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

. (page 77 of 123)
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 77 of 123)
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Senator Forakee. The fact of these numerous associations signing
in this way would seem to indicate that there Avas a good deal of
sentiment out there in support of this petition. I understand you to
say that you have not heard of any of that sentiment at all?

Mr. Smedley. No, sir. T do not know of a single individual in
Dubuque, a single shipper or manufacturer in Dubuque, who has
expressed anything except a good deal of contempt for the idea of
making an effort to cripple our best friends — the railroads: to
hamper them, to do anything that would reduce their revenues that
they need for the maintenance of first-class equipment.

Senator Foeakee. Are you interested in any way in any railroad?

Mr. Smedley. Not at all, sir.

Senator Foeakee. You speak entirely from the standpoint of a
shipper ?

Mr. Smedley. From the standpoint of a shipper ; yes, sir.

Senator Foeakee. And a citizen ?

Mr. Smedley. Yes, sir.

Senator Foeakee. What have you to say about distance rates, if
you understand by that what I mean — ^fixing the rate at so much per
ton per mile? Have you ever given that any consideration?

Mr. Smedley. I have.

Senator Cullom. The Iowa law ?

Mr. Smedley. I have ; but I have alwaj^s felt that there was a good
deal of time lost in working it out or thinking about it. Our method
has been this: In the case of a carload shipment, or a shipment of
any kind, the great bulk of our work goes to the Gulf States, to the
sugar houses — sugar-house pumping machinerj' — and whenever we
have an order to equip a sugar house we simply ask the railway com-
pany what is the rate to that point, and they say, " We will let you
know." In a little while we are rung up, and they give us the figures.
We size up the rate, compare it with tlie value of the machinery, and
have always found it reasonable; and we go no further.

Grievances have come up, of course, but not through overcharges,
with us. We have had some grievances arising from damage to ship-



ments from accident, derailment, or something of the kind, the care-
lessness of employees; but invariably they have been settled by the
railroad company promptly and satisfactorily.

Senator Foeakee. You are situated right on the Mississippi Eiver?

Mr. S:medley. Yes, sir.

Senator Foeakee. Do you ship much by the river ?

Mr. Smedley. No.

Senator Forakee. To these sugar plantations?

Mr. Smedlet. No; we never make a practice of it, for the reason
that during a good part of the year the river is not navigable. In
extremely low water it is hardly safe to send anything, and in the win-
ter time the river is frozen.

Senator Foeakee. Do you think water transportation there has any
effect on railroad rates?

Mr. Smedley. Not with us; sometimes, in high water, in the case
of a cargo of pipe coming from St. Louis, or something of that kind,
we use the river ; but it does not happen once a year.

Senator Foeakee. Have you any complaint to make of rates charged
on intermediate points between you and Chicago?

Mr. Smedley. No, sir; none whatever. "We are perfectly satisfied,
and we sincerely 'hope, gentlemen, that you will let the railroad offi-
cials and us fight it out, and if we do not succeed let us go into the
district court with it. It seems to me that the railroad officials and
the shipper can agree if they are both fair-minded; and if one of
them is not, why, the court decides it.

Senator Foeakee. You have confidence in the courts ?

Mr. Smedley. I have every confidence in the courts. I think they
are the only tribunal that we need to assist us — to take us apart when
we have locked horns. The Commission, I think, is entirely uncalled
for. It has certainly never been needed in our transactions with the
railroad companies.

Senator Foeakee. The tendency of freight rates has been down-
ward all these years that you have been in business, has it not ?

Mr. Smedley. There has been a steady, gradual, easy decline.

Senator Forakee. Do you think that would continue if the Govern-
ment were to interpose and fix a maximum rate to be charged ?

Mr. Smedley. Well, I am afraid, gentlemen, that it is an experiment,
and I do not think it a good time to experiment when you are doing
well. I believe in letting well enough alone.

Senator Fobaker. I want to get the benefit of your opinion as to
what would occur if the railroads were to be told by the Government :
" You can charge so much over this line. Here is a maximum rate
which we name." Do you think there would be the same competition
afterwards — I mean, the same disposition to reduce rates that there
has been ?

