^tate (foUege of AgricuUute l^t (i^orneXl Imoetsttg Cornell University Library HE 1043.U6 Testimony taken by Interstate commerce c 3 1924 014 043 701 „... The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924014043701 59th Congress, ) SENATE, j Document M Session. | ] No. 278. TESTIMONY TAKEN BY INTERSTATE COMMERCE COMMISSION OCTOBER 15-NOVEMBEK 23, 1906 IN, MATTER OF RELATIONS OF COMMON CARRIERS TO THE GRAIN TRADE WASHINGTON GOVERNMENT PRINTING OFFICE 1907 59th Congbkss, I SENATE. j Documeni 2d Session. \ ] No. 278. TESTIMONY TAKEN BY INTERSTATE COMMERCE COMMISSION OCTOBER 15-NOVEMBER 23, 1906 IN( MATTER OF , RELATIONS OF COMMON CARRIERS TO THE GRAIN TRADE WASHINGTON GOVERNMENT PUINTING OFFICE 1907 IN THE MATTER OF THE RELATIONS OF COMMON CARRIERS SUBJECT TO THE ACT TO REGULATE COMMERCE, TO THE OWNERSHIP AND OPERATION OF ELEVATORS, AND THE BUYING, SELLING, AND FOR- WARDING OF GRAIN. Chicago, III., October 15^ 1906 — 10 o'clock, a. m. Present Commissioners Prouty, Lane, and Clark. Commissioner Peoutt. The Commission is here this morning to prosecute an inquiry into the relations of common carriers to the ownership and operation of elevators in the buying, selling, and for- warding of grain. That inquiry is undertaken in obedience to a reso- lution of the Senate, and the function of the Commission is merely to ascertain and report the facts. Mr. John H. Marble will act as attorney for the Commission in producing and examining witnesses, but the Commission will be glad to hear from anybody else who has knowledge of the subject. We will be glad to have anybody ask any questions or volunteer any information. Are you ready to proceed, Mr. Marble ? Mr. Marble. I am ready, your honor. I will ask Mr. Dunn to take the stand. E. G. Dunn, called as a witness, being duly sworn, testified as fol- lows: Mr. Marble. Where do you reside, Mr. Dunn? Mr. Dunn. At Swaledale, Iowa. Mr. Marble. What is your occupation ? Mr. Dunn. At present I am a traveling solicitor for a Chicago commission firm. Mr. Marble. Grain? Mr. Dunn. Yes, sir. Mr. Marble. What firm do you represent? Mr.. Dunn. Eschenburg & Dalton, 803 Royal Insurance Building. 'Mr. Marble. What is the business of that firm? Mr. Dunn. Handling gi'ain on commission on the Chicago Board of Trade. Mr. Marble. Do they buy grain ? Mr. Dunn. No, sir. Mr. Marble. They receive shipments from parties in the country having grain to sell, is that it ? Mr. Dunn. Yes, sir. Mr. Marble. And sell the grain on the Board of Trade ? Mr. Dunn. Yes, sir. Mr. Marble. For a commission? Mr. Dunn. Yes, sir. 3 4 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Your business is to travel through the country and solicit shipments to them ? Mr. Dunn. Yes, sir. Mr. Marble. Where have you traveled chiefly ? Mr. Dunn. In Iowa. Mr. Marble. How long have you been traveling there ? Mr. Dunn. I started August 1, 1905. Mr. Marble. Were you engaged in business there prior to that time? Mr. Dunn. Yes, I was a country dealer prior to that. Mr. Marble. At what point? Mr. Dunn. Burchinal, Iowa. Commissioner Prouty. On what railroad is that ? Mr. Dunn. The Chicago Great Western. Mr. Marble. Are you acquainted with an organization known as the Iowa Grain Dealers' Association ? , Mr. Dunn. Yes, sir. Mr. Marble. Did you come into contact with them Avhile in business for yourself before working for Eschenburg & Dalton ? Mr. Dunn. Yes, sir. I ^ will say that I was not in business for myself. I was the manager of an elevator company working on a sal- ary, and as such manager came into contact with the Iowa Grain Dealers' Association. Mr. Marble. In what way did you come into contact with them ? Mr. Dunn. Well, the farmers around Burchinal made up their minds that they were not getting the prices they should get for the grain, considering the price paid the terminal markets, and they formed an organization, commonly called The Cooperative Grain Company, and employed me to manage that company. It was as manager of that company that I came into contact with the Iowa Grain Dealers' Association. Mr. Marble. Did you pay more than had previously been paid at that station for grain ? Mr. Dunn. Yes, sir. Mr. Marble. Was there any protest because you did that? Mr. Dunn. Yes, sir. Mr. Marble. From whom? Mr. Dunn. The protests came to me through my competitors, and indirectly through commission houses that I tried to do business with. Mr. Marble. What did your competitor say to you ? Mr. Dunn. He came to me and told me that unless I would agree to the prices that were being paid, the association prices — I thought it a bluff at the time — he said he would put me out of business. Mr. Marble. Did you agree to tht)se prices ? Mr. Dunn. I did not. Mr. Marble. What did he do ? Mr. Dunn. He immediately ran up the price higher than I could pay. He paid prices that were prohibitive, so far as I was concerned. Mr. Marble. How long did he continue that ? Mr. Dunn. From about August 20, 1905, to February or March, 1906. Mr. Marble. You do not mean 1905 and 1906, do you — last year and this year ? GRAIN ELEVATOR INVESTIGATION. 5 Mr. Dunn. I , will take that back. It was 1904 — about August, 1904, and he continued until about February or March, 1905 — some seven months. Mr. Marble. Then did he change his policy ? Mr. Dunn. He traded out his property and quit the business. Mr. Marble. What communication did you get from Chicago com- mission men ? Mr. Dunn. Well, some of them — I remember the great majority of commission- men that I wrote to ignored the communications. They did not answer or recognize me at all. Some few wrote back declining to have anything to do with us. Mr. Marble. Telling you why ? Mr. Dunn. Yes, they told me they would not do business with me because I was not a member of the Iowa Association. Mr. Marble. And in 1905 you severed your connection with that company and went to work for Eschenburg & Dalton ? Mr. Dunn. Yes, sir. Mr. Marble. What has been the policy of that firm so far as receiving consignments from regular or irregular dealers ? Mr. Dunn. Our business has been to accept consignments from anyone. Mr. Marble. They have received consignments from farmers? Mr. Dunn. Yes, sir. Mr. Marble. And independent dealers? Mr. Dunn. Yes, sir. Mr. Marble. Regardless of the price paid ? Mr. Dunn. Yes, sir. Mr. Marble. What protest has been made to you or to them because of their action in receiving those shipments ? Mr. Dunn. At the time I went to work for them I understood that the regular so-called association business that we had been getting from Iowa had been taken away from lis through the influence of Mr. Wells, and when I went on the road I found that that was true. The regular association men that I called on in Iowa refused to do business with me. They said that we. were an irregular concern; that we did not recognize the Iowa Grain Dealers' Association ; that we did business with scoop shovelers arid irregulars, and, in fact, . they treated me as a kind of outlaw simply because we had taken that position. Mr. Marble. When you say Mr. Wells who do you mean ? Mr. Dunn. The Secretary of the Iowa Grain Dealers' Association. Mr. Marble. George A. Wells, of Des Moines, Iowa ? Mr. Dunn. Yes, sir. Mr. Marble. Have you seen any letters written by Mr. Wells on this subject? Mr. Dunn. I have. Mr. Marble. Where are those letters? Mr. Dunn. We now have some of them in our office. Mr. Marble. Eschenburg & Dalton have them ? Mr. Dunn. Yes, sir. Mr. Marble. Will you ask Mr. Dalton to bring over those letters this afternoon ? Mr. Dunn. Yes, sir. b GRAIN ELEVATOR INVESTIGATION. Mr. Marble. What is the situation in Iowa now, so far as the mar- ket for the farmer is concerned? Mr. DuNN^ In the part of Iowa that I travel over the farmer ele- vators or independents are now so numerous that I think the farmers are getting nearly the full value of their grain in that part of the State. Mr. Marble. What part of the State? Mr. Dunn. The northern half or part of Iowa, north of the main line of the Chicago and Northwestern Railroad. Mr. Marble. I will ask you, during the time you were managing this elevator or since, has it come to your observation that the rail- roads have shown any favoritism to any dealer or any discrimination against any dealer because of prices paid for grain? Mr. Dunn. Yes, sir. Mr. Marble. Tell us what. Mr. Dunn. Well, in the first place, while buying for the Farmers' Elevator Company at Burchinal, an independent company at Dough- erty, Iowa, were refused permission to build an elevator on the Chi- cago and Northwestern. The Chicago and Northwestern refused them permission to build until a bill was passed in the legislature to compel them. Mr. Marble. What reason was given for that? Mr. Dunn. None, except that these two line houses then doing business at Dougherty were sufficient to handle that situation. Mr. Marble. Was there room on the track for another elevator? Mr. Dunn. Plenty of it. Mr. Marble. After the bill had been introduced did thev get the site? Mr. Dunn. Yes, sir. Mr. Marble. WTiat is the situation now so far as discrimination goes, so far as you know ? . Mr. Dunn. There is still some trouble over elevator sites on the railroad. Mr. Marble. How about the supply of cars to the different ele- vators ? Mr. Dunn. So far as I know the railroads are not discriminating now in the car supply. Mr. Marble. Do you know of any rebates given to any of them now Mr. Dunn. I do not. Mr. Marble. Do you know of any railroad employee or stockholder or officer who is interested in the grain business, beneficially or otherwise? < Mr. Dunn. No, I do not. Mr. Marble. Do you know the situation in the southern part of the State of Iowa at present ? Mr. Dunn. No , except from hearsay. Mr. Marble. The Iowa Grain Dealers' Association is still in business ? Mr. Dunn. Yes, sir. Mr. Marble. Are they still engaged in this boycotting, so far as you know ? Mr. Dunn. Well, yes, they are to a certain extent. Mr. Wells, only GRAIN ELEVATOR IKVESTIGATION. 7 last week or the week before, sent out a cartoon to the dealers of Iowa directed at our firm as an independent receiving company. Mr. Marble. You took that as an endeavor on his part to prevent shipping to your company ? Mr. Dttnn. Yes, sir. Mr. Marble. Has your firm any business now with regular dealers in Iowa ? Mr. Dunn. A few. Mr. Marble. Did they have any business before this agitation ? Mr. Dunn. Yes, sir. Mr. MareTle. More than now ? Mr. Dunn. Yes, sir. Mr. Marble. What effect did it have on their business with regu- lar dealers ? Mr. Dunn. At the time Mr. Wells put out the letter condemning our company and asking the regulars of Iowa not to ship to us, we had, I should say, 200 accounts with regular dealers. At present I think there are three of those on our books. Mr. Marble. Your business now is with the farmer elevators largely ? Mr. Dunn. And independent men not members of the association. Mr. Marble. I think that is all. Commissioner Lane. Was the effect of this boycott to temporarily raise the price of grain in that district ? Mr. Dunn. I do not understand your question. Commissioner Lane. Did the competitor who attempted to drive you out of business pay more to the farmer than you were able to pay ? Mr. Dunn. Yes, sir. Commissioner Lane. The farmer got the benefit of that rise, did he ? Mr. Dunn. Yes, sir. Commissioner Lane. How long did that last? Mr. Dunn. My competitor stayed about seven months and kept the price up during all that time. I could not buy and sell on any market I knew of. Commissioner Lane. The result was that the Iowa farmer in that district got a larger price for hi§' grain because of the fight between you ? Mr. Dunn. Yes, the price in comparison with the Chicago market was 3 to 5 cents higher than the years preceding that. Commissioner Lane. How much of a radius did that cover ? Mr. Dunn. Well, we had spme 200 farmers belonging to the cor- poration that I worked for. It covered a radius of probably 65 to 70 square miles. Commissioner Lane. When he quit, the market price went down ? Mr. Dunn. No, sir. It went down to the legitimate basis that I could buy it, but not to the position it had been in before we went into business. Our company aimed to buy the grain at a reasonable margin to cover shrinkage and interest on the money invested. That is all we aimed to do. Commissioner Lane. Was the net result of the boycott to the Iowa farmer a slight increase in the price he got for his grain ? Mr. Dunn. Well, yes. I do not know whether you would call 8 GRAIN ELEVATOR INVESTIGATION. it the result of the boycott, but the establishment of an independent company brought him an increase in the price he got. Commissioner Lane. The establishment of an independent com- pany, which the regulars fought ? Mr. Dunn. Yes, sir. Commissioner Lane. In order to drive the independent out of busi- ness the regular paid more for the grain ? Mr. Dunn. Yes, sir ; the man in competition with me was a buyer. He had only that one station and he told me himself when he went out of business that he lost money during all the time he tried to drive me out. Commissioner Lane. Did he lose that money himself? Mr. Dunn. He claimed to. He did not tell me whether any associa- tion was backing him in the loss or not. I presume he lost it himself. Commissioner Clark. Did this bill that you referred to as having been introduced into the Iowa legislature become a law ? Mr. Dunn. No, sir ; it did not. It was withdrawn as part of the •compromise by which the Dougherty people got permission to build on the Northwestern. Commissioner Clark. Do you know whether or not there was similar complaint on other lines of railroad ? Mr. Dunn. Yes, sir; we have had complaint on the Rock Island and on the Illinois Central. Commissioner Clark. Has the number of cooperative elevators increased considerably in the last year or two ? Mr. Dunn. Yes, sir. When I hired out to manage the company there were only -13 in Iowa. To-day there are about 135 or 136 in northern Iowa. Commissioner Clark. Has the effect of the establishment of such elevators generally been an increase in the price paid to the farmers for grain ? Mr. Dunn. Yes, sir. Commissioner Clark. That is, they pay more than the regular com- panies paid before they were established ? Mr. Dunn. Yes, sir. I want to sav in that connection that only about five weeks ago the farmers at Richard, Iowa, on the Illinois Central, asked permission to build "an elevator on the Illinois Central, there being but one elevator there, the Western Elevator Company, and the Illinois Central refused them permission to build on their right of way, and they had a hearing before the Iowa commissioners, and Mr. Wells appeared at that hearing and attempted to convince the railroad commissioners of Iowa that the farmers should not be allowed to build on the road because they paid too much for grain. Commissioner Clark. Do you know what reason the Illinois Cen- tral assigned for their refusal ? Mr. Dunn. I do not. Commissioner Clark. How much of a place is Richard ? Mr. Dunn. It is a small country place, only a depot and couple of stores. Commissioner Clark. Have you any idea of the amount of grain marketed there la year ? Mr. Dunn. A man there told me that he thought the station would handle 250,000 to 300,000 bushels. GKAIN ELEVATOR INVESTIGATION. y Commissioner Clark. Do you know the capacity of the elevator there now ? Mr. Dunn. I think it is 20,000. Commissioner Clark. That belongs to a company that has a line of elevators on that railroad ? Mr. Dunn. Yes, sir. Commissioner Prouty. On what basis are these farmer elevators organized? Are they stock companies? Mr. Dunn. Yes, sir'. ' Commissioner Prouty. The stock being owned by the farmers? Mr. Dunn. Yes, sir. Commissioner Prouty. Is there any agreement between the farmers to sell to them ? Mr. Dunn. I think in most of thern they have a by-law and the tendency of that by-law would be to have them sell to their own com- pany. Commissioner Prouty. Did the farmers sell to you when they could get more at other elevators ? Mr. Dunn. Not all of them. Commissioner Prouty. How many commission houses are there in Chicago at the present time that will accept the consignments from these farmer elevators ? Mr. DujsTN. I could not say. At the present time I understand that nearly all of them are accepting that class of business. Commissioner Prouty. That seems to be all. The witness was excused. J. E. Brennan, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your occupation, Mr. Brennan? Mr. Brennan. Traveling solicitor for Eschenburg & Dalton. Mr. Marble. You reside in Chicago? Mr. Brennan. I do. Mr. Marble. How long have you been engaged in the grain business ? Mr. Brennan. Since July, 1897. Mr. Marble. How long have you been traveling for Eschenburg & Dalton? Mr. Brennan. Since June 1, 1905. Mr. Marbles. Where do you travel for them? Mr. Brennan. I travel mostly through southern Minnesota, South Dakota, and make an occasional trip through Iowa; but that is my territory mostly out there. Mr. Marble. What do you find to be the conditions out in Minne- sota so far as the farmers' elevators and independent dealers are c;oncerned ? Mr. Brennan. That part of thp country is under the jurisdiction of what is known as the Tri-State Association. That is a different association from the Iowa. So far as I learn, they do not discrim- inate. You can handle either man's grain. You can call on both parties and it is all right. You can call on an independent and also on the farmers. 10 GBATN ELEVATOB INVESTIGATION. Mr. Marble. The independent dealer does not discriminate against you if you receive shipments from an elevator there ? Mr. Bbennax. Not as an association move. He may have personal feelings. Mr. Marble. You have traveled some in Iowa? Mr. Brennan. I have. Mr. Marble. Do you find the situation in Iowa to be the same as in the other States ? Mr. Brexxan. Xo, sir ; the Iowa situation is different. I know of commission houses in Chicago that will handle farmer elevator stuff from Minnesota and South Dakota and will not touch the same class of stuff from Iowa. Mr. Marble. How about the scoop-shovel man in Minnesota and South Dakota, the man that has not an elevator. Is he discriminated against ? Mr. Brennan. Not so far as I know. Mr. Marble. You can receive shipments from him without discrim- inating against yourself? Mr. Brennan. We do. Mr. Marble. Is that true in Iowa ? Mr. Brennan. No ; it is not. Mr. Marble. Do you know whether or not the farmers' elevators in Minnesota and South Dakota belong to the association? Mr. Brennan. Some of them do belong to the Tri-State Associa- tion and some da not. Mr. Marble. Do they agree on prices with members of the asso- ciation ? Mr. Brennan. I do not think they do. Mr. Marble. Not to your knowledge ? Mr. Brennan. No. Mr. Marble. That is all. Commissioner Clark. What is included in the Tri-State Asso- ciation ? Mr. Brennan. I think it takes in southern Minnesota, South Da- kota, and a little section of Iowa. Commissioner Clark. Where are its headquarters? Mr. Brennan. At Minneapolis. Commissioner Clark. Do you know the name of the president ? Mr. Brennan. No; Mr. Quinn — I do not know his initials — he is secretary. Commissioner Clark. Is there any connection between that asso- ciation and the Iowa association ? Mr. Brennan. I do not think they work together. If I remember correctly, the first trip I made to South Dakota somebody told me that the Iowa association took it up with the Tri-State and asked them to boycott us, and this association refused to act on that. As an association movement in that part of the country I do not think they act on it. There is a little feeling there. Commissioner Clark. Are there many of these farmer elevators in South Dakota and Minnesota ? Mr. Brennan. Yes, sir; considerable. Commissioner Clark. Is the number increasing all the time ? Mr. Brennan. Yes, sir. Commissioner Clabe. Has it any effect on the market? GRAIN ELEVATOR INVESTIGATION. 11 Mr. Beennan. It makes them pay up to the market. Commissioner Clark. The price of grain is increased by the estab- lishment of them? Mr. Beennan. Yes, sir. Commissioner Clakk. Have you heard any complaints up there as to inability to get sites for elevators ? Mr. Beennan. No; they do not seem to have the trouble there that they do in Iowa. They do not seem to have the trouble up there. Mr. Marble [referring to book] . This is what purports to be " the official directory of grain dealers in southern Minnesota, South Dakota, and northeastern Nebraska " [handing book to witness] . Mr. Beennan. Yes, sir. Mr. Marble. I find this paragraph under the head of " Objects :" The protection of regular established grain dealers against scoopers. So far as your observation goes of the methods of that association, what does that mean ? Mr. Beennan. I should think, according to that, there would have to be discrimination ; that a man that would handle the scoop-shovel stuff would have to be discriminated against; but I have not seen anything of that. Mr. Marble. It has not come under your notice ? Mr. Beennan. No, sir. Mr. Maeble. That is all. The witness was excused. W. M. Stickney, called as a witness, being duly sworn, testified as follows : Mr. Maeble. Please give your full name, Mr. Stickney. . Mr. Stickney, W. M. Stickney. Mr. Maeble. What is your business? Mr. Stickney. I am associated in the grain business with Lowell, Hoit & Co. Mr. Maeble. Where is your residence ? Mr. Stickney. Chicago. Mr. Marble. How long have you been associated with that firm? Mr. Stickney. For five or six years. Mr. Marble. You have been acquainted with their correspondence and business during that time? Mr. Stickney. Yes, sir. Mr. Marble. Have you traveled for them during that time ? Mr. Stickney. Yes, sir. Mr. Maeble. Where? Mr. Stickney. In Illinois and Iowa. Mr. Marble. For what purpose? Mr. Stickney. Why, for the same purposes which a traveling grain man or solicitor goes out — to get business. Mr. Maeble. To solicit shipments of grain to your firm? Mr. Stickney. Yes, sir. Mr. Maeble. Shipments to be sold on commission? Mr. Stickney. Yes, sir. Mr. Maeble. I will show you a letter and ask if you have seen it before [handing letter to witness] . 12 GRAIN ELEVATOB INVESTIGATION. Mr. Stickney. I have ; yes, sir. Mr. Marble. When did you see it before? When did you first see it? ■ Mr. Stickney. Well, when it was received by the firm along in October, 1892— no, 1902. Mr. Marble. What was the occasion of the sending of that letter to your firm, so far as"you know? Mr. Stickney. We had had some correspondence with the firm men- tioned in that letter, known as the Howard Grain, Mercantile and Elevator Company, located at Lotus, 111. Mr. Marble. I will read the letter [referring to letter]. There is the heading " The Illinois Grain Dealers' Association, Secretary's Office, Forsyth, 111., October 7, 1902." Lowell, Hoit & Co. Gentlemen : I am told that you are bidding an irregular firm at Howard, 111. I presume you supposed them to be regular. I am, very truly yours, H. C. Mowey, Secretary. I will ask that that be marked. (The same is hereto annexed and marked " Exhibit No. 1 to Mr. W. M. Stickney's testimony.") Mr. Marble. What did you do when you received that letter? What did you do about it ? Mr. Stickney. I forget whether we answered it or not. I do not remember. Mr. Marble. Did you continue to bid the firm mentioned in the letter? Mr. Stickney. We never had bid the firm. This firm had just started in business and had shipped no grain at the time that letter was written, if I remember rightly. We, however, commenced to do business with them shortly, in a day or two at least, and have con- tinued ever since. Mr. Marble. Did any result follow so far as your business was con- cerned ? Did the letter lead you into any course of business? Mr. Stickney. Why, the result of our continuing to do business or commencing to do business with this firm and others, of course, had some effect upon our business. Commissioner Prouty. Just tell us what it was, Mr. Stickney. Was there at that time a grain dealers' association in Illinois ? Mr. Stickney. Yes, sir. Commissioner Prouty. And firms that belonged to that association were known as " regulars?" Mr. Stickney. Yes, sir. Commissioner Prouty. Did most firms belong to that association that bought grain in the country ? Mr. Stickney. A very large number of them did. Commissioner Prouty. What was the effect on your business with those firms? Mr. Stickney. Well, the effect of our doing business, not only with this concern but with others, caused practically every shipper we had belonging to the grain-dealers' association to discontinue their business with us at that time. Commissioner Prouty. Is that true to-day? Mr. Stickney. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 13 Commissioner Prouty. Has your business, as a whole, increased or decreased as a result of that? Mr. Sticknet. It decreased at first, but in the last year or two it has increased. Commissioner Pkouty. Has the number of these independents mul- tiplied in Illinois? k Mr. Stickney. Yes, sir ; three or four times over. Mr. Marble [handing letters to witness]. I will show you these letters and ask if they were received by your firm? Mr. Stickney. Yes, sir. Mr. Marble. Do you recognize them? Mr. Stickney. Yes, sir. , Mr. Marble. I will read them : Des Moines, Iowa, September 22, WUii. Lowell, Hoit & Co., Chicago, III. Gentlemen : I wish to advise you that F. M. Terry, of River Sioux, has no facilities for handling grain and is not recognized as a dealer by this asso- ciation. Will you please advise me what your disposiion is in regard to doing busi- ness with shippers who have do facilities? Not hearing from you I shall con- clude that you are disposed to take business from scoop-shovel shippers and will be compelled to advise our members of the facts. Yours truly, Geo. a. Wells, Secretary. Commissioner Prouty. What date is that? Mr. Marble. September 22, 1903. That is the last date. The first one has the same heading. i Des Moines, Iowa, June 1, 1903. liOWELL, Hoit & Co., Chigago, 111. Geni'lemen : I am informed that F. M. Terry, of River Sioux, has shipped to you car No. 6154 loaded with corn, and beg to state that as an association we do not recognize him as a dealer for the reason that he has no facilities for handling grain properly located upon a railroad track. Will you kindly advise me of your disposition in regard to confining your business to dealers who operate proper facilities? I inclose stamped envelope for reply. Hoping to hear from you promptly, I am, Tours truly, Geo. a. Wells, Secretary. Then there is one of June 13, 1903 : Des Moines, Iowa, June 13, 1903. Lowell, Hoit & Co., Chicago, III. Gentlemen : I wrote you under date of June 1 with reference to F. M. Terry, of River Sioux, and asked as to your general disposition in r'egard to confining your business to dealers that operate proper facilities at stations, and, although I inclosed stamped envelope addressed for reply, have had no answer. As an association we always endeavor to treat terminal receivers with courtesy, and we can hardly feel that you are giving us courteous treatment in neglecting to reply to our correspondence. I desire again to ask the question as to whether or not you are disposed to cooperate with us, and your reply will greatly oblige. Yours truly, ' ■ Geo. a. Wells, Secretary. Then follows the letter first read, which should have been read last. I will have these marked. (The three foregoing letters are marked "Exhibits Nos. 2, 3, and 4, to Mr. Stickney's testimony.") Mr. Marble. I will ask if you acceded to the request of Mr. Wells ? 14 GRAIN ELEVATOR INVESTIGATION. Mr. Stickney. We did not. Mr. Marble. Did you continue to receive from Terry ? Mr. Stickney. We did. Mr .Marble. And from the other dealers similarly situated? Mr. Sticknet. I think so ; yes, sir. Mr. Terry, let me say, was a merchant at River Sioux, an old friend of mine. He often took grain on account. He was not a grain dealer. He asked if our firm would take care of that grain for him if he shipped it to Chicago. We did that and have continued to, although he ships but very little ; only three or four carloads a year. Mr. Marble, [handing paper to witness]. Is that a communica- tion received by your firm, or what is it ? ' Mr. Stickney. (after examining paper). That is a copy of a circu- lar letter issued on the letter head of the Illinois Grain Dealers' Asso- ciation and signed, as that one is, by George A. Wells, secretary. Mr. Marble. Did you see the original ? Mr. Stickney. I did, or one of the originals. Mr. Marble. Do you know whether this is a correct copy ? Mr. Stickney. I know it is a correct copy. Commissioner Clark. Do you mean the Illinois or the Iowa Grain Dealers' Association ? Mr. Stickney. I mean the Iowa Grain Dealers' Association. Commissioner Clark. You said "the Illinois." Mr. Marble. I will read it and have it marked. Confidential.] Des Moines, Iowa, August SI, 1904. To members: Will you please correspond with Lowell, Hoit & Co., Chicago. 111., with a view to giving them some shipments. They are taking business from farmers' elevator companies not recognized by this association, and I find that they are not getting any business from the regular dealers. My purpose is to thus place them under sufficient obligation to the members of this association, so that they will consider it for their best interest to confine their dealings in the future to the firms that are recognized. Do not raise the question about the farmers' elevator companies in your first letter, but take that up with them later after having given them some business. Please keep this matter confidential and advise me of your action and results. Please answer questions in blank form given below, detach, and return same to me at once. Yours trulj;, Geo. A. Wells, Secretary. The blank form given below is as follows : Have you done any business with firms named below during the past year, to wit : Hately Bros., Chicago, 111. ? Aus. O. C. Kellogg & Co., Chicago, 111.? Ans. — Eschenberg & Dalton, Chicago, 111.? Ans. Lowell, Hoit & Co., Chicago, 111.? Ans. — E. D. Hamlin, Des Moines, Iowa? Ans. — Did you receive any business from regular dealers after that letter was sent out, so far as you know ? Mr. Stickney. No ; we received a very large number of communi- cations one day from different sections of the State, written by regular dealers, asking about grain markets, and insinuating that at some future time they might give us some business. (The above letter is marked " Exhibit No. 5 to Mr. Stickney's testimony.") Mr. Marble. Did they ask a reply from you or not ? Mr, Stickney, Yes; I think they did. We, I remember, wrote a GRAIN BLEVATOK INVESTIGATION. 15 very courteous letter in reply. I think that is the last we ever heard of it from any of them. Mr. Marble [producing another letter] . This purports to be a copy of a letter, does it not ? Mr. Stickney. Yes, sir. Mr. Marble. Did you see the original? Mr. Stickney. I did. Mr. Marble. Is that a correct copy [handing letter to witness] ? Mr. Stickney. Yes ; that is. Mr. Marble. I will read it. [Lowell Hoit & Co., Commission Merchants, 52 Board of Trade, Chicago.] Illinois Geain Dealers' Association, Office of Seceetaey. Decatur, III., Felfruary 2i, IdOlf. To Members: Inclosed you will find* report of the advisory committee of the National Asso- ciation, on terminal conditions at Memphis, Tenn. Please read it carefully. It should be of interest to every shipper of grain, v^hether he ships to Mem- phis or not. You will notice that in selling to Memphis firms you must depend entirely upon the facilities and responsibility of the firm to whom you sell. The letter from Secretary Greaves, of the Merchants' Exchange, shows the bene- fits to be derived from association work, and every dealer should give It their moral and financial support. For your Information I will state that a few receivers of grain are said to be soliciting business from irregular dealers, scoopers, and cooperative companies. Ws do not question .their right to do this, but as such companies and combines are generally understood to be organized to eliminate the regular dealer (or so-called middleman), persons who accept their business are supposed to be in sympathy with their views. If this is correct they can not be in sympathy with you or your business. You must be the judge of this yourself. I give you below the names of parties supposed to be receiving such business : H. H. Carr, John West & Co., Lowell, Holt & Co., and M. E. Cook, Chicago, 111. ; Mills Bros, and Quinn & Co., Peoria, III. ; SufEern, Hunt & Co., Decatur, 111. ; J. W. Hastings Com. Co., New Orleans, La. ; W. A. Randall & Co., Toledo, Ohio. Yours truly, Geo. Beybe, Secretary. (The above letter is annexed hereto and marked " Exhibit No. 6 to Mr. Stickney's testimony.") Mr. Marble. So far as you know, did that letter have any effect upon your business ? Were you receiving shipments from these regu- lar dealers when that letter was sent out? Mr. Stickney. I think not. Mr. Marble. You had already lost it ? Mr. STEcmsTEY. We had already lost it. Mr. Marble. I will ask if you have seen this [handing paper to witness] . Mr. Stickney. Yes, sir ; I have. Mr. Marble. That is a communication sent out by Mr. George A. Wells, of Des Moines, Iowa, is it ? Mr. Stickney. It is signed by him ; yes, sir. Mr. Marble. The first page has no heading. The last page is headed " Iowa Grain Dealers' Association, Des Moines, Iowa," and contains a list of the regular companies doing business in the State, which is of no interest here. The part which is of interest here is as follows, on the first pages : The following farmers' elevator companies do not enforce the " Penalty Clause " and are therefore recommended to the Grain Trade by the Iowa Grain Dealers' Association. 16 GKAIN ELEVATOR INVESTIGATION. Then follows a list of about twenty Iowa farmers' companies. Commissioner Peoutt. What is meant by the " penalty clause ? " Mr. Marble. I will ask the witness to explain. He is an expert on that subject. Can you explain to the Commission what is meant by the " penalty clause ? " Is it referred to by the farmers' elevator com- panies as a penalty clause? Mr. Stickney. Xot as a general thing. It is a clause generally placed in their by-laws that provides that any member of their organ- ization who sells his grain to any other dealer in the town shall pay into the treasury of the company a half cent per bushel, or one cent per bushel, whatever it may be, for the support and maintenance of their organization. ' Mr. Makble. ^Yhat is the purpose of that clause, Mr. Stickney? Mr. Stickney. Why, I presume the purpose of that clause is to keep alive self-protection. Of course, it is a known fact that wher- ever a farmer elevator company starts in business the price of grain is immediately placed by the opposition, by their competitors, about a half a cent to one cent a bushel above what any dealer could rea- sonably and legitimately pay for it. Mr. Marble. And the penalty clause, then, from the farmers' side of it, is to insure a return to the farmers' elevators of that raise of price, whether he sells farmers' elevators or not ? Mr. Stickney. Yes, sir. Mr. Marble (producing paper). Is this a correct copy of that penalty clause? Mr. Stickney. It is a copy that some of them use, while with others the wording is slightly different. Mr. Marble. Is this in effect the same as all the others ? Mr. Stickney. This is in effect the same as others, so far as I know. Mr. Marble. Without stopping to read it, I will hand it to the stenographer. (The same is hereto annexed and marked " Exhibit Xo. 8 to Mr. Stickney's testimony.") Mr. Marble. Does this penalty clause apply to anyone but stock- holders in the elevator ? Mr. Stickney. It applies to no one but the stockholders in the elevator ? Mr. Marble. It is a mutual agreement? Mr. Stickney. Yes, sir. Mr. Marble. To come back now to Mr. Wells, I will ask if you have had any recent experience with him either here or in St. Louis ? Mr. Stickney. Yes, sir; we are having a little experience most of the time with the gentleman. Mr. Marble. What especially recently? I will ask if you estab- lished an agency for the sale of grain recently in St. Louis? Mr. Stickney. Yes; we did. Mr. Marble. What resulted ? Mr. Stickney. We employed in that market as the manager of our business a member of the St. Louis Merchants' Exchange, Mr. T. O. Ballard. Mr. Ballard had been doing some business himself over Iowa and in some parts of Illinois. He was one of the leading members of the exchange. Shortly after he commenced to look after our business there he received a communication from Mr. Wells asking if he was GRAIN ELEVATOR INVESTIGATION. 17 handling this business, and if not, who was ? Mr. Ballard wrote him and gave him the facts in the case, and a couple of weeks afterwards Mr. Ballard's traveling man, who solicits business personally for him, went up over Iowa among the regular trade, and he was immediately told by them that Mr. Ballard was handling the business of Lowell, Hoit & Co., of Chicago, and he could not expect any business from them. Evidently they had been posted by Mr. Wells. Mr. Marble. Did the regular shipments to Mr. Ballard's company cease at that time, do you know ? Mr. Stickney. To a great extent they did ; yes, sir. Mr. Marble. When did this take place? Mr. Stickney. Last spring ; in 1906. Mr. Marble. How many farmers' elevators are there in Iowa that you are acquainted with ? Mr. Stickney. I think about 140. Mr. Marble. What effect have they had on the market at points where they are situated ? Mr. Stickney. The only thing I know is what they have told me — the stockholders and directors of these different organizations. I think I have been at every station in Iowa where they have a coop- erative grain company and they have agreed that their organization has raised the price of grain at each station all the 'way from 3 to 6 cents a bushel. Some will place it at 3, some at 4, some at 5, and some at 6. This, I may add, is nearly always drawn out at a meeting, perhaps, of stockholders and a public meeting also, where everyone is at liberty to give his opinion as to whether the cooperative grain company has been of any advantage financially to the farmers and merchants of the community. In these meetings very often are regular grain dealers. Everyone is at liberty to tell what he thinks. I have never been at one of those places where they have placed the advance at less than 3 cents — very often it is 6 cents a bushel. Mr. Marble. Do you mean that there is more paid at those towns than at other points where there is no farmer elevator ? Mr. Stickney. That, they tell me, is the way they arrive at the conclusion. Mr. Marble. They do not count a gain in the general market as due to their establishment ? Mr. Stickney. No; they will generally compare some market at a point 10, 20, or 30 miles distant. Commissioner Prouty. Take grain at Chicago, and add the freight rate, how much below does grain sell at the country point — I should say, subtract the freight rate? Mr. Stickney. I should say all the way from 1 to 3 cents at the stations where there are cooperative elevators. Commissioner Protjty. Well, at other stations, if you know ? Mr. Stickney. That I could not tell you, because I very seldom visit them. Commissioner Prouty. Proceed, Mr. Marble. Mr. Marble. Have these farmer elevators complained to you of inability to find a market for their grain? Mr. Stickney. Not in the last year or so they have not. Mr. Marble. Did they have difficulty before that ? S. Doc. 278, 59-2 ^2 18 GRAIN ELEVATOR INVESTIGATION. Mr. Stickney. Yes, they did. Mr. Marble. Do they know why, so far as you know ? Or do you know why ? Mr. Stickney. As far as the Illinois association is concerned, or as far as the Illinois grain dealers were concerned, it seems that there was an organized attempt about three years ago to shut them out of the ma rket entirely. Mr. Marble. How ? By what method ? Mr. Stickney. The traveling representative of the Illinois Grain Dealers' Association came to Chicago, I think it was three years ago last November, and interviewed about every commission house doing business with the few farmer elevators in Illinois, and gave them to understand that it would be to their interest not to handle shipments from cooperative grain companies, implying that if they did they could not receive any business from any member of that association. Mr. Marble. Do you know whether that was successful ? Mr. Stickney. Yes, sir. Mr. Marble. The commission men did accede to the demand? Mr. Stickney. Yes, sir Commissioner Clark. Has it been your observation, Mr. Stickney, that the Iowa Grain Dealers' Association has been more active and vigorous in its effort to confine the dealings to members of the asso- ciation than they have in Illinois ? Mr. Stickney. I think it has ; ^es, sir. Commissioner Clark. Is that the case to-day ? Mr. Stickney. Yes, it is true to-day. Commissioner Clark. Is the number of farmer elevators in Illinois increasing ? Mr. Stickney. Yes, sir Commissioner Lane. In those letters are lists of names given at the bottom when notices are sent out to the firms of dealers that are to be blacklisted. Mr. Stickney. Yes, sir Commissioner Lane. For dealing with irregular grain dealers ? Mr. Stickney. Yes, sir. Commissioner Lane. What has been the effect of that on the suc- cess or failure of any of those firms ? Mr. Stickney. The commission firms, do you mean ? Commissioner Lane. The commission firms; yes. Mr. Stickney. I do not know that any of them have failed. I know that the business of some of them has suffered in consequence, or did at least for a time. Commissioner Lane. Is there a difference in price paid for grain in States like Illinois, where there are comparatively few farmer elevators, as I understand you, and places elsewhere where there are a large number of farmer elevators? Mr. Stickney. Perhaps the question has not been asked or an- swered. There are about 150 farmer elevators in Illinois at this time. There were only 30 three years ago, when the boycott started. Commissioner Lane. The effect of the boycott seems to have been ~ to promote the farmer elevator, instead of destroying it? Mr. Stickney. That was the effect ; yes, sir. Commissioner Lane. And the blacklist and boycott together have GBAIN ELEVATOR INVESTIGATION. 19 not tended to destroy the competition of the farmer elevator or to reduce the price of grain ? Mr. Stickney. No; the tendency has been the other way, because the blacklisting and boycotting did not succeed. It seems to have aroused the combativeness of the people. Commissioner Lane. There was a reaction ? Mr. Stickney. Yes ; a reaction and demand for fair play and hon- est treatment. Jdr. Marble. You say, Mr. Stickney, that fair play has been achieved at all grain-selling points in Iowa ? Mr. Stickney. Oh no; it is very far from being achieved. You take it in a great measure in the grain business in Iowa and Illinois there is no such thing as fair play, because it is the evident desire and intention of the Illinois Grain Dealers' Association and the Iowa Grain Dealers' Association, and all of its members, to still put out of business every cooperative grain man. They not only advance the price for that purpose, paying more than the market, but more than it is worth, making it up at other stations, thinking, I presume, that at some distant time they will again have control of the market and be able to make the price as low as they please. Commissioner Lane. What percentage of the whole volume of business' do the independents, the irregulars, get as compared with the regulars ? Can you tell that ? Mr. Stickney. No, sir; I can not. I believe there are around a thousand elevators in the State of Illinois. You see the farmers own only 150, and the proportion might not be far out of the way in Iowa. These figures may not be exactly correct in regard to the number of elevators in the two States, but it is not far out of the way. Commissioner Lane. The regulars have very nearly a monopoly yet? Mr. Stickney. Yes; practically speaking, to a great extent they have. Commissioner Claek. Did the regulars pay more than the grain was really wjorth at a point where a farmer's elevator was in opera- tion with a view of making the stockholders of the farmers' elevator dissatisfied ? Mr. Stickney. Yes, sir; that is the case in every single one of them in Iowa and Illinois. Commissioner Claek. As a matter of fact or as a business propo- sition, can it make, any difference whatever to a commission dealer or to the buyer of grain actually delivered in Chicago, whether it came originally from a scoop shovel or an independent elevator, or line elevator ? Mr. Stickney. It ought to make no difference. Commissioner Claek. I say, as a business proposition, can it? I lay aside the sentiment as to forcing business into a certain channel. Mr. Stickney. I think that a car of grain shipped by a scoop shoveler or farmers' elevator company or line elevator concern will bring practically the same money here. Is that what you have refer- ence to ? Commissioner Clark. Is it worth the same money ? Mr. Stickney. Yes; I think it is worth the same money. There is no reason that I can see why it should not be. 20 GRAIN ELEVATOR INVESTIGATION. Commissioner Peouty. These associations of grain dealers are made up of a considerable number of grain dealers ? Mr. Stickney. Yes, sir. Commissioner Peotjty. Does the same grain dealer own elevators at different points ? Mr. Stickney. Yes, sir ; some of them a hundred. Compiissioner Protjty. You say that when the farmers' elevator is organized, the independent dealer puts up the price ? Mr. Stickney. Yes, sir. Commissioner Prouty. Do you understand that if he sustains a loss, that is borne by the association — that the association represents him ; or must he stand on his own resources ? Mr. Stickney. I think that has been true at a number of places in Illinois, at least it has been told on good authority that such was the case, but they have become so numerous now that I think every dealer now stands on his own bottom. Commissioner Prouty. Have many of these farmer elevator asso- ciations gone out of business? Mr. Stickney. Very few of them that I know of in Iowa or Illinois in the last three years. I have been acquainted with it only during that time — this movement. I should say perhaps one or two, maybe three, in Illinois during that time, and I clb not know of any in Iowa, although there may have been some. Commissioner Prouty. Any more questions, Mr. Marble? Mr. Marble. Nothing more. The witness was excused. ^. Edward C. Bergfield, called as a witness, being duly sworn, testi- fied as follows : Mr. Marble. Where do you reside? Mr. Bergfield. I reside, myself, at George, Iowa. Mr. Marble. What is your business ? Mr. Bergfield. Manager of the farmers' elevator there, buying and selling grain for them. Mr. Marble. How long have you been managing that elevator ? Mr. Bergfield. Since the 2d of January. Mr. Marble. Of this year? Mr. Bergfield. Yes, sir. Mr. Marble. Prior to that, where were you engaged ? Mr. Bergfield. With the Fancy Prairie Grain Company. Mr. Marble. Was that a farmers' concern? Mr. Bergfield. Yes, sir. Mr. Marble. Prior to that, where were you engaged in business ? Mr. Bergfield. I was with H. H. Carr & Co. here in Chicago. Mr. Marble. What is the business of H. H. Carr & Co. ? Mr. Bergfield. Commission merchants of grain. Mr. Marble. Receivers and sellers of grain ? Mr. Bergfield. Yes, sir. Mr. Marble. They receive and sell on commission ? Mr. Bergfield. Yes, sir. Mr. Marble. Do they buy grain themselves ? Mr. Bergfield. No, not that I know of. GRAIN ELEVATOR INVESTIGATION. 21 Mr. Makble. In what way were you engaged with them? What were your duties ? Mr. Bergfield. Soliciting grain. Mr. Marble. Soliciting shipments ? Mr. Bergfield. Yes, sir. Mr. Marble. What peculiar class of shipments did Carr & Co. seek through you? Mr. Bergfield. They never sought any peculiar kind — any ship- ments I could get ; any kind of shipments. Mr. Marble. Have they especially tried to have farmers ship direct ? Mr. Bergfield. Yes, sir. Mr. Marble. They have made a specialty of that? Mr. Bergfield. Yes, sir. ]\Ir. Marble. Did you seek to have farmers ship direct ? Mr. Bergfield. We worked exclusively among farmers for their business. Mr. Marble. In what States? Mr. Bergfield. Iowa, Nebraska, South Dakota, Illinois, Minnesota, Wisconsin, and eastern Indiana. Mr. Marble. In Illinois did you succeed in persuading- farmers to ship to this firm ? Mr. Bergfield. I did to a great extent. Mr. Marble. AVhat experience did the farmers have in getting cars? Mr. Bergfield. For a number of years they got cars all right, but after the movement became general they were shut off. Mr. Marble. Does that mean the cars became scarce for all ship- per, or were your farmers treated differently ? Mr. Bergfield. No, sir; the railroad company would not give the farmer cars the same as the elevators. Mr. Marble. Did they impose any rule as to having the grain in sight? Mr. Bergfield. Yes, sir ; he was to have his grain in sight on the railway before they would furnish cars. Commissioner Lane. Have you specified the railroad? Mr. Marble. What railroad are you referring to ? Mr. Bergfield. The Chicago and Eastern Illinois is one and espe- cially the Burlington. Mr. Marble. The Burlington in Illinois ? Mr. Bergfield. The Burlington in Nebraska. I had some special experience with them out there. Mr. Marble. What you have said about the experience of farmers in getting cars in Illinois, does that apply to the other States you spoke of ? Mr. Bergfield. Yes, sir ; I hardly found any station that I stopped at long enough to get the farmers to ship, but they were turned down in that way. Mr. Marble. By what roads ? t Mr. Bergfield. The Burlington, the Milwaukee — ^there are a num- ber ; I could not call the names, but I could go back with my records and see where the places were and tell. In one case at Hartwell, Nebr., I went out there. There was a man who went to ship his 22 GEAIN ELEVATOR INVESTIGATION. wheat and could not get cars. I went out and saw him and I asked him if he wanted to ship his wheat. He said, " Yes." I said, " Whj' don't you ship it ? " He says, " The agent at Heartwell will not let me have a car." I said, " Are other people getting cars?" He says, " Yes ; they are getting them every day." I said, " I will go with you to the depot and you order your car as you always have and I will go in and see what the agent says." He went to the depot the next morning with me and ordered his car for wheat. There were three cars on track. The elevator people were loading one and the other two were empty. The agent says, " You can not have any car." The man says, " Why can't I?" He says, " The orders are that you have to have the car of grain in sight." He says, " I can have it in sight if you will have the car here when I get here with the grain." He says, " I can not do that ; you have to have your grain in sight." I turned to him and said, " This is one of our intending shippers. Do you mean to tell him you won't furnish him his share of the cars here?" He says, " Yes." I said, " Why?" He said, " Here are the orders from the superintendent." He jerked out a letter from the superintendent. I read it and showed it to the shipper. I shoved the letter in my pocket and said, " I will take that up and will bring this back in a few days." He said, " I ought not to have showed you that letter ; I am a young man and ought not to show you that letter." I said, " Well, we know what is on it," and returned it to him. I went down then to Minden and this man from Heartwell went with me. We looked up some men that wanted cars. I had them go into the depot and act the same way, and there was an old man there then. He simply came out and said, " I have told you dozens of times. Why do you bother me. You can not have cars. It is of no use for you to come here bothering me about cars. You can not have them as long as there is any grain in the elevator." I turned to him and said," Do you mean to say you will not let these people have their share of the cars to ship their own grain ?" He says, " If you want to be in the grain business, why don't you go out and build an elevator?" Mr. Maeble. Where was that ? Mr. Beegfield. On the Burlington, at Minden, Nebr. Mr. Maeble. At what station did the farmer live ? Mr. Beegfield. The first one I was talking about at Heartwell and the others at Minden. Mr. Maeble. What year was this — ^how long ago ? Mr. Beegfield. Four or five years. Mr. Maeble. Coming down to this year or last year, are the rail- roads following that policy so far as your laiowledge goes ? Mr. Beegfield. The last two years I have not been on the road soliciting Mr. Maeble. I am asking about your knowledge of the matter. Mr. Beegfield. I could not say as to that. Mr. Maeble. How about the farmers elevators? Do they have trouble receiving caxs ? Mr. Beegfield. No, sir. Mr. Maeble. Are the other farmers elevators so far as you laiow ? Mr. Beegfield. So far as I Iniow ; yes, sir. Mr. Maeble. Are there line elevators, regular elevators, in the town where you are located? GEAIN ELEVATOR INVESTIGATION. 23 Mr. Beegfield. Yes ; one. Mr. Marble. How do you get along with them ? Mr. Bekgfield. I am practically stalled and have not cars to ship out. Mr. Marble. Has the other elevator got cars? Mr. Bergfield. No, sir. Mr. Marble. At Fancy Prairie, how did you get along ? Mr. Bergfield. I had trouble the first month getting cars. Mr. Marble. Did you have trouble about the price you paid ? Mr. Bergfield. No, sir ; because I paid no attention to their prices. Mr. Marble. Did they pay attention to yours ? Mr. Bergfield. Yes, sir ; they paid more than I did. Mr. Marble. Did they pay more than they had before you began business ? Mr. Bergfield. I could not say as to that, because the elevator had been running since 1900. I started out and bought the grain on the basis that I thought I could run on ; it would frequently overbid. Mr. Marble. I think that is all. The witness was excused. C. L. Aygarn, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you live? Mr. Aygarn. At Pontiac, 111. Mr. Marble. What is your business? Mr. Aygarn. I am out of business at this time. Mr. Marble. How long have you been out of business ? Mr. Aygarn. About three months. Mr. Marble. What was .your business prior to that time? Mr. Aygarn. I was in the grain business. Mr. Marble. Grain business? Mr. Aygarn. Yes, sir. Mr. Marble. In what way? Mr. Aygarn. Part of the time in shipping for farmers, and part of the time in buying and shipping on my own account. Mr. Marble. What do you mean by " shipping for farmers ? " Mr. Aygarn. Well, when I could not satisfy them as to the price, I would ship the grain for them at a margin. Mr. Marble. You have done that business from Pontiac entirely? Mr. Aygarn. From Pontiac and from Peoria, and from several other stations up there in Livingston County. Mr. Marble. AVhat experience did you have in getting cars for that business ? Mr. Aygarn. Eather sad. Mr. Marble. In what way? Mr. Aygarn. In getting the cars that I ordered. Mr. Marble. Were your competitors getting cars at the same time? Mr. Aygarn. Yes, sir. Mr. Marble. They received cars when they were refused to you ? Mr. Aygarn. Yes, sir. Mr. Marble. Were you told why they were refused to you? Mr. Aygarn. No, sir; not always. Mr. Marble. At all? 24 GBAIN ELEVATOE INVESTIGATION. Mr. Aygaen. Sometimes they gave me a good promise. Mr. Marble. But you did not get the cars ? Mr. Aygaen. No, sir. Mr. Marble. Were you told it was because you did not own an elevator ? Mr. Aygarn. I had two elevators the last years, but the years pre- vious I bought at other stations where I had none, and that seems to be the main reason for not getting cars. Mr. Marble. When you were operating through your elevators only, did you get cars ? Mr. Aygarn. At one place, but not at the other. Mr. Marble. Why didn't you get them at the other place? Mr. Aygarn. Well, I could only surmise as to the reason why. Mr. MarbLe. You have no knowledge? Mr. Aygarn. No positive knowledge. Mr. Marble. What is your opinion about that matter ? Mr. Aygarn. Well, my opinion is this, that the Mr. Marble. Did you have any communication with the railroad officials about it? Mr. Aygarn. Yes, sir; I have had communications. Mr. Marble. What were those? Mr. Aygarn. I at different times telegraphed for cars, and they promised them. Mr. Marble. And you didn't get them ? Mr. Aygarn. I would get cars now and then. I looked over a couple of years preceding last year, as I got a wire from Mr. Carr that I was wanted here, and during the month of May three years back I got 10 cars, and my competitor, I think, got 26 or 28 cars. Mr. Marble. That was three years ago? Mr. Aygarn. Yes, sir ; and the following month I got a few cars and the other people got about 2 to my 1, and I oftentimes would have grain in my little elevator and grain in wagons and grain in bins on the right of way, and they would hold the cars on the track empty for my competitor to receive grain until he got grain in. I have the documents in my possession to corroborate this statement. Commissioner Prouty. At what station was this, Mr. Aygarn ? Mr. Aygarn. This was at Rowe station. Commissioner Prouty. On what railroad ? Mr. Aygarn. On the Wabash, in the State of Illinois. Mr. Marble. What was your experience this year, so long as you remained in businefe ? Mr. Aygarn. I did not get that far along, as I only got hold of the first part in my hasty work, and we have had a great deal of trouble last fall — had a great deal of trouble in getting cars. Mr. Marble. Did you have more trouble than your competitors, would you say ? Mr. Aygarn. Why, yes; I should think so. Mr. Marble. It seemed to you so, anyway ? Mr. Aygarn. It seemed to me so, because I went out to the station here, to Rowe station, at one particular time. My son was in charge of the elevator, and I had these orders in for 20' cars, and I had re- ceived two. My competitors did not have a bushel of grain — ^that is, not enough for a carload — and they had no orders in, so the agent informed my son, who can be had here. In the meantime he bought GBAIN ELEVATOR INVESTlGATIOH. 26 a few hundred bushels and told the agent to just set him in a car, and as soon as he wanted a car he got a car. And oftentimes I had thousands of bushels of grain getting away from me on account of being refused cars on the different roads in Livingston County. Mr. Marble. At times when your competitors could get cars ? Mr. Aygaen. Yes, sir. Mr. Marble. Does that refer to this year ? Mr. Aygaen. Not to. this year. Mr. Marble. Last year? Mr. Aygaen. "Well, some years back. Mr. Maeble. Not recently ? Mr. Aygarn. Not of recent date. Mr. Maeble. During the time you were buying did you belong to the grain dealers' association of Illinois ? Mr. Aygaen. No, sir ; I only belonged there five or six months about five years ago. Mr. Marble. During the time that you did not belong, did you pay more or less than your competitors who did belong ? Mr. Aygaen. I paid more. Mr. Marble. Was anything said to you about that? Mr. Aygaen. Yes, sir. Mr. Marble. By whom? Mr. Aygaen. It was not in a direct way said to me. The grain dealers in the vicinity of Fairbury, Chenoa, CuUom, and Pontiac met at a station and discussed the prices that I was paying at Pontiac and other stations, and during that time I was a member of the regular, grain dealers' association of Illinois. Mr. Marble. That was several years ago? Mr. Aygaiin. Yes, sir. , . . . Mr. Marble. Well, did they do anything? Did you find any dis- crimination against yourself because' of the prices you were paying? Mr. Aygaen. I have thought it was discrimination. The railroad officials and the grain dealers together discussed how to get me out of the way. Mr. Maeble. How do you know that? Mr. Aygarn. I was informed so by those present. Mr. Marble. And what means did they take to get you out of the way? ... Mr. Aygarn. They passed a resolution, that I have letters for, in Peoria, that all houses that were receiving grain from me — at this time I had withdrawn, went out of the association, and I received two letters from Chicago houses, and I surmised there was something wrong in Detroit. I got on a train and went down there, and they had received numerous letters from the grain dealers' association to not receive my grain. Commissioner Peouty. Why did you leave the grain dealers' asso- ciation ? Mr. Aygaen. Sir? Commissioner Peoxjty. Why did you leave the grain dealers' asso- ciation ? Mr. Aygaen. Why, I asked Mr. Mo.wry,, secretary at the time, if there was anything wrong in my buying at the station, where the farmers requested me, when I had a scale and where the grain was shoveled into cars, and where we had made request on the railroads 26 GRAIN ELEVATOE INVESTIGATION. to build elevators. We had an elevator at Kowe. He said : " No ; you are a regular grain dealer." And upon that condition I was taken in. Afterwards, when I learned that they commenced to boycott me, or discriminate against me, and got the railroads with them, I made up my mind I would step out — -withdraw. Mr. Marble. That is all. Commissioner Clark. You said, did you not, that you had been in the grain business up until about three months ago ? Mr. Aygarn. Yes, sir. Commissioner Clark. Well, did this discrimination and boycotting against you have any influence upon your getting out of that business ? Mr. Aygarn. The boycotting and the discrimination by the rail- roads and the grain dealers has caused the loss of what I have earned for years past. Commissioner Proutt. I guess that is all. You may be excused. Witness excused. H. H. Carr, being called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Carr ? Mr. Carr. Chicago. Mr. Marble. What is your business ? Mr. Carr. Commission business. Mr. Marble. Are you a member of the Chicago Board of Trade ? Mr. Carr. Yes, sir. Mr. Marble. Do you buy grain yourself ? Mr. Carr. We make bids occasionally, the same as other commis- sion houses. We buy and sell on commission. Our main business is commission business. Mr. Marble. Receiving grain to be sold on commission ? Mr. Carr. Yes, sir. Mr. Marble. Have you made a specialty of farmers' business not going through elevators? Mr. Carr. Yes, sir. Mr. Marble. In what States ? Mr. Carr. The twelve principal grain-raising States. Mr. Marble. How long have you done that ? Mr. Carr. Ever since 1888. Mr. Marble. Let me see if I understand your business. You have the owner of the grain engage a car at the country station, and load the grain out of the farmer's wagon and ship it to the Chicago market without the intervention of the elevator buyer ? Mr. Carr. Yes, sir. Mr. Marble. I will ask if the experience of your customers with regard to discrimination in cars has been general ? Mr. Carr. If it is permissible to use as harsh a term, I would say it is " damnable." It has been sufficient to almost stop the practice. Mr. Marble. Do you Imow whether or not your customers have failed to secure cars at times when the elevator men in the same town could secure cars ? Mr. Carr. Yes, sir. GEAIN ELEVATOR INVESTIGATION. 27 Mr. Marble. Have statements been made by your customers to you to that effect ? Mr. Care. Yes, sir ; a thousand cases. Mr. Marble. I will ask you if any railroad official in conversation with you has shown any unfriendliness to your manner of doing business ? Mr. Carr. Yes, sir. Mr. Marble. Can you give an instance ? Mr. Carr. The most marked instance that comes to my recollection is an experience with an official of the C. & E. I. Kailroad. Mr. Marble. That is the Chicago and Eastern Illinois Railroad? Mr. Carr. Yes, sir. The gentleman who has charge of distributing the cars along their line through Indiana and Illinois. Mr. Marble. Pardon me, but his name? Mr. Carr. I think his name is Mr. O'Day. Mr. Marble. Where is he located ? Mr. Carr. In the Postal Building, south of the Board of Trade Building, in Chicago. Mr. Marble. Now tell us what the instance was. Mr. Carr. I had a request for a car from a point in Illinois to ship some grain to Chicago. I saw Mr. O'Day and asked him if he would not assist this gentleman in getting a car. He wanted to know if he owned an elevator. I replied, "I do not know." "Well," he in- quired then, " Is he a farmer?" I said, " He did not so state in his communication." " Well," he said, " If he is a mere farmer he stands as much show of getting a car as a rabbit." Mr. Marble. Did you get the car ? Mr. Carr. I did not. I wished to know why he should discrimi- nate so against the farmer, and he replied that they could always get the farmers' business, but they had to protect the elevator man who had his money invested on their right of way.- I inquired how much their elevator man had invested. He replied from $3,500 to $5,000. " Well," I said, " how much has my farmer invested ? " He said : " I don't know and I don't care." " Well," I said, " I do. Now, he owns 160 acres of land, valued at $125 an acre, which equals $20,000, and there are 250 other farmers surrounding that station with an equal investment, which equals $5,000,000 ; and your elevator owner has an investment of $5,000. Is that fair ? " And I furthermore went on to explain that in Illinois we have nearly 600,000 farmers, with an investment of $6,000,000,000, and 2,000 grain buyers with an invest- ment of $5,000 each, which equals $10,000,000. Owing to the organ- ized consolidation of the grain dealers, and the disorganized condi- tion of the farmers, these 2,000 men with $10,000,000 determine what the 600,000 farmers, with $6,000,000,000 invested in their business, shall get when it comes to selling their grain. Mr. Marble. What did he say to you ? Mr. Carr. Turned me down. Just gave me the laugh. Mr. Marble. Did he give you the car? Mr. Care. No, sir. I never did get it. Mr. Marble. You haven't got it yet ? Mr. Carr. No, sir. Mr. Marble. Without going into detail, what proportion of your customers have succeeded in getting cars as well as the elevators in their towns, would you say ? 28 GRAIN ELEVATOR INVESTIGATION. Mr. Cakk. I can not say ; but here are lists of nearly 7,000 farmers that have shipped to me in the last few years ; and through the dis- criminations of the railroads my business is busted in Illinois. That .shows it up. I am broken up in business. Mr. Marble. How do you know it was discrimination of the rail- roads ? Mr. Carr. Because they have discriminated. My friends have written in repeatedly that they could not get the cars and the rail- road agents would not give them cars, as Mr. Bergfield stated before ; at Minden, Nebr., they stated that so long as their grain men or the elevators wanted cars that they would not give them to the farmers. And, so I sent Mr. Bergfiejd out there, and what was the result? We organized a farmers' elevator at Minden, with 68 charter mem- bers, and to-day there are over 300 members of that association. And there are innumerable farmers' elevators throughout Nebraska and South Dakota, and Minnesota, Iowa, Illinois, and some in west- ern Indiana. And the day following the organization of the farm- ers' elevator at Minden I understand that the railroad agent went around and said to these farmers that had been vainly endeavoring to get cars prior to the organization, " You can now have all the cars you want." We had a man at Farwell, who was buying grain on track. He had a little warehouse, and he intended getting a site on the railroad there; consequently he built a little warehouse, and he hauled his grain across the road, across the track to the railway cars and loaded them and shipped them to me. He did this for a long time, and finally his competitors succeeded in driving him out of business. He had a car there on track for over forty days and the railroad would not pull it out, and finally they dumped that grain onto the track and took the car. Mr. Marble. When did that take place ? Mr. Care. Within the last two or three years. Mr. Crosby of the B. & M. Railroad, the general freight agent of the B. & M. in Nebraska, brought the traffic manager of the Union Pacific up to see me, and left him there and we argued for two hours and a half for and against farmers' shipments. This official declared that the farmer should be satisfied to sell his grain to the local buyer, and submit to an unjust tax or toll of from 4 to 6 cents a bushel on his grain. Commissioner Lane. What was the name of that official ? Mr. Carr. I do not remember his name, but he was the traffic manager. Commissioner Protjty. Was it Mr. Munroe? Mr. Carr. I do not remember his name. Mr. Marble. With what railroad was he connected? Mr. Carr. With the Union Pacific. And Mr. Crosby, of the B. & M., brought him in there and introduced him. Mr. Marble. How long ago ? Mr. Carr. That was a couple of years ago. And while those men were in my office, I believe — ]ust to simply illustrate the grain buyers' antagonism to the farmers shipping, a farmer at Lexington lU. where this letter is from [indicating] was loading a car of corn to ship to me, and a grain buyer swaggered down there in his overbear- ing way, and inquired of the farmer, " What in the hell are you GRAIN ELEVATOR INVESTIGATION. 29 fellows doing down here?" Mr. Farmer replied, "What are you uns doing up there at the elevators?" "Why," replied the grain buyer, " trying to make some money when we buy your grain." The farmer in return said, " Well, me and the boys is tryin' to save some money for me and the old woman." The grain buyer turned on his heel and walked away. That argument was sufficient; he couldn't answer it. Mr. Marble. About this letter, Mr. Carr. This is a letter received by you recently? Mr. Cakr. Yes, sir. Mr. Marble. Is this letter the first of the kind you have received ? Mr. Carr. We have thousands of them. Mr. Marble. Of this same general tenor? Mr. Carr. Yes, sir. Mr. Marble. Have you had such letters as this, this year ? Mr. Carr. We have them. We are buried with them. Mr. Marble. You have received many of them? Mr. Carr. Yes, sir. Mr. Marble. Several hundred this year? Mr. Carr. Yes, sir. Mr. Marble. Eeceived from what points generally ? Mr. Carr. All over the twelve States. Mr. Marble. You have received such letters as this? Mr. Carr. Yes, sir ; similar letters. Perhaps not quite as marked as that one. Mr. Marble. With that explanation, showing that this is not an isolated letter, but is typical of the business which Mr. Carr is doing, I will read the letter. (Reading:) Lexington, III., September 29, 1906. H. H. Caeb & Co., Chicago, III. Gentlemen : Replying to your inquiry. — why farmers' shipments to you have dropped off around Lexington, III., would say, we have become discouraged in trying to ship grain direct. I have repeatedly gone to the Chicago and Alton Railroad agent at this station and ordered cars to ship grain to you, but have been turned down by him, saying he did not know when he could furnish me with cars ; that they had all they could do to supply the elevators with cars ; he did not know whether I could get a car in one or two months or not. This unfair discrimination (in my opinion) by the railroad agents against farmers is one of the causes why you are not getting more shipments from farmers than you have during the past few years. The remedy, it seems to me, is either for the Government to take supervision of the railroads, compelling them to treat right every individual intending shipper, without fear or favor, or else the farmers should organize, joining together in townships, counties, and States, working together as a unit, thus becoming strong enough, through the ballot, to pass laws that will protect the individual the same as corporations are pro- tected. Respectfully, yours, Howell Rowlands. (The same is hereto annexed and marked " Exhibit No. 1 to Mr. Carr's testimony.") Mr. Carr. I do not know but what it would be only justice to the Commission to give a little more detailed statement of the grain bus- iness of this country than is possible for you to draw out in your questions, if they would like to have it. Mr. Marble. Would it be possible for you to prepare that in writing, Mr. Carr ? Mr. Carr. I scarcely think so. I can do so if you like. 30 GRAIN ELBVATOE INVESTIGATION. Mr. Marble. I would like it in that permanent form. Mr. Care. But I believe I could give it orally in a very short manner. Commissioner Peotjty. Well, you can go on and we will stop you when we think it is as far as necessary. What we want to know largely is, what the condition of things is to-day or has been for the last two or three years. Mr. Carr. The grain business and the railroad business i^ so dove- tailed in that you have to commence and see where they began, and then where they have gone to. Chicago was the original grain market of this country. My grand- father hauled grain from La Salle County, 111., to Chicago, a hun- dred miles west of here, by team before railroads existed. The Chi- cago and Northwestern Railroad, the Galena Division, was the first one going west, from Chicago ; the first railway west from Chicago. I believe the Illinois Central was likewise one of the first going south. As the railroads started, were built, grain men on the Chicago Board of Trade furnished capital to put up elevators at the stations, and farmers would sell their grain to their nearest station, .instead of bringing it to Chicago, as had been the former practice. In these early days the farmer hauled his grain onto the streets of Chicago and his grain was bought by local buyers here. When the railroads became so numerous and the receipts so numerous that that was not practicable, a board of trade was formed where buyers and sellers could meet on a central ground and grain could be handled more economically and more expeditiously. The result is that as the rail- roads branched out throughout this country there were innumerable grain buyers, and they bought from the farmer for years and seemed to feel that the farmer was their bonanza, and they must work him for all he was worth. I, having been brought up on a farm, and latterly from the farm was engaged in the mercantile business with Marshall Field & Co., and then onto the board of trade ever since 1870, with one of the largest grain receiving houses here, E. F. Peltz & Co., whose receipts in one day equaled 31 canal boat loads of grain — hundreds of cars. My experience has been quite large. The result was that I felt that the farmer was not receiving the justice that he should receive, and he was not receiving what he should receive for his grain. There- fore I originated the plan of the direct farmer shipping, trying to save for the farmer the several cents a bushel tax or toll in the shape of a profit, which the local buyer felt was his due. In many cases that amounted to 10 or 15 cents a bushel and even more. Just to illustrate : One poor old foreign farmer out here at Sheri- dan, Wyo., when we sent him an offer from the Pure Food Company at Battle Creek, Mich., for a car of their fine spring wheat and told him that they would allow him equal to 49^ cents on his wheat on track, wrote back and said : " I hope you don't think that farmers *are such big fools as to sell you their wheat for 49^ cents a bushel when we can get 65 cents a hundred for it right here at home." Sixty-five cents a hundred, by the way, equals 39 cents a bushel. Those cases are innumerable. You take it thrqughout Minnesota, Iowa, and many of those Western States. They take 50 pounds for a bushel of barley; and one poor farmer asked a grain buyer if he wouldn't give him 51 cents, and the grain buyer bragged to me, say- GRAIN ELEVATOR INVESTIGATION. 31 ing that he turned around to a shelf which he called a desk and pretended to figure and finally turned around and says to the man : " I will give you 51 cents, but you must not tell anybody, and I must have 61 pounds." I said, "Why didn't you give him a dollar for a hundred pounds? " But that shows the way many of these grain buyers take the advantage of our poor foreign population who come in here and are not posted on the ways of the American grain buyers. I sent a telegram up to Minnesota to two farmers, explaining the price we had received for their barley, and it proved to be 11 cents a bushel more than their home buyers were paying. I secured for a farmer from a point in Nebraska 14 cents a bushel for a car of rye more than the best offer- he was receiving. And you take it through- out that section of Nebraska, and it was quite common for them to make a price for flaxseed all over a certain territory, and they would dictate or make their own prices. Now, in Illinois I was receiving from hundreds of farmers (hero is my record), and I was the prime cause which gave birth to the frain dealers' association. The Illinois association was formed, and rom the Illinois association it has grown into eight States, and then a ninth association, which we call the national association, has been organized. A short time ago I sent a man down to Oklahoma, and was on the verge of getting about 2,000,000 bushels of wheat in the vicinity of Hennessey and Kingfisher; and when he came to order cars from the Rock Island road he couldn't get them, because they decided that the farmer shipper must have his grain in sight inside of the corporate limits of the station before they would entertain an order for a car. How preposterous that a man should have 10 or 15 or 20 wagonloads of grain standing in the street and perhaps remain there for two or three weeks before his car arrived. The result was that I did not get a bushel of that 2,000,000 bushels. And those experiences are without number. I contend that any shipper, if he wants to sl^ip a bag of grain or a box of grain, or if he wishes to ship live stock or any kind of freight, that he should be treated the same as any other intending shipper. That is the way I understand the interstate commerce law — that every intending shipper shall be treated alike, and without fear or favor, by the railroad agent, and regardless of his vocation. Commissioner Lane. Let me ask you a question there. Do you contend that the independent shipper has been put out of business by reason of the boycotting and the blacklisting ? Mr. Cakr. Principally so ; yes, sir. Commissioner Lane. You heard Mr. Stickney's testimony here? Mr. ,Carr. Yes, sir. Commissioner Lane. You disagree with that ? Mr. Carr. Yes, sir. Commissioner Lane. How many instances can you give of men who have been affected by this manipulation, and injured — seriously injured ? Mr. Carr. One ; myself. And my clients are legion. I am ruined by it. That is sufficient for me. Commissioner Lane. But you know of more ? Mr. Carr. I have no doubt that this man, Mr. Bergfield, who has been familiar for ten or twelve years with it — if he was collected — that he could give instances without number; but he probably could 32 GEAIN ELBVATOB INVESTIGATION. not remember them without referring to his data. Why, they have made me sick with their recurrence. All I need to say is that you can take a slice out of any place throughout the Northwest and you can not miss them. I find, however, that the railroads within the last few months are — somehow or other they seem to be afraid, or they seem to think that somebody is after them. Our President hits the nail on the head when he says that the rail- roads should have a governmental supervision. I did not know what we needed. I felt as though we must, perhaps, need governmental ownership ; but I think that that is unnecessary. I believe that Mr. Roosevelt has hit it right^-that we require governmental supervision. Commissioner Peouty. How long have you been in what you call this farmer's business ? Mr. Caee. Ever since 1888. Commissioner Peouty. And that business consists in receiving grain from the farmer? Mr. Caee. From the producer. Commissioner Peouty. From the producer? Mr. Caee. Yes, sir. Commissioner Peouty. Do you handle the grain which is shipped to Chicago by farmers' elevator associations ? Mr. Caee. Individuals and elevator associations. That was the cause of starting the farmers' elevator companies. I proposed that they do this. Take a township Commissioner Peouty. We understand what is done in fact. Now, what is the reason that, while these other concerns who handle grain of farmers' elevators appear to do business and make money, in fact, so that they stay in business, you have gone out of business ? Mr. Caee. I haven't gone out of the Dusiness. Commissioner Peouty. You said your business was " busted." Mr. Caee. I did not say that. I say that I am practically driven out of business. I have spent a quarter of a million dollars in build- ing up this business. I say the grain dealers have joined together and boycotted me, and then I started in to organize the farmers. There are a great many people in this world who are like the physi- cian in Mr. Smiles's works on " Self-Help ; " it tells where Doctor Jen- ner was the originator of the system of vaccination to prevent getting smallpox, and there were a great many other physicians who opposed that plan. It would never have proven to be a success until Doctor Jenner got in with the crowned heads of Europe and one of the moth- ers of the Crown had her children vaccinated. That gave the thing a standing in the community; and then these other men came in and tried to knock Doctor Jenner out by saying that they were the origi- nators of it. Now, that thing, that same spirit, permeates all lines of business. You see some of my competitors have succeeded. They probably won't fjet up here and tell you how much they are injured by many of these ine elevators. Look at our line elevators. Here are the Peavey's ; they have from 500 to 800 elevators scattered along the various lines of railways ; and here are the Bartlett, Frazier & Carrington's, and here are the Nye, Jenks & Co.'s. Here there are a great many of these people, and what do they do? I am informed that in many cases people lower the GBAIN ELEVATOR INVESTIGATION. 33 price from one-eighth to a quarter of a cent and that gives them from 2 to 4 cents a bushel that they can use at stations where there are farmers' elevators that are competitors of theirs. You take it in Nebraska alone ; in the last few years Commissioner Lane. Where does that information come from? How do you know that to be so? Can you give us any direct testi- mony on that ? Mr. Cakr. a few months ago I was down at Somers, Iowa, and I was informed by a farmer who brought in some grain that he was offered 23 cents a bushel for a wagon load of oats, a hundred bushels. Now there were a number of houses at stations all around that be- longed to these line houses, some of them with headquarters at Min- neapolis and some in St. Louis and some in Chicago. Another farmer came in and said he had some oats to sell, and he wanted to know what they were paying. They said 23 cents. Well, he said, he guessed he would take his oats over to an adjoining station; they were paying 25 cents over there, and it was just as easy to haul there as it would be to haul to Sftmers, only that there was a little more hill for him to pull up ; the distance was the same from his house. They said in this instance : " We will give you 25 cents." Now, he made $100 on 5,000 bushels of oats that he sold there. Mr. Marble. That is one instance under your observation where they were paying more at one station then they were at a nearby station ? Mr. Care. Yes, sir. Mr. Marble. And that thing occurs frequently, so far as you have observed ? Mr. Carr. Yes, sir. Mr. Marble. I want to ask you one other question. Your business is somewhat different from that of any other commission firm in Chi- cago, in that you have tried to encourage the farmers to ship to you direct, without the intervention of an elevator ? Mr. Care. We started in with that, but finally, finding that the farmer could not get cars and could not load his grain into the cars by hand, I tried to overcome that difficulty by inventihg a portable elevator, which I did, and that elevator will load from 10,000 to 20,000 bushels of grain from wagons to cars. Mr. Marble. That is a device to help this shipping by the farmer ? Mr. Carr. Yes, sir. Mr. Marble. And your firm, as I understand it, has encouraged that device more than any other firm, and has made a specialty of it? Mr. Care. Yes, sir. Mr. Marble. I think your testimony really is that you are the only firm which has done this same thing. Now, tell us as to the diM- culties you have met in that respect ? Mr. Case. We have also endeavored to get the farmers to organize, as I said, in their townships, and build elevators, which they have been doing. Commissioner Prouty. It appears that when they organize and build elevators they have no trouble in disposing of their grain ? Mr. Carr. No ; because there are plenty of others that are glad to handle it then. S. Doc. 278, 59-2 3 34 GEAIN ELBVATOE INVESTIGATION. Commissioner Peouty. Now, do you think it is a practical way of handling grain to load from the farmer's wagon direct into the cars ? Mr. Caee. Yes, I do. Commissioner Peouty. Is it handled in that way to any extent ? Mr. Case. Well, yes, if they could get the cars. Commissioner Peoutt. How long must a car usually stand on the siding which is to be loaded in that way before it is loaded ? Mr. Caee. I shouldn't think a car needed to stand on the track much longer than it would where it is loaded from an elevator, for the reason that they put the car in, we will say, to the elevator to-day, and it may be loaded to-day or to-morrow and hauled out on the first train going away. Now, ordinarily the farmer has plenty of help ; his neighbors come in and assist him by working and in haul- ing the wheat, and they load it within the prescribed limits, and if they do not, the rules of the Car Service Association protect the railroad company. Commissioner Peotjty. About how many bushels do they usually put into a car as it is shipped into this market ? Mr. Care. We will say that it averages 2,000 bushels of corn, 1,500 bushels of oats or barley, and 1,000 bushels or from 1,000 to 1,200 bushels of jrheat and rye. Commissioner Peouty. How many bushels will the farmer draw in a load to the station? Mr. Caee. About 100 bushels of wheat or rye or oats in a load; from 75 to 100 bushels. It takes from 17 to 20 wagon loads to fill a car. Commissioner Claek. Why is it that the railroads object to having cars loaded direct by the farmers ? Mr. Caee. I do not think that the officials do. I think that it is more these local agents, who are hail fellows well met with the grain buyers; perhaps they belong to the same church or to the same society, or their wives call upon one another and the grain buyer may tip him a cigar occasionally, while the farmer does not meet the local agent so often. And, in my judgment, that is one of the great reasons. Perhaps the grain buyer may be a relative of the agent, like it was at Oklahoma, at that Oklahoma station Hennessey. The agent there, I learned, was the secretary of the Oklahoma State Grain Dealers' Association, and one of the elevator owners at this same station was the father of the railroad agent. Commissioner Claek. This case, which you spoke about, where a car was loaded and stood around some forty days and then the load was dumped out on the ground — where did that occur ? Mr. Caee. That occurred at Farwell, Nebr. Commissioner Claek. On what railroad? Mr. Caee. On the B. & M. Eailroad. Commissioner Claek. Who threw the grain out of the car ? Mr. Caee. The owner of the grain was in my office, and he stated the railroad company did. Commissioner Clark. Do you know why it was done ? Mr. Caee. Because he had taken this car and put his grain into it without permission from the agent. He felt he had a certain right to his share of the cars, and they had some quarrel, and I think he finally cabbaged a car. GKAIN ELEVATOR INVESTIGATION. 35 Commissioner Claek. Do you mean to say that the car was there forty days before he cabbaged it, or afterwards? Mr. Care. Afterwards. They wanted him to take that grain out, and he wouldn't do it. Commissioner Clakk. When did that occur. Mr. Cark. I should judge that was within the last two or three years. He was in my office. I have written to the Interstate Commerce Commission in regard to these matters. I have written to Mr. Eoosevelt. I have written to Mr. Cortelyou, the Chairman of the National Committee, and I have written to General Knox. Commissioner Clark. Do you know the name of this man ? Mr. Carr. Yes, sir ; Mr. Watke. I do not just remember what his initials are. I think his name is Robert Watke. I was referred by your Adjutant-General in Washington to the Adjutant-General in Nebraska, and I wrote to him about this case and never heard anything about it. Mr. Marble. You mean Attorney-General? Mr. Care. Yes, sir; Attorney-General. And when it was traced down I was informed that they couldn't expect anything from down there, because his relatives were in the service of the railroad. Commissioner Prouty. At the present time, Mr. Carr, do you think the railroads are discriminating in this same way by refusing to fur- nish cars to the farmer? Mr. Care. They do not to my face. When I go there the officers are very polite and nice about it — ^most of them. There are a few excep- tions, like I cited there. Commissioner Peouty. Now, the Commission would be glad if you hear of any specific case of that sort, to have you report it to the Com- mission at Washington. Mr. Caee. That is what I have had from them so many times. Commissioner Peouty. Well, but until now we have had very little power to act. This new law went into effect on the 28th day of Aug- ust. Now, if you have a specific case of the sort you have referred to here, we would be very glad to have you send it to the Commission. I do not know what we can do about it now, but we will look into it and investigate it and see what can be done. Mr. Carr. I will be very glad to do it, and I hope the Commission have the power now which they apparently did not possess formerly. Commissioner Peouty. I am not sure that we have it now, but we would look into the instance anyhow and investigate it. I think that is all. (Witness excused.) Mr. Maeble. We can adjourn now, if it suits the Commission. Commissioner Peouty. You have no other witnesses now ? Mr. Marble. The witnesses are weary with the morning's railroad journey and they would prefer to have a little rest first. Commissioner Peouty. We will take a recess until half past 1 o'clock. At 12.15 the Commission took a recess until 1.30 p. m. 36 GBAIN ELEVATOR INVESTIGATION. after recess. 1.30 o'clock p. M. Commissioner Prottty. Are you ready to call a witness, Mr. Mar- ble? Mr. Marble. I will call ISilr. McCreery. J. A. McCreery, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside? Mr. McCreery. At Mason City, 111. Mr. Marble. What is your business ? Mr. McCreery. Manager of the Farmers' Grain and Coal Company of Mason City ; also secretary of the Farmers' Grain Dealers Associa- tion. Mr. Marble. Is the Farmers' Grain Dealers Association a coopera- tive institution ? / Mr. McCreery. It is. Mr. Marble. Owned by whom ? Mr. McCreery. By about ninety farmers. Mr. Marble. Kesident near that place ? Mr. McCreery. Yes, sir. Mr. Marble. How long has it been organized ? Mr. McCreery. It was organized April, 1899. Mr. Marble. Have you been with it since its organization ? , Mr. McCreery. I have. . . Mr. Marble. Were you in the grain business before ? Mr. McCreery. I was not. Mr. Marble. Were you familiar with it before that ? Mr. McCreery. No, sir. Mr. Marble. What prompted the organization of that Farmers' Grain Dealers Association? Mr. McCreery. The belief by the farmers that they were not getting what they should get for their grain. They felt that they were not getting just prices. Mr. Marble. What has been their experience since organizing that concern ? Mr. McCreery. It has been very satisfactory in regard to prices. Mr. Marble. Were they getting less at Mason City than was paid at other places before the organization of this farmers' elevator ? Mr. McCreery. They were. Mr. Marble. Do they get more or less now ? Mr. McCreery. More. Mr. Marble. Has your concern operated at a loss or profit to the stockholders ? Mr. McCreery. At a profit. Mr. Marble. Does it hire labor or depend on voluntary labor ? Mr. McCreery. It hires its labor. Mr. Marble. It operates as a commercial institution ? Mr. McCreery. Yes, sir. Mr. Marble. Have you had any difficulty in finding a market for grain bought by you? Mr. McCreery. We have. Mr. Marble. What difficulty, and with whom ? GRAIN ELEVATOR INVESTIGATION". 37 Mr. McCreery. When we first began we did not experience any difficulty, at least any to speak of, if any; but about two years, or such a matter, after the organization, we began to find it very difficult to market grain. Concerns that we had been doing a pleasant busi- ness with prior to that time refused to handle any of our shipments and we were at a loss to know where to ship grain that we had bought. We received a number of letters from commission firms, etc., and track men, stating that they would have to discontinue the accounts, and of course, we would be compelled to switch the accounts to another firm and possibly ship one or three or four cars probably to the firm, and we would get practically the same sort of a letter from that firm, and we were simply forced to switch from one firm to another, en- deavoring to dispose of the grain we had on hand. This state of affairs continued quite a while. Mr. Marble. Did this commission firm that refused to handle your grain tell you why they would not handle it ? Mr. McCreery. Yes, they did ; in a way. Mr. Marble. I will show you this book [handing book to witness] " Orders and Opinions of the Railroad and Warehouse Commission of Illinois for the year 1903." Have you these letters that were received by you at that time [referring to book] ? Mr. McCreery. They are on file at Springfield. Mr. Marble. In a case of yours? Mr. McCreery. In a case of our competitor against the Illinois Central Railroad. These letters were used in that case. Mr. Marble. Have you seen a copy of this publication [referring to book already produced] ? Mr. McCreery. Yes, sir. Mr. Marble. Are these letters correctly copied here? Mr. McCreery. To the best of my knowledge they are. Mr. Marble. It is your opinion that they are correct ? Mr. McCreery. Yes, sir. Mr. Marble. They go back to 1902. They are from firms that refused to handle the grain. I will read one or two, but not all of them, to establish the course of business: Chicago, III., November 22, 1902. Fabmers' Geain and Coal Company, Mason City, III. Deab Sirs : For some time past we have been considering the advisability of asking you to change your account to some other house. As you l^now, we are dependent upon the country grain shippers for a living, and in times past have operated country elevators ourselves. We have, therefore, decided not to solicit ,or handle any grain except from the regular country grain shippers. Hence, we have come to the conclusion that, although our past business has beep satisfac- tory, it is to our financial advantage to have you transfer your account to some other house. We will, therefore, collect for all the grain we have sold for you and get account sales to you just as soon as possible. Yours, very truly, Nash, W. & Co., Baker. Chicago, III., December 1, 1902. Farmers' Grain and Elevator Company, Mason City, III. Gentlemen : Our representative, Mr. White, has reported having had a very pleasant visit with you. In reply to your inquiry whether we would take your account will say, that after considering the matter very carefully we have come to the conclusion that if you will join the Illinois Grain Dealers' Association 38 GRAIN ELEVATOR INVESTIGATION. (which we are satisfied will be to your interest as well as ours) we will be pleased to take your account and handle your shipments to your best advantage. Are confident that if you join the association and worli in harmony with your competitors that the ill-feeling now existing will not be so bitter. Have written Mr. Mowry, secretary of the association, the stand we have taken and believe the sooner you send him your application the better it will be for all concerned. As to the action of to-day's markets, we will refer you to inclosed market letter and price current. Hoping to hear in the near future that you have joined our ranks, we remain. Tours, truly, H. IIemmelgaen & Co. Now, did these firms cease receiving shipments from you? Mr. McCreery. They did. Mr. Marble. Have they since received shipments from you ? Mr. McCkeeey. They have not. Mr. Marble. Do you know whether or not they are now willing to receive shipments from you ? Mr. McCreery. Well, some of these firms, I think, possibly would be willing now to receive shipments and some of them would not. Mr. Marble. Now, I will show you this letter, which is a copy, and will ask if you saw the original [handing letter to witness]. Mr. McCreery. Yes, sir. Mr. Marble. Is that a correct copy ? Mr. McCreery. That is a correct copy. Mr. Marble. I will read it. Hammond, Ind., January 11, 1905. J. N. WooLiscEOPT, Cincinnati, Ohio. Deab Sib : This in answer to your valued letter 10th. We are still receiving more grain from the West than we are able to place East to advantage. As long as this condition continues there will- be no inducement for us to buy grain from you for direct shipment. We have paid your draft to-day on ear of yellow corn shipped from Shirley, 111. We note the shippers are the Shirley Farmers' Elevator Company. We have repeatedly refused to buy grain from these people, for the reason that we have a very large trade among regular dealers in Illinois, and we prefer their friendship to the business of a handful of farmers' concerns, and it seems to be necessary to make a choice. We will, of course, handle the business contracted through you, but we would not buy any grain of these people if we knew it, for the reasons mentioned. Just as quick as conditions change we will be pleased to keep our prices before you. Yours, very truly, Hammond Elevator Company. These letters [producing two other letters] relate to a transaction with another firm ? Mr. McCreery. Yes, sir. Mr. Marble. These letters came to you as secretary of the Farmers' Grain Dealers Association? Mr. McCreery. Yes, sir. Mr. Marble (reading from one of these letters). This is "Ham- mond Elevator Company (Incorporated), Hammond, Ind., June 25 1904." ' J. A. McCreery, Secretary Farmers' Grain Dealers Association, Mason City, 111. Dear Sir: This in answer to your valued letter 24th, and we thank you for the information conveyed relative to the Kempton Farmers' Elevator Com- pany and the Longview Grf in Company. What business we have transacted with these concerns has been highly satisfactory to us and we consider them good business people and perfectly responsible. We do not remember of writing the Kempton Elevator Company that we did not consider their financial standing GEAIN ELEVATOR INVESTIGATION. 39 good, as such is not the case. We believe we did write them that our past experience with farmers' organizatons has not been satisfactory, and that we found as a general proposition that it is almost impossible to arrive at the financial strength of concerns on account of there being so many divided inter- ests. To make a long story short, we have been handling shipments from several hundred so-called regular dealers who seem to desire to confine their shipments to receivers who do not handle this farmers' business, and as a business proposition we do not care to sacrifice our established business by handling shipments from farmers' concerns. We recognize the fact that people who raise the grain have the right to market it and we are only sorry that we can not see our way clear to work with you freely, and we trust conditions will shape themselves a little later on so that we will be able to do so, har- moniously with all parties interested. Yours, very truly, Hammond Elevator Company. C. W. Jewell, Manager. Mr. Marble (producing the other letter). This is another letter from the Hammond Elevator Company, dated " Hammond, Ind., AprM 4, 1904." Sam a. Bhown, Manager Longview Grain Co., Longview, III. Deab Sir : This in answer to your valued letter 2d instant. We are sorry that we can not see our way clear to handle this farmer-elevator business. What business we have had with you has been wholly satisfactory to us, but the fact is we are handling shipments from several hundred members of the Illinois Grain Dealers' Association and you will appreciate the fact that it would not be good business for us to exchange this business for the business of a half dozen farmer-elevator concerns. Yours, very truly, Hammond Elevator Co. C. W. Jewell, Manager. (The three foregoing letters are marked " Exhibits 1, 2, and 3 to Mr. McCreery's testimony.") Mr. Marble. Did these otTier farmer elevators have the same experience you did in regard to shipments to terminaL markets? Mr. McCreery. I can not say every one did. I know a great many of them did, as you will see by these letters you have read. The Longview and Kempton and others I could mention, the Easton and numbers of them, experienced the same difficulty. I do not know whether they all did; Mr. Marble. Let me ask, at your town, what kind of competition have you ? Have you worked in harmony with the other elevator ? Mr. McCreery. We have not. Mr. Marble. Has any attempt been made to get you to pay the same price they did — any proposals of that sort ? Mr. McCreery. No; there has not been any particular proposal of that kind. Possibly such remarks as this have been made, that we ought to buy grain and make money or we ought to be able to get together, or something of that kind. No particular proposition. Mr. Marble. How have the railroads treated you in the matter of cars for your grain ? Mr. McCreery. The railroads have treated us very nicely. Mr. Marble. You have nothing to complain of? Mr. McCreery. No. Of course, there are times we do not get all the cars we want, but we have no particular complaint. I think we are as well treated as any one in regard to cars. Mr. Marble. Then, all you have to complain of is the attempt to keep commission merchants from recei^ving your grain? 40 GRAIN ELEVATOR INVESTIGATION. Mr. McCeeery. That and the fact that we are overbid a great many times by a competitor while at the same time, in the same territory, by the same party, prices will be lower at another station. They will be higher at our station than at a nearby station, all by the same party. Mr. Mahble. Let me understand. You mean there is a line ele- vator at your town owned by a company that also has elevators at other points? Mr. McCeeeey. Yes, sir. Mr. Maeble. And that line elevator bids differently at your town than at other towns? Mr. McCreeey. Yes, sir. Mr. Maeble. How much more? Mr. McCeeeey. Three to six cents more at our station. Mr. Marble. Does that allow you to make any money ? Mr. McCeeeey. It does not. Mr. Marble. What do you do when that takes place ? Mr. McCreery. Sometimes we handle the grain at a loss, and at other times let it go to the other party. Mr. Maeble. Do you have a penalty clause ? Mr. McCeeery. We have not. Our organization is composed of, I think, about 90 stockholders who own the stock and put up the money to build the plant. There is no' penalty and they are free to sell wherever they see fit, and we are overbid most of the time, in fact, by parties, as I stated, who own elevators at other stations, and at those other stations the price is 3 to 6 cents a bushel lower than at our place. Mr. Maeble. Have you ever had any statement of the policy that dictates that sort of bidding at your town on the part of your com- petitor ? Mr. McCeeeey. No, sir ; I do not think so. Mr. Maeble. Have you observed that sort of competition at other points ? Mr. McCeeery. Yes, sir. Mr. Marble. Bidding higher where the independent buyer is ? Mr. McCeeery. Yes, sir. Mr. Marble. Than where there is no independent ? Mr. McCeeeey. Yes, sir ; 2 to 6 cents. Mr. Marble. You have about 90 farmers interested in your ele- vator ? Mr. McCeeeey. Yes, sir. Mr. Marble. So, bidding up the grain is to their financial benefit, is it not? Mr. McCreeey. Yes, sir ; as long as they can continue in business, but of course no organization can continue in business and meet such competition without there is some finance comes from somewhere to sustain it. You understand what I mean ? Mr. Marble. I understand. Have you known of cases where such competition as this has resulted in securing a monopoly of the market ? Mr. McCreery. Yes, sir. Mr. Maeble. Did the price drop ? Mr. McCeeeey. Yes, sir. Mr. Maeble. How low did it drop compared with other places ? Mr. McCeeeey. Three to four or five cents. Mr. Marble. Did something occur at New Holland, near you ? GRAIN ELEVATOR INVESTIGATION. 41 Mr. McCeeeey. Yes, sir; it is the station east of us. The same thing existed there. Prices were kept so high there that the indepen- dent farmer company was forced out of business, forced into the hands of receivers and the elevator sold. When the elevator was closed up, the price immediately dropped, I think, about three cents. I am not positive about that, but at least 3 cents below the price at our town and continued so. Mr. Maeble. Can you make an estimate of the nimiber of towns where grain is marketed at farmer elevators ? Mr. McCeeeey. About 150. Mr. Maeble. You have 150 towns where there are elevators? Mr. McCeeeey. Yes, sir. Mr. Maeble. What is the situation in the State in regard to points where there are no farmer elevators ; are you familiar with that ? Mr. McCeeeey. No, sir ; I am not. Mr. Maeble. You can not say whether there are any points in the possession of a monopoly ? Mr. McCeeeey. How is that? Mr. Marble. Can you say whether there are any points in the State in the possession of a grain dealers' monopoly that dictates prices ? Mr. McCeeeey. I could not name any particular case. I presume there are a number of them, but I could not name a particular one. Mr. Maeble. Would you say the farmers' elevators in the State are generally prosperous or unprosperous ? Mr. McCeeeey. I would say they are generally prosperous, taking into consideration the antagonism there is against them. You under- stand what I mean, that with what they have to contend with, the fight that is being made -against them, I would say they are fairly prosperous. Mr. Maeble. Who is this competitor of yours that pays more in your town than in the near-by towns ? Mr. McCeeeey. D. H. Curry & Co. Mr. Maeble. How many elevators has he ; do you know ? Mr. McCeeeey. He has at the present time — well, just down to two points outside of Mason City. He had three or four — three out- side of Mason City, but I think he has two now. Mr. Maeble. Do you know whether he bears the expense of this kind of competition or is it borne for him by the association ? Mr. McCeeeey. I do not know. Mr. Maeble. Have these farmers' elevators made a little money in spite of this sort of competition ? Mr. McCeeeey. Well, some of them have and some have not. Mr. Maeble. I think that is all. Mr. McCeeeey. If I am allowed to state, the farmers' companies experience a good deal of difficulty in securing bids for their grain to-day. It seems to be, where they are bid, it is done under cover or something of that kind. It seems to be hard for them to get an open market, to get a free and unhampered market. Commissioner Claek. Is that true now ? Mr. McCeeeey. It is. Commissioner Lane. How many farmers' elevators were there five years ago? Mr. McCeeeey. Five years ago ? 42 GRAIN ELEVATOR INVESTIGATION. Commissioner Lane. Yes, sir. Mr. McCeeery. I do not presume there were over, possibly, 15. Commissioner Lane. And there are nearly 150 now ? Mr. McCreeey. Yes, sir. Mr. Lane. Those farmer elevators are able to sell their grain some- where ? Mr. McCeeeey. Yes, sir ; I think they are all able to sell it some- where ; but as I stated, it is hard to get bids for it. Commissioner Lane. Suppose more farmer elevators were put m, would they be able to sell their grain ? Mr. McCeeeey. I can not say as to that ; I do not know how lon^ those that are in will be able to sell their grain. I could not say as to that. I suppose they would experience the same treatment and diffi- culty as those who are now in experience. Commissioner Lane. Are your people ever asked to joiii the grain dealers' association? Mr. McCreery. We are not. Mr. Lane. Suppose you made application to them to join. Has anybody ever made application to. them to join among the farmers' elevators ? Mr. McCeeeey. I think there have been probably two or three who joined. Commissioner Lane. Who joined? Mr. McCeeeey. Yes, sir. Commissioner Lane. What difference did that make in the rate the farmer got for his wheat ; any ? Mr. McCreery. I am not. able to say what difference it did make, but I would judge it would make a difference, as I understand the farmer company would be supposed to fix the price with the com- petitor of that town. Commissioner Lane. And that would be higher or lower than the price he would get if he stood out alone ? Mr. McCreery. It would be lower. Commissioner Lane. Then it would not be to the interest of the farmers that constitute the company to join the Grain Dealers Asso- ciation ? _ Mr. McCreery. It would not be, so far as price was concerned. Of course, as I stated before, if the competition and the hardships keep up, so that the company will eventually have to go out of busi- ness and go into the hands of some private man, the question would be hard to answer which would be the best financially to the company in the long run. Commissioner Lane. Now, you have had system enough and busi- ness sense enough to build and carry on 150 elevators. Can not that system be extended so that here in Chicago you will have brokers who will handle that wheat for you ? Mr. McCeeery. Oh, there are men who will handle it here in Chicago and at other points, so far as that is concerned, and then there are points where it is nearly impossible to get it handled, and some very good markets. Chicago, as you understand, at certain seasons is the logical market and there are other times for particular orders that not much is shipped to Chicago, because it is not the best market. Commissioner Lane. What is the best market, then? Mr. McCeeeey. Well, they differ; sometimes Memphis is a very GKAIN ELEVATOR INVESTIGATION. 43 attractive market for certain shippers; sometimes Nashville; some- times we find New Orleans a good market, and sometimes we find St. Louis a good market. Commissioner Lane. What I am getting at is this: This inquiry should lead to something practical that would be of aid to the farmer in selling his grain. Mr. McCkeery.i Yes, sir. Commissioner Lane. Is there machinery you can devise by taking the initiative by which the objections raised to the present competitive system, the monopoly system, we will say, can be avoided and by which you will be able to market your grain in competition with the Grain Dealers' Association by the establishment of agencies in this and other cities, always assuming that the railroad companies do not discriminate ? Mr. McCeeeey. Well, I could not answer that. That would have to be tried. It would be quite an undertaking for us to establish — as I understand Avhat you mean — to establish brokers of our own, as we might say, in those different markets. Of course, that would be quite a task and quite an expense. These men who are already in the markets and own the memberships, of course, are better prepared; are already located to handle the business. We would have to go to work and do the same thing they have done. We would have to buy mem- berships and establish agents, and so forth, which would be quite an undertaking' at the present time. Commissioner Lane. The railroads do not discriminate against farmers' elevators now, do they ? Mr. McCeeeey. I think they do at some points. Commissioner Lane. Where do they? Mr. McCreery. I can not name any particular place, but I know it seems to have been very hard at a number of places to get a site for the erection of one of these independent houses. Commissioner Lane. Do the railroads assume that they have the right to decide whether there is sufficient elevator capacity there already ? Mr. McCeeeey. Yes, sir. Commissioner Lane. That is the reason they give you for not per- mitting you to build an elevator? Mr. McCeeery. That is the principal one. Commissioner Lane. Do you know any case in which application has been made and that application has been rejected by the railroad on that ground ? Mr. McCreery. I can not call to mind any right now, but I can fur- nish a number of them. Commissioner Lane. I would like to have them. Mr. McCreery. Where they were compelled to buy land adjacent to the railroad and build their own switch. The railroad absolutely refused to allow them to erect on their right of way. They were com- pelled to buy land adjacent to the right of way and pay for the switch, which cost them several hundred dollars. One recent case is Delavan. Mr. Marble. How about Hersher? Mr. McCreery. Yes ; at Hersher they have not succeeded in getting a switch yet. Commissioner Lane. AVhat railroad is that on? 44 GRAIN ELEVATOR INVESTIGATION. Mr. McCeeery. The Illinois Central. Commissioner Lane. Is there a farmers' company there; I mean is there a company organized? Mr. McCeeery. Yes. I will not say whether it is organized or not. If it is not organized it is in process of organization and would be organized—in fact, I think it is organized. Commissioner Lane. Do you know that demand has been made on the company? Mr. McCreery. I do. Commissioner Lane. And know it has not been acceded to ? Mr. McCreery. Yes, sir. I have written a letter myself, so I know the demand has been made. Commissioner Lane. You will give me the names of cases of that kind? Mr. McCeeery. Yes, sir; I will furnish them. Commissioner Lane. Outside the elevator situation and the rail- road discrimination against farmer elevators, is there discrimination against the farmer himself in places where there is no elevator, or where the farmer wishes to load his wheat into the car itself? Mr. McCeeeey. Well, I am not in a position to say as to that, but T presume there is; but I would not state positively that there is or is not. We are particularly interested in the elevators. We have the elevators — not scoop-shoveling into the car. But I presume there would be some discrimination. I know there would be with commis- sion firms. Commissioner Lane. You have never known of any cases of dis- crimination in favor of the farmers' elevators against the scoop-shovel man, have you? Mr. McCeeeey. How is that ? Commissioner Lane. I say you have never known of the railroads discriminating in favor of the farmers' elevators against the scoop- shovel men? Mr. McCeeery. No ; I do not Jknow of any case of that kind. At the present time we are shut out of Memphis, or practically so. We can not get anything handled into Memphis. We are in possession of some letters that state the reason. Memphis is a very good market at certain times of the year for certain grains. Commissioner Lane. What is the reason you are shut out ? Mr. McCreery. The letters we are in possession of seem to set forth the reason that because we are not members of the Illinois Grain Dealers' Association. Commissioner Lane. The railroad companies give that answer ? Mr. McCreery. No. Commissioner Lane. Who does give that answer ? Mr. McCreery. The commission men. They refuse to buy the grain because we are not members of the Illinois Grain Dealers' As- sociation. Mr. Marble. I have the letters here and will introduce them sub- sequently. Mr. McCeeery. I called up a certain trackman a few days ago and tried to sell him some corn to go to Memphis. It was corn or oats, I do not remember which. I said to him : " I see that so-and-so has bid so much for corn." He said: "Yes; but I will tell you. They GBAIN ELEVATOR INVESTIGATION. 45 will not handle your stuff." This particular broker was at Cham- paign — a man we sell considerable grain to, to go to other firms. Commissioner Clark. Do the brokers here in Chicago have an established commission for handling grain ? Mr McCeeeey. An established charge you mean? Commissioner Claek. Yes, sir. Mr. McCeeeey. I think so. Commissioner Claek. Is that different in regard to the farmers elevator grain from what it is for others? Mr. McCeeeey. I think not. Commissioner Clark. What is the rate ? Mr. McCeeeey. That rate, I think, on wheat is a cent a bushel; corn and oats, and probably rye, is one-half a cent. I do not know what it is on barley and flax, because in our part of the country we do not have that. Commissioner Peotjty. Have you any reason to suppose that the farmers' elevator company does not finally get as .good a price for its grain as the line elevator ? Mr. McCeeeey. How is that ? Commissioner Peouty. Have you any reason to suppose that your elevator at Mason City does not receive as good a price at the same point as your competitor ? Mr. McCeeery. Well, I have not any evidence of that. I have my own opinion. Commissioner Peouty. What is your opinion ? Mr. McCeeeey. My opinion is that in a great many cases they do not. Commissioner Peouty. Why do they not? Mr. McCeeeey. Well, there might be several reasons for that. The man who owns a great many elevators of his own possibly does. his own brokerage and saves that expense, which would have to come out of the private shipper or independent shipper, and another reason is, that in a number of the markets we do not seem to be given a free and open market. While we succeed in getting a bid in a great many cases it is a difficult matter to get it, and we feel this way, that if a man does not want to buy from us, he possibly is not giving us as good a price as if he wanted our business. Commissioner Peouty. Is your price at Mason City influenced by the price your competitor there pays ? Mr. McCeeeey. How is that ? Commissioner Peouty. Is the price you pay the farmer at Mason City influenced by the. price your competitor pays the farmer ? Mr. McCeeeey. Do I understand you to mean that it would influ- ence what we would pay ? Commissioner Peouty. Yes, sir. Mr. McCeeeey. Certainly. Commissioner Peouty. His price affects your price ? Mr. McCeeary. Certainly. Commissioner Peouty. So, if he pays a little more, you advance your price and pay a little more ? Mr. McCeeeey. It would be like this : If a customer came into our office and we wanted to buy his grain, if we were offering him within a cent or half a cent of what we could get, and the competitor offered 46 GRAIN ELEVATOR INVESTIGATIOK. a half cent more than we offered, it would be up to us to meet that competition or lose the business. Commissioner Peoutt. And you do meet the competition ? Mr. McCreeky. Not always. Sometimes we do and sometimes we do not. Commissioner Prouty. The price you pay in a measure determines the price your competitors must pav ? Mr. McCreery. How is that? Commissioner Prouty. I saj', the price you pay determines the price your competitors must pay? Mr. McCreery. Certainly. Commissioner Prouty. Does your competitor buy more than half the grain? Mr. McCreery. I could not say as to that. Commissioner Prouty. Do you think he pays a higher price than he is obliged to in order to get his part of the grain? Mr. McCreery. I could not say as to that. Commissioner. Prouty. That is all. Mr. Marble. One question. Are these farmers' elevators voluntary organizations or corporations? Mr. McCreery. Corporations. Mr. Marble. They are organized as corporations ? Mr. McCreery. Yes, sir. Commissioner Prouty. Could you not put into the case, Mr. Mar- ble, the articles of some of these concerns ? Perhaps you did ? Mr. Marble. No ; I will ask Mr. McCreery if he can furnish me the articles and send them to me? Mr. McCreery. Yes, sir. Mr. Marble. And the by-laws — the constitution and by-laws. Mr. McCreery. The by-laws, I do not presume are all alike. Mr. Marble. Send us a typical one. Mr. McCreery. I can send you a copy of the by-laws of our own and possibly some others. Of course, they are not all alike. Mr. Marble. That will be sufficient. Commissioner Prouty. .That is all. The witness was excused. Mr. Marble. I have one more witness from out of the city^ Mr. Eoss. John Ross, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside? Mr. Eoss. At Easton, 111. Mr. Marble. What is your business? Mr. Ross. Manager of the Easton Farmers' Grain Company. Mr. Marble. How long have you been manager of that concern? Mr. Ross. Four years. Mr. Marble. You operate an elevator there? Mr. Ross. Yes, sir. Mr. Marble. You have competitors at that point? Mr. Ross. Yes, sir. Mr. Marble. Who are your competitors? GEAIN ELEVATOB INVESTIGATION. 47 Mr. Eoss. McFaddeu & Co., of Savannah, and Turner, Hudnut & Co. Mr. ]\Iarble. Tlioy operate an elevator? Mr. Ross. Yes, sir. Mr. IMakble. Why was the farmers' elevator built at Easton? Sir. Ross. 1 suppose because of the low prices for grain. Mr. Makui.e. AVere they getting less than other places? ]\Ir. Ross. Yes, sir. Mr. Makble. How have the prices ranged since you built the elevator? Mr. Ross. From 3 to 5 cents higher. Mr. Marblk. You are comparing the market on the same day? Mr. Ross. Yes, sir. Mr. Marble. I will ask if you had difficulty in marketing the grain you bought? Mr. Ross. Yes, sir; several times. Mr. Marble. (Exhibiting bunch of lettei-s.) These are all letters you have handed me. "Were these letters received by your farmers' grain company '■ Mr. Ross. I'^es, sir. Mr. Marble. All of them? Mr. Ross. All of them. I would like to state that at the time they sliut us off we had about 20,000 bushels of corn bought, and Memphis was the best market at that time. They shut us out before we got rid of the corn. Mr. Marble. Shall I read the letters? Commissioner ruoiTTY. You might read a typical one. Are they all from Slemphis? Mr. JMarble. Different firms in Memphis. (Reading letter.) C, W. Carver vt Co., Flotjr and Grain Brokers, A'o. 3i5 Front Street, Memphis, Tenn., June 10, 1904. Easton F.\rmkbs' Grain Company. Easton,' lU. Gknti,kmen : The grain dealers of Memphis have been notified that you are not members of the Illinois Grain Dealers' Association and have notified us this day that thoy can not buy grain from us shipped by you. This, of course, cuts out our sollins srain for yon unless you decide to join the Grain Dealers' Association of Illinois. We regret exceedingly that such a turn has been made, but, of course, wo oun not afford to be boycotted l\v the wholesale grain dealers of tills city. Our business relations have certainly been very pleasant, and It now looks as if things were just shaping themselves to increase your business in this city. Hoping you will understand fully the position in which we are placed, we are, Yours, very respectfully, C. W. Carver & Co. Commissioner Prouty. The other letters are all of the same im- port ? Mr. Marble. Yes, sir. Commissioner Proxtty. You say you can not find any firm to do business with ? Mr. Ross. No, sir. Commissioner Protjty. You coidd find no firm in the whole city of Memphis to do business with ? Mr. Ross. No, sir. 48 GRAIN ELEVATOR HTVESTIGATION. Commissioner Protjtt. Do any of these letters show who had written the Memphis men to the effect that you did not belong to the Illinois Grain Dealers' Association ? Mr. Eoss. I tried to get them to write, but they would not do it. They would not give that part away. Commissioner PRorTX. That is all. Mr. Marble. There is another bundle of letters of older date than those read this morning. Commissioner Protjtt. From where? Mr. Marble. From Chicago. Commissioner Prouty. You might let him identify them and put them into the case. Mr. Marble. (Producing another bundle of letters.) These are originals received by you in your business ? Mr. Ross. Yes, sir. Mr. Marble. Jn the ordinary business — aU of them? Mr. Ross. All of them ; yes, sir. (The bunch of letters from Memphis are marked " Exhibit Xo. 1 to Mr. Ross's testimony," and the bunch of letters from Chicago are marked " Exhibit No. 2 to Mr. Ross's testimony." ) Commissioner Lane. I would like to ask a question: Has there been any change in the situation since June, 1904. at Memphis? Mr. Ross. I have been selling a little grain there since. Commissioner Lane. I notice in a letter of Jxme 14, 1904, this statement : Furthermore, there is not a dealer In Memphis who would buy grain from you If they knew you were not members of this association. Has that situation changed there? Mr. Ross. Not that I know of ; no, sir. Commissioner Lane. All grain that you have been selling in Mem- phis, you have been selling without the knowledge of the parties that you were not members of the association? Mr. Ross. Yes, sir. Commissioner Lane. The boycott still holds good against you? Mr. Ross. I have no doubt it does. Commissioner Lane. Is that true of any other cities you know of? Mr. Ross. I do not know of any other ; no, sir ; except our place. Mr. Marble. How do the railroads treat your farmers' elevators? Mr. Ross. Well, fairly well. Mr. Marble. As well as your competitors? Mr. Ross. With very few exceptions; yes, sir. Mr. M4RBLE. That is aU. The witness was excused. John J. Stream, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Stream, you reside in Chicago? Mr. Stream. Yes, sir. Mr. Marble. What is your business? Mr. Stream. Grain business. Mr. Marble. What conipany are you connected with? Mr. Stream. J. C. Shaffer & Co. and the South Chicago Elevator Company, GBAIN ELEVATOR INVESTIGATION. 49 Mr. Marble. You have public houses in South Chicago ? Mr. Stream. Yes, sir. Mr. Marble. What public houses are they ? Mr. Stream. Two elevators; one called South Chicago C and the C Annex. Mr. Marble. Both public houses? Mr. Stream. Yes, sir. Mr. Marble. Have you private houses also? Mr. Stream. Yes, sir; South Chicago Elevator D. Mr. Marble. One private house? Mr. Stream. Yes, sir. Mr. Marble. Who operates those? Mr. Stream. The South Chicago Elevator Company. Mr. Marble. You are president of that company? Mr. Stream. Yes, sir. Mr. Marble. Who owns those houses? Mr. Stream. My information is the Eock Island Railroad. Mr. Marble. They are leased by your company? Mr. Stream. Yes, sir. Mr. Marble. How much rent do you pay ? Mr. Stream. I do not know. That is a matter Mr. Shaffer will have to explain. Mr. Marble. How long have they been leased from the company ? Mr. Stream. From the railroad company? Mr. Marbus. Yes, sir. Mr. Stream. That I do not know. Mr. Marble. This company was in existence before Mr. Counsel- man died, was it? Mr. Stream. Yes, sir. Mr. Marble. They did not have those elevators before ? Mr. Stream. The South Chicago Elevator Company operated them from the time they were constructed. Mr. Marble. You were not president before Mr. Counselman's death, were you? Mr. Stream. Yes, sir ; about a year. Mr. Marble. And you have continued to be under a changed man- agement since ? Mr. Stream. Yes, sir. Mr. Marble. That is the situation ? Mr. Stream. Yes, sir. Mr. Marble. Did Mr. Counselman own all the stock of this com- pany or a control? Mr. Stream. Practically all the stock. Mr. Marble. And after his death the ownership of the property passed from his estate to whom ? Mr. Stream. Mr. Shaffer. Mr. Marble. Then, what was done with the elevators ? Mr. Stream. The elevators, I think, were sold. I am quite sure they were sold by the executors to Mr. Shaffer. Mr. Marble. They sold the stock in the company to Mr. Shaffer? Mr. Stream. Yes, sir, and the elevators also. Mr. Marble. The stock carried the elevators, did it not ? S. Doc. 278, 59-2 4 50 GEAIN ELEVATOE INVESTIGATION. Mr. Stream. That is true, but I think for some purpose Mr. Shaffer had the elevators deeded over to him from the South Chicago Elevator Company. Mr. Marble. That would be done by whom — the board of directors ? Mr. Stream. No, the executors — well, the board of directors, under orders from the executors of the Counselman estate. Mr. Marble. Do you know what Mr. Shaffer paid for those' eleva- tors, what he paid to your company? Mr. Stream. Seven hundred thousand dollars cash. Mr. Marble. He did not keep those elevators in his possession. You say they are now the property of the Chicago, Rock Island and Pacific Road ? Mr. Stream. "Well, he had possession ; I do not know how long. Mr. Marble. Did he sell direct to the Chicago. Rock Island and Pacific? Mr. Stream. I think not. Mr. Marble. To whom did he sell ? Mr. Stream. The Chicago and Rock Island Elevator Company. Mr. Marble. That is another elevator corporation ? Mr. Stream. Another corporation. Mr. Marble. Do you know who owns the stock of that concern? Mr. Stream. I think Mr. Shaffer does. Mr. Marble. Mr. Shaffer having bought the Counselman stock, he bought the stock from one of his corporations and sold it to another ? Mr. Stream. He did not own the stock in the South Chicago ele- vator until long after the deeds had been passed to the property. Mr. Marble. He deeded the elevators before he bought the stock, which was already owned by the Chicago, Rock Island and Pacific Elevator Company? Mr. Stream. I can not give you the facts as to that. Mr. Marble. Do you know anything about the transaction between the Rock Island Elevator Company and the Rock Island Railroad ? Mr. Stream. No, sir. Mr. Mabrle. Do you know how much was paid Mr. Stream. I am not positive about that. Mr. Shaffer can give that information. Mr. Marble. What is the difference between a public elevator and a private elevator in the city of Chicago ? Mr. Stream. A public elevator in this State is licensed as a public house. In that house no cleaning or mixing can be done. The identity of the grain must be preserved. An operator of a public elevator can not own grain in his own house under the law of the State. Mr. Marble. You mix the grain of your customers, do you not ? Mr. Stream. Of the same grade. Mr. Marble. You mean that you can not mix grain of different grades to change the grade ? Mr. Stream. That is the idea. Mr. Marble. Where does the grain come from that goes into your public elevators — the bulk of it? Mr. Stream. The bulk of the grain is forced into the public ele- vators through our efforts. GBAIN ELEVATOB INVESTIGATION. 51 Mr. Makble. Into j^our public elevators? Mr. Stream. Yes, sir. Mr. Maebi-e. Out of your private elevators? Mr. Stream. Some but of private elevators and contract grades originally from the country. We are compelled to sell that before it goes into the public elevators. Mr. Marble. Explain what you mean by " forced " into the public elevators. Mr. Stream. We generally buy grain on basis of futures. The price of the future is established on the floor and we base the price of the cash on the futures, so when we send out our bids to the country any acceptance we get we sell for future delivery. When the grain comes in, if it grades we sell it out and buy back the future. If it does not grade, we put it into the cleaning house, and if we can ship it to better advantage we ship it without putting it into the public house. If we can not, we make it into contract grade and sell to a member of the board to go into a public house, immediately buying back our future. Mr. Marble. From the same man? Mr. Stream. As a rule. Mr. Marble. Do you sell to him at the current market price of cash grain that day ? Mr. Stream. We usually have to allow about one-eighth of a cent a bushel profit to the buyer. Mr. Marble. You select" this man to be the holder of the, grain in the house? Mr. Stream. Not necessarily. We sell the grain to Jones, for instance, at one-eighth of a cent under the current option. Take October corn. Say October corn is quoted at 45 cents. We are buy- ing corn, we calculate, that will make us a profit if we sell at 44J. We will go to Jones and say we will sell you 50,000 corn at 44| and then buy 50,000 October corn at 45 cents. Under the rules of our exchange that corn can be delivered to us, but we can not retain it. In other words, the first 50,000 October corn we sold when we bought the corn in the country may be settled against the October corn bought against the party we sell to to go to store. Mr. Marble. When you say the cash grain is worth 45 cents, does that mean that a man can go on the floor of the board of trade and sell at that price? Mr. Stream. The future ? Mr. Marble. No, the cash. Mr. Stream. There is always a market. Mr. Marble. Why do you sell grain worth 45 cents for 44| cents? Mr. Stream. We discount one-eighth of a cent of the earnings, because there is three-quarters of a cent elevation that follows the grain. If the grain remains in store the elevator interests earn the second storage after the first ten days. The first ten days carries a charge for loading and unloading. Then there is a storage charge. Mr. Marble. The one-eighth of a cent that you lose on the sale you earn back in elevator charges? Mr. Stream. We have to take that chance. If the grain remains in store we get it back. Mr. Marble. Would you sell grain twice to a man who took it one-eighth of a cent below the market and then took it out 'of store? 52 GKAIN EL.EVATOE INVESTIGATION. Mr. Stream. How is that? Mr. Marble. I say, would you sell grain twice to a man who took it one-eighth of a cent below the market and then took it out of store ? Mr. Stream. As a rule we sell grain to nonshippers. If we sell the October, it practically means that the man delivers it out on October sales. Mr. Marble. You so select a buyer that the chances are that the grain will remain in the house ? • Mr. Stream. Well, he delivers it out. Here is the operation: I buy 50,000 corn in the country. I immediately sell it, 50,000 October corn. I may sell it to 20 different parties. "When that corn comes in I find I can not ship it out to advantage and that it is more profitable to me to _put it into the public house. Under the law I can not own grain m the public house. I sell to somebody else at one-eighth of a cent under the October option. The party sells me October in return. When the grain gets into store he delivers it back to me on the October sale and I deliver it on the first 50,000 October sale I make. What becomes of that I do not know. It may fall into the hands of a shipper, and he may take it out in four hours, or it may fall into the hands of a man that carries it three or four months. If it does we get the storage. Mr. Marble. You make certain of getting the three-quarters of a cent that the grain carries when it goes into the house, do you not? Mr. Stream. The competition is so keen that the three-quarters of a cent is often lost entirely in the price. Mr. Marble. You mean that you use a portion of that to buy grain on? Mr. Stream. Yes, sir ; sometimes more. I have known this spring when elevator interests were buying wheat and they were discounting not only the three-quarters of a cent, but some of the storage. Mr. Marble. What elevators do you mean ? Mr. Stream. Every elevator. Mr. Marble. You mean public elevators ? Mr. Stream. Well, yes. Mr. Marble. You do not make these sales at one-eighth of a cent below the market openly, do you ? That is, you go to one buyer and sell to him? Mr. Stream. It does not make any difference to us ; we will sell to anybody. Mr. Marble. Suppose the broker buys at one-eighth of a cent below, and instead of ordering it into your house he orders it into some other house ? Do you insure that it goes into your house ? Mr. Stream. The purpose of buying the grain is to try and get it into the house. I could not sacrifice three-quarters of a cent a bushel and put it in somebody else's house. Mr. Marble. Are public elevator operators in the city engaged in the grain business ? Mr. Stream. Well, indirectly. The public elevators, as a rule, are operated by a corporiation. Mr. Marble. And the same interests are engaged in the grain busi- ness? Mr. Stream. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 53 Mr. Marble. Are the public elevator prbprietors really the great grain merchants of the city ? Take the interests that control the public elevators of the city, what portion of the grain trade of the city would you say they do ? Take Armour, Peavey, Bartlett-Frazier, etc., are they the great grain merchants of the city ? Mr. Stream. Yes, sir. Mr. Marble. Is there anybody not owning a public elevator that would rank with the public elevator operators as a grain man — a re- ceiver and shipper of grain ? I do not mean a speculator. Mr. Stream. No ; I would not say that there is any that would rank with an elevator, because they have not the facilities for storing. Mr. Marble. Would you say that the greatness of the elevator in- terests in the grain trade comes from the fact th^t the elevator charge is frequently used in the buying ? Mr. Stream. Yes, sir. Mr. Marble. That shows Mr. Stream. That shows that the elevator interests are having a hard time to get along. Mr. Marble. Being in the elevator business and the grain business, they are forced to lose one profit? Mr. Stream. Sometimes more than one profit. Mr. Marble. The man that does not own an elevator has not that profit to lose, and can not compete, of course ? Mr. Stream. Can not compete, no ; not very well. Mr. Marble. To whom do you make the bulk of these sales now below the market for the purpose of getting storage ? Mr. Stream. Well, we are doing some business with Chapin and sonie business with Gambrill ; we sold some grain to Booth and some to Kitson. We are not tied down to anybody. Mr. Marble. You are acquainted, of course, with the grain busi- ness in Chicago. You must be, in your business. Is this way of doing the business common to public-elevator men ? Mr. Stream. Yes, sir ; that is the only way they can do it. Mr. Marble. They are all forcing grain into their elevators by giving away part of the cash value and earning the storage charge ? Mr. Stream. If it remains in store. Mr. Marble. Making one profit instead of two profits ? Mr. Stream. That is it. Mr. Marble. When you buy a future, you buy a long-distance future, do you not, as far as possible ? Mr. Stream. When we buy a future? Mr. Marble. When you buy back. Mr. Stream. No, indeed; we generally buy the future we have originally sold or hedged. Mr. Marble. The future you hedged when you bought the grain in the country ? Mr. Stream. That is it ; yes, sir. Mr. Marble. In your public elevator at the present time is there any grain except grain you have forced in in this way? Mr. Stream. Is there any grain in. there ? Mr. Marble. Yes, sir. Mr. Stream. There is some; not much. Mr. Marble. What proportion of your grain in your elevator is there that you did not force in in this way ? 54 GBAIN ELEVATOR INVESTIGATION. Mr. Stream. I do not think there is thirty thousand bushels in the house. Mr. Marble. How much all told is there ? Mr. Stream. We have, I think, in the C Annex eighteen hundred thousand bushels. Mr. Marble. Some of that will not earn you the storage. Mr. Stream. That is true. Mr. Marble. What futures have you bought as a rule on that? You have sold that grain the way you have testified ? Mr. Stream. Well, it is future I had the original hedge -in. For instance, if I had a hedge in October, as I was making the contract grain before it went into store, I would make my sale and get the October back. Mr. Marble. Would you say that any particular future predomi- nates on that grain? Mr. Stream. I do not know. The grain is out of our hands. Mr. Marble. Did you buy any December against that cash grain? Mr. Stream. December; no, sir. Mr. Marble. Or any May ? Mr. Stream. No, sir. Mr. Marble. That would deliver it out shortly, would it not, if the futures are near? Mr.. Stream. You asked if we bought December. Mr. Marble. No ; the future you bought. Mr. Stream. I can not tell. We may buy to-day on the basis of the October and to-morrow we may buy on the basis of the December ; and we aim to buy back that same future when the grain is dis- posed of. Mr. Marble. I am requested to ask what sort of surety you have that the grain is going to stay in your elevator. — ^how are you going to keep it there and earn storage ? Mr. Stream. Well, as I explained, if it is delivered out we take the chance whether the receipt holder is going to move it out of store or not. Mr. Marble. Unless the broker should Mr. Stream. We moved a lot of corn into store this month or in September, probably 600,000 or 700,000 bushels, on which we dis- counted a portion of the first earnings. A lot of that moved out the first day. Some of it is still in store, earning second storage. It may be taken out this afternoon and may not be taken out for a month. It is that chance we are always taking in this business. That is how fine it is. Mr. Hill. May I ask the witness a question ? Commissioner Prouty. Yes, sir. Mr. Hill. How much cash grain are you holding in the elevator for these persons you speak of against which you have purchased a May future? Mr. Stream. I am not carrying any grain, Mr. Hill. I do not carry any grain in a public house. Mr. IIiLL. You do not carry any grain in a public house? Mr. Stream. No, sir ; not in my own public house. Mr. Hill. Assume that you are a warehouse man. You can put grain in your own house. How much of the cash grain in that house have you the May future bought against ? GBAIIT . ELEVATOB INVESTIGATION. 55 Mr. Stream. Bought against? Mr. Hill. Yes, sir. Mr. Stream. Mr. Hill, if I buy grain in the country and sell it for May, the price of the May, as a rule, is at a premium over the cash because of its distant future, and when the grain comes in we will sell it to Mr. Jones or whoever it may be on the basis of the May. We get back our May and it wipes the transaction off our books. Mr. Hill. Have you transacted any of that business in which the May future was a hedge ? Mr. Stream. No, sir. Mr. Hill. Have you any in which the December was a hedge ? Mr. Stream. Yes, I think I have. Mr. Hill. Then you have brought in the cash grain, put it into store, sold it to some person on the board of trade and bought from them an equal amount of the December future ? Mr. Stream. Yes, sir. Mr. Hjll. How much discount did you make on the December future ? Mr. Stream. A quarter of a cent a bushel under the December. Mr. Hill. That is, you discounted the current market one-quarter of a cent? Mr. Stream. No, not the current market. We discount the price under the December one-quarter of a cent. Mr. Hill. What do you mean by that ? Mr. Stream. If we buy the December back and sell cash we are dis- counting the December one-quarter of a cent. Mr. BDell. You sell the grain, not on the basis of cash, but on the basis of next December ? Mr. Stream. Sell at the December price less the charges and a quarter of a cent. Mr. Hill. They will have to keep that grain in your house until December before they get their money back ? Mr. Stream. They are earning a quarter of a cent. Mr. Hjll. They have to keep that grain in your house until next December before they can get their money back? Mr. Stream. Not necessarily. Mr. Hill. Why? Mr. Stream. They are the owners. Mr. Hill. They pay the December price ? Mr. Stream. Less the charges, as I stated. Mr. Hill. What are the charges? Mr. Stream. That depends on when you made the sale.. If you made the sale to-day, you would sell at the December price, less the charges to December 1 and a quarter of a cent. Mr. Hill. You say you have known of those transactions in May? Mr. Stream. Not m May. Mr. HiLi,. All in December. Now, if you deliver a l^rge quantity of wheat, say, to-day, and buy back the December future from the party to whom you deliver it, he pays you the December price less his per cent ? Mr. Stream. Less the charges to December. Mr. Shaffer. If your Honors please, I am Mr. Shaffer. Mr. Stream here is the manager of my business. We are here to answer all questions that the attorney for the board may ask and that the 56 GEAIN ELEVATOR INVESTIGATION. Commission may ask, but I would like to ask the Commission why a gentleman who is not interested in this, except as being a member of the board of trade, should have the right to ask my manager ques- tions about the management of my business. I confess that I am not a lawyer. I am a layman, but it does seem to me to be the most improper thing that this gentleman, evidently with some intent on his part of entangling Mr. Stream in some kind of business trans- action, is permitted to tangle up Mr. Stream in his evidence. I sub- mit that the attorney for the board has a perfect right to ask the wit- nes s any question^ but it does seem an injustice that this man, who is J th€£ga32jjQESJe-Jbe«¥dT-©f--tKadfe, should be permitted to come here "^ and entangle my employee in a mesh on a lot of questions that relate to the State of Illinois. . I am not a lawyer and have not brought any lawyer here, but I ask for justice and fairness on this thing. Commissioner Peouty. We are none of us lawj'ers so far as the conduct of this investigation is concerned. We merely want to get at the facts. My associates may have known, but I did not, who Mr. HiU was when he asked his first question. We simply want to get at the facts in this case, whatever they are. I have not learned the alphabet of it yet far enough to be able to read, but there seems to be some sort of claim that you are evading the law of Illinois by in fact warehousing your grain in a public warehouse. That seems to be the claim, as I understand. Mr. Shaffer. But, if the Chairman please, this gentleman con- stitutes himself the righteous exponent of the board of trade. The position I take is that he has no right to come and ask questions here. The attorney for the board can ask the questions, and if there is any- thing we have done that is wrong or that we are doing that is wrong, let it be exposed. Commissioner Lane. Would there be any objection if we should constitute him an associate counsel for the Commission ? Mr. Shaffer. If you want to do that, you can. He has no right to stand here as the sponsor for the board of trade of Illinois. Commissioner Lane. We have no objection if you ask the witnesses questions on cross-examination. Mr. Shaffer. If the Commission please, this gentleman will an- swer any question that is put to him, even though it be put by Mr. Hill, but I protest that Mr. Hill should not be permitted by this Commis- sion to be the one man from the board of trade that stands as sponsor for the dignity and honor of the board of trade. I am a member of the board of trade and have as keen a sense for the honor of the board of trade as Mr. Hill. Commissioner Peouty. The question Mr. Hill was asking appears to be in line with the question Mr. Marble asked. Mr. Marble did not seem to be able to get a satisfactory answer to the questions, and it seems that Mr. Hill, with his greater knowledge of these matters, might be able to do so. You may proceed, Mr. Hill, to ask another question, and if it seems improper we will excuse him from answer- ing it. _Mr. Hill. I have nothing more now. Commissioner Protjty. Mr. Stream, you say you buy 50,000 bushels of com in the country ? Mr. Stream. Yes, sir. Commissioner Peouty. Do you buy that for cash ? GEAIN ELEVATOR INVESTIGATION. 57 Mr. Stream.. Yes, sir. Commissioner Peouty. How do you fix the price you pay for that ? Mr. Stream. We take the conditions to-day. Corn for October delivery in the pit is selling at 44^ cents. That means contract corn No. 2 grade. We are in the shipping business. We have our brokers in the East, who keep us posted on the hour almost what the trade is paying for corn. If the trade is not paying enough for corn] or as much as we could realize by putting it into contract, we will sell it, as a hedge. If it grades contract, we sell to go on store. If it does not grade contract Commissioner Prouty. You have not answered my question. How do you fix the price in the country ? Mr. Stream. Basis of the October option. Commissioner Protjty. Here in Chicago? Mr. Stream. In Chicago. Commissioner Protjty. You subtract the freight rate and cost of purchase in the country and that determines the price you pay ? Mr. Stream. Yes, sir. Commissioner Peouty. You have paid so much for that corn and bought it on an October basis ? Mr. Stream. Yes, sir. Commissioner Prouty. You aim to do one of two things with that corn. Possibly you may bring it to Chicago and send it along east for sale there ? Mr. Stream. Yes, sir. Commissioner Prouty. Or, if the corn when it gets here is not suitable for that purpose, you desire to put it into an elevator ? Mr. Stream. Yes, sir. Commissioner Prouty. There are two kinds of elevators here ? Mr. Stream. Yes, sir. Commissioner Prouty. A public elevator and a private elevator? Mr. Stream. Yes, sir. Commissioner Prouty. You can store your own corn in a private elevator ? Mr. Stream. Yes, sir. Commissioner Prouty. Or in a public elevator? Mr. Stream. Yes, sir. Commissioner Peouty. Can you store anybody else's corn in a private house ? Mr. Steeam. Yes, sir. Commissioner Peouty. Can you store my corn in a private house? Mr. Steeam. Yes, sir ; that is a matter of private agreement. Commissioner Peouty. What is the object of making your elevator a public elevator ? Why don't you make it a private one, if you can store my corn and your corn and anybody's, and get, what you see fit? Mr. Steeam. You could not make deliverj'^ on the board of trade. Commissioner Prouty. Let me understand. You say you can not make delivery on the board of trade. You mean you must have a receipt from a public warehouse to make delivery on the board of trade? Mr. Stream. Yes, sir. Commissioner Prouty. So, the reason you have a public warehouse is to make delivery of a warehouse receipt ? Mr. Stream. That is the only way you can make delivery. 58 GRAIN ELEVATOR INVESTIGATIOIT. Commissioner Peotjty. You want to force this corn into a ware- house, and that must be a public warehouse ? Mr. Stream. Yes, sir. Commissioner Peouty. You accordingly sell^you bought it on the basis of cash in October ? Mr. Steeam. Yes, sir. Commissioner Peouty. You sell now some future, like a November future. How do you arrive at that price ? Mr. Steeam. On the November future? Commissioner Peouty. Yes, sir. Mr. Steeam. By the closing price, whatever it is selling at in the pit. Commissioner Peouty. You sell for one-eighth of a cent less than that? Mr. Stream. Yes; we sell cash to go to store at one-eighth of a cent less than that. Commissioner Peouty. You sell this 60,000 bushels of corn to some member of the board for one-eighth of a cent less than the November future? Mr. Steeam. Yes, sir. Commissioner Peouty. What is the evidence of that transaction? Mr. Steeam. Well, the object of that transaction Commissioner Peouty. But what is the evidence of it ? Mr. Steeam. The evidence of the sale? Commissioner Prouty. The evidence of the sale. Mr. Stream. We make a record of the sale, whoever we make the sale to, and in turn we buy from the buyer an equal amount of the October or November option, whichever we wish to buy back. Commissioner Peouty. You buy the same amount of the same option ? Mr. Steeam. Yes, sir. Commissioner Peouty. What is the evidence of his sale to you ? Mr., Steeam. His record of sale. He makes his purchase and the grain goes into store. The receipts are delivered to him and he pays for the grain. He delivers out on his October sales. Commissioner Prouty. You are the owner of that grain to start with ? Mr. Stream. Yes, sir. Commissioner Peouty. You sell it to him and deliver to him as an evidence of that sale public warehouse certificates, do you ? Mr. Steeam. I sell it to him to go to store. Commissioner Prouty. What does that mean? Mr. Stream. I sell it to him before it gets into the elevator. It must be sold him before it gets into the elevator. Commissioner Prouty. He has to put the grain into the elevator? Mr. Stream. Yes, sir. Commissioner Prouty. Does your trade with him specify the ele- vator into which that grain will go ? Mr. Stream. It is an understood fact. Commissioner Prouty. It is an understood fact that he will put that grain into your elevator ? Mr. Stream. Yes, sir. Commissioner Peouty. Tell me once more what it is he gets from you to show he has bought that grain ? GBAIN ELEVATOR INVESTIGATION. 59 Mr. Stream. He has the record of sale. We confirm those sales the usual way. Commissioner Peouty. At the same time you make the sale to him you buy back the grain from him ? Mr. Stream. Yes, sir. Commissioner Peouty. And buy back at one-eighth of a cent less ? Mr. Steeam. No, we buy the option back, and that option as a rule is one-eighth of a cent above the price of the cash. Commissioner Peotjty. So there is a margin of a quarter of a cent in that transaction in his favor ? Mr. Stream. It is one-eighth of a cent as a rule. Commissioner Peouty. I thought you sold at one-eighth less and bought back for one-eighth more ? Mr. Stream. One-eighth of a cent under the option — one-eighth under the option. He gets the option price when he delivers. Commissioner Peouty. What do you get from him to show you have bought the grain from him ? Mr. Steeam. He sells me 50,000 October Commissioner Prouty. He sells you 50,000 October; what is the evidence of that sale ? Mr. Stream. Confirmation of the sale under the rules of the board. Commissioner Peouty. So far there is simply a confirmation of the sale on your part and on his part ? Mr. Stream. Yes, sir. Commissioner Peouty. No grain has been delivered and no certifi- cate on the grain ? Mr. Steeam. Not until it gets into store. Commissioner Peouty. When the grain gets here, he puts it into your elevator ? Mr. Stream. Yes, sir. Commissioner Prouty. And receives warehouse receipts? Mr. Stream. Yes, sir. Commissioner Peouty. He then transfers those warehouse receipts to you ? Mr. Stream. No, not necessarily ; he delivers that out on his Octo- ber sales. Commissioner Prouty. When that grain gets into your elevator, or sometime, he delivers to you warehouse receipts for that grain? Mr. Stream. No, sir ; he may and may not. It all depends on what sales he may have open in October. The 60,000 October I have bought from him may run up against that that I sold as a hedge. That closes my transaction. He may deliver that out on other sales. Commissioner Prouty. He may deliver to you the 50,000 bushels of corn from your storehouse or any other ? Mr. Stream. Yes, sir ; that is it. Mr. Marble. How does that work out from time to time? Does he deliver those receipts, or does he hold them to make delivery with when the future comes in ? What is the usual course of business? Mr. Stream. If he has got the grain sold for December, as a rule he holds it for December delivery. Mr. Maeble. To you? Mr. Steeam. Not necessarily to me. Mr. Maeble. I mean, what is the usual course of business with those men, Mr. Gambrill or Mr. Chapin? You sell them the cash 60 GRAIN ELEVATOR INVESTIGATION. in the way you testified, and you buy the future from them, and they get the warehouse receipts in your public elevator as their title to the cash grain ? Mr. Stream. Yes, sir. Mr. Marble. What is the usual course of business — not speaking of what they can do, but what they actually do — do they as a rule deliver those receipts out to the other buyers, or do they as a rule hold those receipts and keep the grain in your house ? Mr. Stream. As a rule they carry that grain and deliver on that future. Mr. Marble. So that, as a rule, you do earn the entire amount of the storage charge ? Mr. Stream. Not necessarily. Mr. Marble. Except what you have given away in the trade ? Mr. Stream. Yes, sir ; in order to create the business. Commissioner Prouty. Let me ask one more question. When do you make delivery? When does your purchaser and seller to you make delivery of the future to you; when does he make delivery of the warehouse receipts to you which transfers to you or conveys to you title to that 50,000 bushels of corn ? Mr. Stream. If he makes the delivery to me, as a rule he does it when he gets the receipts. For instance, this month being the month of October, and he has a sale made in October, he gets his receipts in October and he makes the delivery immediately. Commissioner Prouty. Suppose the delivery is a November deliv- ery, and he gets his receipts Mr. Stream. (Interrupting.) He would make the delivery in No- vember, if he had sold for November delivery. Commissioner Prouty. When these receipts are passed to you, you become the owner of the grain ? Mr. Stream. No ; we can not own the grain. Under the rules of the board, contracts may be closed by delivery of any receipt. But we can not own the grain. We must deliver it out immediately. We can not hold grain in our own house. Commissioner Prouty. I understand you can not. I am trying to find out what you do. Mr. Stream. That is delivered out immediately. If a buyer of the cash delivers the elevator receipts to me, it is because he has delivered on the sale to me, against which I have had a hedge and sale of the same month, and I immediately deliver it out on the original sale. Commissioner Prouty. So that you do not, in point of fact, hold the receipts against the grain in your warehouse ? Mr. Stream. No, sir ; not at all. Commissioner Clark. When you buy this corn in the country, you pay for it in cash, don't you ? Mr. Stream. Yes, sir. Commissioner Clark. When you sell it, you simply get a confirma- tion of the sale? Mr. Stream. We sell it, and the moment it goes into the eleva- tor Commissioner Clark (interrupting). Just let us go along a little step at the time. When you sell it you get a confirmation? Mr. Stream. Yes, sir. GBAIN ELEVATOE INVESTIGATIO]Sr. 61 Commissioner Clark. And when you buy it back again or when you buy a future you get a confirmation ? Mr. Stream. Yes, sir. Commissioner Clark. When the grain goes into the warehouse you deliver to him warehouse receipts representing that much grain? Mr. Stream. Yes, sir. Commissioner Clark. Does he pay you in cash? Mr. Stream. He pays for it absolutely. Commissioner Clark. In money? Mr. Stream. In money. Commissioner Clark. As a matter of fact, this sale is simply a device by which to legalize the receipts against this grain that is in that elevator, isn't it ? Mr. Stream. You might hold it so. That is the only way that the elevator man can get any earnings out of his house nowadays. Commissioner Clark. Do you know of any instance, Mr. Stream — I will ask you one other question before that. I understand that the law here prohibits you from issuing warehouse receipts against your own grain. Mr. Stream. Yes, sir. Commissioner Clark. Do you know of any instances in which the proprietors or owners of different public warehouses exchange re- ceipts against grain in their warehouses, as, for instance. Smith's giving Jones a receipt for a certain amount of grain of a certain grade, and Jones giving Smith a like receipt for grain in his house ? Mr. Stream. I do not know of any such instances. I have heard of one elevator man selling another grain to go to store on the lines I have told you. Commissioner Clark. And buying back an equal amount of the same kind of grain in the other man's house ? Mr. Stream. Yes, sir ; to go into store. I say I have heard of that. Commissioner Clark. Do you know of any definite instance ? Mr. Stream. No, sir. Commissioner Clark. Does any grain come to your elevators ex- cepting over the Rock Island road ? Mr. Stream. Yes, sir. The largest portion that we have had came over foreign roads. Commissioner Clark. Does the most of that which comes over the Rock Island Railroad go to your elevator? Mr. Stream. The most of it that comes over the Rock Island ? Commissioner Clabk. Yes, sir. Does the most of the grain that comes into here over the Rock Island Road come into your elevator ? Mr. Stream. Yes, sir. Commissioner Lane. If you did not have this rule of the board of trade as to public warehouse receipts being necessary, but could take private warehouse receipts, you could save a certain amount of money which you now expend, which you now lose, to the broker, couldn't you? Mr. Stream. Yes, sir; if that system could work out. Private receipts are not very good collateral at the banks/ however. Commissioner Lane. Those receipts aren't very good collateral ? Mr. Stream. The banks won't accept them. Commissioner Lane. Is it more than a rule of the board of trade — 62 GBAIN ELEVATOE INVESTIGATION, is it a law that there shall be no sale except upon the presentation of a public warehouse receipt ? Mr. Stream. It is an absolute law. Commissioner Lane. A law of the State ? Mr. Stream. A law of the board of trade. Commissioner Lane. Oh, a law of the board of trade, but not stat- utory. The board of trade simply requires a public warehouse receipt ? Mr. Stream. Yes, sir. Commissioner Lane. And in order to avoid the requirement of the law that you shall not store your own grain in your, own warehouse, you make the sale and cover it ? Mr. Stream. We make the sale to go to store. Mr. Marble. In one respect I think you inaccurately did yourself an injustice. You can not store and mix grain of the public in your private warehouse — that is, grain of the same kind ? Mr. Stream. I said we can store grain for other people in our pri- vate house. Mr. Marble. But you have, haven't you, a special bin ? Mr. Stream. Not necessarily. We just preserve its identity. It is all a matter of agreement. We have arrangements with individuals where they put in a grain of a certain grade, and all they ask is grain of a certain grade to go out. Mr. Marble. If you put your grain in a public elevator you have to special bin it there. You can put your own grain in a public elevator. Mr. Stream. I think the law permits that. Mr. Marble. That is impracticable in the ordinary course of business ? Mr. Stream. Yes, sir. Mr. Marble. When you were here before you told us about your trouble at Omaha — about this boycott of the Rock Island Road by the Omaha Mr. Stream (interrupting). Omaha Grain Exchange. Mr. Marble. Is the condition any different now than what you testified to then ? Mr. Stream. No, sir. Mr. Marble. Are you still without membership in that Omaha Board of Trade? . Mr. Stream. That is my condition, sir. Mr. Marble. Are you still doing your own grading and weighing at Council Bluffs? Mr. Stream. Yes, sir. Mr. Marble. For the benefit of the Commissioners who were not here before — and I will ask you to correct me if I do not state it accurately— I will say that he testified that he had an elevator at Council Bluffs, that he shipped most of his grain over the Rock Island, that there was a grievance on the part of the Omaha commer- cial public against the Rock Island Road because of certain rates that were put in from Nebraska to Kansas City, that that resulted in a boycott of the Rock Island by the commercial public of Omaha, and that because he shipped over the Rock Island he was denied membership in the Omaha Grain Exchange; that the Omaha Grain Exchange grades and weighs grain of its members only, and that, GEAIN BLEVATOB INVESTIGATION. 63 therefore, he is unable to buy at Omaha on the basis of the Omaha market, because he can not get Omaha grade and weight. Such was your testimony? Mr. Stream. That is correct except that I do n6t own an elevator at Council Bluffs. I have all my grain transferred through the Rock Island transfer elevator there, an elevator that is open to the public. Mr. Marble. It is the discrimination against you which you com- plain of? Mr. Stream. Yes, sir. Mr. Marble. One other point. You buy some grain on track here in Chicago, don't you ? Mr. Stream. Some grain. Mr. Marble. A good deal? Mr. Stream. At times a good deal. Mr. Marble. And that you deal with in the same way; you sell it for an eighth of a cent? Mr. Stream. Yes, sir. Mr. Marble. Up to its going into the elevator you are loser by the transaction ? Mr. Stream. Yes, sir. Mr. Marble. If you did not get the elevation charge you would be a loser? Mr. Stream. That is the way it appears. Wherever there is a manipulation in the future the elevator man is able at times to buy cash grain less than the future, but that only occurs when some fellow is trymg to manipulate the market. Mr. Marble. Just let me understand one thing. Just what profit does the broker make out of the two transactions, out of the buymg of cash from you and selling the future to you ? Mr. Stream. One-eighth of a cent a bushel. Mr. Marble. How about the quarter of a cent on the future? I thought you spoke of a quarter of a cent ? Mr. Stream. That is on a distant future. Mr. Marble. On a distant future he makes a quarter of a cent? Mr. Stream. Yes, sir. On an immediate delivery he gets one- eighth of a cent. Mr. Marble. Why does he get a quarter of a cent on the future? How do you figure a quarter of a cent on the future ? ' Mr. Stream. No one would want to buy it unless they had that much in it. Mr. Marble. Is that a rule of the board of trade ? Mr. Stream. No rule. Commissioner Protjty. You say that the man who buys the grain from you for store pays for it ? Mr. Stream. Yes, sir. Commissioner Prouty. And when you buy it back from him at the same moment you pay him for it ? Mr. Stream. When we buy it back from him ? Commissioner Prouty. Yes. Mr. Stream. I do not pay for it because I never keep it. If he delivers it on an option sale, an October sale, it is immediately redelivered, and the final party that gets the notice pays for the grain. That is a mode of settling contracts on the board. For instance, I 64 GRAIN ELEVATOR INVESTIGATION. may have October bought from him and sold to somebody else, and somebody else to somebody else, and he delivers me a notice that he is holding receipts for me on a certain contract for 5,000 corn. I deliver that notice out, and it is the parties, the final parties, who come in and pay for it ; but all these deliveries wind up and close up these open contracts. Commissioner Pbouty. Well, he buys from you to-day 5,000 bushels of corn for November delivery? Mr. Stream. Yes. Commissioner Proitty. You say he pays you the cash for it ? Mr. Stream. When I give him the receipts ; yes, sir. Commissioner Protjty. You buy back from him the same quantity of corn for November delivery? Mr. Stream. Yes, sir. Commissioner Protjty. Who pays him for it? Mr. Stream. As I say, he makes his delivery on the board. Where the sale is made for the future, these contracts are always filled by delivery of notice on the floor during certain hours, and that notice is used and delivered and redelivered according to the way a man has his contracts open, until the notice finally lands into the hands of some one that has got the corn bought and not sold. Then that party comes in and pays for the grain. Commissioner Prottty. How does he pay you for the grain ? You sell him 5,000 bushels of corn. Does he draw his check and pay you for that identical corn ? Mr. Stream. He pays me the moment I deliver him the receipt, when the stuff goes into store. What he does after that, I don't know. Commissioner Peouty. You say you buy back from him? Mr. Stream. For November delivery ; yes, sir. Commissioner Peouty. You buy back? Mr. Stream. Yes, sir. Commissioner Peouty. When did you pay for it? Mr. Stream. I did not pay for it. Commissioner Peouty. But you paid for it. It had to be paid for at some time? Mr. Stream. I never paid for it. Commissioner Prouty. You are extremely fortunate if you can get 5,000 bushels of corn without paying for it- Mr. Stream. If I were to stop the notice and would have the deliv- ery remain with me I would have to pay for it, but the delivery to me did not stop with me ; it goes on. Commissioner Peouty. Who determines whether it will stop with you or whether it will go on ? Mr. Stream. Who? Commissioner Prouty. "Who determines whether it will stop with you or whether it will go on ? Mr. Stream. Whoever chooses to pay for the grain. When I buy the grain in the country I may hedge it so that I may have it sold here to you for November delivery. Then when it comes in I will sell the cash to Mr. Marble and buy the November delivery from him if he chooses to deliver that out on the contract. It comes to me, but I do not stop it, but I deliver it on to you, and the differences are GRAIN ELEVATOR INVESTIGATION. 65 settled ; or, if the charges are to follow the grain I pay them and you pay Mr. Marble for the grain. Mr. Marble. I think I understand it. Commissioner Peouty. I do not care whether you do or not. You sell me 5,000 bushels of corn for November delivery ? Mr. Stream. Yes, sir. Commissioner Peotttt. You say I pay you cash for that? Mr. Stream. Yes, sir. Commissioner Peouty. I draw my check for that amount and pay you cash ? Mr. Stream. Yes, sir ; you have the receipt. Commissioner Prouty. And I take the receipt. I may sell it back to you ? Mr. Stream. Yes, sir. Commissioner Peouty. And you say you do not pay for it ? Mr. Stream. No; because I do not stop it. I may make delivery right on. I have sold it to him. If I choose to accept the grain and pay for it, I would haVe to pay for it, but I transfer it to -some one else. I have got the grain sold to Mr. Marble I bought from you. Commissioner Peouty. You transfer it to somebody else, and instead of you paying me the transferee pays me ? Mr. Stream. Yes, sir; and the differences in the price are settled. Commissioner Prouty. In point of fact, do I, who buy the grain from you and pay the cash for it, and who sell it back to you — do I, in point of fact, ever hold that grain ? Mr. Stream. Sometimes. If I sell it to you for December delivery, and buy the December delivery back from you, you might exact a bigger profit. You would say Commissioner Prouty. No, no. I do not exact a bigger profit. It is a part of the whole transaction that I shall sell back to you without a profit? Mr. Stream. You would not make that transaction unless there is a profit in it. Commissioner Peouty. There is a profit of an eighth of a cent in it. That is all the profit I have expected to make. In that sort of a transaction when I buy and sell that grain back to you, when do I deliver it back to you, and what do you do with that grain ? Mr. Stream. It all depends on your terms. If I should sell grain to you to be delivered to store — to my store — between now and De- cember 1, and you in turn immediately sell me an equal quantity of December ; if I should happen to get the grain in here in November I will send it into store, and if you choose to take it, deduct the charges until December 1; or I can retain my grain in my cleaning house until December 1, and then may undertake a contract to put it into store for you. It is all a matter of agreement whether you want to pay for this grain at once . Commissioner Prouty (interrupting). You do not seriously claim that a broker who buys this grain ordinarily buys it for speculation ? He buys it just simply to get that eighth of a cent a bushel profit? Mr. Stream. Yes, sir. Commissioner Prouty. My question is, when does the broker dis- pose of the grain which he buys from you ? He sells back to you an equivalent ? S. Doc. 278, 59-2 5 66 GRAIN ELEVATOR INVESTIGATION. Mr. Stream. Yes, sir. Commissioner Pkouty. When does he get his money out of it ? Mr. Stream. The moment he makes delivery. Commissioner Prouty. He makes delivery to you ? Mr. Stream. Yes, sir. Commissioner Proutt. You can pay for it or you can turn it over to somebody else ? Mr. Stream. Yes, sir. Commissioner Prouty. But it is always his option to make the delivery to you and you have to pay for it unless you sell it to some- body else ? Mr. Stream. When he sells the grain for future delivery if I am the only party that has grain bought from him, he makes delivery to me. Understand this, that these trades in futures are often rung up before delivery time comes, so that instead of having me as a pur- chaser on his books he may have somebody else, and he may deliver that purchaser that amount on his books. These trades are rung up every day. Commissioner Lane. By " rung up," you mean balanced ? Mr. Stream. Yes, sir. Commissioner Lane. One offsets the other? Mr. Stream. Yes, sir. Commissioner Protjty. All I wanted to know is where the price of that 5,000 bushels of corn was going to " ring up " before I entered into that transaction with you. Commissioner Lane. The broker does not stand any chance to lose at all ; he had what they call a " cinch ? " Mr. Stream. Yes, sir. Commissioner Prouty. But he gets the cinch by reason of the fact that he ordinarily sells back for the December price. I am asking when he gets his cash out of it. Mr. Stream. The day he delivers the receipts. Commissioner Prouty. He can, in point of fact, deliver the re- ceipts to you that day? Mr. Stream. That is, if it is sold for October delivery. Commissioner Prouty. And in that case you would pay him the money ? Mr. Stream. Yes, sir. Commissioner Prouty. In point of fact, he has an understanding with you that he shan't make the delivery that day? Mr. Stream. No. He has this understanding, if he buys grain to go into store and I buy the December from him, that he has got this particular grade to be delivered in December, and when it goes into store it is sold to me on the basis of December, less whatever the charges, the expense may be attached to the grain up to December 1. Commissioner Prouty. If he pays cash and does not get his cash out of it for a month, he loses the interest on his money ? Mr. Stream. I say, in a sale of that kind we would sell at less the charges, the insurances, interest, etc. Commissioner Prouty. You call interest a charge? Mr. Stream. Yes, sir. Commissioner Prouty. It follows the grain ? Mr. Stream. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 67 Commissioner Prouty. So that in reality you pay him for the grain one-eighth of a cent. Do you pay him any charges besides ? Mr. Stream. The carrying charges. Commissioner Prouty. In addition to the price of the grain ? Mr. Stream. Yes, sir — that is, where the grain is sold, for example, for some distant future. ■ Commissioner Lane. And you do all that for the purpose of being able to store the grain yourself ? Mr. Stream. Well, it is done for the purpose of trying to get an earning out of your elevator business. Commissioner Lane. Getting it into somebody else's hands, so that you won't be storing your own grain ? Mr'. Stream. That is the idea, exactly. Commissioner Prouty. It will enable you to do a grain business while you own a public warehouse, although the law contemplates that the public warehouse man shall not do a public business ? Mr. Stream. We do it in this way : The South Chicago Elevator Company operates the elevators. They do not buy grain. They do not sell any grain ; but J. C. Shaffer & Co. buys grain and sells grain. J. C. Shaffer & Co. creates the grain in the manner I have outlined. The South Chicago Elevator Company does not buy any grain, neither do they sell any grain. Commissioner Clark. J. C. Shaffer & Co. own the South Chicago Elevator Company? Mr. Stream. They hold a majority of the stock. Mr. Shaffer. Shaffer & Co. do not own the South Chicago Eleva- tor Company, but J. C. Shaffer owns the stock. Commissioner Prouty. What is the reason why Mr. J. C. Shaffer can not take a public warehouse receipt from the South Chicago Ele- vator Company for his own grain ? Mr. Stream. I think there has been a ruling in the State by Judge Tuley that an individual owning the majority of stock of a corpora- tion that operates a public warehouse could not take the receipt in his individual name. Commissioner Clark. Does the Rock Island Railroad Company make the South Chicago Elevator Company any allowance on grain for elevation or storage ? Mr. Stream. No, sir. Commissioner Clark. Their elevators are located right on the tracks of the Rock Island Company ? Mr. Stream. They are not exactly on the Rock Island ; they are a short distance away ; we are connected by a switch. Commissioner Clark. Who owns that switch? Mr. Stream. I think it is owned jointly by the Belt and some other lines. Commissioner Clark. You get your deliveries from the Belt Line ? Mr. Stream. Well, this switch is operated by the Baltimore and Ohio, the Lake Shore, and the Pennsylvania. They all operate over this switch. They will make delivery to the elevator. Commissioner Clark. Is there any switching charge on grain delivered to your elevators ? Mr. Stream. Switching charge ? Commissioner Clark. Yes. 68 GBAIN ELEVATOR INVESTIGATION. Mr. Stream. Xo : we have free delivery over the Great Western and the Xorthwestern, and the Eock Island, and the Baltimore and Ohio, and the Lake Shore, and the Pennsylvania. They make free delivery, but the Burlington, the St. Paul, and a few other roads charge for it ; that is, they make free delivery to the connecting line, but the delivering line charges a switching charge to the elevator. Commissioner Clark. Who pays that? Mr. Stream. We pay that. Mr. Marble. This sort of selling the cash and buying the future determines to some extent the price of cash wheat and the future wheat in this market, doesn't it? Mr. Stream. Well, the futures always determine the price of gi-ain. Mr. Marble. Now, then, supposing that a man not an elevator pro- prietor should buy grain, store it in an elevator and pay you the statutory charges, and sell the future at the prevailing price, with you dealing in this way, would he as a rule lose money or make money? Could he meet your competition in that regard ? Mr. Stream. Often times that is done and done very extensively, and it is done, as I say, at times when the future is manipulated. You take it last winter, or take it last May, when there was a comer in May grain ; the future went up so high that there was an earning between the value of cash and the future, so that anybody could buy grain and put it into the elevator, and they did. Mr. Marble. At such times you do not have to give away the eighth of a cent ? Mr. Stream. Xo, sir. Mr. Marble. I mean at those times when you are giving away an eighth of a cent and the outsider wants to store grain and deliver on the future, he can not make the warehouse charge; he would lose a portion of the warehouse charge ? Mr. Stream. That is true. Mr. Marble. So that, as a general thing, the use of the public ware- house by the public to buy cash grain, store it, and deliver on future is impossible; the business is so close because of this very competi- tion Mr. Stream. It is just the reverse. The elevator man is compelled to take this very method to get some earning out of his profit, because the public does not store any grain. The business has changed. Mr. Marble. Can the public make any profit by buying cash grain and storing it and delivering it on the future I Mr. Stream. No, because the grain business is changed. Fifteen or twenty years ago an elevator man did not have to buy any grain; didn't have to force any grain into his elevator. The public always filled up his elevator. To-day the conditions are reversed. Now, the result is that the public see no jDrofit in storing- grain as they used to years ago. There isn't any. Commissioner Prottty. Well, the public can not see any profit when you charge the public three-quarters of a cent and shrink that three-quarters of a cent 3'ourself. Mr. Stream. The public are always at a loss of three-quarters of a cent, and if they didn't have a profit in the grain they never put it in store. Commissioner Prouty. I know, but the price that you pay for the grain shrinks that three-quarters of a cent. GBATN ELEVATOR INVESTIGATION. 69 Mr. Stream. I assiuv you wc would not, pay any preniiuni for the j>rain if wo didn't have to. Commissioner Proutv. That seems to be all. Witness excused. J. P. Dunne, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in Chicago, Mr. Dunne? Mr. Dtjnne. Yes, sir. Mr. Marble. What is your business? Mr. Dunne. Cashier of the Evening Post Company. Mr. Marble. Are you also interested in the grain business ? Mr. Dunne. No, sir. Mr. Marble. You are an officer of the South Chicago Elevator Company, are you not? Mr. EIunne. No, sir. Mr. Marble. I do not mean of the South Chicago Elevator Com- pany; I mean of the Chicago, Eock Island and Pacific Elevator Company ? Mr. Dunne. Yes, sir. Mr. Marble. ^Ylmt officer ? Mr. Dunne. President. Mr. Marble. And a stockholder? Mr. Dunne. Yes, sir. That is, I was a stockholder. Mr. Marble (interrupting). You are not a stockholder now? Mr. Dunne. No, sir. Mr. Marble. AVhen did you cease to be a stockholder ? Mr. Dunne. AVhen we sold the elevator. Mr. Marble. '\Mien was that ? Mr. Dunne. I believe that was in October, 1904. Mr. Marble. "Wlien you sold what -elevator? Mr. Dunne. We sold the Chicago, Rock Island and Pacific Ele- vator Company. Mr. Marble. You say when you sold the company or the elevator ? Mr. Dunne. Sold the company. Mr. JMarble. Have you been president since 1904? Mr. Dunne. Yes, sir. Mr. Marble. You are still president ? Mr. DiNNE. Yes, sir. Mr. Marble. Were you president when the Chicago, Rock Island and Pacific Elevator Company bought the South Chicago public ele- vator, as testified to by ]\Ir. Stream here ? Mr. Dunne. Was I president? -Mr. Marble. Yes. Were you president at that time? These ele- vators which Mr. Counselman owned when he died, which Mr. Shaffer bought and sold to the Chicago, Rock Island and Pacific Company — were you president at that time ? Mr. Dunne. I was made president then. Mr. Marble. Were you president at the time that deal was put through — ^before or after? Mr. Dunne. I was made president of the Chicago, Rock Island and Pacific Elevator Company when the corporation was formed. Mr. Marble. And then you bought — ^your company bought these elevators from Mr. Shaffer? 70 GRAIN ELEVATOR INVESTIGATION. Mr. Dunne. Yes, sir. Mr. Mabble. How much did you pay him for them ? Mr. Dunne. A million dollars. Mr. Marble. A million dollars? Mr. Dunne. Yes, sir. Mr. Marble. How did you pay him ? Mr. Dunne. A million dollars in stock and a million dollars in bonds. Mr. Marble. A million dollars in stock and a million dollars in bonds ? Mr. Dunne. Yes, sir. Mr. Marble. And then what did you do with the elevators ? Mr. Dunne. We sold them to the Chicago, Eock Island and Pacific Eailroad Company. Mr. Marble. What did you get for them ? Mr. Dunne. We got the bonded indebtedness ; they were to assume the bonded indebtedness. Mr. Marble. How much was that ? Mr. Dunne. A million dollars stock and a million dollars bonds. Mr. Marble. This million dollars stock and a million dollars bonds which you delivered to Mr. Shaffer was the bonded indebtedness which you referred to ? Mr. Dunne. That is what we paid Mr. Shaffer for them. Mr. Marble. Was that what was assumed by the railroad ? Mr. Dunne. I believe it was. Mr. Marble. That is, the bonded indebtedness which they as- sumed • Mr. Dunne. They assumed a million dollars bonds and a million dollars stock of the Chicago, Eock Island and Pacific Elevator Company. Mr. Marble. By " assumed " you mean what — that they agreed to pay these bonds as they became due ? Mr. Dunne. Agreed to pay these bonds as they became due. Mr. Marble. Does your company now own any elevators? Mr. Dunne. No, sir. Mr. Marble. It is practically a defunct corporation? Mr. Dunne. It has no property, as I understand it. Commissioner Prouty. What has become of that million dollars of stock ? Mr. Dunne. You will have to ask Mr. Shaffer ; I do not know. Mr. Marble. That company is not engaged in operating elevators or in the grain business now ? Mr. Dunne. No, sir. Mr. Marble. It was organized just before this deal? Mr. Dunne. It was organized to purchase from Mr. Shaffer. Mr. Marble. Organized to purchase these elevators from Mr. Shaffer? Mr. Dunne. Yes, sir. Mr. Marble. And to sell them to the Chicago, Eock Island and Pacific Eailroad Company ? Mr. Dunne. Yes, sir. Mr. Marble. Mr. Shaffer got the elevators and a guarantee from the railroad that your company would pay its bonded indebtedness GRAIN KLKVATOR INVESTIGATION. 7l (o hini, or rathor yo\ir oompany yot from (ho riulroad a guarantee (ha( your bonds would bo paid 5? Mr. Dv NNK. Yos, sir. Mr. Makui.k. Thut is all. Oouu\ussionor Puouty. Do you havo any uioolinjis of your corpora- tion now^ Mr. l>i NNK. 1 do not. roally know. 1 boliovo thoro was a uiootinji;, hut 1 was not in the oity. Oommi.ssionor l*ROi rv. That is all. Mr. Jackson. 1 think ihoro may bo somo confusion in tho record by ivason of tho witness havinii' made a mistake. He used the term Chicaoo, Uoek Island and Pacific Klovator Company. The elevator con)|nniy was the Chicau'o, Kock Island Elevator Company, wasn't it ? Mr. Dv NNK. Yes, sir. Mi\ Jackson. 1 just wanted to make that correction. Mr Mariu.k. You did not know until you looked at Mr. Shalfer just what tho name of the company was'? Ml*. Di'NNK. I simply ji'ot mixed. Conunissiouor Ci auk. Are these million doUai-a of bonds that you s[H>ak of here secured by a real estate mortgasie * Mr. DiNNK. 1 do not know. Couunissioner Puoi ty. AVhat did you say your business was be- sides Ix^ing president of this elevator company'? Mr. DxNNK. Cashier of the Chicago Evening Post Company- newspaper. Couunissioner Lank. Do you know whether any of the bonds have boon paid or not i Mr. Dv NNK. I do not know anything about it. Couunissioner Pkoity. That is all, Air. Dunne. Witness excused. Joii>c CuAKi.Ks Shaffer, called as a witness, being duly sworn, t est i tied as follows: Mr. Marbije. You reside in Chicago, Mr. Shaffer? Mr. SiiAFKKK. 1 reside in Evanston. Mr. M.VR1U.K. .Vmong other businesses yon are engagvd in the ele- vator and grain business? Mr. SiiAFKKu. Yes, sir. Mr Maruik. You bought fitim the Counselman estate these South Chicago elevators, concerning which testimony has been given? Mr. SiiAKKKR. Yos, sir. Mr. MARni.K. How much did you pay for them? Mr. SuAKKER. $7(X),(X)0. Mr. Mauiu.k. In cash? Mr. SiiAKFKR. lit cash. Mr. Marble. And then what did you do with them ? ■^"^[r. SiiAFKEU. I organized the company that my cashier spoke of, tho Chicago. Rt>ck Island Elex'ator Company, and transferred the ole\*atoi-s to the Chicago, Rock Island Elevator Company, taking in exchange for the elevators !?1.0(X>.000 in bonds and $i,000,OtX) in stock of that corporation. Mr. Marble. And then what beeame of the elevators? 72 GEAIN ELEVATOR INVESTIGATION. Mr. Shaffer. The elevators were then sold to the Chicago, Rock Island Railway Company, subject to the million dollars of bonds. Mr. Marble. Which means exactly what? That when the bonds become due the railroad will pay them ? Mr. Shaffer. The railroad will pay them; and the railroad pro- vides in this further transaction that they will redeem part of the bonds, $50,000 worth of bonds each year, and also reserve the right to pay off all the bonds at any time, giving thirty or sixty days' notice, I have forgotten which, at the interest-bearing time the bonds come due. Mr. Marble. What interest do these bonds bear ? Mr. Shaffer. Five per cent. Mr. Marble. Then what became of the elevators — how did they get back into the possession of the South Chicago Elevator Company ? Mr. Shaffer. The Rock Island Railroad Company, as a part of the consideration in purchasing these bonds, agreed with J. C. Shaffer that he should have the use of the elevators until all the bonds were paid off. Mr. Marble. Free of rent ? Mr. Shaffer. Free of rent. Mr. Marble. Who pays the taxes ? Mr. Shaffer. The railroad company. Mr. Marble. The railroad company pays the taxes ? Mr. Shaffer. Yes, sir. Mr. Marble. And the insurance ? Mr. Shaffer. Yes, sir. Mr. Marble. The railroad company pays the insurance ? Mr. Shaffer. Yes, sir. Mr. Marble. And the repairs? Mr. Shaffer. The repairs of the exterior of the building. Mr. Marble. Are paid by the railroad company ? Mr. Shaffer. Yes, sir. Mr. Marble. How about repairs to machinery and operating ? Mr. Shaffer. They are paid by J. C. Shaffer. Mr. Marble. Now, Mr. J. C. Shaffer — that is, does the South Chi- cago Elevator Company or does J. C. Shaffer operate them. Mr. Shaffer. The South Chicago Elevator Company. Mr. Marble. You own practically all the stock ? Mr. Shaffer. I own all the stock of the South Chicago Elevator Company. Mr. Marble. Of that corporation ? Mr. Shaffer. Yes, sir. Mr. Marble. Do you get any elevation allowance ? Mr. Shaffer. I do not know anything about that part of the trans- action. Mr. Stream attends to that entirely. Mr. Marble. As I understand it, you paid-the^StStr^TOOJOOO for these elevators ; you sold them to your own corporation for a million dollars iaJaonds of that corporation and a mill inn. dfiUarg of stock, and then your corporation sold them to the railroad company, the railroad company agreeing to pay these bonds, and 5 per cent interest up to the time it should be paid, and lease the elevators back to you, free of rent, the railroad company paying the taxes and the insurance and a portion of the repairs — that is correct, is it ? Mr. Shaffer. You have stated it exactly. GRAIN ELEVATOR INVESTIGATION. 73 Commissioner Peouty. You have testified that the railroad com- pany assumed and agreed to pay these bonds, but you have not stated what else they did. Did they pay you anything except as specified by this agreement ? Mr. SnAFrBE. Nothing whatever. Commissioner Peouty. And can you use the elevators until the bonds have been paid for ? Mr. Shaffee. Yes, sir. Commissioner Peottty. That leaves the stock valueless ? Mr. Shaffee. Absolutely. The corporation was made for the specific purpose of getting out the bonds. The railroad company did not desire to pay out cash for the elevator, and hence bonds were put on, in order that the transaction might cover a number of years. Mr. Maeble. How often is this interest payable ? Mr. Shaffee. Semi-annually. Mr. Maeble. Has any payment become due yet ? Mr. Shaffee. Yes, sir. Mr. Marble. Have the payments been made? Mr. Shaffee. Yes, sir. Mr. Maeble. So that, practically, the railroad company, which owes you a million dollars is paying you interest on that million dollars, and is giving you the use of the property besides, and paying the taxes and the insurance ? Mr. Shaffee. Yes, sir; but a further consideration. I agreed with the railroad company that we should create at least 5,000,000 bushels of business. In other words, to put it better, I agreed that I would bring to the elevators over the Eock Island System at least 5,000,000 bushels of grain a year, which was a part of the considera- tion,, and if I failed to bring 5,000,000 bushels, or any part of it, then I was to pay them at the rate of 1 cent a bushel for every bushel that was not brought in up to the maximum of 5,000,000. Mr. Maeble. , So that, in consideration of your shipping grain over their road to these elevators, they give you whatever profit may accrue from this transaction? Mr. Shaffee. In the buying and selling of the elevator ? Mr. Maeble. Yes, sir. Mr. Shaffer. They haven't anything to do with that. That is a business transaction. If the Rock Island did not desire to buy at a million dollars, I might have sold out to somebody else at a better price. That is a real estate transaction. If the Chairman and the other gentlemen will permit me, you see that the transaction was made for this purpose on the part of the Eock Island Eailroad. They wanted and needed elevators to take care of the grain business that might come over their road. They had two elevators up the river, but they were so located that they were not available for the business, and they wanted these elevators, and other people wanted these elevators. I was not limited to selling the elevators to the Eock Island Eailroad Company. Commissioner Peouty. Was it understood when you bought the elevators from the Counselman estate that the Eock Island would take them from you at a million dollars ? Mr. Shaffee. Not definitely, though I had reason to believe that I could make such a transaction. Now, then, we have created the 74 GRAIN ELEVATOR INVESTIGATION. and that was the purpose of the Rock Island company in making this transaction — that we might create business for them and bring this grain in over their road for them. Commissioner Protjty. Did you share that profit with any officer of the Rock Island Railroad Company ? Mr. Shaffer. No, sir. Mr. Marble. Do you own any stock in the Rock Island road ? Mr. Shaffer. No, sir. Mr. Marble. These elevators are in the same physical position that they were before you bought them, of course? Mr. Shaffer. Yes, sir. Mr. Marble. They are no nearer to the Rock Island road than they were before you bought them and sold them ? Mr. Shaffer. No, sir. Mr. Marble. They are public elevators, and, under the law, open to the general public to put grain in ? Mr. Shaffer. Two of them are. Mr. Marble. The Rock Island company desired your activity in buying and shipping grain ? Mr. Shaffer. If they hadn't had the elevators somebody else would have shipped grain over other roads. Mr. Marble. It was to get you to ship over their road ? Mr. Shaffer. It was to create business and be able to take care of anybody else's business that might come there. There is other grain that comes in over the Rock Island Railroad other than the grain that we buy, that J. C. Shaffer & Co. buys, that goes either to that elevator or to some other elevator. Commissioner Lane. Does the corporation that owns the elevator — that is a corporation and it is still alive, isn't it ? Mr. Shaffer. The Chicago-Rock Island Elevator Company ? Commissioner Lane. Yes. Mr^ Shaffer. Oh, I think we keep it just alive, just in order that ay be a corporation. Commissioner Lane. When you say " your bonds," they aj-e the bonds of that corporation. Mr. Shaffer. Yes, sir. Commissioner Lane. And you gave a mortgage — the corporation gave a mortgage to secure those bonds? Mr. Shaffer. Yes, sir. Commissioner Lane. And if any profits come to the elevator com- pany, they go into the corporation and are distributed by the corpo- ration ? Mr. Shaffer. No ; there is no profit that comes from the corpora- tion, because the corporation has no property. It bought the prop- erty of me, and then the same day, or the next week, they transferred the property to the Rock Island Railroad ; hence they have no prop- erty — nothing to get any revenue from. Commissioner Lane. Where is the interest paid? Mr. Shaffer. To the first trustee. Commissioner Lane. I don't mean when, but to whom was it paid ? Mr. Shaffer. To the trustee of the bonds. Commissioner Clark. I understand that this property is sold directly to the Rock Island and Pacific Railway Company? GRAIN ELEVATOR INVESTIGATION. 