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Mr. BOOTH. You say they were coming to Florida?

Senator THOMAS. They were unloading a cargo of oranges, and it struck me as remarkable that in the city of Jacksonville a Clyde steamer was unloading a cargo of oranges, evidently for the Florida market.

Senator WALSH. Where did she come from, Senator?

Senator THOMAS. I do not know; I think from Philadelphia or New York, or some other point-possibly from Galveston or New Orleans.

Senator BRISTOW. Do you not think that was from some of the West India islands?

Senator THOMAS. I was told they were California oranges. I have no personal knowledge of it. That very fact rather impressed it upon my mind.

Mr. BooтH. That is a very unusual situation. I can very readily. see, Senator, where the Southern California Fruit Exchange in the marketing of that product and there are a great many ramifications to this marketing business which I will not take the time to go into, because I do not want to intrude further upon your time, and perhaps they are not germane. They might have a number of carloads of oranges in New York on which the market was too low to warrant them to be sold, and they might sell that fruit at a better price in Jacksonville or some other point at such a price as would warrant a freight rate in the delivery and sale. That is done right along. I know where a trainload of 25 or 30 cars starts eastbound, and oftentimes only two or three of those cars are distributive, that the routing of the car follows its arrival at eastern destinations, due to conditions which change overnight in the orange business. That is the fickleness of it.

Senator SIMMONS. I should like to get your opinion about this: You know, of course, of a provision in the present law which prohibits railroad-owned ships from going through the canal and also the provision prohibiting controlled ships in competition with them going through without the consent of the Interstate Commerce Commission. Do you think whether the railroads are permitted to own these ships or not that they will in fact manage to control them? Have you any views about that?

Mr. Bоoтн. On that, Senator, I would only want to express a personal opinion. I would have no authority to express the opinion of our organization on that subject, because so far as I know it has not taken action on that subject.

Senator SIMMONS. I just wanted to know whether you thought the fact of railroad control would indirectly continue or not?

Mr. BOOTH. The railroad control with which we have been familiar up to this time has been of such an unfortunate character that we naturally have a very intense feeling against the control by the railroad of the steamships, giving only a nominal and not an actual competition, which is what we are struggling for.

Senator SIMMONS. Right at that point, if the railroads shall by any device, any manipulation or scheme, continue to control these vessels, you would not expect any great reduction of rates however much cheaper they could carry the freight?

Mr. BOOTH. Of course, the premise which you give me is hard for us to conceive, if we can be allowed a free competition and an encouragement to the development of new lines east and west bound.

Senator SIMMONS. What do you say about this: If the railroads are compelled to surrender all their interest in water transportation, and that they do as a fact absolutely get out of it, and this water transportation after the canal is open is owned entirely by private corporations, or by individuals, do you agree with Prof. Johnson and other witnesses here who have testified, that however these vessels are owned that they will fix their rates by conference, and that those rates will be about what the traffic will bear?

Mr. BOOTH. You ask me if I agree with that?

Senator SIMMONS. Yes.

Mr. BOOTH. Their agreement is based upon the assumption, doubtless, that all of the lines nominally competitive can be pooled and become noncompetitive.

Senator SIMMONS. By conference agreement?

Mr. BOOTH. By conference agreement. Whether they do or do not do that is something which they have a judgment on and which we have a judgment on. Unquestionably, I think we are all familiar with the control of the Atlantic shipping by conference agreement, and it might be natural to presume that a parallel condition might exist

Senator SIMMONS. What do you mean by Atlantic shipping-the shipping on the Atlantic coast?

Mr. Bоoтн. Shipping between Europe and South America. Senator SIMMONS. That is controlled by conference now, is it? Mr. BOOTH. I say we are all familiar with the nature of that conference control.

Senator SIMMONS. At the present time is not the coastwise trade on the two coasts controlled by a conference agreement also?

Mr. BOOTH. I am not in a position to testify about that.

Senator SIMMONS. Are not the rates of all the lines substantially the same?

Mr. BOOTH. I understand that they are.

Senator SIMMONS. Is it not a fact that notwithstanding we have regulation of the transcontinental railroads by our Interstate Commerce Commission-and there are four or five of those railroads, I believe is it not a fact that they all charge the same rate?

