COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

HOUSE OF REPRESENTATIVES.

JAMES R. MANN, ILLINOIS, Chairman.

The CHAIRMAN. The following letters and suggestions may be inserted in the record:

Hon. JAMES R. MANN,

House of Representatives, Washington, D. C.

CHICAGO, January 4, 1910.

DEAR SIR: This company is one of a number of Chicago business concerns which met on the 29th of December and drew up a joint letter, which was sent to you, a copy of which is inclosed. We wish to make an individual appeal to you.

Owning and operating a great many plants in this country, five of them in the State of Illinois and two of them in your own congressional district, we feel that we have mutual personal interests in these two plants, and therefore we beg to advise you that since November 1, 1907, these two plants, employing 1,000 men, have been absolutely closed, and the men all idle; that recently we started up about 20 per cent of the capacity of these plants, hoping that by next year we would have them running full blast. We regret to say that at present we have no such hope. In fact, we doubt our ability to even keep them running at this limited capacity for more than two or three months. We attribute the cause as entirely due to the alarm with which the financial public view the future earning capacities of the railroads. With ever-increasing demands of their employees, which if satisfied would reduce their earning capacities very materially, with all of the adverse railroad legislation now in vogue, and with threatenings of a vast amount more in sight in the coming Congress, it is not to be wondered at that railroads should buy absolutely nothing but that which they are compelled to, and here is where it affects us, and already we feel the conditions of 1907 repeating themselves.

We believe that you can do the men whom you represent in general, and us in particular, a great deal of good by opposing this ever-increasing and hasty congressional action concerning railroad operations. We do not ask you because of our love for the railroads, but we are asking you for ourselves, because we are really the ones who are suffering most from this excessive railroad legislation.

The subject is too great to be confined in a short letter. We would gladly give you more definite reasons, but in the meantime we would ask you to please take our word for the situation, and use all the effort you can to hold back this senseless rush, at least until we have time to recover from the last assault.

Believing and hoping that this will meet approval at your hands, I remain,

Yours, very truly,

GRIFFIN WHEEL COMPANY, By T. A. GRIFFIN, President.

DECEMBER 29, 1909.

DEAR SIR: At a meeting held this day it was voted that we present for your consideration some facts, from our point of view, concerning newly proposed railroad legislation. We are all manufacturers, doing business in Chicago, many of our factories in your district, representing thousands of employees.

In the outset we wish to disclaim any desire to ask favors for ourselves or for the railroads; all we want is justice. The Federal Government and the state governments have passed many laws for the regulation of railroads, and other laws will be proposed, and some of them will be adopted. We admit the necessity of wise regulation of railroads by the nation and by the States, and if such wise regulation seems to injure us or our employees we will submit.

The particular subject to which we ask your attention is the revision of the interstate commerce law, which it is thought will, within a few days, be recommended by the President. Should one of the President's recommendations be that the railroads

shall not make any changes in their tariff rates until the Interstate Commerce Commission shall have given its approval, we dread the effect which this might have on general business.

We must do everything in our power to avoid a recurrence of the business stagnation which began in the fall of 1907 and continued for nearly two years. During that period many of our men were out of employment and the remainder worked only part time. Many manufacturing establishments in your district and elsewhere were idle. We believe that the business depression referred to was caused entirely, or almost entirely, by the feeling of antagonism which existed two years ago toward the railroads. We are not here to excuse the railroads for their faults, and we know they had many. We believe the railroads have made unusual efforts during the past two years to remove the causes of public dissatisfaction; they have accomplished much in that direction; they are still trying, and we believe will continue to do so.

At the present moment there is a second decrease in railroad purchases; we feel it in our business, and some of us are again reducing our output and laying off men. We think this is the result of the present agitation of further railroad legislation, especially the fear that the rate-making power is to be taken from the roads.

We ask that very careful consideration be given the subject before any additional regulatory laws are passed, to the end that nothing may be done to check the continuation of the business prosperity which commenced a few months ago.

We have not undertaken in this communication to set forth in detail our reasons for objecting to taking the rate-making power from the roads, as that subject, and others, is treated in a letter dated October 27, 1909, addressed to the AttorneyGeneral by the Railway Business Association, of which most of us are members, and of which letter a printed copy is attached hereto, and to which we ask your careful

attention.

We wish to impress upon you the seriousness of the situation to us as employers of a large number of men, and request you as our Representative to do everything in your power to oppose the passage of any law that will take from the railroads the power to initiate or originate rates.

