Mr. HAILE. I suppose you mean the Mallory Line?

Commissioner PROUTY. Yes; the Mallory Line.

Mr. HAILE. I had a talk, as I say, with Mr. Warfield, and I told him it was the very earnest desire on the part of our people to make an advance in our rates from St. Louis, that naturally we could not do it unless there was an advance from New York, and I asked him, in view of the competition that he had to meet from New York to Galveston in the way of schooner competition and tramp vessels, whether they would bring about an advance in their rates to Galveston, and the net result of the interview was that they could probably make some advance without affecting in any marked degree the volume of tonnage they had. That was with reference primarily and, in fact, I think, solely to the business between New York and Galveston. I felt satisfied in my own mind that if they could make that advance, if they were satisfied that they would make the advance to Galveston they would not hesitate to make it to the interior.

[Mr. Haile had just stated that he had a theory respecting increase in damage claims, and that he could state it if desired.]

Mr. COWAN. You may do so.

Mr. HAILE. That is, that the cattle men themselves, believing from their standpoint that these advances in rates were not justified or proper, made up their minds to avail of every pretext or technicality to get back as much of that advance in the way of claims as possible. I do not mean that that resulted from a dishonest purpose, but it followed the advance in rates and was the result of the determination on their part to secure from the railroads every cent it was possible to get on such a showing as they could make.

Mr. COWAN. Now, Mr. Haile, that might apply to some of those who have made claims, but the evidence taken in this case as shown by many men engaged very extensively in the cattle business is that they have had very few claims. The principal cattlemen in Texas have very few claims, do they not?

Mr. HAILE. I know some men who do not.

Mr. COWAN. There may be that disposition on the part of some men.
Mr. HAILE. I think so.

Mr. COWAN. There has been a general complaint of an advance in rates, has there not?

Mr. HAILE. Yes, sir; there has been complaint.

Mr. COWAN. Is it not a fact that resulted in the Cattle Raisers' Association inviting a conference with the traffic offiials at St. Louis some three years ago, in which the representatives of the association immediately met you and a number of traffic men to talk over the matter and see if we could not get the advances of 1899 reduced? Do you remember that?

Mr. HAILE. Yes, sir.

Mr. COWAN. And after giving consideration, you all declined to reduce them? Mr. HAILE. Yes, sir.

Mr. COWAN. The advances which were made in those rates made them higher than they had ever been before?

Mr. HAILE. I think they are.

Mr. COWAN. Is it not a fact that for ten years previous to the advances made in 1899 the rate from Fort Worth, for example-which would be a fair one-had never been more than 31 cents per hundred pounds?

Mr. HAILE. I will tell you. I think that is substantially true, Mr. Cowan. Mr. COWAN. Is it not a fact that during that period--say, from 1890 up to 1899-that the rates had gone from 25 to 283 cents for the major portion of the time to Kansas City?

Mr. HAILE. No; I find that such rate was, in 1889, to Kansas City, 28 cents, and it was advanced from that figure up to 33 cents, where it remained for a series of years, and was reduced again to 28 cents, and then advanced to 33 cents, and then again to 36 cents.

Mr. COWAN. When I said 313 I meant 33 cents; at all events, the 363-cent rate to-day is a higher rate than has existed since the organization of the Interstate Commerce Commission and since we have had a file of the tariffs with them?

Mr. HAILE. Yes, sir.

Mr. CowAN. What else could you expect, then, than that the cattlemen would complain of the advances in these rates, when they did not know anything about your operating expenses and you have increased your volume of traffic? Mr. HAILE. Oh, I expect them to complain.

Mr. CowAN. What better standard is there which a man should take than

what has voluntarily been kept in force for a long period of years? What better standard is there for him?

Mr. HAILE. It would depend on the conditions entirely under which that rate had existed.

Mr. COWAN. That rate existed under a condition. we will say, of competition? Mr. HAILE. I think it is clearly shown in the testimony which has been taken in this case that it was an unreasonably low rate during all that period.

WEDNESDAY, January 25, 1905. The committee met at 10.30 o'clock a. m., Hon. William P. Hepburn in the chair.

STATEMENT OF MR. H. T. NEWCOMB.

Mr. NEWCOMB. Some time last summer I wrote a magazine article contending that the question whether rates had been advanced or decreased could not be decided without reference to the changes in the value of the standard money in which the rate is paid. I have since been requested by some of the railroad companies to apply the principles that I used in that article to this Senate Document No. 257, in which the Interstate Commerce Commission alleged that there has been a great advance in rates, and made the statement, which has been repeated here, that this amounted to about $155,000,000, as compared with the year 1899, in the single year 1903.

Mr. BACON. One hundred and fifty-five million dollars in the last year, as compared with the next preceding year, not the four years past.

