the statistics furnished by the Interstate Commerce Commission. They have means of information which are beyond my controversy. But speaking for the great territory in which I am interested I know that up to the last period of which we had any account there is a continuous decrease in the rate per ton per mile.

Much stress has been laid upon the fact that in the official classification-the western roads, our roads, are not included in that--in the official territory, that many articles have been raised into a higher class, and it is contended that that has a great effect on the rate per ton per mile. I am not so sure of that. I know that many changes have been made, but I have not heard a single word to prove that the present classification is such as to create an improper relation between various articles, nothing to show that in the crudities of early railroad evolution and management, the various articles had a proper relation to each other; and it is a very important question, and perhaps it is for the Commissioners to prove that the present relation of articles is not justified and that the old relation was justified.

But no matter if the changes in classification were unwise or did in some cases result in unjust discriminations, in any legislation which strikes at all property rights alike, and strikes roads which_are_not connected with the alleged offenses, is clearly unwarranted and unjust. You can not pass a law to fall upon roads who are known to be guilty if it falls also upon those roads in every other part of the country against whom no such complaint can be justly made.

Mr. RICHARDSON. Is it not a fact that the traffic relations between the railroads and the public are greatly improved, and that there is a better understanding to-day than for years past?

Mr. BIRD. Undoubtedly. I speak guardedly when I say that I am in touch with a great number of people directly interested in traffic and railway regulation, and I never had so few complaints and my company never had so many friends as it has to-day; and I want to say further, and to lay great stress upon it, that my observation of the complaints, and of what has been said before your committee, is that complaint comes primarily from the man who has no right— legally he has, but as a matter of fact he is a man who never pays the rate-the middleman. Nine-tenths of all the complaints we have had comes from the man who says to himself:

If I can have this rate changed so as to bring this traffic to my city I can get a commission on that business, and if it goes to Minneapolis or some other place I

can not.

Mr. RICHARDSON. It does not come from the producer?

Mr. BIRD. The producer has very few complaints, and I want to say that the theory usually advanced by professional complainants, that the producers, the farmers, the little manufacturers and shippers are held in terror by the railroads, is utterly false.

Mr. BLYTHE. I would like to have you refer to the testimony taken by the Interstate Commerce Commission in Chicago as illustrating the effect of competition in bringing about the conditions you refer to. Mr. BIRD. It is notorious that the railway officials, or many railway officials in Chicago, last January-and I must admit that I was one of the number-testified that they had violated the law in conceding rates to shippers which were not provided by the tariffs. I refer to the packing-house traffic.

Mr. RICHARDSON. That was a rebate system?

Mr. BIRD. That was the rebate system, so called. The shippers obtained lower rates than were published.

Mr. RICHARDSON. Why do you give the rebates to one interest, or were they given to one interest, and not to another?

Mr. BIRD. They were given to all alike.

Mr. RICHARDSON. Then who had a right to complain?

Mr. BIRD. I am not lawyer enough to discuss that from a purely legal standpoint, and I am not willing in any degree to assume to defend the practice of conceding rates that are not duly published, even if they do not result in undue preferences in favor of one person against another. I believe thoroughly that all rates used by the public and the railroads should be duly published, and the only safety lies in that proceeding. Any other method leads to corruption and that which destroys one man's business and builds up another's.

There is no possible deflection from the straight line in that direction without leading to abuse. But the actual practice itself did not, I believe, in a single instant result in one shipper getting a lower rate than another. The competition there originally was between localities. Kansas City is the great packing-house point of the West-the largest. Atchison, Leavenworth, St. Jo-St. Jo especially is an important point--South Omaha is perhaps next in importance to Kansas City-Sioux City, and St. Paul. Many roads reach Kansas City that do not reach these other points; some of the roads reach all the points. The St. Paul company's lines reach all Western packing points except Atchison and St. Jo.

There was a continual strife between not only the carriers, but the merchants who handle live stock. They wanted the rates arranged so that the packers in their towns could buy live stock freely.

