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 87 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 87 of 123)
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difference between the two lies.

Mr. Bird. I would not give any commission the right to essentially
modify the law as it exists to-day. The moment you give them the
right that is included in this bill you give them the right to over-
turn the principles of the interstate-commerce act. They can, in dis-
cussion of a subject, strike out absolutely any reference to " similar
circumstances and conditions." They can do a hundred things, a
thousand things. The upshot of it is that if they had the power that
is supposed to be given them in that bill they could put an absolutely
different construction upon the bill; they could become the law-
makers.

Senator CijApp. If you will bear f)atiently with me for one moment,
you will recall that, instead of speaking of that bill or any bill, I
am speaking of taking the law as it is now, with all its limitations, its
long and short haul clause, qualified by the condition that it shall
not apply where the circumstances are similar — in short, the right
as it exists now in the railroad to initiate its rates notwithstanding
they have been changed. I am simply asking what difference it
would make if we should take the suggestion of the Commission as
it is now, giving it the same legal force, no more and no less, leaving it
still subject to review by the courts, still subject to all the legal condi-
tions as interpreted by the courts, and simijly give to that suggestion
of the Commission as to the modified rate the same legal effect that
to-day, in the light of la«' and its interjjretation, is given to the order
condemning a given rate. It does seem to me, in the logical se-
(juence, that there can not be any great difference ; and if you think
there is, that is the point upon which we desire information. If you
think there is, we certainly want you to bring it out.

Mr. Bird. I believe there is a great difference.

Senator Clapp. That is what we want to know.



TWENTY-SECOND DAY. 73

. Mr. Bird. I am not in favor of the disregard of the law as it stands
to-day with respect to the long and short haul clause. That is an
essential feature of the law to-day.

Senator Clapp. Yes.

Mr. Bird. It contains the expression that " under similar circum-
stances and conditions " you shall not do so and so.

Senator Clapp. Yes.

Mt. Bird. Xow, a case comes up before this Commission

Senator Clapp. To-day?

Mr. Bird. A new case, if the law is amended.

Senator Clapp. No ; first take it before we amend it.

Mr. Bird. As it comes up to-day, the defendant railroads say,
" The circumstances and conditions are substantially different."

Senator Clapp. Yes.

Mr. Bird. And the Commission may not be at liberty to condemn
the action which has been complained of. That is as it is to-day.

Senator Clapp. Yes.

Mr. Bird. The court says that certain things are to be considered,
as differing circumstances and conditions, substantially different.

Senator Clapp. Yes.

Mr. Bird. Now, take the Townsend bill

Senator Clapp. But, Mr. Bird, I am not talking about the Esch-
Townsend bill.

Mr. Bird. Well, the power to make rates is what I am talking
about.

Senator Clapp. I am not talking about that, in that sense. I am
talking about taking the law as it exists to-day, and simply adding to
this law, with all its limitations, as it has been construed by the
courts — the courts ha^e gone to say that the mere fact of competition
is a dissimilar case on the long and short haul clause.

Mr. Bird. Yes.

Senator Clapp. I refer to taking this law as it stands to-day, and
simply adding to it the one provision that will give to the suggestion
of the Commission as to the modified rate the same legal force which
to-day is given to its order condemning the excessive rate.

Mn Bird. I understand your view now.
' Senator Clapp. Yes.

Mr. Bird. And my objection remains just the same; because with
that modification, the single modification that you suggest, let us
assume that a case comes up down here in the Southern States.

Senator Clapp. Yes.

Mr. Bird. I am not trying to protect those railroads down there;
they can do it better than 1 can; but it affords an illustration. The
Commission will hear everything that is to be said, and they will
make up their minds. They are opposed to the rules that exist down
there now; very much opposed. Thej' think they are unfair and
that the long and short haul rule ^^hould be applied. They are firmly
committed to that. I do not raise the question of the wisdom or un-
wisdom of that view; but they try a case, and they can decide it
according to their own bent and judgment. They may not be willing
to give weight to the alleged differing circumstances and conditions,
and may bring in a verdict — a rate — that is in line with their views.
Now, just to that extent they can subvert such a law as you have
described; they can take away from the railroad companies that



74 TWENTY-SECOND DAY.

right, because you can not enter into their minds and see why and
how they announce that rate to be fair.