75 Mr. Shaffer. It was sold by the Chicago-Rock Island Elevator Company to the Chicago, Eock "island and Pacific Eailway Company. Commissioner Clark. And, then, subject to this bonded indebted- ness, the title of the property is in the Rock Island Railway Com- pany ? Mr. Shaffer. Yes, sir. Commissioner Clark. The Chicago-Rock Island Company is the holding company? Mr. Jackson. It is the operating company. Commissioner Lane. Is it part of your idea to make these trans- actions upon the part of that paragraph by which the property — by which this wheat is eventually placed with you — to keep your agreement with them that 5,000,000 bushels shall be created over their road each year? Mr. Shaffer. We buy in the country, out in Iowa, Nebraska, and Kansas, and then bring it in over the Rock Island road's tracks, and create the business for them. Commissioner Lane. But they wouldn't be able to put it in the warehouse so long as it was yours? Mr. Shaffer. They put it into the private warehouses. Commissioner Lane. You do that first ? Mr. Shaffer. Yes, sir. Commissioner Clark. Have you a line of elevators along the line of the Rock Island Railroad ? Mr. Shaffer. None whatever, Mr. Clark. Commissioner Clark. You buy from any elevator companies along the line of that road ? Mr. Shaffer. We buy from them ; yes, sir. Commissioner Prouty. You own some private elevators as well as these public elevators, Mr. Shaffer, or your company does ? Mr. Shaffer. Only these three elevators here. I am interested in elevators in Cleveland and other places. Commissioner Prouty. One of the elevators here is a private elevator ? Mr. Shaffer. Yes, sir. Commissioner PROtFTY. Under what circumstances do you store grain in that private elevator ? Mr. Shaffer. Well, Mr. Stream, as you are aware, is my manager, and any grain that goes into the private elevator would go through under a private contract with Mr. A. or Mr. B. agreeing what should be the conditions. Commissioner Prouty. That would not be grain that would be dealt in on the board? Mr. Shaffer. No, sir. Mr. Jackson. Mr. Shaffer, at the time you bought from the Coun- selman estate this elevator property, did you do' so on your own account entirely? Mr. Shaffer. Entirely, sir. Mr. Jackson. Had the Chicago, Rock Island and Pacific an inter- est, directly or indirectly, in that transaction? Mr. Shaffer. None, whatever. Mr. Jackson. Had the Chicago, Rock Island and Pacific any knowledge, so far as you know, at the time they made the purchase, what you had paid for that property? 76 GRAIN ELEVATOR INVESTIGATION. Mr. Shaffek. No, sir. Mr. Jackson. At the time of the sale to the Chicago, Eock Island, and Pacific of the elevator properties what was a fair cash value, in your own mind, and on the market, of that property which you sold for a million dollars ? Mr. Shaffer. The book accounts showed it was carried at a million, three hundred thousand dollars. Mr. Jackson. Still that is not a direct answer to my question. Give your opinion as to what was the actual cash value at that time of the property on the market. Mr. Shaffer. I think over a million dollars. Mr. Jackson. As a matter of fact, the result of this whole transac- tion was that the Chicago, Rock Island, and Pacific Railway Com- pany purchased those elevators at a valuation of $1,000,000, Taut paid no cash, but had twenty years' time, at certain installments per year to pay for them ? Mr. Shaffer. That is absolutely correct. Mr. Jackson. Just one other question. Was this whole transac- tion of the sale of the elevators, the giving of the bonds, the guaran- teeing of those bonds, and the leasing of the elevators to you — was that all reduced to writing? Mr. Shaffer. It was.. Mr. Jackson. I desire to make the contracts a part of this record and want to ask this preliminary question: Was the transaction, as appears in the writing, between you and the Rock Island, carried out ? Mr. Shaffer. It was. Mr. Jackson. Was there any secret understanding of any kind between you and the company by which these contracts" were violated in any respect ? Mr. Shaffer. Absolutely none. Mr. Jackson. I wish to make the contracts a part of the record. Commissioner Prouty. They are already filed with the Commission. You make a note, Mr. Young, that these contracts between the Chicago, Rock Island, and Pacific Railway Company and Mr. Shaffer are introduced in evidence, reference to be made to copies on file. Commissioner Clark. What would be, in cash, a fair annual rental for these elevators now, and for a period of twenty years ? Mr. Shaffer. I do not know. They would be a burden to anybody unless they could get business, create business, and bring business to the elevator. Commissioner Clark. Well, you stated that the cash value of them at the time they were sold was in excess of a million dollars ? Mr. Shaffer. Yes, sir. Commissioner Clark. Still you sold them for a million dollars, and a part of the consideration was the rental for twenty years unless they elected to pay the bonds off inside of twenty years, and then, I suppose the rental would cease. Now, what is a fair valuation for their rental ? Mr. Shaffer. It depends on altogether what business you can get there. The rental is not of any account unless we can create business and get it there. Commissioner Clark. That is obvious. An empty and idle elevator would be a very unprofitable property. GRAIN ELEVATOB INVESTIGATION. YY Mr. Shatter. Precisely. Commissioner Clakk. This property was worth a million dollars cash ; it was not worth a million dollars to stand empty or idle, and it had no such value as that unless it was easily possible to get busi- ness for it. There is some reasonable estimate of the value of these rentals. Mr. Shaffer. That was the part that I was going to take, as to whatever the rentals, the valuation might be, in consideration of my creating this business. It was worth that to me. I should not have deeded the elevators to the Eock Island Eailroad Company on any other condition. I would have made a contract with some other rail- road company. Commissioner Clark. But that rental has a valuation ? Mr. Shaffer. I would not be able to determine what the valua- tion is. Mr. Jackson. You spoke of your guarantee to create business of 5,000,000 bushels a year. Do you remember what the contract pro- vides in case you fail to do that ? Mr. Shaffer. It provides that I shall pay to the railroad company a cent per bushel for all grain that I do not deliver it or bring in up to 6,000,000 bushels. Mr. Jackson. In case you fail to deliver any grain at all there, you would have to pay $50,000 a year ? , Mr. Shaffer. Yes, sir. Mr. Jackson. One other question. You spoke of the book value being $1,300,000. Was that on Counselman's books or on yours? Mr. Shaffer. On Counselman's. Mr. Jackson. That is the way the estate stood? Mr. Shaffer. Yes, sir. Commissioner Lane. Was that the appraisement of the estate? Mr. Shaffer. No. Commissioner Lane. What was the property appraised at, do you know? Mr. Shaffer. I do not know. Commissioner Prouty. I gather from all this testimony that nobody in Chicago can afford to own an elevator unless that person is in the grain business. Mr. Shaffer. I should say exactly so. He has got to create the business. The business will not come to him. Mr. Marble. These elevators you bought from the executors of the estate, did you not ? Mr. Shaffer. Yes, sir. Mr. Marble. They were sold through a court ? Mr. Shaffer. Yes, sir. Mr. Marble. And the sale was ratified by a court? Mr. Shaffer. Yes, sir. Mr. Marble. Do you think that these executors violated their oath of office when they sold you these properties for $700,000 ? Mr. Shaffer. It is a question of morals, and I do not care to pass upon the question. That was the best they could get. Mr. Marble. That was the cash value of the property ? Mr. Shaffer. It was the best they could get. They offered the 78 GRAIN ELEVATOR INVESTIGATION. property to three or four different people, but found no purchasers until I came. Mr. Marble. Do you know whether they offered it to the Rock Island? Mr. Shaffer. I do not know, sir. Mr. Marble. Were they advertised as being for sale? Was it a matter of general knowledge in the elevator and shipping business ? Mr. Shaffer. I think it was, sir. Mr. Marble. And you paid more than anybody else would pay for them ? Mr. Shaffer. I paid more than anybody else would pay for them ; more than anybody else offered to pay for them. Commissioner Protjty. It clearly appears that Mr. Shaffer could not have made this trade unless he was also willing to say he would get five million bushels of grain over the road. Mr. Shaffer. Yes, sir. Commissioner Clark. How much time elapsed from your purchase of the Counselman elevators to the sale to the Rock Island? Mr. Shaffer. I took possession of the elevators on the 15th of August, and the" final transactions were made on the 1st day of October. I had the privilege with the estate to pay any time between the 15th of August and the 1st of October, and that time was spent in , organizing this company a^d getting out the bonds, in order that we might make the transaction clear. Mr. Marble. This grain that you buy, is that on the line of the Rock Island out in the country? Mr. Shaffer. Not always. Mr. Marble. You go oflf the line ? Mr. Shaffer. Very frequently. Mr. Marble. And you bring it to the Rock Island to ship it in? Mr. Shaffer. Yes, sir. Mr. Marble. You have to meet the competition of buyers on other roads? Mr. Shaffer. Yes, sir. Mr. Marble. And you give away a portion of the transportation? Mr. Shaffer. I do not know what we give away. So far as managing the grain business is concerned, the buying and selling of grain, Mr. Stream does that entirely. I give him perfect latitude to make what prices he may elect and then hold him responsible for managing the business. Mr. Marble. Though the way it is done, you don't know? With what official of the railroad did you make this deal? Mr. Shaffer. The selling of the property? Mr. Marble. Yes. Mr. Shaffer. The president of the railroad. Mr. Marble. When did this transaction take place? \Mien did you buy the elevators, and Commissioner Prouty (interrupting). The record will show when the transaction occurred. Mr. Shaffer. October 1. Commissioner Prouty. That is all. (Witness excused.) GRAIN ELEVATOR INVESTIGATION. 79 Joseph Rosenbatjm, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Rosenbaum, you reside in Chicago ? Mr. Rosenbatjm. I do. Mr. Marble. You are in the grain business? Mr. Rosenbaum. I am. Mr. Marble. What company are you connected with? Mr. Rosenbaum. J. Rosenbaum Grain Company. Mr. Marble. You own and operate public elevators in this city, your company does? Mr. Rosenbaum. I individually operate the public elevators. Mr. Marble. What public elevators are they ? Mr. Rosenbaum. A and B, Rock Island. Mr. Marble. You individually operate them? Mr. Rosenbaum. Yes, sir ; I am the lessee. Mr. Marble. And who owns these elevators? Mr. Rosenbaum. The Rock Island Railroad Company. Mr. Marble. And you lease from them? Mr. Rosenbaum. Yes, sir. Mr. Marble. On what terms do you lease from them? In fact, you pay no rental ? Mr. Rosenbaum. I pay no rental. Mr. Marble. How long have you had these elevators under these terms ? Mr. Rosenbaum. I think we are in the second year. Mr. Marble. Who pays the taxes on these elevators? Mr. Rosenbaum. I think the Rock Island Railroad. Mr. Marble. And the insurance? Mr. Rosenbaum. Also. Mr. Marble. And the repairs? Mr. Rosenbaum. I pay for the repairs to the machinery, and all that. I would have to refer to the leases to tell you just what each of us does, but I am not positive. The leases provide what I pay and what the Rock Island pays. That would be more satisfactory than my guessing at it. The leases are here. Commissioner Prouty. Have you filed those leases, Mr. Jackson? Mr. Jackson. Yes, sir. Mr. Marble. What do you agree to do in consideration of this free rent, and the payment of these taxes ? Mr. Rosenbaum. Am I allowed to explain that in my. own way ? Mr. Marble. Yes, sir ; that is exactly what we want. Mr. Rosenbaum. The. houses A and B of the Rock Island are old structures; one was built in 1861 and the other in 1881. Charles Counselman & Co. had leases of them for some years, and during the last few years of their business career I bought a line of elevators from him in Kansas and Colorado, I think. He offered me that lease; he wanted me to take them off his hands. I didn't ask him what he paid for them. I didn't Avant them. After the leases ran out these houses were vacant for some time. They were on the mar- ket for anybody who wanted to take them. I think what the Rock Island wanted to get rid of were the charges; it cost them from $5,000 to $6,000 a year for watchmen and keeping fires up and pro- tecting the property. I refused to take them. At the same time it 80 GEAIN ELEVATOR INVESTIGATION. seemed that they were not the only elevators in Chicago that were begging for a tenant without rent. At the same time I took those elevators the Chicago, Milwaukee and St. Paul Railroad offered me the St. Paul and the Fulton house free of rent. I did not take them or anybody else. They were finally pulled down. I hesitated for some time to take these houses for the simple rea- son that I did not think we could do business through them to make any money out of it. As a matter of fact the first year we did not make any money. This year we are making some money. The cost of doing business in A and B houses, I will venture to say, was $1.75 to $1 in a well modern-built house. The insurance alone on the Rock lL;land elevators compared with an elevator that the J. Rosenbaum Company own in South Chicago, a private house, amounted to a difference of $31,000 — ^insurance alone. • Mr. Mayer. That is, those two elevators are not fireproof? Mr. Rosenbaum. Yes, sir ; there is $20,000 difference in insurance on A and B and a modern house. I have an elevator at South Chi- cago — a modern house, of the capacity of both these houses that will do more work than both of these houses for the same money, and I think I am paying all the houses are worth. You have got to force business into them. They are open for everybody. I had no preference over anybody in getting these houses. They were offered to many others without success. But having houses along the line and having my private house, I took them reluctantly, on the advice of my associate. And, as I said, the first year they made no money ; there was a money loss. This year they are going to make some money. Mr. Marble. Were they offered to anyone not engaged in the grain business, do you know ? Mr. Rosenbaum. I do not know anything about that. Mr. Marble. These offers that you speak of from elevators, were they made to people simply to run public elevators and not engage in any grain business, or were they offered to men who were exten- sive grain dealers ? Mr. Rosenbaum. I do not know. I know that the Milwaukee offered us a like elevator free of charge. Mr. Marble. I believe in your lease of these houses that the road also contracts to switch grain from your Irondale house to these houses for $3 a car? Mr. Rosenbaum. Yes, sir. Mr. Marble. What is the regular switching charge ? Mr. Rosenbaum. Three dollars. Mr. Marble. And they simply contracted to continue the regular switching rate of $3 ? Mr. Rosenbaum. I guess we do not pay any more than anybody else. Mr. Marble. There is no grain that comes into these elevators except from your Irondale house ? Mr. Rosenbaum. Yes, sir. Mr. Marble. Some other grain ? Mr. Rosenbaum. Yes, sir. Mr. Marble. Some other grain that is bought on track ? Mr. Rosenbaum. Yes, sir; comes direct there. Mr. Marble. What proportion ? B GRAIN ELEVATOR INVESTIGATION. 81 Mr. EosENBAUM. I couldn't tell. Mr. Marble. Isn't that a small proportion that is bought only on delivery day? Mr. RosENBAUM. Oh, no ; bought every day. Mr. Marble. Bought every day and put in there ? Mr. RosENBAUM. Yes, sir. Mr. Marble. You spoke of forcing business into these houses — what do you mean by that? Mr. RosENBAtJM. You have to create business ; you have to go into the country and buy it. Chicago is not tributary for wheat. You have got to make the business. Mr. Marble. How do you get your wheat into your elevator ? Mr.. Rosenbaum. J. Rosenbaum has houses in Kansas City, Colo- rado, Omaha; we buy it at Kansas City and other places and force it here. Mr. M4RBLE. How do you get that grain into your public elevator ; that grain that you buy ? Mr. Rosenbaum. I do not buy any. Mr. Marble. That the Rosenbaum Grain Company buys; how is that forced into your elevator ? Mr. Rosenbaum. I will have to let my son answer that ; who man- ages the details of it. I am not active on the board. I do not know anything about the details. What little I know would be, perhaps, misleading. In a general way I know. Mr. Marble. Are you familiar with the terms of the contract be- tween you and the Chicago, Rock Island and Pacific Railway Com- pany for the erection of an elevator at Kansas City, Kans. ? Mr. Rosenbaum. I am. Mr. Marble. Can you tell us why that contract was made ? Mr. Rosenbaum. We had a lease of an elevator from the Rock Island, which was an old-timer; no good. I do not know what the capacity was. We asked the Rock Island to build an elevator of sufficient capacity to do the business that we were doing. They told us they could not do it ; had no money that they wanted to put into the elevator, and we finally agreed that we would put up the elevator and they could pay us back in installments, but the contract itself is the best evidence on that. They can pay for it at any time in cash and own the property. We took a lease for ten years. We also got a cent and a quarter for transferring, which was then paid by other roads, and we considered that we could not afford to spend over a quarter of a million dollars to put in any property of that kind with- out having equal facilities with others doing business. Mr. Marble. Are you getting that cent and a quarter now ? Mr. Rosenbaum. No, sir. Mr. Marble. As I remember that contract, you were to pay for the rent a sum equal to 5 per cent of the amount that elevator cost ? Mr. Rosenbaum. Correct. Mr. Marble. And the railroad company was to pay you the cost, with 5 per cent interest on the deferred payment ? Mr. Rosenbaum. Yes, sir. Mr. Marble. And was to pay you in sums equal to one-fifteenth of the freight bills paid by you to the company ? Mr. Rosenbaum. I think that is correct, 82 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Have you paid any rent- Mr. Mayer (interrupting). You have that wrong. Mr. EosENBAUM. I was to have 15 per cent of the gross freight. Mr. Marble. Have you paid any rent ? Mr. Rosenbaum. Yes, sir. Mr. Marble. How much rent have you paid ? Mr. Eosenbaum. I will have to look it up ; I do not know. Mr. Marble. Isn't it a fact that you have ceased paying rent because the elevation is stopped by an agreement with the company? Mr. Rosenbaum. No, sir ; we stopped it before ; we stopped paying _ rent, as, under the agreement, the Rock Island agreed to furnish equipment to do the business. Last year they were not able to fur- nish any equipment; in fact, I think they issued an embargo. We told them we couldn't afford to pay rent, and we would not pay rent until they furnished us equipment as per agreement. We did not think we were called upon to pay rent when they did not give us the facilities to do business. Mr. Marble. By " equipment " what do you mean ? Mr. Rosenbaum. Cars. Mr. Marble. As a matter of fact, you were not paying rent for that then? Mr. Rosenbaum. No, sir. Since then, Mr. Biddle, who was very much opposed to paying one and a quarter cents transfer, who wanted to be in peace and harmony with everybody, the Commission included, wanted to know whether we would not hold that in abeyance until a final decision was ren- dered, and in the meantime we should not pay rent, and we agreed to do that. Mr. Marble. You understand a final decision in what case? Mr. Rosenbaum. In the case whether one and a quarter cents shall be the right charge. AVhenever the final decision is rendered, we shall abide by it. Mr. Marble. You understand that if that decision should be in favor of one cent and a quarter at Council Bluffs — that is what you refer to? Mr. Rosenbaum. No, sir ; that is at Kansas City. Mr. Marble. Then, that you will collect the one and a quarter cents for all the time along. It is simply the payments that are in abeyance ? . Mr. Rosenbaum. I do not know about that. We merely held it in abeyance until a decision should be rendered ; whether it is going to get back or not, I do not know. I will try to get all that belongs to me. I am not a philanthropist. Mr. Marble. Mr. Rosenbaum, what purports to be a copy of this contract reads in this way : The amount so determined, together with 5 per centum per annum thereon from the date of said acceptance, shall be paid by the Rock Island Company to the said J. Rosenbaum out of his gross earnings, as hereinafter described, rep- resenting the refunding to said J. Rosenbaum of a sum equal to 15 per centum of the gross earnings of the Rock Island Company from freight charges on each and every car moving into or out of Kansas City, Kans., which shall bo transferred through said elevator, or, which having originated on the line of the Rock Island Company, and not having been transferred through any elevator at Kansas City, Kansl, shall be forwarded by J. Rosenbaum & Company, or his GBAIN ELEVATOR INVESTIGATION. 83 allied interests from Kansas City, Kans., over lines of railroad operated by the Rock Island Company, whether it is transferred through said elevator or not, provided, hovcever, that said payment shall not in any case exceed one and three-quarter cents per hundred pounds. The point I want to direct attention to is, what is meant by " his allied interests?" Mr. EosENBAUM. I own interests in other. companies. Mr. Mayer. There is a paragraph in the contract that defines that. Mr. Marble. Will you turn to that ? Mr. Mayer. I think paragraph 24. Other companies in which he is interested. Mr. JMarble. It is not 24. Mr. Mayer. It is toward the close of the contract. Commissioner Prouty. If that is defined in the contract we need not spend any time on it. Mr. Rosenbaum. You read that we will ship over the Kock Island, provided the rate was as low as any other rate. Mr. Marble. These allied interests are country elevators ? Mr. Rosenbaum. Yes, sir ; also a terminal at Fort Worth. Mr. Mayer. It is paragraph 21. Mr. Marble. Now, then, these country elevators of yours ; they are buying grain from the farmers ? Mr. Rosenbaum. Yes, sir. Mr. Marble. In Oklahoma, Kansas, Iowa Mr. Rosenbaum (interrupting). We own no houses in Iowa. Mr. Marble. Do your country elevators belong to State associa- tions of grain dealers in the States where they are located? Mr. Rosenbaum. I think not. Mr. Marble. Do you know whether or not they do ? , Mr. Rosenbaum. No; I wouldn't answer that positively, but I think they are not allied with any association, except it might be in Illinois. Mr. Marble. Do your country elevators at any point where they are buying take prices from anyone else as to what they shall pay, or agree with anyone else what they shall pay ? Mr. Rosenbaum. They have positive instructions not to. Mr. Marble. It is your understanding that they operate as inde- pendent dealers and not as parties of any association ? Mr. Rosenbaum. Yes, sir. Mr. Marble. You also buy from othfer elevator men, do you not? Mr. Rosenbaum. We do. Mr. Marble. Do you buy from farmers' elevators? Mr. Rosenbaum. We do. Mr. Marble. Would you buy from a countryman who owned a country elevator and operated it ? Mr. Rosenbaum. I think we always have. Mr. Marble. How about a scoop-shovel man? Do you ever dis- criminate against them if they have the grain? Mr. Rosenbaum. No. At the same time it is not profitable to buy from a scoop-shovel firm. Mr. Marble. Why? Mr. Rosenbaum. Because you do not get what you buy. They are not reliable. 84 GKAIN ELEVATOR INVESTIGATION. Mr. Marble. You would be willing to buy grain from a scoop- shovel man and pay him for it if he was reliable ? Mr. EosENBAuar. As a matter of fact, we do. Mr. Marble. You mean they are not reliable ? Mr. RosENBAUM. As a matter of fact they do not have the money. They have got to have the money before it leaves the station. Mr. Marble. It is for that reason that you found them unreliable. Mr. Rosenbaum. We have found them unreliable. There are some exceptions. Mr. Marble. You buy of those exceptions? Mr. Rosenbaum. Yes, sir. "\Miere we find the man that is good for any overdraft we buy of him, but we want to be satisfied on that. Mr. Marble. That is all. Mr. Mayer. Let me ask a question. Mr. Marble has asked you with reference to the purchase price. What was the investment in the elevator? Mr. Rosenbaum. At Kansas City? Mr. Mayer. Yes. Mr. Rosenbaum. I think $257,000, in round figures. Mr. Mayer. And the plans and specifications and vouchers all passed through the railroad company ? Mr. Rosenbaum. They were all passed and O. K'd, the plans, by Mr. Stevens, a vice-president of the road at that time, and approved by him. All vouchers, monthly vouchers, and pay rolls were sub- mitted and approved by the Rock Island Railroad Company. Mr. Mayer. Now, the contract provides that that elevator becomes the property of the railroad at once — do you remember that ? Mr. Rosenbaum. -Certainly ; when they pay for it. Mr. Mayer. And they agreed to pay you in installments ? Mr. Rosenbaum. Yes, sir. Mr. Mayer. And while it is unpaid for, you are charging them 5 per cent on the money you put into the elevator? Mr. Rosenbaum. That is all. Mr. Mayer. You are paying them 5 per cent rent on the total cost of the elevator ? Mr. Rosenbaum. On the total cost. Mr. Mayer. So that if the total purchase price of the elevator is paid back to you to-morrow, your rent will continue to be 5 per cent on the total investment? Mr. RosENBAuiM. Certainly; absolutely. Mr. Mayer. And instead of paying you in cash, they are paying you by allowing you 15 per cent on the gross freight? Mr. Rosenbaum. Yes, sir. Mr. Mayer. That is all. Mr. Rosenbauji. May I make a little explanation ? Commissioner Prouty. Certainly. Mr. Rosenbaum. Mr. Marble asked me a question about buying from scoop-shovel dealers and others. Now, if you will allow me a few minutes T would like to be heard on that. The J. Rosen- baum Grain Company does not care — our orders go out every day by telegraph to different people to bid so much. We have no agreement of any kind not to buy of this or that person, but we are careful, and years of experience have taught me — I have had to pay for it — that GRAIN ELEVATOR INVESTIGATION. 85 we have got to bo careful. J think in 97 per cent of the cases that you buy grain you have to pay for it from 3 days to 6 weeks before you see it. It takes a large amount of money, and we have got to be careful. As to discriminating against the farmers' elevators, gentlemen, you know that the farmers' elevator companies and corporations have an agreement that if any farmer sells to an outsider they must pay a cent a bushel to the corporation. Who is the greatest discriminated against ? We have to pay a cent a bushel more to get it. I heard a gentleman talk that they can not sell from Mason City. We were doing business in Memphis in 1904. We bought grain all over Iowa for Memphis, and I think the farmers' corporations and associations are closely allied and discriminate against others more than they are discriminated against. Thank you. Mr. Makble. I just vv'ant to ask you another question. Do you own any railroad stock? Mr. EosENBAUM. I am sorry to say, no. Mr. Marble. Does any railroad official or stockholder or emploj^ee own any stock in your grain company ? Mr. RosENBAUM. No ; and I am sorry for that, too. Mr. Marble. Or have any beneficiary interests? Mr. Eosenbaum. None whatever. Mr. Marble. Or any share in your profits ? Mr. Eosenbaum. No ; never had, for which I am sorry. Mr. Mayer. Have they at any time ? Mr. Eosenbaum. No, sir ; they have not. Mr. Jackson. Mr. Eosenbaum, at the time you made arrangements about these elevators A and B in Chicago were they then unoccupied, and had they been without a tenant for some time ? Mr. Eosenbaum. They had. I think they had been without a ten- ant, without being operated, for between two and three years. Mr. Jackson. Were they, or either of them, in a partial state of decay ? Mr. Eosenbaum. Both of them. Mr. Jackson. Were they, from such inspection that you made of them at the time, deteriorating from month to month by reason of their being not occupied ? Mr. Eosenbaum. From day to day, as any property of that kind will deteriorate faster without being used than with use. Mr. Jackson. I think you referred to the fact that there was some expense attached on the part of the Eock Island Eailroad Company to the carrying of these elevators before you went in there. They had some watchmen, didn't they ? Mr. Eosenbaum. I think their operating department told me that their expense of maintenance was from $5,000 to $6,000. Mr. Jackson. Was our company relieved of that charge after you went in there ? Mr. Eosenbaum. Entirely. Mr. Jackson. And in addition to being relieved of that charge, was it also a part of this arrangement that the repairs to the property should be kept up during your occupancy by you ? Mr. Eosenbaum. The working part — the interior. 86 GRAIN ELEVATOR INVESTIGATION. Mr. Jackson. In addition to those two savings on the part of our company, what increased revenue did our company get from these elevators by reason of this agreement with you? Mr. RosENBAUM. I understand that we paid your company in the past year nearly $15,000 switching bills. Mr. Jackson. Was that an earning for our company which we did not have prior to your taking hold of the property ? Mr. RosENBATjM. We had no elevator down there; we didn't give you anything. Mr. Jackson. We didn't get any switching charge for those two elevators ? Mr. RoSENBATJM. No. Mr. Jackson. Is it true that you also created certain new busi- ness from which we derived a revenue which went into the elevators ? Mr. RosENBAUM. Why, I think I would be safe in saying that in the past two years, that the business you have gotten from us, that more than one-half we created from other roads outside of yours. Mr. JacksOn. Then, to sum it all up, is it a fact that during the time that these elevators were without a tenant they were an actual charge of five or six thousand dollars a year, as you understand it, to the company, besides the deterioration which was going on from day to day, and that after you went in that expense charge of $5,000 or $6,000 for watching and keeping the property heated, and so on, was saved to the company; that there was a switching earning of something like $15,000 a year, and a considerable revenue to the com- pany on the business which you created ? Mr. RosENBAUM. .Yes, sir; certainly. Mr. Jackson. That is all. Commissioner Pkouty. That is all, Mr. Rosenbaum. Witness excused. E. F. Rosenbaum, called as a witness, being duly sworn, testified as follows: Mr. Mabble. You reside in Chicago? Mr. Rosenbaum. Yes, sir. Mr. Marble. You are engaged in the grain business? Mr. Rosenbaum. Yes, sir. Mr. Marble. You are connected with — the firm with which you are connected, what is its name? Mr. Rosenbaum. The J. Rosenbaum Grain Company. Mr. Marble. The one which the gentleman just on the stand testi- fied about? Mr. Rosenbaum. Yes, sir. Mr. Marble. And you operate these Rock Island elevators, your company ? Mr. RosENBAtJM. Practically; yes, sir. Mr. Marble. What do you mean by " practically?" Mr. Rosenbaum. They are leased by J. Rosenbaum, who turns the operation of them over to the corporation. Mr. Marble. Mr. Rosenbaum a moment ago said there would be no business in these elevators unless it was forced in, and when I asked him for an explanation he referred me to you for that; what was meant by the term; how do you get grain into these elevators how do vou force it in ? GEAIN ELEVATOR INVESTIGATION. 87 Mr. RosENBAtJM. Years ago when the public elevators were oper- ated, grain came here from all parts of the country. Competing markets did not exist to any great extent. This was a great central market. Markets like St. Louis, Kansas City, etc., were not in exist- ence at that time. To-day those conditions are diflferent. The grain does not come here of its own accord. We go after it. We are ex- porters as well as public warehousemen. We go out and meet com- petition as far as we can and bring the grain here. Mr. Marble. How do you force it into the warehouse ? Mr. RosENBAUM. If we desire to put some of the grain into the public warehouse which we bring here, we sell it to some other firm on the board of trade, at either a fixed difference or the best bargain we can make with them. They in turn put it into the house. Mr. Marble. You sell it to go to store? Mr. Rosenbaum. We sell it to go to store. Mr. Marble. And you determine what warehouse it shall be; de- termine what it shall be, and then deliver the warehouse receipts to them? Mr. Rosenbaum. Well, that isn't quite true. It is assumed that it will go into the warehouse which we operate. Mr. Marble. As a matter of fact, it does go into the warehouse ? Mr. Rosenbaum. Yes, sir. Mr. Marble. You heard Mr. Stream's testimony ? Mr. Rosenbaum. Yes, sir. Mr. Marble. Was that substantially descriptive of the way in which you do business ? Mr. Rosenbaum. Yes, sir. Mr. Marble. You sell it at a little less than the market price — an eighth of a cent? Mr. Rosenbaum. It is not always an eighth. . Mr. Marble. It is not less than an eighth ? Mr. Rosenbaum. Sometimes. Mr. Marble. How much? Mr. Rosenbaum. A sixteenth of a cent sometimes. Mr. Marble. And sometimes you pay more ? Mr. Rosenbaum. Yes, sir. Mr. Marble. How much more? Mr. Rosenbaum. We have only been in the public warehouse busi- ness a little over a year, and our experience is somewhat limited. I do not know that we have ever paid more than an eighth of a cent. We may have. Mr. Marble. You buy back the future from the man you sold the cash to? Mr. Rosenbaum. Yes, sir. Mr. Marble. And really use a part of your earnings to get the grain into the warehouse? Mr. Rosenbaum. Yes, sir; very often. Mr. Marble. Is practically all of your business done in that way — the most of it? Do you make a full warehouse charge on the bulk - of your business ? Mr. Rosenbaum. I should say that practically on all that — a good portion of it at least — the first charge is spent in bringing the grain here. Mr. Marble. And in order to get just your position, as I under- 88 GRAIN ELEVATOR INVESTIGATION. stand it from what you say, it would be this: That if you did not take these public elevators and give away a portion of this charge; if you did not go into the grain business, but simply operated a pub- lic warehouse and charged the statutory rate, it is your opinion that no grain would come to Chicago and go into the public houses? Mr. RosENBATjM. That is my position. Practically none. Mr. Mahble. And that the public warehouse man, by giving away 'a portion of this charge, instead of monopolizing the market, creates ^a market? Mr. EosENBATjM. That is the position I take. Mr. Maeble. But it is a fact that the public, the man who does not own a public warehouse, is not in position to receive and ship grain in Chicago and deal on the board of trade, in selling cash and buy- ing futures? Mr. Rosenbaum. I wouldn't say that; as a matter of fact a great many firms do business that haven't any public or private elevator". Without the facilities they are at a great disadvantage here or at any other market. Mr. Marble. How do they get grain to Chicago ? Mr. Rosenbaum. They have to meet the market. Mr. Marble. How do they do it ? Mr. Rosenbaum. You will understand that it is not at all profitable at all times to put grain into a public warehouse. There are times here — up to this year — when the public houses were practically empty, have been for five years — no business in the public houses. This year, under existing conditions, they are much better able than they have ever been during the past eight years, I should say. There are times when there is a much better domestic market east of Chicago or a foreign market, and that will permit the shipper, of course, to meet any competition. Mr. Marble. Even then, if the grain is sold on the board of trade, it has to go through the warehouse and pay three-quarters of a cent ? Mr. Rosenbaum. No, sir; the independent shipper buys his grain in tlie west, orders it to Chicago over any road for transfer, and the grain is transferred and shipped east. Mr. Marble. But no delivery on the future can be made that way. Mr. Rosenbaum. If it is sofd on the Chicago market that has to be done through a public elevator. Mr. Marble. That business is practically all done through the firms which operate public elevators — is that right ? Never mind what the reason is ; it is done that way, as a matter of fact ? Mr. Rosenbaum. It originates with them. Mr. Marble. The grain business to Chicago of that sort is done by the firms which operate the public elevators ? Mr. Rosenbaum. It originate^ with them. Mr. Marble. Originates. What do you mean by that? Mr. Rosenbaum. They bring the grain here. Mr. Marble. And sell the cash and buy th.e future, and then when the time for future delivery comes, sell that and pass the grain on. Mr. Rosenbaum. That may be the way. The conditions change. There isn't a fixed condition here. You have variable conditions, and the conditions to-day are entirely different frOm what they were yesterday, or what they may be to-morrow. So to make a positive GEAIN ELEVATOR INVESTIGATION 89 statement to a general,, v)roi:)Osition would not be correct. In a gen- eral way, the business is done in that way. Mr. Makble. How much grain have you in these two public ware- houses now ? Mr. RosENBAUM. Roughly^ speaking, 1,800,000 bushels. Mr. Marble. What proportion of, it has been forced in bv vou by this method? "' Mr. RosBNBAUM. Oh, I should Say practically all of it. Mr. Marble. The public is not 'halving and storing and delivering on the future? I'll' Mr. RosENBAUM. No, sir. Well] the public is dealing in the futures. : Mr. Marble. Yes; I understand that. The speculative public. Mr. RosENBAUM. Not the speculative public alone. The public at large is dealing in the future. .; Mr. Marble. But they are not buying cash and putting it into the elevators, and paying the carrying charges to deliver on the future. That is not a profitable business? Mr. Rosenbaum. No ; not just now. ^ ^ Mr. Marble. If it was, you wouldn't give , away this eighth of a cent? TI Mr. Rqsenbattm. No, sir. Mr. Marble. Or whatever you have to to make these deals ? Mr. Rosenbaum. That is correct. Commissioner Prouty. Who owns the grain that is in these public houses now? Mr. Rosenbatjm. Why, the grain in our elevators may be held by 50 different people. Commissioner Prouty. That is to say, that the grain that is in store in the public warehouses in Chicago is not necessarily owned by the men who operates these warehouses as a whole? Mr. Rosenbaum. No, sir; it is not. Commissioner Prouty. Proceed, Mr. Marble. Mr. Marble. With whom are you making these — how are you sell- ing cash current and buying futures back in the way it is done at the present time, the bulk of the business? Mr. Rosenbaum. The bulk of our business is done with S. H. Woodbury & Co., Jackson Brothers & Co., Booth & Co., and two or three others. Mr. Marble. You sell them the cash and buy back the future. Are they obligated by any agreement with you to hold that grain in your warehouse to deliver to you on the future? Mr. Rosenbaum. They own this grain outright. Mr. Marble. Yes; I understand. But they are not obligated le- gally? Mr. Rosenbaum. No, sir ; as a matter of fact the larger firms prob- ably do not deliver back to us the identical grain which they received. Commissioner Prouty. When is this delivery back to you made ? Mr. Rosenbaum. Any time during the current month. Commissioner Prouty. It may be immediately? Mr. Rosenbaum. It may be immediately. Commissioner Prouty. Is it usually immediately ? Mr. Rosenbaum. In our case it is usually immediately. 90 GKAIN ELEVATOR INVESTIGATION. Mr. Marble. What would you say, as an expert in this business, as to the possibility of the grain man, not a grain dealer, operating a public warehouse in the city of Chicago to receive grain and store it and earn the statutory charges? Mr. EoSBNBAUM. Will you please repeat that question again ? Mr. Marble. I say, what would you say would be the business pos- sibility of one, not a grain dealer, operating a public warehouse in the city of Chicago to earn the statutory charges on business from the general public — not to force grain in by this method which you have described ? Mr. RosENBATJM. It is almost impossible to do that. Mr. Marble. The difference between cash and future does not allow enough to make a profitable business for the general public ? Mr. RosENBAUM. Ordinarily no. Mr. Marble. What would you say if no grain dealer in the city of Chicago operated a public warehouse, but all the public houses were run by people not grain dealers, so that the proprietors would not go into the market and give away a portion of these elevator earnings — what would you say would then be the chance of a public elevator house in the city of Chicago ? Mr. EosENBAUM. Ordinarily there wouldn't be any grain in the public house at all. The grain would simply go through the private houses. Mr. Marble. Suppose the statutory rates for elevation were re- duced from the figure at which they now stand on the books to rates which you actually earn, and the houses were actually operated by men who were not grain dealers, and no portion of that given away ? Mr. EosENBATjM. Ultimately the farmer would get that much less for his grain. Mr. Marble. Why ? Mr. Rosenbatjm. If we couldn't get so much for our grain, the dealer wouldn't get so much, and if the dealer wouldn't get so much, he couldn't pay the farmer so much, and the farmer would be the loser. Mr. Marble. You give this to the broker ? Mr. Eosenbaum. To the extent of ^ of a cent? Mr. Marble. Yes. Mr. Eosenbaum. That is only an additional tax on the public ^^•a^e- houseman. Mr. Marble. Do you mean that you take another portion of this warehouse earning and bid in order to bring grain here ? Mr. Eosenbaum. At times. Mr. Marble. At times it would be so much more impossible for the Chicago man to bid the country against you? Mr. Eosenbaum. If the shipping demand is better than the demand in the pit, which happens a great deal of the time, I do not know just what percentage of time, but I should say nine months during the year — the public house would not have to be used by him at all. Mr. Marble. But at those times you do not give away a portion of that charge, do you ? Mr. Eosenbaum. Well, which portion do you mean? Mr. Marble. During the time when the grain can go on through and the public houses not be used — at that time, do you use a portion of this warehouse charge to bid against the other man ? GRAIN ELEVATOR INVESTIGATION. 91 Mr. RosENBATJM. Oiir bids may not be based on the possibility of putting the grain in the warehouse. Mr. Marble. At those times the warehouse charge does not operate in the competing ? Mr. RosENBAUM. No, sir. Mr. Marble. 'V\Tiat portion of the year would you say you use a portion of this warehouse charge in order to get grain — taking the last two years, for instance ? Mr. Eosenbaum. Our experience does not extend quite over two years, but I should say that when grain is moving most freely Mr. Marble (interrupting). It is when grain is moving most freely that you use it? Mr. Eosenbaum. Yes, sir. Mr. Marble. And that is when the bulk of the buying is done ? Mr. Eosenbaum. Certainly. Mr. Marble. So that, taking the year in bushels of grain, it would be a very considerable part of the time that you are using this charge to buy grain with and get it to this market ? Mr. Eosenbaum. It is growing less each year. The farmer mar- kets his grain different now from what he used to. Mr. Marble. Do you own any elevators at Buffalo ? Mr. Eosenbaum. No, sir. Mr. Marble. Or any portion of any elevator ? Mr. Eosenbaum. No interest in any way. Mr. Marble. Are you concerned in the operation of these line houses in the country ? Mr. Eosenbaum. We operate country houses this side of the Mis- souri Eiver. We operate a line of about 25 houses in Kansas and Nebraska, and about thesame number in Oklahoma, managed entirely from the Missouri Eiver. Mr. Marble. You are familiar -with the way in which that business is done, are you ? Mr. Eosenbaum. I am familiar with the way in general, but the management is done entirely from the Kansas City office for Kansas, and from the Fort Worth office for the Oklahoma business. Mr. Marble. You have an elevator rented from the railroad at Graham, Tex. ? Mr. Eosenbaum. Yes, sir. Mr. Marble. On what terms ? Mr. Eosenbaum. I don't know. Commissioner Prouty. I think the return of the Eock Island Eoad shows that, does it not ? Mr. Mayer. It is in writing. Mr. Marble. You are not familiar with that ? Mr. Eosenbaum. I had forgotten all about that elevator arrange- ment. Mr. Marble. Have you anything at New Orleans ? Mr. Eosenbaum. Not now. I take that back. Yes; we have an elevator at New Orleans. Mr. Marble. Is that leased from a railroad ? Mr. Eosenbaum. That is leased from the New Orleans Terminal Company. Mr. Marble. That is a local railroad there? 92 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Do you remember the terms of that lease ? Mr. RosENBAusi. Yes, sir. Mr. Mahble. State them. Mr. Rosenbaum. It is on a tonnage basis. It is a 500,000-bushel house, and we pay a quarter of a cent a bushel for every bushel of grain that goes through the house, with a minimum of $7,500 per year. Mr. Marble. That is a written contract, is it ? Mr. EosENBAtrii. Yes, sir ; we also pay 75 per cent of the insurance and taxes, and we also pay for the maintenance of the house. Mr. Marble. I will look and see if we have a copy of that contract, and if we haven't, will you furnish me with a copy ? Mr. RosENBAuiM. There is a copy on file with the Commission. Mr. Marble. To go back to these line houses. You have a line of houses in Illinois? Mr. Rosenbaum. Yes, sir. Mr. Marble. Do you know whether or not you make any discrimi- nation against other buyers? You buy grain from other elevators? Mr. Rosenbaum. Yes, sir. Mr. Marble. Do you discriminate as against the man who Mr. Rosenbaum (interrupting). "\Ve make no discrimination as to the men. We do not buy of those Avhom we consider unreliable. Mr. Marble. Substantially in the way in which the gentleman on the stand before you testified ? Mr. Rosenbaum. Yes, sir. Mr. Marble. You would buy from the farmers' elevators if they were reliable? Mr. Rosenbaum. Yes, sir. Mr. Marble. The fact that they bid more for the grain and did not make what you considered a fair profit would make no difference? Mr. Rosenbaum. It would indicate that they were unreliable if they were selling grain for less money than they were paying for it. Mr. Marble. Suppose they were making only a cent a bushel, and you consider a fair rate at the station 2 cents, would you let that fact influence you? Mr. Rosenbaum. I don't think so. Mr. Marble. Do you loiow? Mr. Rosenbaum. The matter has never come up. We would either consider them solvent or insolvent. Mr. Marble. And you would determine that by the amount at which they were paying for the grain? Mr. Rosenbaum. No. Mr. Marble. If you found they were solvent you would not dis- criminate against them because tifiey were farmers' elevators or be- cause they paid too much for grain ? Mr. Rosenbaum. That is right. Mr. Marble. Do you discriminate against the man with an eleva- tor, if he is a solvent man, and you know him to be reliable? Mr. Rosenbaum. No. Mr. Marble. Would you buy grain from the scoop-shovel man ? Mr. Rosenbaum. As a rule, no. Mr. Marble. Why? Mr. Rosenbaum. Because the scoop-shovel man usually is generally unreliable. GBAIN ELEVATOR INVESTIGATION. 93 Mr. Marble. If he would put up a bond, would you buy from him ? Mr. EosENBAUM. Yes, sir. Mr. Marble. You would not discriminate against him because he did not own an elevator? Mr. EosENBAUM. No, sir. Mr. Marble. Do your elevators belong to State associations, so far as you know ? Mr. RosENBAUM. I do not know. Mr. Marble. I think that is all. Commissioner Clark. Does your company get any allowance from any railroad company at any of these elevators that you operate? Mr. Rosenbaum. J^To, sir. Commissioner Clarii. Neither at New Orleans or elsewhere ? Mr. Rosenbaum. No, sir. At Kansas City, however, the matter is merely in abeyance. Mr. Mayer. Last week, or two weeks ago, there was some testimony here in which it appeared that $5,000 was paid as a gratuity by the Rock Island system to your company in connection with the elevator at Kansas City. I wish you would explain that. Mr. RosENBATJM. The contract provides for our payment of that elevator during the constructive period, and various sums of money were advanced during the time, and in order to avoid any unnecessary boolckeeping we made an agreed sum to cover all these charges; we made the sum of $5,000, which was Mr. Mayer (interrupting). As a matter of fact, what was the exact total interest owing your concern for moneys advanced on that structure ? Mr. Rosenbaum. Figured on the basis of 5 per cent, it amounted to 4,965 odd dollars. Mr. Mayer. And it was a lump sum ? Mr. Rosenbaum. Yes, sir. Mr. Mayer. Mr. Marble, due to the fact that he does not live in Chicago, has an idea that futures are always a profit as against cash sales, and consequently you are making money this year. Mr. Rosenbaum. Yes, sir. Mr. Mayer. How was it last year between .cash sales and the futures ? Mr. Rosenbaum. As a rule, the cash current was selling above the futures. Mr. Mayer. So that the sale of the future' would be at a loss? Mr. Rosenbaum. Yes, sir; a big loss. Mr. Mayer. There are times frequently here when the future is a price less than the cash current, not including the carrying charges or interest and storage. It was so last year. Mr. Rosenbaum. It was so last year, and has been for four or five years. Mr. Mayer. What is the principal part of your company's busi- .ness, domestic or export? Mr. Rosenbaum. Export. Mr. Mayer. And how many million bushels of wheat do you export a year? Mr. Rosenbaum. I couldn't answer that question offhand. Mr. Mayer. From fifteen to twenty million bushels ? 94 GEAIN ELEVATOR INVESTIGATION. Mr. EosENBATJM. No, not so much; of all grains, I should pre- sume so. Mr. Mayek. So that grain that you handle is grain that is pur- chased and you export principally ? Mr. KosENBAUM. Yes, sir. Mr. Mayer. Domestic business is very small ? Mr. RosENBAUM. Very small. Mr. Mayer. That is all. Commissioner Prouty. That is all, Mr. Rosenbaum. You are excused. (Witness excused.) Commissioner Prouty. We will take a recess until 10 o'clock to- morrow morning. Mr. Makble. Will you bear with me a minute, Mr. Commissioner, and then I can finish with Mr. Rosenbaum? What is the rate fixed by statute for storage in public elevators now; is it the rate you are charging ? Mr. Rosenbaum. Three-quarters of a cent per bushel for the first ten days and one- fortieth for each succeeding day. Mr. Marble. Isn't it a fact that the rate fixed by the statute is a cent and a quarter, and that this three-quarters of a cent is fixed by agreement among the Chicago elevator men ? Mr. Rosenbaum. As a matter of fact, I believe there are two rates. The State of Illinois fixes a maximum, and the board of trade fixes the going rate, which is, of course, always within the maximum. Mr. Marble. Is that fixed by the board of trade or the elevator men? Mr. Rosenbaum. I believe that rate is fixed by the board of trade ; but I am not positive on that question. We must advertise it once a year, what the rate will be. Mr. Marble. I am requested to ask you this question: You said you would buy from a farmer's elevator if they were financially worthy. Are you familiar with the refusal or failure of your com- pany to bid the farmers' elevator at Mason City ? Mr. R,osENBAUM. I am not. Mr. Marble. You do not know whether you concluded that they were an unreliable company? Mr. Rosenbaum. I do not; no. In the bidding in the State of Illinois, practically all of our bids are made from two places — Cham- paign and Decatur. We employ a broker at each place, and we pay them so much per bushel for each bushel they buy; and naturally, if they buy from parties who are unreliable, they are very apt to lose the amount. Mr. Marble. You are not familiar with the refusal or failure of your company to bid the farmers' elevator at Mason City ? Mr. Rosenbaum. I am not. Mr. Mayer. You do hot know that you did refuse ? Mr. Rosenbaum. No. Commissioner Prouty. We will take a recess until 10 o'clock to-morrow morning. At 4.40 p. m. the Commission took a I'ocoss until 10 o'clock a. m., Tuesday morning, October 16, 1906. GRAIN ELEVATOE INVESTIGATION. 95 Chicago, III., October 16, 1906 — 10 o'cloch a. m. Present: Commissioners Prouty, I^ane, and Clark. Commissioner Peouty. Mr. Marble, are you ready to call some witness ? Mr. Marble. Is Mr. Gambrill here ? Richard Gambrill, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside ? Mr. Gambrill. At 917 Evanston avenue. Mr. Marble. Chicago ? Mr. Gambrill. Chicago, 111. Commissioner Peouty. What is the name of the witness? Mr. Marble. Mr. Gambrill. What is your business, Mr. Gambrill ? Mr. Gambrill. I do a general brokerage business, a little commis- sion business, and buy for eastern exporters. Mr. Marble. Grain business on the Chicago Board of Trade ? Mr. Gambrill. Yes, sir ; I have some correspondence. That grain does not come through Chicago. Mr. Marble. Did you hear the testimony of Mr. Stream yesterday ? Mr. Gambrill. Mr. Rosenbaum was on the stand when I came in. T heard four or five minutes of his testimony. Mr. Marble. Mr. Stream testified concerning certain transactions by which, as he put it, he forced wheat into his public elevator and named you as one of the brokers through whom he had those transac- tions, selling you cash wKeat and buying the future back from you and having a spread between the two prices sufficient to include all carrying charges, interest, insurance, and storage, and a commission of about one-eighth of a cent. Do you recognize the transactions by that description? Mr. Gambrill. Some of them. Mr. Marble. What is the volume of those transactions you have had with the South Chicago Elevator Company during the current j'ear ? Mr. Gambrill. Well, some of the grain that probably was handled that way, I bought for Mr. ShaflFer in the country. In July I prob- ably bought between 600,000 and 750,000 bushels— probably 700,000. In August it was not quite as large a volume. I bought that grain on overnight limits and limits from Mr. Shaffer during the day, exer- cising my right as a broker in wiring, 'phoning, and carding dealers through Illinois and Indiana. Most of the grain was bought in that section, with, the exception of a few hundred thousand bought in Kansas City. Mr. Marble. Being guided in the price paid in the country, by the bid made you by Mr. Shaffer ? Mr. Gambrill. On overnight bids; yes, sir. Various elevator people would have prices and I would buy the grain and get broker- age for buying such grain, the same as I buy for Hancock & Co., of Philadelphia, and Bassett & Co., of Newport News. Mr. Marble. Those transactions would show the elevator company or Mr. Shaffer as your principal and you as a broker? Mr. Ga3ibrill. Yes ; the grain was bought in my name. 96 GRAIN ELEVATOE INVESTIGATION. Mr. Marble. That is always true, is it not, when a broker buys for a principal ? Mr. Gambeill. Not necessarily. I specify on some cards that the bids are for such and such an eastern house. That is to obviate any difficulty; in case of late acceptance, I am not responsible for the loss, if any occurs. Mr. Maeble. On other purchases you do not put the name of your principal, so far as the seller of the grain is concerned ? Mr. Gambeill. He knows me. Some is billed to Mr. Shaffer and some to Kichard Gambrill. I have in my drawer at present 14 cars of wheat billed to me on consignment. That wheat stands absolutely in my name. I may order it into the elevator on my name. Mr. Maeble. You also buy cash wheat of Mr. Shaffer, do you ? Mr. Gambeill. Yes, sir. Mr. Maeble. It all goes into the South Chicago Elevator in your name and you at the same time sell a future for an equal amount of grain of the same grade to Mr. Shaffer ? Mr. Gambeill. Not necessarily to Mr. Shaffer. I might sell it openly in the pit. In July I sold Mr. Maeble. Well, these transactions we are talking about — there are many transactions where you buy it in the country under Mr. Shaffer's offer to take it or buy of Mr. Shaffer on track and immedi- ately sell him a future for the identical amount of grain? Mr. Gambeill. Yes ; as a rule. I buy for other people besides Mr. Shaffer, but Mr. Shaffer's has been the largest volume. Mr. Maeble. I will ask about that. On those transactions of that sort, have you any speculative interest in them ? Mr. Gambeill. Very slight. I receive brokerage for the cash and brokerage on the futures. Mr. Maeble. That eliminates speculation, does it not? Your in- come is certain? Mr. Gambeill. On the floor, yes, sir. Mr. Maeble. Buying the cash from Mr. Shaffer and selling the future to Mr. Shaffer, there is no speculation in your mind whether you will make or lose by the total transaction ? Mr. Gambeill. Not in that case. Mr. Maeble. You know, taking the cash grain at the price you have paid and letting it go into the elevator and wait until the delivery of the future, that identical grain can be delivered out and make a profit to you? Mr. Gambeill. Yes, sir. Mr. Maeble. The price of th,e future is no guaranty of the price of the cash grain in that month, is it? Mr. Gambeill. Absolutely not, except the cash may be in the mar- ket here— the past few years I have seen cash wheat at a very heavy premium over the option. At the present time the cash wheat is at a discount. We have various grades of grain; for instance, the two- hard, which is deliverable at a penalty of 2 cents a bushel on regular contracts on the board, is selling at a premium over two. Mr. Marble. Take the price of a December future. Now, there is no indication in that future, except the estimate of those skilled in the market as to what the actual price of cash grain will be in Decem- ber? GRA^N ELEVATOR INVESTIGATION. 97 Mr. Gambeill. It changes every half hour during the day. Mr. Marble. And may be very different in December. Now, if a man sells a future and does not buy cash grain to store against the future he is speculating, is he not ? Mr. Gambeill. Absolutely. Mr. Maeble. If the cash grain you buy should be delivered by you on other trades and you part with the ownership of that, you would still be under contract to make good your future to Mr. Shaffer, would you not ? Mr. Gambeill. Whoever would hold the contract. Mr. Maeble. Suppose you bought cash, grain. Suppose you say, I will sell it in the market and will deliver it to my Nfew York corre- spondent. You would be still obligated to deliver that number of bushels to Mr. Shaffer when it became due ? Mr. Gambeill. In the meantime I might go into the market and buy a certain amount of grain. If I sold one hundred thousand wheat to Hamlin-Snyder, of Baltimore, the contract would be based on the future. I would go into the market and buy fifty or a hundred future. Mr. Maeble. To satisfy Mr. Shaffer? Mr. Gambeill. Yes, sir ; they may stay open until the actual wheat is delivered, or there is a process of ringing we have on the exchange by which the trades may be worked out that way. Mr. Maeble. That is the way you prevent the speculative element from coming into these transaction ? Mr. Gambeill. Well, there is more or less speculation on any trans- action. For instance, during the day I may be buying on the basis of an option and put out a bid. Mr. Shaffer may say, I will give so much on December wheat. He does not guarantee any loss I run. Mr. Maeble. Take the cash wheat you buy on track arid sell a future against it to Mr. Shaffer. I understood you to testify that on a transaction of that kind you had no speculaive interest and your profit would be certain. Mr. Gambeill. That is right. Mr. Maeble. I want to see just what you have to do to make certain of that. Would you have to keep that identical cash wheat in store to deliver on that future ? Mr. Gambeill. Not the identical, but grain of a similar grade. Commissioner Claek. If you sold that wheat to somebody else, you would be bound by the future you sold and there would be a speculative element involved as to what that would cost you when the time for delivery came? Mr. Gambeill. The question in that case would be whether the wheat would ring up; and if not, there is always a question involved. A house may fail or something of that kind. You may not be able to make prompt settlement. Commissioner Claek. If you buy this grain from Mr. Shaffer and sell him back a future against it and put that grain in a public ware- house and retain possession of the certificate representing that grain, there is no question of doubt ? Mr. Gambeill. There would be no speculation. Commissioner Claek. No speculation? Mr. Gambeill. No speculation. 98 GEAIN ELEVATOR INVESTIGATION. Commissioner Claek. If you let that wheat go out of your posses- sion, you are still bound by your futul-e that you have sold ? Mr. Gambeill. Yes, sir. Commissioner Claek. And there is a speculative element as to what that is going to cost you when the time to deliver comes? Mr. Gambeill. Yes, sir; there would be. Commissioner Peouty. What do you in point of fact do with the certificates that you obtain from the public warehouse on Mr. Shaf- fer's grain? Mr. Gambeill. Very few of these certificates pass through my hand's. - I deliver them out on the contracts. If I, for instance, would buy 50,000 or 100,000 bushels of wheat from any elevator con- cern to-day and sell the current month, I would simply give up .the name of the principal and Mr. Shaffer himself would deliver. I would turn it over and say, deliver to so and so. Commissioner Protjty. You mean you never receive the public warehouse receipts actually ? Mr. Gambeill. I never paid for all of them. Commissioner Peotttt. If you receive the public warehouse receipts you pay the money for the grain? Mr. Gambeill. Yes, sir. Commissioner Peouty. If you do not receive the receipts you would not actually pay the money for the grain ? Mr. Gambeill. No, sir. Commissioner Peouty. In what part of the instances do you actually receive the receipts on your transactions with Mr. Shaffer? Do you ever receive the receipts ? Mr. Gambeill. Sometimes. When the grain comes in biUed to me I sometimes take them up through various commission houses and sometimes through Mr. Shaffer. Commissioner Peouty. In that case what do you do with the receipts ? Mr. Gambeill. The bills of lading from the country are surren- dered by the various commission houses and the grain is put into the elevator in my name. I indorse it and they deliver out on contracts. Commissioner Peouty. You take the receipt and indorse the re- ceipt and hand it over to Mr. Shaffer ? Mr. Gambeill. I act as a broker in the matter. That is absolutely the extent of my liability. There was a great deal of that business done until recently. As long as my friend, Mr. Hill, seems to be interested in the matter, I wish to say that recently there has been a rule passed on the board that virtually prohibits — that is, in my estimation — prohibits a broker like myself doing business in the country. That placed Chicago in the position of a country village, you might say ; that is, we have passed a rule on the board, and as a majority of the members voted for it everybody else is compelled to submit, and that is, we have a call in the afternoon and on that call prices are bid and asked and trades made, and on that basis no man can go out and bid over a certain price in the country. Since that has been established my business has been virtually cut off. Commissioner Peouty. You can not bid a price in the country Mr. Gambeill. Except a price arbitrarily fixed by the call. Since that has gone into effect I have virtually ceased to bid the country. Mr. Maeble. Have you a copy of that rule ? GKAIN ELEVATOR INVESTIGATION. 99 Mr. Gambrill. No, sir. Mr. Marble. Can you furnish us one? Mr. Gambrill. I can get one for you ; yes, sir. That, to my mind, is as detrimental to trade as anything I know of, and I bring this up with due consideration, after thinking this over last night. 1 take very little interest in railroad matters any more, but it seems to me as long as your august body is looking into matters and being seconded by a gentleman for whom I have the greatest regard, I think it is well to bring out all these things. Commissioner Clark. I want to ask you a little more aboilt buy- ing grain. The South Chicago Elevator Company buys grain out in the country, does it not ? Mr. Gambrill. Yes, sir. Commissioner Clark. And they sell you large amounts of such grain before it arrives in Chicago, do they not? Mr. Gambrill. No, sir ; they bid in the country every day, and I bid at times for them. Commissioner Clark. Don't they sometimes sell you grain in large quantities before that grain arrives in Chicago? Mr. Gambrill. No, sir. Commissioner Clark. Do they ever sell you grain with the under- standing that upon its arrival it will be put into the public ware- house and the receipts delivered to you ? Mr. Gambrill. When the grain is sold me I do not know whether they intend to put it — most of it they have sold me has been in a public house. They could sell me grain to arrive. I have bought cash grain to arrive and for my own personal account. Corn is wanted to ship, for instance. There is no brokerage in that at all. Commissioner Clark. I am talking about deals where the broker- age does go — where they sell you wheat or grain and buy back the same amount. Mr. Gambrill. They do not necessarily at all times buy it back. Commissioner Clark. I do not say at all times. Please confine yourself to one specific deal. They do sell you, do they not, 50,000 bushels of wheat, for instance ? Mr. Gambrill. Yes, sir. Commissioner Clark. After that arrangement is made with you, that wheat is put into a public warehouse ? Mr. Gambrill. Yes, sir ; and stands in my name. Commissioner Clark. And warehouse receipts are issued? Mr. Gambrill. Yes, sir; in store. Commissioner Clark. Do you pay Shaffer & Co. cash for that amount of grain when you get those receipts ? Mr. Gambrill. Not at all times. Commissioner Clark. Do you generally ? Mr. Gambrill. As a rule I do not. Commissioner Lane. What is the purpose of that trahsaction ? Mr. Gambrill.' I suppose these gentlemen want to earn some carry- ing charges for their elevators. If the elevators did not carry the grain, I doubt whether there would be much grain here. Commissioner Lane. And they can not carry the grain themselves unless they contravene the law of Illinois, when it is their own grain ? Mr. Gambrill. I believe there is a law on the books to that effect. I hav^ji)«ai^;^#£^^sa!is^l(l|pH|^ know positively. 100 GRAIN BLKVATOE INVESTIGATION. Commissioner Lane. "Well, tell me, or tell the Commission if you can, why that general scheme as carried out is not properly construed as a device by which you avoid the effect of the local law ? Mr. Gambkill. Well, I do not know. I have never looked into that matter very deeply. I am not interested in an elevator here at all and I have never given the matter much thought. Commissioner Lane. But you get a sure and certain profit of one- eighth of a cent a bushel out of the transaction? Mr. Gambeill. Anything done through me I most assuredly do. Commissioner Lane. And there are other brokers of the same kind that do the same kind of business with these elevators? Mr. Gambeill. That I can not state. Commissioner Lane. Can you give us an estimate as to how much business in millions of bushels you do in the course of a year in that way? _ Mr. Gambeill. Well, I probably handled 2,000,000 bushels the last six months. Commissioner Lane. Two million bushels the last six months? Mr. Gambeill. Practically. We bought in the country Commissioner Lane. I mean these specific transactions in which you get the one-eighth of a cent brokerage. Mr. Gambeill. I guess 600,000 or 700,000 bushels. I could not tell without going over my books. I could furnish any information by looking over my books. Commissioner Lane. That transaction in essence is not bona fide as a sale of grain, is it? Mr. Gambeill. I would think so ; just as much so as any ordinary transaction. It is a bona fide transaction, and I receive a brokerage for it. Commissioner Lane. So far as you are concerned that may be true, but from the standpoint of a warehouse man, you being used as a medium by which the wheat is taken out of the warehouse owner's name and put into your name, and you getting a certain and sure one-eighth of a cent a bushel without risk, do you regard that as a bona fide transaction in the sale of wheat ? Mr. Gambeill. So far as I am concerned, I do. Commissioner Lane. As to the warehouse man, what do you think ? Mr. Gambeill. I do not see but that is covering the letter of the law. Commissioner Lane. You do not think it is a trick ? Mr. Gambeill. I do not. Commissioner Lane. And do not think it is a sham ? Mr. Gambeill. I certainly do not. Commissioner Peouty. If you transfer those warehouse receipts back to Mr. Shaffer, Mr. Shaffer thereby becomes the owner of that grain ? Mr. Gambeill. Anybody that has possession after I indorse those receipts — anybody that has possession is the owner of the grain. Commissioner Peotjty. If he continues to hold possession of them, he continues to be the owner ? Mr. Gambeill. Yes, sir. Commissioner Lane. There is an instant that he is the owner of the wheat ? GRAIN ELEVATOB INVESTIGATION. 101 Mr. Gambeill. Yes, sir ; that may be delivered to thirty houses in the trade. A great deal probably was delivered the same day to other members of the trade. The receipt is a negotiable receipt, and the possessor, unless it is obtained by fraud, is the actual owner of the grain. Conunissioner Lane. That is all. Mr. Marble. Mr. Gambrill, suppose the prohibition of the law re- garding the storing and mixing of the grain belonging to public warehouse proprietors in their own public warehouses were with- drawn and Mr. Shaffer was free to buy grain in the country, put it into his warehouse, sell a future, and hold the grain for delivery on that future — except for the payment to you of one-eighth of a cent a bushel and the different name on the warehouse receipt, would that transaction be any different from these transactions, concerning which you have testified ? Mr. Gambeill. How is that ? Mr. Maeble. I will ask the stenographer to repeat the question. (The question was repeated by the stenographer.) Mr. Gambeill. Well, I do not know that I can answer that ques- tion intelligently or not. In the first place, no grain is mixed in a public elevator to the best of my knowledge. Mr. Marble. By " mixed " I mean mixed with other grain of the same grade, not to raise the grade, which is forbidden the owners of public warehouses. Mr. Gambeill. I do not know that I could answer that. Commissioner Peouty. Let me put you a question. That elevator is operated in the name of the South Chicago Elevator Company ? Mr. Gambeill. Yes, sir. Commissioner Peouty. Suppose Mr. Shaffer' himself put the grain into the South Chicago Elevator and received in his own name the warehouse receipt, would that transaction stand any different in that case from what it does after you have indorsed and turned over the receipt to Mr. Shaffer ? Mr. Gambeill. I would think it made a material difference. Commissioner Prottty. Why ? Mr. Gambeill. In the first place, I was the actual owner of the grain when it went into the elevator. That stands as a self-evident fact. Commissioner Peouty. Yes; but when you transfer those receipts to Mr. Shaffer he becomes the actual owner of the grain, so there is simply a moment of time that you are the actual owner of the grain, but the practical result of the transaction is the same in each case. Mr. Gambeill. I would suppose in the case the grain was turned over to me in Chicago — that grain I bought in the country — ^most of it stands in my name after I obtain possession of the bills of lading. Commissioner Peouty. That is where you buy the grain yourself? Mr. Gambeill. Yes, sir. Commissioner Peouty. That is a different transaction. Mr. Gambrill. Most of my transactions have been of that order. Coinmissioner Peouty. Anything more, Mr. Marble ? Mr. Maeble. There are transactions which are not of that order where you buy cash grain in Chicago of Mr. Shaffer. You testified to that? 102 GEAIN ELEVATOK INVESTIGATION. Mr. Gambeill. Yes, sir. Mr. Marble. As to those, you do not feel capable of answering the question as to the difference between the two transactions ? Mr. Gambrill. Well, as I say, I consider myself the actual owner, whether for a minute or a month of time, until the grain is delivered. That is simply a technical question. Mr. Marble. Even though you did not pay for the grain ? Mr. Gambrill. Well, I have paid for some of it. Even in the case I did not pay for the grain, the grain belonged to me. If I hold the elevator receipts and they are made out to me, that grain belongs to me. Mr; Marble. You are speaking of the letter of the law, your legal rights ? Mr. Gambrill. Yes, sir. Mr. Marble. This rule of the board of trade — I had that in mind as a thing to be brought out in this investigation, and you anticipated me just a little. Will you describe that a little more fully, exactly what that rule is ? Mr. Gambeill. I only know in a general way. The rule, to my mind, is so contrary to the law, such a restraint to trade, that I have rather ignored it. Mr. Marble. Tell us what it is. Mr. Gambrill. It is this: That in bidding for corn, oats, rye — wheat is not included in the call — certain prices are established at 1.15 — between 1.16 and 1.30. They have a call immediately after the close of change. For instance, Mr. Woodbury may bid me for 5,000 corn for the first half of November shipment — ^he would bid me 42 cents. I would sell him that corn for 42 cents. That establishes a price for the first half of November corn. Now, I want to buy corn in competition with Buffalo, Indianapolis, Toledo, or Cleveland. It makes no difference what bids I may have in hand from eastern ex- porters or interior men, I am compelled to go into the country and bid 41^ cents for the first half of November corn. That absolutely holds good. Nobody in the West, no one of my correspondents in Ohio or Indiana — Ohio grain very seldom comes here except in case of stress in the market — but in Indiana, Illinois, Kansas, Nebraska, no man can go out and bid more than 41 J cents. I may have orders that I can bid 43 cents on. Mr. Marble. Are you free or not, to influence that closing price by yourself bidding the price you are able to make ? Are you free to go there and bid ?■ Mr. Gambrill. Yes, sir ; but the quantity exchanged on that call is so limited that a man does not always want to show his hand. Commissioner Clark. What is the penalty if you violate that rule ? Mr. Gambrill. I think the rule says expulsion. I have not looked into the matter very closely. Mr. Marble. It comes to this, does it, that the bidding that is to be done for the twenty- four hours must be done within the business hours of the board of trade and on the board of trade, and other country bidding during the time the board is closed must follow the closing bid on the board of trade ? Mr. Gambrill. Not only country bidding, but any bidding after the close of the market until the opening at 9.30 o'clock the next GRAIN ELEVATOR INVESTIGATIOIT. 103 morning must be according to the prices established on the call of the board. Mr. Maiible. It must follow the closing bid — any buying while the board is closed ?. Mr. Gambeill. Yes, sir ; and I for one have quit it, because to my mind it is money thrown away, and is an unfair proposition and a restraint to trade. Mr. Marble. What is the purpose of that? Do you know? Are you familiar? Mr. Gambeill. I think some friends here of Mr. Hill could tell you. Mr. Marble. Mr. Hill is not an issue, here. Mr. Gambrill. This is a sort of heart to heart talk, I understand, to bring out the facts. Mr. Marble. I say, do you know what the purpose behind that resolution is? Mr. Gambrill. May I ask you a question ? Mr. Marble. If it is pertinent to the investigation. Mr. Gambrill. What reason has Mr. Hill to put forward interroga- tions to me through you ? Mr. Marble. Mr. Hill has not asked you a question through me. I am asking if you know the purpose behind this resolution? Mr. Gambrill. I do not, except to let the smaller commission men — a great many of them were dissatisfied. They claimed that the elevator people were getting the majority of the trade. This is to curb — ^put every man on an equal basis, and have a price established every day that no man can bid higher. Commissioner Prouty. The elevator men are usually members of the board of trade, are they not? Mr. Gambrill. Yes, sir. Commissioner Prouty. And the small commission man — is he a member ? Mr. Gambrill. Yes, sir. ■Commissioner Prouty. You mean by the small commission man the man that sells oh commission? Mr. Gambrill. "Well, as a rule, the commission houses will not carry a large line of grain unless they have a place to stop off. They will not go into the country and take an almost unlimited amotmt of grain. Mr. Marble. There is a relation between this rule and the trade with the public elevator men you have testified to, is there not ? Mr. Gambrill. No ; I am simply speaking more or less personally regarding this rule. You asked about .this grain I bought. I have quit bidding the country and explained the reason why. You are making a one-horse town out of Chicago so far as the grain market is concerned. Mr. Marble. Can you tell us whether or not the public-warehouse bidding for grain has any relationship to this rule? Mr. Gambrill. They dare not bid higher than this price. There is no man a member of the board who dare bid over the price bid on the call. Mr. Marble. Why do they not go there on the call and bid; if they want to bid a higher price for grain, why don't they go there and bid? 104 GRAIN ELEVATOR INVESTIGATION. Mr. Gambeill. I do not know. I see no reason. Any man is at liberty to go there. It is a public call for members of the board. Mr. Marble. If you want to buy grain at a price higher than the call is likely to close at, why don't you go there and bid the country and get the grain ? Mr. Gambrill. In the first place, if I had an order for 100,000, Baltimore, New York, or Boston, I would certainly be foolish to step in on the call and show my hand on 5,000 or 10,000, and bid the top limit. Commissioner Clark. You receive orders of that kind after the hours of closing, don't you ? Mr. Gambrill. Yes; I receive orders daily from eastern corre- spondents, not on Chicago terms. Some are based on Chicago terms, and some on eastern terms. I cover territory east of Chicago as well as west. Commissioner Clark. Then, if the closing price here should be 42 on corn, and after the board closed you got an order for 100,000 bushels, for which you could afford to pay 44, you would be obliged to confine your bid to 41^, and if you did not get it for that, lose the deal? Mr. Gambrill. Yes, sir ; so far as Chicago terms are concerned. ■ Commissioner Prouty. How do you bid the market? What methods do you employ ? Mr. Gambrill. Sometimes I have postal cards.- Largely by wire when I am active or trade is active — largely by wire. Sometimes by • circular letter and sometimes by telephone. Commissioner Lane. There was some testimony given yesterday to the effect that Chicago was no longer the natural market for much of this grain. Do you think that is due in any sense to the rules of the board of trade? Mr. Gambrill. Very largely. Commissioner Lane. The board of trade itself is injuring Chicago as a grain market? Mr. Gambrill. I think certain interests in the"^ Chicago Board of Trade are so shortsighted that they are killing Chicago as a grain center. Commisioner Lane. Therefore, according to the testimony given yesterday, it is necessary to artificially force grain into this market? Mr. Gambrill. Not at all. Chicago is naturally situated to draw grain from a large section of country. Just such a rule as I have mentioned in some cases is prohibitive to bringing grain here. Toledo is a competitor of Chicago. It goes to Nebraska and buys on the Union Pacific through St. Joe, and buys on the Rock Island — people like Paddock-Hodge — New York houses and Baltimore houses are in the market, west of the river, and Chicago has to compete against , those people. According to this rule we are restricted as to the price we can bid the country. Any other market is open. It is free trade and seller's rights, except as to anybody here in Chicago. Wliy this rule was passed I do not know. I voted against it, but I accept the inevitable. It is gradually killing the grain trade of Chicago. Commissioner Lane. If that rule were erased from the rules of the board of trade it would not be necessary for the warehouseman to artificially force grain into his warehouse, would it? GRAIIir ElJiiVATOR INVESTIGATION. 105 Mr. Gambeill. I can not say that they artificially force it here. A. Chicago elevator man is like anybody else. He is in the trade for the money and not for glory. I do not think there is any sentiment in any man bidding for grain in Chicago. Commissioner Prouty. The Chicago elevator man does offer a price which is higher than a person who must pay the elevator charge can afford to pay. Mr. Gambrill. Not at all times. He may want a certain line of grain — a certain class of grain to keep. While the grain is moving, Chicago will buy it. It is the only market in the world, that when the grain tTops of the West are moving — there are few markets, Minneapolis, Cliicago, and Duluth, perhaps, that will step in and (ake any volume of grain coming. They expect to get a profit by holding, I suppose. That is the way it looks to me. I am not an elevator man. That is the common-sense view of it. Mr. Hill. Is it not a fact, Mr. Gambrill, that this rule has only been in effect two or three months? Mr. Gambrill. Yes, sir. Mr. Hill. Is it not a fact, a notorious fact, that prior to the pas- sage of that rule the elevator men of Chicago were paying more for grain to come to Chicago and sending the bids out at night generally a quarter of a cent higher than they would pay on the Chicago mar- ket to the receivers that were bringing in grain? Mr. Gambrill. No, sir; they never did it in my case. I will say for the Chicago elevator men that they never played any way but square with me. Mr, Hill. I am talking about the bids sent out. Mr. Gambrill. 1 never in my experience found but what if a per- son went to an elevator man he would give another man a chance to make brokerage. Mr. Hill. I am not talking about brokerage or commissions. I am asking about bids for cash grain on the Chicago market already here for sale and grain to arrive, and the manner in which they send out bids. Were not the bids they sent out in excess of the bids they would give to the receiver that had the grain here ? Mr. Gambrill. I think not. Mr. Hill. Is it not a fact that this rule in no way prohibits you from buying grain on Baltimore terms or any other eastern terms you wish? Mr. Gambrill. I can bid what I please for Baltimore. Mr. Hill. You can bid what you please for any other market, can you not ? Mr. Gambrill. Yes, sir. Mr. Hill. It is only Chicago that is affected ? . Mr. Gambeill. Yes, sir. I have always brought the majority of my grain for the last twelve years here. Every pound of my grain the Fast twelve years has paid tribute to the Chicago market. Mr. Hill. Going back to warehouse receipts, in trading on Decem- ber terms or basis of December future, for J. C. Shaffer & Co., what became of the receipt in trades of that kind — the warehouse receipts ? Mr. Gambrill. I do not know where they are to-day, sir. Mr. Hill. Have you the contracts open to deliver Mr. Shaffer grain in December ? " 106 GRAIN ELEVATOR INVESXJGATION. Mr. Gambrill. Some of them are and some are closed. Mr. Hill. You do not know where the warehouse receipts are? Mr. Gambrill. So far as I am concerned, all of my grain with the exception of probably 30 or 40 cars — less than that, 25 cars — are completed with Shaffer & Co. Commissioner Prouty. His testimony is that he does not retain the warehouse receipts. He passes them over. Mr. Hlll. Who carries that? Commissioner Prouty. He says he does not know. When they have been indorsed by him and passed over to Mr. Shaffer he has no further knowledge. Mr. Hill. But he has contracts to deliver somebody grain two months hence. Do you transfer the December contracts? Mr. Gambrill. I sell it in the pit — the options. Most of my con- tracts have been in the current month. Mr. Hill. That is all. Commissioner Lane. Was this rule of the board of trade passed by the smaller members of the board? Mr. Gambrill. I do not know. I voted against it. I am a small member. Commissioner Lane. Was there a contest in the board of trade? Mr. Gambrill. There was a most decided contest. Commissioner Lane. Was it passed on account of the feeling of a large number of the lesser members of the board — those that do not have control of the market and make such large deals — that the larger men were getting an advantage? Mr. Gambrill. Well, the outcome of it was, I think, from a spirit of dissatisfaction. The trade had been somewhat dull for some time and I suppose they thought this would help matters. It was really copied after a rule they have in Minneajpolis. They have a rule of that kind, but I have never looked into it, but I believe in that case the elevator men do not bid in the country at all. I think it is a deal in which the commission man is allowed only a certain com- mission and turns it over to the elevator man next morning. I do not state that positively. I think there is a rule of that kind. It seemed to work so well there that the commission houses thought they would try it here. To my mind it is a great detrimeint to the market and contrary I think Mr. Marble. Mr. Gambrill,. will you furnish us a copy of that rule? Mr. Gambrill. I will endeavor to get it for you. I have not one in my possession. Mr. Hill could furnish you one without any trouble. Mr. Marble. I prefer to get it from you and make it part of your testimony. Bring it in some time this afternoon between 2 o'clock and 5. Mr. Gambrill. Yes, sir. Mr. Marble. Was there a certain opinion of the attorney in refer- ence to this rule? Mr. Gambrill. To the best of my knowledge it was read in open meeting. At least the board was called to order and the opinion was read and expressed that it was contrary to the laws of the land for any such rule to be passed. Mr. Marble. Can you get us a copy of that opinion also? Mr. Gambrill. That was the opimon read from the balcony of the GRAIN ELEVATOE INVESTIGATION. 107 board of trade. I do not know whether there is any record of that kept or not. Mr. Marble. Will you see if it is convenient for you to bring that? Mr. Gambeill. I will endeavor to get you one. Mr. Maeble. I thinlc that is all. (The witness was excused.) Sam Finney, called as a witness, being duly sworn, testified as follows: Mr. Marble. What is your business, Mr. Finnejr? Mr. FiNNET. Grain commission. Mr. Marble. Where do you reside? Mr. Finney. Kenilworth, 111. Mr. Marble. Are you a member of the Chicago Board of Trade ? Mr. Finney. Yes, sir. Mr. Marble. Are you familiar with this rule concerning which Mr. Gambrill has testified ? Mr. Finney. More or less familiar. Mr. Marble. How do you regard that rule? Mr. Finney. In what respect ? Mr. Marble. As to its effect on the trade and a free market. Mr. Finney. I think it is an open question. The rule was advo- cated by the smaller commission firms for the reason that they con- sidered that they were not getting the amount of trade due them. For instance; corn would be selling on the market at 40 cents a bushel, the large elevator concerns would go out in the country and bid almost the market to the local dealer in the country, thereby elimi- nating the profits that the ordinary commission man would get, and he was, as it were, out of the running, and as business was slack they were hunting a method by which they could get returns and estab- lished this rule, which I understand is similar to the One in force at Minneapolis. Mr. Marble. Ytfu are a commission man? Mr. Finney. Yes, sir. Mr. Marble. You also buy grain? Mr. Finney. Occasionally; but as a rule I handle it on com- mission. Occasionally I buy. Mr. Marble. Have you any elevator interest? Mr. Finney. I have a small elevator down in the country — a country elevator. Mr. Marble. Where is that located? Mr. Finney. At Finney, a little station in the country. Mr. Marble. Who are your competitors at that station? Mr. Finney. I have none right there. It is only a switch siding there. Mr. Marble. Have you in your business come into conflict or con- tact with the Iowa Grain Dealers' Association? Mr. Finney. I handle grain from Iowa on consignment and occa- sionally buy from there. I have had no particular dealings with them. I am not a member of that association. Mr. Marble. Do you confine your dealings in Iowa to members? Mr. Finney. No; I take it from anybody except scoop shovelers. Mr. Marble. Why don't you take it from them? Mr. Finney. They have no money invested. They are a water fly- 108 GRAIN ELEVATOR INVESTIGATION. dfe night and handle by the week or month. They can afford to han- e it cheaper than the regular dealer. Mr. Marble. You do not regard that as fair to the regular dealer? Mr. Finney. No, sir. Mr. Marble. And want to discourage that kind of competition ? Mr. Finney. I do. Mr. Marble. How is the price you pay at Finney fixed ? Who fixes that price? Mr. Finney. There are prices that are tried to be made by a certain number of dealers in that locality. They ar« adhered to at times and at times they are" not. Mr. Marble. An association of dealers that try to agree? Mr. Finney. They have meetings once a week or once a month. Mr. Marble. They try to agree on what prices they will pay the farmer? Mr. Finney. Yes, sir; sometimes they adhere to the prices and sometimes they do not. Mr. Marble. You mean that some of the dealers belonging to the association do not adhere to the prices ? Mr. Finney. Yes, sir. Mr. Marble. Do you punish them in any way for not adhering to the prices ? Mr. Finney. None whatever. Mr. Marble. It is simply a gentleman's agreement? Mr. Finney. That is all; just as you would agree in any other line. Mr. Marble. Are there dealers in this territory who are not in this agreement ? Mr. Finney. Yes; I think so. Mr. Marble. What do they do? Mr. Finney. They try to pay what everybody else is paying. These prices are not made in an exorbitant way. They are only made to keep one man from trying to cut the throat of the next man. Mr. Marble. To put a brake on competition, aS it were ? Mr. Finney. Well, so they can handle it at some margin. Mr. Marble. Where is the territory to which you refer? Mr. Finney. Western Indiana and Eastern Illinois. Mr. Marble. Can you indicate more exactly where that territory is — what counties of Illinois and Indiana ? Mr. Finney. Warren County, Ind.; Fountain County, Ind. ; Ben- ton County, Ind. ; Vermilion County, 111. That gives you an idea. Mr Marble. Are there farmers' elevators in this district? Mr. Finney. Some few. I think there are one or two or three. Mr. Marble. Are there any farriers' elevators at towns where you attempt to make this sort of an agreement ? Mr. Finney. They are in that neighborhood. Mr. Marble. Do they join in the agreement? Mr. Finney. I do not know that -they do. We do not hear any- thing from them. Mr. Marble. That would indicate that th^ do? Mr. Finney. Well, in a general way, yes; I think so. Mr. Marble. Have you had any experience with dealei^ that did • not belong to the agreement who persistently paid more than you con- sidered a fair price for the grain m that territory ? Mr. Finney. Ask that question again. GBAIN ELEVATOR INVESTIGATION. 109 (The question was repeated by the stenographer.) Mr. Finney. At all times there are dealers that are not paying the price. Mr. Marble. At some points? Mr. Finney. Yes, sir. Mr. Marble. How do you meet their competition? How do the members of the association meet that competition? Mr. Finney. They meet it the best they can. At my station I instructed my people there to me^t the competition. Mr. Marble. You have no competition? Mr. Finney. Not at that particular station, but there are adjacent stations. Mr. Marble. Have you made use of such a device as this : Paying more for grain than you considered it really worth at any station, so that this competitior would consider it unfair and buy at a loss or buy no grain at all, and so discipline him ? ' Mr. Finney. I think I have had no such experience. The prices we have had have been below a living margin at times and at other times excessive. Mr. Marble. You do not know of such a practice on your part? Mr. Finney. No, sir. Mr. Marble. You do not know of that at all? Mr. Finney. No, sir. Mr. Marble. You have heard of such things in the grain trade, have you not? Mr. Finney. I have heard of such things, yes, sir. Mr. Marble. But it has not occurred in this district of which you are testifying, to your knowledge ? Mr. Finney. I am trying to think. Everything is going smoothlj^ I do not know of anybody that is being damaged down there. Mr. Marble. There is nobody there troublesome? Mr. Finney. No, sir. Mr. Marble. Perhaps they are all in the agreement ? Mr. Finney. I just told you they were not. Mr. Marble. Where are those prices made up ? Mr. Finney. They are sent out from Chicago here Mr. Marble. Agreed on here? Mr. Finney. Yes, sir. Mr. Marble. You help to make those prices? Mr. Finney. I suppose I do to an extent, but slightly. Mr. Marble. Who else helps you? Mr. Finney. Other firms on the board of trade — Bartlett, Frazier & Co., the Rogers Grain Coinpany Commissioner Prouty. Where do you get the price you send out to your elevator? Mr. Finney. From those people I just mentioned. I do not make the price myself. Afr. Marble. You are a factor? Mr-. Finney. I have had instructions to send out the price other people make. I get prices from them. Commissioner Clark. Who do you get those instructions from ? Mr. Finney. From the people that receive the prices. Commissioner Prouty. You mean the people down in Illinois and Indiana? 110 GBAIN ELEVATOE INVESTIGATION. Mr. Finney. Yes, sir. Mr. Marble. Who personally gives you those instructions ? What is the man's name ? Mr. Finney^ Well, there are different ones. Mr. Marble. Well, from Bartlett, Frazier & Carrington? Mr. Finney. Well, Wilson Henderson. He is one of them. Mr. Marble'. He is from Bartlett, Frazier's 1 Mr. Finney. Yes, sir; he is one of them. Mr. Marble. Who from Eogers Brothers? Mr. Finney. Any member of the firm. Do you want a particular name? Mr. Marble. The one that commonly does it. Mr. Finney. Harry Newell. Mr. Marble. You mentioned some other firm. Mr. Finney. Those are the only two. You can put down Harry Patten, of Bartlett, Frazier & Co. Mr. Marble. You do not get any rebates now from railroads, do you? Mr. Finney. No, sir. Mr. Marble. Do you own any railroad stock? Mr. Finney. No, sir. Mr. Marble. Does any railroad officer, employee, or stockholder, so far as you know, own any stock in your grain company? Mr. Finney. No, sir. Mr Marble. That is all. (The witness was excused.) W. B. BiDDLE, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in the city of Chicago, Mr. Biddle? Mr. BiDDLE. Yes, sir. Mr.. Marble. You are president of the Chicago, Rock Island and Pacific Railway Company? Mr. Biddle. No, sir; third vice-president. Mr. Marble. Are you the official who had charge of the negotia- tions with Mr. Shaffer and Mr. Rosenbaum ? Mr. Biddle. I am not. Mr. Marble. Who had charge of them? Mr. Biddle. I could not tell you. It was prior to my connection with the company. Commissioner Prouty. Mr. Winchell had charge of those negotia- tions. Mr. Marble. I will call Mr. Winchell. Commissioner Prouty. You may be excused, Mr. Biddle. (The witness was excused.) B. L. Winchell, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in the city of Chicago, Mr. Winchell? Mr. Winchell. I do. Mr. Marble. You are president of the Chicago, Rock Island and Pacific Railway Company? Mr, Winchell. Yes, sir. GRAIN ELEVATOR INVESTIGATION. Ill Mr. Marble. Did you have charge of the negotiations with Mr. Shaffer regarding the purchase by your road from him of the South Chicago Elevators? Mr. WiNCHELL. I did. Mr. Marble. You are familiar with this agreement and contract and the reason for making it ? Mr. WiNCHELL. Yes, sir. Mr. Marble. You are the official who knows? Mr. WiNCHELL. Yes, sir. Mr. Marble. Now, I will ask you — this agreement is dated the 1st day of October. ^ Commissioner Prouty. What year is that — 1904? Mr. Marble. 1904. The third recital is that the second party, who is Mr. Shaffer, does not at this time have title to the said Counselman Elevators, but has control of the same. Who had title at that time, the time referred to? Mr. WiNCHELL. I am not clear on that as to who had title. Mr. Shaffer represented to me that he was in control of the property and that if we bought it he could deliver it. Mr. Marble. Do you know whether or not the executors of the estate of Counselman had title? Mr. WiNCHELL. That is my impression. I do not know that. Mr. Marble. You knew that this property was for sale by the executors before they disposed of it, did you not ? Mr. WiNCHELL. I knew nothing of it until it was brought to my attention by Mr. Shaffer. Mr. Marble. You knew that Mr. Counselman died? Mr. WiNCHELL. I knew of the fact of his death. Mr. Marble. But you did not keep track of the elevators on your road ; what was to become of them ? Mr. WiNCHELL. No; not in this case. Mr. Marble. Do you know whether or not they had been offered around the town to many men ? Mr. WiNCHELL. I do not. Mr. Marble. It had not been brought to your attention ? Mr. WiNCHELL. It had not. Mr. Marble. It is your impression that the title remained in the executors at the time that this contract was entered into? _ Mr. WiNCHELL. It was my impression — if you wai^; my impres- sion — that when Mr. Shaffer came to me he had an option on the property, had either an option or had bought it. He represented to me that he had control of the property and if I bought it that he could deliver it. Mr. Marble. Do you know whether or not you made any inquiry to determine whether or not the elevators still belonged to the estate ? Mr. WiNCHELL. I do not remember. Mr. Marble. Or whether .the estate would sell them for less than Mr. Shaffer was offering them for? Mr. WiNCHELL. I do not remember anything of that. Mr. Marble. You did not concern yourself with the question whether they could be bought cheaper than Mr. Shaffer offered them ? Mr. WiNCHELL. I did not, thinking that he controlled the property, as he said he did, 112 GRAIN ELEVATOE INVESTIGATION. Mr. Maeble. As I read this agreement — you are familiar with it? Mr. "WiNCHELL. In a general way. Mr. Maeble. The price paid is $1,000,000, and the company is obligated to pay to -the trustee of the bonds an interest of 150,000 a year semiannually and $50,000 a year on the purchase price, for the benefit of the bondholders. You make that agreement. There is another clause here — clause 4 : The said purchase price of $1,000,000 shall be paid by the the first party, to the trus- tee, in monthly instalments, commencing on the 1st day of November, 1904, of 2 cents per 100 pounds on all grain which may be delivered to said elevators, or either of them during the continuance of this agreement, and which originates on the line of the first party, west of Joliet, 111., or which is carried continuously over its own rails to the city of Chicago from any point distant therefrom 40 miles or more, together with interest thereon at the rate of 5 per cent per annum, payable semiannually. In what way does that modify this agreement to pay 5 per cent interest on the bonds and $50,000 a year on the principal? Mr. WiNCHELL. That only provides the way that the $50,000 shall be paid and the interest. Mr. Marble. But you pay the $50,000 whether any grain is shipped or not ? Mr. WiNCHELL. We do. Mr. Marble. If more grain is shipped than enough to make $50,000 a year at 2 cents per hundred pounds, you pay more than $50,000, is that correct ? Mr. WiNCHELL. Yes; we pay it to the trustee for the benefit of the bondholders. Commissioner Lane. Is there not a condition there that Mr. Shaffer shall pay back to the Chicago and Rock Island a certain amount in case he does not ship the wheat ? Mr. WiNCHELL. Yes; there is a provision that he shall ship a minimum. Mr. Marble. Is there a penalty in case he does not ship that minimum ? Mr. WiNCHELL. There is. As I remember, it is 1 cent a bushel for all short of 5,000,000 bushels a year. Mr. Maeble (referring to contract). I have not been able to dis- cover that. [Contract handed to witness.] This agreement to pay 2 cents a hundred pounds, what is the purpose of that agreement? Why did you put it in that shape instead of making simple yearly payments ? Mr. WiNCH'ELL. Because it seemed to me to be a good business plan to allow the business as far as possible to make tlie payments. In other words, the faster the business came into the elevator, the more rapidly the trustee would receive the money to the credit of the bondholders. If 25,000,000 bushels, if you please, had come in one year, the bonds would be extinguished much more rapidly than if the shipments were only 5,000,000 bushels a year. It seemed to us a good device to stimulate the business. Mr. Maeble. To stimulate the business on your line? Mr. WiNCHELL. And have the bonds' retired as fast as possible. Mr. Maeble. To pass from this contract, you have a contract at Kansas City, Kans., with Rosenbaum with a similar provision? Mr. WiNCHELL. Yes, sir; in a general way. Mr. Maeble. Except that you pay 15 per cent of the gross rate paid by Rosenbaum, not to exceed If cents per hundred pounds? GRAIN ELEVATOR INVESTIGATION. 113 Mr. WiNCHELL. I can not give the exact fact. In a general way, the payments to the elevator are based on the volunae. Mr. Marble. They are part of the freight rate of the man owning the elevator? Mr. WiNCHELL. The payments toward the elevator are based to an extent on the volume of business done. Mr. Marble. As I remember Mr. Rosenbaum's testimony, there is no agreement in that for any yearly definite payments on this con- tract, but it all depends on the tonnage carried over the line. Mr. WiNCHELL. If I remember correctly, there is not a minimum in that contract, but I will not be sure of that, because I have not seen it for more than a year. Commissioner Lane. Do I understand that you buy the elevator and pay for it out of the freight rates ? Mr. WiNCHELL. Yes, sir. Commissioner Lane. So you are paying for an elevator out of the freight rates you receive? Mr. WiNCHELL. Yes, sir; a certain part of the revenue goes toward the payment of the elevator. It is what the darky would call " timely payment." Commissioner Lane. Is not that very near like paying for adver- tising with transportation ? Mr. WiNCHELL. Well, I do not know that they have much to do with each other. Commissioner Lane. Is is not a similar proposition? Mr. WiNCHELL. It does not appeal to me as a similar proposition. Commissioner Lane. In one case you buy a certain amount of advertising space and pay for it with transportation. In the present case you buy an elevator and pay for it with freight. Mr. WiNCHELL. I do not know that the principle is the same, although I do not see the point exactly of your question. Commissioner Lane. We have recently made a ruling under the clause of the new act that the language used, that no compensation greater, less, or different shall be paid for traffic or transportation than that fixed in the schedule means that money must be paid. You are familiar with the ruling, are you not? Mr. WiNCHELL. Yes; I have seen that ruling. Commissioner Lane. In this Kansas City elevator case are not you paying something different than money ? Mr. WiNCHELL. I think not. I think we are paying money. Commissioner Lane. Yes; but you are really taking from them an elevator and you are giving to them transportation. Is not that it ? Mr. WiNCHELL. I think a fairer way to state it, Mr. Commissioner, would be that the measure of the money we shall pay is the volume of the business done. Commissioner Prouty. That does not measure the amount of money you pay. You pay so much money for that elevator. Commissioner Lane. And the way you shall pay it. Mr./WiNCHELL. And the way. Commissioner Lane. And the thing it shall be paid in. They pay you for transportation with an elevator. Mr. WiNCHELL. Not at all. S. Doc. 278, 59-2 8 114 GRAIN ELEVATOR INVESTIGATION. Conunissioner Lane. What I am trying to get at is this: why is not your contract illegal, if an advertising contract is iUegal ? Mr. WiNCHEix. An advertising contract was not illegal, I take it, two years ago. Commissioner Lane. No; but it would be now. It is a question your counsel might consider, whether or not your contract for the purchase of the elevator itself might not be abrogated. Mr. WiNCHTiTJ.. I take it you do not care for an answer from me on that. Commissioner Lane. No; I refer that to your counsel. Mr. Marble. Mr. Winchell, in this agreement as to the 1 cent in the lease of the elevator is an agreement on Mr. Shaffer's part that he will pay back 1 cent for any deficit in the 5,000,000 bushels of grain. Commissioner PROtiTT. So the contract is as stated by iix. Shaffer? Mr. Marble. Exactly. Mr. WincheU, are you familiar with this lease of the elevators to Mr. Rosenbaum? Mr. Winchell. The Chicago elevators ? Mr. Mabble. The Chicago elevators. Mr. Winchell. Oidy in a general way. Of course I can not carry all the details in my mind. Mr. Marble. Mr. Rosenbaum pays no rent, does he, for these elevators? Mr. Winchell. No; it is part of the purchase price. Mr. Marble. About the situation of these elevators which Mr. Rosenbaum gets rent free — they are located on a very busy portion of your track, are they not? Mr. Winchell. Yes, sir. Mr. Marble. C ong ested traffic there? Mr. Winchell. Well, aU of our tracks in Chicago are more or less congested. Mr. Marble. Your contract with him provides for switching from the Irondale elevator to these Rock Island elevators at S3 a car? Mr. Winchell. I do not know the rate. Mr. Marble. Do you know whether that is the regular published rate? Mr. Winchell. I do not. Mr. Marble. Did you make an estimate whether that is desirable business for the road, switching from the Irondale Elevator to that district at $3 ? Mr. Winchell. If you will permit me, Mr. Biddle is much better acquainted with the traffic details than I. Mr. Marble. Is there anything you wish to add to this* Mr. Winchell. No. Mr. Marble. I think I am through. Mr. Jackson. Mr. Winchell, to clear up this matter, under this con- tract — does the contract itself provide for any transportation, either passen ger or freight, for Rosenbaum's company? Mr. Winchell. I do not quite understand. Do you mean free transportation? Mr. Jackson. Yes, sir. Mr. Winchell. It certainly does not. Mr. Jackson. Under that contract, or under the practice under that contract, has any free or reduced transportation been furnished Rosenbaum in payment for the ele^ ator? GRAIN ELEVATOR INVESTIGATION. 115 Mr. WiNCHELL. Absolutely not. Mr. Jackson. This arrangementf as set out in the contract, is simply a maimer of paying the purchase price of the elevator agreed on in the contract ? Mr. WiNCHELL. Eather than pay all cash at once. Mr. Jackson. And the payment instead of being in transportation is in money. Is that right ? Mr. WiNCHELL. I so stated. Mr. Jackson. Now, in regard to the purchase of the Shaffer Ele- vators; it is a fact, is it not, that the first time this was called to your attention, that these elevators were for sale, was when Mr. Shaffer came to you and represented that he had control of this property and undertook to sell them to you for the company ? Mr. WiNCHELL. It is. Mr. Jackson. Had it been suggested to you or had it occurred to you that the executors of the estate would sell the property on such terms that the company would not have to pay any cash? Mr. WiNCHELL. I had not given it any consideration prior to that. Mr. Jackson. Mr. Shaffer's proposition to you involved the pur- chase of these elevators by the company in such a way that the com- pany would not have to pay any money, but extended over a series of years in partial payments. Is that not true ? Mr. WiNCHELL. Yes, sir. Mr. Jackson. That arrangement would have been impossible with the executors of the estate, would it not ? Mr. WiNCHELL. It was an arrangement that appealed to me and it did not come from any other source. Mr. Jackson. As to the value of these elevators, what did you understand when you bought the elevators for the company was their value and what steps had you taken to ascertain the value before you entered into this contract? Mr. WiNCHELL. We had our operating vice-president and chief engineer and other elevator experts go over the property, and they reported to me that it was worth well above the asking price. Mr. Jackson. Of a million dollars ? Mr. WiNCHELL. Of a million dollars. As a matter of fact, the value of the real estate was reported to m.e by those wellposted in real estate in Chicago to be a considerable portion of what i understood yester- day for the first time Mr. Shaflir paid for the elevators. I did not know what he paid for the elevators. It was one of those cases where the cost price was not attached in plain figures. Mr. Jackson. I suppose, as a matter of fact, you did not care what he paid for the elevators ? Mr. WiNCHELL. I had no choice as to what he paid for the elevators. It was property I wanted for the railroad company. It gave us an additional footing on the Calumet River, and it was property we could not afford to have go into the possession of any other railroad company, any of our western rivals. I made the best trade I could. Mr. Jackson. Did you at the time of the purchase and do you now believe those elevators were worth a million dollars to your company? Mr. WiNCHELL. I had expert opinions that they were worth more than a million dollars, and I still feel that they were worth more than that. Mr. Jackson. Now, Mr, W inchell, do these several contracts, Missing Page GRAIN ELEVATOR INVESTIGATION. 117 coTild afford to pay. That does not cover the compensation that we necessarily get for the moving of grain into these elevators. That is, we made that charge for grain that he might have to take out of one elevator and put into another elevator. Mr. Marble. This compensates you for bringing grain from his cleaning house at Irondale to these elevators ? Mr. BiDDLE. Or taking it from A and B houses to Irondale and bringing it back again, if you please. , Mr. Marble. Do you know what rate you charge for switching from Irondale to the Byrne's elevator at Thirty-first street ? Mr. BroDLE. I do not know. Mr. Marble. You do not know whether it is higher or less than this rate to Rosenbaum.? Mr. BiDDLE. I do not know. Mr. JklARBLE. Do you regard this rate to Rosenbaum as a low rate ? Mr. BiDDLE. I regard it as a low rate. Mr. Marble. And it goes over a track that is very busy? Mr. BiDDLE. I regard it as a rate that would only be justified under the pecidiar conditions that exist there, for the passing of grain back and forth, and we do it only for that reason. Mr. Marble. Customarily do you give a lower rate on a shipment that has previously paid freight ? Mr. BiDDLE. Sometimes when an export man of this kind is con- templating shipment, that is taken into consideration in making the rate. Mr. Marble. You would not do that with an interstate shipper ? Mr. BiDDLE. That would depend. We would not do it unless we did it in a manner that we considered legal. Mr. Marble. That is all. (Witness excused.) Commissioner Proutt. !Mr. Marble, do you want anything more of Mr. Biddle? Mr. ilARBLE. No; nothing more of IMr. Biddle or of Mr. Winchell. James Pettit, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you live ? Mr. Pettit. Highland Park, HI. Mr. Marble. What is your business ? Mr. Pettit. I am president of the Peavey Grain Company. Mr. Marble. What is the business of the Peavey Gram Company? Mr. Pettit. The Peavey Grain Company are warehousemen — receivers and shippers; they also do a commission business. Mr. Marble. Does this reavey Grain Company operate any ele- vators ? Mr. Pettit. It does not. Mr. IklARBLE. Any line houses m the country? Mr. Pettit. None whatever. Mr. Marble. In that part of the grain business the Peavey interests are in other corporations ? Mr. Pettit. Yes, sir. Mr. Marble. With which you are not acquainted ? 118 GRAIN ELEVATOR INVESTIGATION. Mr. Pettit. With which I am not acquainted; no, sir; except as a stockholder. Mr. Marble. Are you familiar with the grain business at the coun- try houses ? In a general way where are those line houses situated ? Mr. Pettit. The Peavey interests have line houses throughout Minnesota, North Dakota, Iowa, Nebraska, and Kansas on several lines of railroad. They are so generally scattered that I can scarcely describe them more definitely than to Commissioner Peouty (interrupting). Can you give the number? Mr. Pettit. Not accurately. I think there is something over 600. Mr. Marble. Do these elevators belong to the grain dealers' asso- ciations in those States, or in any of them? Mr. Pettit. Do they belong to the grain dealers ? Mr. Marble. Yes. Mr. Pettit. I have no knowledge of any such connection. They could scarcely belong to the grain dealers. Mr. Marble. What do you say — could scarcely be? Mr. Pettit. I can not imagine how they could belong to the grain dealers. They belong to the Peavey interests. Mr. Marble. Do they have a membership in these grain dealers' associations ? Mr. Pettit. Of that I have no knowledge. Mr. Marble. You do not know ? Mr. Pettit. No, sir. Mr. Marble. Do they attempt to control the grain on the lines where they are situated and the prices at which it shall be bought ? Mr. Pettit. Without speaking from my own knowledge, I should say not. Mr. Marble. You would say they do not ? Mr. Pettit. Yes, sir. I would like to explain that I have abso- lutely no particular connection with any country lines whatever, and no more laiowledge of the Peavey country lines than I would have of country lines operated by corporations without any connection with the Peavey corporation. Mr. Marble. Then, we wiU leave that to some other member of the company. In Chicago you have private warehouses, and public ware- houses as well ? Mr. Pettit. We have one private warehouse and one public ware- house. Mr. Marble. Were you here yesterday afternoon ? Mr. Pettit. I was not. Mr. Marble. It was testified by Mr. Stream and Mr. Rosenbaum that it was necessary for the proprietors of public warehouses in this city to force grain into their public warehouses or else earn no storage charges; and they stated to the Commission, as did Mr. Gambrill this morning, the device by which they so force grain into these public warehouses of theirs. Do you find the same conditions in your busi- ness? Mr. Pettit. May I explain it in my own way? Mr. Marble. Yes, sir; that is exactly what we want. Mr. Pettit. We purchased and operate a public elevator for the sake of the storage charges allowed us under the State law. We find that the volume of grain moving to Chicago having materially altered in the last few years, we are obliged to use every end of our organiza- GKAIN ELEVATOR INVESTIGATION. 119 tion and every facility and ability we have to bring the largest volume of grain to our own houses. Now, we have a private warehouse and a public warehouse located on our own property and immediately adjacent one to the other. Accofding to the methods by which grain business is done in this and similar markets, it becomes neces- sary for us to merchandise the grain which we bring to our private warehouse. Commissioner Peouty. What do you mean by that — "merchan- dise?" Mr. Pettit. To seU or dispose of it. It becomes necessary for us to use a means for selling that grain which comes to us. We are obliged to dispose of that grain in the Chicago market in relation to certain hedges which we have already put on the grain, protecting ourselves against fluctuations in the market. We sell that grain in certain delivery months through the sale of certain futures, and if that method is not clear to you I will be glad later to explain it. When that month comes aroimd and the contemplated delivery is made, it must be made in a public warehouse, and a public warehouse regularly under the rules of the Chicago Board of Trade. Our Peavey elevator B, which is the public regular house under our control, is not only the nearest public warehouse to our private warehouse and clean- ing house and therefore the most convenient to put the grain which we bring to Chicago into, but since we are the owners of and the operators of that public warehouse, we naturally iafluence to that warehouse aU the grain we can for the sake of the storage charge that grain wiU earn. Does that approximately cover the point ? Mr. Marble. In what way do you influence grain to that house? Mr. Pettit. We influence grain to that house by making our sales of grain to go to the public store on our own tracks, which are adjacent to our public house, and we request the buyers of that grain to have the gram unloaded in our public house, which they are glad to do, since we sell it to them on the basis of a through profit to them. Mr. Marble. You sell it to them on a basis of a through profit to them? Mr. Pettit. Yes, sir. Mr. Marble. And whether it be aflat agreement or not, at any rate you request them to send it to your house in consideration of the fact that they make a through profit ? Mr. Pettit. We do. Mr. Marble. Your deal is so hedged about that you actually know the amount of that profit which they are to make ? Mr. Pettit. We know it, and they know it. We simply add a cer- tain discount under the price at which we take the future contract from them. In other words, they buy of us at, we will say, 80, and sell on the future contract at 80^, the difference being one-eighth of a cent. Mr. Marble. The cash price being based upon the future and deter- mined by it, and with an eighth of a cent to pay the man for the sale or the purchase; is that it? Mr. Pettit. That being his profit; yes, sir. Mr. Marble. When the grain is put in the warehouse, what storage charge does it immediately earn ? Mr. Eectit. It :-.nmftdia,t,ftlv fa.lla under the public rate of storage 120 GEAIN ELEVATOE INVESTIGATION. allowed by us under the law of three-fourths of a cent for the first ten days, including taking it in and loading it out, and one-fortieth of a cent per day for each day succeeding. Mr. Maeble. Is that rate fixed by law? Mr. Pettit. The law provides the method by which the rate shall be fixed, and that the rate shall be published for a certain period each year, and we do publish that rate on the 1st of January each year. Thereupon it becomes fixed. Mr. Marble. Who fixes that rate? Mr. Pettit. We fix it. Mr. Maeble. The warehouse proprietors fix it ? Mr. Pettit. Under the law; yes, sir. Mr. Marble. The law provides a maximum? Mr. Pettit. The law provides a maximum. We provide the mini- mum under the law. Mr. Marble. Do you, in bidding the country — you being both grain merchant and pubhc warehouse proprietor — do you rive away any portion of your warehouse profits to influence grain to Chicago — do you find that necessary? Mr. Pettit. I have frequently bid a premium for grain to bring it to Chicago to be loaded into our private house and eventually sold on track, presuming it willgo into our public store, bidding a price which would assure me a flat loss through the hope that the grain may earn storage and the knowledge that it will at least earn a transfer charge through my public house. Mr. Marble. Using the one profit to make certain the earning of the other? Mr. Petttt. So to speak. Mr. Marble. You have spoken of these sales. Do you make any of these sales to proprietors of other pubhc warehouses? Mr. Pettit. We nave done so. Mr. Marble. They are hedged about in this same way so that they earn the one-eighth of a cent? Mr. Pettit. Yes, sir. Mr. Marble. No more ? "Mr. Pettit. And no more. Mr. Marble. And do you also make purchases from other pubHc warehouses on the same conditions? Mr. Pettit. I have done so. Mr. Marble. To what public warehouses have you made such sales ? Mr. Pettit. At this time I can not recall the name of one. You refer to the company, not the pubhc warehouse? Mr. Marble, les. Mr. Pettit. The Armour Grain Company. Mr. Marble. The Armour Grain Company? Mr. Pettit. Yes, sir. Mr. Marble. Have you purchased from the Armour Grain Com- pany in a hke way? Mr. Pettit. I have. Mr. Marble. Were your sales on certain days exactly reciprocal? Mr. Pettit. I do not remember any such instance. Mr. Marble. But on the same day you may be selling No. 2 wheat, for instance, and buying back No. 2 wheat from them, under this arrangement? GKAIN ELEVATOR INVESTIGATION. 121 Mr. Pettit. It might happen. Ml-. Maeble. Would you consider that swapping storage? Mr. Pettit. By no means. Mr. Marbi^e. In this way you force OTain into the wai-ehouse ? Mr. Pettit. I would like to add that I have never made a contract with the knowledge or for the purpose of equaling the amount that I am selling by the amount that has been purchased. Mr. MlSiBLE. You are friendly with the Armour people? Mr. Pettit. Yes, sir. Mr. Makble. Do you run your business in any sort of harmony with their business, by any sort of agreement with them? Mr. Pettit. We do not. Mr. Marbu;. Are the public warehousemen — — Mr. Pettit. I would like to qualify the public statement which I have referred to as to storage — that has always been uniform. Mr. Marble. That goes without saying. Are the public ware- housemen of this city organized in any way as public warehousemen? Mr. Pettit. Each company is individual. Mr. Marble. No — I mean are they organized as an association, the proprietors of these public warehouses? Mj. Pettit. They are not. Mr. Marble. Or the public warehouses? Mr. Pettit. They are not. Mr. Marble. Or the men operating them? Mr. Pettit. They are not. Mr. Marble. Have they ever been? Mr. Pettit. I know of no time when there has been any organiza- tion; no, sir. Mr. Marble. Did they ever have a written contract with each other to protect each other in the storage of grain — not to take grain away from each other? Mr. Pettit. Yes, sir; there has been such a contract. Mr. Marble. When was that? Mr. Petttt. There was such a contract up to within the last sixty days, if my memory serves me right. Mr. Marble. When did it begin? Mr. Pettit. I could not give you the date. Mr. Marble. About when? Mr. Pettit. It has lasted, I think, for some two or three years. Mr. Marble. Possibly four years? Mr. Pettit. Possiblj". Mr. Marble. Or possibly five years? Mr. Pettit. I tliink not. Mr. Marble. What was that conti-act? Mr. Pettit. The kernel of it was as regaa-ds the point that you now touch on. The storage charge of public warehouses in Chicago, as I have described, after the first ten days, including loading in and load- ing out, amounts to one-fortieth of 1 cent per day for each bushel of OTain, There was an understanding between the public warehouses of Chicago that in order that pubhc rate of storage might be maintained and in order that the public warehouses of Chicago, which are public servants just as a railroad is a public servant, might not discriminate between one holder of grain and another holder of grain, we would apportion from the storage collected by us as pubhc warehousemen on 122 GRAIN ELEVATOR INVESTIGATION. grain in store in our public warehouses, three-fifths — if I have the frac- tion correct in my memory — of that storage collected for the first ten days, which would be accumulated into a fund and be redistributed among those which had paid into that fund according to the propor- tiona;te quantity of grain which had gone into each public store during the period involved. May I make an example so as to make it more clear ? Mr. Maeble. Yes, sir. Make it just as clear as you can. Mr. Pettit. Presume that there are two public warehouses in Chi- cago — one belonging to A and one belonging to B. Two hundred thousand bushels of grain has been put into A's store and 100,000 bushels of grain into B's store, making 300,000 bushels of grain in pub- lic store in Chicago. One of these houses would pay into — they would each pay three-mths of the storage collected for the first ten days into a fund. Commissioner Proutt. You mean the storage actually collected, -or the storage which should be collected? I Mr. Pettit. The storage accruing. The storage follows the receipt, as is probably within your knowledge. That would be redistributed and paid back to these companies in proportion to the amount of grain which had gone into each public store. Therefore, if no grain had gone out, the exact amount of money which had been paid into the fund would be paid back to the subscribers thereto. If, however, 100,000 bushels had been taken out of the public store which had originally 200,000 bushels in, that company would receive back two- thirds of the amount being paid into public store and the other com- pany one-third, exactly as though that grain was still in store. In other words, the payments into the fund in every case equaled so nauch a bushel upon the grain in store at the time the payment is made, and the collections from the fund are based upon the amount of grain which has been put in store. The working of that agreement was exactly this: that during the months or seasons when grain was scarce and hard to bring to this market, the arm of the less courageous company, so to speak, was held up, and he was enabled to go out and bid a price for grain which he would sell, and it in turn would go to the public store, believing it would go to his public store, with the knowledge that if his grain were all taken out he would still, to some extent, participate in the storage which was earned by grain in other public stores in Chicago. There was an ad.ditional provision to this contract — ^or to this agreement, I should say — providing, that no public warehouseman should go to the storehouse of another public warehouseman and take out graiti for the purpose of bringing it to his own public store to earn storage on himself. There were two reasons for this: one that .we believed it was contrary to the law and the rides of the board of trade to do that; the other was that we believed it improper for one to benefit by the industry and courage of another in brmgmg grain to this market. And there was a third reason, which is a cor- ollary of the other two, that if the public warehouseman did clean out his competitor's store that his competitor would be very chary of again going out and bidding prices which would fiJl his storage, and that would be to the detriment of the trade at large. Now this agreement was canceled, as I have said, within the last sixty days because — I am now speaking for myself, but I presume. GRAIN ELEVATOB INVESTIGATION. 123 the same thought was in the minds of others — I did not know what bearing the new rate law would have upon this agreement. I knew it was entirely legal under the existing law prior to the new rate law, but I did not know, and I could not get a definite opinion as to the bearing under the new rate law upon the agreement, con- sequently I erased my name from it, and the other subscribers thereto did the same thing. Mr. Marble. Was that a written agreement ? Mr. Pettit. It was. Mr. Marble. Can you furnish us with a copy of it? Mr. Pettit. I do not think that I can. I may have a copy of it, and I shall be glad to investigate and see. Mr. Marble. If you have, will you give it to us? Mr. Pettit. If I h»ve it, I will do so. Mr. Marble. How many copies were there? Mr. Pettit. I have only seen one copy. Mr. Marble. That was your own ? Mr. Pettit. Yes, sir. Mr. Marble. How many parties were there to it? Mr. Pettit. I think there were six. Mr. Marble. Can you name them? Mr. Pettit. There would be the Pettit Grain Company, the Armour Mr. Marble. (Interruptitig.) The Armour what ? Mr. Pettit. Armour Elevator Company, the Calumet Elevator Coinpany, the Central Elevator Company, the South Chicago Eleva- tor Cornpany, J. Rosenbaum. That is six, isn't it? Mr. Marble. Was Keith a member ? Mr. Pettit. At one time I believe he was. I think he has not been in active business recently. Mr. Marble. As men went into the public elevator business they became parties to this agreement, did they? Mr. Pettit. Not necessarily. I now remember that Keith was not on the last agreement. Mr. Marble. Was he at any time a member to one of these agree- ments ? , Mr. Pettit. I think he was; yes, sir. Mr. Marble. During the life of this agreement did anyone operate any public elevator who was not a party to this agreement ? Mr. Pettit. Yes, sir. Mr. Marble. Who? Mr. Pettit. Keith; also Harris, Scotten & Co. Mr. Marble. They were never members to it ? Mr. Pettit. I can not of my own knowledge say whether or not they were. I remember that they were not at one time. Mr. Marble. Was Richardson ever a party? Mr. Pettit. No, sir; not to my knowledge. Mr. Marble. Or Counselman? Mr. Pettit. Yes, sir. Mr. Marble. Or Weare? Mr. Pettit. Not to my knowledge. Mr. Marble. The Weare Commission Company, operating a pub- lic elevator ia Chicago at the time this agreement was formed ? Mr. Pettit. I do not remember that they were, but that was a 124 GRAIN ELEVATOR INVESTIGATION. good while ago. The names, that were mentioned were the names that I recall as being signed to the last agreement. That was the reason it was fresh in my memory. Mr. Marble. Isn't it true that a certain action of Mr. Weare was the cause of the formation of this agreement? Mr. Pettit. Not to my knowledge. Mr. Marble. Who drew up the agreement? Mr. Pettit. I could not say. Mr. Marble. Who framed it? Who determined its provisions? Mr. Pettit. I do not know that. Mr. Marble. Didn't you and Mr. Marcy do that very largely? Mr. Pettit. I criticised several clauses in the first agreement and there were probably some changes made. I would not say who drew up the agreement. • Mr. Marble. Let me see if I can get an understanding. You have said that public warehousemen bidding the country find it necessary to use a part of their profits as warehousemen to buy the grain, and so force grain into Chicago into their warehouses, as was testified to by Mr. Stream yesterday. That is correct, is it ? Mr. Pettit. Substantially. I am inclined to think that you mis- understood what I said, however. I intended to say that public warehousemen — that I have paid, and I presume others have paid, higher prices for the grain with the hope that I could get that grain to our private house and sell it in such way as to influence it to go to our public house and thereby earn a transfer charge and be paid a storage on it. Mr. Marble. Now, Mr. Pettit, isn't it true that the purpose of this contract was to prevent the public elevator men from competing •against each other in that way and to confine their competition to this interior grain going to pubHc warehouses? Mr. Pettit. By no means. Mr. Marble. Didn't it prevent them from competing against each other in this way? Mr. Pettit. By no means. Mr. Marble. Did they, when you offered grain, or when grain in the warehouses was offered on the market for dehvery, did they buy grain and take it away from each other's warehouses? Mr. Pettit. No. "They bought the grain. and shipped it out very frequently. There is no provision prohibiting any such thing. That is a very ordinary procedure. The majority of the grain which has been taken out of our public elevator has been taken out by other elevator men. Mr. Marble. But other public-elevator men do not buy grain in your warehouse in the hope of gaining a warehouse profit ? Mr. Pettit. No. Mr. Marble. And pay such a price for it that no one else can pay, because they depend on the warehouse profit to put the transaction through ? Mr. Pettit. Obviously not. Mr. Marble. They can not under this contract, because the con- tract provides that the man from whom it comes shall be compen- sated and they made up a fund for that purpose. Wasn't that the purpose of that contract? Mr. Pettit. No, sir. GRAIN BLEVATOE INVESTIGATION. 125 Mr. Marble. It had that effect? Mr. Pettit. In my memory there has been only one or two cases where the warehouseman has done such a thing as that. Mr. Marble. It did prevent it? Mr. Pettit. Yes, sir; it would prevent it had anyone intended to do it. I do not remember that any warehouseman during the life of this contract had any desire or intention of taking grain from another warehouseman. Mr. Marble. That sort of dealing was common before this con- tract was formed, wasn't it? Mr. Pettit. I think not. Mr. Marble. Wasn't it? Mr. Pettit. I mentioned a case, I think, where Weare took quite a quantity of grain out of their public warehouse and put it into his warehouse, and that prevented the grain men of Chicago bidding. Mr. Marble. That is to say, it prevented the elevator man using a part of his elevator profit to get grain into his elevator because his competitor, a public-elevator man, would take the grain away from him, and so deprive him of the profit? Mi. Pettit. It might have that influence, and probably did. Mr. Marble. And this contract provided that if he did bid grain into his elevator he would earn storage on that grain, and not the other public-elevator man ? Mr. Pettit. The other public-elevator man would not. Mr. Marble. What was that case of Lloyd Smith in 1899, or thereabouts, where he took grain out of another public elevator and made some trouble ? Mr. Pettit. I have no definite memory of that. It never was a common practice. Mr. Marble. Wasn't there a penalty in this contract for taking grain out of another public warehouse? Mr. Pettit. I have no definite memory as to just what the pro- vision was. There was no penalty, if I remember it, unless it was that a warehouseman, who might take grain out of another ware- house and so operate, that that grain got into his own warehouse would to some extent not participate in the division of the fund in its bearing on that particular lot of grain — on the fund that I have described earlier. Mr. Marble. And that was done to still further discourage the taking of grain by warehousemen from each other? Mr. Pettit. Yes, sir. I want to frankly say that it was intended to entirely discourage any such practice. Mr. Marble. It was not intended to discourage the bidding of the country by a man owning a pubhc warehouse and paying higher than any man could pay that did not own a public warehouse? Mr. Pettit. It was intended to encourage the bidding of the high- est possible market price. Mr. Marble. It was not as high as possible by the pubhc-elevator man? Mr. Pettit. It was intended to encourage the building to outside independent or any other dealers of the highest possible price that could be paid, warranted by this market. Mr. Marble. Do you regard Chicago as a great grain market? Mr. Pettit. Yes, sir. 126 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Do you regard it as intrinsically powerful commer- cially, so that it is able to be a grain market if thmgs are run on an even key without combinations or rebates, etc. ? Mr. Pettit. Your question is difficult to answer, because I know of no combination or rebates ; but I still believe Chicago to be a great grain market. If you will permit me to put it in my own way, I believe Chicago to have such strong competition, and the general system — the rail situation and the moving center of crop raising, so to speak, to different centers — to be such that all grain does not go to Chicago with the naturalness and ease which it did some years ago. Therefore it takes more industry and skill and better organization to bring to Chicago the volume of grain which it gets. It becomes more important that all these things should be watched carefully. Mr. Marble. You recognize the fact, don't you, that public houses, public warehouses, using a portion of their profit to force grain into their warehouses and so overbidding others, and having a combination of this sort, are not the sort of public warehouses contemplated by the law of Illinois ? Mr. Pettit. I believe them to be exactly the sort of warehouses, as I have stated when I first spoke of this contract, as you call it, or the agreement. In the first place this agreement was to prevent any discrimination by the public warehouses, which are public servants. Mr. Marble. In what way did it intend to prevent discrimination? Mr. Pettit. Exactly this: if you and I were competing public warehousemen and business was dull you might go to your favored customer, s,o to speak, and allow him a lower rate of storage than I would. Mr. Marble. You do, don't you? Mr. Pettit. We do not. Mr. Marble. Do you, on this stuff, where you make these sales of cash and buy back the future immediately from the same man earn the whole carrying charge ? Mr. Pettit. For the period the grain is in store; yes. Mr. Marble. Isn't it a fact that the eighth of a cent the broker makes comes out of the carrying charge ? Mr. Pettit. No. That is compelled under the law. Mr. Marble. To what, then, do you charge that in your opera- tions ? Mr. Pettit. The grain account ; if it is wheat. Mr. Marble. You charge it to the profit on the grain? Mr. Pettit. Yes, sir. Mr. Marble. As a matter of fact, you perform the transaction to make the elevator storage charge? Mr. Pettit. We perform the transaction in order to make the best sale on the grain. We couldn't do it if there were a higher market for the grain. Mr. Marble. I am asking you about the times when you do it; the times when you do it you do get the grain into your elevator, don't you? Mr. Pettit. That is one object. There is another, however. As merchants, we buy and handle as much grain as possible, and we sell that grain in the highest market. We buy it as low as we can and sell it as high as we can. Mr. Marble, But as merchants GRAIN ELEVATOR INVESTIGATION. L'Zi Mr. Pettit. Let me have one word more, for I think you do not know what I am driving at. We buy it as low as we can and bring it to Chicago. Now comes the time when we must dispose of it. We look around and see where we can dispose of it to the best advantage. We may send it to Buffalo, or we may sell it for delivery in public store. If the latter, we do everything we can to influence it to our own public store. Mr. Marble. You buy that; you make a price on the cash, and the broker buys on the future, and the price for the future on the same amount at the same time, which allows the broker an eighth of a cent, and no more or no less ? Mr. Pettit. That is my custom. Mr. Marble. You do that, not because you want the grain to go to store, but because you want it to go to store in your elevator, and you want to make sure that it goes into your elevator ? Mr. Pettit. Yes. We have no choice; if the law allowed us we would put that grain in our house, but we can not carry our grain in our own house. Mr. Marble. I understand that rule, but what I am getting at is this — that transaction is for the purpose of getting that grain into your house and earning the storage charge thereon? Mr. Pettit. That is one object. Mr. Marble. What other object is there? Mr. Pettit. The other is to get the highest price for it. We have bought it; we must now sell it. There are two ways of selling. One is the merchant selling it for shipment, and the other is a merchant selling it to go to store in liquidation of the, hedging contract. Mr. Marble. You could send it to Mr. Armour's public ware- house ? Mr. Pettit. That is why I answered your question by saying that that is one of the objects. We could send it to Mr. Armour's ware- house; we could not send it to our own house. There are two reasons why we do not send it to Mr. Armour: one, it costs more to get it over there, and the other is that Mr. Armour owns his house and we own our house. Consequently we send it through the house that will Mr. Marble (interrupting). Wouldn't you have to pay a broker an eighth of a cent to put grain in any other warehouse than yours ? Mr. Pettit. Why certainly. Mr. Marble. If you sold cash grain, you would have to pay for it? Would you have any such transaction as this at any time except to get the grain into your own warehouse ? Mr. Pettit. I can conceive of no analogous case whatever. If we had sold the grain to go into Armour's store, it would have to be done in the same manner. Mr. Marble. And to get it into your warehouse the broker makes an eighth of a cent? Mr. Pettit. Yes, sir. Mr. Marble. To what fund do you charge that eighth of a cent in your bookkeeping ? Mr. Pettit. It is not charged as an eighth of a cent into any fund. I will just in a few words describe the transaction, and then you will see what I mean. When we buy the grain — presume it is wheat — 128 GRAIN ELEVATOR INVESTIGATION. it is charged ia our books — that is our method — to the wheat account. When we sell it, the proceeds are credited to wheat account. Commissioner Pboutt. At just what poiat do you credit the pro- ceeds to the grain accoxmt ? Mr. Pettit. When the grain, is paid for. Commissioner PKOtrrT. Do you credit the proceeds to the grain account when you sell it in store ? Mr. Pettit. If it is paid for. When the receipt is delivered and the check is received, the check is credited to the grain account. Commissioner Peoutt. In point of fact, do you usually deliver the receipt and receive the check when you sell this grain to the broker for store, in the first instance? Mr. Pettit. We sell it to go to store, and the custom v/hen grain is sold to go to store is that the delivery shall be made in the form of a warehouse receipt, which we immediately send over to our broker and receive his check for it. We deUver the receipt and get the check, and we credit the check to the grain accoxint. Commissioner Prouty. So that the transaction, as far as you are concerned, is closed then ? Mr. Pettit. Yes, sir. Commissioner Prouty. And the transaction is closed by your sale to the broker for store ? Mr. Pettit. It is closed as soon as the delivery of the receipt has been made on that sale; yes, sir. Commissioner Peoutt. Who, in point of fact, puts that grain in store? You deliver him the grain; you sell him the grain before it goes into store, and he puts the grain into store ? Mr. Pettit. Yes, sir. Commissioner Prouty. At what time does he pay you for the grain? Mr. Pettit. We sell it to him on track to go to store, but there is no method of determining the weight of the grain or of delivering any documents which will legally represent the grain until it is actu- ally delivered into pubhc store. Cfonsequently it is unloaded into public store in his name, and the receipt is usually issued to him, as the owner. We send that receipt to him and receive in turn his check. Commissioner Pkouty. Doesn't he at that time seU this same amount back to you on some future contract ? Mr. Pettit. The transaction is simply this : we sell him one hun- dred or a thousand bushels of wheat, and we buy back from him 100 or 1,000 or 100,000 bushels of December futures. Commissioner Prouty. The number of bushels is always the same ? Mr. Pettit. Yes, sir. That is the theory of hedging; when we buy to sell the same amount of the future, or to make a contract for future delivery equal to the amount of our purchase. When we make a sale, we buy back the same amount of future or make a con- tract of purchase of the same amount. Eventually the grain is dehv- ered on this contract of purchase. Commissioner Prouty. Now, if you make a contract of purchase, he delivers to you certificates then and there at that time ? Mr. Pettit. When we make a contract of purchase ? Commissioner Prouty. Yes. Mr. Pettit. No, sir. Contracts of purchase and of sale are made GEAIN ELEVATOR INVESTIGATION. . 129 in future months. There are several active trading months on the exchange — ^May, July, September, and December — and the large majority of contracts are made in those months. There are others made, but of smaller volume. Commissioner Peoutt. You say you buy back the same number of bushels of grain from this broker ? Mr. Pettit. Yes, sir; for future delivery. Commissioner Protjtt. For future delivery. When do you pay him for that grain ? Mr. Pettit. When the actual grain is dehvered on the contract. If we did not have a sale of a similar delivery, a contract of sale balanc- ing the contract of purchase, we would then pay for the grain; take it in and pay for it. We wouldn't be allowed to take in and pay for our own grain, because that would be owning our own grain. If it should happen that grain in our warehouse was delivered to us on such con- tract of purchase, we would be obliged immediately to sell it. I do not now recall of any such instance. But getting at exactly what I think is the intent of your question — ^when we buy this grain we make a contract of sale, we may say, in December, which we call a hedge. We would then bring this grain into Chicago and put it into our private warehouse; we might then find that the most profitable method of disposing of the grain would be to sell it to go to public store, and we would naturally desire it to go to . our own public store. We would then have these two : we would have a contract open of sale, which is the hedge, and we would have the actual cash grain. We would sell this grain on track to go to store to Mr. A. B. & Co., buying back from them at an eighth of a cent higher, which is the broker's profit, just spoken of; the December future, or making a contract of purchase. Now, what has happened? The cash grain which we had bought we have now sold. The hedge which we had sold we have now bought, so that both ends of the transaction are liquidated. Commissioner Pboutt. That is all right, so far as you are concerned. But now suppose I am A. B., who is the oroker, and you say that I have given you my check for the price of 100,000 bushels of wheat. Kindly tell me when I get back that money, plus my one-eighth. Mr. Pettit. You have contracts of sale against that, among them the 100,000 bushels which you sold to me, when you bought that cash grain. We will assume that you delivered that grain to me on those contracts; then I would immediately, after paying for that grain, redeliver it on a short contract which I described at first, which was my hedge. When I bought the cash grain, I sold a hedge against it or made a contract of purchase. The grain that you delivered to me all belonged to the man that I made the original contract of sale to, and he gives you the check for that grain. Commissioner Pbouty. It is all done at the same time? Mr. Pettit. Yes, sir; under the rules of the board, if I have a con- tract of sale balancing my contract of purchase, I am allowed to pass on your notice of deUvery to the party to whom I have the contract of sale, and he will pay you instead of me paying you. Commissioner Peouty. You have virtually, then, sold that grain? Mr. Pettit. Yes, sir. Commissioner Peouty. You have sold it and delivered it? Mr. Pettit. Yes, sir. S. Doc. 278, 59-2 9 130 GEAIN ELEVATOR IN\ESTIGATION. Commissioner PEomy. You no longer have title to the grain? Mr. Pettit. None whatever. Commissioner Proity. But the grain is in your warehouse? Mi\ Pettit. We are custodians. Conunissioner Prouty. You have sold yom" grain. That is what the transaction amounts to, and not as Mi'. Stream stated yesterday. Mr. Marble. "NMien the future becomes due, wai-ehouse receipts will be delivered to you to satisfy that future? Mr. Pettit. Yes, sir. Mr. M.VRBLE. If you discover that they are in your wiirehouse, you will immediately deliver them out somewhere else on your contracts? Mr. Pettit. \'es, sir; but the warehouse receipts are not deliv- ered to me. A notice that warehouse receipts are ready for delivery is delivered to me describing those receipts, and regardless of A\hether I want to carry the grain or not, I must deliver them out according to the law and the rules of the board. Mr. Marble. Who was the agent of the parties to this agreement to keep the accounts between them and distribute the futm-es? Mr. Pettit. ^Ir. Seaverns was the clerk. Mr. Marble. W. S. Seaverns? Mr. Pettit. I believe those ai-e his initials. Mr. Marble. Have you destroyed the copy of the contract which you had ? Mr. Pettit. I couldn't say without looking it up. 'Ms. Marble. You have not destroyed it \mder legal advice ? Mr. Pettit. No, sir; oh, no. Mr. Marble. You do not know that all of these contracts have been destroyed under legal advice? Mr. Pettit. No. Mr. Marble. Does all the grain that goes into your public ware- house earn the same storage? Mr. Pettit. Yes, sir; the same rate of storage. Mr. Marble. Does it actually earn the same amount ? Mr. Pettit. You do not mean the same amount of money? Mr. Marble. I mean the same amount of money per bushel. Mr. Pettit. No ; because it may remain in longer. Mr. Marble. For the proportionate time? Mr. Pettit. Yes, sir; it actually does. Mr. Marble. In your dual capacity, you bid the coimtry to force grain in. How can you say you earn the same storage on all the grain you get in? Mr. Pettit. I answered the question as I thought you asked it, as to whether we earned the same rate of storage. We do. To-day I may bid higher than my competitor in the country and to-morrow lower, and the books are kept, of course, according to the different systems of the different companies. If I want to charge one loss against another profit, I might have the right to do so; if I don't want to do so, I might not. I would not consider them as havuig any rela- tion one to the other. My public house is an entirely sepai-ate propo- sition, and its earnings are kept in a separate fund,' just as though I was not in the private warehouse business; and if I didn't so keep my figures I would not loiow where I stood. Commissioner Peouty. As you transact your business do you ever own any grain ? GKAIN ELEVATOK INVESTIGATION. 131 Mr. Pettit. Yes, sir; we practically always own a large quantity of grain. Commissioner Peouty. You say as soon as you buy grain you sell a future against it. Mr. Pettit. Yes, sir; we own the cash grain, but make a -contract for delivery in the future. Commissioner >Prouty. As a practical matter, then, -your grain has all been sold? Mr. Pettit. I did not understand the intent of vour question. Commissioner Peouty. While you do have legal title to the grain, in practical working you sell your grain as soon as you buy it ? Mr. Pettit. Yes, sir ; that is true with this qualification, that since I have legal title to the grain I am not obliged immediately to make my contract of sale good until the time comes around ; I am therefore privileged to sell that in the highest market and buy back my contract of sale, so that I have that grain to handle until the time comes when . I must make my contract good, and I may sell it for shipment or I may sell it to go to public store. May I add one word in answer to this last question ? Commissioner Prouty. Certainly. Mr. Pettit. As regards "giving awayj" as you call it, a profit, I want to make this statement: Our bidding in the country bears no relation whatever to our business as public warehousemen under any ordinary conditions. We do not confuse the two in any way. Your questions arose from my first stating that I could conceive of 'the time and had experienced the time when we had gone out and bid an extra high price in the country to influence grain to Chicago, hoping that we might earn storage on it. But in ordinary practice the one branch of the business has no relation to the other. Mr. Maeble. You absolutely know that you can earn three-quar- ters of a cent by giving an eighth of a cent to the broker on the grain which you bring in ? Mr. Pettit. Yes, sir. Mr. Marble. There is no hope about that — ^you have that knowl- edge absolutely? Mr. Pettit. We are allowed that for bringing the grain in and put- ting it into storage and giving ten days' storage. Mr. Marble. Will you bring us one of those contracts if ycu can find it? Mr. Pettit. If I can find it, I will be very glad to do so. Mr. Marble. You have stated that this contract was intended to prevent certain evils. How do you propose to prevent those evils, now that that contract has been ended? Mr. Pettit. As far as I am concerned, there will have to be Mr. Marble (interrupting). How .do you propose to prevent those evils ? Mr. Pettit. We have lost one protection against those evils. Mr. Marble. What other protection have you? Mr. Pettit. The good sense of the elevator proprietors, and their experience and good sense, and their regard for the law and the rules of the board. Mr. Marble. Is there any written agreement of any sort? Mr. Pettit. None whatever. Mr. Marble. Any verbal agreement of any sort? 132 GRAIN ELEVATOR INVESTIGATION. Mr. Pettit. None whatever. Mr. Marble. Any gentleman's agreement of any sort? Mr. 'Pettit. None whatever. Mr. Marble. As I understand it, to put it succinctlyj there is now no combination of any sort between the elevator men in the city of Chicago except this one to name the storage rate? Mr. Pettit! None that I am a party to, and the 'testimony is that none exists now. Mr. Marble. And has not for about sixty days ? Mr. Pettit. For about sixty days. Mr. Marble. I want to ask you on another line. In the inspection into your public elevator and out of your public elevator, do these iaspections agree? Do you get the same grades out and the same number of bushels of the same grade that you put in? Mr. Pettit. Yes, sir. Mr. Marble. Does it work out practically? Mr. Pettit. Yes, sir. Mr. Marble. How wide in point of value are the wheat grades in the Chicago market ? How wide is number 2 wheat, in point or value — the different qualities — in that grade? Mr. Pettit. We have three deliverable grades of wheat only — two hard, two red, and one northern. I have known the time when two red was 10 or 12 cents premium over two hard, and I have known the time when they were practically worth the same. Commissioner Prouty. What he means is this: Take No. 2 hard. What is the difference in price of two different carloads of No. 2 hard? Mr. Marble. How wide apart can they be and still be in that grade ? Mr. Pettit. They are approximately of the same value. Of course you might take a sample of the wheat and the inspector might say that one was a little stronger than another. Mr. Marble.' Well, in point of market value, how wide a difference can there be in wheat No. 2 red or No. 2 northern? Mr. Pettit. That is a hard question to answer. I have known of there being a cent and a cent and a half. Of course the pborest sample of the grade establishes the market price. Commissioner Proutt. Do you sell wheat by sample from a public elevator? Mr. Pettit. No. Commissioner Prouty. It is sold by grade? At what stage of the transaction does this difference manifest itself? If the wheat has gone into your elevator, it comes out on a certificate of a certain grade ? Mr. Pettit. Yes, sir. Commissioner Prouty. Now, at what time will one man pay a cent or a cent and a half more for a carload of grain at your public store? Mr. Pettit. I do not know of any instance where the grain would not all be worth the same amount of money. Mr. Marble. Grain goes into this market and is graded, and then saniples are sent to the board of trade for sale ? Mr. Pettit. Yes, sir. Mr. Marble. You do not buy on the grading; you buy on the sample ? Mr. Pettit. We buy on both. We may buy 100,000 bushels of grain to arrive. We will of course get the lowest grain of that grade; that is natural. Other times we buy by sample and buy in the open GRAIN ELEVATOR INVESTIGATION. 183 market. This has no relation to the public warehouse, in point of market value, from that lowest grade of wheat if we take this of the better quality. Mr. Marble. In the same grade? Mr. Pettit. Yes, sir. Mr. Marble. How great a premium can exist in the same grade of wheat ? Mr. Pettit. It might be a cent or a cent and a half. Mr. ^Lvrble. In the lower grades ? You are speaking of the higher grades, aren't you? Mr. Pettit. Yes, sir. Mr. Marble. How wide would it be in the lower grades? Mr. Pettit. Ten or 12 cents. Mr. Marble. Therefore an elevator man could satisfy his certificates with wheat of a grade which might be possibly worth several cents less than other wheat of the same grade? Mr. Pettit. I would not say so. Mr. Marble. In the ordinary course of business, a man having grain stored in a public elevator in the city of Chicago, what would you say he gets on his certificate ? Does he get the bottom or the top or the middle of the grain? Mr. Pettit. He gets exactly the quality of the wheat that was put in of that grade. He gets the run of the wheat of that grade that was going at the time that the wheat was loaded into the public ware- house. There is some slight variation in the run of the wheat at differ- ent times of the year, so that if you bought a car of No. 2 red to-day you might possibly get a lower run of wheat than if you had bought it earlier in the season, when better wheat was running, but all wheat loaded into public warehouses the lowest of it must be fully equal to that grade. There might be some variation, just as I have described. Mr. Marble. I am speaking of deliveries to the general pubHc — to millers. Millers in the general course of their business have stated that their elevator certificates did not represent the average of the grade, but represented the lowest possible grade. Mr. Pettit. No, sir. Mr. Marble. Isn't it a fact that millers usually buy by sample? Mr. Pettit. That is not the reason that millers prefer to buy by sample. I have had some experience in the milling business myself. A miller buys by sample because he desires to make flour of a certain given strength and keep up his brand of flour, and by going into the open market and buying grain which he knows will make flour of a certain strength he can work to better advantage than by using what you might call an average run of wheat. Any miller will prefer to see the wheat he buys, for that reason. What might be suitable for one miller might not be suitable for another. Mr. Marble. Inspection would not even attempt to develop what you call the strength? Mr. Pettit. No. Mr. Marble. You would regard that as the reason why the millers buy by sample, and the only reason? Mr. Pettit. That would be the reason that would occur to me. Mr. Marble. Let me ask you this along the same line: is the inspec- tion on grain coining into Chicago stiffer — is it more critical on the grain coming into Gmcago than the inspection of the grain going out 134 GEAIN ELEVATOR INVESTIGATION. of Chicago ? Do you regard the grain coining into Chicago as getting a lower grade of inspection than the same identical grain gets going out of Chicago ? Mr. Pettit. I will have to qualify my answer. The tendency of the inspectors, with the best intention in the world as to grain on tracks, is to be as generous as possible. We often have to call for reinspection. By the time that grain has reached our elevators and we attempt to put it into our stores we get the strictest inspection there is in the State, so that the elevator men have to protect them- selves continually against the good nature of the inspectors in giving grain that we might want to buy — contract grain — a little the advan- tage, a little the benefit of their judgment, so that the grain we get may be lower than the grade we want. By the time that grain gets to the Eublic store I consider it a full average of the grade, and somewhat igher than the grade on incoming tracks. Mr. Marble. As public storehouse men it would be to your interest to receive the strictest inspection before it went into your elevator? Mr. Pettit. We have no interest in it whatever. Mr. Marble. You have the interest in it that you want to have the grade that goes in so that it will go out on the same grade? Mr. Pettit. Yes, sir. Mr. Marble. So that it is to your interest to have a strict inspection at your elevator? Mr. Pettit. It is to our interest to have a careful inspection. Mr. Marble. So that on the grain that goes into the elevator the stricter the inspection is coining in the better for you ? Mr. Pettit. No. Mr. Marble. Why? Mr. Pettit. This grain when it goes into public store is grain not only inspected by State inspectors, but by the board of trade, and under ordinary circumstances there ought not to be, and I believe is never, reasonable chances of any quantity of grain going into our public stores lower than a proper standard; whereas when the grain comes in on any tracks with one inspector looking at it he might want to give the countryman the benefit of it, and we might have to have a reinspection on that grain. Mr. Marble. You have stated that it was a strict inspection at the time it goes in. What inspection would you say it had at the time it went out? Is that a strict or lenient inspection? Mr. Pettit. I believe that the department, assisted by the grain committee of the board of trade, have succeeded in making as near a uniform in-and-out inspection as is humanly possible to give. Mr. Marble. Do you know of any cases where grain has been given a grade for export from Chicago and has been stopped outside of the city and brought back here and has been inspected at a lower grade when it came into the city than it got when it was going out ? Mr. Pettit. I do not recollect any now; there might have been such cases. There are accidents in afl lines of work. Mr. Marble. This inspection is a matter of human judgment, any- way. It is not a mechanical proposition. Mr. Pettit. It is a matter of judgment. Mr. Marble. And there is a line where one grade passes from one grade to another, where it may be very close to the grade — either above or below? GRAIN ELEVATOE INVESTIGATION. 135 Mr. Pettit. That is true. Mr. Marble. In fairness to the inspection, that ought to be stated. Mr. Pettit. That is true. Gominissioner Glare. How far apart are your private and public elevators? Mr. Pettit. There is room for about four switch tracks between them, so that they are practically right together. They are on the same piece of ground. Gommissioner Glark. If grain has to be taken from your private warehouse to your public warehouse, what physical process of trans- fer is employed? Mr. Pettit. We load it into empty cars, and an engine comes down and switches it from our public to our private warehouse. Gommissioner Glare. And it is unloaded from these cars into your warehouse? Mr. Pettit. Yes, sir. Gommissioner Glare. Is there anything in the law that would pro- hibit an elevator connection between the two? Mr. Pettit. There is ; yes, sir. Gommissioner Protjty. You say that when you buy grain and bring it into the city you buy agamst it, or, rather, you sell against it a future? Mr. Pettit. Yes, sir. Gominissioner Prouty. And that future is of a certain grade? What determines the grade of that future? Mr. Pettit. The rules of the board of trade provides that in the case of wheat Gommissioner Protjty (interrupting). Yes; I understand that ; but you intend to sell a future which will just offset the grain you have. How do you know what the grade of the grain you have is ? Mr. Pettit. There is only one character of grain, so that whatever the grade of the grain we may buy we sell the same character of future against it. We regulate that matter by the price we pay for the grain, paying a greater or less discount or a less or a greater premium, accord- ing to whether that grain is worth more or less than the grades deliv- erable upon that future contract. Gommissioner Prouty. You can sell a future in No. 1 northern or No. 2 red or No. 2 hard, can't you? Mr. Pettit. No, sir. There is* only one future sale. For instance, in December we would sell December wheat. No. 1 northern is deliv- erable on it, or 2 red is deliverable on it, or 2 hard is deliverable on it, the latter at a discount of 2 cents, and at the option of the seller any of those grades may be deUvered upon that future. Cominissioner Prouty. And the difference in price is only 2 cents ? Mr. Pettit. Between the 2 hard and the other two grades. Commissioner Prouty. So that the price of the future is determined by the price of the cash wheat — the price you paid ? Mr. Pettit. Yes, sir. We pay a price for the cash wheat Cominissioner Prouty. It simply takes the grade of this wheat when it comes in? Mr. Pettit. Yes, sir. Gommissioner Prouty. And you put it into your private elevator? Mr. Pettit. Yes, sir. Cominissioner Prouty. My question is this : can you put different 136 GRAIN ELEVATOR INVESTIGATION. grades into your private elevator and by mixing the wheat in your ele- vator take out a oetter grade than you put in there ? Mr. Pettit. No; we can do this: we can buy grain that is better than the grade and grain that is poorer than the grade, and then by mixing them together get twice the amount of grain that is just as good as the grade — a grain that is equal to the average of the grade. Commissioner Pkoutt. So that you make a profit in that way? Mr. Pettit. We make a handling profit at times. Commissioner Peouty. That is all ? Mr. Pettit. Our grades are mixed grain in all cases; they are the average of the grade. The wheat.in the grade is not all uniform in all cases, so that if we took wheat of better quality and wheat of poorer quality it would make the average of the grade. Mr. Marble. I should like to have Mr. Pettit look for those con- tracts, if he will, during the noon hour. I will also ask that he be back here. Mr. Pettit. I will be very glad to do so. If it will suit the conven- ience of the Commission I would like very much to be back here to-morrow morning instead of this afternoon, as I am one of the direc- tors of the board, and we have a meeting this afternoon on some mat- ters that are very important. Of course I will follow your wishes. Commissioner Peouty. How many witnesses have you this after- noon? Mr. Marble. We have more witnesses this afternoon than we can examine. Commissioner Peouty. Do you see any objection to allowing Mr. Pettit to return to-morrow? Mr. Marble. Not if the Commission will be in session to-morrow morning. Commissioner Prouty. If you have more witnesses than we can examine, we will have to remain over to-morrow. We will now take a recess until 2 p. m. At 12.30 p. m. the Commission took a recess until 2 p. m. AFTER RECESS 2 o'CLOCK P. M. Commissioner Prouty. Will you call a witness, Mr. Marble ? Mr. Marble. I will call Mr. W. S. Seaverns. W. S. Seaverns, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Seaverns, where do you reside ? Mr. Seaverns. In Chicago. Mr. Marble. What is your business? Mr. Seaverns. Commission business. Mr. Marble. On the board of trade? Mr. Seaverns. On the board of trade. Mr. Marble. Dealing in grain? Mr. Seaverns. Dealing in grain. Mr. Marble. Do you buy grain yourself? Mr. Seaverns. No; not as a rule. I sell it on commission. Mr. Marble. Deal in it as a broker? Mr. Seaverns. As a commission man. Mr. Marble. Are you famiMar with the terms of a contract entered GRAIN ELEVATOR INVESTIGATION. 137 into four or five years ago between the public elevator proprietors of this city by which they pooled a certaia portion of their earnings and afterwards, distributed that pool money? Mr. Seaveens. I know there was such an agreement as that. Mr. Marble. Have you ever seen a copy of it? Mr'. Sea VEENS. I saw a copy of it; yes, sir. Mr. Maeble. Did you become familiar with its provisions ? Mr. Seaveens. Tolerably so; I could not recall them now. Mr. Maeble. You could recall some of them, could you not? Mr. Seaveens. Oh, yes. Mr. Marble. How lone ago was that contract entered into? Mr. Seaveens. I shojim say four or five years ago. Mr. Maeble. Yoii had a part to play in that? Mr. Seaveens. I had a part; at least, my firm did. Mr. Maeble. What was that? Mr. Seaveens. The firm was to do the business, the clerical work of the elevators, and keep an accoimt. The daily balances or amounts or charges were sent into our offices, and the clerks did the work. Mr. Maeble. You kept account of all grain going into the elevators ? Mr. Seaveens. Yes, sir. Mr. Maeble. And charged them a certain amount that they were to pay into the pool? Mr. Seaveens. Yes, sir; charged them a certain amount. Mr. Maeble. What was that amount? Mr. Seaveens. I should say three-fifths of a cent a day; it might have been two-fifths. Mr. Maeble. Did you collect the money from them? Mr. Seaverns. Yes, sir. Mr. Maeble. There were certain penalties assessed for certain acts? Mr. Seaveens. Yes, sir. Mr. Marble. What were those penalties? Mr. Seaveens. Where the elevator men drew grain out of other houses and took it into their own house, the penalty was attached to that. Mr. Maeble. How much penalty was there? Mr. Seaveens. My recollection is it was simply the penalty oro- hibiting them from participating in the money that was collected for that account; that is, where the grain went into store they paid so much. When the grain went out of store, they still had a percentage in the profits of the grain that went into store. Of course you under- stand this contract was made a long time ago, and I was a party to it in that way, but I never did the work. My office men did the work, and in a general way I am familiar with it, but as to particulars I could not give them. Mr. Maeble. Do you recall who were the parties to that contract? Mr. Seaveens. Why, yes — I do not know that I can entirely. There was the Armour Grain Company; the Seaverns Elevator Com- gany ; the Weare Commission Company— 7I think it is called the Weare ommission Company; Peavey Grain Company — Counselman at that time; the National, and Keith's Elevator. I think that is all. Sub- stantialty, I.think it took in all the regular houses at that time. Mr. Marble. That contract in its practical operation prevented ele- vator men from buying cash grain out of each other's houses to go to store, did it not? 138 GEAIN ELEVATOR INVESTIGATION. Mr. Sea VEENS. No; it prevented them buying cash grain out of other houses and putting into their own houses. Mr. Maeble. I said to go to store. Mr. Sea VEENS. Well, it might not go to that store. It did not interfere with the cash business. Any elevator man could buy the grain and ship it, but it did interfere with their drawing the grain out of other elevators and putting it into their own house. Mr. Maeble. You operated a pubUc elevator at one time, did you not? Mr. Sea VEENS. No; that was George Seavems. Mr. Maeble. Is that contract now in existence? Mr. Sea VEENS. I could not tell you. Mr. Maeble. You know whether or not your of&ce is still acting under it, do you not? Mr. Sea VEENS. Oh, no; that is not in existence at all. Mr. Maeble. How long since it ceased? Mr. Seaveens. It ceased, as I recollect it, two years ago in July. It was started again the 1st of May, this year, and only lasted two or three months. Mr. Maeble. Lasted two or three months from the 1st of May ? Mr. Seaveens. Yes, sir. Mr. Maeble. Do you know of any device, ajrangement, or agree- ment of any sort between public elevator men now that is at all equiv- alent to that? Mr. Seaveens. I do not. I would not be in a way of knowing it. Mr. Maeble. In your opinion, why was that contract entered into ? Mr. Seaveens. As I said before, to prevent the grain dealers or the elevator men from taking the grain out of other houses and drawing it into their own. It acted in another way. It left the party who had shipped the grain — it gave him a certain percentage of this stor- age back; so in that way it was not such a loss to him, but as to make mm use any great effort to move the grain into his house. It was for the benefit of the trade. Mr. Maeble. The benefit of the trade to have the grain stored in the city? Mr. Seaveens. A benefit to the trade to have the rates go in the market and so they would not be controlled by the elevator people. Mr. Maeble. You had a copy of that agreement, did you not ? Mr. Seaveens. I had a copy. Mr. Maeble. Have you disposed of that copy? Mr. Seaveens. I do not recollect, it is so long since. I have not fot one. There is a copy of the other arrangement made the 1st of [ay. Mr. Maeble. Have you a copy of that? Mr. Seaveens. I had a copy. It was given up three or four months ago. Mr. Maeble. To whom did you give it up? Mr. Seaveens. I gave it to Mr. Pettit. Mr. Maeble. Do you know where we could get a copy of the agreement ? Mr. Seaveens. I suppose from Mr. Pettit. I do not know. Mr. Maeble. You do not know where there is one in existence? Mr. Seaveens. No. GRAIN ELEVATOR IKVESTIGATION. 139 Mr. Marble. Do you know whether or not you have a copy of your first contract ? Mr. Seaverns. I do not know that I have. It might be in the safe. Mr. Marble. You do not recollect destroying it? Mr. Seaverns. No, sir; and I do not recall having it. Mr. Marble. Well, you look for that and send it over to us, if it is here. Mr. Seaverns. I will. Mr. Marble. I would like that very much. About how much money went into this pool month by month? What was the volume of business that that contract affected ? Mr. Seaverns. Well, I could not Mr. Marble. Approximately. Mr. Seaverns. Approximately a thousand or twelve hundred dollars — well, six hundred dollars to a thousand dollars on the original proposition. Mr. Marble. Per month? Mr. Seaverns. Per month. Mr. Marble. You were paid a salary for your services? Mr. Seaverns. The office was paid a certain amount for the work we did. Mr. Marble. What was that amount? Mr. Seaverns. The original amount was $3,600 a year, or $300 a month. Mr. Marble. That was later increased, was it not? Mr. Seaverns. No; the last arrangement was $3,000 a year, or $250 a month. Mr. Marble. You did not get $5,000 at one time? Mr. Seaverns. Oh, no. Mr. Marble. You are sm-e of that? Mr. Seaverns. Yes, sir. Mr. Marble. That is all. Mr. Seaverns. The expense of running this original one might have come up more than that. At one time there was so much work that we had to employ a clerk that we paid $15 a week. Mr. Marble. Did you receive an extra allowance for that? Mr. Seaverns. The amount for our clerk hire which was neces- sary to run the business we charged to the concern. Mr. Marble. So you received at one time $3,600 and at another time $3,000 and an allowance for the , extra clerk hire which the business made necessary ? Mr. Seaverns. That is it. Mr. Marble. This was a sort of clearing house. Have you the records ? Mr. Seaverns. I kept no records. It was put on a sheet of paper and the amounts were collected at the end of every week. Mr. Marble. Where are those sheets? Mr. Seaverns. They are destroyed long ago, I suppose. Mr. Marble. All of them? Mr. Seaverns. I suppose so. It was drawn on a blank sheet of paper and the amounts sent to different people. Mr. Marble. You kept copies, I suppose? 140 GEAIN ELEVATOR INVESTIGATION. Mr. Seaverns. I did not keep any copies. Mr. Marble. Did not keep any copies ? Mr. Seayerns. No; I say not. I was not the one that did that work. My partner did that work and attended to all of that. Mr. Marble. Will you look and see if you have those copies left, or some of those sheets ? Mr. Seaverns. I ^vill. Mr. Marble. And send them over to us^ Mr. Seaverns. I will. Mr. Marble. That is all. Commissioner Clark. I understand you to say, Mr. Savems, the amount paid in on this pool per month was something over $600 ? Mr. Seaverns. As I recollect it, it was. You must recollect that this was three or four year's ago. The latter one, that was in exist- ence only a short time, payments did not amount to more than SlOO or $150 a month — something of that kind. It varied of course -with the amount of business that the concerns were doing. Commissioner Clark. You were paid $300 a month for collecting it and disbursing it ? Mr. Seaverns. And for the clerical work in the oflBce, which was very burdensome and took a great deal of time. Commissioner Clark. During the life of this latter agreement you collected somewhere from $100 to $200 a month, and for that received compensation of $250 a month? Mr. Seaverns. Yes, sir. Commissioner Clark. And some extra clerk hire? Mr. Seaverns. There was no clerk hire on the last one, because my partner was able to do the work. Commissioner Clark. I understood you to say the penalty for a violatioDi of this agreement was a forieiture of their interest in or proportion of this amount, to be divided at periods ? Mr. Seaverns. Yes, sir; substantially so. It was not exactly in that way. It was where the grain had been dra\sTi out of the eleva- tors they were allowed a certain percentage; that is, they were allowed the percentage which the}- bore to the business of the other parties, and where the grain was drawn out in this way then thev simply had to pay the rate on the storage and got nothing bacli; but I would say this, that there was not any case on this last agree- ment where anything of that kind happened. There were several cases on the old agreement, but I could not tell what they were. Conunissioner Clark. Well, who paid this $3,000 a year which you received as a sort of commissioner under this pool ? Mr. Seaverns. Whj-, the elevator men. Each party paid his proportion according to the business he was doing. Commissioner Clark. Outside of this pool entirely ? Mr. Seaverns. It was really all connected with the pool. Commissioner Clark. Did you deduct this amount from the pay- ments you collected each month? Did you deduct yom- salary, or were you paid outside of that ? Mr. Seaverns. They were disbursed every week, and at the end of the month the expenses were figured up and it came out of the general amount that was in the bank. Commissioner Clark. That is, it was deducted from the amounts you collected from the elevators? GRAIN ELBVATOE INVESTIGATION. 141 Mr. Seaverns. Yes, sir. Each elevator man that went into this put in $200, not as a forfeit, but so that there would be something m the bank to pay the checks, as we always gave the checks before we collected from the others. When we sent our checks out we also sent out to those that owed bills. Our checks went in first. There was this amount of money that stayed in there. Then at the time the payment came due each one was assessed the proportion, accord- ing to the business he did, of the expenses. Commissioner Clark. And in that way the shortage was made up ? Mr. Seaverns. Yes, sir; the main amount was kept intact all the time. Mr. Marble. Who hired you to perform this service? That is, what particular person? Mr. Seaverns. I do not recollect the first time. The last time, the arrangement was made by my partner, and I think the arrange- ment was made with Mr. Marcy, but of course it was consummated probably by a meeting of the other elevator men. Mr. Marble. Who were the parties to the last agreement, the one entered into last ? Mr. Seaverns. The South Chicago Elevator Company — well, now, I suppose it would' be better to give the firms — Bartlett, Frazier, J. C. Shaffer, the Peavey Grain Company, the J. Rosenbaum Grain Com- pany, and Armour. Mr. Marble. What company of Armour's was that? Mr. Seaverns. The Armour Grain Company, I suppose. Mr. Marble. Was it the Armour Grain Company? Mr. Seaverns. Yes, sir. Mr. Marble. Or the Armour Elevator Company? Mr. Seaverns. I could not tell you. I do not know which it was. Mr. Marble. Well, was it Bartlett, Frazier & Carrington, or was it the Calumet Elevator Company ? How was the membership ? Mr. Seaverns. I could not 'tell you that. I know they both were in the arrangement. Mr. Marble. Both the elevators ? • Mr. Seaverns. Both the elevators, but imder one head was Bart- lett, Frazier. Mr. Marble. Was Keith in the last one? Mr. Seaverns. No. Mr. Marble. That is all. Commissioner Prouty. That is all, Mr. Seaverns. The witness was excused. A. V. Booth, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Booth? Mr. Booth. Chicago. Mr. Marble. What is your business? Mr. Booth. Commission. Mr. Marble. Grain? Mr. Booth. Yes, sir. Mr. Marble. Are you a member of the board of trade? Mr. Booth. Yes, sir. Mr. Marble. Are you familiar with a class of business here by 142 GEAIN ELEVATOB INVESTIGATION, which public elevators sell cash grain and buy back futures of the same amount from the purchasers of the cash grain ? Mr. Booth. Yes, sir; in a measure. Mr. Makble. Are you engaged in that business? Mr. Booth. Yes, sir. Mr. Marble. For what company principally or with what com- pany? Mr. Booth. For myself. Mr. Marble. With what elevator company? Mr. Booth. I have made trades for several elevator companies. Mr. Marble. With what company are you principally engaged at the present time in that business ? Mr. Booth. J. C. Shaffer & Co. Mr. Marble. Do you buy grain in the country for them? Mr. Booth. No, sir. Mr. Marble. This is buying cash grain in Chicago ? Mr. Booth. To go to store; yes, sir. Mr. Marble. Your cash price is — the cash price you are to pay is based on the value of the future at which you sell the grain back, is it not? Mr. Booth. Yes, sir. Mr. Marble. And both prices are so arranged by agreement between you that the storage and insurance and interest and all the carrying charges and a compensation to you are certainly fixed. Is that it? Mr. Booth. Yes, sir. Mr. Marble. What is that compensation to you ? Mr. Booth. It all depends; usually one eighth of a cent. Mr. Marble. Sometimes more? Mr. Booth.- Sometimes more; never less. Mr. Marble. What would make it more? Mr. Booth. The further the future sold against. Mr. Marble. The length of time? Mr. Booth. Yes, sir. December contracts would be a quarter and maybe a half. Mr. Marble. When you buy the cash grain, where is it located physically, usually? In cars? Mr. Booth. It is to go to store, when I buy it, presumably in cars, in transit or here in Cmcago. Mr. Marble. In what way do you pay for that grain? Mr. Booth. By certified check. Mr. Marble. By certified check? Mr. Booth. Yes, sir. Mr. Marble. And then what do you receive? Mr. Booth. I receive the elevator receipts. Mr. Marble. The elevator receipts made out in your name? Mr. Booth.- Made out in my name. Mr. Marble. In the meantime you have sold a future for the same grade of grain? Mr. Booth. Yes, sir. Mr. Marble. In a way that allows you this one-eighth of a cent? Mr. Booth. Yes, sir. Mr. Marble. What do you do with the elevator receipts? Mr. Booth. Take them over to the bank, quick. GRAIN ELEVATOR INVESTIGATION. 143 Mr. Marble. And put them up as security for the money you bor- rowed to buy the cash grain? Mr. Booth. Yes, sir. Mr. Marble. So, the elevator receipts are put into the bank and locked up there and the graia is put in the elevator and locked up there? Mr. Booth. Yes, sir. Mr. Marble. Now, suppose that the future is, say, three months distant in delivery, and at some time after this transaction and before the dehvery time, cash grain should go to a premivun so that there would be a profit in selling out the gram in the elevator and buying a future to put against the future you have sold, do you do that ? Mr. Booth. I can. Mr. Marble. Do you ? Mr. Booth. I never have yet. I have never had the opportunity. Mr. Marble. Why don't you do that? Mr. Booth. I never had tne opportunity. Mr. Marble. You mean the market has not offered it? Mr. Booth. No ; not since I have been in the business. Mr. Marble. How long have you been in this particular business? Mr. Booth. About six months. Mr. Marble. And cash grain has not been at a premium in that time? Mr. Booth. No, sir. Mr. Marble. Then you do have a certain speculative interest in the transaction ? Mr. Booth. Yes, sir. Mr. Marble. Do you think if you made that profit you could con- tinue in the business with that firm? Have you discussed that with them? Mr. Booth. Never. Mr. Marble. You do not know whether they would expect to make that premium ? Mr. Booth. I do not see how they could. It is bought and paid for by me. Mr. Marble. Do you know whether they think, they having fixed the selling price and the buying price so that you are assured a certain profit, that your profit is limited to that, absolutely? Mr. Booth. I think so. Mr. Marble. Then, you have no speculative interest? Mr. Booth. Yes; it is my grain. I can take it if I want to. Mr. Marble. Then your profit is not limited to one-eighth of a cent. There is no chance for you to lose. Mr. Booth. No, sir. Mr. Marble. And an additional chance for you to win? Mr. Booth. Yes, sir. Mr. Marble. Would you take advantage of that if occasion arose? Mr. Booth. Yes, sir. !Mr. Marble. And keep the money yourseK? Mr. Booth. Yes, sir. Mr. Marble. Are these certified checks cashed? Mr. Booth. Yes, sir; every one of them. Mr. Marble. In the meantime they are cashed by the banks that hold the grain receipts as security? 144 GRAIN ELEVATOR INVESTIGATION. Mr. Booth. Yes, sir. Mr. Marble. Has occasion arisen where you could have sold out the cash grain immediately without ordering it to store? Mr. Booth. No, sir. Mr. Marble. And bought a future against the future you sold? Mr. Booth. No, sir. Mr. Marble. Have you studied the market to see? Mr. Booth. Yes, sir. Mr. Marble. As a matter of fact, you have no control of that grain before it gets into store ? Mr. Booth. No; it is not my grain until I have the receipt. It is bought to go to store, and when the receipt is issued it is in my name. Theil it is paid for. Mr. Marble. You do not decide what elevator it goes to ? Mr. Booth. No, sir; that is part of the contract when the trade is made? Mr. Marble. Are you carrying any stuff for December delivery now? Mr. Booth. Yes, sir. Mr, Hill. Who are you carrying it for? Mr. Booth. A. V. Booth & Co. Mr. Hill. In what elevators? Mr. Booth. I have some in the National — I mean some in the South Chicago C. I have some in the Eock Island B — I can not remember — I have four different elevators. Mr. Hill. Did you acquire this wheat in the manner in which you described in your testimony? Mr. Booth. Some of it. Some of it I am carrying on my own per- sonal account. A little I am carrying for customers. Mr. Hill. Such as you acquired in the manner stated to Mr. Marble at the time you acquired it, what was the market for the cash wheat as compared — that is, the market on the board — compared with the price you paid for the wheat? Mr. Booth. I do not remember. Mr. Hill. Has there been a full carriage charge against the cash market and December futures? Mr. Booth. Almost; not absolutely, but almost. Mr. Hill. You got this wheat at a discount below the market at the time you took it? Mr. Booth. Yes, sir. Mr. Hill. You had a profit in it if you wished to go into the market and sell ? Mr. Booth. I had my one-eighth of a cent. Mr. Hill. You had the difference between the market and what you paid? Mr. Booth. Yes, sir. Mr. Hill. Why did you not accept that? Mr. Booth. I had one-eighth of a cent profit in it. Mr. Hill. Why did you not accept that profit? Mr. Booth. Because I did not want to. Mr. Hill. There was no chance of your getting any better profit, was there ? Mr. Booth. I do not know. I can not speculate on the future. GRAIN ELEVATOR INVESTIGATION. 145 Mr. Hill. What was your agreement with the parties that took in the wheat? Mr. Booth. I have no agreement with them. I am making 1 per cent on the money I am investing in this business. The money I am using is paying me 1 per cent net over what I pay for it — most of it. It is to my interest to carry the grain and make the 1 per cent. Mr. Hill. And lose the one-eighth of a cent on -the current profit ? Mr. Booth. No, sir. Mr. Hill. You said you had one-eighth of a cent. Mr. Booth. I still have. I bought the cash wheat at one-eighth of a cent discount from the future. I had that profit in sight and still have it. Mr. Hill,. You mean the one-eighth of a cent allowed you for com- mission? Mr. Booth. Yes, sir. Mr. Hill. That is not what I am talking about. I am talking about the difference between the cash price of the wheat and the price you pay for the wheat ? Mr. Booth. As to that I am not familiar at this moment. I do not remember. Mr. Hill. In order to make the full carrying charges, these eleva- tor companies must give you the wheat at below the actual market, must they not ? Mr. Booth. Not necessarily. Mr. Hill. When was there a full carrying charge on wheat? Mr. Booth. I am not familiar with it. I do not know. Mr. Hill. .You are figuring on.it, are you not? Mr. Booth. Sometimes. Mr. Hill. Is there a full carrying charge now? Mr. Booth. I think not. Mr. Hill. Do you remember any time this fall that there has been a full carrying charge ? Mr. Booth. No, I do not this minute. Mr. Hill. Then, on all the wheat you have taken in, you have got that wheat below the cash price on the day you bought it ? Mr. Booth. No, I got it at the cash price, one-eighth of a cent below the December option. Mr. Hill. Then, you would lose on the carrying of the grain? Mr. Booth. No, I would not. Mr. Hill. Explain why you would not. Mr. Booth. The wheat is figured to me at a price. Mr. Hill. What is the price? Mr. Booth. The December price, less one-eighth of a cent, less car- Fying charges. Commissioner Prouty. You take the December price and figure back? Mr. Booth. Yes, sir. It costs so much to carry it to December. Mr. Hill. Is the arbitrary price made on the December or cash wheat ? » Mr. Booth. The December. Mr. Hill. Why not buy back your December at a profit, and sell out your cash wheat and secure that profit? Mr. Booth. Because I do not wish to. S. Doc. 278, 59-2 10 146 GRAIN ELEVATOE INVESTIGATION. Mr. Hill. Why? Mr. Booth. I do not care to. I want my money to earn interest. Mr. Hill. You are losing an apparent profit ? Mr. Booth. No, I have one-eighth of a cent profit. I have to carry the cash wheat. What am I going to do to fill my December sales ? Mr. Hill. Can you not buy your December wheat back? Mr. Booth. I can. What will I do with my cash ? Mr. Hill. Can you not sell your cash? Mr. Booth. I do not know that you can sell and recover that differ- ence. Mr. Hill. These future contracts you make are not in the market on the board of trade? Mr. Booth. Yes, sir. . Mr. Hill. You stated that the December price is an arbitrary price fixed by you. Mr. Booth. No, fixed on the December market on the day the transactions are made. They are figured on the basis ot December. Mr. Hill. The December market on the day you make the transac- tions ? Mr. Booth. Yes, sir. Mr. Hill. How do you get any of these carrying charges between the December and cash price ? Mr. Booth. Because, if you take the wheat this minute and pay for it, it costs so much to carry it until December. It costs you that much money to carry that cash wheat. Mr. Hill. You can not go on the open market in Chicago to-day and make those sorts of transaction?. Mr. Booth. You can not ? Mr. Hill. No. Mr. Booth. I do not know why. Mr. Hill. You testified that the difference between cash wheat and December wheat will not permit the carrying of that wheat to pay the charges. Is it not a fact? Mr. Booth. I am not familiar with it. I do not know. Mr. Hill. Who figures these transactions out for you ? Mr. Booth. I figure some and the bookkeeper figures the balance. Mr. Hill. And you do not know whether there has been a difference between cash wheat and December wheat that would permit the car- rying of wheat in a public elevator ? Mr. Booth. I am not familiar with the immediate details of that question. Mr. Hill. How do you figure it out? You say you figure it out sometimes. How is it you are not familiar with it ? Mr. Booth. I figure what the interest, insurance, and storage will cost and deduct it from the December price. Commissioner Claek. Pardon me. Let me ask a question in my homely way. What is cash wheat worth to-day ? Mr. Booth. To tell the truth, I do not know. I have been over hfire all day. Commissioner Clakk. What was it worth yesterday? Mr. Booth. I do not know; I do not remember. I could tell you by looking at the circular. Commissioner Peouty. When you take the December price and GBAIN ELEVATOR INVESTItfATION. 147 figure back to the cash price you pay, is that the cash price on the market that day? Mr. Booth. Supposedly so. Commissioner Peouty. Is it in fact ? Mr. Booth. I think so. Mr. Hill. Then, Mr. Booth, anybody on the board of trade can buy cash wheat and sell the future and carry the wheat and pay all the charges and make 6 per cent interest? Mr. Booth. They can sometimes. Mr. Hill. Can they today? Mr. Booth. I do not know. They could the day I made my last transaction, within a very small fraction. I presume they could do it exactly. Mr. Maeble. In these transactions, when the elevator comes to you to sell you cash and buy a future, does it make any difference to you what the two prices are ? Mr. Booth. Absolutely none. Mr. Maeble. And so far as you are concerned, they have no refer- ence to the real price of grain m the city of Chicago ? Mr. Booth. Not necessarily. Mr. Maeble. So the difference between the two charges is the carry- ing charges and one-eighth of a cent ; that is all there is to it ? Mr. Booth. That is all there is to it. Commissioner Peouty. That seems to be all. The witness was excused. Mr. Marble. I am informed by Mr. Seaverns that he desires to make a correction in his testimony. Commissioner Peouty. He may do so. W. S. Seaveens, resumed the stand. Mr. Seaveens. I think I made a statement that the amount of money it took to carry on this business was $600 or $700 besides the expense of the salaries. What I should have said was, that these amounts simply balanced; that this was the amount of money I handled every week; that it took just the same amount of money out that a firm would pay and receive. The only expense of running the office was as I stated. Commissioner Peouty. You stated that the amounts paid in for the carrying charges of this grain were $600 to $1,000 a month, and that it cost you $300 more to do the business. Mr. Seaverns. That was entirely wrong. What I should say was that that was the amount of money I received and paid out. The two balanced all the time. The only amount of money that was paid out was the amount of money it cost to carry on the office, which I stated, $300 a month originally, and later $250. Commissioner Prouty. It was said this morning, and you said that three-fifths of a cent carrying charge was paid in by these elevator men. Mr. Seaveens. I said either three-fifths or two-fifths of a cent a day. Commissioner Peouty. Was that actually paid into your oflace in cash? 148 GRAIN ELEVATOB INVESTIGATION. Mr. Seaverns. It was. Commissioner Proutt. How much did that amount to in a week or a day or a month? Mr. Seaverns. About $600 or $700 a week. That was paid out by the parties who shipped that grain. In other words, the two sides balanced each other. I kept the same amount of money in the bank all the time, except the last day of the month. Commissioner Frouty. Well, never mind that, Mr. Seaverns. We do not know anything about it. If you do, I am glad of it. Mr. Seaverns. I wanted to put myself straight on this. The witness was excused. Commissioner Clark. I would like to ask Mr. Booth one or two more questions. A. V. Booth, recalled. .Commissioner Clark. Having in mind only one of these transac- tions, such as Mr. Marble referred to, where you buy a given amount of grain from an elevator or dealer — a man that owns a public house — and sell him a future against that, I understand you to say that you pay for this grain when you receive the warehouse receipts. Mr. Booth. Yes, sir. Commissioner Clark. And that you then take those warehouse receipts to the bank? Mr. Booth. Yes, sir. Commissioner Clark. What I want to get at is just how those receipts are handled by those banks. Do you put them in there as collateral for the loans? Mr. Booth. Yes, sir. Mr. Clark. Do they hold them there to be redeemed by you ? Mr. Booth. Yes, until such time as I dispose of those receipts and return them the money. Commissioner Clark. How ? Mr. Booth. Until such time as I dispose of those receipts and turn them in the money. Commissioner Clark. Now, these receipts state the price at which this grain is to be sold ? Mr. Booth. No, sir. Commissioner Clark. The receipt simply shows a given amount of a certain grade of grain for December delivery? Mr. Booth. No, sir; it simply states that there is that much grain in the elevator, subject to my order, of the standard grade. Commissioner Clark. Now, we will suppose that it is a certain grade of wheat that is worth 80 cents a bushel and this certificate is for a thousand bushels. How much money can you borrow on that ? Mr. Booth. You can usually borrow within 10 per cent of the value of the grain. Commissioner Clark. Of the present market price ? Mr. Booth. Yes; which 10 per cent you have to keep good. Commissioner Clark. If the market goes up, you have to put up more? Mr. Booth. No ; not if it goes up. Commissioner Clark. I mean if it goes down, you have to put up that much more collateral ? GRAIN ELEVATOR INVESTIGATION. 