It is asserted that one town is reaping an advantage, and then a man whose road is reaching only one or other of these places, in a weak moment, says: "It is absolutely necessary that I get a part of this, and he gives a secret rate. And it is absolutely futile to expect that a private rate conceded to an industry like that can be kept private. You may not be able to prove it, but it is inferred in a short time with absolute certainty, and the knowledge of that spreads like summer sheet lightning, and everybody and everything is involved, and if you do not put yourself on an equality with the other carriers and other markets, your business is gone in a night. It is not like a steamboat, which a man can tie up to the shore if he has not business for it; but you must run your railroad business anyhow. The public have a mighty power, and they exercise it. It is the cause of this disgraceful condition revealed in the investigation by Chairman Knapp and his associates.

Mr. BLYTHE. I wish simply to state to the committee, if they will permit me, one thing.

The point I want to have Mr. Bird emphasize is that during a long period not a single pound of packing-house products or dressed beef was moved east from the Missouri River except upon the secret rebates, and that was disclosed in the first case, where it was admitted in Chicago, and it was said that that was the result of the very stringent, strenuous competition existing not only between railroads at Kansas City, but also between Kansas City itself as a producing market and its rivals in the same trade.

I thought perhaps I could state that more briefly than by asking Mr. Bird to state it.

Mr. BIRD. That is correctly stated.

The fourth reason alleged for the immediate passage of the bill pending seems to me a great fallacy, and it seems to me to have been stated frequently without proper consideration of the facts. It is, that for the first ten years, under the law, the carriers as well as the commissioners and the public understood that the commissioners had the power then which it is now sought to confer upon them by the pending measure, the power to fix rates upon any commodity after investigation of a complaint; that their orders were complied with and that the railroads and the public and the Commission were satisfied. That is what you may properly infer from what has been stated.

I would like to read a brief extract from the Interstate Commerce Commissioners' report for 1891. The act was passed in 1887, and, practically speaking, it was hardly in effect until the beginning of the year 1888. Of course, it was in effect upon its passage, but the machinery was not in working order. In 1891 the following appeared on pages 14 and 15 of the report for that year:

The Commission, not being invested with power to enforce its own orders, is dependent for the efficiency of such execution and enforcements upon the courts.

That was practically in the third year of the law. That comment is followed in that report by references to many cases upon which the Commission had issued orders which the railroads refused to comply with. So that it seems to me that the argument which was elaborated so much upon in the earlier investigations before this committee may be set aside.

It may be true that it was not for ten years, more or less, that a distinct opinion was rendered by the Supreme Court. It is a fact that before that decision the orders of the Commission were not by any means always enforced. I think it very likely, and in fact know it to be true in the district in which I am acquainted, that in most cases the railway companies are glad to act upon the recommendations or orders of the Commission; and it is only when some vital principle is involved upon some matter, perhaps of apparently little consequence, but of great importance as a precedent, that the railroads are disposed to stand upon what they conceive to be their lawful rights.

Another unique argument in support of a unique measure is that the railroads enjoy the right of eminent domain, and that that is a sufficient reason for depriving them of all other rights. That matter has been touched upon very ably before the committee, but I wish to add a word or two to what has been said, and to repeat what has been said, that the right of eminent domain is conferred upon the carriers, not for any benefit to the carriers, but because it is essential to the welfare of the American people, and that without that right being conferred upon the carriers the American people must suffer great loss and inconvenience. It is not conferred upon them as a matter of favor.

Assuming that the right of eminent domain gives the Congress, or any judicial body, the right to regulate interstate traffic, here is a suggestion which I wish to make: If a railway company seeks to enter upon and use the property of some individual, a private person, it is not permitted to do so until it has either agreed with that person as to the price which shall be paid for it or until the price has been defi

nitely determined by the legal process of the courts and paid to the owner of the property.

Here is a case where it is proposed to enter upon the property of the railway company by private individuals or by the public-which is but an aggregation of private individuals-to take possession of that property, and then find at some time in the future whether it has a right to do so or not. And when that determination is reached, the property has been confiscated-in whole or in part confiscated-so much of it as involves a reduction of its rights without any possible hope of a remedy or of compensation to the owner of the property; and if the public-if the private citizens can not be deprived of their rights until the courts have determined the value of those rights, why should the public or private citizens obtain possession of the property-the essence of all railroad property-until the courts have decided that it is right, unless the owner of the property, the carrier, admits the justice of it, or, in other words, agrees with the person as to the price to be paid.

