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It must be used there, to do that business there, and it soon becomes evident to every man who investigates this question at all that railroad competition, while it may add immediately to the traffic of a business, is suicidal in the end. Every railroad manager sees it. The first thing he tries to do is to make a traffic agreement to agree on what these rates shall be. That does not amount to much, because it will not be observed. Then comes the following arrangement: He says that there is so much traffic; he says, "We will divide it between these three railroads." Then Congress passes a law and says, "You shall not pool." Then comes the traffic association. They say, "We will agree on some rate." And then comes the antitrust law and says, "You shall not maintain your traffic association."

Then, gentlemen, this thing finally gets back to the owners of this property, and they say, "We are paying for this nonsense. We, the owners of these three roads, are the sufferers," and the thing which can not be controlled through the traffic department, and never is, is controlled through the medium of ownership.

In some way or other those three roads are bound to get together. The owners of those three roads are bound to get together to eliminate that competition, which does not do anybody any good and which does everybody-from a railroad standpoint-harm.

Now, I said when the joint-traffic decision was made that that decision did more to eliminate railroad competition in the United States than any other thing which had happened for years. I believed it would. I said five years ago, when I first investigated this question, that there was but one possible outcome, and that was the consolidation of the railroads of the United States. My opinion would not be worth anything, and it was not worth anything then, but conditions to-day have verified that judgment.

You, gentlemen, have seen from the newspapers from time to time the extent to which these consolidations have proceeded. I doubt if you realize it fully, and I want to call your attention to it as an important phase of this problem, and one which has to be reckoned with in disposing of this subject.

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I have in my hand here an article written by a gentleman named Kuneth. I do not know him, but I have taken this from the World's Work for February, 1902. Í say I do not know him, and I attach no particular importance to his opinion, but I use these tables merely for the sake of reference. What do these show? Here we have, first, the Vanderbilt system, which embraces 19,500 miles of railroad. I do not take Mr. Kuneth's opinion for that; that fact is shown by the records of the Interstate Commerce Commission-with this exception: The Northwestern Railroad is reckoned as a part of that system, and while everybody understands that the Northwestern Railroad is a part of the Vanderbilt system, the records of our office would not demonstrate that fact. But you can safely say to-day that the Vanderbilt system embraces 19,500 miles.

Next we have the Pennsylvania system. That system is set down here as embracing 14,350 miles; but that computation includes the Baltimore and Ohio Railroad. The Chesapeake and Ohio Railroad and the Norfolk and Western Railroad are treated as controlled jointly by the New York Central and the Pennsylvania. I think, in fact, they are controlled by the Pennsylvania Railroad and should be added to

the Pennsylvania system; making that system 18,000 miles, in round numbers.

We know that from the records of the Interstate Commerce Commission.

We have next here the Morgan-Hill system, which embraces roads in which Mr. Morgan is most prominently interested and which he controls, and they aggregate here 37,500 miles.

Now, with respect to that, we know from the sworn testimony before the Commission that Mr. Morgan and Mr. Hill control the 18,000 miles of road embraced in the Northwestern merger. It is known and assumed by everybody that Morgan controls the Southern Railroad. Since this article was written I have added 6,000 miles to the mile age given here, because Mr. Morgan to-day controls the Louisville and Nashville. It is somewhat remarkable how these things happen up in New York. There is a flurry in the stock market and something has been done, and nobody knows exactly what. Somebody says Mr. Gates has it, and another man says Mr. Rock Island Road has it; but in two or three days Mr. Morgan says, in reply to an inquiry, “I own it."

Mr. Gates says, "I thought I did, but I didn't," and Mr. Belmont says, "I did, but I don't. Mr. Morgan owns the Louisville and Nashville."

Add that to this statement here and you have 43,000 miles of road which Mr. Morgan controls to-day. I think I can say in respect to that, taking this transaction in Louisville and Nashville, that the testimony given before the Commission, and from the records of the Commission, that that statement is correct.

We have here now the Gould system, of which the Missouri Pacific is the nucleus, and about which I do not pretend to know so much, and I do not know whether the records of the Commission would show it or not. I have to take that system alone, as Mr. Kunith gives it, at 16,000 miles.

The chairman suggests that when the reports for this year are in they will probably show that fact. That leaves the Harriman system, which is set down here at 21,000 miles; and in respect to that I will say we know that from sworn testimony given by Mr. Harriman before our Commission.

