The CHAIRMAN. An independent line?

Dr. HUEBNER. An independent line, too; it does not belong to any consolidation.

Senator PERKINS. Is it steam schooners principally?

Dr. HUEBNER. No, sir; regular steamers. Here is a railroad-owned line which pays 6 per cent regularly, and the net earnings, as reported to the committee, are nearly three times the amount of the dividends paid.

Senator WALSH. To what account do they carry that? Is that a surplus ?

Dr. HUEBNER. I presume they will carry it to surplus, but there is no uniformity in the accounts. One of the recommendations the committee made for proposed legislation is to the effect that all the domestic lines should be obliged to file reports according to a prescribed standard. Here is another prominent line, a very prominent line, which pays dividends of 7 per cent regularly and has net earnings to nearly four times that amount. So, generally speaking, in reply to your question, Senator, those lines that pay dividends are doing well.

Senator BRANDEGEE. If they lose the vessel, of course they get the insurance?

Dr. HUEBNER. There is no risk involved.

Senator BRANDEGEE. No risk about that?

Dr. HUEBNER. Provided they have it fully insured; but a good many do not.

Senator WALSH. They have to have them inspected and see their condition all the time and have to pay the repairs for them, and what you have alluded to as these various percentages are things that would be available for dividends if they wanted to distribute?

Dr. HUEBNER. Yes; it would be very unwise, of course, for a line to pay out all its earnings for dividends, because the depreciation allowance is very heavy.

Senator BRANDEGEE. You have indicated lines. Do you know anything about the profit of the individual ships?

Dr. HUEBNER. No, sir; I have not made an investigation along that line.

Senator BRANDEGEE. I assume a vessel property that is not connected with any lines and operated regularly between fixed ports stays in the business because it is profitable. There is nothing to compel them to stay in it if they are not making money that I know of. Dr. HUEBNER. I am under the impression, from the studies I have made thus far, that the bulk carriers, generally speaking, are not as independent as many of us believe.

Senator BRANDEGEE. Independent of what?

Dr. HUEBNER. I mean independent of some sort of conference arrangement or a community of interest. I was interested in that matter especially on the Great Lakes. There is a chart in this same volume

Senator BRANDEGEE. Perhaps we had better print that whole volume.

Dr. HUEBNER. I should like to allude to it. I have, for instance, in one chart here the facts pertaining to 105 so-called bulk-carrying companies on the Great Lakes, and they represent 30 distinct groups by ownership or management.

Senator BRANDEGEE. You mean they are controlled by railroads or other kinds of affairs?

Dr. HUEBNER. No, sir; they are controlled by a community of interest. For instance, about 85 per cent of the efficient American bulk-carrying tonnage on the Great Lakes for ore, lumber, and coal I find to be in a community of interest. In other words, we called for the 10 biggest stockholders, the officers, and the intercharter relations, and it was amazing to see how 105 different companies, representing from 80 to 85 per cent of the American tonnage on the Great Lakes were so closely related in one way or another.

Senator BRANDEGEE. I am rather solicitous, with the Chairman, after we get loose of the railroad octopus, after we loosen its grip on these vessels, are they not liable to fall into the control of some marine octopus?

Dr. HUEBNER. I do not want to use that particular word.

Senator BRANDEGEE. Then we shall have to have a euphonism for it. We will call it a community of interest.

Dr. HUEBNER. I am a believer in cooperation if it is the right kind, and I do feel confident that when the railroads lose control of the boat lines, those boats or lines will in some way find their way into a new conference arrangement; that is bound to be the result, because, as I said, competition in water transportation is impossible for any length of time as far as rates are concerned.

Senator BRISTOW. You spoke of combinations or associations on the Pacific coast-five I believe you said. Will you please mention what five they were and by whom they were controlled?

Dr. HUEBNER. You mean consolidations?

Senator BRISTOw. Yes; on the Pacific coast.

Dr. HUEBNER. For instance, the Alaska lines, with the exception of four very small lines, are controlled through interstock ownership by the Alaska Steamship Co. and the Pacific-Alaska Steamship Co. Senator BRISTOW. You say there is a consolidation? Who controls this consolidation?

Dr. HUEBNER. That is a shipping consolidation and not a railroad consolidation.

