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INTERSTATE COMMERCE COMMISSION,

Tuesday, April 29, 1902. The committee met at 10.30 o'clock a. m., Hon. William P. Hepburn in the chair.

STATEMENT OF MR. A. C. BIRD, OF CHICAGO, ILL.

The CHAIRMAN. What road or system are you connected with? Mr. BIRD. The Chicago, Milwaukee and St. Paul Railway Company. The CHAIRMAN. What are the principal points that that line reaches? Mr. BIRD. That line is operated in eight States-Illinois, Wisconsin, and the peninsula of Michigan, Missouri, Iowa, Minnesota, North Dakota, and South Dakota. Its lines reach Omaha and connect with the system of roads running through Nebraska and west to the Pacific coast. In Kansas City its lines connect with the Kansas lines running to the coast, Denver, and all through the far West and the Southwest, Texas, and the Gulf of Mexico. It is directly interested in the traffic of many large cities, commercial centers, manufacturing and distributing points, such as Chicago, Milwaukee, Racine, St. Paul, Minneapolis, Lacrosse, Winona, Dubuque, Cedar Rapids, Des Moines, Sioux City, Sioux Falls, and the great Northwest wheat belt, which lies east of the Missouri River in the Dakotas and extends northward to Fargo. It is in touch with the general traffic of the country, as well as through all the States I have named.

If you please, Mr. Chairman, I am not a public speaker, and I can not easily suffer interruption and preserve my thought, and if I may be permitted to go forward with my statement without interruption I would prefer to do so.

Mr. BLYTHE. Just at this point I would like to ask Mr. Bird to state his services with the Milwaukee and St. Paul in a general way, in order that the committee may be informed of his means of knowledge.

Mr. BIRD. I am the third vice-president of that company. I have been connected with the company twenty years in various capacities. I have heard and read a good deal of what has been said on the subject of the necessity of the proposed legislation, and I have attempted to keep in touch with what has been said in this committee room in favor of the bill. I understand that the bill in contemplation is the Corliss bill, and that that clause of it by which it is proposed to confer upon the Interstate Commerce Commission greater power over rates than they have at present is more particularly under consideration.

That clause proposes to give to the Commission the power to fix rates after complaint and investigation, and to enforce their orders by a process which sets aside the usual order of procedure and denies to the railway owner the rights of property which are conceded to all other property owners.

The right to fix a rate and to collect it is the essence of railroad property, and to take away that right and vest it in a board is to deprive the stockholders of their property without due process of law. Many reasons have been urged in support of this unique proposition, and the principal ones which have attracted my attention are: First. That serious abuses exist, and therefore the proposed measure should be adopted to put an end to them.

Second. That the orders of the Commission are disregarded, and certain cases have been cited and elaborated upon to show that an emergency exists which justifies an unusual procedure. The cases upon which great stress has been laid are the Milwaukee Chamber of Commerce grain rates case, the Eau Claire lumber rate case, and the food rate case of the Northwest. At the proper time I will make some further statement in regard to these cases.

Third. The practical abolition of railway competition.

Fourth. It is said that for the first ten years under the law the carriers as well as the public and the Commission believed that the Commission had the power to fix their rates after investigations, and that the orders of the Commission were promptly complied with; that the public was well served and satisfied.

Fifth. That the right of eminent domain enjoyed by carriers is a sufficient reason for depriving the carriers of all other rights.

Sixth. That, aside from the prevalence of secret preferential rates and rates which are unreasonable per se, relatively unreasonable rates prevail generally, and no remedy is available unless the Commission is clothed with the arbitrary power of the enforcement of its own opinions. These are the principal reasons that have come to my attention which have been urged in support of the measures now under consideration, and I would like, if you please, to touch upon these matters as briefly as possible from the standpoint of everyday experience.

I am not versed in law, and I can not undertake to view this subject from a strictly legal standpoint. I claim some practical knowledge of the practical side of these questions.

The first great complaint is well founded. There is not an official of any of the railways of any prominence or weight who will attempt to deny that the railway service has been honeycombed with secret preferential rates, which, to use an old popular phrase, make the rich man richer and the poor man poorer.

Nor is there a respectable railway official of responsibility or authority who will not admit that that one abuse adds more to the difficulties, the anxieties, and the perplexities of railway management than all others combined; and speaking for myself, for the company which I represent, and for the class of officials of which I am one, I think the unanimous desire of railroad people is to aid in the enactment of measures which will do away with that great, admittedly great, and flagrant abuse. At the proper time, if you permit at this time, perhaps, as well as any-I wish to make a suggestion that is not an original one (it has already been made to this committee), but I wish to add the weight of my opinion to what has been said on that subject.

