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pose A makes application to the Commission for a reduction, and the Commission orders that reduction, and the order goes into force; the railroad company during the time that order was in force would have to reduce the freight rates on that commodity not only to the applicant, but to everybody else.
The CHAIRMAN. That is my question. I said that.
Senator McLAURIN. Practically, it would deter any body from making application if he had to give bond to idenmify the railroad company against all loss.
The CHAIRMAN. Not one shipper alone, but every other shipper.
Senator McLAURIN. There would be this trouble about that, that although B might have had nothing to do with the litigation between the applicant and the railroad company, he would have to become a bondsman.
The CHAIRMAN. How is the railroad to be protected against hauling freight at a loss of $400,000 to $500,000? We do not want to confiscate the railroads.
Senator McLAURIN. There would be considerable difficulty about it, but you might require everybody to pay into some fund somewhere the difference between the amount of compensation authorized by the Commission and the amount that the railroad had fixed, and then if the railroad company should win, that goes to the company; but if the company should lose, that would go back to the shippers.
The CHAIRMAN. I will suggest, Senator, that these are questions that we can perhaps discuss better in executive session. I would like to get in print before the committee the ideas of Mr. Bacon on that subject. Now, Mr. Bacon, you say, as I understand, that there is no recourse provided in the bill, and should be none. Is that your posisition or the position of the organizations you represent?
Senator MCLAURIN. I ask your pardon, Mr. Chairman. I think your suggestion is the better way.
The CHAIRMAN. I want the ideas of the parties who desire to support the bill and who hold, as I understand, that the railroad under this bill has no recourse and should not have any.
Mr. Bacon. I do not think it should not have any.
Mr. Bacon. But, so far as I am able to see, it is impracticable to make such provision, and certainly there is no such provision in the bill. It is largely a question of the preponderance of right or of the suffering and hardship. In the nature of the case, one party or the other must suffer some hardship, and the question is who will suffer the more-the railway company or the public.
The CHAIRMAN. That is your position.
Senator DOLLIVER. I find nothing in here that would make the permanent order applicable to anybody else except the complainant. Why should the rates be suspended as to the whole upon an individual complaint.
Mr. Bacon. It changes the rate, and of course that rate is open to all shippers.
Senator DOLLIVER. There might be some mechanism to make it applicable to the complainant only.
The CHAIRMAN. The Nelson bill does not provide for pooling at all. Mr. BACON. No.
The CHAIRMAN. Are you against pooling?
Mr. Bacon. The convention which I represent was silent on that subject; expressed no sentiment on the subject. Therefore, as the representative of that convention, I have nothing to say on that point.
Senator FORAKER. That is a very important question. You are a well-informed man, and I, as one member of the committee, would like to have the benefit of your views on that subject.
Mr. Bacon. Let me answer the question put by the Chairman.
Mr. Bacon. I am answering your question. I am now going on to say that the protection of the carrier lies in the fact that the Commission which has determined this question is a competent body, and has acquired a knowledge of traffic matters and skill in the adjustment of them sufficient to enable it to promulgate a decision which in all probability will stand the test of appeal to the courts, and the cases in which it will not stand that test will be a very small number; consequently the loss entailed upon the carrier will be exceedingly small. On the other hand, without this provision the public is subjected to a continuance for years of this rate, which has been pronounced by a competent body to be wrong, and the whole community is paying hundreds and thousands, possibly millions, of dollars, while the case is being carried through the courts.
So that it seems to me, as a matter of practical expediency, that there can be no question but the right way is to make the order immediately operative and let the carrier take the slight risk which will result in these exceptional cases, rather than to permit the public to be wronged year after year while the cases are pending. The wrong in one instance is comparstively insignificant, while in the other instance it is enormous.
Senator FORAKER. Will you give me the benefit of your views about pooling? That is a very important subject. The CHAIRMAN. Perhaps the gentleman who is to succeed you,
Mr. Bacon, will address himself to that subject.
Senator KEAN. But Senator Foraker has asked for Mr. Bacon's opinion.
Senator FORAKER. I do not want it unless he is willing to give it; I am sure it would be an intelligent one.
