Extract from report by United States Railroad Administration—Freight-car miles (thousands), July, 1919. During this same period British steamers moved from Atlantic coast ports, principally New York, to trans-Pacific destinations 80,710 tons of cargo. Japanese vessels during this period moved 38,555 tons. The only movement in that direction via American vessels consisted of two cargoes from New York to Honolulu, totaling 14,687 tons. And that, gentlemen, was trade in which these foreign craft could not enter, because it was protected by our coastwise laws, except under special permit that exists only during the period of war and 120 days thereafter. Mr. HAMILTON. Will you kindly elaborate why foreign carriers will be able to get so much larger proportion of the traffic than our own carriers? Mr. CLARK. I think I cover that in this statement, if I may proceed. Will you kindly make a memorandum of the question in case it is not covered by what follows? Mr. HAMILTON. Very well. Mr. CLARK. The 11 British ships which were engaged in handling this cargo are virtually British tramp vessels in that they bring no return cargo but operate irregularly on a triangular service, generally carrying freight from New York to the Orient and Australia, from whence they carry freight to Britain and the Continent, thence with freight to the United States, and so on. This practice would likely leave American vessels attempting competition dependent largely upon a one-way cargo, just as we have found they were dependent upon one-way cargo when we were supplying the needs of the Scandinavian countries in the matter of foodstuffs. The greater part of this freight which moves from New York through the Panama Canal to trans-Pacific destinations originates in the interior of the United States, as far west as St. Louis, in some instances. It will therefore be readily understood that the diversion of this business away from Pacific coast ports and to eastern railroads leaves the West short of cars and prevents a balanced traffic of water carriers upon the Pacific. A statement of the water movement for July is here inserted in the record: Statement of vessel movement from Atlantic coast ports through the Panama Canal to Honolulu and trans-Pacific destinations during July, 1919: Cargo carried represents 2,981 carloads. Eliminating oil and like cargoes which can be delivered at Atlantic seaboard without the use of rail transportation, we still have 97,041 tons, or 2,426 carloads. If this cargo could have been moved to Pacifiic coast ports by rail it would have reduced the west-bound empty car mileage for July by more than 5,000,000 car-miles. If it could have moved in American ships it would have furnished employment to Shipping Board vessels, which by the dozen are swinging idly on their anchor cables in the water of Lake Union at Seattle. This could be accomplished if we were to take a leaf or two from the book of European and oriental diplomacy and fearlessly establish a program protective of American interests. Some years ago Mr. James J. Hill, of the Great Northern Railway, established an American water service to the Orient in connection with his rail line. Eventually, however, he was forced to make traffic arrangements with a Japanese steamship line, and not infrequently to give to them cargo which should have moved in his own Dakota and Minnesota. Why? The Japanese competitor enjoying the cooperation of his Government was able to name the same rate to the interior point of Tokyo as to the water port of Yokohama. It was impossible, however, for these operating under other flags to name or even ascertain the Japanese rail rate from seaport to interior, which would apply upon that shipment when it reached Japan if moved by other vessels. Yet in our country, however, the foreign craft received the same benefit from export rail rates as the American craft, and one after another American lines, laboring under this and other handicaps, were withdrawn from service after operating several years at a loss. Mr. HAMILTON. How do you expect under any system to obviate that discrimination, for illustration, in Japan in favor of her own shpiments in relation to interior points? Mr. CLARK. I would meet it by a counter proposition, which I will analyze later. The Interstate Commerce Commission could, at the present time, practically control the movement of export cargo by low-rate encouragement for the movement of trans-Pcaific cargo through Pacific coast ports and the discouragement of rates calculated to force its movement through New York or other congested Atlantic seaboard ports. Such action would relieve congestion on eastern railroads and at ports and supply cars to the West, moving under revenue instead of expense. So long as no consideration is given to these subjects by rate-making bodies, just so long must all the people pay exorbitant rates to cover the cost of incompetent and uneconomic operation of rail lines incidental to an unbalanced traffic. Further, if we are to encourage the movement in our own ships of our own foreign commerce, we should provide by statute that export and import rail rates shall only apply in connection with ships of the United States, in this manner emulating Japan. This answers Mr. Hamilton's inquiry. DISCRIMINATION AGAINST PORT-TO-PORT SHIPPERS. The Interstate Commerce Commission applies its inflexible rule of practice to water-carrier divisions of rail and water rates, not taking into consideration the enormous increase of the past few years in the cost of all materials, supplies, and labor incidental to water carriers' operations. Permit me to present a concrete example. In 1908 the railroads serving Puget Sound from the East, wishing to eliminate an undesirable empty car haul, agreed with the Pacific Coast Steamship Co. as to divisions for the ocean haul and made through rail and water rates from North Dakota, Montana, Idaho, and eastern Washington, to California points, on flour, wheat products, etc., and upon certain commodities from California to the States named, which through joint rates were slightly lower than the all-rail rates between such points via Portland, Oreg., or Ogden, Utah. As the divisions of the steamship companies at the time equaled or exceeded the port-to-port charge upon similar commodities, and were, therefore, satisfactory, the arrangement was concluded