Senator CHANDLER. They did it in the Joint Traffic Association. They did it there by penalty.

Mr. BACON. I hardly feel qualified to discuss the proposition with members of the committee. I supposed the purpose of our coming here was to give information from our standpoint.

Senator CHANDLER. You come here with a proposition which is no part of the original bill, but which was carried through the National Board of Trade that met in this city; it is to be put in our faces-we who believe that competition as a principle ought not yet to be eliminated from railroad transportation-and then you say you do not want to discuss it, because you do not understand it. I understand it very well.

Mr. BACON. I do not mean to say that I am not willing to be questioned. I am willing to give you all the information I can, but to enter into a general discussion of the principle I believe would absorb the whole time to-day.

Senator CHANDLER. I only interrupted you because you said there could not be any objection to this proposition, because rates have been Rates have been low because competition has kept them low. It does not follow that if you destroy competition, as the board of trade proposes, rates will continue low. Competition will be gone absolutely under that clause.

Mr. BACON. I attempted to answer that by saying that the conditions of competition were such that it could not be extinguished by any other process than by an actual pooling of earnings or of freight or an actual consolidation of the railroad interests of the country. Senator CHANDLER. Very good.

Mr. BACON. Let me go on and carry out this idea.

Senator CHANDLER. Right here I simply answer in reply to that statement that the Joint Traffic Association existed for three and a half years, until it was destroyed by the act of 1890. It did not provide for pooling of freights, but destroyed competition by the authority which was given to impose penalties upon a railroad that lowered its rates below those fixed by the Joint Traffic Association. Now, you come in here and say it can not be done. My answer to that is that the Joint Traffic Association did it.

Mr. BACON. Those associations are constituted of so many different lines that lie in different localities, and although in competition with each other in some section of their lines they are not in others, and the interests of the various members of the association are so diverse that it is utterly impossible for them to agree upon any one settled policy, except by making concessions one to the other. In that way they arrive at a compromise rate on each of these commodities between certain points by which they are all willing to abide. It is a matter of concession on the part of every individual road. The difficulty only arises in striking that balance and finding out where the concessions can be made where they can meet on those concessions. That exists with reference to each particular section of the country. Probably there were forty of these associations in various parts of the country, each association covering a certain section of the country in which it was particularly interested. No two of those forty associations, to say nothing of the whole forty, could combine their interests and ever come to any agreement in relation to rates. It is utterly impossible. Senator CHANDLER. Did they not do it in the Joint Traffic Association?

Mr. BACON. That is only one section.

Senator CHANDLER. The association embraced the nine roads between Chicago and the seaboard?

Mr. BACON. That is true, but that is only a very limited section of the country. I do not know how many there were, but as near as I can judge there must have been about forty. No two could come together, to say nothing about the forty.

Senator CHANDLER. If there was one association which embraced more than one-fourth of the railroads, how could there have been 40 associations?

Mr. BACON. That, perhaps, is a matter of theory, and I will not take the time of the committee to go into it further. I will simply say that in my intimate acquaintance with the rates established by the freight association I never heard the charge that the rates established by any of those associations were excessive or unreasonable or unsatisfactory. The dissatisfaction on the part of the public has arisen from the unequal rates, the inequitable rates, made between different points in the country with reference to each other; that one certain locality or section of the country was deriving a benefit at the expense of another locality or another section of the country; and it is only by the existence of such organizations that liveable rates can be made, not only between the railroads themselves, but between the different communities of this country. It is the only method by which the rights of the respective localities and the respective sections of the country with reference to each other can ever be equalized. No body could be organized by Congress or any other authority whatever that would be capable of accomplishing the purpose.

It is for this reason that the National Board of Trade presents this proposed addition to the bill. Another reason is that there is an element in the National Board of Trade which is desirous of legalizing pooling. It is a pretty strong element.

Senator ALLEN. Do you believe in that?

Mr. BACON. I would only submit or consent to it as the choice of evils. Senator ALLEN. Do you believe in destroying, by statute, the freedom of contract?

Mr. BACON. I look upon matters in a practical, rather than a legal, way. I am not a lawyer. Rather than to have the chaotic condition that has existed since the Supreme Court has denied to the commission the power to state what is a reasonable rate when it has found the existing rate to be unreasonable, I would perfer to see all the railroads in the country in one grand pool.

