Mr. STEWART. You say you have them in your archives?

Mr. THURBER. We have in this respect, that we are in constant contact and communication with them, and I know their views, and I am voicing their interests.

Mr. STEWART. Will you produce any minutes of your association authorizing you to appear here and represent them before this committee?

Mr. THURBER. Yes, sir.

Mr. STEWART. I wish you would do so.

Mr. THURBER. I will.

Mr. CORLISS. Mr. Thurber has said that the members of this corporation thought it necessary to incorporate, that it was the object of the corporation to avoid liability

Mr. THURBER. The object of the incorporation; yes, sir.

Mr. CORLISS. Is the business such as to make a man liable

Mr. THURBER. Any voluntary association is subject to the unlimited liability of its members unless it is limited by an incorporation.

Mr. CORLISS. You are, then, doing something that might create liability if it was done by an individual, and that you seek to remedy by the organization of this corporation?

Mr. THURBER. Yes, sir. Suppose that I, as president of the association, were to go and make contracts binding the association, and that it was not incorporated with a limited liability, every member would be individually liable.

Mr. MANN. The liabilities being just.

Mr. THURBER. A man making a contract with you would be limited to $500 in his recovery. The liability of the members is limited to their membership dues.

Mr. STEWART. Under what laws are you incorporated?

Mr. THURBER. The laws of New York.

Mr. STEWART. Under what particular incorporation law?

Mr. THURBER. Our general incorporation law.

Mr. STEWART. What powers have you to do business?

Mr. THURBER. General business powers, not the banking power.

Mr. STEWART. Have you resolutions and by-laws?

Mr. THURBER. Yes, sir; a constitution and by-laws.

Mr. MANN. Without an incorporation your members would be only liable for just claims?

Mr. THURBER. Yes, sir.

Mr. MANN. But under your incorporation you are not liable for just claims

Mr. THURBER. You are now speaking of the association; but taking the individual membership, they are liable to the extent of their membership dues, which is $100 a year.

Mr. MANN. Practically nobody who had a just claim against you could recover it?

Mr. THURBER. We do not have any liabilities.

Mr. MANN. You might have.

Mr. THURBER. Our membership dues pay our liabilities.

ADDITIONAL STATEMENT OF F. B. THURBER, PRESIDENT OF THE UNITED STATES EXPORT ASSOCIATION.

Mr. Chairman and gentlemen of the committee, I appear before you in behalf of the United States Export Association, of which I am president, and which is a union of American interests for the purpose of widening the markets for American products, and whose membership comprises leading houses in the principal lines of industry situated in thirty-four States. It does not, therefore, represent any special interest, or any special port or section, but the interests of the country as a whole.

I have been studying the Corliss bill (H. R. 8337), with the result of concluding that while much in it is good, in its present form it is inexpedient, for the reason that it proposes the wrong remedy for the disease. Section 2 proposes to confer the rate-making power upon the Interstate Commerce Commission when the rate-making power has nothing whatever to do with the prevention of unjust discriminations. In so far as this bill strengthens the hands of the Interstate Commerce Commission to investigate and expose unjust discriminations it is likely to be beneficial, but in so far as it confers upon the Commission the power to make rates and classifications it is likely to be injurious alike to shippers and carriers, because, in the first place, it will prevent the passage of any bill amending the interstate-commerce law, and if the proposed bill could be passed, conferring the rate-making power on the Interstate Commerce Commission, it would not prevent the evasions of it which constitute unjust discriminations.

The only thing which will prevent this is to give carriers the same right of contract which is enjoyed by all other corporations and individuals, the right to legally enforce their agreements upon each other, a right which is denied to carriers at the present time by the prohibition of pooling in the interstate-commerce law, and the interpretation which has been given by the Supreme Court of the United States to the antitrust act in the joint traffic and trans-Missouri decisions, pronouncing all associations for the maintenance of rates illegal, the direct result of which has been to promote the "community of interest" consolidations, a process which has already progressed so far that close observers are in doubt as to whether or not the master spirits in these consolidations would not prefer to see the present conditions of chaos maintained in order that these consolidations may be fostered. As chairman of the committee on railroad transportation of the New York Board of Trade and Transportation, and of the National Board of Trade, as well as member of the committee on internal trade of the New York Chamber of Commerce, I have been a close student of this question for 25 years from a shipper's point of view. I have had perhaps as much to do with legislation regulating the relations of shippers and carriers as any other individual. I advocated the New York railroad commission and the enactment of the interstate-commerce law, and cooperated with Mr. Reagan, the father of the bill, in prohibiting pooling. We feared that with the right to pool carriers might charge the public exorbitant rates for freight, but the experience of fifteen years has shown that there is no danger of high rates in this country; that the chief danger is in unjust discriminations, which always operate to the benefit of the few instead of the many; to the advantage of the large instead of the small shipper.