Mr. Smedley. I would rather leave it with them. I do not think a
fixed rate is a good thing at all. I would rather leave it flexible, as
it is, to be adjusted by the railroad company. We can say to them
now, " We have a pretty sharp competition with Chicago ; do the best
you can for us." I do not think there is any discrimination at all in
giving us a little assistance in that way. It is a businesslike propo-
sition ; it is not a matter of rates.

Senator Cullom. You ask them to give you a little assistance ?


Mr. Smedley.- Give us a little assistance, if possible; yes, sir. I
think that is all right.

Senator Cullom. But not your competitor ?

Mr. Smedley. Not to the injury of that man, though, Senator, but
to our help a little, if possible. If they say they can't do it, all
right; if not, yve will go and fight for the business anyway, and we
generally get some of it.

Senator Foraker. You believe in equality as between shippers
from the same point to the same point ?

Mr. SmedTjEY. Yes, sir.

Senator Guelom. Mr. Smedley, I rather infer from your remarks
that you do not think there is any necessity for any law governing
the railroads at all. How is that ?

Mr. Smedley. I do not mean to say that. I say the courts are
sufficient — that is, the law.

Senator Gullom. Yes; I know you say the courts are sufficient.
The courts would exist if we had no interstate-commerce act, would
they not?

Mr. Smedley. I said I did not think a commission was necessary.

Senator Giixlom. You think the Commission that now exists ought
to be abolished, do you ?

Mr. Smedley. I think it would be better if it were abolished.

Senator Gullom. You do?

Mr. Smedley. I do, indeed.

Senator Gullom. And rely iipon the courts ?

Mr. Smedley. Yes, sir — rely upon the courts and the railway
officials, on fairmindedness among men.

Senator Gullom. You think the interstate-commerce law, includ-
ing the Elkins law, ought to be repealed?

Mr. Smedley. Well, it is not absolutely necessary to repeal them;
but I do not believe in extending their powers. It would be well if
the Gommission never had been created; but as it is, I think I should
let it stand without increasing its powers.

Senator Gullom. You say it would be better if it never had been
created at all?

Mr. Smedley. I think it would be better ; yes, sir ; to leave it with
the railroads and the courts.

Senator Gullom. Yoii are rather at the extreme, are you not?

Mr. Smedley. Yes, sir; I believe the courts are sufficient.

Senator Foraker. I am not disputing that ; but what I am getting
at is whether you think the interstate-commerce act, or any portion
of it, is necessary at all?

Mr. Smedley. I do not think it is absolutely necessary.

Senator Foraker. You would rather have it all repealed — wiped

Mr. Smedley. I would rather be left alone in my business to deal
with the railway officials.

Senator Gullom. You never have had anything to do with the
Gommission, have you?

Mr. Smedley. Not further than to make reports.

Senator Gullom. I am talking about the Interstate Gonimerce

Mr. Smedley. Oh, no; no.


Senator Foeakee. They have never been in sight of your town,
have they?

^Ir. Smedlet. Xever; never.

Senator CtLLOM. You never have called on them to do anything
for you?

Mr. Smedley. Xever ; we have never had occasion to.

Senator Cxjlloji. And you have gotten along all right, as I under-
stand ?

Mr. Smedley. Yes, sir. I believe that if a man is fair-minded
Avith a railway company he will have no trouble with it.

Senator Cullom. If the man is fair-minded and the railway com-
pany is fair-minded, they certainly ought to get along all right.

ilr. Smedley. Yes, sir.

Senator Cullom. But sometimes one or the other gets a little bit

Mr. Smedley. Sometimes an employee in a freight department
becomes a little impudent, or something of that kind. Now, we
simply do not talk to him; we just appeal to a little higher authority,
and the gentleman is sometimes taken by the ear and taken out. We
have known them to be let out and somebody else put in. A rail-
road company should not be condemned on account of the impudence
of an employee, or on account of the forgetfulness of the switchman,
or an accident.

Senator Cullom. When you say a subordinate is impudent, and
see the proprietor about it, he dismisses him ?

Mr. Smedley. I think that is the right way. I do not think it
requires a commission from Congress to do that.

Senator Cuix.om. Where do you get your coal from ?

Mr. Smedley. We get our coal — I was a little surprised at Mr.
Cunmiins yesterday — ^we get our coal from Illinois. We get a better
coal, and cheaper.

Senator Cuijlom. Perhaps that is what he is complaining of.

