convention of shippers representing various interests, held at St. Louis, November 20, 1900, at which the Cullom bill (S. 1439) was indorsed, which was substantially the foundation for the present Corliss and Nelson bills. There is a diversity of opinion, both among shippers and carriers, as to the necessity for any legislation in the direction of increasing the powers of the Interstate Commerce Commission.

Spurred by some criticisms to the effect that the Commission was not using the powers at its disposal, it has recently invoked the power of the courts to prohibit unjust discriminations by injunctions, and it is too soon yet to say just what effect the injunctions which have been granted will ultimately have, but thus far they have been beneficial, and it seems to me that if made applicable to shippers as well as carriers the probability of their being a permanent remedy for the evils of unjust discrimination would be increased. Railroads do not willingly make unjust discriminations. The initiative is always with the shippers, and railroad agents yield to pressure brought to bear upon them by shippers controlling large amounts of business. In closing, Mr. Chairman and gentlemen of the committee, I wish to repeat that I believe that in the face of the basic fact that the present system of elasticity in American railroad management has resulted in giving our great country lower rates by one-half for the transportation of freight than any other principal nation enjoys, and that this affords an outlet to the markets of the world for the great volume of our surplus products, we should go slow in imposing cast-iron rules and regulations in an intricate and complex business like that of transportation. It may seem unjust to a merchant on our seaboard that he should be charged a higher rate in proportion than the same freight destined for export, or that freight originating on the seaboard should be charged a higher rate than freight from foreign countries destined for an interior city in our own country pays.

It may seem unjust to a local shipper doing business within his own State that his local rate should be so much higher than interstate rates, but if a producer or manufacturer can get a contract at a distant point through the means of a reduced rate of freight, the carrier, having perhaps empty cars going in that direction, can afford a concession rather than let its rolling stock go empty. Labor and capital are both benefited by a reasonable elasticity which permits of such concessions being made, and, after all, it comes down to a question of what is reasonable, and of this there is perhaps no better authority than the courts, notwithstanding that delays sometimes may result in a substantial denial of justice. Such instances are the exception rather than the rule, however, and you gentlemen, who represent all sections of our great country, after hearing all sides, must make up your minds as to what is reasonable, but I hope, if there is any amendment to the interstate-commerce law, that it will be in the direction of strengthening the provisions for investigation and publicity, conferring the right of contract upon carriers, subject to the approval of the Interstate Commerce Commission, and giving equal right of appeal to the courts of both shippers and carriers, but not conferring the authority upon the Commission to make rates or classifications.

STATEMENT OF HON. MARTIN A. KNAPP, CHAIRMAN OF THE UNITED STATES INTERSTATE COMMERCE COMMISSION— Continued.

Mr. KNAPP. Mr. Chairman and gentlemen, before proceeding with my argument I desire to make a word of comment upon some of the observations made by my esteemed friend, Mr. Thurber.

Inferences drawn from the average rate per ton per mile on all traffic are liable to be very misleading. It is frequently said that railway rates in the United States are not half what they are in England. That is true only when you compare the average rate per ton per mile on all traffic of the one country with the same average in the other country. Allow me briefly to explain to you how the average rate per ton per mile may be greatly reduced without any change at all in the rates as to any particular shipment.

Now the relative amount of low-grade freight carried in this country, like ore, coal, etc., has enormously increased in the last fifteen years. If in one year you carry a thousand tons of first-grade freight at $1, and another thousand tons of sixth-class freight at 20 cents, the average rate will be 60 cents. But if in the next year you carry a thousand tons of first-class freight at a dollar, and 10,000 tons of sixth class at 20 cents, the average rate on all the traffic will be more than cut in two without any change in the rates themselves. Now the enormous reduction in the average rate per ton per mile in this country has come from three principal causes. First and mainly, the enormous increase in the relative amount, the relative tonnage, of these low-grade articles which are carried at a low price; second, there has been from the beginning a difference between carload and less than carload rates, and in the last fifteen years there has been an enormous increase of the relative proportion of the traffic carried in carloads and at carload rates, so that without any change in the rates themselves, without reducing the cost of shipping a carload or 100 pounds, you may have an average reduction in the average rate per ton per mile on all traffic. There have been reductions in grain to some extent, in iron articles, and in other commodities, which I will not stop to mention, which have entered into the reduction of the average.