The original act, or the act as soon afterwards amended, provided penalties for this class of offenses; it was made criminal. The committee is well advised of all those conditions, that the offense has been made infamous, not only criminal but infamous, because punishable by an infamous punishment. The very nature of the case is such that if the offense is committed, or when an offense is contemplated, the two parties to the offense surround the case with every possible safeguard, and there are so many ways of violating the spirit of the act in that respect that it has always been exceedingly difficult to obtain evidence sufficient to bring the guilty parties to punishment.

So much has been said regarding the reasons why railroad officials who are morally certain that the offenses exist will not testify that it

is unnecessary for me to amplify upon that point, because all that has been said by the proponents of this measure is freely admitted by railroad people. This is the great crime of the times-secret preferential rates--and it seems to me that this committee may wisely attempt to devise means by which those crimes can be reduced in number and the practice itself discontinued.

If I conceive the situation properly, the method, the whole responsibility, of the convicting and bringing the guilty parties to justice devolves upon the Commission and the limited agencies which it is able to maintain. And, for the reason I have given, they have met with the utmost difficulty. It has been almost no thoroughfare.

Every railroad officer, stockholder, director, manager, or official is much more in position to find the facts and ascertain the means by which the truth can be ascertained in the form of testimony, and has much more complete and satisfactory means of so ascertaining it than any expert of the Government has so far been able to employ. As the bill stands, if the law could be so amended as to abolish the personal feature of this penalty and to levy a just and proper fine upon the offending carrier for each offense, that act would instantly convert an army of 100,000 experts into detectives interested in bringing about the enforcement of the law. I speak in this manner after an experience of a good many years, and I know that there are thousands of cases where to the public the existence of the evil is morally certain, but none but an expert knows how to get evidence such as is necessary to enforce the penalty.

It has been asserted here that there are a number of cases that show where the order of the Commission is disregarded, which proves conclusively that this is an emergency and that new measures must be adopted. I would like to add a few words, if you please, in regard to the first subject. I find nothing whatever in the proposed measures that touch upon the chief cause of complaint. I do not see how it is possible that the mere power on the part of the Commission to fix a rate after a complaint will enable it or any other tribunal to detect and punish the grave secret offenses so often and so properly referred to. I find nothing whatever in the bill that even approaches that subject.

Regarding the second argument, that the orders of the Commission are disregarded, the Milwaukee grain-rate case was a peculiar one, and I am glad that the chairman of the Interstate Commerce Commission is here to hear what I have to say on that subject, and correct me if I fall into error. The complaint was brought by the Milwaukee Chamber of Commerce against the Chicago, Milwaukee and St. Paul Railway Company. In the course of the proceedings other roads became parties. I am not sure but a number of them were originally parties to it; but others were added. Also, in the course of the procedure the Minneapolis Chamber of Commerce, a rival (and a very strong rival) of the Milwaukee Chamber of Commerce, also became a party to the controversy. In order to make that case clear to the committee a map ought to be here to show the geography of the lines involved, but I will try to describe them to the committee.

The St. Paul Company has a line running west from Milwaukee through Wisconsin to Prairie du Chien and westwardly through the northern counties of Iowa to its western border, and beyond into South Dakota to the Missouri River., This line is known as the Iowa

and Dakota Division. It is as near a direct east-and-west line as exists anywhere. It also has a line, one of its main thoroughfares, running northwestwardly from Milwaukee to La Crosse and thence westwardly through the southern portion of Minnesota and beyond. into South Dakota, known as the Southern Minnesota Division, parallel to the first described line, to its intersection with the James River Valley, which is the center and heart of that portion of the northwestern spring-wheat belt which is reached by the lines of the St. Paul Company, with one exception. It also has a line running southwardly from Minneapolis through southern Minnesota, and which crosses the Southern Minnesota Division and thence southwardly to Mason City, Iowa, where it connects with the Iowa and Dakota east-and-west line first described.

