SENATE COMMITTEE ON INTERSTATE COMMERCE,

Wednesday, February 1, 1905.

STATEMENT OF MR. JAMES J. HOOKER.

Senator DOLLIVER (in the chair). Please state your name, your residence, and whom you represent.

Mr. HOOKER. My name is James J. Hooker; I reside at Cincinnati, and I am chairman of the committee to appear before you to represent the Receivers and Shippers' Association of Cincinnati.

Mr. Chairman and Senators, I appreciate the difficulty of advancing any new thoughts not already brought out in the discussion, either in the press or before the House committee. Through the press we have been informed of the visits of various railroad presidents to Washington to lay before you or the House committee the dangerous and awful consequences that will follow the attempt to clothe the Interstate Commerce Commission with power to reform abuses and rates. It is not my purpose to go into the subject of rebates, private car lines, private switches, or damage allowances. These abuses must go, and will go, and there can be very little effective opposition to remedial legislation. Therefore I shall only speak of the necessity of legislation that will clothe the Interstate Commerce Commission with power to fix reasonable rates, rules, or regulations when these are found unreasonable, and make the decisions of the Commission effective and in force until revised, if need be, by some judicial tribunal.

Individual firms or organizations do not employ attorneys by the year, and, to relieve of the expenses and interminable delay now incident to securing relief, the carriers must be placed, if not contrary to law, in the position occupied by shippers since 1897. That is, that the orders of the Interstate Commerce Commission shall become effective within thirty days and continue until reversed by a court clothed with the power to review such cases. The transportation interests are more opposed to this idea than any other, as they expect to wear out 90 per cent of the complainants by the long delays and expense, if given the right of appeal, with stay, on the giving of a bond. If carried to the Supreme Court, several years could be safely counted upon as the delay.

It seems eminently proper that Mr. Spencer should come forward as defender of the position of many transportation interests on this question, because in the section which is served by the road of which he is president rates are relatively higher, more unequal, and greater injustice to localities exist than in any other section of the country. Senator CLAPP. What road is that?

Mr. HOOKER. Mr. Spencer is president of the Southern Railway Company, but when before the House committee he stated that he represented a large number of other lines. This can not be better illustrated than in the case of Cincinnati. Grown desperate by the small-minded policy of the then management of the Louisville and Nashville Railroad, the only road then granting access to the South, which at Louisville resorted to delaying shipments from Cincinnati at Louisville, and other means that would not now be indulged in, and certainly should not be tolerated, the city of Cincinnati resolved to

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build a railroad to the South, which was completed to Chattanooga in 1880. This road stands the city of Cincinnati a total cost of about 30 million dollars. In anticipation of the completion of this road there was formulated a new basis of rates to and from the territory south of the Potomac and Ohio and east of the Missouri River, which in effect resulted in a division of the business. To protect the shippers of farm and packing house products in the territory north of the Ohio River from competition with New York, Pennsylvania, and New England, the rates were made favorable from the Ohio River gateways, but on nearly every manufactured article, especially those coming under the numbered classes, the rates were made so as to divert the business to the Middle States and New England.

The completion of the roads from the Missouri to Memphis and Birmingham about 1887 resulted in the almost complete extinction of business in the packing-house products originating in Cincinnati and other Ohio gateways to the South, and also in a large decline of shipinents of farm products.

Since the adoption of this basis of rates and division of business, the Middle West has increased enormously the variety, volume, and value of manufactured articles produced in that section, and justly claim that these new conditions demand changes in rates to meet them.

By changes of rates, I want to say again, emphatically, is not necessarily meant reduction in rates, but a rearrangement of rates; advancing rates from some localities and reducing others, giving carriers practically the same gross revenue. For twenty-nine years it seemed practically impossible to bring about any change until, forced by local conditions in Georgia, on December 1, 1904, when at a meeting of persidents of southern roads certain reductions in south-bound freights were ordered to take effect on February 1. These reductions, although applying to Chattanooga from Baltimore and other northern shipping points, did not apply to shippers from the Ohio gateways to Chattanooga. The rates from these gateways continue. to be based on 76 cents per 100 pounds, first class, from Cincinnati.

