help to enforce a law with good effect. Any mill employee can get $500 whenever he wants it by giving us information that anything like that is going on. We help the agents in that way a good deal. Senator ELKINS. You live in St. Louis?

Mr. GALLAGHER. Yes, sir.

Senator ELKINS. You were speaking when I came in. Perhaps I did not hear all that you said.

The CHAIRMAN. He is commissioner for the Millers' National Association.

Senator ELKINS. You were speaking of the discrimination by railroads in the transportation of export flour and wheat, were you not? Mr. GALLAGHER. Yes, sir.

Senator ELKINS. By what lines does most of that flour, say from Minnesota and Chicago, or beyond Chicago and sometimes from St. Paul, reach New York for water transportation?

Mr. GALLAGHER. That was the trunk-line tariff. It included all the trunk lines.

Senator ELKINS. Did not a great deal of this export flour go by the Canadian Pacific?

Mr. GALLAGHER. Some of it went over the Soo and by that route. Senator ELKINS. How much?

Mr. GALLAGHER. That Northwestern flour.

Senator ELKINS. Was not there the greatest cut in transportation? Mr. GALLAGHER. Yes, sir.

Senator ELKINS. That is the fact?

Mr. GALLAGHER. Yes, sir. Yes; they pay no attention

Senator ELKINS. Do you now ever ship from St. Louis by way of the Canadian Pacific to New York?

Mr. GALLAGHER. Have you lately, Governor Stanard?

Mr. STANARD. No.

Mr. GALLAGHER. I think it very seldom goes that way.

Senator ELKINS. Did you ever ship it that way, or to Boston?

Mr. GALLAGHER. Yes; I can not call to mind any specific shipment, but I am satisfied they have shipped that way.

Senator ELKINS. You get a lower rate from St. Louis to Boston by the Canadian Pacific than you could get by the Pennsylvania or the Baltimore and Ohio?

Mr. GALLAGHER. At times when they were looking for freight I dare say they would, because they have not any respect for our interstate-commerce laws.

Senator ELKINS. Does the Canadian Pacific have any respect for us generally?

Mr. GALLAGHER. No; our laws are weak, and they have no respect for them.

Senator ALLEN. According to your best judgment, what percentage of the annual product of American wheat is manufactured into flour in England or other foreign counties?

Mr. GALLAGHER. We exported last year 148,000,000 bushels of wheat, and I believe that Great Britain-England, Ireland, and Scotland-took about 60 per cent of it.

Senator ALLEN. What is the labor cost of reducing wheat to flour in this country?

Mr. GALLAGHER. The labor cost?

Senator ALLEN. The labor cost.

Mr. GALLAGHER. The labor cost would be hard to arrive at.
Senator ALLEN. Approximately.

Mr. GALLAGHER. The cost of taking wheat and reducing it to flour will average in the mills of 500 barrels' capacity from 20 to 22 cents a barrel.

Senator ALLEN. That was all lost to American labor by the exportation of this wheat?

Mr. GALLAGHER. Yes, sir; more than that was lost.

Senator ALLEN. That is hardly in keeping with the idea of protecting the American laboring man?

Mr. GALLAGHER. It is exactly the opposite.

Senator ALLEN. Now, in your best judgment, how much of a loss was that in aggregate dollars to the American laboring men?

Mr. GALLAGHER. I would not undertake to compute that right off. Senator ALLEN. Would you compute it and give the result to the committee?

Mr. GALLAGHER. I can make a statement to that effect.

Senator ALLEN. I wish you would do that. There is one more question. What are the names of the organizations of elevator companies of which you speak that control the price of wheat in this country? Mr. GALLAGHER. Take the Chicago, Milwaukee and St. Paul. They have their terminal elevators at Chicago.

Senator ALLEN. That is the railroad?

Mr. GALLAGHER. Certainly. Take the Chicago Great Western if you are looking for positive information under oath. I think President Stickney is one of the frankest railway men in the country about I think everybody will admit that Mr. Stickney will tell

statements.

the truth.

Senator ALLEN. He has written some very nice books upon the subject of railroads.

Mr. GALLAGHER. His evidence before the Industrial Commission will tell you just how they operate those elevators in connection with the railroad and who owns them; and he states further that the Chicago Great Western has done this because it was necessary by reason of competition, other railroads doing the same thing.