149 Ml'. Booth. Yes, sir. Commissioner Clark. You do not give your check for the grain until after you have received these receipts ? Mr. Booth. No, sir. Commissioner Claek. That is all. The witness was excused. S. H. Woodbury, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Woodbury? Mr. Woodbury. In Chicago. Mr. Marble. What is your business? Mr. Woodbury. Grain commission. Mr. Marble. Are you a buyer of grain? Mr. Woodbury. Not as a rule. Mr. Marble. A commission man ? Mr. Woodbury. Commission; anything to get the commission. Mr. Marble. You have heard this testimony regarding methods used by public elevators in this city to force grain into the elevator ? Mr. Woodbury. Yes, sir. Mr. Marble. Are you familiar with that transaction? Mr. Woodbury. Not very. Mr. Marble. Are you engaged in transactions of that kind? Mr. Woodbury. I have carried some. Mr. Marble. For whom? Mr. Woodbury. The J. Rosenbaum Company, and I have carried some for people in Baltimore and some for myself and various other people, as one would in the commission business. Mr. Marble. You do not operate a public elevator? Mr. Woodbury. No, sir. Mr. Marble. What you carried for yourself is in another category from what we are inquiring about ? Mr. Woodbury. I should say so. Mr. Marble. Two different transactions? Mr. Woodbury. Yes, sir. Mr. Marble. In the transactions where you buy cash grain and sell the future is your profit a certainty to you from the time the two transactions are made ? Mr. Woodbury. It is supposed to be. Mr. Marble. In any instance have you found that it is not? Mr. Woodbury. Not up to the present time. Mr. Marble. Do you consider that there is a chance for it not to be ? Mr. Woodbury. There might be. Mr. Marble. How? Mr. Woodbury. If the rate of interest should go too high or there should be a failure on some stuff we have sold, or I can see where contingencies would arise where my profit would be smaller. It is supposed to be an exact profit. Mr. Marble. The intent is to have all speculative elements elimi- nated ? Mr. Woodbury. That is our intention. Mr. Marble. Do you buy this cash grain as a rule at less than the ruling cash price on the board ? 150 GRAIN ELEVATOR INVESTIGATION. Mr. WooDBTJET. That I do not know. Mr. Marble. You pay no attention to that? Mr. WooDBUET. I pay no attention to that. Mr. Marble. You buy this grain? Mr. Woodbury. We buy this grain, some of it on track with orders to go into store and some of it possibly that has been ordered to store — I do not know. We pay for this grain when we get the receipts, the same as Mr. Booth pays for his. Of course we do not Eay for anything until we get it. We pay various people for it or ave paid various people for it and have sold to various people. Mr. Marble. You seU the futxu-e to the person fi-om whom you buy the cash? Mr. WooBBUET. Not necessarily. In many transactions we have not. Mr. Marble. In these cases where the public elevator is forcing wheat into its elevator, do you seU it to him ? Mr. Woodbury. Not necessarily. Mr. Marble. Do you sell it to persons named by him? Mr. Woodbury. Not necessarily. Sometimes we sell on the market. Mr. Marble. At his suggestion? Mr. WooDBUEY. I do not know whether it came from him. We have sold stuff on the market that we could buy at a price. I do not know that that would be in the category you are asking the questions about. We would probably in the transactions you refer to, buy the grain either from him or somebody else and perhaps sell the grain to him for the future. Mr. Maeble. The price at which you would buy the cash and the price at which you would sell the future would be determined at one and the same time, so as to give you your compensation ? Mr. WooDBUEY. We so look at it, that there would be that com- pensation in carrying. Mr. Marble. If after having bought this grain and sent it to store cash grain would be at a premium over future, do you feel free to sell out? Mr. Woodbury. That contingency has never occurred since we have been carrying. Mr. Marble. Have you waited for it? Mr. Woodbury. I have waited for it, and it has been the reverse. I do not agree with Mr. Booth's testimony in saying that there has not been a carrying charge. I think there is a carrying charge to-day. A person can buy cash wheat to-day and sell December and make pretty close to 6 per cent, if not 6 per cent, on his money. It costs a cent and a quarter to a cent and three-eighths to carry grain to make 6 per cent. October wheat was selling at 2f under December, which would give fully 6 per cent, which is less than two months to carry it. Mr. Maeble. Is not that a profit for that kind of business? Mr. WooDBUEY. Yes, sir. Mr. Maeble. Is the general public engaging in that business? Mr. Woodbury. That I do not know anything about. I judge from the absence of speculation that the general piiblic was attending to their business and letting ours alone. Mr. Marble. When that condition exists, do the public elevators have to make such contracts as have been testified to? Mr. Woodbury. I know nothing about their business. GRAIN ELEVATOR INVESTIGATION. 151 Mr. Marble. Do they actually make these contracts at a time when such a profit can be made? M-. Woodbury. That I do not Imow. Mr. Marble. Have you been watching the market to see if you could sell youi" cash at a premium and make a profit that way ? Ml-. Woodbury. I have not been watching it with that object in view, but I have been watching it with an object in view of buying October and selling December. Mr. Marble. That would be another sort of transaction? Ml-. Woodbury. Yes, sir; but if October is at enough discount under December there would be no opportunity to sell cash at a premium. Mr. Marble. If the contingency should arise at which the cash could be sold at a premium and the future bought to satisfy the future you have sold and in that way carry the cash wheat through, would you feel free to take that profit ? Mr. Woodbury. I could not very well answer that question yes or no, because the contingency has never arisen. What a person would do under certain conditions, of course, they can not say offhand. Mr. Marble. Well, it is plain what I am getting at. Mr. Woodbury. I could of course do that. I would feel as if I had that right. Mr. Marble. Legally? Mr. Woodbury. Legally. Mr. Marble. Moralfy? Mr. Woodbury. Well, there is an open question. I might say morally also. I presume if I should do that my business might be curtailed. Mr. Marble. You would not get any more of this business? Mr. Woodbury. I would not say I would not get any more of it. Mr. Marble. You would not be living up to the expectations of the elevator men ? Mr. Woodbury. What their expectations are I can not say, but I would not be living up to my expectations of getting more. Mr. Marble. That would not be your understanding of the way to carry out the transaction ? ISi. Woodbury. I have not any understanding. It would not be my understanding of a good way to get more business. Mr. Marble. Then, in other words, you do not consider that you are the owner of this wheat as you would be the owner of wheat in an ordinary transaction? Mr. Woodbury. I consider that I am the absolute owner of that wheat, and I have paid for it. It is insured in my name. I have sold that wheat and do not propose to let that wheat get out of my hands unless there is some good reason. Mr. Marble. You do consider that as regards wheat obtained in that way that there is a certain moral obligation or obligation of busi- ness policy that makes you treat it differently ? Ml-. Woodbury. I should say an obligation of business policy; yes, sir. Mr. Marble. That is all. Mr. Hill. May I. ask a few questions ? Commissioner Prouty. Yes; although the witness seems to have told everything about it. Go ahead. 152 GEAIN ELEVATOR INVESTIGATION. Mr. Hill. Who makes your transactions on the floor in cash grain, Mr. Woodbury? Mr. WooDBTiRY. Who makes them? Mr. Hill. Yes, sir. Mr. WooDBURT. Sometimes Mr. Murphy makes them; sometimes I make them; sometimes Mr. Rosenbaum makes them; and some- times they are made by different brokers on the floor. Mr. Hjll. When Mr. Rosenbaum makes them, what do you mean by Mr. Rosenbaum makes them ? Mr. WooDBTiBY. When he makes them, I suppose — I do not know exactly the way he conducts his business — but I presume he buys cash grain from somebody and has instructions from us that if he can buy this cash grain at a point that he can net us a profit, to send it down to us. Mr. Hill. That is the grain that goes into the Rosenbaum elevator? Mr. Woodbury. That is the grain that goes into the Rosenbaum elevator. Mr. Hill. That is all. (The witness was excused.) F. D. CouNTiss, called as a witness, being duly sworn, testified as follows: Mr. Marble. You reside in Chicago ? Mr. CouNTiss. I do. Mr. Marble. What is your business ? Mr. CouNTiss. Stock and bonds and grain commission. Mr. Marble. Are you a member of the board of trade ? Mr. CouNTiss. I am; yes, sir. Mr. Marble. You have heard the testimony just given by Mr. Woodbury. I will ask you if you are familiar with transactions of that same general sort? Mr. CouNTiss. I am not very -familiar; no, sir. I attend to the stock and bond end of it. I do not know much about grain. Mr. Marble. Your firm is engaged in transactions of that sort, is it not? Mr. CouNTiss. Our principal business is stock and bonds. We do a httle grain business, but very little. Mr. Marble. Are you in charge of that? Mr. CouNTiss. No; we have a manager that looks after it. Mr. Marble. Are you acquainted with it ? Mr. CouNTiss. Not very well. Mr. Marble. Do you know whether your firm is carrying grain for public elevators in this way that has been testified to ? Mr. CouNTiss. Do I know whether we are carrying any? Mr. Marble. Yes; or have you been recently, within a year or so? Mr. CouNTiss. I do not think we ever carried any for an elevator. Mr. Marble. Has your firm bought cash wheat from an elevator and sold back the future with a spread between the two prices that would give you one-eighth of a cent and the carrying charge? Mr. CouNTiss. I think not. The only grain we handled has been on the commission basis. Mr. Marble. You have had a number of transactions of this sort with Mr. Shaffer, have you not, of buying cash from him and imme- diately selling him future for the same amount as the cash sales? GBAIN ELEVATOB INVESTIGATION. 153 Mr. CouNTiss. I could not say. We have bought cash wheat and sold futures on the board, whether to him or to somebody else, I do not know. Mr. Marble. Who would know about that? Mr. CouNTiss. Mr. Dennison, our manager, or the assistant manager of the grain department. Mr. Marble. Will you ask Mr. Dennison to come over? Mr. CouNTiss. Yes, sir. Do you want him to come over? Mr. Marble. Yes, sir. That is all. (The witness was excused.) W. S. Jackson, called as a witness, being duly sworn, testified as follows: Mr. Marble. You reside in this city, Mr. Jackson? Mr. Jackson. Yes, sir. Mr. Marble. What is your business? Mr. Jackson. I am in the grain and provision business on the board of trade. Mr. Marble. Are you a member of the board of trade ? Mr. Jackson. Yes, sir. Mr. Marble. A commission man? Mr. Jackson. Yes, sir. Mr. Marble. You have heard the testimony of Mr. Woodbury and Mr. Booth? Mr. Jackson. Yes, sir. Mr. Marble. T will ask if you are familiar with transactions of the same sort they have described? Mr. Jackson. Somewhat familiar. Mr. Marble. Have you been engaged in such transactions ? Mr. Jackson. I have. Buying cash grain and immediately selling a future of the same grade? IVIr. Marble. Yes, sir. Mr. Jackson. No ; the question would not be quite correct as yes or no. Mr. Marble. Just explain. Mr. Jackson. I have nought cash grain. I have sold before I have bought frequently, so that the two do not fit in as being done at one and the same time. Mr. Marble. I am not speaking ot ordinary commission business. I am talking of times when the elevator men are forcing grain into the elevator. Mr. Jackson. I am speaking of that. Mr. M.\rble. Sometimes they buy the future of you betore you sell the cash? Mr. Jackson. No; sometimes I sell the future before I buj^ the cash of them — I will sell the future in the market. Mi. Marble. Sell it to the man from whom you buy the cash? Mr. Jackson. No, sir. Mr. Marble. That is a different matter from what we are inquiring about, is it not ? Mr. Jackson. It is in the same line of transactions. Mr. Marble. Would yom* profit be a certainty? 154 GRAIN ELEVATOR INVESTIGATION. Mr. Jackson. Yes, sir. Mr. Marble. And the prices so arranged as to earn you what com- pensation? Mr. Jackson. One-eighth of a cent profit. Mr. Marble. And the carrying charges? Mr. Jackson. Yes, sir. Mr. Marble. Would the sale by you of the future and the purchase price given you by an elevator proprietor or the arrangement be made by him? Mr. Jackson. Ordinarily; yes, sir. Mr. Marble. With what proprietor did you do that sort of busi- ness? Mr. Jackson. For the J. Rosenbaum Grain Company. Mr. Marble. Only the Rosenbaum Grain Company? Mr. Jackson. Yes, sir. Commissioner Protjty. You mean you would sell a future without buying grain against that future? Mr. Jackson. Yes, sir. Commissioner Proutt. When you do that you speculate ? Mr. Jackson. At the time it may be regarded as a speculative transaction. Mr. Marble. At the time you sell that future have you an arrange- ment or a moral certainty that the cash grain is going to be brought to you to complete the transaction and earn your one-eighth of a cent? Mr. Jackson. That is my behef. Mr. Marble. And it is done in that way? Mr. Jackson. Yes, sir. Commissioner Proutt. What is the source of your belief that the cash grain will come along when you make this bargain ? What makes you think so ? Mr. Jackson. Mr. Eosenbaum would give me an order to sell 25,000 or 50,000 bushels of wheat. I go into the market and sell it. It might stand there a week or ten days. Commissioner Prouty. He takes care of it this way? Mr. Jackson. We take care of it. Mr. Marble. After the purchase by you of the cash has been made, has a time arisen when the cash has risen to a premium and there would be a chance of selhng the cash wheat? Mr. Jackson. No, sir; never since I have been in this business. Mr. Marble. You heard the questions put to Mr. Woodbury? Mr. Jackson. Yes, sir. Mr. M.ARBLE. How would you feel in these transactions of yours if such an occasion shoidd arise? Mr. Jackson. I should feel that I had a legal right to dispose of the cash wheat. Mr. Marble. Would you feel that you had a moral right to take the premium as your own property? Mr. Jackson. I would not think it was a wise business transaction for me. It would be apt to curtail my future business. Mr. Marble. That is all, unless the Commissioners have some ques- tions. Commissioner Proutt. That is all. (The witness was excused.) GBAIN ELEVATOR INVESTIGATION. 155 Robert MoDougal, called as a witness, being duly sworn, testified as follows: Mr. Marble. What is your business ? Mr. McDougal. Grain brokerage and grain commission. Mr. Marble. Of what firm? Mr. McDougal. Knight & McDougal. Mr. Marble. You have heard the testimony given by former wit- nesses regarding these transactions of buying cash wheat from an elevator proprietor to go to store and selling him immediately a future with a spread between the two prices that insures a certain profit and eliminates speculative features, have you? Mr. McDougal. I have. Mr. Marble. Are you familiar with transactions of that sort? Mr. McDougal. I am. Mr. Marble. Are you engaged in transactions of that sort? Mr. McDougal. To some extent. Mr. Marble. Your firm is? Mr. McDougal. Yes, sir. Mr. Marble. And have been for how long? Mr. McDougal. Well, a year or two, at least. Mr. Marble. A year or two ? Mr. McDougal. At least. Mr. Marble. How much more? Mr. McDougal. Well, I really can not remember. The business is not a particularly advantageous business at certain periods. We take it when we can not employ our capital to better advantage. Mr. Marble. With whom do you do the bulk of that sort of busi- ness ? Mr. McDougal. We have bought grain to go to store from the Armour Grain Company, Bartlett, Frazier & Carrington, the J. Rosen- baum Grain Company, and I believe some others. Mr. Marble. When you conclude a brace of transactions of this sort, by which you buy cash grain and sell the future, do you con- sider that that is a speculative business? Mr. McDougal. Essentially, no. Mr. Marble. Absolutely not ? Mr. McDougal. I would not say absolutely. Mr. Marble. The calculation of the parties is that it shall not be, is it not? Mr. McDougal. I am not in the speculative business. Mr. Marble. I will ask if it is not the calculation of the parties and if the terms are not arranged to insure you a certain profit and eliminate the speculative features, so far as you are concerned? Mr. McDougal. There are no calculations that I know anything of except our own share — to get a share of the profit and as much more as we can. Mr. Marble. Has the time come in these transactions when you have made more than the amount figured that you should make in the preliminary arrangements? Mr. McDougal. I think likely we have. Mr. Marble. Do you kiiow of such times? Mr. McDougal. I do not. I do not personally watch the details of that business. It is only a small part of our business. 156 GRAIN ELEVATOE INVESTIGATION. Mr. Maeble. I will ask you if cash wheat should go to a premium, so that it would show a profit to you on that transaction to close out cash wheat and buy a future to set against the future you have sold, do you do that? Mr. McDouGAL. The occasion has not arisen. Grain has been at a discount. There has been no occasion to discuss such a contingency. Mr. Marble. In two years grain has not been at a cash premium ? Mr. McDouGALl It may have been in some instances. I do not remember any. Mr. Marble. Have you watched to see? Mr. McDouGAL. Certainly. Mr. Marble. Have you discovered that it was? Mr. McDougal. I discovered that it was not lately. Mr. Marble. At any time that you have been engaged in it ? Mr. McDougal. I did not notice any. The business does not all come under me. That is a small part of our business. I do not per- sonally even look at the confirmation of the transactions. Mr. Marble. Do you know how large a volume of business you do in this way? Mr. McDougal. Yes, sir. Mr. Marble. How many bushels a month would you say? Mr. McDougal. About at the rate of a thousand bushels a month. The last four or five months the business is not advantageous. Mr. Marble. Prior to the last four or five months how much were you doing? Mr. McDougal. All we could get. Mr. Marble. How much would that be ? How much of this have you been carrying at any time since you began the business ? Mr. McDougal. I can remember, I believe, a million and a half bushels of oats. Mr. Marble. How much wheat at the same time? Mr. McDougal. Not very much. Mr. Marble. Well, how much? Mr. McDougal. Maybe 100,000 or 200,000 or 300,000 as a maxi- mum. Mr. MaeblEi- How much corn at the same time ? Mr. McDougal. Not very much. Mr. Marble. How much? Mr. McDougal. Well, as much as the wheat, or less. I am speak- ing only in the rough. Mr. Marble. Somewhere from 100,000 to 300,000 bushels of wheat and from 100,000 to 300,000 bushels of corn and 1,500,000 bushels of oats. That is a good business, is it not? Mr. McDougal. Yes, sir. Mr. Marble. You say that at no time, so far as you have dis- covered or remember, has cash wheat gone to a premium? Mr. McDougal. I do not think cash wheat has been at a premium in two or three years — any wheat we have been interested in. Mr. Marble. As a matter of fact, do you know whether you have closed out any deals that way? Mr. McDougal. What way? Mr. Marble. Selling the cash because it was. at a premium and buying a future. GEAIN ELEVATOB INVESTIGATION. 157 Mr. McDouGAL. I do not remember any such instances, but I have no doubt but we have done such. Mr. Marble. If such an instance should arise, would you take advantage of it and keep the profit as your property? Mr. McDouGAL. We most assuredly would, if we wanted to. Mr. Marble. You would want to, would you not? Mr. McDougal. My answer would be similar to that of my prede- cessor in the witness chair. Mr. Marble. You would not consider it wise business to do so ? Mr. McDougal. Yes; but we could do it morally and legally. Mr. Marble. But you would not do it, because you would lose money in the long run? Mr. McDougal. I think that is about correct. Mr. Marble. Do you know whether the occasion has arisen this way while you have been doing this kind of business that the cash wheat has been sold at a premium and the profit has come not to you, but your principal? Mr. McDougal. I do not. The highest price anywhere for cash wheat is in the Chicago pit. I would like to corroborate the correc- tion of Mr. Woodbury as to Mr. Booth's testimony. Carrying charges have been present in the immediate past and are to-day — full carry- ing charges. Mr. ]\fi.RBLE. Has that been the customary course of the market ? You consider that out of the ordinary when that appears ? Mr. McDougal. Well, somewhat. It depends on conditions. His- tory repeats itself. Going back four or five years you have the same conditions as to-day. We have 1 1,000,000 bushels of No. 2 red wheat, for which the highest market in the world is in the Chicago pit. New York does not want it. Millers do not want it. It is here because of the big crop and fine quality of it. Mr. Marble. This wheat is in the public elevators, a good deal of it ? Mr. McDougal. Part of it is iu the public elevators and part in the private elevators. I believe we have not any. We may have 1,000 or 2,000 bushels — practically none, to my knowledge. Mr. Marble. With whom is the Armour Grain Company doing this business that it formerly did with you ? Mr. McDougal. 1 could not tell you. Commissioner Prouty. How long since this business has been done this way in Chicago ? Mr. McDougal. I guess you will have to qualify that, Mr. Com- missioner. Commissioner Prouty. Well, you may try to answer that. I ask how long that business has been done in that way here in Chicago? Mr. McDougal. I will have to answer two questions, then. One is, how long has it been possible for a man to make money by carry- ing grain? Commissioner Prouty. I am not talking about that at all. I want to know how long elevator men have adopted this method to force grain into their elevators. Mr. McDougal. To my knowledge, I should say two or three years. Commissioner Prouty. And not previous to that time? Mr. McDougal. Not in my participation or knowledge. Commissioner Prouty. Previous to that a man who wanted to put 158 GEAIN ELEVATOR INVESTIGATION. grain into an elevator bought it and put it in there and paid the charges ? Mr. McDouGAL. Pardon me. Commissioner Prouty. I say previous to that grain was stored there by parties who bought it, put it there, and carried it there? Mr. McDouGAL. I think that was the custom. This is only a small portion of our business, except at times we handle a large amount. Commissioner Prouty. That is all. (The witness was excused.) Lee Kincaid, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you live, Mr. Kincaid ? Mr. Kincaid. Athens, 111. Mr. Marble. What is your business? Mr. Kincaid. I am in a bankuig firm. Mr. Marble. Are you engaged in the grain business ? Mr. Kincaid. Yes, sir. Mr. Marble. In what way? Mr. Kincaid. I am president of the Farmers' Association at Athens and also president of the Farmers' State Association. Mr. Marble. You are familiar, then, with the farmers' elevator operations and their ways of doing business? Mr. Kincaid. Yes, sir. Mr. Marble. Some testimony was given yesterday regarding what was called a penalty clause or protection clause. I will ask if such a clause as that is contained in the by-laws of the elevator company • of which you are president ? Mr. Kincaid. No, sir; it is not. Mr. Marble. Is it generally in the by-laws of elevator companies in this State? Mr. Kincaid. Well, there are a number of them that have it in and a number of them do not. Mr. Marble. I will ask you if you know of its being enforced, or if it is enforced in actual practice ? Mr. Kincaid. I only know of two cases in the State at present that have ever paid — two cases at Monticello, 111., but it was not enforced. They sold to the other elevator and came over and paid without being asked for it. Mr. Marble. How many farmers' elevators in the State? Mr. Kincaid. About 150. Mr. Marble. Have they increased recently ? Mr. Kincaid. Yes, sir; all the time. Mr. Marble. What caused them to increase in number ? Mr. Kincaid. The increased price of grain. Mr. Marble. You mean grain increases in price when they are put in ? Mr. Kincaid. Yes, sir. Mr. Marble. Does it increase in the town where they are installed as against nearby towns ? Mr. Kincaid. Yes, sir. Mr. Marble. Are they generally successful or not? Mr. Kincaid. Yes; quite successful. GRAIN ELEVATOB INVESTIGATION. 159 Mr. Maeble. Does your elevator company have difficulty in secur- ing a market ? Mr. KiNCAiD. Not at present. Mr. Marble. Have you had difficulty ? Mr. KiNCAiD. No ; our individual elevator, no ; we did not. Mr. Marble. How long has it been in operation? Mr. KiNCAiD. About three years. I shipped a great deal of grain for my customers before I started the elevator, on account of the low price that was offered to my patrons of the bank, I took the matter up and shipped it for them — probably shipped a couple of hundred thousand bushels, maybe more — very little to Chicago, mostly to Peoria, and from the increase in price I obtained, I agitated the Farmers' Elevator Association. Ml'. Marble. Do these farmers' elevators ffiid a free market now at the terminal markets ? Mr. KiNCAED. Yes; now. Mr. Marble. How long have they? Mr. Kincaid. About two years. Mr. Marble. Would you say that for two years they could ship to any commission men they chose ? » Mr. KiNCAiB. Yes, sir. Mr. Marble. You mean there are some that make a specialty of that business ? Mr. Kincaid. Yes, sir; the majority of them now. Mr. Marble. There are still some that refuse to receive from them, are there not ? Mr. Kincaid. I think so; I would not say positively. Mr. Marble. Do you know what led to that refusal of commission men to receive this sort of business ? Mr. Kincaid. It is on account of the elevator people over the State that wished to term themselves "the regulars;" that if they bought grain from our farmer elevator companies they would not ship to them. Mr. Marble. Do you know of such notice being given ? Mr. Kincaid. There was never a notice sent to our elevators that way, but elevator companies have told me that they have received that kind of notice and even received word from the commission men thair they could not handle their grain any longer. Mr. Marble. That is not a present practice now? Mr. Kincaid. No. Mr. Marble. It has not hampered your business much? Mr. Kincaid. There has been only a case or two I know of this summer. One case was not a farmers' elevator. It was an inde- pendent buyer with an elevator — ^Mr. Milo Leach, of Springfield. He has an elevator; I think it is at Cornland, near Mount Pulaski — in that neighborhood. He met me at Springfield, or called me to Spring- field for advice. He said he had been threatened; had had letters from commission firms in Chicago that if he did not submit to their dictation they would ruin him, and asked me what to do. Mr. Marble. When did he tell you this ? Mr. Kincaid. This was either in May or June last. Ml'. Marble. He recently got these letters ? Mr. Kincaid. Along in May or June. Mr. Marble. Do you know whether he has these letters ? 160 GRAIN ELEVATOE INVESTIGATION. Mr. KiNCAiD. He told me he did. Commissioner Peouty. What were they trying to dictate? Mr. KiNOAiD. That he should not pay as high a price as he was paying; that they would advance the price beyond where he could make anything and ruin him. Mr. Marble. Do you know who his competitors were? Mr. KiNCAiD. The firm that he told me wrote him that letter was Bartlett, Frazier & Co. Mr. Marble. Do you know of any other instances of this sort? Mr. KiNCAiD. Not lately. Mr. Marble. How does the farmers' elevator man regard the scooper? What is your attitude toward him? Mr. KiNCAiD. If he can do business, let him do busiaess. We have no kick coming. Mr. Marble. Do you try to keep him out? Mr. KiNCAiD. No, sir. Mr. Marble. Do you buy grain from him? Mr. KiNCAiD. No ; we do not. Mr. Marble. You have no terminal facilities? Mr Kincaid. No, sir. Mr. Marble. I will ask you if you own any railroad stock? Mr. Kincaid. I do not. Mr. Marble.- Does any member of your farmers' association own any, railroad stock? Mr. Kincaid. No, sir. Mr. Marble. Any of them, so far as you know? Mr. Kincaid. No, sir. Mr. Marble. How have the railroads treated you? Mr. Kincaid. Our railroad through our town has treated us very well. Mr. Marble. What railroad is that? Mr. Kincaid. The Chicago, Peoria and St. Louis. I have heard some complaint from the farmers' elevators on the Baltimore and Ohio — the Baltimore and Ohio Southwestern along in — I think that was in April or May, probably; and the farmers' elevator companies, two or three of them at Farmington, Ashland, and Pleasant Plains called me to Springfield to meet them, claiming they were discrimi- nated against m regard to cars; that they could not get cars, while the regular, Mr. Edward Beggs, of Ashland, could get cars when he wanted them. They had their- elevators full of corn and could not get it out; also that they were discriminated against in the freight rate to St. Louis. Mr. Marble. What do you mean by that? Mr. Kincaid. They were charging the farmers' association a higher freight rate than they were the regular dealer — Mr. Beggs. They went to work and got the freight bills which proved it. They charged the farmers' elevator 8 cents a hundred and Mr. Beggs 6 cents a hun- dred to the same market on the same day. Mr. Marble. Do you know where those freight bills are now? Mr. Kincaid. They are in the hands of the attorney-general of the State, Mr. Steed. Commissioner Prouty. That shipment was from a point in the State of Illinois to another point in the State of Illinois ? Mr. Kincaid. From the same point in Illinois to St. Louis. GRAIN ELEVATOB INVESTIGATION. 161 Commissioner Prouty. St. Louis or East St. Louis? Mr. KiNCAH). Well, I think that was to St. Louis — old St. Louis. I would not say for certain just now. Commissioner Peoutt. Did one go to St. Louis and the other to East St. Louis ? Mr. KiNCAiD. No; they both went to the same place. There were some of the freight bills that called for 7 cents also, of the farmers' elevators, and one or two — I think two probably as low as 6 — which were made out by a substitute agent. The old agent was either sick or had to go away and the new agent had not got on to the way of doing. He made then! out the same way — 6 cents. Commissioner Prouty. That is all. Mr. Marble I think that is all. Commissioner Lane. You say the attorney-general of the State has those bills ? Mr. KiNCAiD. Yes, sir; he has brought suit against the Baltimore and Ohio. Commissioner Lane. Brought suit? Mr. KiNCAiD. Yes, sir; for $5,000 damages. Commissioner Lane. Under a State statute? Mr. Kincaid. Yes, sir. . Mr. Marble. Has this discrimination ceased, or does it still con- tinue ? Mr. Kincaid. It has ceased. • Mr. Marble. And the discrimination in the furnishing of cars, has it also ceased ? Mr. Kincaid. The general freight agent wrote me that he would see that there was no further discrimination in the matter of cars. Mr. Marble. You took it up as the representative of the associa- tion ? Mr. Kincaid. Yes ; at Cincinnati. Mr. Marble. That is all. (The witness was excused.) E. A. James, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside? Mr. James. Chicago. Mr. Marble. What is your business? Mr. James. Secretary and treasurer of the Armour Grain Com- pany. Mr. Marble. What is the business of the Armour Gram Company? Mr. James. Buying and selling grain. Mr. Marble. Buying and selling grain ? Mr. James. Yes, sir. Mr. Marble. Do they operate any elevators? Mr. James. Yes, sir. Mr. Marble. What elevators do they operate? Mr. James. The Minnesota elevator, the Minnesota annex, the Armour E, Armour F, and the Iowa. Mr. Marble. Are those private houses or public houses? Mr. James. Private. S. Doc. 278, 59-2 11 162 GRAIN ELEVATOB INVESTIGATION. Mr. Marble. All private houses? Mr. James. Yes, sir. Mr. Marble. Are you connected with any other company than the Armour Grain Company? Mr. James. Yes, sir. Mr. Marble. What company? Mr. James. I am secretary and treasurer for the Armour Elevator Company. Mr. Marble. That is the same position that you hold iu the Armour Grain Company? Mr. James. Yes, sir. Mr. Marble. What is the business of the Armour Elevator Com- pany? Mr. James. Public warehousemen. Mr. Marble. What public warehouses do they operate? Mr. James. They operate the A and B and the B annex. Armour C, and the Union. Mr. Marble. Are you employed by any other grain or elevator com- panies than those ? Mr. James. Yes, sir. Mr. Marble. WTiat? Mr. James. By the Neola Elevator Company. Mr. MLarble. What position do you hold in that company? Mr. James. Secretary and treasiu-er. Mr. Marble. The same position that you hold in the other com- panies ? Mr. James. Yes, sir. Mr. Marble. And by any other company? Mr. James. By the Milwaukee Elevator Company. Mr. Marble. What position do you hold ia that company? Mr. James. Secretary and treasurer. Mr. Marble. The same position again? Mr. James. Yes, sir. Mr. Marble. Wliere is the property located, operated by the Mil- waukee Elevator Company? Mr. Jambs. They have no property.. Well, that is, they have some property ia the State of Wisconsinr and some ia Minnesota. Mr. Marble. Are you connected with any other grain or elevator conipanies ? Mr. James. The Southwestern Elevator Company at Kansas City. Mr. Marble. What position do you hold in that ? Mr. James. I am secretary and assistant treasurer. Mr. Marble. And any other elevator companies or any other grain companies ? Mr. James. No, sir. Mr. Marble. That is all? Mr. James. Yes, sir; that is all. Mr. Marble. WTio is the president of the Armbur Grain Company ? Mr. James. Mr. George E. Marcy. Mr. Marble. Is Mr. Marcy also president of these other companies ? Mr. Jambs. Yes, sir. Mr. Marble. All of them? Mr. James. Yes, sir. Mr. Marble. Have those companies all the same officials? GEAIN ELEVATOB INVESTIGATION. 163 Mr. James. Yes, sir. Mr. Marble. In what respect do they differ? Mr. James. The Southwestern Elevator Company has a Mr. H. B. Mulhall, who is treasurer and assistant secretary; the others are the same. Mr. MakbLe. He is the treasurer and assistant secretary ? Mr. James. Yes, sir. Mr. Marble. You are the secretary and assistant treasurer ? Mr. James. Yes, sir. Mr. Marble. Otherwise they are all the same ? Mr. James. Yes, sir. Mr. Marble. These companies are, as a fact. Armour companies, are they not ? Mr. James. Yes, sir. Mr. Marble. Armour interests control them all? Mr. James. Yes, sir. .' Conmaissioner Glare. Do they have a conmion board of directors ? Mr. James. No, sir. There are different directors. Mr. Marble. I will ask you in detail who the directors of the Armour Grain Company are ? Mr. James. Mr. J. Ogden Armour, George E. Marcy, A. I. Valen- tine, E. M. Higgins, E. A. James, K. K. McLaurin. Mr. Marble. Now, then, of the Armour Elevator Company, who are the officers of that company? Mr. James. The officers or the directors ? Mr. Marble. Who are the directors, I should say? Mr. James. Mr. Marcy, Mr. Higgins, and myself. Mr. Marble. The Neola — who are the directors of that company? Mr. James. They are the same as the Armour Elevator Company — Mr. Marcy, Mr. Higgins, and myself. Mr. Marble. The Milwaukee Elevator Company? Mr. James. Mr. Marcy, Mr. Higgins, and myself. Mr. Marble. And the Southwestern? Mr. James. The Southwestern — C. H. Hodge and one that I can not remember, a Kansas City man — I can not remember his name at present — ^Mr. Marcy. and Mr. Mulhall. Mr. Marble. Where is the office — have you a common office for all these companies? Mr. James. The Armoiu- Grain Company, the Armour Elevator Company, and the Neola Elevator Company are at 712 Home Insur- ance Building. Mr. Marble. In the same quarters? Mr. James. Yes, sir; same office. Mr. Marble. You have stated the Armour Grain Company, the Armour Elevator Company, and the Neola Elevator Company ? Mr. James. Yes, sir. Mr. Marble. The Milwaiikee — where is that ? Mr. James. They have an office in Chicago here, at the same office as the rest; but their main office is in the Mitchell Building, Milwaukee. Mr. Marble. Their principal place of business? Mr. James. Yes, sir. Mr. Marble. But they have an office with these other companies? Mr. James. Yes, sir. Mr. Marble. The Southwestern? 164 GRAIN ELBVATOK INVESTIGATION. Mr. James. Their office is in Kansas City. Mr. Marble. Who owns the stock of the Armour Elevator Com- pany ? ■ ■ Mr. James. The stock is owned by the Armour Grain Company, George E. Marcy, E. M. Higgins, E. A. James. Mr. Marble. Mr. Marcy and yourself simply holding enough to qualify yourselves as directors? Mr. James. Yes, sir. Mr. Marble. One share ? Mr. James. Yes, sir. Mr. Marble. And the balance of the stock being owned by the grain company ? Mr. James. Yes, sir. Mr. Marble. Who owns the stock of the grain company? Mr. James. J. Ogden Armour, A. I. Valentine, P. A. Valentine, A. L. Valentine, trustees for Philip D. and Lester Armour, George E. Marcy, E. M. Higgins, E. A. James, K. K. McLaurin. Mr. Marble. Is the majority of that stock controlled by these trustees ? Mr. James. No, sir. Mr. Marble. They haven't a controlling interest ? Mr. James. No, sir. Mr. Marble. Does Mr. J. Ogden Armour own any stock in his own right? Mr. James. Yes, sir. Mr. Marble. He owns some stock besides holding that as a trustee? Mr. James. Yes, sir. Mr. Marble. Did you mean that Mr. J. Ogden Armour, A. I. Val- entine, P. A. Valentine, A. L. Valentine were trustees for Philip D. and Lester Armour ? Mr. James. No, sir; they are all stockholders. Then there are cer- tain trustees for Philip D. and Lester Armour. Mr. Marble. So far as you know, do any of the stockholders of the Armour Grain Company own any railroad stock? Mr. James. Not to my knowledge. I would not say that they do not, but I do not know that they do. Mr. Marble. Do you know whether or not J. Ogden Armom- is interested in the Milwaukee road ? Mr. James. I do not know. Mr. Marble. Isn't he a director in the Milwaukee road ? Mr. James. That I do not know. Mr. Marble. Who owns the stock of the Neola Elevator Company? Mr. James. The Armour Grain Company. Mr. Marble. Owns it all? Mr. James. Yes, sir. Mr. Marble. Except enough to make the directors ? Mr. James. They own it all. Mr. Marble. Who owns the , stock of the Milwaukee Elevator Company ? Mr. James. The Armour Grain Company. Mr. Marble. And who owns the stock of the Southwestern Grain Company ? Mr. James. Mr. Marcy, Mr. Higgins, Mr. Mulhall, Mr. Hodge, and that other Kansas City gentleman, but I can not recall his name. " GEAIN ELEVATOR INVESTIGATION. 165 Mr. Marble. Mr. Armour has no interest in that company, then ? Mr. James. No, sir. Mr. Marble. Are you famihar with the plan of operation of the Neola Grain Company ? Mr. James. To a certain extent, yes, sir. Mr. Marble. Before I get to that I will ask you, do you know about the Atlas — is that the Atlas Grain Company or the Atlas Elevator Company ? Mr. James. There is such a concern as the Atlas Grain Company. Mr. Marble. Is that affiliated with your companies? Mr. James. No, sir; that was recently purchased by the Neola Ele- vator Company — a number of their houses. Mr. Marble. The Atlas Grain Company is owned by the Neola Ele- vator Company? Mr. James. No; I didn't say that. I say the Atlas Grain Company recently sold a number of their houses to the Neola Company. The Atlas Grain Company are going out of business. Mr. Marble. Who owns the Atlas Grain Company? Mr. James. A man by the name of E. M. Miner. Mr. Marble. Was that an Armour company? Mr. James. No. sir. Mr. Marble. It was owned by these interests which owned these other companies? Mr. James. Not to my knowledge. Mr. Marble. Who sold all of its elevators to the Neola? Mr. James. That I could not say. Mr. Marble. Do you know how many it sold to the Neola Company ? Mr. James. No; I couldn't say positively how many. I know that the Neola company bought some of the houses. Mr. Marble. The Neola Grain Company has a number of line elevators ? Mr. James. Country elevators. Mr. Marble. On wnat road ? Mr. James. On the Chicago, Milwaukee and St. Paul, and on the Burlington. Mr. Marble. On the Milwaukee and the Burlington? Mr. James. Yes, sir. Mr. Marble. Where are these houses located — what States ? Mr. James. Illinois and Iowa. . Mr. Marble. Do these houses, or any one representing them, belong to the grain dealers associations of either of those States ? Mr. James. That I do not know; not that I know of. Mr. Marble. Do you know whether they do or not ? ■ Mr. James. No, sir. Mr. Marble. Who determines the price which shall be paid for grain in the country by these houses of the Neola Elevator Company? Mr. James. Mr. Dillen is the manager. I presume he fixes the prices. Mr. Marble. Do you know how he fixes the prices ? Mr. James. I do not know. Mr. Marble. Or whether he consults with any one? Mr. James. He may possibly consult with Mr. Marcy. Mr. Marble. You do not know whether he consults with his com- petitors or not ? 166 GRAIN ELEVATOB INVESTIGATION. Mr. James. No; I do not. Mr. Marble. Do you know about his course of business, so far as meeting competition is concerned; how he does that? Mr. James. No, I do not. I have nothing whatever to do with the trading end of the business. Mr. Marble. You have to do rather with the stock books and the bookkeeping? Mr. James. With the office end of it. Mr. Marble. Are you familiar with the business of the Armour Ele- vator Company? Mr. James. Yes, sir. Mr. Marble. Do you know whether they — where does the grain come from that goes into the Armour pubhc elevator? Mr. James. It comes from various sources. Mr. Marble. Does the bulk of it come from or through the private houses operated by the Armour Grain Company? Mr. James. I wouldn't say the bulk of it, no. The grain comes^the greater bulk of it comes Mr. Marble (interrupting). From the Neola Elevator Company; they purchase a good deal of it. Mr. James. It might be, and it is not through shipment. Mr. Marble. And there are purchases made on the board of trade here? Mr. James. Yes, sir. Mr. Marble. Do you know whether or not your company finds itself under the necessity or is engaged in the practice of forcing grain into that elevator in order to earn storage charges ? Mr. James. They want to get all the grain in there that they pos- sibly can; I know that. Mr. Marble. Do you know whether they are engaged in this prac- tice of selling cash grain to commission men and buying back futures on the same account and grade immediately, and having the two prices fixed so that will give all the carrying charges and a certain profit to the brokers ? Mr. James. They have done that. I don't know anything about the prices; that part of it. I know there has been cash grain bought and futures sold. Mr. Marble. The Armour Elevator Company does not do that, .does it? Mr. Jambs. No, sir. Mr. Marble. That is done by the Armour Grain Company? Mr. James. Yes, sir. Mr. Marble. The Armour Grain Company does the forcing of the grain into the Armour elevator? Mr. James. They buy and sell all the grain. The Armour Elevator Company never contracts for a bushel of grain. Mr. Marble. The Armour Grain Company, so far as it can, influ- ences that grain into the Armour Elevator Company's houses, so that they will earn the storage ? Mr. James. Yes, sir. Mr. Marble. Do you know whether the Neola company has trouble in getting cars at country stations? Mr. James. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 167 Mr. Maeble. Recently? Mr. James. Yes, sir. Mr. Marble. Do you know whether they have more or less trouble than their competitors ? Mr. James. That I can not say. Mr. Marble. You are not familiar with that? Mr. James I have heard complaints that they couldn't get stuff in from the country on account of not getting cars. Mr. Marble. You are not getting any rebate from any railroads now? Mr. James. Not that I know of. Mr. Marble. Does the Armour Grain Company own these eleva- tors which it operates ? Mr. James. Some of them they own, and some they lease. Mr. Marble. What ones do they lease ? Mr. James. The Armour E and the Armour F and the Iowa are leased houses. Mr. Marble. From whom are they leased ? Mr. James. The E and F from the Chicago, Burlington and Quincy Railroad. Mr. Marble. And the Iowa? Mr. James. From John S. Goodwin, trustee. Mr. Marble. Trustee for whom, do you know? Mr. James. I do not. Mr. Marble. You do not know whether he is a trustee for a rail- road company or not ? Mr. James. The houses were originally operated by, I think, the Chicago Railroad and Terminal Elevator Company, if I am not mis- taken — one of the old warehouses. Mr. Marble. On what terms are those houses leased from the Chi- cago, Burlington and Quincy? Mr. James. The regular lease. A stipulated price is paid. Mr. Marble. How much rent do you pay ? Mr. James. $7,250 a quarter. I beg your pardon, it is $3,500 a quarter; that is, at these two houses. Mr. Marble. At these two houses? Mr. James. Yes, sir. Mr. Marble. Who pays the taxes on them, do you know? Mr. James. The Chicago, Burlington and Quincy road, I suppose. We never have paid any. Mr. Marble. And the insurance ? Mr. James. That is taken care of by them. Mr. Marble. And the repairs? Mr. James. By them. • Mr Marble. You pay $14,000 a year rent? Mr. James. Yes, sir. Commissioner Clark. What is the respective capacities of those houses ? Mr. Marble. What is the capacity of the Armour E? Mr. James. I am not positive of that. I think it is in the neigh- borhood of 500,000. Mr. Marble. And of Armour F? Mr. James. About the same. 168 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. What is the capacity of the Iowa. Mr. James. That I couldn't say. We just acquired that house recently. Mr. Marble. On what terms did you accjuire that house? Mr. James. $1,500 a month. I think it is fifteen. It is either $1,500 or $1,666. Of that I am not positive. Mr. Marble. In this lease do you have any agreement to influence tonnage from any road as a part of that lease ? Mr. Jambs. No, sir; not that I know of. Mr. Marble. Are there any provisions in the lease by whicn you draw back any of this rent whatever ? Mr. James. No, sir. / / Mr. Marble. Any elevation allowance? Mr. James.. No, sir. '; _ _ - Mr. Marble. Or any reduction in the rent provided you ship ascer- tain amount of grain ? Mr. James. No, sir. \ Mr. Marble. It is a flat, ordinary please? Mr. James. Yes, sir; straight lease-, Mr. Marble. And those three houstes are all o|>tM*private houses which you do not own; is that "right? t^ ^"'^ Mr. James. That is right? ' ./ Mr. Marble. Who owns the public houses? / Mr. James. The Armour Elevator Compasiiy owns A, B, and B annex, and the Chicago, Burlington and Quiacy ovsms the C house; and the Union house is owned or controlled fey Mr. Goodwin as trustee — the same parties as the Iowa. ^ Mr. Marble.' And you lease f rom/him ? Mr. James. Yes, sir. ; Mr. Marble. What is the capacity of the C house? Mr. James. I should say about a pillion and a half. Mr. Marble. On what terms is tttat leased? Mr. James. It is $3,750 a quarter} Mr. Marble. Is that like the other lease, without any drawbacks or variations from it on any contingency whatever? Mr. James. Yes, sir. ; Mr. Marble. On what terms is the Union house leased? Mr. James. It is either $1,500 or $1,666. One house is $1,500 and the other is $1,666. Which is whiqh I am a little at sea on just at present. Mr. Marble. And here again youjhave to pay all the rent, no mat- ter what business you do ? ^|^- Mr. James. Yes, sir. I ^^ Mr. Marble. And you receive no drawbacks. Mr. James. No drawbacks. " Mr. Marble. Any of these hoji^v owned by either the Armour Grain Company or the Armour'Slevator Company, concerning which you have any contract with any railroad or anyone that they are to buy them back on "ome contingency or other, to be determined bv you? ^'' Mr. James. None of these houses; no, sir. Mr. Marble. Or some house on Goose Island? As to any of them do the railroads stand bound in any way ? Mr. James. No, sir. We lease the ground for some of the houses. GBAIN ELEVATOR INVESTIGATION, 169 Mr. Mabble. From the railroads? Mr. James. Yes, sir. Mr. Marble. But you say you have a flat lease for a term of years 1 Mr. James. Yes, sir. Mr. Marble. Without any clauses that would draw back any rent on condition of your shipping over a certain tonnage or anything of that kind? Mr. James. Nothing of that character. Mr. Marble. What is the capitalization of the Armour Elevator Company? Mr. James. $100,000. Mr. Marble. Of course that does not anywhere near represent the amount of its holdings ? Mr. James. Of the Armour Elevator Company? Mr. Marble. Yes, sir. Mr. James. No; not necessarily. Mr. Marble. I think that is all. Commissioner Protjty. That is all, Mr. James. (Witness excused.) G. E. Marcy, called as a witness, being duly sworn, testified as follows : Mr. Marble. You are president of the Armour Elevator Company, and the Armour Grain Company as well ? Mr. Marcy. Yes, sir. Mr. Marble. You are really the manager of the business of these concerns, aren't you? Mr. Marcy. Yes, sir. Mr. Marble. Both of them? Mr. Marcy. Yes, sir. Mr. Marble. You have heard some of this testimony? You were here yesterday? Mr. Marcy. No, sir. Mr. Marble. It was testified by Mr. Stream and by Mr. Eosenbaum that in the operation of their public elevators they found it necessary in their capacity as grain men to use some portion of their profits as elevator men to force grain into their public elevators, so as to earn the storage charges. What has your company found the condition to be in that respect ? Mr. Marcy. At times we have to lose a little money to do that, but at other times we make a little money. doing it. It depends upon conditions. Mr. Marble. You always make some money doing it, only you don't make as niuch as the full two profits on the grain going into the elevator ? Mr. Marcy. Well, competition is very keen; sometimes we are forced to work pretty cheap, and other times we can catch something that we can ma!ke a little on. Commissioner Prouty. What competition is it that is keen compe- tition — with your competitors in Chicago or competition between Chicago and some other markets ? Mr. Marcy. In the first place, the competition in the country between the comftry elevators and the farmers' elevators — our com- 170 GRAIN ELEVATOR INVESTIGATION. petitors nmnmg country elevators push the margins down very fine. Then, when we attempt to get that grain from the different country elevator people to bring into Chicago, we run up against Omaha, St. Louis, Kansas City, Mumeapolis, and all the other markets. Then, even if Chicago is m line, there are three or four firms pushing for the business from here. It makes pretty hard work very often to get any^ thing out of it. Mr. Marble. At times when you find it necessary to get grain into your warehouse for storage to force it in, what is the method which you use to accomplish that result ? Mr. Marcy. That is a hard question to answer. It is almost impos- sible to answer it. Mr. Marble. Why is it difficult to answer? Mr. Marcy. Because you never do it alike the second time. Mr. Marble. Are you familiar with the methods of finding a broker, a commission man, on the board of trade, and selling to him cash grain and buying from him at the same time a future for the identical amount, the identical sort of grain, with a spread between the two operations sufficient to cover all the carrying charges and an eighth of a cent or aome compensation to him for his services besides — the grain sold to go to store? Mr. Marcy. You are speaking now of public elevators ? Mr. Marble. Public elevators. Mr. Marcy. We do that very often. Mr. Marble. You do that very often? Mr. Marcy. Yes, sir. Mr. Marble. And in bidding the country do you find it necessary to use any portion of your eammgs as public elevator concerns to add to the price there to force the grain in here to keep it from going to some other market ? Mr. Marcy. We have to give away a good many of our profits to fet the business to come this way. But now we are stopped from oing that on com and oats. The board of trade call rule prevents us from doing it. Mr. Marble. But you do, from time to time, as the necessity arises, if grain is not coming to Chicago — you do, for the Armour Grain Com- pany, give away some portion of the storage charge, some of the ware- house profits, in order to force the grain in here in the public ware- house ? Mr. Marcy. I would not say that we do. We possibly buy some stuff and bid up strong for it, a little stronger than we should, trusting that when it comes in we will be able to sell it at a premium and get out. Sometimes we find we can not, and we will have to put it into the public elevators and sell it, and in a little time it will be delivered out on the contracts. Mr. Marble. Making yourself what the grain company does not make, by having the elevator company make the storage charge ? Mr. Marcy. Sometimes it works that way. Mr. Marble. A good deal of the business is done in that wav isn't it? Mr. Marcy. I wouldn't say. It might be. It is something we try not to do. If we do it, it is on account of the poor trade. Mr. Marble. The grain that you have here on trapk in Chicago, you seU a good deal of that in this way, selling the cash and buymg the GBAIN ELEVATOR INVESTIGATION. 171 future; selling it to go to store, counting on the elevation charge to pay this eighth of a cent which the broker gets ? Mr. Maeoy. We do that at times. Mr. Mabble. Supposing, after such an arrangement as that is made, cash graiQ should go to a premium, so that there would be a profit in selling out that grain, buying a future to oflEset the future which has been sold, would you consider that the broker to whom you have sold it had a right to so handle the grain and himself take all that profit as profit? Mr. Maecy. Yes, sir. Mr. Maeble. You would consider that he had a legal right to do so ? Mr. Maecy. Yes, sir. Mr. Maeble. Would you consider he had a moral right to do so? Mr. Maroy. Yes, sir. He has a moral right. It is his property. He can do with it as he sees fit. Mr. Maeble. You would not consider he was betraying any obliga- tion or in any way not carrjdng out the deal in the way he had been expected to if he should do that ? Mr. Maecy. No, I would not, although naturally the people who are anxious to buy this grain to go to store and carry usually carry it imtil the delivery day. Mr. Maeble. You do not know why they usually do so and let these profits go ? Mr. Maecy. It is very seldom they can make any profit. Mr. Marble. Has that occasion arisen since you have been making these account sales ? Mr. Maecy. I do not remember a case, but nobody does. Mr. Maeble. You can not say, then, that it has ? Mr. Maecy. Not that I know of . . Mr. Maeble. You do not know, then, of such profits being reached by anyone, either yourself or the broker? Mr. Maecy. No, sir. - Commissioner Prouty. All you would lose by such a transaction on the part of the broker would be your carrying charges, wouldn't it? Mr. Maecy. We would lose the earning of any additional store after we sold it. ■ Commissioner Peouty. And instead of getting the carrying charges for the entire period you would only obtain carrying charges for part of it? Mr. Maecy. The storage charges; that is all. Commissioner Prouty. Would you think that you had any right to go to that broker and tell him to sell out for cash and buy in the ftiture and give you the profit that accrued from that transaction? Mr. Maecy. No; I don't think I would. Mr. Maeble. Are the elevator men of the city of Chicago organized or combined in the conduct of their business ? Mr. Marcy. No sir, except as Mr. Pettit has explained to you this morning. Mr. Marble. Did you hear Mr. Pettit' s testimony here this morn- ing? Mr. Maecy. Yes, sir. Mr. Maeble. Were there any features of that contract which he failed to elicit which occur to you now? Mr. Marcy. No, sir. 172 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Were there any penalties on fflrain men taking grain out of each other's elevators which we did not elicit? Mr. Marcy. No, sir. Mr. Pettit will have the contract. Mr. Marble. He has found one? Mr. Marcy. I think he will be able to find one. There must be one. So that the Commission and all of you can read it, and just see every- thing there is in it. Mr. Marble. Have you one of those contracts? Mr.* Marcy. No ; I haven't. Mr. Marble. How are you going to avoid the evils which Mr. Pettit says that contract was intended to avoid now that that contract is out of the way? Mr. Marcy. Just simply take the chance. Since it was canceled I have felt that it was a mistake ever having it in. Mr. Marble. You do not consider it was valuable to you? Mr. Marcy. No, sir. Mr. Marble. Have the public elevator operators of this city had any other combination than that? Mr. Marcy. No, sir. Mr. Marble. Have they ever had an oral agreement or understand- ing as to deliveries, on delivery days, having in view the result on the cash market of their deliveries? Mr. Marcy. No, sir. Mr. Marble. Never? Mr. Marcy. No, sir. You mean making an agreement to deliver certain stuff ? Mr. Marble. Making an agreement so that, say, on the 1st of the month they will weaken the market by delivering all at once ? Mr. Marcy. No, sir. Mr. Marble. And so reducing the price of wheat? Mr. Marcy. No, sir. Mr. Marble. Never had any such understanding? Mr. Marcy. No, sir. Mr. Marble. Have any number of them? Mr. Marcy. No, sir, not that I know of. Mr. Marble. Or any two of them? Mr. Marcy. Not that I know of. Mr. Marble. Do you have charge of the business of the Neola Ele- vator Company? Mr. Marcy. Yes, sir. Mr. Marble. You are familiar with their course of business in the country ? Mr. Marcy. Yes, sir. Mr. Marble. I will ask you if you or anyone for your company, or for any members of it, belong to this State grain dealers' association? Mr. Marcy. I was. Mr. Marble. You do not belong now? Mr. Marcy. No, sir. Mr. Marble. Do you in any way support them? Mr. Marcy. I do not think we do. About a year ago — up until a year ago we paid them 50 cents a station for sending out the postings ; that is, all the bids; but about a year ago I told them to stop it and not do any of it, and I think that has been stopped. Mr. Marble. How is the price determined which will be paid by GBAIN ELEVATOR INVESTIGATION". 173 your country elevators of the Neola company — ^who is that deter- mined by? Mr. ]\iABOY. By myself, largely. I make up the prices at the close of 'change for our bids and everything. They are passed over to the ofl&ce. The people managing the Neola take those prices and figure off and send out their wires and card bids and instruct their agents. It is all. done from my ofiice. Mr. Maeble. Have you any understanding with any of your com- ■ petitors, or did you at any time, or have you ever, as to the amount of these bids, so as to reach an agreement with them? Mr. Mabcy. Not that I have heard of. Mr. Marble. You have heard of such devices ? Mr. Marcy. I have heard of them, but I have always endeavored to steer clear of them. Mr. Marble. You are famihar with the operation? Mr. Marcy. Yes, sir. Mr. Marble. Yom- company has not been engaged in them? Mr. Marcy. Not that I know of. Mr. Marble. You bid competitively, then, at every station?. Mr. Mabcy. I did not quite understand your question. Mr. Marble. You bid competitively at every station? You do not agree with your competitors as to what the price shall be at any station? Mr. Marcy. Certainly not. Mr. Marble. Are there farmers' elevators where you are located? Mr. Mabcy. Yes, sir. Mr. Marble. Do they bid the same amount that you do ? Mr. Marcy. Not always. Some of them may. Especially where they have a penalty clause they make pretty hot competition. Our margins are so thin that usually they are complaining to us that we are paying up too close to the basis of the Chicago market. Mr. Marble. Do you pay more for grain in towns where farmers' ele- vators are located than you do in other towns that are similarly situated so far as freight rates are concerned ? Mr. Marcy. No, sir. Mr. Mabble. You make the same price all along the line? Mr. Marcy. Well, the competition drives you at different places to do different things; not only the farmers' elevators but competitors on other roads across the country or different conditions one way or the other cause us to have to spring our prices very often. We try to get about a certain margin, a cent or a cent and a half a bushel above the price we pay the farmer, and at times competition there, from the farmers' elevators or any other grain dealers, springs the price on us, and we very often lose mat price. Mr. Marble. Where there is no competition you make a very com- fortable profit? Mr. Marcy. We do not make anything big, because all over the western country the stations are so close together and the farmers so well posted — ^he has a telephone and daily deliveries of mail. The postmaster comes along with his newspapers in the morning which tell him what he ought to have for his wheat, and a great deal of our trading with the farmer is done over the telephone. Mr. Marble. Do you try to get rid of competition by a device which has been described "here uke this — of paying more than the 174 GRAIN ELEVATOR INVESTIGATION. grain is really worth at stations where competition appears, so that the competitor will either get no grain or willtake it at a loss, in order to drive him out of that place? Mr. Makcy. No, sir; I have never done it or allowed it to be done. I have always gone on the theory that the man in there is going to get his share and we are going to get our share. We have curried favors with our competitors in that way and have tried to get along with them. Mr. Marble. Your idea being rather to spring your price, and when he wants to pay more than that let him have it 1 Mr. Maect. Yes, sir; you see a man that works that way Mr. Marble (interrupting). Do you buy grain from country eleva^ torsi Mr. Maect. Yes, sir. Mr. Marble. Other than your own? Mr. Marct. Yes, sir. Mr. Marble. Do you discriminate against any because of the prices they pay for the grain? Mr. Maect. No, sir. Mr. Maeble. You have heard of that device being used? Mr. Maect. Yes, sir. Mr. Marble. You do not engage in that ? Mr. Maect. No, sir. Mr. Maeble. How about the man who does not own an elevator — would you buy grain from him? Mr. Marct. No, I will not, for he isn't rehable financially. If a farmers' elevator company owns that elevator, and they are responsi- ble I will trade with them. I send traveling men around the country to see them and tell them I would hke to handle their business. Mr, Marble. Supposing a man did not own an elevator, but had other property there, a country merchant for instance, operating a shovel house? Mr. Maect. I have bought from these people; but it would depend on who they are. Mr. Marble. I am drawing your attention to this matter to find out if you attempt to restrict business to elevators. Suppose the man is a country merchant or is engaged in some other industry so that he is a rehable man to deal with — ^will you bid him on equal terms ? Mr. Maect. Yes, sir. Mr. Maeble. You do not discriminate as against that sort of man? Mr. Maect. No, sir. Mr. Maeble. It is only when it seems that he would be unsatisfac- tory to deal with? Mr. Maect. Yes, sir. Mr. Maeble. It has been testified by elevator men that they did not regard that as fair competition and that they attempted to discourage it by not trading. Mr. Marct. I never thought it was just exactly fair to discriminate against any outfit if they had the facilities for handling grain, but very often when they haven't the facihties you buy grain from them and they can not fill your contract. I send traveling men into the country and attempt to find out. Sometimes I make mistakes. GRAIN ELEVATOB INVESTIGATION. 175 Mr. Marbt.k. I wish you would give us your views of what you call the penalty clause. Mi. Mabct. Farmers will bimch together and form a farmers' ele- vator company. They wiU put in $50 "or a $100 apiece and buy an elevator, and then they sign an agreement that in case they do not sell their grain to that company they must pay to the company a half cent or a cent a bushel; I have never seen one of these contracts; I have been told about them. Mr. Maeble. Do you know whether they enforce this contract or not? Mr. Mabct. No, I do not. Mr. Marbt.k, Do you regard that as a discrimination or restraint of trade? Mr. Maect. It is mighty hard competition to go up against. Whenever I hear of a farmers' elevator starting in, I always try to sell them our elevator. Mr. ^Iakble. This rule of the board of trade — what is that? Mr. Maecy. It is a rule that at the close of the market they have a call on corn and oats to arrive. That call is open and free; any- one can bid whatever they want, but as soon as the call is closed, under the rule of the board you can not bid more than the price established by that call, less a commission. Mr. Mabble. You did not favor the adoption of that rule ? Mr. Mabcy. No, sir. I voted against it. It was passed because it was reported around that I was opposed to it. Mr. Marble. Do you think that was the only reason it was passed ? Mr. Maect. Mr. Hill and a lot of his friends seemed to be anxious to pass it. Mr. Mabble. Do you know what the purpose of the rule is ? Mr. Maect. To prevent Chicago people from paying too strong prices in forcing business in on a commission basis. Mr. ^Iaeble. Do you feel it is aimed at the interests owning pubhc elevators in any way? Mr. Maect. No, sir. Mr. ^Iabble. Or is it in relation to their manner of doing business? Mr. Maect. No, sir; just simply a case of the Chicago elevator people being so anxious for business that different dealers — commis- sion men — 9iey would bid out in the country and bid so strong that there was no profit by the time they got it. Mr. Mabble. You regard it then as a thing to force the grain into the city? Mr. Mabct. Force it to pay a commission. Mr. Mabble. You have testified that you were glad this agreement between the pubUc-elevator men had been wiped out — that it was a mistake. It was ia operation for several years, wasn't it, and then abrogated ? Mr. Maect. It was in operation, I think, about two years and stopped a httle over two years ago. Then it was put back on the 1st of last May, and then I think it ran about sixty days, something like that. I have forgotten the exact time. Mr. Mabble. Why was it annulled or resciaded this last time? Mr. Maect. When the rate biU passed it was a question iu my mind and iu the miads of most of us as to whether the rate bill included 176 GRAIN ELEVATOR INVESTIGATION. elevators and whether that would be included. We talked with our attorneys and they could not tell us clearly one way or the other, so we thought we would be on the safe side and cancel it. Mr. ]\£\.EBLE. You wondered whether or not your elevators were instruments of interstate commerce ? Mr. Maecy. We have been unable so far to have our lawyers tell us what they were. Mr. Marble. If your lawyers should determine that they were not instruments of interstate commerce, what would your attitude be? Mr. Maecy. I do not believe t would favor going back to it. Mr. Maeble. You might change your mind and go back to it again? Mr. Maecy. If it was legal and nothing against it. Commissioner Claek. What was the occasion of reissuing that rule in May last? Mr. Maecy. Well, there was — I do not know — ^just one of those things that are hard to explain. We kind of thought possibly if it was established it might possibly prevent somebody taking grain from one house over to his own house. Commissioner Claek. You had tried it for two years and then aban- doned and did without it for a year and a half or so ; then you again established the rule. Wasn't tnere some particular or special cause for so doing ? Mr. Maecy. Well, I think a large crop of wheat had something to do with it. Everybody felt there was going to be pretty good crops and that they might still be absolutely free and not afraid of each other. Commissioner Peouty. Anything more, Mr. Marble? Mr. Maeble. Just one minute. You heard Mr. James testify regarding these leases ? Mr. Maecy. Yes, sir. Mr. Maeble. From the railroads? Mr. Maecy. Yes, sir. Mr. Maeble. Was that correct in every detail? Mr. Maecy. Not quite. Mr. James neglected to state that our com- bined lease with the Chicago, Burlington and Quincy road, which includes the Armoiir Grain Company and the Armour Elevator Com- Eany, for elevators E, F, C, and the ground under elevator D, which as since burned down, that we pay $29,000 a year for. Our D house lease — the house we built— we built that house ourselves, and at the time we built it the Burlington road agreed that if at any time we canceled our lease for all our elevators they would take it off our hands at the cost to build at that time, less depreciation, and, as the house was damaged by fire, we have notified the Burlington road that we desired to cancel our lease for the whole thing and have them pay us for the elevator D. That matter has been turned over — our archi- tect has made up his figures; they have gone to the Burlington road's architect, and he did not think they were correct. These two* are now at work trying to agree. When these two agree they will pay us whatever the agreement is and cancel our lease. As to whether we will make a new lease with the company for E and C we have not fully decided. Commissioner Lane. Did you buy any of your elevators from any railroad company? Mr. Maecy. No, sir. This D house we spoke of, about three years GRAIN BLEVATOK INVESTIGATION. 177 ago — something like that — the Burlington road owned at an elevator that time, and it burned down, and then we rebuilt at our own expense the new elevator D. It burned down a few months ago, and that is the one the Burlington road agreed to take off our hands, at the cost to build less depreciation. Commissioner Peouty. Anything further, Mr. Marble ? Mr. Maeble. Are you being paid any elevation allowance by any railroad now ? Mr. Marcy. No, sir. Mr. Maeble. Are you getting anything for loading out from the eastern roads ? Mr. Maecy. I would correct myself. Yes, sir. The eastern roads there in Chicago pay a quarter of a cent elevation allowance. Mr. Maeble. But you are getting no other allowance ? Mr. Maecy. We are getting it at me Grand Haven, Mich. We own an elevator there on the Grand Trunk, and we elevate from vessels for the Grand Trunk road into their cars, and they pay us a half a cent a bushel. The Commission has a copy of that lease. Mr. Maeble. You also own an elevator at Buffalo, N. Y., do you not? Mr. Maecy. We are stockholders in one. Mr. Maeble. That you own jointly with Bartlett, Frazier & Car- rington? Mr. Maecy. Yes, sir; they are stockholders. Mr. Maeble. That is all. Commissioner Peouty. That is all, Mr. Marcy. (Witness excused.) James B. Wayman, called as a witness, having been duly sworn, testified as follows : Mr. Maeble. Where do you reside? Mr. Wayman. Argyle Park. Mr. Maeble. Where? Mr. Wayman. In the city here. Mr. Maeble. You are in business in the city? Mr. Wayman. Yes, sir. Mr. Maeble. What is your business ? Mr. Wayman. I am manager of the Keith elevator, or at least office manager of the Keith elevator. Mr. Maeble. Is the Keith elevator a public elevator? Mr. Wayman. Yes, sir. Mr. Maeble.. How long have you been manager of that concern? Mr. Wayman. Well, I nave been connected with it more or less ever since 1872, in one position and another. Mr. Maeble. Is that company also a grain dealer? Mr. Wayman. No ; we are not in the sense of the word. No, sir. Mr. Maeble. In any sense ? * Mr. Wayman. We have sometimes handled some grain. Mr. Maeble. Do you bid the country for grain ? Mr. Wayman. No, sir. Mr. Maeble. You do not try to force grain into Chicago by a giving away of any portion of your elevation charge ? Mj. Wayman. No, sir. S. Doc. 278, 178 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. You buy all your grain in Chicago? Mr. Wayman. Yes, sir. Mr. Marble. After it arrives here? Mr. Wayman. Yes, sir. Mr. Marble. Do you find that you have, yourself, forced that grain .into your elevator after it comes into Chicago? Mr. Wayman. I do not know how you mean. Mr. Marble. You have heard this plan of business described here of selling cash and buying future? Mr. Wayman. We have to buy the cash grain, and have the future sold for us to protect us. That is all. Mr. Marble. You hire a broker to buy the cash for you? Mr. Wayman. Yes, sir; when we buy. Mr. Marble. You buy it to go to store? Mr. Wayman. Yes, sir; and have it carried for us. Mr. Marble. In whose name does he buy that? Mr. 'Wayman. In his own name. Mr. Marble. And orders it into your house? Mr. Wayman. Yes, sir. Mr. Marble. And he sells the future for you? Mr. Wayman. Yes, sir. Mr. Marble. How do you determine his compensation? Mr. Wayman. Pay him a commission for it. Mr. Marble. Pay him a commission for it? Mr. Wayman. Yes, sir. Mr. Marble. Have you any other device by which you stimulate the flow of grain into the house? Mr. Wayman. No, sir. Mr. Marble. Were you familiar with the elevation situation at the time this combination which has been testified to here was formed? Mr. Wayman. I do not know what combination you refer to. I haven't heard all the testimony — only very little of it. Mr. Marble. Some four or five years ago a combination of public elevator men was formed to pool a certain portion of their earnings and then divide them again. Were you a party to that agreement? Mr. Wayman. Yes, sir; for a part of the time. Mr. Marble. What was that agreement formed for? Mr. Wayman. In order to make storage for the houses and pay expenses. It was done in that way. Mr. Marble. Did you hear the description of the terms of that contract ? Mr. Wayman. No, sir; I did not. Mr. Marble. Will you give us your recollection of the terms ? Commissioner Prouty. Now, probably we will have that here in the morning. Do not take the time to do that. Mr. Marble. This is the second contract to be brought to us in the morning. I will ask you if there was in that first contract, or at some time was there made in any way in any other writing or orally, or was there at all made at any time an agreement between the public ele- vator men in the city of Chicago as to their action oii delivery day that they should deliver a great amount all at once, and so influence the market? Mr. Wayman. I never heard of anything of the kind. GEAIN ELEVATOB INVESTIGATION. 179 Mr. Marble. You never knew of such an agreement? -Mr. Wayman. No, sir; not a thing. Mr. Marble. Have you a copy of the old contract? Mr. Wayman. No, sir. I do not know that there was but on copy. I never saw but one copy and I never read that through. Mr. Marble. Are the owners of pubhc elevators ia the city of Chicago the great grain dealers of this market? Mr. Wayman. That question I could not answer entirely. Mr. Marble. Are there other great grain dealers — that is, receivers ' and shippers of grain — who are not owners of public elevators ? Mr. Wayman. Yes, sir. Mr. Marble. But all the public elevators are receivers and ship- pers of grain? Mr. Wayman. They are, more or less, so far as my understanding goes. Mr. Marble. I think that is all. Commissioner Prouty. How long have you been obliged to resort to this expedient for sending grain to your elevator for store? Mr. Wayman. Well, I couldn't say just exactly how long, but quite a number of years that the grain has been going that way. Commissioner Prouty. For the last three or four years? Mr. Wayman. More than that. Commissioner' Prouty. More than that? Mr. Wayman. Yes, sir. Commissioner Prouty. That is all. (Witness excused.) James Crighton, called as a witness, being duly sworn, testified as follows: Mr. Marble. Mr. Crighton, you reside in Chicago? Mr. Crighton. Oak Park. Mr. Marble. What is your business? Mr. Crighton. Commission. Mr. Marble. Are you a member of the board of trade? Mr. Crighton. Yes, sir. Mr. Marble. Do you bid the country for grain? Mr. Crighton. A little. Mr. Marble. And you also receive consignments from the country to be sold on comimission? Mr. Crighton. We do; yes, sir. Mr. Marble. How long have you been engaged in that business? Mr. Crighton. Thirty years. Mr. MarblE; I will ask you if you have discriminated in the con- duct of your business as between regular and irregular dealers in any State? Mr. Crighton. No, sir; we accept all consignments offered to us. We have written to farmers that have offered us business that we did not care for it, because they haven't the facilities to handle the grain, and it is no credit for a commission house. They can not get the prices. The grain dealers and the elevators handle the grain so that in the country market it generally brings a good price. A farmer handles his stuff — it is not cleaned, and the price is not satis- factory, so we do not care for the trade. We tell them that. We accept shipments, but we do not ask for them. 180 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Have you at any time received shipments from Iowa from parties who are advertised to you as irregular dealers by the Iowa Grain Dealers' Association? Mr. Crighton. We have received shipments from parties from Iowa that we have been notified that they are not regular dealers — that they didn't have an elevator. Mr. Marble. Being so notified, would you refuse to deal with them? Mr. Crighton. We didn't in this case, because we had an account with those people for a great many years in a speculative way, and we accepted the grain. Mr. Marble. Was there any penalty visited upon you because you continued to receive their gram? Mr. Crighton. No, sir. Mr. Marble. Was there only the one instance ? Mr. Crighton. I think so. I think that was Fred Hyde, of Shells- burg, Iowa. Mr. Marble. Concerning whom only you have received communi- cations from the grain dealers' association? Mr. Crighton. I think that was all. Mr. Marble. Do you know whether or not you have received bids from those who are not members of the grain dealers' association? Mr. Crighton. Oh, we have. Mr. Marble. And you have not been communicated with in regard to them? Mr. Crighton. No, sir. Mr. Marble. Have you had any communication? Mr. Crighton. Yes, sir. Mr. Marble. The same as to Illinois ? Mr. Crighton. It was from the Illinois business. We have some custom in Illinois, but our trade is largely in Iowa, Minnesota, and South Dakota. Mr. Marble. At the present time you receive consignments from those who can furnish the grain ? Mr. Crighton. Yes, sir. Mr. Marble. Regardless of their membership in any association? Mr. Crighton. Yes, sir. Mr. Marble. And you are not experiencing any boycott on that account ? Mr. Crighton. We have experienced no boycott. Commissioner Prouty. That is all. You are excused. (Witness excused.) Israel P. Rumsey, called as a witness, being duly sworn, testified as follows: Mr. Marble. You are engaged in the commission business in this city? Mr. Rumsey. Yes, sir. Mr. Marble. You are receiver of grain from the country to be sold on commission? Mr. Rumsey. Yes, sir. Mr. Marble. You receive from what States ? Mr. Rumsey. Illinois, Iowa, Nebraska, Wisconsin, and Minnesota. Mr. Marble. I will ask you, if you, in the conduct of your business, have had any communication from' any of the grain dealers' associ- GRAIN ELEVATOR INVESTIGATION. 181 ations or any of them inviting you not to receive shipments from cer- tain shippers because they were paying too much, or for any other reason? Mr. Rtjmset. I do not know that they did it in that way exactly. We are members of the grain dealers' association, national, Illinois, and Iowa. Mr. Marble. Associations ? Mr. RuMSET. Yes, sir; we get different communications from them from time to time. Mr. Marble. Do you know about the operations of the Iowa Grain Dealers' Association and Mr. Wells; are you acquainted with that? Mr. RuMSEY. I am familiar with Mr. Wells. Mr. Marble. Have you refused to receive shipments at any time from those not members of the association? Mr. RuMSEY. We have never refused to handle any grain that has ever been consigned to us to the best of my belief. Mr. Marble. Have you declined to receive consignments; declined to have consignments made to you ? Mr. Rumsey. I do not know that I have ever refused, but I do not encourage them. I have been in the business for fifty years, and I have known of many grain dealers of the different States who have been ruined by each other paying in their competition more than their grain would bring, thereby making it very unsafe for us to advance them on their bills of lading and advance money for their grain, and I have always encouraged their acting in such way as any careful business man would. And the organization of these what you call grain dealers' associations, I think, is the naost manly and needed and safe proposi- tion for a man who has invested $5,000 to $15,000 for an elevator and who stands usually ready to take one load or the farmers' whole crop any day or night that he has a mind to deliver it, and I always favor that kind of a man; he is much safer to do business with. Therefore I discourage the farmers' elevator or the farmers shipping the grain. Anything that the farmer ships to us we handle to the hest of our dibility, but we do not encourage that class of business. Mr. Marble. You encourage business from those who join the asso- ciation and reach an agreement as to the price to be paid.? Mr. Rumsey. No; that is not fair. Mr. Marble. I do not want to'be unfair. Mr. Rumsey. The agreement you are talking about — it is an understanding; there is no agreement. I am pretty familiar with those associations. It is simply an understanding that they will not pay above a certain price. Then you take the chances of a wait. A great deal of the time they can not get cars to ship. I attended a little meeting down here in Illinois a year ago and I told them: "You are paying too much for oats; you will find some- time between twenty-four hours that you will not have a profit, but that you will have a loss." It was very true. It is not good business transaction for a man to do that kind of business. The grain dealers are the most honorable men in this country as a class, and they are not exorbitant. My experience of fifty years leads me to say that that is true. Some irresponsible men go* to work and get a lot of a hundred farmers to put in $50 apiece and some- times $100 so that they will get a little more for their grain. The maioritv of those men, to my knowledge, are to-day away in the 182 GRAIN ELEVATOR INVESTIGATION. hole, and the next thing the farmer knows they will find that th?y are not only out the hundred dollars, but are called upon for a defejt. I know the banks will not put up for these associations. There is a great difference between a safe and good business policy and this encouragement that a lot of young-— well, I will say irresponsibles, on the general terms, who encourage these farmers to go into these asso- ciations and build elevators, and, as Mr. Marcy says, generally all these places have got from two to three elevators. They can not sup- port over two — the majority of them can not possibly — and then all dealers do not get $1,000 a year for their fine services, and then these farmers will put up a third elevator. Where are they and where are the men who have advised them ? Some of those fellows that encour- age this kind of business are big enough fools_ to advise the farmers not to buy an elevator, but to build one — a third elevator — and they all three go into bankruptcy. Mr. Marble. So far as you know, do any of the railroads operating through Illinois or Iowa agree with your views in this respect ? Mr. RuMSEY. No, sir; none to my knowledge. Mr. Marble. So far as you know, they serve all just alike without any discrimination ? Mr. RuMSEY. Yes, sir. Mr. Marble. It has been testified to here that the formation of farm- ers' elevators usually resulted in increasing the price 4 or 5 cents a bushel at the station. Would you doubt the correctness of that ? Mr. RuMSEY. Very much. I know that very many of these farmers' elevators are in the hole from $4,000 to $6,000. Mr. Marble. Are you familiar with what is called the penalty clause ? Mr. RuMSEY. Yes, sir. I know there are those who insist — they claim that if they do not sell to the farmers' elevator, if they sell to an elevator man, that they have got to pay a half cent to a cent a bushel to the farmers' elevator as a penalty for not having sold to the farmers' elevator; and I know where they have got a price sufficiently hi^h to pay the penalty to the farmers' elevator and still make money. Mr. Marble. Do you know whether it is a part of the policy and procedure of the Iowa Grain Dealers' Association to attempt to cut off irregular dealers from the terminal market, by persuading commission men not to receive their consignments ? Mr. RuMSEY. I do not know what you mean by "irregular." Mr. Marble. Those whom the association regard as unfair com- petition. Mr. RuMSEY. Those that they regard as unfit competition they discourage. Mr. Marble. How do they discourage them ? What is the method, if you will describe it from your standpoint ? Mr. RuMSEY. Simply in relation to their responsibility. Mr. Marble. I say what method do they take to discourage them from getting a market ? Mr. RuMSEY. I do not think any. I never heard of any. Mr. Marble. Have you ever known of any commission man in Chi- cago being notified that he could have no consignments from regular dealers if he accepted consignments from irregular dealers ? Mr. Rumsey. No, sir. Mr. Marble. Would you sympathize with that sort of thing? Mr. Rumsey. It doesn't amount to anythiag. Grain elevator investmatiou. 183 Mr. Marble. It might amount to a great deal if the commission man had a number of regular dealers. He, perhaps, would not receive the consignments from an irregular dealer, because he would be afraid of losing the business of the regular dealers. Otherwise he might be glad to do it. I am asking you if you know of this attempt to keep these people from a market by refusing to sell to commission men who handle their business. I am not discussing the right to do these things. I am asking you if you are familiar with this course. Mr. RuMSEY. I do not know that there is anything that amounts to anything in that direction, because there are plenty of men on the floor who will receive consignments from anybody who will ship ^em. Mr. Marble. Are you at all familiar with the course of business of Lowell, Hoit & Co. ? - Ml'. RuMSEY. They are there on the floor, and stand high, doing a fiii.e biisiness. Mr. Marble. Do you know whether they are receiving shipments from irregtdar dealers? Mr. RuMBEY. I do not know who their business comes from. Mr. Marble. You are not familiar with that? Mr. RuM.:,jSiY. No, sir. They have a fine business. Mr. Marble. Do you regard it as right for the supposedly compet- ing bidders at the country stations to agree from day to day what price ihej shaBKpay? Mr. RuMSEY. 1 think it is decidedly right. Mr. Marble. And even impose penalties on each other so that they will Mr. RuMSEY. It is the farmers' elevators that impose the penalty, not the others. Mr. Marble. The farmer elevators impose a penalty to keep the price up ? Mr. Rumsey. No; I do not understand that they do. Mr. Marble. I just want your idea about the matter. Mr. Rumsey. My idea is that the man who has invested his money and is trying. to support his family by the grain business is willing to pay a reasonable price for grain, and he has to take the chances of when it can be shipped and what it is going to bring, and the interest on the money in the meantime; and my judgment is that there is no country shipper but what is willing to pay and are paying up fully as high a price as they can possibly afford to pay. Mr. Marble. You think there is no legitimate reason for the con- struction of the farmers' elevators ? Mr. Rumsey. No, sir. Mr. Marble. Nor for added competition in the grain business at any point, as far as you know ? Mr. Rumsey. No, sir. The country is filled with elevators. Mr. Marble. That is all. (Witness excused.) . Harry J. Patten, called as a witness, being duly sworn, testified as follows: Mr. Marble. You reside in Chicago ? Mr. Patten. In Evanston, a suburb of Chicago. Mr. Marble. What is vour business ? 184 GRAIN ELEVATdE INVESTIGATION. Mr. Patten. I am in the grain commission business. Mr. Marble. Associated with what firm? Mr. Patten. I am a member of the firm of Bartlett, Frazier & Car- rington. Mr. Marble. You are a member of the firm of Bartlett, Frazier & Garrington? Mr. Patten. Yes, sir. Mr. Marble. What business is that firm engaged in ? Mr. Patten. They are engaged in the buying and selhng of cash grain; the managing of grain elevators, both in Chicago and the coun- try, and the buying and selling of stocks and bonds. Mr. Marble. You operate elevators in the city of Chicago? Mr. Patten. Yes, sir. f Mr. Marble. What elevators? ; Mr. Patten. Indirectly; that is, there are two corporations io which we are interested — the Central Elevator Company, operatiikg Central A and B, and the Calumet, operating Calumet A, B, and C; Mr. Marble. You also operate country elevators? i Mr. Patten. We operate about 25 or 30 country elevators at coun- try stations, all in the State of Illinois. / Mr. Marble. In the State of Blinois ? / Mr. Patten. Yes, sir. f Mr. Marble. Where is the price that will be paid af these country elevators determined and by whom? ^""^ Mr. Patten. By myself. / Mr. Marble. You have competitors at these country stations ? Mr. Patten. Not all of them; at probably one-half of them or more. Mr. Marble. Do you at any point agree with your competitors as tO'What shall be paid for grain? Mr. Patten. We have no fixed agreement with our competitors. Mr. Marble. Do you have agreements from day to day? Mr. Patten. Our own prices are made here, as a rule, at the close of 'change and wired, as a rule. Sometimes, if there is no particular change, they are sent by mail, giving the prices. Mr. Marble. Do you furnish these prices to your competitors? Mr. Patten. Only indirectly. It may be that at some of our sta- tions our competitors may ask what we "are paying, and we may talk over the situation with them. Mr. Marble. Don't you send out any prices through Mr. Fumey? Mr. Patten. Not except to our own agents. I haven't sent any prices. I don't know what he does, except that he controls, I believe, three stations of his own. Mr. Marble. I understood from' his testimony that he controlled one. Mr. Patten. I understood that he had three. Mr. Marble. Kogers Brothers are competitors of yours at some of these points ? Mr. Patten. They are not competitors at any station we have. Mr. Marble. Do you have an agreement with them as to the price that shall be paid in this territory ? Mr. Patten. I do not think we have any elevators at any station within 25 miles of theirs. I have talked over the price of grain with i GEAITSr ELEVATOR INVESTIGATION, 185 Mr. Rogers, as with other people. It is my business to discuss the values of grain; but we have no elevator within 25 miles of Rogers &Co. . Mr. Maeble. But there is no agreement with your competitors in the ordinary course of business, as to the price to be paid for grain? Mr. Patten. As a general custom the country dealers in the coun- try pay about the same price, because that price is fixed. It is, as a rule, from a cent and a half to 2 cents; perhaps less under certain circumstances. I might say from a cent to 2 cents. Mr. Marble. Yqu have discussed these matters with other people? Mr. Patten. Yes, sir; the people who are in the same business, as to . iYe prospect of getting cars and the condition of the carrying of com, ■ especially of new com. liil. Marble. Are you a member of any association which imposes any penalty on its members who pay more than the agreed price ? Mr. Batten. No, sir. JWb-. Marble. Are there farmers' elevators at the stations where you are locaited? Mr. PattjEN. Yes, sir. M?. MAUBi;-E. How do you get along with them? Mr. PatteJ?. To speak more definitely — at Farmers City there is a farmers' elevMor that at times has paid more than us, and at times less. After the .first year they started up they found that the margin ^ profit that wg/S paid by the regular men was so small that they CTi^d not pay more than us, as a rule, and I think for the last year therhprices have not varied much from the prices that we have paid. In fact, we buy grain from them, and have bought as high as ten cars of grain in one morning from them. Mr. Marble. You do not discriminate against farmers' elevators if they have the grain to sell? Mr. Patten. If they have the grain to sell and if they are financially responsible. There are some farmers' elevators that are not finan- cially responsible. The men back of them may be, but they are not; and there have been quite a number of failures of farmers' elevators in the country in the last few years; there have been several in this State. We generally discriminate or refuse to bid a farmers' elevator, but we always investigate them very carefully to find out if we think they are responsible. Mr. Marble. You investigate all dealers? Mr. Patten. Yes, sir. Mr. Marble. You treat the farmers' elevators the same as any- body else ? Jiffr. Patten. Yes, sir. We send a postal card or send a track bid; we can not send those bids blindly; we have traveling men to investi- gate the responsibility and circumstances of those who operate farmers' elevators, as well as other elevators. Mr. Marble. Eliminating the element of financial irresponsibility which may arise in this case and perhaps of moral responsibility, everything of that sort — suppose in the case of a farmer or a country merchant who does not own a country elevator, but who is finan- cially responsible and who has grain to sell, what do you do about his business ? Mr. Patten. I think I would hesitate about buying grain from a 186 GRAIN ELEVATOR INVESTIGATION. man who had no elevator, because frequently we buy grain, as we are engaged in the buying of grain for certain markets. We have to sell against that perhaps to a certain steamer at the seaboard, and my experience has frequently been that a man who has not an elevator is not in position to ship his grain. Unless he gets cars — and at the present time, and for a great portion of the year we have been ham- pered by lack of cars — a man that hasn't any elevator is not apt to get the cars when the farmer is ready to deliver the grain. Mr. Marble. It has been testified here by one receiver of grain that he considered that that sort of competition in tlje grain business is unfair competition, and he did not want to encourage it, and for that' reason he would not receive shipments from such parties. Do yod share in that feeling? / Mr. Patten. I think that is true. I have bought grain witbih a, week, delivered at a station where there was no elevator — simply a. railroad station that was located 4 or 5 miles from any elevator — and the farmer wanted to deliver it there. In that case he was able to ^et cars to ship within a few days. / Mr. Marble. Would you consider that sort of thing unf aJr ? Mr. Patten. We couldn't start out and give bids recklessly to every farmer in the State of Illinois. Mr. Marble. You belong to the State Grain Dealers' Association? Mr. Patten. I think — I am not sure whether myself or my agent at Decatur is a member, or pays $10 a year, which I belitef^is the dues of the Illinois State Association. It is a sort of nominal thing. I have attended one or two meetings, but not for two or three years. Mr. Marble. Do you regard Chicago as a great grain market now, or is it one in which the flow of grain must be artificially stimulated in order to bring it here? Mr. Patten. I do not believe that grain comes to Chicago naturally in the last ten or twelve years. Mr. Marble. Are you familiar with the testimony regarding the methods of public elevator men here in forcing grain to the city and forcing it into their houses, using a part of the storage earnings to bid the country with, perhaps? Mr. Patten. In a general way, but I get it by hearsay. Other members of the firm — one has been subpoenaed to come here — are more familiar with that than I am. Mr. Marble. Who is that? Mr. Patten. Mr. Bartlett, the senior member of the firm. Mr. Marble. He is to be here in the morning? Mr. Patten. Yes, sir. I think you would obtain more informa- tion by examining him than by taking up the time with my testi- mony. Mr. Marble. Are you familiar with this combination of the public elevator proprietors of this city some time ago ? Mr. Patten. Only by hearsay. Personally, it was not in my department. Mr. Marble. That was in Mr. Bartlett's department? Mr. Patten. I think he will know all about it. Mr. Marble. Has any railroad official or stockholder or employee any interest in your grain companies, or any of them ? Mr. Patten. No, sir. Mr. Marble. Either beneficially or otherwise? GEAIN ELEVATOR INVESTIGATION. 187 Mr. Patten. Absolutely none, directly or indirectly. Mr. Marble. And that, of course, carries with it an answer to the question as to whether any of your stockholders own any railroad stock? Mr. Patten. Some three months ago it was stated that Mr. Harri- man was vice-president of the Central Elevator Company. There must be some confusion. The Central Elevator of New Orleans — I think Mr. Harriman is vice-president of that. I know Mr. Stuyves- ant Fish is president. Neither Mr. Harriman or any employee of the Illinois Central has any interest in our elevators. , Mr. Marble. Are you interested in an elevator. at Buffalo? ' Mr. Patten. Mr. Marcy did not state that correctly. Two mem- bers of the firm are interested. Mr. Marble. Mr. Bartlett and Mr. Frazier? Mr Patten. Yes, sir; but there are seven other partners who own ni^ interest, and the firm in conducting their business pay no attentiral to the fact that there is some personal business there. Mr. Marble. Do you have charge of the branch of the business which ships gram to the warehouse at Buffalo ? Mr. Patten. No, sir; I do not. Mr. Marble. Are you familiar with the course of business at Buffalo? '-- _ Mr. Patten^ Only in a general way. I think you will get more f^om Mr. Bartlett. Mr. Marble. Are you familiar with the inspection at Buffalo as to its satisfactoriness ? Mr. Patten. Mr. Bartlett can inform you as to that much better than I can. Mr. Marble. I think that is all. Commissioner Lane. Mr. Bartlett and Mr. Frazier are your part- ners, and there are seven other partners ? Mi. Patten. There are, counting the two. Commissioner Lane. Seven partners with you ? Mr. Patten. Yes, sir. Commissioner Lane. Are they the controlling partners — Bartlett and Frazier ? Mr. Patten. They are two of the largest interests; yes, sir. Commissioner Lane. What, interests do they own in this Buffalo elevator ? Mr. Patten. I don't know. I think Mr. Bartlett will be in in the morning, and will give that information to you. It would only be guesswork on my part. Mr. Marble. Do you own private houses here? Mr. Patten. Yes, sir. Central A is a public house, and Central B is a private elevator; Calumet A and B are private elevators and Calumet C is a public elevator. Mr. Marble. Does your company own these elevators or are they leased ? Mr. Patten. They are leased. Mr. Marble. All leased? Mr. Patten. Yes, sir. Mr. Marble. From whom ? Mr. Patten. From — I would rather that Mr. Bartlett be asked these questions. 188 GRAIN ELEVATOR IKVESTIGATION. Mr. Marble. He is more familiar with the lease? Mr. Patten. Yes, sir. He is more familiar with it, and he can give you all the information you desire. Commissioner Prouty. You may be excused. (Witness excused.) Commissioner Prouty. We will take an adjournment until 10 o'clock to-morrow morning. At 4.30 p. m. the Commission took a recess until 10 o'clock a. m., Wednesday morning, October 17, 1906. Chicago, 111., October 17, 1906—10 o'clock a. m. J. C. Pbttit, recalled. Mr. Pettit. Should I be sworn again? Mr. Marble. No ; it is not necessary. Mr. Pettit. If the Commission please, I would like to make a coif- rection before I enter on my testimony. I yesterday testified,\ through a slip of the tongue that I had bought grain of, or sold grain to, to go to store, to the Armour Elevator Company; E should have said the Armour Grain Company. It was an unintentional inaccuracy. I also testified relative to a certain agreement, and I find on investigation that the agreement referred to was entered into about last March — March of the present year — and was substantially the same as a similar agreement that had expired about a year and a half previously. Mr. Marble. Did you find a copy of that agreement ? Mr. Pettit. I was able to find the original which I have with me. Mr. Marble. May we have that ? Mr. Pettit. Yes; there is no objection at all. Mr. Merrick. We would like to have you leave the original with us. We will copy it, and then we will submit to you a copy, if that is satisfactory. Commissioner Prouty. That is satisfactory. Mr. Pettit. This document also bears the clause of cancellation. Mr. Marble. Have you examined this agreement since your testi- mony yesterday? Mr. Pettit. Not in detail; no, sir. Mr. Marble. Is there anything further that you want to say regarding this agreement, or any statement you want to make fur- thering your testimony? Mr. Pettit. Yes; I would like to make a statement. Mr. Marble. Very well. Mr. Pettit. Justified by the cursory examination of the agreement, and in looking the matter up fully, I only want to say that in addition to what I said yesterday, if I may, I want to make the following statement: There has never been to my knowledge (and the agreement itself plainly evidences that there never could be) any result from this agree- ment which would give an opportunity to, or cause any of the signers thereof to lower the price paid for any grain, or raise the price which they might charge to any consumer for any grain. The result' of the agreement is merely an attempt to prevent GRAIN ELEVATOR INVESTIGATION. 189 favoritism or special rates being granted to favorite customers as against less favored customers, and it is in harmony, as I believe, fully with the law and with the rates of storage allowed us under the law and under the rules of the board of trade. Mr. Marble. Mr. Pettit, when you receive your license from the court of this State to carry on a business, the business of a public elevator man, you are put under bond, are you not, to adhere to those prices agreed upon yea*rly, and to not discriminate? Mr. Pettit. I do not so understand it. Possibly I do not under- stand your question. Mr. Marble. You were saying that this agreement operated to prevent discrimination and the lowering of prices to certain custo- Sfers. .1 am asking you if that is not already safeguarded, if there is nM already a safeguard established lay the State of Illinois for that ? ■\ MivJ?ETTiT. I do not so understand it. The State of Illinois pro- ■^|des a"imaximum rate and provides that the minimum rate shall be published-j which we do once a year, but it does not definitely go into the exact \ adherence to any particular rate within the maximum rate, as I remember it. I have not looked into it recently. Mr. Marble. You understand that you are free to charge any 'amount that, you please between the maximum and the minimum, ■ and to vary yl)ur charges as between different customers ? Mr. Pettit. My memory is that the law merely refers to the max- "4mum rate. I am speaking without any exact or recent knowledge. Mr. Marble. I will ask the permission of the Commission and of the witness, as well, to let Mr. Hill look this contract over. He is entirely familiar with those matters, and I would like to have him examine it for a few moments. Commissioner Prouty. There is no objection to his looking at the contract. Mr. Marble. So far as I see, in this hasty look at it, it is substan- tially as Mr. Pettit testified yesterday. Commissioner Prouty. Are there any further questions to be asked of Mr. Pettit now? Mr. Marble. Not now. Commissioner Prouty. You may please remain here, Mr. Pettit,, until Mr. Hill has had an opportunity to examine the contract. We itfay desire to ask you another question or two afterwards. Mr. Pettit. Very well. Commissioner Prouty. Call another witness, Mr. Marble. Mr. Marble. I believe Mr. Bartlett was to be here. Mr. Merrick. Mr. Bartlett is here. 'William H. Bartlett, called as a witness, being duly sworn, testified as follows : . Mr. Marble. You reside in the city of Chicago? Mr. Bartlett. I do; I reside in Evanston, right outside of the city of Chicago. Mr. Marble. You are engaged in business in Chicago? Mr. Bartlett. I am. Mr. Marble. In what business? Mr. Bartlett. In grain, stocks, and bonds. Mr. Marble. You are a member of the firm of Bartlett, Frazier & Carrington? 190 GRAIN ELEVATOR INVESTIGATION. Mr. Bartlett. I am. Mr. Marble. What is the business of that firm? Well, I will ask you if they operatepublic elevators in this city? Mr. Bartlett. Tney do. Mr. Marble. And private elevators in this city? Mr. Bartlett. They do. Mr. Marble. And they also operate country elevators in this State? Mr. Bartlett. They do. Mr. Marble. And in other States? Mr. Bartlett. No. Mr. Mar-ble. Not other States ? Mr. Bartlett. No. Mr. Marble. It has been testified here that the public elev&tor men of thife city find it necessary to force grain into their warehouses by using a portion of their earnings as warehousemen to bid the country and also buying and selling cash grain — by selling cash grain and immediately buying back a future from the broker, paying im one-eighth of a cent for the sale, and the purchase^ so hedged about one by the other that his compensation shall be fixed at the time of the two transactions. Do you conduct your busiiess in that way? Do you also find that a necessity? Mr. Bartlett. There are really two questions, as I understand it, and I will have to separate them. ( Mr. Marble. Take it separately then. . / Mr. Bartlett. The first question is whether it is necessary to use fart of our possible profits on the elevator to bring grain to this city. t has been; at the present time we can not do it. Under the rule of the board of trade, while we may buy grain on the floor of the ex- change, and in that way shrink our elevator charges by the price we paid, we can not do the same thing in the country. Commissioner Prouty. Why not, if you have made a price on the call that permits of it? Mr. Bartlett. We would have to bid half a cent under them. Commissioner Prouty. Suppose you establish a price by yoiu- bid on the board, which is half a cent lower than anybody else can afford to pay, and bring that grain here and put it into store ? Mr. Bartlett. That might be very expensive; we might have to sell too much stuff on the call. Commissioner Prouty. That is to say, you can not establish a price arbitrarily on a call. You have got to make a basis by an actual transaction? Mr. Bartlett. We do. Commissioner Prouty. You might be liable to take a good deal of stuff? ^ Mr. Bartlett. Yes, sir. Mr. Marble. Is it or is it not true that the grain being in Chicago for sale, there is a more economical way for you to get it into your ele- vator by means of this transaction with the brokers than by this method, so that you use the other method for grain that is in thecity rather than the bidding method, which contains a portion of your warehouse profits in the country? Mr. Bartlett. I do not know as I exactly understand your ques- tion. As I stated, we are at liberty on the floor to pay any price we GRAIN ELEVATOR INVESTIGATION. 191 please, but we are not at liberty to do the same thing in the country. We exercise the liberty we have in both cases. Mr. Marble. But why can you not at the closing call bid the price which you desire to bid in the country? Is it because contingencies arise after the close of the board ? Mr. Bartlett. They might sell me too much corn if I bid for it, too much grain, and I might not want it at that price. It might cost me too much to make the price I want to make on the call. Mr. Marble. You might not want as much grain as you would buy on the call, is that it? Mr. Bartlett. Certainly. Mr. Marble. And you prefer to bid in the country, where you would not get so much ? Mr. Bartlett. No; that aia't the point. I might not want the grain at all at the call price, and it is not in my power to make the call price; there are too many grain firms here. Mr. Marble. You mean that the call price is made higher than you care to bid in the country ? ' Mr. Bartlett. It might be, I can not tell how it would be from day to day. Mr. Marble. To get this rule into the record, which has been referred to by Mr. Gambrill and which he was requested to bring, he has brought it — a copy of the rules, by-laws, and regulations of the Board of Trade of the City of Chicago. I will now show it to Mr. Bartlett and ask him if he recognizes it, and if that is the rule to which he refers — the one that is marked [handing book to witness]. Mr. Bartlett. Yes, sir; that is the rule. Mr. Marble. That is the rule to which you refer? Mr. Bartlett. That is the rule to which I refer. Mr. Marble. May I read it? Commissioner Prouty. Yes. Mr. Marble. This is a copy of the incorporation, rules, by-laws, and regulations of the Board of Trade of the City of Chicago, also rules governing -the inspection of grain in force August 15^ 1906, printed in 1906: Section 32. (A) The board of directors is hereby empowered to establish a public call for corn and oats to arrive to be held in the exchange room immediately after the close of the regular session on each business day. (B) Contracts may be made on the call only in such articles and upon such terms as have been approved by the call conunittee. (0) The call shall be under the control and management of a committee consisting of five members appointed by the president, with the approval of the board of directors. (D) Final bids on the call, less the regular commission charges for receiving and accounting for such property, may be forwarded to dealers. It is the intent of this rule to provide for a public competitive market for the articles dealt in, and that with such market the making of new prices by members of this association shall cease until the next business day. Is that all of that rule ? Mr. Bartlett. As far as I know. Mr. Marble. There is no other part that you desire to draw atten- tion to? Mr. Bartlett. Not at all. Mr. Marble. Nor any other rule of the board of trade that you desire to draw attention to in this regard or any other? Mr. Bartlett. No, sir. 192 GEAIN ELEVATOR INVESTIGATION. Commissioner Clark. What is the purpose of that rule ? Mr. Bartlett. Well, as I read it, as I interpret the rule, it is to prevent us from bidding any closer to the market than half a cent a bushel. The actual commission that would be paid, that is, if the grain was consigned to the market. In other words, it is. to limit the power of the grain buyers of Chicago, so that they will not interfere with the old line commission business, where the grain is consigned and half a cent a bushel paid. Commissioner Clark. Then its effect is restrictive of competition in the buying of grain? Mr. Bartlett. That is the effect without any c[uestion. Commissioner Clark. It is the fixing of a price by combination and rule, is it not, which prohibits the members of the board of trade (who handle practically all the grain that comes to this market) from competing with each other except under the rule? Mr. Bartlett. Under the rules, it limits our power to bid. Commissioner Clark. Do you think that is a good business propo- sition? Mr. Bartlett. I do not, and I never have. Commissioner Proutt. It might be a -good business proposition for the commission man? Mr. Bartlett. Undoubtedly. Commissioner Lane. It is possible under this rule for a combina^ tion of brokers to fix the call rate, isn't it? Mr. Bartlett. Yes, I should suppose they could fix the call rate. Commissioner Lane. Do you know whether that has been done or npt? Mr. Bartlett. No, I do not. I do not imagine it has been done, I have never heard any such statement. Commissioner Lane. You do not know of any single broker bidding down the rate on a particular grade ? Mr. Bartlett. No, I am not in touch with that call, or the details of the cash business, so I would not know. Commissioner Lane. You do not know whether it has been done or not ? Mr. Bartlett. No, I do not. Commissioner Prouty. How much less than half a cent of the closing market price were you in the habit of paying before this rule was adopted? Mr. Bartlett. It all depended upon our needs. I have seen times when I have bid clear over the market price, if I had contracts matur- ing, or if I was short in this market, or if I wanted any special grade for export or to fill sales in the East, and I felt at liberty to bia any price that I considered profitable. I very frequently have bid more than the closing market price. Mr. Marble. On which end do you regard that the injury comes to you, that you would desire to bid less than this call or you would desire to bid more ? Mr. Bartlett. I think the injury comes to the man in the country, who has stuff to sell, and who can not get the higher price, if you come right down to the man who loses it. Mr. Marble. The man in the country, who is deprived of receiving your bid, which would be more than these calls ? GKAIN ELEVATOK INVESTIGATION. 193 Mr. Baetlett. It might be. It is in restriction of trade and restriction of competition, which certainly is injurious to the seller. • Mr. Marble. What would be the penalty if you should violate the rule? Mr. Baetlett. Expulsion. Mr. Maeble. Expulsion from the board of trade? Mr. Baetlett. Yes, sir. Mr. Marble. You regard, then, that this rule was passed Mr. Meeeick. I think the rule provides for suspension, rather than expulsion. Mr. Baetlett. I thought it was considered dishonorable conduct. I won't be positive, but I thought it came under the rule as to dishon- orable conduct. Mr. Meeeick. I think the rule is suspension or expulsion within the discretion of the Board. Mr. Marble. Just one more question. You regard this rule as being in the interests of the small commission men who do not own public warehouses as against the large dealers who have warehouses; is that it ? Mr. Baetlett. No ; I did not state it that way at all. There are others here, for instance, Mr. Gambrill, I beheve, who testified the other day (and he owns no elevator) that it was detrimental to his interest. It is detrimental to the interest of any man who is in the habit of bidding for grain in the country. Mr. Maeble. Was not Mr. Gambrill's interest that of a broker who was bidding for the public warehouse man and using for him a part of this warehouse charge to bid the country? Mr. Baetlett. As far as I know it was not. He has always been a buyer for eastern houses. I do not know who he buys for now. Mr. Maeble. You also operate line elevators. I will ask you how the price is made that is bid for the grain at those houses ? Mr. Baetlett. How it is made ? Mr. Marble. Well, by whom, and in what manner, and what ele- ments are taken into account ? Mr. Bartlett. It is made, I think, in our office. As I said -to you before, I am not very familiar with all the details of the cash grain business. But Mr. H. J. Patten — Mr. George Patten is really at the head of the cash grain business of our house. Mr. Harry Patten and Mr. Wilson Henderson consult with him relative to the prices they shall make at our stations. Mr. Marble. Do you know whether or not your firm, through Mr. Henderson, consults with your competitors at these stations, and especially with Mr. Finney and the Rogers Grain Company, and reaches an agreement with them as to the price to be bid ? Mr. Bartlett. I know that is absolutely not so. We make no agreements with anyone. Mr. Marble. Do you know whether or not you furnish prices to Mr. Finney for him to send out which are sent out to the country by Mr. Finney? Mr. Bartlett. I can not state positively except that on inquiry I found from Mr. Wilson Henderson, he tells me — and that is all hears say — that that is not so.^ That while they discuss prices, he don't furnish prices to anybody to send out. Mr. Finney has no elevator- S. Doc. 278, 59-2 13 194 GEAITSr ELBVATOB INVESTIGATION. that come in competition with our elevators. His are on the Eastern Ilhnois, and those that we have are on the Ilhnois Central. They come in competition nowhere. Mr. Marble. Are you, or any one of your firm or those who are interested in these elevators, or representatives of them, members of any association which attempts to maintain an agreement between the dealers at country stations, as to what they shall pay ? Mr. Baetlett. I suppose you mean are we members of any State or national grain association? Mr. Marble. Yes; or any other association, and if so, what are their objects? Mr. Baetlett. As to their objects, I don't think that I should tes- tify to that to any extent. I will, however, state that our firm is a member of the National Grain Association and that we are members of the Illinois association, and I think of the Iowa association. Mr. Marble. As such members do you join in any efforts to secure agreements between the dealers at stations supposed to be competi- tors, so that they will agree on the price to be paid for grain? Mr. Baetlett. We never have so far as I know, we have never been asked to. Mr. Marble. You have not joined in any such agreement? Mr. Bartlett. We never have. Mr. Marble. Nor have you joined at any station in agreements to divide the business at the station? Mr. Baetlett. Not to my knowledge. Mr. Maeble. Paying the penalty to the competitive dealer, if you bought too much? Mt. Baetlett. Not to my knowledge. Mr. Maeble. You know of such agreements, don't you? Mr. Baetlett. Oh, certainly. Mr. Marble. But your firm is not engaged in them? Mr. Bartlett. Not to my knowledge. Mr. Marble. Are you as a member of the Illinois and Iowa associa- tions, acquainted with any efforts of those associations, or of any members or officers of them to pursuade the regular dealers not to ship or sell grain to commission men who buy from irregular dealers ? Mr. Bartlett. Not at all. I would like to state right here that our relationship to these grain dealers' associations is really only an hon- orary one. We joined simply because we are a large grain firm, and we have had nothing to do with them, and I don't know anything about their methods or practices. We have no general interest with them at all. Mr. Marble. None that has been brought to your attention ? Mr. Bartlett. Not at all. Mr. Marble. Have you joined in refusing to buy from any country dealer because he paid too much for his gram? Mr. Bartlett. Not at all. _We buy of farmers" elevators where they are responsible. This brings up a point right here and now. There was some testimony which came in here yesterday, after I left that I would like to reply to right now. As I understand it, Mr. Kmcaid, president of the Illinois State Farmers' Elevator Association, said that Miles Leach, an elevator man living at Springfield, had told him that he received a letter from Bart- lett, Frazier & Carrington, to the effect that if he did not stop paying GRAIN ELEVATOR INVESTIGATION. 195 the farmers such high prices for grain that Bartlett, Frazier & Carring- ton would ruin him and drive him oiit of business. I will state that that is absolutely false. Our relations with Miles Leach have always been the most friendly, and I will state further that he sold us grain yesterday to our agent at Springfield. That is my denial of that statement. Mr. Marble. Have you a broker at Decatur? Mr. Bartlett. I can not answer that. You are going into a detail of the cash grain business that I can not answer. Mr. Marble. Do you know whether or not you have a broker at Decatur who sends out letters in the name of your firm ? Mr. Bartlett. I can not answer. I think we have a man stationed there in that section by the name of Cline, but whether it is at Decatur or not I am not positive. Mr. Marble. rDo you know whether or not Mr. Cline or any broker at Decatur has had correspondence with Mr. Leach, and told him he must not pay too much for grain, and that if he did he would be put out of business? Mr. Bartlett. I do not know what he may have said or done, but !■ do know that he was never authorized to do any such thing by the firm of Bartlett, Frazier & Carrington. Mr. Marble. You don't know whether he has ever carried on any such correspondence in your name as a part of yom- business ? Mr. Bartlett. Certainly I do not. Mr. Marble. Do you know whether or not you have bid or furnished bids to the Easton farmers' grain elevator at Easton? Mr. Bartlett. I do not. Mr. Marble. Do you know whether they have written and wired you many times dm-ing the last year for bids ? Mr. Bartlett. I do not. Mr. Marble. Without receiving any cominunication from you? Mr. Bartlett. I should say, as a general proposition, if they were responsible they would get a price. Mr. Marble. That is the general policy of your business ? Mr. Bartlett. That is the general policy of our business absolutely. As to their responsibility or the reason that we did not answer, or whether they telegraphed us or not, I do not know. Mr. Marble. You would not be governed in refusing a bid by the fact that a farmers' elevator paid more for the grain than the regular dealer if that was a fair price ? Mr. Bartlett. The only thing that would interest us would be whether they would sell at oiu- price. Mr. Marble. How about the man who owns no elevator — take the case of a cotmtry merchant who, in connection with his business, should buy grain and shovel it into a house and shovel it out again into cars when he could get them ? Mr. Bartlett. What kind of a house ? Mr. Marble. Any house that he saw fit, any house that he could obtain; no matter what kind, so long as he gets the grain into the cars. Mr. Bartlett. I can not answer as to the policy of the house, but I would state, so far as I am personally concerned, that I would con- sider that the man who had put money into an elevator and furnished storage room for the grain was entitled to consideration above the man who was only there at that station occasionally and shoveled it 196 GRAIN ELEVATOR INVESTIGATION. into cars, and if I was making bids, for my part of it I would favor the man who owned the elevator. Mr. Marble. "Would you favor him to the extent of refusing to buy from the man who had no elevator? Mr. Bartlett. Not necessarily. Mr. Marble. Would you favor him to the extent of giving him a bid higher than the man with the shovel ? Mr. Bartlett. It depends upon circumstances entirely, how badly I needed grain and the conditions at the station. We have no fixed policy relative to that. Mr. Marble. All other conditions being equal, you would favor the man with the elevator ? Mr. Bartlett. I should say he was entitled to consideration from the fact that he was a permanent dealer there and had money invested. Mr. Marble. Your elevators in this city — do you own them? Mr. Bartlett. Which elevators ? Mr. Marble. Well, the public and the private elevators. Mr. Bartlett. We operate six elevators in this city, Mr. Marble. Do you own them all? Mr. Bartlett. No. Mr. Marble. Well, are they leased — any of them? Mr. Bartlett. Some of them; yes, sir. Mr. Marble. Would you tell us about the leases? Mr. Bartlett. Certainly; I will tell you about them all. Mr. Merrick. By "you" what do you mean, Mr. Bartlett, per- sonally or the firm ? Mr. Marble. Those interests that are represented by Mr. Bartlett. Mr. Merrick. Well, explain fully, Mr. Bartlett. Mr. Bartlett. I will explain fully as we go along. Commissioner Proutt. What was the name of the man who put that question or made that remark ? Mr. Merrick. Merrick is my name; George P. Merrick. Mr. Bartlett. The firm of Bartlett, Frazier & Carrington leases Calumet Elevators "B" and "C." They are owned, those two elevators, by Mr. Frazier and myself, and no other member of the firm — there are 9 members now of the firm of Bartlett, Frazier & Carrington — and the other 7 have no interest in them. The old firm of Bartlett, Frazier & Co., operated them, and when the new firm was formed of Bartlett, Frazier & Carrington, Mr. Frazier and myself operated these elevators as the Calumet Elevator Com- pany, and we leased them to Bartlett, Frazier & Carrington. Commissioner Prouty. Are these elevators of the old type or are they modern elevators? Mr. Bartlett. I think they are as modern as any in the city, more so probably. Commissioner Prouty. What is their capacity? Mr. Bartlett. Three million and a half. Commissioner PROxn'Y. Would you have any objection to stating what the rental is ? Mr. Bartlett. No, sir; $53,000 a year. Commissioner Clark. For the two ? Mr. Bartlett. No, for the three. Commissioner Prouty. How much would those elevators fairly cost to construct to-day? GEAIN ELEVATOR INVESTIGATIOHT. 197 Mr. Bartlett. They would cost — there may be somebody here that will correct me on this — but I should say they would cost 30 cents a bushel on their capacity, somewhere in that neighborhood, 27 to 30 cents a bushel, I think, all of that. Commissioner Lane. That is for the construction of the building alone ? Mr. Baetlett. That is for the construction of the building alone ; yes, sir. Of course, those buildings have been built sometime and are subject to depreciation, but I do not think you can build elevators of the type of those for less than 30 cents a bushel on their capacity. Commissioner Peouty. Well, proceed. Ml-. Baetlett. We then have Central Elevators "A" and "B" for which we pay a rental of 132,000 a year since February 1, 1906. We pay this by paying $2,666.66 per month in cash. Commissioner Peouty. To whom ? Mr. Baetlett. To the Illinois Central Railroad. Commissioner Peouty. What is the capacity of those elevators ? Mr. Baetlett. The capacity of those elevators? It is about two million and a half. Commissioner Peouty. Are those modern elevators ? Mr. Baetlett. While they are among the oldest elevators, they have been modernized somewhat, although they are old houses. Commissioner Peouty. Proceed. Mr. Baetlett. We then have the National Elevator, which we rented July 21, 1906, with a capacity of one million bushels, for which we pay $12^00. (jommissioner Peouty. To whom ? Mr. Baetlett. I think the Vincent estate own that. That was made while I was away this summer, and I do not know. Commissioner Peouty. That is not owned by any railroad ? Mr. Baetlett. By no railroad, no. Commissioner Peouty. And that comprises all your elevators ? Mr. Baetlett. All our elevators in the city of Chicago. Commissioner Peouty. How many of those are operated as public elevators ? Mr. Baetlett. Three. Calumet "C" and one of the Central Elevators — Mr. Rogers, which one of the Central is it ? Mr. RoGEES. Central Elevator "B." Mr. Baetlett. And the National. Commissioner Peouty. Are your public elevators profitable under the rental which you pay? Mr. Meeeick. And the National? Mr. Baetlett. Yes; the National, too. Excuse me. Commissioner Peouty. Are your public elevators profitable under the rentals which you pay? Mr. Baetlett. They have been sometimes, and again they have been operated at a loss. When we first took these Central Elevators they had lost money for several years for the old firm of Carrington, Patton & Co., which united with our firm. They had had these ele- vators and for the last two years they had them they had lost money. Commissioner Peouty. Is there any incidental benefit which comes to a grain firm from the ownership and operation of a public elevator ? Mr. Baetlett. Yes, sir; there is. In times of large crops, there should be a profit. In times of such crops as we have this year there 198 GKAIN ELEVATOR INVESTIGATION. should be a profit, and I imagine that they showed a profit last year. It then gives you an opportunity, where you are buying grain in the country to take care of your cash grain that you wish to deliver on future contracts. I have seen times here when elevator storage has actually been cornered and the man who could not protect himself by the use of regular storage has had to default on contracts. Commissioner Peouty. Now, you have heard the testimony as to the way in which this grain is put into elevators. When grain goes into your elevator in that way, do you still have an interest in the grain? Mr. Bartlett. Absolutely not. It is free on the market. There is no string tied to it of any kind or description. Mr. Marble. The purpose of forcing it in is to earn the three quar- ters of a cent storage charge, which accrues as soon as it goes in. Mr. Bartlett. Certainly. We try to get all the grain we can in there and we have to do that or we are not going to be able to pay these rentals. Mr. Marble. With the possible chance of earning more if the broker shall hold that grain m the warehouse 1 Mr. Bartlett. We always hope it will be held, but he is under no obligation to do it, and, in fact, a great deal of it is loaded out. Mr. Marble. Has it ever occurred that cash grain has gone to a premium after these transactions, so that it would be profitable to sell out the cash grain and buy a future to set against the future that was sold. Mr. Bartlett. Very frequently cash grain goes to a premium. Mr. Marble. What is done in that case ? Mr. Bartlett. By whom ? Mr. Marble. By the broker; what does he do? Mr. Bartlett. I suppose he makes all he can. Mr. Marble. Do you know whether he sells out the cash grain and takes it out of the elevator? Mr. Bartlett. He undoubtedly consults his own interests in the matter. Mr. Marble. Do you know whether he consults any member of your firm? Mr. Bartlett. No ; we have no interest in it. Mr. Marble. Has it ever been brought to your attention that any broker has sold it out and made the premium ? Mr. Bartlett. I do not understand you. Mr. Marble. Has it ever been brought to your attention that any broker has sold it out, taken the grain out, depriving you of the opportunity to earn any further storage charges, so that he could make the premium? Mr. Bartlett. No ; I do not know of any such case. Mr. Marble. Do you know that any broker has so sold out the grain and made the premiumf Mr. Bartlett. Not that I remember of. We never trace the grain .after it leaves us. Mr. Marble. Do you know whether any member of your firm has done so — that is, trace the grain, or anyone for you ? Mr. Bartlett. No. Mr. Marble. You do not know whether or not? Mr. Bartlett. I should say absolutely not. I think I would GRAIN ELEVATOR INVESTIGATION. 199 know if it had occurred, and absolutely, we have never had any interest in the grain after it has left our hands. Mr. Marble. Now, this broker of yours at Decatur — are you at all familiar with his operations? Mr. Bartlett. 1 do not know him by sight; I never even saw the man. Mr. Marble. You are not familiar with the letters which he writes? Mr. Bartlett. Not at all; that branch of the business, the country stations, don't come under my supervision at all. Mr. Marble. You don't know whether or not he refers the bids of farmer elevator companies to the president of the Illinois Grain Dealers Association, do you ? Mr. Bartlett. Absolutely not. Mr. Marble. Do you mean that you do not know or that you know he has not done so? Mr. Bartlett. I know he has no authority to hold any such com- munication from the firm of Bartlett, Frazier & Garrington, and that is all I can know. Mr. Marble. Are you familiar with the prices sent out by your firm from this city? Mr. Bartlett. I am not. Mr. Marble. Do you know whether about a year and a half ago there was sent out by your firm from this city bids to supposed com- peting dealers in Illinois towns, directing them what to pay the next day? Mr. Bartlett. I should say that was not so, but I do not know anything about it. Mr. Marble. On what railroads are your line elevators situated ? Mr. Bartlett. One is on the — oh, our line elevators ? Mr. Marble. Your line elevators in the country. Mr. Bartlett. They are situated on the Illinois Central and the Three I's. Mr. Marble. I will ask you if along the Illinois Central you have a number in a line, from station to station? Mr. Bartlett. That I can not answer. I asked this morning, which is my first knowledge of it, how many we had, and I find we have 24 elevators in the State of Illinois, on those two roads, but just how they are located I do not know. I think there are six or eight of them on the Three I's and the balance on the Illinois Central, but I can not name a station where one of them is located. Mr. Marble. Is any ofiicer or employee or stockholder or represen- tative in any way of any one of those classes of persons in any way interested in your grain business, that you know of? Mr. Bartlett. I do not understand your question. Mr. Marble. Is there any interest in your grain business or in the Erofits of your grain business in any way held by any officer or stock- older or employee of any railroad company? Mr. Bartlett. You did not say anything about railroads in the question before. No. Mr. Marble. So far as you know? • Mr. Bartlett. I stated absolutely that I do know that there is not any such interest. Mr. Marble. You have elevators in Nebraska, have you not? Mr. Bartlett. To whom do you refer ? 200 GEAIN ELEVATOR INVESTIGATION. _ Mr. Marble. To you or the members of your firm or the firm espe- cially. Have they any interest in the Trans-Mississippi properties ? Mr. Bartlett. Weil, if you will put it in that shape, that is dif- ferent. The firm of Bartlett, Frazier & Carrington owns the majority of stock of the Trans-Mississippi Grain Company. _ Mr. Marble. On what railroad are the properties of that company situated ? Mr. Bartlett. They have properties on the Union Pacific and on the Northwestern, and they may have some on other roads, for all I know. I do not know where they are located, except I know that to be a fact — that they have them on both of those roads that I have mentioned. Mr. Marble. And your answer as to the interest of railroad men in any of your grain business applies to this Trans-Mississippi Com- pany as well as to all the others? Mr. Bartlett. Yes, sir. Mr. Marble. How many elevators has the Trans-Mississippi? Mr. Bartlett. I can not answer that; I should judge 40 or 50, but I do not know. Mr. Marble. Do you get an allowance from the Illinois Central — elevation allowance? Mr. Bartlett. We do not get anything from the Illinois Central. Mr. Marble. Nor any of your elevators? Mr. Bartlett. Nor any of our elevators; no. Mr. Marble. No unloading allowance? Mr. Bartlett. No. Mr. Marble. It has been testified that you do share in this cent and three-quarters or a cent and one-quarter at Council Bluffs, on the Union Pacific. Mr. Bartlett. Well, when you get me on that Council Bluffs business, I don't know anything about it. As I say, I do not attend to the details of the grain business. I know about the policy of the firm and the important matters connected with it. Commissioner Clark. Did you hear any part of the testimony yesterday with regard to these transactions by which grain is sold to go to store? Mr. Bartlett. Yes; I heard Mr. Pettit's testimony. Commissioner Clark. You are acquainted, I suppose, with the nature of those transactions and the details of thena? Mr. Bartlett. Yes, sir; in a general way. I have heard it dis- cussed here, and I have heard it discussed in my own office. Commissioner Clark. I would like to ask a few questions about that, with the idea of getting one particular point clear in my own mind, free from some of these technical phrases and terms that I am not sure that I know all about. Mr. Bartlett. I would be very glad to tell you what I know about it. Commissioner Clark. Now, take for instance the case of a man or a firm who own a private warehouse and a public warehouse. They sell a given amount of grain in "their private warehouse to a broker, taking as a basis of the sale, for instance, the December price. Mr. Bartlett. Yes, sir. Commissioner Clark. And buying back a December future from the same broker and guaranteeing him a commission, we will say, of GRAIN ELEVATOR INVESTIGATION. 201 one-eighth of a cent. That grain is then taken to the public ware- house and certificates are issued against it. Those certificates, as has been stated, the broker takes to the bank and gets presumably within 10 per cent of the market price and issues a check in pay- ment of the grain. Now, the statement is repeatedly made that that graia is his; absolutely his. What I want to get at is how this grain can be his after he has hypothecated the certificate that represents it, and after he has taken his commission and has nothing more to do with it. Mr. Baktlett. He has to take up his note with the bank, of course. He gives a note to the bank when he gets the money to pay for the grain, and he can always get the receipts when "he pays his note. Commissioner Clakk. In that transaction is the fijm who made the sale and who owns the warehouse obliged to take up those certificates again in connection with the liquidation of the December option ? Mr. Bartlbtt. Not at all, we never touch them. If by any chance those receipts should come back to our firm for instance, they would be passed right along the delivery slip. They would never be held by us. Of course, it might happen, taking it that they might come to us that way, but we would never have any interest in them. We absolutely have nothing to do with those receipts after they leave our hands. Commissioner Clark. In this deal that we have been discussing, is there any obligation either in fact or implied or understood that the original owner of the grain — that is, the man who owns the ware- house, will protect this broker's note and pay it when it becomes due, or see that it is paid ? Mr. Bartlett. It has never been done by our firm. I can give at least a list of six or eight firms. The impression seems to have been given out that it is simply a reciprocal business between elevator firms. I will say that that is not so; that it is not. There are quite a lot of brokerage firms that have been glad to take this business, and I would be pleased to give the names of six or eight of them who have taken it from us. Commissioner Clark. It is easily understood why brokerage firms would be glad to take this business, because it is the commission for them, as has been testified to.. Mr. Bartlett. Certainly. Commissioner Clark. What I want to get clear in my mind is where the certainty of the commission man's profit comes in if he has to assume the speculative feature of the December option. Mr. Bartlett. You mean the broker? Commissioner Clark. The broker. Mr. Bartlett. Why, he don't. He gets the cash and at the same time he gets the, cash he sells the future. Commissioner Clark. Yes. Mr. Bartlett. So he is absolutely protected on the price, and he gets the cash stuff at one-eighth of a cent under the future, so that he 's bound to make that difference. Commissioner Clark. He sells the cash stuff on the December price? Mr. Bartlett. Yes ; the December price is one-eighth of a cent above the price of the cash stuff, above the price it is billed to him at. Commissioner Clark. Assume that it is your firm that has made 202 GRAIN ELEVATOR INVESTIGATION. this deal, and you have bought from this broker, say 100,000 bushels of wheat for December dehvery. Mr. Bartlett. Yes. Commissioner Clark. Now, who is responsible for the delivery of that grain? Mr. Bartlett. He is. He gets the cash stuff, and sells us the December. We sell him the cash stuff at one-eighth of a cent under the price at which he sells us December, so he is absolutely protected, because he has the December sold to us. Commissioner Clark. Then if he holds those certificates against that grain hypothecated as security for his note or placed in escrow he is absolutely secured? Mr. Bartlett. He is. Commissioner Clark. But if he loses those, or allows those to pass out of his control, then he assumes the speculative feature of the December option? Mr. Bartlett. Certainly; he is held for that amount of the Decem- ber future and he has to deliver it in some way. Commissioner Protjtt. In point of fact, you would not pay for that December wheat until it was delivered to you ? Mr. Bartlett. No; and probably it might not be deUvered to us at all, because he might have a lot of open transactions, and when that wheat would go out it would go on the first December that he had sold. The chances are nine out of ten, or, I might say, 99 out of 100, that in a transaction of that kind, the grain that goes to the broker never goes back through the elevator concern, because they all have hundreds or thousands of cars of December to protect, and the first grain he would deliver out would be the oldest December option. Commissioner Proutt. You might say that your purchase from him liquidated your sale that you made against that wheat when you bought it ? Mr. Bartlett. That might possibly happen. Mr. Marble. Providing the wheat stayed in the house till Decem- ber, or the December deliveries, it would be imnaaterial to you in every sense whether these receipts were delivered to you or other receipts to fulfill the future. Mr. Bartlett. It would not make a particle of difference to us, so long as we hold the receipts. Mr. Marble. And so far as your profits were concerned it would make no difference whether the delivery of those receipts was the delivery that was made, or whether it was other receipts when the time for delivery day came ? Mr. Bartlett. Not a particle. Mr. Marble. Your interest would be to have the grain remain in your elevator until delivery day ? Mr. Bartlett. Yes, sir. Mr. MaAble. You have used a phrase which suggests a question, and it is this. You have made sales of this sort to the Armour Grain Company from time to time ? Mr. Bartlett. Yes, sir. Mr. Marble. And they have made sales to you from time to time ? Mr. Bartlett. Yes, sir. Mr. Marble. Without any agreement between you that they should be equal in amount ? GRAIN ELEVATOR INVESTIGATION. 203 Mr. Baetlett. Absolutely. Mr. Marble. It sometimes occurring that you have each sold to the other and bought from^ the other on the same day? Mr. Baetlett. Not to my knowledge. Mr. Marble. But that may occur. You have no provision against it ? Mr. Bartlett. Oh, it may be, but it would be simply in the way of a business matter. It might occur and it might not. Mr. Hnx. May I ask the witness a question? Commissioner Peouty. Yes, certainly. Mr. Hill. Suppose that the difference between the ciurent market for cash wheat and the current market for December wheat is less than the cost of carrying the grain from the time that you sell it to the broker until December; how do you provide the broker with the necessary difference to carry that grain? Mr. Baetlett. The wheat is billed to him so that it will cost him on the 1st day of December one-eighth of a cent under the December price. Mr. HUl. Then if it costs 2 cents a bushel to carry the grain from the day that it is billed to him, including all charges, and cash wheat on the board of trade is worth only 1 cent under December, you arbitra- rily sell the man the wheat at 2 cents under December, or 1 cent less than the current market ? Mr. Baetlett. Now, that is a business matter that I have not gone into, and I do not know. Mr. Hill. Is it a fact, or is it not a fact, as you state, that you have billed it to him at a price that will permit carrying it to December regardless of the market price? Mr. Baetlett. It is. We sell it to him , based entirely on the December, without any regard to the cash or the market. Mr. Hill. The moment you sell him that wheat, that cash wheat, and buy December of him, he has a cent a bushel profit in it, has he not, under the conditions that I have outlined ? Mr. Baetlett. If it was at a preinium, yes, but allow me to state right there that I do not consider it possible that any firm receiving grain would be so anxious to get it in their own elevator that they would sacrifice a cent a bushel and the cash commission by making the supposititious trade that you suggest. We would take that grain and sell it on the floor and make our cent a bushel on the profit. Commissioner Peotjtt. The testimony was on the first day here that this is put in the elevator here in this manner; that that method was only resorted to when the wheat could not be advantageously used for cash wheat. Mr. Baetlett. Tha,t is it precisely. If we can do better on the floor with it we always do it. Commissioner Peouty. It was stated yesterday that when they took the December option and figured back, as an actual practical matter, it did not produce a price less than the cash value of the wheat. Mr. Hill. But the contrary fact is true, Mr. Conamissioner, and we all know it on the board of trade. Commissioner Peouty. Do you mean to say that they do sell wheat on that basis, for less than the cash wheat ? Mr. Hill. Yes; and Mr. Bartlett will admit it. Mr. Bartlett. No; I will not- any such thing. 204 GRAIN ELEVATOR INVESTIGATION. Mr. Merrick. I think Mr. Hill had better take the witness stand. Mr. Hill. Mr. Hill does not happen to be the witness. Mr. Bartlett. You asked me that question direct, Mr. Hill. Mr. Hill. How often, Mr. Bartlett, in the last year, can you recall a time when the markets were in a position so that the difference between cash grain and any future would give a full carrying charge, covering all the expense of carrying the grain? Mr. Bartlett. Well, now, Mr. Hill, I have said half a dozen times that I do not run the grain business of my firm. Commissioner Proutt. Now, Mr. Hill, it has been stated all the while here that these people sacrifice a part of their carrying charge, possibly, so that a man might sacrifice a portion of his carrying charge and put the wheat into the elevator notwithstanding. Mr. Hill. I wish to say, Mr. Commissioner, that the only thing they can sacrifice is their storage charge. Commissioner Prouty. Yes; that is it. Mr. Hill. And that they often sacrifice 1 , 2, or 3 cents a bushel — that is a common practice. Commissioner Proutt. Well, go ahead and ask him. Mr. Hill. No matter how much they spar, it is a common practice. Mr. Bartlett. I say, ask me that question direct, Mr. Hill. Mr. Hill. Which question? Is it not a fact that you give away a certain portion of your storage charge in order to get grain into the elevator? Mr. Bartlett. I think we do at times. Mr. Hill. And is it not at times 1 cent or 2 cents a bushel? Mr. Bartlett. I think it is very doubtful; I doubt very much whether that is ever done. Mr. Hill. How about carrying grain until May? Mr. Bartlett. What grain? Mr. Hill. From the present price to May? Mr. Bartlett. I should think that would be very little profit; I can not figure it out. Mr. Hill. If you do sacrifice any portion of your charge, does not that charge represent to the man who takes the trade off your hands, or your broker, a profit to the extent of that sacrifice ' Mr. Bartlett. If he should sell it right out at the time, yes. Mr. Hill. Why don't he sell it out? Mr. Bartlett. That I do not know. Mr. Hill. And get his profit? Well, that is all I care to ask. Commissioner Prouty. These people have all virtually said that they would not sell that wheat until it was time to deliver it out. That is your expectation and understanding? Mr. Bartlett. There is no understanding at all. Commissioner Prouty. I don't mean whether you have an agree- ment with them or not. Mr. Bartlett. They are perfectly free to do it; I will state that. There is not even "a gentleman's agreement " that they shan't sell it. Commissioner Prouty. You would not sacrifice a cent a bushel, or a half cent a bushel, on your wheat if you expected you were going to lose it? Mr. Bartlett. No ; certainly not. We would not deliver it under those conditions. GEAIN ELEVATOH INVESTIGATION. 205 Commissioner Claeic. Those commission men, as a rule, keep entirely out of the speculative part of the deal, do they not? Mr. Bartlett. To whom do you refer? Commissioner Clark. To the commission firms on the board of trade, through whom these deals are made. Mr. Bartlett. No; I think every firm on the board of trade is more or less in the speculative business. Commissioner Lane. Are all of the other boards of trade in other cities, that are in competition with you, under the disadvantage of this rule? Mr. Bartlett. There is only one city where I believe it is enforced. I believe there is a similar rule in Minneapolis, on which this rule is modeled. Commissioner Lane. What are your competitive markets? Mr. Bartlett. We have to compete with all the Gulf ports, Phil- adelphia, and Baltimore. Then Peoria is a heavy bidder against us, and Cleveland, the Cleveland Grain Company at Cleveland. There are large competitors all through the East — St. Louis, and in fact, every market south and east of us. Commissioner Lane. How do you find that owing to this rule the amount of wheat that you get from the country is decreasing ? Mr. Baetlett. It does not affect wheat so much. Commissioner Lane. It does not apply to wheat, does it ? Mr. Bartlett. No. Commissioner Lane. The amount of grain and com, or rye, how about that ? Mr. Bartlett. Up to this time it has not worked especially det- rimentally, although the principle is there.' The time is coming when the principle, if it is not correct, when the rule will be detri- mental. Mr. Merrick. This call rule applies to corn coming here, and oats ? Mr. Bartlett. Yes, I believe so. Commissioner Clark. I would like to ask Mr. Bartlett as to the natural tendency of grain under present conditions to gravitate to Chicago, as compared with a few years ago ? Mr. Bartlett. I think it is unfortunately placed compared with a few years ago. Of course, the spring wheat naturally goes to the new spring-wheat market, to Minneapolis and Duluth. The opening up of the Gulf traffic has cut off a great deal of our Southwestern territory. Freight rates have not yet been adjusted over a great deal of the Western and Northwestern territory, to an equitable basis. Some years ago, as you may have known, those things were equalized by rebates. Rebates are not given now, and at the same time freight rates have not been thoroughly equalized as between the different markets, the Northwest and Chicago, St. Louis and Chicago. There has been more or less done in that direction, but there is a good deal of the territory where the rates are not fair to Chicago as compared with those other markets, where in the old days they were equalized in that way. It is competition from the Gulf ports more than anything else that has hurt and cut off our trade, the competition from the Gulf ports. Commissioner Clark. More grain is milled in this country than there used to be, is there not? 206 GRAIN ELEVATOR INVESTIGATION. Mr. Bartlett. Yes, but the volume of our receipts in Chicago, keeps up to about as much as ever so far. Of course we have had very large crops during the last two or three years. Commissioner Prouty. Do you desire to ask Mr. Pettit any more questions ? Mr. Marble. No; I have no more questions for Mr. Pettit. Mr. Pettit. Thank you. Mr. Marble. Mr. Pettit is to furnish us with a copy of the contract. Witness excused. James Bradley, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in Chicago, Mr. Bradley? Mr. Bradley. Yes, sir. Mr. Marble. What is your business ? Mr. Bradley. Secretary of the Nye-Jenks Grain Company. Mr. Marble. What is the business of the Nye-Jenks Grain Com- pany ? Mr. Bradley. Buying and selling grain. Mr. Marble. Do you operate any elevators? Mr. Bradley. We operate one elevator in Chicago. Mr. Marble. Is that a private elevator or a public elevator ? Mr. Bradley. Private. Mr. Marble. Do you operate other elevators ? Mr. Bradley. No. That elevator, Mr. Marble, is one of the Rialto Elevator Companies, separate and distinct from us, but we operate the elevator. Mr. Marble. Do you control that company, own the majority of the stock and control it in that way ? Mr. Bradley. No ; we do not. Mr. Marble. You lease the elevator? Mr. Bradley. We lease the elevator, that is, we did lease it, but now we pay them simply a charge for handling our grain. Mr. Marble. Then they operate the elevator ? Mr. Bradley. They operate the elevator. Mr. Marble. With a special contract with you for handling your grain? Mr. Bradley. A special contract. Mr. Marble. They hire the help and stand all the expenses? Mr. Bradley. It is just the same contract as we give to anybody else that wants to do it. Mr. Marble. So that really you operate no elevator in Chicago, your firm? Mr. Bradley. No ; that is, the firm. Mr. Marble. Do you operate lines of country elevators? Mr. Bradley. No, sir. Mr. Marble. Nor do you control any company which does? Mr. Bradley. No. Mr. Marble. Where do you buy your grain ? Mr. Bradley. Iowa, Nebraska and Illinois, principally. Mr. Marble. You bid country dealers that buy grain throughout the country towns; is that the way? Mr. Bradley. We did up to the time the call was put into effect, and then we stopped bidding the country. GRAIN BLBVATOB INVESTIGATION. 207 Mr. Maeble. By "the call" you mean this rule of the board of trade which has been referred to here ? Mr. Bradley. Yes, sir. Mr. Marble. Have you any statement in regard to that, which you desire to make? Mr. Bradley. I have the statement to make that our objection here is that when we bid there we can not have the privilege of bid- ding on any particular road. We have to bid for the grain and if our bid is accepted the seller has the privilege of giving it to us on any road that he sees fit, but when we bid in the country on the Rock Island, Great Western, and Northwestern, we always bid on those roads because those roads have facilities for delivering the grain at our elevator without any switching charge. Mr. Marble. You get no other consideration from these roads, or any of them? Mr. Bradley. No, sir. On the other roads, such as the Illinois Central, the Chicago, Burlington and Quincy, and the St. Paul, it costs us $3.50 a car to deliver to our elevator. Mr. Marble. Has your company a relationship to the Nye, Snyder, Fowler Company, of Nebraska, in the way of ownership ? Mr. Bradley. No ; they are interested in our company. Mr. Marble. Do they own the controlling interest in your com- pany? Mr. Bradley. Yes, sir; they do. Mr. Marble. They own a controlling interest in your company? Mr. Bradley. Yes, sir. Mr. Marble. You do a very large grain business here in this city, do you not? Mr. Bradley. Yes, sir; quite a large business. Mr. Marble. In spite of this rule, you do a large business here still ? Mr. Bradley, Yes, sir; we do quite a business. Mr. MAEkBLE. Do you find it possible to carry on a large grain busi- ness here without owning a public elevator, then ? Mr. Bradley. We always have. Mr. Marble. Do you think Chicago is intrinsically a great grain market ? Mr. Bradley. I do. Mr. Marble. Capable of sustaining itself, without being artifi- cially stimulated ? Mr. Bradley. Yes ; I think all we need is equal terms. Mr. Marble. Do you know whether the Rialto Company owns this elevator itself, or is it a leased elevator? Mr. Bradley. They own the elevator. Mr. Marble. They own the elevator? Mr. Bradley. No, the elevator in Chicago — they own the elevator in Chicago, yes, and they operate leased elevators in Milwaukee. Mr. Marble. Do you know whether the ,Rialto Grain Company is controlled by the Nye, Snyder, Fowler Company? Mr. Bradley. The Rialto Company? Mr. Marble. Yes; whether it is controlled by the Nye, Snyder, Fowler Company? Mr. Bradley. I think it is. Mr. Marble. The Nye, Snyder, Fowler Company control both your company and the company from which you lease the elevator ? 208 GRAIN ELEVATOR INVESTIGATION. Mr. Bradley. Yes, sir. Mr. Marble. Has your company any other elevator at any place other than this which you have referred to here in this city? Mr. Bradley. No. Mr. Marble. The Nye, Snyder, Fowler Company has a great many elevators ? Mr. Bradley. I believe they have. Mr. Marble. Are you familiar with their business? Mr. Bradley. I am not. Mr. Marble. And consequently you are not able to testify concern- ing it ? Mr. Bradley. No, sir. Commissioner Lane. You spoke a moment ago of Chicago being able to do the business if she had equal terms. Is she suffering under any disadvantage now? Mr. Bradley. Not that I know of. Commissioner Lane. Is there any complaint that you have to make as a grain buyer against the advantages as they exist in Chicago to-day, or the situation, the conditions? Mr. Bradley. The only complaints that I hear at all in reference to this call, saying that it is affecting our market as compared with Omaha and St. Louis and Kansas City. Commissioner Lane. Do you find that is diverting any business from Chicago to these other places ? Mr. Bradley. Well, only from hearsay. Commissioner Lane. There is no discrimination, so far as you know, on the part of any of the railroads against Chicago ? Mr. Bradley. There is not. Commissioner Lane. Do you know of any discrimination on the part of the railroad in favor of any elevators or against any elevators ? Mr. Bradley. I do not. Mr. Marble. I beg the Commissioner's pardon; I was busily engaged and I missed the questions of Commissioner" Lane. Has the gentleman been asked as to the ownership of stock? Commissioner Lane. No. Mr. Marble. So far as you know does any railroad ofScial or stockholder or employee, or cny representative of any such person, have any interest m the stock or the profits or the business in any way of your company? Mr. Bradley. Absolutely none. Mr. Marble. Do you know that they have not? Mr. Bradley. I know that they have not. Mr. Marble. Then of course your stockholders or partners are not in any way interested in the railroad business ? Mr. Bradley. No. Witness excused. H. D. Wetmore, called ^if a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Wetmore? Mr. Wetmore. At Barrington, a suburb of Chicago. Mr. Marble. You are in business in this city? Mr. Wetmore. Yes, sir. Mr. Marble. A mepaber of the board of trade? GRAIN ELEVATOR INVESTIGATION. 209 Mr. Wetmoee. Yes, sir. Mr. Marble. Engaged in the grain business? Mr. Wetmore. Yes, sir. Mr. Marble. In what way are you engaged in the grain business? Mr. Wetmore. Our principal business is merchandismg grain, buy- ing in the West and selling, and we do a commission business also. Mr. Marble. As a member of the board of trade are you familiar with this rule of the board which has been discussed nere ? Mr. Wetmore. With reference to the call ? Mr. Marble. With reference to the caU. Mr. Wetmore. Yes, sir. Mr. Marble. Tell us about that — what is your attitude toward it ? Mr. Wetmore. Friendly. Mr. Marble. Friendly — and why? Mr. Wetmore. It makes an open market for the whole exchange, and you can buy any amount that you have in mind to there, and sell any amount. It closes the business at a certain hour. In the old times we had sometimes to stay down late, and all sorts of things, waiting for wires, and Eastern offers, and all that sort of thing, where to-day the business stops at the proper hour. Mr. Marble. Don't you regard it as a restraint upon the business for the business to stop at that hour, instead of allowing it to continue for the benefit of the country ? Mr. Wetmore. No; just as any other business which should close at a certain time. Mr. Marble. You regard the closing hour as a reasonable time? Mr. Wetmore. I regard the closing hour as a reasonable time; yes. It is later than the general or main exchange session closes. Mr. Marble. You have heard the criticisms of this rule here this morning, as to its effect upon the prices in the country? Mr. Wetmore. Yes, sir. Mr. Marble. And limiting the business of the city? Mr. Wetmore. Yes, sir. Mr. Marble. Will you please discuss those criticisms and give us your views of them ? Mr. Wetmore. I think that they are wrong in some ways. Our call is on every class of corn and oats, each grade, and each shipment and each class of freight rates and all section of the country. We have a call, for instance, on No. 3 corn, through billed. We have a call on No. 3 corn, local, Chicago, proportional bill and Mississippi Eiver, that is, the proportion, which is the proportional rate from Iowa points, and No. 3 corn on the Missouri River, so that if the Missouri River is rather hard competition, we can bid that up irre- spective of Illinois or any other point. Commissioner Lane. Are you familiar with the procedure in regular exchange's ? Mr. Wetmore. To some extent; yes,_ sir. Commissioner Lane. Is this call similar to the last call of the day on the regular stock exchange ? Mr. Wetmore. Something like that. Commissioner Lane. Where they fix the last price for the stock which obtains until the following morning? S. Doc. 2Y8, 59-2 14 210 GBAIISr ELEVATOE INVESTIGATION. Mr. Wetmore. Well, I am not familiar enough with that to say; but this call fixes the price ; this call provides, as 1 understand it, that all trading shall cease at that hour. Five minutes before that I can wire any price to the country I see fit, but when that call is finished, it means that price shall drop with the regular commissions off, what- ever they are. The commissions to an outsider, who is a member, would be one-quarter, and the commission to an outsider, for instance, in the country town, that was not a member, would be one-half. We deduct that commission from the closing price, and, until 9.30 the next morning, when the exchange opens, that price prevails. Then you can bid what you see fit for the grain. Mr. Marble. Is this commission charge of from one-quarter to one- half a cent, is that a reasonable charge ? Mr. Wetmore. Yes, sir. Mr. Marble. Or is it exorbitant ? Mr. Wetmore. I have refused business at one-quarter of a cent. Mr. Marble. You have refused business ? Mr. Wetmore. Yes; commission business at one quarter of a cent. Mr. Marble. Now, to make this matter a little bit plainer, I will ask you what caused the adoption of this rule? Does it represent any contest between different interests or what ? Mr. Wetmore. Yes, sir; it was a contest between the commission men and the elevators largely. Commissioner Prouty. Any other questions ? Mr. Marble. Yes, if you will pardon me a moment. What was the last question asked ? (The last question and answer were read by the reporter.) Mr. Marble. Now proceed and answer that question further. What was that contest, and what were the interests, and why was the rule adopted ? Mr. Wetmore. From the fact that the elevators often paid above the Chicago market for grain on overnight bids; I have done it myself, had to do it, and the trade generally thought, and it seemed to be the apparent thing that the elevators would hold out the market in Chi- cago, when there was like receipts, and let the market go a little slow and then bid it up one-quarter higher so as to induce the country to sell, thinking that would be more in the country than they would on the floor. That is a mere conjecture among most of the boys, but it seems to be apparent though. Mr. Marble. What is the objection to having them do that? Mr. Wetmore. It lets the Chicago market down, and possibly the whole market of the country down. Commissioner Clark. Does it operate to reduce in any way the profits which the commission men would otherwise get ? Mr. Wetmore. It reduces the prices here on the floor. Commissioner Clark. In the business under this rule, would the commission man's profit be less without the rule than under this rule? Mr. Wetmore. His profit would be the same on what grain he got; he would get a very small amount. Commissioner Clark. That is, I mean the aggregate from his commission business ? Mr. Wetmore. His aggregate would be less for the reason that the country shipper does not care to consign grain when it is selling on our board at less than the bids going out in the country every mght. GRAIN ELEVATOK INVESTIGATION. 211 Commissioner Clark. Then in the absence of this rule, the country seller might get more for his grain than he would get under the rule ? Mr. Wetmore. It is possible, but then, I do not think it has been true since this rule has been in effect, for the reason that there is an open competitive market and they pay well. They pay up very close to the price for grain on this call. This call makes the price and I have found that I could sell grain on the call at a higher price than I could on the floor there, myself, right along. Mr. Marble. I will ask you, 1V&. Wetmore, in your business, as a commission man, if you have come in contact with the grain dealers' association of the State of Illinois, and the grain dealers' association of the State of Iowa, or have had any communications from them ? Mr. Wetmore. Well, yes; I have had communications, but I never have had much trouble with them. I have always bid their list through the West. Mr. Marble. Have they ever invited you to cease bidding any persons ? Mr Wetmore. Yes, they have. I have had grain consigned to me from Iowa in the last six months — not over a year ago I should judge, where the secretary telegraphed to me that a car was in transit, and that it was from an irregular dealer, and wanted to know what I should do about it. Mr. Marble. The secretary wanted to know what you would do about it? Mr. Wetmoeb. Yes; before I heard of the car being shipped, or knew anything about it. I had never heard of the man. Mr. Marble. By "the secretary" you mean the secretary of the Iowa Grain Dealers' Association? Mr. Wetmore. Secretary Wells; yes, sir. Mr. Marble. Was any penalty held over you, if you should handle this grain, or did you so understand it ? Mr. Wetmore. No, but I have seen what they have done with others, and I have always bid their list. Mr. Marble. What penalty would you fear, if j^ou did not bid their list? Mr. Wetmore. Well, they might have listed me with people doing business with irregular houses, and receiving grain from the irregular dealers. Mr. Marble. What result could be caused in that event ? Mr. Wetmore. Well, it has not been done, and I could not say, but I would not want to try it. Commissioner Lane. What effect has it had on the others? Mr. Wetmore. Well, I can not say, because I don't know their business, what effect it has had. They seem to do some business all the time. Commissioner Lane. You know that a sort of a black list has been issued? Mr. Wetmore. Yes, sir; and I have seen these circulars myself. Those I have read this morning here. Commissioner Lane. Has it put any of these men out of business ? Mr. Wetmore. I don't know that it has. Commissioner Lane. Has it decreased their business materially that you know of? 212 GRAIN ELEVATOR INVESTIGATION. Mr. Wetmore. I can not tell you, sir; I do not know about their business. Mr. Marble. You have acceded to the request in the conduct of yom- business? Mr. Wetmore. Yes, sir; I have stayed with the grain dealers association. Mr. Marble. Have you not done business with irregular dealers? Mr. Wetmore. No, sir. Mr. Marble. Have you heard the testimony given here, regarding the practice adopted by the public elevators to force the grain into their elevators in the city of Chicago ? Mr. Wetmore. Yes, sir. Mr. Marble. Have you had any dealings of the sort testified to? Mr. Wetmore. Yes, sir. Mr. Marble. When? Mr. Wetmore. At various times. Mr. Marble. When? When did you have the first one, if you can remember? Mr. Wetmore. I had the first one at the beginning, after the law was passed, and I took the grain in Charles Counselman's elevator the next day. Commissioner Prouty. How long ago about was that? Mr. Wetmore. That was either four or five years ago ; it was after the decision was handed down. Mr. Counselman's president came to see me, and told me that Mr. Counselman wanted to see me, and he wanted me to take the grain. I took what was in their store there, and there was somewhere in the neighborhood of $280,000 worth. It was sold to me at that time, I think about a cent and a half under the market, and we carried it through until the next delivery in the future, whenever it was. I know that it included the storage and the interest and the insurance, and it was something like a cent and a half a bushel under the market. There was three-quarters of a cent — no, that was about what it was, a cent and a half under the market. Mr. Marble. You mean your compensation was about a cent and a half a bushel for the transaction? Mr. Wetmore. No, sir. I mean my compensation was one-eighth, but they deducted a cent and a half off the market, below, the spot price for the grain. Commissioner Proutt. That is, they sold it to you for a cent and a half below the cash market — sold the wheat to you ? Mr. Wetmore. Yes; they sold me all the grain they had in the house. I think it was something like a cent and a half. We figured the storage and the insurance, and the interest on the money, and one-eighth profit to me, and the grain was sold on that basis. Commissioner Lane. Did that gentleman tell you what the pur- pose of this transaction was? Mr. Wetmore. He told me that the law had been passed, and they did not want to carry the grain in their own house there, and I took it for an eighth of a cent, and I sold them back the future. Commissioner Lane. The purpose was to evade the injunction that had been granted by Judge Tuley? Mr. Wetmore. Well, I can not say. I inferred so, although there was nothing said about it. GKAIN ELEVATOR INVESTIGATION. 213 Commissioner Lane. And this practice never had obtained before that time? Mr. Wetmobe. No, sir. That was the first. Mr. Marble. That was not an ordinary transaction before ? Mr. Wetmore. No, sir. That was the first one and the first one on the board. After that I took the grain right along for that house, for a number of years in the same way, sometimes where the market was deliverable on that day— just one-eighth less. Commissioner Prouty. Did you pay for that grain? Mr. Wetmore. Yes, and we considered the grain ours, of course, but we understood, of course, that we were to carry it for a delivera- ble future. In fact, after that, I can not tell you the exact date of the time, but I had a large amount of oats at one time, carrying them for that firm, to be delivered the 1st day of September. September came along and they sent for me and asked me if I could still carry those oats for about ten days, that navigation was still open, and they wanted the oats carried until the close of navigation, so that they would not be likely to go out of store, and they would still remain in Chicago during the winter, and they allowed me one-eighth of a cent more and interest, insurance, and storage up until that time. Commissioner Pkouty. When you carry grain in that way, it neces- sitates or involves the t3dng up of a certain amount of money, does it not? Mr. Wetmore. Yes, sir. Commissioner Prouty. There is no risk in it, but still you have to have the money in order to carry the grain? Mr. Wetmore. Yes, sir. Commissioner Pjiouty. You -have to pay for it, but you don't get your pay for it, until you get the future delivery ? Mr. Wetmore. Yes, sir; we carry the business in that way. Mr. Marble. The receipts for the cash grain are good for the money at the bank, are they not; they are good for that? Mr. Wetmore. To a certain extent. Mr. Marble. You find them so in these deals generally? Mr. Wetmore. Well, we are heavy borrowers anyway. We handle a great deal of cash grain from the West all the time, and are heavy borrowers at the bank. Mr. Marble. In each of these transactions you figure an interest allowance to you from the parties selling the grain ? Mr. Wetmore. Yes, sir. Mr. Marble. That would equal the interest that you have to pay? Mr. Wetmore. Yes, sir. Mr. Marble. So that in this way the disadvantages from the tying up of the money were borne by the first owner of the grain ? Mr. Wetmore. Yes, sir. Mr. Marble. Did you consider yourself really the absolute owners of this grain in this transaction? Mr. Wetmore. In one sense of the word, yes. We pay for it, and we own it in that way, but the disposition of it was different. I remember at one time that I had a line of grain and it went to a premium, quite a premium, and I spoke to them and said, I would like to merchandise this grain to the East. Well, they said : " We are going to do that ourselves," and in a day or two they came to me and said: 214 GRAIN ELEVATOB INVESTIGATION. "Well, we -will give you another one-eighth of a cent, and you put this on the vessel for us, and ^ve will buy it back from you on the vessel," so I sold it back to them on the vessel f. o. b. the boat. Mr. Marble. You made one-eighth of a cent on that transaction? ^Mr. Wetmobe. I made one-ei^th on that transaction and also turning it back to them f. o. b. boat, and they made a profit of prob- ably — well, I don't know what it was, but I know I would have liked to have merchandised it. Mr. Marble. Was it greater than one-eighth? Mr. Wetmore. Yes, sir; the profit was considerable. Commissioner Prouty. So while the grain in fact belongs to you, and while you can legally do what you have a mind to, you would feel vmder a moral obhgation to leave it there till it is deliverable out ? Mr. Wetmore. Certainly; it is business pohcy. Conmiissioner PROtrrr. That is the intent of the whole thing? Mr. Wetmore. Yes, sir. Commissioner Prouty. And you know you can not do business unless you do carry out the intent? Mr. Wetmore. Yes, sir. Mr. Marble. So that you really carried this grain subject to their orders. Is that right? Mr. Wetmore. Well, no; I can not say that it was. We could, I suppose, have sold the grain. Mr. Marble. I mean in the practical conduct of the business; I don't mean your legal rights, but I mean in the practical conduct of your business, you carried the grain subject to their orders? Commissioner Clark. In effect ? .Mr. Wetmore. In a sense, probably; yes. Mr. Marble. Enough so in that sense, so that they reaped the profit, when the cash grain went to a premium. Mr. Wetmore. Well, I could, of course, have sold that grain myself and taken the proceeds, and nothing could have been done or said by them or anybody else, except that I would not have had any more business from them. That is understood. Mr. Marble. What do you know about the mixing of different grades of grain in Chicago — the mixing of two grades ? Mr. Wetmore. I have done a great deal of mixing of grain. Mr. Marble. Well, tell us about it. Mr. Wetmore. Oh, you put in No. 3 corn and No. 4 corn together, and make No. 3, and all that sort of thing. Mr. Marble. Well, that was the ordinary combining of grades in a private elevator? Mr. Wetmore. Yes; in a private elevator. I never have done that in public elevator, of course, but I have mixed grain in private elevators and in railroad elevators, and a great deal of it. Mr. Marble. What was the effect of that ? Mr. Wetmore. Well, there is not much trouble in taking No. 4 and No. 3 corn, and mixing them together, and thus getting No. 3 if they are not mixed too heavy. Commissioner Lane. Is that the purpose of having a private ele- vator ? Mr. Wetmore. Yes, that is the only and the whole and sole pur- pose for a private elevator for mixing grain. GEAIN ELEVATOR INVESTIGAtlON". 215 Commissioner Lane. So that they can mix a higher and lower grade, and thereby get a higher grade and higher price? Mr. Wetmoee. Yes, sir; and eveiy bushel that comes out of the private elevator or goes into a public elevator is what they call "s kin " grain. Mr. Marble. What effect does that have tipon the grata going into a public elevator? Does it average all the grades or does it leave the lowest of the grades? Mr. Wetmore. As I ju§t said, it leaves it a "skin" grade, or a bottom grade. If you are going to get grain for a pubhc house, you are buying grain cash or you get it coming in from the country; you are going to take all the No. 4 and off grade of g^ain that you can and put mto that grain of a grade which will raise it to a point where you can dehver it. Commissioner Proutt. Does not grain go from the country into a pubhc elevator? Mr. Wetmore. No, sir. It could do so if it w"as a contract grade, but the percentage of it is almost nothing — I should say not one one-hundredth per cent. It might be done so, in fact that is the intent of the public elevator, but it is not done. Mr. Marble. What effect does that have, in your opinion, upon the desirability of an investment or purchase of the receipts of a pubhc elevator establishment; what effect does it have upon the grain business of the city? Mr. Wetmore. The public elevator grain nearly always sells lower than it does on the cars coming in. It always sells lower; I don't know of a time when it was sold at the same, price as it does on the cars. Commissioner Peoitty. How much difference is there in any par- ticular grade ? Mr. Wetmore. Oh, there will be half a cent or more difference. Commissioner Lane. Does that mean that there is something wrong in the inspection laws ? Mr. Wetmore. It simply means that you get the bottom. No, sir, it does not mean but what they inspect carefully, but it means that they get the bottom grade of pubhc grain in the public house. Conunissioner Lane. Is there a wide margin in the public grade? Mr. Wetmoee. Well, take a car of com that comes from the country; the inspectors of course understand that if this is graded a little too high there will be — the elevator will call for a reinspection on it to make it a grade lower. The elevator man wants to get that as low a grade as he can. If he can buy No. 3 com in the country, if he can get that No. 4 he does so, because he then takes it at a dis- count, and then he can make it up and get No. 3 or No. 2 by Tniying it, and he will get a profit of between — somewhere between 3 and 4 cents a bushel by its being No. 4. Commissioner Lane. Is it because of the doctoring in the private warehouses that the private warehouses are called hospitals? Mr. Wetmoee. Yes, sir. Now, you take on this car; if it would be graded a little lower possibly than it would if it was being put out, that is not through any fault of the inspector, but the inspector knows when the car comes in, he knows that if it is a little too high, if it is graded a httle too well that there will be an objection, just as Mr. 216 6BAIN ELEVATOR INVESTIGATION. Pettit testified here, that they had to call a reinspection sometimes on grain coming in, and it would be made possiBly lower, and the inspector don't like the worry of that sort or a thing; while, if he is inspecting out of a private house into a public, No. 2 corn, he knows very well that the house foreman, or inspector, has put that out for No. 2 corn, and if he grades it No. 2 corn it is going to be dumped on to the pit and there is not anybody that is going to make anv objections, and can not, and he will be a little easy, although he will take it at the bottom, of course. They try to do what is right, but then when there is corn that comes in from the West — well, here is an illustration.' A few weeks ago a car came in that was a little wet in one corner. It was beautiful yellow corn, just a little wet in the corner, perhaps fifty bushels, and of course they had to take it at the lowest grade. They called for a reinspection. Now, they have to grade according to the lowest in the car, and they grade it that way down on account of the fifty bushels. When the car goes into the elevator and is going up into the chute, it will be No. 3 com, beautiful cojn, and there would not be two handfuls of wet corn in the car, and the elevator would get the advantage of it. Mr. Marble. Now, you have testified, Mr. Wetmore, that taking No. 2 corn, coming into the city in a car, that that is worth more than a warehouse receipt for the same amount of No. 2 corn? Mr. Wetmore. Yes, sir. Mr. Marble. What effect does that condition have upon the desirability of these public elevators to the public? Is it possible for public owners of grain to profitably store grain in the public elevators ? Mr. Wetmore. It is not; no. Mr. Marble. It is not? Mr. Wetmore. No, sir. Mr. Marble. Can they depend on getting as good grain out of public elevators as they put in ? Mr. Wetmore. No. Mr. Marble. Are they practically certain of getting a poorer grain, a^oorer grade of grain than they put in ? Mr. Wetmore. They are pretty sure to get the bottom of the grade. Mr. Marble. No matter what ihef put in? Mr. Wetmore. Yes, sir. Mr. Marble. Have you had any experience in that respect ? Mr. Wetmore. I never put airjr gram in a public elevator. I take it out, buy it, and ship it, but I don't put any in. My grain that comes from the country I don't put in the public elevator. Mr. Marble. How long have you been in the grain business in this city? Mr. Wetmore. Twenty-four or twenty-five years; that is, I have been in business for myself for about eighteen years, probably sixteen or eighteen years, but I have been connected with other people's business here. Mr. Marble. I will ask you, at the present time, who owns the bulk of the grain in the public elevators, the public or the proprietors of the different pubhc elevators ? GRAIN ELEVATOR INVESTIGATION. 217 Mr. Wetmore. It is put in by the — it is largely put in by the elevator companies through the private houses. Mr. Marble. Through such arrangements as you have testified to here ? Mr. Wetmore. Yes, sir. Mr. Marble. Are the public elevators of Chicago used by the public ? Mr. Wetmore. No, sir. Mr. Marble. And as you have testified, it is not possible for them to be used by the public ? Mr. Wetmore. Oh, it is possible. Mr. Marble. Well, it is not financially profitable? Mr. Wetmore. It is not financially profitable, no, and the percent- age is small. Mr. Marble. Is it your experience that the inspection of grain going out of the city is the same as on grain coming into the city, or different ? Mr. Wetmore. Well, it is supposed to be. Mr. Marble. I mean in the regular and ordinary practice ? Mr. Wetmore. The same? I can not state as to that. I know, as I said before, that the grain going out is a "skin" grade, or the bottom of the grade, while the grain coming in is virgin grain, as we call it, and it may be very high of the grade. I know if you take straight No. 3 com that comes mto Chicago and mix it together — the bulk of it — it would be a very high grade of No. 3 corn, and the same grade shipped out of 'No. 3 corn would be very much below, and I take it on that basis. Mr. Marble. I want to ask you if you know of any manipulation of the market for new oats this year in this city brought about by the mixing of old oats and new, and what that was, and how it was done, and what the effect was? Do you recognize the transaction that I refer to ? Commissioner Proutt. Call his attention directly to it if you know what it is. Mr. Wetmore. What was that again, if you please? Mr. Marble. Well, about the mixing of new oats, of new oats in the city of Chicago, some time this summer, with a great quantity of old oats? Mr. Wetmore. Yes, sir. Mr. Marble. You know that transaction? Mr. Wetmore. Yes, sir. Mr. Marble. Tell us what that was, who did it, and what the effect was. Mr. Wetmore. It came under my observation through another thing, but I remember the occurrence. It was, I should judge, about the 20th of July, possibly a few days before or a few days after, and the market was fUled up all of a sudden with new oats. It broke our markets from 4 to 5 cents a bushel. It was a surprise to the entire trade. I investigated it and found that up until this night (it was either the 20th or the 18th, or somewhere in that time) that there had only been 41 cars of new oats that had arrived in Chicago, according to the records. New oats are worth a great deal less than the old, when they first 218 GRAIN ELEVATOR INVESTIGATION. come on the market. These oats had been mixed, or a part of them had been mixed with large quantities of old oats, which depreciated the value of all the oats into Chicago. Eastern buyers did not want the mixed oats, the old and the new mixed. These graded " new stand- ard" and the wonder came how it was possible, I believe, Peavey should turn out 80 and Armour 35 cars, when we had only 41 cars in Chicago all told qf new oats; but these were the records of the receipts which had been turned out at that time. Armour's receipts were on the records of the registration, and Peavey's, both Armour's and Peavey's. The eastern buyers did not want the "new standard." When the oats came out finally, it was found that there was hardly a dozen kernels in a handful of the new, but it broke our market substantially and completely. Mr. Marble. Did that have an effect on the eastern market? Mr. Wetmore. On the whole United States. Mr. Marble. What is the oat crop of the United States this year, approximately ? Mr. Wetmore. Well, about 750,000,000. Mr. Marble. Was this at a time when the new oats were being marketed in the country ? Mr. Wetmore. This was the beginning of the first run of new oats, about the first forty cars that were received in Chicago and unloaded, and the elevators took some of them, and the shippers took some of them. — but they had enough to make all those new oats that they got in a few cars. Mr. Marble. Now, to make this perfectly clear, if new oats and old oats are mixed, the rules of the inspection department are that they shall all be inspected as new oats ? Mr. Wetmore. The rules of the inspection department are to grade according to the lowest grade of the car, and if there are any new oats in a car at all they must grade them as "new standard" oats and let it go' at that. Mr. Marble. Would you say that the selling price to the farmer of his oats at the beginning of the market this year had been affected throughout the grain-producing section by that process ? Mr. Wetmore. Yes, sir; our market broke from 4 to 5 cents a bushel immediately after that, and that was generally supposed to be owing to that pressure, because our oats were discredited, as they were graded as new oats. Mr. Marble. Where was this mixing done, if you know? Mr. Wetmore. Well, sir; it is shown by the records of the regis- tration office. The registration office shows that the new oats were put out largely out of Peavey's house, and in the name of Armour, and Armour's oats were put out of their private house into their public house under the name of Peavey. Mr. Marble. Those two establishments, they are large buyers of oats in the country? Mr .Wetmore. Yes, sir. Mr. Marble. And those receipts for those oats were then delivered on the board as new oats ? Mr. Wetmore. Yes, sir; delivered right off that day — the same day. Mr. Marble. And all that caused a slump in the oats ? Mr. Wetmore. Yes, sir. GEAIN ELEVATOR INVESTIGATION. 219 Commissioner Lane. That allowed somebody to go into the market and buy oats at 4 or 5 cents less ? Mr. Wetmore. Yes, sir; and it allowed the sharks to get a big profit. Commissioner Clark. Were these certificates issued on the same day? Mr. Wetmore. Yes, sir; they were issued on the same day; I had them both. One was in Peavey's house for oats in the name of Armour, and the other was in. Armour's house in the name of Peavey. I had them both. Commissioner Clark. Did the certificates represent an equal amount of grain — an equal number of bushels of oats f Mr. Wetmore. I did not have all the receipts, but I had 5,000 bushels in both houses, and the 5,000 in Armour s were crossed on the same day that was. Mr. Marble. The same kind of oats? Mr. Wetmore. Yes, sir. Mr. Marble. "New standard"? Mr. Wetmore. Yes, sir. Commissioner Clark. Did these certificates that you say you had represent the same in the aggregate ? Or more in the aggregate than the total of the new oats that had been received ? Mr. Wetmore. No, sir; not the oats that I had. The oats that were delivered, and the oats that were put out which you can easilly see by going to the ofiicial registration office. I took the trouble to fo up and see what the records showed and see how many new oats ad Deen delivered, and I went up there to the registration office, which is open, and I looked at the registration books. All those receipts must be registered before they are delivered, and there is a rec6rd there that is public, and from that public record I got the amounts. Witness excused. William S. Warren, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in the city of Chicago ? Mr. Warren. Yes, sir. Mr. Marble. What is your business ? Mr. Warren. I am in the grain business and brokerage business. Mr. Marble. A buyer and seller of grain ? Mr. Warren. Yes, sir. Mr. Marble. And a commission man, as well? Mr. Warren. Yes, sir. Mr. Marble. Are you a member of the Chicago Board of Trade ? Mr." Warren. Yes, sir. Mr. Marble. Have you held any position in that body ? Mr. Warren. Yes, sir. Mtv Marble. What position and when ? Mr. Warren. I was president from 1900 to 1903, and I was director in 1904. Mr. Marble. How long have you been in the grain business in this city? Mr. Warren. About thirty years. 220 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. I will ask you to state whether or not the number of, receivers and shippers of grain is increasing in Chicago ? Mr. Warren. It is not. Mr. Marble. Is it less now than it has been before, and for how long? Mr. Warren. The number of receivers and of shippers of grain in Chicago, in my judgment, is not to exceed 15 per cent of what it was twenty years ago. Mr. Marble. I will ask you how it compares now with the number at the time Judge Tuley issued the injunction, in 1897, I believe that was? Mr. Warren. Well, within that period I think there has been very little change. Mr. Marble. It has not increased? Mr. Warren. It has not increased, no. It probably has decreased somewhat, but in no such proportion as it has during the longer period. Mr. Marble. So that the situation regarding the number of inde- pendent receivers and shippers of grain is practically the same now as it was at the time that injunction was issued? Mr, Wareen. My judgment would be that it is slightly less. Mr. Marble. Than it was previous to the issuance of that injunc- tion? Mr. Warren. At the time I understand you to say? Commissioner Clark. Is there any substantial change? Mr. Warren. Since 1897, I would say there is none. Mr. Marble. To what do you ascribe the fact that the number has decreased from the period before 1897 and has remained stationary since 1897? Mr. Warren. Well, I think the large decrease in the period which I have named was due to the concentration of the grain business in a few hands, through the favors granted by the railways to certain grain buyers. Mr. Marble. Is it your judgment that these favors are now being granted ? Mr. Warren. I have no means of knowing. Mr. Marble. Well, do you know? Mr. Warren. I do not know. Mr. Marble. Is there any other reason than that why the number should not now be increased, that you know of? Mr. Warren. Yes, there is a reason. Mr. Marble. What? Mr. Warren. I think that the fact that the pubhc warehousemen of Chicago deal in grain, tends to confine the business very largely in their hands. Mr. Marble. Why does it have that effect? Mr. Warren. Because they have the advantage of the first storage of three-fourths of a cent a bushel. Mr. Marble. Is it your observation or judgment that they use that advantage in bidding as against the man who has no pubUc elevator? Mr. Warren. I have no doubt that they do so. Mr. Marble. If they use that to force the grain into their elevators to earn that storage, it would have that effect, would it not? Mr. Wareen. Yes, sir. GRAIN ELEVATOE INVESTIGATION. 