Senator Clapp. Can you enter into their minds to-day to see how
they announce a given rate unfair and condemn it?

^Ir. Bird. No; but I am only presuming that the power that you
give to the Commission may be exercised.

Senator Clapp. How is that^

^Ir. Bird. AMiatevei- additional po^ver you may give to that Com-
mission will probably be exercised, and in the exercise of that power
they may take a^vay from the railroads the privileges or the rights
which they now enjoy. Now, I am not particular about that case.

Senator Ci-app. Is there a single reduction that could be made under
that power, supposing that the court in the last analysis would sustain
the action of the Commission as to that rate, that they can not now
force down under the existing law, supposing that the court sustained
them in this action ?

Mr. Bird. I think not, sir.

Senator Clapp. "Well, that is all there is of it.

Mr. Bird. I mean to say, I disagree with you; I think there are
cases.

Senator Clapp. Oh, you think there are ?

Mr. Bird. Yes.

Senator Clapp. I do not want to take too much of the time of the
committee, but it seems to me that it is the logical sequence that if we
reduce a rate from $1 to 80 cents by one process, and the Commission
have the power now to do it — assuming that the courts will sustain
them — the effect would be the same whether they did that by a direct
order or not.

Mr. Bird. Well, I think this: I think that when it comes to the
issue, as the laws are construed to-day and exist to-day, the rights the
railroads have under the judiciary, under the courts, may be essen-
tially different in their result from the rights which they would have
under the amended proposition as you have suggested it. We are
entitled to all the rights we can get from the courts.

Senator Clapp. Yes.

Mr. Bird. The line of reasoning and the protection of property
and all that sort of thing may have a vastly different appearance to
the court than to the Commission who come in contact with these
people. We want our daj' in court. That is not the sole reason why
I object to the Commission having that power, however.

Senator Clapp. Mr. Bird, you could not have understood my ques-
tion. My question includes your day in court, as you have it now.

Mr. Bird. Oh, I know ; I know ; but we do not want to go before
the court with a prima facie case against us. We do not want to have
to go into court and prove a negative.

Senator Clapp. Do you not now i

Mr. Bird. No, sir.

Senator Clapp. If the Commission makes an order, and you dis-
obey it, you are cited into court.

Mr. Bird. Very well ; but we may reduce our rate under the Com-
mission's order, but not as much as they think we ought to.

Senator Clapp. I know ; but if they do not think you have re-
duced it enough they can attack it again.

Mr. Bird. Certainly, that is true ; but that is long litigation.



TWENTY-SECOND DAY.



75



Senator Clapp. "\^'ell, when you get down to a given point, what
is bothering my mind is to see what difference it makes whether you
get down to it by the condemnation of a given rate and the acceptance
of that condemnation by the substitution of another rate or the
declaration of the Commission putting this other rate in force.

Mr. Bird. The chief objection which I have to a simple modifica-
tion of the law in that one particular is this : That the law already pro-
vides a fairly safe and prompt remedy, and we are dealing with an
enormous area of country and an enormous and prodigious traffic.
There are very few complaints that justify an experiment with all
this traffic. Do not legislate against anything except that which is
clearly determined to be an existent evil.

Xobody has shown, nobody has tried to show, that in the present
law there are defects which deprive the people of their rights.
Nobody has laid before you any case in which anybody is deprived
of his rights.

Senator Clapp. That argument would go to the wisdom or unwis-
dom of the proposed amendment ; what I am getting at is the prac-
tical effect of such an amendment on the traffic, and I would like to
have that explained.

Mr. Bird. There may be, Senator, very little difference in the
theory of the one case or the other; but the point is, we do not
know — ^we do not know what the precise result will be. Therefore
do not experiment, especially in cases where the evil is not a plainly
defined one, or the complaint is not set forth specifically with reason-
able certainty to you. No such presentation has been made. There
is no popular demand for such a law. That is the point. Why
should Congress legislate ? "What for ? Why, at the demand of the
people who are affected. There is no such demand. There is tio call
for such legislation — no real, genuine call.

You are dealing with enormous interests. Why experiment?
That is my view, and that is the view I take of the whole subject;
and I think it is the sum of the whole thing.

