United States. Congress. Senate. Committee on Inte.

Regulation of railway rates : Hearings before the Committee on Interstate Commerce, United States Senate, in special session, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, third session, April 17, 1905- online

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Online LibraryUnited States. Congress. Senate. Committee on InteRegulation of railway rates : Hearings before the Committee on Interstate Commerce, United States Senate, in special session, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, third session, April 17, 1905- → online text (page 4 of 123)
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Mr. Meyer. I do not believe that it ought to be abolished.

The Chairman. No; but that would follow, would it ?

Mr. Meyer. Undoubtedly; and the Interstate Commerce Commis-
sion in many cases has condemned blanket rates.

The Chairman. Then it would follow that the near-by shipper
being preferred, railroads could not live, and far-oil markets could
not be supplied with the necessaries of life ?

Mr. Meyer. Yes, sir — well, they would not be adequately supplied,
and in many cases they would not be supplied at all with certain kinds
of commodities; and the railroads of course could not develop or
maintain anything like the existing volume of traffic.

The Chairman. Would that rule operate directly against the ship-
ment of grain, if you please, and impair the farming production ?

Mr. Meyer. Oh, if it were carried out of course it would practically
destroy, very nearly destroy, the value of farm lands in the Dakotas
and those States; and it would greatly increase the value of farm
lands in Pennsylvania and Ohio — ^that is, it would take us back
thirty-five years.

The Chairman. Do you think that the Minnesota and Nebraska
and South Dakota and North Dakota farmers would complain if they
did not get their grain to market at these low rates ?



24 FIFTEENTH DAY.

Mr. Meyer. I think, sir, that " complain " would be no word for it.

The Chairman. You think it would be a revolution ?

Mr. Meyer. I think so.

The Chairman. Your contention is, I believe, that if the Govern-
ment should regulate rates there would follow a war between locali-
ties contending for low rates to the various localities?

Mr. Meyer. Every locality would contend for rates which would
exclude the competing localities from the market that it particularly
wanted to reach. There would be infinite conflicts of interests be-
tween the different localities of the country. There would be no
such thing in the long run as lumber from Oregon selling in Nebraska
in competition with lumber from Texas and Arkansas and South*
Carolina. That trade would go to the man nearest to the market.

The Chairman. You think that the railroad can prevent this war
between localities by eliminating distance or equalizing distance as
between the cities near by and far off ?

Mr. Meyer. It practically makes the whole country one ; it makes
this country a unit. But, of course, there is much feeling aroused
incidentally to that process. I think very much of the difficulty of
the railways is due to the fact that in the course of the development
of the country when they bring in the distant producer they offend
the near-by producer. But the feeling of the near-by producer has
to vent itself upon the railway, which is not a political institution —
at least, not directly. Sometimes it is indirectly, as I have pointed
out. You have the State railroad commission of Texas, for instance,
notifying the railways coming down from New York and St. Louis
that they must not bring commodities from those districts too freely
into the State of Texas to compete with Texas jobbers and Texas
manufacturers; but you could not have that if you did not have
the misfortune of having a Texas State railroad commission.

The Chairman. You think that the railroads are so directly in-
terested in the localities on their lines and their branches that they
can adjust these differences in a way that would be fair, or fairer
than other parties — any other body of men ?

Mr. Meyer. I think nobody else can do it with anything like an
approach to that degree of fairness. You get substantial justice,
and more substantial justice, that way, because the railway is directly
in touch with the .producer and the shipper. That is the business of
a railway man.

The Chairman. And another reason, you think, is that the rail-
road has a direct interest in getting up and sustaining and supporting
each locality ?

Mr. Meyer. Oh, certainly.

The Chairman. And not having a war between localities?

Mr. Meyer. Certainly.

The Chairman. Such as would result in the case of a commission
undertaking to settle these questions ?

Mr. Meyer. Certainly; certainly; it has that.

The Chairman. The railroad looks at the interest of every locality
on its line, because it i« to its interest to do so ?

Mr. Meyer. Certainly.

The Chairman. Then it is your idea, I believe, that vou should
leave free play to the forces in the business, commercial, and rail-



FIFTEENTH DAY. 25

road world with reference to the settlement of the rate-making
power ?

Mr. Meter. Entirely. I do not see how you can possibly settle it
in any other way.

The Chairman. Do you think Government regulation, then, would
lead to confusion and disturbance in the business world ?