When you speak of English rates, you must remember that their rates include cartage at both ends. An English carrier goes to the warehouse and gets the stuff and transports it to the railroad, and when it arrives at its destination he gets it and transports it to the place of the customer. Of course, that enters into the rate. Now, I ask Mr. Thurber to bear in mind that England is a small country, and that it is seldom that traffic moves more than 500 miles there, and taking into account the cartage, I ask him to compare what it costs a man in New York to deliver dry goods, boots and shoes, or merchandise of any class, the articles in which the great mass of people are interested -how much it costs him to effect the movement from his store to the store of the customer as compared to the cost of moving the same articles the same distance in England, and I think that he will be very much surprised. It is not so very much lower than it is there. Mr. THURBER. How is it with other countries?

Mr. KNAPP. There is no country that is as low as the United States. Now, there is another thing that is to be taken into account. It is a well-known thing in railway transportation, and water transportation,

too, for that matter, that the cost per unit of traffic moved diminishes with the distance it is carried. You do not get twice as much for carrying a carload 1,000 miles as for carrying it 500 miles. Our traffic is carried long distances, because we have a great big country, and much of it moves 2,000 and even 3,000 miles, while in England there is but little movement that exceeds 500 miles, so that my suggestion is that you compare the ordinary cost of moving the ordinary merchandise, the articles in which the mass of the people are interested, the same distance for the same service, and you will find that it is not anything like twice as great in England as it is in the United States. The truth is, gentlemen, that in the official territory, that is the territory north of the Ohio and the Potomac rivers and east of the Mississippi, the most populous and wealthy part of the United States, producing the greatest volume of traffic, the basis in making rates in all that territory is the Chicago rate. Places nearer New York take a percentage under the Chicago rates, and places farther than Chicago take a percentage over the Chicago rate, so that when the basis of New York and Chicago is reduced there is a corresponding reduction in all that territory.

Now, the class rates in all that territory on the six classes are just as high to-day as they were fifteen years ago, and in numerous instances the actual rates applied have been increased by the fact that articles have been advanced in their classifications to take a higher rate. Gentlemen, I did not mean to go into that. I just wanted to call your attention, however, to the fact that we may be very much misled when our attention is called to the extremely low average rate per ton per mile on all traffic. Why, the Chesapeake and Ohio Railroad shows the lowest average rate per ton per mile on all its traffic of any railroad in the United States, and yet everyone knows that the actual rates applied to merchandise, applied to the articles that the people living along the line of that road are interested in, are very much higher than they are along the New York Central or along the Pennsylvania Railroad, simply because 90 per cent of the traffic of the Chesapeake and Ohio is coal and ore, and that is of course carried from the summit where it is produced both ways to tide water, and of course that results in a very low average rate per ton per mile on all articles on that road, and yet it costs more to haul a carload of boots and shoes or clothing or any of the articles of domestic use over that road than it does over the New York Central.

In order that I may not forget it, I want to make another observation now. If I understand the measures which are pending before this committee, and I have endeavored to examine them with care, there is not a single one of them which proposes to change the present state of the law in respect to allowing a rate on exports lower than on domestic traffic; not a syllable.

Mr. THURBER. It proposes to give the power to the Commission, which they do not now have, and that might enable the Commission to decide that the contention of our local New York merchants, that they should pay no higher than the proportionate rate on export goodsthan the people who export-might be sustained.

Mr. KNAPP. Let me see. I might as well strike out that question right here now. I want you to bear this in mind, that this Commission, under the Corliss bill even, can make no order except an order justified by the sworn testimony before it; and if, in a proceeding

where all parties have an opportunity to be heard, the facts are produced and the testimony is presented which warrants and justifies a conclusion that that relation between domestic and export rates is wrong, then it ought to be changed. Now, I am not saying for a moment, gentlemen, that domestic traffic should always be carried at the same rate as export traffic. I think conditions arise in this country, have arisen, and are likely to arise again, when it is an economic advantage, to say nothing about a commercial benefit to the people of this country, to permit these surplus products to be carried abroad at rates for the land carriage to the seaport which are less than the rail carriers should be obliged to accept on domestic transportation.

Mr. ADAMSON. An instance was cited the other day where a shipper had billed on an export bill of lading, and then had stopped cotton, I believe it was, in New York, thus enabling him to sell cotton cheaper there. You would not permit any such thing as that, I suppose?

Mr. KNAPP. I do not think that such a practice as that can find a defender or an apologist in the United States. I think to allow such a practice as that is disgraceful.

