Mr. MANN. But you say the court can not take the evidence. Mr. BACON. That is the provision of the bill as it stands. It must be referred back to the Commission for its taking of the evidence, and the Commission may give an entirely different decision on the receiving of the entire evidence. Mr. MANN. There is no authority for it in the bill; there is no authority for it to give any different opinion at all. Mr. BACON. The bill certainly provides that after hearing the testimony it shall give its opinion on the case. Mr. MANN. Not after the second decree. Mr. BACON. I so understand it. Mr. TOMPKINS. It must necessarily follow or else that provision would be void. Mr. MANN. There is no such provision in the bill whatever, but if there were it would not affect the question of the constitutional power of the legislature to say that the court shall not take testimony. Mr. BACON. Well, that may be easily remedied, if it is erroneous in point of law. I wish to read further the statement of the Industrial Commission on "Remedies in procedure suggested," in connection with this point. The report says: What are the remedies proposed for the defects in procedure which have been above described and which are responsible for much of the dissatisfaction with the interstate-commerce act as it stands? * * In the first place, that the burden of * * * appeal to the courts from orders or findings of the Commission shall rest upon the carriers rather than upon the Commission itself. In other words, the Commission having promulgated its order, the same shall become effective and binding unless the carriers shall bring suit in a United States court within thirty days to compel a review of the case. This, it is alleged, will operate to give finality to the larger proportion of the proceedings of the Commission, making them effective at once. And secondly, that the evidence, pleadings, papers, and exhibits taken before the Commission and certified by its secretary shall be filed with the court and received in evidence. The court may render its decision upon the basis of this evidence, if it please, or it may require that the Commission secure additional testimony. In any event, however, such testimony or papers submitted by the Commission shall be regarded as competent. I will give way at this point, Mr. Chairman, in order that another gentleman who is here from abroad may present his testimony. The CHAIRMAN. Before that I would like to ask you a question. You speak of your experience as a business man. In this connection let me ask you what is your business? Mr. BACON. I am engaged in the grain commnission business in the city of Milwaukee, and have been for thirty-five years. The CHAIRMAN. Now, will you not explain to the committee, if you please, some of the hardships; give us some idea of the wrongs that, in your judgment, are to be remedied by this bill? Of course, you understand, Mr. Bacon, in the line of questions that are asked, that members ask you simply seeking light and in no other spirit. We want gentlemen who have studied this question and understand it in all of its bearings to enlighten us, and especially with regard to certain particular matters that we have less information about, perhaps, than others. So I wish you would give the committee some idea of the character of wrongs and of the remedies. Mr. BACON. The wrongs are of two kinds. In the first place, the wrongs of discrimination. These pertain particularly to business men The CHAIRMAN. Right there. All discriminations are prohibited under existing law, are they not? Mr. BACON. They are prohibited. The CHAIRMAN. And there are penalties that may be urged against those who indulge in them under existing law? Mr. BACON. They are in the case of rebates; but in the case of published rates which are discriminative, the only remedy is by means of complaint before the Interstate Commerce Commission and showing the Commission the fact of the discrimination in those published rates. The CHAIRMAN. The more serious and frequent complaint in regard to discriminations are complaints of rebates? Mr. BACON. They are not the more serious in their effects; they are serious as between individuals only. But the other class of discriminations is serious between communities. They debar certain communities from a share in the trade to which they are naturally entitled. The direction of trade is controlled by the rates prescribed by the railroad companies. The CHAIRMAN. Take the large interests from a city like Milwaukee, in the grain trade. They are there in the nature of rebates, are they not? Mr. BACON. No; they are more in the nature of discriminations against localities. The Milwaukee Chamber of Commerce brought a case before the Commission on the ground The CHAIRMAN. I was asking you the discriminations on these rates on traffic originating at Milwaukee. What is the character of those discriminations-rebates? Mr. BACON. There are discriminations in rebates on business originating in Milwaukee. The CHAIRMAN. Are those discriminations that the community of Milwaukee would complain of? Mr. BACON. Yes, a part of them; not nearly so much as in the discriminations in the published rates, more especially from points in the West from which Milwaukee derives its business, and to points in the West to which its merchandise is shipped. The CHAIRMAN. You mean discriminating published rates that would favor, for instance, Chicago rather than Milwaukee? Mr. BACON. More