Senator BRISTOw. But, as I understood you-I may have been mistaken-you said that there was but one of these steamship lines that you have been talking about that would compete with the rail lines of the company that owned them, except the Morgan Line if it used the canal.

Dr. HUEBNER. No, sir; I do not believe I made any such statement.

Senator BRISTOW. I understood that

Dr. HUEBNER. I can name those lines now, if the names are desired. The CHAIRMAN. You may do that.

Dr. HUEBNER. In the New England traffic, the New York, New Haven & Hartford lines, owned by various companies which I do not think I need to enumerate, and the Eastern Steamship Corporation. In the Middle Atlantic trade the railroad owned lines are as follows:

Old Dominion Steamship Co., the Ocean Steamship Co., the Merchant & Miners Transportation Co., the Baltimore Steam Packet Co., and the Chesapeake Steamship Co. The Atlantic, Gulf & West Indies Steamship lines is a consolidation of the Clyde Steamship Co. and the Southern Steamship Co. Now this consolidation owns a considerable number of other lines, operating in the Atlantic-Gulf trade, but only the Clyde and Southern Steamship companies. operate in the Middle Atlantic coast section.

The independent lines are the New York & Baltimore Transportation Co., the Baltimore & Philadelphia Steamship Co., the Philadelphia & Gulf Steamship Co., and the Baltimore & Carolina Steamship Co.

Senator BRISTOw. Does that report show what railroad interest owns these boats in part or in whole?

Dr. HUEBNER. Yes, sir. I would suggest that if all this information is desired that two chapters of this report might possibly be incorporated in the record.

Senator BRISTOW. To what two chapters do you refer?

Dr. HUEBNER. I refer to chapter 13, entitled "Steamship company affiliations on the Atlantic and Gulf coasts," published in volume 4 of the proceedings of the Committee of the Merchant Marine and Fisheries, in its investigation of steampship combinations. Senator THOMAS. What year is that?

Dr. HUEBNER. Published in 1914. And also chapter 12, entitled "Steamship company affiliations on the Pacific coast," published in the same report.

The CHAIRMAN. Have not those two chapters been published in a separate document ?

Dr. HUEBER. Yes, sir; they have been published in volume 4 of the proceedings I refer to, which covers not only the entire coastwise and great Lakes trade, but also all the foreign trades in which the United States is interested.

Senator SIMMONS. Doctor, are the boats engaged in our foreign trade controlled by railroads also?

Dr. HUEBNER. No, sir; the foreign steamship lines, of which there are a great many, are not controlled by railroads except in very few instances. Still, those steamship lines almost without exception are controlled by conferences. There is not a trade or a branch of the American foreign trade, whether to Europe or to Asia, Africa, Australia, South America, and the West Indies, where practically

every line in that trade is not a member of some conference which has for its purpose the regulation and control of rates.

Senator SIMMONS. Whether it is an American vessel

Dr. HUEBNER. That does not make any difference. An American company frequently, because of the law, will not be any party to the agreement, but still it lives up to all the conditions of the agreement. I may say that the agreements are gradually becoming oral agreements. The tendency is away from written agreements. There must be cooperation in water transportation. There can not be open competition for any length of time, and hence in one way or another-there are some 28 different methods existing-the steamship companies in every trade, whether it be in our coastwise or foreign trade, bring about cooperation and regulation of rates.

Senator BRANDEGEE. Why do you say there could not be competition for any length of time in water transportation? I mean, what is the reason for it? I do not understand it.

Dr. HUEBNER. It is an economic proposition. There is no limit to water competition.

Senator BRANDEGEE. Oh, yes.

Dr. HUEBNER. Our theory

Senator THOMAS. That is, there is no limit to water competition, so consequently there is no water competition.

Dr. HUEBNER. There is no water competition, except occasionally when a rate war is on, which lasts only for a short period of time. Competition in water traffic inevitably leads to an absolute monopoly. The lines begin to fight. One line cuts rates, and the other line must go the rate-cutter one better. The inevitable result is that the strong crush out the weak. Of the some eighty-odd foreign steam ship agreements which are explained in this volume, and I think we obtained practically all of them, nearly all represent a treaty of peace, and most of them have been the result of a disastrous rate

war.

Senator BRANDEGEE. I mean, economically, how does competition between ports by steamboats differ from competition between cities by railroads?