Mr. SjMedley. Well, it is really a fact that the Illinois coal is
better than our Iowa coal. I am very sorry that that is the case, but
it costs us just the same from Illinois as it does from Ottumwa, and
Ave find the quality a little better. Nature seems to have done a little
more for Illinois in that line than for us — that is, so far as develop-
ments have gone. We still hope that Iowa has a better quality yet.
We have not found as good coal yet as we find in southern Illinois.

Senator Cxuxom. That is all.

Senator Newlands. Suppose all the railroads coming into Dubuque
and going out of it were consolidated under one system. Would you
then think there would be no occasion for a tribunal that would
determine disputes between the shippers and the railroads?

Mr. SsiEDLEY. I do not think it would be necessary, for this reason :
If one company owned and operated the four trunk lines now center-
ing in Dubuque — ^namely, the Illinois Central, the Chicago, Burling-
ton and Quincy, the Chicago and Great Western, and the Milwaukee
and St. Paul — ^the operating expenses would be less; there would be
one set of officials — one freight agent instead of four, one traffic man
instead of four — and other reductions of a nonproducing force of
such a character that we think we would get a little better rate.

Senator Ne-vntaxds. You do not think that if this combination had


the entire monopoly of transportation there it would either increase
the rates or maintain them without reducing rates as business in-
creased ?

Mr. Smedlet. While I do not think there is a possibility of their
ever being merged, I should not be afraid to take my chances with
them if they did merge.

Senator NE\TO.AisrDS. And you would not, even in that event, desire
any regulating power ?

Mr. Smedlet. No, sir; only thp court. I think the district court
is sufficient.

Senator Newlands. And there you would have your remedy in a
suit for damages ?

Mr. Smedley. There is where I would have my remedy in a suit
for damages, right there on the spot, without having to send to Wash-
ington or elsewhere for it.


The ChairmajST. What is your occupation and place of residence?

Mr. Thayee. I live in Chicago ; I am engaged in soft-coal mining
in Illinois and in Iowa.

The Chairman. What is the extent of the shipments you make in
a year ?

Mr. Teayer. We mine from 750,000 to 1,000,000 tons a year.

The Chairman. Coal ?

Mr. Teayee. Soft coal — j'es; more than one-half of which is now
handled from Illinois.

The Chair3ean. You may make your statement as you see fit
about the question before the committee.

Mr. Trayer. I will say, Mr. Chairman, that I am speaking en-
tirely for myself, although I have conversed on this subject with
numerous friends, and my coming here was at the suggestion of sev-
eral of them, and I wish to make my statement, not with the idea
of instructing the committee at all, but merely to express to the com-
mittee my idea of the general principles as I understand them.

This subject of regulating railroads is, to my mind, the most im-
portant to business men of all of the subjects now before Congress.
I think it is more vital to the people than the protective tariff. I
think it is next in vital importance to the monetary standard and to
the monetary system, because it affects practically everything that
the people use. I believe that to everybody engaged in business or
possessing property, or who wishes to retain any hope in either direc-
tion it is more important that this question should be dealt with
correctly than that it should be dealt with quickly.

I believe that business men generally wish to have the bottom
touched in the investigation of this matter before any experiments
are made in applying treatment by legislation. I hope you will
bear with me m making these statements, because I dare say you
realize that yourself, but perhaps you will not be averse to learning
that there are also some people in the country who realize it.

Judging from my own experience with maximum-rate laws and
rate schedules which have the force of law, and rigid long and short
haul or mileage-rate la^^:s, I have found them to be mpre harmful



than beneficial to shippers; but my experience has been with the
Iowa law and the Illinois law entirely. Iowa has both the maximum-
rate schedule and the mileage-rate law, and the result has been tliat
neighboring or competitive States not under those same disabilities
haA'^e gained steadily at Iowa's expense. I have been engaged in
soft-coal mining in Iowa for seventeen years. During that tiuie the
relatiA'c importance of the Iowa coal business has declined steadily.
The oitire tonnage of the State is now but little larger than it was
seven or eight years ago; and going back to the panic of 1893 it is
but little larger than the maximum had reached in 1S92. Going
back to 1892, the coal tonnage of the State of Illinois has more Ihan
doubled, or, we will say, from fourteen or fifteen millions to thirty-
five or thirty-six millions. The Iowa tonnage is now probably six
or seven millions at the maximum, and in 1892 it was between five
and six. I believe those figures will be found on investigation to be

Instead of being manufactured at home with Iowa coal, Iowa corn
and live stock are mainly sent out of the State, where Iowa coal can
not naturally reach the manufacture of them, or it is prevented in
part by the same rate disabilities which sent the corn and the live
stock away. Missouri and Kansas coal go into Omaha on as favor-
able terms and relatively more favorable terms than Iowa coal does,
and Missouri and Kansas coal go clear up to Sioux City on relatively
more favorable terms. I am not speaking of absolute rates; 1 am
speaking of relatively more favorable terms.