Mr. Meter. Oh, undoubtedly. It would immediately lead to a
general arrest of business, and before long it would lead to a general
readjustment of business. It would not be long before the New Eng-
land boot-and-shoe man found it exceedingly difficult to sell west of
the Mississippi in competition with the Chicago and St. Louis boot
man, and it would not be long before the farmer of Nebraska would
find it difficult to sell grain on the Atlantic seaboard in competition
with the farmers of Pennsylvania and Ohio, unless the Government
should say, " Well, we have got to maintain the existing conditions ;
we can not destroy them entirely; but we simply will not make any
further development along those lines." In many cases, however, it
would be compelled to destroy even the existing trade relations.
Many trade relations were destroyed in Germany after the introduc-
tion of State ownership — ^great branches of trade.

The Chairman. As I understand you, you would not favor chang-
ing the long and short haul section of the original interstate-commerce
law as now interpreted by the Supreme Court ?

Mr. Meter. No, sir. I think it affords every protection to the
interests which we may call the noncompetitive points, and you could
not make any change without breaking down the system an^ restrict-
ing it even at those points where it is beneficial. The system, as a
whole, is extraordinarily beneficial. It is liable to abuses. Those
abuses, however, can be corrected perfectly well under the present
state of the law.

The Chairman. You think, then, that this section, as interpreted
by the Supreme Court, is in the interest, in the long run, of the far
western farmers in getting their surplus grain to the seaboard and
to Europe ?

Mr. Meter. Yes ; I should think it would be more to their interest
as consumers, and more to their interest as producers of milk and
vegetables, and so on, as persons who are interested in having cities
built up west of the Mississippi Kiver. Without the competitive
basing-point system we could not have built up cities west of the
Mississippi River as rapidly as we did, and that was a matter of great
interest to the western farmer.

The Chairman. You referred to the French Government. I be-
lieve the ownership of the railroads in France is private ownership ?

Mr. Meter. Almost exclusively, sir.

The Chairman. Almost exclusively; but they have Government
supervision in France, have they not?

Mr. Meter. Yes, Sir. No rate may be changed until approved by
the Government, and once approved it must remain in force a whole
year.

The Chairman. The French Government, as I understand it, has
a commission of 33 experts, and the matter goes from them to the
minister in whose department it is ?

Mr. Meter. Yes, sir.



26 FIFTEENTH DAY.

The Chairman. I mean, the whole question is finally determined
there?

Mr. Meyer. Yes, sir.

The Chairman. But the commission is comj)osed of these 33
experts, is it not?

Mr. Meyer. So I understand; I am not very familiar with the
machinery. It has been some years since I have looked at the
machinery itself, having been more interested in the working of the
machinery.

The Chairman. Has the French commission been able to effect any
material reduction in rates ?

Mr. Meyer. It has not been large ; it has not been as rapid as the
fall in prices. With the possible exception of very recently, in
France as in Germany, the reduction in railway rates has been very
much slower than the general fall in prices. That is the great
feature wherein France and Germany differ from the United States.
The reduction in railway rates here has been much more rapid than
the general fall in prices.

The Chairman. Do I understand that, the railroads having failed
to meet their fixed charges, the Government has had to come to their
relief?

Mr. Meyer. Yes, sir. The Government has guaranteed from time
to time certain minimum returns on certain investments made by the
companies ; and those have not been earned by the railways. And I
might have pointed out the fact that from time to time the commis-
sioner of railways for the time being has pointed out that if the
Government could only set free the hands of the railways, and allow
them to make rates which would develop traffic, free them from the
conflict of local interests, these sums that the Government has to make
good would not be so large; and at times those sums have been a
serious burden on the French treasury.

The Chairman. I have understood that in order to prevent the
insolvency of the railroads the French Government has had to make
money grants directly to the extent of over a thousand millions of
dollars. Is that your information?

Mr. Meyer. I know that as a matter of fact they have made direct
money grants;" but whether it was for the purpose of preventing
insolvency or stimulating business, building, I do not know.

The Chairman. Do you attribute the arrested development of
manufacturing in France, of which you speak, to the impairment of
the railroads under government supervision?

Mr. Meyer. No, sir ; but I point out that if France had not been a
stationary state, if it had been a state that desired to go ahead and
progress and develop great industries, it would have found itself
tremendously hampered by the fact that the railway has been para-
lyzed as an efficient agency in the development of trade and industry.
In other words, the fact that they have had Government regulation in
France does not constitute any presumption that we could have had it
without suffering much harm in this country, because we are a
progressive country.