Senator Clapp. Have you read the evidence of these other gentle-
men — ^Messrs. lincoln and Tuttle?

]Mr. Bird. I have read IMr. Lincoln's testimony; I have not read
Mr. Tuttle's.

Senator Clapp. I think Mr. Lincoln conceded that the practical
effect would be the same.

Mr. Bird. Perhaps Mr. Tuttle has a better knowledge of the facts
than I have. I defer to him. Perhaps Mr. Lincoln has not had the
same opportunity for observation that I have. I defer to him largely.
He is a subordinate officer, and a very respectable and useful 'gentle-
man, and I think he is very well informed in his own territory. I
take a wider view. I have a larger view ; and I think that the whole
gist of my testimony is contained in the last three or four minutes'
remarks. That is the basis of my objection; that is the reason of
it all.

Senator Clapp. That simply goes to the question of the policy of
Congress, as to whether we will have such legislation. What I am
getting at is, in all this controversy. What is the real issue, and what
would be the practical effect of this amendment ?

Mr. Bird. The practical effect of this amendment, so far as it
touches my line of business, is as I have stated — to substitute one



76 TWENTY-SECOND DAY.

measure for another. There is a means of correcting these evils
alleged to exist, though I do not know where they are. There is a
means now of correcting those evils. Here is another means that has
been suggested, and we are to judge between the two. I do not know
which is the best; and ^^ith due deference to this committee of Sen-
ators, I do not believe that any of you gentlemen know what is best.
It is a matter of guesswork.

Do not let us guess any more than we must about this prodigious
interest, the prodigious traffic of this country, with its revenues.
Give us a chance to breathe; give us a chance to determine whether
there is an evil, or whether it is a straw man put up here for political
purposes. I do not know, but I believe the power behind these com-
plaints is 'from phantom organizations and so-called " commercial "
bodies. The Senator from Ohio explained that there were some very
respectable gentlemen and organizations connected with this move-
ment. That may be true, but at the beginning it was not so. They
have been led in in the hope of correcting an evil which doubtless
exists — and, by the way, I believe the Interstate Commerce Commis-
sion has practically settled the very question which gave rise to the
complaints from Cincinnati. Why are the railroads picked out to be
the target of every schemer who wants to rake the rake-off into his
own pocket? That is what we have suffered for the last seventeen
years.

Now, we are respectable gentlemen — I do not speak for myself, but
for all of the men engaged in this business. They are trying to do
the best th^y can for the interests they represent and that are irrevoc-
ably connected with the interests of this great country. They are
working hard. They are doing their best. They have accomplished
wonders. Twenty-five years ago you would not have believed it j)os-
sible to do what has been done. Now, why project with it? Why ex-
periment with it? Is there a cleaiiy defined case that convinces you
that this experiment is necessary? I do not know of any. I do not
think the honorable Senators have ever had their attention called to a
single case of that kind.

That is the whole situation. ^Miy experiment? That is my
objection, or chiefly my objection. I am ashamed of myself for hav-
ing taken so much of your time, gentlemen, but I am warm on this
subject. I have given forty years to it. I have studied this last
question seventeen years and I can not find a case of the kind I have
mentioned. Why substitute one measure for anothei- unless the
measure in existence has been proved defective? That is the ques-
tion I want to have answered, and I think it ought to be answered.
Why substitute one measure here for one that has existed seventeen
years or less — for a long time — and there is no fault found with it
or no fault has been demonstrated?

There was a man once, gentlemen, a hypochondriac, who took great
quantities of patent medicine — and you will see them advertised all
over this broad country. Every newspaper is full of remedies for
this and for that. Each one is a " sure cure." He tooli this and he
took that and he toolt the other jjatent medicine, until he came to
his deathbed. Then he realized his foolishness and that he was
going to die in a few minutes, and he told his wife to put this inscrip-
tion on his tombstone : " I Avas well ; I M'anted to be better ; I took
medicine, and died."



TWENTY-SECOND DAY. 77

Senator Newlands. Mr. Bird, you remember that Governor Cum-
mins favored the fixing of rates according to the cost of service 'i

Mr. Bird. Yes, sir.

Senator Xewlands. Would not that involve the fixing of trainload
lots at a less price than single carload lots ?