221 Mr. Marble. Would that mean that they would be able to store the grain, practically, whatever device was used, at a less rate than was open to the public? Mr. Warren. Yes, sir. Mr. Marble. Are the public elevators of Chicago open to the public, that is, practically, in the practical operation of business now 1 Mr. Warren. Yes, sir. Mr. Marble. Do you use them and find it profitable to do so? Mr. Warren. They are used to a limited extent, in my judgment. Mr. Marble. What limits the extent? Mr. Warren. I would not undertake to say Mr. Marble. Why are they not freely used? Mr. Warren. Because of the fact that the greater portion of the grain is bought to come here by the firms who own or run public elevators, and they have the advantage in that way, the advantage I just testified. Mr. Marble. And the independent buyer is not able to compete, is not able to buy in competition as against them, would you say that or not? Mr. Warren. Yes, sir. Mr. Marble. How about buying cash grain by an independent buyer and carrying it in an elevator; is that business open to the public now? ■ Mr. Warren. No. Mr. Marble. It is not financially profitable? Mr. Warren. No. Mr. Marble. Why not? Mr. Warren. Because the market difference between the cash grain and the future seldom, if ever, amounts to as much as the actual storage charges and the other charges. Mr. Marble. You are, of course, familiar with the agitation in this State for the public warehouse laws, and the section in the constitution and the reasons therefor, and what the laws are, are you not ? Mr. Warren. Reasonably so. Mr. Marble. Is it your opinion that public elevators in the city of Chicago, such public elevators as are here, are now such public eleva- tors as were contemplated by the lawmakers, in fact ? Mr. Warren. I do not think they are. Mr. Marble. Do you think the proprietors of these public elevators are fulfilling the duty imposed upon them by the law as public trus- tees? Mr. Warren. I think they are evading the law. Mr. Marble. And not fulfilling their duty? Mr. Warren. Yes, sir. Mr. Merrick. May I ask the witness a question ? Commissioner Proutt. Do you think the storage charges of those elevators, those public elevators, are reasonable ? Mr. Warren. I think that they are reasonable, with the exception of the first storage. Commissioner Prouty. You mean the elevation and storage ? Mr. Warren. Yes, sir. Commissioner Prouty. Which is three-fourths of a cent for the first ten days? Mr. Warren. Yes, sir. 222 GBAIN ELEVATOR INVESTIGATION. Commissioner Prouty. What do you think it ought to be ? Mr. Waeren. I do not think it ought to be over three-eighths. Commissioner Pkoutt. The statute fixes it at a maximum of one cent and a quarter. Mr. Waeeen. I beheve so. Commissioner Peouty. And they voluntarily make a rate of three- fourths of a cent, and you think the statute should fix that rate at three-eighths ? Mr. Waeren. I think that would pay the expense of the elevation and a fair profit. Commissioner Protjty. If that was done, do you think the pubUc would be able to use these elevators? Mr. Waeeen. They could to a greater extent than they do at the present time. Commissioner Peouty. The public doesn't use the elevators now, because it is not profitable to buy graiu and put it into the elevator? Mr. Waeren. Well, that is true in a sense. The consigning of grain has gone out; the grain, the large bulk of the grain, is bought on track, by the elevator men themselves. Commissioner Peouty. And isn't that largely for the reason that the profit of the elevator man comes in the mixing of that grain in his private elevator? Mr. Waeeen. To a certaia extent I think it is. Commissioner Peouty. So that a grain man, in order to indulge in the practice of doing business at a profit, must have a private elevator in which he can doctor his grain and grade it ? Mr. Waeren. I think they all have them. Commissioner Peouty. Do you think the business could be done profitably without them ? Mr. Waeeen. I think an out and out pubUc warehouse, if the grain trade was open to all comers on the same terms, could be operated profitably, yes, sir. Commissioner Peouty. Commissioner Clark wants to know whether in your opinion you could operate a pubhc warehouse or pubUc elevator profitably at three-eighths of a cent charge for elevation? Mr. Warren. I think so. Commissioner Clark. That is, that is if you were not a dealer in grain yourself? Mr. Warren. If I could get the grain to handle I think I could make a profit out of it. Commissioner Clark. The point I want to make is, that if your pubhc warehouse is operated by a man who is not himself dealing in grain in a speculative way, could he attract enough business to make it profitable, at the price you suggest ? Mr. Warren. Well, that would depend on his market, and on the rate. I think the ideal condition would be that the railroads should operate these public elevators and give a free delivery of cash grain, {'ust as they do with other commodities and merchandise. You )ring a carload of grain here in sacks and you get a free delivery through a freight house. You bring it in bulk and you have to pay three-fourths of a cent the moment it comes out of the car. Commissioner Prouty. The rule is that carload freight is unloaded by the consignee. That is the rule, taking this country as a whole. Do you think the railroads should unload this grain? GRAIN ELEVATOE INVESTIGATION. 223 Mr. Warren. Yes, sir. Cominissioner Peouty. And should operate the elevators? Jklr. Waeren. I think they should do for Chicago just what they do for New Orleans, Galveston, Newport News, and a great many other markets. Commissioner Peouty. Suppose the elevators were owned by the State, and operated at some reasonable charge — that a pubhc eleva- tor could only be owned and operated by the State — do you think that that would make the grain market more open than it is now ? Could anybody without a private elevator engage ux the grain business then? Mr. Warren. I think so. Conunissioner Lane. Then the man who has a private elevator would make more money? Mr. Wareen. Yes, sir. Conunissioner Lane. Than the man who did not? Mr. Warren. Yes, sir. Commissioner Lane. Then he couldn't very well keep up the com- petition a long while against the man who had the private elevator? Mr. Waeeen. Perhaps not. I think that the ideal condition existed ia this market thirty years ago, when the railroads ran the public elevators, and every car of grain was graded here when it arrived and unloaded into the elevators, and the car went for another load the same night. Commissioner Peouty. That is, there were no private elevators ? Mr. Waeeex. No, sir. Conunissioner Peouty. That is all. Mr. Marble. At that time — if you will pardon me just a moment — what was the status of your inspection certificates at that time com- pared with now, and for sale to millers ? Mr. Warren. I think they stood higher. Mr. Marble. Were they good for sale to Enghsh millers? Mr. Waeeen. Yes, sir. Mr. Marble. Do Enghsh millers buy grain on inspection out of the pubhc warehouses here now? Itu-. Wabken. I do not think they will. Mr. Marble. Not as a rule ? (No answer.) Commissioner Clark. Did the railroads who operated elevators in those days issue certificates representing the grain in the elevators ? Mr. Warren. Yes, sir. Commissioner Clark. They were commercially useful and recog- nized? Mr. Warren. Yes, sir. Commissioner Clark. And the raihoad was responsible for them? Mr. Warren. They were just as good collateral as they are to-day. Mr. ^Merrick. Mr. Warren, may I inquire whether you ever owned or operated a public elevatoi' in Chicago ? Mr. Warren. I was interested in a firm which operated a public elevator here some years ago. ilr. Meeeick. When ? Mr. Wareen. Between 1894 and 1898 or 1899. I can not just remember. Mr. Meeeick. What was the name of the firm? Mr. Waeeen. The firm was A. C. Davis & Co. 224 GRAIN ELEVATOE INVESTIGATION. Mr. Merrick. In which you were a partner? Mr. Warren. Yes, sir. Mr. Merrick. And you were the managing partner here, weren't you? Mr. Warren. Yes, sir. Mr. Merrick. Why did you go out of the public-elevator business ? Mr. Warren. I went out because the Rock Island Railroad can- celed my lease and gave it to Charles Counsehnan. Mr. Merrick. Did you find it profitable to operate that elevator? Mr. Warren. I did not. Mr. Merrick. Do you know what the railroads charged and other transportation lines charge at Newport News and New Orleans for handling grain ? Mr. Warren. I beg your pardon, Mr. Merrick. Mr. Merrick. Do you know what the raihoads and other trans- portation companies charge at Newport News, New Orleans, and other ports for elevating and transferring grain from the cars to boats or boats to cars ? Mr. Warren. I have no knowledge of my own. It is my informa- tion and behef that in New Orleans and in Newport News and in Gal- veston free delivery is made on grain. Mr. Merrick. That is your opinion? Mr. Warren. If not now, it is only recently changed. Mr. Merrick. What do you know about the value, difference in value, between Chicago inspection certificates of grain and those of other markets to English buyers — export business ? Mr. Warren. I think that all Amercian inspection certificates are discredited. Mr. Merrick. Isn't the Chicago inspection certificates accredited higher by English buyers than that of any other market certificate in the United States ? Mr. Warren. I would not contradict that. I know that all the grain that goes out of Chicago is sampled and supervised by other than the State inspector. Mr. Merrick. "That is all. Commissioner Lane. Pardon me one moment. Did the Rock Island road have the right to cancel your lease at its option ? Mr. Warren. Yes, sir. Commissioner Lane. Do you know whether it inserts that provision in the leases which it makes generally to elevators ? Mr. Warren. I am under the impression, Mr. Commissioner, that our lease ran from year to year, and that it was canceled at the end of one of the periods. Commissioner Lane. The lease expired then ? Mr. Warren. Yes, sir. Commissioner Lane. It was not because your relations with the Rock Island Railroad were not as Satisfactory as those they contem- plated with Couselman that it was canceled ? Mr. Warren. I never knew why it was canceled. Commissioner Lane. You never knew ? Mr. Warren. No, sir. Commissioner Lane. Why did the railroads go out of the elevator business here? Mr. Warren. I do not know. GRAIN ELEVATOR INVBSTKJATION. 225 Mr. Mekrick. Were they ever in it, Mr. Warren? Mr. Warren. Yes, sir. Mr. Merrick. When? Mr. Warren. They were in it in the sixties and early seventies. Mr. Merrick. Do you remember what roads they were, in the sixties and seventies? Mr. Warren. They were in it in this way, Mr. Merrick, that the elevators were operated under the direction of the railroads by cer- tain firms. Mr. Merrick. Can't you name a road by name? I would like to know as a matter of information for the Commissioners, as well as myself. Mr. Warren. The Illinois Central elevators were operated by Munger, Wheeler & Co. The Rock Island elevators were operated by Flint, Thompson & Co., and so on through the list. I can not recall them all. Mr. Merrick. Didn't those firms operate them on their own pri- vate account, and a$ their own private business ? Mr. Warren. I do not know what their contracts were. Mr. Merrick. You do not know about that, you say ? Mr. Warren. I do not know what their arrangements were. Mr. Merrick. Can you give me now the name of any railroad company that ever operated an elevator on its own account in its own name in Chicago ? Mr. Warren. No further than I have stated. ' Mr. Merrick. I do not want to pry into your business, Mr. Wari-en, but what did you pay for the Rock Island lease ? Mr. Warren. I do not remember what we paid for it. We paid a cash rent. I am under the impression that it was $5,000 a year, but I wouldn't testify to that fast. Mr. Merrick. What was your first storage charge at that time ? Mr. Warren. Three-quarters of a cent. Mr. Merrick. Three-quarters of a cent ? Mr. Warren. Yes, sir. Mr. Merrick. Well, you didn't make rnoney, you say? Mr. Warren. Very little. Mr. Merrick. At three-quarters of a cent ? Mi-. Warren. A very little. Mr. Merrick. Then how are you going to make money at three- eighths ? Mr. Warren. Well, the situation then was just as it is now. We had nominally a public elevator, but there was no grain in it but what belonged to us, and the carrying charges in the market were so small that we couldn't make any money out of it. Mr. Merrick. Well, do you think you can make money out of it at just half of that ? Mr. Warren. I think a public elevator which could be open to the pubhc, all things being equal in the trade, so that one man could engage in the grain trade as well as another, could be operated with three-eighths of a cent first storage and make money, yes, sir. Mr. Merrick. Does that take into consideration the competition of country elevators on trunk lines at junction points like Kankakee and Matteson and points of that kind, for instance, on the Three I and S. Doc. 278, 59-2 15 226 GRAIN ELEVATOR INVESTIGATION. on the Belt Line, and on the Elgin, Joliet and Eastern outside of Chicago ? Have you thought about that ? Mr. Wabren. Well, how does that enter into it? Mr. Merrick. Why it is competition. That is all. Mr. Warren. I believe the actual cost of running an elevator could be made and a profit, and a Hving profit, on the terms I have mentioned. Mr. Merrick. Do you know of any elevator company in Chicago in the last five years — public elevator — that has made any money? Mr. Warren. I couldn't testify on that. Mr. Merrick. Isn't it a fact, as a matter of practical experience in the public elevation of grain, that the cost of labor has been increased by the action of the unions to exactly twice what they were fifteen years ago, which is the largest element in the cost of elevating grain? Mr. Warren. I do not know what they are now, Mr. Merrick. I haven't been in the business for some years. Mr. Merrick. Then how can you tell that you can operate profit- ably at three-eighths of a cent if you do not know these features ? Mr. Wahren. Well, I base it on my former experience. Mr. Merrick. Well, I say, of ten or fifteen years ago, when you made no money, and paid half as much for day labor as you would have topay now? Mr. Warren. But the conditions Mr. Merrick. Isn't that true? Mr. Warren. But the conditions. I have been asked a hypothet- ical question here. The conditions which existed when I operated the Rock Island B Elevator were not the ideal conditions under which to operate a public elevator. Commissioner Prouty. What he says is that if he could get busi- ness to do he could make money at three-eighths of a cent. Mr. Merrick. I understand that he says so. I am trying to find out on what he bases his belief. That is all. Mr. Marble. I would like to ask Mr. Warren just a question or two. You spoke of this grain which was in a pubhc elevator being grain belonging to your firm ? Mr. Warren. Yes, sir. Mr. Marble. Did you then make the full published storage rate on that grain? Mr. Warren. No, sir. Mr. Marble. So that perhaps you only made three-eighths of a cent a bushel or less on that grain then? Mr. Warren. I might have lost money. It depends altogether on how I was able to speculate this grain over from month to month. Mr. Marble. So that really you did not consider that you were runninea public elevator? Mr. Warren. No, sir. Mr. Marble. In the sense the law gives of that term, at that time? (No answer.) Mr. Marble. Now, then; speaking of these railroad elevators, I wiU ask you if the railroads themselves operated these elevators, or did they own the elevators and lease them to firms who were not grain dealers, at the time the condition was ideal ? Mr. Warren. I think that was the situation that they were known as the railroad elevators. You never heard the Central elevators GRAIN ELEVATOR INVESTIGATION. 227 referred to as aaiytliing but the Illinois Central elevators; and the Eock Island elevators, and so on. Mr. Marble. They were run with reference to the railroads rather than with reference to the grain business ? Mr. Warren. The firms who operated them and issued the receipts were not dealers iu graiu. Mr. Marble. Was that in your opinion the essential element of difference between the ideal condition then prevaihng, and the condi- tion now prevailing? Mr. Warren. Yes, sir. Mr. Marble. That is all. Mr. ilERRiCK. Just a moment, Mr. Warren, if you will pardon me. Were those elevators that you say were denominated railroad ele- vators, either of them or any of them, ever owned actually by a rail- road company? Wasn't that a mere name, but as a matter of fact weren't they owned, for instance, by Munger, Wheeler & Co. ? Mr. Warren. I can not testify as to my actual knowledge. Mr. Merrick. What was the storage, Mr. Warren, after first stor- age, at your elevator? Mr. Marble. You mean the rates earned or the rates he pubhshed? Mr. Merrick. No; the storage charge after the first charge. Mr. Marble. The published rates? Mr. Warren. In the Rock Island elevator. Mr. Merrick. Your elevator; yes. Mr. Warren. At that time it was a quarter ot a cent every ten days. Mr. Merrick. And what is it now ? Mr. Warren. It is a fortieth of a cent every day. Mr. Merrick. That is all. Commissioner Proutt. That is all, Mr. Warren. Witness excused. Mr. Marble. Is Mr. Dalton here? Mr. Dalton or Mr. Eschenburg? I would like at this time to state to the Commission that there is a witness, Mr. Dalton, who has some letters, whom I thought would be here at noon, who wiU be here at 2 o'clock? I have a number of references to the law of this State, which I desire to put into the record, and printed opinions of judges of this State, which I desire to put into the record. I desired the attendance of Mr. J. Ogden T^jmour, but the marshal has returned subpoena unsatisfied. I understand that he is out of the city. Mr. Carr, who testified the other day, desires to make a correction in his testimony. Now those are the unfinished matters which I have in hand. Mr. Carr is present. Commissioner Prouty. Mr. Carr is present now. Mr. Carr, you may make any corrections you desire. H. H. Carr recalled. To the honorable Commission: I came before this Commission at its request, in a friendly spirit, to furnish information which it was seeking, which I hope I succeeded in a small degree in doing; but do not feel it just that my business reputation should be irreparably in- jured thereby through a slight inadvertence or failure on my part 228 GRAIJSr ELEVATOR INVESTIGATION. to make myself clearly understood on a point vital to my business standing What I said in one part of my statement, in regard to the serious injury to my business in the State of Illinois, through the action of the railroads and the grain dealers' association, owing to my negligence to make it clear that I referred only to that portion of my farmers' shipments from the State of Illinois, which were knocked out or busted, was construed by the press as a confession on my part that my business has been entirely ruined, so far as farmers' shipments were concerned. This is very far from the facts in the case. The farmers of South Dakota, Minnesota, Iowa, Nebraska, and Wisconsin are to-day and have been continually for a number of years making direct shipments to this market and to my house in spite of the discrimination on the part of the railroads, in many instances, and in the face of the greatest opposition from grain dealers' associations in all of these States, the farmers persist in shipping direct; and I shall be greatly pleased if this investigation by your honorable Commission of the conditions as they exist will result in a square deal for the grain raisers of this country who show a determination to do their own marketing in Chicago. I am in this fight to stay, and the farmers are in this fight to stay; and all they ask is that they can use the railroads of this country as common carriers on the same basis as other shippers use them. When the Commission inquired Monday what effect this opposition had on my business, I intended to convey the idea that Illinois farm- ers' shipments had almost entirely ceased, and that I had been greatly damaged in other States, I have received fanners' shipments from 43 stations on the Chicago and Eastern Illinois Railroad alone, which, owing to their unfair treatment of farmers in fumishiag cars, all of this business was lost to me. But at no time has there been any let-up in my effort to encourage direct shipments by farmers, many scur- rilous reports by selfishly interested grain dealers to the contrary notwithstanding. My only object in coming before your honorable Commission is to furnish the facts to show that railroads are in many cases discrimi- nating against individual farmer shippers. I am very glad in this connection to be able to state that there are two or three exceptions among western railroads in the matter of refusing to furnish cars for farmers' shipments. They have come around to a much fairer consideration of the matter and have in numerous instances of late furnished cars when requested for indi- vidual grain shippers. I refer especially to the Chicago Great Western Railway, the Chicago and Northwestern Railway, and the Chicago, Milwaukee and St. Paul Railway. I called upon their superintendents recently, who read me their rules on furnishing cars, which specifically state that all intending shippers should be treated^ alike. I hope that if there is a single farmer in this country who wishes to ship his grain to the central market, and is not furnished facilities for so doing by the railroads that this Commission will, before it finishes its labor in this direction, make such recommendations as will secure for the ten million farmers of this country the right to use the railroads as common carriers without discrimination. I thank you, gentlemen, for being permitted to make this correction. GRAIN ELEVATOR INVESTIGATION. 229 Commissioner Pbouty. This is all you desire to say, Mr. C'arr^ Mr. Carr. Yes, sir. Commissioner Peoxjty. Now, Mr. Marble, who is this witness whom you expect here at 2 o'clock this afternoon? Mr. Marble. Mr. Dalton, of Eschenburg & Dalton. Commissioner Pbouty. Where does he reside? Mr. Marble. He resides in this city. Commissioner Protjty. To what point do you wish to interro- gate him? Mr. Marble. He is a member of one of the firms which accepted shipments from irregular dealers, and he has received a number of letters, such as Mr. Stickney's firm received; and also, in addition to that, a number of letters from the members of the Iowa Associa- tion^ taking up the fight of their secretary and writing in accordance with the secretary's views or instructions, whichever it may be. (Sworn statement of Mr. Dalton filed as part of record.) Commissioner Peouty. We think, Mr. Marble, that you can put that correspondence in, but the Commission will hardly come back here this afternoon on that. Mr. Marble. Then I would like at this time if the Commission would just give me a moment to offer certain matters. Commissioner Prouty. You need not take time to offer at this time Mr. Marble. I will specify what they are, if there is anyone here who wants to be acquainted with them; I will specify, so that they can be informed. Commissioner Prouty. You can put them into the record, or you can state now what you want to put in. Mr. Marble. Yes; I know exactly what I want to put in." Commissioner Prouty. Yes. You can state now. Mr. Marble. I want to put in the findings of Judge Tuley in the case of Central Elevator Company, appellant — this is the title in the supreme court, Central Elevator Company v. People of the State of Hlmois. There are identical findings in some nine cases against the public elevators, where the injunction was issued restraining them from owning and mixing grain in their own elevators — grain belong- ing to themselves. I want to put in the findings of Judge Tuley in that case. (See page 230.) I want to put in his printed opinion, and also the printed opinion of the supreme court, when that case was on appeal. Commissioner Clark. What supreme court ? Mr. Marble. The supreme court of the State of Illinois. Commissioner Clark. The State court. Mr. Marble. Judge Tuley's opinion is contained in the printed pamphlet which I now put in as an exhibit. On appeal the title of this case was Central Elevator Company et al. v. 'The People. The decision of the Illinois supreme court sustaining Judge Tuley's injunc- tion will be found at page 203 of the 174th Illinois Report. Then the opinion of the supreme court of this State in the case of Hannah v. The People, in the 198th Illinois Report. That is an opinion" rendered by the supreme court on appeal from a decision of Judge Tuley in which Judge Tuley declared unconsti- tutional a statute passed by the legislature of this State, which attempted to provide that elevator men, pubhc elevator men, might 230 GRAIN ELEVATOR INVESTIGATION. own and mix grain in theii- own elevators. That statute was passed while the first case was on appeal. The public elevator men of this city, as I understand it, relying upon that statute, continued their former practice. Mr. Hannah was brought up for contempt of Judge Tuley's injunction, and relied upon the statute for his defense. Judge Tuley declared the statute unconstitutional, holding it to be beyond the power of the legislature to give a trustee permission to have his own interests antagonistic to those of his customers or those trusting in him. The supreme court in this case that I refer to affirmed the decision of Judge Tuley and held the statute unconstitutional. Those references I believe will fix the legal status of the public elevators of the city of Chicago, completely. The same are hereto annexed and marked ' ' Filed by Mr. Marble, at Chicago, Illinois, October 17, 1906." Commissioner Prouty. That is all you desire? Mr. Marble. That is all. Commissioner Clark. The public elevators of the State of Illinois, isn't it? Mr. Marble. Yes, but I believe elevators of this peculiar sort are only in cities of more than 100,000 population. Isn't that true? Mr. Merrick. Sometimes. Mr. Marble. Well, it will appear from the decisions as to that. Commissioner Prouty. The statute and the decisions will show, of course. Mr. Merrick. Yes, sir. Commissioner Prouty. This will conclude this investigation. There will be subsequent investigations at other places, and at times to be fixed by the Commission, and there may be a subsequent in- vestigation at Chicago, but we will now adjourn for the present investigation. At 12.30 o'clock the Commission adjourned. The following findings of Judge Tuley in the case of Central Elevator Co. V. The People of the State of Illinois, were offered in evidence by Mr. Marble: This cause coming on for hearing upon the amended information, the amended answer of defendant thereto, and replication to said answer, and upon oral and docu- mentary evidence introduced by the parties, the court being advised, finds that said defendant was, at the time of the commencement of this suit, and is duly licensed by the circuit court of Cook County to transact the business of a public warehouseman of Class A in Chicago, and at such times was, and now is, engaged under said license in the business of a public warehouseman and in the operation of two public warehouses of Class A, known as Alton Elevator and Alton Elevator B, having a total capacity of 1,850,000. That grain has been heretofore and at and since the commencement of this suit, and now is, bought by said Central Elevator Co., and when so bought has been and is now stored in said warehouses of said Central Elevator Co., and has heretofore been, and now is, mixed with grain of others therein stored; that the railroad and warehouse commissioners of Illinois many years ago established the different grades of the different kinds of grain mentioned in said -amended information and said amended answer; the said grades are still in force in Chicago, and the grades so estab- lished for the different qualities of grain are not such that, under such inspection and grading thereof, all the grain of each grade is of exactly the same quality, nor is it practicable to establish grades of grain which will comprise only grades of grain of exactly the same quality, but it always has resulted and must always result that in the inspection of grain coming to the Chicago market carloads of grain of different qualities have been and must of necessity continue to be graded into the same grade, the difference in the market price at the saine time of diSerent qualities of the same grade of grain varying from 2 cents per bushel in the upper grades to 15 cents per GRAIN ELRVATOR INVESTIGATION. 231 bushel in the lower grades; that the great bulk of grain brought to Chicago is brought by rail, and in carloads, and is inspected by the State inspectors while on the track and before being transferred into the public warehouses of said defendant; that there did not exist in or prior to 1871, in Chicago or in Illinois, any well-known, general, or uniform custom or usage among grain warehousemen to deal in or buy and sell grain, or to store grain owned by them in their own warehouses, or to mix grain bought by them with that of their customers, and the proprietors of public warehouses of Class A in Chicago did not, to any general extent, begin to buy and sell grain and store or mix their said grain in their said warehouses with the grain of their customers there stored until about the year 1885; that since that year the practice has continued to grow, until for the last two or three years the defendant Central Elevator Co. and the pro- prietors of Class A warehouses in Chicago are the principal buyers and sellers of grain in the Chicago market and on the Chicago -Board of Trade, and, by reason of the advantages they possess and certain changes in the grain trade, they have practically driven out of business the class of persons who were before that time engaged in buying and shipping grain in the Chicago market, and said Central Elevator Co. and said warehouse proprietors are fast monopolizing the business of dealing in grain in the Chicago market ; that upon some of the lines or systems of railroad entering Chicago, the proprietors of the public grain warehouses along the lines of said railroad are prac- tically the only buyers of grain received in Chicago over said lines or systems, and at the time of the filing of said information said Central Elevator Co. and said ware- housemen owned at least three-quarters of all the grain stored in the public ware- houses in Chicago; that there now are in Chicago twenty-nine public warehouses of Class A, with an aggregate capacity of 41,000,000 bushels, and the amount of grain received into them was 73,000,000 bushels in 1895 and 61,000,000 bushels in 1896, and nearly all of said proprietors of said warehouses in Chicago also deal in "futures" — that is, in the class of contracts for the future delivery of grain which are dealt in on the Chicago Board of Trade; that said defendant and other proprietors of Chicago warehouses of Class A exact established rates of storage from others, and, while so doing, said Central Elevator Co. and the proprietors of the other warehouses of Class A often overbid other buyers of grain in the Chicago market and elsewhere, and are enabled to do this because said defendant and other proprietors of warehouses of Class A in Chicago yield a portion of the established storage rates charged to others upon like grain; that the buying of grain by said Central Elevator Co. and said proprietors of Chicago warehouses of Class A tends to crush competition in the Chicago grain market and to foster in said Central Elevator Co., and in the proprietors of Class A warehouses in Chicago, a monopoly in the grain trade which is and will be hurtful to the people of Illinois, and it is unlawful for a proprietor of a, public warehouse of Class A to store his own grain in his said warehouse. It is therefore ordered, adjudged, and decreed that from and after five months from the date of the entry of this decree said defend- ant and his agents, servants, employees, and officers be perpetually enjoined from storing in his public warehouses any grain directly or indirectly owned by or belonging to said Central Elevator Co. , or in which said Central Elevator Co. may have any interest other than as warehouseman. Dated January 9, 1897. Kansas City, Mo., October 22^ 1906—10 o'clock a. m. Present : Commissioner Clark. Commissioner Clark. Gentlemen, Commissioner Lane, who was expected to be here this morning, is delayed by a late train, and as our time is somewhat limited we will proceed. Mr. Marble. Will the Commissioner read the resolution, or does he expect me to do so ? Commissioner Clark. This hearing is pursuant to a resolution adopted by the United States Senate June 25 last, which reads as follows : Resolved by the Senate, That the Interstate Commerce Commission is hereby directed to make a tnorough investigation of the elevator and grain buying and forwarding business of this country to determine to what extent special favors have been granted to them by railroad companies, the influence which the alleged monopolizing of this branch of business has had upon the market, the injury it. has worked to the grain producers, the extent to which the railroads, their officers, directors, stockholders, and employees own or control the grain buying and grain forwarding companies, and 232 GRAIN ELEVATOR INVESTIGATION. the manner in which these railroads, their officers, directors, stockholders and employees secured holdings, if any, in these grain buying, storing, and forwarding companies, and to report the same to the Congress at its next session. The Commission will be represented in the hearing by Attorney J. H. Marble. You may proceed, Mr. Marble, and call such witness as you choose. Mr. Marble. Mr. Simonds. N. P. Simonds, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Simonds? Mr. Simonds. Here in the city. Mr. Marble. What is your business? Mr. Simonds. The grain business. Mr. Marble. Do you own country elevators? Mr. Simonds. No, sir. Mr. Marble. What is your relationship to the grain business ? Mr. Simonds. I am a member of the board of trade and do business on the board of trade here, in a wholesale way. Mr. Marble. You receive consignments from the country? Mr. Simonds. Yes, sir. Mr. Marble. And buy grain from others who have received consignments ? Mr. Simonds. Yes, sir. I want to say that I am president of the Simonds-Shields Grain Company. Personally when I say I do this business it is for the Simonds-Shields Grain Company, Mr. Marble. Do you own an elevator in the city? Mr.- Simonds. No, sir. Mr. Marble. Do you operate an elevator in the city? Mr. Simonds. No, sir. Mr. Marble. Your partner, Mr. Shields, what relation does he hold to the Chicago, Milwaukee and St. Paul Railroad? Mr. Simonds. He is manager of the Milwaukee and St. Paul elevator. Mr. Marble. Manager of their elevator? Mr. Simonds. Of their elevator; yes, sir. Mr. Marble. Your firm formerly operated that elevator, did you not? Mr. Simonds. Yes; we did. Mr. Marble. Up to what time? Mr. Simonds. Well, I can not say just now. Mr. Marble. Approximately? Mr. Simonds. Some time last spring. Mr. Marble. The spring of this year ? Mr. Simonds. Yes, sir. Mr. Marble. Have you any portion of that elevator leased by youi; firm ? Mr. Simonds. Yes, sir. Mr. Marble. What portion? Mr. Simonds. We have the tile tanks. Mr. Marble. What portion is that ? Mr. Simonds. Well, the tile tanks hold about 500,000 to 600,000 bushels. Mr. Marble. What is the capacity of the elevator ? Mr. Simonds. I think about — I think now it is about 350,000 — that is, the elevator proper. GEAIN ELEVATOR INVESTIGATION. 233 Ml'. Marble. Have you all the storage capacity leased? Mr. SiMONDS. No; we have the tile tanks, and then the elevator building with the machinery is a wooden building that, I think, holds about 350,000; may be, 400,000. There was an addition put on last spring. Mr. Marble. The portion you have leased is greater than the bal- ance of the elevator? Mr. SiMONDS. Yes, sir. Mr. Marble. From whom do you lease that? Mr. SiMONDS. The Chicago, Milwaukee and St. Paul Eailroad. Mr. Marble. They are the owners of the elevator? Mr. SiMONDS. Yes; as I understand it. Mr. Marble. When did you lease those tanks? Mr. SiMONDS. I think they were leased — I could not say the date. Mr. Marble. About when? Mr. SiMONDS. I think about the 1st of July. Mr. Marble. Of this year? Mr. SiMONDS. Of this year. Mr. Marble. They were leased at the time of the change of the operation of the elevator by your company? Mr. SiMONDS. Yes; I think so. A copy of these leases, I think, is on file with the Interstate Commerce Commission. Mr. Marble. What are the terms of that lease as you remember them? Mr. SiMONDS. I signed it — Mr. Shields was away at the time. He was the one that arranged it, but as I understand that lease of the tile tanks, we were to pay two hundred dollars a month for the tile tanks; then, our grain was to be handled through the elevator free of cost, the same as other people's. I do not remember any other terms. Mr. Marble. Do you get any portion of that two hundred dollars back at any time on condition of shipping over the road ? Mr. SiMONDS. No, sir; not that I know of. There was never any such intimation to me. Mr Marble. Do you pay any more if you do not ship the grain over that road ? Mr. SiMONDS. No. Mr. Marble. Do you contract to make your shipments over the Milwaukee road ? Mr. SiMONDS. No, sir. Mr. Marble. Is that a fair rental for those tanks, in your opinion? Mr. SiMONDS. Well, take the condition the Milwaukee road was in, I think it was a very fair thing for them. Mr. Marble. What condition do you refer to? Mr. SiMONDS. They had the tanks there, and for transferring pur- poses the tanks were of no value to them, because the machinery is in the main house. Mr. Marble. Do you think those tanks would bring more if leased to some one else? Mr. SiMONDS. I could not say. Mr. Marble. What would be your opinion about that? Mr. SiMONDS. Well, I think there would be doubt about it. Mr. Marble. Would the fact that Mr. Shields is the grain agent for the road have anything to do with the reasonableness of that amount ? Mr. SiMONDS. I would not think so. 234 GEAIN ELEVATOR INVESTIGATION. Mr. Maeble. Are they any more convenient for you to use than for anybody else 1 Are they worth any more to your firm than they would be to any other firm ? Mr. SiMONDS. I can not say they would be except that in the years we have been doing business we nave worked up trade on the Mil- waukee road, that is on that line. In that way they might be of advantage to us. Mr. Marble. Beciause they are more convenient to your trade? Mr. SiMONDS. To our trade that we worked up in past years. Mr. Marble. Who hires the labor in the elevator? Mr. SiMONDS. I think Mr. Shields sees to that. Mr. Marble. Who pays the wages? From what fund, I mean, do they come? I do not mean the person who handles the money. Mr. SiMONDS. It is paid in our office and charged to the Milwaukee and St. Paul road. Mr. Maeble. You pay it and charge it back to the road ? Mr. SiMONDS. That is what I understand. Mr. Marble. Who is manager of the elevator? Mr. SiMONDS. Mr. Bender. Mr. Marble. What is his first name ? Mr. SiMONDS. George; I do not remember his middle name. Will you allow me to make a little explanation here ? Mr. Marble. Surely. Mr. SiMONDS. Two years ago last spring I told Mr. Shields and my son that I was 60 years old and that it was time for me to quit, and that I would practically turn over the business to them; that I would just retain sufficient interest so that there would be no need of a change of officials. I would give them, say, three months of my time in the fall, from July 1 to October 1, and put in another month in the spring; that I would keep desk room at the office, and make it my headquarters when in town. If at any time I was in town and they really needed my services I would help them out. I wish to explain that, because if there are a good many of these thirds I do not know about, my interest in the business is so small that 1 am more in the nature of an employee than a proprietor. Mr. Marble. You say your son is interested in the business? Mr. SiMONDS. Yes, sir. Mr. Marble. What are his initials ? Mr. SiMONDS. N. J. Mr. Marble. The same as yours? Mr. SiMONDS. No, sir; mine are N. P. Mr. Marble. What is Mr. Shields's arrangement with the Milwaukee road; on what terms is he employed? Mr. SiMONDS. I understand he is to have $2S0 a month. Mr. Marble. Is that contingent on getting certain business for the road? Mr. SiMONDS. Not that I know of. Mr. Marble. Does he get any commission on the freight shipped over the road ? Mr. SiMONDS. Not a thing that I know of. Mr. Marble. Does he get anything on grain going through the elevator? Mr. SiMONDS. Not that I know of. Mr. Marble. Is there any contingency that can vary his compen- sation and make it more or less ? GEAIN ELEVATOR INVESTIGATION. 235 Mr. SiMONDS. As I understand, we lease the tanks. Mr. Shields gets $250 a month for managing the elevator. I do not know of a single thing, one way or the oflier, that would be beneficial in anyway outside of those two. Mr. Marble. That would vary that ? Mr. SiMONDS. No. Mr. Marble. Is there anything in the contract ? Mr. SiMONDS. I do not think there is anything in the contract; the contract, as I understand, is on file with the Commission. Mr. Marble. Is Mr. Shields in the city? Mr. SiMONDS. No, sir. Mr. Marble. Where is he? Mr. SiMONDS. He was in St. Louis. Mr. Marble. Is the Simonds-Shields Company a corporation? Mr. SiMONDS. Yes, sir. Mr. Marble. Who owns the stock of that corporation? Mr. SiMONDS. Mr. Shields, my son, and myself. Mr. Marble. You own it all ? Mr. SiMONDS. We three own all of it. Mr. Marble. No portion of it is owned by any railroad or railroad employee or stockholder? Mr. SiMONDS. No, sir. Mr. Marble. Does any employee of any road share in the profits of.it? Mr. SiMONDS. Not to my knowledge. Mr. Marble. Is any of that stock neld for some one else by any of the three of you ? Mr. SiMONDS. Not that I know of. Mr. Marble. Don't you know? Mr. SiMONDS. I would say certainly it could not be. Mr. Marble. You three own and control in your own right this company absolutely ? Mr. SiMONDS. We own the stock; yes, sir. Mr. Marble. There was a reduced rate on grain from Kansas City to Chicago in August, was there not, from August 1 to August 10? Mr. SiMONDS. There was some time there. Mr. Marble. So far as you know did any elevator man, either your firm or. anybody else, have any advance notice of that rate? Mr. SiMONDS. Not that I know of. Mr. Marble. Do you know of anyone using that rate after August 10? Mr. SiMONDS. It was used after the rate was put in. Mr. Marble. But after August 10? It was supposed to expire August 10, was it not? Mr. SiMONDS. I think so. I do not remember when those dates were. Mr. Marble. Do you know of anyone using that rate after it was supposed to have expired and after it was closed to the public? Mr. SiMONDS. No, I do not. Mr. Marble. Your firm is the largest grain dealer in Kansas City doing business over the Chicago, Milwaukee and St. Paul, it it not? Mr. SiMONDS. I should say so. Mr. Marble. Do you know about this elevator and the manage- ment of it, who gives the orders to the superintendent or to the fore- man? 236 GEAIN ELEVATOR INVESTIGATION. Mr. SiMONDS. Why, the way it has been run — I would like to say this: things have been in a rather chaotic state in this grain business, getting matters shifted about to meet the law, etc. Now, whether they have got the thing where it will remain eventually I do not know; I sometunes have doubts about it. Mr. Shields is the manager of the elevator. The people that put grain in there to be transferred, I understand, give their orders to him, what they want done, and he tells the elevator. Mr. Marble. Mr. Shields tells the elevator ? Mr. SiMONDS. Yes, sir. Mr. Marble. Tells the foreman? Mr. SiMONDS. Yes, sir. When -it comes to our own grain I do not hesitate to tell the foreman myself what I want done with our grain. Mr. Marble. Do you know whether or not your firm keeps a standing order for cars with the Milwaukee road? Mr. SiMONDS. I do not know as you would call it a standing order, but we have orders there for cars and we want cars badly, and we want lots of them. Mr. Marble. Do you know how large an order you have had in six months? Mr. SiMONDS. I do not know. Mr. Marble. Who gives those orders to the railroad company for cars? Mr. SiMONDS. I think it goes through the superintendent of the elevator. Mr. Marble. That is Mr. Bender? Mr. SiMONDS. I think he is the one. Mr. Marble. Who directs the foreman as to which grain to ship and which to ship first ? Mr. SiMONDS. Why, Mr. Shields would be the man. He is the manager of the elevator. Ml'. Marble. Who would direct the foreman about unloading cars — which ones to unload first? Mr. SiMONDS. I suppose any orders that went to the elevator about the general business would be from Mr. Shields. Mr. Marble. Are you familiar with those orders? Mr. SiMONDS. No, I am not; except once, Mr. Shields was away and I think Nash-Ferguson came in and left an order, wanted ten cars loaded badly. My recollection is that we had a lot of wheat to go to Milwaukee aboard a boat. We wanted to get the complete lot out at once, because it was going by the steamer all at once, but Mr. Dulaney and Nash-Ferguson arranged to have his. I called up the elevator and told them to cut out ten of ours and let Nash- Ferguson have them. I think that is the only time I recollect giving -. an order. Mr. Marble. What would have been done at the elevator if you had not given that order ? Mr. SiMONDS. I think they would have had the cars, because, as I understood from Mr. Shields, the people doing business through the elevator were to have the "preference all the time over others. Mr. Marble. Do you think that has been the practice? Mr. SiMONDS. I think it has. Mr. Marble. Don't you think your firm has been discriminated against if you had to wait for everybody else ? GRAIN ELEVATOR INVESTIGATION. 237 Mr. SiMONDS. I think as regards that we were, because the amount we put in was so much larger. Mr. Marble. So this would be a disadvantage to your firm? Mr. SiMONDS. It would be as regards that; yes. j\Ir. Marble. Do you know with what railway official Mr. Shields made his arrangements? Mr. SiMONDS. No. Mr. Marble. Do you know the officer of the Milwaukee road that made this arrangement with Mr. Shields ? Mr. SiMONDS. I do not. Mr. Marble. What railway official negotiated the lease with your firm for the tanks ? Mr. SiMONDS. I do not know. Mr. Marble. Mr. Shields was the active man in that ? • Mr. SiMONDS. Yes ; you see our business is divided up. I generally look after the buying of the grain and help to buy grain on the floor and look after the office more or less. Mr. Marble. If grain is ordered to your elevator, you know who the owner of the grain is, don't you? Mr. SiMoxDS. Notice is generally sent to the office that they are going to send so many cars from some firm. I never notice much about it. In fact, personally, I know very little about any graih being sent down there by these different people. Mr. Marble. Mr. Shields knows about it ? Mr. SiMONDS. I think he would know about some; whether he would know about all, I do not know. The orders go there to the clerks and would be left in the office. Mr. Marble. Do you know whether or not Mr. Shields knows the destination of the grain going through that elevator? Mr. SiMONDS. No; I do not. Mr. Marble. Who the receiver is to be ? Mr. SiMONDS. I do not know whether he knows that or not. I do not know how he would know. Mr. Marble. I will show you this and ask if you have ever seen it before [handing letter to witness] or a paper like it ? Mr. SiMONDS (after examining the paper). I think I have seen something like that. Mr. Marble. Do you know whether that is information given out by the Chicago, Milwaukee and St. Paul Eailroad to all customers or to any customers ? Mr. SiMONDS. I should suppose it would take an order like that to any elevator Mr. Marble. I am not discussing that- Mr. SiMONDS. Except he has made the error instead of saying, " You must advise the Simonds-Shields Grain Company," he should say, " You must advise Mr. Shields." Mr. Marble. Is that a copy of anything given out by the railroad company ? Mr. SiMONDS. I suppose it comes from the railroad company. Mr. Marble. But do not know — were you familiar with that be- fore I showed it to you ? Mr. SiMONDS. I remember seeing something of that kind. I think there was something said about people ordering cars to the elevator to be transferred, and in ordering empty cars there they would fre- quently, get in large cars; that the car to be transferred was a small 238 GEAIN ELEVATOR INVESTIGATION. car ; then, again, they would have a large one to be transferred and a small one would be put in; that is what I understand this order was for, in order that a transfer might be made promptly, so as to know what sized car to get on the other side of the elevator. Mr. Marble. You say this is an order of the railroad? Mr. SiMONDS. I should say it was. Mr. Adsit is the agent. Mr. Marble. Does the Commissioner require further identifica- tion? Commissioner Clark. Is it signed by a railroad oiBcer ? Mr. Marble. It is all in typewriting and purports to be. We can put it in later if necessary. Mr. Simonds, do you buy grain in the country ? Mr. SiMONDS. Yes, sir ; that is, we bid. Mr. Marble. You bid in the country ? Mr. Simonds. Yes, sir. Mr. Marble. In what States do you bid ? Mr. SiMONDS. Missouri, Oklahoma, Kansas, and Nebraska. Mr. Marble. Whom do you bid — I do not mean as to names, but classes of country buyers ? Mr. SiMONDS. Grain dealers. Mr. Marble. Elevator men? 'Mr. SiMONDS. Yes, sir. Mr. Marble. Do you confine your bidding to what is known as regular dealers? Mr. SiMONDS. Not wholly.- Mr. Marble. In what way do you vary ? Mr. SiMONDS. There are some termed regular dealers who are strictly in the grain business. There are some farmers' associations. Mr. Marble. You bid them also ? Mr. SiMONDS. We bid some of those also. Mr. Marble. Do you bid men — say, a country merchant having a warehouse and scooping grain into the warehouse and scooping it out of the warehouse into the car — would you bid him ? Mr. SiMONDS. We would, if he asked for it. The chances are we would bid him. We do not really like that class of business. Mr. Marble. Why? Mr. SiMONDS. Well, they are generally men that do not' under- stand the grain business, and it is not very satisfactory. Mr. Marble. Is that the only reason you do not like that class of business? Mr. SiMONDS. It is the only one I know of. Mr. Marble. Is it unsatisfactory because the country elevator men do not like that you should bid that class of business? Mr. SiMONDS. Well, not particularly that. Of course, if there was a merchant in a town and an elevator there, and the elevator man was one of our good customers and we knew it was going to make trouble, we might not bid them. Mr. Marble. What trouble could it make? Mr. SiMONDS. It might make a feeling that the elevator men — they might say we were bidding a competitor of theirs who is doing a very, small business. Mr. Marble. Would you fear that it would make feeling with many elevator men and associations of elevator men ? Mr. SiMONDS. No, sir. Mr. Makble. You have nothing of that kind to contend with ? GRAIN ELEVATOR INVESTIGATION. 239 Mr. SiMONDs. Not that I know of. Mr. Marble. In Oklahoma are conditions the same as in Kansas in that respect? Mr. SiMONDS. I suppose so. Mr. Marble. Have you ever been instructed from Oklahoma as to whom you should bid? Mr. SiMONDS. I think so. I do not know. It seems to me two or three years ago they wrote up — somebody down there, I don't remem- ber who — and notified us that we were bidding some people that did not belong to the association, but I never paid any attention to them. Mr. Marble. Did you continue to bid the people? Mr. SiMONDS. Yes, sir. Mr. Marble. Do you belong to the Oklahoma Grain Dealers' Asso- ciation, or anyone for your firm ? Mr. SiMONDS. Not that I remember. Mr. Marble. Then you find no coercion on you in the country as to whom you should bid? Mr. SiMONDS. Not at all. Mr. Marble. And you bid farmers' elevators the same as the rest ? Mr. SiMONDS. Some of them. We do not bid all. The list of grain dealers is very large. For instance, we are not bidding in Southern Kansas or in Oklahoma Mr. Marble. That is a question of locality. Mr. SiMONDS. We do not like the wheat down there, and do not want it, so we bid in other sections; but of course when we make bids we do not cover the whole country. It is a pretty large terri- tory. We have parties at Solomon City, Hastings, Lincoln, and Wellington, and one or two other points where, when we want to bid in those territories, we telegraph them to put out bids so much. They have postal cards and catch these trains that go out of here in the morning. In that way we reach the western part of the country before to-morrow morning. The country this side we reach from Kansas City. Mr. Marble. You say you had one letter from Oklahoma notify- ing you not to bid. What was the reason given asking you not to bid? Mr. SiMONDS. I would not want to say positively about this letter. It is simply a vague recollection. Mr. Marble. -Do you know where that letter is ? Mr. SiMONDS. No. Mr. Marble. Do you remember who it is from ? Mr. SiMONDS. No. . Mr. Marble. You have had only one ? Mr. SiMONDS. I do not remember but one. Mr. Marble. Has there been any from Kansas within a year or two? Mr. SiMONDS. Not for a year. I would not think it was a year and would not think it was for two years. Mr. Marble. Prior to that you have received some letters from Kansas ? Mr. SiMONDS. We have had two or three. Mr. Marble. Only two or three ? Mr. SiMONDS. I would not say the number, but it was not a great number of them. Tvr,. MapuijT!, Frorai whom did they come? Do you remember? 240 GBAIN ELEVATOR INVESTIGATION. Mr. SiMONDS. Well, we had letters from grain dealers — I think it was at Powhatan, Kans. They objected to our bidding another party there. Mr. Marble. Did you accede to that ? Mr. SiMONDS. No, sir. Mr. Marble. Have you any such letters from Missouri ? Mr. SiMONDS. I do not remember receiving one from Missouri. Mr. Marble. Or Iowa ? Do you bid in Iowa ? Mr. SiMONDS. We do not bid in Iowa except occasionally when conditions are right to get some corn or oats there. Mr. Marble. How about Nebraska? Mr. SiMONDS. Well, we have had such letters from Nebraska, but it is a long time ago. Mr. Marble. More than a year or so ? Mr. SiMONDS. I should say so ; yes, sir. Mr. Marble. You do not regard that as a very prominent feature at the present time — not a trouble of yours ? Mr. SiMONDS. Oh, no. There is nothing of that kind now. We have no complaint. I do not remember receiving one of any de- scription. Mr. Marble. You do not belong to any of these associations in any of these States ? Mr. SiMONDS. No. Mr. Marble. Have you any special affiliation or any affiliation at all with the Armour Grain Company? Mr. SiMONDS. No. Mr. Marble. Do you own any portion of the stock of any of their companies ? Mr. SiMONDS. No. Mr. Marble. You have testified that they own no portion of the stock of your company ? Mr. SiMONDS. No. Mr. Marble. Is any member of your firm a representative of theirs here ? Mr. SiMONDS. No. Mr. Marble. You are as independent of them as the Eosenbaum or any other company ? Mr. SiMONDS. Yes, sir. This year we have done scarcely any busi- ness with them. Mr. Marble. That is all. Commissioner Clark. Is your elevator located on the tracks of the Milwaukee and St. Paul Railroad Company ? Mr. SiMONDS. Yes, sir. Commissioner Clark. On any other railroad ? Mr. SiMONDS. I think not. Commissioner Clark. Is there a switching charge on grain brought in on other roads and brought to that elevator ? Mr. SiMONDS. I think there is a switching' charge of $5 a car in. Commissioner Clark. Who pays that ? Mr. SiMONDS. I think the elevator pays it. Commissioner Clark. You think so. Don't you know anything about any of these things ? Mr. SiMONDS. As I say, I have not had much to do with theses things the last two. years. GBAIN ELEVATOR IKVESTIGATION. 241 Commissioner Clakk. Is your son well acquainted with these facts ? Does he know ? Mr. SiMONDS. No; he looks after the commission business. As I understand, there is a $5 charge to the elevator. If the grain goes out over the Milwaukee and St. Paul there is no charge. If it does not go out over the Milwaukee and St. Paul, as I understand, there is a $5 switching charge in and $5 out. Commissioner Clark. Then, as a matter of fact, there is some con- sideration in connection with grain that goes out over the Milwaukee ? Mr. SiMONDS. Well, you say the switching Commissioner Clark. What difference does it make whether it is $10 switching or $10 a month? Mr. SiMONDS. Well, I think that is the rule of nearly all the elevators here. Commissioner Clark. Well, that is what we want, the facts. We want to get at the truth. What other privileges are extended by that elevator to grain passing through it ? Mr. SiMONDS. Why, they have a right to clean and clip. Commissioner Clark. And grade? Mr. SiMONDS. What is that? Commissioner Clark. And grade and mix? Mr. SiMOKDS. Well, mix, yes. They mix the wheat. Commissioner Clark. All free of charge? Mr. SiMONDS. Free of charge. Commissioner Clark. How long has that been the rule? Mr. SiMONDS. Well, some' time, I think, beginning this season — ^I think about July 1, or somewhere there. I can not say just when. Commissioner Clark. Was that the rule announced in the tariff circular by the railroad company ? Mr. SiMONDS. I do not think it was at first; then, afterwards, it was. Commissioner Clark. What was the date of that announcement — that tariff? Mr. SiMONDS. I could not say. Commissioner Clark. Have you got a copy of it in your office ? Mr. SiMONDS. I could not say whether we have or not. I do not believe we have. The Milwaukee official, Mr. French, could tell all about it. Mr. Marble. Perhaps this will remind the witness, so that he can an- swer the Commissioner's question. [Handing tariff to the witness.] Mr. SiMONDS (after examining tariff). I got the dates wrong. I thought it was farther back than that when that was put in. Mr. Marble. There may have been a tariff prior to this. This tariff says September 1, 1906. There may have been another prior. The witness perhaps can tell. Commissioner Clark. You say that this is dated September 1? Mr. Marble. Yes, sir. (Addressing witness.) Does that provide rules for cleaning, clipping, and so forth ? Mr. SiMONDS. This purports to be a copy of a tariff that comes from H. G. Wilson, of the board of trade. Commissioner Clark. That is not an issue of the railroad company itself? Mr. Marble. No. S. Doc. 278, 59-2 16 242 GRAIN ELEVATOR INVESTIGATION. Commissioner Clark. Mr. Simonds, when did Mr. Shields go away ? Mr. Simonds. I could not say for sure. I understood he was going Friday night. Commissioner Clark. Do you know when he will be back ? Mr. Simonds. He went to St. Louis. We have bought a member- ship down there, to be put in Mr. Shields's name, and we had a tele- gram from the secretary of the board of trade saying that Mr. Shields could appear before the committee. As I understand, he was going from there to Chicago to see about vessel room for a large shipment of wheat to go to Buffalo. I should suppose he would be back there ; it is according to whether he has left St. Louis or not Commissioner Clark. Is it customary to go to Chicago in person to arrange these shipments? Mr. Simonds. We have a large shipment of grain going to Buffalo, and it is going to winter storage in Chicago or Milwaukee. The grain is put into vessels at Chicago or Milwaukee and lays in the vessels at those ports until the spring and there seems to be a great deal of dif- ference in the rate for storage, and there is a Chicago firm — Prinder- ville, that we have been working for — I think he wanted to see that firm to see if a better arrangement could not be made than we were making. I think we have secured two boats now. Commissioner Clark. Do you think it would be possible for him to be here to-morrow ? Mr. Simonds. Why, if we could reach him, he could be here. If he is in Chicago to-day he could be here to-morrow morning, or if he is in St. Louis he could be here to-morrow morning. Commissioner Clark. I thought it would be more convenient for him to come here to-morrow to give such testimony as we want than it would be for him to give it to us somewhere else later. If you could reach him, it might be well for you to suggest that. Mr. Simonds. If you would like it, I will see if I can reach him. I do not know whether I can or not. Commissioner Clark. We would like very much to have him here to-morrow morning. Mr. Simonds. If I can reach him, I will. Commissioner Clark. We will be very much obliged. Mr. Marble. You are a member of the Kansas City Board of Trade? Mr. Simonds. Yes, sir. Mr. Marble. Is Mr. Shields also ? Mr. Simonds. Yes, sir. Mr. Marble. Is any other member of your firm a member of the board of trade? Mr. Simonds. My son is a member, Mr. Marble. That is all. The witness was excused. Mr. Marble. Is Mr. Winton here? (No response.) Mr. Marble. Mr. Warrick. F. E. Warrick, called as a witness, being duly sworn, testified as follows : Mr. Marble. Your name is F. R. Warrick^ GRAIN ELEVA.TOK INVESTIGATION. 243 Mr. Warrick. Yes, sir. Mr. Marble. You reside M'liere ? Mr. AVaerick. In Kansas City. Mr. Marble. What is your business ? Mr. Warrick. Manager for the John I. Glover CJrain Company. Mr. Marble. What is the business of that firm ? Mr. Warrick. Buying and shipping grain. Mr. Marble. Is that owned by Mr. Glover personally ? Mr. Warrick. Personally. Mr. Marble. It is not a corporation ? Mr. Warrick. No, sir. Mr. Marble. Nor a partnership ? Mr. Warrick. No, sir. Mr. Marble. Do you own elevators? Mr. Warrick. No, sir ; we lease. Mr. Marble. What elevators do you lease? Mr. Warrick. The Frisco Elevator, located on the Frisco tracks, and the Santa Fe Elevator, located on the Santa Fe tracks. Mr. Marble. "Who owns the Frisco Elevator? Mr. Warrick. The Frisco Railway Company. Mr. Marble. On what terms is it leased ? Mr. Warrick. We pay $206 per month. Mr. Marble. Two hundred and six dollars per month ? Mr. Warrick. Yes, sir. Mr. Marble. And do you pay the interest and taxes and repairs, or does the railroad ? Mr. Warrick. The railroad. Mr. Marble. The railroad pays that? Mr. Warrick. Yes, sir. Mr. Marble. Have you any arrangement by which you receive back any portion of that on any contingency whatever ? Mr. Warrick. None whatever. Mr. Marble. Or by which it is added to if you do not ship grain over the line ? Mr. Warrick. No, sir. Mr. Marble. It is a flat rent that can not be increased or decreased by any circumstances whatever? Mr. Warrick. That is right. Mr. Marble. What was the figure ? Mr. Warrick. Two hundred and six dollars. Mr. Marble. How long have you leased that elevator ? Mr. Warrick. Five years. Mr. Marble. Have you any contract with the railway company to transfer grain or handle grain for them, the Frisco ? Mr. Marble. I think there is, but I am not familiar with it. It was made before I became an employee of the company. Mr. Marble. Do you know the terms of that contiact ? Mr. Warrick. Yes, sir. Mr. Marble. Tell us what they are, as briefly as you can. Mr. Warrick. When the railway company sets a car of grain in there to be transferred, as we term it, a railroad transfer, and they are in bad order and must be transferred, we get $1.50 a car. The car is not weighed. Mr. Marble. Do you preserve the identity of the grain ? Mr, Warrick. Yes, sir. 244 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Car for car? Mr. Warrick. Car for car. Mr. Marble. Have they any arrangement that they must give yoa any certain amount of that work ? Mr. Warrick. No, sir. Mr. Marble. Any minimum fixed ? Mr. Warrick. No, sir. Mr. Marble. One dollar and fifty cents a car whether one car or more? Mr. Warrick. Yes, sir. Mr. Marble. Do you get any payment for transferring your own grain ? Mr. Warrick. No, sir. Mr. Marble. No loading or unloading compensation from the rail- road company? Mr. Warrick. We get what is known as a transfer charge under their tariff issued at various times. Up until early this spring they paid a cent and a quarter a hundred pounds, on all grain shipped in there. Commissioner Clark. Speak a little louder. Mr. Warrick. Up until this spring we were allowed a cent and a quarter on all grain we transferred and shipped out over that road. Mr. Marble. That applied to vour own grain as well as to any other? Mr. Warrick. Yes, sir. Mr. Marble. That is not now being paid? Mr. Warrick. No, sir. Mr. Marble. Is anything being paid in lieu of it or in considera- tion of that rent? Mr. Warrick. For about two months there was nothing paid. Something like sixty or ninety days ago they issued a circular stating that they would allow $3.50 a car. Mr. Marble. Three dollars and a half a car instead of $1.50? Mr. Warrick. No; instead of a cent and a quarter a hundred pounds. Now, they pay a flat rate of $3.50 to any shipper that ships out over their road. Mr. Marble. A cent and a quarter a hundred would be about $7 a car, would it not? Mr. Warrick. The cars avei;p.ge about 60,000 pounds. Mr. Marble. That would be $7.50. Mr. Wakrick. Yes, sir. Mr. Marble. What did you do for this $1.50 a car that you tes- tified to? Mr. Warrick. Simply elevated the grain from the car and dropped it into another. Mr. Marble. What more did you do for the one cent and a quarter ? Mr. Warrick. We consolidated the grain. Mr. Marble. Consolidated? You mean mixed the grain of dif- ferent grades together? Mr. Warrick. No, sir; I mean that cars coming from the coun- try — this is a primary market — run all the way from 40,000 up to 60,000 pounds. In loading out large amounts of grain, as all large grain elevators do, we load them 10 per cent over the capacity of the GRAIN ELEVATOE INVESTIGATION. 245 car. It IS the request of the railroad companies to give them full tonnage in each car so as to save equipment. Mr. Marble. That would be less labor, would it not, than preserv- ing the identity of the grain, car for car ? Mr. Waekick. Well, you can stop your grain a great deal Mr. Marble. Would you say that one and a quarter cents was more or less profitable business than the $1.50 business? Mr. Warrick. It was certainly more profitable business. Mr. Marble. Compare the $1.50 business with the $3.50 business that you are now doing as to profit. Mr. Warrick. As to profit, the $3.50 would certainly pay the most. Mr. Marble. Why do you get $3.50 instead of $1.50? Who makes those terms ? Mr. Warrick. The railroad company. It is not only paid to us but to any shipper. Mr. Marble. Do you regard that as compensation to the elevator for services or some sort of reduction in the freight rate ? Mr. Warrick. For services. Mr. Marble. It is more for the service as compared with the $1.50 than they really need to pay ? Mr. Warrick. No; the payment of that $1.50 is perhaps to take care of bad order cars, and they made that part of the lease at the time the lease was made. Mr. Marble. You regard that as a cheap rate made in the lease ? Mr. Warrick. To take care of their bad order cars. Mr. Marble. And not sufficient compensation for the work done ? Mr. Warrick. No ; it is not. Mr. Marble. That is what I am trying to get at, these different figures, for what seems nearly the same service. Is Mr. Glover the grain agent of this road ? Mr. Warrick. No, sir. Mr. Marble. Does he have any relationship to the road ? Mr. Warrick. None whatever. Mr. Marble. Receive any salary ? Mr. Warrick. No, sir. Mr. Marble. Does he own country elevators ? Mr. Warrick. No, sir. Mr. Marble. He is simply here in the city ? Mr. Warrick. Yes, sir. Mr. Marble. Where do .you buy the grain you handle ? Mr. Warrick. We buy three-quarters of it on exchange. Mr. Marble. Are you a member of the board of trade ? Mr. Warrick. Yes, sir. Mr. Marble. Do you discriminate against grain in any way because of its origin in buying ? Mr. Warrick. No, sir. Mr. Marbi-e. Not at all ? Mr. Warrick. No, sir. Mr. Marble. As to switching, what switching do you have to pay at your elevator to get grain in or out? Mr. Warrick. One dollar in and $4 out. Mr. Marble. Does that apply to all cars that come to the elevator? Mr. Warrick. Yes, sir. Mr. Marble. To all your business? ■Wf ■WAPPTmr. There is nothing out if it goes out over that road. 246 GRAIN ELEVATOR INVESTIGATION. but Ave ship a great deal of grain over other railroads and the switch- ing tariff from Eosedale to connecting lines is $4. The in-switching to the elevator is $1. Commissioner Clark. What jjroportion of the grain that goes into this elevator belongs to you ? Mr. Warrick. All of it. Commissioner Clark. You say there is $3..50 a car that the rail- road allows for service? Mr. Warrick. Yes, sir. Commissioner Clark. What services? Mr. Warrick. For unloading the car and putting it in their own equipii(ient. This grain we buy on exchange comes in over various railroads and must be loaded out into their equipment. Commissioner Clark. Do you pay this switching charge of $1 per car? Mr. Warrick. Yes, sir. Commissioner Clark. Does this arrangement for an allowance of $3.50 — is it a matter of contract ? Mr. Warrick. No, sir; it is a tariff issue, allowed to anyone who ships out over that road. Commissioner Clark. Which road is this ? Mr. Warrick.' The Frisco. Commissioner Clark. Have you a copy of that tariff? Mr. Warrick. No, sir ; I can get you one. Cammissioner Clark. Does it provide any other privileges, such as cleaning and mixing and clipping? Mr. Warrick. None whatever, no. Commissioner Clark. Do you remember the date of that tariff approximately ? Mr. Warrick. I think it was issued in August. Here is a copy of it furnished by our transportation department, which is dated July 27 and effective July 30. Commissioner Clark. That arrangement has continued up to the present ? Mr. Warrick. Yes, sir. Commissioner Clark. Does anybody else wish to interrogate Mr. Warrick ? (No response.) The witness was excused. F. G. Crowell, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Crowell ? Mr. Crowell. My home is in Atchison, Kans. I am in business here at Kansas City, Mo. Mr. Marble. With what firm are you connected ? Mr. Crowell. I am vice-president and secretary of the Hall- Baker Grain Company. Mr. Marble. And familiar with its business? Mr. Crowell. Yes, sir. Mr. Marble. What is the business of that company ? Mr. Crowell. They are engaged principally in exporting grain. Mr. Marble. Where do they buy their grain ? Mr. Crowell. In the country through country elevators from bids sent to the country, and upon the exchanee, and f. o. b. the seaboard. Missing Page 248 GRAIN ELEVATOR INVESTIGATION. the cash grain upon the floor, and they know the value of the grain. We bid them also. Mr. Marble. Are they informed concerning the price which your country -elevator at the same place is going to pay from day to day ? Mr. Crowell. No, sir. Mr. Marble. Your card bid is from Kansas City, is it not? Mr. Crowell. Well, no, sir. In order that you may imderstand, we may have an elevator at a certain station in Kansas or Nebraska owned or practicallv controlled by the Hall-Baker Company through the lease I have referred to. There are apt to be two or three inde- pendent dealers at the same point where we have an elevator. Now, we send a card bid to them ; that is, we bid them for ^ain and buy their grain in case our bid is in line from the same station where we may have an elevator also. Mr. Marble. Do you bid them the same as the farmer at the same station ? Mr. Crowell. We bid them the same that we would bid to any man for grain to go into Kansas City — the wholesale price. Our agent, when he gets our card bid — he is supposed to buy from the farmer on the basis of a margin under that bid, conditions being considered, 1, 2, or 3 cents, and the condition of the grain being considered. Mr. Marble. For particular stations a set margin of profit is fixed, or do you leave that to the discretion of the local man from day to day? Mr. Crowell. We found that we have been unable to fix a certain margin of profit. We endeavored to buy on the basis of from 2 to 3 cents under the value of the grain at the Kansas City market at our station based on No. 2 wheat, for instance, or No. 2 corn. Mr. Marble. Name some country stations where you have country elevators. Mr. Crowell. We have elevators at Palmer, Kans. Mr. Marble. On what road is that ? Mr. Crowell. On the Missouri Pacific. Mr. Marble. Palmer, Kans. Who determines at that place what profit you are going to make to-day on grain you buy ? You have sent your card bid to your agent, and that includes his profit? Mr. Crowell. Our card bid shows the price of grain at Kansas City. Mr. Marble. And he must buy less that ? Mr. Crowell. Yes ; and less the freight. Mr. Marble. Who determines what he bids the farmer? Mr. Crowell. Our station master would probably write him from time to time stating that he should endeavor to buy grain on a 2 or 3 cent margin. We would give him 2 or 3 cents. Mr. Marble. Your card bid tells him practically what he is to bid that day to the farmer? Mr. Crowell. Yes, sir. Mr. Marble. And these card bids go to your competitors also ? Mr. Crowell. Yes, sir. Mr. Marble. Do you notify them what margin of profit you expect at the station ? Mr. Crowell. No, sir. Mr. Marble. None of them ? Mr. Crowell. No. GRAIN ELEVATOR INVESTIGATION. 249 Mr. Marble. Have you any arrangement at any point to divide the business of the town with any of your competitors? Mr. Crowell. Not that I know of. Mr. Marble. Wlio would know if you had such ? Mr. Chowell. I am quite positive it does not exist at any point where we have country elevators. Mr. Marble. Do your competitors furnish you their card bids also? Mr. Crowell. No, sir; except that we endeavor to keep fully in- formed in reference to the price being paid by others. Mr. Marble. I understand that. Mr. Crowell. And our competitor in the country — that is, a com- petitor as against our elevator — perhaps receives 10 or 15 bids a day from other Kansas City firms or other grain firms that are competi- tors of ours as wholesalers of grain, you might call it. At times they are higher than we are and at times they are lower, and we fre- quently get a communication from our agent who states that his com- petitor at the point is buying grain upon a certain basis due to the fact that some grain concern is bidding him half a cent to a cent over us. Mr. Marble. Then, what do you do? Mr. Crowell. We usually tell him to hold down and buy it on a margin, but if competition forces him to do so, to take care of his portion of the grain and not let his regular customers suffer. Mr. Marble. But you say you are not in combination to divide the business or to agree upon prices at any country station ? Mr. Crowell. To the best of my ability, no. One of the principal reasons why is that in the various States — that is, the Western States — a general order was issued by our company to our managers, and from them to our buyers in the country, that under no circum- stances slkould they enter into any so-called pooling arrangements or combinations of any sort, on account of the fact that a great deal of trouble had been caused to various parties by reason. of combina- tions that were made, and we didn't want to be placed in position where we would be violators of the law. Mr. Marble. It is your understanding that no one is doing that for your company ? Mr. Crowell. Yes, sir. Mr. Marble. And they have positive instructions not to do it ? Mr. Crowell. They have positive instructions not to do it. Mr. Marble. The Crowell Grain Company — is there such a con- cern as the Crowell Grain Company? Mr. Crowell. No, sir. Mr. Marble. Or the Thorstenberg Grain Company? Mr. Crowell. Yes, sir. Mr. Marble. Have they elevators ? Mr. Crowell. Yes, sir. Mr. Marble. Who controls them? Mr. Crowell. They are controlled by Amos Thorstenberg. Mr. Marble. Not principally by the HaU-Baker Grain Company? Mr. Crowell. No, sir ; we have an interest in them. Mr. Marble. So liiat it works in harmony ? Mr. Crowell. Yes, sir. Mr. Marble. It is another company owned by these interests ? 250 GRAIN ELEVATOK INVESTIGATION. Mr. Ceowell. Yes, sir. AVe control absolutely the Hall-Baker, but we do not the Thorstenberg Grain Company. Mr. Marble. You at one time had elevators leased at Coffeyville ? Mr. Ceowell. Yes, sir. Mr. Marble. And at some other points, from the Missouri Pacific? Mr. Crowell. We had a handling elevator at Coffeyville, which we operated under a lease from the Missouri Pacific, or rather from the Coffeyville Elevator Company, which we understood was a holding company for the Missouri Pacific Company. We had under lease also the Kansas and Missouri Company's elevator here, which we under- stood was the holding company for the Missouri Pacific Eailway Company; and then we had leased from the Baker-Crowell Grain Company at Atchison, Kans., an elevator that is not owned by the Missouri Pacific; and we also had under lease terminal elevators at New Orleans which were owned by the Texas and Pacific Railway Company. Mr. Marble. Now, these elevators that were leased from the Mis- souri Pacific — on what terms were they leased ? Mr. Crowell. We leased the elevator here at Kansas City, known as the Kansas-Misouri elevator — that is, it is leased by the Hall- Baker Grain Company on the basis of $20,000 a year rental, payable at the rate of $1,666J a month, in advance. That continued, I sup- pose, for about a year or more. Mr. Marble. When — fix that year. Mr. Crowell. Well, this elevator was completed two years ago; it was a new elevator, and that continued for something over a year. Then upon an examination or investigation by the Interstate Com- merce Commission, held in St. Louis about a year ago, it was ascer- tained that the Missouri Pacific Railway Company was practically the only company that was exacting large rentals from their grain shippers, and the Hall-Baker Grain Company insisted that their company was discriminated against in paying a rental of $20,000 a year. About a month or two after that time that rental was reduced materially; and then finally at the beginning of this grain year, in July, the lease was canceled entirely, and we have no lease upon any railroad elevator property Mr. Marble (interrupting). How much was that lease reduced? Mr. Crowell. It was reduced practically — I won't state positively, but I think upon the basis of about six to eight thousand dollars a year; perhaps a little less. It was figured upon the basis, I under- stand it, to cover the fixed charges of the elevator — that is, the insur- ance, taxes, etc. Mr. Marble. So that practically, when that rental was reduced, it simply meant that you should pay the insurance, taxes, etc. ? Mr. Crowell. No. We paid a fixed rental. Mr. Marble. Equivalent to the insurance, taxes, etc. ? Mr. Crowell. I think so ; I think it was on about that basis. Mr. Marble. These other elevators — were they rented at a nominal or a substantial rental ? Mr. Crowell. The elevator at Coffeyville was rented on the basis of a substantial rental. I understand that elevator, which is a com- paratively small elevator, we paid $175 a month rental for. Mr. Marble. The one at Westwego, at New Orleans ? Mr. Ceowell. That was the Westwego terminal there. Mr. Marble. What rental did you pay for that? GRAIN ELEVATOR INVESTIGATION. 251 Mr. Croweix.. We j'fi'd — it cost us about ten to twelve thousand dollars a year. Mr. Marble. For rental or for insurance? Mr. Crowell. Based on insurance and taxes. Mr. Marble. Was that simply equivalent to insurance and taxes? Mr. Crowell. Practically so. Mr. Marble. This one at Coffeyville was simply equivalent to in- surance and taxes ? Mr. Crowell. It was more than that. Mr. Marble. How much more ? Mr. Crowell. The elevator, I presume, shows a margin of profit, based upon the value of the house, upon about a 5 per cent basis. The house, I should judge, was worth about $25,000— $25,000 or $30,000. Mr. Marble. And the one at Atchison, Kans. ? Mr. Crowell. The one at Atchison, Kans., was leased from the Baker-Hall Grain Company, on the basis of $175 a month. Mr. ]Marble. That was not leased from a railroad company ? Mr. Crowell. No, sir. Mr. Marble. Has your company ever been in an agreement to fix prices in the country ? Mr. Crowell. I do not know just what you mean. Mr. Marble. Well, such as we have been talking about. Mr. Crowell. I dare say that at times in the past — not the Hall- Baker Grain Company, but their predecessors in business before the consolidation, and it might have been the Hall-Baker Grain Com- l^any at certain stations — that the country agents would fix prices with the competitors. Mr. Marble. Can you fix, approximately, the most recent date that that took place ? Mr. Crowell. Not for two years, I should judge. Mr. Marble. How about the cash market at Kansas City ? Mr. Crowell. So far as Kansas City is concerned, I have known of no fixing of prices, or no attempt to fix prices, within the last three or four years. I am under the impression that about that time — three or four years ago — there was an attempt made by some of the elevator buyers to agree upon a basis below the Chicago option ; but that was unsuccessful, and it has not been attempted since. Mr. Marble. Now, this elevator which you had under lease here in Kansas City — ^who is operating that now ? Mr. Crowell. The Missouri Pacific, or the Kansas-Missouri Ele- vator Company, I don't know which. Mr. Marble. T\1io owns the Kansas-Missouri ? Mr. Crowell. The Missouri Pacific is supposed to own it. Mr. Marble. \ATio actually has the physical charge of the elevator ? Mr. Crowell. It is under the superintendence of Mr. Williams — Mr. Claude Williams. Mr. Marble. Is he a member or employee of the Hall-Baker Com- pany? Mr. Crowell. Not at all. Mr. Marble. Has he ever been ? Mr. Croavell. Yes, sir ; he has been. Mr. Marble. He was when you were operating the elevaj;or ? Mr. Crowell. Yes, sir. A very experienced man, and we recom- 252 GBAIN ELEVATOR INVESTIGATION. mended to the Missouri Pacific to retain him when they took over this elevator. Mr. Marble. Have you any option on that elevator lease ? Mr. Crowell. None at all. Mr. Marble. You are in the same relationship to that elevator as any other firm ? Mr. Crowell. Any other shipper. Mr. Marble. You do not have charge of these books or access to them? Mr. Crowell. No. We have no preference in any respect. Mr. Marble. On what terms do you put the grain through this elevator ? Mr. Crowell. We put grain through the elevator upon the basis of sending it over there for shipment, in which it is loaded out or pre- pared in a manner that we may direct, either going for export or to local mills. As I have stated to you, however, most of our grain goes for export. Mr. Marble. As to whether charges are made against you or not, is what I am getting at. Mr. Crowell. No charges are made to us at all. Mr. Marble. They clean, and clip, and weigh it ? Mr. Crowell. The weighing and inspection, of course, we have to pay ; but the other items are done free of charge. Mr. Marble. You understand that they are doing it free of charge for everyone ? Mr. Crowell. For everyone. Mr. Marble. You are one of the largest shippers of grain over that line from this city, are you not ? Mr. Crowell. Yes, sir. Mr. Marble. Is it your observation and experience that that elevator is able to accommodate all shipments, all shippers? Mr. Crowell. Yes, sir. Mr. Marble. Physically able to ? Mr. Crowell. Yes, sir. Mr. Marble. And that it actually does so ? Mr. Crowell. Yes, sir. Mr. Marble. Without any favoritism ? Mr. Crowell. Yes, sir. Mr. Marble. You don't consider your firm gets any better service on account of those relations ? Mr. Crowell. No, sir. Mr. Marble. Do you know whether any profits are made by you in mixing grain in that elevator — 1 mean grain going through, put in there to be shipped out ? Are the grades mixed in such a way as to make grain of a higher grade when going out than when coming in ? Mr. Crowell. Yes, sir. And our experience has been recently that a car of grain will go into the elevator as No. 2 grain, and its identity can be preserved, and when we attempt to put it out they won't take it as No. 2. Mr. Marble. How do you explain that ? Mr. Crowell. I explam that upon a basis of a difference of opin- ion on the part of the so-called judges of grain. Mr. Marble. You mean the Kansas inspection and the Missouri' inspection' differs ? GRAIN ELEVATOR INVESTIGATION. 253 Mr. Crowell. Yes, sir; as well as they differ with the grain appeal committee of the board of trade. Mr. Marble. Is there any uniformity of inspection, or is one in- spection more strict than the other? Mr. Crowell. I can not say that it is. But the great difficulty in judging grain is to get two men whose ideas are exactly the same re- garding the grain, in fixing a grade — whether it shall be No. 2 or No. 3 or No. 4, or rejected or no grade wheat. They differ; and when' they do differ in that respect it is very difficult to have uniformity in inspection. Mr. Marble. This difficulty — is it of a uniform sort, that grain will go in at one uniform grade higher or lower than it will go out ? Mr. Crowell. No, sir. Mr. Marble. Do you regard this difference as due to anything ex- cept the fallibility of human judgment? Mr. Crowell. That is all I attribute it to. I am inclined to believe that it is due entirely to that, so far as the two inspection departments are concerned. Mr. Marble. And not at all to any attempt to favor any interests ? Mr. Crowell. No, sir. Mr. Marble. No corrupt motive at all ? Mr. Crowell. No, sir. Mr. Marble. There is some road running out of Kansas City that makes a cargo rate on grain, is there not, as well as a car rate ? Mr. Crowell. I do not know. I have understood that the Kansas City Southern does. Mr. Marble. Have you shipped any grain under that rate? Mr. Crowell. No, sir. Mr. Marble. Do. you know the effect of that? Mr. Crowell. No, sir; we shipped some grain over that road last year or the year before, going to Port Arthur, but not recently. Mr. Marble. That is all. Commissioner Clark. Would you consider this lease that you had of this Kansas City elevator a valuable lease to you ? Mr. Crowell. Why, I consider, Mr. Clark, the leasing of an ele- vator by any grain concern valuable when they have the absolute con- trol over the elevator and the right to discharge and hire-the em- ployees that they want. I did not consider the leasing of the Kansas- Missouri elevator upon the basis of $20,000 a year as a valuable lease. It is a difficult question to state whether the leasing of an elevator, even upon the basis of a practically nominal rental through a series of years, would be a valuable lease, without the payment of a handling charge, I mean. The reason that this is true is due to the fact that the valuableness of any elevator to any grain concern depends to a great extent upon the amount of grain that they can put through the elevator. If they can put the volume through the elevator, why it is all right; they can pay their fixed charges, etc., in case they are getting a handling charge. Otherwise we do not consider it a valu- able lease. Commissioner Clark. Then you are perfectly willing to have this lease canceled ? Mr. Crowell. Yes^-sir. • Commissioner Clark. The country elevators that you have testified to are practically all located on the lines of the Missouri Pacific ? Mr. Crowell. Yes, sir. 254 GRAIN ELEVATOE INVESTIGATION. Commissioner Clark. Does most of the grain you handle come over the Missouri Pacific Eoad ? Mr. Ceowell. Well, I would say the majority of it. We buy on other roads, too, Mr. Commissioner ; as a matter of fact, all roads. Commissioner Clark. This elevator is located on the Missouri Pacific tracks? Mr. Ceowell. Here ? Commissioner Clark. Yes, sir. Mr. Crowell. Yes, sir. Commissioner Clark. Is there a switching charge on grain that comes over other roads ? Mr. Crowell. Yes, sir. Commissioner Clark. Do you pay that? Mr. Crowell. It is absorbed by the Missouri Pacific Road upon its going out over their rails. That is the uniform rule, as I understand it, of all railroads here. That grain going in with a switching charge attached to it, the switching charge is absorbed by the road taking it out in case it goes over their rails. Commissioner Clark. Do you consider the cleaning and mixing and switching of grain any necessary part of its transportation ? Mr. Crowell. I would hardly consider it a necessary part of its transportation, but I am inclined to believe during certain seasons of a grain year, that the necessity exists, outside of its being a commer- cial necessity, as a transportation problem, to put grain in condition, so that it can go out without clogging the elevators with that heating grain, etc. But as a purely transportation proposition I would not consider it so. Commissioner Clark. Is it necessary that the grain be so treated; that has to be done by some one ? Mr. Ceowell. By some one. Commissioner Clark. But it is not necessarily a part of the trans- portation ? Mr. Crowell. No, sir ; I would not consider it so. Commissioner Clark. Can you tell me why railroad companies have embarked in that line of business — doing it free of charge ? Mr. Crowell. I would be unable to tell you why they do so, unless it is upon Commissioner Clark. Give us your theory of that ? Mr. Crowell. My theory would be that they do so to facilitate the handling of grain over their line and to get tonnage for their line. Commissioner Clark. How long has such a practice been in vogue here ? Mr. Crowell. I understand ever since the building of the Maple Leaf Elevator, called the Great Western. " Commissioner Clark. How long ago was that ? Mr. Ceowell. I presume some of these gentlemen can tell accu- rately ; I do not know. Commissioner Clark. Did they begin by furnishing these services, or did they pay an allowance ? Mr. Crowell. Well, I believe at first it was based upon an allow- ance, and then it was based entirely on a free handling, free clipping, and an allowance besides of a cent and a quarter. That is my under- standing. Commissioner Clark. Do all of these elevator services, such as you GRAIN ELEVATOR INVESTIGATION. 256 have just enumerated, partake of the nature of an allowance from the railroad to the shipper of the grain ? Mr. Ceowell. I would hardly consider it that, Mr. Commissioner. I would consider it an inducement for the shipment of grain over their line. The privileges that are granted they grant to everybody and state openly what they do. Commissioner Clark. But it is in the nature of an allowance as an inducement for grain to come or go over their lines ? Mr. Croavell. You might put it that way ; yes, sir. Commissioner Clark. And if one railroad company does it, its competitors feel bound to meet that competition either in exactly the same or a different way ? Mr. Ceowell. Yes, sir. It has been contended by some, of course, that the handling of grain through an elevator is a thing that is incumbent upon a railroad company, the same as the handling of mer- chandise upon their depot platform, etc. Whether that is a good argument or not I do not know. Commissioner Clark. If a railroad company transports a car of horses and it is necessary to take them out for feeding, or transfer them from one car to another, the railroad company does it, doesn't it? Mr. Ceowell. I am inclined to believe they do. ■ Commissioner Clark. Do they furnish any men to clean the horses ? Mr. Ceowell. Well, I presume not. Commissioner Claek. I thought not. Are the stockholders of your company large in number ? Mr. Ceowell. Yes, sir. Commissioner Claek. Is the stock widely spread? Mr. Ceowell. All the stock of our company is owned by Mr. H. F. Hall, the estate of F. M. Baker, now deceased, myself, and the em- ployees of our companjr. Commissioner Clark. Are any of those stockholders interested in or employed by any railroad company ? Mr. Ceowell. None at all, sir. Commissioner Claek. That is all. Mr. Maeble. Just one other question, so as to clear up entirely this question of combining on prices. Have you or any one for your com- pany, in placing these bids here in the city, consulted with ether managers of line elevators and agreed with them as to the prices to be bid in the country ? Mr. Ceowell. There are times when there are exchanges of views, but I believe that the bids going out from Kansas City by the various bidders here for the last year or two will show the widest range in the nature or the amount of the bids that is possible to conceive of, going all the way from a cent and a half down to a quarter of a cent ; which, upon good merchandizing of grain, should not be so, but com- petition has made it so. Mr. Marble. Country competition, which the particular firm bid- ding might have to meet, might explain that also, I presume ? Mr. Ceo' ell. Well, I think that is based entirely upon the anxiety of the larger grain firms to handle a large volume of business. Mr. Maeble. Have you, during this crop year, had any sort of an agreement with any of these other line elevators as to what you should pay? Mr. Crowell. None. 256 GKAIN ELEVATOK INVESTIGATION. Mr. Marble. Or exercised any sort of supervision or anything of that sort? Mr. Crowell. No, sir. I do not believe it has occurred in a single instance. Mr. Marble. At any time in the last crop year ? Mr. Crowell. Xo, sir. Mr. Marble. Or the year before ? Mr. Crowell. No, sir" There was frequently an exchange of views. Mr. Marble. That is as one business man meets another ; but I am talking about a combination to fix prices. Mr. Crowell. Not even a gentleman's agreement. Mr. Marble. Has there ever been ? Mr. Crowell. I am inclined to believe there was three or four years ago. Mr. Marble. That related to track buying and selling ? Mr. Crowell. Yes, sir. I would say, Mr. Commissioner, that Mr. H. F. Hall has been subpoenaed here. He is the president of our company and he has been at home sick for the last week, and I spoke to Mr. Marble with reference to the matter, and he stated that he did not know whether it would be necessary to bring Mr. Hall here or not. I am quite sure that he will willingly answer any questions you may ask, and he knows all about anything that he does. And I told Mr. Marble, however, that it might be possible for Mr. Hall to come down in a buggy. He is under the charge of a physician. Commissioner Clark. You will be where we can reach you in case we want anything further from you ? Mr. Crowell. Yes, sir. Commissioner Clark. We will try not to impose any hardship upon a sick man. Mr. Marble. Mr. Hall need not come unless we so advise you later. That is all. Witness excused. George A. Adams, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business, Mr. Adams ? Mr. Adams. Grain merchant. Mr. Marbu;. How long have you been a grain merchant? Mr. Adams. About twenty years. Mr. Marble. You do business in Kansas City ? Mr. Adams. Yes, sir. Mr. Marble. How long have you done business in Kansas City? Mr. Adams. Over twelve years. Mr. Marble. Are you a member of the board of trade ? Mr. Adams. Yes, sir. Mr. Marble. I will ask you about these elevators operated by the railroads. First, I will ask you about your business. Where do you buy grain ? Mr. Adams. On the board of exchange, principally. Mr. Marble. Do you bid the country ? Mr. Adams. At times ; not all the time. We buy some in the coun- try, occasionally. Mr. Marble. And you are a shipper of grain ? Mr. Adams. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 257 Mr. Marble. Over what roads do you ship grain, principally ? Mr. Adams. I ship over all of them. I do not have any particular road. Mr. Marble. Have you put grain through these elevators operated by the railroads in Kansas City ? Mr. Adams. Yes. Mr. Marble. What has your experience been with them? Satis- factory or unsatisfactory ? Mr. Adams. It has been satisfactory. Mr. Marble. Satisfactory ? Mr. Adams. Yes, sir. Mr. Marble. Do you regard that you have beeii treated with any discrimination in any way ? Mr. Adams. No, sir. Mr. Marble. Do they serve you well ? Mr. Adams. Yes, sir. Mr. Marble. And promptly? Mr. Adams. Yes, sir. Mr. Marble. In bidding the country, how do you make up the price which you will bid in the country ? Mr. Adams. Based on the market value here of cash grain. Mr. Marble. Do you consult your competitors as to what you shall bid? Mr. Adams. No, sir. Mr. Marble. Have you any agreement with them ? Mr. Adams. No, sir. Mr. Marble. Have you ever done so ? Mr. Adams. Not in four or five years. Mr. Marble. Do you own an elevator ? Mr. Adams. No, sir. Mr. Marble. Do you know whether or not there is any attempt by buyers of this market to fix the prices by agreement at the present time? Mr. Adams. I do not know of any attempt to fix the prices. Mr. Marble. Do you know whether or not there has been such an attempt during the crop year ? Mr. Adams. I do not know. Mr. Marble. Either in the country or on the board here? Mr. Adams. No, sir ; I do not know of any such attempt. Mr. Marble. Do you know whether there was any during the last crop year? Mr. Adams. No, sir. Mr. Marble. You do not know about that ? Mr. Adams. No, sir. Mr. Marble. Do you know whether the large buyers of cash grain are consulted as to the price they shall pay for it here on the board of trade ? Mr. Adams. Oh, they may exchange views as to what the value shall be, but there is no combination that I have heard of. Mr. Marble. Are any profits made in these railway elevators on transferring grain — that is, in the mixing of different grades together, which results in a higher grade — if so, to whom does that profit go ? Mr. Adams. It goes to the shipper of the grain. Mr. Marble. It does go to the operator of the elevator ? S. Doc. 278, 59-2—17 258 GRAIN ELEVATOR INVESTIGATION. Mr. Adams. No, sir. Mr. Marble. This method of operating elevators by the railroads— the elevators on the Milwaukee, that on the Missouri Pacific and the Santa Fe — ^have you any criticism to offer of that ? Mr. Adams. No, sir. Mr. M4KBLE. Do you find that that hurts you in your business? Mr. Adams. No, sir. Mr. Marble. Is it more or less satisfactory than the old arrange- ment of having elevators owned by private parties ? Mr. Adams. Well, while the railways absorbed the handling charge on grain of a cent and a quarter it was more satisfactory to handle your own grain. Since they discontinued that allowance, grain can not be handled by private elevators and compete with free handling through elevators. Mr. Marble. It is a hardship to the owners of private elevators, then? Mr. Adams. Yes, sir. Mr. Marble. You say that there was not in this last crop year, or the crop year before, so far as you know, any agreement — gentleman's agreement or contract of any sort to fix prices, either in the country or in the city ? Mr. Adams. No, sir. Mr. Marble. That is all. Witness excused. George H. Hunter, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business? Mr. Hunter. Milling business. Mr. Marble. Where is your business located ? Mr. Hunter. Wellington, Kans. Mr. Marble. Where do you buy your grain which you mill? Mr. Hunter. I buy some off the streets of Wellington and differ- ent parts of Kansas and Oklahoma. Mr. Marble. Do you buy any in the Kansas City market? Mr. Hunter. No, sir. Mr. Marble. I will ask you if you have had experience as a miller with wheat which has gone through these cleaning houses and mixing houses — so-called hospitals, I believe is the term used in the trade — at the terminal elevators? Mr. Hunter. Yes, sir. Mr. Marble. You have "had experience with that wheat? Mr. Hunter. Yes, sir. Mr. Marble. Do you know what the opinion is generally of millers concerning such wheat? Mr. Hunter. The general opinion is that the mixing of wheat is detrimental to the wheat ; that it detracts from its value ; lowers the grade, you might say. Mr. Marble. It makes it less desirable wheat for the miller ? Mr. Hunter. It makes it less desirable wheat for the miller for milling purposes. Mr. Marble. Does this mixing of wheat that is done make the wheat more desirable for any consumer that you know of? Mr. Hunter. I think not. GEAIN ELEVATOK INVESTIGATION. 259 Mr. Marble. Practically the millers are the consumers of the Avheat ? Mr. Hunter. The millers are the consumers ; yes, sir. Mr. Marble. Would you say or not that the mixing that is done at these cleaning houses is with the view of passing the inspection simplj', rather than with the view to the use of the grain finally ? Mr. Hunter. The object of mixing is for the purpose of making a higher grade. Mr. Marble. Is to meet the inspector's eye? Mr. Hunter. Yes, sir. Mr. Marble. But so far as the miller is concerned, is the wheat more or less desirable? Mr. Hunter. It is less desirable, in my judgment. Mr. Marble. Taking wheat as it comes, or the grade having been raised, would a miller prefer that wheat to be mixed in the way which it is mixed, or would he prefer to have it separate? Mr. Hunter. He would prefer to have it separate. If there is any mixing to do he would prefer to do that himself. Mr. Marble. Even though he had to pay the same amount for the wheat ? Mr. Hunter. Yes, sir; I do a little of it myself,, or used to. I used to buy grain for shipping. I do very little of that now. Mr. Marble. "\ATiien you mix grain to ship or to sell, do you mix it differently from what you would if you were to use it in your own mill? Mr Hunter. In what way different ? I did it then with a view of raising the grade, and I didn't have any view as to the quality, whether it would be as good for the miller or not ; I didn't have that in view. Mr. Marble. Have you had difficulty with rates? I will direct your attention particularly to the Texas rate; rates on flour from your place. Mr. Hunter. Yes, sir. Mr. Marble. What was that difficulty ? Mr. Hunter. The rate on flour from any point in Texas for mill- ing, not for export, I will say is 5 cents higher than it is on the grain. Mr. Marble. How does that affect your business at Wellington ? Mr. Hunter. It pretty nearly knocks out everybody from doing business with his flour in Texas. Mr. Marble. "VATio fixed that rate ? Mr. Hunter. The railroads, I presume. Mr. Marble. Do you know whether or not the rates are fixed by the Texas State Railroad Commission ? Mr. Hunter. I am of the opinion that they had something to do with it. Mr. Marble. But you don't know ? Mr. Hunter. I am of the opinion that they required the railroads to do that. Mr. Marble. That is in favor of the Texas millers and against the millers of all other States desiring to sell in Texas ? Mr. Hunter. Yes, sir. Mr. Marble. I will ask you if the millers of the State of Kansas or of your territory are organized — ^have you millers' clubs? Mr. Hunter. Yes, sir. Mr. Marble. What is your millers' club ? 260 GEAIN ELEVATOR INVESTIGATION. Mr. Hunter. It is a combination of millers. Mr. Marble. For what purpose ? Mr. Hunter. Well, generally for the bettering of milling condi- tions, to get acquainted with each other. Mr. Marble. What do you do to better conditions ; in what way ? Mr. Hunter. Our principal talk is the freight rates ; trying to get better freight rates. Mr. Marble. Do you agree as to the price you will pay for wheat ? Mr. Hunter. No, sir. Mr. Marble. Do you agree as to the price you shall charge for flour. Mr. Hunter. Well, we have talked that matter over, and have made an attempt to do it. Mr. Marble. Have made an attempt to do it ? 'Mr. Hunter. Yes, sir. Mr. Marble. Have you succeeded ? Mr. Hunter. No, sir ; we haven't. Mr. Marble. How recently was that attempt made ? Mr. Hunter. Well, within the last two or three years. Mr. Marble. How long ago was the last attempt made of this sort ? Mr. Hunter. I couldn't say just exactly. I would say within the last — well, probably the last three years. Mr. Marble. It has been three years since that attempt was made, you say? Mr. Hunter. It might not have been just exactly that time. Mr. Marble. But about when ? Mr. Hunter. A little less or a little longer. Mr. Marble. Would you say it was more than two years ? Mr. Hunter. Yes, sir ; I think it has been more than two years. Mr. Marble. Certainly it has been more tha,n one year? Mr. Hunter. Yes, sir ; I am positive it is more than one year. Mr. Marble. Now then, in what way was that attempt made — what did you do ? Mr. Hunter. We talked about that we ought to be able to get a certain price for flour, or a better price for flour, and be governed by the price of wheat. Mr. Marble. And all agreed that you do that ? Mr. Hunter. No; we didn't all agree to it. That is where the trouble came in. Mr. Marble. But a number of you agreed that you would do that ? Mr. Hunter. Well, some of them did at the time, and some of them did not. Mr. Marble. What proportion of the millers of your territory agreed to do that? Mr. Hunter. Probably 25 or 30 per cent. Mr. Marble. Was it a plan to put up a penalty and enforce the making of prices in this way ? Mr. Hunter. No, sir; there was no penalty to it. Mr. Marble. Membership in this association — was that at stake to those who did not uphold the new plan ? Mr. Hunter. No, sir. Mr. Marble. But as a matter of fact that was never done ? Mr. Hunter. No, sir. Mr. Marble. It did not result ? Mr. Hunter. No, sir. GKAIN ELEVATOR INVESTIGATION. 261 Mr. Maeble. Did you ever make an attempt to fix the prices which you would pay for wheat ? •Mr. Hunter. No, sir. Mr. Marble. Did these millers divide the territory as to where they shall buy or sell ? Mr. Hunter. No, sir. Mr. Marble. They are free and you can compete with each other? Mr. Hunter. Yes, sir. . Mr. Marble. How about the other grain buyers in your territory ; do you have to consult them as to the price you will pay for wheat? Mr. Hunter. No, sir. Mr. Marble. Do you at any point where you buy wheat — have you an arrangement with your competitors in buying as to the price that shall be paid or the margin of profit that shall be made? Mr. Hunter. No, sir. Mr. Marble. Not at all ? Mr. Hunter. No, sir. Mr. Marble. Have you at any town at which you buy wheat any division of the market at that point, or any agreement that each shall buy a certain proportion and stop then ? Mr. Hunter. No, sir. Mr. Marble. So that the market is a free market, so far as you are concerned, both in the buying of wheat and the selling of flour? - Mr. Hunter. Yes, sir. Mr. Marble. Is there anything else you desire ,to bring to the at- tention of the Commission — any discrimination that you feel or ex- perience as a manufacturer or shipper or seller ? Mr. Hunter. I do not believe there is anything I care to mention at this time. Mr. Marble. I have not anything further. Commissioner Clark. What is the capacity of your milling plant ? Mr. Hunter. 1,500 barrels. Commissioner Clark. 1,500 barrels? Mr. Hunter. Yes, sir ; per day of twenty-four hours. Commissioner Clark. You buy a good deal of wheat, then ? Mr. Hunter. I will say that I just completed, about three or four weeks ago, a 1,000-barrel mill, and up to that time I have only been operating ; in fact, up to this time I have only been operating a 500- barrel mill. Commissioner Clark. Do you buy direct froin the farmers, or do you buy from the elevator men ? Mr. Hunter. Anyway we can get it. We have some-elevators of our own, and then we buy from dealers wherever we can. Commissioner Clark. You do not find any embarrassment about buying all you want ? Mr. Hunter. Not within the last two weeks. Prior to that time we did. We have had considerable trouble since harvest, getting good, dry milling wheat, on account of the conditions of wheat. Commissioner Clark. That is on account of the condition of the wheat, but not on account of any action on the part of the grain buyers and shippers ? Mr. Hunter. No, sir; just on account of the wheat being in bad condition. Commissioner Clark. You do not find any difficulty in running up 262 GRAIN ELEVATOR INVESTIGATION. against prices fixed by combinations, or the division of the amount of grain offered by big bidders ? Mr. Hunter. No, sir. Gonmiissioner Clark. That is all. You may be excused. Witness excused. T. P. Gordon called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business? Mr. Gordon. Grain business. Mr. Marble. Where do you do business? Mr. Gordon. St. Joseph, Mo. Mr. Marble. Do you own an elevator there ? Mr. Gordon. No, sir. Mr. Marble. Do you operate an elevator there? Mr. Gordon. No, sir. In what way are you connected with the grain Mr. Marble business ? Mr. Gordon. sell from there- Mr. Marble. pany? Mr. Gordon. Mr. Marble. Mr. Gordon. Mr. Marble. Mr. Gordon. Mr. Marble. Mr. Gordon. Mr. Marble. Mr. Gordon. Mr. Marble. market ? Mr. Gordon. Marble. I buy grain there and ship from there. I buy and —ship from there. Are you connected with the Gordon Elevator Com- Yes, sir. Are you manager for that company? Yes, sir. But it has no elevators? No, sir. From whom do you buy grain? From the country, and there on the market. Do you buy in the Kansas City market ? Some little, but not very much. During this crop year did you buy in the Kansas City Yes, sir. Mr. Marble. About how much would you say ? Mr. Gordon. About twenty or thirty thousand bushels. Mr. Marble. Where else do you buy? Mr. Gordon. Out through Kansas and Nebraska, Missouri, and Iowa, a little. Mr. Marble Mr. Gordon, Mr. Marble. I will ask you in bidding the country if you have any agreement with anyone else or any combination as to the price to be bid? Mr. Gordon. No, sir. Mr. Marble. You make up your prices absolutely without any con- sultation with any competitor? Mr. Gordon. Yes, sir. Mr. Marble. Do you belong to any association which provides that you shall bid a certain price or make a certain profit ? Mr. Gordon. No, sir. Mr. Marble. Whom do you bid? Do you bid elevator men, farm- ers? Mr. Gordon. Elevator men and dealers along the road; regular dealers. You bid the country? Some ; yes, sir, GHAIN ELEVATOR INVESTIGATION. 263 Mr. Marble. Do you confine your bidding to what you call regular bidding ? Mr. Gordon. Not altogether. Mr. Marble. Practically? Mr. Gordon. Practically. Mr. Marble. Do you desire to do that ? Mr. Gordon. To some extent ; yes, sir. Mr. Marble. Why do you bid the regular dealers only ? Mr. Gordon. Because they are more reliable. Is that the only reason ? Mr. Marble. Mr. Gordon. Mr. Marble. reason ? Mr. Gordon. Mr. Marble That is the principal reason ; yes, sir. What other reason is there that is not the principal There is no other reason. Has notification been made to you that if you bid irregular dealers you would lose the trade of regular dealers? Mr. Gordon. Not lately. Mr. Marble. How long since? Mr. Gordon. Probably a year. Mr. Marble. From where would you say you received the last noti- fication ? Mr. Gordon. I can not say. It was not a direct notification. It came indirectly. Mr. Marble. You took it as a real notification, at any rate ? Mr. Mr. Mr. Mr. Mr. Gordon. Marble. Gordon. Marble. Gordon. Yes, sir. Where did that come from ? I think from Nebraska. And how about Iowa? Well, I have not had any; I do not remember any from Iowa. Mr. Marble. Have you been bidding regular dealers only in Iowa ? Mr. Gordon. No, sir. Mr. Marble. Farmers' elevators? Mr. Gordon. Yes, sir. . Mr. Marble. Is there afiy case in your territory where a merchant is himself a buyer and shipper of grain, perhaps, without having an elevator ? Mr. Gordon. Without having an elevator ? Mr. Marble. Yes; just a shovel house. Mr. Gordon. I do not know. Mr. Marble. You do not know of that ? Mr. Gordon. I do not recall. Mr. ilARBLE. You do not know whether you are bidding any per- son or refusing to bid any such person ? Mr. Gordon. We are not refusing. Mr.- Marble. ^Vhere do you sell your grain, as to market, I mean ? Mr. Gordon. Minneapolis and Chicago and St. Louis, principally. Mv. Marble. You have the Missouri River rates from St. Joseph ? Mr. Gordon. Yes, sir. Mr. Marble. How is that rate made up from St. Joseph ? Say on graip. coming from other points to St. Joseph ; do you pay the local m from every other point? Mr. Gordon. All points. Mr. Marble. How about grain you buy in Kansas City ? Do you nav the local into St. Joseph? 264 GEAIN ELEVATOR INVESTIGATION. Mr. Gordon. That is usually billed through, and we pay the through rate. Mr. Marble. Do you get the through rate from Kansas City to Chicago ? Mr. Gordon. Yes, sir Mr. Marble. And take the grain off at St. Joseph ? Mr. Gordon. Sometimes; yes, sir. Mr. Marble. And hold it there in the elevator on the through rate? Mr. Gordon. We do not hold it there very much. It is usually unloaded there and transferred. Mr. Marble. How long would you say you hold grain there ? Mr. Gordon. Probably from one day to a week. Mr. Marble. What would you say is the longest time you have held grain there this summer on your through rate? I do not mean other grain that pays the local rate. Mr. Gordon. Well ; we might occasionally hold a car a couple of weeks or three weeks. Mr. Marble. You do not hold it as long as a month ? Mr. Gordon. We do not aim to. Mr. Marble. Two or three weeks would be out of the ordinary, would it? Mr. Gordon. Yes, sir. Mr. Marble. During the time that there was a reduced rate in effect, from August 1st to 10th, did you have any notice of that rate before it was promulgated to the public? Mr. Gordon. No, sir. Mr. Marble. Do you know of any one who did ? Mr. Gordon. No, sir. Mr. Marble. Did you use that rate after it had been withdrawn from the public or do you know of any one who did ? Mr. Gordon. No, sir. Mr. Marble. This grain that you bought in Kansas City — was that shipped on this reduced rate? Mr. Gordon. I suppose what, was bought during that time was. Mr. Marble. How long would you say yt)u held that wheat in your elevator ? Mr. Gordon. Just about the same time. Mr. Marble. About the same time ? Mr. Gordon. Yes, sir. Mr. Marble. From one day to three weeks ? Mr. Gordon. Yes, sir. Mr. Marble. But most of it went out in a day or two ? Mr. Gordon. Yes, sir. Mr. Marble. Do you know whether or not you bought grain in Kansas City on the basis of that reduced rate and held it in your elevator in Bt._ Joseph waiting for the rate to be withdrawn, and the market to adjust itself to the new and the higher rate, and then made a sale after that time? Mr. Gordon. No, sir. Mr. Marble. Do you know whether or not grain shipped on the through rate was sold by you after the rate had been withdrawn ? Mr. Gordon. How is that ? Mr. Marble. Do you know whether or not grain shipped from Kansas City on that through, rate, on that reduced rate, was by you GEAIN ELEVATOR INVESTIGATION. 265 sold after the rate had been withdrawn' from the general public and then billed through from St. Joseph to Chicago ? Mr. GoEDON. Yes, sir ; I suppose there was, perhaps. Mr. Marble. So that at St. Joseph you had the benefit of that through rate, so far as the market was concerned, after it had been withdrawn ? Mr. Gordon. No, sir. Mr. Marble. You did not sell until the rate had been withdrawn ? Mr. Gordon. There might have been some sold afterwards that had not gone out. Mr. Marble. I mean that you made the bargain to sell after the rate had been withdrawn ? Mr. Gordon. I could not say as to that. Mr. Marble. Did you sell some to the South Chicago Elevator Company after the rate had been withdrawn ? Mr. Gordon. There probably was some. Mr. Marbls. You took the grain from Kansas City to St. Joe on this lower through rate ? Mr. Gordon. I do not know that it came through Kansas City; I think not. Mr. Marble. You think it did not come through Kansas City ? Mr. Gordon. It was shipped from up there. Mr. Marble. On what billing was it shipped? Mr. Gordon. The Kansas City billing. Mr. Marble. Without going to Kansas City? Mr. Gordon. I do not remember whether it was shipped. - If it was on order it was shipped from St. Joseph. Mr. Marble. Can you send for your books and have them here to- morrow that will give the facts about these shipments — grain shipped by you from St. Joseph after the 10th of August up to the 20th of September; as to where that grain came from, as to when it was sold, and as to what billing it went out on, particularly with the date of sale and the date of shipment, with reference to this August 10 ; and not only grain which went to South Chicago, but other grain which was handled in that same way, by going from Kansas City to St. Joe on this lower through rate, taken off there and held until after the rate was withdrawn and then sold?_ Can you get those books down here? Mr. Gordon. Yes, sir. Mr. Marble. And have them down here at ten o'clock ? Mr. Gordon. I do not know whether I can do that or not. Mr. Marble. You can telegraph for them? Mr. Gordon. Yes, sir. Mr. Marble. If you can not have them here at 10 o'clock, have them here at 2 o'clock. Mr. Gordon. Yes, sir. Mr. Marble. All right. That is all now. Commissioner Clark. You may be excused. Witness excused. Mr. Marble. It is now 25 minutes past 12, and I would suggest that if the Commissioner is willing that we adjourn until 2 o'clock. Commissioner Clark. Very well, we will take a recess until 2 o'clock this afternoon. A+ 19. 35 ri- m t.lip. Commission took a recess until 2 p. m. 266 GEAIN ELEVATOR IiSfVESTIGA.TlON. AFTER RECESS. 2 o'CLOCK, P. M. Mr. Marble. I will call Mr. Morrison. R. T. Morrison, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business, Mr. Morrison ? Mr. Morrison. Grain business. Mr. Marble. Where? Mr. Morrison. In Kansas City, Mo. Mr. Marble. In what way are you interested in the grain busi- ness — in what capacity? Mr. Morrison. The commission business. Mr. Marble. Receiving shipments from the country to be sold on commission ? Mr. Morrison. Yes, sir. Mr. Marble. Do you bid the country as well ? Mr. Morrison. Not very often. Mr. Marble. Xot regularly in your course of business ? Mr. Morrison. No, sir. Mr. Marble. From what part of the country do you receive con- signments principally? Mr. Morrison. Principally Nebraska and Kansas. Mr. Marble. How long have you been so engaged in the grain business ? Mr. Morrison. Since 1898. Mr. Marble. What portioij of Kansas do you receive grain from ? Mr. Morrison. Mostly from the northern half. Mr. Marble. Do you receive from anyone having grain to sell, or do you restrict your business to elevators ? Mr. Morrison. I receive grain from anybody that I think is good for overdraft. Mr. Marble. That is the only restriction you make on customers ? Mr. Morrison. Yes, sir. Mr. Marble. Have you any farmer elevators shipping to you? Mr. Morrison. One or two. Mr. Marble. Do you welcome that business ? Mr. Morrison. Yes; regular elevators are all right. Mr. Marble. How about a country merchant owning an elevator and shipping. Do you welcome his shipments ? Mr. Morrison. Yes, if he is a regular dealer. Mr. Marble. If not a regular dealer ? Mr. Morrison. I am afraid of him. Mr. Marble. Why ? Mr. Morrison. He may not know how to buy grain. I can not satisfy him. Mr. Marble. You mean he can not satisfy you ? Mr. Morrison. No; I can not satisfy him. He expects to get the highest price for poor stuff. Mr. Marble. So you do not welcome his business ? Mr. Morrison. No, sir. Mr. Marble. Is there any other reason? Mr. Morrison. No, sir. Mr Marble. Has any association asked you not to receive such shipments ? GRAIN ELEVATOR INVESTIGATION. 267 Mr. Morrison. No, sir. Mr. Marble. Never? Mr. Morrison. No, sir. Mr. Marble. So far as concerted action to influence your conduct is concerned, do you feel yourself free to accept shipments from any one? Mr. Morrison. Yes, anybody in the business. I do not want everybody's business. Mr. IMarble. That is according to your own interests, as you con- sider it ? Mr. Morrison. Yes, sir. Mr. Marble. Has any concert of persons helped you to that con- clusion by intimating that they would not ship to you if you re- ceived such shipments? Mr. Morrison. No, sir. Mr. Marble. "\Miere do you sell your grain ? Mr. Morrison. Mostly on the floor ; sometimes to mills. Mr. Marble. Have you had any experience in shipping east, or through the Santa Fe elevator? INIr. Morrison. A little ; not much. Mr. Marble. Has that experience been satisfactory? Mr. Morrison. Yes, sir. Mr. Marble. How do you regard this arrangement in Kansas City witli the railroads operating elevators and doing shipping. Is that satisfactory to you as a shipper ? Mr. Morrison. I have not tried it since the railroads have come to an agreement, or tlie conditions as they are now. Mr. Marble. You can not testify as to that ? Mr. Morrison. No, sir. Mr. Marble. Was the old arrangement satisfactory to you? Mr. Morrison. Mostly; yes, sir. Mr. Marble. That arrangement was, as I understand, all the ele- vators being operated by private individuals and corporations not connected with the railroads. Mr. Morrison. I do not know as I ever did much business with those elevators. I did some. Mr. Marble. With what elevators did you do business? INIr. Morrison. Some with the Maple Leaf and I have done some through the Kansas and Missouri— Broadnax & McLiney. Mr. Marble. How is that ? Mr. Morrison. They treated me square. Mr. Marble. How about Kansas inspection and Missouri inspec- tion ? Has that been satisfactory to you ? Mr. Morrison. Well, satisfactory, I think, as far as human judg- ment goes. It varies. Mr. Marble. Of course that is the best that can be asked. That is all. Commissioner Clark. You may be excused. J. W Radford, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business ? Mr. Radford. Chief grain inspector for Kansas. Mr. Marble. Chief grain inspector for the State of Kansas? Mr. Radford. Yes, sir. 268 GRAIN ELEVATOR INVESTIGATION. Mr. Maeble. And is all the inspection of the State of Kansas under your observation and direction ? Mr. Eadfobd. All the State work. Mr. Maeble. All the State inspection ? Mr. Radfoed. Yes, sir. Mr. Maeble. You are principally located at Kansas City, Kans., are you not ? Mr. Radfoed. Yes, sir. Mr. Maeble. Are you familiar with the elevators of Kansas City, Mo., and their manner of doing business ? Mr. Radfoed. No, not very well ; not Kansas City, Mo. Mr. Maeble. The elevators of Kansas City, Kans., you are famil- iar with them ? Mr. Radfoed. Yes, sir. Mr. Maeble. Have those elevators a practice of deducting a cer- tain weight on each car of grain ? Mr. Radfoed. Well, I would not.be able to say that from my own knowledge. Mr. Maeble. Well, you are familiar, as a matter of fact, though, with the way in which business is done, are you ? Mr. Radfoed. Yes ; yes, reasonably so._^ Mr. Maeble. Common report and observation ? Mr. Radfoed. Yes, sir. Mr. Maeble. I will ask you from that whether they do have a fixed charge as against each car for sweeping and loss. I believe that is what they call it, is it not ? Mr. Radford. Well, they have a hundred pound deduction from each car, so my information is, the best I have got. Mr. Maeble. Do you know what that is taken off for ? Mr. Radfoed. No, I do not. Mr. Maeble. So you can not discuss that, as to whether it is justi- fiable, or can you ? Mr. Radfoed. Well, different men give different explanations. Mr. Maeble. Well, have you an opinion of your own as to that ? Mr. Radfoed. As to whether it is justifiable? Mr. Maeble. Yes, sir. Mr. Radfoed. Yes; I do not think it is. Mr. Marble. You do not think it is? Mr. Radfoed. No, sir. Mr. Marble. Why do you think it is not justifiable? Mr. Radfoed. Well, in the first place, all this work is done on Harper scales. The man does not get credit for his weight until the grain gets near the top of the elevator in the center of the build- ing. Any that might be scattered or lost or left in the car, the elevator is not charged up for it anyway, and then, to take off a hundred pounds of the net, and the elevator get what is reasonable, to pick up all the fallings and sweepings after it is scattered, I do not see any justification in it. Mr. Maeble. Let me see if I understand you. You mean there may be some loss around the elevator before the grain gets where it is weighed, and that the elevator can sell if it desires to? Mr. Radfoed. Yes, sir. Mr. Maeble. The grain is weighed less that loss after it is in the elevator and 100 pounds is deducted from the weight of each car ? Mr. Radfoed. Yes; that loss I referred to would be in such small GRAIN ELEVATOR INVESTIGATION. 269 quantities that my man would not force them to take it up or it would not be practicable to take it up. For instance, when you burst a car open the grain scatters a little. There will be some about the grate, and possibly some will stay in the boot, and in those cases the elevator always gets it in cleaning up sometime during the day. In handling a number of cars it would not be practicable to take it up and credit it to each car. It would amount to only a few pounds. Mr. Marble. Would it be possible for the elevator to save it — gather it up ?• Mr. Radford. Yes, sir; it would accumulate in such quantities. They keep cleaned up. Mr. Marble. You would regard that as an actual source of income to the elevator, the saving of that grain ? Mr. Eadford. Yes, sir. Mr. Marble. Is it worth more than it costs to pick it up ? Mr. Radford. No; ordinarily it would not be worth more than it costs to pick it up. Mr. Marble. But the deduction of 100 pounds you would not con- sider justifiable, because the grain is not weighed until after it gets into the elevator ? Mr. Radford. Yes, sir ; such is my information. Mr. Marble. Have you been through the State of Kansas traveling this summer ? Mr. Radford. Yes; some. Mr. Marble. I will ask if you observed as to grain buying and if you attended meetings of grain buyers? Mr. Radford. I have; yes, sir. Mr. Marble. During this last summer? Mr. Radford. No ; not through this last summer. Mr. Marble. When did you last attend meetings of grain buyers in the State of Kansas? Mr. Radford. I am not sure, but I think in January. Mr. Marble. During this last year — during this present year ? Mr. Radford. Yes ; I am not positive of that. Mr. Marble. And immediately prior thereto, in December and November of last year ? Mr. Radford. I have attended several meetings last year. Mr. Marble. Now, then, as a result of that attendance, did you reach any conclusion as to whether or not these grain buyers are now fixing prices and dividing business by agreement among themselves ? Mr. Radford. No, sir; I never attended any of their meetings excepting those — well, the meetings I attended I did not get any Mr. Marble. Did not get any impression ? Mr. Radford. No information of that ; no, sir. Mr. Marble. Did you hear them discuss farmers' elevators and ar- rangements with farmers' elevators ? Mr. Radford. Well, I do not know but what I have some, but not as I would connect it up that way. I have heard diflFerent discussions at times, hut paid very little attention to them. Mr. Marble. Did you get any impression whether or not the deal- ers and the railways are working together to shut out farmers' elevators ? Mr. Radford. No. Mr. Marble. You have not so stated to anyone ? Mr. Radford. No; I think not. 270 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. You think you have not so stated to anyone? You are certain you did not get that impression or that information ? Mr. Eadford. Yes, sir; not that I recall, I have not. Mr. Marble. You do not recall so stating to anyone ? Mr. RADroRD. No, sir. Mr. Marble. Did you ever hear any of these dealers say that it had been fixed so that the farmer companies would have to get out or agree to prices or division of grain or division of profits ? Mr. Eadford. I do not believe that I have heard that talked in those places. I have heard different people talking of such a condition, but I do not believe I got that around the meetings. Mr. Marble. Have you heard people talking who were profiting by that ? I do not mean the people suffering from it, but I mean, have you heard people talk who gave you to understand that they expected that to be done ? Mr. Radford. I do not believe I have. Mr. Marble. And have not so stated to anyone ? Mr. Radford. No, sir ; I think not. Mr. Marble. How does the Missouri and Kansas inspection com- pare, as a rule? Is one stricter than the other, as a rule, would you say? Mr. Radford. No ; I do not believe there is very much difference. Our rules are about the same. Mr. Marble. Well, as a result of the inspection, do you generally agree in your judgment? Mr. Radford. Pretty generally. Mr. Marble. There is not more variation between them than you would expect between different stations in the same State ? Mr. Radford. Well, I might say that I hardly think that we are as close together as we expect to be within the borders of the State, because, being under one government, one set of rules, we are better able to keep together, keep our men working uniformly, perhaps. Mr. Marble. You mean you should be closer together than you are, or you are very close together ? Mr. Radford. Well, we are very close together within the State. Mr. Marble. Oh, in the State ? Mr. Radford. As to the Missouri department, we are pretty gen- erally together. Of course, there are times there are charges that we are more severe than we had ought to be. Mr. Marble. I am not speaking of passing criticisms. I am ask- ing what your observation is of the facts ? Mr. Radford. Well, I do not think the Missouri department and Kansas department are quite as close together as possibly either department is with itself. Mr. Marble. Do you hope to correct that ? Mr. Radford. Why, yes ; it would be better if all departments were uniform. Mr. Marble. Do you think it can be corrected ? Mr. Radford. Well, there is some doubt as to whether we will ever correct it with different managements in different States, entirely. I think we are all seeking to get on the same basis, to work under the same rules practically. Mr. Marble. Would you regard a common inspection for the grain- producing States as a good thing — inspection under common control ? Mr. Radford. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 271 Mr. Marble. Whether that be JFederal or some arrangement that would cover the States and have a central control for all — a central supervision ? Mr. Radford. Yes, sir. Mr. Marble. In your inspection, do you make up a type sample for use on the crop ? Mr. Radford. No, sir. Mr. Marble. Are you familiar with the type sample of the board of trade of this city ? Mr. Radford. Why, reasonably so, only. Mr. Marble. Have you examined it closely and critically, so that you can discuss it ? Mr. Radford. No, sir ; I would prefer not to. Mr. Marble. Well, can you ? Mr. Radford. Yes; I could. Mr. Marble. Do you know how that type sample was made up ? Mr. Radford. Well, I know how it is reported to be made up. Mr. Marble. Have you examined it so that you have an opinion of your own as to whether or not the report was correct? Mr. Radford. Well, I have examined it, and as we do not take any standard samples and only go by the rules and are not bound by any standard they would make up, we have not regarded it as being very much. Mr. Marble. I will ask you if it is your opinion that that is made up of virgin wheat, all of one grade or not? Mr. Radford. No, sir. Mr. Marble. You think that is made of grain of different grades ? Mr. Radford. Yes, sir. Mr. Marble. Is it made up of elevator- treated wheat? Mr. Radford. Part of it. Mr. Marble. Part of it is elevator- treated wheat ? Mr. Radford. Yes, sir. Mr. Marble. Do you regard that as a proper standard for testing wheat? Mr. Radford. Well, I do not think that is really material as to whether it has been part of it treated by an elevator process or not. , It only tends to make it more difficult for you to decide what it is after it has been treated. Mr Marble. Would a miller, if he attempted to mill such wheat as that sample, have any difficulty in deciding what it was ? Mr. Radford. Well, it is deceptive. The process employed by peo- ple preparing grain and proving its condition makes it deceptive. Mr. Marble. Makes the samples deceptive, do you mean ? Mr. Radford. Yes, sir. The appearance — it is deceptive on the face of it, but if you examine it closely enough you can tell what the condition is. Mr. Marble. Tell what it is ? Mr. Radford. What the quality is. They change the condition, but they are not able to change the quality of the wheat by those processes. Mr. Marble. In your inspection you inspect grain according to the lowest that is contained in the particular lot, do you not ? Mr. Radford. No ; we inspect it according to the average drawing, unless there is evidence of the car having been loaded deceptively. Mr. Marble. Do you know whether or not millers have a prefer- 272 GEAIN ELEVATOR INVESTIGATION. ence as between wheat direct from the farm, that has not been mixed and treated, and grain from elevators that has been mixed to raise the grade? Mr. Eadfokd. Oh, yes ; they prefer the virgin wheat. Mr. Marble. Would you say the sample represents elevator neces- sities rather than m.illers' necessities ? Mr. Eadfoed. I do not believe that I quite understand that ques- tion. . Mr. Maeble. Well, is it a standard made for elevator men or such a standard as millers would put there to test the crop by ? Mr. Eadfokd. Oh ; the millers, my experience is, would rather have the standard of virgin wheat. In fact, they would rather not have any wheat that has been worked on by the elevator. Mr. Marble. Virgin wheat is the normal, is it not? Mr. Eadford. Yes ; as it comes from the field. Mr. Marble. And elevator wheat is in a measure abnormal ; artifi- cially treated and mixed ? Mr. Eadfoed. Not necessarily so, but generally so. Mr. Marble. I mean what actually is. That is all. Commissioner Clark. What is your duty as grain inspector ? What do the rules or the laws require of you ? Mr. Eadfoed. Well, I have deputy inspectors that do my inspect- ing, and deputy weighmasters. I have charge also of the weighing, and my duties are to look after the men or to employ men to do the work, and I have a supervising inspector and supervising weigh- masters, who is directly over the men. They are all under my charge. Commissioner Claek. Well, I mean what the duties of your office are, not particularly what you give your personal attention to. What is the requirement as to the inspection of grain ? When do you inspect it ? Mr. Eadfoed. Grain that comes in on the railroad is carded on its arrival in any yard with what is known as a " hold " grain card. That is notice to my department that they want inspection; it is being held for inspection. The name of the"consignee is on the card, and I have a crew of men in each yard that start in at 7 o'clock in the morning and get all the arrivals that came in the night and afternoon before, that break open the car and take a drawn sample that repre- sents an average sample out of at least three places in the car, put that in a small sack and label it to the consignee, and bring the sample to the board of trade, or to wherever his office is in the city. The inspector files a yard sheet of his report in the office and the office force make out a certificate certifying to the contents, grade, etc., and that is delivered within a few hours afterwards to the same party. Commissioner Claek. At how many points in the State is this done? Mr. Eadfoed. At fourteen. Commissioner Claek. Do you inspect grain out? Mr. Eadfoed. In inspecting grain out of the elevators, after the car has been loaded, we are notified that so many cars are ready for in- spection and my men go to the elevators and inspect the cars, and, if they want samples, deliver samples to the elevator. In most cases they do not care for samples. He brings a report to the office as in the other case, and the certificates are made out and sent to the eleva- tor people that afternoon or the next morning. GRAIN ELEVATOR INVESTIGATION. 273 Commissioner Clark. You spoke of having attended meetings of grain associations out in the State. What were those meetings held for? Are you a member of the Grain Dealers' Association of Kansas? Mr. Radixjrd. No, sir. Commissioner Clark. The meetings were not secret, then, were they? Mr. Radford. No, sir. Commissioner Clark. Well, what was the purpose of the meetings? Mr. Radt-grd. Well, I do not know as I am able to say. Commissioner Clark. How did you come to be there ? Mr. Radford. Well, I have tried to attend such gatherings of men interested in grain wherever they met in the State, or even out of the State, if handy. I have a good deal to do with the trade in answer- ing correspondence and explaining the affairs of my office, and so on, and wherever I would hear of those meetings, and could, I have attended. Commissioner Clark. Did I understand you to say that you did not know of any effort to control or regulate the price to be paid for grain in the country or for a division of the grain sold at a particular station between two or more buyers at that station? Mr. Radford. No, I do not. Mr. Marble. Did not you tell Mr. McKenzie that you did get that impression ? Mr. Radford. No, I do not think that I did. Mr. Marble. You did not tell him that? 'Slv. Radford. No, I do not think so. Mr. Marble. You know whether you did or not, don't you? That is a notable thing. You do not need to be uncertain about that. Mr. Radford. You asked if I said I had that impression? Mr. Marble. Exactly. Mr. Radford. No, I did not tell him so. Mr. Marble. And did not tell him that you heard them talking about the farmers" elevators; that they had them where they would have to come in or quit the business? Mr. Radford. No, I never made that remark. Mr. Marble. Or an^-thing. like that — that meaning ? Mr. Radford. No, sir ; I did not. Commissioner Clark. Then, according to the best of your knowl- edge and belief, no such proceedings have at any time been had in the State of Kansas ? Mr. Radford. Not so far as I know ; no, sir. Commissioner Clark. That is all. The witness was excused. C. M. WiKTON, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business, Mr. Winton ? Mr. WiNTON. Clerk. ]Mr. Marble. By whom are you employed? Mr. Winton. I am jointly employed by the Milwaukee Elevator and the Simonds-Shields Grain Company. Mr. Marble. Jointly employed by the Milwaukee Elevator and the Simonds-Shields Grain Company? S. Doc. 278, 59--2 IS 274 GRAIN ELEVATOR INVESTIGATION. Mr. WiNTON. Yes, sir. Mr. Marble. With regard to the Milwaukee elevator, what are your duties ? Mr. WiNTON. I keep records of the ingoing and outgoing grain. •Mr. Marble. Do the orders to the elevator pass through your hands as to grain to be handled ? Mr. WiNTON. Partly so ; yes, sir. Mr. Marble. Only partly so ? Mr. WiNTON. Yes, sir. Mr. Marble. Are you familiar with those other than those that pass through your hands ? Mr. WiNTON. I have a general knowledge of them. Mr. Marble. From whom does the foreman get his orders as to what grain to load and what grain to load first? Mr. WiNTON. Well, he mainly gets them from Mr. Shields. Mr. Marble. Who else ? Mr. WiNTON. From me. Mr. Marble. From who else ? Mr. Winton. No one that I know of. Mr. Marble. W^hat are the orders to the foreman ? Are there any standing orders to the foreman regarding the Simonds-Shields grain ? Mr. WiNTON. Not that I know of; no standing orders. There could not very well be. Mr. Marble. What is that? Mr. WiNTON. There could not very well be. Mr. Marble. No standing orders that the Simonds-Shields grain is to be handled first? Mr. WiNTON. Not that I know of. Mr. Marble. Is it the practice at the elevators to give that grain the preference? Mr. WiNTON. No ; I can not say it is. Mr. Marble. Can you say it is not? Mr. WiNTON. I never have heard it given one way or the other — never had the subject brought up before. Mr. Marble. It never was discussed whether or not the Simonds- Shields grain had the preference? Mr. WiNTON. No, sir. Mr. Marble. Do you know, as a matter of fact, in the jDractice — whether it has been brought up before or not — whether or not the Simonds-Shields grain has the preference there? Mr. WiNTON. No ; it has not. Mr. Marble. You know it has not? Mr. WiNTON. I know it has not in the majority of cases. Mr. Marble. Has it in any case? Mr. WiNTON. Not that I recall. Mr. Marble. Why did you say " the majority of cases? " Mr. WiNTON. It is a natural expression. Mr. Marble. In the minority of cases would you say it has the preference ? Mr. WiNTON. No ; I would not. Mr. Marble. You say it has not the preference at all ? Mr. Winton. No, sir. Mr, Marble. It is your observation that the elevator serves all GKAIN ELEVATOR INVESTIGATION. 275 patrons alike, the Simonds-Shields Grain Company the same as any other? Mr. WiNTON. Yes, sir. Mr. Marble. Do you know about any standing order for cars for the Simonds-Shields Company? Mr. WiNTON. No. Mr. Marble. Do you know they have an order for 400 cars ? Mr. WiNTON. No, sir. Mr. Marble. Do you know anything about the cars ? Mr. WiNTON. The foreman gives the orders from the elevator. He knows about what he can do in a day and knows about what he has to load, and gives orders accordingly. Mr. Marble. The ca'rs are ordered by the foreman of the elevator ? Mr. WiNTON. Yes, sir; the .foreman. Mr. Marble. He orders cars for the Simonds-Shields Company? Mr. WiNTON. For everybody. Mr. Marble. For everybody ? Mr. WiNTON. Everything to be loaded out. Mr. Marble. Anybody that wants grain on the Milwaukee Road notifies that foreman ? Mr. WiNTON. No ; the order comes through the office. , Mr. Marble. They notify Mr. Shields ? Mr. WiNTON. Mr. Shields or me ; yes, sir. Mr. Marble. Every shipper ? Mr. WiNTON. Yes, sir. Mr. Marble. And the office notifies the foreman ? Mr. WiNTON. Yes, sir. Mr. Marble. And the foreman notifies the railroad? Mr. WiNTON. Yes; when he is ready to load it. Mr. Marble. Either you or Mr. Shields decides which grain shall go in those particular lots ? Suppose cars are there, it is you or Mr. Shields who decides who shall have the cars ? Mr. WiNTON. Yes, sir. Mr. Marble. Have you had that question to decide with cars short ? Mr. WiNTON. Yes, sir. Mr. Marble. With different shippers wanting the cars ? Mr. WiNTON. Yes, sir. Mr. Marble. In whose favor did you decide ? Mr. WiNTON. I did not decide in anybody's favor; I decided as near in the order of the orders as I could do it — the priority of the orders. Mr. Marble. Did it happen that any firm uniformly had the first order ? Mr. WiNTON. No, sir. Mr. Marble. It did not happen that Simonds-Shields had the first orders ? Mr. WiNTON. Simonds-Shields have the majority of the orders and the greatest bulk, and, consequently, get a majority of the cars. Mr. Marble. Most of the grain passing through that elevator be- longs to them, does it not ? Mr. WiNTON. Yes, sir. Mr. Marble. What proportion ? Mr. WiNTON. I could not say exactly. 276 GRAIN ELEVATOR INVESTIGATION. Mr. Mabble. Approximately would you say 90 per cent ? Mr. WiNTON. Yes, sir. Mr. Marble. Ninety-five per cent ? Mr. WiNTON. Close to that. Mr. Marble. Would you say 98 per cent? Mr. WiNTON. No, sir. Mr. Marble. All the grain shipped over the Milwaukee road goes through that elevator ? Mr. WiNTON. I should say jiot. Mr. Marble, ^yhat proportion does not ? Mr. WiNTON. The proportion that does not, I could not say. I have nothing whatever to do with the outside business that does not pass through the elevator. Mr. Marble. That is the only elevator capacity provided by the Milwaukee road in this city, is it not ? Mr. WiNTON. So far as I know, yes, sir. Mr. Marble. Does it do certain things free, like clipping and grading ? Mr. WiNTON. It does not clip and grade free. Mr. Marble. Does it furnish a certain amount of storage free I Mr. WiNTON. A certain length of time. Mr. Marble. And about 95 per cent of the grain receiving that benefit belongs to the Simonds-Shields Company^ Mr. WiNTON. Yes, sir. Commissioner Clark. You say this elevator does not do any grad- ing, cleaning, or clipping free of charge? Mr. WiNTON. It does not clip free, no, sir. It transfers free, but does not clip. Clipping is another business. Commissioner Clark. How about cleaning? Mr. WiNTON. They make a charge for cleaning. Mr. Marble. Do you know what charge they make for cleaning ? (Paper produced by witness.) Mr. Marble. Have you one of the tariflFs ? (Paper handed to Mr. Marble.) Mr. Marble [referring to paper] . This states, " For cleaning or mixing, one-quarter of a cent per bushel ? " Mr. WiNTON. Yes, sir. Mr. Marble. Is that the usual rate at elevators in this city, do you know ? Mr. WiNTON. I do not know about other elevators. Mr. Marble. You do not know about the standard charge here for that purpose? It says " for clipping, one-half cent per bushel." Do you know whether that is the usual charge? Mr. WiNTON. I do not know about the charges of other elevators. Mr. Marble. To what do you attribute the fact that so large a proportion of that grain belongs to Simonds-Shields that goes through that elevator? Mr. WiNTON. Because they do the larger amount of business over the Milwaukee Road. Mr. Marble. .How are they able to do so much of that business? Have they any special consideration on the part of the road ? Mr. WiNTON. Not that I know of. ' Mr. Marble. Or in the management of the elevator? Mr. WiNTON. No, sir. Mr. Shields is manager of the elevator. GEAIN ELEVATOB INVESTIGATION, 277 Mr. Marble. I understand that. Commissioner Clark. Pardon me a minute. Before we get too far away from that I would like to have the witness explain what the last paragraph or sentence on that tariff means. (Referring to tariff produced by witness.) I would like to have you read it. Mr. Marble [reading from tariff]. "Note: On all grain forwarded via the Chicago, Milwaukee and St. Paul Eailway there will be no charge for cleaning, mixing, or clipping." Commissioner Clark. If that elevator makes a charge for that work, what does that mean? Mr. WiNTON. I had not noticed that clause before on that. [Ex- amining tariff.] I noticed these others above here. Commissioner Clark. Well, is it not your business to know what the elevator is doing? Have not you testified that you are vested with certain authority there? Mr. WiNTON. Yes, sir. Commissioner Clark. But you do not know what it is doing? Mr. WiNTON. I do not know everything it is doing ; no, sir. Commissioner Clark. You may proceed, Mr. Marble. It is a surprising thing how many people there are in this business who do not know anything about it and are making a great success of the business. Mr. Marble. When did you first see this tariff, effective October 8 ? Mr. WiNTON. I have seen that tariff just within an hour. Mr. Marble. Well, you received it on the 8th of October, did you not, in the course of business— this same tariff? Mr. WiNTON. No, sir ; I have not had it. Mr. Marble. Do you have charge of the dealings with other ship- pers than Simonds-Shields at that elevator ? Mr. WiNTON. In what manner ? Mr. Marble. The charges against them for cleaning, clipping, and grading? Mr. WiNTON. No, sir ; I have not had any of that. Mr. Marble. Who has charge of that ? Mr. WiNTON. I could not tell you. Mr. Marble. You do not know' what member of this establishment you are working for makes out the bills ? Mr. WiNTON. No, sir. Mr. Marble. Who keeps the books ? Mr. WiNTON. It depends on what books you mean. Mr. Marble. The charges on grain passing through the elevator. Mr. WiNTON. I do not know. Mr. Marble. Do you know where they are kept? Mr. WiNTON. No, sir. Mr. Marble. Are there any books kept? Mr. WiNTON. Yesj sir. Mr. Marble. You know that ? Mr. WiNTON. Yes, sir. Mr. Marble. How? Mr. WiNTON. I keep some. Mr. Marble. Which ones? Mr. WiNTON. The general elevator books; the grain going in and going out. 278 GEAIN ELEVATOK INVESTIGATION. Mr. Marble. Who keeps the books in which a charge would be made for service rendered by that elevator ? Mr. WiNTON. I do not know, sir. Mr. Marble. Do you know whether there are any such books or not? Mr. WiNTON. No, sir. Mr. Marble. Who would know ? Mr. WiNTON. Mr. Shields, I suppose. Mr. Marble. Would anybody besides Mr. Shields know ? Mr. WiNTON. Not that I knoAv of. Mr. Marble. Does Mr. Shields keep the books ? Mr. WiNTON. No, sir. Mr. Marble. Don't you know the bookkeepers in the employ of Mr. Shields? Mr. WiNTON. Yes, sir ; but not the ones that keep that portion of it. Mr. Marble. Have Simonds-Shields and this elevator one office or two? Mr. WiNTON. The elevator has office room in Simonds-Shields' office. Mr. Marble. Mr. Shields has a grain office for the Milwaukee road, and Mr. Shields, as a member of the firm or corporation of Simonds- Shields, has an office in one place ? Mr. WiNTON. Yes, sir. Mr. Marble. Are any bookkeepers especially assigned to the service of keeping books for these elevators and others for keeping books for Simonds-Shields, or are they jointly hired, as you are? Mr. WiNTON. They are jointly hired. Mr. Marble. Jointly hired, as you are ? Mr. WiNTON. Yes, sir. Mr. Marble. How long have you been jointly hired ? Mr. WiNTON. Well, I could not say positively about that. Mr. Marble. Well, ten years? Mr. WiNTON. No, sir. Mr. Marble. Five years ? Mr. WiNTON. No, sir. Mr. Marble. Ten months? Mr. WiNTON. Less than that. Mr. Marble. Five months ? Mr. WiNTON. Less than that. Mr. Marble. Well, about how long? Mr. WiNTON. Well, about four or five months. Mr. Marble. You were hired by Simonds-Shields before that? Mr. WiNTON. Yes, sir. Mr. Marble. Are your duties any different now than they were before ? • Mr. WiNTON. About the same. Mr. Marble. About the same? Mr. WiNTON. Yes, sir. Mr. Marble. Who pays you now ? Mr. WiNTON. The Milwaukee Elevator and Simonds-Shields. Mr. Marble. Do you get a separate check from each? Mr. WiNTON. No, sir. Mr. Marble. How does your pay come to you ? Mr. WiNTON. Through Simonds-Shields. GRAIN ELEVATOR INVESTIGATION. 279 Mr. Marble. Then, Simonds-Shields pays you? Mr. WiNTON. No — well, in one sense of the word they do, but my portion is charged to the Milwaukee Elevator. Mr. Marble. How do you know that ? Mr. WiNTON. The general bookkeeper has told me so. Mr. Marble. Did the general bookkeeper tell you who paid the bill finally, whether the elevator or railroad company or Simonds- Shields, or who? Mr. WiNTON. Simonds-Shields pay my salary, and a portion of it is charged to the Milwaukee Railway. Mr. Marble. So far as you are concerned, except for this informa- tion from the bookkeeper, your duties and compensation and the source of your compensation are the same now as before you were an employee, are they? Mr. WiNTON. Well, I have been told, besides the bookkeeper, by Mr. Simonds, Mr. Shields, and Mr. French, and Mr. Adsit. Mr. Marble. But your duties are about the same as before? Mr. WiNTON. About the same. Mr. Marble. Are they exactly the same? Mr. WiNTON. No ; they are not. Mr. Marble. In what respect are they different? Mr. WiNTON. Well, a little detail work. Mr. Marble. Necessary to the change in bookkeeping because of this arrangement ? Mr. WiNTON. Yes, sir. Mr. Marble. But they are exactly the same, except for that ? Mr. WiNTON. Yes, sir. Mr. Marble-. Your compensation is the same? Mr. WiNTON. Yes, sir. Mr. Marble. And your compensation comes from the same pay- master, and you understand that he gets a portion of that allowed him from some other source. Is that it ? Mr. WiNTON. Yes, sir. Mr. Marble. And you can not tell who keeps the books for this elevator ? Mr. WiNTON. Not that portion of it ; no. Mr. Marble. Will you undertake to find out and let us know ? Mr. WiNTON. Yes, sir. Mr. Marble. And let us know this afternoon. It is now near 3 o'clock. Can you let us know at 4 o'clock ? Mr. WiNTON. I can try. Mr. Marble. Very well. Commissioner Clark. It would be a good idea to let him bring the name of the bookkeeper or of the bookkeepers. Give us the name or names of the bookkeeper or bookkeepers if there are more than one. Mr. WiNTON. Of all of them? Commissioner Clark. Yes; the bookkeepers in the office. How many bookkeepers are employed there? Mr. WiNTON. Five or six. Commissioner Clark. Well, find out which one keeps this book he has reference to. Mr. WiNTON. All right, sir. Commissioner Clark. That is all. The witness was excused. 280 GRAIN ELEVATOR INVESTIGATION. George B. Fi.ack, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business, Mr. Flack ? Mr. Flack. Secretary of the Midland Elevator Company. Mr. Marble. That is what is known as the Peavey Elevator ? Mr. Flack. It is one of the branches of the Peavey system. Mr. Marble. As secretary of that company what are your duties? Mr. Flack. Well, I am a sort of an assistant manager of the company. Mr. Marble. Are you familiar with the business of the company ? Mr. Flack. In some respects. I try to be in all respects. Mr. Marble. What is the business of that company ? Mr. Flack. The buying and selling of grain, both at the local sta- tions we buy at, on the floor, and by card bidding, and selling to any market that we can get the best results. Mr. Marble. You have the line of elevators on the Union Pacific in this State? Mr. Flack. Yes, in Kansas. Not in this State. Mr. Marble. How many elevators in that line ? Mr. Flack. There are about 17 on the Leavenworth, Kansas and Western that we consider one and the same. I think there are 56 on the Union Pacific system in the State of Kansas. We have nothing in Nebraska^ Mr. Marble. Those in Nebraska are held by the Omaha Elevator Company, are they not ? Mr. Flack. As I understand ; yes. Mr. Marble. Those companies, of course, buy grain.at country sta- tions from farmers. Do you bid the country in addition to that ? Mr. Flack. We do at times. The bidding business is something that has not produced much of any results to our notions the last three or four years, and we are rather spasmodic in our bidding. Mr. Marble. Your company is the largest shipper of grain on the Union Pacific in the State of Kansas, is it not ? Mr. Flack. Well, I do not know. I am inclined to think it is. Mr. Marble. At any rate it is one of the first two or three ? Mr. Flack. I should say that. Mr. Marble. Do you have charge of making up the prices sent to your country elevators to be paid? Mr. Flack. I practically dictate to them what they shall pay. Mr. Marble. What do you take into consideration in making up those prices? Mr. Flack. Where I can see an outlet. Mr. Marble. Are .there other line elevators in competition with you? Mr. Flack. Yes, sir; the Morrison Elevator Company has a few houses and the Hoffman Elevator Company. Mr. Marble. Do you consult with or advise with or agree with your competitors, or any of them, as to prices to be paid ? Mr. Flack. Well, there is no doubt but we do talk over conditions occasionally, but I do not think I have talked to Morrison about con- ditions for three months, and the other officers are not in the town here and I do not see them. Mr. Marble. How about any of the others? GEAIN ELEVATOR INVESTIGATION. 281 Mr. Flack. That is what I say, they are out of town. Mr. Marjble. All of the others? Mr. Flack. Yes, sir. Mr. Makble. At any station where you have an elevator, have you an agreed price with your competitors at that station as to prices to be paid ? Mr. Flack. No, sir. Mr. Marble. Not at any station ? Mr. Flack. Not one. Mr. Marble. At any station have you an arrangement for the divi- sion of the business ? Mr. Flack. No, sir. Mr. Marble. Not any arrangement ? Mr. Flack. Not any arrangement of any description. Mr. Marble. By which if one gets more than his share the others shall bid less? Mr. Flack. "We have not. Mr. Marble. Or any arrangement by which you pay your com- petitors or they pay you a bonus or penalty on an excess or deficiency ? Mr. Flack. No, sir. Mr. Marble. Are there farmers' elevators situated on the line ? Mr. Flack. There are a few on the line. Mr. Marble. You are not combining with any of them ? Mr. Flack. No, sir. Mr. Marble. How do you get along with the farmers' elevators ? Mr. Flack. Well, we bid them if we are bidding, and we take grain on consignment from them. We had cars in last week from one of our farmer concerns. Mr. Marble. Do you get along with them the same as with any other competitor ? Mr. Flack. I have always recognized that the man had a house there and an investment, and there was no reason he should not be treated the same as any other. I do not care whether he is a farmer or not. Mr. Marble. You treat them all alike ? Mr. Flack. If he is not a scoop shoveler. I do not bid him. He is a man who is here to-day and gone to-morrow. Mr. Marble. Is it because the scoop shoveler is here to-day and gone to-morrow that you do not bid him, or because you want to get him out of business ? Mr. Flack. I go at him. If a man opens up in my territory I will advance on him to my last profit. Mr. Marble. To get him out as a demoralizing element ? Mr. Flack. I make the contention that I have put in a house that will cost me $4,000. We have to pay insurance and taxes and hire an agent and pay all incidental expenses. It makes our expense stand so that we have to earn at least 3^ cents a bushel. Now a man that comes in and owns $2.50 worth of property is different, and I will make it as uncomfortable for him as I can. I will pay up to my limit. Mr. Marble. After he is gone do you take as fair a percentage of profit at that station as at any other? Mr. Flack. I try to make 2J cents profit. Mr. Marble. Do you try to make a little more at that station ? 282 GRAIN ELEVATOR INVESTIGATION. Mr. Flack. No, sir; because all our stations are, to an extent, in competition with each other, and it is not feasible, practical, or advisable to go on a wide margin. Mr. Marble. Is the scoop shoveler the only one you treat this way ? Mr. Flack. We have not the past year had but one place we had a scoop shoveler. Mr. Marble. You do not have that sort of competition against other line elevators ? Mr. Flack. Well, the other line elevators, as a general thing, are in- clined to feel that they have to have some margin to buy on and they are disposed to use that margin to get along. Mr. Marble. And the farmers' elevators, how about them ? Mr. Flack. I think the farmers' elevators have all realized that they can not handle for nothing. It is not all profit, the difference between what they paid and what they sold for. Mr. Marble. You state very frankly your attitude toward scoop shovelers. Have you a like attitude toward the farmers ? Mr. Flack. No, sir ; they have their houses and have to pay taxes just as we have to. Mr. Marble. Have you at any time had? Mr. Flack. That has been my personal attitude. I have only been here about five years. Mr. Marble. Has that been your attitude ? Mr. Flack. Yes, sir. Mr. Marble. You have not raised on the farmers' elevators because it was a farmer's elevator? Mr. Flack. I have shown no prejudice against the farmer. Mr. Marble. You have not raised bids on a farmer's elevator be- cause it was a farmer's elevator and have treated them the same as the line elevators ? Mr. Flack. Yes, sir. Mr. Marble. Are you friendly toward farmers' elevators ? Mr. Flack. I have not encouraged them. Most of them have a penalty clause that restrains the market. Mr. Marble. I want to hear your views on that before you leave the stand, on the penalty clause. But in making prices, you have treated the farmers' elevators the same as others and have regarded them the same ? Mr. Flack. We put out a card in the afternoon to our agents and tell them what we consider the grain worth at Kansas City. Their basis of buying is freight plus a certain margin that we have told them to buy at. Commissioner Clark. Is that instruction binding on your agent ? Mr. Flack. I give them the maximum price they can go on. If the freight would be a 10-cent rate, I would give them to buy 12^ cents off our card bid. If I know that competing markets are bad and we have got to buy closer, I may give them a limit of 11 off our card bid. At that, if they can not buy, they must quit. Mr. Marble. You have testified as to raising the price for the pur- pose of getting rid of the scoop-shovel competition. Do you raise the price to get rid of the farmers' elevator competition ? Mr. Flack. No, sir. Mr. Marble. You do not ? Mr. Flack. No, sir. There would be two reasons for that. One GRAIN ELEVATOR INVESTIGATION. 283 is that I have nothing against them, and another is that if I did get rid of them I would be followed by another, and the house would be still there. Mr. Marble. I will ask you if you have seen this letter before [handing letter to witness] . Mr. Flack. (After examining letter.) I presume I dictated that. I have not signed it. It was signed after I left the office. That is the only farmers' elevator we have had trouble with to amount to anything. Mr. Marble. Then, your answers have not applied to all elevators ? Mr. Flack. I intended that it should. I do not remember writing that letter, but there is no question, I guess, but I dictated that. Mr. Marble. I will read it. (Eeading letter.) Midland Elevatob Company, Kansas City, Mo., January 31, 1906. Agent, Marietta, Kans. Deab Sib : We Dote yours of the 30th relative to the corn situation and sup- pose you are right in keeping prices up in line with other towns, and also high enough to cause dissatisfaction among the farmers' stockholders. You can ship corn whenever you need to make room, billing same to us at Kansas City. Yours, truly. Midland Elevatob Company, Flack. If the witness and the Commissioner will pardon me a moment, I want to say, as a matter of entire justice, that this letter came from a farmer in this territory and not at all through Mr. Flack's employee, and I do not want in any way any injustice to be done that employee by an}' failure of mine to state that fact. It comes from a farmer entirely disconnected from the Peavey business. Mr. Flack. That letter, as I recollect it, was written — we had to, to hold our share of the grain — ^to buy higher than the farmer, be- cause there was a penalty clause. Mr. Marble. You also had another object in view, did you not? "Mr. Flack. I do not know that we did. I have always considered the farmers' elevator in that place was entitled to as much grain as we get. There are only two elevators there. Commissioner Clark. I suggest that he produce the letter that elicited this reply. Mr. Marbl*;. Can you do that? Mr. Flack. I do not know. If I can, I will. Mr. Marble. Will you do so ? Mr. Flack. If I can; yes, sir. On account of the penalty clause we have to pay more. The farmer goes to his association and pays one-half a cent a bushel if he sells to us. Mr. Marble. "Will you produce the letter to which this is a reply? (Referring to the letter already read.) - Mr. Flack. I think I can find it. I will do what I can. Mr. Marble. Will you tell in your own way what this phrase means: "And also high enough to cause dissatisfaction among the farmers' stockholders." Mr. Flack. That is on account of that penalty clause. They are not at liberty to go into the market and sell to the highest bidder. If they are bidding 30 to-day and we are bidding 30J, they have to pay a half a cent to their association. We can not expect to get any grain on that basis. They have to pay back a half a cent to their 284 GRAIN ELEVATOR INVESTIGATION. association. It would be perfectly proper for us to go on that basis. They would get better results if they were free and independent to sell to anyone. Mr. Marble. Bidding a price that would insure your buying, the farmers would have to pay into their own treasury a half a cent or a cent that the penalty clause calls for. Is that the idea ? Mr. Flack. My idea was to convince the farmer that he would have got as good results had he not been a member of the association and could sell on any market he got. Mr. Marble. You think he could have ? Mr. Flack. We have always kept that market up there to a close basis to Kansas City, not on account of the farmers' elevator only, but there is a town 3 miles south, and another 6 miles north, and another a little southwest Mr. Marble. As a matter of fact, you did raise the price because of the presence of the farmers' elevator ? Mr. Flack. I raised it on account of the penalty clause. Mr. Marble. I think Mr. Flack better tell us about the penalty clause. We have heard something about it already. Mr. Flack. I can not tell you further than the common hearsaj'. Farmers tell us that it is part of their constitution that if they do not sell to their own association, for each bushel they sold elsewhere they shall pay a certain amount into their own treasury. That amount I have been told varies from a half a cent to a cent a bushel. Mr. Marble. Is there anything further you want to say about that or its effect on you ? Mr. Flack. That has been the biggest detriment to us in holding our share of the trade where a farmers' organization has been in. Mr. Marble. Do all the farmers' associations have that clause, do you know ? Mr. Flack. I do not know that any of them have it, further than the farmers have told me. I understand it is the case at several of the places; in fact, I think it is the disposition at all places to put it in. Commissioner Clark. What is the general rule, Mr. Flack, as to the effect on prices after the farmers' elevator is established at a grain-buying station ? Mr. Flack. The effect I haA'^e noticed the first year the margins are practically nothing. Our experience has been when a farmers' ele- vator opened up in our territory they thought the whole thing was profit — the difference between what they bought at and what they sold at. It took them about a year to find out that that was not the case. Then they were disposed to buy on larger margins. Commissioner Clark. Has the result been an increased price paid the farmers for their products ? Mr. Flack. I would think so, the first year. Commissioner Clark. Was not that also true the second year ? Mr. Flack. Our experience — what we can hear — of course, we are not stockholders in those other concerns and do not get all the figures, but the way it comes to us is, the second year they have not shown any margin, and they are more disposed to buy at a margin. Mr. Marble. I will ask you, Mr. Flack, as to your elevators along the line of the Union Pacific. Do you know whether or not the Union GEAIN ELEVATOR INVESTIGATION. 285 Pacific employees clean up around them and clear away the grass and otherwise take care of them as if they were station property ? Mr. Flack. I have known of two cases where the section foreman volunteered to cut the weeds away. Mr. Marble. It is not a practice ? Mr. Flack. No, sir ; and not a thing that I would ask them to do. The only case I know of, we did not have an agent at the place and the section foreman said he would cut the weeds. He was afraid of fire ; the depot was so near the elevator. Mr. Marble. You know it is not a general order for them to take care of the elevators ? Mr. Flack. Yes, sir. Mr. Marble. You are treated the same as other elevators? Mr. Flack. Yes, sir. Mr. Marble. I have asked you as to the country. I will ask you now as to making the price on cash grain, do you know of any agree- ment among the buyers on this market as to what they should pay — I will say at the present time ? Mr. Flack. No, sir ; I do not know of any. Mr. Marble. Do you know of any during this crop year ? Mr. Flack. No, sir. Mr. Marble. When was there such an agreement? Mr. Flack. I do not know. About four years ago there was an attempt to get up a combine here. I do not know that it lasted a day, but there was an attempt to get up one. I thought, personally, it was folly to try and do anything of the kind. We are only one gateway out of 10 or 15 out of Kansas, and it did not work right and could not. We had a rule here at Kansas City when I came, they had a quotation committee that put up the price that the cash grain sold at, and we could not bid within a cent a bushel, as I recollect the figures. It was in my early days here and I am not clear on it. I know we have to compete with the mills everywhere and the grain dealers everywhere and it was known as soon as the market was over that we were going to bid so much. All they had to do was to tip off what we were going to do and they beat us. Mr. Marble. You say that not for four years has there been such a combine ? Mr. Flack. I do not know that you could call it a combination be- fore. I do not know of a combination. Mr. Marble. You called that an attempt to get up one? Mr. Flack. Yes, sir. Mr. Marble. You would know if there was one ? Mr. Flack. Not necessarily. I am on the road from one-third to one-half of my time and can not answer for what takes place when I am gone. Commissioner Clark. Your company does not receive any allow- ance from the Union Pacific Railroad Company, now, does it? Mr. Flack. At the Union Pacific Elevator we do ; yes, sir. Commissioner Clark. At Kansas City ? Mr. Flack. Yes, sir. Commissioner Clark. What is that allowance ? Mr. Flack. A cent and a quarter. I have not heard of its being canceled. 286 GRAIN ELEVATOE INVESTIGATION. Commissioner Clark. Do they make the same allowance to other elevators here. Mr. FLACit. I do not understand they do. Commissioner Clark. Do you think, as a matter of fact, that your company pays more for grain in the country because of having that cent and a quarter allowance than otherwise it would pay? Mr. Flack. No, sir; because I think the comparison of the bids would show that we have been the lowest bidder when we have been bidding. Commissioner Clark. Well, that allowance made by the Union Pacific Company is met in substance or in part, is it not, by other allowances of free service given by competing railways here? Mr. Flack. Well, I do not figure that we could keep our property at all if we did not get that allowance ; that the railroads simiply are doing for nothing what it costs, us money to do. They operate a house. They get the coal in at a wholesale rate that we can not touch. They pay no taxes in the shape of a personal property tax in Kansas. It cost us $400,000 last year. Everything they have got comes at a cheaper rate then we can buy it, and if they can not con- tinue on that basis I do not see anything but confiscation for our property. Commissioner Clark. Let us assume that no railroad is operating ah elevator or giving any service free in any way. There would, of necessity, be a certain cost for the handling of grain at Kansas City, would there not ? Mr. Flack. Yes, sir. Commissioner Clark. And in the absence of its being borne by the railroad companies it would have to be borne by the owners of the grain ? Mr. Flack. Yes, sir. Commissioner Clark. Such companies as your own? Mr. Flack. Yes, sir. Commissioner Clark. If that cost is borne by the railroad company do you pay any more for the grain in the country than you would if you paid this cost here yourself ? Mr. Flack. I suppose everybody has got his own outlet, what he can sell for, and pays according to what he is going to sell for. Commissioner Clark. Then, you are not certain whether these al- lowances made by the railroads are reflected back in the country in the price of grain there? Mr. Flack. Well, I think that eventually, outside of the actual expense put in, it all goes back to the farmer. The country dealer gets more money for his grain by reason of saving the handling down Here. Commissioner Clark. Do you imagine that the railroads would give free elevation and cleaning and clipping, etc., if it were not for the allowance the Union Pacific Eailroad makes to your people ? Mr. Flack. Well, they always did, and before the Union Pacific gave that they all had more than the Union T*acific gave. It looked to me like they were pointing and saying " look at the thief," because they had things they wanted to hide themselves. I think the al- lowance we have had has been the lowest of any. Of course, we had no way of knowing. GBAIN ELEVATOR INVESTIGATION. 287 Mr. Marble. You are unfortunate enough to have yours in a writ- ten contract? Mr. Flack. We have ours in a written contract, open and above board. Our elevator was the first elevator of any magnitude to be built here. There were no transferring facilities, and the nonorigi- nating roads built elevators to attract grain away from the other railroads, and to do it they had to give concessions of some descrip- tion. Commissioner Clark. And all these allowances and privileges given free are in the line of inducements ? Mr. Flack. I think so. I do not see any object in putting up an elevator here unless it would be to get grain to go there. Commissioner Clark. That is all. Mr. Marble. I would like to ask, Mr. Flack, in your experience^ as an elevator man and grain man, can one of these elevators, run this way by a railroad company, doing cleaning, clipping, and grading serve the public impartially and attend to the business over a Kansas City road to this point ? Mr. Flack. They make the point that they can, but I do not think they can. It has always been the favorite one. Take the Mil- waukee case. If I want to ship a car of grain out here, I have got to file my order with a competitor. I do not want to do that. Mr. Marble. You mean Mr. Flack (interrupting). I handled a car last week, a consigned car. I wanted to order that car to the Milwaukee. I have to give my order to Simonds-Shields to do it. I do not like to go to a com- petitor for that. The other roads are maintaining it as a separate office, arid I do not think the competitors would know what is being done. The Burlington, I understand — I do not know whether their house is ready or not — they have a separate agent not connected with any grain firm, and the Santa Fe have. Mr. Marble. You think it a disadvantage to have to let your com- petitors know what you are doing that way ? Mr. Flack. Yes, sir. Mr. Marble. And prefer not to do it. Mr. Flack. I prefer to have my dealings direct with the agents of the authorities I am doing business with, and not with a competitor. Mr. Marble. Do I understand that you can not give your order to an agent of the company other than Mr. Shields? Mr. Flack. If you are shipping by the Milwaukee, the order has got to go to Simonds-Shields. I am a little hazy on some of that proposition. I have been away the last three months, and most of this has come up since the Hepburn bill, but I had a demurrage bill the other day. They said, on account of your neglect to notify Simonds-Shields, the car was not transferred, and you have got to pay $6. Commissioner Clark. If your company has occasion to get grain from the Omaha Elevator Company at Council Bluffs, by what route would it be shipped ? Mr. Flack. We have brought it down by the Missouri Pacific and the Burlington, and some has been brought down on the Union Pacific. Commissioner Clark. You do not get any allowance on grain com- ing over the Missouri Pacific ? 288 GRAIN ELEVATOR INVESTIGATION. Mr. Flack. No, sir. Commissioner Clark. Or any road but the Union Pacific ? Mr.' Flack. That is all ; the Union Pacific. Commissioner Clark. If you have grain shipped from the Omaha Elevator Company at Council Bluffs by the Union Pacific, you get an allowance on that ? Mr. FtACK. No, sir. Commissioner Clark. How do you determine whether or not that has once had an allowance? Mr. Flack. There is no determination about it. If it shows billing out of Council Bluffs, they do not pay for it ; do not bill for it. Commissioner Clark. That is all. Mr. Marble. If that is payment for a service, yoii unload cars from Council Bluffs the same as any other place, do you not? Mr. Flack. Yes, sir. Mr. Marble. On that basis don't you think you ought to be allowed on those? Mr. Flack. I have always thought so. Mr. Marble. Even though the same car has received an allowance before ? Mr. Flack. We do very little of that. Mr. Marble. Did you know of any grain getting more than one allowance ? Mr. Flack. I think the tariffs provided once for a double allow- ance. Mr. Marble. Do you know of any grain getting more than the tariffs provided for? Mr. Flack. Not at present. Mr. Marble. At any time ? Mr. Flack. I do not think the last year or two anybody looked up for the tariff in effect. They were simply notified that they were doing that. Mr. Marble. The allowances were paid, you mean, without look- ing it up ? Mr. Flack. I never investigated to see if there was a tariff to cover it. Mr. Marble. You think grain got more than two allowances ? Mr. Flack. Well, we knew what the man could pay in cases. We did not figure the tariff unless two allowances had been paid. That is all we knew. Mr. Marble. That is all you could know about it ? Mr. Flack. That is all that was possible for us. to know. Mr. Marble. That is all. Commissioner Clark. You may be excused. The witness was excused. George K. Walton, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business ? Mr. Walton. Grain business. Mr. Marble. What firm ? Mr. Walton. The Logan Grain Company. Mr. Marble. Kansas City ? GRAIN ELEVATOR INVESTIGATION. 289 Mr. Walton. Yes, sir. Mr. Marble. Wliat is the business of that firm? Mr. Walton. Handling grain on commission. Mr. Marble. Receiving shipments from the country ? Mr. Walton. Yes, sir. Mr. ISIaeble. And selling them ? Mr. AA' ALTON. Yes, sir. Mr. INIarble. You ship out considerable grain, do you not ? Mr. Walton. Yes, sir; more or less. Mr. Marble. You buy on commission as well as sell on commission ? Mr. Walton. Yes, sir. Mr. Marble. I will aslv you if you have, during this grain season, sliipped any grain over the Chicago, Milwaukee and St. Paul Rail- road? Mr. Walton. Yes, sir. Mr. .^Iarble. Have you had diiRculty — ha^e j^ou put grain through the elevator of the ]\Iilwaukee Elevator Company ? Mr. Walton. A little bit; a few cars. Mr. jMarble. Did you have difficulty in getting service there ? Mr. Walton. Yes, sir. Mr. Marble. ^Vliat difficulty did you have? You can make a statement now in your own way. Perhaps this will help you. (Counsel hands witness papei\) Mr. Walton. On September 28 we ordered five cars of grain to the Milwaukee elevator, with instructions to the Simonds-Shields Grain Company, to whom all instructions must go, that thej^ be run together and loaded out in Milwaukee cars as soon as possible. A few days afterwards we ordered four more cars, with similar instructions. Our first five cars we wanted handled promptly. The wheat was mi- loaded on October 2, but we were not able to get the cars loaded out until October 8. In the meantime we had been calling the elevator foreman, Mr. Winton, who has charge of the matters in the Simonds- Shields office urging prompt action. The elevator foreman told me over the "phone that it was more convenient to load out our second lot firet, even though I had asked him to load our special lot of five care, and they were loaded first; but finally, after six days, the five care were loaded out, although we had in the meantime taken the matter up witli Mr. Shields and told him tliat we absolutely must have the stuff attended to. During that time, according to the records of the inspection bureau, there were 212 cars loaded at the Milwaukee elevator. That is our experience in handling and order- ing wheat direct to the elevator. We have had similar experiences in ordering wheat to the Milwaukee for transfer and shipment. As has been stated, we have to notif^^ the Simonds-Shields Grain Company of every car Avhich is ordered to the Milwaukee for transfer and shipment. And if you will pardon me, I will refer to my notes here regarding this matter. We ordered a number of cars on September 18, 1 believe it was, for transfer and shipment, and on the 18th and 19th put in billing with the Milwaukee and St. Paul. This billing bore a notation " must be board of trade weights," which, if the Milwaukee is running the ele- vator themselves, should be e\"idence enough that he wanted a trans- fer. On September 23 I wrote a letter to Mr. Shields, calling his S. Doc. 278, 59-2 19 290 GRAIN ELEVATOR INVESTIGATION. attention to the fact that the stuff was not handled, and urging prompt action. On September 26 I wrote them another letter, stating that I would like to get the stuff out, and on October 1 it was trans- ferred. Mr. Marble. October 1 ? Mr. Walton. Yes, sir. Mr. Marble. How long had that been in there ? Mr. "Walton. The grain had been on the tracks of the Milwaukee road — five of the cars were received on the 18th and one on the 19th or 20th. At that time they were handling on an average of 28 cars per day at the house, as Mr. Tedford's records will show. Mr. Marble. Do you know to whom those cars belonged which they did handle? Mr. Walton. I do not. Mr. Marble. Have you had any other or further experiences than that? Mr. Walton. Yes, sir. Mr. Marble. What was that ? Mr. Walton. The question has been brought up here of switching charges being absorbed by the Milwaukee road, and by all roads. Mr. Crowell remarked that he understood that it was absorbed by all the roads. We have had occasion to handle considerable wheat through elevator A, which is on the Santa Fe tracks. There is a switching charge of $5 to this elevator when the grain is taken out. We have shipped some by the Chicago and Alton and some by the Burlington, and we made claims against those roads for the $5 switch- ing which was carried by them in grain, and also $2 reconsigning, and these claims are being paid by those roads. We had six cars of wheat, which were loaded at elevator A and shipped out about Sep- tember 18, which carried this $5 switching charge to elevator A. I have prepared a claim against the Milwaukee in the usual manner and it was returned to me, stating that they had no authority to absorb switching charges from other elevators. Now, in my mind that is showing favoritism to grain in their own elevators, because if a man owns wheat in the Santa Fe elevator and sells to a customer on the Milwaukee, he has a penalty of $5 per car which he must absorb, if they sustain the attitude they have taken. This claim has been returned to them with this condition stated. Mr. Marble. Was there anything said about that being the first time the question was brought before them? Mr. Walton. Yes. In talking with their Mr. Richards, the chief clerk of the commercial office, I asked him why they didn't absorb it, and he said he didn't know what they were going to do. " Tliat is about the first claim of this sort that I have had," he said. I said : " What do you mean ? Do you mean to tell me you haven't handled any wheat from other lines ? " He said : " I haven't seen a claim of that sort." Mr. Marble. What has been your experience at other elevators in the city — the Great Western, the Santa Fe, and the Missouri Pacific? Mr. Walton. We have handled no grain over the Great Western. We have handled some through Elevator A on the Santa Fe. Mr. Marble. What was your experience there? GRAIN ELEVATOR INVESTIGATION. 291 ilr. Walton. Our experience in ordering and in getting equip- ment, which is probably what you refer to — we have had all the equip- ment that we ask for and promptly furnished by the Alton and by the Burlington. We have had a pretty good sized order to fill on the Milwaukee which we finally had to turn over to another road, because we couldn't get the equipment. We placed orders beginning Sep- tember 11 with 5 cars, and then 5 or 10 cars a day up until about the ISth. and finally on the 2'2d we had to cancel the order be- cause during that interval we had received only six cars and we had ordered 45. Mr. Marble. So far as your firm is concerned, is the ^Milwaukee road a common carrier? Ml". Walton. So far as I know it is supposed to be. Mr. Marble. Actually I Mr. Walton. Yes, sir; that is my understanding of the term. ]Mr. ^Iarble. But you can not ship wheat over it when you want to? Mr. Walton. We tried hard enough to. Mr. ^Iarble. But you didn't succet^d ? Mr. Walton. Xo, sir. I would say we didn't, because we have had 40,000 bushels of wheat that we wanted to ship, and we couldn't get equipment to fill our orders in time. Mr. Marble. Have you had any other experience than that in doing business on the Milwaukee road, either with this firm or any other ? Mr. Walton. I have been associated with grain firms here for four years, and my previous position was with a house that did some busi- ness over the Milwaukee road. Mr. Marble. Do you know what experience they had in doing busi- ness over the road ? Mr. Walton. Their cars was handled, I believe, with reasonable dispatch at that time. Mr. Marble. I will ask you this question: Have you had any trouble in making known the names of your customers, or having them being made known through this arrangement to your competi- tors? Mr. Walton. I do not know positively that I have. I do know that at one time a previous employer had orders for grain which he was shipping over the Milwaukee, placing our orders for cars for transfer along, and I do know that Mr. Shields went to Chicago, and after that his name was reported by the northwestern millers as well as by our customers at Milwaukee, and I also know that we got very few orders after that. Mr. Marble. You are not prepared to say that it was through this arrangement ? Mr. Walton. I can not say it was. I do not know. Mr. Marble. When Mr. Shields is not here, with whom do you communicate regarding this elevator and business through it ? Mr. Walton. My, communications at all times are with the ofiice, and if by telephone, usually with Mr. Winton. Mr. Marble. And by the office, what office do you mean ? Mr. Walton. The Simonds-Shields Grain Company. Mr. Marble. You do not know of any separate office maintained to run this Milwaukee elevator ? 292 GRAIN ELEVATOE INVESTIGATION. Mr. Walton. I have never heard of any other office. Mr. Marble. As a matter of fact, you do your business with the Simon ds-Shields Grain Company? Mr. Walton. Yes, sir. Mr. Marble. Does the Commissioner desire to ask any question ? Commissioner Clark. No, sir. Mr. Marble. I will ask you about country conditions, so far as you know. Have you at any time recently had communications report- ing shippers to you that they were regular or irregular dealers or anything of that sort ? Mr. Walton. Not that I know of regarding irregular dealers. We had a communication from a firm regarding one man whom they claim was paying too high prices and did not believe he could make money, but he had an elevator, and was regular, so far as I know. Mr. Marble. That complaint came from a competitor of his? Mr. Walton. Yes, sir. Mr. Marble. Was it at all an invitation to you not to buy his grain ? Mr. Walton. As I took it, they felt that if we handled his grain we were liable to get stuck. Mr. Marble. Because he was paying too much? Mr. Walton. Yes, sir. Mr. Marble. What did you do about that ? Mr. Walton. I visited him and also the territory tributary to it and told him that we were in business for the revenue, but that he ought to try and buy on a reasonable market, and we told the other dealers that so long as he was regular and had an elevator we did not see how we could discriminate against him. All the regular dealers down there have an investment in plants, as has been stated here. The matter was finally dropped and nothing further known about it. We are receiving business, not only from him, but from the parties who complained ; so evidently they are perfectly satisfied. Mr. Marble. You do not know whether or not they make an arrangement to divide the business or to agree on prices or anything of that sort ? Mr. Walton. I do not know, but I will say I do not think they do. Mr. Marble. Suppose a country merchant was buying grain and shoveling it into a house and shoveling it through the house into the cars, carrying it on as a side line ; you would feel differently toward him than you feel toward the grain man owning an elevator, wouldn't you? Mr. Walton. Where a country merchant — where there is no ele- vator in the town and the man handles a few cars with a portable , elevator — I have seen a few instances where the man who has the gen- eral store, and not in the business enough to warrant building an elevator, had a portable elevator for loading the cars ; and these men who run the general store and have their money invested in their •other business, and are reliable residents, I see no reason for trying to refuse to handle business of that sort. Mr. Marble. Supposing there is an elevator in the town and they are competing in that way, and perhaps the man is using his own labor and furnishing competition that the elevator finds pretty heavy, how would you feel about that ? GRAIN ELEVATOR INVESTIGATION. 293 Mr. Walton. I do not know what we would do, as I have not had any experience of that sort. Mr. Marble. Have you had occasion to pass on it ? Mr. Walton. No, sir. I would not care to state what I might do if it were brought up. Mr. Marble. I think that is all. Commissioner Clark. You may be excused. (Witness excused.) Commissioner Clark. Mr. Winton is here with his book now, Mr. Marble. Mr. Marble. All right. C. M. Winton, recalled. Mr. Marble. What is this book which you have here? Mr. Winton. What we call the elevator book. Mr. Marble. What does it contain ? * Mr. Winton. It contains a record of the car numbers, initials, test weights, and grade of the incoming cars, together with the un- loading weight, as unloaded at the elevator,- together with the amount of freight paid on those cars. Mr. Marble. Of all business going through the elevator? Mr. Winton. All business going through the elevator, and also the outgoing business. Mr. Marble. You do not mean that it includes any of the Simonds- Shields business ? Mr. Winton. Not that page. The book does. Mr. Marble. Where in the book does it include Simonds-Shields' business ? Mr. Winton. From here forward [indicating] . Mr. Marble. Does this book show all the charges made for service at that elevator ? Mr. Winton. No. It shows no charges whatever, made for service. Mr. Marble. Doe's it show all the charges that were made actually ? Mr. Winton. No, sir. Mr. Marble. What charges were made that do not appear in that book? Mr. Winton. There are charges on direct transfers that we made of practically $1 a car for weighing, which consists of 35 cents for the board of trade weight, 50 cents for the State weight in, and 15 cents for the State weight out, although that charge does not appear in the book. Mr. Marble. None of that is income for the elevator or for Simonds- Shields, or for the railroad ? Mr. Winton. No, sir. It is simply an income which we collect and pay to the State and the board of trade weighmaster for all the grain handled at the elevator ; these charges are charged to us, and we make the collection from the party for whom we handle it. Mr. Marble. Does it show all charges made for clipping and clean- ing? Mr. Winton. It shows no charge of that kind. Mr. Marble. Doesn't the book show any such charge ? Mr. Winton. There has been no such charge of this kind since this 294 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. This arrangement? Mr. WiNTON. The new arrangement went into effect. Mr. Marble. No one has been charged anything for elevator serv- ice? Mr. WiNTON. No, sir, Commissioner Clark. The reason that no such charges appear in this book is the fact that no such charges have been made or col- lected ? Mr. WiNTON. There is no claim, so far as I know, in that book for this arrangement. Commissioner Clark. But if such charges have been made and collected they would appear in this book, would they not? Mr. WiNTON. No, sir. Mr. Marble. Where would that appear? Mr. WiNTON. I would take from the record of the book weight of the unloading and make a charge on the invoice in my other book, keeping an impression copy of it. Mr. Marble. Has any such charge been made ? Mr. WiNTON. None whatever. Mr. Marble. Not to anyone ? Mr. WiNTON. No, sir. Mr. Marble. Not to the Simonds-Shields Grain Company ? Mr. WiNTON. No, sir. Mr. Marble. Not to Logan ? Mr. WiNTON. No, sir. Mr. Marble. Nor to anyone at all? Mr. WiNTON. No, sir. Mr. Marble. This is a tariff of the Chicago, Milwaukee and St. Paul brought in by you, is it not ? (Counsel hands paper to witness.) Mr. WiNTON. Yes, sir. Mr. Marble. Will you read it, please, so that it may be put into the record ? Or, I will read it if it is at all difficult. ■ Commissioner Clark. You may make an exhibit of it. Mr. Marble. I will make an exhibit of it (reading) : No. I. On all shipments received from connecting lines for transfer, to be reloaded into cars for shipment over the Chicago, Milwaukee and St. Paul Railway, no charge will be made for transfer (whicli will include elevation and reloading into car) if shipments are forwarded within ten days after receipt of grain into the elevator. No. 2. On all shipments received for transfer, to be forwarded from Kansas City, Mo., via lines other than the Chicago, Milwaukee and St. Paul Railway, a charge of one-half cent per 100 pounds will be made for transfer (which will include elevation and reloading into cars), if forwarded within ten days after the receipt of the grain into the elevator. No. 3. On all shipments received from connecting lines for transfer and for- warding, which are held in the elevator for a longer period than as stated above, a storage charge will be made as follows: One-half cent per bushel for each thirty days or fraction thereof. No. 4. For cleaning or mixing, one-fourth of a cent per bushel. No. 5. For clipping, one-half cent per bushel. No. 6. The charges mentioned herein will be subject to such rules and regu- lations as may be adopted by and govern the sale of grain, on the Kansas City Board of Trade, provided such rules are not in conflict with State or national laws. (The same is hereto annexed and marked " Exhibit No. 1 to Mr. Winton's testimony.") GBAIN BLEVATOE INVESTIGATION. 295 Commissioner Clark. What is the date of that ? Mr. Marble. That is dated, eflPective September 1, 1906. There is no other date than that. Commissioner Clark. That is enough. Mr. Marble. Now, then, this grain of Simonds-Shields that went through that elevator, beginning September 1, here, how many lines are on the page, do you know ? Mr. WiNTON. Fifty-seven, dropping the top and bottom line. Mr. Marble. How many cars are on that page, then [indicating] ? Mr. WiNTON. Fifty-seven in. Mr. Marble. And how many on that page ? Mr. WiNTON. Fifty-four. Mr. Marble. The first page is page 195, showing 57 in; the next page is 196, showing 54 in. How about this ? Mr. WiNTON. Fifty-five. Mr. Marble. Page 197, showing 55 in; page 198, showing 18 in; page 199, showing 28 in ; page 200, showing 32 in ; page 201, showing 43 in ; page 202, showing 27 in. Commissioner Clark. What date are you getting to ? Mr. Marble. We are down to September 17 now. How many on this page ? • Mr. WiNTON. Fifty-five. Mr. Marble. Page 203, 55 cars in; page 204, 55 cars in; page 205, 53 cars in ; page 206, 56 cars in ; page 207, down to the date of Octo- ber 1, 27 cars in. Now, all on these pages we have been counting is the grain of the Simonds-Shields Grain Company ? Mr. WiNTON. Yes, sir. Mr. Marble. And none of that grain paid for any cleaning or mixing or clipping? Mr. WiNTON. Not a cent. Mr. Marble. Will it pay ? Mr. WiNTON. I do not know that. Mr. Marble. No charge has been made? Mr. WiNTON. No charge has been made. Mr. Marble. None has been collected by the elevator ? Mr. WiNTON. No, sir. Mr. Marble. Now, this page 274 and page 240 show all grain going through the elevator between September 1, 1906, and the present time belonging to grain firms other than the Simonds-Shields Grain Company, do they ? Mr. WiNTON. No, sir. Mr. Marble. What do they show ? Mr. WiNTON. Stuff taken into the elevator and held a certain length of time and handled before it went out, such as cleaning and mixing. Mr. Marble. Well, is there any other account, then, showing grain going through that elevator ? Mr. WiNTON. No ; there is no account kept of that ; that is, in a book. If the firm has an agreement that they want simply transfer to get the board of trade weights, they advise the ofiice, and we then order such and such a car to the Milwaukee for transfer and ship- ment, or advise the elevator of that car number, and that car, on its arrival, is transferred and weighed and loaded into another car at once. It does not remain in the house at all. It is a direct transfer. 