Mr. RICHARDSON. Is not that upon the theory that the railroads perform governmental functions, and in the performance of these governmental functions they should be expected to discharge their duty in the same manner as the Government; is it not upon that theory?

Mr. BIRD. I do not know. I should prefer that that question should be asked of a lawyer. But this much I will say, that aside from all I have said in respect to the right of eminent domain, there is this fact, that the carrier pays an exceedingly high price sometimes for that right. The private carrier, or a carrier by water, which Congress does not assume to regulate

Mr. RICHARDSON. I simply called your attention to the fact of the distinction, as I assume it to be, between the individual and the Government, as to the right of eminent domain as exercised by the individual and by the Government.

Mr. BIRD. It may not be exercised as a governmental function. The carrier does perform a governmental function, but he has a right to be paid for that performance; and there is the question, Shall he perform that governmental function without due compensation? And he does pay a price for the right of eminent domain which nobody else ever pays. The private carrier, not being satisfied with the volume of business, can tie up his vehicle and not perform any service; but the common carrier must continue to run; must perform that service whether he wants to or not. These functions must be performed continuously to pay for the right of eminent domain, and sometimes for a year that service is performed without any profit whatever or at a loss, and that may leave the stockholders in bankruptcy some lean year. But the carrier must perform those functions, and carry the pas sengers and all the property intrusted to its care with reasonable celerity and dispatch, although it may not be able to get one-half of the cost; but if the carrier gets back only 99 per cent of the cost of carriage, there is no reason why it should be taxed that 1 per cent.

The CHAIRMAN. If you will submit to an interruption, we will bring this hearing to a close at this point, as we wish to have a brief executive session of the committee.

(Thereupon, at 11.50 a. m., the committee went into executive session.)

INTERSTATE COMMERCE COMMISSION,
Thursday, May 1, 1902.

The committee met at 10.30 o'clock a. m., Hon. Loren Fletcher in the chair.

Mr. FLETCHER. Evidently the chairman is detained somewhere for a few moments, and I think we had better proceed. Mr. Bird, will you resume your statement where you left off on Tuesday?

STATEMENT OF MR. A. C. BIRD-Continued.

Mr. BIRD. Mr. Chairman and gentlemen, the greatest stress laid upon the necessity for the measures proposed by the proponents of the bill has centered largely under two heads. I refer especially to the various statements or arguments made by several Interstate Commerce Commissioners.

It was announced with considerable force first, that rates were advancing; that not only had the general volume of business largely increased in the last year or two, but that the rates per ton per mile had advanced. One of the commissioners said that the statistics of his office showed this to be a fact. I am not quite clear as to the precise phraseology. I have not the same means, or in fact any means at the present time, of knowing the aggregate results of the operations of all the roads in the United States. What was said may be true with respect to the group of roads lying east of Chicago, east of the Mississippi River, and north of the Ohio River. What are known usually as the Eastern trunk-line roads are great carriers of tonnage, and I do not know and can not know at this time the precise results of their operations during the last year.

Speaking, however, for the railroad company which I represent, and for the group of roads in the Middle West, of which the St. Paul company is a fair type, I wish to renew the denial I made day before yesterday, and to reassert that the rate per ton per mile is decreasing, and to say that that fairly represents the general conditions in the Middle West. I wish to give to this committee a very brief statement of the facts regarding that particular subject.

For the fiscal year ending June 30, 1900, the St. Paul company hauled 3,357,456,584 mile-tons, and it earned on that traffic $31,287,566.16, the rate per ton per mile being $0.00930. The operating expenses of the company for that period was $26,729,608.04.

Now, the operations of the succeeding year, which is the latest period for which we have the statistics were as follows: Mile-tons, 3,639,977,919, upon which was earned $31,444,279.12. The operating expense of the company for that year was $27,251,723.51, an increase of mile-tons of 282,521,335; and the increased tonnage brought an increased revenue of $156,718.96. But the increase of expense of operations for that year was $577,884.63. The rate per ton mile on the operations of the larger business was $0.00069, a little more than 7 per cent decrease.

As I said before, this is a fair representation of the condition of affairs in the Middle West in all those so-called larger systems of road, and it fairly represents, in fact, all the smaller roads in that part of the country.