porting of products. The instant the common carrier becomes more interested in the success of some other enterprise which transports commerce than in the transportation of that commerce, then he will immediately attempt to avoid all those provisions of the law which compel the carrier to treat all shippers alike. And it is not necessary for me to say to this committee that the instant a common carrier fails to treat all shippers alike-the minute it fails, all things considered, to haul for all shippers of the same status at the same priceit has totally failed to perform the duties for which it was ordained. I propose by this bill to bar the interlocking of directors between industrials and common carriers; I propose to prevent the voting of stock owned by any industrial in any common carrier; I propose to prevent any person-and, to save a multiplicity of words, I will use the word "person" generically-from being a director in an industrial and a common carrier; and I propose to prevent an employee in an industrial concern from being an employee in a common carrier. The CHAIRMAN. You think that carriers should be engaged in no other business but that?

Mr. STANLEY. That is it, absolutely.

Now, Mr. Chairman, I am of the opinion that it is more vitally important that the common carriers should treat all shippers with rigid impartiality than that they should haul at a reasonable rate. The vice of which I complain is in discriminaton rather than in excessive charges. I do not mean by that to imply that the common carrier is not guilty of charging excessive rates; but that that offense is not as pernicious in its affects as discriminaton in rates, even where the rate is not excessive.

Mr. J. A. MARTIN. Could you give the committee some illustration of the discrimination you have in mind?

Mr. STANLEY. I could give you a number of them: Take the orecarrying roads of the Steel Corporation. All the ore, or practically nine-tenths of the ore in the United States, is produced in the Lake Superior region, from the Mesabi and Vermilion ranges, and Marquette and other ranges in Michigan. The bulk of that ore is hauled over the Great Northern, the Duluth & Iron Range, and the Duluth, Missabe & Northern Railroad. The cost of transporting that ore from the range to the lake, a distance of about 80 miles, is 26 cents. The charge is 80 cents, or 60 cents, it is now. Now, all that ore that leaves those ranges is carried over the Great Northern, or the Duluth & Iron Range, both of which are owned by the United States Steel Corporation absolutely. The independent shipper must have his ore hauled over the Steel Corporation's road, and every time they haul a ton of ore for a competitor they pay for hauling three tons of ore for themselves. The same conditions prevail with the steamship lines plying the Great Lakes between the headwaters of Lake Superior and the lower lake ports. When that ore reaches these lower lake ports it is hauled over the Bessemer & Lake Erie, and I think the cost there is about 96 cents a ton.

Mr. J. A. MARTIN. Is that a case of discrimination between the different shippers?

Mr. STANLEY. I will show you where it ends as discrimination. The charge is a mere matter of bookkeeping, of course. The difference in cost to the Steel Corporation and to the independent shipper for assembling a ton of ore is about $3; in other words, the steel

corporation by its ownership of the railroad assembles its raw material $3 a ton cheaper than the independent can assemble the same material, and it is therefore enjoying 300 per cent more legitimate profit.

Now, to show you some further instances. These discriminations are not naked rebates any longer. They are concealed by the most complicated, invidious system of terminal charges and division of rates, terminal allowances, switching charges, and charges for the operation of plant facilities. Take the average shipper, for instance, who pays for shipping steel or iron or anything out of Pittsburgh, and his competitor owning a common carrier, like the Union Railroad, the Bessemer and Lake Erie, or stock in the Pittsburgh Terminal, gets a flat allowance of 10 cent a ton for handling; when it goes out they get from 15 to 35 cents of the through haul. There is no possible doubt but that this is 300 or 400 per cent more than the service is worth.

Not long ago there was a rate changed out of Chicago on rails, steel rails used, I think, by the Kansas City Southern, or some such a line as that. The rate from Chicago to Kansas City on that character of freight was $2.75, and it was divided equitably between the various railroads. That rate was changed overnight

Mr. STEVENS (interposing). How could they do that when the law requires that 30 days' notice shall be given?

Mr. STANLEY. I don't know; but it was done. I have the proofs. Mr. STEVENS. If so, the commission is criminally guilty for not prosecuting them.

Mr. STANLEY. That rate-I have the whole thing here of record— that rate was changed in such a way that the Elgin, Joilet & Eastern took off 10 cents a ton of its allowance; the Chicago & Alton lost about 50 per cent, and the Kansas City & Southern was to deliver these rails at a place but 30 miles from Kansas City, and for hauling these rails over its own line they were to get over a dollar a ton for rails to be used on that road.