particularly Minneapolis. The rates to and from Milwaukee and Chicago between the points in the West and those places are uniform, though the distance to Milwaukee is less than to Chicago. It is a well-established policy of the railroads to make the rates uniform to those two places, and there are certain circumstances which prevent its operating unjustly toward Milwaukee; but the injustice Milwaukee suffers from is the disproportionate rate charged from points in the extreme West, where grain is produced largely, to Milwaukee as compared with Minneapolis. The CHAIRMAN. Minneapolis gets the better rates? Mr. BACON. Minneapolis gets the better rates, and we brought a case, which I spoke of a moment ago, before the Interstate Commerce Commission, and the Commission decided in our favor and declared that the rates to Milwaukee were, from certain territory, from 2 to 3 cents too high as compared with the rates existing at the same time from the same territory to Minneapolis. But Milwaukee got no benefit from this decision, because it was given out just about the time that this decision of the Supreme Court was given which declared that the Commission had no power to prescrioe what change should be made in rates when it found that existing rates were unreasonable or discriminating. The railroad companies declined to obey the order, and the Milwaukee Chamber of Commerce summoned the railroad companies to appear before the Commission and show cause why they should not comply, but their simple defense was that they were unable to agree among themselves upon a less differential in rates than already existed. That injustice and that burden has been borne up to the present time, and will always have to be borne unless some change is made in this law. And that is only one case of a score of them that have come to my personal knowledge during the last few years. The CHAIRMAN. On those products that go from Minneapolis eastward is there any rate that is compensative or that evens up the general charge that Milwaukee merchants would have to suffer from? Mr. BACON. That question was considered by the Commission in the determination of the case, and it was decided to the contrary. It was decided that in order to place Milwaukee on an equality this difference which it prescribed should be made, and it reaffirmed this order when this second hearing was held, but no attention was paid to it. I will not say no attention, because a very slight reduction in the rate to Milwaukee was made by the several companies at that time, varying from a cent to a cent and a half a hundred pounds; whereas the difference should be 2 to 3 cents to place Milwaukee on an equality. And the effect of that was practically nothing, for the reason that the difference prescribed by the Commission was barely sufficient to place the two markets on an equality, and the result was that Milwaukee suffered just as much after the partial reduction as before any reduction was made, and the tendency in favor of Minneapolis continued just as great as before, because the difference made was insufficient to affect the route or the destination of the grain from the point of origin as between these two competing markets. Mr. MANN. Is it not a fact that nearly every large city of the country claims that the railroads running into it discriminate against them? Mr. BACON. A great many of them do, and that is what the Commission is for to determine such questions, to hear the evidence of the parties who complain of discrimination and determine whether it exists or not. Mr. COOMBS. What has been the effect of the action of the Commission upon freight and bringing about a better condition for shippers, generally speaking? Has it been an instrument? Mr. BACON. During the period when it exercised its authority of prescribing a rate to be substituted it was thoroughly satisfactory. Mr. COOMBS. But I am speaking about the general results that have been brought about since this came into existence. Mr. BACON. That is what I refer to. The results were very satisfactory during the ten years I have referred to, but since then they have been very unsatisfactory. Mr. ADAMSON. I take it that if one point is charged a little higher than another point for the same distance it is claimed as a discrimination unless justified by some local condition. Mr. BACON. As a general thing, yes. Mr. ADAMSON. What conditions justify such a differential, aside from competition and the bulk of the business? Mr. BACON. Distance is taken into consideration for one thing. Mr. ADAMSON. But I say the same distance. Mr. BACON. The rates are so intertwined with each other from one part of the country to another that they all have to be taken into consideration. Mr. ADAMSON. That is what I am trying to find out. Mr. BACON. Take shipping grain from the country I refer to to Milwaukee and Minneapolis. The rates to Milwaukee and Minneapolis have a certain difference one over the other. The rates to the seaboard from Milwaukee and Minneapolis, which is the final destination of most of the grain, have a certain difference. That difference should be equal in each case-that is, the rate on grain to Milwaukee and from Milwaukee to the seaboard should be equal to the rate on grain from the same point of origin to Minneapolis, added to the rate from Minneapolis to the seaboard. Mr. MANN. You entirely eliminate Lake Superior. Mr. MANN. But you are simply speaking of the