Mr. ADAMSON. If you bill on a bill of lading it should be in good faith?

Mr. KNAPP. Certainly; in good faith. Now, there are some other remarks made by Mr. Thurber which I prefer to comment upon in their proper connection as I proceed.

Gentlemen, I have already said all I care to say respecting those proposed amendments to the law which aim to give greater efficiency to the criminal remedies provided for its enforcement. My position is simply this: A right to the common highway, the right to use it on equal terms with everybody else, is a right that existed long before any written constitutions were adopted. That is a right founded in the very constitution of human society. It belongs to that class of rights which the Declaration of Independence described as inalienable; and that right is exactly the same, gentlemen, whether the highway is made of dirt or of steel. And I do not for one moment assent to any suggestion that laws should encourage or permit a public service to be performed for one man cheaper than it is for another; and speaking from my observation, and such crude reflections as have resulted-Mr. ADAMSON. I do not think anybody has made such a suggestion as that.

Mr. KNAPP. Some questions were asked the other day on that line. Mr. ADAMSON. Those questions were on an entirely different position.

Mr. KNAPP. That you might allow shippers to get a secret and preferential rate if they could.

Mr. COOMBS. Who made those statements?

Mr. KNAPP. They were implied in some questions which were asked. Mr. COOMBS. I asked some questions in regard to that, but I desire to say that I did not intend to imply anything by those questions. I thought I had a right to ask them to get all the light that I could.

Mr. ADAMSON. Nobody has ever disputed your presumption as to the right of the Government to control the highways. I asked you some questions about the right of the Federal Government to regulate the commerce between the States, and I could not understand your discrimination between regulating different kinds of commerce, private as well as public.

Mr. KNAPP. I venture to say that I said that the best answer I could make was to refer you to the Supreme Court of the United States. Mr. ADAMSON. Referring me to the Supreme Court does not answer my question.

Mr. KNAPP. It would be idle for me to make an answer inconsistent with the law of the land laid down by the highest judicial authority. Mr. ADAMSON. I did not ask you about law at all. I simply asked you where you claimed to get your authority.

Mr. KNAPP. Of course, the authority to make any provision in the line of these bills is found in the commerce law of the Constitution. Mr. ADAMSON. We are legislating every day about private commerce as well as public-private tradesmen and individuals engaged in interstate commerce.

Mr. KNAPP. So far as the subject of legislation is interstate commerce there is no question about the right to legislate.

Mr. ADAMSON. That has nothing to do with it at all.

Mr. KNAPP. The question is whether this is interstate commerce or not.

Mr. ADAMSON. You touch no corporation except in interstate commerce, no railroad except in interstate commerce; so there is no discrimination in your authority at all as to whether it is a corporation, a public carrier, or a private citizen, or who it is, so long as he or it is engaged in interstate commerce.

Mr. KNAPP. So long as it is interstate commerce it does not matter whether it is an individual, or a corporation, or a partnership, of

course.

Now, not to take too much time, I feel that I am abusing your patience, and I can only say that I regard it not only as an act of justice, but of probably great value, to so change the tenth section as to make the corporation carrier, and I do not know of anyone who makes a serious objection, or any objection at all, to that proposition. And I say that if the shipper is to be made liable at all, then it should be under circumstances and a rule of law which makes it practical to bring the shipper to justice when he violates it. If, in your wisdom, you think this law will be more efficiently enforced by leaving the shipper out altogether and putting the penalties solely on the carrier, I am not disposed to argue against that proposition.

The CHAIRMAN. But your judgment would be against that?

Mr. KNAPP. It would be against it, Mr. Chairman. While I can see that as a matter of practical administration there would be advantages in having the shipper innocent, so that he could be called as a witness and he could be required to testify without pleading any constitutional privilege, because he is not himself an offender, still, after all, gentlemen, after all, I must express my honest conviction to be that the shipper ought to be liable as well as the carrier, first, because I think that is necessary to satisfy the fair-minded sense of justice.

The CHAIRMAN. In cases where he would be liable, you think there should be an exemption from punishment when he is called upon to testify, so as to compel him to testify?

Mr. KNAPP. Yes, sir; that is provided so now. You do not need to legislate on that subject. It is no longer, under existing conditions, the occasional, the infrequent shipper, who gets a rebate. It takes a very powerful shipper or combination of shippers to get a preferential rate. Therefore, when these secret arrangements are made, when