Some ten or twelve years ago the Cincinnati Freight Bureau took up with the Interstate Commerce Commission the injustice of this practice I have just spoken of, and secured a decision from the Cominission that a proper relation did not exist between the rates from the territory north of the Ohio River and the territory from Baltimore, New York, and Philadelphia to the south and southwest.

Senator DOLLIVER. That was the old abuse that the Interstate Commerce Comission tried to correct in 1896, was it not?

Mr. HOOKER. I am just coming to that. The Interstate Commerce Commission were asked by the Cincinnati Freight Bureau, the organization which brought the suit, to order a relative adjustment, and not to order a stated reduction to a given rate. There was pending at the same time before the Commission another case. Having both of these cases before them, and the Cincinnati Freight Bureau case having the right of way, the Interstate Commerce Commission in its younger days saw fit not to follow the advice given by the representatives of the Cincinnati Freight Bureau to order that the rates should have a certain stated relation to each other. Instead of that they ordered that a certain rate should be made.

Now, no one knows what would have been the result if the Commission had followed the advice of the Cincinnati Freight Bureau and ordered merely that the rates should bear a certain relation to each other. Perhaps had the Commission done so, the Supreme Court would not have decided against them, as it did in the Cincinnati Freight Bureau case.

Senator KEAN. Is it one of your complaints that the rates from Cincinnati and that region are greater than the rates given other points for practically the same service?

Mr. HOOKER. Yes, sir. I think some of the members of the Commission admit that there was their first mistake, in not ordering the relative adjustment, rather than a stated adjustment.

Senator DOLLIVER. Do you think the Interstate Commerce Commission now has the power to order a relative adjustment in the case of such abuses as were claimed to exist in 1896?

Mr. HOOKER. That would be for a lawyer to decide.

Senator DOLLIVER. What do your counsel advise you in respect to that?

Mr. HOOKER. Under the Supreme Court decision in the Cincinnati Freight Bureau case I should doubt very much whether the Commission would now have the right to order a relative adjustment. But I contend that if the Commission had not so directly raised the question of the power to make rates in that case and had established a precedent of relative adjustment, we should be operating to-day under different conditions. Most of the troubles, outside of private car lines, private side tracks, and other abuses of that nature, are more abuses of relations of carriers to each other than otherwise.

Senator DOLLIVER. Are there no complaints of excessive rates and extortionate charges?

Mr. HOOKER. During my long experience I have known of no rates that were extortionate. It is only because these rates are not relatively adjusted.

Senator DOLLIVER. The complaint, then, is based entirely upon alleged discriminations?

Mr. HOOKER. I can not say entirely. I can only speak from our own experience.

Senator DOLLIVER. You would say that that is the view of the mercantile community of a city situated as Cincinnati is?

Mr. HOOKER. Looking merely at the adjustment of rates, I do not say that the correction of that would correct the abuse of private car lines, etc., which I am not attempting to touch upon here. What I want to show is that the adjustment of rates and the adjustment of relations between one locality and another are susceptible of being corrected, and of being corrected without doing damage to the interests of the transportation companies.

The CHAIRMAN. If there be a decision in favor of one locality, will not the other locality complain?

Mr. HOOKER. As I stated before you came in-perhaps I had better return to that.

The CHAIRMAN. No; proceed.

Mr. HOOKER. Will you put your question again, please?

The CHAIRMAN. When there is a contest or dispute between localities, if there be a decision in favor of the one locality will not the other be dissatisfied?

Mr. HOOKER. That may be; but satisfaction has not reigned very greatly over the shipping interests of the country during the last twenty-five years, and I do not suppose it will, even if you pass another interstate-commerce law.

Senator DOLLIVER. You are not looking for complete satisfaction? Mr. HOOKER. No, sir; some one locality or another will be dissatisfied, as some localities have been dissatisfied for twenty-five years. They feel that their turn should now come.

The reduction from eastern territory to Chattanooga was 9 cents per 100 pounds, first class, and corresponding reduction on other classes, thus making the discrimination against Cincinnati 25 cents per 100 pounds more on first-class freight than had been decided by the Interstate Commerce Commission as a just and reasonable rate. This will serve as an example of the unfair treatment accorded Cincinnati and the territory north of the Ohio.