Senator BRISTOW. What is it whose are they? Who controls it? Dr. HUEBNER. I do not know the names of the individuals offhand, but in the domestic trade the control in nearly all instances is through stock ownership.

We

Senator BRISTOW. But it seems to me to be useful to us. ought to know who owns this stock; who is the controlling factor; what is the controlling force.

Senator CHILTON. How can you tell it is a combination if you do not know who it is?

Dr. HUEBNER. The committee issued a schedule of inquiries to about 600 steamship lines and under oath the officers made returns to a large number of questions. They were asked to state what stock and what bonds their company held in other navigation companies. In that way we arrived at the names of the lines that were interrelated through a common ownership of stock.

Senator CHILTON. But you did not pursue that inquiry down through the individual stockholders?

Dr. HUEBNER. The committee's schedule of inquiries called for the 10 biggest stockholders.

Senator BRISTOW. Can you give them?

Dr. HUEBNER. We have the names of the 10 biggest stockholders; yes, sir.

Senator BRISTOw. They are not confidential, are they?

Dr. HUEBNER. I do not know as to that. I should have to ask the chairman of the committee.

Senator BRISTOW. Why should they be confidential?

Dr. HUEBNER. From my personal standpoint there is nothing confidential about them, and I shall be glad to ask the chairman.

Senator BRISTOW. I should be glad if you could consistently with your duties to the other committee incorporate in the record-furnish to the committee rather—a statement as to who these consolidationswho compose the members.

Senator SIMMONS. Doctor, how do the rates of foreign ships compare in this country with the rates charged for coastwise traffic?

Dr. HUEBNER. That is a very difficult question to answer, since the rates vary so much in the different trade areas. Every route in our foreign trade has rates of its own.

Senator WALSH. Could you not compare New York and Porto Rico with New York and Habana, for instance?

Dr. HUEBNER. Yes; that can be done.

Senator WALSH. How would that run?

Dr. HUEBNER. I would prefer not to guess at that. I can get that information, however, and compile it.

Senator SIMMONS. I should be very glad if you would get all of the information you can, comparing the through rates with coastwise rates wherever a comparison would be valuable to us.

Dr. HUEBNER. That would take some little time to do, but I shall be very glad to give you all I can.

Senator SIMMONS. Furnish that to the committee as soon as you

can.

Dr. HUEBNER. If I could be given some idea as to what routes you wish compared.

Senator WALSH. Compare New York and Key West with New York and Bermuda, could you not?

Dr. HUEBNER. Yes; that can be done. Generally speaking, I will say that the rates in the coastwise traffic are higher than the rates in the foreign traffic.

Senator SIMMONS. Generally speaking, how much higher?

Dr. HUEBNER. That is where I would prefer not to make a guess. I know they are higher.

Senator ŠIMMONS. Are they not very considerably higher?

Dr. HUEBNER. In some instances they are considerably higher; yes, sir.

Senator SIMMONS. The railroad rates in this country are regulated by the Interstate Commerce Commission. Suppose you should regulate the water rates by the Interstate Commerce Commission, and both rates, by water and by rail, should be fixed upon the same general basis. How do you think they would compare?

Dr. HUEBNER. I have absolutely no means of knowing what the outcome would be.

Senator SIMMONS. Can you not tell what the difference between. the Lake traffic rates and the railroad rates are?

Dr. HUEBNER. Yes; they are all published. The differentials between the all-rail rates and the all-water rates on the Great Lakes are published in this volume, but those differentials are regarded as too small. Now, what the correct differential ought to be requires an investigation and I do not feel that I can answer that in an offhand way Senator CHILTON. What was it you started to say a moment ago, "that no one has ever been able to tell"

Dr. HEUBNER. What constitutes a reasonable rate on the water requires that many, many factors be considered and I can not offhand give you any idea as to what constitutes a reasonable rate on that traffic. That is a matter for an investigation by a body like the Interstate Commerce Commission.

Senator CHILTON. It depends on many conditions and factors? Dr. HUEBNER. Yes, sir.

Senator SIMMONS. Doctor, do you know how the rail rates, the transcontinental railroad rates now compare with the water rates to and from the same points?

Dr. HUEBNER. Have you in mind transcontinental rates?
Senator SIMMONS. Yes; I said transcontinental rates.