Yours, respectfully,

American Radiator Company, Adams & Westlake Company, Ajax Forge
Company, American Steel Foundries, By-Products Coke Corporation,
Block-Pollak Iron Company, Blue Island Car and Equipment Com-
pany, Buda Foundry and Manufacturing Company, Camel Company,
Chicago Bridge and Iron Works, Chicago Pneumatic Tool Company,
Jas. B. Clow & Sons, Fairbanks, Morse & Co., Federal Furnace Com-
pany, Featherstone Foundry and Machine Company, Griffin Wheel
Company, Hewitt Manufacturing Company, Hickman, Williams &
Co., Edward Hines Lumber Company, Robt. W. Hunt & Co., Joyce-
Watkins Company, McCord & Co., Morden Frog and Crossing Works,
Niles-Bement Pond Company, Pettibone, Mulliken & Co., Pickands,
Brown & Co., Pneumatic Gate Company, Rodger Ballast Car Com-
pany, Sellers Manufacturing Company, Standard Forgings Company,
United Supply and Manufacturing Company, Railway Steel Spring
Company, Guilford S. Wood, Chicago Railway Equipment Company,
W. H. Miner Company.

Hon. GEORGE W. WICKERSHAM,

RAILWAY BUSINESS ASSOCIATION,
New York, October 27, 1909.

Attorney-General United States, Chairman Committee Appointed by

President to Recommend Changes in Laws Regulating Interstate Commerce. DEAR SIR: At the request of the Railway Business Association for an opportunity to lay before your committee our views as to railroad legislation, you have indicated a willingness to present for the consideration of the committee any written statement we might submit. We will confine our suggestions at this time to one subject, namely, the proposal suggested tentatively for discussion by the President of the United States in an address at Des Moines, Iowa, on September 20, to confer upon the Interstate Commerce Commission power to postpone freight-rate increases until final hearing and adjudication by the commission as to their reasonableness. To this legislation our association is opposed, not because of any lack of confidence in the personnel of the present Interstate Commerce Commission, for whose ability, experience, industry, and integrity we have the highest respect, but because we believe the proposal to be fundamentally and economically mistaken and fraught with injury to the country.

The mem

We beg to remind you that our position is by no means only that of industries seeking to shield our customers, the railroads, from attack. We do not seek to represent the railroads, nor are we authorized to do so. We appear in our own interest. Industries dependent upon railroad purchases employ 1,500,000 men. bers of our association, though only a part of the whole, represent a capital invested exceeding $500,000,000. Injury to our customers by unwise, unfair, or unnecessary legislation is damaging to our employees and to those whose investment of money has made the industries possible. With us wisdom in railroad regulation is a business necessity. Nor should it be forgotten that we pay freight bills aggregating millions annually and are as much interested as any other class of shippers in having rates reasonable and equitable.

Our position is not one of general obstruction to all measures affecting railroads. We admit the necessity of and believe in the desirability of their regulation. Furthermore, our attitude being more friendly than critical toward the railroads, we hope our influence with them may help in their task of meeting the reasonable desires of their patrons. The problem, as we conceive it, is to establish such regulation as will make the railroads efficient and adequate agents of transportation and maintain equity between shippers and carriers. It is in this spirit that we now offer you our views. As reported in the press dispatches, President Taft's Des Moines speech contained the following:

"Under the interstate-commerce law a new rate classification is to be filed with the commission. It is proposed now to authorize the commission to postpone the date that such new rate classification is to take effect. This introduces a new element into the act by placing the railroad company in the situation when it proposes to make a change in the rate that it should be prepared to show to the commission affirmatively that the change to the new rate is justified.

"I am inclined to think that this is a fair change in the provision of the law. It gives to the public the same right to have changes which affect them injuriously investigated before they go into effect as it does changes of rates by the railroads by appeal to the courts to have the order of the commission subjected to investigation and hearing. Railroads ought not to be permitted to change rates unless they can give a reason for it."

It is our opinion that of all the proposals affecting railroads now seriously considered none is more dangerous than this. The proposed clause, if it accomplished the purpose defined in the above quotation, would absolutely deprive the railroads of the power to make rates.

A careful study of the debates in both Houses of the Fifty-ninth Congress, preceding the enactment of the Hepburn bill, throws important light upon the subject. The proposal was to give the Interstate Commerce Commission power to investigate on complaint a scheduled freight rate and to declare it unreasonable if so found. Such a decree automatically mulcted the carrier to the amount unlawfully taken from the shipper, with interest.

It was contended by some opponents of the bill that in effect it would take away the right that should inhere in the carrier to initiate rates. In answer to this, and in defense of the bill, it was argued, and as events have shown, rightly, that the bill did not take from the carriers the power to initiate rates, because it explicitly authorized the carrier to fix the rate, which went into effect and so remained until the commission declared it unreasonable.

President Roosevelt, in his message of the preceding December, had said:

"My proposal is not to give the commission power to initiate or originate rates generally, but to regulate a rate already fixed or originated by the railroads, upon complaint and after investigation.'