Mr. Bird. Oh, it would, if you answer the question technically, in
a literal sense. I do not think the Governor intended that applica-
tion, and I do not think anyone else would. That would strike at the
foundation of the entire business. It would create a source ,of great
harm.

Senator Xewlaxds. The Interstate Commerce Commission has de-
cided that you can not fix a lower rate, has it not ?

Mr. Bird. The unit for the small lot is a hundred pounds, and for
the large lots 1 carload, and I do not think it ought to be changed.

Senator Xewlands. You do not think it ought to be changed.
Now, Mr. Bird, I want to ask you one or two questions in regard to
the present complexity of the railroads engaged in interstate com-
merce, the necessity of their looking after fluctuations in relation to
taxation and legislation and regulation, etc. Can you make any sug-
gestion at all that would simplify the operations of the existing sys-
tem of railways, so far as they relate to interstate commerce ?

Mr. Bird. Do you mean simplify them in relation to these ques-
tions ?

Senator Xewlands. Any system of organization or incorporation?

Mr. Bird. Oh, no, sir; I have never had time to study that. I
have been swimming in rough water, barely able to keep my nose
above the water, in matters of traffic, and I have not been able to enter
into the question of the future policy as to finances. It has been
simply ■' paddle away " in my case.

Senator Newlands. As I understand that you wish to get away, I
will not keep you longer, Mr. Bird.

The Chairman. We thank you very much for the patience with
which you have waited, Mr. Bird, and the statement you have made.

Mr. Bird. Mr. Chairman and Senators, I am sorry that I have
taken so much time. I thank you for the very patient and courteous
hearing that you have given to me.

STATEMENT OF MR. C. A. JENNINGS.

The Chairman. Please state your -name, occupation, and place of
residence.

Mr. Jennings. My name is C. A. Jennings. My residence is Chi-
cago. I am manager of the transportation department of the Ameri-
can Cotton Oil Company and its subsidiary companies.

Ours is an organization doing business at local and competitive
points in 15 different States, in Canada, and Europe. We operate
in all about 70 plants. In this country they extend from Provi-
dence, E. I., on the east, to Seguin, Tex., on the west, principally
throughout the Southern States, but with locations also at Cin-
cinnati, Chicago, and St. Louis. From this it may be seen that I
speak from no standpoint of a particular locality or territory.

We crush, during a season, something in excess of 500,000 tons
of cotton seed, which move largely locally. We also handle, to a
large extent, the products of others, originating at points both local
and competitive. I have been engaged in handling transportation



78 TWENTY-SECOND DAY.

matters for twenty years, and in that time I have had little or noth-
ing to complain of as to unfair or arbitrary treatment on the part
of the railroads.

The general business has spread and increased and the roads have
been very instrumental in enhancing the value of cotton seed and its
products and in enlarging the contribution to the wealth of the
country from this source. The rates have been gradually and ma*
terially reduced.

My experience generally has been that legitimate business ethics
have been adhered to by the transportation officials in the handling
of propositions in which we were interested.

With such an experience I can not conscientiously recommend a
radical departure to untried methods. I believe in the elimination
of discrimination in rates as reached through the medium of rebates
or subterfuge. I think stability in rates is greatly to be desired.
However, they should, at the same time, be sufficiently flexible to
respond promptly to changing conditions. In this busj-, progressive
country we may expect frequent and rapid changes. If we could
regulate conditions, we could nearer approach desired stability.

There should reasonably be Government provision against unfair
discrimination.

Along the line that our various States provide against the practice
of usury, some Federal provision might reasonably be made against
the abuse of power or extortion in rates on the part of railroads. It is
quite likely that this Government machinery is already provided in
the various district or circuit courts. "WTiat might be considered
usury in Massachusetts might not rightfully be so called in Texas.
The conditions may naturally be quite different, and this difference
in condition should be carefully weighed and considered, and the rate
extortion or abuse should be absolutely determined and proven before
a remedial ruling is applied.

Notwithstanding the public nature of transportation as a factor in
the nation's business, it still represents a preponderating private in-
vestment, and as such should be generally under private management,
accountable to the General Government for proven transgressions on
the rights of others.

Senator Cullojm. You have been in business twenty-one years. I
believe you said ?

Mr. Jennings. Something in excess of twenty years ; yes, sir.