Senator ALLEN. Do you know the ramifications of Peavey & Co. ? Mr. GALLAGHER. No, sir; only in a general way. I know the effect of the ramifications.

Senator ALLEN. They control the wheat product of Nebraska and Iowa largely.

Mr. GALLAGHER. Along the Union Pacific and allied lines.

Senator ALLEN. They have absorbed the Omaha Elevator Company recently?

Mr. GALLAGHER. I am told so.

Senator ALLEN. Do you know what their capitalization is?

Mr. GALLAGHER. I do not.

Senator ALLEN. Something like three or four hundred thousand dollars, or more?

Mr. GALLAGHER. Perhaps. They do not need much with two or three railroads behind them.

Senator ALLEN. Do I understand you to say that the railroad companies are behind them? You used the word "behind," which means, suppose, that they are interested with them.

Mr. GALLAGHER. I mean backing them.

Senator ALLEN. Back of them? Do you mean to say that the railroad companies and the elevator companies or any of them are pooled on the profits of wheat-that is, that the railroad companies participate, directly or indirectly, in the profits made by the elevator companies in handling wheat?

Mr. GALLAGHER. I could not answer that better than to refer you again to Mr. Stickney's evidence, in which he states that that is the case and that it is necessary.

Senator ALLEN. That is your understanding?

Mr. GALLAGHER. Yes, sir; that is my understanding.

Senator ALLEN. The railroad man who owns stock in or is an officer of the railroad company will also own stock in the elevator company and cooperate with those engaged directly in the elevator business in fixing the prices and fixing the rates of transportation?

Mr. GALLAGHER. They will not have the same corporate names. Senator ALLEN. Oh, no; they will have different names, but it is really one organization. Now, those organizations have for one of their principal objects the disposition of all competition. An independent elevator operator located at a town where this company has its elevators could not successfuly compete with it, could he?

Mr. GALLAGHER. No; he could not. He would go out of business shortly. They generally, though, give a man a lease of a few months each year, to let him be doing something.

Senator ALLEN. To what extent, if you know, has the destruction of independent competing elevators gone by this system of organization which you have mentioned?

Mr. GALLAGHER. It has been to this extent: Take a road that I have not mentioned. Take the line of the Missouri, Kansas and Texas Railway Company, which is generally conceded to be in the hands of J. K. Davidson & Co., of Kansas City.

Senator ALLEN. Who are J. K. Davidson & Co. ?

Mr. GALLAGHER. They are favored shippers. They have a right to do business along the line of the Missouri, Kansas and Texas.

Senator ALLEN. Do they own elevators?

Mr. GALLAGHER. They do not own elevators. They own the Union at Kansas City and the property at Parsons, but aside from that the railroad backs them in business.

The CHAIRMAN. What railroad?

Senator ALLEN. The Missouri, Kansas and Texas.

Mr. GALLAGHER. The Missouri, Kansas and Texas.

Senator ALLEN. The Katy.

Mr. GALLAGHER. Yes, sir.

Senator ELKINS. There is no one here to answer for that line. I have no stock in it, but do you not think you ought to furnish proof up and down? That is an impression of yours.

Mr. GALLAGHER. I have been told so by gentlemen.

Senator ELKINS. By the owners of the roads?

Mr. GALLAGHER. No, sir; people interested in the grain business.

Senator ELKINS. Not in the road?

Senator ALLEN. Let him tell what he knows.

Senator ELKINS. That is it exactly. Let him tell what he knows and not his impressions. I suggest that you request J. K. Davidson to appear here and defend himself.

Senator ALLEN. Who told you this?

Mr. GALLAGHER. A man employed by Davidson at that time. Senator ELKINS. Did any of the Missouri, Kansas and Texas peo

ple tell you that?

Mr. GALLAGHER. No, sir.

Senator ELKINS. Do you not think it is hard to say that here? You would not take a fellow's word without hearing the other side; we would not, at least. We will have to send for the Missouri, Kansas

and Texas people to find out.

Mr. GALLAGHER. I believe it would be good for this bill.
The CHAIRMAN. Tell all you know and nothing more.

Mr. GALLAGHER. Senator Allen asked me the effect of this business. A gentleman who was formerly engaged in grain buying found it impossible to continue in business, and he became an employee of the people who could do business along the line. He described the effect of it to me, and I was describing it to Senator Allen.