Mr. NEWCOMB. I beg Mr. in error in regard to that. page 5 of this document:

Bacon's pardon; I think Mr. Bacon is
I will read the statement, which is on

The average rate per ton for this year was $1.0793, or nearly 12 cents per ton greater than the average rate per ton for the year ending June 30, 1899, this difference amounting in revenue to $155,475,502 over what it would have been at the average rate of the first-mentioned year.

Mr. BACON. I stand corrected.

Mr. NEWCOMB. Now, it is rather startling, Mr. Chairman, that this statement depends on an erroneous use of the Commission's own figures. The figures used by whoever prepared this report differ from those used by the statistician in the statistician's report, and the differences, as between the year 1899 and the year 1903, amount to one-third of the total advances. The author of this report gives the rate per ton for 1899 as 95 cents. As a matter of fact, it was 97 cents. He states the first year of his comparison too low. He gives the year 1903 as $1.07, when, as a matter of fact, it was $1.05. So that he puts the first year 2 cents too low and the last year 2 cents too high, and if we correct those figures by using the figures in the statistician's report, which were open and available to the author of this report, at once $53,000,000 of this increase disappears. I will furnish, to go with my remarks, a table showing the figures furnished by the auditor for this report, and the reports which are available to the statistician. But, Mr. Chairman, a calculation of that sort depends entirely upon the selection by the author of the report of the year

which he shall make the basis of his calculation. These rates per ton have differed from year to year, and anyone can get any results which he pleases by using a selected year. In order to show this I have made a table on precisely the same basis, taking the year 1904, and I show in columns the results as compared with the Commission's table; but it appears from my figures, using the year 1904 instead of the year 1899 as a basis, that on that comparison there was a lowering of rates amounting to $234,000,000.

I do not attach great importance to that table. It merely shows how easy it is to use figures of this sort to get any result you want. The Commission might, perhaps, have gotten an even higher figure if they had taken another basis, and I can get a much higher figure again by having some other basis. Anything in the world can be gotten by taking figures of that kind. One result is as real as the other.

It is proper to call the attention of the committee to the increased expenses of railroad companies as between those two years which were used for that comparison. Between 1899 and 1903 operating expenses increased $400,000,000. Wages paid to the employees of the railroads increased $222,000,000. The cost of maintaining structures and equipment and roadbed increased $175,000,000, and the fuel bills of the railway companies increased from $77,000,000 to $146,000,000, or $69,000,000 altogether.

I have also made some calculations showing the efficiency of money payments for fuel, for operating expenses, for wages, and so forth. It appears that for every dollar paid out in wages in 1899 the railways were able to carry 294 tons of freight a mile. In 1903 for each dollar paid in wages they were only able to carry 240 tons a mile. So that with that slightly higher rate it affected their earnings per ton per mile, and they could only earn from freight $1.88 where they earned $2.13 in the earlier year.

The efficiency of the amount paid in wages was less in 1903 than it was in 1899. I have made similar calculations relating to coal, which show that for a dollar paid for coal the railways were able to earn $9 from freight in 1903 where they earned $13.25 in 1899.

The same is true of their operating expenses, the figures being $1.05 in 1903 as against $1.19 in 1899. On page 6 of the report we find considerable discussion as to the advances of rates of particular articles. I selected the article of hay, which was advanced from the fifth to the sixth class, and that advance is now the subject of litigation. The Commission states that this is an average of about 80 cents a ton on 12,000,000 tons. I do not know whether that average is correct or not, but perhaps it is worth while showing that the price of hay has gone up so much during the year that if the railroads did get the advance of $14,000,000 which the Commission thinks they got on account of this higher rate, the additional farm value of the amount moved during that time was $34,000,000, or two and a half times as great; and it is worth noting that during the four years used for this comparison, although the crop was never as great as the crop of 1899, the value of hay to the farmers of the United States was $204,000,000 more than it would have been at the price of 1899.

It was stated here the other day, I think yesterday, that there had not been any reduction in freight rates. I made a comparison on the basis of the report published by the auditor of the Commission about

a year ago, called a " Forty-two year review of railway rates," a document containing a good deal of very valuable data. There are three great classifications, you know, of the freight traffic in the United States. The official classification applies to all business east of the Mississippi River and north of the Ohio and Potomac rivers.

In that classification during the period from 1887 to date or to the date of this report, some time in 1902-the net result of changes in the classification has been that 95 articles are classified higher than they were at the beginning of the period and 121 articles are classified lower than they were in the beginning of the period.

In the western classification, which applies on all classified traffic west of the Mississippi River and the Great Lakes to the Pacific coast, 65 articles are classified lower and 23 are higher than they were before. In the southern classification, which applies east of the Mississippi River and south of the Ohio and Potomac rivers, there are 254 reductions as against 125 advances. Those are net changes.

