. Yes, sir.
Senator SIMMONS. And you agree to abide by that!

Mr. DRAKE. Yes, sir; down to a certain figure. They can not go below a certain point without our authority to change it.

Senator SIMMONS. They can not go below a minimum?
Mr. DRAKE. No, sir.
Senator MORGAN. Now, if I understand you, Mr. Drake-

Mr. DRAKE. May I understand you, Senator? Do you wish all the forms of bills of lading, or a sample form?

Senator MORGAN. Just one of the forms which contains the contract for the 25 per cent allowance. They contain that, do they not?

Mr. DRAKE. No, sir; that bill of lading is simply a cargo paper. It follows along with the cargo and is accompanied by what is known as an "accountable receipt," on which is checked, at the intersecting points, exceptions taken, because each carrier is responsible for its own loss and damage. If you give a clean bill of lading to a shipper for an article—you being the English carrier, for the moment—and by the time you bring it to me I note on the accountable receipt that it was damaged, that it was wet, that it was stained, that it was broken and repaired, that it was resewn, or that one of the contents was missing, that it was deficient in weight as stated by the bill of lading, etc., that notation is made on the accountable receipt so as to protect me from the claim the shipper will make for that loss.

Senator Morgan. What I am trying to get at, Mr. Drake, is the general nature of the contract which is obligatory upon the United States.

Mr. DRAKE. Yes, sir.

Senator MORGAN. I want to know what kind of business we are doing through you as an officer or agent of the United States.

Mr. DRAKE. Yes, sir.

Senator MORGAN. And how far the United States Government is made responsible for all the damages and losses and whatever may occur to the disadvantage of the shipper by these bills of lading. I just want to see what the contract is.

Mr. DRAKE. In answer to that, may I say that the object of these notations upon the accountable receipt which accompanies the cargo is to fix the liability of each carrier; and the claims of shippers are settled on the basis of those notations, those following notations on the cargo papers.

Senator MORGAN. They are settled by the company -
Mr. DRAKE. By the company that is responsible.

Senator MORGAN. By the company that is responsible, and not by the railroad company? Mr. DRAKE. If the railroad company is responsible it pays.

Senator MORGAN. Of course if the loss occurs on the railroad, then it pays the damages.

Mr. DRAKE. Yes, sir.

Senator Morgan. If not, it is not responsible for any of these losses or damages

Mr. DRAKE. Not at all, sir,

Senator Morgan (continuing). That may occur on the shipment from the home port out across to the port of destination ?

Mr. DRAKE. Not at all, sir. Each carrier is distinctly made responsible for the loss that occurs on its own link.

Senator MORGAN. Yes. Now, no ship is admitted to give these through bills of lading except those that belong to this combination ?

Mr. DRAKE. There is not any combination, sir.

Senator MORGAN. Well, I call it a combination. If you will find a better word, I will try to adopt it.

Mr. DRAKE. I do not know of any combination. We treat each line separately. We have always refused to recognize any combination. We deal with each line separately, and it is a uniform

Senator MORGAN. I understand that your contracts are with each line separately; but taking the aggregate together, the rates are the same across the Isthmus for all of them?

Mr. DRAKE. Yes, sir; from each port.

Senator Morgan. Now, no ship is permitted to come there and demand that rate across the Isthmus of 25 per cent upon its fares, its cargo, except those that are in this arrangement?

Mr. DRAKE. May I correct that, sir? Except a line which has been admitted to through billing privileges.

Senator MORGAN. I am not very particular about words; I am trying to get at ideas. Mr. DRAKE. Yes, sir.

Senator Morgan. They are not admitted to pass the Isthmus at the rate of 25 per cent of their through rate unless they belong to this coterie, and have the privilege of giving through bills of lading?

Mr. DRAKE. I must take exception to that statement, Senator. Any line can be admitted; every line would be admitted. The door is open. We will gladly welcome any line that will come and operate with us regularly.

Senator MORGAN. I understand that.

Mr. DRAKE. In the case of any line that comes for one trip and delivers its cargo to us, we take it and carry it across on the railroad at our local rate, the same as we would carry a passenger.