Senator ALLEN. Is there any end to the evils that would ensue from the doctrine of the legal destruction of the freedom of contract? Is it not opening a Pandora's box whenever the Government undertakes, by legislation, to destroy the freedom of contract?

Mr. BACON. Unrestricted competition between transportation lines in this country would be the most unfortunate thing to the country conceivable.

Senator ALLEN. Unfortunate; how?

Mr. BACON. I was going to tell you. There is nothing more destructive to business and business interests than inequality in rates. To the business man it matters little what a rate is provided it is uniform, but as business men we desire to see the producers and the consumers of the country protected from extortion.

Senator ALLEN. It is the application of the law of the survival of the fittest.

Senator CHANDLER. It is to abolish competition in order to secure uniformity of rates. That is the proposition of the board of trade, Senator Allen.

Mr. BACON. I have lost my point now, I am sorry to say.

Senator CHANDLER. I will give you a point. Why is it necessary to abolish all competition in railroad transportation in order to secure uniformity in rates?

Mr. BACON. The great destructive element in trade is inequality in rates. The second is instability of rates. Unless rates can be made uniform to all, and unless they can be equitable to all as to a locality and as to a section, the business interests of this country are in chaos; and what is required is the uniformity that was sought to be accomplished by the enactment of the interstate-commerce law. Uniformity in the first place, equability in the next place, and reasonableness in the third place. All three of these objects are sought to be accomplished by the interstate-commerce act, and those are the three necessary things for the promotion of our business interests-the interests of the producers and the consumers throughout the United States. Senator ALLEN. What do you call business interests?

Mr. BACON. I use that term in its general sense-merchants and manufacturers.

Senator ALLEN. As applicable to whom?

Mr. BACON. Applicable to shippers, and particularly as applicable to merchants.

Senator ALLEN. Stopping there?

Mr. BACON. No, sir; it is applicable to shippers of all classes; to mercantile, manufacturing, or producing interests, involving, in fact, all the material interests of the country.

It was supposed when the interstate-commerce act was passed-I will say incidentally that I had some connection with the passage of that act when it was originally adopted. Senator Cullom may remember the fact. I was then a representative of the National Board of Trade before the Interstate Commerce Committee of the Senate, and previous to that time I attended the hearings of the select committee of the Senate, of which Senator Cullom was chairman, held in different parts of the country. I watched its proceedings very closely during the preparation of the bill and followed the proceedings attendant upon its enactment, and I have also observed its operation after it was put into effect.

I was going to say that it was understood and was generally believed, both by the public and by the railroad companies, for years that the commission did have this power to state, when it found a rate that was unreasonable or discriminating, what was a reasonable or equitable rate. The commission acted upon that assumption. They made numerous decisions to that effect. The railroads complied with them. That period of five years, after the enactment of the original interstatecommerce act, saw the most extensive practice of justice and uniformity and equability in railroad rates that ever existed in this country; and I will say that I have been connected with railroad transportation for the past forty years, either as a railroad man, which was my profession for fourteen years, or as a business man, and, in consequence, in close contact with railroad transportation.

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Now, what we desire is to see the power which we supposed was conferred, and was admitted on all hands to be conferred, by the act originally, specifically inserted in the act, inasmuch as the Supreme Court has held that it does not now exist.

Senator ALLEN. Has your organization ever taken the sense of the producing interests of the country, as distinguished from the manufacturers, respecting this measure?

Mr. BACON. I am not aware that the producers' organizations have participated at all in the consideration of this question.

Senator ALLEN. Do you know of any instance within the history of the Interstate Commerce Commission where they have given the farmers, as distinguished from the manufacturers, tradesmen, and shippers, a distinct hearing?

I

Mr. BACON. I think that when the hearings were held by this committee your chairman will be able to answer the question, perhaps, better than I-the agricultural interests were invited to present their views of the case. But to what extent they did so I am not aware. do not think they availed themselves of it to any particular extent. Senator ALLEN. Representative farmers have never been summoned. The CHAIRMAN. Before the interstate-commerce act was passed the select committee, which was then composed of five Senators, traveled over the country very considerably, and, among other places, we held meetings in your State, Senator. I sent out prepared inquiries and invited the leading farmers and grangers, if I may so call them, to come in. They appeared from all over the State, and they were heard before the committee at that time probably more extensively in Nebraska than in any other State in this Union. They made very intelligent statements. You will find their statements in one of the two volumes of testimony which I reported to the Senate and which are now in the Library.