In north-bond business, on southern products-cotton goods, for instance the rate from Georgia milling points to Cincinnati proper is 49 cents per 100 pounds. If designated to points beyond, some goods take a rate of 35 cents per 100 pounds to Cincinnati. In defense of this basis, was the claim that in order to compete with New England mills it was necessary to make the rate through to Chicago the same as from New England cotton-mill points. It has been shown by every witness so far examined in an interstate-commerce suit that there were over 1,000,000 spindles in South Carolina alone which did not ship a pound of their product into territory north of the Ohio, and that while, especially in colored cottons, New England and Southern goods may be known by the same general trade names, the New England goods of a high class and character command high prices, and it requires the wildest stretch of imagination to sustain the theory that low freights from the South are necessary for mills in that section to enable them to compete with New England mills for the trade of the West.

Senator DOLLIVER. How do you account for that? That seems to be a deliberate throwing away of revenues.

Mr. HOOKER. Exactly; but it is simply because the evolution that has been going on in every technical trade in the world for the last twenty-five years necessitates a closer knowledge of every subject handled by the men who profess to handle it, whether that is the construction of an armored cruiser, or steel works, or anything of that sort. That close knowledge has not yet reached the traffic departments of the railroads.

Senator DOLLIVER. Do you think it will strike the Interstate Commerce Commission before it strikes the traffic departments?

Mr. HOOKER. Yes, I do; I might say a little more on that same subject, since you ask the question.

These tariffs were constructed by men who now are traffic managers and who are expected to sustain those tariffs. What would you think of a man you were holding responsible for results in a large department of your business if, after five or ten years, you discovered that he had been working on an entirely wrong hypothesis; that he had been throwing away opportunities to make profits while working upon certain suppositions that did not exist? You would think that he should have learned better in the five or ten years previous. That is the position occupied to-day by the south

ern traffic men. The southern cotton-mill industry does not need the fostering care of the Southern Railroad any more than the Southern Railroad needs the fostering care of the southern cotton-milling industry.

Senator DOLLIVER. It seems to me, referring to your illustration, that if I owned a railroad and discovered that the traffic manager was breaking away from the law or regulation I had made, I would at once cast about for another traffic manager.

Mr. HOOKER. You would think so. In this particular case I have alluded to the parties offered to make this proposition to Mr. Powell, that they would be willing to try that case before Mr. Spencer. At that time there was practically no more competition between the New England cotton mills and the southern cotton mills for the trade of the West than there was between the southern cotton mills and Russia for the trade of New England. Mr. Powell was astounded. As I say, every witness who has been examined by the Interstate Commerce Commission knows that, two of whom were southern cotton manufacturers. Every statement I have made can be verified, and the more strongly the southern cotton representatives advocate it the stronger the position of the complainant will be made here. The southern traffic managers have simply fallen into the general belief, which is a very superficial one, that there is the keenest competition between the southern and the New England cotton mills, whereas that competition exists practically on one article only-print cloths and print-cloth yarn goods.

Mr. Twitchell, president of the Clifton Manufacturing Company, Spartanburg, S. C., testified that he was engaged in the manufacture of heavy drills and light gray cottons; that he did not ship any goods to the West, and that if the rate was about the present rate, it would in no wise affect his interests.

Although relief has been sought from the Interstate Commerce Commission, as you know, the Commission is now powerless to enforce its decrees. The Cincinnati Southern, the city-built road, is operated by the Southern Railway Company, which (you will say) should be interested in being just to the largest city reached by their rails. I have already shown by their action, in not reducing the rate from Cincinnati to Chattanooga, that they were guilty of a most unfriendly act. But there may be other reasons. The ablest and strongest competitor of the Southern Railway Company in the interchange of business between the West and South is the Louisville and Nashville. No stronger opponent of Federal interference of transportation companies exists. No railroad management is less inclined to give ear to complaints of business organizations than the Louisville and Nashville; the masterful ability of the president of that road has enabled him to bluff the management of the Cincinnati Southern from the day it was finished. The uniting under the ownership of the Louisville and Nashville and the Atlantic Coast Line increases this power to dominate in the southern field. Mr. Spencer would have Congress believe that this question of adjusting rates between localities is the most intricate question of all; that changes will create greater confusion than the world has seen since that great day in Babylon when work was suspended on the Tower of Babel. He greatly exaggerates the difficulties.