Senator Morgan. Now, there is the difference: You will charge it the local rate, instead of the 25 per cent rate upon the charges?

Mr. DRAKE. Yes, sir; that is the thesis of the business of a common carrier.

Senator MORGAN. What is about the average difference between your local rates and this 25 per cent rate?

Mr. DRAKE. There is quite a material difference.
Senator MORGAN. Quite a material difference?
Mr. DRAKE. Yes, sir; that is all I can say.

Senator MORGAN. So that a ship that has no right to give a bill of lading through the Isthmus, under this agreement, could not claim the 25 per cent as the charge of the company?

Mr. Drake. No, sir; it must pay the local rate.

Senator Morgan. Now, I think we have the situation upon that point. That is what I was trying to find out—whether there was any discrimination made, and I find that there is.

Mr. DRAKE. It is a distinction, not a discrimination.

Senator Morgan. You charge a local rate to the company that is not in the contract, and you charge the 25 per cent rate to the company that is; and the local rate is much higher than the 25 per cent rate. That is the situation?

Mr. DRAKE. Yes, sir.

Senator MORGAN. That is what I was trying to get at. My real point about it, Mr. Drake, is this: That on my part, I object to the United States being involved, through the transactions of this railroad company in any such net of bargaining and contingencies in carrying on such traffic.

Mr. DRAKE. Senator, may I say that there is nothing exceptional in the situation? It is done by every line. In the case of one vessel coming to us with one cargo, being a perfect stranger, we would have to be paid our rate for transportation. It might never come

again, and we could not follow that cargo on to its destination. We do not know what that first carrier has done, what contracts he has made at the initial point. We do know what contracts have been made by our cocarriers, and we are parties to them.

Senator SIMMONS. When this tramp ship comes, and you accept its business, you require the vessel to pay the local freight rate?

Mr. DRAKE. Yes, sir; or to guarantee us in some way; that would be enough.

Senator SIMMONS. But if they guarantee it, you do not know that you will ever see them again.

Mr. DRAKE. We would require prepayment; we do of all local business across the Isthmus. We collect the same as any other railroad does for the business transported across the railroad locally; we collect at the time.

Senator DRYDEN. Do you refuse to enter into any contract with any vessel or steamship company which has expressed a desire to make a contract with you!

Mr. DRAKE. Absolutely not, sir. On the contrary, we are now encouraging a line that is proposed to be established by the Peruvian Government. They want better service than is afforded by the lines they have now. It has been a matter of correspondence between the State Departments of the two countries that are organizing the line and the railroad company. I believe they are going to inaugurate a line, and we are urging them to do it. It is the same way with the Kosmos Line, a very important line that goes by us on the Pacific side. We have urged them time and again to make a traffic arrangement with us so as to compete with the lines that are already there. They have been unwilling to do so yet, because their movements are irregular and they are independent; they are free lances. It is a very strong line, and we would be very glad to have them there.

Senator MORGAN. What is meant by “ free lances ? "

Mr. DRAKE. They go up and down the coast; they do not sail at regular scheduled times. They run down to one port, and they go back to another port; they will go in one port and take fifteen or twenty days to get a cargo. They are perfectly independent of all other lines.

Senator MORGAN. They are a regular line of steamers?

Mr. Drake. They are a regular line of steamers; yes, sir. They run to the home port, Hamburg; they have forty or fifty steamers running from all ports.

Senator MORGAN. Their steamers, then, though they belong to an established line, to what you call a regular line, have no established sailing dates, etc., from one port to another? Mr. DRAKE. No regular itinerary; no, sir. Senator MORGAN. No regular itinerary!

Mr. DRAKE. They move according to the requirements of their business.

Senator MORGAN. That is why you call them “ free lances ?" Mr. DRAKE. I meant by my term that they operate as suits themselves.

Senator MORGAN. Yes. And they decline to go in with you?

Mr. DRAKE. They decline to come in for some reason. I can not imagine why. We have tried to make them.

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