296 GRAIN ELEVATOE INVESTIGATION. Commissioner Clark. The identity of that grain is preserved, isn't it? Mr. WiNTON. Yes, sir; absolutely. Commissioner Clark. Well, this book shows the grain that be- longed to firms other than the Simonds-Shields Grain Company that has passed through that elevator since the 1st of September and that has been mixed or graded ? Mr. WiNTON. Yes, sir. Commissioner Clark. And it shows all the charges that have been made for such service, does it not ? Mr. WiNTON. As there has been no charge made, it does. Commissioner Clark. That is the point we want to make. Mr. Marble. Where is the book that shows the grain going through on direct transfer ? Mr. WiNTON. There is no book record of that. Mr. Marble. You keep no record ? Mr. WiNTON. Yes, sir. Mr. Marble. Where is the record ? Mr. WiNTON. They are on the elevator sheets that are made at the elevator and sent to the office and preserved. Mr. Marble. The office could tell us about those cars? Mr. WiNTON. I could tell you about them by producing them. Mr. Marble. Will you produce them ? Mr. WiNTON. How many do you want? Mr. Marble. From the time this arrangement went into effect, Sep- tember 1, or whenever it was. Mr. WiNtON. Do you think there are any other papers that you want ? Mr. Marble. Not that occurs to me now. All the cars shown in this book show something other than simply a direct transfer was done for them ? Mr. WiNTON. Yes, sir. Mr. MarUle. All of these cars of the Simonds-Shields Grain Com- pany were cleaned or clipped or graded ? Mr. WiNTON. No, sir. Mr. Marble. What was done ? Mr. WiNTON. Simply put in different bins, and then when we had sold a certain grade of wheat we loaded it out. Mr. Marble. Have you any account showing how many have been cleaned or clipped ? Mr. WiNTON. No, sir. Mr. Marble. No account has been kept? Mr. WiNTON. Not at the office. Mr. Marble. It would be at the office if it were kept ? Mr. WiNTON. I do not think so. Mr. Marble. Will you see how many were received other than on a direct transfer ? Mr. WiNTON. Yes, sir. Mr. Marble. Now this is the account of those other than the Simonds-Shields Grain Company, wl^ose grain was treated in some way? Mr. WiNTON. Yes, sir. Mr. Marble. Is there a different grain of Simonds-Shields Grain Company in this book — grain that received different treatment from GRAIN ELEVATOR IKVESTIGATION. 297 this grain in this column, or is this simply grain taken in and held and treated and which received more than the transfer for all the firms? Mr. WiNTON. This represents the grain that was taken in and handled, cleaned, and mixed, for firms other than the Simonds-Shields Grain Company. This [indicating] represents the Simonds-Shields grain. Mr. Marble. That was taken in and handled and treated? The book is identical so far as the service to the grain is concerned to the Simonds-Shields Grain Company and those others? Mr. WiNTON. Yes, sir. Mr. Marble. On September 11 there were two cars for Bower? Mr. WiNTON. Yes, sir. Mr. Marble. On September 19, 6 cars for Nash Ferguson; Sep- tember 20, 3 cars for Nash Ferguson ; September 22, 2 cars for Nash Ferguson ; September 26, 2 cars for Logan ; September 23, 2 cars for Logan; September 25, 2 cars for Logan; September 28, 5 cars for Logan. That is all the grain that was handled for parties other than the Simonds-Shields Grain Company through that elevator, except on direct transfer, between September 1 and October 11 Mr. WiNTON. Yes, sir. Mr. Marble. A period corresponding to the time covered by these other amounts belonging to Simonds-Shields Grain Company which we read first? Mr. WiNTON. Yes, sir. Mr. Marble. No charge has been made against either the Simonds- Shields Grain Company or any of these other firms at all ? Mr. WiNTON. No, sir. Understand me — no charge except the weigh- ing on the direct transfer. Mr. Marble. No charge by the elevator for its service ? Mr. WiNTON. Yes, sir. Mr. Marble. Does the Commissioner desire to interrogate Mr. Winton? Commissioner Clark. Put in the tariff of October 8. Show it in your record. Mr. Marble. That tariff goes past the 1st of October ? Mr. WiNTON. Yes, sir ; it goes to October 8. Mr. Marble. We will complete this if you will show me where this is in the book of Simonds-Shields. Commissioner Clark. I think the purpose is shown. Mr. Marble. It is enough to show the comparison ? Commissioner Clark. It is shown down to October 1. Ten cars are just as good as a hundred. Mr. Marble. This has been brought out, I believe. What did the Commissioner have in mind ? Commissioner Clark. I want to show in the record that, in com- parison to the tariff which you made an exhibit a few moments ago, of date September 1, and which provided a charge for cleaning and clipping, that on October 8 they issued a circular, or tariff circular, stating that no such charge would be made. It appears from what you have read out of that book that on grain so received during that month no charge was made, although the tariff provided that there should be. 298 GRAIN ELEVATOB INVESTIGATION. Mr. Marble. I will show you this tariff effective October 8. That' is the first tariff amending this one of September 1. Mr. WiNTON. The first one that I know of. Mr. Marble. What is the amendment ? Mr. WiNTON. The note says: "On all grain forwarded by the Chicago, Milwaukee and St. Paul Railway there will be no charge for cleaning, mixing, or clipping;" if it goes other than via the Mil- waukee Road these charges Avill be made. Mr. Marble. I will offer this tariff and make .it an exhibit. (The same is hereto annexed and marked " Exhibit No. 2 to Mr. Winton's testimony.") Mr. Marble. Will you ask the acting foreman of this warehouse to come up here in the morning? Mr. WiNTON. Yes, sir; do you want me to come back in the morning? Mr. Marble. Send your foreman with these records if he knows; you testified except as to those of the warehouse ? Mr. WiNTON. Yes, sir. Mr. Marble. Now, then, the foreman has that in charge ? Mr. WiNTON. Except the invoices for the charges for weighing. Mr. Marble. Those are at the warehouse? Mr. WiNTON. At my oiRce. Commissioner Clark. They were made out at the warehouse and" delivered to the oiSce? Mr. WiNTON. They are sent up overnight to me. Mr. Marble. You bring them at 10 o'clock and ask that foreman to be here at 10 o'clock, too. I will not keep him more than a minute. You have heard the testimony of Mr. Walton ? Mr. WiNTON. Only a portion of it. Mr. Marble. Regarding the delay and the difficulty which the Lo- gan Grain Company had ? Mr. WiNTON. I did not hear that portion of it. All I heard was where he stated that when he ordered the stuff over he generally noti- fied the office by telephone, mainly Mr. Winton in that office. Mr. French. In the testimony of the gentleman representing the Logan Grain Company he stated that on September 28 he ordered 5 cars of wheat to be run together and loaded out to the Milwaukee, care via the St. Paul Railroad. He states that a few days afterwards he ordered more cars. He states that this wheat was unloaded Octo- ber 2 and that none of these cars went out until October 8. I would like to ask the witness why these cars did not go out earlier — if there was any preference shown? Mr. WiNTON. What were those dates, Mr. French ? Mr. French. September 28 he ordered 5 cars. Commissioner Clark. Those cars were ordered simply for trans- fer? Mr. French. To be run together, as he expressed it, and shipped. Mr. WiNTON. He ordered 5 cars. Three of them were to be, and two were not to be, for any particular work done to them. Two of them were unloaded, the first three on the 2d, and at that time there was a great scarcity of cars, and we got his wheat out just as quick as we could. Mr. French. That does not explain what I am trying to get at. He testified further that there were 212 cars handled between the GEAIN ELEVATOR INVESTIGATION. 299 time he gave the order and the time his order was shipped out at the Milwaukee elevator; that his cars were not shipped promptly. If you remember, I called you up and asked what the facts were about that. Mr. WiNTON. Yes, sir; I told you that I had given orders that day to load his wheat. Commissioner Clark. What date was that ? Mr. WiNTON. I do not remember the date, sir. Mr. French. That date was evidently October 8, the date the gen- tleman stated. Mr. WiNTON. Yes, sir. Mr. French. You gave me some reason at that time, and I would like you to give it now, and state what it was, why you hadn't got that wheat out earlier. Mr. WiNTON. My recollection is that we did not have the cars, and prior orders were ahead of it. There were other orders to get stuff out that had been received before Mr. Logan's was. Mr. French. There was no intentional delay on your part ? Mr. WiNTON. No intentional delay whatever. In fact, outside parties had been given preference. Mr. Marble. These prior orders were from the Simonds-Shields Grain Company ? Mr. WiNTON. Yes, sir. Commissioner Clark. Is that the same reason that was assigned at that time ? Mr. French. No. Commissioner Clark. We will give you a chance to tell it. Mr. French. Mr. Logan called me up on the 'phone himself and told me the circumstances, and I telephoned at once to find out what the trouble was, and I got Mr. Winton and he explained the matter to me; and I subsequently saw Mr. Shields and he explained to me that it was — it is dim in my mind what he said — but that he would explain that to Mr. Logan personally and to his satisfaction; that he had just done something — I don't know what it was — it wasn't a straight case of delay at all ; and he had especially given orders that there should be no delay in this Nash-Ferguson case in unloading grain. I am sure that I did everything in my power to see that there was no delay. Commissioner Clark. You may be excused. Witness excused. Allen Logan, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in Kansas City ? Mr. Logan. I do. Mr. Marble. What- is your business? Mr. Logan. Grain and commission. Mr. Marble. With what firm? Mr. Logan. The Logan Grain Company. Mr. Marble. Is that the same company with which Mr. Walton is connected, who testified? ' Mr. Logan. Yes, sir. Mr. Marble. Are you familiar with the transactions concerning which he testified ? 300 GBAIN ELEVATOE INVESTIGATION. Mr. Logan. Yes, sir. Mr. Makble. Did you hear his testimony ? Mr. Logan. Yes, sir. Mr. Mabble. Are you familiar with the facts concerning which he testified ? Mr. Logan. Yes, sir. Mr. Marble. Is there any correction in his testimony that you can make? Mr. Logan. I think it is accurate ; in fact, I know it is. Mr. Marble. You know that the facts stated by him are true ? Mr. Logan. Absolutely correct. Mr. Marble. They come under your observation at the same time ? Mr. Logan. Yes, sir. Mr. Marble. And you were in part engaged in this matter ? Mr. Logan. Yes, sir. Mr. Marble. Was there any reason for that delay that you know of or have heacd of arising from your own conduct or change of orders, or anything else ? Mr: Logan. No ; not so far as I know of. Mr. Marble. So far as you have been informed ? Mr. Logan. No, sir. Mr. Marble. Have you been informed by Mr. Shields that it was your fault? Mr. Logan. He gave me an explanation the morning after I had the conversation with Mr. French. Mr. Marble. What was that explanation ? Mr. Logan. He said he had orders ahead of me for 400 cars. Mr. Marble. Did he tell you who these orders were from ? Mr. Logan. ,No. He said he had two boats for loading at Milwau- kee, and, that while he gave preference on stuff for direct transfer, he did not give preference on grain handled through the elevator; that everybody shared alike. Mr. Marble. And the result to you was that you did not get your grain shipped ? Mr. Logan. On the evening of the 7th I called up Mr. French and told him that my wheat had been in the house six or seven days, I forget just which, and that my contracts were about to expire and I wanted to know whether he was going to get it out or not, and I told him that in the event it was not handled properly and promptly, inasmuch as I had had other trouble there, I would see if I could not get action through your kind office, and the next day the stuff was loaded. Mr. Marble. How do find doing business on the Milwaukee Road ; have you any experience as to that or difficulty ? Mr. Logan. Why, I have made an effort to do some business on the Milwaukee Road during the last . four or five years, but up until recently have not been successful. Recently I got in line several hun- dred thousand bushels of wheat and I started to give the tonnage to the Milwaukee Road, for the reason that the buyers wanted it to go that way, and after asking for 400 cars, covering five or ten days, and being assured by Mr. French he could not promise me anything. I then diverted the stuff to another line, which gave me the grain to GBAIN ELEVATOR INVESTIGATION. dUl the Milwaukee Road at Chicago, and made my Milwaukee delivery in that way. Mr. Marble. Do you know whether or not at that time some grain was going out over the Milwaukee Road ? Mr. Logan. Yes, sir. Mr. Marble. How much? Mr. Logan. Between the 2d and the 8th, 212 cars were loaded out of the Milwaukee elevator. I got this information from the Missouri State grain-inspection department, and I believe there is such a docu- ment filed in this correspondence. Mr. Marble. You stated that until recently you had been unsuc- cessful in doing business over the Mil'waukee Road. What do you mean by that? Mr. Logan. I have always been out of line — price too high. Mr. Marble. You could not sell grain as cheap as some other grain competitor was selling it? Mr. Logan. Couldn't meet Simonds-Shields's competition. Mr. Marble. Do you know why? Mr. Logan. No, sir. Mr. Marble. That has not been explained to you ? Mr. Logan. No, sir. Mr. Marble. Have you protested to the officials of the company or any of them regarding this state of affairs ? Mr. Logan. You mean in the past ? Mr. Marble. In the past or at any time. ' Mr. Logan. No, I haven't. Mr. Marble. Have you had any conversation with them regarding that? Mr. Logan. No; I have always heard it was not possible to do business on the line. Mr. Marble. What do you mean by that ? Mr. Logan. I was going down to Excelsior Springs about a year and a half ago, and while in the diner with Mr. French, he, in a con- versation, told me that he did not believe it would be worth while to try to do any business on the Milwaukee. Mr. Marble. Did he tell you why? Mr. Logan. No. Mr. Marble. No further explanation on that ? Mr. Logan. No. Mr. Marble. You didn't ask him why ? Mr. Logan. No. Mr. Marble. It has been your experience, or has it not, that it was a waste of time and energy to attempt to do business there ? Mr. Logan. Yes, sir. Mr. Marble. You couldn't meet the price of your competitor ? Mr. Logan. No, sir. Mr. Marble. That is all. Mr. French. May I ask a question ? Commissioner Clark. Yes. Mr. French. You stated that on the train going to Excelsior Springs you said something about doing business, and I told you it wasn't worth your while ? Mr. Logan. Yes, sir. 302 GRAIN ELEVATOR INVESTIGATION. Mr. French. Did the conversation end there? Mr. Logan. Yes, sir ; I am sure it did. Mr. French. And you have no knowledge whatever of why I made such a statement? Mr. Logan. No ; because I felt sure you wouldn't tell me anyway, and I just wanted to know the facts, whether I could or could not. Mr. French. Mr. Logan, I would like, if I may ask for it, what was the name of the gentleman with whom Mr. Shields was sitting talking on the Milwaukee Board of Trade Mr. Logan. I do not know about that at all. I think that was an experience Mr. MofEt enjoyed while Mr. Walton was employed by him. Mr. Marble. When you desire to ship grain over the Milwaukee road with whom do you communicate ? Mr. Logan. The Simonds-Shields Grain Company. Mr. Marble. Why do you do that? Mr. Logan. We were so instructed. Mr. Marble. Who so instructed ? Mr. Logan. I think the Milwaukee got out a tariif to that eflPect. Mr. Marble. Would you recognize one if you saw it? Mr. Logan. Yes. [Counsel hands tariff to witness.] Mr. Logan. That is a copy of the one we have. " Mr. Marble. Was there a tariff like this distributed to you by the Milwaukee road? Mr. Logan. I think so. The subject-matter was the same anyway. Commissioner Clark. I think it is not really accurate to call that a tariff. Mr. Marble. That is true. I think I will ask Mr. French about that. Mr. Logan. I will state that I am not here for the purpose of harassing the Simonds-Shields Grain Company or the Milwaukee road, but when I have grain for shipment I dislike very much to have it held in the elevator an indefinite period, where I am out of use of the money and have to pay insurance on the grain ; and I just want relief, if I can get it, under the law. Mr. Marble. Have you any objection to notifying the Simonds- Shields Grain Company when you ship over this road ? Mr Logan. Yes, sir. Mr. Marble. What is that objection — why? Mr. Logan. It is confusing and it is unusual. Mr. Marble. Any objection to notifying a competitor when you do business ? Mr. Logan. Yes, sir; because I then put my business and customers in their hands. I don't think any road has a right to appoint a com- petitor of mine in the grain business as an agent to look after my grain. He can follow it, if he so desires, to destination. He can put in orders for cars ahead of me, or ahead of anybody else, and in that way handicap a business which might go to other people than them- selves. Mr. Marble. That is all. Commissioner Clark. You may be excused, Mr. Logan. Witness excused. GRAIN ELEVATOE INVESTIGATION. 303 George B. French, called as a witness, having been duly sworn, testifies as follows : Mr. Marble. What is your business, Mr. French ? Mr. French. General agent of the Chicago, Milwaukee and St. Paul Railway. Mr. Marble. At Kansas Gity ? Mr. French. Yes, sir. Mr. Marble. And as such, what are your duties generally ? Mr. French. My duties are conserving the interests of the com- pany as far as the freight department is concerned. Mr. Marble. Did you make the arrangement by which Mr. Shields was appointed grain agent here ? Mr. French. I did not make the arrangement. I was a party to it — was cognizant of it at the time it was made. Mr Marble. Who made the arrangements ? Mr. French. Mr. Hiland. Mr Marble. And you knew of the matter ? Mr. French. Yes, sir. ^ Mr. Marble. What is that arrangement? ^ Mr. French. That arrangement is that Mr. Shields is elevator agent of the company at a salary of $250 per month. Mr. Marble. What are his duties ? Mr. French. Well, his duties are rather nondescript — we do not know what his duties are. We have recognized this situation down here, that we are simply at sea. I couldn't tell you any specific thing about his duties. Mr. Marble. Were his duties prescribed at the time this contract was made ? Mr. French. No, sir ; they were not. Mr. Marble. He was simply hired and put on a $250 salary ? Mr. French. As elevator agent, and our Mr. Dudley, freight agent, was to send down one of our traveling freight auditors familiar with the grain business the way we handled it in Minneapolis and Milwaukee, and advise us as to how we were to conduct the business, or rather, how Mr. Shields was to conduct it. Mr. Marble. Mr. Shields didn't know what he was going to be when he made this contract ? Mr. French. He doesn't know the railroad method of doing business. Mr. Marble. He didn't know what he was going to be called upon to do? Mr. French. I couldn't say, because I don't laiow. Mr. Marble. And you and Mr. Hiland, who made the contract with him, do not know what he was going to be called upon to do ? Mr. French. Well, merely to conserve the interests of the St. Paul road, so far as the elevator business is concerned, but I do not know what the details are. Mr. Marble. How could you reach the conclusion and decide as to what compensation would be right for those unmapped duties ? Mr. French. We certainly thought the compensation was low enough. Mr. Marble. Low enough for what ? Mr. French, For handling the men at the elevator. 304 GRAIN ELEVATOR INVESTIGATION, Mr. Marble. He did know he was going to do that ? Mr. French. Yes, sir. Mr. Marble. What else did he know he was going to do ? Mr. French. Look after the interests of other grain firms who sent their shipments to the Milwaukee. Mr, Marble. How look after them? Mr. French. See that they were carried out in accordance — that their instructions were carried out. Mr. Marble. What else did he know he was going to do ? Mr. French. I am not very intelligent in the gram business. Mr. Marble. What I am trying to get at is how could you make a contract until you had the elements determined ? Mr. French. Mr. Shields handled the elevator prior — I don't know the exact date, but prior to three or four months ago on a lease, as I understand it, and he was familiar with the handling of the ele- vator. We were not familiar with it. So we merely asked him to conduct the business until we could arrive at a period where possibly we could do it ourselves, or get somebody cheaper than Mr. Shields. Mr. Marble. And the $250 a month, then, in your mind, had no very definite relation; it was simply that you had to have him, and 3'ou started him at $250 per month? Mr. French. We had to have him, and he thought it should be more, but we couldn't give any more. He testified at the time that other people here, handling elevators, other managers, were getting large salaries. I think he mentioned some ten or twenty thousand dollars, if I am not mistaken, but we couldn't stand for that. Mr. Marble. Getting that much from railroads for managing rail- road elevators? Mr. French. So I understand. My memory is rather indefinite on that. Mr. Marble. What were the terms of this lease which expired three or four months ago? Mr. French. That I do not know, but I know the terms of the new lease, the new lease for the tile tanks. Mr. Marble. How was the compensation or rental for these tile tanks reached ? Mr. French. That was reached on an estimated value of the tanks ; also on an estimated value of the cost to the company of cleaning and clipping, etc. Mr. Marble. What would the cost of cleaning and clipping have to do with the cost of rental of tl e tanks? Mr. French. Because in the co:itract there was a clause to the effect that in consideration of the bum received he should have the rental of the tanks, and the cleaning, clipping, etc. Mr. Marble. How much grain ? ^ Mr. French. On any amount. / Mr. Marble. On any amount that he chose to put through the elevators ? Mr. French. Yes, sir. Mr. Marble. Who made the estimate of the tanks on which that estimate was based? Mr. French. I do not know, sir. Mr. Marble. You and Mr. Hiland were together when that con- tract was made? GRAIN ELEVATOR INVESTIGATION. 305 Mr. French. No. I was only cognizant of the details after they were perfected. Mr. Marble. Do you know whether or not that is a fair rental for those tanks ? What rental is to be paid ? Mr. French. $2,500. Mr. Marble. A year ? Mr. French. I think so. I have the contract right here. Mr. Marble. May I see it a minute? Mr. French. Yes, sir. (Witness hands contract to counsel.) Mr. Marble. I believe this contract is on file ? Mr. French. You are at liberty to have anything I have got. Mr. Marble. You were going to find something about the rental; the amount of rental on these tile tanks? Mr. French. Yes. $2,500 per annum in equal installments of $208.33, in advance, and before the 15th day of each month. Mr. Marble. What is the capacity of these tanks, do you know ? Mr. French. Only what Colonel Simonds said this morning. I think he overestimated both the houses and the tanks. Mr. Marble. You knew at the time this lease was made what the capacity was ? Mr. French. No, sir. Mr. Marble. Did Mr. Hiland know ? Mr. French. I presume so. Mr. MaAble. You do not know whether he did or not? Mr. French. No, sir. Mr. Marble. Did you have anything to do with determining the price which should be paid for them ? Mr. French. No, sir. Mr. Marble. Do you know whether or not that is a fair price ? Mr. French. I consider the price of $2,500 a year for the tile tanks alone, as too big a price. Mr. Marble. Do you know whether or not any other elevator man would pay more ? Mr. French. I haven't the slightest idea. Mr. Marble. Do you know whether your road made any effort to determine whether or not they would ? Mr. French. No, sir. Mr. Marble. Were they offered to anybody else ? Mr. French. Not to my knowledge. Mr. Marble. Were the negotiations or the .fact that they were for rent made known to anybody else ? Mr. French. That I do not know. Mr. Marble. Was there any sort of competition in determining the rental ? Mr. French. Not within my knowledge. Mr. Marble. It has not been determined as yet what Mr. Shields' duties shall be, has it, exactly ? Mr. French. No, sir. The traveling freight auditor is to arrive here sometime this week and is to bring down and get a bond out and put him under bond and all that sort of thing. That takes time. Mr. Marble. So that, as a matter of fact, neither you or Mr, S. Doc. 278, 59-2 20 306 GEAIN ELEVATOR HsTVESTIGATION. Shields can tell whether he made a good contract in getting $250 a month for this service? Mr. French. I think we made a good contract. We could not have gotten along without his knowledge of the grain elevator busi- ness, because all of the employees were known to him personally, and all hired by him. Mr. Marble. You regard it as a good thing for you to continue the old arrangement, and it was a good thing for you ? Mr. French. Yes, sir ; until it is determined whether we should be in the elevator business or not. Mr. Marble. You regard that as an open question ? Mr. French. I would like to have it decided very much. Mr. Marble. By this contract Mr. Shields gets $250 a month, and by the lease he gets these tile tanks for $2,500 a year, and in consider- ation of making that lease he gets free clipping and cleaning of as much grain as he may pass through the elevator? Mr. French. He did at the time that contract was made. Mr. Marble. Has that been changed since ? Mr. French. Only changed in this respect; that has not been changed at all, but the utility of it has only been changed by reason of the fact that we have issued another tariff, effective October 8, which admits these same privileges to anybody. So that any advan- tage he had ceases in that contract. Mr. Marble. "With him it is a matter of contract, with others it is a matter of tariff, which may be issued or withdrawn? Mr. French. Yes, sir. Mr. Marble. That is the only difference now ? Mr. French. Yes, sir. Mr. Marble. Does Mr. Shields, or the Simonds-Shields Grain Com- pany, get any other consideration or allowance on putting grain through that house ? Mr. French. Absolutely nothing. Mr. Marble. Any reduction of freight rates ? Mr. French. No, sir ; nothing. Mr. Marble. Does Mr. Shields's salary at all depend on the grain shipments made by his firm? Mr. French. No, sir. Mr. Marble. Does it depend on the amount of grain carried by your road for other shippers ? Mr. French. No, sir. Mr. Marble. It is a flat $250, not to be raised or decreased by any circumstances whatever ? Mr. French. Unless we do it arbitrarily. Mr. Marble. That would be by another contract? Mr. French. Yes, sir. Mr. Marble. And there are no circumstances provided whereby it shall vary ? • Mr. French. No, sir. Mr. Marble. Now, to come to the testimony and give you your op- portunity to answer it, I will ask you what your experience has been under this contract; has it been satisfactory? Do you regard it as good for the roads and good for the public? Mr. French. I do not know how to answer that question. "We all have different views. GBAIN ELEVATOR INVESTIGATION. 307 Mr. Marble. How shall I divide the question ? Mr. French. I don't know. Mr. Marble. Do you regard it as being desirable by the road ? Mr. French. 1 wish we were never in the elevator business. Mr. Marble. You would like to be out of it ? Mr. French. Yes, sir. Mr. Marble. Why are you in the elevator business? What is the reason, or necessity, or circumstance that hinders you from getting out of the elevator business? Why don't you retire from the elevator business, if you want to ? Mr. French. Well, what are we going to do ? I will have to throw the question back to you. I do not know how we could go on. Mr. Marble. Is it the ownership of the elevator that troubles you, or is it competition with other railroads ? Mr. French. Primarily, first, is competition of other roads. Mr. Marble. That is the reason you are in the elevator business, because other roads are; is that what you mean to say? Explain why you are in the elevator business. Make the explanation in your own way. Mr. French. I am not sufficiently well informed in regard to the territory to answer that question as well as a great many other gentlemen who are present. Mr. Marble. Why do you wish the road was not in the elevator business ? Mr. French. I simply made that offhand remark on account of the unhappy time we are having. Mr. Marble. Not to pay any attention to the fact that the Inter- state Commerce Commission has come here, or to the criticisms of grain men, or anything of the sort, is there any reason interior to the road; do you regard it as good railroading, or not; as a railroad man, what do you say ? Mr. French. There are so many intricacies, exigencies, and con- tingencies attached to the railroad business, that it is more or less of a nuisance from a traffic standpoint. Mr. Marble. Difficulty of operation ? Mr. French. Difficulty of operation. Mr. Marble. Do you think that your road is giving the public good service? Mr. French. Yes, sir. Mr. Marble. Through that elevator? Mr. French. Yes, sir. Mr. Marble. Do you think that shippers other than the Simonds- Shields Grain Company can put grain through that elevator on. equal terms with them ? Mr. French. I think, in answer to that question, that the personal equation of the grain man who sells grain is of far more importance than of any small favors he may receive from railroads. Mr. Marble. You do not think that has always been true ? Mr. French. Not when it gets up to a large sum; I said small favors. Mr. Marble. Do you consider that Mr. Shields or the Simonds- Shields Grain Company are getting any small favors through this arrangement ? Mr. French. No, sir. 308 GRAIN ELEVATOR INVESTIGATION. Mr. Mabble. Do you consider that you are serving all grain ship- pers at this point with equal care— Mr. Logan, Mr. Shields, and others ? Mr. Fkench. Yes, sir ; so far as I know. Mr. Marble. That is your observation? ' Mr. French. Yes, sir ; and my intention. Mr. Marble. As a traffic man here, are you content with the record submitted by the railroad company for equality of service to ship- pers at this point ? - Mr. French. Yes, sir. Mr. Marble. You would like to have more cars, of course ? Mr. French. Yes, sir. Mr. Marble. But for equality of service you are content with that record ? ~ \ Mr. French. Yes, sir. _'' Mr. Marble. Why was the lease with the Simonds-Shields Grain Company canceled and this new arrangement made? Mr. French. That I do not know. Presumably in order to con- form to the law in some way. ^ Mr. Marble. Do you think the leasing was not lawful ? i Mr. French. That I do not know. I Mr. Marble. You do not know what those considerations were ? . Mr. French. No, sir ; excepting that the intention was to conform to the law. Mr. Marble. Is there anything you desire to add to your testimony by way of statement or otherwise for your road ? Mr. French. I simply would like to correct the testimony of Mr.' Winton; rather" to explain how the railroad is run and how the. operatives are paid. Mr. Marble. You mean the elevators? Mr. French. Yes, sir. Mr. Marble. We would like to know about that on general prin- ciples. How are they paid? Mr. French. The laborers down there were paid by the week, and of course we paid by the month ; and the thing being up, there was confusion. Mr. Shields has paid those, wages down there and has submitted ishe paid paj rolls to us, and I have sent them to Chicago for vouchers, which for two months, July and August, arrived to- day, and which will be paid to Mr. Shields. In regard to Mr. Winton speaking of being a joint employee of the Milwaukee road and the Simonds-Shields Grain Company, I would like to state in a friendly way why that happened. Mr. Shields submitted the pay rolls, and the salaries opposite the various names were too much from a railroad standpoint, and we could not stand for them; so we cut them down to what we considered a fair com- pensation. And I understand that he pays the balance for his outside work of some kind in the handling of his own grain business. Commissioner Clark. Are Mr. Wintpn's services materially dif- ferent now from what they were before this arrangement was made ? Mr. French. That I do not know, sir. Commissioner Clark. The tariff circular of October 8, I under- stood you to say, extends to all shippers the privilege of free cleaning, mixing, and clipping of grain ? GEAIN ELEVATOB INVESTIGATION. 309 Mr. French. Yes, sir. Mr. Marble. Prior to that time this privilege had been enjoyed by the Simonds-Shields Grain Company? Mr. French. Yes, sir. You mean free ? Commissioner Clark. Yes. Mr. French. For the consideration outlined in that contract; yes. sir. Commissioner Clark. What is the date of that contract? Mr. French. August 1, 1 think. Mr. Marble. The 1st day of August, 1906. Commissioner Clark. Well, between September 1 and October 8 were patrons of that elevator, other than Simonds-Shields Grain Company, charged the amount specified in the tariff of September 1 for the service rendered ? Mr. French. So I understood Mr. Winton to show on the books. I have no knowledge myself. Commissioner Clark. You evidently misunderstood Mr. Winton. He showed that nothing had been charged or paid. Mr. French. I did not hear him. Commissioner Clark. That was his testimony and the record of his book, that between the 1st of September and October 1 grain ship- ments were passed through the elevator belonging to others than the Simonds-Shields Grain Company, which was mixed and cleaned, and for which no charge under the tariff was made. I ask you if you know whether or not the tariff charges were made and collected. Mr. French. That I do not know, sir; whether they were or not. I have no means of knowing. Commissioner Clark. Who would know ? Mr. French. Mr. Shields. Commissioner Clark. Wouldn't anybody representing the Mil- waukee road know? Mr. French. No, sir ; he is our elevator agent. Commissioner Clark. Do you know where Mr. Shields is? Mr. French. No, sir; I received two or three telegrams since I have been here this afternoon trying to locate him. Mr. Marble. In practice, if any one wants to put grain throiigh this elevator and ship over the road, whom do they notify ? Mr. French. Mr. Adsit got out the circular here very recently and sent it, I think, to Mr. Wilson, or to some one on the board of trade, and in that he used the words " Simonds-Shields " instead of " E. W. Shields, elevator agent." That testimony came out this morning and Mr. Adsit is getting out another circular this afternoon correct- ing it. Mr. Marble. You ask Mr. Adsit to come here in the morning and bring one of those old circulars and also one of the new circulars that he is preparing this afternoon. Mr. French. Yes, sir. Commissioner Clark. You may be excused. Witness excused. Commissioner Clark. Before we take a recess I want to ask Mr. Crowell one question. 310 GEAIN ELEVATOR INVESTIGATION. F. G. Ceowell, recalled. Commissioner Clark. It is largely a matter of opinion, Mr. Cro- well, but you have undoubtedly a conviction on the subject, and I would like to ask you whether or not, in your judgment, an allowance made by the railroad comjDanies, either in the form of so much per 100 pounds of free service, is reflected in the price paid to the farmer in the country ? Mr. Ceowell. That is a very difficult question to answer, but I should state that it is bound to be to a limited extent. Commissioner Claek. Not to the full extent of the allowance ? Mr. Ceowell. No, sir. The reason I arrived at that conclusion was brought out in some questions your honor asked Mr. Flack, and that is based on the abolishment of all elevator charges or elevator allowances, based upon the abolishment of the handling of grain by railroad companies through free elevator service. Then, if it was possible for grain concerns to own and operate private elevators themselves, the cost of the operation of the elevator, plus the fixed charges of the elevator, would necessarily have to be deducted from the price that is paid the grain man, and consequently a correspond- ing reduction made in the price paid to the farmer. Commissioner Clark. Then, if all elevator allowances, and in- cluding the free service, were abolished, it would necessarily result in either a reduction in the price paid the farmer in the country or a reduction in the freight charges on that grain ? Mr. Crowell. One or the other, sir, is my opinion. Commissioner Claek. Much obliged. We will take a recess until 10 o'clock to-morrow morning. At 4.40 p. m. the Commission took a recess until 10 a. m., Tuesday morning, October 23, 1906. Kansas City, Mo., October 23, 1906—10 o'clock a. m. Present: Commissioners Lane and Clark. Mr. Marble. Is Mr. Gordon here ? (No response.) B. E. Beall, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Beall, where do you reside? Mr. Beall. I reside in Kansas City. Mr. Marble. What is your business? Mr. Beall. The grain business. , Mr. Marble. In what way are you connected with the grain busi- ness? Mr. Beall. I am manager of the National Grain and Elevator Company. Mr. Marble. What is the business of the National Grain and Elevator Company? Mr. Beall. Buying and selling grain. Mr. Marble. Cash grain ? GEAIN BLEVATOB INVESTIGATION. 311 Mr. BeaIjL. Yes, sir. Mr. Mabble. Where does it buy its grain ? Mr. Beall. It buys its grain in Kansas, Nebraska, Oklahoma, and Missouri. Mr. Makble. Does it own any country elevators? Mr. Beall. No, sir. Mr. Makble. From whom does it buy its grain — I do not mean the names of the parties, but the classes of persons ? Mr. Bkall. From grain dealers. Mr. Marble. Does it confine its business to any particular class of grain dealers? Mr. Beall. No, sir. Mr. Marble. Does it discriminate between persons having grain to sell because of their facilities for handling the grain ? Mr. Beall. No, sir. Mr. Marble. Does it discriminate between persons having grain to sell bticaiise of the price paid by them for grain? Mr. Beall. No, sir. Mr. Marble. Do you buy grain from farmers' elevators? Mr. Beall, Yes, sir. Mr. Marble. Would you buy grain from a country merchant own- ing a warehouse into which he shoveled his grain and from which he shoveled it into the car ? Mr. Beall. Yes, sir. Mr. Marble. The fact that he did not own an elevator would not cause you to discriminate ? Mr. Beall. It would have nothing to do with it, whatever. Mr. Marble. You look simply to see whether your customer has the grain you want ? Mr. Beall. That we buy. Mr. Marble. Your answers carry with them — the answer to this question — you may answer it. Do you confine your business to dealers known as " Eegulars," that is, members of the State asso- ciation ? Mr. Beall. No, sir. Mr. Marble. Have you ever done so? Mr. Beall. No, sir. Mr. Marble. How long has the National Grain and Elevator Com- pany b(!(!n in existence? Mr. Beall. Since about July 1. Mr. Marble. Are you a member of the Kansas City Board of Trade? Mr, Beall. No, sir. Mr. Marble. Is any member of the National Grain and Elevator Company a member of the board of trade — any representative of that company ? MTr. Beall, No, sir, Mr. Marble. Is it represented in the board of trade in any way ? Mr. Beall. No, sir, Mr, Marble. Where do you sell the grain, you buy ? Mr. Beall. We sell it to other markets. Mr. Marble. To other markets ? Mr. Beall. Yes, sir. Mr, Marble. What other markets? 312 GRAIN ELEVATOR INVESTIGATION. Mr. Beall. St. Louis, Minneapolis, and New Orleans. Mr. Marble. Do you sell any grain in Kansas City? Mr. Beall. No, sir. Mr. Marble. Have you attempted to sell grain in Kansas City ? Mr. Beall. Yes, sir. Mr. MARBLE._And did not succeed? Mr. Beall. Did not succeed. Mr. Marble. Do you know why ? Mr. Beall. Because the only buyers here are millers, to whom we attempted to sell our wheat, and they have refused, because they said it was against the rules of their board of trade to buy from the National Grain and Elevator Company. Commissioner Lane. Against what rules ? Mr. Beall. They are all members of the Kansas City Board of Trade, and their rules prohibit their members from dealing in any way with the National Grain and Elevator Company ; at least that is what they tell us, and they refuse to buy our grain. Mr. Marble. Have the millers explained further to you, saying they would like to buy your grain and liked your grain ? Mr. Beall. I have been told so ; yes, sir. Mr. Marble. Did they say why they wanted it ? Mr. Beall. We handle a nice line of grain, which comes directly from farmers, and is not mixed or scoured. It is such grain as millers prefer. Mr. Marble. Have any Kansas City millers explained to you that they would buy your grain if it were not for fear of a penalty ? Mr. Beall. Yes, sir. Mr. Marble. What penalty ? Mr. Beall. They say they would be expelled from the Kansas City Board of Trade if they bought our grain. Mr. Marble. Do you know what rule of the Kansas City Board of Trade it was that they referred to ? Mr. Beall. Yes ; they have it in their rules. Mr. Marble. Can you point it out to me here [branding witness book of rules of the Kansas City Board of Trade] ? Mr. Beall (examining book) . It is in here somewhere. Mr. Marble. Is this the rule here, on page 30 ? Mr. Beall. Yes; that is the rule, section 15, page 30. Mr. Marble. They have referred you to that rule as the rule bind- ing them ? Mr. Beall. Yes, sir, Mr. Marble. Do you know what this book is ? Mr. Beall. The Constitution, Rules, and Regulations of the Board of Trade of Kansas City, Mo. Mr. Marble. Mr. Stone, there will be no contention that that is not the rule? Mr. Stone. (Representing Kansas City Board of Trade.) None whatever. Mr. Marble. May I read this rule into the evidence? Commissioner Lane. Yes, sir. Mr. Marble (reading rule). — Sec. 15. Any member of the association who shall be interestefl or associated in business with, or shall act as the representative of, or who shall knowingly, directly or indirectly, buy or sell any cash grain or execute any order or orders for the account of any organization, firm or individual dealing in GEAIN BLEVATOE INVESTIGATION. 313 any manner in differences on the fluctuations in the marlset price of any commodity or corporate stocli without a bona fide purchase and sale of the article for au actual delivery ; or who shall be a member of, or shall, in his own behalf, or as agent, directly or indirectly make, execute or give any orders for a trade or transaction in or upon any bucket shop or any so- called exchange, wherein is conducted or permitted the business aforesaid, or who shall knowingly accept, either directly or indirectly, from any member of any so-called exchange, wherein is conducted or permitted the business afore- said, any orders for trades or transactions to be executed in the exchange hall of this association, shall be deemed guilty of unmercantile conduct; and upon complaint to and conviction thereof by the board of directors, he shall be sus- pended or expelled from membership in the association, as the board of direc- tors may decide. That is the portion of the rule that affects you, is it? Mr. Beall. Yes, sir. Mr. Maeble. Does the balance of this rule or is that all ? Mr. Beall. The cash grain. Mr. Marble (continuing reading of rule). — Any member who shall, directly or indirectly, become or continue a member of, or in his own behalf or as agent make any trade upon, or otherwise con- tribute to the maintenance of or accept any orders to be executed upon the exchange of this association from any member of a market or exchange in the city of Kansas City, Mo., permitting the distribution of its quotations covering the commodities dealt in upon the exchange of this association without imposing and enforcing prohibitions upon the use of such quotations in bucket shops, such as are, or may hereafter be imposed by this association upon it% quota- tions, shall, upon complaint to and conviction thereof by the board of directors, be suspended or expelled from membership in this asociation. Is the National Grain and Elevator Company a member of any board of trade in Kansas City ? Mr. Beall. No, sir. Mr. Marble. Is anyone representing it a member of any board of trade in Kansas City? Mr. Beall. Yes ; I am a member. Mr. Marble. You are a member of what board of trade? Mr. Beall. The National Board of Trade. Mr. Marble. Does the National Board of Trade come within the prohibitions of this section as read ? Mr. Beall. It does not. Mr. Marble. I will ask you, whether the National Grain and Ele- vator Company comes within the prohibitions of this section, as read ? Mr. Beall. It does not. Mr. Marble. Except as to your membership ? Mr. Beall. No, sir. Mr. Marble. Does it deal in futures? Mr. Beall. No, sir. Mr. Marble. Make quotations? Mr. Beall. No, sir. Mr. Marble. It is confined to receiving cash grain? Mr. Beall. Yes, sir. Mr. Marble. From the producers in the country? Mr. Beall. Yes, sir. Mr. Marble. How long have you been organized ? Mr. Beall. Since about July 1. Mr. Marble. Since July 1 to the present time how much grain have you handled in this market ? 314 GBAIN ELEVATOR INVESTIGATION. Mr. Beall. I think nearly a half million bushels of wheat. Mr. Marble. None of wliich you have been able to sell here ? Mr. Beall. No, sir. Mr. Marble. I will ask you if in any other manner than by pre- venting you from selling in this market your business has been in- terfered with, if that occurs to you ? Mr. Beall. Yes ; it has been interfered with at New Orleans. Mr. Marble. At New Orleans? Mr. Beall. Yes, sir. Mr. Marble. In what way ? Mr. Beall. We attempted to export some wheat through the Illi- nois Central elevators at New Orleans and we were handicapped on account of the elevator being leased and in control of the J. Rosen- baum Grain Company. Mr. Marble. Tell us what occurred. Mr. Beall. We needed some handling done there, and the first embargo they put on us was a charge of 5^ cents a bushel for run- ning some wheat that we could get done elsewhere for a half a cent. Mr. Marble. Was the wheat to be treated ? Mr. Beall. Dried and aired. Mr. Marble. Did you finally pay 5^ cents ? Mr. Beall. No, sir ; we did not. Mr. Marble. What did you pay ? Mr. "teEALL. A half a cent a bushel. Mr. Marble. Why was the price reduced? Mr. Beall. We made strenuous protests to the officials of the Illinois Central at Chicago and New Orleans, and after so long a time the charges were reduced to a half a cent. Mr. Marble. Did you have any other trouble than that with that shipment ? Mr. Beall. We had a great many shortages. Our grain was all short into the elevator — the weights. Mr. Marble. Have you had similar trouble with other shipments? Mr. Beall. No ; we have got along very well with other shipments. Mr. Marble. This was short how much? Mr. Beall. I could not tell you — a thousand to two or three thou- sand pounds to a car. Mr. Marble. Was that shipment handled differently from other shipments that you say came all right? Mr. Beall. No, sir. Mr. Marble. It came off the same scale? Mr. Beall. Yes, and was weighed by the same people. In fact, it was all weighed by the Burlington road at their transfer elevator at Harlem. Mr. Marble. I will ask you if you have put grain through the elevators owned or operated by the railroads in this city? Mr. Beall. A little through the Missouri Pacific one. Mr. Marble. Did you experience any disadvantage in using those elevators ? Mr. Beall. I have not had any trouble at the Missouri Pacific. It has been very satisfactory. Mr. Marble. Is there anything in the arrangement between. the railroads and those elevators of which you want to complain ? Mr. Beall. I would not feel safe in putting my grain through an GBAIN ELEVATOE INVESTIGATION. 315 elevator operated by a member of the Kansas City Board of Trade, whose rules are inimical to our interests. Nearly all the elevators are operated that way except the Missouri Pacific. Mr! Marble. Have you any complaint to make that they are operated by people in the grain business? Mr. Beall. Yes, sir. Mr. Marble. What is that ? Mr. Beall. I would not feel like putting my business in the hands of a competitor. Mr. Marble. You have a double complaint : That these elevators are in the hands of competitors and also members of the board of trade of Kansas City who are antagonistic to you ? Mr. Beall. Yes, sir. Mr. Marble. Were you ever a member of the Kansas City Board of Trade? Mr. Beall. I have been ; yes, sir. Mr. Marble. Up to what time? Mr. Beall. Up to about a year ago — a little less than a year ago, I believe. Mr. Marble. I will ask you if, while you were a member of the Kansas City Board of Trade, you were a member or were you acquainted with any combination of members of that board of trade to agree upon prices to be paid in this market for cash wheat? Mr. Beall. I was at one time. Mr. Marble. When ? Mr. Beall. About March, 1904. Mr. Marble. About March, 1904 ? Mr. Beall. Yes, sir. Mr. Marble. Who else was in that combination with you ? Mr. Beall. I think the elevators were generally represented in the combine. Mr. Marble. As elevators or by individuals ? Mr. Beall. Individual representatives of the elevators, like my- self. Mr. Marble. Did you own an elevator at that time ? Mr. Beall. Yes, sir. Mr. Marble. Or were you controlling one at that time ? Mr. Beall. Yes, sir. Mr. Marble. What elevator ? Mr. Beall. The Diamond Elevator. Mr. Marble. Tell us who else was in that combine. Mr. Beall. I do not know that I could remember all of them, but Mr. Hall, of the Hall-Baker Grain Company, was there ; Mr. Sidney J. Smith, of the Sidney J. Smith & Son, or, I believe, of the Grant W. Kenny Grain Company, I think it was at that time ; Mr. Flack, of the Midland Elevator; Mr. Warrick, of John I. Glover; Mr. E. W. Shields, of the Simonds-Shields Grain Company; and I think Mr. Hoose, of the Armour Grain Company — the Southwestern Grain Company,, owned by Armour & Co. There were others there ; I do not just remember who they were. I think Mr. Broadnax, of Broad- nax & McLiney, was there, or Mr. McLiney, I do not remember which. Mr. Marble. Was Mr. Adams there ? Mr. Beall. Yes ; I think he was. 316 GKAIlir ELEVATOR INVESTIGATION. Mr. Marble. Was he well acquainted with what was done in that combine ? Mr. Beall. He must have been. He was present. Mr. Marble. Did Mr. Adams have anything to do with giving out the prices to be bid by that combine ? Mr. Beall. I think not. I think the prices were to be given out by Mr. Cockle, of Carrington & Patton. Mr. Marble (handing paper to witness). I will ask you if you have ever seen anything like that before ? Mr. Beall. Well, that was the style in which they were to be — that was the basis we were to buy on, as I understand it. Mr. Marble. Do you recognize that as one of the price cards of this combine or not ? Mr. Beall. Yes, sir. Mr. Marble. You do ? Mr. Beall. Yes, sir. Mr. Marble. By whom were these prepared ? Mr. Beall. I think by Mr. Cockle. Mr. Marble. I offer this in evidence. (The same is hereto annexed and marked " Exhibit No. 1 to Mr. Beall's testimony.") Mr. Marble. I will read it : In effect November 28, 1904 ; under May ; 58, No. 3 hard. May price ; 56 and 57, No. 3 hard, 1 under ; 54 and 55, No. 4 hard, 6 under ; 53 and 53^, No. 4 hard, Y under ; 52 and 52i, No. 4 hard, 8 under ; 51, No. 4 hard, 10 under ; 50, No. 4 hard, 12 under ; reject not over 85 cents hard. Where was this combination you tell us of formed — at whose office ? Mr. Beall. The time I met with them was in Mr. Hall's office. Mr. Marble. About when, would you say, that was ? Mr. Beall. As I recollect, in March, or possibly in April ; I do not remember exactly. Mr. Marble. Had you ever seen this slip before I showed it to you ? Mr. Beall. No, sir. Mr. Marble. You recollect that as similar to Mr. Beall. Similar to and like the one I saw. I do not think I was a party to the agreement then. Mr Marble. How long did the agreement last ? Mr. Beall. I do not know. Mr. Marble. How long were you a party to it ? Mr Beall. One day. Mr. Marble. Why not longer ? Mr. Beall. Because I did not like the plan and withdrew from it. Commissioner Lane. Were all the elevator men in that combine — all in the city ? Mr. Beall. I think all the elevator men in the city were. Commissioner Lane. And did they fix these rates every day ? Mr. Beall. Every morning, before the opening of the market. Commissioner Lane. Do you know what the effect was as to the controlling of prices ? Mr. Beall. Well, they bought the wheat at those prices. Commissioner Lane. At the price they fixed ? Mr. Beall. As far as I know. Mr. Marble. That was the attempt anyway? GRAIN ELEVATOR INVESTIGATION. 317 Mr. Beall. That was the attempt. I do not know what they did after I left them. Commissioner Lane. Do you linow whether the prices they bought at were lower than the prices that otherwise would have obtained ? Mr. Beall. Well, that was the plan; that was the object of the combination. To buy a little lower than they had been.' They had been paying a little too much, they thought. Commissioner Lane. Do you know whether or not the price was cut on account of the combine ? Mr. Beall. Oh, yes; it was cut. Commissioner Lane. Did it last a sufficient length of time to make proof of that? Mr. Beall. Well, sir, I do not know how long the combine lasted after I left it. I only attended one meeting and got one slip. Commissioner Lane. You do not know whether it is in existence to-day or not? Mr. Beall. I do not. Mr. Marble. Did you have an agreed margin of profit in that combine ? Mr. Beall. Well, it was not managed in exactly that way. It was simply agreed to buy the grain at a certain price. Mr. Marble. What margin of profit did you intend? Was that discussed ? Mr. Beall. No; that was not discussed. Mr. Marble. Were the prices fixed arbitrarily, then? Mr. Beall. Yes, sir. Mr. Marble. In what way was the price determined, do you know ? Mr. Beall. I think it was to be fixed on a basis of the Chicago option, perhaps — some such basis. Mr. Marble. Was Mr. Kemper a member of that combine ? Mr. Beall. I am not sure whether he was there or not. I can not tell you. He was running an elevator at that time. Mr. Marble. Was Mr. Kenny ? Mr. Beall. Mr. Kenny was not present, as I recollect it. I think Mr. Smith represented Mr. Kenny. Mr. Marble. Was Mr. Jolly ? Mr. Beall. Now, I am inclined to think that Mr. Jolly was there. I will not be positive about that. I think he represented the Rosen- baum Grain Company at that time. Mr. Marble. I will ask you if you are familiar with the operations of the grain dealers' associations of Kansas and Oklahoma, Missouri, Iowa, Nebraska, or any of them ? Mr. Beall. Well, somewhat. Mr. Marble. Do you know whether or not Kansas City dealers are now, or have at any time, been notified by any official of those asso- ciations, or any of them, of shipments of irregular grain ? Mr. Beall. Yes, sir. Mr. Marble. When did that occur, so far as you know ? Mr. Beall. Well, as far as I know, I think it occurred as recently as two or three years ago. , Mr. Marble. How were those shipments dealt with after such notice was gi\ jn? What was the effect of the notice so far as you know? 318 GKAIN ELEVATOR INVESTIGATION. Mr. Beall. Well, the Kansas Grain Dealers' Association, it was generally understood, would boycott any concern that would handle the farmers' business. Mr. Marble. Do you know of anyone having such experience ? Mr. Beall. No ; I do not. Mr. Marble. You can not testify as to that? Mr. Beall. I know that they observed the wish — followed the wish of the Kansas Grain Dealers' Association to a large extent for quite a time in discouraging the farmers' shipments. Mr. Marble. Did you follow the wish of the grain dealers' asso- ciation in your own business at that time ? Mr. Beall. I did not. Mr. Marble. Was any penalty visited upon you ? Mr. Beall. None, except I did not get any business from the Kan- sas Grain Dealers' Association. Mr. Marble. You found yourself without business from the mem- bers of the association ? Mr. Beall. Yes, sir; except in isolated cases. Mr. Marble. Did the railroads take any part in that controversy, so far as you know ? Mr. Beall. Well, as far as my personal knowledge extends, I do not know, only what I have been told by the shippers. Mr. Marble. Shippers who had had trouble? Mr. Beall. Shippers who had had trouble and were complaining about not being able to get cars, not being able to get elevator sites. The fact is, I think the railroads refused to set cars for anybody that did not have grain in sight. A man that did not have grain in an elevator on the right of way could not get a car at one time. Mr. Marble. Was that simply one railroad? Mr. Beall. It was nearly all of them — the Union Pacific, Missouri Pacific, and Rock Island. Mr. Marble. Going back to the time the railroads were making elevation allowances, do you know of any grain receiving more than the published allowance or more allowances than the number published ? Mr. Beall. No, sir. Mr. Marble. You are not familiar with that? Mr. Beall. No, sir. Mr. Marble. Do you know of any grain receiving three or four allowances ? Mr. Beall. Well, I have heard of grain that was said to receive more than one allowance. Mr. Marble. You do not know of that yourself ? Mr. Beall. No, sir. Mr. Marble. Do you know on what basis that charge was made ? Mr. Beall. Well, it was an allowance at different elevators owned by the same company, at different points on the line, while it was in transit. Mr. Marble. I mean, do you know on what basis it was charged, that the grain did receive more allowance than that published ? Was the matter discussed or laid before you ? Mr. Beall. No ; I do not understand Mr. Marbi,e. \Vhy did you think the grain received more than the published allowance? GRAIN ELEVATOR INVESTIGATION. 319 Mr. Beall. Because of the price at the final destination and the price at the originating point, which would indicate that they were getting more than one allowance. I understand that grain arriving at Kansas City would receive an elevation; an elevation would be paid for it on the initial line, and the outgoing road would also pay an elevation, which would make two elevations on the same grain; but I never had that paid me. Mr. Makble. Have you had any controversy with the newspapers of Kansas City, growing out of the controversy with the board of trade? Mr. Beall. Well, the newspapers, on account of the threats made, refused to publish National Board of Trade quotations. Mr. Marble. That related to the National Board of Trade ? Mr. Beall. And not to the National Grain and Elevator business. Mr. Marble. Not to your cash business ? Mr. Beall. No, sir. Mr. Marble. How do you know that was brought about ? Mr. Beall. How did I know ? Mr. Marble. Yes, sir. Mr. BeaIl. It was public talk. It was published in the papers. Mr. Marble. They were threatened with punishment if they pub- lished these quotations ? Mr. Beall. Well, to that effect. Commissioner Lane. How many members has the National Board of Trade? Mr. Beall. How many members? Commissioner Lane. Yes, sir. Mr. Beall. I think something like 80 working members, and what they call " general members," about 400. Commissioner Lane. How many in Kansas City ? Mr. Beall. I think about 25. Commissioner Lane. Do you have a regular organization and meet every day ? Mr. Beall. Yes, sir; and do business the same as on other boards of trade. The National Board of Trade is incorporated under the laws of Missouri. It is a corporation. Commissioner Lane, Where, besides here, do you have board meet- ings ? In what other cities do you have meetings ? Mr. Beall. We have no meetings excepting here. Commissioner Lane. Then the remainder of the 400 members are outside of this city ? Mr. Beall. Yes, sir. Commissioner Lane. And they act as agents for this board, do they? Mr. Beall. Agents for the members of this board in some cases, and in other cases they act as their own agents, etc., the same as is thepractice on other boards of trade. Commissioner Lane. Do you have representatives in Chicago? Agents in Chicago — ^The National Board of Trade? Mr. Beall. No ; the National Board of Trade has no agents ; they only have members, the same as other boards of trade, and it is the individuals that transact business on this board of trade. Commissioner Lane. Do you have some membership in Chicago ? Mr. Beall. I think we have some membership in Chicago. 320 GEAIN ELEVATOR INVESTIGATION. Commissioner Lane. Do you know whether the board of trade of Chicago boycotts or blacklists your members because of your member- ship here? Mr. Beall. Yes, sir. Commissioner Lane. Is it so at other boards of trade in the country ? Mr. Beall. The Chicago Board of Trade, Kansas City Board of Trade,, and Minneapolis Board of Trade. Commissioner Lane. On the ground that you are a bucket shop? Mr. Beall. On the ground that we are a bucket shop. Commissioner Lane. Have you ever tested that matter in court ? Mr. Beall. We have had no occasion to test it. Commissioner Lane. Has it been tested at all ? Mr. Beall. I do not think so. Commissioner Lane. You have made no effort, and no member of your board has made any effort to get membership in the board of trade on the ground that your membership in this organization did not exclude him ? Mr. Beall. No, sir; it would be no use. Commissioner Clark. Is that the attitude boards of trade generally assume toward what they believe to be bucket shops ? Mr. Beall. That is the attitude, I understand ; yes, sir. Mr. Marble. But, in your mind, there is a distinction at any rate to be drawn between the National Board of Trade and the National Grain and Elevator Company? Mr. Beall. It is a separate corporation. One is a board of trade and the other is a commercial organization for buying and selling grain. They have no relation to each other except that I, as man- ager of the National Grain and Elevator Company, am also a member of the board of trade. Mr. Marble. Now, is there anything you desire to add to this, con- cerning which you have not been questioned ? Mr. Beall. I would like to add that we have been interfered with in a further way by the weight department of the Kansas City Board of Trade insisting on weighing all our grain and reporting it to their board, or to their weight department. Commissioner Clark. By what right do they demand the privilege of weighing your grain? Mr. Beall. They claim the right to weigh all grain coming into Kansas City. Commissioner Clark. Suppose you refuse ? Mr. Beall. I did file a very vigorous protest with the department, but Mr. Jones, the chief clerk, said he would weigh the grain any- way. Commissioner Clark. What department do you mean ? Mr. Beall. The Kansas City Board of Trade weight department. Commissioner Clark. How do they get possession of your grain to weigh it? Mr. Beall. They have weighers at the transfer places, where all grain coming into Kansas City must be transferred through some ele- vator for shipment in order to release the equipment belonging to the initial lines and put it into equipment belonging to the lines taking the stuff out of town. They have men stationed at all these places GEAIN ELEVATOR INVESTIGATION. 321 and weighing at all these places, and all these places are represented by members on the Kansas City Board of Trade. Commissioner Clark. Is that arrangement by courtesy of the differ- ent elevator companies ? Mr. Beall. It is by an agreement of the Kansas City Board of Trade that their department shall take charge of and weigh all grain. Commissioner Clark. You stated at the beginning of your testi- mony that your company did not own any elevators. Do you operate any elevators? Mr. Beall. No, sir; our business is transferred by railroad eleva- tors and transfer stations. Commissioner Clark. Is that all, Mr. Marble ? Mr. Marble. I have nothing further. Commissioner Clark. Does anybody else desire to interrogate Mr. Beall? Mr. Stone. (Representing the Kansas City Board of Trade.) Who are these millers who are members of the board of trade who will not buy your wheat ? Mr. Beall. Well, Mr. John Kelly refused to buy our wheat, and Mr. Bouldy and Mr. Moore, of the Zenith Mills, refused to buy our wheat, and J. F. AUbright, a broker, refused, and the Matthews & Broughton Grain Company refused to handle our wheat, and Mr. Shields refused to handle it. Mr. Stone. Was it because of this rule 15? Mr. Beall. That is what they told us, that they were liable to get into trouble with their board oi trade and be expelled if they bought grain from the National Grain and Elevator Company. Mr. Stone. When did you sell or dispose of your membership in the Kansas City Board of Trade? Mr. Beall. I think it was some time in February. Mr. Stone. Of this year ? Mr. Beall. Yes, sir. Mr. Stone. You were a member in March and April of 1905 ? Mr. Beall. No; I do not remember about that. I think not. I think I disposed of my membership in February. Mr. Stone. 1904, I mean — I am mistaken. Mr. Beall. Yes, sir. Mr. Stone. Along in March, 1904, you were cited before the arbi- tration committee of the board of trade to answer a charge made by the Adams Grain Company that you owed them something like $2,000, 1 believe, which you refuse to pay. Is that true ? Mr. Beall. I desire, your Honor, not to answer the question, be- cause that is in litigation and it is evident that Mr. Stohe wants to cross me up here in order to get information material in the trial of that case. I would like to be excused. I do not think it has any- thing to do with the hearing here. Mr. Stone. May it please the Commission, I only intend to ask Mr. Beall one or two questions. It is not desired to get any evidence. Under the law of our State we can take depositions, and I would have the right to subpoena Mr. Beall to-morrow and take his testi- mony on any question involved in the case in court, so there is no object of that kind. Commissioner Lane. What is your object? S. Doc. 278, 59-2 21 322 GEAIN ELEVATOR INVESTIGATION. Mr. Stone. I want to show Mr. Beall's quarrel with the board of trade. Mr. Beall. I have a right to be notified when my deposition is taken, so that I can have counsel there, and I do not think this is the proper place to take my deposition in that case. Commissioner Clark. I do not think we shall insist on the witness answering the question, because we have no desire to go into private affairs. You may introduce testimony, if you desire to, from other sources to show there were other and sufficient reasons for the action of your members of your board of trade. Mr. Stone. Mr. Beall, were you suspended from the board of trade in 1904? Mr. Beall. I decline to answer the question for the same reason I stated before. Commissioner Claek. I do not think that reason holds good. He asks you a simple question whether or not you were suspended. What do you say ? Mr. Beall. I was. Mr. Stone. You have now pending against the board of trade two suits in the circuit court of this county, have you not, Mr. Beall, aggregating damages or claims for damages, something over $50,000 ? Mr. Beall. Yes, sir. Mr. Stone. And your company, the National Grain and Elevator Company has for some months been sending out market letters, in many of which you have taken occasion to vilify the board of trade, calling them " that gang," and prophesying a speedy dissolution, etc.? Mr. Beall. I do not remember that I ever prophesied a speedy dissolution. Mr. Stone. Have not you in some of those letters spoken of them as " that gang " ? Mr. Beall. I have endeavored to answer some of their vilifications in a little dirty sheet down at Wichita, called the Southwestern Grain Journal, that they have had a man send out broadcast over the coun- try vilifying us and the National Board of Trade. Mr. Stone. And your method of answering them has been Mr. Beall (interrupting). The only method we had. 3Ir. Stone. Your method of answering has been through your market letters and has been vilification in return ? Mr. Beall. The market letters will speak for themselves, if you have got them, and I suppose you have. The Commission would like to hear them. That is the best evidence. Mr. Stone. But that is a fact, is it not ? Mr. Beall. I do not think so. I am willing, however, to let the Commission be the judge, if you will introduce the letters. They are the best evidence. Mr. Stone. Are you a director of the National Board of Trade ? Mr. Beall. I am not. Mr. Stone. There are two classes of membership there, I believe, are there not, in the National Board of Trade ? Mr. Beall. Yes, sir. Mr. Stone. One is $100 and the other a $10 membership ? Mr. Beall. I do not know of any $10 membership. GEAIN ELEVATOE INVESTIGATION. 323 Mr. Stone. What is the difference in the character of those mem- berships ? Mr. Beall. As I understand, under their rules a man before get- ting quotations or being able to do business must become a member, and for a certain use there is a membership sold for $20, but it does not carry with it the privilege of trading on the floor. The member- ship that sells for $100 carries with it all the privileges of the trading floor of the exchange. Mr. Stone. Are the National Board of Trade quotations furnished to the members holding a $20 certificate ? Mr. Beall. Yes, sir. Mr. Stone. How many members have you holding these $100 mem- berships ? Mr. Beall. I do not know, sir, how many there are. The records of the board of trade will show. The secretary is here. You can have him subpoenaed and he can tell you exactly. I am not thor- oughly conversant with the management of the board of trade, be- cause I am busy with my own business. Mr. Stone. Are you familiar with the organization at the National Board of Trade? Mr. Beall. Somewhat. Mr. Stone. Do you know who its incorporators were ? Mr. Beall. I do not. Mr. Stone (handing pamphlet to witness). Are these the rules, regulations, and by-laws of the National Board of Trade ? Mr. Beall (after examining pamphlet). Yes, sir. Mr. Stone. These were issued, or, rather, are marked on the front page, "Adopted, September 18, 1905." The first matter in this pam- phlet is the articles of incorporation. A copy of them, and article 4 of those articles of incorporation is as follows : The names and places of residence of the several shareholders herein and the number of share subscribed by each is as follows, to wit : Name. Address. Shares. 80 A. M. McDearmott do 20 George W. Glawson St. Louis, Mo 20 J. C. Burger 20 C. P. Hunt Memphis Tenn 30 Bruce Detrich 20 A. A. Davis 10 Do you know those gentlemen whose names I have called ? Mr. Beall. I know most of them. Mr. Stone. Mr. Burger, of Denver, Colo., what is the title of his business ? Mr. Beall. I do not know the gentleman or his business. Mr. Stone. C. P. -Hunt, of Memphis, Tenn. ? Mr. Beall. I do not know him. Mr. Stone. Bruce Detrich, of Kansas City, Mo.? Mr. Beall. I think he is an official of the Christie Grain and Stock Company. I know him very well. Mr. Stone. He is vice-president of Christie & Co., is he not? Mr. Beall. I do not know his position, 324 GEAIN ELEVATOR INVESTIGATION. Mr. Stone. And C. C. Christie, mentioned in here, is president of that company? Mr. Beall. Yes, sir. Mr. Stone. Do you know A. A. Davis, of Memphis, Tenn. ? Mr. Beall. I do not know him. Mr. Stone. To get it into the record, I would like to read article 3, showing the total capitalization, or I can hand it to the stenog- rapher and have him copy it in. Article 3, referred to by Mr. Stone, is as follows : The amount of the capital stock of this corporation shall be the sum of $10,000, divided into 200 shares, of the par value of $50 each, all of which is actually paid up in lawful money of the United States, and the same is now sub- scribed in good faith, and is in the custody of the persons herein named as the fiEst board of directors. Mr. Stone. These articles of incorporation are acknowledged as required by law, and the acknowledgment is as follows : State of MissotrEi, County of Jackson — the stenographer can copy that in. Commissioner Lane. We want to get to the real vitals of these mat- ters we are investigating. Mr. Stone. I will not go very far into it. I will just read this. That is all I care to put in, just the date of the acknowledgment. The acknowledgment is as follows: On this 10th day of June, 1905, before me, a notary public, within and for the county of Jaclcson and State of Missouri, personally appeared C. C. Christie, A. M. McDearmott, George W. Clawson, J. C. Burger, C. P. Hunt, Bruce Detrich, and A. A. Davis, to me known to be the persons described in and who executed the foregoing instrument, and acknowledged that they executed the same as their free act and deed. In witness whereof I have hereunto set my hand and affixed my oflBcial seal at my oflSce in the city of Kansas City, Mo., this 10th day of June, 1905. My commission as notary public expires April 13, 1908. [L. s.] Ltdia B. Molmes, Notary Public. Mr. Stone. That was the 10th of June, 1905. Here is a fact I would like to get into the record, simply as a matter of record. , (Reading from book.) And that is that the case of the board of trade of the city of Chicago, petitioner, against Christie Grain and Stock Company and C. C. Christie, No. 224 ; in the, case of L. A. Kin- sey et al., petitioners, against the board of trade of the city of Chicago, No. 280, it is decided by the Supreme Court of the United States Mr. Beall. Will you allow me to interrupt you a moment ? Mr. Stone. Certainly. Mr. Beall. I would like to ask the Commission if they do not think that it is right as long as the National Board of Trade is attacked here by the Kansas City Board of Trade, that they be given time to get their attorney here. Commissioner Clark. The Commission is not going into any great length into a controversy between these two boards of trade. That is not our mission. I presume the State courts or the Federal courts can afford redress to any injured party. Mr. Beall. They seem to be going into it to some extent. , Commissioner Clark. You started the story in your accusation of discrimination against you on the part of the Kansas City Board of GRAIN ELEVATOK INVESTIGATION. 325 Trade. I take it that Mr. Stone is endeavoring to show that the Kansas City Board of Trade had some reason for their action. Mr. Stone. Precisely. Commissioner Clark. To a reasonable extent, you will be allowed to continue. Mr. Beall. Will you allow us to answer what he has to say ? Commissioner Clark. It will depend on how much necessity there may be, or how much justice there may be in the request. As I say, we are not going to spend all day in this controversy between you gen- tlemen. What he proposes to submit now, I understand, is the official record of the decision of the Supreme Court of the United States, which is public property. Mr. Stone. That is correct. Commissioner Clark. You may proceed. Mr. Stone (continuing reading). " Decided by the Supreme Court of the United States, May 8, 1905, reported in 198 U. S., 236 ; 49 Law Edition, 1031." So this National Board of Trade was organized or. rather its arti- cles were drawn up two days over a month after this decision by the Supreme Court. I would like to ask you, Mr. Beall, if you know whether Mr. Chris- tie, mentioned in here [refering to Kules, Regulations, and By-laws of the National Board of Trade] as the holder of 80 shares, approxi- mately half of the offered stock of the National Board of Trade, and James H. Harkless, attorney for the National Board of Trade, the' latter part of this July just past, presented to the prosecuting attor- ney of this county and asked to be filed a petition in the nature' of a quo warranto for the purpose of disbanding this board of trade on account of this rule 15 and its refusal to deal with the National Board of Trade, and after a hearing of over a month and arguments pro and con that petition was not dismissed ? Mr. Beall. I only know what I have heard about it. I do not know about it from my personal knowledge. I never saw the peti- tion. Mr. Stone. Do you know whether Mr. Christie, Mr. McDearmott, and Mr. Clawson were, at the time of the organization of this board, and the first two are yet, engaged in running bucket shops ? Mr. Beall. I do not. Mr. Stone. Do you know they are not ? Mr. Beall. That is my opinion. I do not know that they are. Mr. Stone. Who owns the stock in your elevator, Mr. Beall ? Mr. Beall. The stock in our elevator company is owned by a num- ber of stockholders in Kansas and Mr.. Christie and myself. Mr. Stone. Who owns the majority of it? Mr. Beall. The farmers in Kansas and myself. Mr. Stone. What is it capitalized for? Mr. Beall. $25,000. Mr. Stone. How much do you own ? Mr. Beall. $7,500 of it. Mr. Stone. How much does Mr. Christie own ? Mr. Beall. $7,500 of it. Mr. Stone. Well, that makes a majority of the stock, does it not? Mr. Beall. Yes; but $7,500 and $10,000 by the others makes an- other majority. 326 GRAIN ELEVATOR INVESTIGATION. Mr. Stone. Mr. Christie and you hold $15,000 of the $25,000 of that stock ? Mr. Beall. Yes, sir ; or the farmers and myself own $17,500 of it. Commissioner Clark. Or the farmers and Mr. Christie own a ma- jority of it. Mr. Beall. Or the farmers and Mr. Christie own a majority of it. You can figure that almost any way to suit yourself. Mr. Stone. Have you ever found any injustice or inaccuracy in the weights made on your grain by the weighers of the board of Kansas City? Mr. Beall. No, sir. Mr. Stone. I believe that is all. Commissioner Claek. You may be excused, Mr. Beall. (The witness was excused.) Mr. Stone. There is one piece of evidence we should like to ask the Commission to obtain and make a part of this record. It is a report by the post-office inspector at this ' place recommending, I under- stand^! have, never seen the report and know only by hearsay — recommending the issuance of a fraud order against the National Board of Trade and prohibiting their use of the mails. We should like to have that called for by the Commission and made a part of the record. Mr. Durham. The inspector is here with the report. Mr. Stone. The inspector has been subpoenaed and if the Commis- sion will permit, we would like to make it part of the record. We do not care to read it or introduce it otherwise now. Mr. Marble. I would like to ask, Mr Stone, if this is a thing that the inspector has any right to make public ? Mr. Stone. I do not know. Commissioner Clark. We do fiot think it would be proper to admit this testimony from this inspector without giving the other people an opportunity to answer and enter their denial, and, as has been repeatedly stated, this is not the essential purpose of this hearing, nor is it within the province of this Commission to decide a local contro- versy clearly within the jurisdiction of the courts. We want to show the relationship between these elevators and the transportation com- panies, and the manner of buying and selling grain according to the provisions of the resolution under which we are acting. Mr. Durham. In order to justify the action of the Kansas City Board of Trade, who refuse to trade with Mr. Beall, we want to show that he belongs to a bucket shop, a gambling concern, pure and simple. Commissioner Clark. It has been shown that that is the attitude of the Kansas City Board of Trade toward Mr. Beall. It has been shown that that is the usual attitude of boards of trade against what are considered to be bucket shops. If Mr. Beall is injured, his remedy lies in the courts and not in the Commission. Mr. Marble. This, so far as the Commission has to do with it, relates to his inability to sell the cash grain. The board of trade has its justification. I understand that the fact of its refusal to allow him to sell here and its justification "for that refusal is now before the Commission. Mr. Crowell. I would like to have the opportunity to give some testimony in view of the testimony of Mr. Beall, in reference to the GRAIN ELEVATOR INVESTIGATION. 327 presence of Mr. Hall at an alleged combine in 1904. Mr. Hall being absent, I would like to have the opportunity to go on the stand to show that Mv. Hall was in Europe at that time. Mr. ^Marble. I would like to have Mr. Hall here this afternoon as a witness. You say it may be possible to bring him ? Mr. Ckowell. It may be. J. S. Adsit, called as a witness, being duly sworn, testified as follow : Mr. Marble. Mr. Adsit, what is your business? Mr. Adsit. Railroading. Mr. Marble. "With what railroad ? Mr. Ajdsit. The Chicago, Milwaukee and St. Paul. Mr. Marble. ^Tiere are you located? Mr. Adsit. At Kansas City, Mo. Mr. Marble. In what capacity? Mr. Adsit. Superintendent of terminals and local freight agent. Mr. Marble. Are you familiar with the operation of what is known as the Milwaiikee Elevator here? Mr. Adsit. Indirectly only. Mr. Marble. Wlio has charge of the operation of that elevator? Mr. Adsit. E. TV. Shields. Mr. Marble. Do you have anything to do with its operation? Mr. Adsit. So far as the transportation part of it is concerned, in the way of furnishing cars and seeing that cars are promptly handled. Mr. Marble. Do parties desiring to transfer grain to that elevator, to get cars for transfer to that elevator, or cars for transfer from that elevator, deal with you ? Mr. Adsit. "Well, indirectly. They order the cars to our line for transfer and shipment. It is my duty to see. that the car is furnished. Mr. Marble. But not your duty to receive orders for the cars ? Mr. Adsit. No. Mr. Marble. "UTiose duty is that ? Mr. Adsit. All cars are handled through the terminal in a case of that kind by the carding of the cars. The cars come to us carded to the Milwaukee Elevator for shipment. That goes to the elevator. Then it is the duty of the elevator superintendent to know what is to be done with that car, and the capacity in the car, and to see a certain capacity is furnished for the transfer, and probably the other work to be done on that grain. Mr. Marble. My question is this: If a Kansas City shipper has grain in the Milwaukee elevator he wants to ship to Chicago or some other point, and wishes cars in which to ship it, is it your business to receive his order for cars ? Mr. Adsit. He places the order with me — ^that is, in some cases, where grain comes out of our elevator — and in some cases places it with the elevator company. Mr. Marble. Who is the elevator company? Mr. Adsit. "Well, Mr. Shields. Mr. Marble. There is an elevator company, then? Mr. Adsit. No ; it is the Chicago, Milwaukee and St. Paul elevator 328 GRAIN ELEVATOR INVESTIGATION. now at present. That was prior to the change. It was called the elevator company prior to the change. Mr. Marble. In what does the change consist practically ? Mr. Adsit. Well, prior to July 1, the. elevator was operated by the Simonds-Shields Grain Company. Mr. Makblj:. And now. Mr. Adsit. Now it is operated by the Chicago, Milwaukee and St. Paul. Mr. Marble. In charge of whom ? Mr. Adsit. E. W. Shields. Mr. Marble. Take parties ordering grain to this Chicago, Mil- waukee and St. Paul Railway for transfer and shipment, who do they advise of the car number and weights ? Mr. Adsit. They advise ]\[r. Shields, so that he will know what to do with the cars when they arrive at the elevator. Mr. Marble. Is that all the order issued ? Mr. Adsit. That is all I know of. Mr. Marble. Is this an order issued by you [presenting paper to witness] ? Mr. Adsit. Yes, that order was issued under me. Mr. Marble. How about the date on that order? Is that correct? Mr. Adsit. I could not say as to that. Mr. Marble. Did you issue any such order in 1905 ? Mr. Adsit. Yes, sir; I will not say 1905. I have issued several of these orders. Mr. Marble. Was it true under the old arrangement ? Mr. Adsit. Yes, sir. Mr. Marble. This same arrangement was true? Mr. Adsit. Yes, sir ; we had no other way of handling our grain. Mr. Marble. Have you issued some recent orders in relation to tlfiis matter ? Mr. Adsit. Yes ; I think in July of this year I issued one. Mr. Marble. Have you one with you ? Mr. Adsit. Yes ; I have [producing order] . Mr. Marble. Let me see that. (Paper handed to Mr. Marble.) Mr. Marble. You issued a new order yesterday, did you not ? Mr. Adsit. Yes, sir [producing order]. Mr. Marble. I will take that also. (Order handed to Mr. Marble.) Mr. Marble. If the Commission please, I will offer these. The first: Kansas City, Mo., July 18, 1905. To whom it may concern: Parties ordering grain to the Chicago, Milwaukee and St. Paul Railway for transfer and shipment must advise Simonds-Shields Grain Company, in writing, of car number and weights, in order that transfer may be made promptly and car service may not accrue. Cars will not be transferred unless above is complied with. J. S. Adsit, Agent. The second : Kansas City, Mo., July 11, 1906. To whom it may concern: Parties ordering grain to the Chicago, Milwaukee and St. Paul Railway for transfer and shipment must advise Simonds-Shields Grain Company, in writing, GBAIN ELEVATOE INVEStlQATION. 329 of car number and weights, in order that transfer may be made promptly and car service may not accrue. Unless above Is complied with they will be run by, and car service will be assessed against the car and follow as advance charges. J. S. Adsit, Superintendent. Commissioner Lane. Does that mean superintendent of terminals ? Mr. Adsit. Yes, sir. Mr. Makble. Here is a third one which I will read : Kansas City, Mo., Octoher 22, 1906. To lohom it may concern: Parties ordering grain to the Chicago, Milwaukee and St. Paul Railway for transfer and shipment must advise E. W. Shields, elevator agent, room No. 121, Board of Trade, in writing, of car number and weights, in order that transfer may be made promptly and car service may not accrue. Unless above is complied with, they will be run by^ and car service will be assessed against the car and follow as advance charges. J. S. Adsit, Superintendent. (The above papers are hereto annexed and marked " Exhibits Nos. 1, 2, and 3 to Mr. Adsit's testimony.") Mr. Marble. Where is room 121, Board of Trade? Mr. Adsit. It is on the second floor. Mr. Marble. Do you know who has an office there besides Mr. Shields? Mr. Adsit. The Simonds-Shields Company. Mr. Marble. Is there any mark on it showing he is the agent ? Mr. Adsit. I think there is a sign " C, M. & St. P. Elevator Office." Mr. Marble. That has been there a long time, has it not? Mr. Adsit. No, sir; I think it was put up recently. Mr. Marble. But that is the office of the Simonds-Shields Grain Company ? Mr. Adsit. Yes, sir. Commissioner Lane. You issue these by the direction of your com- pany? (Referring to three orders offered in evidence.) Mr. Adsit. No, sir; that was issued by me in order to expedite business, hurry matters along. Commissioner Lane. As superintendent of terminals and agent, you have authority to issue such letters as that? Mr. Adsit. Yes, sir. Mr. Marble. Do you know whether or not that arrangement is satisfactory to your shippers ? Mr. Adsit. I have heard no complaints to the contrary. In fact, it should be. What got me to give out those orders, we would not get the advice of those cars being shipped over our line until we get the billing. A car would be ordered over to-day to the Milwaukee for transfer in shipment. To-morrow or the day afterwards we would get the billing on that car. In the meantime the car would come over. The crews, according to the carding of a car, would set the car to the elevator. The elevator, not taking advice of that car, and not knowing who it belonged to, and not. knowing what to do with it, run it through the elevator. Mr. Marble. Did it not occur to you that some competitors of Simonds-Shields might object to making their business known? Mr. Adsit. They were not making their business known. The only information they would get would be the car number and weight. 330 GEAIHr ELEVATOE INVESTIGATION. Mr. Marble. They would not get the owner of the car ? Mr. Adsit. Oh, no. Mr. Marble. If they had to notify Simonds-Shields, why would they not know and give the cai number? Mr. AsDiT. Whoever the man was, it would have to be known any- how. Mr. Marble. Why would it have to be known to a competitor? Does that occur to you? Mr. AsDiT. No ; it does not. Mr. Marble. As a bad arrangement? Mr. Adsit. No. Mr. Marble. You have no objection to other railroads knowing about your business, then ? Mr. Adsit. Not a bit. Mr. Marble. Have' you those tariffs put in evidence yesterday, one dated September 1 and one October 8 ? (Tariffs handed to Mr. Marble.) Mr. Marble. That is a tariff issued by your company, is it ? Mr. Adsit. It is, sir; yes. (Referring to tariff of October 8.) Mr. Marble. This is the tariff it amended, is it not? (Referring to tariff of September 1.) Mr. Adsit. Yes, sir. Mr. Marble. When was the tariff" dated October 8 published? Mr. Adsit. I could not say. Mr. Marble. Do you know whether it was made public October 8 ? Mr. Adsit. I could not say it was ever made public. Mr. Marble. You do not know, as a matter of fact, that it was held up two weeks ? Mr. Adsit. I do not know anything about it in any way, shape, or form. Mr. Marble. Do you know whether or not between September 1, 1906, and October 8, 1906, any charge has, as a matter of fact, been made under that tariff for cleaning, clipping, and grading grain? Mr. Adsit. No ; I do not. Mr. Marble. Whose business is it to know that? Mr. Adsit. The elevator man, Mr. Shields. Mr. Marble. About all the grain going through that elevator be- longs to Shields's company, does it not? Mr. Adsit. A great portion. Mr. Marble. What proportion? Mr. Adsit. Well, 90 per cent. Mr. Marble. Would you say 95 per cent? Mr. Adsit. Yes, sir. Mr. Marble. Would you say 98 per cent ? Mr. Adsit. The biggest portion. It is the bulk of the business. Mr. Marble. Practically all? Mr. Adsit. Well, the greater portion. I do not know whether it is 95 per cent or 90 per cent. Mr. Marble. Mr. Shields, then, is_ charged with the duty of keep- ing accounts against himself for this grain, is he, as your elevator agent? Mr. Adsit. He keeps the account against the Simonds-Shields Grain Company. GBAIN ELEVATOR INVESTIGATION. 331 Mr. Marble. He is a member of that company ? Mr. Adsit. Yes, sir. Mr. Marble. If he does not keep them, they are not kept ? Mr. Adsit. Yes, so far as I know. Mr. Marble. So far as you know has your road such an arrange- ment with any other shipper, in which the shipper keeps his account and keeps the weight, etc. ? Mr. Adsit. No, sir. ' ■ Mr. Marble. Mr. Shields is the only one you know of ? Mr. Adsit. Yes, sir. Mr. Marble. If any other occurs to you, will you notify us of that matter ? Mr. Adsit. Yes, sir. Mr. Marble. That is all. Commissioner Clark. This contract with the Simonds-Shields Grain Company was made August 1, was it not? Mr. Adsit. July 1. Commissioner Clark. July 1? Mr. Adsit. Yes, sir. Commissioner Clark. Do you know what the practices were in regard to charges for elevation, cleaning, and mixing of grain between July 1 and September 1? Mr. Adsit. No ; I do not. Commissioner Lane. Let me see if I understand that matter cor- rectly. If I go up into Kansas and buy a carload of wheat and bring it in over your road, I have to notify another grain man of the fact that I have purchased that car, and its number, so it will be handled in Kansas City. Is that correct? Mr. Adsit. No ; that is not the motive of my letter. Commissioner Lane. It is not the motive of it, but is that the effect of it? Mr. Adsit. No; a grain firm could notify my office that he had ordered it over and give the weight of it, and I would communicate the information to the elevator, what to do with it. Commissioner Lane. But is that the fact? Is it not the purport of the circular that I must notify Mr. Shields? Mr. Adsit. Yes, sir. Commissioner Lane. Who is in opposition to me as a grain pur- chaser ? Mr. Adsit. If you look at it that way. That was not the intent of the letter. Commissioner Lane. .Why did you select Mr. Shields and not select some one of these gentlemen who might not be interested in the grain business ? Mr. Adsit. Well, that is beyond my answer. I could not answer that. Commissioner Lane. Who directed you to select Mr. Shields? Mr. Adsit. Mr. Shields was appointed elevator agent. I did not make the appointment. Commissioner Lane. You could not say? Mr. Adsit. No, sir. Commissioner Lane. How did you get the information ? Mr. Adsit. Through the general agent. 332 GRAIN BLEVATOE INVESTIGATION. Commissioner Lane. What is his name ? Mr. Adsit. Mr. French. Commissioner Lane. He notified you that Mr. Shields had been selected as elevator agent? Mr. Adsit. Elevator agent; yes, sir. Commissioner Lane. Was it in accordance with his directions that you sent out these circulars? Mr. ADSi*r. No; one of them was a year ago. Commissioner Lane. That was to the firm. Now, it goes to Mr. Shields, personally. Mr. Adsit. We had only one source to transfer the grain. All grain going through Kansas City has to have a weight. The receiver demands that. In order to release the cars we must run them through somewhere to furnish the board of trade weights. Commissioner Lane. This language is used in a clause in your circular that you send out under your authority: Unless above is complied with, they will be run by, and car service will be assessed against the car, and follow as advance charges. That is in the circular of July 11, and the same language is used in the circular issued yesterday ; therefore it becomes absolutely neces- sary that I, shipping in grain from Kansas, should notify my oppo- nent and presumptive enemy, else that penalty will accrue. Is that so ? Mr. Adsit. No. Commissioner Lane. Why not? Mr. Adsit. I do not think it is understood that way, in that frame of mind; because we do sometimes get the orders straight from the parties ordering the grain over to us. Commissioner Lane. This is your circular? Mr. Adsit. That is my circular ; yes, sir. Commissioner Clark. As a matter of fact, it is impossible for any shipper to run grain through your elevator without Mr. Shields having full knowledge of the kind of grain, and of the amount of grain, and the consignor and consignee ? Mr. Adsit. No ; he has no idea who the consignee is or the destina- tion of the car. He has no idea of where the grain is going or the consignee. Commissioner C^ark. ^Vho keeps track of shipments out of that elevator ? Mr. Adsit. They simply handle the grain. The matter of billing is kept in the local office of the railroad company. Commissioner Clark. Where does the local office of the railroad company get the information from which to make the billing? Do they take the shipper's word for the weight, and the fact that the grain has been loaded, etc. ? Mr. Adsit. The elevator company has nothing to do with that, Mr. Commissioner, at all. If you buy a carload of grain and send it over the Milwaukee, you send the billing to the consignee. The car goes to the elevator, is transferred, and that is all the elevator knows about it. We get the record that the original car was transferred to the other car and correct our billing, and the car goes on. Commissioner Clark. Did not I see Mr. Winton bring that book here this morning ? Mr. Winton. I have it here. GBAIN BLEVATOB INVESTIGATION. 333 Commissioner Clark. Let me see it, will you? (Book handed to Commissioner Clark.) Commissioner Clakk. That is all, Mr. Adsit. The witness was excused. Edwin W. Shields, called as a witness, having been duly sworn, testified as follows: Mr. Marble. Your name is E. S. Shields? Mr. Shields. Edwin W. Mr. Marble. Where do you reside, Mr. Shields? Mr. Shields. Kansas City, Mo. Mr. Marble. What is your business ? Mr. Shields. Grain. Mr. Marble. In what way ? Mr. Shields. In all the departments of the grain business, and in addition to that I occupy the position of elevator agent for the Mil- waukee Railroad Company. Mr. Marble. You buy grain in the country — ^bid the country? Mr. Shields. We do all parts of the grain business. Mr. Marble. Do you own country elevators ? Mr. Shields. No. Mr. Marble. Do you own elevators in the city? Mr. Shields. No. Mr. Marble. Do you own a mixing house or cleaning house in the city? Mr. Shields. Yes. Mr. Marble. You buy grain on the track here ? Mr. Shields. Yes, sir ; and in the country. Mr. Marble. And you receive consignments ? Mr. Shields. Yes, sir. Mr. Marble. Did you say you bid the country as well ? Mr. Shields. Yes, sir. Mr. Marble. And you ship grain from here ? Mr. Shields. Yes, sir. Mr. Marble. And sell grain locally to the millers ? Mr. Shields. Yes, sir. Mr. Marble. And you ship to other American markets ? Mr. Shields. Yes, sir. Mr. Marble. And export also ? Mr. Shields. Yes, sir. We do not export beyond putting the stuff on vessels. We do not do any direct export business. Mr. Marble. By " we " you mean the Simonds-Shields Grain Com- pany ? Mr. Shields. The grain company. Mr. Marble. That is a corporation ? Mr. Shields. Yes. Mr. Marble. Who owns the stock of that company ? Mr. Shields. M. P. Simonds, N. J. Simonds, and myself. Mr. Marble. Is any portion of that owned by any railroad stock- holder, or officer, or employee ? Mr. Shields. Not a dollar ; never has been. Mr. Marble. Is any portion of the profits regarded or treated as the property of any one of those persons? 334 GKAIN ELEVATOR INVESTIGATION. Mr. Shields. Never has been. Commissioner Lane. You regard yourself as an employee of the railroad company? Mr. Shields. I have for the last thirty days been. Commissioner Lane. You are a stockholder in the Simonds-Shields Grain Company and also an employee of the railroad? Mr. Shields. Yes, sir. Mr. Marble. So to that extent stock is owned by an employee of a railroad ? Mr. Shields. Yes, sir. Mr. Marble. But to no other extent? Mr. Shields No, sir. Mr. Marble. Does any railroad officer, or employee, or stockholder, or anyone for any persons of those classes, other than yourself, in any way share in the profits of this grain company? Mr. Shields. Not to any extent whatever, and never has. Mr. Marble. Or in your profits ? Mr. Shields No, sir. Mr. Marble. Do any other members of this firm, so far as you know, own any railroad stock? Mr. Shields. I am quite certain they do not. Mr. Marble. Is your firm in any way connected with the Armour Grain Company? Mr. Shields. None whatever ; never has been. Mr. Marble. Or the Armour Elevator Company ? Mr. Shields No, sir. Mr. Marble. Or the Neola ? Mr. Shields No, sir. Mr. Marble. Or the Milwaukee ? Mr. Shields. Not with any other company. Mr. Marble. Are you the Kansas City agent for any of those Armour companies? Mr. Shields No, sir. Mr. Marble. Have you ever been ? Mr. Shields. Yes, sir. Mr. Marble. When ? Mr. Shields. For the Armour Grain Company. Mr.' Marble. When? Mr. Shields. For about ten years previous to, perhaps, 1902. I am not positive, but approximately those dates are correct. Mr. Marble. Approximately 1892 to 1902? Mr. Shields. 1892 to 1902 or 1903. We then represented them as brokers, buying grain for the Armour Grain Company for three- eighths of a cent a bushel. Mr. Marble. Conducting their Kansas City business? Mr. Shields. Yes, sir. Mr. Marble. Who conducts their Kansas City business now? Mr. Shields. No one. They organized a small company on the Burlington and built a small transfer elevator, which they operated for about three years, but for a year they have not had any interest in the market whatever. Mr. Marble. Do you know why they have withdrawn from this market ? GRAIN ELEVATOR INVESTIGATION. 335 Mr. Shields. I think it was unprofitable for them. Mr. Marble. Do you sell a large portion of the grain of your com- pany to them? Mr. Shields. Scarcely any. Mr. Marble. You have testified that you are grain agent of the Chicago, Milwaukee and St. Paul Kailroad. Mr. Shields. Elevator agent. Mr. Marble. Elevator agent is the title ? Mr. Shields. Yes, sir. Mr. Marble. When did you become elevator agent? Mr. Shields. On July 1, or immediately after that. Mr. Marble. Previous to July 1 what relation did you occupy to the Milwaukee and St. Paul ? Mr. Shields. We leased their elevator from them. Mr. Marble. Your grain company — the Simonds-Shields Grain Company ? Mr. Shields. Yes, sir ; they leased the elevator. Mr. Marble. Did that lease expire July 1? Mr. Shields. No, sir. Mr. Marble. It was Mr. Shields. (Interrupting.) Canceled. Mr. Marble. By mutual consent? Mr. Shields. Yes, sir. Mr. Marble. By either party giving the other any consideration for that cancellation? Mr. Shields. Nothing at all. Mr. Marble. Did you regard the lease as unprofitable ? Mr. Shields. No, sir; it was profitable and desirable to us, but Mr. Hiland, of the Milwaukee Railroad, thought it was not in con- formity to the present law — the law that was to become effective on the 28th of August. Mr. Marble. Did you contest his opinion in that respect? Mr. Shields. Yes, sir. Mr. Marble. But you did not contest it in court ? Mr. Shields. No, sir. Mr. Marble. You acceded to his demand that it be canceled ? Mr. Shields. Yes, sir. Mr. Marble. But received no consideration ? Mr. Shields. None whatever. Mr. Marble. And yet the lease was profitable to your company ? Mr. Shields. Yes, sir. Commissioner Lane, ^t what date was that you canceled the lease ? Mr. Shields. About July 1, or about a day or two after that. Commissioner Lane. What time did you begin to serve as elevator agent ? Mr. Shields. About July 1, or immediately thereafter. Commissioner Lane. About the same time ? Mr. Shields. Yes, sir. Mr. Marble. This relationship as elevator agent commenced im- mediately when the former relationship as lessee ceased ? Mr. Shields. Yes, sir. Mr. Marble. With whom did you make the arrangement to become elevator agent? 336 GRAIN ELEVATOE INVESTIGATION. Mr. Shields. With Mr. J. H. Hiland, third vice-president of the Chicago, Milwaukee, and St. Paul Kail way Company. Mr. Marble. Did any other officials 6i the railway company have part in the negotiations ? Mr. Shields. Not to my knowledge. Mr. Marble. Was any other official present during the negotiation ? Mr. Shields. I think Mr. Keely was consulted in my presence on some of the points. Mr. Marble. Anyone else? Mr. Shields. No; I think not. I do not recall anyone else. Mr. Marble. Mr. Ad sit — was he present? Mr. Shields. No, sir. Mr. Marble. Mr. French ? Mr. Shields. Not as I recall it at that particular time. Mr. Marble. Now, then, what was that arrangement ? Mr. Shields. That arrangement was that I was to act as their elevator agent, in the same manner and capacity as was established by other railroad companies. We were to have the use of the tile storage tanks. Mr. Marble. Just a minute, if you will pardon me. The lease and the contract to become agent are two different matters, aren't they, or are they? Mr. Shields. Two different matters. The contract with the rail- road is on file with the Commissioners at Washington. That is one transaction. The other is not a written contract, but merely a verbal agreement. Mr. Marble. The employment is a verbal agreement? Mr. Shields. Yes,, sir ; running from month to month. Mr. Marble. Were the employment and the lease connected one with the other, in your mind ? Mr. Shields. They were agreed upon at the same time, but they are not in any way connected. The fact is that we pay for the tanks 4 per cent on the value. The tanks were of no value to the Milwaukee Railroad Company, and would not have been of any value to any grain firm any time within the past ten years, except as a matter of convenience. There has been no storage profit in the grain business in Kansas City for ten years until this year, and when this contract was made I did not know that they would be of any more value to us than ordinarily. They have proven somewhat more valuable. Thej' were essential to a firm doing a large business, but no one for a great many years has done a large business on the Milwaukee Railroad, excepting the Simonds-Shields Grain Company, and for that reason the tanks were valueless to the Milwaukee Railroad Company. We have nothing to do with the main part of the elevator. Mr. Marble. Now, then, if you will permit — what I want to get just here is, were those absolutely separate contracts, this oral contract for employment and the written contract for the lease? Mr. Shields. Yes, sir. Mr. Marble. Would you' have entered into either one had you known the other would not have been made? Mr. Shields. Yes, sir. Mr. Marble. Now, then, we can separate them. What I want to know now is about the employment. What was to be your compensa- tion under the employment? GKAIN ELEVATOR INVESTIGATION. 337 Mr. Shields. The agreed price of $3,000 a year, $250 a month, which was about half the amount allowed elevator agents in similar capacities on some of the other roads. Mr. Marble. But the agreed price was $250 per month ? Mr. Shields. Yes, sir. Commissioner Lane. Why should they only allow you half of what they allowed an ordinary elevator agent ? Mr. Shields. I could not convince Mr. Hiland that grain men's services were any more valuable than the average railroad employee's services. And he said they were employing high-class men for $250 a month. I told him that the Santa Fe was paying $6,000 a year, and the Burlington the same figure to their elevator men, but he did not understand why it was necessary to pay those salaries. He said I could accept that salary or nothing. So I accepted it. Commissioner Lane. The other men that you speak of are not employed here as elevator agents? Mr. Shields. Yes, sir, they are, and they were employed before I entered into this arrangement. Commissioner Lane. Are they in the grain business? Mr. Shields. Well, not strictly speaking, although they are assist- ing in the conduct of other people's grain business. Commissioner Lane. Assisting in the conduct of other people's business ? Mr. Shields. Yes, sir. Commissioner Lane. Can you name them ? Who are they ? Mr. Shields. Mr. Tice, who was the assistant manager of the Santa Fe Railroad Company, aids other people in the purchasing of wheat on the floor and the general conduct of their business. Commissioner Lane. Who is the other agent ? Mr. Shields. Mr. Neill, of the Burlington; but their elevator is not yet built, so he has not taken a very active part on the business. Commissioner Lane. Is he also in the grain business ? Mr. Shields. No, sir. Commissioner Lane. Are there any other elevator agents who are directly or indirectly in the grain business ? Mr. Shields. I couldn't say as to that, for this matter is all com- paratively new. The grain men have been trying to adjust them- selves to something that would at the same time preserve their busi- ness and meet the requirements of the new law. So I do not know. These are questions which are unsettled as yet. All I know are the two I mentioned. Mr. Marble. Is Mr. Dayton in the elevator business? Mr. Shields. I do not know what his arrangements are. This is so recent that we are not very familiar with what the other people do. Mr. Marble. But you know about their salaries ? Mr. Shields. Yes, sir ; because I wanted to get the same salary. Mr. Marble. That was Mr. Tice and Mr. Neill? Mr. Shields. Mr. Boynton is the head, and he has an assistant, Mr. Tice. Mr. Marble. What salary did you say Mr. Boynton gets ? Mr. Shields. Six thousand dollars. Mr. Marble. Does his assistant also get a salary ? S. Doc. 278, 59-2 22 338 GRAIN ELEVATOR INVESTIGATION. Mr. Shields I presume so — probably $3,000. Mr. Marble. You do not know whether Mr. Boynton pays him out of the $6,000 or not? Mr. Shields. I feel certain he does not. Mr. Marble. You agreed upon the salary of $250 per month? Mr. Shields. Yes, sir. Mr. Marble. What were your duties to be? Mr. Shields. They were to look after the management of the ele- vator and the handling of any business pertaining to it for the rail- road company. Mr. Marble. By " look after " — what do you mean ? Mr. Shields. Running the elevator for them. Mr. Marble. They hired a superintendent, did they not ? Mr. Shields. They hired a foreman ; yes, sir ; just as all the others have done. " Mr. Marble. And then you had clerks? Mr. Shields. Just as the rest of them have. Mr. Marble. Never mind about the rest. What were Mr. W'inton's duties ? Mr. Shields. He was the chief clerk ; principal clerk. Mr. Marble. Did he have to do with the direction of cars and shipments ? Mr. Shields. Only under my direction, and during my absence. Mr. Marble. Your understanding is that you were the general manager of the elevator, with these assistants to you? Mr. Shields. Yes, sir. Mr. Marble. Were your duties mapped out and imderstood at the time that contract was made ? Mr. Shields. In a general way, they were. They were not outlined in detail, but in a general way they were. Mr. Marble. And you felt reasonably certain that you knew what you were to do at that time ? Mr. Shields. Yes, sir. Mr. Marble. Did Mr. Hiland have a general idea what you were to do? Mr. Shields. Yes, sir. Mr. Marble. And you say the negotiations were agreed on with him? Mr. Shields. Yes, sir. Mr. Marble. And that no other representative of the railroad was consulted as to that ? Mr. Shields. No ; I didn't say that. Mr. Marble. Well ? Mr. Shields. I said that I thought that Mr. Keeley was consulted, but the official arrangements were made with Mr. Hiland. Mr. Marble. But you say that Mr. Adsit or Mr. Keeley or none of the rest of them were present advising in regard to this ? Mr. Shields. I said that Mr. Adsit was not, nor Mr. French, but Mr. Keeley had one or two interviews, I think, with Mr. Hiland relative to the question. Mr. Marble. Who is the president of the Milwaukee road ? Mr. Shields. Mr. Earling. Mr. Marble. You are quite certain that Mr. Adsit or Mr. French or Mr. Earling were not present? GRAIN ELEVATOK INVESTIGATION. 339 Mr. Shields. Yes, sir. Mr. Marble. Have your duties remained understood and certain since that time ? Mr. Shields. Yes, sir. Mr. Marble. You have had no difficulty in determining what your duties were? ]Mr. Shields. No. Mr. Marble. You have told about the managing of the elevator. But you spoke of another branch — handling the business. What are j'our duties in that respect '( Mr. Shields. That is all one and the same thing — managing the elevator and handling the business is, in my construction, all the same. Mr. Marble. You have other duties than to see that the mere mechanical work of the elevator is properly done? Mr. Shields. Yes, sir. Mr. IMarble. ^Altat are those duties? Mr. Shields. Those duties are to keep track of the cars when they are ordered to the elevator for transfer and for handling and mixing. Anything that pertains to that part of the work. Mr. Marble. Do you mean that exactly now, or do you mean to keep track of the orders for cars. Do you have charge of the or- dering of cars to the elevator ? Do you allot cars for the elevator ? Mr. Shields. Xo. sir; I do not. That is part of the railroad's business. Mr. Marble. Just what is it yoii do in that connection ? Mr. Shields, ^^lienever any one has any grain they want trans- ferred at that elevator, they must notify some one, else it could not be done, and they notify me as the elevator agent. That is, they notify my clerk if I am not present, which happens frequently, as I am out of the city considerably. They notify either me or my office when such and such cars are sent to the elevator, are ordered to the elevator on a certain date, and give directions as to what shall be done with them. That order must come to us, else we would not know what to do with the grain, as we -are managing tlie elevator. Commissioner Lane. Could not that notice come to the railroad agent and then be sent by him to j'ou as manager of the elevator ? Mr. Shields. It could, but it would be thoroughly impracticable. Commissioner Lane. It would ? Mr. Shields. Yes, sir. You can see that, I think, from the fact that the manager of the elevator has entire charge of managing the elevator, of bringing the cars in, of mixing and cleaning or assem- bling the grain in any way that is desirable. But the furnishing of empties is a matter, of course, that the railroad company attends to; we have no control over that. Mr. Marble. Do you regard it as entirely practicable that owners and shippers of grain, your competitors in this market, should have to notify you when they desire to ship grain over this railroad ? Mr. Shields. Yes, sir. Mr. ^Iarble. Would you regard that as entirely practicable if some other owner and shipper of grain, a competitor of yours, was in con- trol of the elevator, and you had to give the notice to him? Mr. Shields. Unless it was shown clearly that he was discriminat- ing against me. We do not, understand me, know anything about 340 GRAIN ELEVATOR INVESTIGATION. what is becoming of that grain. We merely handle the stuff as directed, which can not injure him in any way. Mr. Marbee. But you do know who the owner is ? Mr. Shields. Yes, sir. Mr. Marble. Which grain is his ? Mr. Shields. Yes, sir. We would have to know that. Mr. Marble. Do you know the source of the grain ? Mr. Shields. No, sir. Mr. Marble. Do you know what road it comes off of ? Mr. Shields. We could easily determine that by looking the matter up, but we do not. Mr. Marble. You have it in your power to do it ? Mr. Shields. We have it in any case. Mr. Marble. In any case of grain that comes into your elevator ? Mr. Shields. Yes, sir. Mr. Marble. Do you know the destination of that grain ? Mr. Shields. No, sir. Mr. Marble. Do you have that in your power to determine ? Mr. Shields. No, sir. Mr. Marble. But you could determine the source if you chose? Mr. Shields. Yes, sir. Any one could determine that at any elevator. Mr. Marble. But you say that the elevator man could not deter- mine the destination ? Mr. Shields. No. I should think that was so. Mr. Marble. You know what road it is going out on ? Mr. Shields. Yes, sir; because we have to get the proper kind of cars to load the grain in. Mr. Marble. Don't you know what point it is going to ( Mr. Shields. No, sir. Mr. Marble. The cars are not marked to destination ? Mr. Shields. No, sir. Commissioner Clark. I understood you to say that you do not know what road these cars come in over ? Mr. Shields. We imagine a Union Pacific car will come in over the Union Pacific Railroad, but we haven't any positive assurance of that, because it may come in over the Union Pacific in some other car. Commissioner Clark. Does any of this grain come in with over- charges upon it ? Mr. Shields. Yes, sir. Commissioner Clark. Who pays those charges ? Mr. Shields. We pay those after the car is unloaded. Commissioner Clark. But you do not know what road it came over ? Mr. Shields. Not until after we have paid the freight. Commissioner Clark. How do you know who to pay the freight to? Mr. Shields. The line that brings the grain in brings the bill in. Commissioner Clark. Then, as a matter of fact, you do know ? Mr. Shields. If we pay the freight we know. Mr. Marble. When you pay the freight, you also are in a position to learn the name of the shipper, are you not ? Mr. Sherman. Mr. Shields has got confused. GRAIN ELEVATOR INVESTIGATION. . 341 Commissionc)- Clark. Mr. Shields is amply able to take care of himself. Mr. Si-iERjiAN. He is talking about his own grain. Commissioner Clark. Please don't interrupt him. Mr. Marble. When you pay the freight bill you learn the name of the shipper, do you not ? Mr. Shields. Of coui'se we know who ships the grain to us. Mr. Marble. So that by this arrangement you have this much of an insight into your competitors' business. Mr. Shields. Not our competitors' business. I explained in the beginning that I know nothing about our competitors' business. You are speaking of what we know of cars that come to our elevator. Mr. Marble. Well, cars are put through j'our elevator by competi- tors of yours in Kansas City ? Mr. Shields. Yes, sir ; some few cars. Mr. Marble. And practically all that is put through besides yours belongs to competitors at Kansas City? Mr. Shields. Yes, sir; we do not know anything about that, how- ever, unless we look the matter up, and we never do that. Mr. Marble. I will ask you if it is in your power when a competi- tor desires to ship grain over the Milwaukee road, to know who the owner of the grain is, know the source, both as to the road and the individual shipper, the sort of grain in which he is dealing and the road over which it is going out — is it in your power to learn those things if you so desire? Mr. Shields. We necessarily know the road that it is going out on because those are the cars we load. We necessarily know the char- acter of the grain that is in the elevator for other people because we see it. We do not know, as I have stated before, the origin of other people's grain. It is possible that we might learn that by getting around a^^ong the railroads and asking, but we have never done that. There is no occasion to. Mr. Marble. Do these cars come in with cards on them showing the source from which they came? Mr. Shields. Usually ; but the cards are frequently torn off in the handling of the grain and setting it over to the elevator. Mr. Marble. But they are meant to stay on ? Mr. Shields. Yes,, sir. Mr. Marble. There is no practice of tearing them off, before they get to your elevator, by the railroads? Mr. Shields. No, sir. Mr. Marble. So that if they come in in the ordinary way, if you choose you can know, not only the shipper, but the place from which he buys his grain, and have that much information about his busi- ness? • Mr. Shields. No ; we do not know that. Mr. Marble. Why can't you tell ? Does not this card, which gives its source, contain this iniormatioi^ ? Mr. Shields. It does not. It merely states the railroad over which the car was received. Mr. Marble. There is no name or number on the card that gives its source to you ? Mr. Shields. You mean the point of origin or the road? 342 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. The point of origin. Mr. Shields. No, sir. Mr. Marble. But you think if you chose— you say you do not do this, but if you chose you could determine this point of origin ? Mr. Shields. I suppose we could go to some western line and ask if their records showed from what station it was shipped. It is the practice of the board of trade to send down and look over the record and see what grain comes in. Commissioner Clark. When you get a bill of expense for the freight on a certain car from another railroad, that shows where it was shipped from and the amount in the car, etc. ? Mr. Shields. Yes, sir ; in our own business it does. Commissioner Lane. And how about a car that is transferred for somebody else? Mr. Shields. We do not pay the freight on them. Commissioner Clark. You do not ? Mr. Shields. That is my recollection. Let me see. Wait a min- ute. Where it is set for transfer we do not pay the freight on it. If it is set to the elevator flat for some special service, my impression is that we do pay that, in which case we could find that out. Commissioner Clark. If a car of grain came in here over the Union Pacific Eailroad, owned by somebody besides the Simonds- Shields Grain Company, and it was sent to the Milwaukee and St. Paul elevator to be unloaded and cleaned and shipped out, the bill from the Union Pacific Railroad for its freight charges would be paid by you, would it not? Mr. Shields. It would depend on what manner it was ordered. If it was ordered for shipment and transfer we would, as I recollect it, not pay the freight. If it was ordered through for mixing and cleaning and clipping and other items, and not for direct transfer, we would pay the freight. Commissioner Clark. I said to be unloaded, cleaned, and loaded out? Mr. Shields. It would depend on the manner in which the car was ordered. The way in which it was originally ordered. If it was, as I say, for transfer and shipment direct, there would not be any occa- sion for us to pay any freight, because it would be Commissioner Clark (interrupting). Well, I specified in my ques- tion that it is not ordered for transfer and shipment direct. It is ordered for unloading, treatment, and loading out ? Mr. Shields. We would pay the freight as you have last stated. I did not understand that you specified that. Commissioner Clark. And that freight claim order bill would show the amount of grain and the points from which and to which the Union Pacific was to transport it? Mr. Shields. Yes, sir. Commissioner Clark. Then you would not h'h.ve any great diffi- culty in finding that out ; where it, came from. Mr. Marble. You have had active charge of that elevator since about July 1 ? Mr. Shields. About July 1. Mr. Marble. Have you been familiar with its operations in that time ? Mr. Shields. Practically so ; yes, sir. GRAIN ELEVATOR INVESTIGATION. 343 Mr. Marble. Wliat proportion of grain passing through that elevator from July 1 to the present date belonged to the Simonds- kShields Grain Company, or was dealt in by them? Mr. Shields. Between 90 and 95 per cent. Mr. Mahule. Is there any other grain shipped out on the Milwau- kee road from this city than grain going through that elevator? Mr. Shields. Yes, sir. Mr. Makble. How much, proportionately, to the total tonnage going out of this city ? Mr. Shields. Very little. Mr. Makble. Practically, then, 90 to 95 per cent of the grain going out over the Milwaukee road from this place belongs to the Simonds- Shields Grain Company, or is dealt in by them? Mr. Shields. Yes, sir. Mr. Marble. You are familiar with the charges made by the rail- road company for the service of this elevator — people putting grain in — are you not ? Mr. Shields. Yes sir. Mr. Marble. Have those charges been imposed and collected? Mr. Shields. No, they haven't. Mr. Marble. They have not ? Mr. Shields. Not from anyone. Mr. Marble. There was a published tariff imposing charges, was there not? Mr. Shields. Yes, sir; effective September 1; and on, I think, October 7 or 8 there was a tariff put in to meet the Santa Fe tariff, eliminating any charges. The reason we have not made any collec- tions — the principal reason — is that the Milwaukee Railroad notified me about the 1st of the month that they would send us an auditor here to show us the form on which they wanted these amounts made up, and the two or three instances where we have performed the services we have held until that officer came to see the form on 'which he wanted us to make them up. Mr. Marble. Have the people putting grain through that elevator been informed that they were to pay charges? Mr. Shields. Not by me. Mr. Marble. Then, they have all been treated alike in that respect ? Mr. Shields. Yes, sir. Mr. Marble. The charges have been eliminated as to all of them? Mr. Shields. Yes, sir; at the present time. No one has been charged for this service since the 1st of July. Commissioner Clark. You say this tariff of October 8 was put out to meet the Santa Fe? Mr. Shields. Yes, sir. Commissioner Clark. Does it in fact change the practice of the Milwaukee and St. Paul Railroad? Mr. Shields. Well, as I explained to you, the instances where; we have done business for other people are very few ; only comparatively few instances; and I have been holding any bills on this business for the arrival of the auditqr of the company. Now, what action will be taken after he arrives, in view of the fact that other railroads in Kansas City have made no charges, I do not know. Commissioner Clark. But, as a matter of fact, from July 1 or from September 1 to October 8, you made no charges ? 344 GEAIH ELEVATOR INVESTIGATION. Mr. Shields. From July 1. Commissioner Claek. Well, all right. From July 1 to September ] you made no charges ? Mr. Shields. There were no charges in that instance for any one. It was run without any tariff charge's, but in the month of September there was a tariff. Commissioner Claek. On September 1 they issued a tariff provid- ing a list of charges? Mr. Shields. Yes, sir. Commissioner Claek. And on October 8 they issued another tariff stating that these charges would not lie against grain that went out over their railroad; but from July 1 to the present time none of these charges have been assessed against anybody who has used the elevator facilities ? Mr. Shields. No, sir. Commissioner Lane. Do I understand that you had a schedule in force which required payment of these charges during some of the time from this date back to July 1 that you have not collected? Mr. Shields. From September 1 to October 8 there was a period when the published tariffs stated what the charges were to be, but during that interval there were very few cases where grain went into the elevator for a number of days, and it just so happened we have not made any bills up yet. I have been waiting, as I have stated, to find what form the Milwaukee auditor wanted to use. Commissioner Lane. That is merely a question of the form. It is not for the auditor to decide whether you shall make a charge which your tariff requires? Mr. Shields. No ; it is not. Commissioner Lane. Were you directed by somebody to waive the charge for that period? Mr.* Shields. No, sir; I was not. Commissioner Lane. That was an authority which you assumed for yourself under your general power as elevator agent? Mr. Shields. Yes, sir. I have not waived any charges. I have delayed making the bills. Commissioner Lane. Could you mere distinctly give me an im- pression as to what the duties of an elevator agent are? Are they at all written down? Mr. Shields. No, sir. Commissioner Lane. Well, from whom did you get your direc- tions — from what railroad officials did jou get your directions as to what your duties were to be? Mr. Shields. From Mr. Hiland, the vice-president. Commissioner Lane. What was the nature or detail of the duties that he gave you ? Mr. Shields. Well, as I stated before, to act as general manager of the elevator. Commissioner Lane. Did he say what the general manager of such an elevator was to do ; what the duties were as a railroad official, or what the elevator agent would be called upon to perform? Mr. Shields. Did he say what they were ? Commissioner Lane. Yes. GRAIN ELEVATOB INVESTIGATION. 345 Mr. Shields. It was not necessary. I knew in a general way what the duties were. Commissi onei- Lane. You knew that the duties as general mana- ger were to act as genei'al manager? Mr. Shields. Yes, sir. Commissioner Lane. Can you tell me a little more in detail what the general manager's duties are? Mr. Shields. As I have stated before once or twice, they are to manage the elevator; to see that any grain sent to that elevator for anybody is handled as directed ; to look after the employment of the men at the elevator ; to purchase materials, and, in a general way, to direct the management of that whole elevator, just the same as any other business. Commissioner Lane. That is all. Mr. Marble. You spoke of grain going through for other people, and you said that had been comparatively small ? Mr. Shields. Yes, sir. Mr. Marble. What do you mean by " other people ? " Mr. Shields. Other people than the Simonds-Shields Grain Com- pany. Mr. Marble. Are you speaking from the viewpoint of a Milwaukee Railroad employee when you say " other people ? " Mr. Shields. Yes, sir ; other than the Simonds-Shields Grain Com- pany, whom I said did about 90 or 95 per cent of the business. Mr. Marble. The Milwaukee Railroad Company and you as an employee of that company do not regard this business as being peculiarly the property of the Simonds-Shields Grain Company? Mr. Shields. Not in any sense. Mr. Marble. In fact it is ? Mr. Shields. We do more business, as I have stated, than others. Mr. Marble. Now, this lease -of these tile tanks; what is the capacity of those tanks ? Mr. Shields. 500,000. Mr. Marble. 500,000? Mr. Shields. Yes, sir. Mr. Marble. Is that all? Mr. Shields. Yes, sir. Mr. Marble. How many tanks are there? Mr. Shields. Twenty-seven. Mr. Marble. Are they all of uniform capacity ? Mr. Shields. No ; 18 of them are about 23,000 bushels ; something in that neighborhood ; and eight of them contain about 8,000 bushels. Mr. Marble. And the other one? Mr. Shields. There is no other one. Mr. Marble. You said there were 27? Mr. Shields. There are 26. Mr. Marble. What rental do you pajr for those tanks? Mr. Shields. Two thousand five hundred dollars a year. Mr. Marble. Do you get any consideration other than the tanks? Mr. Shields. We have the handling of our grain free. Mr. Marble. What do you mean by that? Mr. Shields. I mean that the railroad company has waived the charge of cleaning, clipping, and mixing on our grain. 346 GEAIN ELEVATOR INVESTIGATION. Commissioner Clark. The unloading- and loading? Mr. iSi-UELDS. Yes, sir; they ne\-er made that charge to anyone. Mr. Marble. On how niuciti grain do they waive the charge? Mr. Shields. All that we ship on the Milwaukee road. Mr. Marble. An indefinite amount ? Mr. Shields. Any amount we ship on the Milwaukee road. Mr. Marble. They do not waive the charge on any grain which you do not ship on that railroad ? Mr. Shields. No, sir. Mr. Marble. It might be 100,000, or if you could get so much grain, a hundred million bushels, under the agreement which you have free elevator service? Mr. Shields. Yes, sir. Mr. Marble. You pay $250 for the storage tanks ? Mr. Shields. $208. I understand that every one has this same facility now. Mr. Marble. But at the time the contract was made it was, not intended that every one should have what was expressed in the contract ? Mr. Shields. But every one, did have it. Mr. Marble. After the 1st of September the tariff ceased? Mr. Shields. Yes, sir. Mr. Marble. And that tariff published other and different condi- tions for other shippers in this market through that elevator than you enjoyed under your contract? Mr. Shields. Yes, sir. Mr. Marble. What do you consider a fair rental ? You spoke of those elevators, because of some change in the conditions, being more favorable. How favorable would you say those elevators are for this crop year? Mr. Shields. We do not know what the outcome will be. Mr. Marble. You mentioned renting the elevators with the advan- tage of the present outlook. With the advantage of the present out- look, if you were bidding for them against experienced grain men, wanting them in this market, how much would you expect to have to pay for them ? Mr. Shields. At the time we made the contract ? Mr. Marble. No; now. Mr. Shields. I presume we would have to pay $5,000 for this particular season as it turned out. Mr. Marble. $5,000 for how long a time ? Mr. Shields. For the year. Mr. Marble. How much would you have to pay at the time you made your lease, if you had been bidding against any other grain trade of Kansas City, and the matter of lease had been public? Mr. Shields. I do not think we would have had to pay any more than we pay. Mr. Marble. Supposing the management of the elevator, in the way you manage it, had gone with the tanks, how much would you then have had to pay, so that the man would have had the manage- ment of the elevator and the privilege of using the tanks ? Mr. Shields. I do not think it would make any difference. Mr. Marble. You think the rental is a fair rental ? Mr. Shields. Yes, sir. GEAIN ELEVATOB INVESTIGATION. 347 Mr. ISIarble. You spoke of their not having been valuable hereto- fore ? Mr. Shields. They have not been. I mean that no storage has been of any particular value for ten years until this year. Mr. Marble. They have not been of any particular value to you during the last ten j'ears until recently ? Mr. Shields. They have not been worth a cent. Mr. Marble. But you used them for the accumulation of grain ? Mr. Shields. Yes, sir; for the convenience of the railroad com- pany and for our own convenience, but not because there was any money in carrying grain. Mr. Marble. Didn't you, last spring, accumulate a large amount of grain in these tanks? Something like — well, how much did you accu- mulate — the amount you accumulated last spring? Mr. Shields., I didn't accumulate any last spring. Mr. Marble. And the crop year before, or at any time during this year, have you accumulated a large amount of grain in these tanks at sometime or other ? Mr. Shields. Not a large amount. Mr. Marble. How much of an amount ? Mr. Shields. Perhaps 400,000 bushels. Mr. Marble. When did you accumulate that? Mr. Shields. We have that now. Mr. Marble. Did you accumulate a large amount before the 1st day of August ? Mr. Shields. No ; not a large amount. Commissioner Clark. "When were these tile tanks built ? Mr. Shields. They were finished about eighteen months ago. Commissioner Clark. What was the object of building them? Mr. Shields. Of building the tanks ? Commissioner Clark. Yes, sir. Mr. Shields. To release the equipment of the western lines at such times as the Milwaukee did not have cars to take grain out, so that they might take this grain out during the period that the movement was lighter: Mr. Marble. Just to have this matter clear — did you at any time last spring accumulate a large amount of corn and wheat in that elevator — in those tanks or in that elevator ? Mr. Shields. We did not accumulate any grain during the spring in that elevator. Just pardon me. I presume I know what you are driving at. Along about the last of August we did accumulate a large amount of wheat — not a large amount at one time. We made heavy shipments during a short period, but at no time did we have anything like what you might term a large accumulation in the eleva- tor, unless you call 300,000 or 400,000 bushels a large accumulation. Mr. Marble. At what time did you say that accumulation was made? Mr. Shields. In May; I presume about in May I went to Minne- apolis, Milwaukee, Chicago, and other markets, and sold a large amount of wheat for shipment the last half of July and the first half of August, and I made purchases on the basis of the Kansas City market, July option ; and on that basis it showed a profit. So that when the time, when the last of July came we had a large amount of wheat to go forward in a very short time. At that time the rate was reduced 348 GEAIN ELEVATOB INVBSTIGATIOK. from lOf to 8 cents, and we bought an additional amount. We origi- nally sold 600,000 or 700,000 bushels of grain, three months before the movement was made, on the basis of the July option in Kansas City. Practically all that wheat — I am mentioning this because it has created a good deal of comment here. Previous to the reduction in the freight rate on the 25th of July, occasioned by the reduced flour rate, we shipped nearly 500 cars, immediately prior to the reduced rate. We kneAv the rate would be reduced several days before it became effective, but we continued shipping grain just the same. Had we known positively that rate might be reduced ten days before we would not have shipped this grain, and would have saved $10,000. I happened tp be in Chicago on the day the reduction in rates was made and I immediately went out on the board of trade and sold 700,000 or 800,000 bushels of grain. Then, when I got home in three days, I got a telegram from Mr. Hiland saying that the rail- roads had agreed to advance the rate on the 10th. That left us nothing to do but to buy our wheat, which we did, in most instances, at a loss. And that explains the thing that has been commented on. I would like in this connection to say that not only there was no collu- sion or understanding, but there wasn't the slightest intimation upon the part of any official of the railroad company that any such rate was going to take effect, and the very fact of our shipments proved that we did not know anything of the kind. Commissioner Lane. Mr. Hiland notified you when the rate was raised ? Mr. Shields. He notified me two and a half days prior to the change. I got a telegram in the afternoon stating that the rates would be advanced on the 10th. That, of course, meant scurrying around to buy this wheat at a loss to us. Commissioner Lane. Do you know whether. that telegram was sent to everybody in Kansas City who was in the grain business or not? Mr. Shields. I do not know. Commissioner Lane. You do not know that Mr. Hiland tele- graphed to all of the other members of the board of trade that the rate was going to be increased ? Mr. Shields. I do not suppose he did. He telegraphed Mr. French in the course of an hour or two and it was posted on the board of trade. He telegraphed me personally, because I was in Chicago at the time. In the usual course of business Mr. French was, perhaps, notified, and an hour or two after he received the telegram it was unquestionably posted on the board of trade. Commissioner Lane. You received advance notice from Mr. Hi- land, the third vice-president of the Chicago, Milwaukee, and St. Paul Railroad that the rates would be advanced? Mr. Shields. Yes, sir ; but there is no advantage in having a noti- fication of an advance rate. It is only reduction that is of any value. Commissioner Lane. You can not get out wheat, I suppose, to take advantage of a low rate if the rate is going to be advanced ? Mr. Shields. No. Commissioner Lane. Suppose that to-day I receive notice that ten days hence the rate on wheat would be advanced 2 cents. I would hasten to sell my wheat and ship it before the new rate went into effect? Mr. Shields. If you were the first one to get that information you GBAIN ELEVATOR INVESTIGATION. 349 would have rather a difficult time selling your wheat for ten-day shipments at the advanced rate. You could do it on a declining rate. If you were the only one cognizant of the fact that the rates were going to advance you would have trouble of disposing of your wheat at the advance rate, so you would not have any advantage. It would be just the reverse. Commissioner Lane. What would be the effect on the price of wheat when the rate is advanced ? Mr. Shields. It would put the cash wheat up. But the next morn- ing before we could buy a carload of wheat, everybody knew of the advance. Everyone knew it within an hour. Commissioner Lane. Then the price of wheat ought to be more in Kansas City when the price of the freight is less ? Mr. Shields. Yes, sir. Commissioner Lane. And you have the advantage in knowing that the rate was low, but was going to be advanced? Mr. Shields. We did not have any advantage. Commissioner Lane. Whatever advantage there was, you had ? Mr. Shields. There wasn't any advantage. This occurred in the afternoon, and in an hour everybody knew it,' and we did not buy a bushel of grain on that notice. It was of no value anyway. It could not be. If you will just think a moment you will see that it could not be of any advantage. Commissioner Lane. Why do you suppose Mr. Hiland sent the telegram to you if it was not going to be an advantage to you ? Mr. Shields. Simply because he had given me assurances that the rate would not be advanced until the last day of August. Commissioner Lane. He had given you assurances that- Mr. Shields (interrupting). Me told me that the rate would last as long as the flour rate lasted, which was about the 26th or 27th of August. He expected to maintain that rate, I presume, and after- wards when he found that the other roads insisted upon advancing the rate on the 10th he recognized the embarrassing position in which we were placed and notified us. Commissioner Lane. Having given you certain information, or something that you considered as practically an assurance that the rate would not be advanced, when it was advanced, as a gentleman, he notified you that it was going to be advanced ? Mr. Shields. Yes, sir. Mr. Marble. You spoke of learning in Chicago that the rate was to be reduced on the 10th ? Mr. Shields. Yes, sir. Mr. Marble. If I understood you rightly, you stated that you went on the board of trade and sold Mr. Shields (interrupting). I did not say it was to be reduced on August 10. I said it would be reduced between the 30th and the 1st, somewhere along there; whatever legal notice was necessary. The roads had held a meeting to reduce the rates. Mr. Marble. And you immediately sold your grain in Chicago ? Mr. Shields. Yes, sir ; 400,000 or 500,000 bushels. Mr. Marble. Why did you do that? Mr. Shields. Because t thought I had the whole month to get the wheat out and it would be profitable to sell. I did not sell to anyone who did not know that the rate was reduced, because everybody knew. 350 GRAIN ELEXATOE INVESTIGATION. Mr. Makble. Did you sell thi's grain before or after that hour that you received the telegram? Mr. Shields. The two cases in which I sold grain — one was to the Bartlett, Frazier & Carrington Company and the other to Armour. Both of those men knew there was to be a reduction ; in fact, I told them so before making the sale. In a few minutes time they all knew it. Mr. Marble. Did you tell Bartlett, Frazier & Carrington that the rate was to be reduced before it was made public by the railroads ? Mr. Shields. No, sir; I didn't know it before. Mr. Marble. The first you knew it was the public notice ? Mr. Shields. The first I knew it was perhaps an hour axrer the meeting, when everybody knew it. I happened to be in Chicago and perhaps knew it an hour sooner than somebody knew it in Kansas City, but it didn't profit me anything. Mr. Marble. You think that the fact that the rate was to be reduced Avas made public as soon as the meeting adjourned which reduced the rate? Mr. Shields. Yes, ^.r. Commissioner Lane. But you knew it before the Armour people knew it, because you said you informed them. Mr. Shields. At the adjournment of this railroad meeting I walked immediately to the board of trade and told Armour and Bartlett, Frazier & Company that the railroads had just publicly announced a reduction in the rate, to meet the flour situation, and that I would, at a stated price, sell some grain, which I did. Mr. Marble. Were you present at this meeting ? Mr. Shields. No, sir. Mr. Marble. You knew it was to be held before it was held ? Mr. Shields. Yes, sir. Mr. Marble. Was it publicly known that it was going to be held? Mr. Shields. Yes, sir. Mr. Marble. How was it publicly known ? Mr. Shields. It was in all the papers. Mr. Marble. Where were you when the meeting was being held ? Mr. Shields. At the Auditorium Annex. Mr. Marble. Was the meeting in the same building '( Mr. Shields. In the railroad exchange in Chicago. Mr. Marble. Who told you the rate was going to be reduced ? Mr. Shields. You mean after it was reduced ? Mr. Marble. After this meeting. Who told you this rate was go- ing to be reduced ? Mr. Shields. I have forgotten. I think Mr. Hiland's clerk told me, and Mr. George French happened to be in Chicago and he told me within a half hour or three-quarters of the adjournment of the meeting. Mr. Marble. And then you went from the Auditorium x\_nnex to the floor of the stock exchange ? Mr. Shields. No ; from the railroad exchange. Mr. Marble. That is about how far? Mr. Shields. About five minutes walk. Mr. Marble. And you walked over? Mr. Shields. Yes, sir. Mr. Marble. And when you got there you met Mr. Marcy ? GRAIN ELEVATOR INVESTIGATION. 351 Mr. Shields. Yes, sir. Mr. Marble. Who did you meet from Bartlett, Frazier & Carring- ton? Mr. Shields. Mr. Pierce. Mr.' Marble. Met them on the floor of the exchange ? Mr. Shields. Yes, sir. ' Mr. Marble. And you then told them that it had been decided to reduce the rate ? Mr. Shields. Yes, sir. Mr. Marble. Did they know it 'before you told them ? Mr. Shields. I don't know. I don't suppose they did. Mr. Marble. They took it as being news ? Mr. Shields. They were not greatly surprised. Mr. Marble. Do you suppose that they knew it beforehand ? Mr. Shields. I couldn't say. Mr. Marble. Did you know before the meeting that the rate was going to be reduced ? Mr. Shields. I stated a little while ago that I hadn't the slightest information of such a thing, nor had I any information from any of the railroad people to that effect. Mr. Marble. Do you know whether it was known on the floor of the exchange at the time you went on the floor and made these sales that it would be reduced ? Mr. Shields. No, sir. Mr. Marble. Did you make any attempt to find out whether it was known ? Mr. Shields. I didn't make any attempt. I stated to both the Ar- mour Company and Bartlett, Frazier & Carrington that the railroad companies had just publicly announced that the rate would be re- duced and that I could sell them some grain if the price was profit- able to us. Mr. Marble. Did you own that grain at that time? Mr. Shields. No, sir. That was where the trouble was. Mr. Marble. How much did you have on hand in these tanks at the time these rates were reduced? Mr. Shields. Oh, I suppose approximately 300,000 bushels ; 250,000 or 300,000. Mr. Marble. Was that what you would call an extraordinary quantity ? Mr. Shields. No, sir. Mr. Marble. Nor an extraordinarily small amount? Mr. Shields. It was just an average amount; just about what we ordinarily have. Mr. Marble. You had no advance notice other than you have stated that the rate was to be put in ? Mr. Shields. Absolutely none. Mr. Marble. You had the advance notice that it was to be put in on the 10th? Mr. Shields. Yes, sir. Mr. Marble. You got a telegram from Mr. Hiland. Is it your un- derstanding that he telegraphed you before he telegraphed Mr. French ? Mr. Shields. No, sir. I stated that he notified us on the board of trade a little later. 352 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. You can buy and sell a good deal of wheat if you choose within a short time ? Mr. Shields. We did not buy or sell. Mr. Marble. I say you can if you choose. Mr. Shields. No; not as a general thing; in the afternoon you can not. You can not as a rule buy or sell. You can sell, but you can not buy any grain much after the hour of l.l5 to 5 o'clock, as a general rule. Mr. Marble. You can make contracts for delivery ? Mr. Shields. You can do it, but it is not customarily done in that way. The wheat is bought on the floor during the session or by card bids in the country. Mr. Marble. So that the only reduced rate on grain this year — was there a reduced rate in the spring? Mr. Shields. No ; I do not know of any. I do not think there was, but I was in Europe all spring, for about four months. Mr. Marble. You are not familiar with the freight rates during ihat time, then, or the operations of your firm during that time ? Mr. Shields. No, sir; but I know they didn't do any business to speak of. Mr. Marble. You do not know whether or not a large amount of grain was accumulated in these tanks during the spring? Mr. Shields. I know there was not. Mr. Marble. How about the last crop year ; did you happen to ac- cumulate a large amount of grain ? Mr. Shields. Not an unusual amount at any time. Mr. Marble. Just prior to the reduction in rates ? Mr. Shields. No, sir. Mr. Marble. When you made these sales for delivery, about the last of July or the 1st of August, had you any information or under- standing or hope that the rate would be reduced just at the time for you to ship that grain ? Mr. Shields. I had the hope, of course, but for the third time I will say that I had absolutely no knowledge on the subject. Mr. Marble. Let me ask you upon what that hope was based ? Mr. Shields. On the common sense view that the railroads could not maintain an 8 cent rate on a high price commodity like flour and at the same time obtain and maintain a lOf cent rate on wheat. We reasoned that that condition could not exist very long, particularly as there was a great deal of pressure brought to bear to have the rate reduced. Mr. Marble. Your reasoning was correct ? Mr. Shields. Yes, sir. Mr. Marble. You want to be understood as saying that that was entirely due to your own skill as a grain man that foresaw that that would happen and not due to any notice given by any officials of the railroads ? Mr. Shields. I want to say that I had not the remotest idea of any reduction in rates, or the slightest intimation from any source. If there is anything further to bring out to make that clear to you I would be glad to do it, because that has been the one point that has been brought up repeatedly. I would like, if possible, to make it thoroughly clear. GKAIN ELEVATOE INVESTIGATION. 353 Mr. Marble. Now, what you have said about wlieat shipments. Let us turn to corn. I had meant to ask you about grain, not wheat alone. Mr. Shzelds. It applies equally to corn. Mr. Makble. All you have said applies to corn and oats and every other grain ? Mr. Shields. Yes, sir. Mr. Marble. Did you accumulate an amount of corn this last spring for export, which was sent, perhaps, through Baltimore, and which enjoyed a reduction in the export rate? Mr. Shields. Yes, sir. You are talking about last fall ? Mr. Marble. Tell us about that. Mr. Shields. We did, along in the fall, and I think perhaps in October. I was called to Chicago and there met Mr. Dennis, of Baltimore, and I did not meet, but I understood that Gill & Fisher, the other export house on the seaboard, was there, and they asked what would be necessary in order to move a large volume of wheat to the Atlantic seaboard for export, stating their reasons for doing so — not the desirability of the business, but their desire to establish a better rate basis to the seaboard, with relation to the Gulf. Mr. Den- nis and I figured out what was necessary, and they put that tariff in some thirty days later, and that tariff was based on the basis of the 15 cents — proportional of the export rate of 15 cents to the seaboard — and we did ship about three and a half million bushels of corn on that sale. Commissioner Laxe. You knew that rate was going into effect before it did ? Mr. Shields. Yes, sir. Commissioner Lane. How long did that rate obtain? How long did it last? Mr. Shields. About two or three months; something like that. Commissioner Lane. In the meantime you shipped how much? Mr. Shields. Three and a half million bushels ; 3,500 cars. Commissioner Lane. That rate was not made public until after you had known of it for some time ? Mr. Shields. Yes, sir ; that was an export rate. Commissioner Lane. A rate made to cover Mr. Shields (interrupting). I know these other people knew it; the two or three exporting firms at the seaboard knew it. I do not know how generally it was known outside of that. Commissioner Lane. But you were the first grain man who knew anything about it, because you participated in the making of it ? Mr. Shields. It was participated in simultaneously by Omaha dealers and by Gill & Fisher, of Baltimore. Commissioner Lane. I mean the western grain men, of course ? Mr. Shields. I do not know that, of course. I presume so. Mr. Marble. This advice was of some value in this respect ? Mr. Shields. Not a cent's worth. We unloaded on an average and loaded in the ten hours a hundred cars, so we did not carry the grain a minute. Mr. Marble! Did that go into these tanks at all ? Mr. Shields. No, sir; I couldn't say that some of the grain did S. Doc. 278, 59-2 ^23 354 GRAIN ELEVATOR INVESTIGATION. not go into the tanks, but the tanks were of no service in this business. We moved the grain just as quick as we received it. Mr. Marble. How much corn did you have on hand or purchased when that rate was published by the railroad company ? Mr. Shields. I couldn't answer that now. You mean by " on hand or purchased " — do you mean purchased or in the elevator ? Mr. Marble. Give us both — both purchased and in the elevator. That is, first had you any purchased when that rate was agreed upon at this meeting? Mr. Shields. No, sir. Mr. Marble. None purchased ? Mr. Shields. No, sir. Mr. Marble. How much did you have in these tanks and in the elevator when that rate was agreed upon ? Mr. Shields. None. Mr. Marble. How much did you have purchased at the time the rate was published? Mr. Shields. I can not answer that from memory; only approxi- mately. I suppose a million bushels. Mr. Marble. About a million bushels you bought between thj time the rate was agreed upon and the time it was published ? Mr. Shields. I couldn't answer that positively without looking up the records. My memory is not good. I can furnish it. Mr. Marble. Would you say approximately a million bushels? Mr. Shields. It wouldn't be safe for me to say. I will be pleased to furnish the information of what it was. Mr. Marble. Would you say it was no more than a million bushels? Mr. Shields. Yes, sir. I do not think it was. It was probably between a quarter of a million and a million bushels. ' Mr. Marble. When was this? Mr. Shields. About October — somewhere about the middle of Oc- tober — around about that time. Mr. Marble. 1906 ? Mr. Shields. Yes, sir. I am giving you this information simply from memory. I can not be sure of it. Mr. Marble. How many times in the last five years would you say Mr. Hiland has consulted with you regarding the reduction or raising of freight rates on grain ? Mr. Shields. I couldn't answer that. Mr. Marble. Well, about; very often? Mr. Shields. Not very often, but I couldn't say the number of times. Mr. Marble. Would you say once a month on an average? Mr. Shields. I shouldn't say more than perhaps once a year, or perhaps twice. Mr. Marble. Once or twice a year? Mr. Shields. Possibly. Mr. Marble. Are you familiar with this tarifl", effective October 8, regarding charges in this elevator ? Mr. Shields. I have heard of it. Mr. Marble. Do you know when that was published'? Mr. Shields. When it was published ? Issued, you mean ? Mr. Marble. When was it made known to the general public ? Mr. Shields. I do not know. GRAIN ELEVATOB INVESTIGATION. 355 Mr. Maeble. Do you know whether or not it was made known to the public on October 8 ? Mr. Shields. I think it was, but I do not know. Mr. Marble. You do not know ? Mr. Shields. No. Mr. Marble. In your position as elevator agent, was it brought to your attention that the general public knew it? It is your business, as elevator agent, to be familiar with these tariffs and their changes all the time, isn't it ? Mr. Shields. Yes, sir ; but not to see to their publicity. Mr. Marble. And these people, when they put grain through the elevator, have to deal with you ? Mr. Shields. They do not do it, but they are supposed to. Mr. Marble. It is published by the railroad company that they must or incur certain penalties ? Mr. Shields. Yes, sir ; but they have been very remiss in that, and careless. Mr. Marble. The Logan Grain Company, when they sent grain that they wanted to put through the elevator, had to deal with your company, didn't they ? Mr. Shields. They put some grain through ; yes, sir. Mr. Marble. And. they had to deal with your grain company to put that grain through ? Mr. Shields. They had to notify me. Mr. Marble. You were not careless as to that ? Mr. Shields. No, sir. Mr. Marble. Nash-Ferguson — were you careless as to them ? Mr. Shields. No, sir. Mr. Marble. They had to notify you ? Mr. Shields. Yes, sir. Mr. Marble. A^liat shipper has put grain through that elevator since the 1st of September to whom this carelessness applied that you speak of? Mr. Shields. Well, the Logan Grain Company, for instance — I thought you asked if I had been careless. Mr. Marble. I thought you said that certain shippers did not notify you, but notified somebody else? Mr. Shields. The Logan Grain Company. We have had some little trouble with them in getting them to notify us at the time they sent their shipments to the elevator. I notice by the morning paper that that is one of the complaints. I would like to explain that, if I can, to you. The Logan Grain Company had been setting some grain to the Milwaukee elevator for transfer and shipment from time „to time. In each and every instance their business was receiving the very best attention we could give it, and had preference over our own business, except in the case of five cars, which were set to the ele- vator sometime the latter part of September, on which they asked to have some special service rendered. The last car of which arrived on October 2, and was unloaded on that date, but the report of which did not get to our office until the 3d. In every other instance that I can recall their transfer business has had preference. All other transfers have been given preference. What cars remained on the track were taken in at the elevator by us. Mr. Logan, it seems, communicated with Mr, French on October 8, 356 GRAIN ELEVATOR INVESTIGATION. stating that he had five cars which had been delayed. I saw him the next morning and told him I was very sorry that he had not told me he wanted some special attention given to those cars, but I called attention to the fact that on or about September 30 or October 1, knowing Mr. Logan's difficulty — the difficulty of pleasing Mr. Logan — I wanted to make a personal explanation to him that for the following week the elevator -would be Ytn-y badly congested on account of shortage of cars; that the Simonds-Shields Gram Company had about 225,000 or 250,000 bushels of wheat to be loaded in boats for Buffalo, which vessels had been engaged — one for the 5th and the other for the 10th of October; and in addition to that that there was a large amount of wheat going to the Washburn- Crosby Company, of Milwaukee, for export on the 8th ; that we had orders in for six weeks for empties, and hadn't got any of them ; and that I was going to specially explain that siluation to him so that if he had any special business that required attention, if he would notify me at the time, I would use every effort in getting it attended to, and that I would try to have the railroad company hold the cars back in their yard, instead of delivering them to the elevator, so as to avoid demurrage to him. At that time he made no mention of having five cars he was specially anxious to get out. I see by the papers that he considers five or six days an unreason- able delay and discrimination against him. It has not been my inten- tion to discriminate against anyone. On the contrary it has been the reverse. But at such times as these it is very difficult to do all you want done. He wanted no grade wheat and 4 wheat and various kinds of wheat cleaned and run together to malte 2 wheat of. It is difficult to do that without stopping the conduct of your whole busi- ness to do this. Commissioner Lane. Don't you think the presumption is always bound to arise that you are taking advantage of your position as elevator agent, and an employee of the railroad company, against men who have some adverse interest to yours as shippers of grain? Mr. Shields. Yes, sir. I think, moreover, that that same thing will continue as long as the railroads engage in running elevators, or engage in any business. I am speaking now for the Simonds-Shields Grain Company and not for the Milwaukee elevator agent. Commissioner Lane. You think that the railroads should get out of the elevator business? Mr. Shields. Certainly. Commissioner Lane. And do you think they should give anything for that elevator service; that the railroad should give anything, in the nature of a rebate or an allowance, for the elevator service? Mr. Shields. Not a rebate; not to put it in that term. They should pay for the service rendered to them, its approximate cost. Whether they pay it from their own treasury by operating their ele- vator, and in that way in a measure discriminate against individuals, as they probably will as time goes on ; they should be compelled to pay the approximate cost of the service rendered, where it is necessary to meet a through rate at some mai'ket point. If they pay in excess of its approximate cost, it gives the man performing the service an ad- vantage over somebody else, which he should not luive, and which they should not permit. If they }iaid the approximate cost of the GRAIN ELEVATOR INVESTIGATION. 357 service rendered to a private elevator, or if they did it themselves, so long as they do not engage in the business, and merely do a transfer- ring of the grain, nobody would be injured. These complaints could not come up. Commissioner Lane. Then the elevator itself or the elevator com- pany, the company that manages the elevator, should not be in the grain business. It should be merely a transfer agent or agency ? Mr. Shields. I did not say that. I do not see why a man engaged in the grain business could not manage a railroad elevator just as well and just as much within the law as if he were not in the grain busi- ness. The point I make is that I do not think a railroad company should engage in any business. I think it is just as reasonable for them to make flour in transit as it is to clean and mix grain. Commissioner Lane. Isn't it a temptation to a man who is in the grain business and who also runs an elevator, to make a little combi- nation with the railroad company or the railroad to make a combina- tion with him ? Mr. Shields. That would occur in any kind of business; just as the Parmalee Company in Chicago hauls passengers from one station to another for a certain compensation. It gives them the advantage over a man who doesn't have a contract. The question is, is their remuneration reasonable ; is it in effect a discrimination against other people in the same business? Commissioner Lane. If it allows any margin— if the charge made by them for the services allows any margin upon which they can go out and bid the country at an advantage, it certainly is wrong to the farmer and wrong to the competitor, isn't it? Mr. Shields. Yes, sir ; but if you do not allow the advantage it is a greater wrong to the farmer. If you do not alljOW the cost of trans- fer that simply means that the cost falls upon him, and you rob him of intermediate markets which are vital to him, such as Kansas City. Kansas City has done more for the farmer — and St. Joseph and Omaha and Minneapolis have been of greater benefit to the farmer than any terminal market could be, because they prevent and avoid the congestions which are certain to arise at those terminal markets. Therefore, in my judgment, it is essential for the railroads to be per- mitted to absorb the cost of this service in which ever way they see fit, either by performing the service or by paying some one else to do it. In most instances the elevators have been there years before the rail- roads were there and are just as much entitled to consideration. If you do not permit a thing of that kind, if you eliminate the transfer, it is impossible to have a staple basis of rates, for the reason that the short line going from A to C and going through B has a distinct advantage over the two short lines that parallel that line. If you impose that tax upon the dealer it will be the cause of a continual unsettled rate condition. Commissioner Lane. Now, why wouldn't it be the correct thing if the railroad company itself is not in the grain business and is not in an alliance with anybody who is in the grain business, for them to do the elevating and the transferring, inasmuch as it releases their equip- ment? Mr. Shields. That should be optional with them. They should be permitted, in my opinion, to do the transferring, but not to mix, clean, clip, or make flour. 358 GKAIN ELEVATOR INVESTIGATION. Commissioner Lane. Not to go into a separate business, but to make that a part of the transportation condition? Mr. SkiELDS. Yes, sir. The difficulty arising there is the one that has arisen now. The question has been raised of five cars being delayed five or six days, which does not look to be unreasonable, knowing the situation as I do. If a question of that kind is possible in such an insignificant instance as this, what will it be with the railroad agent, who prefers naturally to handle the business of the shipper that gives him the largest volume of business? It will be the same thing. Commissioner Lane. That could be regulated automatically, I sup- pose, so that the first wheat in should be handled first. Mr. Shields. That is the way it is done — that it is regulated— but still there is complaint on it. If we had waited for these five cars to take their turn, they would scarcely be out of the elevator now. Commissioner Lane. I suppose this complaint would not have been made if you had not been in this peculiar dual capacity ? Mr. Shields. I do not know about that. It is quite possible it might in this case. Mr. Marble. I would suggest that we adjourn. I have no doubt that it will be agreeable to the witness, and I know it is to me. Commissioner Clahk. I think, Mr. Marble, we will not take more than one hour for recess to-day. We want to get done all we can here before we leave. Mr. Marble. Which do you prefer? Commissioner Clark. We can adjourn now, or sit until 1 o'clock. Mr. Marble. I would prefer to adjourn now. Commissioner Clark. Well, we will take a recess until half past one. At 12.30 p. m. the Commission adjourned until 1.30 p. m. after recess. , 1.30 o'clock p. m.* Commissioner Clark. You may proceed, Mr. Marble. Mr. Marble. Is Mr., Shields here ? E. W. Shields resumed the stand. Mr. Marble. Have you a pass on the Chicago, Milwaukee and St. Paul Railway at the present time ? Mr. Shields. Yes, sir. Mr. Marble. As an employee ? Mr. Shields. As an employee. Mr. Marble. In your journeys on that road do you attend to any business except your business as an elevator agent ? ' Mr. Shields. Yes, sir ; I presume I do. I usually, in fact, always, combine with the business duties — duties I have at the elevator — I combine some business. I nearly always go into Chicago at the request, or to attend to some business pertaining to the conduct of the elevator and incidentally try to do some grain business if I can. Mr. Marble. If your grain business calls you out on the Milwaukee Road you use the pass to travel on, do you ? Mr. Shields. Yes, sir. Mr. Marble. Has that occurred ? aSAIN ELEVATOR INVESTIGATION. 359 Mr. Shields. I do not recall any instance in which I have gone out on the Milwaukee Road entirely on our own business. Mr. Marble. Do you recall any instance in which you have gone out on your business ejitirely as an elevator agent? Mr. Shields. Generally that is the cause of my trips. Mr. Marble. Your business as a grain merchant is not generally attended to on these journeys? Mr. Shields. Yes; I said it was attended to in connection with that. Mr. Marble. You do not mean to say that most of your trips are exclusively for railroad service, but you mean that on them you have both sets of duties to attend to ? Mr. Shields. Yes, sir. Mr. Marble. When this export grain rate, this relating to corn in 1905, which was testified to this morning was published, how much corn had you bought, including that you had actually received and that which you had bought options for the delivery ? Mr. Shields. Before this arrangement was talked about, you mean? Mr. Marble. Yes; up to the time it was published? Mr. Shields. As I explained this morning, I could not give that information without reference to the records; probably 250 to 500 cars — perhaps a little more than that. Mr. Marble. 250 to '500 cars ? Mr. Shields. Probably; I have not a positive statement, I could not remember. Mr. Marble. You say that that includes actual grain and options for delivery of grain ? Mr. Shields. Well, I could not say positively about that. There probably were some options for grain bought in addition to that. Mr. Marble. Make an estimate of the amount of the option busi- ness? Mr. Shields. I made that estimate this morning, that the tonnage was probably somewhere between 250,000 and 700,000 bushels alto- gether. I am making the figure wide — probably 250,000 to 500,000. Mr. Marble. Can you make the maximum nearer than that ? Mr. Shields. Not in my memory. Mr. Marble. When did that rate expire ? When was it first due to expire — I will ask you that question first ? Mr. Shields. I do not recall the dates. Mr. Marble. Were there two dates for its expiration, first a date fixed and after that a later date fixed, the date being extended ? Mr. Shields. I can not make an accurate statement on that. It has passed from my memory. Mr. Marble. Do you remember whether or not that date was to expire January 1 ? Mr. Shields. Yes ; I remember that. Mr. Marble. And then by publication it was extended fifteen days or something? Mr. Shields. Yes, sir. Mr. Marble. What was the extension ? Mr. Shields. I do not remember. Mr. Marble. Were you consulted as to the extension by Mr. Hiland or anyone?^ 360 CHAIN ELEVATOR INVESTIGATION. Mr. Shields. No, sir. Mr. Marble. Do you know whether or not that extension was made especially in behalf of your firm, because you were loaded up, and could not get the stuff shipped out ? Mr. Shields. I do not know that. Mr. Marble. Did you have any consultation with any official of the railroad to the effect that you were loaded up and needed an exten- sion, and did you solicit it? Mr. Shields. I can not recall those circumstances that far back. Mr. Marble. Well, this is not a year old, is it ? Mr. Shields. No ; but if you were handling ten million bushels a year and making various deals from time to time, it is hard to remember dates. Mr. Marble. You can not say whether or not you solicited that extension or whether or not it was made specially in behalf of your firm? ^ Mr. Shields. I think not, but could not say positively. Mr. Marble. Do you remember whether or not it was in fact advantageous to your firm — that extension? Mr. Shields. I suppose it was. Mr. Marble. You do not remember, though, as a matter of present memory ? Is that what you mean ? Mr., Shields. I do not recall the circumstances definitely just now. Mr. Marble. I will ask you if, about the time of the expiration of that rate, grain was billed from the country through to some eastern point or to the point of export via the Chicago, Milwaukee and St. Paul Railroad from Kansas City — I mean, being billed very close to the time of the expiration — so as to save the through rate on that grain ? Mr. Shields. You mean, did we buy grain in the country for ship- ment before the expiration of that rate to get the benefit of the rate? Mr. Marble. And did you bill it from the country to the point of export so as to avoid the time of expiration ? Mr. Shields. No; we did not do that. There might have been an isolated case, but as a proposition, we did not. Mr. Marble. In your services for this company as elevator agent, is it your understanding that you perform practically the same serv- ices as these elevator agents and grain agents for other roads in this city? Mr. Shields. That is my understanding. Mr. Marble. Do you solicit business from shippers — try to get business for the road ? Mr. Shields. Yes; excepting at such times as I stated as to Mr. Logan, we did not have any cars. At other times I naturally solicit business — try to get all the business I can for the Milwaukee. Mr. Marble. It is your understanding that you have been as active soliciting business for your road as they have for their roads ? Mr. Shields. I could hardly make comparison with them as to what they have done. I do not know what they have done. Mr. Marble. You do not find yourself in competition with them sufficiently to bring their activities to your attention ? Mr. Shields. Why, no. We have on this crop— our own business has been sufficient to just about take care of all the equipment the GRAIN ELEVATOR INVESTIGATION. 361 Milwaukee road had, so it has not been necessary for me to solicit business, perhaps, as urgently as I perhaps would at some time when they had more equipment. Mr. Marble. So, as a matter of fact, considering the extent of your own business, you have not solicited the business to any extent? Is that what you want to be understood as saying? Mr. Shields. That is not what I said. Mr. Marble. Would it be fair to put it that way ? Mr. Shields. No; I do not think it would. I simply stated that I solicited business, and the portion I solicited in relation to other agents in similar positions, I could not say, because I have not watched their business. Mr. Marble. You say you solicited the business when the equip- ment was such that the road needed more business than it had ? Mr. Shields. Yes ; that has not occurred on this crop year. For- mer years, I have. When we leased the elevator I solicited business. Whenever they had cars to move stuff I solicited it when we could find it. Since this arrangement they have been short of cars. Mr. Marble. And there was no occasion to solicit business from anyone else? Mr. Shields. No ; there was no occasion for it, but I have. Mr. Marble. Why did you do it if you did not want the business ? Mr. Shields. I did not say we did not want the business. Mr. Marble. If you could not handle it you could not want it very badly. Mr Shields. We have handled it. Commissioner Lane. Do I understand you to say that heretofore, }iefore the 1st of July, when this arrangement of yours went into effect, that there were times when the Chicago and Milwaukee had more equipment than it had business? Mr. Shields. Yes, sir. Commissioner Lane. At those times you solicited for them? Mr. Shields. Any business we could get ; yes, sir. Mr. Marble. Do you keep any standing order for cars with the Milwaukee road? Mr. Shields. We do not ordinarily. We have for the last six weeks had a standing order for all the cars they could give us, because they could not give us enough to get out our sales. Ordinarily we do not do that. Mr. Marble. You have had a priority the last six weeks over any other shipper? Mr.. Shields. Yes, sir ; and notwithstanding that we gave other business the preference, except the four or five cars you referred to and which I explained. I explained when we start in the morn- ing, that we take the track grain on the elevator and give it the preference, and if there are any cars left in the afternoon, or when we get ready to load our own business, we load the grain into them. Mr. Marble. You are a member of the Kansas City Board of Trade? Mr. Shields. Yes, sir. Mr. Marble. How long have you been a member — about ? Mr. Shields. About seventeen years — sixteen or seventeen. Mr. Marble. Are you at the present time engaged in, or are you 362 GRAIN ELEVATOR INVESTIGATION. advised of any combination in this city to fix the price at which grain shall be bought in this city ? Mr. Shields. No. Mr. Marble. Or of srnf combination to fix the price or agree upon the price that shall be bid in the country ? Mr. Shields. No. Mr. Marble. Have you been during this crop year ? Mr. Shields. No, sir. Mr. Marble. Have you been this crop year ? Mr. Shields. None whate^'er. I could make it broader and say none practically at any time. Mr. Marble. What is the exception that compels the insertion of the word " practically ? " Mr. Shields. I presume as long as ten years ago there have been periods during which there was an effort made to get together on prices, which are not clear in my mind, and I. would not want to make the statement positively on that account. But I will say in that connection, that our policy has been the opposite. We have always opposed agreements from a purely selfish standpoint, because we get most of our grain on the floor. We have been in the elevator business only three years and previous to that have not been invited to meetings, and previous to that I did not know much about it. Mr. Marble. Did you hear Mr. Beall's testimony this morning? Mr. Shields. No. Mr. Marble. What you say about not being in a combination, will it cover all the time and every year for the last ten years? Mr. Shields. I think it would. I am not positive. Mr. Marble. Would you say nine years — that there was no such combine in nine years? Mr. Shields. In which we have entered ? Mr. Marble. Or which you have known of and had to deal with? When was the last combine you know of ? Mr. Shields. I have not any idea of it, because, as I stated to you, at the time when there were efforts made to get together among the elevator men, we did not operate an elevator and were not consulted. During the time we have operated this elevator, the last three years, we have not been in any such agreement, nor have we any agreement as to the country, what we shall bid or who we shall bid. We have tried to conform as near as we could to what others were bidding, but we entered no agreements. Mr. Marble. If you endeavored to conform to what they were bid- ding, did you know what they were bidding ? Mr. Shields. Yes ; we knew the previous day. For instance', grain bids were going out of here a quarter or half a cent above a certain option. That being so, we knew there was no use of our going out over half a cent unless Ave were especially desirous of grain, and then we went out regardless of what others bid. Mr. Marble. How did you know what others bid ? Mr. Shields. By receiving postal cards from our shippers. Mr. Marble. You were not advised by the Kansas City buyers what they were going to bid ? Mr. Shields. Occasionally; not regularly. Occasionally somebody would say, we are going to bid so and so to-night. GBAIN ELEVATOR INVESTIGATION. ■ '363 Mr. Marble. On those occasions how many people would say that to you ? Was it any more than a passing remark ? Mr. Shields. That is all, so far as we are concerned. Mr. Marble. You say there is no practice of advising each other as to what you propose to bid the next day ? Mr. Shields. I do not know. I am only stating so far as we are concerned. Mr. Marble. So far as you are concerned ? Mr. Shields. Yes, sir. Mr. Marble. You do not advise any competitors in Kansas City as to what you are going to bid ? Mr. Shields. No. Mr. Marble. Would you say you have never done so ? Mr. Shields. No. I say we frequently knew what they were bid- ding and frequently told other people, but we have no agreement, have not pursued that policy, do not confine ourselves to any uniform bids, as the bids will show, that go to the country, as a rule. Mr. Marble. What are the occasions for these exceptions when you do make an exception ? Mr. Shields. An effort to keep the market in line, I suppose. That is probably the reason. Mr. Marble. That is your idea when you tell these competitors ? Mr. Shields. No. Ever since we have been operating an elevator we have not put ourselves out to tell anybody what we are bidding. Mr. Marble. Have you incidentally told any competitor what you are doing? Mr. Shields. Incidentally; yes, sir. Mr. Marble. With the*dea of helping to keep the market in line? Mr. Shields. Well, possibly that might have had some influence on our mentioning it. Mr. Marble. How long would you say it has been since you have • so made known to a competitor what you were going to bid with that idea or any idea ? Mr. Shields. I should think a year. Mr. Marble. Not in this crop year ? Mr. Shields. No. Mr. Marble. With what competitors did you so advise or make known the last crop year ? Mr. Shields. I have not any recollection of any specific or particu- lar cases. Mr. Marble. Well, without recollecting specific or particular cases, what would you say ? With whom are you on such terms as to make known your prices to each other in an effort to keep the market in line? Mr. Shields. Any bidders to the country. I would not hesitate to tell anyone. They frequently ask us what we are bidding, and we ask them. We do not hesitate to tell them. Mr. Marble. All bidders in Kansas City ? Mr. Shields. Any qf them. Mr. Marble. You would not tell Mr. Beall ? Mr. Shields. No, we would not tell Mr. Beall. Mr. Marble. Would you tell anybody that was not a member of the board of trade ? 364 ■ GEAIN ELEVATOR INVESTIGATION. Mr. Shields. We would not get any business if we did not. This comes from the country Mr. Maeble. I do not mean the country. I mean consulting with your competitors. Mr. Shields. We would not make any difference except it happens that Mr. Beall is a member of another board of trade, that our board of trade has stamped as a bucket shop. They claim it is a gambling institution, and for that reason, to avoid a violation of our rules, we do not deal with those people. Mr. Marble. You do not let your competitors know what you are going to bid to keep the market in line with any idea of buying from . them? Mr. Shields. Yes, we frequently buy from our competitors. I am not sure but we buy more from competitors than from the country. We- have bought large quantities from every dealer in Kansas City of consequence. That is where we buy most of our grain. We have no country stations, or country business to any extent. Mr. Marble. Do you, in bidding the country, discriminate at all between different classes of persons having grain to sell because of their owning elevators or not, or belonging to your association or not ? Mr. Shields. No, we do not. I will try to explain briefly what we do. If we have two shippers at a certain station — if there are two shippers at a certain station and one of those shippers consigns grain to us, or both, whether they are regular or so-called irregular, we have never, that I know of, refused to handle the consignment from either class. If at the same station we have a regular gram dealer — so-called regular grain dealer — who sells his grain to us on our card bids, and the other so-called regular does not, and the one man should mention that he sees our card bids going to so and so, we would probably stop doing business with the man that does not do business with us if it , conflicted with the other man's business. Otherwise we handle them the same. Mr. Marble. Have you had any experience of being threatened with the loss of regular customers if you received shipments or bought grain from irregular customers ? Mr. Shields. Well, I can not recall those cases. As I say, I only look after the general policy of our company. That is done by Mr. Simonds and his son. I simply know our general policy. Some cases of this kind may have occurred, but have not come to my notice. Mr. Marble. Is it your understanding that such cases have occurred? • Mr. Shields. I think in the past perhaps they have. Mr. Marble. Would you undertaJse to say how long ago? Mr. Shields. No; years ago. Mr. Marble. More than a year ago ? Mr. Shields. Yes, sir; three or four years ago is the last instance. I do not recall any special case, but the last two or three years there has been a lot of agitation on this subject and the thing has unfortunately dropped out. ' Mr. Marble. You mean you feel free to bid ? Mr. Shields. We always did. We never hit them, although it is pleasanter not to come into conflict with that sort of thing. Mr. Marble. You say you buy a great deal of grain from your competitors in Kansas City? GEAIN ELEVATOB INVESTIGATION. 365 Mr. Shields. Yes, sir. Mr. Marble. You ship practically all the grain you buy over the Milwaukee road, do you not? Mr. Shields. Yes, sir. Mr. Marble. Your competitors ship very little grain over the Mil- waukee, as you testified. Mr. Shields. Yes, sir. Mr. Marble. Do you know why they do not ship that over the Milwaukee, why they find it more profitable to sell to you, as they evidently do ? Mr. Shields. There are a good many reasons. One is that for twenty years we have been cultivating the mills on the Milwaukee road diligently and we have reached a point where we believe we can get their orders at the preference. Other operators frequently operate in some other direction on some other line. When we buy, for instance, from Hall-Baker, it happens sometimes when the export business is not good to the south, as they have not developed to any extent the business to the nothwest, we can buy and make a profit. Mr. Marble. "Not because of your leasing these tanks or your agency with the elevator, or any other consideration from the road ? Mr. Shields. Not at all. Mr. Marble. It is your understanding that so far as rates and service are considered, they are as free to do business on the road as you? Mr. Shields. Absolutely the same. Mr. Marble. How many grain dealers, or how many shippers from Kansas City would you say are in the business here? Mr. Shields. How many shippers out of this market? Mr. Marble. Yes, sir. Mr. Shields. About all of them, more or less. Mr. Marble. How many would that be? Mr. Shields. About 50, but the business is done, as every other class of business is done, largely by a dozen concerns. The big end of the business is done by a dozen or fifteen firms. . Mr. Marble. I think that is all. Commissioner. Clark. I understood you to say this morning, Mr. Shields, in answer to Commissioner Lane's question, that you thought the railroad companies ought to get out of the elevator business ? Mr. Shields. Yes, I do. Commissioner Clark. Now, I would like to have your opinion concisely as to the manner in which that could be brought about. In what way could the necessary transfer of grain be had at points like Kansas City and in a business way, that is, in a way that is practicable? Mr. Shields. It seems very clear and very simple to me. Of course, I may not see it in the right light; that is, by ascertaining the approximate cost of the service which is rendered by the elevators to the railroads; that is, not selecting an obsolete house or either the most modern elevator, but something that is approximately what would perhaps be an average of the cost of the service, and fixing the charge at that exact cost. If that exact cost was allowed to an elevator .for performing the service to the railroad company, or if it were left optional to the railroad company to pay that direct amount, so much, or do the service free themselves, the pure transfer, I do 366 GEAIN ELEVATOR INVESTIGATION. not see how the contract to transfer gram at the cost price could injure any one. As it is to-day, as it has been in the past, even with a transfer allowance of a cent and a quarter a hundred, it does leave a small margin of profit, a margin of profit, which however small it is, however insignificant it is, gives the elevator operator some advant- age over the man that does not operate an elevator. But if that allowance were the mere approximate cost of the service rendered, then the private elevator,where the money has been invested for all the years past, would not be totally destroyed or ruined, nor would any- body be injured; and it would also prevent the thing you mentioned this morning, which is without foundation, the preference of our own business over that of other grain companies, which we have studiously tried to avoid. That thing would become just as obnoxious and annoying as the old rebate business. The old rebate system was uniform. Anybody could get the 7 cents out of Kansas City years ago. The large and the small shipper could get that rate, but when the Elkins law was effective it prevented that and made the rate 14 cents instead of 7 cents a hundred. It did not help anybody because they put a cent and a quarter on the elevator, precluding the small shipper. In the cent and a quarter there was a margin of profit. Eliminate the profit and nobody cares for a thing that does not pay them. It will help those that have a business and help the market and help the country shipper. Commissioner Clark. Would you say, if that policy were adopted, that the allowance, whatever it may be, should be made to a com- pany that owned and operated their own elevator and took the grain in there for mixing and treating purposes ? Mr. Shields. I should think so. The mixing and treating pur- pose is hazy in the ideas of many people. The mixing of an ele- vator adds slightly to its cost. In the largest elevators, the new modern houses, those services amount to the cost of about two men at $70 a month, one on the first floor, a mixer, and the other above to do the spouting. For that reason I do not consider that that thing adds any great advantage. It is an advantage for a man to be able to conduct his own business as he pleases, just as it is an advantage to the man that has employment over the man that has not employment. That is the only advantage. Commissioner Clark. The only service as a transportation serv- ice that can be rendered a railroad company by an elevator company is the unloading and loading of cars. Mr. Shields. Exactly; yes, sir. Commissioner Clark. Do you think that the railroad company should either do that free of charge to the owner of the gram or hire somebody else to do it ? Mr. Shields. Yes; they should do that for the owner of the grain, and nothing else, or they should hire somebody, and it shoidd be optional. I think it should be obligatory on them to allow that transfer to any and all elevators on their tracks. If they have a public house like the Milwaukee elevator and a private house somewhere else, should they choose to do that transfer themselves the cost should be figured out and allowed the other elevator on their tracks just the same. That is where the injustice in railroad elevators comes in. GRAIN ELEVATOR INVESTIGATION. 367 . Commissioner Claek. Would you exclude the elevator not on their track? Mr. Shields. Certainly; you would not ask them to give up possession of their cars. Considerable has been said in the papers as to the Logan Company complaint, that the Milwaukee refused to set their cars to the elevator for them to load. The Milwaukee elevators are at Coburg, 5- miles from here, and the Santa Fe, 10 miles from there in another State and city. You could hardly expect the Milwaukee, when their own freight house was badly in need of cars and their elevator was accumulating grain which they could not take out — you could hardly expect them to send their cars to another town and State and pay switching in order to get business. I do not see how it should be applicable to any other elevators except on that particular track. Commissioner Clark. Suppose their own elevator was not over- flowing with business, and they had idle cars, and they should see fit to set those cars to a Santa Fe elevator for the purpose of loading to points on the Milwaukee, should they not pay the Santa Fe for loading those cars the same as they pay you ? Mr. Shields. No; I do not think so. I think that should be a mat- ter of competition and their willingness to do it. I mean I do not think any railroad company should be asked to release their equip- ment and turn it over to some other road, which, in all probability, would appropriate some cars to their own use. I do not think they should be asked to do that unless they wish to. Commissioner Clark. What advantage could they be to anyone except themselves? Assuming, for instance, that you had some arrangement for leasing and operating the Milwaukee and St. Paul, elevator, and we will assume for argument sake that there is a fixed allowance of half a cent per hundred pounds for loading out. If you are the only one that can get that from the Milwaukee Road and Mr. Smith is the only one that can get it from the Alton road, and Mr. Jones is the only one that can get it from the Great Western, what show has anybody but yourself and Mr. Smith and Mr. Jones ? Mr. Shields. That is what I am trying to get at. I am trying to forget our personality in this business. If you put the business mto the hands of the railroad companies, that is exactly what will follow. Certain larger shippers will of necessity have facilities that, perhaps, in a measure are discriminatory; but if you allow an elevator on that track the same course and if you compel a railroad company to pay it to this person, it will result in the upbuilding of smaller elevators on the tracks that would have an advantage over the larger ones because they would be more economically handled and better. But instead of losing the use of the cars two or three days and paying the switching charge and losing one or two of their box cars each time, as they would, it does not seem reasonable to me. The other plan will take care of itself if the railroad companies are compelled to allow every elevator not their own — and that be optional with them what to do with it — if they are compelled to allow the same allowance to other elevators, the question will not have any more difficulties, because, for instance, if Logan does not like it, it is simple for him to ' rig up a little transfer, or any one else. Commissioner Clark: He would have to get permission to put that on their right of way, or on their tracks. 368 GRAIN ELEVATOR INVESTIGATION. Mr. Shields. I presume so, but he could put it on land adjacent to them and they would have to furnish the service. I thmk they would gladly do it. Commissioner Lane. As an elevator man, what is the reasonable or the average cost of elevator service to a railroad — putting in and taking out? Mr. Shields. This is our third year operating the elevator. The first year we operated on a fraction over a cent a Dushel. That is not a fair estimate, because we were ignorant in the handling of the ele- vator. The cost was much greater. It should have been and was no index. Last year we had a good, fair, average year and handled several million bushels of grain as economically as we could, ending July 1, at fifty-one one-hundred ths of a cent. Commissioner Lane. That included something — it included clip- ping, cleaning, etc.? Mr. Shields. But as I said before, they do not affect the result to any extent. Of course, that could be reduced a little, probably by a mere skeleton elevator that did nothing but transfer the grain, but that would not serve the railroads or the markets. It is fair to take an elevator that has the facilities. Commissioner Lane. Why would it not serve the railroads to have a skeleton that makes the transfer? Mr. Shields. To-day, for instance, the receipts are large in Kansas City — 500 cars. Say the Santa Fe elevator or the Chicago and Alton buys a car. They did not know yesterday that they could use it and sell it. The Chicago and Alton or the Milwaukee is not prepared to furnish 50 cars the following day or the day afterwards without great .expense and without robbing other lines of business. They will in a week be prepared to. The car must stand loaded at a loss of the use of the car until an empty can be furnished. There should be storage enough to release the equipment and let it get back into the country to get the grain. Commissioner Lane. Or else the railroad should have more equipment ? Mr. Shields. Yes, but Commissioner Lane. That would be an unreasonable request? Mr. Shields. No; but it would take years for them to get cars enough to move the crop in the West and Northwest in the heaviest time. Then they would have cars that would not be of service to them the rest of the year. It would be reasonable to ask them to have more equipment, but not that much. Commissioner Lane. Do you think a half a cent a bushel is a rea- sonable transfer charge? Mr. Shields. Yes; I think so. Commissioner Lane. And that includes something that is not properly chargeable to transfer? Mr. Shields. But it is so small that you could not recognize it. Eighteen hundred dollars a year in thie expense of operating an eleva- tor would really count as nothing on the per cent per bushel. Commissioner Lane. Do you count in the half cent a certain charge for insurance and interest ? Mr. Shields. No. Commissioner Lane. It is just for operating? Mr. Shields. Yes. We did not pay any rent last year or the year before on the elevator. We expected to — made a contract and GBAIN ELEVATOR INVESTIGATION. 