These lines from the wheat belt in western Minnesota, western Iowa, and South Dakota to Minneapolis are right-angle lines in each case. Its lines to Milwaukee are direct lines. There exist a number of rival lines radiating westwardly and southwestwardly from Minneapolis. tapping the lines of the St. Paul Company which I have described at acute angles. One instance will be sufficient to illustrate. The Northwestern system, including the Northwestern road proper and the St. Paul, Minneapolis and Omaha, intersects or parallels the St. Paul Company's lines in southwestern Iowa, southern Minnesota, and South Dakota. Pipestone, Minn., is one point of direct contact which is sufficient for the purpose of explanation, but the two competing lines are parallel for a long distance east of Pipestone. The lines of the Great Northern Company radiate like the spokes of a wheel from Minneapolis, cutting the lines of the St. Paul, and the north and south lines in the James River Valley, at angles in every direction.

Then the Minneapolis and St. Louis Railway Company has lines extending southwardly and westwardly from Minneapolis, largely parallel with the lines I have described from Minneapolis, and those lines radiate westwardly and southwardly, crossing the St. Paul lines to Chicago, Milwaukee, and Minneapolis at various angles and distances from the principal market of the competing companies, Minneapolis. The Chicago and Northwestern system has lines southwardly and southeastwardly from Minneapolis to Milwaukee and Chicago. The Illinois Central has lines through the northern portion of Iowa. east and west, not touching the Milwaukee market, but reaching Chicago only.

Now, the complaint of the Milwaukee Chamber of Commerce was that the rates from the wheat district, say, from Pipestone to Milwaukee, did not bear a just relation to its rates from that point to linneapolis; that the differential was not justified by the additional haul; that the distance from Pipestone of the two rival markets was disproportionate; or rather that the differential against Milwaukee was disproportionate with the difference in distance. Proceedings were brought under that clause of the law which requires that rates shall be comparatively just and reasonable.

It seemed to me, representing the interests of the St. Paul Company, that there was much foundation of justice in the complaint. I, like many others, was influenced by what appeared to be the interests of my company. There were many reasons why it would have been profitable to have hauled a larger proportion of the wheat crop to Milwaukee, and the principal defense of the conditions complained of was

the importance of the Minneapolis market as a millers' market and the large volume of business which resulted from the manufacture of the wheat into flour. The order or recommendation of the Commission in the case seemed to be eminently just, and at first it was regarded as a wise, prudent decision. There was no attempt by the Commission to fix the rates to Milwaukee from any of the wheat-producing districts. The controversy was as to the relation of rates, and the substance of the order was that a properly constructed distance tariff which was designated by the Commission should be used by applying it to the rate from a given point to Minneapolis, using the distance traversed, and from that same point to Milwaukee, using the distance in that case also, to see what the rate difference was, and that difference should be substantially the differential in lieu of the differential complained of. I think the Chairman of the Commission will correct me if I am wrong. I do not attempt to follow every detail.

Necessarily, all the railways concerned in the complaint, or concerned in its settlement, convened their traffic officers to revise their rates so as to bring them into harmony with the decision of the Commission.

But practical difficulties that had never before been encountered in that precise way showed themselves, so that it was found impossible (practically impossible) to make any substantial modification of the rates, because companies that were rivals of the St. Paul company had the same standing that the St. Paul company had, and they were entitled to the application of the same principles that was to govern the St. Paul Company, and the Minneapolis Chamber of Commerce was entitled to all the benefits that could be obtained from the Commission's decision, precisely the same as the Milwaukee Chamber of Commerce. It soon became apparent that the distance of the St. Paul Company from Pipestone to Milwaukee bore a greatly different relation to its distance from Pipestone to Minneapolis from that which the distance over the Northwestern from Pipestone to Milwaukee bore to its distance from Pipestone to Minneapolis, the Northwestern Company's line from Pipestone to Minneapolis being the short line, and its line to Milwaukee being the long line, and the St. Paul Company's line to Minneapolis being the long line, and its line to Milwaukee being the short line.

So that if the St. Paul Company reduced its rates to correspond with its own individual mileage the same line of reasons and the same recommendations of the Commission would require the Northwestern to reduce its rate from Pipestone to Minneapolis; and so we would have the rate of first one road going down and then the other, and so on back and forth without end a whirlwind of reduction, without in the least changing the relation of the rates, which was the sole cause of the complaint.

The modifications of the rates under these circumstances were immaterial. The Milwaukee Chamber of Commerce people were dissatisfied, and in the course of time they petitioned for a further hearing, which was granted. The circumstances and conditions affecting the case was explained to the Commission.

My recollection is that one member of the railroad committee then and there, by the consent and approval of all the others, made this suggestion, that the Commission might fix rates from all the territory involved to the two competing markets, and the railroads were pledged to accept them in full. If I recollect right the chairman of the Commission himself disclaimed for the Commission their fitness for under