Mr. Booтн. I presume that they do; I do not know

Senator SIMMONS. They would not be able to do that except by some sort of conference agreement, would they?

Mr. BOOTH. I do not see how they could possibly, but I do not know that is germane to our thought on that matter.

Senator SIMMONS. Do you know any character of transportation in this country in which this idea of fixi g the same rates for the same commodities, the same distance of destination, by some sort of an agreement or understanding does not obtain ?

Mr. BоOтн. I am not posing as a traffic expert.

Senator SIMMONS. Do you know any way to avoid that?

Mr. BOOTH. It looks to me that that is simply a matter of business between men operating those things.

Senator SIMMONS. Let me progress a little farther. If you can not avoid it, then whatever we may do we may expect that the rate is going to be fixed at all the traffic will bear?

Mr. BOOTH. No; I can not follow you that far, because it seems to us from any such thought as we have been able to give it

Senator SIMMONS. I am just trying to get your ideas.

Mr BOOTH (continuing). From any such thought as we have been able to give it that the coastal merchant marine now, like all our merchant marincs, is of a restricted character. Whether or not we are going to start in a new thought on the matter and really develop it in a way that will make a merchant marine out of it seems to us to be the principle that we have before us. If our merchant marine really develops where the shipping business becomes attractive to capital, which it is not at this time in a very large way, then we are going to get competition where the rates will make the profit. If the fact remains that the shipping rates under conference agreement are such rates that they give more than a normal profit to the businessif they do not give more than a normal profit, they are justified, they are fair, then they invite competition. Then if we can have competition we have hopes, and that is all we have in this business. If the canal tolls are in existence and if these established companies. have the tonnage, and for that reason make their net tonnage cost approximately the rate per ton that the Government has established for the tolls, then we can offer very little encouragement to competitive steamship lines, even though the freight rate be attractive."

Senator SIMMONS. Suppose we get it a little more in the concrete. Suppose we remit to the coastwise vessels the tolls which will average about 60 cents a ton, a weight ton

Mr. BOOTH. That is when they are carrying full cargo, Senator. Senator SIMMONS. Suppose we remit that altogether, do you believe that the water transportation companies will give either the shipper, the consumer, or the purchaser the benefit of that remission which will affect the cost of their service? Do you believe they would give them the benefit unless they are compelled to by some sort of competition either by rail or water?

Mr. BOOTH. I was just going to develop that fact. That is entirely a question of competition. If they can control the business they will control it, and if we can have a free hand and develop competition so that they can not control it, they will not control it. It does not seem to me that there is any other way out of that.

Senator BRISTOW. Mr. Booth, if this competition and the possibility of it, which seems to be disturbing Senator Simmons's mindSenator SIMMONS. Senator, do you think when I ask the witness a question trying to get his viewpoint that you are justified in saying that the thing is disturbing me?

Senator BRISTOW. The Senator for the last 10 days has been very much concerned, it seems to me, about that prospect of combination. Senator SIMMONS. I have been examining the witnesses along the line of the testimony we have had from experts, who

Senator BRISTOW. I did not mean to say anything that was not agreeable to the Senator at all.

Senator SIMMONS. Oh, it is not disagreeable, particularly. But I have not indulged in that sort of reference to any other Senator around the board.

Senator BRISTOW. If such a combination should be formed of these existing lines, or lines that might exist, could not the fruit associations of California charter vessels and send their products to market over this watery highway independent of those lines?

Mr. BOOTH. There is not any question but what that is exactly what they will do if the rates quoted are not low enough to give a normal profit to the operating companies. I did not want to make that statement in so many words because I did not have authority for making it. If the profit owing to the ton cost of these conference rates is more than a normal profit to the operating company there is no question in the world but what the fruit shippers will get a new line of ships.

Senator WALSH. If these transportation companies can and will combine, as is suggested in the questions directed to you by Senator Simmons, and will tender a rate just a little below the railroad rate, what earthly use is the canal at all to us commercially?

Mr. BOOTH. The use to us would be this, Senator: It is just the question which I believe Senator Bristow has asked me, if that rate which the coastal steamship lines might make is based upon being simply under the railroad rate instead of being based upon a normal profit for the cost of operation, then the fruit business, which will be in five years from now at least 50,000 carloads of fruit a year, is not going to pay as it is now obliged to pay because it has no recourse; it is not going to pay to the railroad company its present rate, and it is not going to pay to the conference line of coastal steamships any rate they may establish if that rate is in excess of what these growers can by their own volition and by their own incentive build a line of steamships for and send through there.