Mr. Bacon. I will say that I have a definite opinion on that subject, but as chairman of the committee that has prepared this bill, in which there is no provision in regard to it, I feel somewhat embarrassed in stating that opinion.
Senator FORAKER. I do not want you to be embarrassed at all. Subsequently
Mr. Bacon. Mr. Chairman, I would like about two minutes to answer a question by Senator Foraker. He asked what provision there was in the bill that would be effective in relation to the prevention of discrimination. As an answer to that I will read, beginning at the top of page 9 of Senate bill 3575:
Any circuit court of the United States for a district through which any portion of the road of a carrier runs shall, upon petition of the Commission, or of any party interested, enjoin such carrier or its receivers, lessees, trustees, officers, or agents from giving, and a shipper from receiving, with respect to interstate transportation of persons or property subject to the provisions of this act, any concession from the lawfully published rate, or from accepting persons or property for such transportation if a rate has not been lawfully published; and by “concession” is meant the giving of
any rebate or drawback, the rendering of any additional service, or the practicing of any device or contrivance by which a less compensation than that prescribed by the published tariffs is ultimately received, or by which a greater service in any respect than that stated in such tariffs is rendered.
That covers that point.
Mr. Bacon. No; there is no provision of that kind in the present law. But the question has recently appeared before the courts as to whether they can enjoin railroad companies in this way. A temporary injunction has been granted in several cases in Kansas City and Chicago, and we are told authoritatively that it is the opinion of counsel of the various railroad interests that a permanent injunction can not possibly issue. This specifically provides that a permanent injunction may be issued in such cases.
The CHAIRMAN. I believe that we are all in favor of the most drastic provisions in any of these bills that will prevent discriminations or secret rebates. There is no controversy about that. Any suggestion from anybody to make the law stronger than is proposed in either the Nelson bill or the Elkins bill will meet with the favor of the entire committee, I am sure. So on that point there can be no controversy.
Mr. Bacon. I want to answer another inquiry by Senator Clapp, in relation to the enforcement of the order of the Commission requiring a differential not greater than 2 cents a hundred on flour as compared with wheat, why that has not been enforced.
Senator CLAPP. No; I did not ask that question.
Mr. Bacon. The question was asked by some Senator. The reason is that under the decision of the Supreme Court the Commission has no right to say what change shall be made. Hence the complainants are debarred from going to the courts and asking an order to enforce the order of the Commission.
STATEMENT OF BERNARD A. ECKHART.
The CHAIRMAN. Will you be kind enough to state whom you represent?
Mr. ECKHART. I represent the Chicago Board of Trade and the Illinois Manufacturers Association.
The CHAIRMAN. And your business?
Mr. ECKHART. I am in the flour-milling business at Chicago. I will not attempt to discuss the inadequacy of the present interstatecommerce act or the different features of the bills pending before the committee. Those points have been covered largely by Mr. Bacon, and I assume will be discussed by others wbo have given that branch of the subject considerable attention.
I desire briefly to call your attention to a few important facts in relation to the milling business of this country, and as to how the inability of the Interstate Commerce Commission to enforce its findings affects the millers of the United States.
It may be interesting to state that there are about nine to ten thousand mills in this country, scattered over 33 different States of the Union, and that their annual output is about $600,000,000. The value of the flour alone produced in these mills is about $400,000,000, to say nothing of the by-products and the cooperage, bagging, fuel, and
other things consumed. There are mills enough in this country to grind up all the wheat that we raise annually in the course of four or five months.
The difficulty that we have had in the last four or five years has been the freight-rate discrimination practiced by the transportation companies against flour for export in favor of wheat for export.
The CHAIRMAN. By export do you mean to go across the ocean?
Mr. ECKHART. Yes; from the interior of the country to the seaboard, and from there to Europe.
The CHAIRMAN. By discrimination you mean the amount of freight paid for flour over and above what is paid for the transportation of wheat?
Mr. ECKHART. Charging a proportionately higher rate of freight for flour than for grain.
Senator DOLLIVER. Just how is it between Chicago and New York?