Senator Cui.lom. Doctor, you are an American-born citizen, are
you not?

Mr. Meyer. Yes, sir.

Senator Cullo:m. What is your ancestry — German?



FIFTEENTH DAY. 27

Mr. Meyer. My father and mother were Germans, who came over
from Germany. I was born in Cincinnati.

Senator Culloji. As I understand j^ou, you do not believe in Gov-
ernment ownership of railways at all ?

Mr. Meyer. No, sir.

Senator Cullo.m. Any more than you do in the regulation of them?

Mr. Meyer. Xo, sir.

Senator Ctjllom. You are opposed to both, are you not ?

Mr. Meyer. Yes, sir.

Senator Ctjllom. You do not believe in any attempt at regulation
by the Congress of the United States in this country ?

Mr. Meyer. No, sir ; I do not.

Senator Cullom. You think that there ought not to be any law
passed on the subject of regulation?

Mr. Meyer. Oh, of course we have got to retain the act to regulate
commerce. To discuss the question of doing away with that, it seems
to me, would be merely an academic discussion. It is an impossible
thing. But I mean I do not see any further need for any legislation
of any kind.

Senator Cttllom. Oh, well, I did not understand that you were for
anything on the subject.

Mr. Meyer. Oh, certainlj-.

Senator Cullom. I thought you thought that commerce ought to
have its own way and be allowed to run to suit itself. But you do
believe in the present law ? Is that what you say ?

Mr. Meyer. As interpreted by the Supreme Court; yes, sir.

Senator Cttllosu. As interpreted by the Supreme Court ?

Mr. Meyer. But I take it that that, of course, would be the same
thing.

Senator Cullom. Yes; of course. Well, you discussed the Com-
mission a good deal in your remarks, and I want to say, I have been
very much interested in your speech all the time. You showed a
great amount of information on the subject, but I have not been able,
I believe, to learn that the Commission, so far as your criticism of it
has been concerned, has ever done anything that was desirable.

Mr. ]Meyer. I think that the construction that it sought to put
upon the long and short haul clause and a number of cases under the
third clause, saying that rates must not be relatively unreasonable,
has been most unfortunate throughout. I think the Commission
has done very useful work in acting as an arbitrator in settling many
differences of opinion between railways and shippers, and I think
a body of that kind is an exceedingly useful body. I think that our
experience would be very much like that of England. In England
they have a board of trade that acts in that capacity, and recently
the late secretar3^ Sir Courtney Boyle, said he attributed much of the
success of the board of trade as an arbitrator to the fact that it was
only an arbitrator. The moment you bring a party in that has power
to compel adherence to its conclusions you create friction between the
two parties between whom you are going to arbitrate.

Senator Ctjllom. So that, as I understand you, then, you have no
objection to the Interstate Commerce Commission as a body, but you
think it ought to be confined to the settlement of questions between the
railroad and the shipper ?

Mr. Meyer. And I thinlf, also, the investigation of abuses — taking



28



FIFTEENTH DAY.



active steps to have abuses, such as the matter of secret rebates and
matters of that kind brought before the courts. I think it ought to
have matters of charges of extortionate rates tested before the courts.
I think the mere fact that we have a body of that kind is a safety-
valve. It makes the public feel secure, and it tends to bring about a
satisfactory state of the public mind.

Senator Ctjllom. But you do not think they ought to be given any
absolute power to make rates ?

Mr. Meter. I think it would be most unfortunate.

Senator Cullom. Would you have any objection to allowing them
to make an order, after investigation, stating that such a rate, where
there has been complaint, is an unreasonable one, and let it go to court
for final decision?

Mr. Mett!r. No, sir.

Senator Ctjllom. You have no objection to that; but you would
not willing to allow them to make a rate, and to decide that any
given rate that is in force is imreasonable, and allow the order declar-
mg it unreasonable to stand until passed upon by the court? Is
that your idea ?

Mr. Meyer. I think that would be undesirable. I think it would
be better to retain the past practice, under which, as I understand,
you have a suspension of the order until it has been passed upon by
at least some of the courts. I do not know whether the order could
be suspended if approved by the circuit court. I do not know about
that.

Senator Ctjllom. You do not profess to be familiar with that?

Mr. Meter. No, sir ; not being a lawyer, I should hesitate to speak
on that subject.

Senator Ctjllom. Are you at all familiar with the traffic of rail-
roads ?