through the filing by the steamship company of blanket concurrences which permitted the railroad companies to fix such through rates as they might elect. Water carriers' costs of operation did not materially change from 1908 to 1914, but commencing with 1915 such costs, particularly upon the Pacific coast, mounted so rapidly that by 1917 the cost per ton of handling this cargo, ex-rail lines, reached, and finally rose above, the freight moneys allowed the steamship company for its carriage. Application crease in the division for the ocean haul. The railroads expressed sympathy, but declined to grant the request. The only alternative, therefore, was an appeal to the Interstate Commerce Commission to permit the withdrawal of concurrences which represented net loss in operations upon every ton carried. was made to the participating rail lines for an in 152894-19-VOL 3 -9 On March 14, 1918, the Pacific Steamship Co., which succeeded the Pacific Coast Steamship Co., made formal application to the Interstate Commerce Commission for the cancellation of the concurrences referred to, setting forth in the application under oath that the vessels of the company handling such cargo in 1917 had suffered a net loss of $113,315.68, and further indicating that wage increases enforced by union labor, aside from other increased expenses, would add another $250,000 to the already increased operating expenses of 1918. Action was apparently not taken upon this application until in May following, I think, when the request for withdrawal was made public in the territory affected. The protests by organizations representing shippers, against the withdrawal of the concurrences were based exclusively on the selfish desire to have them continued, as a matter of economy and convenience, and none contained a single basic reason why the steamship company should be required to continue an operation which represented net loss to its stockholders. It is evident that the commission neither gave consideration to the steamship company's sworn statement of losses, nor made inquiry into the costs of operation, with a view to determining the reasonableness of the rate under investigation. Neither did it make any attempt to expedite its determination of the question at issue. On the contrary, notwithstanding the urgent need expressed by the steamship company in support of its application, no definite action was had by the commission until the following January, some ten months after the application had been filed, when, without other explanation, the application was formally, on January 4, 1919, denied in so far as it affected these particular tariffs on which the cargo moved at the objectionable rates. With the permission of the chairman I will insert in the record at this point copies of the original application of the steamship company, setting forth the facts as related, copies of protests by Spokane Merchants' Association, Great Falls Commercial Club, Montana Millers' Association, Weenatchee Commercial Club, with replies to protests made by C. E. Flye, general freight agent for the Pacific Steamship Co., also final order of commission. PACIFIC STEAMSHIP CO., To the Interstate Commerce Commission, Washington, D. C.: The Pacific Steamship Co., by C. E. Flye, its general freight agent, does hereby petition the Interstate Commerce Commission, under section 15 of the act to regulate commerce, as amended August 9, 1917, for authority to cancel the following concurrences: 1. It is the desire of the Pacific Steamship Co. to withdraw from participation in all joint through rates published under concurrences shown above. Your petitioner bases such request upon the following facts, which present all of the circumstances and conditions relied upon by your petition in justification of the request herein made. 2. Your petitioner maintains a passenger and freight service between the ports of Seattle and Tacoma, Wash., Vancouver, British Columbia, on the one hand, and San Francisco, Wilmington, and San Diego, Calif., on the other hand. The major part of its freight traffic moves locally from port to port, and is not subject to the jurisdiction of the Interstate Commerce Commission. Most of the remaining part of its freight traffic moves between San Francisco and points in eastern Washington, Idaho, Montana, and Canada under joint through tariffs, published by the various rail lines serving the Pacific Northwest, and concurred in by your petitioners. To partially meet the recurring increases in shore and ship wages, marine insurance rates, prices of fuel, materials and supplies, your petitioner has, from time to time, increased its port-to-port rates during the last 16 months, until now such port-to-port rates greatly exceed the ocean divisions, under which the freight moving under the joint through rates, referred to above, is handled. The ocean divisions at present applied on this through traffic are substantially those agreed to in 1908 between the rail carriers and the Pacific Coast Steamship Co., to whose business your petitioner succeeded on November 1, 1916. In 1908 the Pacific Coast Steamship Co.'s local rates between San Francisco and Seattle were substantially the same as the ocean divisions of the through rates then and now in effect. It has been held by the commission that each class of traffic should bear its share of the operating expense. With this and our imperative need of more freight revenue in mind, we would ask our rail connections to petition your commission for authority to increase the joint through rates enough to give us remunerative divisions, but this would not solve the problem. Were the through rates increased enough to afford your petitioner a reasonable compensation, the result would be a scale of water and rail rates exceeding the competitive all-rail rates in effect via Portland, Oreg., or Ogden, Utah, as the case may be. On most of this through traffic the ocean divisions are in cents per 100 pounds, as follows: While our San Francisco-Seattle local port to port rates are as follows: On most of the through traffic (not including grain and grain products and ore,) your petitioner absorbs the cost of marine insurance up to a value of $250 per ton. This expense has been steadily growing as the values of merchandise have increased. The cost of marine insurance is not included in the local port to port rates. |