369 lease to pay the rent, but it developed in these inquiries that nobody- else was paying rent, and we objected. Commissioner Lane. How much rent were you paying? Mr. Shields. Five thousand dollars. Commissioner Lane. Five thousand dollars a year? Mr. Shields. Yes, sir. Commissioner Lane. All the other elevators here renting from railroads were not paying anything? Mr. Shields. So it developed; yes, sir. These hearings here in Chicago and St. Louis brought out that we are much behind the times in our railroad arrangements. Commissioner Clark. We will assume that half a cent is a fair charge. Suppose all the railroads centering at Kansas City made an elevator allowance of a half a cent a bushel, what would be the practi- cal effect as between roads like the Santa Fe and the Rock Island and Burlington, that have through lines from the grain fields to Chicago, and roads like the Milwaukee and the Alton, that have no lines west of here and must take grain that comes in over some other road? Mr. Shields. It would, of course, mean a distribution of some of this originating grain that the through lines claim as theirs, and which they have not a right to. This is a grain market of a benefit so great that you can hardly measure it to the country. It would certainly divide the business somewhat between them, depending on how active the people were shipping on certain lines, how well established their busi- ness was in certain directions, and how faithfully they served the mills and the export firms they dealt with. Commissioner Clarjc. Would it be possible under an arrangement of that kind, if they were so disposed, for the through lines to work out of that plan an advantage to themselves as compared with the lines that have to get their business here ? Mr. Shields. I think not. Commissioner Clark. That is all. Mr. A. F. Sherman (representing the Simonds-Shields Grain Com- pany). You spoke about paying freight bills for grain ordered to your elevator by other people. How does that come about and what is the reason for it ? Mr. Shields. That came about originally under the old system which we fell heir to when we took the elevator. For the convenience of the grain dealers it was found advisable for each public elevator and private elevator to furnish a bond, an approximate bond, to each railroad company, so when the grain was unloaded there need not be but one settlement. In other words, if the car contained 58,900 pounds, the freight was paid on 58,900 pounds and not 60,000 pounds, the capacity of the car, or the railroad weight, and the correction made. That was done purely and entirely in the interest of the general merchant, the merchant here, the whole trade, to save them annoyance. Mr. Sherman. Is it any benefit whatever to your firm ? Mr. Shields. Absolutely no benefit whatever. It is an annoyance, if anything. Mr. Sherman. What are your sources of information as to the different grain men throughout this section of the country, without reference to these freight bills? S. Doc. 278, 59-2 2A 370 GRAIN ELEVATOR INVESTIGATION. Mr. Shields. There are published lists of all grain dealers in. the country, also pubhshed lists of all millers, on every railroad, which we use to get information from. Mr. Sherman. Have you for years known all the dealers on the St. Paul between here and Milwaukee? Mr. Shields. For nearly twenty years I have known personally every buyer of grain in that locality — for eighteen years. Mr. Sherman. State what caused the change in the management down here about July 1 . What brought that about ? Mr. Shields. Well, for three years I nave been repeatedly asking the railroads' attorneys and ofiBcers of the roads if the transfer allowance of a cent and a quarter was legal. In each case they have always said it was legal, thoroughly justifiable, that the Commission passed upon it. But suddenly they asked me to come in last spring, and said it was all illegal; that they had been doing something illegal, and that a new method must be adopted. As I explained early this morn- ing, we had a large amount of wheat sold for July and August on the basis of a transfer allowance. We had repeated hearings before the Interstate Commerce Commission. They have never ruled definitely what was legal and what was not. We had to hunt about for an expedient to continue to do business. We hit upon that already outlined by other railroad companies, by operating their own eleva- tors, which in substance is the same as paying a transfer. Commissioner Lane. You refer to the Peavey case ? Mr. Shields. No particular case. Commissioner Lane. The ruling of the Interstate Commerce Com- mission ? Mr. Shields. Yes, sir. Commissioner Lane. That ruling was that it was allowable. Mr. Shields. That is what I say. Commissioner Lane. Why was there a change ? Mr. Shields. I do not know. The legal departments of the rail- roads discovered that it was illegal. Commissioner Lane. The Union Pacific did not ? Mr. Shields. No; the rest of them did. Commissioner Lane. That were opposing it ? Mr. Shields. Yes. We had to hit on some other expedient, and that was for the railroad to pay the operating expense, which was not as much as the original transfer. There was a small profit in the transfer, especially m the busy season. It was the only thing they thought within the laW. Commissioner Lane. It was simply a device for doing the same thing — getting aroimd it. Mr. Shields. Yes, sir; adopting a method brought about by other lines, which, as you say, was a device to change the method. Mr. Sherman. Were there any changes at that time made by others ? Mr. Shields. They all drifted over one by one without any defi- nite action. To-day there is no uniformity of action. One road puts in one tariff and another another. Mr. Sherman. Is that condition also what caused the change September 1? Mr. Shields. Certainly. Mr. Sherman. And the change of October 8 ? GEAIN ELEVATOR INVESTIGATION. 371 Mr. Shields. Certainly; uncertainty as to where they stood. Mr. Sherman. What in your opinion is the necessity for mixing the different grades of grain ? Mr. Shields. What is the necessity? Mr. Sherman. Yes, sir. Mr. Shields. Well, it is of great necessity in order that the farmers in the country might receive the highest price. For instance, to-day, for this last season there has been a great deal of low-grade wheat come to this market hot that would be valueless in a short time. Instead of that, it brings a good price. Commissioner Lane. But you get that ? Mr. Shields. We do not get a thing out of it. Our margin of profit is so small that if it were varied a quarter of a cent a bushel we would have to go out of business. Commissioner Lane. You buy at the low grade and do not buy before it is mixed ? Mr. Shields. No. When you pay within 5 cents a bushel for low- grade wheat of the price of two and stand a shrinkage of 2 to 2 1 cents a bushel and mix it generally with wheat that is not Commissioner Lane. The total expense of running the mixing department is only $140 a month? Mr. Shields. Yes, sir. Commissioner Lane. And none in the small elevator; so it can not be a tremendous expense to do it. Mr. Shields. As I explained, we buy this grain at 5 cents. There is 2^ cents loss immediately drying it out. That leaves 2i cents. If you use it at all, you use it in such small quantities — the price of the wheat that is mixed is a standard of wheat that sells less than No. 2 wheat coming. The average grain dealer, if he nets a half a cent a bushel on the Missouri River, especially where competition is so keen, he does well. Somebody gets the benefit, either the buyer.or seller — perhaps both. Commissioner Lane. That is quite contrary to my understanding of the testimony given at other places as to the value of mixing and grading of wheat to the dealer. I understood from testimony we ave taken elsewhere that the farmer got a certain price for a certain grade of wheat and that wheat was mixed, and if the dealer made any profit it came as a result, and that the profit was quite extensive. Mr. Shields. I will answer that and put it to you clearly. For some six or eight weeks this summer a great deal of wheat came in here graded No. 4. It brought within a half a cent a bushel of No. 2. Evidently the elevator man did not get a fabulous profit. It is true that a part of that may have accrued to the country elevator, but a large portion of it went straight to the farmer. The country elevator man, as soon as he saw No. 4 wheat was within a half a cent of No. 2, he bid up the No. 4 wheat. The margin of profit is greater than in the cities. Commissioner Lane. I do not think that is what the Chicago men do. That is almost philanthropic. Mr. Shields. The margin of profit in Kansas City is closer, I think, than any market. That is why there are no rich grain men in Kansas City. That is why I am anxious to see it protected as a grain market. A car may come here and be diverted to the Gulf or to Chicago or to Minneapolis. This is the last point where it can be stopped and have 372 GRAIN BLEVATOK INVESTIGATION. the advantage of those markets. For that reason there is always a big demand for low grades of wheat and off grades seldom can be bought at a profitable figure so far as any large profit is concerned. Mr. Sherman. What percentage of the crop of these western States that comes to Kansas City would you say is No. 2 wheat? Mr. Shields. It depends on the year entirely. Mr. Sherman. Take this year as an example; what has been com- ing already? Mr. Shields. I should think about 30 per cent. Mr. Sherman. Seventy per cent is less than No. 2. Mr. Shields. Yes, two-thirds is less, and perhaps one-third is 2. Mr. Sherman. That is all. Commissioner Clark. You may be excused. The witness was excused. H. G. Wilson, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business, Mr. Wilson? Mr. Wilson. I am manager of the transportation department of the board of trade. Mr. Marble. What are your duties as such manager? Mr. Wilson. To keep an eye on the freight rate adjustment in and out of the city, the markets that we reach, and the territory we draw from. Mr. Marble. Is it your duty to keep members of the board of trade advised of changes in rate in and out of the city? Mr. Wilson. One of my duties ; yes, sir. Mr. Marble. And you do, as a matter of fact, advise them on receiving notice ? Mr. Wilson. As a rule as soon as I get advice. Mr. Marble. Do the railroads send notice of change of rates to you ? Mr. Wilson. Generally, yes. Mr. Marble. You are in touch with all of them? Mr. Wilson. We are. Mr. Marble. And you keep yourself in touch with changes, whether they are sent you or not? Mr. Wilson. So far as possible. Mr. Marble [producing bulletin]. Is this a bulletin from your department ? Mr. Wilson. Yes, sir. Mr. Marble. Was that bulletin issued as soon as that rate was made public? Mr. Wilson. Well, I can not answer as to that. Mr. Marble. Was it issued as soon as your office was acquainted with the fact that such a change had been made ? Mr. Wilson. The issue, of which this is a copy [referring to bulle- tin produced by Mr. Marble] was received in my ofl&ce yesterday morning sometime, and this bulletin was issued and posted yesterday. It was not issued as early yesterday morning as it should have been, due to the fact that my stenographer is on jury duty this week. Mr. Marble. Do you know whether or not the circular to which it refers had been made public before its reception by you? Mr. Wilson. I knew nothing whatever of it. In fact, I was sur- prised to receive it — surprised to see it. GBAIN ELEVATOR INVESTIGATION". 373 Mr. Marble. Do you know whether or not members of the board of trade were advised of this change previous to yesterday morning? Mr. Wilson. I do not. I have heard Mr. Shields's testimoiv^, of course. Mr. Marble. But ^ou will say this was issued immediately after the receiving of the notice of this change ? Mr. Wilson. Yes, sir. Mr. Marble. And this is a true copy of the notice issued by you? Mr. Wilson. I think so. Mr. Marble. I will read only a little : [Bulletin No. 109 cancels Bulletin No. 86.] Notice to all Members. The following circular from the Chicago, Milwaukee and St. Paul Railway, effect- ive October 8, 1906, has just been received. This circular is the one bearing the note: On all grain forwarded via the Chicago, JVlilwaukee and St. Paul Bailway ^ere will be no charge for cleaning, mixing, or clipping. That is all. Now, Mr. French, I think I will call you a moment. (The two circulars marked "Exhibits Nos. 1 and 2 to Mr. Wilson's testimony.) G. B. French, recalled. Mr. Marble. Mr. French, are you acquainted with the circum- stances of this circular, the issuing of it? Mr. French. Yes, sir. Mr. Marble. When was that made public? Mr. French. It was made public the day it was received by me. Mr. Marble. When was it received by you? Mr. French. About October 11 or 12. Mr. Marble. It was not received by you on the 8th? Mr. French. I received a telegram from Mr. Hiland, at Wash- ington, stating that the Interstate Commerce Commission had, in view of the action of the Santa Fe road — had given permission to the Milwaukee road to make effective their tariff October 8, and also to notify Mr. Shields as our elevator agent, which I did. Mr. Marble. When did you receive that telegram? Mr. French. October 8. Mr. Marble. When did you make the change public? Mr. French. You mean when did I send out the circular? Mr. Marble. Yes, sir. Mr. French. When the tariff was received. Mr. Marble. About the 11th? Mr. French. The 11th or 12th. It had to be printed in Chicago. Mr. Marble. To whom did you send it ? Mr. French. I sent a copy to Mr. Wilson and one to the secretary of the board of trade; I sent one, I think, to the Simonds-Shields Grain Company and one to Mr. Adsit in the regular course of affairs, and our rate clerk has the balance — has a large file of them there now. Mr. Marble. As to whether or not these were received, of course, you cannot say? Mr. French. What is that ? 374 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. As to whether they were received by the parties, you can not say ? Mj-. French. I saw them posted on the board of trade. Mr. Marble. When did you see it posted on the board of trade? Mr. French. Not this last circular, but prevk)us circulars. I have not been on the board of trade since that last one. Mr. Marble. That is all. Commissioner Clark. I will ask if you, or anybody for you, sent a second copy of this tariff of October 8 to Mr. Wilson? Mr. French. No, sir; not to my knowledge. Commissioner Clark. Was any tariff bearing substantially the same conditions issued prior to October 8 and subsequent to Sep- tember 1 ? Mr. French. Between September 1 and October 8 ? Commissioner Clark. Yes, sir. Mr. French. No, sir; not that I know of. I sent the tariff to Mr. Wilson. I regarded it as a matter of courtesy, not as a duty, because I notified Mr. Shields in regard to it and he attended to those matters. When the tariff arrived I merely sent it as a matter of courtesy. Commissoner Clark. Well, it has been stated here that from July 1 to September 1, no charge was made in your elevator for treating grain and that from September 1 to October 8 no charge was made, although the tariff provided a list of charges. Mr. French. Yes, sir. Commissioner Clark. Will you tell us why the necessity of the amendment of October 8, which stated a change in practice but in fact worked no change ? Mr. French. Mr. Shields, of course, had a copy of the tariff of September 1, and as he explained this morning, he had held back on making collections in order to conform to the prescribed forms of the Chicago Milwaukee and St. Paul Railway, and the tariff of October 8 was issued to meet a tariff issued by the Santa Fe Elevator Com- pany, which company, I believe, is a private corporation and does not consider itself amenable to the interstate-commerce law in regard to filing thirty days' notice; that they can change their tariff at will, whereas, we, as a railroad corporation have to observe the interstate- commerce law. Commissioner Clark. Did the Santa Fe issue a tariff or circular announcement of what they would do ? Mr. French. It is identical to the tariff, the one you have of the Milwaukee, because our tariff is copied from theirs. ^ Commissioner Clark. Does theirs purport to be a tariff at all ? Does it say anything about being a tariff? Mr. French, It covers the rSes and regulations that govern the Santa Fe, so it is a tariff as much as ours. I do not know whether you consider it a tariff, or rules and regulations, or a circular, but its effect is the same. Commissioner Clark. One is simply a circular issued by that elevator company as to what they would do ? Mr. French. Well, that puts us at a great disadvantage. Commissioner Clark. That is all. Mr. Marble. One question, please. Did you send any copy of this to any shipper not connected with the board of trade ? Mr. French. No, sir. GRAIN ELEVATOR INVESTIGATION. 375 Mr. Marble. Nor to Mr. Beall's company. You did not send any down there ? Mr. French. No, I do not presume we are forced to do that. If we keep them on file at our regular freight stations, I presume we have done our duty. Mr. Marble. That is all. The witness was excused. Mr. Marble. I will call Mr. Moore. J. W. Moore, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Moore, what is your business? Mr. Moore. Grain business. Mr. Marble. In what way are you connected with the grain business? Mr. Moore. I am the second vice-president of the Farmers' Coop- erative Shipping Association, and do the selling of all cash grain upon the floor. Mr. Marble. Are you acquainted with the business of that com- pany and its manner of doing business ? Mr. Moore. I am. Mr. Marble. Are you acquainted with its manner of doing business at country stations? Mr. Moore. Yes, sir. Mr. Marble. What is the Dusmess of the Farmers' Cooperative Shipping Association? Mr. Moore. The business ? Mr. Marble. Yes, sir; what form of business does it do ? Mr. Moore. We have an elevator at points where we have stock- holders enough to build an elevator. Take a point, and if the farmers want to become stockholders of the association they put up the money to build an elevator. They aim to sell their gram to whom they can get the most money, whether to our company or to some other coinpany. Mr. Marble. Who are your stockholders? Mr. Moore. We have about 5,500 to 6,000 stockholders, most of them farmers — 3,500 to 4,000 farmers. Mr. Marble. How many country elevators? Mr. Moore. Thirty-six elevators and 40 stations. Mr. Marble. You buy at four points where you have no elevators ? Mr. Moore. Yes, sir; I think we have rented houses. Mr. Marble. From whom do you rent those houses ? Mr. Moore. I could not tell you. Mr. Marble. Do you know whether they are rented from a railroad ? Mr. Moore. I think not. Mr. Marble. Do you know whether any ofiicial, stockholder, or employee of a railroad owns any of your stock? Mr. Moore. I think not a one. Mr. Marble. Where are your elevators situated ? Mr. Moore. In Oklahoma, in Indian Territory, Kansas, and Nebraska. Mr. Marble. You have competitors at every point? Mr. Moore. Every one but four. 376 GEAIN ELEVATOR INVESTIGATION. Mr. Marble. What was the purpose of starting these elevators? Mr. MooKE. I could not tell you. Mr. Marble. Were you -with the company when the elevators were started. ? Mr. MooBE. No, sir. Mr. Marble. You are not f amihar with the agitation that prompted them? Mr. Moore. Only through the newspapers. You know the farmers are great fellows for cooperation. Mr. Marble. Do you know what the effect of starting an elevator has been on the points where they were built ? Mr. Moore. No, sir. ^ Mr. Marble. You are not familiar with that? Mr. Moore. I am not. Mr. Marble. Do your elevators belong to the grain associations of the States and Territories in which they are located ? Mr. Moore. Yes; they do. Mr. Marble. The graia dealers associations ? Mr. Moore. No, sir. Mr. Marble. What association do they belong to? Mr. Moore. The Fariners' Cooperative. Mr. Marble. Now, in the conduct of your business, who makes the prices that shall be bid at these country stations? Mr. Moore. The competition. Mr. Marble. Well, what individual of your company sends out the prices? Mr. Moore. Well, I do not know that any one does. If our men are paying too much we tell them to haul in their horns and not pay so much. Mr. Marble. Does each man at each country station determine for himself what he shall pay for grain? Mr. Moore. No, sir; he does not. Mr. Marble. Who does? Mr. Moore. The market. We furnish them the price current and want them to biiy 2 J to 3 cents lower than the market quoted here. Mr. Marble. Where do you get the figures you furnish to them? Mr. Moore. From sales of the board of trade. Mr. Marble. Sales recorded by the board of trade ? Mr. Moore. Yes, sir. Mr. Marble. Have you at any. point any arrangement with any of your competitors by which the price to be paid at that point is determined ? Mr. Moore. Not that I know of. Mr. Marble. Or any arrangement by which you are to make a certain percentage of profit? Mr. Moore. None whatever, except, as I said, we instruct our elevator men to buy within 2 to 3 cents of the quoted markets. Mr. Marble. Two to three cents? Mr. Moore. Yes, sir. Mr. Marble. And to not buy unless he can make that much? Mr. Moore. No, sir; it takes 2 cents to meet both ends. Mr. Marble. Have you at any point where your elevator is located any agreement with any competitor for dividing the business of that station? GRAIU ELEVATOB INVESTIGATION. 377 Mr. MooKE. Not that I know of. Mr. Mabble. Would you know if there was such an agreement ? Mr. MooBE. I think I would. Mr. Mabble. Do you know whether you would or not ? Mr. MooEE. Xo; but I think I would. Mr. Mabble. Have you advised with any official of the company as to whether there was such an agreement ? Mr. MooBE. I have not. Mr. Mabble. You have not had occasion? Mr. Moore. No, sir. Mr. Mabble. As a matter of fact, you do not know of any such agreement? Mr. Moore. I do not. Mr. Mabble. Do you know whether yom* country buyers advise with or in any manner agree with their competitors as to the amount to be bought or the prices to be paid ? Mr. Moore. No, su-. ilr. Mabble. You do not know ? Mr. MooBE. We do not know, but it is natural to suppose — there are four elevators there and the elevators will not let one man go in and let one man do all the buying. They would know themselves they were entitled to a certain proportion, and no more. lir. Mabble. Why would they be entitled to. a certain proportion and no more? Mr. MooEE. If I was doing business at a certain point and you were doing busine^, you could not do all the business unless you or I were broke. Mr. Mabble. You mean unless you could agree as to the amount that each should buy, it would develop Mr. MooBE. No, I do not mean that. I mean that if you wanted to buy grain and pay more than it was worth I would let you do it. I woiud keep you ri^t there until you did do it. Mr. Mabble. What did you mean by "buving niore than one was entitled to?" Mr. Moobe. I would stand back and let you have it. Mr. Mabble. Have your farmers' elevators had to meet competi- tion of that sort ? ilr. Moobe. We have. Mr. Marble. What was the result ? Mr. Moore. They woidd get tired and quit. Mr. Marble. Who would? Mr. Moobe. The man paying too much for the grain. When he found there was $30 or $40 loss he would quit. Mr. Marble. Then what would occur? Mr. Moore. He would go back and buy at a profit. Mr. Marble. You both having learned this lesson, woidd deter- mine to make this 2 or 3 cents and let it go at that ? Mr. Moore. No. In the first place it takes about 2 cents to cover expenses. Mr. Marble. You say absolutely you have not pooled at a countiy station? Mr. Moore. We have not that I know of. Mr. Marble. At practically all the country stations each elevator does get a certain per cent of the business? 378 GEAIN ELEVATOE INVESTIGATION. Mr. MooKE. I think so. Mr. Marble. And there is no effort by competition to change that ? Mr. Moore. No, sir. Mr. Marble. You concede the other elevators are entitled to a cer- tain percentage of the business ? Mr. Moore. Yes, sir. Mr. Marble. Do you adjust your price to make that? Mr. Moore. If I undertook to buy all the wheat it would be at a loss. If I bought my share and let the other dealers get their propor- tion we would buy at a profit. If you wanted it all you would make no money. Mr. Marble. With this 2 or 3 cents a bushel there is no competi- tion or chance of competition ? Mr. Moore. I think not. There is chance of competition, but they do not make it. Mr. Marble. They do not compete ? Mr. Moore. No, sir. Mr. Marble. That is all. The witness was excused. D. F. PiAZZEK, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business? Mr. PiAZZEK. Grain business. Mr. Marble. In what way are you connected with the grain business ? Mr. PiAZZEK. A general grain business. Mr. Marble. Associated with what company? Mr. PiAZZEK. The Kemper Grain Company. Mr. Marble. You are an official of that company? Mr. PiAZZEK. Yes, sir. Mr. Marble. What? Mr. PiAZZEK. President. Mr. Marble. And familiar with its business and the management of it? Mr. PiAZZEK. I believe so. Mr. Marble. I will ask you if you have had any experience with these grain dealers' associations, with buying from irregular dealers as against regular dealers? Mr. PiAZZEK. Yes; some. Mr. Marble. When did that experience begin? Mr. PiAZZEK. Well, I am unable to state. It is not clear in my mind. We have had requests from them to discontinue bidding or doing business with certain parties. Mr. Marble. From whom did you receive those requests ? Mr. PiAZZEK. The Nebraska Grain Dealers' Association, particularly. Mr. Marble. Any other grain dealers' association? Mr. PiAZZEK. Not that I recall, specifically. Mr. Marble. When did you receive those requests from the Nebraska Grain Dealers' Association? Mr. PiAZZEK. Well, numerous times. I recall one in particular June, 1903. ' Mr. Marble. Whom did that request come from? GRAIN ELEVATOR INVESTIGATION. 379 Mr. PiAZZEK. The Secretary of the Nebraska Grain Dealers' Asso- ciation. Mr. Marble. What was his name; do you remember? Mr. PiAZZEK. I do not recall. I have a copy of the correspondence in my pocket. [After referring to letter.] H. G. Miller. That was December 5, 1903. Mr. Marble. May I see that? Mr. PiAZZEK. Yes, sir; that is just a copy. [Bunch of letters handed by witness to Mr. Marble.] Mr. Marble. These are copies of original letters received by you and answered by you? Mr. PiAZZEK. They are. Mr. Marble. Have you seen the originals of all these letters? Mr. PiAZZEK. I have them on file in the office now, I think. Mr. Marble. You know these are correct copies ? Mr. PiAZZEK. Yes, sir. Mr. Marble. May I offer them? Commissioner Lane. Yes. Mr. Marble. The first letter is: Secretary's Oppice, Nebraska Grain Dealers' Association, Board op Trade Building, Omaha, Nebr., November 23, 190S. The Kemper Grain Company, Kansas City, Mo. Gentlemen: I am advised that you are receiving wheat shipments from the Axtell Farmers' Company at Axtell, Nebr. If this is a fact, beg to advise that this is a farmers' organization which has in its constitution a penalty clause, penalizing its members for selling grain to other than its own company-. This is a restraint of trade, contrary to good business principles, and, I believe, contrary to the statutes of Nebraska. I give you this information, believing that you are not aware of the conditions. You will not, I trust, think there is anything arbitrarily intended by my calling your attention to this matter. As I will be expected to make report to those interested, would you kindly favor me with a prompt reply? Yolo's truly, H. G. Miller, Secretary. Mr. Marble [producing another letter]. This is your answer to that letter? Mr. PiAZZEK. It is. Kansas City, Mo., November 24, 1903. H. G. Miller, Secretary, Omaha, Nebr. Dear Sir: We have yours of the 22d instant relative to the Axtell Company, and before advising you of our conclusion in the matter we would like to know if this concern has a house and is regular otherwise. We are of the impression that they are. On the other hand, we believe that the charges you have preferred against them are not within our jurisdiction and should be taken up with the State authorities. We notice that the territory is occupied by these persons and two of the regular-line houses, and when we have given up their business we are absolutely bidding "good- bye" to any prospects of business from there, which reminds us that the field is grow- ing smaller and smaller every day, and the independent dealer is less frequently met. Pray understand our position; that we do not take offense at you at all for calling our attention to this matter, and we are equally positive that our efforts to investigate the matter before taking definite action will meet with your approval. Yours truly, The Kemper Grain Company. Mr. Marble. Is this a letter from Mr. Miller, received in reply to that? (Producing another letter.) Mr. PiAZZEK. A copy of the letter. Mr. Marble. (Reading letter.) 380 GEAIN ELEVATOR INVESTIGATION. Nebraska Geain Dealers' Association, Board oe Trade Building, Omaha, Nebr., Decembers, 190S. The Kemper Grain Company, Kansas City, Mo. Gentlemen : An answer to yours of the 24th was delayed only because of my absence from the city. In answer to your first question, beg to state that this company has, I am informed, an elevator, but they have a penalty clause embodied in their consti- tution, penalizing their members for selling grain to other than their own company. This restrains the freedom of trade and consequently, we believe you will agree with me, hardly entitles them to classification as regular. We thank you very much for the suggestion to submit this question to the State authorities. We have no desire to do so, nor did we ask you to. Your correspondence will be read at the next series of meetings that I visit; to all present at those meetings, whether shippers to you or not, that they may have an opportunity of ju.dging as to the position you occupy toward them. I will, therefore, be very glad to receive anything from you that will give the dealers an opportunity of clearly understanding your position. Yours truly, H. G. Miller, Secretary. And this is your reply to Mx. MUler, or a copy of it? (Producing another letter.) Mr. PiAzzEK. It is; yes, sir. Mr. Marble. (Reading letter.) Kansas City, Mo., December 4, 190S. H. G. Miller, Secretary, Omaha, Nebr. Dear Sir : We have yours of the 3d inst. , and believe we can correctly read between the lines your veUed threat, and we will be guided accordingly. We note carefully what you say about the restriction of trade, and we can not repress the observation that it would be meet and proper that "He who is without sin should cast the first stone." It is our intention to submit the correspondence in the case to our customers at Axtell for whatever action they may deem proper. You have persistently insisted on a quarrel with us, which we have sought hard to avoid, and now that it is on, you may depend on getting the best we have. We do not believe the members of the association which you represent will uphold you in the position you have assumed in this case, and we believe they will agree with us that the reasons you have urged for our refusing their business are inadequate. In view of the circumstances, we would like to know if it is still your intention to handle our arbitration cases now on file with your association, and on our part beg to say that we have confidence in your committee and have no objections in permitting them to take the usual course. At the same time, we do not want to feel indebted to you under the circumstances. We would appreciate an immediate reply to this. Yours truly. The Kemper Grain Company. Is this the secretary's reply to the letter? Mr. PiAZZEK It is. , Mr. Makble (Reading letter.) Secretary's Ofpice, Nebraska Grain Dealers' Association. Board op Trade Building, Omaha, Nebr., December 5, 190S. The Kemper Grain Company, Kansas City, Mo. _ Gentlemen: I am in receipt of yours of the 4th. Beg to advise that in view of the circumstances this association can no longer handle your arbitration matters, and we return all papers received. Yours truly, H. G. Miller, Secretary. (The above five letters are filed in the record and marked " Exhib- its Nos. 1, 2, 3, 4, and 5 to Mr. Piazzek's testimony.") Mr. Marble. What was the result upon your business of that inter- change of letters ? GRAIN ELEVATOR INVESTIGATION. 381 Mr. PiAzzEK. Well, we got no business from regular dealers in Nebraska after that, with the possible exception of one or two cases. Mr. Marble. Had you business from regular dealers before those letters were written, in Nebraska ? Mr. PiAzzEK. Yes, we had. Mr. Marble. About how many dealers would you say? Mr. PiAZZEK. I could not give you an accurate estimate. We had quite a little business — perhaps our share that was coming from there. Mr. Marble. Could you give any approximation of the number of dealers ? Mr. PiAzzEK. It would be very diflficult, it fluctuates so with the season. Mr. Marble. A great deal more than after those letters? Mr. PiAZZEK. A great deal more. Mr. Marble. Did it have any effect on your business from Kansas ? Mr. PiAzzEK . I do not know. We imagine it did. Perhaps it did, and maybe it did not. .Mr. Marble. Or in any other State than Nebraska? Mr. PiAzzEK. Not that I know of. Mr. Marble. Have you regained the business of those dealers that you lost at that time? Mr. PiAzzEK. No, sir. Mr. Marble. The issuance of the injunction in Nebraska had no effect, so far as your business is concerned ? Mr. PiAZZEK. To all intents and purposes the embargo on our business is as operative as the day it was issued. Mr. Marble. And you are buying from those not members of the association, or any one that will sell to you there ? Mr. PiAzzEK. Yes, sir. Mr. Marble. Do you restrict your business to those owning country elevators? Mr. PiAZZEK. Not in all cases. Mr. Marble. How about a country merchant owning a house into which he shovels the grain, and from which he shovels it into the cars ? Mr. PiAZZEK. We would have no objection to doing business with him if he was responsible. Mr. Marble. If you knew him to be an honest man, or if he put up a bond, or his property was such that his drafts were good, you would receive his business the same as anybody else's? Mr. PiAZZEK. Yes, sir. Mr. Marble. Did you have any difl&culty in getting cars or railroad service after this controversy? Mr. PiAZZEK. No ; we have always had more or less difficulty in getting cars in rush seasons, but it was not more noticeable then than any other time. Mr. Marble. You did not find any of the railroads taking any part in the controversy? Mr. PiAZZEK. I do not believe so. Mr. Marble. Do you have any difficulty in selling this grain you receive from the farmers ? Mr. PiAZZEK. Sometimes a great deal. Mr. Marble. How recently have you had difl&culty? Mr. PiAZZEK. I refer to poor markets. 382 GRAIN ELEVATOE INVESTIGATION. Mr. Marble. farmers? Mr. PlAZZEK. Mr. Marble. Mr. PlAZZEK. Mr. Marble. I mean by reason of that grain coming from the None whatever. Do you sell grain to millers? Sometimes. Do you find them glad to get your wheat or prefer- ring other wheat ? Your wheat does not go through elevators m this city, does it ? Is it treated ? Mj. PlAZZEK. Some of it is. We do not handle business of farmers exclusively, and a great deal of wheat mixing is done at interior points. We get a great deal of mixed wheat. We have some very desirable wheat, and other wheat that is not so desirable. Mr. Marble. Do you find the miller having a choice as to wheat that has been through an elevator and that wliich has not? Mr. PlAZZEK. Our experience is, the last few years, he prefers that that goes through the elevator. We have not been able to sell — we have not been able to sell in competition with the elevators the last two years any amount. Mr. Marble. Is that on accoimt of the ruality of the wheat or the price? Mr. PlAZZEK. The price, I presume. Mr. Marble. Have you any explanation of that? Mr. PlAZZEK. No; I am unable to offer any. Mr. Marble. Do you find others able to make a better price than you can? Mr. PlAZZEK. Yes, sir. Mr. Marble. You made a trip to Texas recently, did you not ? Mr. PlAZZEK. No, sir — well, not since last spring. Mr. Marble. Last spring you made a trip to Texas = Mr. PlAZZEK. Yes, sir. Mr. Marble. Did you visit the city of Galveston at that time? Mr. PlAZZEK. Yes, sir. Mr. Marble. Did you visit an export elevator there? Mr. PlAZZEK. I did. Mr. Marble. Mr. PlAZZEK. Mr. Marble. Mr. PlAZZEK. Mr. Marble. Mr. PlAZZEK. Did you see some wheat being loaded for export? I did. To Bremen? I do not recall the point. Tell us about that incident. Well, I visited the Rosenbaum elevator there and saw them loading some wheat to go abroad. I do not recall the point. What in connection with it do you want ? Mr. Marble. What would you say as to the quahty of that wheat? I did not consider it very rigidly graded. What grade was it supposed to be ? Do you know ? I did not see any proiessed grade on it at all. I understood tnat you knew the grade it was being Mr. PlAZZEK, Mr. Marble. Mr. PlAZZEK. Mr. Marble, sold at. Mr. PlAZZEK That would be impossible, because I simply walked through the gallery as a spectator. Mr. Marble. Did you attempt to take a sample? Mr. PlAZZEK. I believe I did. Mr. Marble. Did you succeed in doing so? Mr, PlAZZEK. No; I did not take it away. GRAIN ELEVATOR INVESTIGATION. 383 Mr. Maeble. Why? Mr. PiAzzEK. Well, they requested me to leave it. He said he would rather I would not take it, I believe. Mr. Mabble. You do not know what quality of wheat that was supposed to be? Mr. PiAZZEK. No, sir. Mr. Marble. I understood you did. Mr. PiAZZEK. I had no means of knowing. Mr. Marble. Did the inspection at Galveston come under your investigation? Mr. PiAZZEK. None at all. Mr. Marble. You did not investigate it at all ? Mr. PiAZZEK. Not at all. Mr. Marble. It did not concern you ? Mr. PiAZZEK. No, sir. Commissioner Clark. You may be excused. The witness was excused. T. P. Gordon, recalled. Mr. Marble. Did you get those books, Mr. Gordon? Mr. Gordon. Yes, sir. Mr. Marble. Are they here? Mr. Gordon. Yes, sir. Mr. Marble. Will you introduce them ? (Large bundle of books produced by witness.) Mr. Marble. Mr. Gordon, you testified yesterday that from August 1 to August K) you enjoyed the reduced rate on grain then obtain- ing, with this privilege, that you shipped the wheat from Kansas City to Chicago, billed to Chicago, with the privilege of putting it into an elevator at St. Joe for transfer. Is this correct ? Mr. Gordon. Yes, sir; some wheat. Mr. Marble. And that the grain carried from Kansas City to Chi- cago simply the through rate without any extra charge for that privi- lege. Is that right ? Mr. Gordon. I do not know of any charge. I did not pay any charge. Mr. Marble. What elevator did" you put that in without so paying ? Mr. Gordon. At St. Joe ? Mr. Marble. Yes, sir. Mr. Gordon. The Maple Leaf Elevator. Mr. Marble. Were all the shipments during that time made by you made over the Maple Leaf Route ? Mr. Gordon. You mean from Kansas City? Mr. Marble. Yes. Mr. Gordon. Yes, sir. Commissioner Clark. Who owned the Maple Leaf elevator — the raili'oad company? Mr. Gordon. The railroad company. Commissioner Clark. What railroad company? Mr. Gordon. The Maple Leaf — the Chicago Great Western. Mr. Marble. Who has charge of the operation of that elevator? Mr. Gordon. They do. Mr. Marble. What individual, what person ? 384 GKAIN ELEVATOB INVESTIGATION. Mr. GoEDON. I do not know. I think Mr. Campbell. Mr. Marble. Mr. Campbell is the St. Joe agent for the raUroad company, is he ? Mr. Gordon. Yes, sir. He has recently left there. Mr. Marble. Is that elevator in charge of any person also engaged in the OTain business? Mr. Gordon. No, sir; not to my knowledge. Mr. Marble. I wish you would look at your book there. You have your sales book, showing the sales made by you during the month of September, have you ? Mr. Gordon. Yes, sir. Mr. Marble. The Gordon Elevator Company. I wish you would see how many cars of grain your company sold on the 5th day of September, 1906. Mr. Gordon. (Referring to book.) This book shows 3,000 bushels of No. 2 hard wheat on the 5th. Mr. Marble. The 5th of September? Mr. Gordon. Yes, sir. Mr. Marble. Does that book show the car numbers in which the wheat was shipped from St. Joe ? Mr. Gordon. No, sir. Mr. Marble. Have you any book that will show the car numbers ? Mr. Gordon. The shipping book may show it. I do not know. Mr. Marble. I wish you would look and see if it does. (Books examined by Mr. Marble and witness.) Mr. Sherman. I would like to have this made a part of Mr. Shields' testimony. (Producing paper.) Commissioner Clark. Mr. Sherman offers some written sugges- tions made by Mr. Shields as to reason for elevator allowances, and asks that they be made part of the testimony in the case. They will be so entered. (The same is hereto annexed and marked "Exhibit No. 1 to Mr. Shields' testimony.") Mr. Marble. Mr. Gordon, will your books show what sales were made by you to the South Chicago Elevator Company on the 5th day of September, 1906? Mr. Gordon. Yes, sir. Mr. Marble. Will your books show what billing was used for the shipment of that grain, and what route it went over ? Mr. Gordon. It went over the Chicago Great Western, I know. Mr. Marble. Do you know what biUing it went out on and what rate it went on ? Mr. Gordon. I do not know as to that particular shipment, no. Mr. Marble. Have you any book that will determine that fact? Mr. Gordon. No, I do not think I have. Mr. Marble. Mr. Gordon Mr. Gordon. Just one moment. Maybe I can find it [referring to books]. ( Mr. Marble. Without stopping to look those up now, let me ask a question. You testified yesterday that you held this grain in the elevator at Kansas City from one day to possibly two or three weeks Is that right? Mr. Gordon. The grain that was shipped from Kansas City ? GEAIN ELEVATOR INVESTIGATION. 385 Mr. Marble. Yes, sir. Mr. Gordon. Well, I do not know. I could not tell about that grain coming to Kansas City. Mr. Marble. Why? Mr. Gordon. Well, because I would not know the grain when it goes into the elevator. Mr. Marble. You mean it goes into the elevator and is mixed with grain from other sources? Mr. Gordon. Yes, sir. Mr. Marble. I will ask how long you hold the billing before you use it ? Mr. Gordon. It depends on how soon we get cars. Mr. Marble. Do you have difficulty in getting cars when you make a sale? Mr. Gordon. We have had difficulty getting cars nearly all the time. Mr. Marble. As a matter of fact, in September, when you made a sale, did you have difficulty? Mr. Gordon. Usually I did not make sales until I got the cars. Mr. Marble. How long a time were you allowed to hold that billing during September or durmg August at that reduced rate ? Mr. Gordon. I did not hold it at all. Mr. Marble. How long was it before you were able to use it? Mr. Gordon. Just as fast as the cars would come. Mr. Marble. How long a time was that ? Mr. Gordon. I think something like a month, or something over. Mr. Marble. Yesterday you thought three weeks was the extreme limit. During that month or a little over the grain was in the elevator at St. Joe? Mr. Gordon. Yes, sir. Mr. Marble. And you held the billing at the reduced through rate ready to use? Mr. Gordon. Grain that was there was billed out. They held the billing. Mr. Marble. When, as a matter of fact, did you sell that grain? Mr. Gordon. I sold it as I could get cars to get it out. I sold first all the grain, kept it sold up; -that is, hedged, and as I could get cars to get it out I took the hedges off. Mr. Marble. Did you pay storage on that grain? Mr. Gordon. I have not paid any yet; no, sir. Mr. Marble. So, as a matter of fact, you for thirty days reserved this billing at the through rate and then used it at that time ? Mr. Gordon. I do not understand that I reserved the billing. The cars were billed out, a certain amount of grain, all the grain we had on hand at the expiration of the rate, was billed out, but we could not get the cars to get it out. That is, the railroad could not. Consequently they had to hold the grain in the elevator until they could get cars. Mr. Marble. You mean it was billed to Chicago from St, Jtie? Mr. Gordon. Yes, sir; some, and some to Minneapolis. Mr. Marble. Don't you know as a matter of fact that you billed much of that grain out of St. Joe as much as 30 days aftef that rate expired ? ' Mr. Gordon. I did not bill any at all on that rate, I have been S. Doc. 278, 59^^—25 386 GRAIN ELEVATOE INVESTIGATION. billing ever since, but all the grain that went out was what was on hand at the time the rate expired. Mr. Marble. Were any bills made for you and dated back? Mr. Gordon. No, sir. Commissioner Clark. Are we to tmderstand, Mr. Gordon, that when this cheap rate was about to expire, aU the grain you had m the elevator was billed out at that rate ? Mr. Gordon. Yes, sir. Commissioner Clark. And some of it was not loaded out for a month? Mr. Gordon. Yes; it was being loaded out, I think up to— right at a month — right along as we could get cars. Commissioner Lane. It was billed out before it was sold? Mr. Gordon. It was billed out, yes, sir. It was billed out before the rate expired, but they could not give us cars and I was afraid to sell on any specified time for fear I could not get cars, so I sold the option and sold the grain as I thought I could get cars to take it out. Mr. Marble. Were you able to do that with any other railroad than the Chicago Great Western ? Mr. Gordon. I never tried. That is the only road I ever did any business with, any elevator business. Commissioner Clark. Is that a customary practice with that rail- road? Mr. Gordon. That is my understanding. Commissioner Clark. Do you frequently bill out a large quantity of grain before you have sold it and before it is loaded into cars ? Mr. Gordon. Why, not frequently. I have before biUed stuff when I had it and they could not take it and billed it the day the rate expired. I do not know that I ever had any in the elevator, a similar case to this. Commissioner Clark. How did you know that the rate was going to expire that day ? Commissioner Lane. The railroad informed you, did they? Mr. Gordon. That was public information. Everybody knew that. Commissioner Clark. How much grain did you have in that ele- vator at that time ? Mr. Gordon. I do not know exactly. I never figured it up — quite a little there and on track. Commissioner Clark. Who did you have this understanding with that this grain should be billed out that way? Mr. Gordon. I did not make any understanding with anyone. We gave them the grain for shipment and billed it. They could not furnish cars to ship it and put it in their house. Commissioner Clark. Where did you bill it to ? Mr. Gordon. To my own order at Chicago and Minneapolis^ Commissioner Clark. I guess that is all. Mr. Marble. Why did you take it into the elevator at St. Joe when you had it in the car? Why did you not let it go through? Mr. Gordon. It has to be transferred and weighed there. Mr. Marble. Was it not weighed here at Kansas City? Mr. Gordon. I do not laiow what we had Mr. Marble. It went on Kansas City billing, did it not? The grain billed from Kansas City was weighed at Kansas City, was it not ? jyir, Gordon. Yes, sir. GEAIN ELEVATOR INVESTIGATION. 387 Mr. Marble. Why did you \mload that at St. Joe? Mr. Gordon. To mix it with other grain. Mr. Marble. You unloaded that to mix it? Mr. Gordon. Yes, sir. Mr. Marble. And then held it until the rate expired? Mr. Gordon. As soon as those cars were unloaded, we would load them again, those that would go through. Mr. Marble. How were you able to bill this grain without knowing the car number? Mr. Gordon. We had the car number. Mr. Marble. You knew every car they would furnish you ? Mr. Gordon. Oh, no; we billed the car we gave them to transport, and when they furnished the empty car, they ex-numbered the car. Mr. Marble. As a matter of fact, these bills that were made out before the rate -expired did not contain the car number, did they ? Mr. Gordon. Yes, sir. Mr. Marble. How could you know the car number if the car had not .been furnished ? Mr. Gordon. We gave them the original car. Mr. Marble. The original car? Mr. Gordon. Yes, sir. Mr. Marble. Did that bill contain the_number of the car in which the grain went into Chicago ? Mr. Gordon. No. Mr. Marble. How did you get the grain into Chicago? Did they make a new bill ? Mr. Gordon. No, they ex-numbered the car. Whatever car they put it in, that was an ex-number. Mr. Marble. You mean they made an addition to the old bill? Mr. Gordon. 1 do not know how they worked it. He called it an ex-number. I suppose they crossed the old one and put on a new one. Mr. Marble. The bill that carried the grain to Chicago did have the number of the car in which it. went into Chicago ? Mr. Gordon. Yes, sir. Mr. Marble. But when it was issued it did not have that number? Mr. Gordon. No, it had the number of the original car. Mr. Marble. I see. Is there anything else? Commissioner Clark. You are excused. The witness was excused. Carr W. Taylor, called as a witness, having been duly sworn, testified as follows: Mr. Marble. Mr. Taylor, where do you reside ? Mr. Taylor. I live at Hutchinson, Kans. Mr. Marble. What is your business ? Mr. Taylor. I am attorney for the Kansas State Board of Railroad Commissioners. Mr. Marble. How long have you been attorney for the Kansas State Board of Railroad Commissioners ? Mr. Taylor. It will be two years on the 1st day of May next. Mr. Marble. As attorney for the Kansas State Board of Commis- sioners, has it been your d!uty to make yourself acquainted with the 388 GRAIN ELEVATOR INVESTIGATION. grain shipping conditions throughout the State of Kansas, and have you in fact, done so ? Mr. Taylor. I have made myself acquainted with the grain rates in the State of Kansas. My work has been chiefly in securing reduc- tions of the rates upon grain and other commodities in the State before the commission. I will say this, that, so far as the elevator service and elevator charges are concerned, that I have made no special investigation of that subject, and when we tried out the grain case before the commission last fall, we went into the question of elevator charges here at Kansas City for a short time, but finally, upon the objection of the railroad companies, the testimony was ruled out and we did not go into the subject any further. But I do know something about the elevator site question. Mr. Marble. What do you mean by the "elevator site question?" Mr. Taylor. I mean where an independent dealer or person desiring to build an elevator makes application to a railroad company for a site upon the right of way. I Imow something about the conditions from correspondence with persons desiring elevator sites. Mr. Marble. I will ask you if independent dealers desiring to obtain elevator sites from the railroad have difiiculty in doing so, as a rule ? Mr. Taylor. They do. Mr. Marble. With what railroads ? Mr. Taylor. With the Chicago, Rock Island and Pacific, the Mis- souri Pacific, and I believe in one instance I know of on the Santa Fe Railroad. Mr. Marble. Are you familiar with the circumstances in those cases so that you know whether or not there was difficulty? Mr. Taylor. I will state this, that on the Rock Island there are two cases pending before the commission now — not for elevator sites upon the right of way, because we have no law that would authorize our commission to give a site upon the right of way, but for a switch service to elevators constructed and in operation abutting the right of way. I will state this to the Commission, that this matter has been inves- tigated, and has been a subject for a long time in the State of Kansas, and the sentiment finally ciystalized to such an extent that the legis- lature of 1905 passed two laws — I believe I have a pamphlet here. The first law was chapter 350 of the session of laws oi 1905, entitled "An act to provide for the construction of sidetracks and switches upon the right of way of railroad compaYiies to grain elevators or flour- ing mills, warehouses, and manufacturies located on lands adjacent to the right of way of any railroad company in this State, or in lieu thereof for the construction and maintenance of such buildings on the right of way of such railroad company." In other words, this act left it optional with the railroad company as to whether or not they should permit a person or corporation desiring to construct an elevator to build that elevator upon the right of way upon a switch already constructed. If the railroad company chose not to grant them that privilege, then this act points out the way in which they could make their application before the board of railroad commissioners and secure an order for the construction of the switch upon the right of way to serve the elevator to be con- structed abutting the right of way. GRAIN ELEVATOB INVESTIGATION. 389 Now, the legislature also, to satisfy public opinion and to grant further relief to the elevators already constructed and in operation that could not get switch service, passed an additional law. It is chapter 351 of the session of laws of 1905. This is an act entitled: "An act authorizing the board of railroad commissioners to make certain orders relating to the construction of side tracks, switches, and of other facilities, providing for the enforcement of such orders and prescribing penalties for the violation thereof." Now, at Glawson, Kans., the case tliat is pending before the board of railroad commissioners now, there is an elevator, a farmers' elevator there that is in operation, and it has to load its cars by what is called a gravity pipe. The elevator is built upon land abutting the right of way; and they have failed to make any arrangement with the railroad company to get switch service to that elevator. They have made an application to the board under this law for such switch service. There is a farmers' elevator at Langden, Kans., upon the same line, the Rock Island Railroad, that has made application for switch service; also made application for right of way. There was a good deal of correspondence in that case and it failed to get any site on the right of way, and has failed to get any relief from the railroad company, and it has commenced an action before the board of railroad com- missioners. I will take that back. It is now contemplating the commence- ment of an action to secure a switch to serve its elevator. The Missouri Pacific Railroad Company has resisted the operation of this law also, and an application was made by an elevator com- f>any at Hargrave. They want to get relief and have resorted to the aw for the purpose of relief. There was another case that I know of on the Missouri Pacific and that is at the town of Muscotah. There is an individual there by the name of William Dunkle, who is seeking to secure switch service to his elevator in that town under this law. He has failed at all times to secure the switch. And I will state this — while it would not be testimony before a court — that I drew the petition for Mr. Dunkle, and about 75 farmers residing in the vicinity of that city signed that petition with him for switch service. An investigation shows that without competition in grain buying at that point that the grain is sometimes 2 or 3 cents less per bushel than at towns at other stations on other railroads near that station and within 5 or 6 or 7 miles. The result is that a great deal of the grain raised in the vicinity of Muscotah has been taken to these other places for market, and the town of Muscotah lost the trade; and they entered a protest and joined in this petition for the construction of that switch. Commissioner Lane. Is there any one class of elevators that is favored by the railroads ? Mr. Taylor. So far as that is concerned, I think there is. I think it is a matter within the common knowledge of the grain producers of our State that certain elevator companies that have transfer elevators at a point like Kansas City and have track elevators along lines of railroads are favored. Commissioner Lane. What companies ? Mr. Tayloe. Well, I will name the Peavey Elevator Company, and the company that operates on the Rock Island. 390 GKAIN ELEVATOR INVESTIGATION. Commissioner Lane. Wliat is that ? Mr. Marble. The Rosenbaum Company. Mr. Taylor. There is a hne of elevators along the Rock Island and it is claimed that they are favored. That is said to be the principal cause of the railroad refusing to grant sites upon their right of way for other service, or to give switch service to the elevators constructed on the land adjoining the right of way. It was that fact which caused the legislature — it was the cfystalizing of that sentiment — which caused the legislature to enact these laws which I have men- tioned. But so far as the specific facts are concerned, they are not within my knowledge. Commissioner Clark. Do these laws provide any limit within which they are operative? Mr. Taylor. Well Commissioner Clark. Can any number of persons demand sites at stations, regardless of the amount of busmess offered at that station? Mr. Taylor. No, sir. That is a matter which is left to the discretion of the board of railroad commissioners, and yet at the same time there is no such limit as that within the law. Of course, the defense that the railroad companies make is that where there is one elevator in a city that it is sufficient to transact the grain buisness of the country ; that it would render the elevator business, say, in that town unprofitable if another elevator should be established. That is their usual defense. But on the other hand, the farmers insist upon rival elevators, in order to get something like the market price for their grain. They contend that the price is very often too low, whereas if there were competing elevators the price would be better. Commissioner Clark. Now, take this town of Muscotah that you refer to. How large a volume of grain is marketed at that place in an ordinary season of good crops ? Mr. Taylor. I do not know that I could give the amount, but there are several hundred carloads of grain that would be marketed from that one point. Commissioner Clark. Is there only one elevator there ? Mr. Taylor. There is one elevator there, which is a member of that — I believe it belongs to the Kansas Grain Dealers' Association — and then there is a small elevator there also. Commissioner Clark. There are now two ? Mr. Taylor. There are two elevators at that point, but one of the elevators does very little business. Commissioner Clark. "Why ? Mr. Taylor. I think on account of its small capacity. That is the reason. Commissioner Lane. I understand from your testimony that it is a fact that where there are two competing railroads, or two competing elevators at a certain point, that the price of grain is raised to the farmer ? Mr. Taylor. I think so, as a rule, unless they both belong to the same firm. Commissioner Lane. And that does not often occur? Mr. Taylor. No, sir; they would not maintain two elevators in the same town. GEAIN ELEVATOB INVESTIGATION. 391 Mr. Marble. Can you tell us about furnishing cars — is there any discrimination in that respect complained of? Mr. Taylor. Yes, sir; there is discrimination. There is perhaps more correspondence addressed to the board of commissioners direct upon that question than upon any other subject. Mr. Marble. Is it your observation that that is simply complaint because of inability to obtain cars, or is it complaint because some are discriminated against in favor of others ? Mr. Taylor. Well, there are a great many complaints that there is discrimination in favor of certain parties, but I have never seen any proof that the railroads — beyond this complaint by letter-^that the railroads do discriminate. And in the correspondence that I have seen from the railroad companies they say that they receive the application for cars and furnish them in their order, and where they are even at a station, they will furnish one grain man as many cars as they do the other. Mr. Marble. Whether or not that is true, you are not able to say? Mr. Taylor. I am not able to say, whether that is true or not. Mr. Marble. Have you made any investigation of the effect upon the prices in the State of Kansas of the payment of elevator charges by the railroads in Kansas City and the maintenance of these railroad elevators here? Mr. Taylor. I have made no investigation except, as I stated a moment ago, when we were trying the grain case, when we got into that question. A small elevator man, I believe, at McPherson, Kans., testified that he was not able to compete with the man who owns the terminal elevator at Kansas City ; that is, in a sense, he was not able to, because he ships, for instance, a carload of grain from Hutchinson, Kans., to Chicago at the through rate. The elevator man at Kansas City will transfer and get a cent and a quarter for the transfer charge. Then he rebills the 'grain on the througti rate to Chicago, and if there is any profit to the man who operates the elevator in Kansas City in that transfer charge, of course he gets it, and he has that much of an advantage over the small elevator man out in the wheat district. I presume, on the testimony of Mr. Shields, that it costs a half a cent to transfer the grain. If that is so, and the charge being a cent and a quarter, these elevators in Kansas City would have three-quar- ters of a cent advantage on the Chicago market over the elevators out here in Kansas. Commissioner Clark. That cent and a quarter is per hundred, isn't it? Mr. Taylor. I do not mean a bushel ; I mean a hundred pounds. Commissioner Clark. And the half cent was per bushel. Mr. Taylor. I did not understand his statement that way. I will withdraw that from the testimony. If there is any profit that is an ad- vantage. I know that was the contention, briefly, in that case. Mr. Marble. Is there anything more you desire to state, Mr. Taylor? Mr. Taylor. I believe that is all. Mr. Marble. That is all. Commissioner Clark. You may be excused, Mr. Taylor. Witness excused. 392 GEAIHr ELEVATOR INVESTIGATION. A. J. Poor, called as a witness, having been duly swom, testified as follows: Mr. Marble. What is your business? Mr. Poor. Grain commission. Mr. Marble. Do you own an elevator here ? Mr. Poor. No, sir. Mr. Marble. Have you been in the elevator business ? Mr. Poor. I have elevators in the country. I have a warehouse here, but not an elevator. Mr. Marble. How many elevators have you in the country ? Mr. Poor. I have six or seven in all. Mr. Marble. On what line are those elevators in the country? Mr. Poor. Most of them are on the Union Pacific. Mr. Marble. Have you made any attempt to get sites on the Rock Island Railroad? Mr. Poor. Yes, sir. , Mr. Marble. What points ? Mr. Poor. I tried to get one at Lavant and one at Brewster. Mr. Marble. And where else. Mr. Poor. They were the only two. Mr. Marble. Did you succeed in getting those sites ? Mr. Poor. No, sir. Mr. Marble. You made application to the railroad company for them? Mr. Poor. Yes, sir. Mr. Marble. What was the answer to that application? Mr. Poor. There were other dealers there, and there wasn't room for another one. Commissioner Lane. How long ago? Mr. Poor. There were no elevators there, however. Commissioner Lane. How long ago were the applications made, Mr. Poor? Mr. Poor. Over a year ago — a year or two ago — the first one at Lavant. Commissioner Lane. When did you receive the answer — imme- diately afterwards? Mr. Poor. Yes, sir; soon afterwards. Commissioner Lane. You say there were no elevators there ? Mr. Poor. There was no elevator at that point, and is not yet. Commissioner Lane. But they made answer to you that there was enough elevators there already? Mr. Poor. They said there were other parties who wanted to build there, and that would make enough. Mr. Marble. Did they tell you who the other parties were ? Mr. Poor. Yes, sir. Mr. Marble. Who did they say they were ? Mr. Poor. The Rosenbaum Company. Mr. Marble. Have these elevators since been built ? Mr. Poor. No, sir. Mr. Marble. They have not. Mr. Poor. No, sir. Mr. Marble. Did you make any attempt to ship from those stations? GRAIN ELEVATOR INVESTIGATION. 393 Mr. Poor. To do what? Mr. Marble. Did you make any attempt to ship from those sta- tions ? Mr. Poor. Yes, sir. Mr. Marble. Did that attempt succeed? Were you able to ship from those stations? Mr. Poor. Not very much. I could not get cars. - Mr. Marble. Do you know whether others could get cars at those stations where you were discriminated against? Mr. Poor. I couldn't say as to that. Mr. Marble. Did you have any talk with any official of the Rock Island Railroad regarding this matter? Mr. Poor. Yes, sir. Mr. Marble. With what official ? Mr. Poor. I spoke to two or three different ones — Mr. Ember and Mr. Smith. Mr. Marble. Is Mr. Ember the local freight agent? Mr. Poor. The general freight agent. Mr. Smith is the local freight agent. Mr. Marble. Well, did any of these officials tell you that they had to take care of their own elevators or anything like that ? Mr. Poor. Yes, sir. They said they preferred to let their own companies in. They had to take care of them first. Mr. Marble. Take care of them first ? Mr. Poor. Yes, sir. Mr. Marble. That was the reason they couldn't let you have these sites ? Mr. Poor. Yes, sir. Mr. Marble. And the reason you didn't get the cars? Mr. Poor. Yes, sir. Mr. Marble. They told you that? Mr. Poor. They did not tell me that was the reason we didn't get the cars. Mr. Marble. Did they tell you that was the reason you didn't get the sites ? Mr. Poor. Yes, sir. Commissioner Lane. What is to prohibit your putting in elevators off their right of way? Mr. Poor. No way of loading. Commissioner Lane. You could get a sidetrack in? Mr. Poor. We never could get one. They would never build one for you. Commissioner Lane. You might make application to the Interstate Commerce Commission to compel it. Mr. Poor. It might take two or three years to get it. We couldn't afford to build an elevator and not have a sidetrack. Commissioner Lane. Could you show that you do business enough to fill your elevators and do a respectable business with, the railroad coinpanies ? Mr. Poor. Yes, sir. If not, why should they object when I was willing to build the elevator ? If they only give me the right of way I would build the elevator. Commissioner Lane. There is a remedy for that. The railroad company has not got that thing exclusively in its power. 394 GRAIN ELEVATOR INVESTIGATION. Mr. Poor. I ^v^ote the railroad commissioners of Kansas, and they couldn't help me out. Commissioner Lane. Because of that law^ Mr. Taylor. If I may be permitted — I do not know what answer you got from the board, but I presume they said to you, did they not, that they could not give you any immediate relief for the reason that both of these laws are being litigated now in the courts ? That is the defense that is being made, that they are unconstitutional, and con- sequently any orders made by the board would be merely cumulative ; that you could not get any speedy relief. Wasn't that it ? Mr. Poor. Something to that effect, I guess. Mr. Marble. You didn't get the sidetrack? Mr. Poor. We didn't get the sidetrack; we didn't get the right of way for the site. Mr. Marble. On the Union Pacific Eailroad you got sites from the railroad company for your elevators there ? Mr. Poor. I have had. Mr. Marble. Did you pay a rental for that? Mr. Poor. Yes, sir. Mr. Marble. Did you construct the elevators yourself? Mr. Poor. Yes, sir. , Mr. Marble. What rental do you pay? Mr. Poor. Ten dollars a year, now. Mr. Marble. Per elevator? Mr. Poor. Ten and fifteen; yes, sir. Mr. Marble. They do not charge you the same price; it isn't a uniform price? Mr. Poor. The last one they are charging more for. Mr. Marble. Do you know whether or not other elevator proprie- tors are charged a rental ? Mr. Poor. I do not know that they are; no, sir. Mr. Marble. You do not know whether they are ? Mr. Poor. No, I do not. Mr. Marble. You do not know? Mr. Poor. No, sir. Mr. Marble. You know that you pay on all your elevators? Mr. Poor. Yes, sir. Mr. Marble. How abotft the taking care of your elevators and cleaning up around them and cutting the grass? Does the railroad company do that? Mr. Poor. No, sir. Mr. Marble. Is it your observation that they do it for any elevator proprietor at all? Mr. Poor. Yes, su-; I have noticed that they do it around the Midland elevator. Mr. Marble. At how many places have you noticed ? Mr. Poor. Several; I do not know just how many. Mr. Marble. Can you approximate it? Mr. Poor. I couldn't say the number. Mr. Marble. Did you notice then which were being taken care of? Mr. Poor. I have heard my agent at different places say that the Midland Elevators were being cleaned around and taken care of by the railroad. GRAIN ELEVATOR INVESTIGATION. 895 Mr. Marble. At the same places your elevator was not being taken care of? Mr. Poor. No, sir. Mr. Marble. You are a competitor of the Midland Elevator? Mr. Poor. Yes, sir. Mr. Marble. At all the points where you have elevators? Mr. Poor. No, sir; not all. Mr. Marble. You have elevators at some places where they have none? Mr. Poor. Yes, sir. Mr. Marble. At how many places are you a competitor of the Midland Elevator? Mr. Poor. Only two or three now. I sold my elevators, what I used to have. Mr. Marble. At any point where you have elevators are you a member of any combination or agreement to fix prices which shall be paid to farmers? Mr. Poor. No, sir. Mr. Marble. You are not ? Mr. Poor. No, sir. Mr. Marble. Do you make the prices which are paid at your elevators yourself? Mr. Poor. No, sir; I do not. Mr. Marble. Who does it? Mr Poor. The agents make them. Mr. Marble. The agents at the local points make the prices? Mr. Poor. Yes, sir. Mr. Marble. You notify them what the Kansas City price is? Mr. Poor. Yes, sir. Mr. Marble. And they have instructions as to the number of cents per bushel to pay so as to make a profit? Mr. Poor. Yes, sir. Mr. Marble. Is that the way in which they are instructed? Mr. Poor. I have no set price regarding that. Mr. Marble. You trust your local agents to attend to that matter entirely ? Mr Poor. Yes, sir. Mr. Marble. Do you know whether or not any of your local agents are in any agreement or contract or understanding with their com- petitors, or advise with them as to prices that shall be paid ? Mr. Poor. Not that I know of. Mr. Marble. Do you know whether or not they are? Mr. Poor. No, sir. Mr. Marble. You don't know? Mr. Poor. I do not know that they are; no, sir. Mr. Marble. Would you say that you know they are not? Mr. Poor. They are not, not that I know of. Mr. Marble. Have you inquired into that matter? Mr. Poor. No, I have not. Mr. Marble. You haven't inquired into that? Mr. Poor. No, sir. Mr. Marble. Do you know whether or not any of your local agents are parties to an agreement at any of these points as to the division of the market at that point ? 396 GKAIN ELEVATOR INVESTIGATION. Mr. Poor. No, sir. Mr. Marble. Well, now, you mean you don't know? Mr Poor. I haven't any agreement. Mr. Marble. Do you know whether or not any of these local agents have any such agreement ? Mr. Poor. Not that I know of. Mr. Marble. Not that you know of? Mr. Poor. No, sir. Mr. Marble. Might they have and you not know it? Mr. Poor. I do not think they have; no, sir, they haven't. Mr. Marble. Have you inquired whether they have or not? Mr. Poor. No. Mr. Marble. Isn't that a pretty important thing in the conduct of a country elevator? Mr. Poor. ,I frequently ask them what they are getting; their proportion of the wheat, or something like that. Mr. Marble. Their proportion. How do you determine what would be their proportion? Mr. Poor. If there are two elevators I consider I should have half. Mr. Marble And you concede the other half to the other people ? Mr. Poor. No, sir; because we do not make any division, but I want to be sure I get all the wheat we are entitled to. Mr. Marble. Do you make any effort by competition to get more than half of the business ? Mr. Poor. Yes, sir. Mr. Marble. Do your agents account to anyone at any point if they get more than their half? Mr. Poor. No, sir. Mr. Marble. Do they call upon their competitors for an account- ing if the competitors get more than half? Mr. Poor. No, sir. Mr. Marble. You would know if any such thing were being done, would you? Mr. Poor. I should. They wouldn't do it without my knowledge, I think. Mr. Marble. Will you inquire into that matter and tell them to stop if they are doing so ? Mr. Poor. Yes, sir. Mr. Marble. You will? Mr. Poor. Yes, sir. Mr. Marble. Do you own any railroad stock, Mr. Poor? Mr. Poor. A little — ten shares. Mr. Marble. What road? Mr. Poor. Missouri, Kansas and Texas. Mr. Marble. Are you an officer of that road? Mr. Poor. Yes, sir. Mr. Marble. You own ten shares; that is all? Mr. Poor. Yes, sir. Mr. Marble. Does anyone else hold any stock in that road for you in which you are beneficially interested ? Mr. Poor. No, sir. Mr. Marble. That is the extent of your ownership in the road ? Mr. Poor. Yes, sir. Mr. Marble. What proportion of this grain company do you own? GEAIlSr ELEVATOR INVESTIGATION. 397 Mr. PooE. What grain company ? Mr. Marble. The A. J. Poor Grain Company. Mr. Poor. The whole of it. Mr. Marble. Do you operate any elevators on the Missouri, Kansas and Texas Railroad? Mr. Poor. I have one. Mr. Marble. One ? Mr. Poor. Yes, sir. Mr. Marble. Where is that? Mr. Poor. At Reeford. Mr. Marble. What is your experience on the Missouri, Kansas and Texas — do you have difficulty in getting sites there ? Mr. Poor. I have never applied only for this one, and one other. Mr. Marble. Did you get both of them that you applied for ? Mr. Poor. Only one; I didn't get the other one. It was already built. Mr. Marble. You do not consider that you are treated with any favoritism on the Missouri, Kansas and Texas because you are a director? Mr. PooR; Not at all. Mr. Marble. Do you know you are not? Mr. Poor. I know I am not. Mr. Marble. You pay just the same freight rate as though you were not a director? Mr. Poor. 1 always thought I paid more. Mr. Marble. On that account? Mr. Poor. No; not on that account. Mr. Marble. You thought you paid more than somebody else paid ? Mr. Poor. Yes, sir. Mr. Marble. How recently have you thought that? Mr. Poor. Well, not within a year or so. I used to think so. Mr. Marble. At a time when you were a director? Mr. Poor. Yes, sir. Commissioner Clark. I do not understand. He has testified that he is a director of the Missouri, Kansas and Texas. Mr. Marble. Yes. You are a stockholder? Mr. Poor. Yes, sir. Mr. Marble. You are a director also? Mr. Poor. Yes, sir. Mr. Marble. Did you use your power as director to put a stop to them discriminating against you in freight rates? Mr. Poor. No, sir; I didn't have any power that I know of. Mr. Marble. Didn't have any power as director? Mr. Poor. No, sir. Mr. Marble. Who has power on that road? Mr. Poor. I guess the president. Mr. Marble. And the board of directors simply ratify his acts ; is that it? Mr. Poor. I think so. Mr. Marble. That is your understanding of it ? Mr. Poor, Yes, sir. Mr. Marble. How about prices on the Kansas City market — do you know of any agreement to pool prices here ? 398 GBAIN ELEVATOR INVESTIGATION. Mr. Poor. No, sir. Mr. Marble. At any time? Mr. Poor. No; I have no knowledge of it; no, sir. Mr. Marble. Well, now, what do you mean by that? Do you mean that you have an opinion on that matter? Mr. Poor. I have thought so at times, but then I don't know. Mr. Marble. What caused you to think so? Mr. Poor. Because they all bid the same price for the grain. Mr. Marble. Was that what you considered less than the fair price ? Mr. Poor. Yes, sir. Mr. Marble. Did you protest or investigate ? Mr. Poor. Yes, sir; I protested. Mr. Marble. With what result? What was the result of that? Mr. Poor. It didn't do any good that I know of. Mr. Marble. Did anyone admit to jj^ou that there was a combi- nation? Mr. Poor. No, sir. Mr. Marble. Did they explain why they all bid the same price ? Mr. Poor. No, sir. Mr. Marble. Did you ask for an explanation? Mr. Poor. I do not remember that I did ; no, sir. Mr. Marble. Did you charge them with having a combine — ' anyone ? Mr. Poor. Yes, sir. Mr. Marble. How many did you charge with having a combina- tion? Mr. Poor. Oh, I do not remember. I have spoken of that two or three times when I thought so. That is all. Mr. Marble. Without getting any admission that there was such a combination? Mr. Poor. Yes, sir. Mr. Marble. Did this practice of all setting the same orice still continue after your protest? Mr. Poor. I do not know how long. Mr. Marble. Well, did it continue or did it cease after your pro- test ? Did your protest have any effect on that ? Mr. Poor. Not that I know of. Mr. Marble. Do you find that at the present time they all bid the same price, or any other indications of a combination ? Mr. Poor. No; I haven't noticed anything lately. Mr. Marble. How long ago did you notice indications of that sort? Mr. Poor. I don't know tliat I have for a year. Mr. Marble. Did you a year ago ? Mr. Poor. Yes, sir. Mr. Marble. But you know nothing further than that one indica- tion that they were all bidding the same urice, and that a smaller price than you got there? Mr. Poor. Yes, sir; that is right. Mr. Marble. That is all. Commissioner Clark. You may be excused, Mr. Poor. Witness excused. GRAIN ELEVATOR INVESTIGATION. 399 W. T. Kemper, called as a witness, having been duly sworn, testi- fied as follows: Mr. Marble. What is your business? Mr. Kemper. I am in several lines of business. My principal business is the mercantile business. Mr. Marble. You are in the grain business? Mr. Kemper. Yes, sir. Mr. Marble. In what way are you in the grain business? Mr. Kemper. Well, we do a general grain business, principally, and shipping business. Mr. Marble. Do you bid the country for grain? Mr. Kemper. Occasionally; but we haven't for the last six or seven months. Mr. Marble. Do you buy grain here in the city ? Mr. Kemper. Yes, sir. Mr. Marble. Do you own any elevators? Mr. Kemper. We do not at the present time. We did, but our elevator burned in March. Mr. Marble. You were bidding the country six or seven months ago? Mr. Kemper. Yes, sir. Mr. Marble. When you were bidding the country, did you dis- criminate against any class of consignors of grain? Mr. Kemper. No, sir. Mr. Marble. Did you solicit business from farnaers' elevators? Mr. Kemper. We didn't solicit business, but we bid them for the grain, if they were in the grain business. Mr. Marble. Did you solicit business from what is known as irreg- ular shippers? Mr. Kemper. That is, did we bid them? Mr. Marble. Yes. Mr. Kemper. We did not pay any attention to what kind of dealers they were. Mr. Marble. Did you receive business from irregular dealers ? Mr. Kemper. If they shipped it to us; yes, sir. Mr. Marble. Did any one make any protest to you ? Mr. Kemper. I think, perhaps, at the time we were in the receiving business they did. Mr. Marble. How long ago was that ? Mr. Kemper. It has been between three and four years ago. Mr. Marble. Were you at that time boycotted for receivmg those shipments ? Mr. Kemper. No, sir. Mr. Marble. Do you know whether the regular dealers refused to ship to you at that time because of that ? Mr. Kemper. I think not. Mr. Marble. So, as a matter of fact, you were not punished for receiving shipments from irregular dealers ? Mr. Kemper. Well, at that time there were not as many what you call irregular dealers as there are at the present time. Mr. Marble. Have you at any time been punished or deprived of any patronage of any sort because you did receive shipments from irregular dealers ? 400 GRAIN ELEVATOR INVESTIGATION. Mr. Kemper. I think not. Mr. Marble. Do you know of any combination to fix prices for cash wheat in this city at the present time ? Mr. Kemper. I do not. Mr. Marble. Have you ever known of any such combination ? Mr. Kemper. I have known of attempts to control prices, but they were not successful. Mr. Marble. How many of such attempts have you known of? Mr. Kemper. Perhaps two. Mr. Marble. How recently? Mr. Kemper. I think the last I knew of was some two or three years ago. Mr. Marble. Did you hear Mr. Beall's testimony this morning? Mr. Kemper. I did. Mr. Marble. Do you know anything about that attempt concern- ing which he testified ? Mr. Kemper. I can not say positively that I do. At that time I was not actively engaged in the grain business; not during those three or four months at that time. Mr. Marble. Do you know of any attempt since that tinae? Mr. Kemper. No, sir; I do not. Mr. Marble. Those that you are familiar with were before ? Mr. Kemper. Yes, sir. Mr. Marble. Did those attempts that you are familiar with suc- ceed or not ? Mr. Kemper. They were never successful. Mr. Marble. Did they succeed at all? Mr. Kemper. Well, I can not say that they were at all successful, Mr. Marble. Mr. Marble. What was the matter? Mr. Kemper. There were too many people wanting the grain; competition was too strong. They could not form a combination that would hold. Mr. Marble. Is it your opinion that there is no such combination now influencing the market at all ? Mr. Kemper. I am sure there is not. Mr. Marble. You are sure there is not? Mr. Kemper. Yes, sir. Mr. Marble. Do you know whether there is any combination influencing prices in the country by agreeing as to what prices are to be paid ? Mr. Kemper. I can not say as to that. I think, however, that there is not. Mr. Marble. You do not know? Mr. Kemper. I do not think so. Mr. Marble. That is all. Commissioner Clark. You may be excused, Mr. Kemper. Witness excused. R. J. House, called as a witness, having been duly sworn, testified ias follows: Mr. Marble. What is your business, Mr, House? Mr. House. Elevator. Mr. Marble, Do you own an elevator? GRAIN ELEVATOR INVESTIGATION. 401 Mr. House. Yes, sir. Mr. Maeble. Where. Mr. House. On the Missouri Pacific tracks, in Kansas City, Mo. Mr. Marble. Is that elevator now in operation? Mr. House. Partially so. Mr. Maeble. Why only partially? Mr. House. Why, the railroad elevators handle the business for nothing, and I can not compete with them. Mr. Maeble. Do you get any allowance? Mr. House. No, sir. Mr. Marble. In what way do you make a revenue with your elevator when you make — what service do you perform? Mr. House. Clipping, cleaning, mixing, and raising the grades of grain, sacking it, grinding corn, etc. Mr. Maeble. It is for performing this ^service that you get your revenue ? Mr. House. Yes, sir. Mr. Marble. Are you able to get customers at the present time for that service ? Mr. House. I can not handle any wheat; I haven't handled any until here the other day when I sold a little stuff, the first I have sold this year. Mr. Marble. Have you, as a matter of fact, since the railroads began to operate these elevators, handled wheat through their eleva- tors, leaving your own house stand idle? Mr. House. No, sir. Mr. Marble. Do you know other elevator owners doing that sort of thing? Mr. House. Not owners. There are one or two instances where they have given up their elevators. Yes, sir; Charlie Dayton does, too. Mr. Marble. He leaves his own house idle and uses the railroad elevator? Mr. House. Yes, sir. Mr. Marble. Just to put this thing in another form, what effect has this method of operati9n of elevators by the railroads, performing the service free, upon the' value of elevator property in the city of Kansas City ? Mr. House. Why, it has made them a liability instead of an asset. Mr. Marble. That is your experience? Mr. House. Yes, sir. Mr. Marble. Do you know whether or not that is the general experience of elevator owners who have not made arrangements with railroads ? Mr. House. Yes, sir. Mr. Marble. You have heard complaints of that sort of thing? Mr. House. Yes, sir. Mr. Marble. Did you get an allowance, an elevator allowance, at the time the elevator allowances were being paid ? Mr. House. Yes, sir; partly so. On competitive business, but not on local business. Mr. Marble. Would you like to see the elevator allowances restored ? S. Doc. 278, 59-2 26 402 GRAIN ELEVATOR INVESTIGATION. Mr. House. I think it is necessary for the market. Mr. Marble. Necessary for the market. Mr. House. Yes, sir. Mr. Marble. Could you, as an elevator man, if the allowances were all abolished, and if the railroads would go out of the elevator busi- ness, could you survive? Mr. House. I think I could come nearer than anyone m town; but even if they were, I think it would practically ruin the market as a big market. Mr. Marble. You regard the payment of elevator allowances as a good thing for the market ? Mr. House. Yes, sir; that is what I think of them. No one derives any benefit from them. Otherwise people who have these large ele- vators and pay a reasonable price for them and try to run them in the hopes of getting what business they can, in competition with country elevators, will have to go out of business. They might remain in business if they get them for a gift, like they have been, or something of that sort, but they couldn't pay any interest on the investment at all, and in no way maintain a plant, I don't believe. Mr. Marble. This you claim under the present conditions ? Mr. House. Yes, sir. Of course, I haven't any chance any more than lots of grain comes here, and, of course, when there is some you can always handle a little. But an elevator is not a paying propo- sition at all. Mr. Marble. That 's all. Commissioner Clark. What suggestion would you make as to a plan by which discriminations and complaints could be — or the well- founded complaints — could be eliminated ? Mr. House. My idea is to divorce the railroads completely from the elevators — the railroads not having any interest whatever in the elevators — and legalize some small allowance if they want to give it for transfer. Leave this to the railroads' option. If they didn't have anything to give anybody, or were not connected with them in any way, they couldn't in any way give it to them. At present we have a six or seven hundred thousand dollars investment for nothing. Commissioner Clark. And paying them a bonus for running it ? Mr. House. Paying them a bonus for running is something no one can compete with. Commissioner Clark. You think if the railroads were divorced from the elevators, aside from paying a reasonable transfer charge, that your elevator could succeed as a Dusiness proposition? Mr. House. Yes, sir; I do. Commissioner Clark. Would the transfer of grain from car to car cut an important part in your business ? Mr. House. No, sir. It has always been that way. People do not want that kind of work. It isn't any good to them. Commissioner Clark. They want the grain treated and mixed ? Mr. House. Yes, sir. It is the only way they can ship it at any advantage. Commissioner Clark. What would you say was a reasonable charge for the transfer of grain? Mr. House. I should think three-fourths of a cent a hundred. Commissioner Clark. And you think that that should be paid on all grain going into the elevator? GRAIN ELEVATOR INVESTIGATION. 403 Mr. House. Well, now that- Commissioner Clark. All grain unloaded at Kansas City — I will put it that way. Mr. House. I think the grain loaded out should pay if anything should. Commissioner Clark. If you were a large grain buyer and owned a large elevator, do you think the roads should pay you for loading out your own grain just the same as they pay you for loading out my grain? Mr. House. Why, anyone handling grain for themselves is in no different position than in handling grain for anyone else's concern. The elevators have to have a certain allowance and revenue, and if they are no greater than the actual cost, without any allowance made for interest or insurance or wear and tear on the property, there is no advantage to the elevator man. If there isn't something at such markets as this to help an elevator to live, there will be very few, I believe, and the market will necessarily suffer. Mr. Marble. Just a minute. When you say the market will suffer, you mean that a portion of this allowance finds its way into the price, and so forces grain into the market ? Mr. House. Yes, sir. When you sell wheat, for instance, you figure that it averages you such and such a cost. If you have to pay elevator charges to cover that, you add that to it; then you add a Erofit and you add something for the shrinkage, and whatever you ave to add to it puts that much against the grain for stopping it 'here; and if that allowance was paid it would simply be a benefit to both buyer and seller. Mr. Marble. Supposing that allowances were made at all points so that your competmg towns would be just as much better off than you were better off, then it would equalize it? Mr.. House. I think it is very necessary that terminal markets, such as St. Louis, Kansas City, Omaha, and such places as that, get those things, because railroad companies do need their cars unloaded, especially on our lines. Mr. Marble. You would make this allowance at terminal markets only ? Mr. House. I haven't anything to say. I can live on equal terms with anyone at any place, but, if you want to benefit everybody, I believe that terminal markets would be the place to make the allow- ance. Mr. Marble. That would be the place to make the allowance? Mr. House. Yes, sir. The countryman gets the benefit of it in the price he gets for the grain. The cost of it is absorbed by the railroad company. Mr. Marble. That is all. Commissioner Clark. You may be excused. Witness excused. E. J. Smiley, called as a witness, having been duly sworn, testified as follows : Mr. Marble. What is your business ? Mr. Smiley. Secretary of the Kansas Grain Dealers' Association. Mr. Marble. How long has that association been formed? Mr. Smiley. It was formed the latter part of December, 1895. 404 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Tell us where it was formed; what the considerations were moving the founders of that association; the evils which they met, and the cures which they expected to make. Just explain that matter in your own way. • Mr. Smilet. The purpose of the organization was to better the con- dition of the grain trade. Mr. Marble. What evils were there in the grain trade at that time? Mr. Smiley. At terminal markets the weights were very unsatisfac- tory, and inspections were unsatisfactory. Mr. Marble. Has the organization made any difference in that respect ? Mr. Smiley. Yes, sir. Mr. Marble. How? What difference has it made, first? Mr. Smiley. Within a year or eighteen months after the organiza- tion was brought into existence we secured the consent of elevator owners and operators at this market to place men, at our expense, to check the weights of the grain passing through the several elevators here. Mr. Marble. Did that make a difference in the weights to your members, did you find ? Mr. Smiley. "Yes, sir. Mr. Marble. In what way; what difference did it make? Mr. Smiley. Well, we got pretty nearly the contents of the car then. Mr. Marble. You hadii't gotten the contents before? Mr. Smiley. No, sir. Mr. Marble. How much on an average had it fallen short ? Mr. Smiley. Oh, I am unable to answer that question on an average. Mr. Marble. Well, I want to find out the extent of the improve- ment you have made in that respect; some approximation to it. Mr. Smiley. Well, I would think that the average shortage — I can not be positive of this; I just approximate it. But the average short- age prior to this time for several years prior to 1897 would run very closely to 2 per cent. Mr. Marble. What would you say the average shortage is now, and has been during this present crop year? Mr. Smiley. Not to exceed one-half of 1 per cent, and probably less than that. Mr. Marble. Is one-half of 1 per cent a profit,, or any portion of a profit? How appreciable is that to the country dealers? Mr. Smiley. It depends on the value. If wheat is worth $1 a bushel and you have a shrinkage of 15 bushels to a car, it is cer- tainly quite a net margin. Mr. Marble. It would amount to a margin for handling the business ? Mr. Smiley. Yes, sir; a net margin. Mr. Marble. How otherwise has your association benefited the grain trade ? Mr. Smiley. Well, prior to the time it was brought into existence, there was no system to the inspection at this terminal market. There has been an effort made on the part of the members of the organization to secure laws that have tended to imprpve conditions regarding inspection at this market and on the Kansas side. Mr. Marble. You have secured such laws ? Mr. Smiley. Such laws are on the statute book. ORAIJSr ELEVATOR INVESTIGATION. 405 Mr. Maeble. Are they enforced ? Mr. Smiley. Yes, sir. Mr. Marble. You actually have a benefit? ' Mr. Smiley. Yes, sir. Mr. Marble. How great a benefit is that, would you say? What does it amount to to the grain dealers? Mr. Smiley. Well, if the car of wheat actually is No. 2, and No. 2 is worth 60 cents a bushel, and through the incompetency of an inspector it is made No. 4, and there is a difference between No. 2 and No. 4 wheat of 4 or 5 cents a bushel, which is quite often the case, it would amount to 4 or 5 cents a bushel on the contents of the car. Mr. Marble. Did such errors as that arise with any frequency before your activities began ? Mr. Smiley. Yes, sir. Mr. Marble. And are they frequent now — such errors? Mr. Smiley. Not as frequent ; not by any means. Mr. Marble. You regard that as a substantial benefit ? Mr. Smiley. I regard it as a benefit to the entire grain trade of Kansas and the entire grain trade shipping to this market. Mr. Marble. Have you benefited the entire grain trade shipping to this market ? Mr. Smiley. Yes, sir. Mr. Marble. I will ask you if you are familiar with the practice of the elevators in Kansas City, Kans., of deducting something from each car for some purpose or other? Mr. Smiley. I know it is a practice at the elevators located in Kansas City to deduct 100 pounds from each car. I will modify that now. I do not know. I can not testify that the elevators deduct 100 pounds from each car of grain unloaded. I can testify that the account sales or the certificate of weight accompanying the account sales that there is a difference of 100 pounds in the account sales and the certificate of weight. Mr. Marble. You mean you can not tell who gets that hundred pounds ? Mr. Smiley. I can not testify as to who gets the hundred pounds; no, sir. Mr. Marble. Is there any dissatisfaction with that, so far as you know? Mr. Smiley. Yes, sir. Mr. Marble. What is it ? State that case, so far as you know it. You have had to do with it? Mr. Smiley. A very large proportion of the country grain dealers do not feel that they should contribute 100 pounds on every car of grain that is coming to Kansas City market. Mr. Marble. What is the elevator man's side of that question, do you know? Mr. Smiley. I do not know. Mr. Marble. Is that deducted in the Missouri elevators? Mr. Smiley. Yes, sir; both sides. Mr. Marble. Do you know whether or not such deduction is made in Chicago? Mr. Smiley. I do not know. Mr. Marble. You do not know as to other markets? . '.'■ .-.'BaSi 406 GEAIiSr ELEVATOR INVESTIGATlOlf. Mr. Smiley. No, sir. Mr. Marble. Does your association 'make an attempt to secure any certain margin of profits for its business ? Mr. Smiley. No, sir. Mr. Marble. Does it attempt to bring dealers at country points into combination to agree upon prices? Mr. Smiley. No, sir. Mr. Marble. Has it ever done so? Mr. Smiley. The association? Mr. Marble. Yes. Is that one of the objects of the association? Mr. Smiley. No, sir; it is not. Mr. Marble. Or of any of its officers ? Mr. Smiley. To illustrate this, Mr. Marble, I will simply state that about— I guess it was 1889 or 1890 that I individually, as secretary of the Kansas City Grain Dealers' Association, had two or three dif- ferent points in the State of Kansas where grain was handled without any margin of profit by the dealers, suggested, acting in an advisory capacity, to pool the stations, and it was done. Mr. Marble. Do you mean 1889 or 1899? Mr. Smiley. 1899. Mr. Marble. To come down more recently — I did not mean to go into that. Since that time has anything of that sort been done, so far as you know? Mr. Smiley, How far back? Mr. Marble. Well, since 1900, or during 1900? Mr. Smiley. Yes, sir. Mr. Marble. In 1901 ? Mr. Smiley. Yes, sir. Mr. Marble. 1902? Mr. Smiley. I am not sure whether it was or not; I am not sure whether it was as late as 1902. Mr. Marble. Was it as late as 1903? Mr. Smiley. No, sir. Mr. Marble. You know it was not? Mr. Smiley. Not to my knowledge. Mr. Marble. And the association does not include that as one of its methods now? Mr. Smiley. No, sir. Never has. The association has never had that as one of its methods. Mr. Marble. What you are testifying as to the methods of the association refers to both pooling and fixing of prices ? Mr. Smiley. Yes, sir. Mr. Marble. What is the sentiment among the members — are they doing that sort of thing at country stations ? Mr. Smiley. Not to my knowledge. Mr. Marble. You are not informed that they are ? Mr. Smiley. No, sir. Mr. Marble. Nor are you informed that they are not? Mr. Smiley. No, sir. Mr. Marble. You do not make it a part of your activities to find out? Mr. Smiley. No, sir. Mr. Marble. Are you careful not to find out? Mr. Smiley. Well, I usually try to attend to my own business. GEAIN ELEVATOR INVESTIGATION. 407 Mr. Marble. Although you are secretary of the Grain Dealers' Association? Mr. Smiley. That is not a part of the association, to look after that work. Mr. Marble. I believe you said that the object for which this association was formed was to benefit the grain trade ? Mr. Smiley. Yes, sir. Mr. Marble. Did you mean just that? Mr. Smiley. Benefit the grain trade? Mr. Marble. Yes. Mr. Smiley. That is the object of the association. Mr. Marble. All the grain trade? Mr. Smiley. Well, we are not philanthropists, but while we benefit the members of our association we must necessarily benefit the grain trade at large. Mr. Marble. This is a publication of your association, isn't it [counsel hands witness book]? And this is the preface and intro- ductory? Have you any other statement of your objects than that? Mr. Smiley. No, sir. Mr. Marble. And that is a fair statement of your objects and the reasons for them? Mr. Smiley. Yes, sir. Mr. Marble. May I read this into the record, for it is of interest? Commissioner Clark. Yes, sir. Mr. Marble. This is the official list of the regular grain dealers in the State of Kansas, published under the management of the Kansas Grain, Dealers' Association, E. J. Smiley, secretary, July 1, 1906 — The object of the organized grain dealers in compiling this list is the protection of the interests of the dealers who are regular in the grain business, as against irregular, irresponsible, or dishonest dealers, by placing it in the hands of buyers, bidders, and solicitors of consignments for their use. In doing this no injustice is done to the farmer or producer, as the methods of irrregular or iresponsible dealers do not benefit him, but only cultivate dishonest methods to obtain profits. As no dealer, either regular or irregular, is supposed to do business unless he m some way expects compen- sation, every member will concede the right of the dealer to a legitimate profit. The ■work has been given the utmost care and the information contained is believed to be as nearly correct and complete to date as it is possible to make it. There are a few more lines, asking information of changes, but that practically covers all that ? Mr. Smiley. Yes, sir. Commissioner Lane. Isn't there a regular dealer who is not a member of your association? Mr. Smiley. Yes, sir. I will state in reply to your question that every elevator owner and operator in the State of Kansas, as well as a number who have not elevators, are listed in that directory. Commissioner Lane. What is it that makes them regular or irregular ? Mr. Smiley. Well, a man who is a nonresident of a town or of a community, who pays no taxes, comes into a town and attempts to do a grain business is not regularly engaged in the grain business in that town. Commissioner Lane. And that might bar out Mr. Armour from trading in a Kansas town. He wouldn't be a resident or a taxpayer in that town? Mr. SmiLey. It might be. 408 GEAIN ELEVATOE INVESTIGATIOST. Mr. Marble. In what way is membership obtained in that organ- ization ? Mr. Smiley. By making application to the secretary and a payment of a fee of $3. Mr. Marble. Who passes upon the application? Mr. Smiley. The board of directors. Mr. Marble. Does any one else pass upon it ? Mr. Smiley. No, sir. Mr. Marble. Do the competitors-to-be,' of the applicant, or his com- petitors pass upon it ? Mr. Smiley. Well, under our rule any concern or corporation making application for membership is supposed to have one or two members of the association sign it as a recommendation. That is pro- vided in our constitution and by-laws; and I will state that any ele- vator owner or operator in the State making application for member- ship that his application will be referred to the board of directors for their approval. Mr. Marble. Will it be referred to his competitors at the point at all for their approval? Mr. Smiley. No, sir. Mr. Marble. Do you know whether or not the Oklahoma Grain Dealers' Association does refer such applications to the competitors- to-be of the applicant ? Mr. Smiley. I do not know. Mr. Marble. These people who sign, do you have any restriction as to where their residence shall be — ?hose who recommend a man for membership ? Mr. Smiley. Yes, sir. Mr. Marble. What restrictions do you have? Mr. Smiley. They must reside at that or a near-by town at which they are located. Mr. Marble. He must get the recommendation of some one at the town he is to do business in, or some one near by ? Mr. Smiley. I stated that that was provided in our constitution and by-laws, but it isn't complied with once in twenty times. In fact the majority of applications that come in do not bear the approval or recommendation of any individual or concern. Mr. Marble. Do you attempt to protect dealers regular in the business against irregular, irresponsible, or dishonest dealers other- wise than by placing this list m the hands of buyers, bidders, and solicitors of consignments ? Mr. Smiley. In what way ? Mr. Marble. Well, in any way. Do you have any other way in which you attempt to protect them against these irregular dealers ? Mr. Smiley. No ; I do not know of any way we could do it. Mr. Marble. Is there any way you do it; anything else you do besides to make up this list and put it in the hands of the buyers at the terminals ? Mr. Smiley. We make up that list and place it in the hands of the terminal dealers; we do that. Mr. Marble. Do you attempt to persuade the terminal dealers to trade with those firms only? Mr. Smiley. No, sir. GRAIN ELEVATOR INVESTIGATION. 409 Mr. Marble. Do you hold out any threat or intimation that if they deal with irregular dealers they can not deal with regular dealers ? Mr. Smiley. Not of late years. Mr. Marble . How long since that has been done ? Mr. Smiley. Three or lour years. Mr. Marble. Why did you cease doing that ? Mr. Smiley. Why, we thought it was time to quit. Commissioner Clark. Wnat made you think so ? Mr. Smiley. We thought it was for the reason that a suit was brought in the State of Kansas, under the antitrust laws of Kansas, and about that time I was in the soup. Commissioner Clark. Were you in anything else? Mr. Smiley. That was enough. Mr. Marble. I had promised, myself that I would not go into that. Commissioner Clark. It is getting late, and if you have any other witnesses to call you will have to hurry along. Mr. Marble. I want to ask you if your association or any officer or any member of it, so far as you know or anyone for it, has any understanding with the railroads regarding the granting of sites to independent dealers ? Mr. Smiley. No, sir. Mr. Marble. Are you in any way, or anyone for your association or any of its members, so far as you know, responsible for the antag- onistic attitude of railroads toward those desiring to put in .new and competing elevators? 1V&. Smiley. Not to my knowledge. Mr. Marble. That is all. Commissioner Clark. You may be excused, Mr. Smiley. Witness excused. Copmiissioner Clark. I think Mr. Flack is here now, if you want that information. Mr. Marble. We will call Mr. Flack. George B. Flack, recalled. Mr. Marble. You were asked to produce certain correspondence. Have you succeeded in finding that correspondence, and have you that correspondence with you ? Mr. Flack. Yes, sir, I have. I have a letter that I wrote to Mari- etta on the 29th day of January, 1906, and a letter that I received from our Marietta man on January 30, and it was in answer to that that the letter you had yesterday was written. Shall I read it ? Mr. Marble. If the Commission desires. Mr. Flack. This letter I wrote on January 29. It is a copy I have taken out of our impression book. January 29, 1906. Agent, Marietta, Kans. Dear Sir: What are the farmers paying now for com? Corn market is very weak and we ought to be buying at 7 oft of our card at your station. If you can reduce to this limit and hold your share, you ought to do so at once. Yours, truly, Midland Elevator Company. 410 GRAIN ELEVATOR INVESTIGATION. I would like to state here, that there be no misunderstanding, that our card reads what we will pay for it at Kansas City. The freight is 9 cents from Marietta, which means 5.04 cents per bushel, and we had instructed him to buy at 7 off, which means 1.96 cents margin. The agent at Marietta wrote to me under date of January 30 as follows (reading) : Marietta, Kans., January SO, 1906. Midland Elevator Company, Kansas City, Mo. Dear Sirs: Replyiag to yours of yesterday: The farmers are paying 30J and 31J cents for corn. I am paying 30 and 32 J. I am not only obliged to do this on account of the farmers, but Beatie Home, Cordon, and Herkimer, on the St. Joseph and Grand Island, are still about 1 cent ahead of me, and Hall is about half a cent ahead of me most of the time. I have hardly got my share of the grain since the farmers started up, partially on account of their having some contracted for months before they started and some of their members had been holding their corn for them. As I wrote you some days ago, they have some kind of a rebate system. As near as I can find out, they intend to take a good big margin — about 9 cents oft top Kansas City quotations — and then at the end of the year proportion the net earnings among those who have sold com, according to the amount sold. But there is beginning to be a lot of kicking, and the probability is they will have to make a change soon. There is more of that letter, if. you wish it. It is in relation to selling corn (reading) : One of their members, named C. Downie, hauled in about 3,000 bushels and put in their elevator, and when he was done he would not accept the price and sold it himself to Mr. M. C. Oummings for 34 cents (white com) yesterday. And I heard J. A. Poor wire him yesterday a bid of 30^ cents, on track, Kansas City. He pays the elevator 1 cent for loading the corn for him. I understand Mr. Cummings takes shippers' weights. I have bought but very little corn at less than 7 cents oft your card bid (not more than 1,000 bushels), and will keep margins as wide as I think safe. The farmers are about blocked, and I will have to load out a couple of cars at once. Yours, truly, C. T. Mann. (The same are hereto aimexed and marked "Exhibits Nos. 2 'and 3 to Mr. Flack's testimony.") Mr. Marble. I have no further questions. Commissioner Clakk. That will be all, Mr. Flack. (Witness excused.) E. O. Moffat, called as a witness, having been duly sworn, testified as follows: Mr. Marble. What is your business ? Mr. Moffat. Grain business. Mr. Marble. How long have you been engaged in the grain business ? Mr. Moffat. Fifteen or sixteen years. Mr. Marble. Where? Mr. Moffat. Here. Mr. Marble. Kansas City? Mr. Moffat. Yes, sir. Mr. Marble. I will ask you if you are acquainted with the tile tanks attached to the Milwaukee elevator ? Mr. Moffat. I know where they are ; yes, sir. Mr. Marble. And do you know their value? Mr. Moffat. You mean what they cost ? GItAIN ELEVATOE INVESTIGATION. 411 Mr. Marble. No. Their rental value at the present time? Mr. Moffat. At the present time they are worth about a half a cent a bushel a month. Mr. Marble. What is their capacity? Mr. Moffat. I don't know. About 750,000 bushels; 600,000 to 700,000. Mr. Marble. And how much would that make the total value of the tanks every month ? Mr. Moffat. Make them about $3,000 a month. Mr. Marble. Do you know of anyone that would pay any such sum as that for them ? Mr. Moffat. I heard a. man say this morning that he would pay $2,500 a month for them if he could get them. Mr. Marble. Who was that man? Mr. Moffat. Mr. J. Sidney Smith. Mr. Marble. Is he an experienced grain man? Mr. Moffat. Yes, sir. Mr. Marble. That is all. Commissioner Clark. I suppose, Mr. Moffat, that in your estimate of the value of these tanks you take into consideration that the rental carries with it the privilege of handling all grain through the elevator? Mr. Moffat, Most assuredly. That is the point exactly. Commissioner Clark. I just wanted to make it clear that this was not simply the rental of these tanks. Mr. Moffat. Oh, no, indeed. The elevator adjunct. Commissioner Clark. That is all, Mr. Moffat. (Witness excused.) C. M. Boynton, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. What is your business? Mr. Boynton. I am a public warehouseman at the present time. Mr. Marble. Operating an elevator in this city? Mr. Boynton. I have the management of the Santa Fe elevators at this city, and also all their terminals. Mr. Marble. At what other terminals also ? Mr. Boynton. Chicago; Winfield, Kans. ; Gainesville, Tex., and Gal- veston, Tex. Mr. Marble. Are you in the grain business? Mr. Boynton. No, sir. Mr. Marble. Directly or indirectly? Mr. Boynton. No, sir. Mr. Marble. You are not associated with Mr. Tomlin? Mr. Boynton. I might be considered to be associated in a way, if I may explain. Mr. Marble. Yes; if you will, please. Mr. Boynton. Mr. Tomlin used to be in my employ about two years ago. He is a very worthy young man; and I had occasion to say to him at various times that he was too valuable a man I thought, to work on a salary; and if he ever wanted to go into business for himself, I would furnish him the money. That was prior to the time that he took charge of these elevators. Mr. Tomlin decided about the 1st of May that he wanted to go into business, and asked me if 412 GRAIN ELEVATOR INVESTIGATION. my pledge was still good, and I assured him it was, and I furnished him some money to do a commission business in Kansas City. Mr. Marble. But you are not interested in the profits of his business ? Mr. BoTNTON. I would be, yes, sir; if he makes any. If he makes some money I will probably participate in the profits. Mr. Marble. Does he do business through this elevator which you operate? Mr. BoYNTON. I think he may have put ten or fifteen cars through there; I do not know about that. I have a local manager who looks after the business here in Kansas City. I am not familiar with the putting of the grain through the elevator. I am out of the town a great deal of the time also. Mr. Marble; You don't know whether his business is confined to these elevators or not ? Mr. BoYNTON. I know it is not. Mr. Marble. You have no relationship with any grain company, other than as manager of this grain business, these grain elevators? Mr. BoYNTON. None whatever, except as manager of all these elevators. Mr. Marble. Are you at that elevator now giving free elevation service to those shipping over the Santa Fe road? Mr. BoYNTON. No, sir. Mr. Marble. Making a charge ? Mr. BoYNTON. We are. Mr. Marble. Do you meet this competition on the Chicago, Mil- waukee and St. Paul road, through published tariffs? Mr. BoYNTON. The first tariff we published we attempted to meet the competition of the Milwaukee and St. Paul road, but we are not attempting to meet it now. Mr. Marble. You are making a charge? Mr. BoYNTON. Yes, sir. Commissioner Lane. You got out a circular before the Milwaukee tariff went into effect ? Mr. BoYNTON. Yes, sir. Commissioner Lane. Practically to the same effect as the Milwau- kee tariff? Mr. BoYNTON. We did that. Commissioner Lane. Why did you do that ? Mr. BoYNTON. Because we knew the Milwaukee road was giving free service, as well as the Great Western and the Missouri Pacific. Commissioner Lane. You knew they were giving it at that time? Mr. BoYNTON. Yes, sir. Commissioner Lane. Did they have any tariffs in effect at that time — the Missouri Pacific? Mr. BoYNTON. No, sir. Commissioner Lane. But they were giving it? Mr. BoYNTON. Yes, sir. It has been testified to here on the stand. It was our understanding that they were, and we wanted to be on the safe side, and we proposed to publish what we did. When we knew they were all doing this free service, we published the fact that we did a free service. Commissioner Lane. You did not file your .tariff with the Com- mission ? GEAIN ELEVATOE INVESTIGATION. 413 Mr. BoYNTON. No, sir; it was simply a circular. Commissioner Lane. At what time did those roads begin that? Mr. BoYNTON. Well, I think about — I think the Great "Western has always done it. Commissioner Lane. That was the first one? Mr. BoYNTON. Yes, sir; that was the first road, I think, to per- form a free service in Kansas City through an elevator. Commissioner Lane. How long ago was that ? Mr. Boynton. I have only -been in Kansas City about two years and a half. To the best of my recollection that has only been the case with the Great Western. Commissioner Lane. Who was the next road? Mr. Boynton. I think the Santa Fe. Commissioner Lane. They came in after the Great Western ? Mr. Boynton. Yes, sir; about the 1st of May. Commissioner Lane. This year? Mr. Boynton. Yes, sir. Commissioner Lane. Then who followed suit after you ? Mr. Boynton. The Missouri Pacific, I believe; I am not sure. Commissioner Lane. And then came in the Milwaukee? Mr. Boynton. About that time; and the Burlington. Commissioner Lane. What time did the Milwaukee put its tariffs in effect? Mr. Boynton. Well, I think the first tariff they published was about the 1st of September. Commissioner Lane. When did they begin the practice ? Mr. Boynton. Well, I think when the crops began to move; about the 1st of July. I am not positive about that. It is common report, of course, what they were doing. Commissioner Lane. What is the difference of giving a free service of that kind and a rebate ? Mr. Boynton. I do not think there is any. It is done for the sake of — it is done for tonnage purposes, of course; to influence business. Commissioner Lane. Every one of these roads that you have men- tioned have been engaged in that business at least since the 1st of July? Mr. Boynton. About that time. Commissioner Lane. About that time? Mr. Boynton. Yes, sir. Conmiissioner Lane. The Chicago and Alton — is that in it too? Mr. Boynton. I think the Chicago and Alton have no elevators. I am sure they have none of their own. Commissioner Clark. Haven't they an elevator here that they control that is commonly known as the Chicago and Alton elevator, that does the business for the Chicago and Alton road ? Mr. Boynton. I think not. Commissioner Clark. Why shotdd they file a tariff then providing for this free service ? Mr. Boynton. There is an elevator on their terminals here, but I understand it is not owned by the Chicago and Alton road. Commissioner Clark. I did not ask you who it was owned by. I asked you if they haven't an elevator here that is recognized as the Alton road elevator, whether it be operated under lease or gift or 414 GEAiN ELEVATOR INVESTIGATION. some of those other devices; it doesn't make any particular difference. It may have discovered some new way. Mr. BoYNTON. The Kaw elevator is located on the Alton road, but I do no know what their arrangements are. Commissioner Lane. What is the justification the roads give for following this practice? Mr. BoYNTON. I haven't heard of any. Commissioner Lane. Why should they in such cold blood break the law ? Mr. BoYNTON. I do not know that they consider it a violation of law when they publish what they do. Commissioner Lane. Some of them haven't done it. Your road, for instance, has not filed a tariff. Mr. BoYNTON. Our road has published everything we have done. Commissioner Lane. You have issued a, circular? Mr. BoYNTON. Yes, sir. Commissioner Lane. But there is no legal rate in effect, and no notice at all, so far as binding you by a legal tariff is concerned. Mr. BoYNTON. We consider that we are just as much bomid by that circular as a tariff. Commissioner Lane. Yes; but you know what the laws says upon that matter, that it is only the rates that have been posted and filed that are legal rates. Mr. BoYNTON. I do not, of course, know anything about that. I am in the elevator business, and not in the common carrier business. I do not know what their duties are about their tariffs. Commissioner Lane. This is a matter I think the Commission will have to refer to the United States District Attorney. That is all. Mr. Marble. Who owns this elevator that you are operating? Mr. Boynton. The Santa Fe Eailway. Mr. Marble. The Santa Fe Eailway? Mr. Boynton. They own all of them. Mr. Marble. Are they operated on the same terms at all these terminals ? Mr. Boynton. In what way do you mean? Mr. Marble. Are the same charges made? Mr. Boynton. Yes, sir. Mr. Marble. The charges are uniform? Mr. Boynton. No, sir. The charges are uniform for each partic- ular market, but they vary according to the conditions surrounding the different localities. Commissioner Clark. When did you discontinue this free service that you inaugurated by this circular of yours? Mr. Boynton. We discontinued it since we have seen a disposition on the part of the Great Western to put in a tariff making a charge. We used every endeavor from the 1st day of May up until the present time to make these railroads put in a tariff that they would stand by, but we were unable to do so, and we knew they were doing it free, and consequently we published the fact that we would do it free ourselves. Commissioner Clark. Were you doing it free from about July 1st until you issued this circular? Mr. Boynton. Yes, sir; that is, we were transferring free. We GBAIN ELEVATOE INVESTIGATION. 415 have never stored any grain free for any one, and we have never handled any grain free, I think, outside of possibly 40 or 50 cars during the season. Conunissioner Clark. Did not this circular that you speak of annoiince the fact that you would give free cleaning? Mr. BoTNTON. Yes, sir. We handled about 40 or 50 cars while that circular was in effect. Commissioner Claek. When was that circular issued? Mr. BoYNTON. I have a copy of that in my pocket. It was issued September 20. Commissioner Clark. When did you discontinue that ? Mr. BoYNTON. I think it was about the 10th of October — the 12th of October. Mr. Marble. Does the Commissioner desire to see them? Commissioner Lane. Yes; let me see them. (Counsel hands tariffs to Commissioner.) Commissioner Clark. Why did you discontinue the practice when you knew that your competitors were continuing it ? Mr. BoTNTON. Well, the car situation was such that we could not accommodate the business we could get under any condition. Commissioner Clark. And then the situation changed so that it was not necessary to say this in a competitive way? Mr. BoTNTON. It was not that entirely. We have always thought that there ought to be a charge for the service and have always tried to get it, and we thought when the other roads came in that we could all get a charge perhaps, and the Great Western and the Milwaukee published a tariff, and we tried to get' every road to publish a tariff making a charge. Commissioner Clakk. When did the Milwaukee publish a tariff making a charge? Mr. BoYNTON. On the 1st of September. Commissioner Clakk. And when did they recall it, so far as grain going out over their road was concerned ? Mr. BoYNTOx. October 8, I understand. I haven't seen it until yesterday. Commissioner Clark. Did you know that when you issued this notice of October 12? Mr. BoYNTON. No, sir; I did not. Commissioner Clakk. Did you make a charge for treating grain — that is, cleaning and mixing and clipping? Mr. BoYNTON. Yes, sir. Commissioner Clakk. If it goes out over your road? Mr. BoYNTON. If it goes out on any road. Commissioner Lane. During the month of July or August did the Milwaukee make known these charges ? Mr. BoYNTON. That is as I heard the testimony; yes, sir. Commissioner LanE. Were you authorized to issue this circular? Mr. BoYNTON. Yes, sir. Commissioner Lane. By whom ? Mr. BoYNTON. By the president of our company. Commissioner Lane. That is all. Commissioner Clark. Is this Santa Fe Elevator Company a sep- arate corporation from the Santa Fe Railroad Company? Jdr. BoYNTON. Yes, sir. 416 GKAIHr ELEVATOR INVESTIGATION. Commissioner Clark. Who owns the stock of this Santa Fe Ele- vator Company? Mr. BoYNTON. Well, practically, the Santa Fe Eailroad Company, I think, or some holding company. I do not know just now what company. Commissioner Claek. Who is the president of the Santa Fe Ele- vator Company? Mr. BoYNTON. Mr. Nicholson — George T. Nicholson, the third vice-president of the Santa Fe Railway Company. Conuxdssioner Lane. You have no objection if we. take these and put them into the record ? Mr. BoYNTON. Not at all. (The same are hereto annexed and marked "Exhibit No. 1 to Mr. Boynton's testimony.' ') Commissioner Clark. Anything further, Mr. Marble ? Mr. Marble. Nothing further. Commissioner Clark. You are excused, Mr. Boynton. (Witness excused.) T. J. Brodnax, called as a witness, having been duly sworn, testi- fied as follows: Mr. Marble. What is your business, Mr. Brodnax? Mr. Brodnax. Grain; receiving and shipping. Mr. Marble. You are a member of a iirm or corporation? Mr. Brodnax. Yes, sir. The firm of Brodnax & McLiney. Mr. Marble. You are also a member of the Board of Trade of Kansas City? Mr. Brodnax. Yes, sir. Mr. Marble. Are you an officer of that board? Mr. Brodnax. Yes, sir. Mr. Marble. What office do you hold? Mr. Brodnax. President. Mr. Marble. President of the board of trade? Mr. Brodnax. Yes, sir. Mr. Marble. Do you operate an elevator? Mr. Brodnax. Yes, sir. Mr. Marble. Does your firm? Mr. Brodnax. Yes, sir. Mr. Marble. Does your firm own that elevator? Mr. Brodnax. No, sir. We lease it from the 'Frisco Eailroad. Mr. Marble. On what terms? Mr. Brodnax. We pay a percentage of the cost of the property. About $137.50 a month. Mr. Marble. You pay a flat rental of $137.50 per month? Mr. Brodnax. Yes, sir. Mr. Marble. That figure is reached by making a percentage of the cost of building the elevator? Mr. Brodnax. Yes, sir. Mr. Marble. What did that elevator cost to build? Mr. Brodnax. The improvements — the building of the 'Frisco elevator, which is operated by John I. Glover, and the Memphis ele- vator, which we operate — they put in something over a hundred thousand dollars; the Memphis was an old property and of not much^ service; it was moved up from Memphis and they remodeled it and GRAIN ELEVATOE INVESTIGATION. 417 they built the 'Frisco elevator and we agreed to pay them 4 per cent of the cost of the two properties. They assessed the cost of the Memphis elevator at 40 per cent and the 'Frisco elevator at 60 per cent, and our contracts are identical, the same as Mr. Warrick testi- fied this morning or yesterday. Mr. Marble. What percentage of the cost do you say you pay? Mr. Brodnax. Four per cent. Mr. Marble. Who pays the insurance on the buildings? Mr. Brodnax. The railroad company. Mr. Marble. And who pays the taxes? Mr. Brodnax. The railroad company. Mr. Marble. Who pays the repairs? Mr. Brodnax. All permanent repairs they pay; temporary repairs we pay. Mr. Marble. That would just about equal the 4 per cent — those items of insurance, taxes and repairs ? Mr. Brodnax. I do not know; perhaps a little more than the cost; that is the rental perhaps would run up a little more than that. Mr. Marble. You think the rent is perhaps a little more than what the cost of owning the elevators is to the railroad company ? Mr. Brodnax. Yes, sir. Mr. Marble. Not very much? Mr. Brodnax. No, sir; very slightly. Mr. Marble. Do you receive any allowances; any elevation allow- ances now? Mr. Brodnax. Yes, sir. Up to this year we received the same allowance as other elevators did — a cent and a quarter. Mr. Marble. Were those allowances withdrawn? Mr. Brodnax. Yes, sir. We get $3.50 per car now, provided it is shipped over the Frisco Road. Mr, Marble. What do you do for that $3.50? Mr. Brodnax. We take the graiu into the house and consolidate it and mix it. Mr. Marble. And load it out ? Mr. Brodnax. Yes, sir; and load it out; unload it and load it out. Mr. Marble. Do you get any other allowance than that ? Mr. Brodnax. That is all. Mr. Marble. This applies to all grain going into the house and going "ut over the Frisco Road ? Mr. Brodnax. Yes, sir. Mr. Marble. And regardless of ownership? Mr. Brodnax. Yes, sir. Mr. Marble. And you ship grain over that road ? Mr. Brodnax. Yes, sir. Mr. Marble. And it applies to grain belonging to you ? Mr. Brodnax. Yes, sir; as well as other people. Mr. Marble. Does the Frisco Road have that same arrangement with Mr. Glover — the $3.50 arrangement? Mr Brodnax. Yes, sir. Mr. Marble. And with any one else? Mr. Brodnax. I think they have that arrangement with all the elevators on their lines; that is my impression. Mr. Marble. All the elevators in Kansas City on their line? S. Doc. 278, 59-2 %! 418 GKAIlir ELEVATOR INVESTIGATION. Mr. Brodnax. Yes, sir. And in Eosedale. Mr. Marble. How about switching charges — do you pay switching charges for cars set to your elevators and taken away ? Mr. Brodnax. Yes, sir; we pay a dollar a car. Mr. Marble. A dollar for taking the car in? Mr. Brodnax. Yes, sir. Mr. Marble. Anything for taking it away again? Mr. Brodnax. No. They do that free of charge providing it goes over their line. If it goes over any other line, we have to pay for it providing they do not absorb it. Mr. Marble. Does any line absorb this dollar a car charge? Mr, Brodnax. Yes, sir; to competitive territory. Mr. Marble. What hues absorb it to competitive territory? Mr. Brodnax. All that we ship. We find out whether or not, before we ship, they will absorb it. Mr. Marble. So, as a matter of fact, this $1 charge is absorbed on all that business? Mr. Brodnax. Yes, sir. Mr. Marble. Will you explain why the Kansas City, Kans., and Kansas City, Mo., elevators take this toll, or allowance, or whatever it is, of 100 pounds of grain on each car? Mr. Brodnax. Yes. The proposition starts out — in the first place all markets do it. There is a dockage in all terminal markets. It is done to cover the sweeping, dirt, etc., that is taken out of the car, and it would be impossible for a public elevator to take in a carload of grain, or any quantity of grain, and load out the same amount. There is a shrinkage in handling it up and down the elevators. The dust and dirt in it is sifted out, and it is done simply to make the elevator wheat hold its own, so that they can load out as much grain as they take in. It is not a source of profit. Our elevator — and it is the experience of every elevator here — always runs short at the end of the year. This dockage does not cover the shortage, but it partially covers it. Mr. Marble. Mr. Brodnax, if I understood Mr. Tedford yester- day — ^no, it was Mr. Radford — he criticised this taking a hundred pounds per car in this way: He said that this hundred pounds was deducted from each car after the grain goes into the elevator and after the waste had ceased. He thought, therefore, it was unjusti- fiable. Mr. Brodnax. He is mistaken in that. It is a State charge. The Kansas City Board of Trade is the only board of trade that advertises that they deduct the hundred pounds from the grain that is unloaded into the elevator. Mr. Marble. When is the grain weighed? Mr. Brodnax. It is weighed as it comes into the elevators, and the elevator pays for this grain, all, with the exception of a hundred pounds to each car. This is done, as I have said, to cover the sweep- ing. The weighing department of the Kansas City Board of Trade in the State of Kansas and the State of Missouri require that the cars be swept as they are unloaded, but all the dust and dirt goes into the elevator, and this is a partial offset of the stuff that goes in. Mr. Marble. Then the allowance is taken because some of the stuff that goes in is not desirable grain? Mr. Brodnax. It goes out in dus.t. You could not take in a car GRAIN ELEVATOE INVESTIGATION. 419 of grain and handle it through the house and load out the exact quantity. It could not be put into a bin and hoisted out and put back into the car and weigh exactly the same. There is always a shrinkage. It is done in order that the elevator may load out just the amoimt of grain that it loaded in. Besides, the shipper in send- ing his grain to Kansas City understands this dockage. It is a part of the co mmi ssi nn for handling the grain at Kansas City. They know when they sell on Kansas City terms that this amount is to come off. It is not a secret, but it is public. Mr. Marble. Is such dockage made at any other markets? Mr. Brodnax. My understanding is that a dockage is made at all other markets. Mr. Marble. Of the same sort? Mr. Brodnax. So much per 100 pounds. Mr. Marble. Not per car? Mr. Brodnax. Not per car. Mr. Marble. Do you know of any combination to regulate the price of cash wheat in this market at the present time? Mr. Brodnax. I do not. Mr. Marble. Has there ever been such a combination, so far as you know? Mr. Brodnax. Several of our members have testified that there were attempts to agree on prices, based on the option, but they never succeeded; it always feU through. Mr. Marble. Do you bid the cotmtry ? Mr. Brodnax. Occasionally; not every day, but occasionally. Mr. Marble. Is there any agreement or attempt to keep these prices in hne, so far as you know, as some one testified — I think that is the phrase used — by consultation? Mr. Brodnax. None that I know of; I am quite sure there isn't. I would know of it if there was. Mr. Marble. How do you regard this elevator arrangement in Kansas City — the operation of these elevators by the railroads and the giving of the free service ? Mr. Brodnax. Well, it is not objectionable to the Kansas City market, provided that the railroads would allow the private institu- tions for handling also. Mr. Marble. So far as they do not, what is the effect upon the market? Mr. Brodnax. Confiscation of private property. The elevator men that are paying rent and own their own property can not compete with the free-elevator service. Mr. Marble. Speaking, now, not as an elevator lessee, but as presi- dent of the board of trade, would you say that that method of operat- ing elevators tended to lessen the market and the physical capacity of the elevators, leaving the others unable to serve the public or not ? Mr. Brodnax. It Hmits the service to those elevators. Mr. Marble. That is aU. Commissioner Clark. You may be excused. Mr. Marble. Unless Mr. Brodnax may desire to offer something on his own accoimt. Mr. Brodnax. Yes, sir. I would like to state there have been assertions made here that the Kansas City Board of Trade discrimi- nated and had rules which we admitted as a fact against certain 420 GKAIN ELEVATOE INVESTIGATION. interests. Mr. Beall testified this morning that he found it difficult to trade with the members of the Kansas City Board of Trade. I wish to state that that is because the Kansas City Board of Trade members considered Mr. Beall's firm an adjunct of a bucket shop. We can prove to the Commission that the National Board of Traae, and all those concerns here operating, are bucket shops, and we con- sider them a menace to the business and a reflection on the legiti- mate boards of trade, and for that reason we tried to keep our mem- bers from trading with them. Commissioner Claek. That is in substance what has been stated before on the same subject? Mr. Beodnax. Yes, sir. Commissioner Claek. That will be all, Mr. Brodnax. (Witness excused.) Commissioner Claek. Have you any other witnesses now ? Mr. Marble. Yes; I will call a witness while Mr. Winton is hunting something up. Is Mr. Landa here? (No response.) Mr. Marble. I will call Mr. Tedford. Fred H. Tedfoed, called as a witness, being duly sworn, testified as f oUows : Mr. Maeble. Fred H. Tedford is your name? Mr. Tedfoed. Yes, sir. Mr. Maeble. What is your business, Mr. Tedford ? Mr. Tedford. Chief grain inspector of the State of Missouri. Mr. Marble. How long have you been chief grain inspector of the State of Missom-i ? Mr. Tedfoed. I have been chief the last three years this next November. Prior to that time I was deputy. Mr. Maeble. You are familiar with the operation of the bureau of which you are head, of course ? Mr. Tedfoed. Yes, sir. Mr. Maeble. Are you familiar with the results of the inspections made at Kansas City, Kans., by the Kansas inspection bureau? Mr. Tedfoed. WeU, not specifically. In a general way — by seeing inspections on the floor of the exchange here, or any inspections, and in a general way in regard to their out-mspections only by hearsay. I never see their out-inspections. Mr. Marble. You sample these cars which you inspect? Mr. Tedfoed. Yes, sir. Mr. Maeble. How do you do that ? Tell us physically how that is done; where do you receive the cars? Mr. Tedfoed. Well, all grain consigned to this market, on whatever f°^ ij n^ ^^® received, the cars are carded with a card marked Hold, and the consignee is shown on that card, and my inspectors are distributed over the Kansas City territory, a certain inspector for each yard, and each morning they inspect the grain in the yard the new arrivals, and sample it, and we deliver a sample to the consignee in the Board of Trade Building with our pan ticket, showing the car number and initial and kind and grade of grain and road location Mr. Maeble. Your men take those samples themselves from the cars, do they? GRAIN ELEViSlTOR INVESTIGATION. 421 Mr. Tedfoed. Yes, sir. Mr. Marble. And do not trust anybody to do it for them? Mr. Tedford. No, sir. Mr. Marble. I will ask how the results of your inspection agree with those at Kansas City ? Do you get uniform results ? Mr. Tedford. You mean Kansas City, Kans. ? Mr. Marble. Kansas City, Kans., and Kansas City, Mo. Mr. Tedford. I think they are uniform. Mr. Marble. You do not find one stricter than the other? Mr. Tedford. WeU, I have been here at Kansas City eight or nine years, and in that time the Kansas chief inspector has been changed several times, but I think as a rule we keep pretty uniform. Mr. Marble. Have you heard any complaints that the Kansas inspection was too strict; that yours was right and the Kansas inspection too strict ? Mr. Tedford. Well, I hear both ways, or have heard. This year I have heard that they are too strict on their outgoing grain. I have heard that complaint from the elevator men and from others that were handling grain on through elevators on the Kansas side. Mr. Marble. How about the results of your inspection here? Is there the same sort of complaint ? Mr. Tedford. We often, when we have occasion to turn down grain loaded out — we of course hear the same complaints. We are too stiff. Mr. Marble. Do you hear complaints that you do not reach uni- form results, the two departments? Has there been complaint of that, so far as you know? Mr. Tedford. Well, I can not say as to results. Mr. Marble. Is there a general complaint of that sort, would you say, or not ? Mr. Tedford. I do not just understand what you want to get at ? Mr. Marble. I want to know, is there a general public complaint or not, that the two departments do not agree and the disagreement introduces uncertainty mto the grain business, or are you so near Mr. Tedford. I do not think there is much complaint as to uniformity. Mr. Marble. At how many points do you inspect grain in the State? Mr. Tedford. Three; at St. Joseph, St. Louis, and Kansas City. Mr. Marble. Do you find your State inspections in harmony, one with another? Mr Tedford. Between the three points in the State? Mr. Marble. Yes, sir. Mr. Tedford. Well, I have at times even heard the complaint that one or the other was more liberal. It is pretty hard to keep separate forces exactly uniform, even under the same head. Mr. Marble. That is your duty, to keep them uniform, is it not? Mr. Tedford. I try to, but it is an every day job you have to keep after. Mr. Marble. Do you know how the results of your inspection agree with the results of the Illinois inspections on grain passing from a Missouri market to Chicago, for example? Would the inspections agree? 422 GBAIN ELEVATOB INVESTIGATION. Mr. Tedfoed. I can not answer that question of my own knowl- edge. I have not had occasion to visit the Chicago market for some time. Mr. Marble. What is your information on that subject? Mr. Tedfokd. I understand from shippers from here that om- grain grades in Chicago going out of here — I nave heard it said that our No. 3 has graded in Chicago No. 2. But I do not know as to the facts. It is just simply hearsay. Mr. Marble. Do you regard Mr. Tedford (interrupting) . Possibly a party would want to seek to say that for some advantage of his own. Mr. Marble. Do you regard the maintenance of inspection systems by separate States as the best arrangement, or would you favor Fed- eral inspection to get a common bead and management? What would you say would be the best for the grain market ? Mr. Tedfoed. Well, in the light of what I have seen of inspection, and know from my experience, an inspection is largely local, in that Kansas City grades are different from Minneapolis, because their wheat is different from ours. So there is a great deal of the wheat going to Chicago that differs from our wheat here in this territory. Our principal variety of wheat here in this territory is hard winter wheat. In Minneapolis it is spring wheat. We seldom ever get wheat from Minneapolis here, and I can not see what advantage — it would be too big a job for one man to supervise all the inspections in the United States. Mr. Marble. So you do not see any benefit to be gained by that ? I just want 3"our opinion on that point. Mr. Tedfoed'. I can not see how Federal inspection can improve it much if the States do their duty; if the States employ competent inspectors. Mr. Maeble. Are the States generally doing their duty, so far as you have observed ? Mr. Tedfoed. I think so. Mr. Maeble. Are you familiar with what is called the type sample of grain on the Kansas City Board of Trade? Mr. Tedfoed. I can not say I am very familiar with the present type sample that has been adopted, as I understand. Mr. Maeble. Have you examined it ? Mr. Tedfoed. I have seen it. Mr. Maeble. Can you tell how that is made up, whether it is all of one grade or mixed grades ? Mr. Tedfoed. I do not know how this one was made up. Mr. Maeble. You did not reach a conclusion as to that ? Mr. Tedfoed. My impression is that it is made up with the idea of meeting the elevator grades going out of the elevators on contract delivery — future delivery. Mr. Maeble. Made up Mr. Tedfoed. With the idea of being the minimum No. 2 wheat, which includes a mixture of the different grades received in the elevator. Mr. Marble. That is the type sample by which deliveries on the futures' are tested or measured, as I understand? Mr. Tedfoed. Yes, sir. Mr. Marble. That is all. GRAIN ELEVATOR INVESTIGATION. 423 Mr. Brodnax. Do you understand that it is a benefit to grain to stop at Kansas City, especially if it comes from the country in a sweated condition or heated condition? Mr. Tedford. I certainly do. If it was not handled, it would con- tinue to grow worse and would be of less value. If it is handled in time, it is not injured. Commissioner Clark. That is all. (The witness was excused.) Mr. Marble. Are you ready, Mr. Winton? C. M. WiNTON, recalled. Mr. Marble. What are these slips of paper? [Referring to slips'- produced by witness.] Mr. Winton. They are the original elevator reports to the office. Mr. Marble. Of what? Mr. Winton. Of grain handled at the Milwaukee elevator. Mr. Marble. Do these include any grain that was mixed, clipped, or cleaned, or simply the cars transferred? Mr. Winton. They include the day's handling of all kind of han- dling, loadiug iu and loading out cars; cars that have been loaded out of the elevator, either directly or by direct transfer. Mr. Marble. Do these figures in here (referring to slips) cover the figures in the book you showed yesterday? Mr. Winton. Yes, sir; absolutely, except the direct, transfers to outside parties. Mr. Marble. There are some direct transfers shown in here that are not shown in that book. Is that right? Mr. Winton. Yes, sir. Mr. Marble. The direct transfers for outside parties are kept only on these slips of paper? Mr. Winton. That is all. Mr. Marble. While the direct transfers for Simonds-Shields are included in the book with the grain treated for them; that is different ? Mr. Winton. Yes, sir. Mr. Marble. So, only these carbons in here are in addition to the book? Mr. Winton. That is right. Mr. Marble. And these carbons show what is transferred for out- side parties? Mr. Winton. Yes, sir. Mr. Marble. Have you the slips from September 1 to October 1 ? Mr. Winton. Yes, sir. Mr. Marble. I will ask how many cars of grain during that period were transferred for outside parties? Mr. Winton. Sixty-five cars. Mr. Marble. Those figures, together with the figures we got from the books yesterday, cover all the cars handled through the elevator in any way in that month. Is that right? Mr. Winton. Yes, sir. Mr. Marble. That is all. Mr. Winton. May I be allowed to add a little testimony? Commissioner Clark. Yes, sir. Mr. Winton. Mr. Logan, I thiuk, testified that it was necessary 424 GEAIN ELEVATOR INVESTIGATION. to give us the destination of these cars he ordered to the elevator for transfer. I have the original letters of Mr. Logan and others included in this month's transfers, advising us of the cars going over for transfer, and in none of them whatever is there any reference to where the cars go. Mr. Maeble. In the case of cars where you paid the freight bill, you learned the origin necessarily, did you not ? Mr. WiNTON. Not necessarily. I handle so many freight bills it would take considerable time for me to stop and examine who the shipper was and where it originated. I simply see that the rate on the bill, the rate and extension, are correct. Mr. Maeble. You could do so? Mr. WiNTON. I could do so, but also any man buying grain, one man from another, sees the expense bill. Mr. Marble. This is different from one buying grain. You are merely performing a transportation service here, as I understand? Mr. WiNTON. Well, we are doing both. Mr. Marble. That is all. Commissioner Clark. Is that all ? Mr. Marble. I can call more witnesses. Commissioner Lane. Would it be corroborative of what has been already testified? Mr. Marble. I would not undertake to say until after the wit- nesses answer. Commissioner Clark. Do you expect to show by them any new material matter? Mr. Marble. Will the Conamission give me a moment to consider the matter? Commissioner Clark. Yes, sir. Mr. Marble. Is Mr. Corbin here? F. M. Corbin. called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business? Mr. Corbin. I am in the grain business. Mr. Marble. In Kansas City? Mr. Corbin. Yes, sir. Mr. Marble. Are you a shipper from this place? Mr. Corbin. I do some shipping. I am mostly in the commission business, though. Mr. Marble. Have you had experience trying to sell grain for feeding purposes in Arkansas ? Mr. Corbin. No, sir. Mr. Marble. Have you hsLd any experience in dealing with the Missouri Pacific Railroad? Mr. Corbin. Why, I ship some over their road — in Missouri par- ticularly. Mr. Marble. Through this elevator they maintain here, or which is maintained ? Mr. Corbin. Well, not as a rule — very little there. Mr. Marble. Do you find yourself at any disadvantage on that road? Mr. Corbin. Well, I have in times past found Hall-Baker & Co. GEAIN ELEVATOR INVESTIGATION. 425 had some advantage over me. Their prices were lower than I could make. Mr. Marble. How long ago was that? Mr. CoRBiN. It was particularly last year, when Missouri was requiring grain for feeding purposes. Mr. Marble. That was to sell grain where? Mr. CoRBiN. To points in Missouri where the St. Louis rate was applicable. Mr. Marble. You found you could not meet their prices? Mr. CoRBiN. Could not meet their prices. Mr. Marble. Do you know why that was? Mr. CoRBiN. No; 1 do not; only I found when I would go up into the territory on the Missouri Pacific, where the Missouri Pacific informed me the river rates would prevail to this territory, and tried to buy grain I could not buy it and put it down in competition with Hall-Baker & Co. Mr. Marble. Did they have superior facilities to you? Mr. CoRBiN. They ofl'ered grain cheaper than I could. Mr. Marble. Was this due to any superior merchandising on their part ? Mr. CoRBiN. I never thought so. Mr. Marble. Do you know the prices they paid for the grain? Mr. CoRBiN. No, sir. Mr. Marble. Do you know the prices they sold at? Mr. CoRBiN. I had quotations sent me frequently. Mr. Marble. Did you know the ruling price at the place they bought at? Mr. CoRBiN. I knew its value and what it was worth in St. Louis and points we were shipping grain to. Mr. Marble. Am 1 to understand that, taking the value and selling price, it did not allow a full freight rate ? Mr. CoRBiN. It did not allow any profit that I could see. Mr. Marble. And you have no information as to how that compe- tition arose ? Mr. Corbin. No, sir; I could not say. Mr. Marble. Have you put grain through any of these elevators owned by the railroads here ? Mr. CoRBiN. An occasional car. Mr. Marble. What has been your experience with them — satis- factory or unsatisfactory? Mr. CoRBiN. It has been satisfactory. I will say that I have found a few cars going through the Missouri Pacific rather slow, but I did not attribute that to any one party. Mr. Marble. You do not know whether they were slower for you than for others ? Mr. CoRBiN. No, sir. Mr. Marble. That is all.' (The witness was excused.) F. G. Crowell, recalled. ^ Commissioner Clark. Mr. Crowell, did not you request an oppor- tunity to put in some statement ? Mr. Crowell. Yes, sir. 426 GRAIN ELEVATOE INVESTIGATION. Commissioner Claek. You may do so now. Mr. Ceowell. I simply wanted to testify in reference to some testimony given by Mr. Beall this morning. "If I remember correctly, Mr. Beall stated that in April of 1904, Mr. H. F. Hall, president of our company, was at some meeting at which the question of a com- bine in reference to the prices to be paid for grain was entered into. I want to state that Mr. Hall at that time was in Europe. He goes over there practically every year for the purpose of consulting our buyers. I know that at that time in 1904 he was in Europe. Commissioner ClIek. Do you know whether there was any other representative of that company present? Mr. Ceowell. I do not know what meeting he refers to. I do not know that there was a meeting in 1904. If there was a meeting held like Mr. Beall refers to, it must have been in 1903, and I testified that there was a meeting of elevator men and grain buyers attempt- ing to form a combine or agreement to buy grain at a certain basis below the option, but it proved ineffective. Commissioner Claek. Do you know whether or not Mr. Hall attended such a meeting in 1903? Mr. Ceowell. I know he did not. I know if anybody attended a meeting of that sort it /would be myself, and I do not have any recollection of it. Mr. Maeble. Do you know whether or not such a meeting was held in Mr. Hall's oface? Mr. Ceowell. All meetings of that sort are usually held in our office, for the reason that we have the only available office space for meetings of that sort. We have a large office, a large room that is not occupied. (The witness was excused.) Mr. Beall. I want to say one word before you are through. Mr. Maeble. You better say it now. Mr. Beall. I understood Mr. Brodnax to make the statement that the National Grain and Elevator Company had been in the bucket shop business or was connected with the bucket shop business, and I want to deny absolutely anything of the kind. We are not doing a bucket shop business, and are in no way connected with a bucket shop in any way, shape, or form. (Mr. Brodnax rose to reply.) Commissioner Claek. There will be no further discussion of this controversy between these two boards of trade at this time. Mr. Marble. Shall I call another witness ? Gommissioner Claek. Unless he can bring a great deal more, infor- mation than the last one; no. Mr. Maeble. Well, I can not guarantee. Commissioner Clakk. Well, I guess we better adjourn. This investigation at this time and place is now concluded. At 5.45 o'clock p. m. the Commission adjourned. The following letter, by direction of Commissioner Lane, is hereby made a part of the record in this case: The Santa Fb Elevator Company, Kansas City, Mo., Oetoher 26, 1906. Dear Sirs : It is very evident that at the recent hearing here on the 22d, at which I testified, that I have been misquoted. I refer you to the newspaper clipping hereto attached. GRAIN ELEVATOR INVESTIGATION. 427 Now, I understood Mr. Lane's question to refer to the conditions testified to during the hearing relative to what some of the other houses had done, and not in any sense as referring to the action of The Santa Fe Elevator Company, for the reason that we had a schedule of charges which we published, and the rate was for the benefit of every one who saw fit to use it, and to this extent it is not a rebate. If your record of the evidence reads as the newspaper has implied, kindly make this letter a matter of record and acknowledge receipt of same. Yours truly. The Santa Pb Elevator Company. Per C. M. BoYNTON, Manager. Interstate Commbbcb Commission, Washington, I). C. Omaha, Nebe., October 2Jf, 1906 — 10 a. m. Present, Commissioners Lane and Clark. Commissioner Lane. The Interstate Commerce Commission, pur- suant to a resolution of the Senate, is continuing its sessions in the matter of the elevators and their relations with the railroads, these sessions having been held heretofore in other cities. Mr. John H. Marble, acting as attorney for the Interstate Com- merce Commission, will present such evidence as he may have, and we will be glad to hear from any others. Call your first witness, Mr. Marble. Mr. Marble. I will call Mr. Merriam. Nathan Merriam, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Merriam? Mr. Merriam. In Omaha. Mr. Marble. What is your business? Mr. Merriam. Elevator. Mr. Marble. How long have you been in the elevator business? Mr. Merriam. About twenty-five years. Mr. Marble. Are you a member of a corporation or of a firm? Mr. Merriam. Of a corporation. Mr. Marble. What is the name of that corporation ? Mr. Merriam. Merriam & Holmquist Company. Mr. Marble. How long has that corporation been in existence? Mr. Merriam. Since 1902 or 1903. Mr. Marble. Do you know who the stockholders of that corpo- ration are? Mr. Merriam. Yes, sir; Mr. Holmquist and myself, principally. I can not give you now the others. I can fill that in. Mr. Marble. I will ask you if you own any railroad stock? Mr. Merriam. No, sir. Mr. Marble. Do you know whether Mr. Holmquist does? Mr. Merriam. I do not know. I should think not. I have never heard. Mr. Marble. Do you know whether or not any of the stock of your corporation is owned by any officer or director or employee of any railroad company? Mr. Merriam. Not to my knowledge. Mr. Marble. Do you know whether or not any person of any of 428 GRAIN ELEVATOE INVESTIGATION. those classes has a beneficial interest in the profits of your corpora- tion in any way ? Mr. Merriam. I can say positively that they have not. Mr. Marble. Does your firm operate country elevators?' Mr. Merriam. No, sir; no country elevators. Mr. Marble. Where do you operate elevators ? Mr. Merriam. At Omaha. Mr. Marble. At Omaha? Mr. Merriam. Yes, sir. Mr. Marble. What is called a terminal elevator? Mr. Merriam. Yes; terminal elevators. Mr. Marble. More than one? Mr. Merriam. Two. Mr. Marble. You are engaged in the grain buying and selling business, are you ? Mr. Merriam. Yes, sir. Mr. Marble. Are these elevators of yours public elevators? Mr. Merriam. No, sir; they are private elevators. Mr. Marble. They are simply for the grain business of your firm? Mr. Merriam. Yes, sir; simply for the grain business of our ,firm. One elevator is regular under the rules of the exchange, but they are not public elevators. Mr. Marble. All the grain, practically, going into the elevator, then, belongs to your firm; is that right? Mr. Merriam. We have one elevator in which grain can be held by others on storage. Mr. Marble. What is the capacity of that elevator? Mr. Merriam. Six hundred tnousand bushels. Mr. Marble. As a matter of fact, what proportion of the grain in that elevator from time to time is held by others than your firm? Mr. Merriam. A small proportion at times. Mr. Marble. Usually all the grain in that elevator belongs to your firm? Mr. Merriam. Usually; yes, sir. Mr. Marble. And the exceptions are not very numerous or very great ? Mr. Merriam. Not very great. Mr. Marble. Does your firm own those elevators ? Mr. Merriam. Yes; we own them. ^ Mr. Marble. They are not leased ? Mr. Merriam. No. Mr. Marble. Do you have any contracts regarding them with any railroad company that they are to purchase them ? Mr. Merriam. No; not for the purchase. Mr. Marble. What contract have you ? Mr. Merriam. We have a contract for the operation of them. Mr. Marble. What is that contract? Mr. Merriam. That was made before we built one of them, and it was a contract that in consideration of the building of the elevator of certain capacity and equipment we would receive a certain allow- ance per hundred pounds. Mr. Marble. Wnat allowance? Mr. Merriam. A cent and a quarter. Mr. Marble. With what road was that contract made ? GEAIN ELEVATOB INVESTIGATION. 429 Mr. Merriam. With the Missouri Pacific. Mr. Marble. Is that contract still in existence ? Mr. Merriam. Yes, sir; it has not been canceled yet. Mr. Marble. Legally it is still in force? Mr. Merriam. Yes, sir; legally. Mr. Marble. Are payments being made under it ? Mr. Merriam. They have been made under it. There is a little suspension now on account of the agitation, but we expect to be pro- tected according to agreement. Mr. Marble. Have you consented to a suspension? Mr. Merriam. No, sir. Mr. Marble. You have not? Mr. Merriam. No, sir. Mr. Marble. They are simply declining to proceed ? Mr. Merriam. Well, not exactly. They are simply delaying, as is general with railroads. They are very slow paying claims. Some- times it takes us a year and sometimes a year and a half to get them paid. Mr. Marble. But you consider the contract is in force now as it has been ever since it was made ? Mr. Merriam. Why, yes; I consider it is. Mr. Marble. You are charging up your accounts to the Missouri Pacific Eailroad under that contract ? Mr. Merriam. Yes; we are. Mr. Marble. And considering those as legal claims ? Mr. Merriam. Yes, sir. Mr. Marble. They have not repudiated those claims at all, have they? Mr. Merriam. No, sir; they have not. Mx: Marble. You have in times past been paid under that con- tract? Mr. Merriam. Yes, sir. Mr. Marble. Do you know whether or not the Missouri Pacific Railroad had like arrangements with other elevators ? Mr. Merriam. No, not in Omaha. Mr. Marble. You know they did not ? Mr. Merriam. Not in Omaha; we are the only ones who have built an elevator on the Missouri Pacific line here under any such agree- ment that we know of. Mr. Marble. When was that contract made ? Mr. Merriam. That was in 1905, I think, Mr. Marble. What was to be its duration? Mr. Merriam. It was not limited to any time, but there was a pro- vision in it making it subject to legal — subject to any changes that may occur in the operation of elevators similarly ^located — similarly situated. Commissioner Lane. Have you a copy of that contract? Mr. Merriam. I have not it with me. Commissioner Lane. Can you let us have it ? « Mr. Merriam. I can get it for you this afternoon, or as soon as I can get to my office. , Mr. Marble. There were no other elevators receiving this at the same time? Mr. Merriam. We were put on the same basis as Kansas City and 430 GRAIN ELEVATOR INVESTIGATION. also we were to be protected in the same manner as other elevators are protected similarly located — not only in Omaha, but in other places, like Kansas City, and, I suppose, St. Louis. Mr. Marble. This refers to elevators on other roads in Oniaha and other elevators at other terminal points on the Missouri Pacific Rail- road ? Is that right ? Mr. Merriam. Yes, sir. Mr. Marble. Not to other elevators on the Missouri Pacific at Omaha ? Mr. Merriam. It would be if there were any other elevators on the Missouri Pacific, I suppose. Mr. Marble. That has not arisen, then? Mr. Merriam. No; that has not. Mr. Marble. About what . volume per month of business has enjoyed this cent and a quarter under that contract? Mr. Merriam. About 500 cars a month on an average would be a fair estimate. Mr. Marble. About 500,000 bushels, then? Mr.MERRiAM. Yes ; about 500,000 bushels. Commissioner Clark. Does this coittract contain any provision for cancellation in the event of its being found unlawful ? Mr. Merriam. Yes, sir; in case any legal points should arise whereby it is necessary to cancel it they have the privilege of cancel- ing it. Mr. Marble. Otherwise the contract is perpetual, as you under- stand ? Mr. Merriam. Perpetual; yes, sir. Mr. Marble. Do you receive any other consideration from the Mis- souri Pacific Railroad than that or have you any other arrangements ? Mr. Merriam. I do not know of any other that we have received. Mr. Marble. How about switching charges? Mr. Merriam. Excepting the switching is free on the Missouri Pacific road; that is, all switching that we pay to the Missouri Pacific road is refunded and any other switching is governed by local regula- tions. It is the same with all roads as it is with ours. I know of no discrimination of that kind or anything we have got that others have not got. Mr. Marble. This switching that is refunded is that in pursuance of the contract? Mr. Merriam. Yes, sir. Mr. Marble. Not in pursuance of a published tariflf? Mr. Merriam. I could not say about that. Mr. Marble. You do not know of any published tariflf? Mr. Merriam. I do not know of any. It has been a custom in exist- ence for years; since we have operated here. Mr. Marble. You do not know whether it is published as a tariff by the railroad or not ? Mr. Merriam. I could not say. Mr. Marble. Do you know that it is covered by the contract ? Mr. Merriam. Yes, sir. Mr. Marble. Those local regulations referring to other railroads, are they published in some form or other ? Mr. Merriam. I could not say whether they are or not. Mr, Marble, Do you know whether other firms than yours enjoy GKAIN ELEVATOR INVESTIGATION. 431 the same treatment under those regulations that you do? Are you the same as other firms ? Mr. Meeriam. We think that we have enjoyed the same as other firms. We put in our claims on that basis, the claims we have had, and we understood that anybody similarly located enjoyed the same privileges we do. , Mr. Marble. You say you put in your claims on that understand- ' ing. What claims do you mean — claims for refunding of switching charges ? Mr. Merriam. Yes, sir. Mr. Marble. Practically all switching charges you pay are refunded by the company, either under the contract or the local regulations ? Mr. Merriam. Yes, sir. Mr. Marble. Would you say all? Mr. Merriam. I think all the switching charges are refunded that are paid to all the shippers here in all elevators. Mr. Marble. Certainly to your firm ? Mr. Merriam. Yes, sir; I think that is the present regulation. Mr. Marble. How about cooperage of cars ? What is your arrange- ment with the railroads concerning that? Mr. Merriam. All that work is done by the elevators. Mr. Marble. At the expense of the elevators ? Mr. Merriam. Yes, sir. Mr. Marble. You receive no consideration ? Mr. Merriam. No, sir. Mr. Marble. And for grain doors ? Mr. Merriam. The gram doors are furnished by the railroads. Mr. Marble. You do not furnish them ? Mr. Merriam. No, sir. Mr. Marble. And make a charge for them? Mr. Merriam. No, sir. Mr. Marble. The railroads furnish them? Mr. Merriam. The railroads furnish them. Mr. Marble. How about switching on other roads than the Mis- souri Pacific ? Is it your understanding that you are treated the same as other dealers regarding that item? Mr. Merriam. Yes, sir; we consider that we are treated the same as other dealers. Mr. Marble. On all charges in the city of Omaha ? Mr. Merriam. I think there is one exception. Mr. Marble. What is that exception? Mr. Merriam. Well, that would not be in the city of Omaha. You would have to include South Omaha. Mr. Marble. We will include South Omaha in the question. Mr. Marriam. You include that? Mr. Marble. Yes, sir. Mr. Merriam. Why, we felt as though there was — that we were at a disadvantage in one particular on account of a switching charge at South Omaha. Mr. Marble. Who makes that charge at South Omaha? Mr. Merriam. The South Omaha Stock Yards Company. Mr. Marble. What is that charge? What is it as paid by your firm, I will ask you first. Mr. Merriam, We do not pay any — it does not come in that way. 432 GRAIN ELEVATOR INVESTIGATION. It does not interfere with us in that way. It has a sort of indirect influence, which I would have to describe. Mr. Marble. I wish you would do so. Mr. Merriam. When the South Omaha elevator was built it was generally tinderstood that the switching in and out should be $2 — $1 in and $1 out, or $2 out and none m. In consideration of that elevator being built on that basis, we were able to obtain the same basis for our elevator built on the Missouri Pacific road. Prior to that time our switching was $2 in and $2 out. The Missouri Pacific, in order to put us on an equality with the South Omaha elevator, made it the same as theirs — $1 in and $1 out, or $2 out. A short time after that the South Omaha elevator charged — the switching charge was raised to $5 instead of $2, and that continued for some time, and then it was put back to $4. It is $4 now. We think we have been put to a disadvantage on account of that switching and we fear that it is going to make us trouble in the future, because our elevator having been built, our switching allowance having been reduced on account of that, and then, soon afterwards, the raise having been made there, jeopardizes the switching charge at our elevator, and suggestions have been made that ours should be put back to the old price — $2 in and $2 out — on that account. Now, why that should have been done is some- thing that we do not understand. Mr. Marble. Who controls the South Omaha elevator? Mr. Merriam. The Updike Grain Company. Mr. Marble. Is it your understanding that others are being charged the same for this service now as you ? Mr. Merriam. We are charged with that service down there. As I said before, it is a secondary influence. Commissioner Clark. You are simply afraid that your switching charges will be increased because the others have been ? Mr. Merriam. Yes, sir., Mr. Marble. Do you think the others have been increased ? Mr. Merriam. No; there has nothing been done yet. Mr. Marble. Do you know what the others are charged? Mr. Merriam. There are no others in South Omaha. Mr. Marble. Do you know what the Updike Grain Company is charged there? Mr. Merriam. I suppose they do not have to stand any of it any more than we do at Omaha. It is all absorbed by the outgoing line. Mr. Marble. Have you heard or do you know whether or not the charge to others than the Updike Company is $5 a car or $4, if that is the last figure, and no charge at all to the Updike Grain Company?' Mr. Merriam. I do not know that. They, being the only ones carrying on the grain business at South Omaha, I am informed that such a charge is not placed on any other commodity; that a dollar in and a dollar out is the highest charge at South Omaha, excepting on this gra,in business. Mr. Marble. And how much is it on the grain business? Mr. Merriam. Four dollars. Mr. Marble. Will you say you are discriminated against in regard to the amount of that charge? Mr. Merriam. We have thought so. It has been generally sup- posed that possibly some of that charge might get back to the elevator. Mr, Marble, -Back to the Updike elevator? GRAIN ELEVATOR INVESTIGATION. 433 Mr. Merriam. It possibly might. Mr. Marble. Have you any reason to believe that? Mr. Merriam. Only general report. Mr. Marble. You have no proof? Mr. Merriam. No. Mr. Marble. Has it appeared in the price of grain — ^buying and selling, so far as you know? Mr. Merriam. We have thought a good many times it has. Mr. Marble. Which way — buying or selling? Mr. Merriam. This market is such a competitive market that an eighth of a cent a bushel gets the business, commands the market — commands the selling and buying market, and a simple matter like that puts the party in possession of the business, and we have often thought we were placed to a great disadvantage on that account. Mr. Marble. You foimd yourself beaten in the market and ex- plained it to yourself in that way? Mr. Merriam. Yes, sir. Mr. Marble. I will ask you where you buy your grain? Mr. Merriam. We buy our grain on the Union Pacific, the Elkhorn, the MinneapoHs and Omaha, and the Burlington and Missouri. Mr. Marble. What do you do; do you oid country buyers for grain? Mr. Merriam. Yes; we bid country buyers. Mr. Marble. Do you control country elevators ? Mr. Merriam. No; we do not control country elevators. Mr. Marble. You have done so since you have been in business, have you not? Mr. Merriam. No, sir; we have not. Mr. Marble. You bid dealers who are not connected in any way with your firm and buy the grain from them. Is that it? Mr. Merriam. Yes, sir. Mr. Marble. Is there any affiliation between the ownership of these concerns from which you buy and your business here ? Mr. Merriam. Why only in this way. We are practically inde- pendent. My partner is associated with a small line of elevators on the Minneapolis and Omaha road under the Holmquist Grain and Lumber Company, but that is the only way we are connected up with any country house. Mr. Marble. Does your partner control the ownership of this Holmquist Grain and Lumber Company? Mr. Merriam. No, sir. Mr. Marble. Is he a minority stockholder? Mr. Merriam. We buy grain from them in the same maimer as we buy of independent shippers. Mr. Marble. And your corporation and the stockholders in it do not own the stock of any of these line elevator corporations? Mr. Merriam. No, sir. Mr. Marble. Or own the line elevator companies in any way? Mr. Merriam. No, sir. Mr. Marble. Nor are your partners controllers ? Mr. Merriam. In no way connected. Mr. Marble. You are only a terminal ? Mr. Merriam. Strictly terminal. S. Doc. 278, 59-2 28 434 GBAIN ELEVATOB INVESTIGATION. Mr. Marble. In bidding the country, do you discriminate between classes in any way? Mr. Meeriam. I do not know of any discrimination. Mr. Marble. You bid farmers' elevators 1 Mr. Merriam. Yes, sir. Mr. Marble. Do you bid country dealers, regardless of the price they pay for grain ? Mr. Mebeiam. Yes, sir. Mr. Marble. Suppose a coimtry dealer is making less than what you consider a fair percentage of profit for a country dealer to make, will you bid him on the same basis and terms as one that makes a fair profit ? Mr. Merriam. We never have any opinion as to the margin the country elevator has. Mr. Marble. You do not concern yourself with that ? Mr. Merriam. No, sir; not in the least. Mr. Marble. Take the case of a country merchant owning an ele- vator and operating it as a side line to his business. Would you bid him? Mr. Merriam. Yes, sir. Mr. Marble. Would you have any hesitancy in bidding him ? Mr. Merriam. No. Mr. Marble. Suppose the merchant, instead of owning an elevator, owned a shovel house or warehouse into which he shoveled the grain and from which he shoveled it into the car. Would you bid him ? Mr. Merriam. Yes, sir. Mr. Marble. The same as the elevator ? Mr. Merriam. Yes, sir. Mr. Marble. Not discriminate against him? Mr. Merriam. No. Mr. Marble. Suppose a farmer desired to ship direct. Would you bid him or receive on consignment and sell it for him ? Mr. Merriam. We do very little receiving business. We hardly ever sell a car on the board here. We are purchasers of grain and we never ask a receiver where the grain comes from or who it comes from. Our dealings are strictly with him. We do not put out bids exten- sively. We do not send bids to everybody. We sometimes send out fifty, sometimes one hundred, sometimes two himdred, and sometimes not any. Mr. Marble. To make it brief, in your bidding, you bid to get the grain of whoever you think can sell it to you, without regard to the facilities with which they handle it or the price they pay for it ? Mr. Merriam. That has been om- system. Mr. Marble. That is your present procedure? Mr. Merriam. Yes, sir. Mr. Marble. Has that been so ever since you have been in business ? Mr. Merriam. Why, I should have to think over quite a little to answer that question. Mr. Marble. Has it been so throughout this year ? Mr. Merriam. We have not been m the custom of putting out bids. We have done most of our business by telephone. It is not until recently that we have adopted the system. Mr. Marble. You put out bids by telephone sometimes, don't you ? GBAIN ELEVATOE IISfVESTIGATION, 435 Mr. Merkiam.' We call up whoever we think best and buy as much or as little as we wish. We might call up only a dozen people and in that way we would not likely call up the man with the shovel house or the farmer. We have done most of "ur business with line elevators. Mr. Mabble. Well, has that been so for ten years, say, that manner of dealing? Mr. Merriam. Yes; until perhaps the last two months. We have put out bids in a limited way. Mr. Marble. Do you know whether any of the line elevators are hostile to this Omaha grain market? Mr. Merriam. I do not know of any. Mr. Marble. You have no evidence of that fact — to be a fact? Mr. Merriam. I beg pardon ? Mr. Marble. You have no evidence of that fact ? Mr. Merriam. No; I have not. I think they are all quite friendly. Mr. Marble. Do you beheve the railways are fair to this market? Mr. Merriam. No; I would say they have not been fair to this market. Mr. Marble. Do you feel that they discriminate against this mar- ket in favor of other markets? Mr. Merriam. I surely do. Mr. Marble. In what way? Mr. Merriam. In the matter of freight rates? Mr. Marble. What is that — the effort of the roads that run through to markets farther east to get a long haul? Mr. Merriam. Yes; that has been so. That has always been that way here in Omaha. The territory ia which Omaha has been able to operate has been prescribed, and not aU the territory tributary to Omaha is put in position by railroads so that we can operate in it. I might cite northern Nebraska, southern Dakota, the St. Joe and Great Western Railway, and a great part of southern Nebraska — the St. Joe and Grand Island. We are unable to get a single car from the St. Joe and Grand Island Railway to-day. We were unable to get any grain from northern Nebraska and southern Dakota during the last year and prior to that. There have been some concessions made by railroads in that section of country, but they have all been lined up — ^Minneapohs and Chicago — and refused time and time again to make rates reasonable and equitable for Omaha. Commissioner Clark. Do you know what the freight rates are from points on the St. Joe and Grand Island road? Mr. Merriam. No, sir; I do not. We have sort of given up that road, knowing we could not operate — ^have paid no attention to it. The rates are fixed so that the grain goes to Kansas City, St. Joe and St. Louis and Chicago, none of it to Omaha. Commissioner Clark. Well, is not that the natural and economical way for grain on the St. Joe and Grand Island road to go ? Mr. Merriam. It may be, but the distance is much longer to any of those markets, and the rates are only a trifle higher. Commissioner Clark. You say the distance is greater to Kansas City than to Omaha? Mr. Merriam. Very much greater. Commissioner Clark. From what points? Ikfr. Mebbiam. From nearly all the points, I think, in the State of 436 GRAIN ELEVATOK INVESTIGATION. Nebraska. I must say, though, that I am not very familiar with that line. It has been that way so long, I have sort of dropped it. The secretary of our exchange is more familiar with that. If he should happen to be on the stand, he could give you better informa- tion. Commissioner Clark (referring to railway guide). From Fairbury, Nebr., on the St. Joe and Grand Island, to Kansas City is 214 miles; from Fairbury to Grand Island is 99 miles. What is the distance from Grand Island to Omaha? Mr. Merkiam. I think it is somewhere in the neighborhood of 150 miles. I think so; I am not sure now. Commissioner Clark (referring to railway guide). One hundred and fifty-four miles. From Fairbmy to Kansas City they would haul it over their own line, and to haul it to Grand Island and thence to Omaha they would have to turn it over to another road? Mr. Meeriam. Of course, I am speaking in general terms. When- ever we looked up that road w'e found that Omaha was cut out by the small difference between Omaha and Kansas City — 1 or 2 cents a hun- dred, perhaps — from a good many places where the distance was, I would estimate, 1 00 miles farther. They would haul it, in round num- bers, 100 miles for 1 to 2 cents a hundred, and the market in Kansas City is always higher than in Omaha, and of course that would com- mand the grain-, but we have been more troubled in northern Nebraska and southern Dakota than anywhere else. We are getting some relief in that section, but ijot what we are entitled to to-day. i Mr. Marble. Who operates this road which does this switching into South Omaha, or controls it ? Mr. Merriam. The South Omaha Stock Yards Company. Mr. Marble. Who is the general manager of that company? Mr. Merriam. Mr. Kenyon. Mr. Marble. What are his initials? Mr. Merriam. I could not give them. Mr. Marble. Do you know whether or not he is interested in the grain business? Mr. Merriam. I do not know. Mr. Marble. Or interested in other business with those who own this South Omaha elevator? Mr. Merriam. I do not know. Mr. Marble. You have no information on that point? Mr. Merriam. No information. Mr. Marble. And no good ground for an opinion? Mr. Merriam. No. Mr. Marble. That is all — just a moment, if you please. "" Commissioner Clark. Mr. Merriam, I understood you to testify that all the switching charges you pay are refunded to you ? Mr. Merriam. Yes, sir. Commissioner Clark. By the Missouri Pacific Railroad ? Mr. Merriam. When it goes out over their line. Commissioner Clark. Well, who refunds it if it goes out over some other road? Mr. Merriam. The road that takes it out. Commissioner Clark. Will you tell us what is the purpose or reason for your paying these charges at all, knowing they are going to be refunded by whoever they are paid to ? GRAIN BLEVATOE INVESTIGATION. 437 Mr. Merriam. I do not, excepting the system growing out of a system adopted by the railroads, and when the grain comes in it is not Imown which line it will go out by. The charge is assessed and then the line that takes it out refunds it. Commissioner Clark. How does the line that takes it out know what you have paid on it coming in? Mr-. Merriam. We have evidence of that — ^receipted switch bills. Commissioner Clark. Do you keep an accoimt yourself of all the switching done for you? Mr. Merriam. Yes, sir. Commissioner Clark. And put in these claims to these different railroads, and they refund you all you have paid ? Mr. Merriam. Yes, sir. Commissioner Lane. How recently have you received $2 per car on any grain going out? Mr. Merriam. A refund of $2 ? Commissioner Lane. Yes, sir. Mr. Merriam. We do not put in our claims only once a month, and I could not say how recently, but I do not think we have had any claims paid recently. It takes about six months to get it back after we have paid it. Commissioner Lane. Well, did you in the month of September receive from any railroad on outgoing grain $2 per car, switching charge ? Mr. Merriam. I do not think we received it yet. We understand we are to get it if we paid it. Commissioner Lane. And have you received from no railroad during September any of the claims that you have presented ? Mr. Merriam. No, sir; they do not get around so quick as that. Commissioner Lane. About what time was the last claim paid ? Mr. Merriam. The last switching claim? Commissioner Lane. The last switching claim. Mr. Merriam. I could not say. Commissioner Lane. Can you give us the name or names of the last road or roads that paid that charge ? Mr. Merriam. No, sir; I could not. That matter is left with our head clerk, and I could not tell you from memory. Commissioner Lane. What is the name of your head clerk? Mr. Merriam. Mr. Zimmerman. Commissioner Lane. I will ask him to be called. Mr. Marble. Will you ask Mr. Zimmerman to come here this afternoon, Mr. Merriam? Mr. Merriam. Yes, sir. Commissioner Lane. And bring whatever books are necessary to show the charges that have been collected or all claims you have presented to the roads, either leading in or leading out. Mr. Merriam. Yes, sir. Commissioner Lane. Have you ever seen a tariff for the switching charge that you speak of? Do you know whether the Missouri Pacific has ever put m a tariff to the Interstate Commerce Commission and filed it for that switching charge ? Mr. Merriam. No, sir; I do not. We usually get those tariffs, but we do most of our business, you know, having an understanding 438 GRAIN ELEVATOR INVESTIGATION. with the agent. He has. the tariff. He informs us what it is and we go by what he says. Commissioner Clakk. Inasmuch as you get it all back, it does not make very much difference to you ? Mr. Merriam. No. Commissioner Lane. With whom was the conversation held upon which you got the $2 rebate — what agent of the Missouri Pacific ? Mr. Merriam. Mr. Phillippi is the agent, and he gives us all the information on .those stibjects that we need. Commissioner Lane (addressing Mr. Marble). Ask Mr. Phillippi to be here. Mr. Marble. I understand Mr. Phillippi is here in attendance. Commissioner Lane. And that he bring in a copy of the tariff show- ing the switching charge Mr. Merriam. I have a matter that I would like to present to the Commission, if it is the proper time. Commissionfer Lane. Does it relate to this subject? Mr. Merriam. It does not relate to the switching subject. It relates to elevation. Commissioner Lane. You mean an elevation charge? Mr. Merriam. It relates to an elevation charge paid in other recon- signing markets and not allowed in Omaha. Commissioner Lane. In the nature of a discrimination? Mr. Merriam. A discrimination against Omaha. Commissioner Lane. Yes, sir. Mr. Merriam. Omaha is the only reconsigning market that has not an elevation to-day, and we think we are discriminated against to that extent. We are cut out of the Northwest and Southwest trade on that account largely, and we consider it an open-faced discrimination. It looks like a concentrated effort on the part of the railroads to discrimi- nate against Omaha. Commissioner Lane. What reason do they give for that? Mr. Merriam. No reason; and I would like to state that I have been putting in claims with all these roads on the same basis they are pajang at St. Louis, Nashville, Memphis, Cairo, Little Rock, Louis- ville, Evansville, and some other places. I have made up the claims and put them in, trusting to your Commission to do for Omaha what she is entitled to. Commissioner Lane. You have put them in where ? Mr. Merriam. I have put them in to the different roads — ^made them up as though they had provided for them on the basis that we should not be discriminated against and that we are entitled to as good an elevation or the same elevation that these other places are. Commissioner Lane. Your purpose is, if those claims are rejected by the railroads, to make formal complaint to the Commission ? JVIr. Merriam. Yes, sir. I am ready now to introduce the subject to you, if it is proper. Commissioner Lane. Well, of course we are not here upon that question, and it is a matter that will be presented in time to the Com- mission, and therefore it would be improper for us to hear you upon it now. Mr. Marble. This allowance of a cent and a quarter under this con- tract — what service do you perform for that ? What is your consid- eration to the road for the sum received imder that? GEAIN ELEVATOR INVESTIGATION. 439 Mr. Merkiam. We unload the cars, elevate them, and hold the grain until empties are placed on the track, and we repair the empties and elevate the grain again, weigh it, load it, and bill it and switch it into the elevator yards — do most of the switching and other work incidental to the general loading and transferring of the grain. We pay insurance on that grain while it is in the house and interest on the money invested in the grain and the facilities furnished in the ele- vator, and we also furnish ground for the elevator — groimd for part of the tracks of the elevator, which we put into condition for the tracks without expense to the raihoad — purchased a large space of groimd, costing about $10,000, for this purpose. We furnish everythmg per- taining to the elevator excepting the tracks, which were laid on the grade which we made for them. Commissioner Clark. Your elevator is on the tracks of the Mis- souri Pacific Railroad ? Mr. Merriam. It is on our ground, but it is alongside of their right of way. Commissioner Clark. I say, is it located on the tracks of the Mis- souri Pacific Railroad? Mr. Merriam. It is; yes, sir. Commissioner Clark. Are you on the tracks of any other railroad ? Mr. Merriam. No, sir; we are not. Commissioner Clark. Does the Missouri Pacific Company pay you a cent and a quarter per hundred pounds on all grain taken mto that elevator? Mr. Merriam. That is to be paid us if it was paid to anybody in Omaha similarly located, or any other markets similarly located. Commissioner Clark. Well, I am talking about a matter of fact. How do you determine what you are entitled to the allowance on? Is it on the grain you take into the elevator or on all grain you ship out over the Missouri Pacific Railroad? Mr. Merriam. All grata we ship out over the Missouri Pacific. Commissioner Clark. Suppose the grain comes in over the Union Pacific — comes into your elevator and goes out over the Missouri Pacific, the Missouri Pacific pays you a cent and a quarter a hundred pounds ? Mr. Merriam. Yes, sir. Commissioner Clark. What does the Union Pacific pay you? Mr. Merriam. I do not understand they pay us a cent and a quarter a hundred pounds now. Commissioner Clark. Well, let us leave that temporary suspen- sion out of consideration. Let us get at the facts as they were up to within a few weeks or months. Mr. Merriam. At the present time we suppose — we were prom- ised by the Union Pacific a cent and a quarter per hundred pounds for unloading. Commissioner Clark. And a cent and a quarter from the Mis- souri Pacific for loading them out ? Mr. Merriam. Yes, sir; barring these legal matters. Commissioner Clark. Well, leaving out of consideration this tem- porary suspension on account of the uncertainty of the legality? Mr. Merriam. Yes, sir. Commissioner Clark. What other railroads make you an allow- ance on grain coming in over their lines ? 440 GEAIN ELBVATOB INVESTIGATION. Mr. Mekbiam. I know of none. We have none. Commissioner. Clark. Suppose the grain comes in here over the Omaha and is sent to your elevator, do you take it in and unload it without charge? Mr. Mereiam. Yes, sir. Commissioner Clark. And if it did not belong to you, I suppose there would be some storage charge against the grain? Mr. Mereiam. Yes, sir. Commissioner Clark. I understood you in answer to Mr. Mar- ble's question as to the service you render in consideration of this one cent and a quarter allowance, to take in, among a number of other items, the question of insurance on the grain and the interest on the money invested in the grain? Mr. Mereiam. Yes, sir. Commissioner Clark. In what way is the railroad conapany inter- ested in either of those items ? They do not own the grain, do they ? Mr. Meeeiam. No, sir; but they are interested in this way. We furnish a place to put that grain so that the cars when they arrive in the city Commissioner Claek. But the Missom-i Pacific does not bring you any grain for unloading, does it ? Mr. Meeeiam. Well, this grain is brought in to be transferred to the Missouri Pacific road, and instead of leaving it on the tracks to wait for empties, which they might not have, we put it into the elevator and let it stay there until empties are placed at the elevator. Then it is loaded out. Those empties may not come to-day or to- morrow. There may be a week's delfey getting the empties to accom- modate that grain. Take a time like the present, when the empties are very scarce, there is no telling when empties could be furnished. It might be a week or ten days. Commissioner Claek. Well, in the meantime, is the Missouri Pacific RaUroad Company liable for that grain if your elevator should burn down? Mr. Meeeiam. No, sir; we keep it insured and protect that feature . of the business, and we think that is one of the features of expense connected with the operation of an elevator. Commissioner Claek. Well, if your elevator should burn down with uninsured grain in there, would you be responsible for that loss to the owner of that grain? Mr. Meeeiam. Yes; we would. Commissioner Clark. Then, as a matter of fact, you insm-e it for your own protection and not tor the protection of the railroad com- pany? Mr. Merriam. We relieve the railroad company of the liability when it comes onto our tracks. Commissioner Claek. What do you say as to the actual cost of unloading grain from cars, carrying it in your elevator, holding it ten days, and loading it again into another car. What is the actual cost per bushel or per hundred pounds ? Mr. I^EERIAM. If everything is figured that properly should be figured in a business way, and take the year's business, letting the grain be handled, as it naturally would, for the best interests of every- body concerned, it would cost us about 2 cents a hundred, about as near as we can figure it. 6BAIN ELEVATOR INVESTIGATION. 441 Commissioner Clark. To transfer this grain ? Mr. Merriam. To handle the business. I mean to conduct the business in a manner that the business merits as a business. Commissioner Clark. You are taking into consideration, perhaps, a great many features we do not know anything about. I am askmg you what the actual cost is of the service in an elevator of transferring grain from one car to another and giving it, say, a week to ten days' storage. Leave out your interest as a grain buyer and the other interests that may be involved. Mr. Merriam. Well, I should think — I would estimate about a cent a hundred — ^from three-foxirths of a cent to a cent a hundred. Mr. Mabble. Have you a reconsignment charge here in this market ? Mr. Merriam. As I was stating to the commission a few minutes ago, we are the only market that has not the reconsignment charge properly established, and we feel as though this market has always been considered the one that is most deserving of a reconsignment. I think I have misunderstood your question. Mr. Marble. I say, is a reconsignment charge made against the grain or against the owner by the railroads ? Mr. Merriam. The reconsigning charge here in Omaha is one made on grain that stops and is inspected, and a change of ownership. Mr. Marble. Is that charge absorbed by the outgoing roads? Mr. Merriam. Yes, sir; that charge is absorbed. Mr. Marble. By aU of them? Mr. Merriam. All, except — as I understand it, all except the Minneapolis and Omaha, or the Omaha, Minneapolis — the road run- ning north — the Minneapolis road. They are refusing to absorb that. All other roads, as I understand, absorb that reconsignment. Mr. Marble. Are they refusing as to all shippers, do you under- stand ? Mr. Merriam. I do not know whether they are or not — I do not think they take very much. Mr. Mabble. Are the other roads absorbing this for all shippers ? Mr. Merriam. As I understand it. Mr. Marble. The Missouri Pacific is absorbing it for you ? Mr. Merriam. I understand they are. Mr. Marble. And for all other shippers, so far as you know ? Mr. Merriam. Yes, sir. Mr. Marble. Do you know of any combination at the present time in Omaha to fix the price of cash grain here by agreement among the buyers ? Mr. Merriam. No, sir; I do not know of any. Mr. Marble. Do you know of any such combination among all or any of the buyers here to fix the prices for this crop year? Mr. Merriam. I do not know of any. Mr. Marble. Or the last crop year? Mr. Merriam. No, sir; I can say that this market has been abso- lutely, so far as I know, free from the fixing of prices. Mr. Marble. For how long. Mr. Merriam. So far as I know, always. I know, speaking for myself, I have never made any prices — ^made the prices, or agreed on prices with anybody for ten years. Mr. Marble. Have you made the prices you were going to bid or 442 GEAIN ELEVAXOE INVESTIGATION. pay for grain either in the country or city known to your competitors without any agreement as to whether or not they should followthem? Mr. Meeeiam. No, sir; I have not made any deals of any kind. Mr. Maeble. Have not consulted your competitors as to what the prices shall be either in the city or country? Mr. Meeeiam. ISfot td fix them. Some conversation might be carried on regarding the merits of different prices and what value should be placed on grain, but there has been no pooling and there has been no — I have never been a party to any agreement of any kind. Mr. Maeble. Have those conversations been carried on as a practice day by day or week by week? Mr. Meeeiam. Oh, no, sir. Mr. Maeble. By any certain set of men? Mr. Meeeiam. No, sir. Mr. Maeble. Or by any certain man ? Mr. Meeeiam. No, sir; I consider that we are absolutely free of anything of that kind. Mr. Maeble. That is all. (The witness was excused.) "J. W. HoLMQUiST, called as a witness, being duly sworn, testified as follows : Mr. Maeble. Where do reside, Mr. Holmquist? Mr. Holmquist. Oakland, Nebr. Mr. Maeble. Do you do business in Omaha? Mr. Holmquist. I do. Mr. Maeble. You are a member of the firm of Merriam & Holm- quist? Mr. Holmquist. I am. Mr. Maeble. You have heard the testimony of Mr. Merriam? Mr. Holmquist. Yes, sir. Mr. Maeble. This Holmquist Grain Company — ^is that the name? Mr. Holmquist. The Holmquist Grain and Lumber Company. Mr. Maeble. That is a corporation? Mr. Holmquist. Yes, sir. Mr. Maeble. Do you know who owns the stock of that corporation? Mr. Holmquist. Yes, sir; I think I know all of them. I know all, so far as the books show. Mr. Maeble. I will ask you if to your knowledge any stock of that corporation is owned by any officer or stockholder or employee of any railroad company. Mr. Holmquist. There is none of it. Mr. Maeble. None of it ? Mr. Holmquist. No, sir. Mr. Maeble. And whether or not any person of any of those classes has any beneficial interest in the profits of the company or dividends, on the stock. Mr. Holmquist. They have not. Mr. Maeble. How many country elevators does that corporation own? Mr. Holmquist. Eight. Mr. Maeble. They are situated in this State? GBAIN ELEVATOR INVESTIGATION. 