"Well, every traffic official who came before us in that capacity-and we prosecuted it for three days at Chicago-testified that rates were absolutely maintained. "Senator Newland-How many did you have before you?'

“Mr. Prouty-'We had the officials of every trunk-line leading from Chicago to New York.'

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"They all testified the rates were absolutely maintained from Chicago to New York. Two years after that I examined the chief traffic officer of the Baltimore and Ohio, and of the New York Central-do not think it was the same man in either case-and of the other lines, and they all testified that rates had never been maintained. I would like to know what I could do as Interstate Commerce Commissioner to make those gentlemen admit that they paid rebates, and as they would not tell that they paid rebates, I would be glad to know how I could obtain evidence that they did.

"Having gotten through, Senator, with the lines between Chicago and New York, we said perhaps this is not a fair example. Now, we will go up in the Northwest, and we will take the lines that carry flour from Minneapolis east. We instituted another investigation, and we put the railroad and the traffic men and the millers on the stand, and they all swore without exception that the rates were absolutely maintained. We could not get the admission from any man there that they had ever paid a rebate. We said: "This does for the East; now let us go West.' So we went to the Pacific coast, to Portland, Oregon, and went over exactly the same performance there. We made one man admit that he burned up his books rather than present them to the Commission, but we could obtain no admission of the payment of any rebate

there.

"There has not been a time since I have been an Interstate Commerce Commissioner when if the traffic officers of the trunk lines between Chicago and the Atlantic seaboard would have consented

to tell the truth under oath, the Interstate Commerce Commission would not have stopped the payment of rebates. I have been able to discover no way in which to make them tell the truth.”

The attainment of publicity, you see, is a very difficult matter so long as the railroads are in the hands of private owners whose interests are opposed to publicity. It is true that Governor La Follette succeeded in turning the light on the rebate business in his state by sending public inspectors to examine the books of the companies in order to test the accuracy of their returns under the tax laws. But the railroads were not expecting the X-rays. They were unprepared. They do not need to leave any traces of their discriminations and if any plan of public inspection were adopted they would not leave any traces.

In the case of government railroads inspection and publicity can be made effective because the roads are not in the hands of men whose economic interests and business ethics command secrecy, but in the hands of public managers who would be traitors to the business ethics of their position as well as to the law, if they tried to defeat or evade inspection and publicity. This is one of the great advantages of public-ownership. Everywhere in Germany, Denmark, Belgium, Austria-Hungary, etc., I found the government railroads absolutely free from unjust discriminations. The same is true of the government roads in the AngloSaxon colonies of Australasia and South Africa. The reasons are that the main motives to discrimination are eliminated, that much fuller publicity is possible, and that the railway managers are employed by an authority that is opposed to discrimination and will discharge them if they are found to be breaking the law, instead of being engaged by an employer who asks only for profit and will approve and promote the manager if he wins that whether through discrimination breach of the law or not.

and

'Why not? Human nature is the same in South Africa as in America. Suppose they made some traffic man a partner in their profits or brought pressure enough on him in some way to get a concession?"

"It would n't be possible."

"Well, why? Suppose it were possible, what would happen?"

"The government auditors would find it out, and the manager would lose his position."

"Could n't he cover up the thing?" "Not for any length of time."

"The people would have a fit if any thing like that were attempted," said a member of the manager's staff.

"You have no attempts to secure preference then?"

"No, it is not even attempted."

The favorite remedy with our railway managers is the legalization of pooling. They say discrimination is the result of competition among the railways for business and that if the railways are allowed to make traffic agreements discrimination can be stopped. But we have seen that competition between railways is only one of the six principal causes of discrimination. Pooling would not touch any of the other five causes. To the president of one of the greatest railroad systems in the country, who told me, as so many others have done, that the legalization of pooling is the remedy for discrimination, I said: Are there not two great classes of discrimination? (1) Those

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that are due to railway competition, and (2) those that are due to the interest of railway managers or their desire to favor influential persons, relatives, business associates or others who have a 'pull?' And while the legalization of pooling might tend to diminish discriminations that result from railway competition it could not prevent discriminations caused by interest or 'pull"." The railroad president said he thought that was true and he admitted also that even competitive discrimination could not be entirely eliminated by pooling. In fact, in earlier years before the Interstate Commerce Act was passed, when traffic agreements were in vogue, it continually happened that some greedy road would cut below the rates agreed upon in order to get a large share of traffic and enlarge its claim upon the pool. Railroad presidents and managers have been known to go direct from the meeting at which the pool was organized, hunt up some big shipper and give him a cut rate at once in order to capture more than their share of his busi

ness.

The fact is that none of the proposed remedies are likely to be effective. We have been assured from time to time that the remedy has been found and that rebates and discriminations have ceased. When the Interstate Commerce Act was passed, 1887, railway men declared that "rebates have been stopped." And for a time direct cash rebates were prevented to a considerable extent; but other forms of discrimination were in full swing all the time and rebates soon came back in full force. Years after the Interstate Commerce Act went into effect a famous railroad president declared "that if all who had offended against the law were convicted there would not be jails enough in the United States to hold them."

After the Elkins law was passed, in 1903, railway men again affirmed that railway rebates and discriminations had been stopped. And last year before the Interstate Commerce Committee of the Senate, presidents and managers testified

by the score that rebates and discriminations were no longer in use. But James J. Hill, president of the Great Northern, and Victor Morawetz, Chairman of the Executive Committee of the Santa Fé, and members of the Interstate Commerce Commission, and other high authorities, testified that rebates and discriminations had not ceased. And President Hill declared that they never would cease.