Now, gentlemen, what is the grand total? One hundred and fourteen thousand miles of railroad controlled by five different systems, or five different persons. You have left the Acheson system, the Rock Island system, the San Francisco, and the Milwaukee, and those are the only important independent systems there are. Those aggregate 21,000 miles. When you have added, gentlemen, to the 114,000 miles that I have stated the 21,000 miles now independent you have a monopoly of the railroads of this country in the hands of five men. You say there are 200,000 miles of railroad. That is right; there are 200,000 miles of railroad. There are 70,000 miles of railroad left. But what railroad? Seventy thousand miles of railroad that does not begin anywhere and does not go anywhere; 70,000 miles of railroad that is absolutely dependent for its existence upon these five great systems.

Now, gentlemen, you may talk about railroad competition, you may rely upon railroad competition to reduce rates or to regulate rates, but there is no railroad competition. When five men seated around a

table in the city of New York can say what the rate on grain shall be from Kansas City to the Gulf and from Kansas City to the seaboard, from the Missouri River to the seaboard, and from the grain fields to Chicago and Duluth, you have not any more competition in the movement of grain. When five men can sit down around a table in the city of New York and say the rates shall be so and so, "if at the end of the year this thing does not pan out to be as we think it ought to we will make it right," you have a pooling arrangement that can never be reached by any law. One of two things has got to result. Either these five men will agree upon some modus vivendi, upon some apportionment of the territory of this country, as they have done in England to-day, with the result that they have the highest freight rate there in the world, or they will become partners, or one man will buy out the other four.

Now, gentlemen, when you have a condition in this country where one man virtually controls its railroads, what are you going to say about it? We asked Mr. Harriman that question, and we asked Mr. Hill that question, and Mr. Harriman and Mr. Hill both said: "You need not be at all alarmed; we will take care of the public; we will reduce freight rates." Gentlemen, I want to read to you, for I drew it up, a statement showing the appreciation of the properties embraced in the Northwestern Securities Merger for five years. I compare March in 1897 with March in 1902, and with this result:

Northern Pacific common, in 1897, was worth 12. To-day it is worth a trifle above par. A gain on $80,000,000 of $72,000,000.

Northern Pacific preferred was worth 35. It is worth par to-day. A gain on $75,000,000 of $50,000,000.

Burlington was worth 72. It has been retired on the basis of 200. Converted into bonds on that basis. A gain of $128,000,000.

The capital stock of the Great Northern was then $40,000,000, and it sold on the market for 120. The capital stock to-day is $100,000,000, and it sells on the market for 180. Á gain of $132,000,000.

This makes in all a net gain on the market value of those stocks of $382,000,000 in five years. Money enough to build and equip two lines of railroads from the head of Lake Superior to the Pacific coast.

What is a freight rate? A freight rate is a tax on everything which enters into the life and commerce of this country. You have not got a stitch of clothes on you which has not borne that tax. You do not eat a single thing which does not bear that tax, unless you dig it in your own garden or buy it from some laborer who digs it in his garden. And to say that one man shall determine what every other species of property shall pay to his property is a thing which I do not believe the people of the United States will submit to. Mr. Hill says in his sworn testimony that a man who charges too high a rate is a pirate. I do not think that. The question of the rate, a reasonable rate, is a matter of opinion. Mr. Hill's opinion might be one way and your opinion might be the other way.

So I do not think that, at all. But I do think this: The history of all time has shown that when you give a single individual power over the property or the liberty of his fellow-man and do not restrain or control that power, he abuses it. If the railroad property of this company has the right, without control, to say what tribute other property shall pay to it, it will abuse that power.

Now, you say that is a theory. You say your rates are still falling.

These operations began, you see, years ago. I say to you that rates are not still falling; I say to you that rates are advancing that there is a steady advance of rates in all parts of this country to-day. This is shown by the published schedules on file with the Interstate Commerce Commission. It is shown even by the rates per ton per mile, which is a poor indication of the actual rate, but which has advanced for the last two years, and undoubtedly, when our computations are completed, they will show a higher rate per ton per mile for the year ending June 30, 1901, than for the previous year.

If you could sit in an office, as I do, receiving complaints from all parts of the country of advances here and advances there, you would understand in a way that you can not understand how this process goes on.