Mr. Meter. In what way, sir ?

Senator Cullom. For instance, suppose a merchant ships a bill of
goods which is destined for Salt Lake. The purchaser, the merchant,
lives in Salt Lake. He wants the goods delivered there. Do you
think it would be reasonable for the railroad to charge as much to
Sajlt Lake as it would charge to San Francisco ?

Mr. Meter. Yes ; say from Chicag6.

Senator Cullom. Or from New York.

Mr. Meter. Or from New York; oh, yes. There have been times
when it was reasonable that they should charge even much less. The
rate from New York to San Francisco is determined by water compe-
tition, and it has to be so low that if extended to all of the interme-
diate traffic points, such as Salt Lake, it would become so unprofitable
that the railroad could not make it at all. The alternative to that
high rate — that discrimination in favor of San Francisco — would not
be a lower rate to Salt Lake, but simply the withdrawal of the rail-
way competition to San Francisco.

Senator Cullom. I am not asking you whether it would be wrong
to charge as much ; but is it right for the railroad, the common car-
rier, to charge more ?

Mr. Meter. Yes, sir; in my opinion.

Senator Cullom. To charge more to Salt Lake than to San Fran-
cisco, although San Francisco is a thousand miles farther ?

Mr. Meter. Yes, sir ; it is to the public interest.



PIPTEENTH DAY. 29

Senator Ctjllom. You think that is right and ought to prevail?

Mr. Meter. Of course, I think that when the business of Salt Lake
becomes so large that you can make a very low rate there the forces
of trade will pull it down. But that is a matter that I think it ought
always to be possible to bring before the courts and have tested, of
course.

Senator Ctjllom. But you do not think any commission ought to
fix a rate so as to make an arbitrary and absolute requirement that
the common carrier should not charge more to Salt Lake from New
York than to San Francisco ?

Mr. Meter. No, sir; I think that would not be to the interest of
the shippers. I think, from the point of view of the shippers, that
would be a misfortune.

Senator Cullom. I remember that yesterday you talked about the
farming interests on the east of Germany and the manufacturing
interests on the west.

Mr. Meter. Yes, sir.

Senator CtnLLOM. And you stated that under their regulation there
a " tapering rate," as I think you called it, could not be sufficiently
tapered to ship the grain from the east side of the country to the
west side ?

Mr. Meter. Yes, sir.

Senator CtFLLOM. Under their regulation ?

Mr. Meter. Yes, sir.

Senator Culi.om. That certainly was a great misfortune to the peo-
ple, I should think.

Mr. Meter. I think so.

Senator Cullom. That was imder government ownership exclu-
sively ?

Mr. Meter. Yes ; and that would not exist twenty-four hours after
the railways had passed into the hands of a private company, if they
should pass into the hands of a private company.

Senator Foeaker. With powep to make rates ?

Mr. Meter. Yes, sir ; with power to make rates.

Senator Cullom. What is your information with reference to that
country ? Is the Government liable to give up the railroads ?

Mr. Meter. No, sir; it is entirely out of the question that they
should do that, one reason being that about 50 per cent of the ex-
penses of running the State of Prussia are defrayed by the surplus
railway revenue, and if the Government had not that it would have
to increase taxes by a hundred per cent.

Senator Cullom. So that however unfortimate the condition is, it
must continue to exist ?

Mr. Meter. Not only that, but you have in Germany the same
situation that you have in many other parts of the world — a most
unfortunate situation, of which the public at large has not become
aware. The average German does not know about these things, and
the average German is thoroughly convinced that government owner-
ship is a very good thing and that government ownership has done
away with local discriminations, as it has *so far as the railways are
concerned, but he does not realize that the water has brought in much
worse discrimination.

Senator Cullom. You say that is a very unfortunate situation.



30 FIFTEENTH DAY.

Do you mean it would be unfortunate to have that condition brought
about in this country ?

Mr. Meyer. Yes, sir ; indeed I do.

Senator Cullom. If the Government of the United States should
get^the roads; if, by force of :circumstances, it should be driven into
buying the roads of the country

Mr. Meyer. I should think it would be a national calamity.

Senator Cullosi (continuing) . It would never let them go, would

it s

Mr. Meyer. I should not think so ; I do not know.

Senator Cxjllom. But you are not in favor of it, as I understand
you?

Mr. Meyer. No, sir.