Senator ALLEN. Is not that quite common?

Mr. GALLAGHER. I am told so. I can not give you the individual cases, but that is the effect of centralizing the trade in the hands of a few people.

Senator ALLEN. The effect and the drift of the whole thing is to depress the price of wheat?

Mr. GALLAGHER. It has been.

Senator ALLEN. Exactly so.

Senator CHANDLER. I should like to ask a question. I notice you say that the National Millers' Association, for which you appear, recommend the passage of a bill which Senator Cullom has introduced for strengthening the powers of the Interstate Commerce Commission, with this addition:

It shall be lawful for the carriers, whether persons or corporations, to maintain associations for the establishment and maintenance of fair, uniform, and lawfully published rates, rules, or regulations affecting the transportation of persons or property, not in violation of the provisions of section 5 of the act to regulate commerce, approved February 4, 1887, and acts amendatory thereof: Provided, That all such rates, rules, or regulations, and any methods adopted for the maintenance of the same, shall be filed with the Interstate Commerce Commission and be subject to its approval.

Now, is it the intention of the Millers' National Association to ask that a law be enacted which would legalize the joint traffic association recently decided to be illegal by the Supreme Court of the United States?

Mr. GALLAGHER. Yes, sir; a reorganization on a legal basis of such associations as the trans-Missouri, the Trunk Line Association, and like organizations.

Senator CHANDLER. For the legalization of an association just like those? The National Millers' Association want the effect of those two decisions destroyed by an act of Congress, do they?

Mr. GALLAGHER. Yes, sir; the millers desire the railroads to make their own rates, subject to regulation by the Interstate Commerce Commission.

Senator CHANDLER. In the interest of the people who have flour to send over the railroads?

Mr. GALLAGHER. That is the idea.

Senator CHANDLER. You are here to-day, then, advocating the crea

tion of a railroad trust which may embrace eleven thousand millions of capital without any competition between any of the railroads. Is that your object?

Mr. GALLAGHER. No; I am not advocating that.

Senator CHANDLER. Yes; you are advocating it, if that is the effect of this clause.

Mr. GALLAGHER. We do not so understand it.

Senator CHANDLER. If it embraces the Joint Traffic Association, with twenty-five hundred millions of capital, of course there is no reason why eleven billions of capital should not be embraced in such an agreement. Then a joint traffic association would be established comprising all the railroads of the United States, and there would be provision that there should be no competition.

Mr. GALLAGHER. The Millers' National Association is here advocating the passage of Senate bill 1439. The resolution which you have read is the resolution adopted by the National Board of Trade and recommended to this committee as an amendment.

Senator CHANDLER. That only makes it worse. Then the National Board of Trade, as well as the National Millers' Association, advocate a law that would authorize an association to be made of all the railroads of the country which may provide against any competition among all those railroads in the transportation of freight and passengers.

Mr. GALLAGHER. I do not understand that it so states. It says not in conflict with section 5. That is the antipooling section. Senator CHANDLER. Section 5 does not say there shall not be such a combination. The Joint Traffic Association decision and the transMissouri decision were made under the act of 1890. This only provides against the pooling of freight and the pooling of earnings, but the Joint Traffic Association agreement was not decided to be illegal under section 5 of the interstate-commerce act. It was decided to be illegal under the antitrust act of 1890. Now, the National Board of Trade and the National Millers' Association

Mr. GALLAGHER. The National Millers' Association has nothing to do with that.

Senator CHANDLER. Both of those organizations have gravely proposed that a railroad trust shall be formed, which shall extinguish competition among the railroads of this country. Is not that what you propose?

Mr. GALLAGHER. No, sir; by no means. We have no intention of proposing anything of the sort.

Senator CHANDLER. Are you not proposing to legalize a trust in transportation?

Mr. GALLAGHER. We are proposing this: We are proposing to allow an association in Chicago territory, 100 per cent territory, say, to fix the rate of freights in that territory, subject to the approval and control of the commission; an association with headquarters in Kansas City, to fix the rates in that quarter-—

Senator CHANDLER. I understand that.

Mr. GALLAGHER. That is what we propose.

Senator CHANDLER. After that no railroad can reduce its rates.

Mr. GALLAGHER. Why? I do not understand that.

The CHAIRMAN. If you will excuse me, I think Senator Chandler misunderstands the gentleman's position or else he does not understand the question.