Senator WALSH. I want you to assume that if the condition which the Senator, from his questions, is afraid, apparently does actually exist, and that the steamship companies do as a matter of fact combine or by conference agree upon a rate just a little below the railroad rate, what earthly use is the canal to us commercially?

Mr. BOOTH. It is useful, because the canal is there and the sea is there, and there is nothing between one port and another but the canal and the sea, and it does not require a line of refrigerator cars, and it does not require an extensive equipment to charter boats and load them in the harbors at San Francisco and Seattle and run them down through the water to where the market may be. That is the way it appears to us from a business proposition.

Senator THOMAS. Have you calculated what the comparative rate per 100 pounds is with the railroad rate?

Mr. BOOTH. I have not gone into those figures.

Senator THOMAS. A shipping ton is 100 cubic feet, and in many commodities you can actually store 2 tons in that 100 cubic feet of space. That being the case, the toll rate is 60 cents a ton, which would be 3 cents a hundred pounds, as against $1.20 a hundred pounds, which you say is about the rate now by rail from coast to coast. I should like to know

Senator BRISTOW. The toll would be 3 cents?

Senator THOMAS. I am talking about the toll, not the rate. How can that almost infinitesimal charge affect the rate of transportation? Mr. BOOTH. Well, because you have assumed a condition which does not exist in the orange business.

Senator THOMAS. We will take a ton of oranges for the entire space. That would be 6 cents a hundred, would it not?

Mr. BOOTH. I am inclined to think that, though I should like to submit figures on this rate and not make any horseback calculation,

if you will pardon the expression. In a car of oranges you do not pack one box up against another box.

Senator THOMAS. I understand that to be true, whether it goes by rail or by water.

Mr. BOOTH. It means that in going by water, in order to give you any testimony worth while we would have to get some actual figures as to what weight would go in a ton of space.

Senator THOMAS. That is just the point. Why do you not have those figures when you come to appear before us as a witness?

Mr. BOOTH. I owe you an apology in that direction. I had expected to meet here Mr. Powell, who has those figures.

Senator THOMAS. To make my position clear, I believe in free tolls for everything, coastwise, overseas-everything that goes through the canal. You ought to know that my question is not designed to be embarrassing.

Mr. BOOTH. I want to answer everything that I can of which I I have knowledge, but I do not want to assume anything that I have no knowledge of.

The ACTING CHAIRMAN. Mr. Booth, have you any further statement to make?

Mr. BOOTH. I have nothing further to state. I only want to say, in summing up, that the matter is, we believe, of intense importance to us. We believe if we are allowed a free operation of the canal in the coastal business that we will be able to forestall, either by our own boats or by other boats, the danger which the Senator sees and which appears to us to be a positive danger in the event that tolls are charged on the coastal business.

Senator WALSH. Have you any figures on the possible transportation of fuel oils to the Atlantic coast from your port?

Mr. BOOTH. I can get you those figures.

Senator WALSH. Have you those figures?

Mr. BOOTH. I have not them with me, because that is done in tank steamers.

Senator WALSH. Are you able to tell us whether that business can be carried on, whether the Atlantic coast can be supplied with fuel oils from California in competition with coal produced on the Atlantic coast?

Mr. BOOTH. I would not want to make a statement on that, because I have not the facts.

Senator WALSH. You do not know whether the business would not be affected by the imposition of tolls?

Mr. BOOTH. I am considerably interested in the oil business, but I do not know the facts on that for the reason, as I say, that the carrying of oil has been a localized business.

Senator WALSH. Has there been any preparation for supplying the Atlantic coast with fuel oils?

Mr. BOOTH. An extensive preparation has been made for supplying the coast of South America, but I know nothing personally of the plan for the supplying of the Atlantic coast of this country.

Senator WALSH. For supplying the eastern or western coasts?
Mr. BOOTH. The western coast of South America.

Senator WALSH. That is not affected by the canal.
Mr. BOOTH. That is not affected by this discussion.

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