Senator Cullom. But your general idea is that it would be an
THifortunate condition if we should legislate the Interstate Commerce
Commission into the power of making rates ?

Mr. Meyer. I should think it would be a national misfortune.

Senator Kean. There is no international business on the continent
of Europe ?

Mr. Meyer. There is no international traffic so far as the railways
are concerned, sir, for the same reasons that grain does not move
from eastern Germany to western Germany. It is a matter of local
jealousy. In the days of private ownership of railways the rail-
ways of Hamburg and Berlin, and even Stettin, went into Russia
to a point directly north of Odessa and drew that Russian grain to
Stettin, Berlin, and Hamburg, and carried it into England. Within
a year after the Government had taken over the railways of Germany,
that trade had completely, disappeared. And to-day all of the grain
of Roumania and much of the grain even of Hungary goes into the
markets of western Europe by rail to the Danube, then it is trans-
ferred to a river vessel, carried to the Black Sea, transferred to an
ocean-^ing vessel, brought to, say, Hamburg, transferred to a
river-going vessel, and carried up the Elbe. There is at Dresden
a mill that mills nothing but Roumanian grain, and every pound
of that Roumanian grain goes that way, though the direct line from
the Roumanian wheat fields to the mill is only 1,100 miles by rail.
They have a railway that carries passengers.

Senator Foraker. You have given a great deal of study to the
railroad conditions, so far as freight transportation is concerned,
in most of the countries of the world ?

Mr. Meyer. Yes, sir; in the United States, Germany, France,
England, Austria, Hungary, Russia, and the Australian colonies.

Senator Foraker. And in England they have private ownership?

Mr. Meyer. Yes, sir.

Senator Foraker. In Australia it is government ownership?

Mr. Meyer. Government ownership.

Senator Foraker. But the ownership is by the States instead of by
the General Government?

Mr. Meyer. By the several States ; yes, sir.

Senator Foraker. In France it is mixed Government and private
ownership, as I understand it?

Mr. Meyer. Yes, sir.

Senator Foraker. In Germany it is chiefly Government ownership,
but some private ownership?



FIFTEENTH DAY. 31

Mr. Meyer. Less than 5 per cent, sir.

Senator Foraker. In Hungary it is entirely Government owner-
ship, and in Austria

Mr. Meyer. Preponderatingly, at least.

Senator Forakeb. Yes; and in Austria it is mixed?

Mr. Meyer. Yes, sir.

Senator Forakek. And in Italy they have had all kinds of owner-
ship, ha^e they not ?

Mr. Meyer. Yes, sir; and I believe that at present everything is
leased to private companies, unless the matter has been changed very
recently.

Senator Forakee. Have j-ou found any place in any of these coun-
tries where the.y are entirely satisfied with the railroad situation ?

Mr. Meyer. No, sir.

Senator Foraker. You have not found any place where they do not
have complaints of all kinds, have you ?

Mr. Meyer. No, sir.

Senator P^oraker. They have complaints in England?

Mr. Meyer. Verj"^ many.

Senator Foraker. And complaints in Australia ?

Mr. Meyer. The men who produce and pay the taxes complain in
Australia ; but they are, luif ortimately, in the minority.

Senator Foraker. But they have complaints of discrimination?

Mr. Meyer. Oh, there is discrimination, very serious discrimina-
tion, in Australia.

Senator Foraker. And they have those same general complaints
everywhere, have they not ?

Mr. Meyer. Yes, sir ; oh, yes.

Senator Foraker. Have j^ou found, in the course of your investi-
gations, any country where they have fewer complaints of this general
* character than we have in the United States at this time ?

Mr. JMeyer. No, sir; with the exception of the matter of secret
rebates in the United States.

Senator Fokaker. Yes. Now, as to the secret rebates, what is the
result of your investigation as to the United States ? Is that practice
practically broken up, or not ?

Mr. Meyer. So I understand. That, of course, is a matter upon
which I could not have as confident an opinion as I could on the gen-
eral question of the working of our policy of nonintervention. That
is, I can see how this country is prosperous compared with others;
but when it comes to the matter of whether there are secret rebates,
we simply have to tak^ the statements of persons who are in a posi-
tion to know. The Interstate Commerce Commission itself has said
very recently that practically secret rebates have



Online LibraryUnited States. Congress. Senate. Committee on InteRegulation of railway rates : Hearings before the Committee on Interstate Commerce, United States Senate, in special session, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, third session, April 17, 1905- → online text (page 4 of 123)