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I think that we may fairly assume, without argument or dispute, that discrįmination, rate cutting, and rebate granting have been common and widespread practices for a number of years. These are the chief causes of complaint, and I have never heard them defended as just, fair, or right.
The complaint is that discrimination has been practiced for the benefit of some to the injury of others, and to the complete destruction of the business and substance of not a few.
The general public appears to be well represented in asking that the powers of the Interstate Commerce Commission be enlarged so that certain conditions which are represented as evils may be properly and justly regulated.
The end thereby sought appears to be that the common interstate carrier must perform every service, to all patrons, without any discrimination whatever—the same price to each for an identical service.
New conditions are now fast making, and with the control of vast systems vested in the hands of a few men, the problem is likely to become more complex through a return to the practices of the old pooling days.
The great danger threatened in this country is railroad monopoly, which will produce an extortionate rate.
Five syndicates, in each one of which some one man is the dominating spirit, control more than 100,000 miles of railroad. If you add to each one of these systems one of five lines which are still independent, and which will not aggregate over 25,000 miles, making 125,000 miles in all, you have railroad monopoly. There are 75,000 miles left, but those railroads are absolutely dependent on the others. The effect of this is already to be seen. Rates are advancing. The grain rate is an illustration. In 1890 the Commission held that 23 cents was a reasonable rate from the Mississippi River to New York; in the winter of 1892 the published rate was 29 cents; in the winter of 1899 the published rate was 13 cents, and later 12 cents from the Mississippi River to New York. That was due to competition between carriers. That rate is to-day 184 cents.
In other words, while it was a few days ago 12 cents per hundred, on Monday of the current week it was increased to 181 cents, which is an increase of more than 50 per cent.
The higher rate has been made possible by the combinations of lines between Chicago and the seaboard. The Pennsylvania has acquired the Baltimore and Ohio, the Norfolk and Western, the Chesapeake and Ohio, and lines north of the Pennsylvania have come mainly under the control of the New York Central and Mr. Morgan.
A year ago the published rate on grain from Chicago to New York was reduced from 16 cents to 13£ cents. At the same time the railroads agreed to charge a secret rate of 11 cents. April 14, 1902, the published rate was advanced from 13 cents to 16 cents.
The CHAIRMAN. That is the rebate.
Mr. CHADWICK. Secret rebates, of course. I do not know that I ought to say that it is always in the way of rebate.
The CHAIRMAN. That is the effect of it!
This rate they must expect to maintain, for certain of the most important lines are under injunction to maintain the published rate. Apparently it is the intention to maintain a rate 5 cents higher this season than last season between Chicago and the seaboard.
When five or six men can sit down in New York and determine what the grain rate shall be from Kansas City to the Atlantic seaboard, from the Mississippi River to the Atlantic seaboard, and from the grain fields to St. Louis, Chicago, and Duluth, there is really no longer any competition in the transportation of grain, and that condition is practically here.
Senator KEAN. Is not that exactly what you are asking to have done?
Mr. CHADWICK. I will come to that later, Mr. Kean. I think it is better to state definitely what we do ask than to make deductions, so far as individual statements go, if that is agreeable to you.
Mr. KEAN. Certainly.
Miles. The Vanderbilt system
20,000 Pennsylvania system
18,000 Gould system
16, 000 Morgan-Hill (including Southern Railway, controlled by Mr. Morgan)
37,000 Harriman system
In the Harriman system I leave out all reference, for good reasons, to the Illinois Central.
The five combinations which are now independent and which have to-day 108,000 miles under the control of five men are:
3, 107 2,084 1, 635
New York Central System (including the main line, the Beech Creek, the
Fall Brook, the Mohawk and Malone, the New York and Harlem, the
Rome, Watertown and Ogdensburg, the West Shore, and many others).
and Lake Erie)
Omaha, and the Fremont, Elkhorn and Missouri Valley)
8, 769 2, 287
Mileage. Pennsylvania R. R. (east of Pittsburg and Erie) (including the New Jersey
lines, the Allegheny Valley R. R., the Philadelphia and Erie, the Northern Central, and many others)
5, 530 Pennsylvania R. R. (west of Pittsburg and Erie) (including the Pennsylvania
Company, the Peoria and Western, the St. Louis, Vandalia and Terre
4, 405 Long Island..
391 Baltimore and Ohio (including the Cleveland, Lorain and Wheeling, the Baltimore and Ohio Southwestern, and others).
Controlled by the Gould-Sage interests:
Missouri Pacific and Iron Mountain
Texas and Pacific
Missouri, Kansas and Texas.
2,968 1, 293 1,619
2, 480 2, 301
5, 487 Great Northern
5, 417 Chicago, Burlington and Quincy
8,171 Erie.. Lehigh Valley
2,178 Controlled by Mr. Morgan:
Philadelphia and Reading (including the Central of New Jersey). 1,677 Hocking Valley (including the Toledo and Ohio Central and the Kanawha and Michigan)
882 Chicago, Indianapolis and Louisville Southern Railway (including the Central of Georgia, the Alabama Great
Southern, the Cincinnati, New Orleans and Texas Pacific, and the
10, 627 Total mileage.