Mr. BACON. I will state in this connection that I am engaged in the grain commission business and have been for the past thirty-five years. My business has been to receive grain on consignment. I have no pecuniary interest in the grain in any way whatever. My sentimental interest has consequently always been with the producer, with the man who finally gets the money for the product after the freight is paid and the commissions are paid; and in what part I have taken in connection with the interstate-commerce act I have had in view just as much the interest of the farmer-the producer-as I have had the interest of the middleman, who has the property to handle. If, in this connection, any question comes up in relation to producers which Senators would like to ask, I shall be glad to answer them.

Senator ALLEN. Are you cognizant of the fact that it takes about 1 bushel out of every 3 in my State to get the other 2 to market?

Mr. BACON. I know that has been the case in occasional instances, when under certain conditions the market price has been exceedingly low. I think that in the State of Nebraska the producers have good reason to complain of excessive rates, but it has been in territory that has not been in the control of any of these associations, and such territory is really the territory that has suffered from excessive rates all over the country. They are the short lines, the noncompeting lines on which the people are made to suffer. The rates west of the Mississippi River are very generally double what they are east of the Mississippi River for that reason, except on principal lines where competition

exists to such an extent that an association has been formed to regulate

rates.

With the permission of the chairman, I will refer to the case which the Milwaukee Chamber of Commerce has had before the commission. I refer to it as an illustration of the necessity of the Interstate Commerce Commission, or some other body having the power, after a full hearing of all parties in interest and a full investigation of the subject and a finding that injustice is being done, to declare what is necessary to remedy that injustice and the necessity of having power to enforce that decision. The Chamber of Commerce of Milwaukee brought a case, in October, 1894, before the Interstate Commerce Commission, making complaint that the rates from points west of the Mississippi River to Milwaukee were discriminative as related to the rates to Minneapolis from the same territory. Minneapolis and Milwaukee compete in the same territory for the shipment of grain, and the rates of freight from points in the territory lying directly west of Milwaukee, on the latitude of Milwaukee, to Milwaukee were greater in proportion than they were to Minneapolis. Complaint was brought by the Chamber of Commerce to correct that disproportion in rates in order that the grain which naturally belonged to the market of Milwaukee should not be diverted, as it was being diverted, to the market of Minneapolis.

The commission took up the case and we had to wait three years for a decision, owing, first, to its being a very complicated case, but largely, perhaps, to the fact that Commissioner Veazey was incapacitated at the time and he had the case in charge, and it was delayed, hoping he might recover and complete it. Furthermore, it was delayed partly through the endeavors made by the commission to procure an equitable adjustment of rates between the railroads without their making a decision and issuing an order. A delay of three years, as I have said, was involved in consequence of those facts.

We finally got a decision from the commission which was entirely satisfactory, to the effect that the rates to Milwaukee should not exceed the rates to Minneapolis by a greater difference than the rates on the distance tariffs on the several lines for corresponding distances; that is, the rate from a given point to Milwaukee should not exceed the rate to Minneapolis by a greater difference than existed in the distance tariffs for the same distance. It was found that the rates were very much in excess of that difference, and the commission made that ruling and issued an order that the rates should be changed to correspond with that principle.

it.

Nobody questioned the rightfulness of the decision or the justice of Even the people in Minneapolis, who were as much concerned as the people of Milwaukee in regard to it, did not dispute the justice of it, and, in fact, the committee of Minneapolis people and Milwaukee people agreed upon the adjustment of rates upon that principle and submitted it to the railroad people for their adoption, but the railroads refused absolutely to carry the order into effect.

We brought a second complaint before the commission, asking them to cite the representatives of those railroad companies before it to show cause why they should not comply with that decision. The commission did so, and held a second hearing of the case under that petition. The whole matter was again gone over, from beginning to end. The commission took the case under further advisement and reaffirmed its