443 Mr. HoLMQUisT. Yes, sir. Mr. Marble. Wlio makes the prices to be paid at those country elevators? Mr. HoLMQuiST. I do most of the time. Mr. Marble. What elements do you take into consideration in making the prices to be bid? Mr. HoLMQUiST. Principally my element of profit — the margin. Mr. Marble. I will ask you — you have competitors at all stations where these elevators are situated? Mr. HoLMQxnsT. Yes, sir. Mr. Marble. Do you advise with, consult with, or agree with your competitors as to the prices you pay? Mr. HoLMQUisT. No, sir. Mr. Marble. Do you make your price known to your competitors in advance ? Mr. HoLMQTJisT. If they ask me about them, I do. Mr. Marble. You tell them what you are bidding? Mr. HoLMQUisT. Yes, sir. Mr. Marble. Do they, as a matter of fact, make a practice of ask- ing you? Mr. HoLMQUisT. No; they do not. I will say, in explanation of that, that most of my competitors are in Minneapohs. Mr. Marble. Well, do your country buyers make known the prices which they are bidding to the competitors' buyers ? Mr. HoLMQXJisT. They do when they are asked. We generally have them at most of our stations on the blackboard. Anybody can see them. They are not always followed, however. Mr. Marble. The prices actually paid are made known to com- petitors ? Mr. HoLMQUisT. No, sir. Mr. Marble. Do you get your competitors' prices as a rule with their consent ? Mr. HoLMQUisT. If I ask them; yes, sir. Mr. Marble. They will tell you what they are bidding? Mr. HoLMQuisT. Yes, sir. Mr. Marble. Do you have any agreement at any station or has any one for you or for this company by which business is pooled? Mr. HoLMQUiST. No, sir. Mr. Marble. Do you have any practice generally adhered to by which you divide the business of the town according to the capacity of yoiir elevators or the number of your elevators ? Mr. HoLMQUiST. No, sir; we have nothing that is forced. We aim to get our share — insist on our share and more, if we can get it. Mr. Marble. What do you consider your share? How do you determine that? Mr. HoLMQUiST. According to the number of elevators. Mr. Marble. And you concede a share in determining the same thing to the competitors ? Mr. HoLMQUiST. Yes, sir. Mr. Marble. And do not press the matter competitively to get more than yom- share by cuttmg your profits ? Mr. HoLMQXJiST. We take all we get. Mr. Marble. If more comes to you than yom- share, do you make ajiy accounting to your competitors ? Mr. HoLMQUiST. I have not. 444 GEAIN ELEVATOR INVESTIGATIOIT. Mr. Makble. Do you require any accounting from your competitor if he gets more ? Mr. HoLMQUiST. I do not. Mr. Marble. Do you advise your competitor what amount of wheat you have bought? Mr. HoLMQUiST. n he asks what I have bought for a certain time, I will. Mr. Marble. Do they make a practice of asking you? Mr. HoLQUiST. They have ia the past. Mr. Marble. Do you make a practice of asking them what they have bought ? Mr. HoLMQUiST. If I do not think I am getting my share of the stuff, I do. Mr. Marble. Suppose you find you are not getting your share of the stuff at any station, what do you do ? Mr. HoLMQUiST. I manage to get it. Mr. Marble. How? Mr. HoLMQUisT. By the price. Mr. Marble. You raise your price ? Mr. HoLMQUisT. Yes, sir. Mr. Marble. Do you go to your competitor about the matter ? Mr. HOLMQTJIST. No, SU-. Mr. Marble. Do you tell him he is getting more than his share? Mr. HoLMQUiST. No, sir. Mr. Marble. You simply begin to fight him on the price? Mr. HoLMQUiST. I get the grain if there is anything in it; if there is not, I do not. Mr. Marble. Suppose you find that you are getting more than your share at any station? Mr. HoLMQUisT. I let him look out for himself. Mr. Marble. Do you drop back in the bidding to equalize the matter? Mr. HoLMQUiST-. No, sir. Mr. Marble. But keep on getting more if you can? Mr. HoLMQuiST. Yes, sir. Mr! Marble. If he raises his price to get his share, do you raise your prioe to meet his competition ? Mr. HoLMQtriST. Not necessarily. Mr. Marble. In that event you might wait until the price equal- izes itself. If he gets his share by raising his price, does he drop back to the normal, as a rule ? Mr. HoLMQUiST. There is no agreement that he shall. Mr. Marble. Does he, as a practice ? Mr. HoLMQuiST. It has been known. Mr. Marble. Do you, when you have gotten your share by raising, drop back to the normal price ? Mr. HoLMQxnsT. I do. Mr. Marble. Why don't you keep the price up and get more than your share ? Mr. HoLMXjtnsT. Because I do not think I am entitled to more than my share of the business. , Mr. Marble. So you do maintain the margin of profit that you consider fair in this way — ^you and your competitors ? GBAIN ELEVATOB INVESTIGATION. 445 Mr. HoLMQuisT. To a large extent. We can not and do not, as a matter of fact, get the margin that I consider we are entitled to. Mr. Makble. Are there any farmers' elevators located at points where you are trading ? Mr. HoLMQUisT. li^s, sir. Mr. Maeble. How do you. get along with them ? ■ Mr. HoLMQinsT. About the same as others. Mr. Maeble. Do they concede to you your share of the grain ? Mr. HoLMQuisT. Yes, sir. Mr. Marble. And you concede to them their share ? Mr. HoLMQUiST. Yes, sir. Mr. Marble. And this price is adjusted in the same way you have stated with your competitors ? Mr. HoLMQuisT. Yes, sir; I will say ia further explanation of that, that the margin the farmers want is about the same, or in other words, about enough to pay the expenses on the ordinary amount of grain handled at the station and a reasonable margin of interest on the investment. Mr. Maeble. Taking the interest charge and the wages charge at the going price so as to get at the element of profit, what do you con- sider a fair profit on wheat for the country buyer, the country ele- vator ? Mr. HoLMQUisT. We aim to get 4 cents per bushel. Mr. Marble. How much do you succeed in getting as a rule, taking all your stations together ? Mr. HoLMQUiST. Less than an average of 3. Mr. Marble. What do you aim to get on corn? Mr. HoLMQtnsT. I send out my prices to my agents on the basis of 2 cents. Mr. Maeble. What do you actually succeed in making, taking your stations all together. Mr." HoLMQUisT. That is different in different years, dependent on the quality of the corn. Mr. Maeble. What do you expect you are going to make from indications this year ? Mr. HoLMQtnsT. About a cent and a half. Mr. Maeble. What did you make last year? Mr. HoLMQTJisT. Less than 1. Mr. Maeble. Is the oat crop a feature in the State with you ? Mr. HoLMQUiST. Yes, sir. Mr. Maeble. What do you aim to make on them? Mr. HoLMQUiST. About the same as on corn. Mr. Maeble. About 4 cents? Mr. HoLMQUiST. About the same as on corn, 2 cents. Mr. Marble. What do you actually succeed in making, taking last year and this year? Mr. HoLMQTJisT. About a cent and a half. Mr. Marble. Is there any other grain you deal in -largely? Mr. HoLMQUxsT. No, sir. Mr. Marble. Barl^? Mr. HoLMQUiST. We handle some barley. Mr. Marble. Rye? Mr. HoLMQuiST. I think I handled one carload of rye last week. 446 I GBAIN ELEVATOR INVESTIGATION. Mr. Marble. Barley and rye are about in the same class as wheat as to profits made, are they not? Mr. HoLMQUiST. No, sir; 1 cent less. I want to state further that the wheat business along our line is very light. Mr. Marble. It is mostly corn? Mr. HoLMQUiST. . Corn and oats. Mr. Marble. Have you had any experience with country mer- chants' or country farmers' warehouses, shoveling grain into the warehouses and shoveling it out again into the cars as competitors? Mr. HoLMQUiST. Yes, sir. Mr. Marble. How do you regard such competition? Mr. HoLMQUiST. I do not consider it fair. Mr. Marble. How do you meet it ? Mr. HoLMQUisT. By paying all I can get back for the grain some- times. Mr. Marble. Pajring all the grain will net you? Mr. HoLMQUiST. Yes, sir. Mr. Marble. That is, by putting your profits into the bidding? Mr. HoLMQUiST. Yes, sir; in other words taking an actual loss. Mr. Marble. You do that to get rid of that sort of competition? Mr. HoLMQUiST. Yes, sir. Mr. Marble. What you say applies to a country merchant that operates a shovel house? Mr. HoLMQUiST. That might depend on the situation. Mr. Marble. In what way ? Mr. HoLMQUiST. Well, if a merchant put up a shovel house on the tracks where he could shovel into the cars and we considered that there was grain enough at that station to warrant this extra house, we might not fight him as hard as we would otherwise. In other cases, there have been times- in my experience — times when merchants put up these houses to take up gram they hold from their customers in order to make collections. In such cases we would not interfere. Mr. Marble. Describe the cases in which you would interfere. Mr. HoLMQUiST. Where he came in as a competitor and there was not enough grain at that station to warrant the extra competition. Mr. Marble. By that you mean that the capacity of the houses already established ought to be used before more are put in? Mr. HoLMQUiST. Yes, sir. Mr. Marble. Is it your experience or observation that the raihoads share in this idea of yours that this unfair competition should be discouraged ? Mr. HoLMQUiST. I am sorry to say it is not shared in on the line that I do business. Mr. Marble. You have not observed any discrimination against those houses on their part? Mr. HoLMQuisT. No, sir. Mr. Marble. In the matter of cars, do you think they are furnished cars, their proportion of cars according to their demands, as well as you are? Mr. HoLMQUisT. Yes, sir. Mr. Marble. At your country elevators, are the grounds kept in order by the railroad company employees ? Mr. HoLMQUisT. No, sir. Mr. Marble. You do that yourself, at your own expense? GEAIN ELEVATOR INVESTIGATION. 447 Mr. HoLMQuiST. Yes, sir. Mr. Marble. And at your two city elevators, do you take care of the grounds about them, and not the railroad employees ? Mr. HoLMQuiST. Yes, sir. Mr. Marble. Do you take care of them? Mr. HoLMQuiST. Yes, sir. Mr. Marble. When grain belonging to these unfair competitors arrives in the terminal market in Omaha, do you buy that as freely and on the same, terms as you would from competitors — fair com- petitors? Mr. HoLMQUisT. I won't buy it from any of them if I know it is from them. Mr. Marble. Would you also use that method,- attempting to get rid of unfair competition? Mr. HoLMQUiST. I would where the shipper had not the facilities for the handling of grain — the proper facilities for the handling of grain. " Mr. Marble. Even though he actually got his grain to market? Mr. HoLMQUiST. Yes, sir. Mr. Marble. Do you know whether or not other buyers in this market feel the same way you do in that matter? Mr. HoLMQuisT. I couldn't say as to that. Mr. Marble. Do you know whether or not their practice is the same as yours in that matter? Mr. HoLMQuiST. I do not. Mr. Marble. You have not observed ? Mr. HoLMQuiST. I have observed sometimes in the past — ^not within the last year, however. Mr. Marble. Previous to last year, did you observe that their practice was as you have described ? Mr. HoLMQuisT. Let me understand your question. It relates back to the other one. Mr. Marble. At the time that this grain of the unfair competitor goes into the terminal market, I want to know if there are buyers who refuse to buy it. Mr. HoLMQXJiST. I couldn't say positively. I think they have. Mr. Marble. You think they do ? Mr. HoLMQUiST. I think so. Mr. Marble. Do you think they are actually doing so now, this crop year ? Mr. HoLMQUiST. I have not observed anything of this kind within the last year. Mr. Marble. Are there, as a matter of fact, any such shippers now? Mr. HoLMQUiST. I don't know. I can not say that I Imow of one now. Mr. Marble. How long since you have known of one? Mr. HoLMQTJiST. I want to correct that last answer. I know of one. Mr. Marble. I will ask you who he is? Mr. HoLMQUiST. That is a man by the name of Demers, at Emer- son, Nebr. Mr. Marble. Do you know Mr. Demers's initials? Mr. HoLMQUisT. I think they are G. F. 448 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. Now, then, he is actually, in this crop year, what you term an unfair competitor? Mr. HoLMQTjisT. He was as late as two weeks ago. Mr. Maeble. Is he in competition with you ? Mr. HoLMQuisT. Yes, sir. Mr. Marble. Are you at his station bidding, so as to give up the profit in the bidding? Mr. HoLMQUisT. Not lately. Mr. Marble. You have ceased that? Mr. HoLMQUisT. Yes, sir. Mr. Marble. Why? Mr. HoLMQursT. Because we can not get cars to take care of what we have. Mr. Marble. If you had the cars you would meet him with that kind of competition? Mr. HoLMQUiST. I should, probably. i Mr. Marble. Can he get cars ? Mr. HoLMQUiST. I think he has had them when he asked for them. Mr. Marble. Do you think that he is better off than you in the matter of cars. ? Mr. HoLMQUisT. Why, I don't know as to that. I am not familiar with just what kind of cars they have ordered and delivered at that station. Mr. Marble. You keep pretty close watch of the supply of your, competitors as well as your own? Mr. HoLMQuisT. We try to; yes, sir. I know that up until two weeks ago we all got all the cars we wanted there. Mr. Marble. Do you know whether or not he has been able to sell his grain to all buyers, or have any of the other buyers besides your- self refused to buy in this market ? Mr. HoLMQtJiST. I have not refused to buy his grain, and it has not been offered. Mr. Marble. Do you know whether or not he has difficulty in selling? Mr. HoLMQUiST. I do not know it; no, sir. Mr. Marble. You do not know about it? Mr. HoLMQUiST. I do not know as to that. Mr. Marble. Well, now, take it in times past, has it been the gen- eral understanding in this market that this unfair competition was to be discouraged Dy declining to buy from such competitors? Mr. HoLMQUiST. I do not think there has been any general under- standing to that effect. Mr. Marble. It has been the general sentiment? Mr. HoLMQUiST. General sentiment has been — I would not say "general," either. Mr. Marble. How far would you say it was general ? Mr. HoLMQUiST. A large percentage of the Mr. Marble. (Interrupting). The heaviest buyers ? Mr. HoLMQUiST. The heaviest buyers; yes, sir. Mr. Marble. The buyers interested m country elevators prin- cipally? Mr. HoLMQUisT. Those and others. Gommissioner Lane. What became of the man in the country — did he go out of business? GBAIN BLEVATOB INVESTIGATION-. 449 Mr. HoLMQuiST. In most cases he does, after a period. Commissioner Lane. He hasn't a long existence, because he is competing? Mr. HoLMQUisT. That is about the finish of it. Mr. Marble. What effect does the unfair competitor have upon the price received by the farmer? , Mr. HoLMQUisT. He naturally gets more. Mr. Marble. The farmer naturSly gets more ? Mr. HoLMQUiST. Yes, sir; in proportion to the market. Mr. Marble. He gets more, Sue to this effort that you and those situated as you are making? Mr. HoLMQUiST. Certainly. Mr. Marble. If you were a farmer, would you be inclined to pay such a man a subsidy to go into your market for grain? Mr. HoLMQUiST. Not as to all these imfair competitors. Mr. Marble. But to some? Mr. HoLMQUiST. There are times. Mr. Marble. You have heard Mr. Merriam describe the relations, your relations to the Missouri Pacific? Mr. HoLMQtrisT. Yes, sir. Mr. Marble. Have you anything to add to that ? Mr. HoLMQUiST. I am not as familiar with it as he is. Mr. Marble. So far as you know, he has described it fully and accurately? Mr. HoLMQUisT. Yes, sir; I think so. I think the contract would be the best evidence, however. Mr. Marble. Has your firm any relationship to the Hall-Baker Grain Company, by way of ownership? Mr. HoLMQUiST. No, sir. Mr. Marble. Or division of profits? Mr. HoLMQUisT. No, sir. Mr. Marble. Or to any other grain company, by way of ownership of stock or division of profits? Mr. HoLMQUiST. Only as to what stockholders Mr. Marble. I mean any other grain company that you own, too ? Mr. HoLMQUisT. No, sir. Mr. Marble. The Armotir Company? Mr. HoLMQUisT. No, sir. Mr. Marble. Bartlett, Frazier & Carrington? Mr. HoLMQUisT. No, sir. Mr. Marble. Or Hall-Baker Grain Company, or the Simonds- Shields? Mr. HoLMQTTisT. Noue whatever. Mr. Marble. How is your fiirm treated by the Missouri Pacific Railroad Company in regard to furnishing cars; as well as other shippers? Mr. HoLMQtrisT. I think so. Mr. Marble. Any better? Mr. HoLMQUisT. Only in so much as we are on their tracks, and possibly, when cars are very scarce, we might get some little advan- tage. Mr. Marble. You mean that they would decUne to let the cars get out of their possession, but would load the grain on their own lines first? S. Doc. 278, 59-2 ^29 450 GBAIN ELEVATOR INVESTIGATION. Mr. HoLMQuiST. Yes, sir. Mr. Marble. Other than that do you regard that they take any care of your elevator in keeping you well supplied? Mr. HoLMQuiST. No, sir. Mr. Marble. More than any other shipper ? Mr. HoLMQUisT. I do not think so. Mr. Marble. Is there any rule about your cars being switched in preference to any other cars ? Mr. HoLMQUiST. Not that I know of. Mr. Marble. That is all. Commissioner Clark. I suppose you have studied the effect on the market and on the general conduct of the grain business of the allow- ances in some form or other made by railroad companies, haven't you? Mr. HoLMQUiST. To some extent; yes, sir. Commissioner Clark. Well, if the raihoad company makes an allowance of a given amount to all of the elevators in Omaha — and in that I include Council Bluffs and South Omaha — and there is on their tracks a large terminal elevator or elevators owned and operated by large grain dealers, have the ones who operate those elevators an advantage over their competitors in that market or in the field from which the supplies are brought along the line of that railroad where they have a line of elevators ? Mr. HoLMQUiST. I think not. Commissioner Clark. You think they have no advantage over the others? Mr. HoLMQUiST. No, sir. Let me ask a question with reference to your question there. You said where the allowance is made to all elevators ? Commissioner Clark. -Yes. Take, for instance, the Union Pacific Railroad as an example. Assume that they make an allowance of a given amount to all elevators here at this terminal. Mr. HoLMQUiST. Yes, sir. Commissioner Clark. Does that give the Omaha Elevator Com- pany any advantage over you with regard to the grain originating upon and shipped over the Union Pacific Railroad ? Mr. HoLMQXJiST. , It does not when I get the same allowance. Commissioner Clark. That is all. (Witness excused.) J. E. Van Dorn, called as a witness, having been duly sworn, tes- tified as follows: Mr. Marble. What is your business? Mr. Van Dorn. I am in the grain business. Mr. Marble. In what way? Mr. Van Dorn. I am interested in two concerns — one, the Cavers- Van Dorn Elevator Company, and the other concern, the J. E. Van Dorn Commission Company. Mr. Marble. What is the business of the elevator company? Mr. Van Dorn. Buying and selling grain. Mr. Marble. They own elevators ? Mr. Van Dorn. Yes, sir. Mr. Marble. Where? Mr. Van Dorn. At Council Bluffs. Mr. Marble. How many? GRAIN ELBVATOE INVESTIGATION. 451 Mr. Van Doen. One. Mr. Marble. Those are not leased elevators? Mr. Van Dobn. We have two leased elevators on the Eock Island. ilr. Makble. The Van Dom Elevator Company? Mr. VanDorn. The Cavers-VanDom Elevator Company. Mr. Marble. Where ? Mr. VanDoen. At Underwood and Neola. Mr. Marble. They are leased from the Mr. YanDorn. Rock Island Railroad Company. Mr. Marble. On what terms ? Mr. VanDorn. At Underwood we own the machinery and cribs, and we pay the railroad $125 a year for the use of the house. At Neola we do not own any property and we pay them $200 a year. Mr. Marble. Who pays the taxes ? Mr. VanDorn. The railroad company. Mr. Marble. And the insurance? Mr. VanDorn. On the building the railroad pays the insurance. We pay the insurance on the grain and on oiir own property. Mr. Marble. How about the repairs ? Mr. VanDorn. We pay our own repairs on the machinery; but on the building the railroad company pays it. Mr. Marble. Do you pay the repairs on the house, where the machinery is owned by the railroad company? Mr. VanDorn. Yes, sir. Mr. Marble. How does the rental paid for those houses compare with the sum total of these items of taxes, interest, and the repairs paid by the railroad company.? Mr. VanDorn. I should judge that at Underwood it would leave the railroad company a net profit of something like $75 a year, and at Xeola it will leave them about $125 a year, I think. Mr. Marble. Do you consider that you are paying a fair rental? Mr. VanDorn. Yes, sir. Mr. Marble. Enough? Mr. VanDorn. Yes, sir. Mr. Marble. Would the elevators, in your opinion, bring any more if the leasing were thrown open to some sort of pubhc com- petition? Mr. VanDorn. I do not think they would bring as much. Mr. Marble. Do you have competitors at those points? Mr. VanDorn. Yes, sir. Mr. Marble. Who are those competitors ? Mr. VanDorn. At Underwood, C. H. Cooper. " Mr. Marble. Has he an elevator?. Mr. VanDorn. He has control of the Neola Elevator Company's elevator there. I beheve it belongs to the Milwaukee Road. Mr. Marble. You mean it belongs to the Milwaukee Railroad and is leased by the Neola Company? Mr. VanDorn. Yes, sir. Mr. Marble. And again leased by the Neola Company to Mr. Cooper? Mr. VanDorn. I understand that he pays the Neola Elevator Company three-fourths of a cent a bushel, I believe, on all the grain that passes through the house. 452 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. Do you know how much the Neola Elevator Com- pany pays the railroad company? Mr. VanDoen. I do not know. Mr. Marble. You don't know about that ? Mr. VanDoen. I don't think they pay them anything. Mr. Maeble. And at Neola, what competition have you? Mr. VanDorn. C. H. Cooper and the Wells-Hord Grain Company. Mr. Marble. At this point, is it your understanding that Mr. Cooper leases from the Neola Elevator Company ? Mr. VanDoen. Yes, sir. Mr. Marble. And the Neola Elevator Company leases from the Railroad Company? Mr. VanDorn. Yes, sir. Mr. Marble. And does the same arrangement, so far as you just described the arrangements at Underwood, obtain at Neola ? Mr. VanDoen. Yes, sir. Mr. Maeble. Now, have you any arrangement with your com- petitors at either of these points regarding the prices to be paid for grain? ]y&. VanDoen. No; we haven't any agreement. There is a card sent out by W. G. Case, of Des Moines, that is used as a basis. We pay about what we want to. It is generally understood by the deal- ers over there that that is about a fair basis of the price. Mr. Maeble. You know that your competitors have that card, do you? Mr. VanDoen. Yes, sir. Mr. Maeble. And they know that you have it, too ? Mr. VanDoen. I don't know whether they do or not. I suppose they do. Mr. Maeble. How are these cards paid for; is Mr. Case hired to prepare these cards and send them out? Mr. VanDorn. I don't know what the arrangement is about it. Mr. Marble. Is he a dealer? Mr. VanDorn. I don't know as to that. I am not famiUar with the details in Iowa at all. I know this card has been sent out. Mr. Marble. Do you know- what makes your company have con- fidence in the card and base prices on it ? Mr. VanDoen. Well, I think we knew it had been sent out for years right straight along. Mr. Maeble. You know it has been sent out to base prices on? Mr. VanDoen. Yes, sir. Mr. Marble. You are confident that joxa competitors have it, and you think you are safe in usingit? Mr. VanDorn. I don't know how much the competitors use the card; in fact, I am inclined to think they do not use it very much. Mr. Marble. You think they do not? Mr. VanDorn. Yes, sir They, can do as they please about it. We feel that it is a fair basis. Mr. Marble. About the margin of profit — while you base on tliat card you allow yourself a margin of profit, or do you simply bid the price indicated by the card ? Mr. VanDorn. We do not follow that card exactly. We feel sometimes the card is too high or too low. It is more a basis of a sort of idea that this man Case has of what will be right. GEAIN ELEVATOR INVESTIGATION. 453 Mr. Marble. Who is Mr. Case; is he an officer of some organiza- tion? Mr. VanDorn. I never saw him in my life. I do not know who he is. Mr. Marble. Do you know whether he is an officer of some organi- zation ? Mr. VanDorn. I do not know; I do not think he is. Mr. Marble. Do you know ? Commander Lane. Does such a man exist? Mr. VanDorn. I think so, because he sends us a bill once a month for the postage on those cards. Commissioner Lane. And you pay it? Mr VanDorn. Yes, sir. Commissioner Lane. Do you get his receipt for it? Mr. VanDorn. Yes, sir. Mr. Marble. Case is not another way of spelling Wells, is it? Mr. VanDorn. I do not think so. Mr. Marble. What margiu of profit does your elevator company consider fair; what does it attempt to get at this point? Mr. VanDorn. We try to get 2 cents on corn and oats and from 3 to 4 cents on wheat. Mr. Marble. And what do you succeed in getting? Mr. VanDorn. Last year we got about a cent on corn and about 2 cents on oats and about 3 cents on wheat. Mr. Marble. A little short of what you attempted to get and what you thought was right ? Mr. VanDorn. Yes, sir. Mr. Marble. Do you know what your competitors made ? Mr. VanDorn. I do not; I do not think they made anything. Mr. Marble. Have you any understanding with yoiu* competitors at those stations as to division of business at the point or as to a cer- tain share being due them as competitors ? Mr. VanDorn. We haven't any particular understanding. At the time Mr. Cooper took this elevator from the Neola Elevator Company, the Neola Elevator Company was practically out of business at those points; they could not compete, on account of wanting to ship all their grain East, and this grain was going West. So Mr. Cooper came to me and asked if it would be satisfactory if he took the house. I told him it would, providing he would sell me the grain and bid there at the same price others were bidding, providing I wanted it, of course. Mr. Marble. He took the house with that imderstanding? Mr. VanDorn. I believe so. Mr. Marble. Has he sold his grain to you? Mr. VanDorn. Yes, sir. Mr. Marble. And that understanding has been lived up to ? Mr. VanDorn. I think he sold about 75 per cent of it to me. Mr. Marble. Why could not the Neola Elevator Company com- pete at those points as well as Mr. Cooper ? Mr. VanDorn. Well, because they seemed to have some imder- standing with the Milwaukee road that all grain bought at their station must go East, ti other words, take the long haul to Chicago or Minneapolis. Mr. Marble. The Neola Elevator Company is an Armour Company, isn't it? 454 GEAIN ELEVATOE INVESTIGATION. Mr. VanDoen. Yes, sir. Mr. Marble. Did they say that that was the reason that they let the house go? Mr. VanDoen. No; they didn't. They didn't say anything. They simply couldn't compete; that is all. Mr. Marble. They did not ship any grain except on the long haul to Milwaukee? Mr. VanDorn. That is all I should say they shipped. Mr. Marble. But Mir. Cooper sells to you 75 per cent of his grain and you do not ship it in that way. Is tnere a better way to ship it ? Mr. VanDoen. I bring it to Omaha. Mr. Marble. That is a more profitable business from those points? ]Mr. VanDorn. Yes, sir. Mr. Marble. The Neola Elevator Company — they knew that it was a more profitable business ? Mr. VanDorn. I think they did. Mr. Marble. They were well-posted grain men? Mr. VanDorn. Yes, sir. Mr. Maeble. And thoroughly competent ? Mr. VanDorn. Yes, sir. Mr. Marble. Is there any understanding or agreement as to the amount that these competitors shall buy other than this agreement that they shall sell to you ? Mr. VanDorn. Well, no; not at Neola. At Underwood there is no agreement, but we both of us feel that we are entitled to about half the grain between us. Mr. Marble. If one of you is ahead, he drops back in the bidding? ■Mr. VanDorn. I can hardly say that. We feel that if he can stand it we raise the price a little. Mr. Marble. The one who is behind raises the price ? Mr. VanDorn. Yes, sir. Mr. Marble. Do you make any accounting or pay any penalty to each other on the excess bought? Mr. VanDoen. No, sir. Mr. Marble. You have heard of such an understanding, or rumors of it? Mr. VanDoen. Not at those stations. Mr. Maeble. At other stations? Mr. VanDorn. Yes, sir. Mr. Marble. No such thing exists at those stations ? Mr. VanDorn. No, sir. Mr. Marble. Where does the Cavers-Van Dom Grain Company sell its grain? Mr. VanDorn. Any place. Mr. Marble. It ships to Omaha mostly? Mr. VanDorn. It is all shipped to Council Bluffs. Mr. Marble. Have you had any experience with grain dealers at either of these station other than elevator operators? Mr. VanDorn. We have had a little experience at one of them — at Neola. Mr. Marble. What was that experience ? Mr. VanDorn. Well, there was a party named Flinn bidding on the track there that made it a little interesting for us for a whUe, and Mr. Cooper hired him to run his elevators. GRAIN ELEVATOR INVESTIGATIOIT. 455 Mr. Marble. That ended the competition? Mr. VanDorn. Yes. Mr. Marble. Now, the other firm in which you are interested — the VanDorn Grain Company Mr. VanDorn. Commission Company. Mr. Marble. What is the business of that firm? Mr. VanDorn. Oh, we solicit consignments and handle accounts — future business — grain-future accounts. Mr. Marble. I will have to go back. These elevators at Council Bluffs, what are they? Mr. VanDorn. We have a terminal elevator at Coimcil Bluffs. Mr. Marble. Just one? Mr. VanDorn. Just a small one. Mr. Marble. Does your company own that ? Mr. VanDorn. Yes, sir. Mr. Marble. It is not leased? Mr. VanDorn. No, sir. Mr. Marble. On what track is it ? Mr. VanDprn. It is on the joint track owned by the Rock Island, the Northwestern, the Burlington; and I understand the Great West- em has an interest also now. Mr. Marble. Do you receive any elevation allowance ? Mr. VanDorn. No, sir. Mr. Marble. How about switching charges — are they absorbed, or do you pay any? Mr. VanDorn. Well, we haven't been running the house since the 15th of September. We have made claims for all switching charges we have paid. I do not believe any claims have been paid so far, but we expect to get them. Mr. Marble.' Do you know whether they have been rejected? Mr. VanDorn. No, sir; they have not been. Mr. Marble. Do you make the claims on the outgoing road? Have you made any claims for in-elevation allowance? Mr. VanDorn. Yes, sir. Mr. Marble. What elevation allowance have you made claim for? Mr. VanDorn. For a cent and a quarter on all outgoing roads. Mr. Marble. Has that claim been accepted or rejected? Mr. VanDorn. It has been rejected. Mr. Marble. By all of them? Mr. VanDorn. Yes, sir. Mr. Marble. Do you receive any elevation from the incoming roads? Mr. VanDorn. We made claim against the Union Pacific for a cent and a quarter on all grain unloaded for them. Mr. Marble. Has that been accepted or rejected? Mr. VanDorn. They have not said anything about it at all. Mr. Marble. Is it your understanding it is going to be settled? Mr. VanDorn. I believe so. Mr. Marble. Reconsigning charges — do you have them at Council Bluffs? Mr. VanDorn. Yes, sir. The Burlington charges us a reconsigning charge there, and the Union Pacific charge us reconsigmnent of $2 a car. 456 GBAIN ELEVATOE INVESTIGATION. Mr. Marble. Are these reconsignment charges absorbed in any- way or refunded to you in any way? Mr. VanDorn. They are absorbed by all the outgoing roads at Council BluflFs except the Wabash road. Mr. Marble. The other elevators at Council Bluffs^— are there any elevators there owned and operated by railway companies? Mr. VanDorn. No, sir; not that I know of. Mr. Marble. You are familiar with the situation at Council Bluffs? Mr. VanDorn. Pretty generally. Mr. Marble. There are no elevators owned and operated by rail- roads there which give free service to shippers? Mr. VanDorn. No, sir. Mr. Marble. About the cooperage of cars — does your elevator com- pany stand the expense of that? Mr. VanDorn. Why, where we have made claim for elevation we have not made any claim for cooperage. What grain we have trans- ferred for direct transfer we have made claim for cooperage. Mj. Marble. And have received it? Mr. VanDorn. I suppose we will. Mr. Marble. How about grain doors ? Mr. VanDorn. The raUroads furnish them. Mr. Marble. Do you pay for the cooperage, and the railway refimd it to you — that is your understanding? Mr. VanDorn. Where we make direct transfers for the railroads; yes, sir. Mr. Marble. Well, where there isn't a direct transfer? Mr. VanDorn. Then we make claim for elevation. Mr. Marble. You simply make claim for elevation? Mr. VanDorn. Yes, sir; that includes cooperage. Mr. Marble. What do you receive for direct transfer ? Mr. VanDorn. We have only done that for the Rock Island, and we have a contract with them for a half cent a bushel from car to car. Mr. Marble. Have you a contract with any other road? Mr. VanDorn. No, sir. Mr. Marble. Is that a written contract? Mr. VanDorn. Yes, sir. Mr. Marble. Can you furnish us with a copy? Mr VanDorn. No, sir; I haven't got a copy. The Rock Island have both of them. Mr. Marble. Do you know where they are? Mr. VanDorn. I suppose they are in Chicago. Mr. Marble. What is covered in this contract? Mr. VanDorn. . Well, the contract was made in consideration of the Rock Island fuiiishing the siding there. They buQt two tracks about 700 feet long- Mr. Marble. Was it stipulated in the contract that they should build them? Mr. VanDorn. Yes, sir. Mr. Marble. What else ? Mr. VanDorn. That is all. Mr. Marble. That was what the railroad company was to do ? Mr. VanDorn. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 457 Mr. Marble. What was the other side of the contract ? Mr. VanDorn. We were to transfer whatever grain was to be offered to us from car to car for a half a cent a hundred. Mr. Marble. No other items on either side were covered by this contract? Mr. VanDorn. That is all. CJommissioner Clark. You mean a half cent a hundred or a half cent a bushel ? Mr. VanDorx. Half cent a hundred, car to car, without weighing. Mr. Marble. Now, the Van Dom Commission Company — ^what is its business ? Mr. VanDorn. I say principally the handling of futures, although we soHcit consignmente of gram. Mr. Marble. You soHcit? Mr. VanDorn. Yes, sir. Mr. Marble. You do not bid the country? Mr. VanDorn. No, sir. Mr. Marble. You do not buy country grain? Mr. VanDorn. No, sir. Mr. Marbt.f.. Do you, as a matter of fact, do a consignment business? Mr.'VANDoRN. Yes, sir. ■ Mr. Marble. As to the class of shippers — ^from whom do you receive consignments ? Mr. VanDorn. Oh, we, of course, prefer shipments from regular dealers, but I suppose if somebody was out of that regular class and would consign us a car we would take care of it. Mr. Marble. On the same terms as you would for a r^ular dealer ? Mr. VanDorn. Yes, sir. Mr. Marble. When you use the term "regular dealer," what do you mean by that ? Mr. VanDorn. Anybody that has proper facdities for handling grain. Mr. Marble. By which you mean an elevator? Mr. VanDorn. Yes, sir. Mr. Marble. Does it make any difference to you in yom- consign- ment business, provided the grain comes to you, whether it comes out of an elevator or out of a shovel house ? Mr. VanDorn. It doesn't make any difference to us. Mr. Marble. You do not consider that fair competition — the country dealer? Mr. VakDobn. It depends on the conditions in the territory where he is located. Mr. Marble. What conditions ? Mr. VanDorn. Now, for instance, there are some stations out here where there is only one elevator and a shovel house alongside of it, and if there is plenty of grain coining in there for both of them, there isn't any necessity for trouble down there, and we think that man would be entitled to ship. Mr. Marble. Supposing there were just enough elevators to do the business and keep them comfortably well employed, and a shovel house should start in — ^how do you feel about that? 458 GEAIN ELEVATOE INVESTIGATION. Mr. VanDokn. I do not think that would be fair to the country- dealer. Mr. Marble. Would your commission firm, in the matter of conduct, treat these shippers differently ? Mr. VanDorn. So far as the commission firm is concerned we would. Mr. Marble. In what way would you treat them differently? Mr. VanDoen. Oh, I wouldn't treat them any different. Mr. Marble. You would receive their consignments ? Mr. VanDorn. Yes, sir. Mr. Marble. And sell them in exactly the same way? Mr. VanDoen. Yes, sir. Mr. Marble. Serve them equally well? Mr. VanDorn. Yes, sir. Mr. Marble. And charge them the same? Mr. VanDorn. Yes, sir. Mr. Marble. So that, so far as this market is concerned, both this fair competitor and unfair competitor would be equally well served, and the market would be equally open through your house? Mr. VanDorn. Yes, sir. Commissioner Lane. That you would do as a commission man; but as an elevator man would you try to discourage them? * Mr. VanDorn. Well, as an elevator man, so far as the elevator is concerned, of course I would prefer to buy my grain of people who had facilities for handling it. Commissioner Lane. There is a sort of feeling generally among the grain buyers that the elevator men ought to be encouraged and the irregular should be discoin-aged ? ]\&. VanDorn. Well, I think the feeling is — there is a sort of feeling of that kind on this basis, that a man with an elevator at a station has an investment there, and he keeps an open market the year round where a man can sell a wagonload of grain whenever he wants to, or any part of it, and that in consideration of those services that he should be given the best of it if there is any best to it. And another thmg — there is a sort of farmers' combination out here that is building elevators, and putting a penalty clause in their by-laws whereby their own members if they sell to any other eleva- tor do that at an expense to themselves of a quarter of a cent a bushel. In other words, it prevents them from selling to anybody else. They are forced to sell to the farmers' elevator. We do not think that is fair competition. We do not think it is fair to the other man with the money invested there." Besides, a receiving house would much prefer that the grain come from an elevator where it would be properly loaded and loaded by people who understand loading grain, and when a car comes from such a firm we feel safe in paying the draft, because they are established; they have an investment there, and we feel that when they say there is 1,000 bushels in the car there is, and it is of the kuid and quality they say. A car of grain being loaded from wagons or shovel, it is hard to say what is m the car. And very often a man who ships out is irresponsible, and if an overdraft was returned it would not be hon- ored. Consequently, we feel safe in doing business with responsible people. Mr. Marble. But there is a feeling that this is unfair competition, GRAIN ELEVATOR INVESTIGATION. 459 and it would be well to be eliminated, as well as these other points that you make? Mr. VanDorn. There is a feeling principally among the receivers, terminal men. They feel safer in doiiig ousmess with regular line people. They feel that they are responsible and do as they say. Mr. Marble. I presume, as a matter of fact, there are some ele- vator men who are not specially skillful in loading grain? Mr. VanDorn. Most of them who have elevators know how to load a car. Mr. Marble. Some elevator men have been known not to have put all the grain into the car of exactly the same quality. Mr. VanDorn. Of course; but then a man who ships a car like that, the elevator man generally knows it. Mr. Marble. What I am getting at is — take the man with a shovel house, who is a country merchant, and who, instead of $5,000 or $10,000 invested in an elevator, may have $20,000 or $30,000 invested in his business. What is the way in which you would regard that competition? You regard that as imfair competition, as I understand it ? Mr. VanDorn. Yes, sir. Mr. Marble. And are inclined to discourage it, all other things being equal? Mr. VanDorn. I would discourage it, because I would rather not do business with that class of people. They don't amount to very much, and they are erratic, and I would just as soon not have their business. Mr. Marble. Does the ownership of an elevator keep a man from being erratic ? Mr. VanDorn. It does, in the business he is engaged in. Mr. Marble. You have bought considerable cash grain in this market, haven't you? Mr. VanDorn. Yes, sir. Mr. Marble. Have you ever had occasion to pay more than what is considered by your competitors to be a fair price for the grain? Mr. VanDorn. I do not know what my competitors considered it. I think I have paid more than I should. Well, yes, I have paid more than some of my competitors thought was right to. Mr. Mahble. You were buying grain for export? Mr. VanDorn. I got quite a httle grain for export some time ago. Mr. Marble. Did your competitors protest about it, or in any way make known their objection? Mr. VanDorn. Well, in a sort of general way, yes. They didn't like it. Mr. Mar,ble. What did they do ? Mr. VanDorn. They tried to put me out of business. Mr. Marble. How? Mr. VanDorn. Well, I know in a general way how they did that. I understand they went to Chicago and made a proposition to the exporters that unless they discontinued bidding me that they wouldn't sell them anythi ng. Mr. Marble. When was this? Mr. VanDorn. That was in 1904, 1 believe. Mr. Marble. Which of your competitors Mr. VanDorn. In the winter of 1904-5. 460 GRAIN ELEVATOE INVESTIGATION. Mr. Marble. Which of your competitors did that, do you know? Mr. VanDorn. Well, I am informed that the Updike Grain Com- pany and the Trans-Mississippi Grain Company and the Omaha Ele- vator Company are the principal parties to the agreement. Mr. Marble. They are very large dealers in this market, aren't they? Mr. VanDorn. Yes, sir. The largest there is. Mr. Marble. Taking the three together, what proportion of the cash grain of this market do they handle ? Mr. VanDorn . Well, I think about 80 per cent. Mr. Marble. They were all indignant at you; is that your under- standing? Mr. VanDorn. Well, they wanted me out of business. Mr. Marble. And they were all of one mind' as to what the price should be here at that time ? Mr. VanDorn. I believe so. Mr. Marble. Do you consider that you paid too much for the grain ? Mr. VanDorn. Not as long as I can make a profit out of it. Mr. Marble. You did make a profit? Mr. VanDorn. Yes, sir. Mr. Marble. Do you know how much above their price you paid ? Mr. VanDorn. From a quarter to a cent and a half. Mr. Marble. That in itself is a profit, isn't it? Mr. VanDorn. Yes, sir. Mr. Marble. From whom were you buying your grain? Mr. VanDorn. From the dealers in the country, generally. Mr. Marble. Dealers in the country? Mr. VanDorn. Yes, sir. Mr. Marble. And you were selling it to exporters in Chicago ? Mr. VanDorn. Here. Mr. Marble. Exporters here ? Mr. VanDorn. Yes, sir. Mr. Marble. Representatives of the Chicago or eastern exporters? Mr. VanDorn. That is, Chicago and Kansas City. Mr. Marble. Do you care to state who those exporters were ? Mr. VanDorn. The Rosenbaum Grain Company and the Harris- Scotten Company, and the Hall-Baker Grain Company. Mr. Marble. What was the result of this effort to keep you from shipping this grain? Mr. VanDorn. Harris-Scotten & Co. and the Hall-Baker Grain Company, and for that matter Rosenbaum for a short time refused to bid me any more. They wouldn't buy any grain of me. But inside of about five or six days Rosenbaum commenced to bid me again, and then, I think about a month afterwards, Harris-Scotten began to bid me again. The Hall-Baker Grain Company never would make me a bid after that. Commissioner Lane. Would you consider that they had a right to boycott you in that matter? Mr. VanDorn. No; I do not think they had. I never thought so. Commissioner Lane. If you have a right to boycott the little fel- lows in the country, why haven't the big fellows in Chicago a right to boycott you? GBAIN ELEVATOR INVESTIGATION. 461 Mr. VanDoen. You might put the shoe on the other foot. Of course, I didn't see it that way at that time. Mr. Marble. I do not know whether I have asked this question or not._ The easiest way is to ask the qurestion. Taking these com- panies you have named, are any stocJkholders in either officers or stockholders or employees of any raihoadl Mr. VanDorn. No, sir. Mr. Marble. You know that; you know that they are not? Mr. VanDorn. I know that they are not. Mr. Marble. And conversely, no officer or stockholder or employee of any railroad company is a stockholder in your company ? Mr. VanDorn. No, sir. Mr. Marble. That answer goes as to division of profits directly or indirectly, as well as to actual ownership of stock? Mr. VanDorn. Yes, sir. Mr. Marble. Do you know of other grain companies in this city which have stockholders who are also interested in railways ? Mr. VanDorn. I do not know of any. Mr. Marble. Have you reason to believe that stockholders in other grain companies are interested in railways ? Mr. VanDorn. I sometimes thought so, but I do not know. Mr. Marble. Have you reason to believe that stockholders in Merriam & Holmquist Company are interested in railroads ? Mr. VanDorn. I do not think so. Mr. Marble. Or in the Peavy Coiripany, at Omaha? Mr. VanDorn. I do not believe so. Mr. Marble. Or the Updike Company? Mr. VanDorn. I sometimes thought so. I sometimes thought that the railroad was interested in that company in some way. Mr. Marble. For what reason ? Mr. VanDorn. Oh, for quite a number of reasons. Mr. Marble. Tell us some of them, or all of them. Mr. VanDorn. Well, for instance, the switching charges at South Omaha. I know that we paid $1 a car for switching cars at Omaha to the Union Stock Yards. I understand that the Union Stock Yards collect from outgoing roads at the rate of $4 a car. Mr. Marble. You mean to say that you paid $1 and then $4 on the same car is afterwards paid? Mr. VanDorn. It amounts to $2 in and out. In other words, we paid $1 where they paid $2. Mr. Marble. So the Updike Company is better treated than you are. Is that your contention? Mr. VanDorn. No. I do not know where this $4 goes to, but I know that they collect $4 a car from the outgoing road for switching. Mr. Marble. Who collects? Mr. VanDorn. The Union Stock Yards Company. Mr. Marble. And you do not know, but you have an idea that they divide that profit with the Updike Company? Mr. VanDorn. I should imagine so. I only pay $1 where they seem to pay two. Commissioner Lane. You mean to say this, that you pay $1 for the switching; they pay $2 for the switchmg, and you get back $1 and they get back $2? 462 GEAIN ELEVATOR INVESTIGATION. Mr. VanDobn. We do not get anything back. Commissioner Lane. How much do they get back? Mr. VanDoen. I suppose they get it all back. Commissioner Lane. Why do you think so ? Mr. VanDoen. These outgoing roads are all paying the Union Stock Yards $4 a car. Commissioner Lane. You are under a disadvantage of paying $1 naore than they pay? Mr. VanDokn. I am not under any disadvantage in regard to that. Of course, it is just this. The Union Stock Yarc^ Company, for the car that they switch for me, they charge me $1. You asked me why I thought they might be connected with each other, and I say that the Union Stock Yards Company is collecting $4 a car for what they cliarge me $2 for, according to the charge they are charging me now. Of course, I do not know why that is so. It struck me that they pocketed $2 and the Union Stock Yards Company pocketed $2. That is the way it struck me. Commissioner Lane. There is no evidence of that, that you have? Mr. VanDoen. I have no evidence of that. That is just the way it looks. Mr. Maeble. That is all. Commissioner Claek. Who is the president of the Updike Grain Company? Mr. VanDoen. Nels Updike. Commissioner Claek. Who is the manager of that company? Mr. VanDoen. I believe Mr. Updike manages it. Commissioner Claek. Who is the president of the Union Stock Yards Company? Mr. VanDoen. I believe Mr. Paxson — W. A. Paxson. Commissioner Claek. Are there any officers that are common to both companies? Mr. VanDoen. Not that I know of. Commissioner Claek. Are there any stockholders that are common to both companies? Mr. VanDoen. Not that I know of. Commissioner Claek. I believe you said you had a contract with the Rock Island Company; that through your elevator at Council Bluffs you would transfer grain at half a cent a hundred? Mr. VanDoen. Yes, sir. Commissioner Claek. When was that contract made, about when? Mr. VanDoen. Well, I am not positive as to that. I think it was made along about a year ago. Commissioner Claek. Do you own that elevator? Mr. VanDoen. The Cavers-Van Dorn Elevator Company does. Commissioner Claek. That is what I mean. How long have you owned it ? Mr. VanDoen. Ever since it was built. It was finished about the 10th of September last. Commissioner Claek. Was that built under any contract with any railroad company? Mr. VanDoen. No, sir. Commissioner Claek. Do you own the land on which it was buUt ? Mr. VanDoen. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 463 Coimmssioner Claek. You had no understanding with any raikoad conapany as to the operation of it ? Mr. V anDorn. No, sir. Commissioner Clark. What is the capacity of that house? Mr. VanDorn. Fifty thousand. It is a small house. Commissioner Clark. Do you consider that a half cent a hundred covers the cost of transferring grain from car to car? Mr. VanDorn. Oh, I think we could just about afford to do it, I did not expect to make any money out of it. We wanted the trackage worse than anything else when we made that contract. Commissioner Clark. You do not think you lose anything ? Mr. VanDorn. No, sir; just about come out even. Conunissioner Lane. That is all. (Witness excused.) N. B. Updike, called as a witness, having been duly sworn, testified as follows : Mr. Marble. Where do you reside ? Mr. Updike. Omaha. Mr. Marble. What is your business? Mr. Updike. Grain business. Mr. Marble. You have other businesses besides that, haven't you? Mr. Updike. No, sir. Mr. Marble. Exclusively in the grain business ? Mr. Updike. Yes, sir. Mr. Marble. You are interested in buying and selling cattle and live stock? Mr. Updike. Well, yes; in a smaU way. Mr. Marble. Taking your grain company, for that is what we are concerned with here, is that a corporation ? Mr. Updike. Yes, sir. Mr. Marble. What is the name of your corporation ? Mr. Updike. The Updike Grain Company. Mr. Marble. You are an officer of that corporation ? Mr. Updike. Yes, sir. Mr. Marble. What officer ? Mr. Updike. President. Mr. Marble. You are manager of its affairs as well, aren't you? Mr. Updike. Yes, sir. Mr. Marble. And well acquainted with all of them ? Mr. Updike. Yes, sir. Mr. Marble. About how many stockholders have you in that cor- poration ? Mr. Updike. I should judge about fifty. Mr. Marble. Do you own the majority? Mr. Updike. No, sir. Mr. Marble. Do any two or three or small number of men own the majority? Mr. Updike. No, sir. Mr. Marble. Who are your large owners ? Mr. Updike. My father, and uncle, and several boys in the office. Mr. Marble. Your uncle — is he a railroad man? Mr. Updike. No, sir. 464 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. Or your father? Mr. Updike. No, sir. . Mr. Marble. Any of those boys in the office? Mr. Updike. No, sir. Mr. Marble. Are any stockholders, as far as you know, either officers or stockholders or employees of any railroad company? Mr. Updike. How is that question? Mr. Marble. I say, are any stockholders, so far as you know, either officers or stockholders or employees of any raihoad company? Mr. Updike. Well, now, that is a question that I would be glad to give you information on, but I do not like to make public — there is one man connected with the railroad that owns a small amount of stock in our company, and he is a friend of mine, and when we sold our stock he bought it and paid for it. He is not in any way con- nected with any railroad — that is, his business does not m any way conflict with our business. I would just as soon give the Commission his name Commissioner Lane (interrupting). It will have to go into the record. Mr. Updike. M. M. Betznal. Mr. Marble. Mr. Betznal is interested in what way? Mr. Updike. He is an agent for the Northwestern Railroad. Mr. Marble. In this city? Mr. Updike. No, sir. Mr. Marble. Where? Mr. Updike. Sioux City. Mr. Marble. Do you desire to state how much stock he owns? Mr. Updike. $5,000. Mr. Marble. 5,000 shares? Mr. Updike. No; $5,000 worth; 50 shares. Mr. Marble. You are speaking of the par value when vou sav "dollars worth?" Mr. Updike. Yes, sir. Mr. Marble. What is the total capitalization of your company? Mr. Updike. $1,000,000. Mr. Marble. So he has $5,000 out of $1,000,000 ? • Mr. Updike. Yes, sir. Mr. Marble. How did Mr. Betznal acquire this stock? Mr. Updike. Bought it. Mr. Marble. Bought it of the company? Mr. Updike. Well, he bought it from me. Mr. Marble. Did he pay the full market price? Mr. Updike. Yes, sir. Mr. Marble. It was not in any sense a gift to him? Mr. Updike. No, sir. Mr. Marble. He paid for it in cash ? Mr. Updike. Yes, sir. Mr. Marble. It was your private, personal property? Mr. Updike. I think it was. It might possibly have been that it came direct from the company. Mr. Marble. In any event, you know he paid the full market price ? Mr. Updike. Yes, sir. GKAIN ELEVATOE INVESTIGATION. 465 Mr. Maeble. It was not at all given to hinx in consideration of the fact of his being a railroad man — of his position in that respect? Mr. Updike. No, sir. Mr. Maeble. And other than that, are any of your stockholders interested in railroad companies in any way? Mr. Updike. No, sir. Mr. Maeble. Or are any railroad men interested beneficially in the dividends on any of this stock or the profits of your company? Mr. Updike. No, sir. Mr. Maeble. Mr. Kenyon, who has been referred to here, doesn't own any stock in this company? Mr. Updike. No, sir. Mr. Marble. To get to this matter of the switching first. It has been testified to here — you have a statement you desire to make in that regard? Mr. Updike. I have a contract with the Union Stock Yards Com- pany. Mr. Maeble. And is that a copy of the contract? Mr. Updike. Yes, sir. Mr. Marble. May we have that ? Mr. Updike. Yes, sir. (The same is hereto annexed and marked "Exhibit No. 1 to Mr. Updike's testimony.") Mr. Updike. The signatures are not all on there. But it was signed by the people indicated there as signed by. We can put those signatures on there if you wish. Mr. Maeble. Will you do so? Mr. Updike. Yes, sir. Mr. Maeble. Is there any statement that you desire to make about this contract? Mr. Updike. No, sir; the part you want, I think, is about on the fourth sheet. Mr. Maeble. What is the Union Stock Yards Company? Mr. Updike. It is a corporation of South Omaha. Mr. Maeble. What is its business? Mr. Updike. Well, I do not know just exactly what they do. They have some side tracks down there. Mr. Maeble. Do they own the stock yards at South Omaha? Mr. Updike. Yes, sir; I think so. Mr. Maeble. And the railroad tracks leading to them? Mr. Updike. I think so. That is, they own the railroad tracks Mr. Maeble. Leading to the stock yards? Mr. Updike. Well, yes. Mr. Maeble. Are there any tracks other than those leading to these stock yards ? Mr. Updike. No, sir; that is, they own the tracks leading to the railroad tracks. Mr. Maeble. Do they operate the rolling stock on these switch tracks ? Mr. Updike. I think so; yes, sir. Mr. Marble, Own and operate them ? Mr. Updike. Yes, sir. Mr. Maeble. Is not the Union Stock Yards Company owned by S. Doc. 278, 59-2 30 466 GEAIN ELEVATOR INVESTIGATION. any railroad company, or the stock owned or controlled by any rail- road company? Mr. Updike. Well, I don't think so. I think — that is Mr. Marble. An independent corporation? Mr. Updike. An independent corporation. Of course the stock of that would be owned all over the country. If you will allow me to, I will just show you Mr. Marble. If you will show me, I will take this after the noon recess is over. It is a long contract, I see. This is a contract between the Union Stock Yards Company of Omaha (Limited), a corporation, party of the first part, and the Updike Grain Company, of Douglas County, State of Nebraska, party of the second part, by which the Union Stock Yards Company agrees to build certain switch tracks to this elevator — is that right ? Mr. Updike. Yes, sir. Mr. Marble. And you agree to build and operate an elevator at that point? Mr. Updike. Yes, sir. Mr. Marblb._ And there are a number of clauses concerning which I am not now at all ready to examine the witness. Commissioner Lane. Are you ready to examine the witness further upon any other questions ? Mr. Marble. No, sir. Commissioner Lane. We will adjourn until half -past 1. Mr. Marble. I would prefer that. Commissioner Lane. We will take an adjournment now until half- past 1. '' At 12.15 p. m., the Commission took an adjournment until 1.30 p. m. after recess. 1.30 o'clock p. m. N. B. Updike resumed the stand. Mr. Marble (referring to contract previously produced by wit- ness). Mr. Updike, is this the only contract existing between the Updike Grain Company or any one m its behalf and the Union Stock Yards Company of Omaha (Limited) ? Mr. Updike. What is the last question? Mr. Marble. This is the only contract between the two companies? Mr. Updike. Yes, sir. Mr. Marble. Has this contract been modified in any way since it has been made? Mr. Updike. No, sir. Mr. Marble. Is it still in force? Mr. Updike. Yes, sir. Mr. Marble. And is the practice now according to the terms of this contract ? Mr. Updike. Well, not exactly. We have not done anything since the new law weiit into effect with an attempt to enforce that contract in any way. We have been waiting. Mr. Marble. According to this contract, the Stock Yards Com- pany furnish the Updike Grain Company with a site for an elevator ? Mr. Updike. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 467 Mr. Marble. Without any charge for that site, except as otherwise appears in this contract ? Mr. Updike. Yes, sir. Mr. Marble. And no compensation for the site does otherwise ap- pear in this contract, does it ? Mr. Updike. No, sir. Mr. Marble. The raihoad furnishes and maintains at its own cost the grade and rails and all the side tracks to the elevator, according to this contract ? Mr. Updike. Yes, sir. Mr. Marble. And is, during the time those tracks remain, to main- tain them at its own cost — the Terminal Railway? Mr. Updike. Yes, sir. Mr. Marble. The railway remains the property — the side track and all of it remains the property of the Union Stock Yards Company? Mr. Updike. Yes, sir. Mr. Marble. You have exclusive use of those side tracks, except in case the general manager of the Union Stock Yards Company should conclude that others might be served without any detriment to your business ? Mr. Updike. Yes, sir; that is, just the new tracks they built for us. Mr. Marble. The new sidings? Mr. Updike. Yes, sir. Mr. Marble. And if the use of these side tracks by anyone else should be detrimental in any way to your business, you have the exclu- sive right, according to this contract ? Mr. Updike. Yes, sir; if that is what it says. I do not remember just exactly. Mr. Marble. And this contract is perpetual, except for the pro- vision that if at any time you should cease to carry on the business of the elevator there for a period of six months, the Stock Yards Com- pany may give you thirty days' notice and so end the contract ? Mr. Updike. Yes, sir. Mr. Marble. And your company agrees that if you should abandon or discontinue the business, you will remove your elevators within a reasonable time, or those improvements will go with the land and belong to the Stock Yards Company? Mr. Updike. Yes, sir. Mr. Marble. You have a right to remove them within a reasonable time? Mr. Updike. Yes, sir. Mr. Marble. And if you remove your inprovements from those premises you are to pay to the Stock Yards Company the cost of the construction of these side tracks, not to include the cost of material in the side tracks, but only the cost of the labor in grading and laying the tracks, and you have agreed that the pr'ce of that labor, the cost of it, is $10,588.52? Mr. Updike. Yes, sir. Mr. Marble. You agree to promptly unload or load all cars that are set to your elevator by the TJnion Stock Yards Company for loading or unloading and agree to pay for any and all damage that may be done to cars, locomotives, or tenders belonging to the Union Stock Yards Company while they are being loaded or unloaded ? Mr. Updike. Yes, sir. 468 GBAIN ELEVATOR INVESTIGATION. f Mr. Marble. And do you agree not to assign this contract ? Mr. Updike. Yes, sir; without their consent. Mr. Marble. Without the consent of the company? Mr. Updike. Yes, sir. Mr. Marble. Now, that brings us to the portion which you indi- cated to me before adjournment as what you considered as the part being inquired into. Mr. Updike. I think so. Mr. Marble. With the Commission's consent I will read it [reading] : It is further agreed that in consideration of the erection of said ternjinal elevator and the location of the same upon the tracks of said Union Stock Yards Company of Omaha (Limited) and the agreement of said Updike Grain Company to maintain said terminal elevator upon said right of way, and not to erect a terminal elevator elsewhere in the city of Omaha or South Omaha,that if any railroad company whose line of road enters the city of Omaha, Council Bluffs, or South Omaha shall hereaJf ter construct or operate a terminal elevator in either of said cities for the transfer of grain, and shall operate the same free of charge to those grain dealers whose grain may be transferred through said elevator, then and in that event the Union Stock Yards Company of Omaha (Limited) will modify this contract to the extent of its ability for the purpose of placing and keep- ing the Updike Grain Company on a parity with grain dealers using such terminal eleva- tor on such lineof road hereinbefore referred to: Provided, however, The Union Stock Yards Company of Omaha (Limited) shall at all times be entitled to charge and receive a reasonable compensation for any and all services rendered under this contract. It is mutually agreed between the parties hereto that all shipments of grain from connecting lines for unloading at said second party's elevator and all shipments of grain from said elevator to connecting lines shall be switched by said first party at the switching charges for grain, as contained in their schedule of rates published by said Union Stock Yards Company of Omaha (Limited) at the time the said switching service is performed. The switching of empty cars to and from said second party's elevator shall be free where said empty cars are intended for loading, or have been unloaded by the said second party, but where empty cars are ordered into said elevator for loading and no load is obtained, and said empty cars are switched out, there shall be a charge made and collected by said first party from said second party of 50 cents per car. Then follows a provision that you must properly tag all cars. Is that right? Mr. Updike. Yes, sir. Mr. Marble. And a provision that for reconsignment of a loaded car you shall pay $1, and for reconsignmen(t of an empty car 50 cents ? Mr. Updike. Yes, sir. Mr. Marble. The Updike Grain Company is to pay the taxes on the improvements it makes on the land, but the Stock Yards Com- pany pays the taxes on the land ? Mr. Updike. Yes, sir. Mr. Marble. You agree in case that the building is destroyed by fire or in any other way that the insurance money shall go first to pay the Stock Yards Company for the cost of labor in these sidetracks ? Mr. Updike. Yes, sir. Mr. Marble. I will also read the last paragraph to the Commission (reading) : It is further agreed between the parties hereto that should the elevator now erocted upon the Stock Yard Comjjany's premises by the grain company be destroyed by fire, or the elements, or should it collapse, or fall down, any insurance money that shall be received or shall be due the grain company in event of such destruction shall be used either to rebuild the elevator, or in case the same is not rebuilt, to pay the Stock Yards Company for the cost of the labor performed in the construction of all improvements, such as railroad tracks, switches, and other conveniences, now placed upon or near the GRAIN ELEVATOR INVESTIGATION. 469 said elevator by the Stock Yards Company, which said sum amounts to $10,588.52, and shall be paid by the grain company in manner and form as follows, to wit: Should the elevator above referred to be destroyed in the manner hereinbefore referred to within one year from its operation, the sum of $10,588.52; or within two years the sum of $8,470.80; or within three years the sum of $6,353.10; or within four years the sum of $4,235.40; or within five years the sum of $2,117.70. But should the elevator be destroyed at any time subsequent to five years from the 2d day of August, 3905, then and in that case the party of the second part will not be required to pay to the party of the first part any part of the said sum of $10,588.52. And, in any event, in case of the destruction of said elevator in any manner, the cost of placing said improvements by the second party at or near the elevator shall be paid for by the grain company as herein specified, the material composing such improvements and con- veniences as made and placed by said first party are to remain as they are now, the property of the said first party. Now, what part of this contract has been discontinued ? Mr. Udpike. Well, I could not say that any of it has been really discontinued. We are just waiting. Mr. Marble. What part is in abeyance, then? Mr. Updike. That is the part, where the Union Stock Yards agree to protect us against the action of any railroad. Mr. Marble. Do you consider that the contingencies provided for in this contract have arisen yet ? Mr. Updike. Yes, sir. Mr. Marble. In what respect? Mr. Updike. The railroads have built elevators here where they perform the transfer of grain free. Mr. Marble. What railroads ? Mr. Updike. The Great Western. Mr. Marble. The Chicago Great Western? Mr. Updike. Yes, sir. Mr. Marble. What is it they do free? Mr. Updike. They transfer grain. Anybody can ship grain in here, care of their elevator, and ship it out, and it does not cost a cent. Mr. Marble. .Do you get free storage? Mr. Updike. Yes, sir. Mr. Marble. How long? Mr. Updike. I do not think they charge any storage. Mr. Marble. No matter what the length of time you hold the grain ? Mr. Updike. No, sir. Mr. Marble. Can you hold it indefinitely? Mr. Updike. Yes, sir. Mr. Marble. Do they give you cleaning, clipping, and grading? Mr. Updike. I think they would. Mr. Marble. Do they publish a tariff in that regard? Mr. Updike. I do not know whether that tariff was ever published. Mr. Marble. Do you know whether or not they are actually giv- ing such service free ? Mr. Updike. Yes, sir. Mr. Marble. You know they are ? Mr. Updike. Yes, sir. Mr. Marble. To whom have they given such service free? Mr. Updike. The Updike Grain Company. Mr. Marble. What service have they given free ? Mr. Updike. All the service you refer to. I do not know that we have had them clip any grain or clean it. We have had them store it and mix it. 470 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. You did not request them to clip or olean it? Mr. Updike. Well, I am not sure; but if we did, they did it. . Mr. Marble. Without charge ? Mr. Updike. Yes, sir. Mr. Marble. You have not been refused? Mr. Updike. No, sir. Mr. Marble. And you consider that that, according to this con- tract, would call on the Union Stock Yards Company to modify this contract to an extent that it would place you on an equality with parties operating with the Great Western? Mr. Updike. I think it would make us close the elevator up. Mr. Marble. Is your elevator closed up or practically out of use now? Mr. Updike. No, sir; we have taken advantage of that clause. Mr. Marble. What advantage have you taken of it? Mr. Updike. We have billed on the Union Stock Yards for the money. Mr. Marble. Have your claims been allowed? Mr. Updike. Yes, sir. Mr. Marble. To what extent ? Mr. Updike. $8,000. Mr. Marble. What did you make the claim for? Mr. Updike. Well, we have not — ^we have been waiting. We told them and explained to them and showed them that we are handi- capped in that way, and they paid us $8,000. We have not made a final settlement on that. Mr. Marble. How did you determine on the figure of $8,000? Mr. Updike. Well, it cost us a great deal more man that to run our elevator and we got all we could to date. Mr. Marble. It is your understanding that you would charge them what ? Enough to make your profits normal ? Mr. Updike. No; profits have nothing to do with it. We wanted to make the cost of operating that elevator equal to the cost of running through the railroad elevator. Mr. Marble. And they have paid you $8,000 without determining the entire amount ? Mr. Updike. Yes, sir. Mr. Marble. The entire amount has not been determined ? Mr. Updike. No, sir. Mr. Marble. Have you any idea what that amount is? Mr. Updike. No ; we have not said anything to them or done any- thing until this new law was in effect. We want to be sure we are legally entitled to any protection. Mr. Marble. When was the $8,000 paid? Mr. Updike. Different times last year, or the last crop year. Mr. Marble. Different times the last crop year ? Mr. Updike. Yes, sir. Mr. Marble. During what period are you entitled to this considera- tion, as you view it ? Mj. Updike. Ever since the railroads commenced to operate their own elevators. Mr. Marble. When was that ? Mr. Updike. Well, that was probably one year. GEAIN ELEVATOR INVESTIGATION. 471 Mr. Marble. About a year ago ? Mr. Updike. I do not know exactly when the Great Western opened an elevator. Mr. Marble. How much a crop year, in your opinion, would this payment reach? With your understanding of this contract and the obligation of the Stock Yards Company under it, what would be the average payment per crop year that you would be entitled to under present conditions? Mr. Updike. We intended we would collect the cost of operating that elevator if elevators were operated by railroads, no matter how much it cost us to operate the elevator. That depends, on the amount of grain handled through it. Mr. Marble. How much did it cost you the year 1905 to operate that elevator? Mr. Updike. $20,000 to $25,000, 1 judge. Mr. Marble. Was last year a normal year? Mr. Updike. This has not run a normal year. Mr. Marble. As you know the grain business, was last year a normal year. Mr. Updike. I judge so. Mr. Marble. Your understanding would be that the Stock Yards Company would pay you $20,000 to $25,000 a year? Mr. Updike. Hardly. They have to get something out of switch- ing, for the service they perform. We have got to divide that up some. We can not expect them to do work for nothing. Mr, Marble. These switching charges provided for in here, are they such switching charges as are paid for by others to the Stock Yards Company for similar service? Mr. Updike. Yes, sir; absolutely, so far as we know, and I never heard anyone say they paid anything different. Mr. Marble (referring to contract). I find here — what is this provision for $1 per car for loaded cars and 50 cents for empty cars? Mr. Updike. The empty cars, is in case we order in some empty cars and can not load them, they will switch them back. A loaded car, the $1 charge mentioned there is the same they charge anyone else for switching grain from one railroad to another. Mr. Marble. Is the 50-cent charge the same as they would charge anyone else ? Mr. Updike. I think so. Mr. Marble. Do you know ? Mr. Updike. I do not think they would perform that service for anyone else. Mr. Marble. You think they charge that only for you ? Mr. Updike. We are the only ones there. Mr. Marble. You are the only ones that such a service could be performed for ? Mr. Updike. Yes, sir. Mr. Marble. How does this $4 charge come up that was referred to in your testimony this morning ? Mr. Updike. There is no $4 charge. Mr. Marble. How about the two in and two out ? Mr. Updike. It is two in and three out. Mr. Marble. You pay one in and how much out? 472 GEAIN ELEVATOR INVESTIGATION. Mr. Updike. I pay two in. I pay whatever their tariff calls for. The part you read in regard to switching charges does not really refer to what you are Mr. Marble. It refers to another matter? Mr. Updike. It refers to another matter. If you read it, it will tell you. Mr. Marble (reading from contract) : The switching of empty cars to and from said second party's elevator shall be free where said empty cars are intended for loading, or have been unloaded by the said second party, but where empty cars are ordered into said elevator for loading and no load is obtained and said empty cars are switched out, there shall be a charge made and collected by said first party from said second party of 50 cents per car. Mr. Updike. Yes; that means where we order empty cars and do not use them and they are sent back, it is 50 cents. Mr. Marble. But on switching loaded cars in you pay $2 ? Mr. Updike. $2. Mr. Marble. And a loaded car out you pay $2 ? Mr. Updike. We do not pay anything. The railroads take care of that. Mr. Marble. You pay the Terminal Company ? Mr. Updike. No ; we pay the $2 to the Terminal Company and they collect 13 from the railroad taking it out. Mr. Marble. Is any portion of that switching charge, either ingoing or outgoing, refunded to you ? Mr. Updike. No, sir; excepting — ^no, sir. Mr. Marble. Excepting what? Mr. Updike. Unless you call that part of the contract you referred to Mr. Marble. This, where you are to be protected and placed on a parity? IVIr. Updike. Yes, sir. Mr. Marble. There is no refunding that refers to switching charges, is there ? Mr. Updike. No, sir. Mr. Marble. It is simply to make you, as an elevator operator, on even terms with those that put grain through the Chicago Great Western Elevator ? Mr Updike. Yes, sir. Mr. Marble. Do they refund switching charges to place you on even terms ? Mr. Updike. No, sir. Mr. Marble. You determine the amount to be refunded by the operating charges? Mr. Updike. Yes, sir. Mr. Marble. So far as switching charges are concerned, your testi- mony is that you pay the published rate? Mr. Updike. Yes, sir. Mr. Marble $2 in and $3 out? lilr. Updike. No; $2 in. That is all. Mr. Marble. $3 out is paid on your grain ? Mr. Updike. By the railroad company. Mr. Marble. You receive no portion of that payment? Mr. Updike. No, sir. GRAIN ELEVATOK INVESTIGATION. 473 Mr. Marble. Is that $3 out absorbed for other dealers besides yourself, do you know? Mr. Updike. Yes, sir. Mr. Marble. That is a uniform arrangement in this market? Mr. Updike. Yes, sir; protected by published tariffs of all rail- roads. Mr. Marble. This provision of a dollar reconsigmnent on loaded cars and 50 cents on empty, is that adhered to ? Mr. Updike. Yes, sir. Mr. Marble. Is that the customary charge to all in this market? Mr. Updike. No, sir — ^yes; it is for them. Mr. Marble. For the Stock Yards Company? Mr. Updike. Yes, sir. The Union Stock Yards Company charge us the regular published tariff on everything. Mr. Marble. They reconsign for everyone? Do you mean that anyone else is ia position to ask them to do that ? Mr. Updike. No, sir. Mr. Marble. You are the only one so situated ? Mr. Updike. Yes, sir. Mr. Marble. Do you receive any portion of that fee back ? Mr. Updike. No, sir. Mr. Marble. Otherwise than you stated as to the allowance for operating? Mr. Updike. Well, I do not know that we would connect those. Mr. Marble. You would not connect the two at all? Mr. Updike. No, sir. Mr. Marble. What is the reason for this graduation according to time of the amount to be paid by you for the side track in case of discontinuance ? Mr. Updike. Merely that they were to that much expense of build- ing the tracks, grading for the tracks, and they expected to make some profit out of their switching charges, and after five years they thought they would have enough profits out of the switching charges to relieve us of responsibility. Mr. Marble. That is a guarantee by you to them that they would not lose by that investment? Mr. Updike. Yes, sir. Mr. Marble. Is Mr. Kenyon a stockholder in your company? Mr. Updike. No, sir. Mr. Marble. Do you get any elevation allowance from this Ter- minal Company? Mr. Updike. No, sir. Mr. Marble. Or from any company? Mr. Updike. We get any elevation allowance that is paid by any railroad. Mr. Marble. As a matter of fact, are you now receiving any eleva- tion allowance? Are you now charging any and expecting it? Mr. Updike. We have got so mixed up on this elevation allowance proposition I will have to kind of explain. Mr. Marble. Very well, in your own way. Ir. Updike. We collect from the Union Pacific for unloading their cars, and that is the only way we get any allowance at the present time. You understand, there is one railroad here that will pay us 474 GRAIN ELEVATOR INVESTIGATION. for unloading their cars, but we have not attempted to collect that at the present time. Gommissioner Glark. What road is that ? Mr. Updike. That is the Wabash. They do it bypubhshed tariffs. Gommissioner Lane. What other road has put in elevators besides the Great Western? Mr. Updike. The Rock Island at Gouncil Bluffs. Gommissioner Lane. Those are the two elevators owned by rail- roads that you have to compete with ? Mr. Updike. I think they are the only two; yes, sir. Gommissioner Glark. When did the Chicago Great Western build theirs ? Mr. Updike. Well, they have been building it about three years. They completed it about the same time we did ours. Gommissioner Glark. Did they begin at that time furnishing this free service? Mr. Updike. Yes, sir. Commissioner Glark. And kept it up continuously? Mr. Updike. Yes, sir. Gommissioner Lane. Have they ever published a tariff giving that free service? Mr. Updike. I am not sure of that, whether they have or not. I think, though, that they have, part of it. Commissioner Lane. Suppose you were not able to recover from the Stock Yards Company anything whatever, what would be the effect of the competition of those two elevator companies upon your business as an elevator man ? Mr. Updike. We think it would compel us to close our elevator, pay our penalty, and move it away from there. Commissioner Lane. Is this business of railroads running elevators and giving free elevator service beneficial to the city of Omaha,, or is it injurious? Mr. Updike. Well, there is a kind of debate on that question. The people that own their own elevators feel that it is very injurious tons. Gommissioner Clark. If you should be obliged to pay that penalty and move that elevator away, could you locate it anywhere else in Omaha or Council Bluffs where you could operate it successfully? Mr. Updike. Well, if we were compelled to do that, we rather believe that some other railroad possibly would build elevators here, and we feel that all railroads would have to build elevators here and do away with all private elevators. Commissioner Lane. That is what it must come to, that all rail- roads must have elevators to themselves or else the railroads must go out of the elevator business? Mr. Updike. That is the way we look at it. Gommissioner Clark. If the railroad gives an elevator allowance and allows it to all elevators, does the company that has a line of country elevators on the line of that railroad, which also owns a large terminal elevator here, have an advantage over others with relation to the buying and marketing of grain that originates on the line of that railroad? Mr. Updike. I do not think so. GBAIN ELEVATOR INVESTIGATION. 475 Commissioner Lane. That depends on the size of the allowance, don't it? Mr. Updike. Why, certainly. I was thinking you referred to a cent and a quarter a hundred. Commissioner Clark. It does not make any difference whether it is a cent and a quarter or 5 cents, so it is uniform. That question involved an allowance made alike to all elevators on grain coming in over that railroad. Mr. Updike. If you do away with the amount of the allowance, I would certainly have to say that could cut some figure. Commissioner Clark. Let me put that question again. I will ask the stenographer to read it as I stated it first. (The question was repeated by the stenographer as follows) : If the railroad gives an elevator ^.llowaiice and allows it to all elevators, does the company that has a line of country elevators on the line of that railroad, which also owns a large terminal elevator here, have an advantage over others with relation to the buying and marketing of grain that originates on the line of that railroad? Mr. Updike. I would have to take into consideration the amount of the allowance. Commissioner Clark. I do not see that that cuts any figure, but we will assume that the allowance is a cent and a quarter a hundred and assume that a given railroad allows all elevators in Omaha the cent and a quarter a hundred for unloading the grain that comes in off'the line of that railroad, and there is on that railroad a company owning a large terminal elevator on its track here and a line of country elevators along the line of that railroad. Would the company owning those country elevators and that terminal elevator have an advantage in buying and marketing grain originating on that railroad over a man who had not the advantages of that line of country elevators and that terminal ? Mr. Updike. Well, I do not think he would. The question there is different from the first one. Commissioner Clark. Well, would the man who owns the elevator and who is handling principally his own grain and receiving the allow- ance be at an advantage or a disadvantage, as compared wi^h the man who did not own the elevator but who has got the same allowance ? Mr. Updike. Not if that allowance was not any more than it costs to operate the elevator at the terminal point. Commissioner Clark. Well, assume that they get the same allow- ance, whether it be more or less, does the company that owns the elevator and that gets the allowance on its own grain and that handles principally its own grain have an advantage over other buyers who do not own their own elevator but who do get the same allowance or an elevator that handles principally the grain of other people and gets the same allowance? Mr. Updike. I do not think he would, if he performed the service and the charge was no more than the cost. Commissioner Clark. Well, would not the advantage be just the same, Mr. Updike, if there is any, where they both got an allowance of 1 cent or 2 cents or 3 cents or 5 cents? If there is an advantage in the situation, would it not be just the same regardless of what the allowance was? Mr. Updike. You have kind of got me mixed up on your original 476 GRAIN ELEVATOR INVESTIGATION. auestion. If you mean if a man has a terminal elevator here in imaha, brings the grain in here dn that road and all terminal ele- vators get the same allowance from the railroad company, then, I say, the man who buys the grain originally at the country station does not have any advantage over anyone else, provided that allow- ance is not greater than the cost of the service. Now, the point where you mix me a little is, the fellow in Omaha would not have any advantage, in any event if they all got the same and aU did the same work. Commissioner Clark. The point I was trying to get at was this: Here is a company that owns a large terminal elevator here in Omaha and also a line of elevators on the line of the railroad. Mr. Updike. Yes, sir. Commissioner Clark. Ninety-five per cent of the grain that goes through that elevator is their own grain, bought by them in the country, unloaded here, and on which they receive this allowance, and which they market where they choose. Here are other buyers out in that market who bring their grain into Omaha and perhaps put it through another elevator, which other elevator gets the same allowance, a cent and a quarter per hundred pounds for unloading that grain. Now, has this company, with the big elevator and the line of country elevators and handling its own grain, an advantage in a business way in the general results as compared with the men who do not? « Mr. Updike. Which one of those men, the. one in Omaha or the one in the country? You said against the man in the cotmtry who buys his grain and ships to another elevator? Commissioner Clark. A man in Omaha who buys in the same country. Mr. Updike. I do not think so. I think it would have to be just the same. I do not think there would be any advantage if they were both in the same condition. Commissioner Clark. There is a very wide difference of opinion on that, according to the testimony that has been placed before us, and I am asking, not with any idea of confusing you, but I just want your opinion as an expert grain man. Mr. Updike. I am trying to give you the answer to just what you want. Commissioner Clark. I guess you have answered it aU right enough. You said that if one railroad or two continue operating the elevators and giving free service, the logical result is that aU the rail- roads must do the same thing. Mr. Updike. Yes, sir. Commissioner Clark. I suppose it conversely follows that if all railroads keep out of the elevator business that the business situation wUl be better. Mr. Updike. That is the way we feel in Omaha. Mr. Marble (referring to contract already produced by Mr. Updike). This contract you have handed me is a true copy of the contract ? Mr. Updike. Yes, sir. Mr. Marble. Except for the signatures ? Mr. Updike. And they are the officers there. Mr. Marble. Will you add the signatures ? GRAIN ELEVATOR INVESTIGATION. 477 Mr. UPDIKE. Yes, sir. Mr. Marble. I will offer the contract and make an exhibit of it, with the understanding that Mr. Updike will add the signatures before we leave. (The contract, with signatures furnished hy Mr. Updike, is hereto annexed and marked "Exhibit No. 1 to Mr. Updike's testimony.") Mr. Marble. You had an experience operating or attempting to operate elevators on the Chicago and Northwestern Railroad, did you not ? Mr. Updike. Yes, sir. Mr. Marble. When was that? Mr. Updike. I have a line of elevators on their line now. Mr. Marble. When you began buying and operating elevators on the road, how long ago was that ? Mr. Updike. Ten years. Mr. Marble. How did you get along then, so far as your treatment by the railroad company is concerned, I mean ? Mr. Updike. The raihoad company then — the territory I went into was not supposed to be very much of a grain territory. I rented and leased and Dought elevators along, the line. Mr. Marble. Did the railroad seem to welcome your advent into that territory? Mr. Updike. Yes, sir. They did not seem to think there was very much grain down there. Mr. Marble. You did come into conflict at that time with the Nye, Schneider, Fowler Company, did you not ? Mr. Updike. Yes; I came into competition with them. Mr.. Marble. When you came into competition with them, did that change the attitude of the railroad at all? Mr. Updike. Well, not for a long while. Mr. Marble. Did it finally? Mr. Updike. Well, I had considerable trouble about getting one or two leases signed up, which were afterwards signed up. Mr. Marble. Is that sort of trouble all over with now? Mr. Updike. I think so; yes, sir. Mr. Marble. You are now operating a line . of elevators on that road? Mr. Updike. Yes, sir. , Mr. Marble. Do you know what the situation is on that road if anyone now attempts to start into business as you did then? Mr. Updike. I think so. Mr. Marble. What is that situation now? Mr. Updike. I think it could be done. Mr. Marble. You think there would be no obstacles put in the way by the railroad ? Mr. Updike. Well, the territory is pretty well filled up now. I do not think anyone would try to do it. Mr.' Marble. Have you had any experience with the Eock Island Railway, attempting to get elevation allowances from them ? Mr. Updike. Yes, sir. Mr. Marble. When was that ? Mr. Updike. Last year. Mr. Marble. Did you make a claim upon the Rock Island Railway for an elevator allowance? 478 GRAIN ELEVATOR INVESTIGATION. Mr. Updike. No, sir. If I did, I got it. Mr. Marble. Do you know whether you did or not? Mr. Updike. It might have been on a few cars. I have not shipped but a few cars over the Rock Island. Mr. Marble. Do you remember asking the Rock Island to pay elevation and getting an answer from some one other than the Rock Island Railroad? Mr. Updike. Yes, sir. Mr. Marble. When was that? Mr. Updike. Last year. Mr. Marble. From whom did you get the reply? Mr. Updike. The J. Rosenbaum Gram Company. Mr. Marble. Had you any communication with the J. Rosenbaum Grain Company ? Mr. Updike. No, sir. Mr. Marble. You communicated with the railrqad? Mr. Updike. Yes, sir. Mr. Marble. And the J. Rosenbaum Grain Company answered the letter? Mr. Updike. No, they telephoned me. Mr. Marble. What did they say? Mr. Updike. They said if any one collected a refund from the Rock Island it would be the J. Rosenbaum Grain Company on grain sold to them. Mr. Marble. Did you have any explanation wjij they were reply- ing to you instead of the railroad company? Mr. Updike. I never bothered the Rock Island much after that. Mr. Marble. That was enough? Mr. Updike. That was all i cared about. Mr. Marble. Do you know whether or not the Rock Island is pay- ing any refund or consideration in Chicago on grain that goes directly to Chicago without going through Omaha ? Mr. Updike. I do not. Mr. Marble. You do not know anything about that? Mr. Updike. No, sir. Mr. Marble. Has there been anything in the bidding of the Rosen- baum people, or any other Chicago firm shipping directly there, that gave you reason to believe that they were getting some consideration ? Mr. Updike. Not at present. Mr. Marble. Last year? Mr. Updike. Last year; yes, sir. Mr. Marble. TeU us about that. Mr. Updike. Last year all railroads leading into Chicago on all grain bid on — aU their bids on railroads leading into Chicago — you could get more for the grain going straight in than if it came to Omaha and was transferred here. Mr. Marble. Do you know why that was? Mr. Updike. We naturally supposed they would rather haul to Chicago than to bring it to Omaha. Mr. Marble. And made a reduction in the rate? Mr. Updike. He just paid the elevation charge. Mr. Marble. In that way the elevation charge did get reflected into the price, you think? Mr. Updike. Well, it did when paid to Chicago people. GRAIN ELEVATOR INVESTIGATION. 479 Mr. Marble. Do you distinguish between an allowance and an elevator charge? Mr. Updike. Not if it is the same service. I can explain that, Mr. Marble, to you if you want to know. The reason that was reflected in the price by the Chicago bidders was because they col- lected a transfer charge from the roads leading out of Chicago. In other words, we always thought here that they did not need the elevation charge to get the grain. Mr. Marble. Do you know whether or not any portion of the stock of your company — I asked you this question this morning, but I did not perhaps direct your attention to this matter in partic- ular — is owned by any stockholder in the Union Pacific road ? Mr. Updike. I know it is not. Well, I do not know as I want to be positive on that. I am practically sure it is not. Mr. Marble. Is Senator Millard a stockholder in your grain company? Mr. Updike. Yes, sir. Mr. Marble. Do you know whether or not he is a stockholder in the Union Pacific ? Mr. Updike. No, sir. Mr. Marble. Do you know he is not, or do you know? Mr. Updike. I do not know. That is the reason I altered that answer. Mr. Marble. A year or so ago in this market — I will ask you this first : Is there any arrangement at the present time or understanding or agreement or method by which bidders of the country for grain for this market bid the same price for grain, or nearly the same price ? Mr. Updike. No, sir; not that I know of. Mr. Marble. You bid the country? Mr. Updike. Yes, sir. Mr. Marble. Do you consult any of your competitors in the terri- tory in which you bid about the bids, or advise with them? Mr. Updike. We exchange bids with everyone we can. Mr. Marble. You exchange bids? Mr. Updike. Yes, sir. Mr. Marble. With your competitors? Mr. Updike. Yes, sir. Mr. Marble. And in exchanging bids, do you also inform your competitors and are you informed by them as to the actual price to be paid to the farmer, or is there an uncertain element of profit included in the business? Mr. Updike. When I answered that other question, I thought you referred to bids made by terminal elevators. Mr. Marble. I am referring to any agreement by which you at the country points hold the prices together — line up the market, I think is the phrase we had at Kansas City? Mr. UpDiKE. No, sir; we have no agreement. Mr. Marble. Do you have any practice without agreement which accomplishes that result? Mr. Updike. We just instruct our agents to meet competitive prices. Mr. Marble. And to know what competitive prices are? Mr. Updike. That is necessary. Mr. Marble. J^ it necessary that your ppmpetitor should know jour prices. 480 GRAIN ELEVATOR INVESTIGATION. Mr. Updike. I presume he thinks so. Mr. Marble. Do you think so yourself? Mr. Updike. Well, yes. Mr. Marble. Why— how? Mr. Updike. If he does not know, somebody will tell him it is one thing when it might be another. Mr. Marble. So, as a matter of fact, in the bidding at the country stations you deem it good business policy, and follow that practice, of advising your competitors who are buying there, and of being advised each by the other, of the prices? Mr. Updike. That is the reason I tried to change the other answer. We do not do that with all country people at country points. Some do not care to have us tell them and we do not get the information from them. What I meant was that we exchange card bids here at Omaha with anybody that we can get. Mr. Marble. Line elevators, you mean? Mr. Updike. Anybody that sends bids to other dealers in that country. Mr. Marble. When the price maker for a liae elevator gives you his bid, does that inform you what is to be paid at stations where you are operating by your competitor on the following day? Mr. Updike. No, sir. Mr. Marble. What undetermined element is there ? Mr. Updike. His bid he makes us for grain has nothing to do with what he pays. Mr. Marble. What I am getting at is, do you advise as to what you shall pay the farmer ? Mr. Updike. No, sir. Mr. Marble. Or inform each other what you propose to pay? Mr. Updike. No; the Updike Company will give that information to everybody — will take it and get it to them as quick as we can. We sometimes have trouble finding out what a competitor is paying. Mr. Marble. Do your buyers consult and advise with the buyers at other country points ? Mr. Updike. I do not know that they advise with them. They try to find out what the other buyers are bidding. Mr. Marble. Do they try to let the other buyers know what they are bidding? Mr. Updike. Yes, sir. Mr. Marble. They do? Mr. Updike. Yes, sir. Mr. Marble. And if the other buyers are influenced, that is a con- sequence? Is it a desire to have the other buyers influenced by that that leads you to disclose to them the price you are paying? Mr. Updike. We feel the nature of the business — it is the same as any practical business — we have got to let the people know what we are paying for grain. It is absolutely necessary. The farmers come in and everybody else comes in and wants to know what we are paying and we have to tell them. It is an every day course. We feel that it is better to let everybody laiow, for many different reasons, exactly what we are paying, as near as possible. Mr. Marble. Do you let your competitor loiow in advance of your bidding what you are going to bid — say, the afternoon of the day before ? GRAIN ELEVATOR INVESTIGATION. 481 Mr. Updike. No, sir. Mr. Marble. Not at all? Mr. Updike. No, sir — oh, once in a while we might, if they ask us; not as a rule. Mr. Marble. Have you any practice of lining up the market so you will be together in the prices you pay? Mr. Updike. No, sir. Mr. Marble. Not at all? Mr. Updike. No, sir. Mr. Marble. How are these prices at country points, as a matter of fact, made by you and your competitors from day to day? Do you find yourself out of line with them, or are they close together? Mr. Updike. They vary. We make up our prices and send them to our agents. Sometimes we are a half a cent and sometimes a cent away from the price of our competitors ; sometimes we lap. Mr. Marble. Is there any general rule about that ? Mr. Updike. No, sir. Mr. Marble. Is there generally a httle difference? Mr. Updike. Yes, sir. Mr. Marble. Now, there has been a time when this competitive condition of making prices did not obtain in the Omaha market, has there not? Mr. Updike. Yes, sir; in the Omaha market? No, sir. Mr. Majbble. Well, the country bidding? Mr. Updike. Nor the country bidding. You get mixed on the country bidding and the station. We call it different. Mr. Marble. I mean the price you make at your country stations. Your country bidding is where you buy grain from other men than the farmer? Mr. Updike. Yes, sir. Mr. Marble. I want to be plain all the time about the prices paid at your elevators to the farmers. Now, your answers have been with that understanding? Mr. Updike. Yes, sir; except that first one, where I tried to change that first answer. Mr. Marble. How long ago was that that there was a different state of affairs? Mr. Updike. About fifteen months. Mr. Marble. About fifteen months? Mr. Updike. Yes, sir. Mr. Marble. Then the managers of line ^levators — what did you do? Mr. Updike. Well, we conferred more than we do at present. Mr. Marble. Did you agree ? Mr. Updike. Well, no; we did not agree exactly. Mr. Marble. How did you confer? Was it over the telephone ? Mr. Updike. Yes, and personally. Mr. Marble. A number of you would get on the same telephone line and talk together? Mr. Updike. I do not know that I ever got on the same telephone line with anyone else. Mr. Marble. Well, you would be talking to two or three persons at once? S. Doc. 278, 59-2 31 482 GEAIN ELEVATOB INVESTIGATION. Mr. Updike. Yes, I suppose so. Mr. Marble. One at Lincoln? Mr. Updike. Yes, sir. Mr. Marble. And one at Fremont? Mr. Updike. Yes, sir. Mr. Marble. And perhaps others in this city? Mr. Updike. Yes, sir. Mr. Marble. And as the result of those conversations, you agreed on the prices to be paid the following day. Is that it ? Mr. Updike. Well, no ; not what would be paid. We agreed on what we thought grain was worth. Mr. Marble. Ajid as a matter of practice the following day you paid what you thought grain would be worth? Mr. Updike. We did in some cases and in some we did not. Mr. Marble. There was no ironclad agreement about that then at that time? Mr. Updike. No, sir. Mr. Marble. Is Mr. Horace C. Burt now a railroad official in this city? Mr. Updike. In this city? Mr. Marble. Yes, sir. Mr. Updike. I do not think so. Mr. Marble. How long since he has been in this city or in this State? Mr. Updike. I think two or three years ago. Mr. Marble. Do you know whether or not he was interested in the grain business ? Mr. Updike. I understand he was. Mr. Marble. You understand he was? Mr. Updike. Yes, sir. Mr. Marble. With what company? Mr. Updike. The Nye, Schneider, Fowler Company. Mr. Marble. He was with the Union Pacific Railroad? Mr. Updike. Yes, sir. Mr. Marble. In what position? Mr. Updike. I believe he was vice — I guess he was president. Now, I am not sure he was a stockholder at the time he was with the railroad, but it has been publicly announced that he was a stock- holder since he left. Mr. Marble. He was formerly with the Northwestern Railroad, too, was he not ? Mr. Updike. Yes, sir. Mr. Marble. In what capacity there? Mr. Updike. General manager. General manager — that is, with the F., E. & M. V. — the Fremont, Elkhorn and Missouri Valley. Mr. Marble. Do you know about three gentlemen by the name of Patten, in Chicago, being interested in Bartlett, Frazier & Co. ? Mr. Updike. I have understood they were. Mr. Marble. Do you know whether or not they have any railroad interest ? Mr. Updike. No, sir. Mr. Marble. Do you know whether or not they have an interest in the Illinois Central? Mr. Updike. I do not. GBAIN ELEVATOR INVESTIGATION. 483 Mr. Marble. That is all. Mr. E. P. Smith. If your Honors please, I do not know whether your procedure contemplates that outsiders shall put any questions to witnesses or not? Commissioner Lane. What is your name? Mr. Smith. E. P. Smith. Commissioner Lane. "Who do you represent? Mr. Smith. Mr. Updike. Commissioner Lane. Mr. Updike and his company? Mr. Smith. Yes, certainly. The reason I speak of this is that nearly every witness on the stand has had somethiiig to say about this company, and there are a few questions I would like to put. Commissioner Lane. Proceed. Mr. Smith. Mr. Updike, the terminal elevator belonging to your cornpany is located in what city ? Mj. Updike. South Omaha. Mr. Smith. Is it on the line of any incoming or outgoing railroad ? Mr. Updike. No, sir. Mr. Smith.' Now, you operate a number of grain elevators here in the State? Mr. Updike. Yes, sir. Mr. Smith. Along the line of what railroads ? Mr. Updike. The Burlington, the Missouri Pacific, and the North- western. Mr. Smith. The Great Western that you referred to Mr. Updike. There is one more, the St. Joe and Grand Island. Mr. Smith. The Great Western that you referred to in your testi- mony, has it any line of road extending out into the State of Nebraska ? Mr. Updike. No, sir. Mr. Smith. But it does extend from Omaha to eastern and north- em markets? Mr. Updike. Yes, sir. Mr. Smith. Now, is there any uniform and published or generally understood switching tariff here at Omaha that is charged where a car is switched from one line of road to another ? Mr. Updike. Different roads charge different amounts. Mr. Smith. If a carload of grain is brought in by you from one of your country stations over the Northwestern, for instance, and you want to send it to the Burlington road, what switching charges do you have to pay? Mr. Updike. Not any. Mr. Smith. If you want to send it to the Great Western, to be there sent out by the Great Western, is there any sAvitching charge ? Mr. Updike. No charges by the Northwestern. Mr. Smith. Well, is there any charge made by any one for trans- ferring this to this Union elevator ? Mr. Updike. To my elevator? Mr. Smith. No, to the Union elevator; I mean, the Great Western elevator. Mr. Updike. Why, not if they have a direct connection. You are talking now about when a car is ordered in there and right out ? Mr. Smith. No ; I am ordering it into their elevator. Mr. Updike. Well, there is a charge. Mr, Smtth. How much? 484 GRAIN ELEVATOE INVESTIGATION. Mr. Updike. Jwo dollars. Mr. Smith. If you bring into Omaha grain from any of your country stations and have it transferred to the Great Western Railroad, or the elevator operated by the Great Western, and they do unload at the Great Western elevator and elevate and clean and mix and subse- auently load out of the Great Western elevator and send it over the reat Western road, who pays all the charges that have been incurred in transferring it, switching it, cleaning it, and loading it out ? Mr. Updike. The Great Western. Mr. Smith. And is that done for you and for any other grain dealer in the State of Nebraska free of charge? Mr. Updike. Yes, sir. Mr. Smith. About what is the capacity of the elevator on the Great- Western road 1 Mr. Updike. A million bushels. Mr. Smith. And do you understand that the Great Western pub- lishes to the world that this switching charge, the transfer charge, the storage and the cleaning, and all of that will be done by it free if it is sent out over its road ? Mr. Updike. I think it is. I am not sure of that. They do on most of it. They do on all the switching and transferring. I am not sure whether the published tariff says anything about cleaning. Mr. Smith. Your South Omaha elevator has a capacity of how much? Mr. Updike. 500,000 bushels. Mr. Smith. You have built that and equipped it at an expense of how much? Mr. Updike. $100,000. Mr. Smith. Is there any switching charge on cars that are switched to your South Omaha elevator? Mr. Updike. Yes, sir. Mr. Smith. How much? Mr. Updike. $2. Mr. Smith. Who pays that? Mr. Updike. We pay it. Mr. Smith. Then, if these cars are unloaded at your South Omaha elevator and subsequently sent out over any different road to the east or south, who pays the outgoing switching charge ? Mr. Updike. The outgoing road pays the outgoing switching charge and also our switching charge. paid in. Mr. Smith. They absorb the charge for the switching? Mr. Updike. Yes, sir. Mr. Smith. Do you have anything to do in the way of paying in the first instance the outgoing switching charge ? Mr. Updike. No, sir. Mr. Smith. But you do have to pay the switching-in charge? Mr. Updike. Yes, sir. V Mr. Smith. You operate your elevator at South Omaha at an expense of how much per annum? Mr. Updike. $20,000 to $25,000. Mr. Smith. If all this grain you send through your South Omaha elevator at an expense of $20,000 to $25,000 per annum were trans- ferred through the elevator of the Great Western it would cost you nothing? GRAIN ELEVATOR INVESTIGATION. 485 Mr. Updike. Yes, sir. It would have to be shipped out over their line. Mr. Smith. Yes. Is there any way by which the grain can be transferred to any road other than the Great Western except by run- ning it through your elevator or some other terminal elevator? Mr. Updike. Well, the Rock Island have their own transfer ele- vator. Mr. Smith. Then if you bring it in over the Northwestern and want to send it out over the Rock Island, can you send it through their ter- minal elevator, and will they pay the switching charge and elevator charge and do all the service for nothing? Mr. Updike. Yes, sir. Mr. Smith. Has, say, the Missouri Pacific or the Wabash any ter- minal elevator here ? Mr. Updike. No, sir; not that I know of. Mr. Smith. If grain is sent through the Great Western elevator and you desire to load it out over the Wabash, do they make a charge then? Mr. Updike. Yes, sir. Mr. Smith. If it is sent out over any other road except their own road, do they make a charge ? Mr. Updike. Yes, sir. Mr. Smith. And you say neither the Wabash nor the Missouri Pacific has a terminal elevator here ? Mr. Updike. No, sir. Mr. Smith. And do you understand that these outgoing roads absorb this $3 switching charge that the Union Stock Yards Com- pany makes for loading the car out? Mr. Updike. Yes, sir. Mr. Smith. And also absorb the $2 in, that you pay? Mr. Updike. Yes, sir. Mr. Smith. What is the fact as to whether these roads through the State of Nebraska, as, for instance, the Northwestern, will let its cars be switched at Omaha and go east or south over some other road ? Mr. Updike. They will not do it. Mr. Smith. If you bring a carload of wheat to Omaha over the Northwestern and desire to send it out over the Missouri Pacific or the Illinois Central, how can you do that? Mr. Updike. Well, we have two ways. We can put it to the Missouri Pacific and let them do the transferring, or we can put it through our own elevator and transfer it. Mr. Smith. But it must be transferred ? Mr. Updike. Yes, sir. Mr. Smith. Then, if it goes east or south over any other road except those that have terminal elevators, there is some expense attached to it? Mr. Updike. Yes, sir. Mr. Smith. Do you know why the Great Western operates its elevator that way without expense to the shipper? Mr. Updike. Ipresume — I do not know — I presume to get tonnage for the Great Western road. Mr. Smith. And the other railroads, in order to meet that com- petition and get the tonnage, have to make some allowance or some provision for the transfer charge ? 486 GRAIN ELEVATOR INVESTIGATION. Mr. Updike. We feel that they will. Some of them are not taking any action at the present time. That is the question we are in a hurry to get solved ourselves. Mr. Smith. The rates from points in Nebraska to Omaha and then . from Omaha on to Mississippi Eiver points or beyond are now what are termed the sum of the two locals, are they not? Mr. Updike. Not in all cases. Mr. Smith. Are they at Mississippi River points and Chicago ? Mr. Updike. Not in all northeastern and southeastern Nebraska. Mr. Smith. Take it from Hastings, Nebr., as an example. The rate on wheat from Hastings to Omaha is how much? Mr. Updike. 16 cents. Mr. Smith. And the rate on wheat from Omaha to Chicago is how much? Mr. Updike. lOf cents. Mr. Smith. What would be the through rate from Hastings to Chicago on wheat ? Mr. Updike. 26f . Mr. Smith. That is the sum of the two? Mr. Updike. Yes, sir. Mr. Smith. If you bring a carload of wheat from Hastings to Omaha, billed to yourself over the Northwestern, and then send it on on the Northwestern, is there any switching charge ? Mr. Updike. No, sir. Mr. Smith. Any elevation charge ? Mr. Updike. No, sir. Mr. Smith. No charge of any kind ? Mr. Updike. No, sir. Mr. Smith. If you bring to Omaha a car on the Northwestern and desire to send it east over the Illinois Central, must it be transferred? Mr. Updike. Yes, sir. Mr. Smith. And to do that you put it through some of these elevar tors? Mr. Updike. We have been putting it through our own. Mr. Smith. If you want to send that east over the Great Western, you could send it through their elevator for nothing? Mr. Updike. Yes, sir. Mr. Smith. If you want to send it east over the Illinois Central, it must go through some other elevator? Mr. Updike. Yes, or they would have to transfer it? Mr. Smith. Or else there would be a charge connected with it ? Mr. Updike. It would have to be transferred, because the North- western won't let their cars go. Mr. Smith. And the purpose of that agreement with the Stock Yards Company is to enable you to transfer your grain through that elevator and be on a parity if you transfer it flu-ough the Great Western elevator? Mr. Updike. As near as possible. Mr. Smith. Are there any other railroads here in Omaha, except the Great Western and the Rock Island, that offer those inducements to shippers that they offer? Mr. Updike. I do not think so. Mr. Smith. Do you know whether or not GRAIN ELEVATOR INVESTIGATION. 487 Mr. Updike. That is, not through elevators. Any of them will take it without going through elevators. Mr. Smith. Do those two roads publish in their tariffs circulated among dealers in Omaha a statement that they make that transfer charge for nothing and absorb the switching charges? Mr. Updike. I do not know about the K.ock Island. The Great Western, I understand, publish their tariff. I have always under- stood that was a published tariff with the Interstate Commerce Com- mission, open to everybody. Mr. Smith. I think that is all, your Honors. I wanted to show why it is necessary to have some such provision as that. Otherwise they could not do business on the one road. Mr. Marble. On grain coining in, do you pay any switching charge except to the Stock Yards Company? Mr. Updike. Yes, sir. Mr. Marble. What other switching charge do you pay? Mr. Updike. Well, whatever is assessed by the railroad. Mr. Marble. What is that? Mr. Updike. Well, that is getting back to that reconsignment charge. Some roads charge what is called reconsignment, or a switch- ing charge, when grain is not billed direct in. care of some elevator or road, or if we brought a carload of grain to Omaha and had it switched to South Omaha. Mr. Marble. That other charge is also absorbed by the road taking it out? Mr. Updike. Y'es, sir; all roads absorb the switching and do it by tariff. Mr. Marble. That is all. (The witness was excused.) J. P. Zimmerman, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Zimmerman, have you with you the contract between Merriam & Holmquist and the Missouri Pacific Railroad Company ? Mr. Zimmerman. No, sir; I have not. Mr. Marble. Mr. Merriam, you have that contract ? Mr. Merriam. Yes, sir. Mr. Marble. Mr. Zimmerman, what is this book you have here [referring to book produced by witness] ? Mr. Zimmerman. The claim book. Mr. Marble. What is in that book? Mr. Zimmerman. All the claims we put in for shortages. Mr. Marble. Shortages ? Mr. Zimmerman. Yes, sir. Mr. Marble. And for elevation allowances ? Mr. Zimmerman. Yes, sir. Mr. Marble. And for refunding of switchmg? Mr. Zimmerman. Yes, sir. Mr. Marble. And what other claims are there in it ? Mr. Zimmerman. That is all. Mr. Marble. May I look at it ? Mr. Zimmerman. Yes, sir [book handed to Mr. Marble]. 488 GRAIN ELEVATOE INVESTIGATION. Commissioner Lane. Does it show what claims have been paid and what claims have not been paid ? Mr. Zimmerman. No; it does not. It does up to a certain date, I believe. We keep our memoranda in a different way and then mark them off afterwards. Commissioner Lane. Does it show when the last claim presented was paid ? Mr. Zimmekman. I can tell you when the last claim was paid. Mr. Marble. With the help of this book? Mr. Zimmerman. Yes, sir. What kind of claim did you refer to? Commissioner Lane. Well, a claim for allowance or elevation charge. Mr. Zimmerman. There is a claim on the Missouri Pacific [referring to book]. The last one for elevation was paid August 23. Mr. Marble. When was the service rendered for which that claim was made? Mr. Zimmerman. The grain went out May 17, four cars, and one car May 26 — two cars on May 26. Commissioner Lane. When was the last switching charge paid? Mr. Zimmerman. The last switc hing claim on the Missouri Pacific was paid on July 18. Commissioner Clark. Well, when was the last one on any railroad paid? Mr. Zimmerman. Well, the latest claim for switching was on Ai^st 27. Commissioner Lane. That was on the day before the new law went into effect. Mr. Zimmerman. Well, I could not say as to that, because I was not in this position at that time. Commissioner Lane. Would you mind if you left that book with us this afternoon and this evening and let us see just what it shows? Mr. Zimmerman. If that is agreeable to Mr. Merriam. Commissioner Lane. Is there any objection, Mr. Merriam? Mr. Merriam. No. Mr. Marble. Then, we will excuse Mr. Zimmerman. Commissioner Lane. Yes, sir. (The witness was excused.) Mr. Marble. I will defer the examination of this contract, also, imtil to-morrow. I will call Mr. Phillippi. J. O. Phillippi, called as a witness, being duly sworn, testified as follows : Mr. Marble. What is your business, Mr. Phillippi? ^ Mr. Phillippi. Assistant general freight agent. Mr. Marble. Of what road? Mr. Phillippi. Covering a prescribed territory. Mr. Marble. What road?. Mr. Phillippi. The Missouri Pacific Eailway. Mr. Marble. What territory does that cover? Mr. Phillippi. That covers a territory from Atchison to Lenora Kans., which is called the Kansas northern territory, better known as the central branch of the Union Pacific Railway; from Atchison to Omaha, the western division. Of course, my territory extends as far GBAIN elevator' INVESTIGATION. 489 north as Winnipeg, and in the west as far as Cheyenne, and east as far as Marshalltown. Mr. Marble. Your railroad is operating an elevator itself at Kansas City, I believe ? Mr. Phillippi. How is that ? Mr. Marble. Your railroad is operating an elevator at Kansas City directly? Mr. Phillippi. That is out of my territory. Mr. Marble. Are you familiar with that ? Mr. Phillippi. No, sir. Mr. Marble. In your territory is your railroad operating any elevators ? Mr. Phillippi. No, sir. Commissioner Clark. Pardon me a minute. This central branch of the Union Pacific is a Missouri Pacific property? Mr. Phillippi. Yes, sir; it is owned by the Missouri Pacific now. Formerly it was the Union Pacific. Commissioner Clark. I wanted to make it clear in the record that that is a Missouri Pacific and not a Union Pacific property. Mr. Marble. Is your road paying any elevation allowance in the territory? Mr. Phillippi. Not to my knowledge. Mr. Marble. Is it your understanding that valid claims are now being made Mr Phillippi. What is that? Mr. Marble. Is it your understanding that you are now becoming obhgated to the Merriam & Holmquist Company? Mr. Phillippi. We are not, so far as I know. Mr. Marble. You think that contract is not now prevailing? Mr. Phillippi. I would say yes, to that. Mr. Marble. You say it is? Mr. Phillippi. I say it is not. Mr. Marble. Has your road many farmer elevators along its line? Mr. Phillippi. We have some. Mr. Marble. And are they located upon the right of way of the road? Mr. Phillippi. Some of them are. I could not give the names of those. I gave Mr. McKenzie a list of all our elevators. Mr. Marble. That is not necessary now. You have many line ele- vators there also — that is, elevators owned by private corporations, many of them in a line along the road? Mr. Phillippi. Yes, sir. Mr. Marble. Does your company treat these people any differently one from the other or welcome the traffic of one more than the traffic of another? Mr. Phillippi. How do you mean? Mr. Maeble. I mean to say, how do you regard it as a railroad man? We have had testimony this morning as to how the elevator men feel as to irregular dealers or the country merchant that operates an elevator or the country merchant who operates a shovel house. I want to know the railroad man's attitude ? Mr. Phillippi. So far as elevators are concerned, there is no discrimination between elevators. i Mr. Marble. Between elevators ? 490 GRAIN ELEVATOfi INVESTIGATION. Mr. Phillippi. No, sir. Mr. Marble. Do you prefer to have the grain come from elevators rather than from shovel houses ? Mr. Phillippi. If you will allow me to explain Ml-. Marble. Surely. Mr. Phillippi. The man that has his office in his hat and his shovel in his hand, in my opinion, should not have the same consid- eration as the Inan that has built an elevator and put ia from $2,000 to $5,000. Mr. Marble. Suppose it was a country merchant who had acquired a shovel house and, perhaps, was a man of means in other business, but, perhaps, only had that investment in the grain business, would you say the same thing about him? Mr. Phillippi. You mean so far as handling the grain, loading the cars, etc., is concerned? Mr. Marble. Yes, sir. Mr. Phillippi. That is a thing that belongs to the operating department. I have not a thing to do with the distribution of the cars. Mr. Marble. You have an opinion as a raihoad man, and you are acquainted with the opinion of the road, the policy of the road in that regard, as to what they prefer and what they actually do? Mr. Phillippi. So far as my knowledge goes the transportation department distributes the cars justly so far as elevators or track loaders are concerned. Mr. Marble. Without at all preferring elevators because of their investment ? Mr. Phillippi. So far as I know they distribute them according to the business they have to ship. Mr. Marble. Do you know whether or not they require to have the grain in sight before they distribute the cars ? Mr. Phillippi. Well, I should say they ought to have. Mr.' Marble. The grain should be in sight on the right of way before the car is set ? Mr. Phillippi. I would not like to swear. Mr. Marble. Do you consider it desirable for your company to add to the number of irregular shippers of this sort? Do you welcome them? Do you think it is desirable? Mr. Phillippi. Well, at all country stations where we have ade- quate facilities for handling the grain tributary to that station, we confine it to about two elevators. Mr. Marble. You confine it to about two elevators? Mr. Phillippi. Yes, sir; just the number that ought to be. Mr. Marble. And you do not encourage any additions to the equip- ment beyond what you think necessary to handle the grain actually comingin ? Mr. Phillippi. No, sir. Mr. Marble. Do you discourage the addition to the equipment? Mr. Phillippi. I would; yes, sir. Mr. Marble. In what way do you discourage it ? Mr. Phillippi. I answered that, I think. Mr. Marble. I just want to make the matter clear. Mr. Phillippi. By having adequate facilities for the handling of the grain. GEAIN ELEVATOR INVESTIGATION. 491 Mr. Marble. Supposing a man comes in and starts a shovel house under those circumstances, in what way — I understood you to say that you discouraged the dupHcation of facihties where they are already, in your opinion, sufScient. Now, then, what I am trying to get at is, in what way would you discourage that duplication of facilities ? Mr. Phillippi. I could not discourage them if the transportation department would furnish them with cars. Mr. Marble. How about the matter of giving elevator sites to farmer elevator companies, for instance, at points where in your opinion there are already elevators enough to handle the traffic from that point? Mr Phillippi. I recommend it. Mr. Marble. You recommend that they be granted ? Mr. Phillippi. I recommend only. Mr. Marble. You recommend that the sites be granted? Mr. Phillippi. Yes, sir. Mr. Marble. As a matter of fact, it is your understanding that your road is allowing that sort of competition without attempting to discourage it ? Mr., Phillippi. Yes, sir. Commissioner Lane. When an application is made to you for farmers' elevator sites on your right of way, do you always recom- mend that that application be granted? Mr. Phillippi. No, sir; I do not. Commissioner Lane. You do not ? Mr. Phillippi. No, sir. Commissioner Lane. When do you refuse? Mr. Phillippi. When I know that we have adequate facihties for handling all grain that is tributary to that station. Commissioner Lane. Then the railroad or its representatives undertakes to say what elevator or elevators there shall be at a cer- tain station? Mr. Phillippi. On our right of way. Commissioner Lane. Would you grant a side track from your right of way to an adjoining piece of property, if an elevator was put up there, upon the application of an elevator owner? Mr. Phillippi. I should not recommend it. I haven't anything to do but simply recommend. That is my authority only. Commissioner Lane. In that way you would discourage putting up farmers' elevators or any independent elevators, it being your judg- ment that there were enough there already? Mr. Phillippi. Yes, sir. Commissioner Lane. Do you think that it is a proper function of a railroad to determine when a man shall put his two thousand, or five thousand, or ten thousand dollars in a certain kind of investment, and when he shall not put in his money in that kind of an investment ? Mr. Phillippi. Mr. Lane, we never discourage where we have not adequate facilities for handling the business. If a farmer comes to me and wants to put up an elevator on our right of way, and we have a place where we think we haven't sufficient storage capacity, we rec- ommend it. Commissioner Lane. Well, now, let me give you a concrete instance. Here is a station where there are two elevators, or, perhaps. 492 GBAIN ELEVATOR INVESTIGATION. where there is but one elevator. That elevator,_ however, is able to handle all the business that has come into the station; but the remark- able fact is brought to the attention of the farmers that they are get- ting 2 or 3 or 4 cents less than they are at some other place. They therefore wish to put up an elevator for themselves. _ They are willing to risk their money in that elevator, possibly not with the purpose of conducting the elevator itself, but because of the influence that that elevator will have in getting an increased price for their grain when they are able to handle it for themselves. Why should it be your business, as a railroad man, to determine that my money, as a farmer, shall not go into that enterprise? Mr. Phillippi. In your case, where there was only one elevator, of course we would recommend it. Commissioner Lane. But there is sufficient elevator capacity to handle all the grain there, I presume. Mr. Phillippi. I would not discourage anybody in that. Commissioner Lane. Supposing, then, that there were two eleva- tors, but that it was my conviction that these elevators were acting together; that they were in what might be called a trust, or that they had an understanding, or that there was a gentleman's agreement, and that I wasn't gettmg — -I, representing a hundred farmers — a suffi- cient amoimt of money for my wheat; that I could raise the price of that wheat by making a small investment there. Why should you exercise the right to say that I shall not put in my money there, and increase the returns that I get for my wheat ? Mr. Phillippi. It is the company's right of way. Commissioner Lane. I have no doubt that as to the right of way you, of course, can deny the privilege, but I am asking now as to the exercise of such a function by a railroad, presuming that the railroad wants business, and presuming that the railroad is in the railroad business, and not in the grain business, and it is not showing any discrimination ? Mr. Phillippi. Have you a case in mind, Mr. Lane ? Commissioner Lane. I think there are a good many cases that can be brought up of just that kind. You have no further answer to make ? Mr. Phillippi. No; not any. Commissioner Lane. All right. Mr. Marble. Do you know about the care, if any^ there is taken by the section men of your railroad of elevator properties along the line ? Mr. Phillippi. How is that ? Mr. Marble. Do you know whether or not section men and em- ployees of your company take any care or have any part in the maintenance of elevator properties along your line ? Mr. Phillippi. No, sir. Mr. Marble. You mean you do not know? Mr. Phillippi. That belongs in the transportation department. Mr. Marble. And has not heen brought to your attention whether they do that or not ? Mr. Phillippi. No, sir. Mr. Marble. That is all. Commissioner Clark. Mr. Phillippi, this contract with the Mer- riam & Holmquist Company, I believe, provides that they should have an allowance of a cent and a quarter a hundred pounds from GBAIN ELEVATOR INVESTIGATION. 493 your company for grain handled in their elevator, and that allowances were or have been made under that contract right along mitil very recently, have they not? Mr. Phillippi. Yes, sir It was canceled on the 8th day of July. Commissioner Clark. It was canceled ? IVIr. Phillippi. Yes, sir. Commissioner Clark. By whom? Mr. Phillippi. By our traffic manager, and by publication. Commissioner Clark. Then you say that this contract with the Merriam & Holmquist Company is no longer in effect ? Mr. Phillippi. As far as I know. Commissioner Clark. Why was it canceled? Mr. Phillippi. I beg your pardon. Commissioner Clark. Why was the contract canceled? You say it is no longer in effect. Mr. Phillippi. Well, I mean to say, Mr. Clark, that the elevation charges were canceled July 8 ; but as to that contract, that I did not make and have had nothing whatever to do with it ? Commissioner Clark. Wny was the elevation charge canceled on July 8?. Mr. Phillippi. That was canceled by instructions from the traffic manager, and was so published. Commissioner Clark. You say, then, that no elevation allowances have been paid for work done since July 8 ? Mr. Phillippi. So far as I know. Commissioner Clark. Did you or the proper officer representing your company notify the Merriam & Holmquist Company of the cancellation of that part of the contract? Mr. Phillippi. So far as I know, they have ? Commissioner Claek. Do you know why they canceled that part of the contract? Mr. Phillipp. No, sir. Commissioner Clark. You have no knowledge of that? Mr. Phillippi. No, sir. Commissioner Clark. Who would know ? Mr. Phillippi. I suppose the traffic manager. Commissioner Clark. Who is that? Mr. Phillippi. Mr. W. C. Stith. Commissioner Clark. Where is he located? Mr. Phillippi. St. Louis. Commissioner Clark. That is all. (Witness excused.) C. Vincent, called as a witness, having been duly sworn, testified as follows: Mr. Marble. Where do you reside ? Mr. Vincent. Omaha. Mr. Marble. What is your business? Mr. Vincent. Grain business. Mr. Marble. In what way are you connected with the grain busi- ness ? Mr. Vincent. I am manager of the Farmers' Grain Company. Mr. Marble. What is the Farmers' Grain Company — what is its business? 494 GRAIN BLBVATOK INVESTIGATION. Mr. Vincent. It is a corporation; buying and selling grain. Mr. Marble. Does it own elevators? Mr. Vincent. Yes, sir; it does. Mr. Marble. Wlxere are those elevators located? Mr. Vincent. In Buffalo County. Mr. Marble. How many? Mr. Vincent. Two. Mr. Marble. At what points in Buffalo County are they located? Mr. Vincent. Pleasanton and Miller. Mr. Marble. By whom is the stock of your corporation owned? Mr. Vincent. Farmers. Mr. Marble. How many? Mr. Vincent. I think there is about 300.' Mr. Marble. Is any portion of that stock owned by an officer of any railroad company ? Mr. Vincent. No, sir. Mr. Marble. Or by any stockholder of any railroad company, so far as you know? Mr. Vincent. No, sir; not that I know of. Mr. Marble. Or any employee of any railroad company? . Mr. Vincent. No, sir; not that I know of. Mr. Marble. It is a farmers' organization purely? Mr. Vincent. Yes, sir. Mr. Marble. Do you buy grain other than at those elevators? Mr. Vincent. Yes, sir. Mr. Marble. Well, that is, this farmers' company that buys grain? Mr. Vincent. Yes, sir. Mr. Marble. At what other points? Mr. Vincent. Calloway, Lodi, Amherst, and Oconto. Mr. Marble. What facilities have you at those points where you have no elevator ? Mr. Vincent. At Calloway, at Lodi, and Oconto, we have several houses — bins holding a couple thousand bushels. Mr. Marble. Are you operating at other points besides those three ? Mr. Vincent. We operated at Amherst last year; we are not doing any business there now. We operated there a leased elevator, and at the expiration of the lease we surrendered it. Mr. Marble. At the present time you are doing business at five points then; two with elevators and three with shovel houses? Mr. Vincent. Yes, sir. Mr. Marble. How do you find yourself . treated by the railroad - companies with regard to furnishing cars ? Mr. Vincent. We are treated all right now, I think. I do not think we are discriminated against at the present time. Mr. Marble. You are treated all right at your shovel houses as well as your elevators ? Mr. Vincent. Yes, sir. Mr. Marble. On what railroad are those towns located? Mr. Vincent. Union Pacific. Mr. Marble. All of them? Mr. Vincent. Yes, sir. Mr. Marble. Have you competitors at the points where you buy? Mr. Vincent. Yes, sir. GEAIN ELEVATOR INVESTIGATION. 495 Mr. Maeble. How do you get along with your competitors at those points? Mr. Vincent. So far as I know, we don't have any deaUngs with them at all. We just set our own prices and get what grain we can. Mr. Marble. Do you advise them what price you are paying? Mr. Vincent. No, sir. Mr. Maeble. Do you think it would be to your advantage or inter- est to do that? Mr. Vincent. I never considered the matter at all. I simply set the price that I thought was right, without any consultation with anybody. Mr. Maeble. And without informing your competitors what you were paying or intended to pay? Mr. Vincent. Never informed them at all. Mr. Maeble. Do they inform you of their prices that they pay farmers? Mr. Vincent. No, sir. Mr. Maeble. How long have these farmers' elevators been in operation? Mr. Vincent. They were both opened in October last year. Mr. Maeble. What prompted their estabhshment ? Mr. Vincent. The farmers considered they were not getting enough for their grain in the territory where they were organized. Mr. Maeble. Have they been in operation long enough so you can describe the result of their estabhshment ? Mr. Vincent. The president of our company made the estimate and told me sometime ago, when he was in my oflSce, that he con- sidered that the prices paid in our territory were now about 2J cents, on an average for all grain, higher than it was before we went into the field. Mr. Maeble. Meaning that the establishment of these elevators has resulted in an increase of price to that amount? Mr. Vincent. Yes, sir; that was his estimate. Mr. Marble. Who is the president of your company? Mr. Vincent. J. E. Johnson. Mr. Maeble. Where does he reside? Mr. Vincent. Now at Kearney. He formerly resided at Pleas- anton. Mr. Maeble. He is a farmer? Mr. Vincent. Yes, sir; that is, he is now a retired farmer. He just removed from his farm last year. Mr. Maeble. Are those elevators operated at a profit? Mr. Vincent. At the present time; yes, sir. Mr. Marble. You still find a profit after paying this increased price? Mr. Vincent. Yes, sir. Mr. Marble. Have you any special competition to meet ? Mr. Vincent. Yes, sir. Mr. Marble. Have you found any arbitrary raising of prices against you? Mr. Vincent. Yes, sir; we have pretty stiff competition. Mr. Maeble. Did your competitors immediately begin to pay more than they were paying before when you opened a house? 496 GRAIN ELEVATOR INVESTIGATION. Mr. Vincent. Yes, sir. Mr. Marble. Do you concede any portion of the grain at those points to your competitors? Mr. Vincent. Not a bushel that we can get. Mr. Marble. You do not consider that any of that belongs to them because they have elevators there? Mr. Vincent. No^ sir. Mr. Marble. Do you make any report to any of your competitors of what amount of grain that you buy for yourself ? Mr. Vincent. No, sir. Mr. Marble. Nor they to tt'ou of the amount of grain bought for them? Mr. Vincent. No, sir. Mr. Marble. Your shovel houses — are they profitable also ? Mr. Vincent. Well, I can not say that there is much profit in them. We about break even. Mr. Marble. What prompted the establishment of grain-buying shovel houses where you did? Mr. Vincent. We did not have capital enough to subscribe to put up a house, so we commenced in a small way. Mr. Marble. Why did you commence at all? Mr. Vincent. For the simply reason that where those elevators are the farmers did not consider that they were getting enough for their grain, and they wanted their own facilities. Mr. Marble. How long have your shovel houses been in operation? Mr. Vincent. A Kttle over a year. Mr. Marble. -What effect have they had on the market ? Mr. Vincent. They raised the market, the same as the elevators. Mr. Marble. As much as the elevators ? Mr. Vincent. Yes, sir; about the same. Mr. Marble. From 2 to 2§ cents ? Mr. Vincent. Yes, sir. Mr. Marble. And you consider that they are not operated at a loss? Mr. Vincent. No, sir. Mr. Marble. But they are not making any profit? Mr. Vincent. They are not making any profit to amount to any- thing. We are pretty well satisfield if we break even. Mr. Marble. Do you consider that a practicable way to handle grain? Mr. Vincent. No, sir. Mr. Marble. The practicable thing to do is to put up an elevator. Mr. Vincent. Yes, sir. Mr. Marble. But you consider them valuable as means of com- petition? Mr. Vincent. I do not regard them so much in that light as I regard them as stepping stones to an elevator. I think, at least in my experience, a great many farmers are afraid to take hold unless you demonstrate to them that there is a profit. We can begin in a small way with a shovel house, and when they see that there is some profit, that we are making some profit out of it, they accumulate courage. Mr. Marble. Have your shovel houses been as fairly treated by the railroads as your elevators? GRAIN ELEVATOR INVESTIGATION. 497 Mr. Vincent. Yes, sir. Mr. Marble. Have you been discriminated against at all by the railroads since the time you started? Mr. Vincent. Not after we got well started. Mr. Marble. Do you consider that you found difficulty in your way to prevent your starting? Mr. Vincent. Yes, sir. Mr. Marble. What difficulty? Mr. Vincent. In getting our sites. Mr. Marble. Did you have any more difficulty than intending builders of elevators usually have? Mr. Vincent. Well, I have thought so ; yes, sir. Mr. Marble. What difficulty did you have? Mr. Vincent. We had a long delay in getting our sites granted. In the first place, when we made our applications for sites they were not paid any attention to. I may say, by way of following out the exact experience, that I filed an application for a site in one place, received no reply, and filed application for a site in another place, but received no reply. I filed the application for a third site, and in that letter I stated that on certain date applications had been made for sites at other points and that I had received no reply to those commimications. I took the precaution to register that letter, and it seemed to awaken the people up at headquarters, and they answered my letter. Mr. Marble. And have you been fairly treated since that time? Mr. Vincent. Hardly. They then wanted to know if I was ready to build a 20,000-bushel house, to cost over $4,000 ; and as the laws of Nebraska did not provide anything of that kind, I said I was not. And then they said the law did provide for that, and it was disputed between us, and I produced the law, which said there was no such requirement, and then they said they were ready to do business under the laws of the State, and I said, "That is all I want." Mr. Marble. And you got your, sites ? Mr. Vincent. Yes, sir. Mr. Marble. And have you been fairly treated in the, matter of cars? Mr. ViNcfeNT. Yes, sir. Mr. Marble. You get the same freight rates as others, so far as you know? Mr. Vincent Yes, sir; so far as I know. Mr. Marble. Have these elevator associations or corporations what is known as the penalty clause? Mr. Vincent. Yes, sir. Mr. Marble. What is that penalty clause ? Mr. Vincent. It provides that if a stockholder sells to. other per- sons than to his own elevator at points nearest where — if we have facilities for handling the grain at his market point, if he sells to any- one else he has to pay back a cent a bushel into the treasury. Mr. Marble. You mean he turns a cent a bushel of the price he gets into the elevator? Mr. Vincent. That is the penalty clause, Mr. Marble. You have that clause ? Mr. Vincent. We have that clause in the by-laws. S. Doc. 278, 59-2 32 498 GKAIN ELEVATOR INVESTIGATION. Mr. Marble. Do you enforce it ? Mr. Vincent. We have not. Mr. Marble. You haven't enforced it as to anyone at all? Mr. Vincent. No, sir. Mr. Marble. Have any occasions for enforcing it arisen ? Mr. Vincent. I believe there were some cases, but I do not have in mind any since the elevators were built. Before they were built there were some men who sold grain to competing elevators where they had facilities for dumping and we had the shovel house, and I con- sidered that they should nave sold to us, but they did not and we did not attempt to enforce the penalty Mr. Marble. Since that time your stockholders have sold to your elevators ? Mr. Vincent. Mostly. I think there are cases where they have not. Mr. Marble. What is the purpose of that clause? What is the occasion which prompted you to put it into your by-laws? Mr. Vincent. It was the fact that opposmg elevators sometimes paid more than the market would warrant, in order, as we deemed it, to break down the farmers' company and make them dissatisfied with their business. Mr. Marble. By this device, if they bid more, a portion of the increased price went back into the treasury ? Mr. Vincent. Yes, sir; simply to keep the machinery oiled and ready to do business when they came back. Mr. Marble. Do you know anything about the pooling of business by elevators in the country? Mr. Vincent. I do not know anything about that. Mr. Marble. Excejjt the general rumor? Mr. Vincent. Nothing, only rumor. Mr. Marble. Did you have to do with trading with other farmers' elevators than those in this company? Mr. Vincent. Yes, sir. Mr. Marble. What points ? Mr. Vincent. At Bee, Nebr. ; at Goehner and Strausville. Mr. Marble. And Upland? Mr. Vincent. Yes, sir; Bladen. Those last two elevatprs belonged to another corporation of farmers' elevators with headquarters at Kansas City. The first three belonged to still another elevator line, known as the National Farmers' Exchange. Then there are numer- ous other local elevators that I have assisted in a general way. Mr. Marble. Did you start elevators at Manley? Mr. Vincent. There isn't any down there. Mr. Marble. Loup City? Mr. Vincent. I think they have an elevator at Loup City. Mr. Marble. Was the occasion for these other elevators the same that you have described with regard to these towns ? Mr. Vincent. Yes, sir. Mr. Marble. Those two towns? Mr. Vincent. Yes, sir. Mr. Marble. What has been the effect of the establishment of farmers' elevators, generally? Mr. Vincent. The general effect has been to raise the price of graia to the farmers. GRAIN ELEVATOR INVESTIGATION. 499 Mr. Marble. Are the elevators operated successfully as a general thing? Mr. Vincent. As a general thing; yes, sir. Mr. Marble. Do you have any difficulty in finding a market for the grain which you buy? Mr. Vincent. I do not have any difficulty; no, sir. Mr. Marble. Have you ever since you began to operate? Mr. Vincent. When I first began, I think I did; yes, sir. Mr. Marble. What difficulty did you have? Mr. Vincent. The first two cars or grain that were placed on sale, I think, were sold on the grain exchange at about 2 cents less than their value, because I did not get a buyer. Mr. Marble. What graui exchange ? Mr. Vincent. The Omaha Grain Exchange. Mr. Marble. Did you find out why? Mr. Vincent. I had a pretty good guess why. Mr. Marble. Did you ask an explanation? Mr. Vincent. No, sir. I didn't need to ask it. Mr. Marble. Well, you might have gotten one. Your understand- ing was that it was because it came from farmers' elevators ? Mr. Vincent. Yes, sir. Mr. Marble. But you had no statement from the men handling that grain that would give you any justification for that ? Mr. Vincent. No, sir. Mr. Marble. Did you have any experience with the Missouri Pacffic RaHroad Company in gettiag sites ? Mr. Vincent. No personal correspondence. Mr. Marble. Do you know about the experience of the farmers' elevators on that road? Mr. Vincent. I know something of one. Mr. Marble. What was that ? Mr. Vincent. StrausviUe. Mr. Marble. What was that experience? Mr. Vincent. I helped to organize the farmers' company there. We raised the capital of over three thousand doUars, and made apph- cation for a site, and it was rejected, and the fanners asked me what I would do under the circumstances, and I said : " Go ahead and build." They said: " Where " ? And we went and examined the tract, and I said: "Over there is a good place." It was just beyond the end of the switch, as it then was at a good place for loading, and I said: "I woiild put up my house there and demand a switch," and they went ahead and acquired the property and put up the house and made an application for a switch and never got it. Mr. MLarble. Haven't they yet secured the switch? Mr. Vincent. My imderstanding is that they have not secured the switch yet. Mr. Marble. Do they operate the elevator? Mr. Vincent. My understanding is that they do. I am not defi- nitely informed. I have had a little conversation with some people there, but my understanding is that the elevator is operated by shoveling the grain into cars. Mr. Marble. Do you know anything about the experience of independent elevator operators at Manley ? 500 GRAIN ELEVATOR INVESTIGATION. Mr. Vincent. Only by rumor. Mr. Marble. Do you know, of your own knowledge, about the experience of farmers elevators' on the Northwestern road? Mr. Vincent. Yes, sir. Two of the elevators that I mentioned are on the Northwestern. Mr. Marble. At what poiats ? Mr. Vincent. Bee and Goehner. Mr. Marble. How about Thayer and Harvard? Mr. Vincent. Thayer never had an elevator; they had a shovel house. Harvard was another place where I assisted them in organ- izing; and it took them over a year after they got their house built before they could get a switch. Mr. Marble. Was there explanation of the delay? Mr. Vincent. None except that it was a farmers' elevator, that I have heard of. Mr. Marble. Did the raUroad officials make that explanation? Mr. Vincent. They didn't make it to me. I don't know what was the reason they gave, but the general understanding was Mr. Marble. What was the experience at these other two places ? Mr. Vincent. At Bee we bought an elevator. At Goehner tne com- pany as I organized it was not completed, and they reorganized and went ahead and secured a site on land adjacent and erected their elevator, and afterwards, I think, they had a switch put to their elevator, if I am not incorrectly informed. Mr. Marble. Do you know anything about the pooliag of grain at Valparaiso, Nebr. ? Mr. Vincent. Nothing, except by conversation with one gentleman down there. Mr. Marble. Was that man personally acquainted with the facts? Mr. Vincent. Yes, sir. Mr. Marble. Did he have any knowledge of them? Mr. Vincent. Yes, sir. Mr. Marble. What did he tell you ? Mr. Vincent. That was two or three years ago, and I do not know that I can recite it exactly. But my und.erstanding, as I remember it, was that there was a division of grain, but I would not like to be quoted m that. Mr. Marble. Unless you know more exactly about it, we won't press for that. Mr. Vincent. I am not clear in my mind just what it was. Mr. Marble. That is all. Commissioner Clark. Where do you sell grain that you accumulate in your elevators and shovel houses ? Mr. Vincent. On the Omaha Graia Exchange. Commissioner Clark. Is it your judgment that the gram market at Omaha and large storage capacity elevators at Omaha are a good thing for the persons interested in growing grain in Nebraska and tributary territory? Mr. Vincent. It has been my impression that it was a good thing. Commissioner Clark. Is it or is it not a fact that the establishment and maintenance of such a large elevator and storage capacity and facilities for treating grain save a good deal of grain that otherwise would not be fit for market — could not be transported farther without being destroyed, through heating, or musting, or something of that kind? GEAIN ELEVATOE INVESTIGATION. 501 Mr. Vincent. I think the storage capacity here is a benefit to the grain in the handling of it. - Commissioner Clark. Is there a larger amount or volume of mar- ketable grain that goes out of this territory because of the existence of such elevators at Omaha than would go if there were no such eleva- tors? Mr. Vincent. I could not give an intelligible answer to that. Commissioner Clakk. Well, just in a general way, is that your judgment, your understanding ? Mr. Vincent. Please repeat the question. Commissioner Clark. Does the fact that there are these large ele- vators, with storage capacity and facilities for handling and treating grain increase the volume of marketable grain going out of this tribu- tary territory ? Mr. Vincent. Only to this extent: elevators can not grow any grain; the treatment of the grain in the elevators probably does to some extent improve its marketable condition. So it has increased the value of that grain to some extent. Commissioner Clark. Well, then, the total value of marketable grain is increased ? Mr. Vincent. I think it is increased to some extent ; yes, sir. Commissioner Clark. In your buying in the country do you find any difficulty in competing with these companies that have a line of elevators and large terminal elevators as well ? Mr. Vincent. We have pretty stiff competition to undergo, and they have been our competitors. Commissioner Clark. Do you find any difficulty in buying grain and marketing grain in a way that it is reasonably profitable ? Mr. Vincent. No, sir. Commissioner Clark. And they do not monopolize the market at either end? Mr. Vincent. No, sir. Commissioner Clark. That is all. Commissioner Lane. That is all. Mr. Vincent. May I make one additional statement ? Commissioner Lane. Yes. Mr. Vincent. I spoke of my experience when I first came on to the grain exchange at Omaha, and it was unfavorable to the member- ship of that body. Since that time there has been no discrimination, and so far as I know we are all treated alike and I have as good advan- tages there as anyone, although my first experience was unsatisfactory. Mr. Marble. You have a law in this State by which anyone intending to erect an elevator on a right of way can bring condemna- tion proceedings ? Mr. Vincent. No, sir. Mr. Marble. In what way can they claim it under the law? Mr. Vincent. The law as it now reads provides that if a person or corporation desires to erect an elevator and agrees to erect one of 15,000 bushels capacity, that the railroad must grant that right or frant a site within sixty days after the making of the application. I elieve I have forgotten what the penalty is if they do not do it. Mr. Marble. Do you bring suit in court or before the State rail- road commissioners? Mr. Vincent. We have no railroad commissioners. Mr. Marble. Then in the courts? 502 GBAIN ELEVATOR INVESTIGATION. Mr. Vincent. We never resorted to the courts in our case. We simply stated to the company that — We have the money raised and we want to put up elevators on yoiu' right of way, and we insist that we have the right to do it. There is ground on yoiu- right of way at certain places where there is room for the elevator, and we have the money raised. The law says we may put an elevator there, and we want it. And when we showed them that we were ready to put up the sized house the law required they granted us the site. Mr. Marble. Have the railroads all accepted that law, or is it being resisted ? Mr. Vincent. I do not know. We have not tested it with anyone but the Union Pacific, and they are giving us sites whenever we carry out our end of it. Mr. Marble. The Northwestern and the Missouri Pacific, do you know about them? Mr. Vincent. The Northwestern would not grant a siding &t Har- vard. Those people had to buy land adjacent, and then they had to wait over a year for a site. At Goehner they wouldn't give them the privilege there. The Missouri Pacific, also at Strausville, would not allow any site privileges at that place. Mr. Marble. That is all. Witness excused. F. S. CowGiLL, called as a witness, having been duly sworn, testified as follows : Mr. Marble. Where do you reside? Mr. CowGiLL. Omaha. Mr. Marble. What is your business? Mr. CowGiLL. Grain business. Mr. Marble. In what way are you connected with the grain business ? Mr. CowGiLL. Well, I operate an elevator here and run a line of country stations. Mr. Marble. You have a corporation ? Mr. CowGELL. Yes, sir. Mr. Marble. What is the name of that corporation? Mr. CowGiLL. The Trans-Mississippi Grain Company. Mr. Marble. You are an officer of that corporation? Mr. CowGiLL. Yes, sir. Mr. Marble. President? Mr. CowGiLL. Yes, sir. Mr. Marble. And manager of its affairs ? Mr. CowGiLL. Yes, sir. Mr. Marble. You have an elevator here in Omaha? Mr. CowGiLL. At Council Bluffs. Mr. Marble. Does that elevator belong to the Trans-Mississippi Grain Company ? Mr. CowGiLL. Yes, sir. Mr. Marble. You erected it yourself ? Mr. CowGiLL. Yes, sir. Mr. Marble. And you have a line of coimtry stations? Mr. CowGiLL. Yes, sir. Mr. Marble. How many? Mr. CowGiLL, Sixty-two. GEAIN ELEVATOR INVESTIGATION. 603 Mr. Marble. Where are they located? Mr. CowGiLL. Well, there are some on the Union Pacific, some on the Northwestern; there are 24 on the Union Pacific and the balance on the Northwestern. Mr. Marble. Mostly on the Northwestern? Mr. CowGiLL. Except three on the Illinois Central. Mr. Marble. YVho makes the prices — determines the prices to be paid at your coimtry stations ? Mr. CowGiLL. We do; I do. Mr. Marble. You have that in charge? Mr. CowGiLL. Yes, sir. Mr. Marble. Do you at aU consult with or advise with any of your competitors at those stations as to the price to be paid ? Mx. Cowgill. No, sir. Mr. Marble. Do you advise them of the price you intend to pay? Mr. Cowgill. I would give them the information if they asked for it. Mr. Marble. Do they ask for it? Mr. Cowgill. In few cases they do. Mr. Marble. What cases in particular? Mr. Cowgill. WeU, I have had some country elevator men ask us what we are paying for grain at those sations and I have told them. I do not furnish the information by mail to anybody. Mr. Marble. Are there other line elevators alongside of you and in competition with you? Mr. Cowgill. Yes, sir. Mr. Marble. Whose elevators ? Mr. Cowgill. Well, the Nye-Snyder Company have elevators in competition with us; the Omaha Elevator Company, and the Updike Gram Company. Mr. Marble. Do you advise with any of those as to the prices to be paid at country stations ? Mr. Cowgill. I do not agree with them. Mr. Marble. But you advise; you make each other acquainted with your views as to the prices ? Mr. Cowgill. No; not as a usual thing. Occasionally I talk to them about prices. Mr. Marble. The phrase we had at Kansas City was, operators of line elevators made each other acquainted with their prices so as to keep the market "lined up. " Do you have any such purpose as that in disclosing your prices to your competitors ? Mr. Cowgill. No, sir. Mr. Marble. As a matter of fact, do you all bid the same price? Mr. Cowgill. No, sir. Mr. Marble. In what way do you vary? Mr. Cowgill. Well, at our stations we instruct our local agents to pay the same price that their competitors do, if their competitors pay more, so that the stations are pretty apt — our stations are pretty apt — to pay the same price, as much anyhow as their competitors. Mr. Marble. Have you stations where your only competitors are these other Hne elevators ? Mr. Cowgill. Yes, sir. Mr. Marble. Do you know whether their elevators at those points have those same instructions ? Mr. Cowgill. I do not. 504 GEAm ELEVATOB INVESTIGATION. Mr. Marble. You have no tmderstanding that they should have the same instructions? Mr. CowGiLL. No, sir. Mr. Marble, Have you, at any time, had any agreement for pooling the business, or dividing the business, or recogmzing any portion of the business as belonging to each other? Mr. CowGiLL. No, sir. Mr. Marble. Where there are two elevators do you feel as though you ought to have half, and the other man ought to have half? Mr. CowGiLL. I certainly do. Mr. Marble. In practice how far do you follow that out ? Mr. CowGiLL. I aim to get my share of the business if possible. Sometimes I can't tell what the other man is handling. If I can get the information, then I try to get as much. Mr. Marble. Do you try to get more? Mr. CowGiLL. Well, I would take more if it came to me; but I would probably do the same thing and even it up with him. Mr. Marble. You do not strenuously compete for more than half? Mr. CowGiLL. No, sir; I am satisfied with half. Mr. Marble. Do you fall back in the prices when you get half, so that he can get his half? Mr. Cowgill. No, sir. Mr. Marble. You remain stationary and let him bid up the price ? Mr. Cowgill. Yes, sir. Mr. Marble. And you do not rise to meet that competition if you have had your share? Mr. Cowgill. Well, no. Mr. Marble. You have your proportioh? Mr. Cowgill. I am satisfied with half of the grain at the station. Mr. Marble. Do you find that your competitors have that same understanding in practice ? Mr. Cowgill. No, I do not know that they do. I heard Mr. Holmquist state that he had. Mr. Marble. In practice at the stations, you treating your com- petitors with this consideration, you must pay close attention to see whether or not they have similar consideration for you. Mr. Cowgill. I think they look out for their own share of the grain just the same as I do. Mr. Marble. Do you have the experience that when you find your competitor has secured his half or his share and you bid up the price a little in order to make grain fall into your elevator, do your com- petitors generally remain stationary in their price, so as to let the grain go to you? Mr. Cowgill. I can not say that they do. Mr. Marble. Do they bid up their prices as a rule? Mr. Cowgill. Sometimes they do. Mr. Marble. As a matter of fact then, if they get their share before you get yours, you do not get even? Mr. Cowgill. I do not get it; no. Mr. Marble. Don't you think you are treating them with a little too much consideration? Mr. Cowgill. What's that? Mr. Marble. Don't you think that you are treating them with a little too much consideration? 6EAIN ELBVATOB IKVESTIGATION. 505 Mr. CowGELL. I do not understand your question. Mr. Maeble. Well, you say that when you have had your share or your half and they bid ahead you keep your prices stationary? Mr. CowGiLL.. I wouldn't have my half if they had met my prices. Mr. Maeble. But I understood you to say that when you found that you had your proportion of the grain at a point, if your com- petitor bid more, that you would keep yom* prices stationary, con- sidering that you had what belonged to you. And I understood you to say that when you found that yom- competitor had his proportion, and you 'put your price up to get your proportion that they very frequently met your prices and did not remain stationary. Mr. CowGiLL. That is so in some cases. Mr. Marble. As a general rule? Mr. CowGiLL. I have a number of stations where I get more than my share of the grain. Mr. Marble. As against the Peavy Company? Mr. CowGiLL. Yes, sir. , . Mr. Marble. As against the Updike Company? Mr. CowGiLL. Yes, sir. Mr. Marble. And the Nye-Snyder Company' Mr. CowGiLL. Yes, sir. Mr. Marble. In some cases you do take more than your share of the grain? Mr. CowGiLL. Yes, sir, and I have some stations where I do not get my share of the grain. Mr. Marble. But as a general thing you aim to get your share? Mr. CowGiLL. I aim to get my share; yes, sir. 'fliat is what I am m business for. Mr. Marble. You do not aim to get more? Mr. CowGiLL. If I get my share I am satisfied. Mr. Marble. Yoxir elevator at Council BluflFs is a cleaning house and mixing house ? Mr. CowGiLL. Yes, sir. Mr. Marble. Is it a public elevator? Mr. CowGiLL. Three himdred thousand of it is public. Mr. Marble. Is it a regular elevator? Mr. CowGiLL. Three hvmdred thousand bushels of it is regular. Mr. Marble. You mix the grain belonging to your customers to change the grade; you do not keep the identity of the grain belonging to your customers preserved? Mr. CowGiLL. Not unless specially asked. Mr. Marble. Do you allow grain belonging to yoiu- customers to become mixed with grain belonging to your firm? Mr. CowGiLL. Of the same grade? Mr. Marble. Of the same grade. Mr. CowGiLL. If my grain — ^if I had the grain in public storage; yes. Mr. Marble. You are not under the same rules as the public elevators of Chicago are — ^that is what I am getting at ? Mr. OowGiLL. No, sir. Mr. Maeble. You had an elevator burned at Council Bluffs not long ago, didn't you? Mr. CoWglll. I leased an elevator that burned at Council Bluffs. Mr. Maeble. And then you put up one yourself ? Mr. CowGiLL. Yes, sir. 506 , GRAIN ELEVATOE INVESTIGATION. Mr. Marble. What other elevator did you use while you were get- ting the new one erected ? Mr. CowGiLL. I used the Omaha Elevator Company's elevator part of the time ; put grain through that. Mr. Maeble. "Who received the elevation allowance by the railroad on that grain that you put through their elevator while you were constructing your own ? Mr. CowGiLL. The Omaha Elevator Company. Mr. Marble. Did you receive any portion of it ? Mr. CowGiLL. No, sir. Mr. Marble. Neither from the railroad nor the Omaha Elevator Company ? You considered that was compensation for the labor per- formed and gave it all to them ? Mr. CowGiLL. Yes, sir. Mr. Marble. Did you receive anything for so considering in any way except the service rendered the grain ? Mr. CowGiLL. That is all I received — the handling of the grain. Mr. Marble. Do you know the Pattens who are in the firm of Bartlett, Frazier & Carrington ? Mr. Cowgill. Yes, sir. Mr. Marble. Do you know whether or not they own any stock in the Illinois Central Railroad? Mr. Cowgill. I do not know. Mr. Marble. You do not know ? Mr. Cowgill. No, sir. Mr. Marble. You have heard the testimony regarding the absorp- tion of switching and reconsignment charges ? Mr. Cowgill. Yes, sir. Mr. Marble. Did you get all your switching charges absorbed by the outgoing lines ? Mr. Cowgill. Yes, sir. Mr. Marble. All ? Mr. Cowgill. Yes, sir. Mr. Marble. What about reconsignment charges ? Mr. Cowgill. I do not have any reconsignment charged to speak of. That only occurs on grain that we buy on the floor here where it changes ownership. Mr. Marble. How about cooperage of cars — who pays that ? Mr. Cowgill. The railroads furnish the car doors, and we do the work. Mr. Marble. Do you get any consideration in rebate for doing the work? Mr. Cowgill. No, sir. Mr. Marble. How about the furnishing of cars — are you as well treated as your competitors? Mr. Cowgill. With reference to what? Mr. Marble. In your car supply ? Your car supply all along the line and at the country stations ? Mr. Cowgill. I think we are. Mr. Marble. Do you think you are any better treated than your competitors ? Mr. Cowgill. I do not think so. Mr. Marble. Neither as to promptness nor as to number of cars ? Mr. Cowgill. No, sir. GRAIN ELEVATOR INVESTIGATION. 507 Mr. Marble. Do you have many claims for shortage of grain against the railroad companies ? Mr. CowGiLL. We have quite a few. Mr. Marble. Do you get prompt settlement on those? Mr. CowGiLL. Some of them we do, and some of them are delayed for some time. Mr. Marble. Take these claims for shortages or damages, do they afford any profit to your concern or in any way serve as a reduction in the freight rates? Mr. CowGiLL. No, sir ; we never put them in except when we have a loss. Mr. Marble. And you never get any excess of the actual loss ? Mr. CowGiLL. No, sir. Mr. Marble. You have heard some testimony about irregular deal- ers or unfair competitors here? What is your feeling, as a grain merchant and elevator man, about the country merchant, for in- stance, who puts up an elevator and by using his own labor is able perhaps to operate his elevator for less than you can hire a man to go to that town and operate your elevator ? Do you regard that as fair competition ? Mr. CowGiLL. Do you mean a storekeeper? Mr. Marble. Yes. Mr. CowGiLL. I haven't any case of that kind. Mr. Marble. Have you had any case of country merchants putting in shovel houses? Mr. CowGiLL. I do not know of any. There may have been in the past, but I do not know of any place where we have a shovel house in competition now. Mr. Marble. In the past what did you do about it when they did put in a shovel house? Mr. CowGiLL. Well, we tried to get our share of the grain. Mr. Marble. Try to get any more? Mr. CowGiLL. Yes ; we would take it. Mr. Marble. Did you, as a matter of fact, raise the price so that the man operating the shovel house could not do business at a profit, so as to get rid of his competition ? Mr. Cowgill. Are you talking about a scoop-shovel man or a man operating an elevator? Mr. Marble. Either one. Mr. CowGiLL. I never recognized the scoop-shovel man as a fair competitor. Mr. Marble. When you do not recognize a man as a fair com- petitor what do you do? What is the practice? What is your practice ? Mr. Cowgill. To get my share of the grain. Not let him interfere with my business. Mr. Marble. How much do you pay for grain, if necessary to accomplish that? Mr. Cowgill. Sometimes as much as I can get out of it. Mr. Marble. Is it your practice to keep him from making any profit, and so discourage his competition so that it will cease ? Mr. Cowgill. I do not pay any attention to his profits. I look after my own. 508 GRAIN ELEVATOB INVESTIGATION. Mr. Marble. Do you recognize him as an element in the grain busi- ness entitled to any share of the business? Mr. CowGiLL. I suppose he is entitled to what he can get. I do not recognize he is entitled to any of my share of the business. Mr. Maeble. Supposing there are three elevators in a town, and a scoop-shovel man started in. Would you consider that he was to get one- fourth of the grain ? Mr. CowGiLL. I can not see any reason why. Mr. Marble. If there were three elevators in the town, would you count him as a competitor ? Mr. CowGiLL. No ; I would not. Mr. Marble. You wouldn't count him as entitled to any ? Mr. CowGiLL. No, sir. Mr. Maebu;. When you got your one-third would you consider that your interest in his competition was ended? Mr. CowGiLL. It probably would not be ended. Mr. Marble. So that you would make him pay all that the grain was worth until he got out of the business; paying, perhaps, all he could get out of the grain^that is right ? Mr. CowGiLL. I suppose I would, but I do not know what he would do. Mr. Marble. You would know what he could get out of the grain ? Mr. CowGiLL. No. He might be able to get more than I can. Mr. Marble. You would not expect him to ? Mr. Vincent. I would not expect him to, but he might. Mr. Marble. That is so unlikely we won't follow it. Is there at the present time, so far as you know, any device or arrangements to line up the price of grain in the Omaha market — ^to control the price of cash grain ? Mr. CowGiLL. None that I know of. Mr. Marble. None that you are a party to? Mr. CowGiLL. No, sir. Mr. Marble. Nor engaged in? Mr. CowGiLL. No, sir. Mr. Marble. You operate elevators in Iowa ? Mr. CowGiLL. Yes, sir. Mr. Marble. How do you determine the price to be paid at those elevators ? Mr. Cowgill. I determine the price the same as I do here. Mr. Marble. Do you get a card from anybody in Des Moines with a base price on? Mr. Cowgill. At some of our stations we do. Mr. Marble. From whom do you receive that card ? Mr. Cowgill. Mr. Case. . Mr. Marble. Do you know Mr. Case ? Mr. Cowgill. I do not know him personally, but our representa- tives do. Mr. Marble. Do you know him to be a competent grain man? Mr. Cowgill. I know him to be a competent judge of a market. Mr. Marble. By investigation that you have made ? Mr. Cowgill. By the prices he makes. Mr. Marble. Judging his prices ? Mr. Cowgill. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 509 Mr. Marble. And after you receive his cards, what do you do with them? How do you base your price upon them? Mr. CowGiLL. Where we pay any attention to his cards, we take into consideration the freight and we pay about the price the cards quote. Mr. Marble. Do you pay him for sending those cards ? Mr. CowGiLL. Yes, sir. Mr. Marble. Do your competitors receive those cards ? Mr. CowGiLL. I think some of them do. Mr. Marble. Do you know that they do ? Mr. CowGiLL. I know that some of them do ; I do not know that they all do. Mr. Marble. As a matter of fact, what are those cards ? Mr. CowGiLL. Those cards are information as to the market price, furnished by Mr. Case for a price. Mr. Marble. Is Mr. Case, at Des Moines, able to get any inside information on the market that you, at Council Bluffs, are not able to obtain ? Mr. CowGiLL. No, sir ; I do not think so. Mr. Marble. There is no market there, is there ? Mr. CowGiLL. We have sent out prices to our agents, and some parts of the State it is more convenient for us to get them from him than to send them ourselves. It is simply information that he fur- nishes. Mr. Marble. Those price cards are not in any way connected with any agreement to fix prices, are they ? Mr. CowGiLL. Not in our case. Mr. Marble. Do you know whether they are in any case ? Mr. CowGiLL. I do not. Mr. Marble. Is Mr. Case connected with the Iowa Grain Dealers' Association ? Mr. CowGiLL. Not in any way that I know of. Mr. Marble. Are your elevators, your country elevators in Iowa — have they membership in the Iowa Grain Dealers' Association ? Mr. CowGiLL. Yes, sir. Mr. Marble. Or any one for them ? Mr. CowGiLL. Yes, sir. Mr. Marble. Are all of them members of that association? Mr. CowGiLL. If one of us is a member that makes all of our ele- vators a member. Mr. Marble. And you are a member of that association? Mr. CowGiLL. Yes, sir. Mr. Marble. Well, it is the policy of that association to control — to keep the price lined up, isn't it ? Mr. CowGiLL. No, sir. Mr. Marble. And insure what you consider a fair profit to ele- vator men? Mr. CowGiLL. Yes, sir. Mr. Marble. That is what it is for ? Mr. CowGiLL. No, sir. Mr. Marble. That is part of what it is for? Mr. CowGiLL. The Iowa Grain Dealers' Association is not for that purpose. 510 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. What is the Iowa Grain Dealers' Association for? Mr. CowGiLL. Well, principally, it is for the improvement of grain for one thing. They improved the quality of corn and the amovmt of corn raised in Iowa very materially this last year. It is for infor- mation of all kinds pertaining to the grain business, and the protec- tion of the grain men in a great many ways. Mr. Maeble. It has been very active, has it not, in protecting grain men from this irregular or unfair competition ? Mr. CowGiLL. I do not know that it has. Mr. Marble. By keeping you advised of its prices and by keeping terminal dealers advised of its prices? Mr. CowGiLL. It is not necessary to keep us advised. Mr. Marble. Supposing there is competition in any way at some station where you have no elevator ? Mr. CowGiLL. That would not interest me. Mr. Marble. If you are buying grain in Iowa to go to Council Bluffs, it would interest you, perhaps ? Mr. CowGiLL. Perhaps; yes. Mr. Marble. Would you buy grain from such an unfair dealer ? Mr. CowGiLL. Track men ? Track shovel men ? Mr. Marble. Yes. Mr. CowGiLL. No, I would not. If it was a farmers' elevator I would buy grain. Mr. Marble. Would you buy from a farmers' elevator which had been vouched for by Mr. Wells ? Mr. CowGiLL. Yes, sir. Mr. Marble. Any of them ? Mr. CowGiLL. Any that I know of. I reserve the privilege of buy- ing from whom I please. I buy of a great many farmers' elevators. Mr. Marble. Do you buy of farmers' elevators having a penalty clause ? Mr. CowGiLL. Not that I know of. Mr. Marble. If you know that they have a penalty clause, do you refuse to buy from them ? Mr. CowGiLL. I think I would ; yes, sir. Mr. Marble. Will you give us the elevator man's attitude toward this penalty clause? It has been explained from the farmers' ele- vator side. Mr. CowGiLL. I do not know what other elevator men's attitude is. 1 know what my own is. We think it is unfair competition. Mr. Marble. In what way ? Mr. CowGiLL. The other dealer at this station does not have the same chance to buy the grain as the farmers' elevator does. Mr. Marble. That is all. Commissioner Clark. Upon the tracks of what railroad company is your elevator in Council Bluffs located ? Mr. CowGiLL. On the Union Pacific. Commissioner Clark. Do you receive any allowance from the Union Pacific on grain ? Mr. CowGiLL. Off their road ? Commissioner Clark. Yes, sir. Mr. CowGiLL. Yes. Commissioner Clark. Do you receive any allowance from other railroads for grain going out? GEAIN ELEVATOE INVESTIGATION. 511 Mr. CowGiLL. No, sir ; not at present. Commissioner Clakk. How long since you did ? Mr. CowGiLL. Since July 8. Commissioner Clakk. From all railroads going east of Council Bluffs prior to that time? Mr. CowGiLL. Well, we received an allowance from several rail- roads where the grain originated on other than the Union Pacific. On grain originating on the Union Pacific we received no allowance save that from the Union Pacific Company. Commissioner Claek. What did you receive from the Union Pa- cific Company ? Mr. CowGiLL. What allowance? Commissioner Claek. Yes. Mr. CowGiLL. A cent and a quarter a hundred pounds. Commissioner Clakk. What was the allowance from the other roads that was in effect? Mr. CowGiLL. A cent and a quarter a hundred. Conunissioner Claek. Any switching charges in connection with the placing of cars there and taking them from your elevator? Mr. CowGiLL. Well, there is a switching charge of $2 out of our elevator which is absorbed by the outgoing roads. I have nothing to do with that. That is between the Union Pacific and the roads that they switch the grain out to. Commissioner Claek. You have no switching charges in ? Mr, CowGiLL. On grain that goes over other roads than the Union Pacific I pay $2 in. Commissioner Clakk. Is that also absorbed by the roads that take it out? Mr. CowGLLL. Yes, sir. Commissioner Claek. Do you, ever buy any grain in Iowa and bring it into your Council Bluffs elevator ? Mr. CowGiLL. Yes, sir. Commissioner Claek. And ship it to Chicago or Minneapolis ? Mr. CowGiLL. Not to Chicago, and very seldom to Minneapolis. I don't know that I have shipped any to Jfinneapolis. We ship gen- erally to the Southeast and the Southwest. Commissioner Claek. You have, I suppose, a proportional rate, through rate, on grain from east of Council Bluffs to Gulf ports and the Southeast ? Mr. CowGiLL. Grain originating east of Council Bluffs ? Conunissioner Claek. Yes. Mr. CowGiLL. We would pay the Iowa distance in and the propor- tional rate out. Commissioner Claek. The proportional of what ? Mr. CowGiLL. The proportional rate in effect here. At the present time the same proportional rate applies on the grain coming from Nebraska. Commissioner Claek. This proportional rate on grain from Ne- braska was intended originally to apply, was it not, to grain coming from west of the river and transported to points east or north ? Mr. CowGiLL. Some years ago it did, but it has not for some time. The tariffs all read " beyond " now. Commissioner Claek. That " beyond " means anywhere around 512 GEAIN ELEVATOE INVESTIGATION. Mr. Co worn, (interrupting). It means beyond Council Bluffs or Omaha or South Omaha. Commissioner Clark. Is it or is it not a fact that that tariff is applied so that grain is brought to Council Bluffs and again shipped east? Mr. CowGiLL. To Chicago? Commissioner Clark. To Chicago on the proportional rate. Mr. CowGiLL. I do not think so, because the rates are so adjusted in Iowa that the rate from that station to Chicago is little^ less than the sum of the local distance tariff and the proportional rate to Chi- cago. There may be a few stations very near Council Bluffs that might figure, but there is no grain there, so I do not think there is any grain handled in that way. We do not have any in that way. Commissioner Lajje. When did you begin to receive I5 cents from the Union Pacific? Mr. CowGiLL. About eight years ago ; eight or nine years ago. Commissioner Lane. You had that constantly? Mr. CowGiLL. Yes, sir; whenever we had any grain shipped that way. Commissioner Lane. Does that give you an advantage in the bid- ding of the country ? Mr. CowGiLL. No, sir ; I do not figure it does. Commissioner Lane. Do you figure that the ceni>and a quarter is necessary to pay the expense of elevation? Mr. CowGiLL. Yes, sir. Commissioner Lane. Do you think it costs that much ? Mr. CowGiLL. I think it costs that much to elevate the grain and wait for the eastern cars. That is part of the consideration in the contract with the Union Pacific — ^that we hold the grain until we get cars; a reasonable length of time. Commissioner Lane. When the grain goes out it would get an additional allowance from the eastern lines? Mr. CowGiLL. Not if the grain originates from the Union Pacific. Commissioner Lane. If it originates from the Union Pacific you get the cent and a quarter ? Mr. CowGiLL. From the Union Pacific. Commissioner Lane. And that is all ? Mr. CowGiLL. Yes, sir. Commissioner Lane. If the grain originates on any other road, what do you get? Mr. CowGiLL. Well, since July 8 we have received nothing. Pre- vious to that time we received a cent and a quarter from the road that we loaded it out on. Commissioner Lane. Over what road ? Mr. CowGiLL. I think all of them paid it ; all the roads going out. Commissioner Lane. Did they pay that on the regular tariff? Mr. CowGiLL. Yes, sir; they published it. Commissioner Lane. For how long ^id you receive it prior to Julys? Mr. CowGiLL. Well, I could not say just how long; it was a year, anyhow. Commissioner Lane. In competition with the Peavy elevator you never were at any disadvantage ? Mr. CowGiLL. I do not think so. GEAIN ELEVATOR INVESTIGATION. 513 Commissioner Lane. Are you at any disadvantage as to competing with any of the grain men here ? Mr. CqwGiLL. I do not think so. Conimissioner Lane. Does it make any difference to you whether the railroads run elevators of their own or not ? Mr, CowGiLL. Yes, sir; if they run them. free. Commissioner Lane. What disadvantage does it put you under? Mr. CowGiuL. It puts me at the disadvantage of the difference of what it costs me to operate and nothing which the grain men get their property transferred for. Commissioner Lane. You could put your wheat through that ele- vator, but that would cut you off from your own revenue ? Mr. CowGiLL. Yes, sir; I could put it through that elevator if I wanted to. I could handle it just the same as anybody else. I pre- fer to handle it through my own elevator. Commissioner Lane. Have you any solution for this problem of railroads running elevators? Oan you think of any solution that would not be a disadvantage to the farmer who raises the wheat, and that would be, at the same time, fair to the railroads ? Mr. CowGiLL. You mean Commissioner Lane. You know the situation as it exists here ; you know it as it exists generally throughout this part of the country. You are an elevator man and a grain man. You ought to have some information upon this question yourself as to the solution, if any there can be, of this problem. Mr. CowGiLL. I do not believe in railroads operating elevators. Commissioner Lane. Do you believe in their owning elevators and renting them to other people to operate ? Mr. CowGiLL. I have no objection to that. Commissioner Lane. If they rent them to the right people? Mr. CowGiLL. If they rent them on the basis of their being operated on the same basis that I am operating my house. Commissioner Lane. But if they were to give an elevator to a man, for instance, rent free, you would believe that that was discriminating against you, wouldn't you ? Mr. CowGiLL. Yes, sir; I think that would be discriminating against me, because he would have no money invested. Commissioner Lane. We have met cases of that kind during this investigation. Now, is it impossible for an elevator man to continue running his elevator with his own private capital in competition with railroad elevators that are rented to elevator men to operate, when those elevators do not require — when the railroads do not require — sufficient rental for their elevators to make up for the capital you , have invested in yours ? Mr. CowGiLL. Well, that is a hard question to answer. It depends on the man that runs the elevator. If he takes that benefit himself, it doesn't make any difference. I would very much rather see the railroads rent their houses to some one, some grain man of that kind, than to operate them themselves free. Mr. Marble. You have only the one company, the Trans-Missis- sippi Company, in which you are interested ? Mr. CowGiLL. Yes, sir. Mr. Marble. Is any officer or stockholder or employee of any rail- road interested in that company ? g. Doc. 278, 59-2 33 514 GEAIN ELEVATOR INVESTIGATION. Mr. CowGiLL. Any officer of any railroad? Mr. Marble. Or any stockholder or any employee? Mr. CowGiLL. No, sir. Mr. Marble. Do you know all the stockholders of your company? Mr. CowGiLL. Yes, sir. Mr. Marble. You know that none of them own stock in any rail- road or work for any railroad ? Mr. CowGiLL. I know that none of them work for any railroad, but Bartlett, Frazier & Carrington, of Chicago, are largely interested in our company. Whether they are interested, I do not know. They are dealing in stocks and bonds all the time. Mr. Marble. Other than that? Mr. CowGiLL. There is no stock owned by any of our stockholders in railroads, and there is no railroad that owns stock in our company. Mr. Marble. And there is no portion of the profits of your com- pany or dividends on the stock that are given or go in any way to any official or stockholder or employee of any railroad company ? Mr. CowGiLL. No, sir. Mr. Marble. Do you pay any tips to get cars? Have you had to meet with the difficulty ? Mr. CowGiLL. No, sir. I pay the Pullman porter, and that is about as far as I go in that business. Commissioner Clark. You haven't got exactly the right phrase. It is " buying empties." Mr. Marble. Then I will change the question and ask you if you have had any experience in " buying empties." Mr. CowGiLL. I do not do that. Mr. Marble. You have heard of its being done ? Mr. CowGiLL. Yes, sir. Mr. Marble. Were you a party to a suit which was brought here in Nebraska some time in the last two years — I do not know the exact date — brought by a Mr. Worrall ? Mr. CowGiLL. I believe I was mentioned as one of the defendants. Mr. Marble. "What was that suit about ? Mr. CowGiLL. I do not believe that I could tell you; that is too long. It was against the Nebraska Grain Dealers' Association and other firms were mentioned. Different firms were mentioned here also as defendants in the case. Mr. Marble. What, in general, was the nature of the charge? Mr. CowGiLL. I believe the charge was that the National Grain Dealers' Association was a combine. Mr. Marble. That it injured Mr. Worrall in his business? • Mr. CowGiLL. I believe so. Mr. Marble. Is that suit still pending ? Mr. CowGiLL. I believe it is, sir. Mr. Marble. Is it still pending against you ? Mr. CowGiLL. It has not been settled that I know of. Mr. Marble. There is no compromise reached with Mr. Worrall ? Mr. CowGiLL. I think the case is still in court. Mr. Marble. There has been no contract made, so far as you know, for its dismissal ? Mr. CowGiLL. I do not know. Mr. Marble. You regard the suit as a pending piece of litigation? GEAIN ELEVATOB INVESTIGATION. 515 Mr. CowGnx. So far as I know it is. Mr. :Marble. That is all. Mr. CowGnx. I would like to add — ^vou asked me a while ago in regard to the cent and a quarter, if the cent and a quarter gave me any advantage on the Union Pacific in buying out there. I want to say to you that 50 per cent of my business on the Union Pacific, that I buy on the Union Pacific from country elevators, is not moved through my elevator at Qoimcil Bluffs. So you can see it has very little influence on my country business. Commissioner Laxe. That is alL Witness excused. C. M. AxDRTTS. called as a witness, having been duly sworn, testified as follows: ilr. Mabrt.t;. Where do you reside ? Mr. AxDRus. Manley, Xebr. Mr. jVIabble. What is your business ? ilr. Andetts. Buyer of grain for the farmers' elevator. ilr. ilAEBLE. What is the name of that firm or corporation ? ;Mr. A^fDEirs. Manley Cooperative Grain Association. ilr. ilABBUE. Were you a member of the — did you help form that association? 5tr. AjjsDErs. Yes, sir. 5Ir. iL\EBi.E. And were you concerned with their operations in getting the site ? Mr. AxDETjs. Yes, sir. Sir. ilARBu:. You are familiar with that matter ? !Mr. AxDEvs. Yes. sir. ilr. S£\RBLE. Tell us what experience they had. With what road did they have it? 'Mr. AxDEUs. The Missouri Pacific. Mr. ]\L\RBLZ. And what experience did they have ? Mr. AxDBCS. We had quite a hard experience. Mr. ilABBLE. Did you get a site on the right of way ? Mr. AjvDRtrs. Xo. sir. ]VIr. Mabble. Did you apply for a site on the right of way ? Air. AxDsrs. Yes, sir; we made written application for a site and they flatly refused. We also made a second application, and they refused us. We offered to stand any equitable share of putting — well, that is a little further along.. They flatly refused us and we sued them. But before that we obtained some ground adjacent to the right of way and built an elevator. Mr. Marbij:. Was any reason given for their refusal ? Mr. ANDErs. That they had plenty facilities there for the handling of the grain. ]Mr. Mabht-t:. What was your reason for wanting to put up an elevator ? Mr. Ajtoetjs. We didn't think we were getting our just dues. Mr. Mabble. You thought you were getting too small price for the grain? Mr. AxDErs. Yes, sir; the men that were buying the grain were getting too big commission. Mr. Mabbue. Did you put up an elevator? 516 GEAIN ELEVATOR INVESTIGATION. ^ Mr. Ai^DETJS. Yes, sir. Mr. Marble. Where? Mr. Andrus. On our own ground adjacent to the right of way. Mr. Marble. And then what did you do ? Mr. Andrus. We gave them notice of the fact that we were going to build on our land, and expected them to put track in, under the law. Mr. Marble. Did they put in the track ? Mr. Andrus. No, sir. ^ Mr. Marble. Did they refuse to put in the track ? Mr. Andrus. Yes, sir. Mr. Marble. And then what did you do ? Mr. Andrus. We started a suit. We had a hearing yesterday in the district court. Mr. Marble. Did you bring a suit to get the site on the right of way? Mr. Andrus. No, sir. Mr. Marble. Why didn't you do that? Mr. Andrus. As we understand the law, after they refused us we could build on our own ground and demr.nd trackage to our elevator. Mr. Marble. Has that suit been decided ? Mr. Andrus. No, sir. It is pending. Mr. Marble. There is, as a matter of fact, no side track to the elevator ? . Mr. Andrus. No. Mr. Marble. Are you using the elevator? Mr. Andrus. Yes, sir. Mr. Marble. How do you get grain from the elevator into cars? Mr. Andrus. We have to draw it by wagons from the track and scoop it into cars. - Mr. Marble. Do they complain that you are scoop-shovel men ? Mr. Andrus. Yes, sir. Mr. Marble. You are perfectly willing to cease to be scoop-shovel men? Mr. Andrus. At any time. I would be glad to. Commissioner Clark. Who complained that you were scoop-shovel men? Mr. Andrus. The Missouri Pacific, or Mr. Phillippi, for one. Commissioner Clark. Did you have any difficulty in getting what cars you wanted to load there ? Mr. Andrus. We have ; yes, sir. Commissioner Clark. Do you get your fair proportion of what cars are given out there? Mr. Andrus. We think we do not. Commissioner Lane. That is all. Witness excused. George C. Thompson, called as a witness, having been duly sworn, testified as follows : Mr. Marble. You reside in Omaha? Mr. Thompson. Yes, sir. Mr. Marble. What is your business ? Mr. Thompson. Grain commission. GRAIN ELBVATOE INVESTIGATION. 517 Mr. Maeble. And before that — ^before entering into the grain bus- iness, what was your business ? Mr. Thompson. Before entering into the grain business I was in the employ of the Union Pacific. Mr. Maeble. You are a stockholder in the Thompson Grain Com- pany? Mr. Thompson. I am one of the partners. Mr. Maeble. That is a partnership ? Mr. Thompson. Yes, .sir. Mr. Maeble. And your business is to receive consignments and sell them on commission ? Mr. Thompson. Yes, sir. Mr. Maeble. Do you buy any grain ? " Mr. Thompson. Very little. We .are not bidders. We do not aim tobuy.it. ,, Mr. Maeble. Have you had any experience in refusing grain from what are known among grain men pi unfair or irregular country dealers % Sf Mr. Thompson. Well, there is qu^ a range in that " ujifair and irregular dealers." Mr. Marble. Irregular dealers.-^^liat is the difference between an unfair dealer and aryxregular ,^^pr ? Mr. Thompson. WelV^Sh^^^f . An irregular dealer has been considered one that — well,^HH»s' elevator, or any corporation that has what is termed " a peiB^^^lause " has usually been consid- ered irregular, or so termed. '^ \. Mr. Maeble. What is an unfair de^er or unfair competitor ? Mr. Thompson. They are, in a measure, considered unfair too; termed unfair or irregular. What I would consider unfair competi- tion would be a man who goes around and buys stuff from farmers and has it scooped directly into the cars. He is a scoop-shovel man, and a man who has no plant whatever and is not regularly located -at any particular station. That I should consider unfair competi- tion. Mr. Maeble. Would you receive consignments from a dealer of that sort? Mr. Thompson. I would not want to ; no, sir. Mr. Marble. You would request them not to consign them to you ? Mr. Thompson. I do not know that I would request them not to consign to me, but I have had letters from those people, and I have never given them but very little attention, and sometimes do not reply to them at all. In cases of that kind, where I get letters from those people, I recommend them to sell to their buyers down at their home station. Mr. Maeble. How about the irregular dealer, as distinguished from the unfair dealer ? Mr. Thompson. I would be very glad at any time to get grain to handle fof* anyone who has an elevator or is known as a regular grain dealer — a man who is permanently located and has a standing at his station. Such a man I would be glad to handle grain for at any time. Mr. Maeble. Just to make your meaning a little plainer, take the case of this farmer elevator concern which was testified about this afternoon. They have shovel houses at three points — at Calloway 518 GBAIN ELEVATOR INVESTIGATION. and Lodi and another point the name of which I have now forgotten. Would you receive consignments from those houses ? Mr. Thompson. I have not received any from them, but I would not refuse to. Mr. Marble. Would you consider farmers' elevators unfair compe- tition, so far as these houses are concerned ? Mr. Thompson. No; I do not think so — where they have a plant and an investment. If they are permanently located there I would consider them a regular dealer, so far as my business was concerned. Mr. Marble. How about their elevators with a penalty clause in the by-laws? Mr. Thompson. There is no attention being paid to them by anyone, so far as I know. Mr. Marble. Would you receive consignments from them? Have you, in the past, been threatened with any penalty or with any loss of business if you should receive consignments from irregular dealers ? Mr. Thompson. Well, I would say yes, that I had in the past. Mr. Marble. By whom ? Mr. Thompson. Well, I have been asked not to receive shipments from irregular dealers during the life of the Nebraska Grain Dealers" Association when they had their secretary here, and when they had headquarters here he requested me not to handle that kind of business. Mr. Marble. Did you accede to his request ? Mr. Thompson. Well, yes ; I would say that I did. Mr. Marble. That secretary was Mr. Horace G. Miller ? Mr. Thompson. Yes, sir. Mr. Marble. When did these requests cease ? Mr. Thompson. When the Nebraska - Grain Dealers' Association was dissolved. Mr. Marble. Has the Nebraska Grain Dealers' Association been dissolved ? Mr. Thompson. That is my understanding. Mr. Marble. When was it dissolved? Mr. Thompson. Oh, I do not know. Mr. Marble. About when ? Mr. Thompson. About a year ago. Mr. Marble. Why was it dissolved ? Mr. Thompson. Just why it was dissolved I do not know that I could state, only that as the " News " had it, that they considered it no longer an advantage to the dealers to continue it, or something to that effect. Mr. Marble. Was it because certain practices that had been fol- lowed had been forbidden by court injunction? Mr. Thompson. I would not be able to say that was true. It was my understanding that the members dissolved before there was a decision of that kind rendered. Mr. Marble. Were you a member of that association ? Mr. Thompson. No, sir. Mr. Marble. Is there, so far as you know, any combination to fix . prices by agreement in this market now ? Mr. Thompson. I do not know of any ; no, sir. Mr. Marble. Do you think the buyers of this market consult with each other or advise with each other with a view to keeping the prices lined up so as to keep together ? GRAIN ELEVATOR INVESTIGATION. 519 Mr. Thompson. That would be only an expression of my opinion ; but that would be that there is no such agreement. Mr. Marble. You do not know of any such agreement ? Mr. Thompson. No, sir; I do not know of any such agreement or understanding. Mr. Marble. You receive shipments throughout the State of Ne- braska pretty much ? Mr. Thompson. Yes, sir. Mr. Marble. What kind of service do you get from the railroads ? I don't mean whether or not they are able to give you all the cars you want, but do you find that you or your customers are discrimi- nated against? Mr. Thompson. Not that I know of. We have had no complaints of that kind, only in a general way, during shortage of cars. That, of course, is a matter that wouldn't come to me, and it would not be up to me to remedy it. Mr. Marble. So far as you have observed the shortage of cars bears equally upon all ? Mr. Thompson. So far as I know. Mr. Marble. And that applies as between large shippers and small shippers? Mr. Thompson. So far as I know. Mr. Marble. The railroads now have no policy, then, that you observe, of favoring large shippers because of the volume of their business as against the small shipper ? Mr. Thompson. I have heard of no complaint of that kind. Mr. Marble. There has been that sort of thing in the past ? Mr. Thompson. I have heard that there was, out not from my per- sonal experience. I know nothing of that. Mr. Marble. That is all. Commissioner Lane. That is all. Witness excused. Commissioner Lane. This hearing will stand adjourned until to- morrow morning at 10 o'clock. At 4.40 p. m. the Commission adjourned until 10 o'clock a. m. Thursday, October 25, 1906. Omaha, Nebr., October 25, 1906 — 10 o'clock a. m. Present, Commissioners Lane and Clark. Commissioner Lane. Have you a witness, Mr. Marble? Mr. Marble. I believe so. Is Mr. Peck here ? Edward P. Peck, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Peck. Mr. Peck. In Omaha. Mr. Marble. What is your business? Mr. Peck. Grain. 520 GRAIN ELEVATOK INVESTIGATION. Mr. Marble. You are the manager of the Omaha Elevator Com- pany ? Mr. Peck. Yes, sir. Mr. Marble. And that company has a terminal at Council Bluffs ? Mr. Peck. Yes, sir. Mr. Marble. And a line of country elevators along the Union Pacific Railroad ? Mr. Peck. Yes, sir. Mr. Marble. I will ask, in your business with the Union Pacific Railroad, if you find your claims promptly settled — all your claims for refund, allowances, and for shortages, or claims of every sort — do you get prompt settlement? Mr. Peck. We get prompt settlement on all our tonnage state- ments in accordance with the terms of our contract with the Union Pacific. Relative to shortage claims, they are very slow at times in settling those. There is a great deal of necessary investigation, and sometimes the. claims are paid and sometimes declined. Mr. Marbi^. a different policy by which the two sorts of claims are treated ? Mr. Peck. One is based on an absolute contract. The other is a question of equity. Mr. Marble. Your claims for shortages and damages — ^you do get consideration for them? Mr. Peck. When they are just. Mr. Marble. Well, you get consideration in any event? Mr. Peck. Oh, yes. Mr. Marble. Have you anything to complain of in that regard ? Mr. Peck. No. Mr. Marble. Are you able to compare the treatment your company receives in that respect with the treatment smaller concerns receive? Mr. Peck. I am not able to compare it. Mr. Marble. Who makes the price paid at your country elevators ? Mr. Peck. I do. Mr. Marble. And I will ask if you consult or advise with your competitors concerning those prices before they are sent out ? Mr. Peck. No. Mr. Marble. Or at the time they are sent out ? Mr. Peck. No. Mr. Marble. Do you inform your competitors concerning those prices ? Mr. Peck. If they should ask me what I was paying at a station I would tell them. Mr. Maiible. If they would ask you what you were going to pay to-morrow, would you tell them? Mr. Peck. I would not know. Mr. Marble. If you knew, would you tell them? Mr. Peck. Yes, sir. Mr. Marble. Is there any practice between you and your competi- tors to keep each other informed, and to keep the prices in line ? Mr. Peck. No, sir. Mr. Marble. No such practice? Mr. Peck. No, sir. Mr. Marble. As a matter of fact, are your prices close together or identical ? GEAIN ELEVATOE INVESTIGATION. 521 Mr. Peck. No, sir. Mr. Marble. You and your competitors ? Mr. Peck. They are not. Mr. Makble. Do you have any pooling arrangement at any station ? Mr. Peck. None at all. Mr. Marble. Do you recognize the right of your competitors to a certain portion of the grain at a country station ? Mr. Peck. Yes, sir. Mr. Marble. How far do you recognize that? If you get up to what you consider your portion, do you cease buying? Mr. Peck. I do not. Mr. Marble. Do you reduce your price below that of a competitor ? Mr. Peck. I do not. Mr. Makble. If your competitor raises his price to get his propor- tion, 'do you raise to meet him ? Mr. Peck. As a usual thing, I do. Mr. Marble. How far do you recognize his right to a proportion of the grain ? Mr. Peck. I have no way of knowing what he gets. Mr. Marble. You do not keep yourself informed as to what com- petitors get ? Mr. Peck. Only I keep myself informed as to about the number of wagonloads of grain that are delivered to each elevator that is in competition with us each day. Mr. Marble. And if you find one of your competitors getting more than what you consider his proportion of the grain, what do you do about it? Mr. Peck. I endeavor to buy all the grain I can with a margin in it. Mr. Marble. Do you go to him about it ? Mr. Peck. No. Mr. Marble. Not to any competitors ? Mr. Peck. No. Mr. Marble. You deal with the sellers and get the grain if you can? Mr. Peck. Yes, sir. Mr. Marble. Straight open competition ? Mr. Peck. Yes, sir. Mr. Marble. Do you know in past times of prices to be paid by line companies in the country arranged by telephone between the managers of line companies ? Mr. Peck. Yes, sir. Mr. Marble. How long ago was that ? Mr. Peck. J think about a year and a half. I have forgotten just what the date was. Mr. Marble. What was the strength of the agreement between those managers? Was it a hard and fast agreement that they would pay no more than the price agreed on ? Mr. Peck. It was not. Mt. Marble.. What was that agreement? Mr. Peck. It was to consult as to the values of grain where we couid sell it in different markets and endeavor as near as possible to place prices to our agents to give us what we considered a fair margin on grain. 