Dr. HUEBNER. No, sir; I can not, but Dr. Johnson's report on Panama Canal tolls, I think, has all of that information embodied. Senator SIMMONS. Assuming that the water rates were to be fixed by the Interstate Commerce Commission according to what you have said there as to the profits of the few lines that you mentioned here a while ago, some declaring dividends of 6 per cent and passing to surplus three to four times as much as these dividends. If the rates were placed upon a reasonable basis, that is, if the same rule applied rigidly as is now applied to rail rates these water rates would have to be greatly reduced would they not?

Dr. HUEBNER. Possibly; I do not know what theory, of course, the Interstate Commerce Commission will follow in fixing a reasonable water rate. There are portions of our coast wise trade where one line will be paying 6 per cent and passing to surplus three or four times that much, and another line facing almost a deficit.

Senator SIMMONS. Suppose the water rates were brought down to a reasonable rate, as we assume that railroad rates are brought down to a reasonable rate. Do you not think the difference between those two rates in favor of the water rate would be so great that 60 cents ton-for that is really what $1.25 based on 100 cubic feet amounts to-would be so small that it would have no appreciable effect upon transcontinental rates?

Dr. HUEBNER. I am inclined to agree with you on that. For instance, 50 or 60 cents a ton spread out over 1,000 pairs of shoes is so small an item that it is difficult to discover it.

Senator BRISTOw. It is a good deal like the tariff, is it not, on our manufactured products?

Senator SIMMONS. Are not the tramp steamers operated in this country owned abroad?

Dr. HUEBNER. I can not answer that question. I think Mr. Chamberlain will be better posted on that.

Senator SIMMONS. I had been under the impression that practically the tramp steamers in this country were owned abroad. Dr. HUEBNER. You mean engaged in the foreign trade?

Senator SIMMONS. Yes.

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Dr. HUEBNER. Yes; there are few American tramp vessels in that trade.

Senator SIMMONS. Are there any tramp steamers engaged in the coastwise trade?

Dr. HUEBNER. All the tramps that are engaged in the coastwise trade must be American.

Senator SIMMONS. Are there tramp steamers in the coastwise trade?

Dr. HUEBNER. Yes; but how many I do not know. Yes; there is a considerable number. However, it is very difficult for a line to charter a desirable tramp steamer. The testimony before the Committee on the Merchant Marine and Fisheries was largely to the effect that gradually the lines have also obtained control of most of the efficient tramps in a given coastwise trade.

Senator SIMMONS. There was a suggestion a little while ago that there was now potential competition between these steamboat lines that are independent, or railroad-owned, or combination lines, and the tramp steamers, and I believe you concurred in that suggestion. Now, I want to ask you if that same competition would not obtain, whether we have tolls or no tolls on the canal?

Dr. HUEBNER. Yes; I think there will be no change. But I did not admit there was much competition.

Senator SIMMONS. Whatever competition there is, the same competition would exist either under free tolls or exemption of tolls? Dr. HUEBNER. Yes.

Senator WALSH. I gather from what you say, Professor, that when you eliminate the railroad-owned ships and the trust-controlled ships there would be practically no ships left engaged in the coastwise trade to go through this canal?

Dr. HUEBNER. It depends on how you interpret the section of the Panama Canal bill that you have in mind. The steamship arrangements in this country are conference arrangements, and I ought to state that the lines have been very explicit in trying to make it clear that they do not definitely bind themselves to live up to certain rates, as discussed in the conferences.

Senator WALSH. Let us reduce it, then. The railroad-owned ship would eliminate what percentage?

Senator SIMMONS. Senator Walsh, if you will permit me, I understood the witness to say that these railroad-owned ships, with the exception of one line, did not compete with the railroads?

Senator WALSH. I understand, but those are not engaged in the kind of traffic that would take them through the canal, are they, Dr. Huebner?

Dr. HUEBNER. They might extend through the canal.

Senator WALSH. They would then be engaged in competition, would they not?

Dr. HUEBNER. No; because most of them are owned by railroads that are not transcontinental railroads.

Senator WALSH. But they would cease then to be extensions of the line and would run parallel with the line, would they not, if they went through the canal?

Dr. HUEBNER. For example, if the New York, New Haven & Hartford boats should run through the canal, that would not make the boat line a competitor.