If one man owned all the railroads of this country he could not charge what rate he wanted to; he would not be fool enough to make any sudden or marked advance. What he would do would be to maintain rates. What does that mean? To just maintain the present published rate? Mr. Morton, of the Atchison Railroad, in testifying before the Commission some time ago, said that departures from the published rates cost his railroad between $500,000 and $1,000,000 a year. His revenues are about one-fortieth of the entire revenues of the railroads of the United States. Now, assume that every other railroad exceeds the rate to the same extent that the Atchison Railroad does, neither more nor less. What does it mean? It means this: That a simple maintenance of the published rates adds to the net revenues of the railroads of this country $20,000,000 a year. On a 4 per cent basis it adds to the capitalization of this country $500,000,000; it puts into the pockets of somebody $500,000,000-the owners of these stocks and securities.

There is another thing. I am sorry I have not time to elaborate more, and I know it is rather uninteresting testimony, but it is important that you gentlemen should have these things in mind, because they go to the basis of this whole question.

The cost of transporting traffic is decreasing every day. Grades are reduced, curves are cut out, the power of locomotives is increased, and the result is to reduce the cost of transportation. The sworn testimony of the manager of the Lake Shore Railroad before the Interstate Commerce Commission not long ago showed the average carload of grain from Chicago to New York was 60,000 pounds. Fifteen years ago that was probably 30,000. He said that the carload of the future would be nearer 100,000. He further said that one engine would draw 50 cars from Chicago to Buffalo, and doubtless the same engine would draw the same number of cars from Buffalo to New York.

Now, observe for a minute what that means. In 1885 the average carload was 30,000 pounds, and the cost at the present rate from Chicago 17 cents. The railroad would receive for hauling that train load $2,625. To-day the average carload is 60,000 pounds, and the railroad would receive for hauling it, gross, $5,250. When the average load is 100,000 pounds the railroad will receive for hauling those 50 cars $8,725. Captain Granner testified that on his line 50 cents a train mile would probably cover the cost of movement. Taking out the cost of movement, $2,100 in 1885; $4,700 in 1900; $8,200 in 1901.

There is another thing. The traffic on these railroads is increasing, and as you increase the density of traffic you can move it cheaper; the

rate ought to decline. These gentlemen say that the cost of their supplies is increasing, and perhaps they are; but statistics just published by Bradstreet show that for the year ending December 31, 1901, the gross revenues of the railroads increased 12 per cent and the net revenues increased 16 per cent.

Now, why is it? When the cost of moving traffic is increasing, when the density of traffic is increasing, when gross revenues are increasing, and net revenues increasing still more rapidly, why is it that the freight rate also is increasing? It is because you are removing railroad competition.

Now, they say that there is no such thing as railroad competition. At the risk of wearying you I will cite one instance, because it arises in the sworn testimony taken by this Commission.

The rate from the Missouri River to New York on grain used to be 29 cents a hundred pounds. I think it was about that in 1892. In 1899 that rate had fallen to 12 cents a hundred pounds. The Commission had investigated that question and had declared that 23 cents was a reasonable rate. We thought we would investigate it again and find out what it was that occasioned this low rate from the Missouri River to the seaboard.

We summoned before us all the traffic managers of the leading railroads, and they all testified, without one single exception (this was in the winter and there was no water competition), that the cause of that low rate was railroad competition between the carriers themselves. What is the rate to-day from the Missouri River to New York? I think it is 18 cents; and why is it 18 cents to-day as against 12 cents three years ago? For this reason: You have eliminated the most troublesome factors in that competition situation. The Baltimore and Ohio and the Norfolk and Western and the Chesapeake and Ohio are to-day controlled by the Pennsylvania. The lines north of Pennsylvania are controlled by not over two men. That is the reason that the farmer west of the Missouri River pays to-day 5 cents a hundred pounds more yes, 6 cents a hundred pounds more than he did three years ago for the transportation of his grain.

I do not say, gentlemen, that the rate is too high now. I am not discussing that question at all; but I am only saying to you that this competition which has been relied upon in the past is a thing of the past and that you have to put something else in the place of it. Now, what are you going to do? What is the remedy? The obvious answer is, Compel competition by law. That is what Governor Van Sant says. Dissolve the Northern Securities Company. That is what the Attorney-General says. Enforce the law against trusts and monopolies. Now, the law ought to be enforced. But suppose you dissolve the Northern Securities Company, what have you gained? Those railroads are still owned by the same men, they are still friendly, you can not by any possibility compel them to be enemies and to compete as enemies. Take all these other mergers. Mr. Morgan has bought this stock in the open market. Can you deprive him of it? And suppose you could. Suppose you could break up every railroad combination that has been formed in the past five years in the United States or in the last ten years. Suppose you could destroy the New York Central system and the Pennsylvania system and the Harriman system and the Gould system.

Suppose you could enforce the antitrust law and prevent all com