The CHAIRMAN. In what period is that?

Mr. NEWCOMR. That is during the period covered by that report. The auditor of the Commission receives something like 300 tariffs per day. They all make changes, and it is the common impression, I am told, that more of those changes are downward than upward. I took the pains to make some inquiries yesterday afternoon concerning the changes, and I found that within a recent period there have been some important reductions. Thus the rate on lumber from St. Louis, Kansas City, and river points to St. Paul and Minneapolis, Minnesota, and Wisconsin practically has been reduced from 16 to 14 cents very recently. Sugar from the Atlantic seaboard to the Missouri River and to New Orleans territory has been reduced. There has been a reduction on crackers and cakes and bakery products throughout the entire West, and on soft coal there has been a reduction from the Mississippi River to Iowa. Only one-half of the regular rates on seed wheat to Iowa. Minnesota, and Dakota are now being charged.

The lines from Chicago and Milwaukee to the Mississippi River have made a reduction from 10 cents to 9 cents on wire articles, nails, etc. The grain rate from Mississippi River crossings to Ohio, Indiana, Michigan, etc., have been reduced from 1 to 5 cents each. There is a great reduction pending covering the entire through south-bound business from the Ohio River, Chicago, Cincinnati, St. Louis, and all points using the Ohio River as a base to the great cities of the South, and that will affect all contiguous territory.

As a result of these reductions all the rates from Baltimore, New York, Philadelphia, and Boston, and similar territory in the East have been reduced so that practically all manufactured products moving into the South have considerably lower rates than they have been taking. And those are voluntary reductions. The rates to Atlanta are reduced 9 cents on first-class freight, about 9 per cent of the old rate. The reduction on second-class freight is 5 cents, on third-class 3 cents, on fourth-class 5 cents, on fifth-class 4 cents, and so all along the line. Other cities the rates to which are reduced are Dalton, Cartersville, Athens, Elberton, Augusta, Macon, Milledgeville, Albany, and Americus, and, as I said, practically all of the territory in that region.

I have here from another Government document a table showing the course of rates on wheat and flour from Chicago and St. Louis to New York. These are the most important rates in the country. The Chicago and New York rate is not only the basis of the rate on all grain from any territory west of Buffalo and Pittsburg, and a line drawn through there-what we call the Central Traffic Association territory-but by the application of differentials is made the rate to all eastern territory on all that freight, whether for domestic consumption or exportation. It is far the most important rate in the country. That rate from Chicago to New York has declined per bushel. It was $6.63 in 1899, the average for the year, and $6.17 was the average for 1903. The table shows a decline from 15.7 cents to the present basis. I have compared the rates per bushel on wheat from Chicago to New York with the farm value of wheat, and it appears that where it took 1 bushel in every 5 in 1899 to pay the freight from Chicago to New York, it only takes 1 bushel in every 7.82 bushels to pay the freight at the present time. That is, 7.82 bushels of wheat will now move from Chicago to New York for the price of 1 bushel, while only 5 bushels would move at that price in 1899.

Mr. BACON. I would like to ask Mr. Newcomb if he considers this a fair comparison, as regards the price of wheat, which is now very high. It is 25 or 30 cents higher now than has been the average price during the last five years.

Mr. NEWCOMB. For 1902 the comparison would have been: It took 1 bushel in 7.20 as against 1 bushel in 5.25 in 1899, so that about the same result would follow in last year or any other year of that series. STATEMENT OF HON. H. STEENERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA.

Mr. STEENERSON. Inasmuch as I have prepared a couple of drafts of a bill to accomplish the purpose recommended by the President in his message in regard to extending the powers of the Interstate Commerce Commission, I thought that I would appear before this committee and give my views.

In the first place, I shall assume that the reason for this legislation is apparent to the committee and that the evils to be remedied are recognized, as they seem to be by the public sentiment throughout the United States as well as by the Executive. So that it is not necessary at all to dwell upon that feature. I will assume that the necessity for the legislation exists and that it is desired to meet that necessity. Neither do I care to discuss the objections which have been made to this legislation, that it would injuriously affect capital invested and labor. Those facts are not new to the committee nor to the American people. Those objections have been heard in the United States almost in the same terms for the last thirty-five years, almost ever since the first granger legislation in Illinois and other western States. I recall very distinctly that I served in the senate of Minnesota in 1885, just twenty years ago, when we proposed to establish a railway commission to regulate freight rates by law, and these same objections were made. We had ten years before that time prescribed by a statute the maximum rate for transporting passengers-3 cents a mile. That was twenty years ago, and that is the maximum rate