The smaller manufacturers of iron and steel articles in Iowa, like
machinery, that uses partly pig iron and partly scrap iron, have either
been killed off or have merely maintained a precarious existence,
while they flourish reasonably well in ^Tlsconsin and in Illinois. In
AA'isconsin, to my personal knowledge, in places like La Crosse and
Milwaukee, those manufacturers are rasonably prosperous; and in
Illinois, at places like Moline, and Rock Island, and Springfield, and
Litchfield, and other interior cities of Illinois, they are able to main-,
tain a fairly prosperous existence. I am not able to say how prosper-
ous, but I know that we can always buy mining machinery of them,
and that they are manufacturing good machinerj^, and that the same
men, or the same concerns from which we could buy years ago we can
still buy from, and their plants have grown. In Iowa I know of
quite a number of plants that have passed out of existence. At
Ottumwa and at Des Moines and Burlington they maintain a pre-
carious existence. I do not knoAv as much about Dubuque, although
I know that two years ago I bought a pumping plant or mining
plant of the Iowa Pump Company, or Iowa Iron Company, and since
that time the Iowa Iron Company has gone out of existence.

Mr. Smedley. Let me correct you there, please. It has gone out
of existence under that title, but it is now running under the name of
the Tower Manufacturing Company.

Mr. Tkatee. We are unable to get the same class of stuff from it.

Eates in States w^idely apart in any article of general use are so
intimately related that the variation of one such rate almost always
causes, and probabty in most cases in conformity to natural commer-
cial laws it should cause, a variation of one or more of the other rates.
"With a multiplicity of State conmiissions and State laws this opera-


tion of natural law would be prevented, or at the least very greatly
hindered and obstructed.

If shippers within the jurisdiction of each particular commission
are to be protected by that commission, the actual making of rates by
a commission tends in the end toward, if it does not necessarily result
in, the making by each commission of all the rates within its jurisdic-
tion; and this Avould, to my mind, be equivalent to Government
ownership so far as the shippers are concerned, at least.

Now, with your permission, I would like to illustrate briefly in
the soft-coal business this interrelation of rates in widely separated
places. Soft coal is mined in western Pennsylvania, in Ohio, in
Indiana, in Illinois, in Iowa, in Missouri, and in Kansas. All of
it to some extent goes into common competitive territory, which is
comprised in that part of certain States like those west of Chicago
and north of the latitude of Peoria and substantially east of the
Missouri Eiver. If you touch a rate from, say, southern Illinois to
St. Paul and Minneapolis, or territory in that general vicinity, and
change it materially, there will be an almost irresistible demand
made for a change in other rates, or at least it will affect them. It
can not but affect the Indiana, the Ohio, the Pennsylvania, and the
Iowa coals as well. That is one illustration, and I have felt it was
sufficient to take up your time in illustrating the interrelation of
rates and the collateral results of changing a rate by a commission.

It is my belief that the self-interest of the railroads, regulated by
natural facts and commercial principles, will govern the railroads
effectively if prompt and easily securable and sunmi'ary remedies are
provided against positive injustices, and against discriminations
that are based on personal and selfish motives. That involves the
maintenance of competition between railroads, of course. Without
competition, these laws could not have any effect.

Senator Newlands. These commercial laws could not have any

Mr. Trayer. These commercial laws could not have any effect.

The Chairman. How does the coal of Iowa compare with the coal
of Illinois?

Mr. Trayer. It is not quite as good, as a general rule. There is a
variation in quality within each State. The best coal of Illinois is
better than the best coal of Iowa. The best coal of Iowa is somewhat
better than the poorest coal of Illinois.

Senator Cullom. "Wliereabouts in Illinois do you get your coal ?