railroad rates; you should remember that Minneapolis has a longer route. Mr. BACON. I know that. The water rates really control the rate by the railroad. Mr. ADAMSON. If the two points you mentioned are practically equal distances from the coast, I would like to know what all the reasons are that could be urged to justify a discrimination against one or in favor of the other? Mr. BACON. Where the distance is practically equal I could not give you any good reason why discrimination should exist. Mr. ADAMSON. The great trouble, I think, that people complain of is about rates. I do not know whether your new plan of letting the Commission fix rates would remedy it; I want to ask you about it. When I practiced law in the South, south of the Potomac and south of the Ohio had what they called basic points. I do not know whether they have the same plan now or not, but in effect I think it is the same. Mr. BACON. Largely the same, yes. Mr. ADAMSON. There are certain cities that have the same rate from either point in that territory, whether their trade goes backward or forward from one to the other, and some of my constituents have made cases and laid them before the Commission and they have died before they were adjusted in the courts. They present this: They say, You start in Washington with a rate the same as New Orleans, and you climb uphill until you get halfway to Charlottesville, or Danville, or whatever town it may be, when you go down again until you reach that point; and then after reaching Charlottesville or Danville you climb up again until you get halfway to Greeneville, or Atlanta, or whatever place it is, and then you go down again until you reach Atlanta and strike the same rate of freight; and then you climb up until you get halfway to Montgomery or Opelika; and then you climb over another mountain of rates between Montgomery and Mobile; and then another one between Mobile and New Orleans, and vice versa, back again. That may be an exaggerated statement, but I understand cases like that are in the books. Mr. BACON. It is precisely cases like that that the committee is intended to remedy, that they are to hear, and they are to decide and determine and prescribe what change shall be made in the rate in order to make them just and equitable. Mr. ADAMSON. The business men in those cities that call themselves competitive or basic points say they are distributing points, say they do a great deal of business, and they say the circumstance justifies them in having a better rate than the little towns along the line. I want to know in the first place what you think about a condition of that kind, and in the second place if your plan provides how that can be remedied. Mr. BACON. It can only be remedied in that way. The railroads have various interests of their own to serve, and in fixing rates between competitive points they are governed more by the probable distribution of business than they are by questions of equity and right. Hence the necessity of bringing these cases before a competent tribunal that can consider all the circumstances in relation thereto and settle them upon principles of equity. Mr. ADAMSON. Is it practical and desirable for the general good that there should be a literal enforcement of the long and short haul idea as to these cities and as to these little towns in between? Mr. BACON. That is too large a question. Mr. ADAMSON. It is one you ought to think about, and one the people are thinking about. Mr. BACON. It has been one, as you know, that has received a great deal of attention during the past fourteen years, and one on which there has never been any substantial agreement reached. Mr. ADAMSON. I supposed you were conversant on all those things? Mr. BACON. I have studied that question and have a settled opinion in regard to it. Mr. ADAMSON. What is it? Mr. BACON. It is that the principle as laid down in the interstatecommerce act should be carried out. Mr. ADAMSON. As to the little towns? Mr. BACON. Yes; but that has been overturned by the Supreme Court upon the ground that elements of competition change the circumstances and the conditions, using the term of the section itself, which are to be considered, whereas the Commission has determined that railroad competition should not be considered; that water competition alone is the one that changes the conditions and circumstances under which that section of the law can be overruled. Mr. ADAMSON. Then, your opinion of the other question I asked. In the event that the Commission should be given the power with which you think it ought to be vested, will the complainant whom I described have any more hope of relief than they now have? Mr. BACON. I think not, on this particular point, because this bill does not propose to make a change in the long and short haul section, the long and short haul clause. The CHAIRMAN. Does it not make a change? Suppose the Commission should adopt this idea with regard to the long and short haul clause, would it not result in an entire change of our business system; would it not do away with distributing points, say, like Milwaukee, and would not the merchandise go directly, say, from the great center, a center like Chicago or New York, to the villege, and not to Milwaukee at all? Mr. BACON. I think not, sir. The long and short haul provision simply prevents intermediate points from being charged a greater rate than the terminal point. Business is naturally concentrated at great |