Mr. STEVENS. Was the rate changed out of Chicago the entire through rate or the apportionment of the rate?

Mr. STANLEY. The apportionment of the rate was changed so as to give this road for hauling its own rails a distance of about 30 miles over a dollar a ton, and there is no evidence that the rails were ever hauled at all.

Mr. DOREMUS. Did that change the aggregate?

Mr. STANLEY. No, sir.

Mr. DOREMUS. The aggregate remained the same?

Mr. STANLEY. Yes, sir; but the division was changed.

Mr. STEVENS. The Interstate Commerce Commission has authority over that now. That very kind of case has been decided time and time again to be a rebate under the Elkins Act.

Mr. STANLEY. The Interstate Commerce Commission has, in my opinion, very little authority over this division of rates. When I sent out a circular request to every road in the northwest, to Chicago, Buffalo, Pittsburgh, and all over the country, asking them for a copy of their divisions of rates sheets, they told me that the Interstate Commerce Commission could ask for anything except their furniture and the division of rates. They had never been requested to give up that. I think the Interstate Commerce Commission will

tell you that they have never made any very close investigation of the division of rates.

The CHAIRMAN. I think that the law provides if the roads participating fail to agree on a partition of the rates, then the aid of the Interstate Commerce Commission may be invoked and may fix the apportionment.

Mr. STANLEY. Yes, sir; that is true, and there are cases where that has been done; in the case of the Harvester Co., and in a case of the division of rates on coke from Connellsville to Pittsburgh, where the Interstate Commerce Commission declared the rates excessive. But those are the exceptions.

Mr. STEVENS. Haven't there been cases where the commission held that an unjust division of rates constituted a rebate; hasn't that been declared to be illegal, and the parties prosecuted?

Mr. STANLEY. That is the case to which I refer. That was the case where coke hauled from Connellsville to Chicago-I forget just the style of the case, but it was over one of the New York Central lines. There are two belt lines at Chicago, one known as the Indiana belt and the other as the Elgin, Joilet & Eastern, both making physical connection with the same road and hauling the same commodity in the same kind of cars the same distance, and right along the same streets; but in this case the Indiana Belt line was allowed 10 cents a ton, while the corporation line was allowed 80 cents a ton, or some such sum as that. They now get 30 cents a ton for that service.

In its last annual report the Interstate Commerce Commission frankly confesses its inability to remedy this evil and says the law is not adequate.

Mr. Escн. As a result of your investigation of the Steel Trust, Mr. Stanley, did your committee secure lists of interlocking directorates? Mr. STANLEY. Yes, sir.

Mr. ESCH. Could you put those in the record of this hearing?

Mr. STANLEY. I might; but they are scattered all through our hearings and it would involve an immense amount of labor to get them together. In the report of the committee we give the directors of the Steel Corporation and the companies in which they are interested as directors, presidents, or vice presidents. We have them tabulated as to industrial companies, banking corporations, express companies, and so on.

Mr. Escн. I was just wondering what connection you found between the common carriers and the Baldwin Locomotive Works, for instance.

Mr. STANLEY. I could not give you that offhand, but the list of directors is published in the report. I can put that in the record for you.

I don't want to wear out the patience of this committee with these details, unless you so desire, but I would like to mention the case of the Elgin, Joliet & Eastern, which runs around the city of Chicago, from one point on the lake around to the lake coast on the other side; I think it runs from Gary to some point on the other side of the city. That road bisects every road in the city of Chicago of any consequence. Now, then, with the great works at Gary and at Joliet, all the old works of the Federal Steel Co. which were located there, with billions of tons of finished products and more billions still of raw ma

terials, they can say to anyone out of 20 roads, "We will give you this traffic, or we will not give it to you, according as you come to our

terms.

Before the Interstate Commerce Commission now you have exactly the same situation in the case of the Louisville & Nashville Railroad, the Southern Railroad, and several other roads intersected by the Birmingham Southern, a belt line around the city of Birmingham, in which they are demanding a division of 25 per cent, and all the roads except one have refused to give it and that one was in the hands of a receiver.