Union Pacific (including the Southern Pacific, the Oregon Railroad and
15, 163 Chicago and Alton
918 Kansas City Southern
873 Total mileage
16,954 It is true, it is forceful, for a man to sit down and look at this matter dispassionately. A man not interested in railroads and being put in possession of these facts would throw up his hands in holy horror. I really do not believe that those who have not studied the question thoroughly can realize it at all.
While the powers of the judiciary should not be conferred on the Commission, it may safely be granted the right to arbitrate.
We consider another provision absolutely essential to reasonably
safeguard the interest of the public if this bill shall pass; namely, that as the Interstate Commerce Commission is composed of men who can have no personal interest in the matters brought before them under the provisions of this bill, the order of the Commission should stand, unless and until it be suspended or revoked by the circuit or other court or judge, as may be provided.
The powers of the Commission are now simply advisory.
For the first ten years the Commission exercised the power of revising rates, which proved quite satisfactory to the country.
The decisions of the Supreme Court about 1897 terminated that power. The consequences have been most serious during the succeeding five years. Of about 135 orders made by the Commission, I think that 68 of them dealt with unjust and unreasonable rates; and for the correction of such wrongs I have not been able to learn of a single instance where the remedy sought has been obtained.
If the Nelson bill is to become substantially the law, we earnestly hope and recommend that it be amended, so that any definite order made by the Commission, as provided in the bill as printed, shall be reviewable by but one particularly designated court of the United States, which shall have jurisdiction in all parts of the United States and Territories, or shall be reviewable by one particularly designated judge of some court of the United States, who shall have the same jurisdiction, for the reviewing and passing upon such orders, so that all causes which may be heard under the act may have the benefit of expert service of the highest order.
Is there any argument in that particular suggestion? Here is a board, the Interstate Commerce Commission; they and their agents are experts. A case is taken to them, they are expert in their judgment of the matter; that is, they apply to the case the results of all the researches and study they have given to former cases and decisions and to such new ones as are necessary, and they come to a decision based upon that expert investigation. The case is then thrown by appeal into the courts. It comes before good lawyers, true; before good judges, true; is argued by able attorneys, true. But it is to be considered by men who never before have had such a case before them and may never have another. They have to decide the case without previous experience in such cases. Whereas if the case were to be considered by experts all the way through, would not that be ideal? And when the ideal is obtainable why not have it?
The CHAIRMAN. Is it your idea that such cases should be taken before the courts of the District of Columbia, or some other court specially designated?
Mr. CHADWICK. They should go to some court somewhere. It might be a loafing court. It is for you to formulate these things. I think it is possibly one of the wisest suggestions that could possibly be made for your consideration, that if you are going to have these matters go ultimately to a court it should be a court that shall have, per se and de facto, expert knowledge. It must be so. It can not be otherwise than expert.
The railroads ask for protection against each other. Are they not willing that the public be granted similar protection against the railroads themselves? Why not?
My personal experience with railroad managers has led me to believe that individually they are the peers of any class in the Republic.
Evidence was recently made public showing the following state of affairs:
That Richardson of Chicago, operating grain elevators and doing a grain business on the Santa Fe system, and Hall & Robinson of Kansas City, operating in grain on the Missouri Pacific, partially in common territory, each received from their respective railroads a private, and to all intents and purposes a secret, rebate of 5 cents per hundred; and that the Santa Fe authorized and employed the Richardson concern to purchase the grain at certain stations, paying to them a stipulated commission of one-fourth of a cent per bushel for handling the grain for the account and risk of the Santa Fe, which thus departed apparently from its proper functions as a common carrier, and thereby instead of performing its duty as the servant of the public, became the competitor of those legitimately so trading, engrossing their business.
Why should they collectively take any different course than each would follow of his own volition individually?
I am not willing to concede that the tariff rates of freight on grain of late have been, or now are, too high, nor do I complain that the different railroads, even in this period of great commercial activity and admitted prosperity, are collecting more pay for their services than honestly may be defended as fair and reasonable; for surely profits may be had more easily and paid with better grace in prosperous than in pinching times.
A crying and annoying evil which works hardship in many cases, and seems to be indefensible, is the irregular, heterogeneous classification of freight; and in this day of organization and method it seems strange that it has not heretofore been regulated.
Whenever any bill is passed it should provide protection for the carrier and the public by making it a misdemeanor, punishable by an exemplary fine, for any person, acting either as principal or otherwise, to obtain transportation at less than tariff, by misrepresentation of classification, weight, character, or any other fraudulent means.
As stability of rates, when fair, is a great desideratum, the orders of the Interstate Commerce Commission should be continued in force and obeyed for two years from the time they become originally operative and observed.
Of course, you know the vexing delays that have occurred all along the line. You know that has been one of the reasons why no one tries to do anything now. How can a man with a small fortune bet it all as against a tremendous corporation loaded with millions and hundreds of millions?
The people are here again with a bill-those same people who have been here time and again-seeking relief from evils which are now undenied and undeniable. It may seem strange that they continue to come again and again, but as you well know, they have no other hope save in you—you who stand morally pledged to do the fair thing, the reasonable, the proper, the possible thing, the thing that is right for the whole community of interests-trade, producer, consumer, shipper, carrier.
Devices for evading the interstate-commerce law have been abundant in the past, and as fast as one is uncovered and corrected, wholly or in part, a new device has been found, and who can say when and where the end will be?