So far as the rate-making power is concerned, it was not intended by Congress to confer that power on the Interstate Commerce Commission. This is shown by the following extracts from the debates in Congress while the interstate-commerce bill was pending.

In the House of Representatives, on December 8, 1884, Mr. Findlay said:

It is perfectly legitimate to prescribe that a rate shall be reasonable and then leave it to the courts to determine what is and what is not reasonable, but to declare in advance, not merely the principle by which the fixing of the rate shall be governed, but to prescribe the rate itself by referring it to a fixed standard and apply the rule to the complicated system of interstate transportation, with all of its vast ramifications and subtle competitions, is the exercise of a power which, if it be held legislative in its nature, certainly ought to be sparingly and cautiously used. The bill of the committee keeps this distinction full in view in all of its provisions, and is consistent and symmetrical throughout; but the Reagan substitute, as I have shown, is not only not distinguished by this unity and integrity of purpose, but is complex and contradictory in some of its essential features.

Mr. REAGAN. But it would be understood from his reasoning that my bill not only requires rates to be reasonable, but fixes the rates. There is not a word in the bill having that effect.

On January 7, 1885, Mr. Reagan said:

One of the greatest troubles I have had, even with the friends of legislation in this direction, has been to get them to understand that this is not a bill to regulate freight rates; that it does not undertake to prescribe rates for the transportation of freight. I know the difficulties which would attend any measure attempting to prescribe rates of freight. I am persuaded that no law fixing rates of freight could be made to work with justice either to the railroads or to the public, and I have intended from the beginning to avoid that difficulty.

The difficulty with gentlemen in considering the bill is that they can not keep out of their minds the arguments of the railroad lawyers and lobbyists who are continually harping upon it, that this bill establishes arbitrary rates of freight. It does no such thing. It carefully guards against that, simply intending to prevent the most manifest abuse against the public, and control the monopoly powers of these corporations.

In the Senate, May 6, 1886:

Mr. KENNA. What constitutes a reasonable rate is precisely the thing which the people of this country are unwilling to leave to the arbitrary discretion of the Railroad Commission.

As regards reasonable rates as a whole the people of the United States have no cause to complain. They have steadily declined until even with the recent advance they are less than half those of other principal nations. Our railroads carry our products 1,000 miles to our seaboard for less than those of other countries charge for carrying the same products 200 miles inland from their seaboard. The steady decline in rates is illustrated by the following figures:

The average rate for 1 ton of freight 1 mile since 1892 has been as follows:

The rate was probably still higher in 1901; but everything else has risen.

These results have been largely attained by subsidies in land, money, and mail pay, and giving freedom of action in combining and consolidating, thereby attaining the highest economies of operation. If we had pursued the same course on the sea as we have on land we would now have a merchant marine which would give us permanent low rates on the sea and enable us to put our heavy products of the field, forest, mine, and factory into all the markets of the earth, and our finished products would closely follow.

I am unwilling to take any steps that will hamper such development, for in this age of steam, electricity, and machinery "the field is the world" in commerce as with religion; and with our command of these forces, brought to bear upon our great natural resources, with intelligent and liberal statesmanship, we will lead the world in the march for commercial supremacy.