In debate many Senators and Representatives favoring the bill declared themselves opposed to any attempt to rob the carrier of his initiative as to rate making, and upon their assurance that it did not do that they asked support for the bill. The whole debate was replete with asseverations by those advocating the measure that the initiative as to rates properly belonged to the carrier. Senator Lodge, of Massachusetts, quoted from a circular sent out by Edward A. Moseley, secretary of the Interstate Commerce Commission, 1899, upon authority vested in him by resolution of the commission, in which occurred the following:

"The commission neither asks nor desires to be invested with general rate-making power. It simply asks for authority to correct rates which have been previously established by the carriers in the full exercise of their rate-making power, when such rates are found by the commission, after due notice, investigation, and full hearing, to be in violation of the act.'

It would seem that the right of the carrier to initiate rates was preserved and specifically sought to be preserved in the Hepburn bill by the provision that only after a rate had been initiated, filed, and effectuated by tolls collected could a complaint be entertained and a decree of unreasonableness issued. It is just here that the

proposition now advanced differs fundamentally from the Hepburn Act. How can the right of initiative be preserved if, as discussed in the President's Des Moines speech, no rate filed by the carrier can become effective until the commission has given its consent? If the commission, in its discretion, may postpone the effectuation of a rate, not by investigation of complaint and decree upon the merits, but merely treating the complaint as a prima facie cause for vetoing such initiative, pending the convenience of the commission in reaching a final conclusion, how can it be said that the carrier has power to make rates? Instead of sustaining the power of the carrier to initiate and establish rates, a law such as is proposed would merely grant to the carrier the prerogative of suggesting a rate for the consideration of the commission.

How can anyone who in 1906 declared against depriving the railroads of their power to fix rates support now a bill to give the power of postponing rates to the commission?

While the Hepburn bill was careful to give the shipper ample protection against any overcharge improperly collected, with interest, no protection is proposed or could be proposed for the carrier as a provision of the suggested change in the law. If the carrier can not collect the rate fixed by it until somebody has approved it, the carrier has certainly not initiated it. If, having fixed a new rate, the carrier must continue to collect tolls at the old rate until it is permitted by the commission to effectuate the new one, and such effectuation has been finally decreed by the commission, has not the carrier been mulcted out of the difference during the period of suspension? Has it not had earnings taken away to which it was entitled, as shown by the approval of the commission, without any possibility of their recovery?

The carrier having, by intervention of the commission, lost a sum of money which that body subsequently decided the carrier ought not to have lost, there is no power to secure this money from those who should have paid it.

The chief ground on which it was urged in Congress that the railroads should retain their power of rate making was that such retention of power by them was in the public interest. Representative Mann, of Illinois, now chairman of the House Committee on Interstate and Foreign Commerce, said in debate:

"The power to fix generally absolute rates is the power to destroy competitive forces, to paralyze industries, to injure railroads, to interfere with all of the principles and methods of modern business life."

What we have said relates to the general policy of permitting the carrier, as a matter of good business for all concerned, to initiate every rate. What has been contended above is that it would be a mistake to give the commission power to veto a new rate before it goes into effect, even if the decisions of the commission could be promptly rendered. We are convinced, however, that the practical evils following bestowal of this power would be vastly greater than the theoretical; for in the nature of things the decisions would be delayed, in many cases indefinitely, owing to the inability of any commission to dispose promptly of so many protests as would certainly be filed. Is it not certain that when money could be saved so easily as by a mere protest, every advance would be protested by somebody? Not even so hard working and well organized a body as the present commission would be able to give more than cursory preliminary examination to each protested rate, and to avoid criticism would be obliged to treat all alike by postponing all. The railroad would thus find itself unable to raise any rate without having first presented its case at a hearing. Thus the rate-making power as affects increases would be taken from the hundreds of traffic officials all over the country whose specific business, each in his own jurisdiction, is making rates, and given, under conditions that would make promptness and dispatch impossible, to the commission, who, even when possessed of as long experience as several of the present members, could only hope to give direct attention to a limited number of concrete industrial situations.

We do not believe it is desirable that such powers of obstruction should be vested in the shippers (of whom we are an important part) when the records for sixteen months after the passage of the Hepburn Act show that out of 5,952 complaints lodged with the commission, 2,105 were outside the jurisdiction of the commission, 3,374 were of such a nature as to require only correspondence or conference for their disposal (half of them being settled without hearing, the other half being dismissed), while the 473 complaints remaining were being decided at the rate of 155 in favor of the railroads to 86 in favor of the shipper, or a final result of less than 3 per cent of all in favor of the shipper.

The chairman of the Interstate Commerce Commission itself, on behalf of that body, in a letter dated January 29, 1908, and addressed to the United States Senate Committee on Interstate Commerce, said:

"If every proposed advance had to be investigated by the commission and officially sanctioned before it could take effect, the number of cases to be considered would presumably be so great as to render their prompt disposition almost impossible.