Senator Cullo:5i. Did you ever receive rebates or any special
favors ?

Mr. Jennings. ^Yhy, long ago,; yes, sir.

Senator Cutxom. Not in recent years?

Mr. Jennings. No, sir.

Senator Cullom. You have no advantages that other people are
not getting?

Mr. Jennings. I do not know of any such. We have some things
which may be considered as advantages which others have 'not. We
have a verj' extensive business, and we have our own car-line equip-
ment.

Senator Kean. They own private cars.

Senator Cullom. You have private cars, have you?

Mr. Jennings. We have a line of between six and seven hundred
tank cars.



TWEISTTY-SECOND DAY. 79

Senator Cullom. You pay for the hauling of these cars on the
different lines, I presume? What is the rate at which your cars are
hauled ?

Mr. Jennings. I did not quite hear you, Senator Cullom.

Senator CuLLOsr. I say, what is the rate you pay for hauling these
cars on the diiTerent railroad lines?

Mr. Jennings. The established tariff rate.

Senator CuiiLOii. How much is that ?

Mr. Jennings. It all depends on the point of departure and point
of destination.

Senator Cullom. Do you not pay so much a mile ?

Mr. Jennings. Oh, no. Are you referring to the movement of the
car itself, or to the movement of the car and contents?

Senator Cullosi. To the movement of the car. In the case of
these private, cars I always get mixed as to whether they pay the
railroad or the railroad pays them. I believe the railroad pays you?

Mr. Jennings. We are allowed a mileage of three-quarters of a
cent a mile.

Senator Cillom. Just the same price as these private cars ship-
ping beef and all that sort of thing?

Mr. Jennings. I would imagine so.

Senator Cullo:m. Of course you are entitled to whatever advan-
tages you can get by virtue of being large shippers.

Mr. Jennings. I can say to you though, very truthfully, that the
tank-car proposition is not a profitable investment — ^that is, that it
is not unduly so — because we are using them as: a part of our general
machinerj', and they are not engaged to any considerable extent out-
side of our own work. There is an idleness of from four to some-
times six months a year in which they are practically inoperative,
earning no money whatever.

Senator Cullozm. Are you having any trouble nowadays between
your firm and persons who undertaJie to ship oil in barrels and that
sort of thing ?

Mr. Jennings. No, sir ; we never have had.

Senator Cullom. There used to be a case of a man named Eice

Mr. Jennings. That was in the petroleum business.

Senator Kean. That was in the petroleum business, in the State
of Pennsylvania.

Senator Cullom. I remember that Eice was always quarreling
with the petroleum shippers in tank cars because he thought there
was a discrimination against him. I did not know whether that was
still going on or not.

Mr. Jennings. We have never considered it a discrimination or
an undue advantage to possess tank cars. They are quite an ex-
pensive piece of machinery to keep up.

Senator Cullom. You have to keep them up in order to do the
business ?

Mr. Jennings. Yes, sir.

Senator Cullom. Do you live in Chicago?

Mr. Jennings. I live in Chicago ; yes, sir.

The Chairman. Have you any complaint to make of excessive
rates in your business, of unreasonable and excessive railroad rates ?

Mr. jieNNiNGS. No, sir.

The Chairman. You know of none in your business ?



80 TWENTY-SECOND DAY.

Mr. Jennings. No, sir.

The Chairman. And in the country, generally, where you operate,
are there complaints of excessive rates, or does there seem to be a
general acquiescence in the rates as fixed by the railroads ?

Mr. Jennings. I do not recall any case, particularly, of complaints
as to rates in any direction on the movement of cotton-seedproducts.

Senator Cullom. Do you consider your cars under the law, as the
railroad companies and the interstate-commerce trade generally are
under the law ?

Mr. Jennings. No, sir; excepting as to safety appliances. "I have
never, for instance, considered that we were common carriers.

Senator Cullom. Common carriers in the ordinary sense?

Mr. Jennings. No, sir.

Senator Cullo^i. So that really you do not regard yourselves as
subject to the interstate-commerce act and under the control of the
Interstate Commerce Commission, do you ?

Mr. Jennings. There has never been any occasion for us to con-
sider the case in that phase and aspect. As I say, our cars are prac-
tically a part of our machinery, and they engage almost entirely, if



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 87 of 123)