Dr. HUEBNER. Of course, the railroad has a given path, which is a monopoly. The sea is an open pathway that anyone can enter; and it is just because the sea is so free and open that the operators of steamship lines will exert themselves to the utmost to make impossible rate wars in that traffic. I attribute the universal existence of agreements to the very fact that the sea is free and open. Moreover, a steamship can not be operated like a train. A train can be operated in installments. You can drop cars any time you desire. A steamship if it wishes to give a line service must operate whether it is empty or full, and for that reason it is desirable to have cooperation in that line of business.

Senator BRANDEGEE. I know, but before we had the Interstate Commerce Commission, before we passed the laws in relation to railroads, did not that very situation exist in the railroads? I mean, cutthroat competition, and then agreements, and so forth, as you are describing in the steamboat business?

Dr. HUEBNER. Yes, sir; that is true.

Senator BRANDEGEE. Then, economically, I do not quite yet follow you to the extent of seeing what inherent fundamental difference there

is between the competition that exists between steamboats between. ports and railroads between cities.

Dr. HUEBNER. There are differences, but there are no inherent fundamental differences.

Senator BRANDEGEE. They are not fundamental? What are the differences? Are they not controlled by the same general laws? Dr. HUEBNER. They are controlled by the same general laws. Senator BRANDEGEE. That is all I care to ask you.

Senator BRISTOW. Do you not regard the statement you made a short while ago that while the track of a road was a monopoly that could only be used by a railroad company, and that the sea was open, and that provided terminals and wharfage facilities could be secured, that anybody could put a ship on the sea and have a track that it could use, does not that very fact result in very much lower rates, naturally and normally, in the operation of business than otherwise would exist?

Dr. HUEBNER. That is a difference which in all probability makes agreements of greater necessity among water transportation companies than among rail transportation companies. These agreements have for one of their purposes the elimination of the outsider, who is enabled, so to speak,' to 'butt into the trade any time he likes. In order to control that outside competition there are some 14 different methods adopted by the foreign lines to accomplish that purpose, As regards rates, it has been testified over and over again before the Committee on the Merchant Marine and Fisheries during its investigation, and it has been frankly admitted by the representatives of the conference lines that they always pursue the policy of charging what the traffic will bear. They will get all they can get in order to move that traffic and have that traffic develop.

In connection with the subject of tolls the lines would regard a toll as an expense. They would get around the conference table and ascertain what the traffic will bear, and what the people are willing to pay in order to have the freight moved, and they are going to charge that as the rate.

Senator BRISTOW. Then why should the rates between water points on land be so much lower than between land points-that is, the rail rates? Why do the railroads lower the rates in order to meet water competition?

Dr. HUEBNER. The water lines want traffic, and if they compete with the railroads they will charge what the traffic will bear. That is, in this case they will charge what the owner of the freight is willing to pay and at the same time have his traffic go by water instead of by rail.

Senator BRISTOW. That is, they will bid for the business against the railroads?

Dr. HUEBNER. They will bid for the business against the railroads, but they will not go any further beneath the railroad rates than they

have to.

Senator BRISTOw. Than is necessary to meet competition?

Dr. HUEBNER. That is right. In other words, they operate on what is called a differential. In connection with the differentials in the United States, everywhere on the Atlantic and Pacific coasts, on the Great Lakes, and elsewhere--the rate is just sufficiently below the rail rate to get a proper share of the business.

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The CHAIRMAN. Would that be true if we had independent ships in the business?

Dr. HUEBNER. No, sir; but I do not think you will ever have independent ships for any length of time.

The CHAIRMAN. That was the purpose in excluding railroad ships from the canal--that we would develop an independent shipping industry was it not?

Dr. HUEBNER. Then my feeling is that that purpose will not be accomplished, because I think it is utterly impossible for any length of time to have open competition on the water. In one way or another the lines will get together, whether they are owned by railroads or by steamship consolidations or individuals. That makes no difference.

Senator THOMAS. Then it makes no difference, does it, whether the canal tolls are repealed or whether they are permitted to remain ?

Dr. HUEBNER. That is exactly my feeling. It makes no difference whether you repeal them or not. The lines will charge what the traffic will bear.

Senator SIMMONS. You mean, so far as the man who ultimately has to pay the freight?