In the railroad investigation in Wisconsin recently instituted by Governor La Follette it was found that every railroad of importance in the state has been paying rebates every year both on freight and passenger business, state and interstate traffic, the total rebates for the principal lines amounting to more than $7,000,000 in six years, and it was further discovered that the total rebates paid in the year following the enactment of the Elkins law were greater than the rebates for the year before. In some cases the payments after the law took effect were very much greater than before. The Northwestern Railroad, for example, jumped from $212,075 rebates in 1902 to $410,476 in 1903 mostly after the Elkins law went into effect (February 19, 1903). Professor Hugo Myer, of Chicago University, asserts that the prosperity of America is founded on railway discrimination and that the trouble with the government railways of Germany and other countries is that they have abolished discriminations. Few, I believe, will agree with Professor Myer that railway favoritism is the foundation of prosperity in general, although there is no question that it is the foundation of the prosperity of the Oil-Trust, Beef-Combine, and many other giant combinations of capital. Our people as a rule, including many of our railway managers. would be very glad to discover an effective method of preventing railway discrimination between persons and places. My studies at home and abroad lead me to believe that there is only one method by which this can be accomplished, and that is to remove the fundamental cause or tap

root from which railway abuses grow, namely, the antagonism of interest between the owners and the public. So long as the railways are owned by a few and operated for the private profit of a few there will be unjust discrimination; men who own coal-mines, steel-mills, packing-houses, oil-refineries, etc., and also control railroads will not give their competitors in business equal rights with themselves over the railway lines whose policy they determine. So long as the railway managers are employed by and are the servants of a small body of stockholders, especially men who own the great trusts, favoritism is bound to continue. The only way to secure management of the railways in the public interest is to make the railways public property and the railway managers servants of the public. You cannot expect the servants of the other fellow to manage the business owned by the other fellow in your interest. If you want to have it managed in your interest you must own it and make the managers your servants.

Before a club of business men in one of our leading cities recently, a member of the Interstate Commerce Commission spoke in favor of the President's railroad policy. Mr. Edgar Rich, successor to Richard Olney as General Counsel for the Boston and Maine Railroad, presented the case for the railways; and I followed with a talk in the course of which I stated the conclusions just set forth. As we were leaving the hall the Commissioner said: "Rich, you and I are both wrong, and Parsons is right. I want to see the other method tried, but it won't succeed. I know it won't succeed."

age can well remember when the man worth $10,000 was far more uncommon than the man of $100,000 to-day.

The natural impulse of the great majority of our wealthy men in this country is to do as much good as they can. They are patriotic, and would be pleased to assist the nation and the people that have made it possible for them to accumulate the immense fortunes they control. They are not profligates; neither do they wish to encourage profligacy in their descendants. They may live well, and may wish that their children may live well after they are gone, but they know that nothing can so completely break down and ruin the moral character of their children as profligacy.

Many a wealthy man doubtless feels that it matters not how much wealth he may leave his children at his death; that it will be hard to conjecture how much of it they will have left in a few short years, or how much lasting injury they may do to his memory, or their own name, in the spending of it.

At best, and should he leave it under the wisest control, it must pay from two to five per cent. per annum in taxes, as well as run the chance of loss in investment. It may accumulate, but the general rule is to the contrary. In a given territory, there may be a thousand men whose learning and intelligence fit them for positions in the highest councils of the nation, and still but very few, if any, among them, could take an inheritance of a couple of million dollars, and have that amount at the end of a life-time.

Let us see if a feasible plan may not be adopted, by which the very wealthy may donate to the public, for the best possible and most worthy object, a part, or all of their fortune, and still get every dollar back thus given away.

Suppose that you should recommend, and Congress should enact, a law with the following among other provisions:

First-The national government should be and act as trustee to receive donations,

by will or otherwise, of money (or property to be converted into money), for the purpose of establishing banks. The donor could give the fund for the use of any state designated by him, or, in case it was given without such designation, then such funds to be assigned by Your Excellency among the different states as nearly as practicable pro rata per capita.

Second-The fund could be donated absolutely, or with the right on the part of the donor, or his heirs, to receive back from the government one cent on the dollar (no interest) each year for one hundred years.

Third-All states to receive such funds under laws requiring that they should forever keep such funds intact, by direct taxation if necessary, thus making good any loss that might occur through the wrongful act of any officers of the bank or otherwise.

Fourth-The state should be allowed to nominate the bank officers, subject to the approval of the national government, and the latter should always retain power of visitation and inspection into the affairs of such banks, and the power also of suspending, or ousting, all officers. The salaries of all officers and employés should be fixed under general rules, promulgated by your department, taking like or similar services of those in your department, and the compensation paid, as your guide.

Fifth-The money so donated should be exempt from all taxes, levies or assessments of any kind, be the same state or national. It should be exempt from attachment, execution, creditor's bill or otherwise, as against the donor, his heirs, or persons described in the will or deed of donation. They might also be prohibited from selling, assigning or encumbering their right to such fund, if the will, or articles of donation, should so declare.

Sixth-General banking, or commercial banking, should be avoided, and the funds of such banks should be invested only in national, state, county, city or