You take the case of the Pittsburgh & Wabash Terminal Railroad. You will recall, if you have studied those things, that before Andrew Carnegie gave up his interest in the Steel Corporation he determined to enter the field of the Federal Steel Co., and he made an agreement with the Goulds and others that he would extend or, at least, he would subsidize, in a way, a railroad from Pittsburgh to Toledo. He secured his terminal facilities and was prepared to give his through rates when this corporation, the Pittsburgh & Wabash Terminal Railroad, was taken over as one of the means to make them take it over; that whole scheme was abandoned, however, and the people outside who had stock in that railroad were in a bad fix. To-day they make that road pay 35 per cent on every through rate before they can get a pound of steel from the Steel Corporation. The other roads get 15 per cent.

Now, I could stand here until to-morrow morning and give you instances of that kind showing the necessity for just such things as are proposed in this bill. More than that, the records of the Steel Corporation show, the admission is made on their books, that it is to their interest to make railroad rates as high as possible and to recoup themselves in rebates. It is amazing to me in the face of these facts that people still talk about the laws prohibiting rebates, and about the power of the Interstate Commerce Commission to prevent this sort of thing. The Interstate Commerce Commission, if you will read its last report, admits its helplessness, and it will admit it here. The commodities clause is a joke and a sham, open at both ends; it isn't worth the paper it is written on.

What is the sense in providing that a railroad shall not own a coal mine, that a railroad shall not own a manufacturing concern, and then let the manufacturing concern or the coal mine own the railroad?

Mr. SIMS. The object of your bill is to prevent that very thing-not only that the railroad shall not own a coal mine or a manufacturing concern, but that a manufacturing concern or a coal mine can not own the railroad that serves those concerns?

Mr. STANLEY. Yes, sir. I can go into detail, if the committee thinks it necessary; or I can discuss the necessity for this bill in a general way. These bills have been submitted to the Interstate Commerce Commission and you can get their opinion touching them. Now, I don't believe it is necessary that I should address myself before this committee to the proposition that you have jurisdiction over the subject matter of these bills. The power of Congress over interstate carriers is so complete and so clear that I take it as admitted that you have the same authority to regulate commerce as if

the Federal Government were a State or a Federal empire. That is the language used, I think, in the Ogden case by Chief Justice Marshall. I don't like to read law to lawyers who probably know more about it than I do.

So I presume there will be no question but that you have a perfect right to take the railroads themselves, if you want to, and operate them. As I understand it and I take the position so ably advocated and proclaimed by Black 20 years ago-a common carrier operating a public highway is to all intents and purposes a publicservice corporation. As far as your jurisdiction goes, the only difference between the operation of a railroad by an individual and the operation of a great highway belonging to the Government by the Government itself, is that these men are permitted to exercise the right of eminent domain and to do all these acts by grace of the Government, but they can not get beyond the duties imposed by the Government, nor can they get beyond the jurisdiction of the Government, which has the right, at any time, to take these roads over and operate them, or to stop their operation altogether, and can, between these two points, exercise any control it sees fit.

Now, it may be, and I do not contend that you could prevent an individual from owning stock in an industrial concern and at the same time owning stock in a concern engaged in transportation-a common carrier. But you can say how that stock shall be voted. You have the right to say to every director of railroads in the United States, to every president and vice president of every railroad, your offices are vacated; we are going to take this road over ourselves; the Government is going to operate it.

Mr. CULLOP. You have the right to fix by law the qualifications of the directors of public-service corporations?

Mr. STANLEY. Certainly; you have the power to say how a railroad shall be operated; in other words, you have the authority to say how their power shall be exercised, and it would be useless to attempt such extensive control unless you had the right to say what the qualifications should be of the men to exercise it.

Mr. HAMLIN. It seems to me the crux of the whole thing is this question of surreptitious rebating.

Mr. STANLEY. Absolutely.

Mr. HAMLIN. And you don't think the Interstate Commerce Commission has the power to prevent that?

Mr. STANLEY. I know it has not.

Mr. HAMLIN. In no case?

Mr. STANLEY. Oh, it has the power to say to A, B, or C you shall not, in the old crude way, as in the case of the Standard Oil Co., give rebates; they will say that you can not haul a ton of freight a hundred miles for one person and charge him 10 cents, and then, for the same service, charge another person 9.

Mr. HAMLIN. Well, why is it that there is no authority to enable the Interstate Commerce Commission to meet that condition of affairs? I am asking for your judgment in the matter.

Mr. STANLEY. For the simple reason that the men who have written the laws creating corporations have shown more astuteness than the men who have written the Federal statutes governing those same corporations.