Dr. HUEBNER. The consumer, I feel, will get nothing out of the repeal of the tolls at all.

Senator BRISTOW. To get back to the point, you say that these rates are made according to differentials, and you cite the Great Lakes. As a matter of fact, do not railroad-owned ships fix the rates on the Great Lakes?

Dr. HUEBNER. Yes; on the Great Lakes the situation is slightly different, because every through packet line there is owned by the railroads, and for that reason the railroads have been narrowing the differential in such a way that transportation by boat lines on the Great Lakes is largely a bluff to-day.

The CHAIRMAN. Let me ask you this: Suppose two independent boats are engaged in the Panama Canal traffic, and each is bidding for cargoes of coal either east or west, do you wish to be understood that a difference of $1.20 per ton in the carriage of the cargo through the canal would not affect the consumer of the coal?

Dr. HUEBNER. I think, Senator, you now have in mind the tramp ship.

The CHAIRMAN. Any ship.

Dr. HUEBNER. The line of steamers, of course, will not engage in the coal traffic. The tramp boat, on the other hand, which carries the coal and the lumber through the canal is a boat which is either owned or chartered by the producer of that coal or that lumber. There may be competition between tramps, and if there is, then I will grant the argument that the toll will in all probability go to the shipper. But even here again there is an irresistible tendency for the big producers of lumber and coal to act through conferences. I feel that if there is exemption from tolls in the case of chartered boats the shipper will pocket those tolls, but I do not think the consumer will get the amount of the tolls, because the big producers operate on the same theory of charging for their goods what the traffic will bear, and are going to get all they can.

Senator BRISTOW. You think a reduction in railroad rates, then, never benefits the consumer anyway?

Dr. HUEBNER. The railroad rates, I feel, will go down, but the boats operating through the canal will follow up the railroad rates just as near as they can in order to get a proper share of the traffic.

Senator BRISTOW. You spoke of tramp steamers. How many tramp steamers are there in operation in the commerce of the world

now?

Dr. HUEBNER. That I can not answer. I think it has been estimated that there are in the neighborhood of 22,000, but I give that merely from hearsay.

Senator BRISTOw. Is there not competition between the tramp steamer and the line steamer?

Dr. HUEBNER. Some, but it is getting less all the time. It is true that the tramp exerts an influence over line rates all over the world. If a conference of steamship lines should become unreasonable, which they are not likely to be, because they are charging what the traffic will bear-but suppose that they put the rates too high-then the big forwarding agencies in New York and other places would promptly rebel against those unreasonably high rates, and would effect what they call combination cargoes, and charter tramps for the carriage of the same.

Senator BRISTOw. Is it not a matter of fact in commerce that a tramp is regarded as the enemy of the line steamer, and is there not a bitter rivalry between them?

Dr. HUEBNER. It is becoming so less and less all the time.

Senator BRISTOw. Is not that the fact up to this time? We will not deal in anticipations.

Dr. HUEBNER. They were until the time we had these conferences so universally in existence.

Senator BRISTOW. As you say, the very fact that when water rates became high that there is an opportunity for a company or a shipper, or a combination of shippers, to charter a ship and put it on the water to carry the traffic, is not that the possibility of competition, and do not high rates invite competition, and can not competition come in? Dr. HUEBNER. In certain parts of the foreign trade, but I do not anticipate it as regards the intercoastal trade through the canal, because the tramp and the liners will carry different kinds of cargoes. The tramp will be used by that man only who conveys freight in such large quantities that he can afford to use an entire ship. The great mass of the shippers for nearly all of the articles will have to use the line service. At the present time only about one-tenth to one-fifth of the intercoastal traffic is carried by tramps. I believe it has been computed that within four years, 1906-1911, the traffic carried by line stamers between the two coasts has trebled, while the traffic carried by the tramps has decreased 50 per cent. I anticipate that in the future it is the line service that will gain on the tramp still more. Senator BRISTOW. You are speaking of four years as between the coasts. You mean between the Atlantic and Pacific coasts? Dr. HUEBNER. Yes.

Senator BRISTOWw. Has not that been due very largely to competition that sprung up on the Pacific coast by a firm known as Bates & Cheseborough?

Dr. HUEBNER. Bates & Cheseborough did not operate tramp

steamers.