Mr. ECKHART. The published rate is about the same, as a rule. But the difficulty we have encountered is that they have made secret and special rates to the grain shippers for carrying wheat that were not made to the millers of the country for flour. In other words, there are instances where they have charged 15 cents a hundred from Chicago to New York for flour, and have carried wheat for about eight or nine cents a hundred, which makes a difference of about twelve to fifteen cents a barrel on flour, thus giving the foreign miller a great advantage over the American miller.
The foreign countries, more especially the United Kingdom, require either our wheat or our flour. They will take our flour, providing the transportation companies do not discriminate against the miller by carrying wheat at a much less rate of freight, or, in other words, make a secret cut rate on wheat for export.
Senator DOLLIVER. Most of the European countries have high tariffs against flour.
Mr. ECKHART. To those countries we do not export flour. We can not.
Senator CARMACK. To what countries do you export most?
Mr. ECKHART. England is the largest buyer of our flour, and Holland comes next.
The American millers can hold their own against the world on an equal basis if the transportation companies cease discriminating against us. We do not enjoy any special privileges, and we have never asked any. We are not a protected industry; we do not need it. But we do feel that the transportation companies should treat us fairly and equitably. We also feel that it would be a great advantage to the transportation companies to carry all of our surplus product in the shape of flour, rather than wheat, because when this cutting of rates is resorted to, as it has been in the past, they get but nominal rates of freight, hardly commensurate with the value, for carrying wheat.
Senator KEAN. Is it not a through rate?
Mr. ECKHART. Sometimes they give a through bill of lading, but they pay the ocean freight; that is, whatever cut is made is generally made by our own inland lines.
Senator KEAN. By the ocean lines?
Mr. ECKHART. No; by the railroad lines.
The CHAIRMAN. Is it your contention that wheat and flour ought to be made to pay the same rates?
Mr. ECKHART. We contend that it costs no more to carry flour than wheat. That matter was up before the Interstate Commerce Commission two years ago.
Senator DOLLIVER. I understand the published rate is the same for both.
Mr. ECKHART. The published rate is generally the same.
Senator DOLLIVER. Why do you not get an injunction and make them stand together?
Mr. ECKHART. In answer to that question, I will say that the matter was placed by us before the Interstate Commerce Commission, where we showed conclusively by a preponderance of evidence that it did not cost any more to transport flour than wheat, for the reason that the millers invariably fix up their own cars and load them, and when the railroads furnish us large cars we load them to their utmost capacity; whereas, in case of wheat shipment the railway company is obliged to furnish inside car doors and clean and fix up its own cars.
Senator DOLLIVER. What effect would this equality of rates have on the foreign shipment of wheat?
Mr. ECKHART. We would export our surplus in the form of wheat.
Senator DOLLIVER. How would that leave the wheat raisers of the United States? Would not that leave them in rather intimate relations with the millers?
Mr. ECKHART. No; that would leave them in this position: They prefer to have buyers of wheat the whole year round. The American farmers of to-day are in such a condition that they like to sell their product to competitors. They enjoy marketing their product to the millers, because the millers are located in different sections of the country and are there competing, one against the other, for wheat to grind in their mills.
Senator DOLLIVER. I have heard the matter complained of in our country that competition has been greatly reduced in recent years.
Mr. ECKHART. Well, that may be true to a certain extent; but it is nevertheless true that competition does exist very largely in the wheatgrowing States of the United States.
Senator CARMACK. The wheat grower then would find his market entirely with the miller; he would have no market abroad for his wheat
Mr. ECKHART. Oh, yes; most assuredly. The miller would have to compete with the exporter in the purchase of his wheat from the farmers.
Senator CARMACK. I understand that.
Mr. ECKHART. There would be the same demand for our surplus, and if they could buy cheaper the manufactured article in the markets of the world than they could buy it in the form of wheat, they would certainly buy it in the form of four.
Senator FORAKER. Can you let us have the benefit of your views as to these pending bills?
Mr. ECKHART. As I stated at the outset, I do not propose to discuss the merits of the bills, for I believe Mr. Bacon and others have given