It is alleged by some that rates for railroad transportation during the last two years have been unduly increased by means of changes in classification, rules, etc. While opinions may differ as to the methods by which rates have been increased, there can be no doubt but that railroads were obliged to advance their rates on account of the large advance in the price of labor and materials. What these have been is perhaps indicated by the following figures: The price of steel rails in 1898 was $19 per ton; the present price is $28. The price of yellow pine lumber, used in the construction of freight cars, in 1898 was $15.75 per 1,000 feet; the present price is $20. The price of axles in 1898 was 2 cents per pound; the present price is 3 cents. Car wheels in 1898 were $6.25; the present price is $7.25. Bar iron in 1898 was $1.10 per 100 pounds; the present price is $1.60 per 100 pounds. Steel required in the construction of locomotives in 1898 was $1.50 per 100 pounds; the present price is $2.25 per 100 pounds. Railroad labor upon the average was advanced 15 per cent during the last two years, while the ton-mile rate of freight on all the railroads of the United States has not been advanced more than 8 to 10 per cent. Of course, the increased volume of business has yielded increased profit as a whole, but much of it has gone into permanent improvements and increased equipment, which when the lean years come will be unremunerative. It will be conceded by fair-minded men that our railroads are entitled to share in the general prosperity of the country, in which they are so large a factor. Both shippers and carriers are apt to see only their own side of the question, and no just conclusion can be arrived at which does not take into consideration both sides.

I believe that a majority of both shippers and carriers are honestly desirous of doing what is fair and right in their relations with each other, but there is an unscrupulous minority in both who are constantly overreaching to get an unfair advantage of the other. single railroad in the month of November last over 50,000 instances of fraud on the part of shippers in billing goods were detected by the inspection bureau of that company in order to get a lower classification than the goods were entitled to, and the chief inspector estimated that 97 per cent of these were willful frauds, and only 3 per cent were attributable to honest error on the part of shippers. The system of organized fraud on the part of ticket scalpers is familiar to all students of transportation questions. There was probably never a head of stock killed or an injury to property that the claim for damages was

not excessive. In view of such facts as these we can not wonder that railroad officials are just a little skeptical of the human nature embodied in the average shipper or citizen.

In conclusion, Mr. Chairman and gentlemen, I would call attention to the fact that the most successful railroad commissions have been those of Massachusetts and New York, neither of which have had the power to prescribe rates, but which have had full powers to investigate and bring abuses to the attention of the courts and public opinion. These have been found sufficient to remedy the evils which existed in their jurisdictions, and I hope that you will not approve this bill unless amended so as to preserve the right alike of carriers and shippers to appeals to the courts without prejudice, and to provide the right to make reasonable pooling and other agreements between carriers, for the maintenance of uniform and stable rates, subject to the approval of the Interstate Commerce Commission. In this way only can the evil of unjust discrimination be eliminated.

From my study of this question, I have become convinced that there is no danger of even the largest combinations imposing upon the public unreasonable rates of freight. It will not eliminate competition, for this principle is all-prevailing. The popular conception of competition is competition between individual shippers and individual railroad lines, but the larger working of the principle is embodied in the competition of markets-the competition of towns, cities, sections, and countries. If all the railroads of the United States were combined into a single corporation or the Government itself, this force would still be active. Every road would be developing the industries along its line, and these industries would compete with similar industries along other lines, even though ownership of all the lines was unified. Another factor in the field of competition is water transportation, embodied in our lakes, rivers, canals, and the ocean, which surrounds our country on all sides. There is no fear whatever of excessive rates for transportation in this country. The only fear is as to unjust discriminations, and these can be remedied by full powers of investigation, by supervision of railroad commissions with power on the part of both shippers and carriers to appeal to the courts, and giving carriers the same right of contract which all other individuals and corporations enjoy except railroad companies, which are debarred from this right by the prohibition of pooling in the interstate-commerce act and the interpretation of the Sherman antitrust act given by the Supreme Court of the United States in the Trans-Missouri and Joint Traffic Association cases.

I am familiar with the agitation which is seeking to confer increased powers upon the Interstate Commerce Commission embodied in the Corliss bill (H. R. 8337) and the Nelson bill (S. 3575). It began by a bankrupt line, leading from Kansas City to Gulf ports, making abnormally low rates on export wheat. To meet this the east and west trunk lines made equally low rates on wheat but not on flour, because they were not exposed to the same competition in carrying the products of the widely-scattered mills of the Middle West to the seaboard, and hence export flour was charged a much higher rate than export wheat. This great discrimination against American millers in favor of European millers led to an agitation for lower rates on flour. Members of the Interstate Commerce Commission endeavored to utilize this well-founded dissatisfaction to get the rate-making power. A preliminary meeting was held at Chicago, followed by a