Mr. Trayer. Where do I mine coal ?

Senator Cullom. Yes.

Mr. Trayer. In Fulton County, near Canton, and in Livingstone
County, about 20 miles west of Kankakee.

The Chairman. You take the coal from Illinois into Iowa to com-
pete with Iowa coal on the interstate rates ?

Mr. Trayer. Yes.

The Chairman. You said that the coal production in Iowa had not
grown relatively nearly as much as it had in Illinois. That is partly
due to the inequality of the coal ; but is it due in any sense to the law
of the State fixing the distance mileage? All local consumption
within the State of Iowa is subjected to the rates made under the
Iowa law?


Mr. Trayer. Yes.

The Chairman. Do you feel that the coal of Iowa can not reach
its full development or expand as fulh' as it otherwise would because
of their laws ?

Mr. Trayer. Yes.

The Chairman. Their freight laws?

Mr. Tra^-ee. Yes ; I feel clearly about that, Mr. Chairman. What
you say about quality is in part the explanation, but it is bj'' no means
the entire explanation. Iowa has a peculiarly bad combination of a
maximum schedule of rates and a mileage-rate law.

The Chairman. Yes ; a distance-rate la\y.

Mr. Trayer. That has proved to be a peculiarly bad combination.
Illinois has a maximum schedule of rates, but the railroads operate
within that or below it, changing their rates for competitive condi-
tions within the State, and also without the State, without a fear of
its changing their entire schedule of rates throughout the State.

The Chaiejian. You think that if Iowa had a law as favorable
as that of Illinois the local consumption and the local coal business
would both increase, do you ?

Mr. Trayek. I think that if the Iowa law imposed no more re-
strictions upon the making of competitive rates according to compe-
tition and commercial conditions the Iowa coal business would be
very much better off than it is.


The Chairjiax. State your full name, residence, and occupation.

Mr. Bird. A. C. Bird ; Chicago : I am the vice-president in charge
of traffic of the various railroads known as the " Gould system."

The Chairman. How long an experience have you had in rail-
roading ?

Mr. Bird. Since the winter of 1865-66, at the close of the civil

The Chairman. Are you prepared to proceed with your statement
to-morrow morning at 11 o'clock?

Mr. Bird. Yes, sir.

Thereupon, at 4.55 o'clock p. m., the committee adjourned until
to-morrow, Saturday, May 13, 1905, at 11 o'clock a. m.




Satvkday, J/ff/y 13, 1905.
The committee met pursuant to adjournment.
Present: Senators Elkins (chairman), CuUom, Kean, Foraker,
Clapp, and Xewlands.


Mr. Geinxell. My residence is Xew Yoi'k City. I am a lawyer;
1 am a bondholder and stockholder, individually and as trustee, in
several railroad companies and industrial companies and banks,
and am a policy liolder in life-insurance companies.

!Mr. Chairman and Senators. 1 am opposed to any commission
'being granted the power to fix raihvay rates upon several grounds.

As to the doubtful constitutionality of any such bill as that called
the ■■ Esch-Townsend " I will not' speak, as the Senators are very
much bettei judges of that than I am, and, as they resisted the enor-
mous pressure brought to bear at the time the bill passed the House
of Representatives by so large a majority, I assume that they are not
in any sense committed to any such radical change in the traditional
jjolicy of the American people as is indicated in this bill. I will
onlj' offer a few remarks on the inadvisability of any such legislation;
not from the point of view of railroads as such, but from the point
of view of the American citizen of the United States, as I understand
the subject.

Our history during the pagt hundred years has proved the truth
of the saying that " the least governed is the best governed country.
Our marvelous achievements in every form of industry have been
owing to the free jslay of individualism, to equal and open endeavor
and initiative for every citizen. We have recognized that under the
equal protection of the law men must thrive and prosper or fail by
virtue of their own abilities and industry. Beyond enforcing the
law, to use your own so as not to injure another, the people have
been free from restriction or restraint, to work out their own salva-

Xow, however, there is a tendency to seek either governmental
aid or governmental protection in almost all forms of industry

22 D— 0.5 M 1 1



for those who are not able enough or industrious enough to help
or protect themselves.

It is a reversal of the old ideals and principles which have made
us the greatest nation in the world and the envy of all foreign nations,

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 77 of 123)