522 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Did all of you generally observe the conclusions reached at those consultations in your bidding, as a rule ? Mr. Peck. Mr. Marble, when you say " bidding," it confuses the grain man a little bit. " Bidding " would mean buying grain from an independent shipper. Making prices to a country station for the agents to pay is different. Mr. Marble. Then I will change that question. What I am after is making the prices to a country station. I will ask if, as a rule, the conclusion as to prices to be paid at country stations was ob- served by the parties consulted ? Mr. Peck. Yes, sir. Mr. Marble. Who were those parties ? Mr. Peck. The different line companies. Mr. Marble. Could you name them ? Mr. Peck. Well there was the Central Granaries, the Nebraska Elevator Company, Nye, Schneider-Fowler Company, the Trans- Mississippi Grain Company, the Updike company, the Omaha Ele- vator Company. I do not recall just now whether the others were. Mr. Marble. You say that has not been done for how long? Mr. Peck. About a year or a year and a half. I have forgotten the date. Mr. Marble. Why was the practice stopped ? Mr. Peck. Because the United States district attorney said to us that he thought it was an illegal practice, and wished to have the Grain Dealers' Association dissolved, and on that request we dis- continued. Mr. Marble. Is there any arrangement or device between these buyers or any others that you know of in this market to replace that arrangement Mr. Peck. No, sir. Mr. Marble. Nothing put in the place of it to keep the price in line or insure a fair margin of profit? Mr. Peck. Not that I know of. Mr. Marbi^. And no agreement at any station to pool the business ? Mr. Peck. No, sir. Mr. Marble. Do you know about a suit brought by Mr. Worrall last year ? Mr. Peck. Yes, sir. Mr. Marble. Were you one of the defendants in that suit ? Mr. Peck. Yes, sir. Mr. Marble. Is that suit still pending? Mr. Peck. As far as I know. Mr. Marble. Has it not been compromised ? Mr. Peck. I do not know. Mr. Marble. Do you know whether or not a stipulation for its dis- missal has been signed and placed either in your hands or the hands of some of the defendants, or the attorneys for some of them. Mr. Peck. I know it has not been placed in my hands. Mr. Marble. Do you know whether or not it is in your attorney's hands ? Mr. Peck. I do not. Mr. Marble. Do you know that a sum of money has been paid Mr. Worrall to compromise that suit ? Mr. Peck. I do not. GBAIN ELEVATOB INVESTIGATION. 523 Mr. Marble. As a defendant you have not been informed ? Mr. Peck. How is that? Mr. Marble. I say you have not been informed that such an adjust- ment has been made ? Mr. Peck. As far as I know the case is still pending. Mr. Marble. Do you regard the case as practically closed as the result of negotiations and payment of a sum of money to Mr. Worrall? Mr. Peck. I said I did not know. Mr. Marble. You do not know about that at all ? Mr. Peck. No. Mr. Marble. Is there any arrangement, so far you know, to influence or determine by agreement or by consultation the price of cash grain in the city of Omaha ? Mr. Peck. Not that I know of. Cash bids would not indicate it. Mr. Marble. I believe you testified in Chicago that you did not like track buyers. Mr. Peck. I do not. Mr. Marble. And you considered their competition not fair com- petition in the grain business. Mr. Peck. I do not. Mr. Marble. Does it make any difference whether the track buyer be a new arrival in the town without property, or a merchant carry- ing on the grain business as a side line ? Mr. Peck. If he was a responsible man and had good financial standing I should think he would have an elevator. Mr. Marble. If he did not you would not consider it fair competi- tion? Mr. Peck. I would not. Mr. Marble. In your buying of grain — well, I will ask you the question. Do you discriminate against or refuse to buy from those you consider in unfair competition ? Do you endeavor to influence others not to buy from them ? Mr. Peck. I do not. Mr. Marble. Do you give them especially hard competition if you find them in the territory you are located in ? Mr. Peck. Yes, sir. Mr. Marble. You raise your prices ? Mr. Peck. Yes, sir. Mr. Marble. Even though you make no profit at the time ? Mr. Peck. Yes, sir. Mr. Marble. Do you lower the prices at other places where you are buying to make up the loss ? Mr. Peck. I do not ; it would be impossible. Mr. Marble. After you get rid of them do you lower the price below what it would have been ? Mr. Peck. No. ^ Mr. Marble. After the track buyers disappear the price simply becomes normal ? Mr. Peck. That is all. Mr. Marble. That is all. Mr. Peck. Gentlemen, I would like to make one statement here. It was testified to yesterday, I think, by Mr. Van Dorn to the effect that I was one of a party that went to Chicago to influence Mr. 524 GRAIN ELEVATOE INVESTIGATION. Rosenbaum and some other people not to bid him on grain. I wish to say that I never made such a trip and never was in a meeting of that kind to make any such agreement. Commissioner Lane. You did not personally or through any repre- sentative ? Mr. Peck. Did not personally or through any representative. Commissioner Clark. Nor in any way or manner tried to influence them not to buy of him? Mr. Peck. I did not. Mr. Clark. That is all. The witness was excused. Mr. Marble. Is Mr. Zimmerman here? Mr. Merriam. I can get him in five minutes. Mr. Marble. Can you testify concerning this book, Mr. Merriam, and the contents of it? [E'ef erring to book produced by Mr. Zim- merman.] Mr. Merriam. I think so. Mr. Marble. Mr. Zimmerman perhaps would be the better man on it. Commissioner Clark. You better have the man that keeps the book. Mr. Marble. Will you send for him? Mr. Merriam. Yes, sir. Mr. Marble. Mr. Merriam, will you take the stand and we will get in this contract ? Nathan Merriam, re-called. Mr. Marble (producing contract). This is a copy of the contract referred to in your testimony of yesterday ? Mr. Merriam. Yes, sir. Mr. Marble. The contract with the Missouri Pacific Railroad ? Mr. Merriam. Yes, sir. Mr. Marble. Is this a true copy? Mr. Merriam. Yes, sir ; a true copy. Mr. Marble. Is there any other or later contract modifying this? Mr. Merriam. No, sir ; that is the only one in existence. Mr. Marble. There has been on modification of this either orally or in writing ? Mr. Merriam. No, sir. Commissioner Lane. Did they serve any notice on you abrogating that contract? Mr. Merriam. No, sir. Commissioner Lane. Of any kind ? Mr. Merriam. No, sir. , Commissioner Lane. You heard the testimony of the official of the company yesterday ? Mr. Merriam. Yes, sir; I think his testimony was a little conflict- ing in this particular. He afterwards testified that he had nothing to do with the contract ; that it was made by the traffic manager. Commissioner Lane. But he stated positively that on July 8 that contract was abrogated and you were notified. Mr. Mekeiam. No, sir ; it was not. GBAIN ELEVATOR INVESTIGATION. 525 Commissioner Lane. It was not ? Mr. Merriam. No, sir. Mr. Marble. AVhen was this contract entered into ? Mr. Merriam. Is it not dated. Mr. Marble. It is not dated ? Mr. Merriam. Prior to December 1, 1895 — possibly in October — last September or October. Mr. Marble. The latter half of 1905? Mr. Merriam. Yes ; the latter part of 1905. Mr. Marble. I wish to put this into the record, and I will read a portion, if I am permitted. Commissioner Lane. There is no necessity for that, is there ? Mr. Marble. I want to examine Mr. Merriam concerning it. (The contract is hereto annexed and marked " Exhibit No. 1 to Mr. Merriam's testimony.") Mr. Marble. This in the form of a letter to you from Mr. W. C. Stith? Mr. Merriam. Yes, sir. You might say in the form of a proposi- tion for acceptance. Mr. Marble. The acceptance does not appear here ? Mr. Merriam. No, sir. Mr. Marble. Were there any modifications in your letter of accept- ance? Mr. Merriam. No modifications whatever. Commissioner Clark. The terms of the instrument as stated therein were accepted and complied with and applied to the transaction of your business ? Mr. Merriam. Yes, sir. Mr. Marble, (referring to contract). I find the first stipulation here provides that you will be allowed — for transfer service, for our account, the same allowance that our company- makes at other points or to other persons at Omaha. Our understanding being that at the present time this amount is at the rate of IJ cents per hun- dred pounds, and that it applies on shipments which are destined to Mississippi River or beyond, including the Gulf ports. Have you received that cent and a quarter on any shipment destined to points this side of the Mississippi River ? Mr. Merriam. I do not think so. Mr. Marble. Do you know ? Mr. Merriam. I could not — I think not. You will discover a little further on that that is put on a different basis. Mr. Marble (Continuing reading from contract) : In the event you are called upon to transfer business to lower Missouri River points or points other than designated in the first paragraph, you would make a special reduced price for the handling of same. You do the same work on both classes of business ? Mr. Merriam. Yes, sir ; the same work. Mr. Marble. Why do you accept a reduced rate on one class ? Mr. Merriam. The revenue on that business is so much less that in the general operation of the elevator we could afford to do that — mix it in the general business without receiving full compensation. Mr. Marble. The price on the two classes of business is propor- tioned to the income of the railroad from that business, then? 526 GKAIN BLEVATOB INVESTIGATION. Mr. Meeriam. Well, I do not know as it would be especially that way, but it was thought that they could not afford to pay that on such small revenue. Mr. Marble. When they made less money they paid you less for the work you did ? Mr. Meeriam. That would apply to that. Mr. Marble. That was the idea with which the different price was made ? Mr. Merriam. Yes, sir. Mr. Marble. Although you performed the same service in both cases ? Mr. Merriam. The same service. Mr. Marble (Continuing reading from contract) : Third. A switching charge of $1 per car is to be assessed by our company on Inbound grain in carloads from foreign connecting lines and $1 per car on out- bound grain from your elevator to foreign lines where the charge is paid by your firm. Where switching is paid by the carrier taking the grain out, the regular switching rate shall be charged. What is the regular switching rate? Mr. Meeriam. Two dollars. Mr. Marble. So that you have been getting this switching for $1 in and a dollar out? Mr. Merriam. Yes, sir. Mr. Marble. Do you know what switching rate has been paid by your competitors ? Mr. Merriam. I understand that that $2 is pretty general. Mr. Marble. Is that two in and two out ? Mr. Merriam. No ; one in and one out. Mr. Marble. What is the reason for the distinction in this para- graph that provides a dollar in and a dollar out on outbound grain from your elevator to foreign lines where the charge is paid by your firm ? It further provides : Where switching is paid by the carrier taking the grain out, the regular switching rate shall be charged. What is the difference between the dollar and the regular rate ? Mr. Merriam. I think that is one and the same thing, amounting to $2. Mr. Marble. Why is the contract written that way ? Mr. Merriam. I do not know of any particular reason, only a sort of detail. Mr. Marble. Did Mr. Stith know what the switching rate was ? Mr. Merriam. The idea seemed to be that the total in and out should be $2, and whether it was one in and one out or two out was immaterial. Mr. Marble. Then, this paragraph means the same as though it set forth in the first place that the charge shall be a dollar in and a dollar out, or that the switching shall be paid by the carrier a dollar in and a dollar out. There is no distinction at all between the two prices ? Mr. Meeriam. I do not know of any distinction at the present time. Mr. Marble. Was there at any time ? Mr. Merriam. No. The system is $2 out. GRAIN ELEVATOR INVESTIGATION. 527 Mr. Marble. Is what? Mr. Meekiam. It is none in and two out. The system was adopted as being more convenient and doing away with a good deal of book- keeping. Mr. Makble. Then, the effect of this provision is this — that on grain, where the switching charge is paid by the carrier taking the grain out, you pay nothing in? Mr. Merriam. Nothing m. Mr. Marble. And on switching that is paid by your company, you pay a dollar in. Is that the idea ? Mr. Merriam. We do not pay anything in excepting it is in the way that has been explained here by the term called reconsigning. In paying that, it means there is $4 to be attached to a car going out. Mr. Marble. Four dollars attached to a car going out ? Mr. Merriam. Yes, sir; we have paid the $2 in; that applies to grain that is shipped and sold on this market; not shipped to any particular elevator. Mr. Marble. According ,to this contract, instead of $4 being attached to the car going out there would be only two. Mr. Merriam. There would be four attached to the car going out if we paid two in. Mr. Marble. But this contract provides you shall pay one in and one out. Is that right? Mr. Merriam. Well, that is the question, because most of the stuff comes direct to the elevator without being bought from other parties here in the city. Mr. Marble. What I want to ask you is, under this contract does any grain coming to your elevator, even though it be a very small proportion, pay less than the customary charges ? Mr. Merriam. No, sir. Mr. Marble. Well, some pays less than $4 ? Mr., Merriam. I know nothing that is not customary — nothing being done at our elevator that is not customary and in general use. Mr. Marble. Is there anything done at your elevator that is not according to the published tariffs of the railroads ? Mr. Merriam. I do not think so ; I do not know of anything. Mr. Marble. But is it your understanding that some grain nor- mally would carry $4 when it goes out ? Mr. Merriam. Yes, sir. Mr. Marble. And according to this contract no grain can carry more than $2 going out from your elevator ? Mr. Merriam. Unless it is provided for in other ways. This extra charge in going out is provided for by a regular switching tariff of the different roads making provisions to cover those emergency cases. Mr. Marble. Do those switching tariffs alter this contract ? Mr. Merriam. No, sir. Mr. Marble. This contract alters the switching tariffs? Mr. Merriam. It would be supplemental. Commissioner Clark. In what way do you make payment to the railroads of switching charges? Mr. Merriam. Payment is always made to the railroad delivering grain. 528 GRAIN ELEVATOR INVESTIGATION. Commissioner Clark. You keep a record of the grain they deliver ? do you, and the amount of switching charges thereon? Mr. Mereiam. Yes, sir; and at the end of the month we collect back what we paid. Commissioner Clark. Under that contract grain that is delivered to your elevator by the Missouri Pacific Company and upon which you are required to pay or bear the switching charges, the charge is a dollar in and a dollar out? Mr. Merriasi. Yes, sir. Commissioner Clark. Who keeps the record of the switching charges you pay and which you can collect from the railroads ? Mr. Merriam. It was thought a better way — — Commissioner Clark. Please answer my question. Mr. Merriam. I was about to say Commissioner Clark. Well, who keeps that record ? Mr. Merriam. At the present time most of that record would be kept by the Missouri Pacific Company. Commissioner Clark. How does the Missouri Pacific know whether you pay the charges or whether the outgoing road pays them ? Mr. Merriaji. As a matter of fact, the Missouri Pacific Company collects this charge from the outgoing road on shipments by that line. Commissioner Clark. And not from you ? Mr. Merriam. Not from us. They collect it from the outgoing road. That is what I was about to explain. That may have been a little obscuBe in the previous talk on this subject. It was thought that that would be easier than it would be for us to pay it then and then collect it back. Commissioner Clark. I thought you just said you did pay it to them and then collected it back. Mr. Merriam. We pay this extra $2 that may be assessed on ac- count of the grain being bought in the town, but only that. Commissioner Clark. What has that got to do with the switching charge ? Mr. Merriam. That had nothing to do with this general switching charge of $2. Commissioner Clark. Let us not confuse this switching contract with that. What I want to get at is how you determine how much you have paid for switching charges and how much you are entitled to recover under the contract ? Mr. Merriam. I might say that under this contract — grain going under this contract — that we could have paid the $2 and collected it back, but it being an equivalent that the company collected, that system' was adopted. The company adopted that system, it being understood that the road taking this grain out was to absorb this $2. It was arranged that it be collected direct by thfe railroad company. Commissioner Clark. Well, if the railroad company was going to collect it direct from the other carrier, such switching charges as were absorbed, why was any provision in reference to them included in your contract ? Mr. Merriam. I think to protect us against a higher rate in making the large investment of $150,000, as we are liable to under the con- tract, we felt as though we needed some protection as regards the switching charge, and under this contract it would appear that $1 GRAIN ELEVATOR INVESTIGATION. 529 in and $1 out would be as much as they would ever assess against that elevator. Commissioner Clark. Well, what does this provision mean : Where switching is paid by the carrier talsiing the grain out — That is, if the outgoing road absorbs it — the regular switching rate shall be charged? Mr. Mereiam. I should think that would refer to the prevailing switching rates at different times and under different circumstances. Commissioner Clark. Which might be more than $1 in and $1 out ? Mr. Merriam. It might be even more if the switching charge should be general around here in Omaha, and it would give the com- pany a rignt to assess the regular charge and have the outgoing road pay it. . Commissioner Clark. Then how do you figure that this protects you against a higher rate than a dollar in and a dollar out? Mr. Merriam. I figure that the Missouri Pacific Company is liable to us to the extent that a higher rate of switching shall not be imposed upon us. Commissioner Clark. Then we understand you to say that your understanding and interpretation of this contract is that wherever a switching charge is paid by you it can not exceed $1 in and $1 out ? Mr. Merriam. I so understand it. Commissioner Clark. But if the switching charge is absorbed by other roads, it may be anything that may be fixed ? Mr. Merriam. I think that would be the proper interpretation to put on it. Commissioner Clark. Does any grain come to your elevator from the Missouri Pacific road ? Mr. Merriam. Very little. I do not think we get more than a dozen cars a year. Commissioner Clark. How about the switching charges on that ? Mr. Merriam. There is none on that. Commissioner Clark. I understand there is a cent and a quarter allowance made at the present time ? Mr. Merriam. No, sir. Commissioner Clark. But that under this agreement they agree to pay you a cent and a quarter per hundred pounds on all the grain which went out of your elevator over their railroad ? Mr. Merriam. Yes, sir. Commissioner Clark. Regardless of where that grain came from? Mr. Merriam. Yes, sir. If I may be allowed to say so, I might say that on the 8th of July a cent-and-a-quarter elevation was ter- minated, and thereafter we claimed three-quarters of a cent. Commissioner Clark. Three-quarters of a cent? Mr. Merriam. Per hundred ppunds. Under our contract we have sufficient basis for such a claim. Commissioner Clark. How did you come to abolish the cent-and-a- quarter allowance on the 8th of July ? Mr. Merriam. Because it was abolished generally, and others were not receiving it either in Omaha, Kansas City, Atchison, or St. Louis. We had good right to claim it under the contract, but since S. Doc. 278, 59-2 34 530 GEAIN ELEVATOR INVESTIGATION". that time a three-quarters of a cent per hundred pounds has been generally allowed at those places and even at Omaha, so that we claim three-quarters of a cent per hundred pounds at the present time, commencing July 8. Commissioner Clark. That is the understanding between you and the Missouri Pacific ? Mr. Meeeiam. We have put in claims on that basis. I wish to in- form the Board that we have put in claims from that date, the 8th of July, on the basis of three-quarters of a cent per hundred pounds, or $4 per car, an equivalent, and not only with the Missouri Pacific Eoad^ but with every road we are doing business with, and I want that well understood by this Commission and by all the railroads we are doing business with. We think we are justified in doing that with the Missouri Pacific on the basis of our contract and with the other roads as a matter of equalization. Commisioner Claek. Then the understanding between you and the Missouri Pacific Company is that from July 8 the allowance shall be three-quarters of a cent per hundred pounds ? Mr. Meeeian. No, sir; I have not the understanding with them, but I claim — I have not had a distinct understanding with them — but 1 claim it and can substantiate it, I think, by the circumstances and on the conditions of the contract. Commissioner Claek. That contract provides for an allowance of a cent and a quarter, does it not ? Mr. Meeeiam. Yes, it does; and I think it also, provides for as much allowance as is being received by any others doing business on their line. Commissioner Claek. Mr. Marble, will you let me see that con- tract ? (Contract handed to Commissioner Clark.) Commissioner Claek. The fifth paragraph of this memorandmn of agreement provides, does it not, that— Fifth. Should legal obstacles or competitive conditions render a modification or abrogation of this arrangement necessary, it is understood that the Missouri Pacific Railway Company has the right to so modify or abrogate it on notice. Mr. Meeeiam. Yes, sir. Commissioner Clark. You have testified that you have had no notice from the Missouri Pacific Company of the modification or abrogation of this agreement? Mr. Meeeiam. No, sir. Commissioner Clark. Yet Mr. Phillippi testifies that on July 8 this provision for the allowance was abrogated by notice. Mr. Meeeiam. I think Mr. Phillippi had reference to a public circular. Commissioner Clark. Well, Mr. Phillippi testified as plainly as the English language would permit that on July 8 this contract pro- vision was abrogated by notice to you. Now, you testify that from July 8 the allowance was three-quarters of a cent, instead of a cent and a quarter, and that you had no notice of modification or abro- gation from the Missouri Pacific Company. Mr. Meeeiam. No notice. Commissioner Clark. If you had no notice of modification from GRAIN BLfEVATOB INVESTIGATION. 531 the Missouri Pacific Companj?;, why should you philanthropically, on July 8, the day Mr. Phillippi says he notified you of the abrogation of this agreement, reduce your allowance a half a cent per hundred pounds, or from a cent and a quarter to three-quarters of a cent? Mr. Meeriam. We considered that sufficient notice to reduce it from a cent and a quarter to the amount which was being paid for a like service thereafter. Commissioner Clark. I have no doubt that is entirely clear to everybody except myself, so I will let it, go. Commissioner Lane. Do you desire to ask any more questions of this witness, Mr. Marble? Mr. Marble. No more questions. The witness was excused. Mr. Marble. Mr. Updike, will you take the stand a moment ? N. B. Updike, recalled. Mr. Marble. Did I ask you yesterday concerning the attitude of your firm toward these unfair competitors ? Mr. Updike. I do not think so. Mr. Marble. Well, I will ask you if a country merchant, for in- stance, should start buying grain, what would you do about it ? Mr. Updike. It would depend. Mr. Marble. In competition with you? Mr. Updike. If he had an elevator, I would not do anything. Mr. Marble. If he did not have an elevator ? Mr. Updike. I would try to persuade him to stop. Mr. Marble. How would you persuade him? Mr. Updike. Advance my price, if necessary. Mr. Marble. Anything else? Mr. Updike. Or I would go to him and ask him, probably, what he was going into our business for — the same class of business we were in — and persuade him, perhaps, out of it. ' Mr. Marble. You would not threaten him? Mr. Updike. No, sir. Mr. Marble. Generally since you have been in the grain business that has been your policy? Mr. Updike. Yes, sir. Mr. Marble. Has your policy changed since you have been in the grain business? Mr. Updike. No, sir. Mr. Marble. It has been uniform throughout? Mr. Updike. Yes, sir. Mr. Marble. I will ask you if you recognize this letter [handing- letter to witness] . Mr. Updike. Yes, sir. Mr. Marble. Was that letter written by you ? Mr. Updike. I suppose so. Mr. Marble. Dictated by you and signed by you ? Mr. Updike. Yes, sir. Mr. Marble. With that testimony to bring it to date, I will offer the letter. 532 GEAIN ELBVATOK INVESTIGATION. (The same is hereunto annexed and marked " Exhibit No. 2 to Mr. Updike's testimony.") The letter was read by Mr. Marble as follows : The Updike Geain Company, Omaha, September 10, 1900. Me. Mtjeeat, Storekeeper, Little Sioux, Iowa. Dear Sie : I understand you are buying grain to be shipped to River Sioux. Now, we are in the grain business at that point, and you are in the store busi- ness at Little Sioux. If you want a new department store started at River Sioux please continue in the grain business, but if you do not, please let us run our business and you run yours. There will be a new store in at Little Sioux and that at once, and it will be that store's business to sell everything at exact cost price if storekeepers at Little Sioux do not leave the grain business alone. They are trying to force us to buy grain at cost price, and there is no reason why we should not force them to sell things at cost if this continues. We want to hear no more complaints from our agent at River Sioux. Yours, truly, Updike Geain Company, By N. B. Updike, President. Mr. Marble. Is there anything you wish to say in reference to that ? Mr. Updike. All I could say is that I had forgotten anything of that kind. That was a long while ago. Mr. Marble. Do you mean that is not your general practice ? Mr. Updike. That is not our general practice. We might have done that in that case. We bought that man's eleA'^ator. He was in the elevator business and agreed not to go in the grain business at River Sioux. We bought his elevator and operated it and after we bought it he started to buy grain there, as I remember it now. I have for- gotten the circumstances. That is the way that letter came to be written. We bought his elevator and supposed he was through with the grain business. Mr. Marble. That is all. Commissioner Clark. Did you testify yesterday, Mr. Updike, that Mr. Millard was a stocldiolder in your company? Mr. Updike. Yes, sir. Commissioner Clark. Do you know to what extent ? Mr. Updike. Yes, sir. Commissioner Clark. How much ? Mr. Updike. Ten thousand dollars. Commissioner Clark. Do you know how long he has had that stock? Mr. Updike. Well, not exactly — four or five years, I should think. Commissioner Clark. Do you know from whom he procured it? Mr. Updike. Yes, sir. Commissioner Clark. Who? Mr. Updike. He procured part of it from me and part of it from the Updike Grain Company. Commissioner Clark. What is the capital stock of your company ? Mr. Updike. One million dollars. Commissioner Clark. And the par value of a share ? Mr. Updike. One hundred dollars. Commissioner Clark. What did Mr. Millard pay for his? Mr. Updike. He paid $10,000. Commissioner Clark. In money ? GEAIN ELEVATOK IKVESTIGATION. 533 Mr. Updike. Yes, sir. Coimnissioner Clark. That is all. Commissioner Lane. How many shares has he? Mr. Updike. One hundred. Commissioner Lane. One hundred shares? Mr. Updike. Yes, sir. Commissioner Lane. He paid par value ? Mr. Updike. Yes, sir. Commissioner Lane. That is all. The witness was excused. Kate A. Kehoe, called as a witness, being duly sworn, testified as follows : Mr. Makble. Mrs. Kehoe, where do you reside ? Mrs. Kehoe. Platte Center. Mr. Marble. Nebraska? Mrs. Kehoe. Yes, sir. Mr. Marble. Are you in business at that point? Mrs. Kehoe. Yes, sir. Mr. Marble. What business? Mrs. Kehoe. Grain and implement business. Mr. Marble. In what way are you in the grain business ? Mrs. Kehoe. I have elevators at Tarnov and Platte Center. Mr. Marble. Are you in the grain business at Platte Center also ? Mrs. Kehoe. Yes, sir. Mr. Marble. In what way are you in the grain business at Platte Center? Mrs. Kehoe. I have an elevator. Mr. Marble. You have an elevator at Platte Center ? Mrs. Kehoe. Yes, sir. Mr. Marble. And one at Tarnov? Mrs. Kehoe. Yes, sir. Mr. Marble. Are you in the grain business in any other way ? Mrs. Kehoe. No, sir. Mr. Marble. How long have you been in the grain business ? Mrs. Kehoe. Since 1896. Mr. Marble. I believe your husband was in the business at that point ? Mrs. Kehoe. Yes ; he died in 1896 and I continued the business. Mr. Marble. Did your husband have an elevator when he died ? Mrs. Kehoe. No, sir. Mr. Marble. You built that since ? Mrs. Kehoe. Yes; he had some werehouses, or shovel houses, and shoveled it into the wagons. Mr. Marble. Had shovel houses at both these points ? Mrs. Kehoe. No, sir ; only at Platte Center. Mr. Marble. Now, I will ask you what experience you had in con- tinuing the operation of that shovel house after your husband's death, so far as the line companies were concerned and the competition against you ? Mrs. KiiHOE. Well, in the first place, a fire destroyed the shovel house at Platte Center and then I continued the business of loading into cars at both Tarnov and Platte Center. 534 GEAI» ELEVATOR INVESTIGATION. Mr. Marble. Did you have any difficulty in getting cars ? Mrs. Kehoe. Well, sometimes. Mr. Marble. More than your .competitors or less ? Mrs. Kehoe. Sometimes it was quite difficult. Mr. Marble. Sometimes you had more difficulty than your com- petitors ? Mrs. Kehoe. I presume so. ' I do not know that I kept close watch on that. Mr. Marble. As to prices paid in the town, did you find strong competition against you? Mrs. Kehoe. Very strong. Mr. Marble. Did the line elevators pay more at that town than at other towns with similar rates ? Mrs. Kehoe. Yes, sir. Mr. Marble. You found the prices raised ? Mrs. Kehoe. Yes, sir. Mr. Marble. But you continued to make a profit ? Mrs. Kehoe. Not at all times. I refused to buy. Mr. Marble. You refused to buy sometimes ? t Mrs. Kehoe. Very, very frequently. Mr. Marble. You maintained yourself with the implement business ? Mrs. Kehoe. Yes ; when I could not handle the grain business at a margin I let it go. Mr. Marble. If you had been dependent on the grain business for a living could you have remained at that town ? Mrs. Kehoe. No, sir. Mr. Marble. Did you have difficulty in getting a market for the grain, you bought? Mrs. Kehoe. At one or two special times I did. That was when the grain dealers' association was in force. I did not belong to it. Mr. Marble. What difficulty did you have? Mrs. Kehoe. It would not receive the offers nor bids. Mr. Marble. No one would bid you for the grain? Mrs. Kehoe. No. Mr. Marble. No one at all ? Mrs. Kehoe. At one particular period I got all my prices-from Chicago by wire. Mr. Marble. You depended on the Chicago market ? Mrs. Kehoe. Yes, sir. Mr. Marble. And could not get bids from Omaha ? Mrs. Kehoe. None at all. When did you build your elevators? The one at Platte Center, I think, about four years ir. Marble. Mrs. Kehoe. ago. Mr. Marble. Mrs. Kehoe. And the other one ? The year following at Tarnov. Mr. Marble. Are they built on the railroad right of way? Mrs. Kehoe. Yes, sir. Mr. Marble. Did you have difficulty in getting a site ? Mrs. Kehoe. No, sir. Mr. Marble. You found the railroads generally fair? Mrs. Kehoe. I found them fair. GEAIN ELEVATOB INVESTIGATION. 536 Mr. Marble. You found them fair? Mrs. Kehoe. Yes, sir. Mr. Marble. Since building the elevators, how has been the com- petition against you ? Mrs.KEHOE. Pretty near as bad as ever. Mr. Marble. You do not see any change of policy of your competi- tors? Mrs. Kehoe. No, sir ; not much. Mr. Marble. Did you agree on prices with competitors? Mrs. Kehoe. No, sir. Mr. Marble. Have you been asked to do so ? Mrs. Kjihoe. Several times. Mr. Marble. By whom ? Mrs. Kehoe. It was done by the grain dealers' association when it was in force. Since that dissolved it has not been requested. Mr. Marble. Have you ever pooled the business or agreed to a division of the business ? Mrs. Kepioe. No, sir. Mr. Marble. Have you ever been requested to ? Mrs. Kehoe. Oh, yes. Mr. Marble. When ? Mrs. Kehoe. Three or four years ago, I guess. Mr. Marble. When the grain dealers' association was in force ? Mrs. Kehoe. Yes, sir. Mr. Marble. That has ceased now ? Mrs. Kehoe. Yes, sir. Mr. Marble. Did you ever accede to the request to agree on prices or pool the business ? Mrs. Kehoe. I never agreed to pool the business. Mr. Marble. Did you ever agree on prices ? Mrs. Kehoe. Yes, sir. Mr. Marble. Why did you do that ? Mrs. Kehoe. For harmony's sake. Mr. Marble. Did you make a better margin when you agreed on prices than when you did not ? Mrs. Kehoe. I think not. Mr. Marble. Why did you not agree on a smaller price? Were there other competitors that did not agree? Mrs. Kehoe. Prices were always higher at those stations than at adjoining places. Mr. Marble. You found the prices higher whether you agreed on the prices or not ? Mrs. Kehoe. Yes, sir ; they were always higher. Mr. Marble. Do you know why they were higher ? Mrs. Kehoe. I might think ; I do not know. Mr. Marble. No one told you ? Mrs. Kehoe. No. Mr. Marble. And you have no evidence except your own surmise as to why ? Mrs. Kehoe. No, sir. Mr. Marble. Do you have difficulty now in getting a market? Mrs. Kehoe. No, sir ; there is not such difficulty since the elevators were built ? 536 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Since the elevators were built? That made the dif- ference, did it? Mrs. Kehoe. Yes, sir. Mr. Marble. That is all. Commissioner Lane. That is all, madam. The witness was excused. Rudolph Beal, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Beal, where do you reside ? Mr. Beal. In Omaha. Mr. Marble. What is your business ? Mr. Beal. Grain business. Mr. Marble. In what way are you engaged in the grain business? Mr. Beal. In a general way ; I buy and sell grain. Mr. Marble. Are you connected with a company ? Mr. Beal. At the present time ? Mr. Marble. Yes, sir. Mr. Beal. I am. Mr. Marble. Is that the Nebraska Grain and Hay Company? Mr. Beal. The Nebraska Hay and Grain Company. Mr. Marble. Is that a corporation? Mr. Beal. No, sir. Mr. Marble. A partnership ? Mr. Beal. Yes sir. Mr. Marble. I will ask you who your partners are? Mr. Beal. E. A. Nordstrom and my brother, Herman Beal. Mr. Marble. Do you or either of your partners own any railroad stock? Mr. Beal. No, sir. Mr. Marble. And do not divide profits in any way with anyone else at all? Mr. Beal. No, sir. Mr. Marble. Nor with any railroad employee, officer, or stock- holder ? Mr. Beal. No, sir. Mr. Marble. You have country elevators? Mr. Beal. No, sir. Mr. Marble. You control country elevators? Mr. Beal. No, sir. Mr. Marble. You or your firm ? Mr. Beal. No, sir. Mr. Marble. How long have you been engaged in the grain busi- ness here ? Mr. Beal. Five years individually myself ; the company only about a month. Mr. Marble. Have ever any attempts been made to persuade you to divide business at country points in this State — at Bennington? Have you been in business at Bennington, A'ebr. ? Mr. Beal. No, sir ; I have bought grain there, though. Mr. Marble. You have bought grain there ? Mr. Beal. Yes, sir. GKAIN ELEVATOE INVESTIGATION. 537 Mr. Marble. Have any attempts been made to force you to divide the business at that point? Mr. Beal. Not to divide the business; no, sir. Mr. Marble. What were the attempts? Mr. Beal. Simply to persuade me not to buy grain there. Mr. Marble. Not to buy at all? Mr. Beal. Yes, sir. Mr. Marble. Who made those attempts? Mr. Beal. The Nye, Schneider, Fowler Company. Mr. Marble. What did they do to persuade you not to buy there ? Did they threaten you at all f Mr. Beal. Why, not necessarily threaten me, because they could not. They had no influence over me. Mr. Marble. What did they do? What did they attempt to do? Mr. Beal. They came and talked to me in my office. Mr. Marble. What did they say to you in a general way ? Mr. Beal. They asked me to quit buying grain there; said they thought it was not right. Mr. Marble. Did they tell you they would make it unprofitable for you ? Mr. Beal. No. Mr. Marble. What did they say? Mr. Beal. Well, there was no threat made. Mr. Marble. Just simply requested you not to buy there? Mr. Beal. Yes, sir. Mr. Mabrle. You told theni you would continue to buy there? Mr. Beal. Yes, sir. Mr. Marble. Then what did they say ? Mr. Beal. This has been years ago. It has been more than four or five years ago. Mr. Marble. Did any railroad join in the request to you not to buy at that point, or any official of any railroad ? Mr. Beal. I do not remember. Mr. Marble. I think that is all. The witness was excused. C. G. Crittenden, called as a witness, being duly sworn, testified as follows: Mr. Marble. You reside at Lincoln, Nebr. ? Mr. Crittenden. Yes, sir. Mr. Marble. You are manager of the Central Granaries Company of that city? • Mr. Crittenden. Yes, sir. Mr. Marble. What is the business of that company? Mr. Crittenden. Grain business. Mr. Marble. Do you have country elevators? Mr. Crittenden. Yes, sir. Mr. Marble. And you have a terminal elevator at Lincoln? Mr. Crittenden. Yes, sir. Mr. Marble. A cleaning house? Mr. Crittenden. Yes, sir. Mr. Marble. Is it a public warehouse? 538 GRAIN ELEVATOR INVESTIGATION. Mr. Chittenden. No, sir. Mr. Marble. All the grain there belongs to your company? You do not store for others? Mr. Crittenden. No, sir. Mr. Marble. Have those elevators of that company changed hands recently — been sold ? Mr. Crittenden. Our principal stockholders sold their stock to the rest of us. Mr. Marble. So you have no new stockholders? Mr. Crittenden.' One or two; yes, sir. Mr. Marble. How long ago was that sale ? Mr. Crittenden. That was in June. Mr. Marble. Who was your principal stockholder? Mr. Crittenden. Mr. Aleck Berger — Alexander Berger. Mr. Marble. I will ask you if at the present time, or since that sale, any portion of your stock is held by any officer, employee, or stock- holder of any railroad company? - Mr. Crittenden. No, sir. Mr. Marble. You know it is not? Mr. Crittenden. I am positive. Mr. Marble. Do you know whether any part of your profits or dividends on your stock are given to any employee, stockholder, or officer of any railroad in any waj', directly or indirectly ? Mr. Crittenden. They are not. Mr. Marble. At your terminal at Lincoln do you receive any ele- vation allowance? Mr. Crittenden. No, sir. Mr. Marble. Have you ever ? Mr. Crittenden. Yes, sir. Mr. Marble. How long ago ? Mr. Crittenden. Well, up to the time we had notice. I forget the date. Mr. Marble. It was within this last summer, at the time notice went to others generally? Mr. Crittenden. Yes, sir. Mr. Marble. What allowance was made then ? Mr. Crittenden. A cent and a quarter. Mr. Marble. Is there any substitute for that ? Mr. Crittenden. No, sir. Mr. Marble. It is just that much net loss? Mr. Crittenden. Yes, sir. Mr. Marbh^ How about the item of switching? Do you have that to deal with ? Mr. Crittenden. There has never been any switching. Our ele- vator is on their own tracks. If we put it on another road there is a switching. Mr. Marble. How about the item of cooperage of cars? Do you pay that ? Mr. Crittenden. We pay for the coopering? Mr. Marble. Do you get any allowance from the railroad company for that? Mr. Crittenden. No, sir. Mr. Marble. And the grain doors ? ~ Mr. Crittenden. Grain doors are furnished. GRAIN ELEVATOR INVESTIGATION. ' 539 Mr. Marble. You understand that is the general policy in this territory ? Mr. Crittenden. Yes, sir. Mr. Marble. Does any road give you any allowance for loading cars? Mr. Crittenden. No, sir. Mr. Marble. Any out allowance? Mr. Crittenden. No, sir. Mr. Marble. Where are your country elevators situated ? Mr. Crittenden. On the line of the Burlington Eailroad. Mr. Marble. I will ask you if at the present time you have any arrangement whatever for keeping your prices in line with competi- tors by consultation with them or agreement ? Mr. Crittenden. No, sir. Mr. Marble. Do you recognize the right of your competitors to a certain percentage of the grain at points where you are located ? Mr. Crittenden. We always feel that where there are two eleva- tors we are each entitled to half the business. Mr. Marble. And you make no effort to get more than that ? Mr. Crittenden. No, sir. Mr. Marble. You have heard the testimony as to the attitude of elevator men as to those that have not facilities. Do you share in those sentiments? Mr. Crittenden. In some cases ; yes, sir. Mr. Marble. What cases? Mr. Crittenden. Where it is a scoop shovel and no grain in sight on track we consider it unfair competition. Mr. Marble. You bid other dealers ? Mr. Crittenden. Yes, sir. Mr. Marble. Do you bid such dealers as that ? Mr. Crittenden. No, sir. Mr. Marble. Do you attempt to persuade others not to ? Mr. Crittenden. No, sir. Mr. Marble. Do you raise prices to get them out of the territory ? Mr. Crittenden. That depends. If they are paying as much as the grain is worth, we do not attempt to do anything different. Mr. Marble. You let them buy if they are not making any profit? Mr. Crittenden. Yes, sir. Mr. Marble. You see that they do not make any profit ? Mr. Crittenden. To be frank with you, I have not had a case of that kind for a long time. Mr. Marble. They do not come into that territory? Mr. Crittenden. They have not been in that territory. Mr. Marble. Does your company avoid the Omaha market or regard it with any disfavor ? Mr. Crittenden. No, sir ; we do not sell any grain here. Mr. Marble. Your grain goes largely to the north, does it not, over the Ashland cut-off ? Mr. Crittenden. No ; I think not. Mr. Marble. Has your elevator, your company, any contract with any railroad regarding elevation or switching or anything of that sort ? Mr. Crittenden. No, sir. Mr. Marble. Or any contracts relating to the cost of buildings ? 540 ■ GEAIN ELEVATOB INVESTIGATION. Mr. Crittenden. No, sir. Mr. Marble. You own your buildings ? Mr. Crittenden. Yes, sir. Mr. Marble. You built them yourself ? Mr. Crittenden. Some of them, and some were already built when I bought. Mr. Marble. You were not aided in building by the railroad com- pany? Mr. Crittenden. No, sir. Mr. Marble. And have no arrangement to have them taken off your hands by the railroad in any contingency ? Mr. Crittenden. No, sir. Commissioner Clark. From what railroad did you receive the cent and a quarter allowance ? Mr. Crittenden. The Burlington. Commissioner Clark. Any other ? Mr. Crittenden. No, sir. Commissioner Clark. Is there any other railroad there with which you did business? Mr. Crittenden. No, sir. Commissioner Clark. That is all. The witness was excused. Mr. Marble. Is Mr. Zimmerman here yet? (No response.) J. B. Hume, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside at Madison, Nebr., Mr. Hume ? Mr. Hume. Yes, sir. Mr. Marble. You are engaged in buying grain from farmers at that point? Mr. Hume. Yes, sir. Mr. Marble. You have an elevator ? Mr. Hume. Yes, sir. Mr. Marble. Have you more elevators than one at that point? Mr. Hume. No, sir. Mr. Marble. Do you ship your grain to the Omaha market, largely ? Mr. Hume. Partly. Mr. Marble. How long have you been in business there ? Mr. Hume. In the grain business ? Mr. Marble. In the grain business? Mr. Hume. Twenty years, I think — no, seventeen years. Mr. Marble. How did you start — with an elevator at the start? Mr. Hume. I bought an elevator. Mr. Marble. Who are your competitors there? Mr. Hume. The Omaha Elevator Company and Thomas O'Shea. Mr. Marble. How do you determine the prices to be paid by you at that point ? Mr. Hume. Why, each fellow for himself. Mr. Marble. Do you consult with each other at all ? Mr. Htjme. Yes, sir. Mr. Marble. You do? GEAIN ELEVATOE INVESTIGATION. 541 Mr. Hume. Yes, sir. Mr. Maeble. And you consult before the bidding is made as to what the prices ought to be ? Mr. Hume. You mean do we arrange as to a price to be paid? No; but we talk as grocery men or any men would talk with each other. Mr. Maeble. Do you make a practice of talking as often as the price changes ? Mr. Hume. We talk each time we meet each other. Mr. Maeble. Do you meet each day ? Mr. Hume. Sure. I do not want you to understand me to say that we meet for the purpose of arranging prices. We meet in the street. Mr. Maeble. You do not attempt to keep prices from each other or get out of line on the prices? Mr. Hume. It is impossible to do it at a country station, because immediately one pays a quarter of a cent more than a competitor, the other has to pay the same. It must of necessity be the same. Mr. Maeble. You keep it the same by means of these consultations instead of one paying more and the other having to go up ? Mr. Hume. No, sir; it is the same. We do not keep it the same, but it is the same because we each get the offers of buyers at Omaha or other markets, and with the changes made on them our changes are made. One man will change and lower his price and hear that the other fellow has not done so and has to go back. Mr. Maeble. The one paying too much has to go back ? Mr. Hume. No; the one not paying enough has lo go up. I do not know that I can make it clear. Mr. Maeble. Just state it in your own way. Mr. Hume. For instance, I get a card that shows that oats is off a half a cent a bushel. I reduce my price a half a cent a bushel. One of my competitors may not have had any instructions from his Omaha house — he represents an Omaha house — and he pays the same. I am compelled in that case to pay the price of the previous day. Mr. Maeble. You do not show him the card and have him reduce his price? Mr. Hume. No, sir. Mr. Maeble. Do you recognize and do your competitors recognize the right of each other to a proportion of the grain ? Mr. Hume. I will explain that. I recognize the right to all I can get. I recognize no other right. Mr. Maeble. Do your competitors recognize that you have a right to all you can get in practice ? Mr. Hume. In practice; yes, sir. Mr. Maeble. How many elevators are there at your point? Mr. Hume. Three Mr. Maeble. Do you, as a matter of fact, get more than one-third , at that point ? Mr. Hume. Yes, sir. Mr. Maeble. Are there complaints by your competitors because of that fact? Mr. Hume. There is not at present. Mr. Maeble. There has been ? Mr. Hume. Yes, sir. Mr. Maeble. How long ago ? 542 GRAIN ELEVATOR INVESTIGATION. Mr. Hume. When Mr. Jaquith was manager of the Omaha Ele- vator Company, three or four years ago. Mr. Marble. Mr. Jaquith tried to make you divide? Mr. Httme. Yes, sir. Mr. Marble. Did he succeed? Mr. Hume. How is that ? Mr. Marble. Did Mr. Jaquith succeed? Mr. Hume. I do not think he did. Mr. Marble. You are not sure whether you acceded to his demand or not? Mr. Hume. Well, yes; I did. Mr. Marble. When did that arrangement cease? Mr. Hume. I do not know. I think about 1901 or 1902; I think about the time Mr. Jaquith ceased to be manager of the Omaha Ele- vator Company. Mr. Marble. Mr. Jaquith's successor did not follow his policy ? Mr. Hume. No, sir. Mr. Marble. Do you know whether or not your competitors com- bined in any way ? Mr. Hume. I do not. Mr. Marble. That is all. Commissioner Clakk. When a farmer brings a load of grain into a station, is it customary for him to go to the different buyers and ascertain what he can get for his grain? Mr. Hume. At our station, not. Occasionally it is, but not neces- sarily. Most men there drive their load of grain into where they are in the habit of selling, where they are known and have done busi- ness. Commissioner Clark. You have a well-established line of cus- tomers, regular customers ? Mr. Hume. Yes, sir. Commissioner Clark. That is all. The witness was excused. F. M. Terry, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Terry? Mr. Terry. At Little Sioux, Iowa. Mr. Marble. What is your business ? Mr. Terry. General merchandise and grain. Mr. Marble. You have a store for general merchandise? Mr. Terry. Yes, sir. Mr. Marble. And are also engaged in the grain business? Mr. Terry. Yes, sir. Mr. Marble. In what way are you engaged in the grain business? Mr. Terry. Well, I have a crib at Little Sioux. I buy and ship from the crib. Mr. Marble. You have no elevator? Mr. Terry. No, sir. Mr. Marble. How long have you been so engaged in the grain bus- iness ? Mr. Terry. Well, since 1892, for myself. GEAIN ELEVATOB INVESTIGATIOlir. 543 Mr. Marble. On what railroad are you situated ? Mr. Terky. The Sioux City and Pacific, on the Northwestern. Mr. Marble. Have you been treated fairly by that railroad since you have been in the business ? Mr. Terry. Well, no. Mr. Marble. How are you treated at the present time ? Mr. Terry. Very fairly. Mr. Marble. How long have you been treated fairly ? Mr. Terry. Since about two years ago. Mr. Marble. What had you to complain of at that time ? Mr. Terry. They would not furnish me cars. Mr. Marble. Would they furnish cars to your competitors ? Mr. Terry. Yes, sir ; plenty of them. Mr. Marble. But not to you ? Mr. Terry. No, sir. Mr. Marble. Did they tell you why they discriminated ? Mr. Terry. Well, because I had not an elevator. Mr. Marble. Who told you that ? Mr. Terry. The local agent. ' Mr. Marble. Did anybody else tell you that connected with the railroad company? Mr. Terry. No. Mr. Marble. Where do you sell your wheat ? Mr. Terry. Wherever I can find a market. Mr. Marble. Well, as a rule ? Mr. Terry. I sold some in Chicago — well, a good deal here in Council Bluffs on track. Mr. Marble. Have you had any experience attempting to sell to millers ? Mr. Terry. I have sold a good deal to millers that way. Mr. Marble. Have you sold some to millers at Missouri Valley ? Mr. Terry. Yes, sir. Mr. Marble. Recently? Mr. Terry. No, sir. Mr. Marble. Have you had trouble about selling at Missouri Valley? Mr. Terry. Yes, sir. Mr. Marble. What was it? Mr. Terry. They did not want to buy from me because the others would boycott them. Mr. Marble. What miller told you that ? Mr. Terry. The Missouri Valley mill — Tamasit. Mr. Marble. A station named Tamasit ? Mr. Terry. No, that is the miller's name. Mr. Marble. Is that Brewer & Tamasit? Mr. Terry. Yes, sir. Mr. Marble. How long ago was that they so refused to buy your wheat ? Mr. Terry. It is about six months ago. Mr. Marble. And have they refused since that,, subsequently ? Mr. Terry. I tried to sell them some last week. Mr. Marble. What did they tell you then ? Mr. Terry. The same thing. 544 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. What was that ? Mr. Terry. That they did not dare buy my grain on account of the elevator here. Mr. Marble. What elevator? Mr. Terry. I think it is the Updike. Mr. Marble. Did they tell you what the elevator would do to them? Mr. Terry. No ; they said I could not do any business now. Commissioner Lane. Have you got those letters ? Mr. Terry. No, sir; I have no letters. It was personal. Commissioner Lane. Who was the individual that told you ? Mr. Terry. Mr. Tamasit. Mr. Marble. Did he say he was notified personally by the elevator ? Mr. Terry. No. Mr. Marble. But he refused to buy your wheat for fear the Updike elevator would not sell him ? Did he complain of that ? Mr. Terry. Yes, sir. Mr. Marble. Did he say there was anything the matter with your wheat? Mr. Terry. No, sir. Mr. Marble. Do you know whether or not he liked your wheat better than the Updike ? Mr. Terry. I do not know about that. Mr. Marble. Is your wheat treated or do you sell it as it comes from the farmer ? Mr. Terry. As it comes from the farmer. Mr. Marble. Do you know whether or not the millers at Missouri Valley prefer that kind of wheat? Mn Terry. No ; I do not. Mr. Marble. Have you done business with the Logan Milling Company at Logan, Iowa? Mr. Terry. Yes, sir ; I have sold them considerable grain. Mr. Marble. Have you had some trouble dealing with them ? Mr. Terry. Some. Mr. Marble. How long since? Mr. Terry. I do not think I have sold them any the last two years. Mr. Marble. Have you attempted to? Mr. Terry. I tried the other day, but they said they were full. Mr. Marble. What was the difficulty two years ago ? Mr. Terry. He bought my grain just the same. Of course, Updike notified him not to, I suppose. Mr. Marble. What makes you think Updike so notified him ? Mr. Terry. Why, Mr. McCord, the owner of the mill, told me so, and also I have my letters. Mr. Marble. Have you those letters ? Mr. Terry. Yes, sir. Mr. Marble. Have you them with you? Mr. Terry. Yes, sir. Mr. Marble. Wlio gave you those letters ? Mr. Terry. Mr. George McCord. Mr. Marble. May I read the letters? Commissioner Lane. Yes. GBAIN ELEVATOR INVESTIGATION. 545 Mr. Marble. The first is dated : The Updike Grain Company, River Sioux Station, August 31, 1903. Updike Grain Company, Omaha, Nehr. Dear Sirs : Writing in regard to our competition I will say that in the sur- rounding towns is satisfactory, in regard to grain and price. Our track buyer here has bought some wheat here that I could not run out of the wagon, and paid 59 cents for it. I did not consider it worth over 35 or 40 cents at the most. And then I would not know what to do with it. I thought best to let him have it. I will look after the good wheat close. Yours, truly, S. H. Robinson. (The same is hereto annexed and marked " Exhibit No. 1 to Mr. Terry's testimony.") The next one is dated : The Updike Grain Company, September %, 1903. Losan Milling Company, Logan, Ind. Gentlemen : Please note the inclosed letter. We understand that Mr. Terry, who is the track buyer referred to, is shipping his wheat to you. How is it that you can use sucli poor wheat from Mr. Terry? Can you use this poor wheat from us ; and if so, at what price per car as good as No. 92642, which you received from Mr. Terry? Yours, truly. The Updike Grain Company, By'N. B. Updike, President. (The same is hereto annexed and marked " Exhibit No. 2 to Mr. Terry's testimony.") Mr. Marble. Are those the letters given to you ? Mr. Terry. He was talking about it. I met him at Missouri Valley,- and he was telling me about these letters, and I said : " What did you do? " and he said: " I wrote to Mr. Updike that I would take 10,000 bushels of grain as good as Mr. Terry's shipment to him." Mr. Marble. And he continued to buy of you ? Mr. Terry. Yes, sir. Mr. Marble. Did you find that hb was threatened in any way ? Mr. Terry. No. Mr. Marble. There is nothing to complain of in that respect at all ? Mr. Terry. No, sir. Mr. Marble. On account of the competition that you had to meet at that place, have you found the prices raised against you in the market ? Mr. Terry. No, sir. Mr. Marble. They concede your right to be in the business there, so far as competition is concerned? Mr. Terry. I don't know about that. Mr. Marble. Did you agree on prices with your competitors at all ? Mr. Terky. No, sir. Mr. Marble. On what basis do you make your prices? Mr. Terry. On the bids that I get from the mills and the Chicago markets. Mr. Marble. And what margin of profit do you make with this shovel house? Mr. Terry. I have made as high as 4 or 5 cents a bushel. S. Doc. 278, 59-2 35 546 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. On wheat? Mr. Terry. Yes, sir. Mr. Marble. On corn, how much? Mr. Terry. Oh, it varies in regard to corn. Mr. Marble. About how much ? Mr. Terry. Well, about 2 cents a bushel. Mr. Marble. And oats ? Mr. Terry. I do not handle oats. Mr. Marble. And you have succeeded in making these margins that you have testified to ? Mr. Terry. I have so far. Mr. Marble. You do not give any portion of that profit away ? Mr. Terry. No, sir. Mr. Marble. Why don't you raise your price and get more grain ? Mr. Terry. I have raised it. Mr. Marble. Why don't you raise it more ? Mr. Terry. Of course, we get that margin sometimes by the market going up. ' Mr. Marble. There is some speculation in that, then ? Mr. Terry. Yes, sir. Mr. Marble. Do you recognize your competitors' right to any por- tion of the grain ? Mr. Terry. Oh, yes. Mr. Marble. You try to get only what you consider your share ? Mr. Terry. I try to get along the best I can. Mr. Marble. Have you an agreement as to how much you shall bid ? Mr. Terry. No, sir. Mr. Marble. Uniformly, how much do you buy — ^what proportion of the market ? Mr. Terry. Well, we handled about 25,000 bushels of corn this last spring and summer. Mr. Marble. And how much has been marketed at your place in that time ? Mr. Terry. I couldn't tell you. . Mr. Marble. You haven't kept track of that ? Mr. Terry. No, sir. Mr. Marble. I am trying to get at whether or not you recognize your competitors' right to a share of that market. Mr. Terry. Yes ; I do. Mr. Marble. You do not draw upon what you consider his share ? Mr. Terry. I do not try to get in his territory. Mr. Marble. You are both in the same town? Mr. Terry. No, sir. A mile apart. We have no railroad at my town at all. Mr. Marble. Are you the only buyer at your town? Mr. Terry. Yes, sir. Mr. Marble. You simply buy what is tributary to that town ? Mr. Terry. Yes, sir. Mr. Marble. How do you sell your wheat — haul it to the station ? Mr. Terry. Yes, sir. Mr. Marble. Well, then, all the trouble you have had has been that which occurred some time ago, and also this attempt to keep you from selling to millers; is that it? Mr. Terry. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 547 Mr. Marble. Did you have any trouble with the Glucose Com- pany, of Marshalltown, Iowa ? Mr. Teeet. I wrote to them and tried to sell them some corn, and they said they couldn't take it because I did not have an elevator. Mr. Marble. Did they tell you they did not belong to the grain dealers' association ? Mr. Terry. Yes, sir. Mr. Marble. How long ago was that? Mr. Terry. That was about three years ago. Mr. Marble. Have they bought any from you since ? Mr. Terry. No, sir. Mr. Marble. Have you tried to sell them any since ? Mr. Terry. No, sir. Mr. Marble. Why didn't you join the grain dealers' association? Mr. Terry. I didn't want to. Mr. Marble. Could you tell us why ? Mr. Terry. Well, I want to do business and do it in my own way of doing business. I didn't want to be handicapped. If I could buy grain and pay a good price for it I wanted to do so. Mr. Marble. In what way would you have to change your manner of doing business ? Mr. Terry. I suppose I would have to pay the same prices as they dictate. Mr. Marble. Is that the understanding you have ? Mr. Terry. And I would have to build an elevator and I couldn't get the ground. Mr. Marble. Why couldn't you get the ground ? Mr. Terry. I suppose the Northwestern would not let me have the ground. Mr. Marble. Have you tried to get ground? Mr. Terry. No, sir ; but that is the general understanding we have. Mr. Marble. Has ground been refused to others? Mr. Terry. I do not know. Mr. Marble. How can you have that understanding if you have not tried at all ? Mr. Terry. They seem to monopolize everything down there — ^the Updike grain people. Mr. Marble. If I were you I would put in an application and find out. Mr. Terry. Well, the way I am situated there I can do business just as well without it. Mr. Marble. Could you not join the association unless you built an elevator? Mr. Terry. No, sir. Mr. Marble. Would you have to agree on prices with your com- petitors if you joined the association ? Mr. Terry. That is the way I understand it. Mr. Marble. Has any such statement been made to you by Mr. Wells or anyone for him ? Mr. Terry. Yes, sir. Mr. Marble. He told you that was one purpose of the organization ? Mr. Terry. Yes, sir. I had a letter from him about two years ago, and that was the substance of it. Mr. Marble. Have you that letter now? 548 6BAIN ELBVATOK INVESTIGATION. Mr. Terky. No, sir. Mr. Marble. Have you had any communication from him since then? Mr. Terry. No, sir. Mr. Marble. It is your understanding that that continues to be the policy of the association ? Mr. Terry. Yes, sir. Mr. Marble. How did you get that understanding? Mr. Terry. In a letter that I received from him. Mr. Marble. He never has told you anything different ? Mr. Terry. No, sir. Mr. Marble. Has he solicited you since that time to join the association ? Mr. Terry. No, sir. Mr. Marble. You understand that you would have to pool grain at your point with anyone else ? Mr Terry. Yes, sir. Mr. Marble. If you joined the association? Mr. Terry. Yes, sir. Mr. Marble. Did he state that to you in a letter ? Mr. Terry. Yes, sir. Mr. Marble. Is that letter still in existence ? Mr. Terry. No, sir. I destroyed a lot of letters about four months ago — three or four months ago. Mr. Marble. That is all. Commissioner Clark. Do you know of any person in the State of Iowa named Case, who sends out market notices for grain? Mr. Terry. No, sir. I never get any notice. Commissioner Clark. You never heard of this Mr. Case, then ? Mr. Terry. No, sir. Commissioner Lane. That is all. Witness excused. J. P. Zimmerman, recalled. Mr. Marble. What is this book, Mr. Zimmerman ? Mr. Zimmerman. It is our claim book. Mr. Marble. This contains all the claims made by the firm of Merriam & Holmquist against railroad companies in the times cov- ered by the dates shown in this book ? Mr. Zimmerman. Yes, sir. Mr. Marble. I will refer you first to this bill, dated April 14, 1906, Chicago Great Western Kailway to Merriam & Holmquist, debtor, containing the numbers of six cars. Van D & H, Minneapolis, and opposite the numbers and names Osceola, Miller, and Amherst — had been billed 193,800 pounds at one and a quarter cents, carried out $24.23, and marked paid 6-14^06, check received $16.50. Mr. Zimmerman. $16.09. Mr. Marble. What is that? That is the claim against the Chicago Great Western Railway ? Mr. Zimmerman. Yes, sir. But that claim was put in before I had this position, and I know nothing about it. Mr. Marble. You don't know what that is for? GRAIN ELEVATOR INVESTIGATION. 549 Mr. Zimmerman. No, sir ; that is beyond me. Mr. Marble. Do you know about that claim [indicating] . Mr. Zimmerman. No. That is also previous. Mr. Marble. Did you make that note ? Mr. Zimmerman. Yes. Simply to get the date when the claim was paid. Mr. Marble. Are you able from your examination of this book to say that that is the latest claim paid by the Wabash Railroad Com- pany? Mr. Zimmerman. Well, according to our records. Mr. Marble. And Merriam & Holmquist have not received any- allowance — elevation allowance — from the Wabash since the date of that claim ? Mr. Zimmerman. No, sir. Commissioner Lane. What is that date ? Mr. Marble. Omaha, Nebr., October 27, 1906. When was the date of this service ? Mr. Zimmerman. March 1. Mr. Marble. This is March 1 to March 26, 1,029,350 pounds, 1^ cents, $128.67, and that was paid when ? Mr. Zimmerman. June 14. Mr. Marble. 1906. But the services rendered all ceased on the 26th of March ? Mr. Zimmerman. Yes, sir. Mr. Marble. What is that claim and this note ? Mr. Zimmerman. That is simply — ^that is the last claim that the Milwaukee paid us for elevation. Mr. Marble. What is the date ? Mr. Zimmerman. April 27, 1906. Mr. Marble. And the service was rendered from the 2d of March to the 7th of March, 1906 ? Mr. Zimmerman. Yes, sir. Mr. Marble. That is the Chicago, Milwaukee and St. Paul Eoad? Mr. Zimmerman. Yes, sir. Paid on June 4. Mr. Marble. And this. This is the Chicago, Rock Island and •Pacific. Is that the last claim that was paid by that company ? Mr. Zimmerman. Yes, sir. Commissioner Lane. Put in the amounts as you go along. Mr. Zimmerman. That was paid August 1. Mr. Marble. The Chicago, Milwaukee and St. Paul amount is 266,650 pounds, at a cent and a quarter, $33.33. Commissioner Lane. Just put in the dollars. Mr. Marble. This is the last claim paid by the Rock Island ? Mr. Zimmerman. Yes, sir. Mr. Marble. Claim dated April 27, 1906. Service rendered March 6 to March 28; amount, $16.54. This is the last claim paid by the Chicago Great Western ? Mr. ZiMsiERMAN. Yes, sir. Mr. Marble. Dated April 27, 1906. Service rendered from March 1 to March what ? Mr. Zimmerman. From March 5. Mr. Marble. From March 5 to Mr. Zimmerman. No : that is a different claim. 550 GBAIK ELEVATOE INVESTIGATION. Mr. Marble. From March 1 to March 19, $595.29. Are you famil- iar with that claim? Mr. Zimmerman. No ; I am not. That was before my time. Commissioner Lane. That was paid — that claim? Mr. Zimmerman. That was paid. Mr. Marble. Is that another claim, that third sheet of the Chicago Great Western ? Mr. Zimmerman. Yes, sir ; that is another claim. Mr. Marble. Was that paid ? Mr. Zimmerman. I don't believe that was paid. Mr. Marble. Do you know why not ? Mr. Zimmerman. No ; I do not. Mr. Marble. You can not tell about whether that is another claim and paid or not ? Mr. Marble. I might find that out for you, but I do not believe it was. It might have been the same date, and he just put one claim in. Mr. Marble. Will you look that up ? Mr. Zimmerman. Yes, sir. Mr. Marble. I will just tuBn the page down. Is this the last claim paid by the Illinois Central ? Mr. Zimmerman. Yes, sir. Mr. Marble. Claim dated Omaha, Nebr., May 18, 1906? Mr. Zimmerman. Yes, sir. Mr. Marble. Service rendered April 10, amount $10. Is that the last claim paid by the Chicago Northwestern ? Mr. Zimmerman. Yes, sir. Mr. Marble. Chicago Northwestern Railroad, May 18, 1906. Serv- ice rendered May 7 to 27, $18.29. Is this the last claim paid by the Missouri Pacific ? Mr. Zimmerman. Yes, sir ; that is the last one. Mr. Marble. Dated at Omaha, Nebr., July 6," 1906. What period did this service cover ? It began on the 1st of June and extended to the 30th of June; $775.82. There is no claim shown in this book since that time. Mr. Zimmerman. You will notice that there is a correction here. Mr. Marble. $775. Mr. Zimmerman. $770.23. Mr. Marble. That is the correct amount? Mr. Zimmerman. Yes. Mr. Marble. That is not marked paid here? Mr. Zimmerman. No. Mr. Marble. How do you tell that that is paid ; do you keep that in another book ? Mr. Zimmerman. We have a separate record. Mr. Marble. But there are other claims of exactly the same ap- pearance in this book against the Missouri Pacific. Mr. Zimmerman. I do not believe so. I could not say as to that. These were paid before I took that position. Mr. Marble. How about this one ? This is dated and almost simi- lar to cover the same details. Do they not cover the same calendar month, beginning June 2 and running to June 28 against the Missouri Pacific ? This, you say, began on the 1st and ran to the 30th ? Commissioner Clark, Are the claims for the same character of service ? GEAIN ELEVATOR INVESTIGATION. 551 Mr. Makble. They are for the same character of the service, but, so far as I can tell, for different car numbers. Back here is the other one. Mr. Zimmerman. Where is that other one ? Mr. Marble. Here. That also seems to be for the month of June. Mr. Zimmerman. Well, those are Iowa points. Mr. Marble. You put in separate claims for Iowa points than for Nebraska points ? Mr. Zimmerman. Yes, sir. Mr. Marble. Why ? Mr. Zimmerman. I do not know why that was done. It was all done before I took the position. Mr. Marble. You can not explain that method of making them ? Mr. Zimmerman. No. Mr. Marble. Do you know about that claim ? Mr. Zimmerman. No. Mr. Marble. This is a claim dated Omaha, Nebr., July 5, 1906, Missouri Pacific Eailroad Company to Merriam & Holmquist, debtor, 45 cars at $5, $225. Paid August 14, 1906, J. W. H. Do you know about that claim? Mr.ZiMMERMAN. Yes ; I know about that. It was a shortage claim. Mr. Marble. Do you have a great many shortage claims against the Missouri Pacific? Mr. Zimmerman. Yes, sir ; we have them against them and against all roads in fact. Mr. Marble. This shortage claim here is Omaha, Nebr., July 5, 1906. To Merriam & Holmquist, debtor, 19817, I. M., bulk corn, Brockman-Daly, St. Louis, March 20, 1906. Our weight 65,000 pounds; return weight 63,750 pounds, difference, 1,250 pounds, less one-quarter of one per cent, 162 pounds, 1,088 pounds or 19 bushels, 24 pounds, at 42| cents, $8.30. Commissioner Clark. What is the use of that? Mr. Marble. There is a great number of these claims and I just wanted to find out the nature Commissioner Clark. It is a claim for shortage of weight. Mr. Marble. The difference is between the weight at your scales ! ad the return weight ? Mr. Zimmerman. Yes, sir. Mr. Marble. Do the railroad companies weigh these cars or do they take your weights? Mr. Zimmerman. I do not know. They do in some instances, I guess, but not in all. Mr. Marble. And they make good to the firm for the difference between the firm weights and the return weights ? Mr. Zimmerman. Yes, sir; in this case they did. Mr. Marble. Is that anything you want to testifv concerning? Mr. Zimmerman. No. Mr. Marble. Do you know about that claim? Mr. Zimmerman. No ; I do not know anything about that. Mr. Marble. Do you know anything about that claim ? Mr. Zimmerma'n. No. Mr. Marble. Do you know anything about that? Mr. Zimmerman. That is a bridge charge; I do not know. Mr. Marble. Do you know anything about that? Mr. Zimmerman. No. 552 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. I will direct your attention to this writing on the back of this claim, which on the face is marked " over," and ask you if you know anything about that writing ? Mr. Zimmerman. I know nothing about that at all. Mr. Marble. Whose writing is that ? Mr. Zimmerman. The stenographer's writing. Mr. Marble. We will have to call Mr. Mernam for some of these things. We won't stop now. The three-quarters of a cent rate ha =5 been testified to by Mr. Merriam. Do you know about what that writing means ? Mr. Zimmerman. No, sir ; I know nothing about it at all. Mr. Marble. About this ? Mr. Zimmerman. No. Mr. Marble. Do you know about that claim ? Mr. Zimmerman. Why, that is a three-quarter of a cent claim. Mr. Marble. Do you know through what elevator that grain went ? Mr. Zimmerman. All through our elevator. Mr. Marble. It is a claim against the Chicago Great Western Rail- way Company for a three-quarters of a cent allowance ; but the grain, you say, went through the elevator of Merriam & Hohnquist ? Mr. Zimmerman. Yes, sir. Mr. Marble. It didn't go through the Chicago Great Western elevator ? Mr. Zimmerman. No, sir. Mr. Marble. Do you know about that claim? Mr. Zimmerman. That is a switching claim. Mr. Marble. WTien was that rendered ? Mr. Zimmerman. October 1. Mr. Marble. Omaha, Nebr., October 1, 1906. Numbers of cars — 13 numbers of cars, dated from June 6 to September 27 — 13 cars at $2, $26, marked^" Reconsigning." Has that claim been paid? Mr. Zimmerman. No, sir; that has not been paid, I don't think. Mr. Marble. I will direct your attention to this claim directly fol- lowing it. The first claim is against the Missouri Pacific Eailway Company. Mr. Zimmerman. Yes, sir. Mr. Marble. Here is one dated Omaha, Nebr., October 1, 1906, against the Chicago, Burlington and Quincy Railroad ; 6 cars, at $4, $24, marked " account reconsigning from South Omaha." The Missouri Pacific claim is $2. Here is one billed at $2 and the other at $4. Is there any difference in the service? Mr. Zimmerman. I can not answer that clearly at aU. I am not familiar enough with it. Mr. Marble. You don't know why there is a difference? Mr. Zimmerman. No, sir. Mr. Marble. How about this? Mr. Zimmerman. That is on the basis of 4 cents. In our shortage claim we have to take charge of it. That is another shortage claim similar to the other one referred to. Mr. Marble. It is taking off the freight on the amount of the shortage claim? Mr. Zimmerman. No, sir. Mr. Marble. It isn't the difference in the freight on the entire con- signment ? GRAIN ELEVATOB IKVESTIGATION. 553 Mr. Zimmerman. No, sir. Mr. Marble. Is this your writing. Mr. Zimmerman. Yes, sir. Mr. Marble. Do you know what that means ? Read it. Mr. Zimmerman (reading). "Allowance, one- fourth of 1 per cent additional 150 pounds ; 2 bushels 38 pounds, at 53 cents, $1.42." This is where we allowed them in the first place a quarter of 1 per cent, and we afterwards allowed a quarter additional. Mr. Marble. It represents an allowance on the claim by you, and not by the railroad company? Mr. Zimmerman. Yes, sir. Mr. Marble. That is a claim made by the Missouri Pacific ? Mr. Zimmerman. Yes, sir. Mr. Marble. " Omaha, Nebr., October 8, 1906. Missouri Pacific to Merriam & Holmquist, debtor, 95715 Q; bulk corn, Omaha to Bir- mingham, August 10, 1906, account unreasonable delay in transit; we should be reimbursed to the following extent : Account difference in market, 1,000 bushels, at 3 cents, $30; account demurrage, $7 — $37." Has that been paid? Mr. Zimmerman. No ; that has not been paid. Mr. Marble. Has it been objected to, do you know? Mr. Zimmerman. No, sir. Mr. Marble. Do you know whether or not the Missouri Pacific pays claims on such shipments as that ? Mr. Zimmerman. Why, I think it has been the case, although I could not refer to any right now. Mr. Marble. Without your specifying the extent of the delay, etc. ? Mr. Zimmerman. They have their full record of the time it took the car to arrive at destination. In a case of this kind I suppose they would go back and want to know the conditions, etc. Mr. Marble. You do not regard that as a completed claim? It has to be supplemented by a further statement from you ? Commissioner Lane. Is there some agreement between yourselves and the Missouri Pacific by which in case they do not deliver your cars in time you shall get a certain amount of demurrage ? Mr. Zimmerman. No, sir ; no agreement whatever. Commissioner Lane. On what basis do you found such claims, then? Mr. Zimmerman. It was simply a case where we sold this grain to arrive on a certain day, and the Missouri Pacific was very slow in han- dling it. Commissioner Lane. It was a case of damages ? Mr. Zimmerman. Yes, sir. Commissioner Lane. You have not that kind of an arrangement with any railroad? Mr. Zimmerman. No arrangements like that at all. Commissioner Clark. Are you acquainted with the terms of the agreement that the firm of Merriam & Holmquist have with the Missouri Pacific or with other railroads ? Mr. Zimmerman. No, sir ; I am not. Commissioner Clark. Are you acquinted with the terms applicable to the switching service performed? Mr. Zimmerman. I think 'so. Commissioner Clark. Well, will you explain to us why your bill 554 GEAIN ELEVATOR INVESTIGATION. for switching service against one road is $2 per car and against another road $4? Mr. Zimmerman. In that case I couldn't say as to that, because I had nothing to do with the claim. I presume from South Omaha there would be a greater switching charge ; it would cost more money than it would locally. Commissioner Clark. These bills that your attention was called to in this book against these several railroads, such as the Great Western, Wabash, the Milwaukee, and the Rock Island, were all for elevator service ? Mr. Zimmerman. The ones that I mentioned there for elevation were. Commissioner Lane. That is all. Mr. Marble. Just a minute. It is suggested that one of these — this charge of $4 is $2 from the incoming road and $2 from the out- going road, which makes up the $4 ; is that right ? Mr. Zimmerman. I could not say as to that. Mr. Marble. Do you know how that is made up at all ? Mr. Zimmerman. No ; I do not. Mr. Marble. That is all. (Witness excused.) Mr. Marble. I would like to call Mr. Merriam and finish this book at the present time. Nathan Merriam, recalled. Mr. Marble. This matter of the $4 and the $2 — can you explain that, Mr. Merriam? Mr. Merriam. I think the explanation he gave is correct — ^that it happened to be on these cars $2 under the term of recDnsigning. Mr. Marble. Two dollars reconsigning in one case and not in the other ? Mr. Merriam. That is, change of ownership made the extra charge of $2. Mr. Marble. But the bills read the same as to reconsigning. Was it switching from two roads so that there would be two switching charges ? Mr. Merriam. Yes; that would occasion that extra charge. Mr. Marble. Both of them are made out for reconsigning. Mr. Merriam. The term " reconsigning " and " switching " has been used here signifying the same class of work by the railroads. Commissioner Lane. You say the term " reconsigning " and the term " switching " have been used interchangeably by the railroads ? Mr. Merriam. I think so ; yes, sir. It seems to mean the same here in Omaha. Mr. Marble. I will ask you why the bills are divided here for this elevation allowance ; the Nebraska bills on one end and the Iowa bills on another? Mr. Merriam. That was in case there should be any difference in opinion as to settlement. We kept it that way for convenience. Mr. Marble. You had an idea that you might not be allowed on Iowa grain ? Mr. Merriam. No ; I don't know it was for that. We have been in GRAIN ELEVATOR INVESTIGATION. 555 the habit of keeping the Iowa erain in a class by itself, and the Nebraska grain in a class by itself Mr. Marble. For any reason connected with this elevation al- lowance ? Mr. Merriam. I do not think so. It was just a matter of conven- ience. Mr. Marble. I am asking why, against the Missouri Pacific, you would put in two claims for the month of June for elevation allow- ance — one on Nebraska grain and one on Iowa grain. Why didn't put them in together under one claim ? Mr. Merriam. Only to keep up the system we have of keeping Iowa grain by itself so far as possible. Commissioner Clark. Are the rates per hundred pounds in those two bills identical ? Mr. Marble. The rate does not show. The first one reads 45,000 — oh, I beg your pardon ; it is a cent and a quarter a hundred pounds. Commissioner Clark. The same for both ? Mr. Marble. Yes, sir ; have both of these claims been paid ? Mr. Merriam. I could not say. Mr. Marble. Your bookkeeper could testify only as to one? Mr. Merriam. If they are not marked paid Mr. Marble. I can not tell from this book. Do you know whether or not both have been paid ? Mr. Merriam. I do not. Commissioner Clark. Read a few of these Iowa points. Mr. Marble. Are those Iowa points? Mr. Merriam. Yes, sir. Mr. Marble. This is a bill dated July 6, 1906, for service begin- ning on the 2d of June. Mr. Merriam. Buck Grove, Persia, Modale, Saloane, Mapleton, Kenwood, Kidau, Moville, Templeton, Mapleton, Acron, Neola, Lake City. Commissioner Clark. That will be enough. Mr. Marble. I will show you this bill against the Missouri Pacific paid July 5, 1906 ; 45 cars, at $5, $225 ; marked paid. This is a bill dated July 6, 1906, a day later ; the Missouri Pacific, the same road, 20 cars, at $4. Why one lot at $5 and the other at $4. You think those 45 cars, at $5, was bridge charge, and it was absorbed ? Mr. Merriam. Yes, sir. Mr. Marble. What was the $4 on the next bill, the next day? Mr. Merriam. That seems to be an allowance for the Missouri Eiver points. Mr. Marble. What kind of an allowance ? Mr. Merriam. An allowance that was in place of the cent, and a quarter. Mr. Marble. There was an allowance in place of the cent and a quarter ? Mr. Merriam. Yes, sir ; to Missouri River points. Mr. Marble. Have you received that allowance since the 1st of July? Mr. Merriam. I think not. Mr. Marble. You do not know ? Mr. Merriam. I do not know. 556 GRAIN ELEVATOR INVESTIGATION". Commissioner Lane. What kind of an allowance. was that? Will you kindly be more definite ? Mr. Merriam. In the contract it mentions that the Missouri River points shall be placed on a special basis. That basis seems to be gov- erned by a small transfer elevator here in the city, which has a con- tract to transfer cars from car to car for $4 per car. That is what is termed a portable elevator, but still it seems to be permanent, cost- ing about $2,500, and all there is to it is just the elevator ; there is no storage capacity ; it is an elevator and dump. It has been operating there for several years on the basis of $4 per car ; and this charge was made on that account, or on that basis to equalize. Mr. Marble. This bill — did I read this one? There are 45 cars at $5, $225, marked paid August 14. When was that service rendered ? Mr. Merriam. It might have been. It was probably rendered within thirty days prior to the claim. Mr. Marble. Can't you tell from this bill when it was rendered ? Mr. Merriam. Not from this bill. Mr. Marble. Can you tell from your books when it was rendered ? Mr. Merriam. The details might have gone out of our hands. Mr. Marble. Who would have those details? Mr. Merriam. The Missouri Pacific. Mr. Marble. Was that claim made in that way, simply 45 cars at $5, $225? How did the Missouri Pacific know what that was for? Mr. Merriam. The cars were particularized. Mr. Marble. In what way ? Mr. Merriam. In the other claims. Mr. Marble. Does that refer to the claim — ^is that the same thing? Mr. Merriam. Yes, sir. Mr. Marble. The next page contains car numbers 6-2 to 6-25, marked " reconsigning from Council Bluffs, $5." Now, then, this claim for $4 further along ; what was that for ? Mr. Merriam. That was the one we were just speaking about. It was on the Missouri River basis. Mr. Marble. Is that another one of the claims on the Missouri River basis? There are eight sheets. This is another claim on the Missouri River basis? Mr. Merriam. This claim is made up on the basis of the present understanding of what we are entitled to. Mr. Marble. Has it been paid ? Mr. Merriam. No ; it has not. Mr. Marble. Are you sure of that? Mr. Merriam. Yes, sir. Mr. Marble. This claim, dated August 31, 1906, Missouri Pacific Railroad Company to Merriam & Holmquist, debtor. Recapitula- tion sheet 1. Forty cars — I see there are eight sheets, giving a number of cars on each sheet — 329 cars, at $4, $1,316. The dates on the sheet — the date of service is August 1 ? Commissioner Clark. "V\Tiat is the service? Mr. Marble. To August 31. Commissioner Clark. For what service? Mr. Merriam. For transfer. For elevating. It is the same as being paid by the Missouri Pacific. Commissioner Clark. This is your claim under the modification of the contract? GRAIN ELEVATOR INVESTIGATION. 557 Mr. Mekeiam. Yes, sir. Mr. Marble. You think that it has not been paid ? Mr. Meeriam. Not yet. Mr. Marble. I will draw your attention to the 6th of September, 1906, marked at the top " July and August." July 12 to August 2, with number of cars ; 6 cars reconsigning from Coimcil Bluffs ; 6 cars at $5, $30. Mr. Merriam. That is on the same basis. Mr. Marble. I will draw your attention next to the following page. On the same date, September 6, 1906, service from — marked at the top the same as the other " July and August," from July 6 to August 29, reconsigning from Council Bluffs, same as the other, 37 cars at $2. Mr. Meeriam. That was reduced to $2. Mr. Marble. But that covers the same period of time, and they were both made out on the same date. Mr. Mereiam. The Missouri Pacific brought it over for $2, and some of the other roads insisted on having $5 or $6. Mr. Maeble. So that you paid a different reconsigning charge to different roads? Mr. Meeriam. Yes, sir. Commissioner Lane. What is the reconsignment included there ? Mr. Meeeiam. Switching from Council Bluffs to Omaha. Mr. Maeble. Does your firm get any portion of this larger amount paid? Mr. Meeeiam. No, sir. Commissioner Claek. Do we understand that that is on grain that was reconsigned from Council Bluffs and brought over here and put into your elevator for the account of the Missouri Pacific road ? Mr. Meeriam. The rate from Council Bluffs to points south is the same as from Omaha, and this is to make the rate good. It is more of a forwarding charge than a reconsignment charge. Perhaps it could properly be called a forwarding charge from Council Bluffs to Omaha. Commissioner Lane. That is also included in the term " reconsign- ment? " Mr. Mereiam. That might be applicable in this case. Commissioner Lane. Is there any tariff on file that you know of that includes such a forwarding charge ? Mr. Meeeiam. The tariff reads the same from Council Bluffs to seveial points as from Omaha, and this is to make that rate good. I think the tariff fully covers all those points. Commissioner Ci/Aek. Is the term forwarding " also synonymous with " switching ? " Mr. Meeriam. Not necessarily, although it might be. In this case it might be synonymous. Commissioner Clark. Did this grain go through your elevator ? Mr. Meeeiam. Yes, sir. Commissioner Claek. And carried with it an elevation charge? Mr. Maeble. It simply says " reconsigning from Council Bluffs." Mr. Meeriam. This grain carried with it possibly the same charge as was charged by this Missouri Pacific transfer. Commissioner Clark. Was this $5 reconsignment charge from Council Bluffs in addition to your elevator allowance from the Mis- souri Pacific Railroad ? 558 GEAIN ELEVATOR INVESTIGATION, Mr. Mereiam. Yes, sir. Commissioner Clark. Now, what arrangements have you had for elevation allowances from other railroads than the Missouri Pacific? Mr. Mereiam. Nothing; only what has been given to everybody. Commissioner Clark. Well,! notice here that you have among the bills read one against the Chicago, Milwaukee and St. Paul for ele- vation service. Mr. Mereiam. Yes, sir. We are putting in claims for three- fourths of a cent a hundred since the 8th of August. Our justifi- cation is that we look at it — we think that all other markets are re- ceiving three-fourths of a cent a hundred with which we come in competition. Comnjissioner Clark. Let us try to get down to what you did prior to the 8th of August, prior to the modification of this agreement. These bills that we have referred to were for services rendered prior to that time, and those that were paid were paid prior to that time. This contract provides, does it not, that the Missouri Pacific Company will allow you for transfer service H cents per 100 pounds on ship- ments destined to the Mississippi River and beyond, including Gulf ports, and that in the event of your being called upon to transfer busi- ness to lower Mississippi River points or points other than those des- ignated, you would make a special reduced price for that? Mr. Meeeiam. Yes, sir. Commissioner Claek. Will you please explain why the bills against the Missouri Pacific Railroad Company for grain shipped to Iowa points are made out and paid on the basis of IJ cents per 100 pounds under this contract ? Mr. Mereiam. On grain shipped to Iowa points ? Commissioner Claek. Yes. Mr. Meeeiam. My recollection is that we have not put any claims in on grain shipped to Iowa points. Commissioner Claek. You exhibited 4 or 5 pages of them here a few minutes ago. Mr. Meeeiam. There are very few Iowa points we ship to. Commissioner Claek. Well, the book there shows for itself. Mr. Meeeiam. There are so few that I do not seem to remember. (Counsel shows book to Commissioner Clark.) Commissioner Claek. Is this claim on grain from Iowa points instead of to Iowa points ? Mr. Meeeiam. It is from Iowa points. Commissioner Claek. Then, in fact, this bill is for elevation charged on grain shipped from Iowa points through your elevator? Mr. Meeeiaji. Yes, sir. Commissioner Claek. To destinations named here ? Mr. Meeeiam. Yes, sir. Commissioner Claek. And the allowances which you received from all of these other roads were similar understandings ? Mr. Meeeiam. Yes, sir. Commissioner Claek. They pay you in a general proportion? Mr. Meeeia^e. Yes, sir. Commissioner Claek. And the allowances for switching, you sav are all covered by tariffs ? Mr. Merriam. I think so, so far as I know. 6BAIN ELEVATOR INVESTIGATION. 559 Commissioner Clark. Who keeps the record of what you are al- lowed for switch service ? Mr. Meekiam. That is kept in the general office of the Missouri Pacific road. Commissioner Clark. You do not keep any record of it ? Mr. Merriam. No, sir. Commissioner Clark. You pay it and do not keep any record of it ? Mr. Merriam. This is all the record we keep of our claims. Commissioner Clark. Do you pay any switching service to any railroad except the Missouri Pacific ? Mr. Merriam. Yes, sir. Commissioner Clark. And does the Missouri Pacific office keep track of that, too ? Mr. Merriam. I do not think they do. Comjnissioner Clark. Wlio does ? Mr. Merriam. We keep track of that in the way of expense bills. That is all in our book account ; we keep that and when we pay any claim they leave our hands, and that is kept in a column of the book, which is the only record that we have, excepting the record that is on the check book when we pay the road. We always pay them by check and put the number of the car opposite the check. Commissioner Clark. You turned over your receipts? Mr. Merriam. Yes, sir. Commissioner Clark. You turn them over to the Missouri Pacific people ? Mr. Merriam. To the different roads. Commissioner Clark. Or whatever road pays you back? Mr. Merriam. Yes, sir. Commissioner Clark. Then, if you advance the switch charges on grain that passes through your elevator and goes out over the Chicago, Burlington and Quincy road, the Chicago, Burlington and Quincy road reimburses you for that amount ? Mr. Merriam. Yes, sir. Commissioner Clark. It does not go through the Missouri Pacific's hands at all ? Mr. Merriam. No, sir. Commissioner Clark. I guess that is all. Mr. Marble. Take this line reading here — 7-20; 21,198, N. C. St. L. X 2102, Mil., reconsignment from Council Bluffs, $5. Is there anything in that bill to indicate to what road the $5 was paid? Mr. Merriam. Yes, sir. The road that these cars came over — the Milwaukee road. Mr. Marble. That second line means that they came in over the Milwaukee road ? Mr. Merriam. Yes, sir. Mr. Marble. And they charged you $5 ? Mr. Merriam. Yes, sir. Mr. Marble. And, then, this 2102 Mil. indicates to the Missouri Pacific on this bill that $5 was paid, and they know what the road is ? Mr. Merriam. That is the initial of the road. Mr. Marble. And they know that the road charges $5 ? 560 GEAIN ELEVATOR INVESTIGATION. Mr. Meeeiam. Yes, sir; that produces the evidence. Mr. Marble. Now, then, the next bill, in the corresponding part of the bill, has these car numbers with " Mil." and those are at $2. Mr. Mereiam. That came by way of the Union Pacific. Mr. Maeble. Is the Union "Pacific marked there separately ? Mr. Meeeiam. These came over the Union Pacific. Mr. Maeble. In what way is that indicated on this bill ? Mr. Meeeiam. The road is indicated by these initials. Some came over the Milwaukee, some over the Great Western, and one over the Kock Island, probably, and those are delivered to the Union Pacific instead of being brought over by the lines that they came in on, who brought them over to Omaha for $2 a car, while all those other lines were charging $6 per car. Mr. Maeble. How about the $5 ? Mr. Meeeiam. We lose out to the extent of $l-on every car. Mr. Maeble. What I am talking about is, what is the difference between these two bills; in what way — ^you say this indicates the road it comes over ? Mr. Meeeiam. Yes, sir. Mr. Maeble. That indicates that it came over the Milwaukee road. Mr. Meeeiam. Some of these roads insist on bringing it througl^ to Omaha. Mr. Maeble. But they didn't insist here? Mr. Meeeiam. Not in this case they didn't insist. Mr. Maeble. This was at the same period. Mr. Meeeiam. Well, we must have fixed it up with them, so that they would deliver to the Union Pacific at Council Bluffs. Mr. Maeble. And the Union Pacific switch free? Mr. Meeeiam. Two dollars. Mr. Maeble. For $2 ? Mr. Meeeiam. Yes, sir. Mr. Maeble. But there isn't anything in the bill to indicate to the Missouri Pacific what the difference in the service was at all. It is simply made out in the same way, indicating that it all came over the Milwaukee road, and one is charged at $5 and the other at $2. Mr. Meeeiam. Those at $2 came over the Union Pacific road. Mr. Marble. This bill doesn't show it, does it ? Mr. Meeeiam. The switch bill would show it. Mr. Maeble. Some other bill? Mr. Meeeiam. The receipted switch bill. Mr. Maeble. Did the receipted switch bill accompany the original of this bill? Mr. Meeeiam. When we pay we get a receipted bill. Mr. Maeble. Did that receipt accompany the original switch bill ? Mr. Meeeiam. Yes, sir. Mr. Maeble. Did the receipted switch bill show that the cars came over the Union Pacific? Mr. Meeeiam. They showed whatever road they came over. Mr. Maeble. So that this needs that further explanation to show what it means ? (No response.) Commissioner Lane. Who has these receipted bills ? Mr. Meeeiam. The Missouri Pacific has these receipted bills attached to the claim. GEAIN ELEVATOE INVESTIGATION. 561 Commissioner Lane. Do you know whether they are still extant or not? Mr. Mebriam. I do not know whether they are or not. They may be in St. Louis ; they likely would be in St. Louis ; possibly here. Commissioner Clark. I understood you to say that in one instance it is because the Milwaukee road insist on doing it themselves ? Mr. Mereiam. Yes, sir. Commissioner Clark. And in the other instance it comes over the Union Pacific tracks ? Mr. Mereiam. There was a time when the Milwaukee road would not deliver these cars to the Union Pacific, but insisted on bringing them over to Omaha, and collected $6 for a car. Commissioner Clark. That is, the Milwaukee road, with its own switch engine and men, brought the car over to Omaha ? Mr. Merriam. Yes, sir. Commissioner Clark. Instead of permitting the Union Pacific to bring it over? Mr. Merriam. Yes, sir. Commissioner Clark. But the Milwaukee brings it over the Union Pacific tracks? Mr. Mereiam. Yes, sir. Commissioner Lane. Anything further, Mr. Marble ? Mr. Marble. Yes, sir. I will show you the first bill in this book. Dated April 14, 1906; Chicago Great Western Eailroad; 3 cars, IJ cents, $24.23. Whose elevator did that go through? Mr. Merriam. Which of our two elevators ? Mr. Marble. Did that go through either of your elevators? Mr. Merriam. Yes, sir; it must have gone through. We do not ship anything without passing through the elevator that I know of. Mr. Marble. Have you passed anything through the Chicago Great Western elevator? Mr. Merriam. Yes, sir; possibly a few cars — whether that is all I do not know. Mr. Marble. Did you receive 1^ cents on what went through their elevator ? Mr. Merriam. While the cent and a quarter was in existence we did. Mr. Marble. Did they charge you anything for putting it through their elevator? Mr. Merriam. No, sir. Mr. Marble. What was the cent and a quarter for ? Mr. Mereiam. It seemed to be needed in the business. Mr. Marble. It was handy. Commissioner Clark. I believe you testified in Chicago, Mr. Mer- riam, that you thought this elevator allowance was a good thing? Mr. Merriam. Yes, sir ; and I still think so. Commissioner Lane. I should think so. Commissioner Clark. I don't blame you. Mr. Marble. Now, Mr. Merriam, this is another bill against the Chicago Great Western — ^$595.29, on April 27. Did that go through your elevator, the 4,700,000 pounds ? Mr. Meeriam. We ship a great deal of grain by the Great Western. S. Doc. 278, 59-2 36 562 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Did you ship any grain during that time over the Great Western which you put through your own elevator ? Mr. Meeeiam. Yes, sir; we put very few cars through the Great Western elevator. Mr. Marble. If you could put it through that elevator free and get a cent and a quarter, why did you put it through your own ele- vator and only get a cent and a quarter? Mr. Meeriam. Well, it costs more, of course. We were at 'the ex- pense of transferring, but it seemed to us that we wanted to handle our own business. Mr. Marble. You preferred to handle your own business even at .the expense of the elevation ? Mr. Merriam. As a rule we would not, but we did it last year. We did not care to encourage to any great extent the system that the Great Western elevator was conducted on. Mr. Marble. Didn't you think you were encouraging it by reliev- ing them of the expense of the offer which they made by doing the work themselves? The way to discourage it would have been to make it costly to them, wouldn't it ? Is there any other reason why you did not put it through the Great Western elevator? Mr. Meeriam. Well, yes. Mr. Marble. What was it? Mr. Merriam. It was very inconvenient for us, having elevators of our own and our men and private inspectors and superintendents and regular system of handling our business, to have it handled at. any other elevator, on account of the elevator inspection which we would be deprived of ; in order to handle grain at the Chicago Great Western elevator we should have to have our men down there to superintend it — one man at least. Mr. Marble. You don't mean that the inspectors of the Great West- ern elevator were more severe on your grain than the inspectors at your own elevator ? Mr. Merriam. No; I mean our inspection which governs ship- ments of our grain. Mr. Marble. Your own private inspection? Mr. Meeeiam. Our own private inspection. Mr. Maeble. So that having this plant and the fixed expenses charged against you anyway, the extra cost of handling the grain, you didn't count very great, and the convenience of it was sufficient to operate— is that it ? Mr. MeeIriam. No, sir; it was not. The competition that we had to figure on — this Chicago Great Western system; and was the means of us having to pay more for our grain than we otherwise would. Mr. Marble. How would free elevation make you pay more for grain than the allowance of 1 J cents all around would make you pay ? Mr. Merriam. A good deal of the time this grain is handled with- out profit. Mr. Marble. But I am trying to fi^d out why you put this grain through your own elevator when you could put it through the ele- vator of the Chicago Great Western. Now, the fact that the Chicago Great Western made you pay more for grain does not answer that. Mr. Meeeiam. When we put our grain in an elevator we actually don't know where that particular kind of grain will go, but in put- GEAIN ELEVATOB INVESTIGATION. 563 ting it into the Great Western elevator it would have to go to markets where they run ; otherwise there would be extra, charges to get it over other lines, which is one reason why we would not operate through that elevator. Mr. Marble. So that putting it in the Chicago Great Western elevator, would make you, for instance, ship to markets on the Great Western Road ? Mr. Merriam. We couldn't do it without costing wi as much as it would to handle it through our own elevator. Mr. Marble. And that is the reason why you did not handle through their elevators, even though you could have it free ? Mr. Merriam. That is one reason. Commissioner Clark. Why would it cost you any more to ship it over the Missouri Pacific or over the Great Western Railroad than it would over any other line? Mr. Merriam. I think the Great Western would charge $4 switch- ing, and also a handling charge through the elevator. Commissioner Clark. "Which the Missouri Pacific Railroad would absorb, wouldn't it ? Mr. Merriam. I do not know whether they would or not. Commissioner Clark. Haven't you testified that it was the common practice here to absorb the charge, whether it was switching or for- warding or reconsignihg, all of which seems to mean the same thing ? Mr. Merriam. Yes, sir. But there seems to be a limit ; and as long as we have elevators on the Missouri Pacific tracks I do not think we could arrange with the Missouri Pacific to have our business done at the independent elevator and they absorb all the switching charges and expenses that would be made on that grain. Commissioner Clark. Then, as a matter of fact, this regulation regarding the absorbing of switching charges is subject to modifi- cation to meet the conditions of each individual transaction instead of being, as you have testified, a matter of tariff publication and fixed regulation ? Mr. Merriam. As I remember it, the business of railroads has been conducted inside of the tariffs, so far as we could keep track of them — inside of the published tariffs. Commissioner Clark. Haven't you just the same right under the tariffs as any other shipper ? Mr. Merriam. Yes, sir. Commissioner Clark. Why should you assume that they would re- fuse to give you what their tariff provides they will give everybody ? Mr. Merriam. I don't know that they wouldn't, but it would not "b^ reasonable for us to let our elevators lie idle and have our business done at a terminal elevator at a, cost to the Missouri Pacific road of $6 per car. We never thought of submitting any such proposition to them. They might absorb it. Commissioner Clark. I understand in explanation of one of these bills that Mr. Marble called your attention to a few minutes ago that you made the answer that in that instance you tlaought you " must have fixed it up with them." That is a pretty good answer to all that, isn't it? (No response.) Commissioner Clakk. You may go ahead, Mr. Marble. Mr. Marble. I will draw your attention to this writing on the back 564 GRAIN ELEVATOE INVESTIGATION. of this claim against the Chicago and Northwestern Railroad, dated 9-20-06. Can you explain that writing? Do you know about that? Mr. Meeeiam. Well, I can not do that because the other copies — without seeing the other copies. Mr. Marble. Did you dictate it ? Mr. Meeeiam. No ; I did not dictate that. _ _ ' Mr. Maeble. I will read the memorandum if the Commission per- mits me. On the back of a bill against the Chicago and Northwestern Eailroad, dated Omaha, Nebr., 9-20-06, in writing, appears the fol- lowing : " $3 a car additional, account Updike Stock Yards manipu- lation; 48 cars, at $2, $96"— the $3 and. $144 being scratched out— " 3,134,888 pounds, at three-quarters of a cent, $235.12 ; total, $331.12." Commissioner Lane. On the back of what bill is that? Mr. Maeble. On the back of No. 776, a bill against the Chicago and Northwestern Railroad, dated 9-20-06, and marked in front, " over," and on the back appears that writing. Commissioner Lane. What is the explanation? ■ Mr. Maeble. I haven't heard any. What does that refer to ? Mr. Meeeiam. It refers to, I suppose, discrimination on account of that switching. Mr. MaebI,e. You thought Mr. Updike was getting something you were not getting ? Mr. Meeeiam. Yes ; we did. Mr. Maeble. And you charged the railroad immediately the amount which you thought he was getting ? Mr. Meeeiam. Yes ; we did. Commissioner Lane. And you presented a claim for it ? Mr. Meeeiam. Yes, sir ; we presented a claim for it. Commissioner Lane. And it has not been paid ? Mr. Meeeiam. No, sir. Mr. Maeble. Has it been refused ? Mr. Meeeiam. No, sir. Mr. Marble. Why didn't you put it on the face of the claim and make it in typewriting — why did you write it in that wa}'^ ? Mr. Meeeiam. It is on the face of the claim. It was changed from $3 to $2. Mr. Maeble. It was not on the face of the claim in typewriting — the original claim. How was the original claim made out ? Mr. Mereiam. It was made out — ^this is attached after the claim was made out. Mr. Maeble. The claim was made out as this shows? Mr. Meeeiam. Yes, sir. Mr. Marble. And then this item on the back was attached to the bottom ? Mr. Meeeiam. Yes, sir. Mr. Maeble. And you made a notation on the back to preserve it here ? Mr. Meeeiam. Yes, sir. Commissioner Lane. What was the information upon which you changed the rate from $3 to $2 ? Mr. Meeeiam. On the general supposition that the switching charge being changed from $2 to $4 down there, our charge being- only $2 — on account of our switching being made $2 to equalize theirs. GEAIN BLEVATOB INVESTIGATION. 565 We considered that if the roads could pay $4 at South Omaha they could pay $4 at Omaha. Commissioner Lane. Why did you have it originally $3? Mr. Merriam. I discovered after that, that it had been reduced from $5 to $2. Commissioner Lane. Why was it originally $3 ? Mr. Merriam. That would have been $3 if the switching charge had been $5, but I think it was only $4, so that left a difference of $2. Mr. Marble. I will draw your attention to this bill of 9-20-06, against the Illinois Central Eailroad. This is a claim for 2,931,850 at three-fourths of a cent, giving car numbers and destination, $219.89 marked up on the corner — ■ over," and on the back appears " to equalize Stock Yards and Updike's switching manipulation, 45 cars, $2, $90; 2,931,850 pounds at three-fourths of a cent, $219.89; total, $309.89." Opposite the 45 cars also has been written $3, $135, but that scratched out, and the $2 substituted therefor. This is a bill against the Illinois Central. Do you make the same explanation as to that of the other ? Mr. Merriam. Yes, sir. Mr. Marble. Has the bill been allowed ? Mr. Merriam. No, sir. Mr. Marble. As a matter of fact, they allowed you all the switching you pay? Mr. Merriam. Yes, sir. Mr. Marble. But you think they ought to allow you something more, inasmuch as they allowed Mr. Updike more ? Mr. Merriam. Yes, sir. Mr. Marble. That notation did appear on the face of the original bill in typewriting as it is here on the back ? Mr. Merriam. That is intended to be a copy of the original bill. Mr. Marble. This bill was put in for your firm ? Mr. Merriam. • Yes, sir. Commissioner Lane. Have you any reason to believe that that bill or the preceding one will be paid? Is there any understanding of any kind, or have you received any assurance from any railroad that if you present a claim of that kind it would be allowed ? Mr. Merriam. In sending in that claim I asked the different roads sent to, that they let me know within a few days whether or not this claim would be allowed, and if it was not allowed whether they would grant me permission to present this matter to the Interstate Com- merce Commission for their consideration without prejudice to the roads. I attached a letter of that character to every claim, expecting only to get what we are entitled to. Commissioner Lane. And they didn't make any reply? Mr. Merriam. I haven't received any reply either in favor or against. Mr. Marble. Not from any of these roads ? Mr. Merriam. Not from any of these roads. Mr. Marble. There is more of this against the different roads. Commissioner Lane. I think we have heard enough of that. Mr. Marble. Now, Mr. Merriam, on the bottom of this bill against the Wabash, dated 9-20-06, appears 35 cars at $2, $70, but under- neath is written " additional $3 account Updike Stock Yards switch- ing." 566 GBAIN ELEVATOB INVESTIGATION. Mr. Meeriam. Yes, sir. Mr. Marble. And you say the same as to this bill against the St. Paul and Milwaukee ; it has the same notation at the bottom and the same as to this bill against the Chicago Great Western ? Mr. Mkbriam. Yes, sir. They are on the same basis. Mr. Marble. Now, I will show you this bill — dated Omaha, Nebr., 10-1-06, Missouri Pacific Railroad Company to Merriam & Holm- quist, debtor, containing dates from 6-6 to 9-27, with a line of car numbers, and an " X " between them, and another line of car num- bers, $2 opposite, which, carried out, makes $26, marked "recon- signing." Mr. Merriam. That is grain bought on the board and which we paid the road that brought it in $2 per car. Mr. Marble. Now, then, the next following bill seems to be exactly the same except that at the bottom it reads " 6 cars at $4, $24, account of reconsigning from South Omaha." Mr. Merriam. Yes, sir ; that was what we had to pay. Mr. Marble. You paid more on those cars actually than you did on the others ? Mr. Merriam. They came out of the independent elevator there, and more was charged — no, those came out of the Updike Elevator — $4. Mr. Marble. Did you pay $4? Mr. Merriam. The road that took it out paid $4. Mr. Marble. Where do those cars come from at $2 ? Mr. Merriam. Those are bought on the board here. Mr. Marble. Did any of them come from the Updike Elevator ? Mr. Merriam. No, sir. Mr. Marble. Did any of them come from South Omaha ? Mr. Merriam. No, sir. Commissioner Lane. Why did it cost more to get the cars from the Updike Elevator than somewhere else? Mr. Merriam. Well, I don't know — only the system they have. Commissioner Lane. The custom they have ? Mr. Merriam. Yes, sir. It is the custom. It is the price of getting -a car out of the elevator at South Omaha. Commissioner Lane. They charge the same to all; do they? Mr. Merriam. Well, I don't know about that. The South Omaha elevator is the only one there; it is the only elevator it was done through at South Omaha. Commissioner Lane. If anybody else gets any wheat out of that elevator they charge him $4 a car ? Mr. Merriam. Yes, sir ; every road that takes it out. Mr. Marble. To whom did you pay that $4 ? Mr. Merriam. We didn't pay it, the road taking it out paid it. Mr. Marble. To whom was it paid? Mr. Merriam. It must have been paid to the Union Stock Yards Company. Mr. Marble. Did Mr. Updike pay it first to the Union Stock Yards Company, and then the road taking it out paid it back to him ? Mr. Merriam. I do not know. Commissioner Clark. If you did not pay it, why did you bill it against the railroad ? GEAIN ELEVATOR INVESTIGATION. 567 Mr. Mereiam. I will take it all back. We paid this — I supposed the system was that they absorbed it, but I see that we paid this our- selves, and then we are putting in a claim to get it back. Mr. Marble. Don't the Chicago, Burlington and Quincy absorb these things ? Mr. Merriam. I suppose they do. I see on these cars we must have paid it ourselves. Mr. Marble. I will ask you who you paid it to ? Mr. Merriam. If we paid it, we paid it to the Chicago, Burlington and Quincy road. Commissioner Lane. To the who? Mr. Merriam. To the Chicago, Burlington and Quincy, the road which took it out. Commissioner Clark. You say you paid it to the Chicago, Bur- lington and Quiilcy? Mr. Merriam. We must have paid it to the Chicago, Burlington and Quincy. On these particular claims — of course, you are examin- ing me here without any data or particular information, and I can only give it as it appears to me. This money must have been paid to the Chicago, Burlington and Quincy road, and we got therefor a switch bill for this amount, and those switch bills were used in the claim to get it back. Commissioner Clark. Against whom ? Mr. Merriam. Against the Chicago, Burlington and Quincy road; the same party we paid it to. Commissioner Clark. You paid it to them ? Mr. Merriam. Yes, sir. Commissioner Clark. And they gave you a receipt for it? Mr. Merriam. Yes, sir. Commissioner Clark. And then you put in a claim and hope to get it back? Mr. Merriam. Yes, sir. Commissioner Clark. That is a nice proposition. What claim did the Chicago, Burlington and Quincy road have to switching charges on that grain that came from the South Omaha elevator ? Mr. Merriam. I will have to correct myself again. We must have paid it to the stock yards company, and then the Chicago, Burling- ton and Quincy in taking it out were trying to collect it of them. Commissioner Clark. Do you think you have got that switching charge right now ? Mr. Merriam. Yes, sir. I was a little mixed on it. Mr. Marble. Can you tell why that bill was for $4 a car, and one for $2 ? One marked " Eeconsigning from South Omaha," and the other for " Reconsigning "--is that because the Union Stock Yards charges more than any one else ? Mr. Merriam. These cars are bought on the board here, and this grain might have been bought in the Updike elevator. Mr. Marble. And is there more switching — does Mr. Updike charge more switching than anyone else ? Mr. Merriam. $4, I understand, down there, whenever a car goes out of Omaha. Mr. Marble. Do you pay less for grain in Mr. Updike's elevator than you do if it is standing on track out here ? 568 GRAIN ELEVATOR INVESTIGATION. Mr. Meeeiam. We are not in the habit of buying grain in other elevators. Mr. Maeble. Well, you bought this ? Mr. Meeeiam. Perhaps the reason we bought this was because it was delivered on a contract. Mr. Maeble. What I am trying to get at is, in this market, is Mr. Updike's grain bought at a discount because it carries more switching charge than other grain? Mr. Meeeiam. No, sir. Mr. Maeble. But you are charging $4 for grain that you bought from him, and $2 on other grain. Mr. Meeeiam. We only charge what we have to pay. Commissioner Lane. You have to pay $2 more ? Mr. Meeeiam. Yes, sir. Mr. Maeble. Does that put him at a disadvantage in the market ? Mr. Meeeiam. No, sir ; because the roads absorb it. Mr. Maeble. Who gets the benefit of the extra $2, do you know ? Mr. Meeeiam. No, sir ; I do not know. Mr. Maeble. To whom do you pay it ? Mr. Meeeiam. We would pay that to the Union Stock Yards Com- Commissioner Lane. Mr. Marble, can you conclude with this wit- ness in five minutes ? Mr. Maeble. In two minutes, I think. I will draw your attention to this claim against the Missouri Pacific Railway Company, dated Omaha, 10-8-06, Missouri Pacific Railway Company to Merriam & Holmquist, debtor; then follows description and car numbers; bulk corn, Omaha to Birmingham, Ala., 8-10-06. "Account unreasonable delay in transit; we should be reimbursed to the following extent: Account difference in market, 1,000 bushels, at 3 cents, $30 ; account demurrage, $7 ; $37." Claim No. 811. Has that claim been allowed ? Mr. Meeeiam. That has not been paid yet. Mr. Maeble. Will it be paid? Mr. Meeeiam/ We expect it will be allowed. Mr. Maeble. Don't you furnish any more information than that when you make a claim ? Mr. Meeeiam. Yes, sir. We use all the memoranda we have. Mr. Maeble. Do you keep copies of that memoranda ? Mr. Meeeiam. No, sir. Mr. Maeble. So that if you should have to bring suit for the claim you would be short your evidence? Mr. Meeeiam. We might have written a letter. Mr. Maeble. But the evidence which completes this claim and shows the market and the amount of the delay you pass out of your hands when you make the claim ? Mr. Meeeiam. Yes, sir. Mr. Maeble. You do not keep any of it ? Mr. Meeeiam. Only that which may be embodied in a letter which we write on the subject. Mr. Meble. But the letter written by you would not be the origi- nal evidence. You sent the original to the railroad company? Mr. Meeeiam, Yes, sir. GEAIN ELEVATOR INVESTIGATION. 569 Commissioner Lane. If they don't pay it what becomes of that original evidence? Mr. Merriam. Did I understand your question, what becomes of the original evidence ? That is sent back to us. Commissioner Lane. Then either the railroad company or your- self would have all the data relating to all these transactions? Mr. Merriam. We should have ; yes, sir. Commissioner Lane. Mr. Marble, I will ask you to read into the record, introduce all the matters there that you. desire out of that book ; examine it between now and 2 o'clock. Mr. Marble. Very well. Commissioner Lane. And until that time we will hold the book. That is all. (Witness excused.) • Commissioner Lane. We will now adjourn until 2 o'clock. At 12.45 p. m. the Commission adjourned until 2 p. m. after recess. 2 o'clock p. m. Commissioner Lane. Call your next witness, Mr. Marble. Mr. Marble. I will call Mr. Mulhall. H. T. Mulhall, called as a witness, bein^ duly sworn, testified as follows : Mr. Marble. Mr. Mulhall, where do you reside ? Mr. Mulhall. In Chicago. Mr. Marble. What is your business ? Mr. Mulhall. General manager and treasurer of the Southwest- ern Elevator of Kansas City, an employee of the Armour Grain Company. Mr. Marble. You have informed me that you desire to make a statement before the Commission. Mr. Mulhall. I do. Mr. Marble. Proceed. Mr. Mulhall. In the newspaper accounts of the hearing at Kan- sas City, B. E. Beall is quoted as affirming that there is a price com- bine or agreement by elevator firms at Kansas City, and that the Southwestern Elevator Company, the representative of the Armour Company, were in combination. I deny positively that the South- western Elevator Company has ever directly or indirectly been a party to any such agreement. Mr. Marble. Is there anything further? Mr. Mulhall. Well, the statement was also made there, accord- ing to the newspapers, by Mr. E. W. Shields, that for ten years his firm were the agents for the Armour Grain Company. The Armour Grain Company Jiave never had any agents at Kansas City except- ing the Southwestern Elevator Company and myself. Mr. Marble. Anything further? Mr. Mulhall. We did business with the Simonds-Shields Grain Company, but they were not our agents in a legal sense. He also made the statement that when he sold 700,000 bushels of wheat, I think it was, in July to Chicago parties that most of it was sold to the Armour company. Our total purchases at that time were 100,000 570 GBAIN ELEVATOR INVESTIGATION. bushels. That grain was bought delivered at Chicago. Therefore, •we were not involved at all in the freight rate. That is all, unless you want to ask me any questions. Mr. Marble. Are you manager at Kansas City of the South- western Elevator Company? Mr. Mtjlhall. Yes, sir. Mr. Maeble. That is an Armour concern ? Mr. MuLHALL. It is an Armour concern. Mr. Marble. Why don't you do more business from that point over the Milwaukee road? Mr. MuLHALL. Because we operate a transfer elevator on the Burlington. Mr. Marble. "Would that prevent you doing business over the Milwaukee ? Mr. Mtjlhall. We, of course, want to put the grain through that transfer elevator so that when the cent and a quarter was allowed we would get it. Mr. Marble. That is the reason you confined yourself to the Burlington ? Mr. MuLHALL. Yes, sir. Mr. Marble. The payment of the cent and a quarter practically secured the freight for the Burlington ? ' Mr. Mtjlhall. Yes, sir. Mr. Marble. Are you 'familiar with the relationship between the Neola Company and the Milwaukee road ? Mr. MuLHALL. No ; I am not. Mr. Marble. Do you know whether or not they give up business they can not ship over the Milwaukee road rather than ship over another road? Mr. Mtjlhall. I do not. I know the Neola Company ship over the Burlington as well, but all the country stations of the Neola are located on either the Milwaukee or the Burlington road, which of itself would be a reason for shipping over those roads. Mr. Marble. I wanted to see why the Armour people at one point seemed to be with the Milwaukee and at another point keep separate. Mr. Mtjlhall. We did business with the Milwaukee. Mr. Marble. Recently you shipped very little over the Milwaukee ? Mr. Mulhall. Very little over any road. Mr. Marble. Mr. Shields testified that he did nearly all the business over the Milwaukee out of Kansas City. Mr. Mtjlhall. Yes, sir. Mr. Marble. That is all. The witness was excused. D. J. Gates, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Gates ? Mr. Gates. At Albion, Nebr. Mr. Marble. What is your business? Mr. Gates. Well, I am interested in farm lands, stock, and also in the Albion Elevator Company. Mr. Marble. What is the Albion Elevator Company ? Mr. Gates. It is a company organized by the farmers of that com- munity — owned by them. GBAIN ELEVATOR I3SIVESTIGATI0N. 571 Mr. Marble. A farmers' elevator company ? Mr. Gates. Yes, sir. Mr. Marble. When was that organized? Mr. Gates. I think we organized in January, 1902. We did not get started to do business until August, 1903. Mr. Marble. August, 1903 ? Mr. Gates. Yes, sir. Mr. Marble. So you have been doing business practically three years ? Mr. Gates. Yes, sir. Mr. Marble. Wliy was that elevator company organized ? Mr. Gates. Well, for the reason that we could not get prices that we thought were due us on our grain. We thought the margin was very large at times ; all the time large, and at times exceedingly large. Mr. Marble. What has been the result of the organization of that company ? Mr. Gates. . I believe it has raised the grain there 4 cents a bushel. Mr. Marble. Has your company operated at a profit or loss ? Mr. Gates. We have operated at a profit ; a small profit, not a large one. We have made an increase every year. Mr. Marble. Have you what is known as the " penalty clause " in your by-laws ? Mr. Gates. We had, but we had a meeting and had it abolished. I might say that our penalty clause did not prohibit our stockholders selling to any elevator, but they were to pay a half cent to maintain our organization. Mr. Marble. That is the usual form of the penalty clause, is it not ? Mr. Gates. Well, I believe so. That was our idea of it, at least, Mr. Marble. Have you experienced any difficulty in getting a market for your grain ? Mr. Gates. We have not the last year. We had a great deal of trouble the first year and some the second. Mr. Marble. From whom did that trouble come, do you know? Mr. Gates. We had a market. The dealers would not give us track bids, and when we would sell our grain at Denver we would get a letter from our customer saying that he had been notified be- fore he received our notice, or about the same time he received our notice that we had shipped him, saying that we were not legitimate dealers. Mr. Marble. Have you some of those letters with you? Mr. Gates. Yes, sir. Mr. Marble. May I see them? Mr. Gates. Yes, sir [handing letters to Mr. Marble] . We did not ' save nearly all of them. We saved some. We received a good many of them from St. Louis, from Denver, and from Colorado Springs. Mr. Marble. Such as you have are fairly representative of all re- ceived ? Mr. Gates. I think they are, except one. There was one I could not find that I would like to find. Mr. Marble. Who was that from? Mr. Gates. A Denver party — the Cash Commission Company, I think it was. Mr. Marble. What was the nature of it — the one you did not find ? Mr. Gates. It was that we would have to be careful in not wiring ; 572 GRAIN BLEVATOE INVESTIGATIOIT. that we better write, as the railroads or the agent must be reporting us to grain dealers, as they "would receive notice from them before they would from us; and they suggested that if we wanted to do business with them that we write and not wire; that our business was being given away all the time. Mr. Marble (handing letter to witness) . Here is what purports to be a copy of a letter. Can you explain that — not the original, but a copy — where did you get that? Mr. Gates (after examining letter). Where did we get this? Mr. Marble. Yes, sir. Mr. Gates. We received this from Mr. IngersoU, of Colorado Springs. Mr. Marble. Why did he send it to you ? Mr. Gates. His reply to a letter we Avrote him on the lines of that letter, I explained — I think we have this letter, probably — that our business was being kept tab on, and that they were receiving notices from Mr. Miller, secretary of the grain dealers association, saying we were not legitimate dealers, etc., and we asked him if he would send us Mr. Miller's letter, and in turn he writes us a letter and sends a copy of what purports to be Mr. Miller's letter. Mr. Marble (referring to letter). This also purports to be a copy. Did you get that the same way ? Mr. Gates. Yes, sir. Mr. Marble. May I read these copies ? Commissioner Lane. Yes, sir. Mr. Marble (reading letter) : [J. W. Holmquist, President, Oakland, Nebr. Chas. Hunter, Vice-president, Inavale, Nebr. Governing Cotamittee : T. D. Worrall, Lincoln ; C. A. McCloud, York ; F. S. Cowgill, Omaba. ] Secbetaet's Office, Nebraska Gbain Dealers' Association, Board of Trade Building, Omaha, 'Nebr., September Jf, 1903. A. S. INGEESOLL, Golorado Springs, Colo. Dear Sir : Wrote you on the 28th of August regarding some oats and corn which were offered to you by the Albion Elevator Company and advising you of their facilities. Since then have had no reply from you. Would you kindly favor me with a reply, as those Interested are waiting to learn your disposi- tion in this matter? Yours, truly, H. G. Miller, Secretary. (The same is hereto annexed and marked " Exhibit No. 1 to Mr. Gates's testimony.") Mr. Marble. The letter referred to in that is here : [J. W. Holmquist, President, Oakland, Nebr. Cbas. Hunter, Vice-president, Inavale, Nebr. Governing Committee : T. D. Worrall, Lincoln ; C. A. McCloud, York ; F. S. CowglU, Omaba.] Secretary's Office, Nebraska Grain Dealers' Association, Board of Trade Building, Omaha, Nehr., August 28, 1903. A. S. INGERSOLL, Oolovado Springs, Colo. Dear Sir: We are informed that the Albion Elevator Company, at Albion, Nebr., offered you some oats and corn on the ■26th of this month. Thinking pos- sibly you are not aware of the nature of this firm's business, beg to advise that they have an elevator but it is situated away from track, thus compelling them to load from wagons into cars just the same as though they had no elevator. GRA5N ELEVATOR INVESTIGATION. 573 These facilities do not entitle them to be classed as regular. We will greatly appreciate anything you may do for the regular trade at this point, the regular dealers being the Omaha Elevator Company, Omaha ; the Westbrook-Gibbons Grain Company, Omaha , and the Nye, Schneider, Fowler Company, Fremont. Yours, truly, H. G. Miller, Secretary. (The same is hereto annexed and marked " Exhibit No. 2 to Mr. Gates's testimony.") Mr. Marble. May I read these other letters without proving each one? Commissioner Lane. Yes, sir. Mr. Makble. You received these other letters in the regular course of business? Mr. Gates. Yes, sir. Mr. Marble (reading from letter) : FUNSTEN BbOS. & Co., COMMISSION MeBCHANTS, 8t. Louis, Mo., V. S. A., October 12, 1903. Skipping the portion about the grain business — It is in order to state right here that prior to opening your letter we received from another source notification of shipment from you to the efCect that you are not situated on the right of way and are compelled to haul in wagons and load into cars, and that your constitution contains a penalty clause penalizing your members from selling to other than your own company. We are members of the National Grain Dealers' Association in good standing and affiliate with all the State associations ; therefore for the present wlien you consign any- thing to St. Louis consign to the "Albion Elevator Company, St. Louis, Mo." Indorse your bills of lading over. We ask you to do this until we can answer the other inquiry and ascertain facts. We are in the grain business for the commission it pays, and we are not going to throw anything away from us that we have a legal and equity right to handle, and from the tenor of your letter we see nothing that should prohibit us from handling your business. Write us fully and frankly and anything that you write to us will be strictly confidential, and please also regard what we write to you in the same way. We think that you fully understand our position in the premises, and let your trade come along in the manner that we suggest above — that is, for the present to bill to your own order. Some one seems to be keeping tab on ship- ments originating in your State. Yours, truly, Funsten Bbos & Co. (The same is hereto annexed and marked " Exhibit No. 3 to Mr. Gates's testimony.") ■ Mr. Marble. Another letter from the same firm in dated October 16, 1903; skipping the first two paragraphs: The St. Edward Elevator Company informed us that the members of their association are at full liberty to sell to any other elevator in that town if they can get more money. The way we suggest is just as easy as any way, and while it is not embarrassing to us to receive your business, it had as well be the way we suggest for the present until this matter has taken more definite and deter- mined shape. Receivers are becoming tired of various interferences from the regular channels of the grain business. Just do as we have said. Your two cars of oats have not arrived at this writing, but may come later in the day. Call your attention to the inclosed market report for full particulars of market. Yours, truly, Funsten Bbos. & Co. (The same is hereto annexed and marked " Exhibit No. 4 to Mr. Gates's testimony.") Mr. Marble. Here is another letter signed by the George A. Adams Grain Company, addressed to E. Gaily, manager. Who is E. Gaily? Mr. Gates. He was manager of that elevator. Mr. Marble. Another elevator than the one you testified about? 574 GBAIN ELEVATOB INVESTIGATION. Mr. Gates. Yes, sir. Mr. Marble. A farmers' elevator? Mr. Gates. Yes, sir Mr. Marble. Did you get these letters from that farmers' elevator company ? Mr. Gates. I do not just understand that. If I could read it, I could tell. (Letter handed to witness.) Mr. Marble. I will read another while you look at that. Here is one from the Consolidated Fuel Company, dated March 29, 1905. (Reading letter:) AiiiON Elevator Co., Albion, Nebr. Gentlemen : Your favor of 28th, asking for quotation on telephone poles re- ceived. We do not understand that you are regularly engaged in the lumber business at Albion, and would therefore prefer not to make any quotation as it is not in accordance with the rules of the Nebraska Lumber Dealers' Association to quote others than regular dealers. Regretting our inability to serve you at this time, we are Yours, truly. Consolidated Fuel Compant. (The same is hereto annexed and marked " Exhibit No. 5 to Mr. Gates's testimony..") Mr. Marble. Here is a letter from the Union Pacific Coal Com- pany, dated Omaha, Nebr., March 2, 1905. Albion Elevatob Company, Anion, Weir. Gentlemen : I have yours of the 1st, in reference to Hanna coal. We consider that we have enough dealers handling our coal at Albion, both Hanna and Rock Springs, and do not care to increase the number of dealers at this time. We would therefore, under the circumstances, not care to quote you price on Hanna coal. Yours, truly, A. H. Doane, General Sales Agent. (The same is hereto annexed and marked " Exhibit No. 6 to Mr. Gates's testimony.") Mr. Gates (returning letter of George A. Adams Grain Company, addressed to E. Gailey, to Mr. Marble). That letter was handed me by the manager of the elevator people, and I have got it mixed with the others. We did not receive it. Mr. Marble. We have two letters here written to another elevator company than the one the gentleman is connected with, which were handed to him. May I read those ? Commissioner Lane. Yes, sir. Mr. Marble (reading letter) : Omaha, Nebe., January 11, 1905. E. Gaily, Manager, Elgin, Nehr. Deae Sib : I have yours of the 9th. In reply will say that we understand that your company either have not got an elevator or have a penalty clause in your by-laws — I do not . understand which — but the Nebraska Grain Dealers' Asso- ciation do not give your name as being a regular concern, for which reason we will not be able to furnish you with bids. We will hand your letter to another party. Very truly, yours, • George A. Adams Grain Company. John E. Von Dorn, Vice-President. (The same is hereto annexed and marked " Exhibit No. 7 to Mr. Gates's testimony.") Mr. Marble. (Eeading another letter.) GRAIN ELEVATOB INVESTIGATION. 575 Omaha, Nebb., January 16, 1905. Elgin Elevator Company, Elgin, Nebr. Gentlemen : We have yours of the 15th and note all you say very carefully. Just as soon as your penalty clause is eliminated, we will be very glad to give you prices and hope to be able to do some business with you. Thanking you in advance for your future favors, we are. Very truly, yours, Geo. a. Adams Grain Company, J. E. Von Dobn, Vice President. (The same is hereto annexed and marked " Exhibit No. 8 to Mr. Gates's testimony.") Mr. Marble. These other letters are of the same general nature, one from Eaton, McClellan & Co., and one from the Cash Commission Company, Denver, Colo. Mr. Gates. There is one letter there I would like to have you read. It is from Denver, from the West, about our business being given away. Mr. Marble. Is this the letter ? ' [Exhibiting letter.] You find which letter it is. [Handing bunch of letters to witness.] I will simply put these in. [Eef erring to two other letters.] (The same are hereto annexed and marked " Exhibit Nos. 9 and 10 to Mr. Gates's testimony.") Mr. Marble. (Producing another letter.) This is the letter re- ferred to by the gentleman, which he asks to have read, from A. S. IngersoU. Colorado Springs, Colo., September 5, 1903. Albion Elevator Company, Albion, Nehr. Gents: Your letter 4th received, notifying shipment of car of oats for which we are much obliged. Xour draft on same will have prompt attention and will remit balance on arrival of car. Can you offer us another car for shipment, say, next week ; do not wire on this; suppose the agent there is the operator. We think he is giving away your business ; for this reason do not like to use the wires to your place. Please to keep this to yourself. Yours, truly, A. S. Ingersoll. (The above letter is hereto annexed and marked " Exhibit No. 11 to Mr. Gates's testimony." ) (Three other letters of A. S. Ingersoll, dated September 9, Septem- ber 14, and September 24, were offered and are marked " Exhibits Nos. 12,13, and 14 to Mr. Gates's testimony.") Commissioner Clark. Is that the same Mr. Von Dorn referred to in some of those letters who was here yesterday complaining of a combination against him ? Mr. Gates. I think he is; yes, sir. Mr. Marble. Mr. Gates, did you succeed in finding a market in spite of such trouble as is indicated by these letters? Mr. Gates. Yes, sir. Sometimes we would be loaded up for a few weeks with trouble. We would get our elevator full. Mr. Marble. Not because of lack of cars ? Mr. Gates. Well at times, yes; but at times we would not get a market, but we did get letters, but I am unable to tell you from what firms, and we have changed managers a time or two. Mr. Mabrle. This is only a portion of the correspondence ? 576 GRAIN ELEVATOR IHTVESTIGATION. Mr. Gates. Oh, we got scores of those letters, I can say, but we never saved them carefully. What one man thought necessary an- other man thought unnecessary. Mr. Marble. What is the situation now ? Mr. Gates. About what? Mr. Marble. About marketing your grain. Mr. Gates. We have, apparently, plenty of business on grain. Mr. Marble. You do not find yourself boycotted in that way any more? Mr. Gates. In the way of bids, not that we know of. We do not, of course, know how strong a price we receive, but we buy and sell our grain at a profit. Mr. Marble. Do you combine at all with your competitors ? Mr. Gates. No, sir. Mr. Marble. Do you consult with them regarding prices to be paid? Mr. Gates. No, sir. Mr. Marble. Or advise them of what you are doing ? Mr. Gates. No, sir. Mr. Marble. Or the amount of your business ? Mr. Gates. No, sir. Mr. Marble. Do you in any way pool the business at your station ? Mr. Gates. No, sir. Mr. Marble. It is absolutely separate and competitive, then ? Mr. Gates. Yes, sir. Mr. Marble. How many stockholders have you ? Mr. Gates. Well, I ought to know, but I presume something like 300. Mr. Marble. Are any railroad officials, stockholders, or employees in that number ? Mr. Gates. No, sir. Mr. Marble. Is there anything you desire to add ? Mr. Gates. I was going to say we received letters from commis- sion firms saying they would not handle our grain, for the reason that we are independent. Commissioner Lane. Recently, have you received those? Mr. Gates. No, sir ; the first year we were in the business. Mr. Marble. ■ These letters I read of 1905 were the last letters re- ceived by you ? Mr. Gates. This letter I could not produce was a letter of 1905 — about May. It was a pretty strong letter. The party wrote from Den- ver that he was satisfied the railroads were giving away our busi- ness for the reason that every time we would wire them they would get notice, and they advised that we look the matter up, and we did make a strong effort, but since this we have not had trouble in that line. Commissioner Lane. Who are your competitors ? Mr. Gates. Nye, Schneider, I'owler, the Omaha Elevator Com- pany, and the Westbrook-Gibbons Company. That is all, except there is a mill there that owns an elevator. There are 5 elevators there. We had 4 before we built. We had plenty of elevators, but we did not have the price that we knew we ought to have. Mr. Marble. Do the railroads treat you fairly now ? GRAIN ELEVATOB INVESTIGATION. 577 Mr, Gates. Well, this fall we have been getting cars — we thought our share. At times we did not think so, but generally this fall we have been getting cars. Mr. Marble. Is your elevator on the raiload right of way ? Mr. Gates. Yes, sir. Mr. Marble. Have you a sidetrack ? Mr. Gates. Yes, sir. Mr. Marble. You had trouble getting a sidetrack for a while, did you not ? Mr. Gates. Yes, sir, Mr. Marble. Why did you have that trouble? Was there any statement from any railroad official? Mr. Gates. The railroads told us in the start we were not legiti- mate people; not legitimate men doing a legitimate business; that we were blackmailers and destroyers of business; that they would not grant us a track or place to build. W:. Marble. Who told you that ? Mr. Gates. Mr. Charlie Lane, first assistant freight agent, I think, is his position. Mr. Marble. Of what road ? Mr. Gates. The Union Pacific. Mr. Marble. That is all ? Mr. Gates. And Mr. Bidwell told us that he did not consider that we had any right to ask for room to build an elevator ; they had four elevators there and that was quite enough, and they had no time to listen to our talk and applications ; that if they were to grant anyone a site for an elevator they had applicants before us. He finally said that, after a long parley. Commissioner Clark. How long did you operate before you got a sidetrack to your elevator? Mr. Gates. Well, I could have told that to the day, if I looked it up. I think three or four weeks; possibly less. We went on and built our elevator. Commissioner Clark. How many railroads are there at your place ? Mr. Gates. Two. Commissioner Clark. The Northwestern and the Union Pacific? Mr. Gates. Yes, sir. Commissioner Clark. Do you ship over both ? Mr. Gates. No, sir; sometimes lumber and coal comes over the Northwestern, but we ship over the Union Pacific. Our ground that we bought is adjacent to their right of way, and they built a switch. Commissioner Clark. Do you sell most of your grain in Omaha? Mr. Gates. I do not believe I could say most or it, but we sell a good part of it in Omaha and probably the last year most of it there. Commissioner Clark. What is the capital stock of your company ? Mr. Gates. It is now $35,000. Commissioner Clark. How much money did you invest in the elevator ? Mr. Gates. We invested some $3,850 in the elevator property be- sides our power. It all cost $4,200 or $4,300. Commissioner Clark. Including the land ? Mr. Gates. No; the land cost about $1,600. S. Doe. 278, .59-2 37 578 GBAIN ELEVATOB INVESTIGATION. Commissioner Clark. Then, you have nearly $6,000 altogether in- vested. Mr. Gates. Nearly $7,000. The elevator and power cost $4,300 or $4,400 and about $1,700 for land. Commissioner Clark. That would make about $6,000 ? Mr. Gates. Yes ; that is correct. I made a mistake. Commissioner Lane. Do you know of any other cases in which elevator sites have been refused by railroads ? Mr. Gates. Yes, sir. Commissioner Lane. Where? Mr. Gates. At St. Edwards. There is a farmers' elevator there and they refused them a site and even went so far as to contemplate moving their track on the east side of the city to be away from the track, the elevator is built on. That is what one of the railroad offi- cials said to myself and three other gentlemen. Commissioner Lane. Any other cases besides those two? Mr. Gates. Yes; I am acquainted with this Elgin Elevator Com- pany quite well. They had trouble; could not get -a site. Finally they bought, as I remember; I can not say positively what was the end of it, but I do not think they were ever granted anything. I know they were not for a long time. Anyhow they were rather forced to buy out a trust elevator there. That is the way the stockholders talked to me, and I am well acquainted with many of them. Commissioner Lane. Do you know what the effect has been of building these farmers' elevators in the country on the price of grain ? Mr. Gates. We are better acquainted in our own locality with what it has done. We have got the credit of managing our elevator quite well. We think, as I have said before, it has raised the price something like 4 cents. Commissioner Lane. You contrast a place where there is no farmers' elevator with one where there is a farmers' elevator. Is that the way? Mr. Gates. Yes, sir; I can explain, if you wish. The first season we were running, when we started up, we knew what grain was worth at our point, what it was worth in the western part of our country, what we got selling our grain and knew about what we could pay, they hauled the grain from the western part of the county to our place — some 15 or 16 miles — and the trust elevators, the line ele- vators, seemed to hold their price right down that season. The last season they came up and paid whatever we paid. Our town and the towns around there have been paying stronger. I am governing my ideas by that. There is about 4 cents difference a good deal of the time. I sold grain at places where there is nothing but trust ele- vators at 4 cents lower. Down at Clark, Iowa, I was selling my oats down there when I received a letter that we were paying about 5 cents more, although we were farther from the market and had a higher rate. Clark was two stations from Columbus — we were off the branch from Columbus. The date that this price was made on oats we were 5 ceiits above them and we received a profit — nothing large. Commissioner Lane. That is all. The witness was excused. GRAIN ELEVATOK INVESTIGATION. 579 Chahles J. Martin, called as a witness, being duly sworn, testified as follows: Mr. Marble. What is your business, Mr. Martin >. Mr. Martin. Clerk to the Independent Elevator. Mr. Marble. Is the Independent Elevator the one operated by the Chicago Great Western Railroad ? Mr. Martin. Yes, sir. Mr. Marble. Are you familiar with the operations of that ele- vator ? j\[r. Martin. Yes. sir; I am. Mr. Marble. Is that elevator operated or managed by one who is also a grain dealer % Mr. Martin. No, sir. Mr. Marble. By whom are you hired ? Mr. Martin. By the Chicago Great Western Eailroad. Mr. Marble. Is the Independent Elevator owned directly by the Chicago Great Western Railroad ? Mr. Martin. Yes ; to the best of my knowledge, it is. Mr. Marble. For what purposes is that elevator used ? Mr. Martin. It is used as a public transfer house at all times to handle grain. Mr. Marble. Do you store grain ? Mr. Martin. Yes, sir. Mr. Marble. Do you clean grain? Mr. Martin. Yes; when so ordered. Mr. Marble. Do you clip it % Mr. Martin. Yes, sir. Mr. Marble. Mix it? Mr. Martin. We generally carry on all the operations known in an elevator, yes, sir. Mr. Marble. Do you do that for anyone in particular, or for the general public? Mr. Martin. For the general public. Mr. Marble. In transferring grain do you keep the identity of the grain, or mix it with other grain of the same grade in the elevator ? Mr. Martin. That depends. We are given some grain to be handled as direct transfer, and the identity of that is retained. Some is put in the elevator to be held for storage purposes or for mixing. We are advised by the firm what to do with it that puts it in. Mr. Marble. If you lost the identity of any grain, you would have instructions beforehand from the owner ? Mr. Martin. Yes, sir. Mr. Marble. Take the volume of your business; is most of it direct transfer or not ? Mr. Martin. Practically all transfer. Mr. Marble. Practically all direct transfer ? Mr. Martin. No ; not all direct transfer. Mr. Marble. What proportion of the grain received by you is treated in some way or other ? Mr. Martin. A very small proportion. Mr. Marble. Most of it, the identity is kept ? Mr. Martin. Yes, sir. Mr. Maeble. And it is not treated in any way ? 580 GRAIN ELEVATOR INVESTIGATION. Mr. Martin. No, sir. Mr. Maeble. Would you say half of it, the identity is so kept — what percentage of the grain during this crop year has kept its identity and has not been treated in any way ? Mr. Martin. Well, during this fall I would not say over 10 per cent was cleaned or treated in any way. Mr. Marble. Ten per cent cleaned and treated ? Mr. Martin. Practically. Mr. Marble. How Was it the last crop year ? Mr. Martin. Just about the same. Mr. Marble. If grain is stored at all, do you preserve its identity '. Mr. Martin. It is put into the tank. We have eight tanks for stor- age, holding 100,000 bushels apiece, and grain of each grade is kept by itself. Mr. Marble. Its identity is not kept if stored ? Mr. Martin. No, sir. Mr. Marble. Do you have a published tariff of charges % Mr. Martin. Yes, sir. Mr. Marble. Have you that tariff with you ? Mr. Martin. Yes, sir [producing tariff]. Mr. Marble (examining tariff produced by witness). This first sheet has been superceded by the second ? Mr. Martin. Yes, sir; it is a supplement, changing some of the rules. Mr. Marble. If the Commission please, these are the same tariffs as those received at Kansas City. Commissioner Lane. They are already in ? Mr. Marble. Yes, sir. Mr. Martin, during any time since you have been connected with that elevator, have you paid an elevator charge to the owner of the grain in addition to doing the work free ? Mr. Martin. Not to my knowledge. The payment of that comes under the railroad company and I do not have anything to do with those charges handled by the railroad aside from the elevator. Mr. Marble. You are not informed as to that ? Mr. Martin No, sir. Mr. Marble. Do you know how much it costs to operate that elevator ? Mr. Martin. An approximate figure, I would say, about seven- eighths of a cent a hundred. Mr. Marble. What service is included in that cost? All you do, the storage and everything, or simply the direct transfer ? Mr. Martin. Simply the transfer. Mr. Marble. In making the transfer how do you divide the cost of the direct transfer from the storage and otherwise ? Do you keep separate books on that? Mr. Martin. No, sir ; we make no division on that. It is handled the same way whether put in for storage or transfer, with the excep- tion that grain put in for storage is put into the tank and that for direct transfer is handled from the bins. Mr. Marble. Would you say, including the storage, treatment and everything that you handle grain for an average of seven-eighths of a cent a bushel ? Mr. Martin. That would not include cleaning. Mr. Marble. It would include the stored grain ? GRAIN ELEVATOR INVESTIGATION. 581 Mr. Martin. Well, simply the cost of labor and power. Mr. Marble. In reaching the seven-eighths of a cent, did you include insurance? Mr. Martin. We carry no insurance on grain. Mr. Marble. The road carries it, I suppose — •! mean insurance on the building. Mr. Martin. I did not figure insurance on the building. Mr. Marble. Did you figure your taxes ? Mr. Martin. No, sir. Mr. Marble. Interest on the investment ? Mr. Martin. No. Mr. Marble. So, this seven-eighths of a cent really represents the addition to the fixed charges made by the grain? Mr. Martin. Yes, sir. Mr. Marble. How much will those charges amount to? Mr. Martin. I suppose that Avould bring it to— in the neighborhood of If cents. Mr. Marbub. Do you have all the business you can do? Is your elevator fairly employed ? Mr. Martin. Yes, sir. Mr. Marble. Is your elevator large enough to be a practical one? Mr. Martin. Yes ; it is. Mr. Marble. How large is it? Mr. Martin. Our capacity is a million and a quarter bushels. Mr. Marble. You consider that you are handling business as cheaply as other elevators in this vicinity? Mr. Martin. No ; we can not do that, really. Mr. Marble. Why ? Mr. Martin. Because the business is spasmodic with us, while other elevators run by independent people handle all grain, we handle it when offered to us. Mr. Marble. That is what I meant when I asked if you have been fairly employed ? Mr. Martin. We have been up to within the last month or so. There has been some falling off. , Mr. Marble. Is there some time lost included in this figure that would not be experienced as to a private concern ? What do you say to that — or can you answer that? Mr. Martin. No ; I can not. Mr. Marble. During the time there was a reduced rate in effect, from August 1 to August 10, was any grain received in your elevator billed through, stored, and later allowed to go forward under the reduced rate after that rate had expired? Mr. Martin. No; I think not. Of course I never see any billing on grain that comes in there. I do not know how it is billed, but we did not handle any grain in such a way as to lead me to think anything of the kind. Mr. jyEiRBi^. You did not see the billing ? Mr. Martin. No, sir. Mr. Marble. Are you familiar with the operations at St. Joe and Kansas City? Mr. Martin. No ; I am not. Mr. Marble. That is all. Commissioner Clark. Are you acquainted with the allowances 582 GRAi:^ ELEVATOR INVESTIGATION. made by your company in the form of absorption of switching charges ? Mr. Martin. No ; I could not say as to that. Commissioner Clark. Who does know that? Mr. Martin. The general agent in charge at Omaha and South Omaha is familiar with those matters. Commissioner Clark. Do you know whether or not your road has a published tariff of terminal charges ? Mr. Martin. Of what charges ? Commissioner Clark. Terminal charges. Mr. Martin. I think they have such a tariff on. I could not say, though. I am not posted on those. Commissioner Clark. Well, what records do you have charge of ? Mr. Martin. Simply the handling of grain — simply elevator rec- ords ; take a record of the grain as it comes in, the cars, weights, etc., and the weights as they go out and whatever charges are made by me for the handling. Commissioner Clark. Not including any switching charges, trans- fers, or reconsignments ? Mr. Martin. No, sir. Commissioner Lane. Do you keep a record of the time when any of the grain is to go out ? Mr. Martin. What is it? Commissioner Lane. If I have grain in your elevator and it is to go forward eastward, what is the custom in your elevator? Are you given notice that that grain is to go out at a certain time ? >Mr. Martin. When the grain is received we receive an order a day or two before the cars are there telling us what to do. They say to go via certain lines or hold the grain subject to our order. Commissioner Lane. If I to-day were to put grain into your eleva- tor to be held subject to your order at what time would it be necessary, or would it be customary, for me to give you notice that I wished the grain to go forward at a certain date ? How many days in advance ? Mr. Martin. That could be any day — the day before or in the morning. If we could get cars we could handle on one day's notice, but usually we say get it out as fast as you can. Commissioner Lane. Are you given any notice whatever by the owner of the grain as to the time the grain is to move forward prior to the exact date when it does go forward? Mr. Martin. No ; nothing except in a general way. They give us an order to load. Suppose a man brings in five cars of wheat and leaves it there a couple of days, and he would call up and say, I wish you would load that in Great Western cars, or what ever it might be, and we would load that out as soon as we got them. Commissioner Lane. Do you always have plenty of cars? Mr. Martin. We do, except when there is a shortage, as there is now. Commissioner Lane. Do you file the orders for cars in succession in the order in which they come in ? Mr. Martin. Yes, sir. Commissioner Lane. If I wanted grain out of your elevator, and served notice on you that I wanted it moved to-day, when would it be necessary for me to file that order with you in order to have it moved to-day? GRAIN ELEVATOR INVESTIGATION. 583 Mr. Martin. Well, I would move the grain to-day. I would move the grain on your verbal notice. You write the letter presumably to-day, but I would handle it just the same. Commissioner Lane. Then you would know — if there was a de- mand on my part for grain to be moved to-day — you would know there was tliat demand, would you ? f Mr. Martin. Yes, sir. Commissioner Lane. How long do you hold grain in your elevator without charge? Mr. Martin. We allow the first fifteen days free and the storage charge is one-eighth of a cent for every ten days after that. Commissioner Lane. That one-eighth of a cent is not paid if you are not able to provide cars? Mr. Martin. Grain over our line is not charged storage when it is delayed on account of our inability to furnish cars. Commissioner Lane. Wliat effect on the railroad, so far as the transportation of grain is concerned, has your ownership of this elevator had? Mr. Martin. You mean what effect on the volume of business we get? . . Commissioner Lane. \es; how much more grain business do you do because you own the elevator and give free transfers ? Mr. Martin. That I do not believe I can answer. Commissioner Lane. How long have you been with the elevator? Mr. Martin. Since it was started last fall — October of last year. Commissioner Lane. You do not know what the volume of freight was of this nature that the Chicago Great Western had before that time? Mr. Martin. No ; I could not say ; could not give a comparison. Commissioner Lane. That is all. Commissioner Clark. "Who is the general agent of your road here ? Mr. Martin. J. A. Ellis is our present agent. Commissioner Clark. He is here in Omaha now? Mr. Martin. Yes, sir. Commissioner Clark. Will you ask him to come up here? Mr. Martin. Yes, sir. Commissioner Clark. And ask him, please, to bring along what tariffs have been in existence governing these terminal charges since the first of 1905. Mr. Martin. Since the first of 1905? Commissioner Clark. Yes, sir. Mr. Martin. Mr. Ellis is in the room, I think. Commissioner Lane. Is Mr. Ellis here? Mr. Martin. Yes, sir. Commissioner Lane. Well, we will ask Mr. Ellis to produce those tariffs himself. Is Mr. Ellis of the Chicago Great Western here? Mr. Ellis. Yes, sir. Commissioner Lane. Have you the tariffs asked for by Commis- sioner Clark ? Mr. Ellis. No, sir ; I have not. Commissioner Lane. Can you get them and bring them to us ? Mr. Ellis. I will make a search for them and see what I can do. 584 GKAIN ELEVATOB INVESTIGATION. Commissioner Lane. Well, they are supposed to be posted in your station. If you please, will you return and let us know what you have found as soon as possible ? Mr. Ellis. Yes, sir. Commissioner Lane. That is all. You are excused, Mr. Martin. « E. E. Huntley, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in Omaha, Mr. Huntley ? Mr. Huntley. Yes, sir. Mr. Marble. What is your business ? Mr. Huntley. I am in the grain commission and brokerage busi- ness. Mr. Marble. Were you formerly in business at country stations ? Mr. Huntley. Several years ago. Mr. Marble. Several years ago ? Mr. Huntley. Several years ago ; yes, sir. Mr. Marble. At Salix, Iowa? Mr. Huntley. At Salix, Iowa. Mr. Marble. How long ago was that? Mr. Huntley. I sold out over there a year and a half ago. Mr. Marble. When you were in business there did you have your business pooled with your competitors ? Mr. Huntley. At times. Mr. Marble. What was the nature of that pool? Mr. Huntley. Well, sir, we divided the grain. Mr. Marble. Divided the grain coming into the town? Mr. Huntley. Yes, sir. Mr. Marble. Did you pay a penalty to each other on the surplus you might buy ? Mr. Huntley. Paid the difference; yes, sir. Mr. Marble. What was that difference you paid ? Mr. Huntley. We paid, I think, 2 cents on wheat and a cent on corn. Mr. Marble. Did you have occasion to pay any such difference ? Mr. Huntley. Yes, sir. Mr. Marble. You mean you reached an agreement as to the volume of business each should have and that if any one got more than that proportion he paid to his competitor on the surplus? Mr. Huntley. If I bought more grain and more corn than the other dealer I paid the other dealer a cent a bushel. Mr. MvRBLE. Did you, as a matter of fact, pay a sum of money to the Trans-Mississippi Company? Mr. Huntley. At times. Mr. Marble. Did you pay them something like $600? Mr. Huntley. I do not remember. Mr. Marble. How much would you say you did pay ? Mr. Huntley. I could not say. They paid me money and I paid them at different times, according to the way it ran. Mr. Marble. Did you also agree on prices ? Mr. Huntley. Yes, sir. Mr. Marble. That is all. GRAIN ELEVATOR INVESTIGATION. 585 Commissioner Lane. Do you know whether that system obtained outside of your own bailiwick ? Mr. Huntley. No, sir. Mr. Makble. Were you a member of the Iowa Grain Dealers' Asso- ciation ? Mr. Huntley. Yes, sir. Mr. Marble. Did this come from your membership in that asso- ciation ? Mr. Huntley. I do not know. I belonged to the Iowa associa- tion since it was organized and I do not remember just where this rule came from. Commissioner Lane. Did you try to discourage the scoop-shovel men? Mr. Huntley. Well, I do not remember. For a good many years there have not been any scoop-shovel men. Commissioner Lane. There have not been any there? Mr. Huntley. Well^ not while I was in the business there. Mr. Mahble. Did this sort of an arrangement prevail up to the time you quit business there ? Mr. Huntley. The greater portion of the time, I think. Commissioner Clark. About when were the last payments made under that arrangement? Mr. Huntley. I do not remember. Commissioner Clark. You know about when, do you not ? Mr. Huntley. Well, I can not tell. Commissioner Clark. Were any made in 1905 ? Mr. Huntley. Probably up until about the time I sold out. Commissioner Clark. That was sometime during the first half of 1905? Mr. Huntley. Yes, sir. Commissioner Clark. Do you know a person in Iowa named Case, who sends out market quotations? Mr. Huntley. No, sir. Commissioner Clark. Did you ever hear of him ? Mr. Huntley. Yes, sir. Commissioner Clark. Did you ever get any of his quotations? Mr. Huntley. Not at this station ; no, sir ; I never got any — I say I did not. I got quotations yesterday or the day before of Case as to the price being paid by different bidders in the territory at Des Moines — ^this sheet that he sends out to brokers. Commissioner Clark. You do not know who he represents ? Mr. Huntley. I do not know anything about Mr. Case. I do not know who he is. Commissioner Lane. Who was the secretary of the Iowa Grain Dealers' Association? Mr. Huntley. George Wells. Commissioner Lane. Did you have any communication with him respecting the combination on prices ? Mr. Huntley. No, sir. Commissioner Lane. That is all. (The witness was excused.) 586 GRAIN ELEVA.TOE INVESTIGATION. I. W. Jacoby, called as a witness, being duly sworn, testified as follows : Mr. Marble. Where do you reside, Mr. Jacoby ? Mr. Jacoby. I reside in Lancaster County, this State. Mr. Marble. What town ? Mr. Jacoby. Haveloek is my post-office. Mr. Marble. What is your business? Mr. Jacoby. I am a farmer. Mr. Marble. Are you interested in the grain business as well? Mr. Jacoby. I am interested in shipping grain. Mr. Marble. In what way do you ship grain? What facilities have you ? Mr. Jacoby. We have an office and pair of scales and a couple of good scoop shovels. Mr. Marble. You also raise some grain? Mr. Jacoby. Yes, sir. Mr. Marble. That is somewhat necessary to the grain business, is it not? Mr. Jacoby. Well, it seems to be now days. Mr. Marble. To have the grain? Mr. Jacoby. Yes, sir. Mr. Marble. Do you buy grain ? Mr. Jacoby. No, sir. Mr. Marble. You simply ship your own grain ? Mr. Jacoby. Yes, sir. Mr. Marble. Haveloek is very close to Lincoln, Nebr., is it not? Mr. Jacoby. Yes, sir. Mr. Marble. Do you ship to Lincoln? Mr. Jacoby. No, sir. Mr. Marble. Where do you ship to? Mr. Jacoby. Principally to Omaha. Formerly we shipped to Kan- sas City, before the Omaha market opened up. Mr. Marble. How long have you been shipping? Mr. Jacoby. I believe our first shipment was in February, 1904. Mr. Marble. Have you been able to get cars for your shipments as ordered ? Mr. Jacoby. No, sir ; not all the time. Mr. Marble. Have you been as fairly treated as other competing shippers ? Mr. Jacoby. You mean elevator men? Mr. Marble. Yes, sir. Mr. Jacoby. No, sir ; I have not. Mr. Marble. They have been able to get cars when you have not been? Mr. Jacoby. At first we could not get any. Mr. Marble. Did you know why? Mr. Jacoby. Well, I think I did. Mr. Marble. Did any railroad man tell you why ? Mr. Jacoby. Well, they just simply did not say we could or could not, but they would not set them in. That is all. Mr. Marble. Tell us about the difficulties you have had, briefly. Mr. Jacoby. Well, when we first organized there, we shipped from Prairie Home, on the Kock Island. That is the second station on GRAIN ELEVATOR INVESTIGATION. 587 the Rock Island east from Lincoln. We applied for cars and applied for a site for an elevator, and we never heard from either. Mr. Marble. Got no reply? Mr. Jacobt. Sir? Mr. Marble. You got no reply ? Mr. Jacobt. No reply. We made application for a site to the agent and also applied for cars. We got no reply. Then we went to Lin- coln and saw the freight agent there, Mr. Miller ; a committee of us. The first time we went we could not find him. We went again and found him, and could not get any definite answer from him whether we could or could not have cars, so I told him we would have to ship over other roads; if he would not give us cars we would try some other road. He kind of made light of the idea and thought we would not do that. I told him I would show him, so he said we would have to show him. So I went to Waverly, on the Burlington, 3 miles north, and got the cars, and we hauled to Waverly until they gave us cars. Mr. Marble. Have you been getting cars ever since ? Mr. Jacoby. Well, we do at times. Mr. Marble. You had some trouble ? Mr. Jacobt. Yes; had some trouble last week. Mr. Marble. Did you have more trouble last week than your com- petitors were having? I understand cars are short for everyone. Mr. Jacobt. I do not know what trouble they have. I know we had enough of it. Mr. Marble. You can not compare ? Mr. Jacoby. No; we were about three weeks getting one car. Mr. Marble. Did you get your elevator site ? Mr. Jacobt. No, sir. Mr. Marble. Was that refused? Mr. Jacobt. We never heard from it yet. Mr. Marble. Did you make an application for a site for scales? Mr. Jacobt. Yes ; for office and scales. Mr. Marble. And was that refused ? Mr. Jacobt. Yes, sir. Mr. Marble. These papers you have handed me are copies of your application to the company for a site for scales and elevator ? Mr. Jacobt. For an office and scales. Mr. Marble. And answers received from the Chicago, Rock Island and Pacific Railroad Company? Mr. Jacobt. Yes, sir ; the officials, the assistant superintendent and general superintendent and Mr. Winchell, the president. There is one from him. Mr. Marble. If the Commission please, I would like to put in these applications, but they are lengthy and I will not read them now. Mr. Jacobt. (referring to correspondence produced). That is cor- respondence between our company and the officials of the Rock Island in regard to office and scales. That is most of the correspondence^ There is one letter out. Mr. Marble. There are three letters here I would like to read. Commissioner Lane. All right. IVfr. Marble (reading letter). 588 GRAIN ELEVATOB INVESTIGATION. APPLICATION FOR LEASE, FAKMERS' GRAIN COMPANY, PBAIRIE HOME. (Refer to file 344-2.5.) Faiebuby, December ll,, 1905. Mr. Fred.C. Hall, Prairie Home, Nebr. Dear Sir: Referring to your application for a site for scales and office at Prairie Home, beg to advise that tlie site selected by you is directly in front of the depot and one at which we could not allow you to locpte. It will be neces- sary for you to choose another location of less prominence and farther from depot. Tours, truly, 0. J. Wilson, Supt. (The above letter is hereto annexed and marked " Exhibit No. 1 to Mr. Jacoby's testimony.") Mr. Marble. Does this blueprint [referring to blueprint pro- duced by witness] you have shown me correctly show the situation at that point ? Mr. Jacoby. Yes, sir ; they have never found any fault with it. Mr. Marble (examining blueprint). I will ask if this is an ele- vator [indicating on blueprint] ? Mr. Jacoby. Yes, sir. Mr. Marble. This is the office of the elevator now existing [indi- cating] ? Mr. Jacoby. Yes, sir. Mr. Marble. This is another elevator [indicating] ? Mr. Jacoby. Yes, sir. Mr. Marble. And this is the office [indicating] ? Mr. Jacoby. Yes, sir. Mr. Marble. What is the distance between those two elevators — the tAvo now existing? Mr. Jacoby. I think you will find it on this blueprint [referring to blueprint]. Mr. Marble. From your memory, tell us about how far they are apart. Mr. Jacoby. Between the two elevators? Mr. Marble. Yes ; now existing — about how many hundred feet ? Mr. Jacoby. I should say within 250 and 300 feet. Mr. Marble. Is there room for another elevator iri between ? Mr. Jacoby. Yes ; we asked for an office and scales, not an elevator. Mr. Marble. How large a town is this? Mr. Jacoby. Well, there are probably a dozen dwelling houses there, two stores, a blacksmith shop, and lumber yard — ^just a small station. Mr. Marble. Does this show the location of the town [referring to blueprint] ? Mr. Jacoby. Yes, sir. Mr. Marble. Is this elevator existing practically between the depot and town ? Mr. Jacoby. Yes, sir. Mr. Marble. As much so as yours would have been? Mr. Jacoby. Twice as much. Commissioner Clark. Has this elevator been built since that letter was written ? Mr. Jacoby. No ; it has been there ten or twelve years. Mr. Marble (producing another letter). I have a second letter, which I will read : GBAIN ELEVATOR INVESTIGATION. 589 LEASE IN FAVOK OF I. W. JACOBY, PRAIRIE HOME. (Refer to file 344-28.) Faiebuby, February 16, 1906. Mr. I. W. Jacoby, Prairie Home, Nebr. Deab Sib : Referring to your lease application for site at Prairie Home sta- tion on which to place scales for the purpose of weighing grain, beg to advise that I have given same careful consideration and am sorry to advise you that 1 must decline to entertain your application. At no station on this division is there a scale located on our right of way except in connection with an elevator or coal yard, and by allowing you this location we would be establishing a precedent that we can not afford, as I believe you yourself will admit the justice of our protecting the elevator men who have paid out their money for elevators in which to store grain, from which we derive the benefit of prompt loading of cars and shipments. Another factor in this proposition that works to your dis- advantage is the location selected by you. We do not care to locate such an in- dustry on our right of way, between the depot and town, as it detracts from the surroundings and Is commented upon unfavorably by the management and the public as well. I return your blueprint herewith. Yours, truly, C. J. Wilson, Superintendent. The same is hereto annexed and marked " Exhibit No. 2 to Mr; Jacoby's testimony.") Mr. Marble. A third letter: Chicago, Rock Island and Pacific Railway, Office of the Genebal Supeeintendent, (Request for site. — Farmers' Grain Association.) On Line, Illinois Division, May 2, 1906. (File C, 104.) Fabmebs' Grain Association, Prairie Home, Nehr. Gentlemen : I have delayed replying to your communication, March 17, as I wanted to have an opportunity to look at the ground at Prairie Home. I have reached the conclusion that I do not care to recommend that there be leased to you a site for office and scales. Real estate is certainly not very valuable at Prairie Home, and I presume there is no doubt that you can obtain a site very near the one designated on your plat and which will be as desirable as is the one which is designated. I return herewith the plat sent me with your letter. Yours, truly, H. S. Cable, Getieral Superintendent. (The above letter is hereto annexed and marked " Exhibit No. 3 to Mr. Jacoby's testimony.") Mr. Marble. So that, as a matter of fact, you got no site? Mr. Jacoby. We have got no site yet. Mr. Marble. Have you had any difficulty in getting a market for your grain since vou began shipping? Mr. Jacoby. Well, we did at first. Mr. Marble. You did at first. Mr. Jacoby. Yes, sir. Mr. Marble. Where did you have that difficulty ? Mr. Jacoby. Well, we could only get one buyer — that is, on a mar- ket on any grain exchange, and that was at Kansas City. Mr. Marble. Did you get a statement of what the trouble was from those that refused to take a consignment? Mr. Jacoby. They did not bid us. We did not get any answer from them. Mr. Marble. You have been ignored ? 590 GRAIN ELEVATOE INVESTIGATION. Mr. Jacoby. Yes, sir ; practically ignored — the railroads and all. Mr. Marble. Is there anything else that you desire to call atten- tion to ? Mr. Jacoby. I have some evidence here, if the Commission will take it [producing large bunch of papers] . Commissioner Lane. What is it about? Mr. Jacoby. This is evidence that was given at Havelock, Nebr., in the Worrall grain case against the Nebraska Grain Dealers' Asso- ciation the 8th of July, last year — 1905, I believe. Mr. Marble. "Was that evidence, a portion of it, given by you ? Mr. Jacoby. Yes, sir. Mr. Marble. Under oath ? Mr. Jacoby. Yes, sir. Mr. Marble. Did you hear the rest of it ? Mr. Jacoby. No ; 1 heard two men testify besides myself. Commissioner Lane. Do you want to introduce your own testi- niony ? • Mr. Jacoby. Yes, sir. Commissioner Lane. We will let it go in as part of the reccjrd. (The same is hereto annexed and marked " Exhibit No. 4 to Mr. Jacoby 's testimony.") Commissioner Clark. What case did you say this was testimony in ? Mr. Jacoby. The Worrall Grain Company against the Nebraska Grain Dealers' Association. Commissioner Clark. Has the case been decided ? Mr. Jacoby. I do not know whether it has or not. Mr. Worrall is here ; he can answer the question. Commissioner Clark. That is all. (The following letters were also offered in evidence by Mr. Marble, and marked as exhibits to Mr. Jacoby's testimony : Letter of March 17, from the Farmers' Grain Company to H. S. Cable, general super- intendent of the Chicago, Rock Island and Pacific, marked Exhibit No. 5; letter of the Farmers' Grain Company of May 25, 1906, to H. S. Cable, marked Exhibit No. 6; letter of March 21, 1906, from the general superintendent of the Chicago, Eock Island and Pacific Railway to the Farmers' Grain Company, marked Exhibit No. 7; letter of August 11, 1906, addressed to B. L. Winchell, president of the Chicago, Rock Island and Pacific Railway Company, marked Exhibit No. 8; letter from B. L. Winchell, dated August 15, 1906, to Farmers' Grain Company, Prairie Home, Nebr., marked Exhibit No. 9.) The witness was excused. S. MacMurray, called as a witness, being duly sworn, testified as follows : ' Mr. Marble. Mr. MacMurray, you, I believe, are a scoop shoveler, are you not ? Mr. MacMtjrray. I am. Mr. Marble. Where are you located ? Mr. MacMurray. At Wood River — Shelton. My home is at Wood River. Mr. Marble. Previous to being a scoop shoveler you had expe- rience in running a country elevator, did you not? GBAIN ELEVATOR INVESTIGATION. 591 Mr. MacMijeeay. I did. Mr. Marble. For the Omaha Elevator Company ? Mr. MacMueeay. For the Omaha Elevator Company. Mr. Marble. At Wood Eiver? Mr. MacMtteray. Yes, sir. Mr. Marble. Why did you start a shovel house? Mr. MacMurray. Well, I could not get along with their agent, and I resigned and tried to buy one of their elevators, and they would not sell, and I started a shovel house. Mr. Marble. If I remember, you have testified that this Omaha Elevator Company had two elevators at your town, one run by you under the name of the Omaha Elevator Company and one run by another gentleman under another name? Mr. MacMurray. Known as the Conrad Grain Company. Mr. Marble. And you competed against each other at that sta- tion? Mr. MacMurray. Well, we did not compete much. Mr. Marble. The farmers thought you did — ^you pretended to com- pete, did you not? Mr. MacMurray. Oh, yes. Mr. Marble. Did you both bid on the same grain to the farmer ? Mr. MacMurray. Oh, at times ; yes, sir. Mr. Marble. Have you tried to put up an elevator ? Mr. MacMueeay. I have asked for a site. Mr. Maeble. Have you got that site yet ? Mr. MacMueeay. I have not. Mr. Maeble. How long have you been trying to get that elevator site? Mr. MacMueeay. I think I asked for an elevator site when I first went into the business, scoop shoveling. Mr. Maeble. How long since? Mr. MacMurray. That is two years past, I think, in June. I have got a copy of the application I made. I think it was in June, 1905 ; the first one was verbal. Mr. Marble. Has it been refused ? Mr. MacMueeay. Yes, sir — ^that is, Mr. Lane said they were so thick in there he did not think there was room for another, and he would not grant me the privilege of building at Wood River. Mr. Maeble. Did you show him a place where you thought there was room ? Mr. MacMueeay. Yes, sir. Mr. Maeble. Was there room? Mr. MacMueeay. He said no. I had a talk with Mr. Lane about three weeks ago, and he said he did not know but he would extend the side track and give me a site at the end of it. I told him I would rather be located in town. Mr. Maeble. I will ask you what your investment in your scoop shovel is ; how large an investment have you ? Mr. MacMurray. I have got about $1,200 in the buildings, office, and scales. Mr. Marble. Then what other capital have you invested in other ways in the same business ? Mr. MacMueeay. In grain there are times I will have $5,000 or $6,000. 592 GEAIN BLEVATOB INVESTIGATION. Mr. Maeblb. What difference was made in the prices by your entry into the grain market as a scoop shoveler ? Mr. IVUcMtjeray. Five cents on wheat and 2 cents on corn and oats. The first day I started at Wood Kiver. Mr. Marble. How about Shelton? Mr. MacMxjeeay. At that time Shelton was getting a regular profit. Mr. Maeble. When you commenced to be a scoop shoveler at Shelton, what happened ? Mr. MacMuehay. They put up the price the same as Wood River. Mr. Maeble. Is the price the same now at Wood River and Shel- ton? Mr. MacMtjreay. Practically. There will sometimes be a half a cent difference. Mr. Maeble. What causes that difference ? Mr. MacMtjreay. My presence, generally. Mr. Marble. You mean the price is higher where you are? Mr. MacMueeay. Yes, sir. Mr. Marble. If you go to Shelton the price goes up ? Mr. MacMueeay. Yes, sir. Mr. Maeble. And if you go back to Wood River the price goes up there? Is that right? Mr. MacMtjrray. Yes, sir. Mr. Marble. Has there been any other attempt to meet your com- petition or put you out of business ? What other form has this com- petition of the elevators taken — any ? Mr. MacMueeay. No ; only I think they were instrumental in keep- ing me from getting cars when I started ; at lea'st Mr. Lane said so. Mr. Maeble. Mr. Lane said what? Mr. MacMurray. They were forcing his hand, the elevator people. Mr. Marble. Had you failed to get the cars ? Mr. MacMureay. Yes, sir; I was buying perhaps a week when I got lots of oats and I ordered cars from Kansas City. I kept that order in five straight weeks. I did not get a car. The market broke and I told them they could let the elevators have the rest of them. The elevators in that time got 42 cars. A few weeks later the market was in better shape and I ordered cars for Kansas City. I waited that time for three weeks and did not get one. The elevators got 31. In that time I coopered up three cars and they were taken from me. They were cars that would go to Kansas City — that is. Cotton Belt and Fort Scott cars — and the excuse the agent offered was that they had to go over another road. I think they said they got cars that would have to go on the St. Joe, or something like that. Mr. Marble. What was it Mr. Lane told you ? Mr. MacMureay. What is it ? Mr. Marble. Was it in connection with this inability to get cars that some official of the Union Pacific Railroad made the statement to you about forcing his hand ? Mr MacMurray. Yes, sir; when he made that statement I had come up from Lincoln with a copy of the bill that was before the legislature, and I had been before the committee the night before and they agreed — there was, by the way, another man there that had a grievance on the Burlington, and he and I were before the committee GEAIN ELEVATOE INVESTIGATION. 593 and they voted to suspend action on the bill until he and I would go to Omaha and see the officers of the two railroads and report back what they said. If they agreed to furnish the cars and site for the elevator — ^the other man wanted a side track to a farmers' elevator by the way — and that was when I took that bill and took it up to Charlie Lane. Mr. Munroe was not in town that day. That is when Charlie said that I came there with that for a club to hit him over the head, and all that sort of thing, and he said he knew it was against the law, but the elevator companies were forcing his hand; he had to do it. Mr. Mabble. He knew what was against the law ? Mr. MacMtjrray. Refusing the elevators cars. Mr. Marble. He admitted, you say, doing so ? Mr. MacMuekay. Yes, sir. Mr. Marble. And stated the elevator men forced his hand? Mr. MacMurray. Yes, sir. Mr. Marble. Did he tell you how ? Mr. MacMxtkray. No, sir. That is about the substance of what he said. Mr. Marble. I will ask you, Mr. MacMurray, if you have observed recently the prices being paid by the farmers' elevators at Neola in particular ? ~ Mr. MacMurkay. I met a gentleman in April. I was going to Omaha on the train and I met the agent for the farmers' elevator at Lodi, Nebr., and I asked him what prices they were paying for grain, and he said 22 cents for oats and 32 cents for corn ; and I asked him if there was much around there, and if a man could buy any of those bunches, and he said yes ; and I asked him if they all paid the same price and he said they did. Mr. Marble. By " all," you mean the farmers' elevators and their competitors ? Mr. MacMtjrray. Yes, sir. I told him I would give him 25 cents for oats and 35 cents for corn if he would buy me four or five loads of each. He said he dare not do it; that he was working for the farmers' elevators, and the stuff he bought would have to go to Omaha, I think, he said. But he stated he had a brother, and he and his brother run a little store, and I think he had the post-office, and I asked him to wire his brother, stating that I would give him 25 cents for the oats. He said one man who was a member of this far- mers' organization had a car of nice yellow oats. I told him to wire his brother, but he said no, he wouldn't dare to do that ; he might lose his job. A little while after that I had a talk with Mr. Lane, and he said I could have cars anywhere on the Union Pacific system. So I started and went over to Pleasanton. There is located at Pleasanton a farmers' elevator, "Worts Brothers, and the Omaha elevator. I wasn't there but a little while when I saw a farmer coming in with a load of oats, and I asked if they were for sale, and he said, " Yes." I said, " How many have you got ? " He replied, "A carload." I said, " I will give you 28 cents for your oats." He began to swear. I said " What is the niatter ? " He said, " I have been a week trying to sell these oats, and 23 cents was all I could get until this morning. Worts Brothers said they would give me 24 cents." S. Doc. 278, 59-2 38 594 GEAIN BLEVATOE INVESTIGATION. While we were talking a farmer drove up with a load of wheat. It was nice 62-pound wheat. He wanted me to put a bid on it. I asked, " Is it sold ? " He said, " Yes." He was taking it to a farmers' elevator. I would not bid on it. He said his brother had a carload "just such wheat as mine. What will you give?" "Sixty-seven cents," I said. He said he thought he wasn't getting enough. Mr. Marble. Where was he selling it ? Mr. MacMtjreay. To the farmers' elevator. Mr. Marble. You have had several years' experience as an operator of line elevators, have you not? Mr. MacMurray. Yes, sir. Mr. Marble. How many years ? Mr. MacMurray. I worked for the Omaha Elevator Company for about eleven years and nine months. Mr. Marble. Did you bid more than that grain was worth to this farmer ? Mr. MacMurray. I had 2 cents if I could have bought it at that time. Mr. Marble. From your experience as an operator of line elevators and a grain man, would you say that such a price could be main- tained by three competitors in that field if they did not agree on the price ? Mr. MacMurray. I could not see how it would be. I don't think I would lay down and let you buy a thousand or two thousand or three thousand bushels at 67 cents, and I take nothing. Mr. Marble. If you were competing, you would have to pay more than they had paid on that grain ? Mr. MacMurray. I think I would. Mr. Marble. Were you able to bid that much with a scoop-shovel house ? Mr. MacMurray. Yes, sir. Mr. Marble. Did you expect to handle it through the scoop-shovel house ? Mr. MacMurray. Have the farmers shovel it into the car. Mr. Marble. Have you seen these letters, Mr. MacMurray [hand- ing letters to witness] ? Mr. MacMurray. Yes, sir. Mr. Marble. Are those letters received by you in the regular course of business ? ' Mr. MacMurray. Yes, sir. Mr. Marble. They are short, and I will read them, if I may. The first one is from the F. C. Ayes Mercantile Company [reading] . Denvee, Colo., December 31, 1904. Wood River Grain Company, Wood River, Nebr. Gentlemen : Nice quality of heavy clean mixed oats are worth 23 cents iDer bushel, your track, and mixed corn 31 cents ; straight yellow corn 32 cents. We are in the market for a great deal of grain and are buying- at these prices every day. Are you a regular grain dealer, and have you elevator facilities? Please advise us fully. Very truly yours, The F. O. Ayes Mercantile Co., Per B. GBAIN ELEVATOB INVESTIGATION. '595 (The same is hereto annexed and marked " Exhibit No. 1 to Mr. MacMurray's testimony.") Mr. Marble. The second letter is as follows : Denver, Colo., August 18, 1905. Mr. S. MacMurkay, Wood River, THehr. Dear Sir : Your Inquiry for bid on corn and oats received. Unless you are a member of the Grain Dealers' Association we can not make you bids, as the association gets after us, and we can not afford to antagonize them, practically every shipper being an association man. Mixed oats we judge are worth about 21 cents, your track to come here. If you want to ship any you would have to bill them to yourself and send us the papers, so that the dealers would not get next. Yours, very truly, P. C. Ayes Meb. Co. Per B. (The same is hereto annexed and marked " Exhibit No. 2 to Mr. MacMurray's testimony.") Mr. Marble. Have you since been able to sell these people ? Mr. MacMurray. No; I have not sold them anything since. I have got bids from them, but their bids are low. Mr. Marble. Did they at any time have you ship to them ? If so, under what firm name did you do it, or did you ship to your own name, rather than to them directly. Mr. MacMtjrray. I never shipped them any. Mr. Marble. There was a Denver firm which required shipments in that way ? Mr. MacMurray. Yes, sir; I have shipped to myself. Mr. Marble. Did they require that, so that it would not be dis- covered that they were receiving shipments from you? Mr. MacMurray. Yes, sir. Mr. Marble. Who is that ? Mr. MacMurray. Thia Cash Commission Company, or Mr. George S. Clayton, is really the head of that firm. He is the man that ran the elevator at Wood River about two years ago and that we had a little fun with and forced him out. Mr. Marble. What do you mean by " had a little fun with ? " Mr. MacMurray. That is when we built the second elevator at Wood River, and two of us worked against him until he sold out. Mr. Marble. How did you work against him? Mr. MacMurray. Well, by two pluck one. Mr. Marble. Did you pluck him? Mr. MacMurray. Well, he sold out. Mr. Peck. I should like to ask Mr. MacMurray what he got for that elevator when he sold out? Mr. MacMurray. My understanding is that it was something between $7,000 and $8,000. Mr. Peck. Wasn't it $8,500? Mr. MacMurray. I wouldn't say it was not. I am not positive. Mr. Peck. What did he pay for it when he bought it ? Mr. MacMurray. He paid $4,000 or $4,500, but he improved it $2,000 or $3,000 during that time. I would say that at the time the elevator would earn good interest even on an investment of $12,000 at the price we were paying the farmers for grain. Mr. Marble. I think that is all. 596 GBAIN ELEVATOB INVESTIGATION. Commissioner Lane. Just one minute, Mr. MacMurray. There has been a good deal of testimony given here to the effect that the scoop shoveler was not a responsible man, and therefore the grain dealers generally refused to bid him. You are acquainted with scoop shov- elers all over the State? Mr. MacMxteray. No. I know a number of them. I will say this, that twenty years ago most of the Peavey houses were scoop-shovel houses in Nebraska, and I think that is also true of Mr. Updike and the rest of them a number of years ago. Commissioner Lane. That is say, you have hopes some day of be- coming a large elevator man when you start in as a scoop-shovel man ? Mr. MaoMtjeeay. That seems to be the way the rest started. And if a fellow had the rebate that they have been getting I think he could build an elevator and pay for it soon. Commissioner Lane. He doesn't always have to build an elevator. Sometimes it is given to him. Mr. MacMtjeray. No. Commissioner Lane. Do you in your business find that it is impos- sible, excepting by subterfuge, to sell your grain directly to the ' Omaha grain dealers? Mr. MacMtjeeay. Well, no ; I can not say it is that way now. Commissioner Lane. Was it so last year ? Mr. MacMueeay. Yes; in a waj it was. Commissioner Lane. Did they give any ground excepting that you were — or did they give the ground that you were irresponsible finan- cially ? Mr. MacMtjeeay. No ; but I have heard that given in the evidence. The evidence seems that that is their opinion of all scoop shovelers. Now, that came up in a conversation with Mr. Peck and Mr. Lane three or four weeks ago in the Union Pacific headquarters, and he spoke about, that all a fellow had invested was a scoop shovel and a broom, and I made the statement that I had more invested in Wood Eiver than the Omaha Elevator Company had, not counting their second elevator. Commissioner Lane. Do you know of any other cases where two elevators in the same place, which are presumed to be in opposition to each other, are owned by the same company really ? Mr. MacMueeay. That is the only one I know of now. No ; I do not know of any other. Commissioner Lane. Do you know of any other cases in which an elevator, an independent elevator man has been squeezed out ? Mr. MacMueeay. Squeezed out? Commissioner Lane. Yes ; in the way you spoke of this man hav- ing been squeezed out. Mr. MacMueeay. I guess Mr. Mitchell felt that way. They put the prices up on him until he sold out; and Clayton was the same way. Commissioner Lane. Mr. Mitchell and Mr. Clayton, of where ? Mr. MacMueeay. Both located at Wood Eiver. Mr Mitchell was the owner and operator of an elevator, the second elevator when I first went to Wood Eiver. And we got into trouble after a while and kept the prices up, I guess, two or three years, until he sold out ; and then Clayton got it, and I think Mr. Clayton ran it possibly two GBAIN ELEVATOR INVESTIGATION. 597 years, or possibly three — I could not say which — and he finally sold out. Commissioner Lane. Does the scoop shoveler, in your opinion, act as a wholesome restraint upon farmers' elevators and other elevators from combining ? Mr. MacMurray. I did not just catch that. Commissioner Lane. I mean to ask you this question : isn't it pos- sible for the farmers' elevators to combine, just as possible for the farmers' elevators to combine with the Armour elevator or with the Omaha elevator, or anybody else to combine with them? Mr. MacMurray. I should think so. Commissioner Lane. I should judge from some of your testimony that you believe that such a combination had at some time and at some places taken place? Mr. MacMurr^vy.' Yes, sir; the Lodi elevator that I spoke of, the farmers' elevators, is a shovel elevator like mine, and they are not having any trouble there about prices like I was at Wood River and Shelton, and if I am rightly informed there is a shovel elevator at Calloway that the farmers are running, so that the Omaha Elevator Company is up against them at both places, but they are buying stuff at a profit. Commissioner Lane. Would there be any restraint, anything to restrain a farmers' elevator from combining with a rival elevator excepting the presence of the scoop-shovel man ? Mr. MacMurray. I am a little deaf and did not just catch that. Commissioner Lane. This is the question, perhaps, in a somewhat simpler form. Do you act, as a scoop-shovel man, in competition with the farmers' elevator and with the other elevator men in your town, to keep the price of grain up, as to keep the elevator people who are there from combining to keep the price of grain down ? Mr. MacMurray. We have no farmers' elevators in Wood Eiver nor at Shelton. There is just the Omaha Elevator Company and the Trans-Mississippi at Shelton, and the Omaha Elevator and Hord — what is called now the Conrad Grain Company, at Wood River. But where I spoke of making, where I bid that grain at Pleasanton, there is a farmers' elevator there, and the Omaha Elevator Company and Worts Brothers, and there I offered them 4 cents more for oats than they were getting, and that was really 5 cents more than the farmer could have gotten the day before, according to his own admission, so that it looked as if there was a combination there. There was 2 cents in the stuff for me at 28 cents. Mr. Marble. Let me ask you just one more question. You are not the agent of any farmer's association or any reform association to keep up the price of grain, are you? Mr. MacMurray. Not that I know of. Mr. Marble. You are in business to make money? Mr. MacMurray. That is what I started out for. Witness excused. Mr. Marble. Mr. Ellis is here with some papers that the Commis- sioner called for. 598 GRAIN ELEVATOK INVESTIGATION. J. A. Ellis, called as a witness, having been duly sworn, testified as follows : Commissioner Clark. This tariff of date August 28, 1906, contains all the rules of your company relative to the switch service here in Omaha ? Mr. Ellis. Yes, sir ; they are in there. Commissioner Clakk. What is the rate for switching between your elevator and South Omaha per car on grain received ? Mr. Ellis. $2 a car. Conimissioner Clark. In either direction ? Mr. Ellis. Either direction. Commissioner Clark. That means that you will take a car from the South Omaha elevator or the elevator on the Union Stock Yards tracks for $2. • _ Mr. Ellis. We will take a car from the Union Pacific or the Union Stock Yards to our elevator for $4, or from our elevator to either one of them. Commissioner Clark. And if any grain is switched to your road from any other road with a switching charge you absorb it if it goes out over your road ? Mr. Ellis. I can not answer that question. I am not familiar with the workings of the elevator. I have only been here a few days. Commissioner Clark. Do you know what the switching charges are? Mr. Ellis. The switching charge, as I have stated, is $2 from the Union Pacific or the Union Stock Yards to the elevator or vice versa ; but as to assuming the switching charges, absorbing them, or any workings of the elevator, I could not tell you. I have just come here. I am a new man. I haven't been over the ground or familiar with the operations of the elevator or the switching terminals. Commissioner Clark. There doesn't seem to be anybody here con- nected with your company that is familiar with it, then, is there ? Mr. Ellis. I couldn't answer your question. Commissioner Clark. Well, we had a gentleman here awhile ago who had charge of the operations of the elevator, and he told us you were the man who knew all about the switching charges. He didn't know anything about anything, except the handling of grain in the elevator itself. Do you know anything about the allowances that are made by your company in the elevator? Mr. Ellis. No ; I do not. Commissioner Clark. You don't know whether there is a tariff covering those allowances or not ? Mr. Ellis. I could not answer that. Commissioner Clark. You do not know ? Mr. Ellis. I came here on the 17th and left here agaki on Saturday for Des Moines, and I got back here yesterday. Commissioner Lane. Where is the man who was your predecessor ? Mr. Ellis. H. H. Churchill. I could't say where he is; he hasn't been here for several weeks. Commissioner Clark. Has he left the service of the company ? Mr. Ellis. Yes, sir. Commissioner Lane. These are your regular office copies, I suppose ? Mr. Ellis. Those are the original files. GRAIN ELEVATOR INVESTIGATION. 599 Commissioner Lane. Any questions you want to ask, Mr. Marble ? Mr. Marble. None at all. Cpmmissioner Lane. That is all, Mr. Ellis. Commissioner Clark. Do you want these tariffs, Mr. Ellis ? Mr. Ellis. Yes ; I would like to take them if you do not want to file them. Commissioner Clark. Those are not the ones we want. Witness excused. A. B. Jaqtjith, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. Where do you reside ? Mr. Jaquith. Omaha, Nebr. Mr. Marble. What is your business ? Mr. Jaquith. Grain business. Mr. Marble. In what way are you in the grain business ? Mr. Jaqtjith. In the general commission business, and also buying and selling and receiving on consignment. Mr. Marble. In your buying and also in your receiving on con- signment, do you discriminate at all against shippers or sellers be- cause of their facilities ? Mr. Jaquith. We absolutely do not. Mr. Marble. You receive from shovel men as well as elevator men ? men? Mr. Jaquith. We do. Mr. Marble. And from farmers' elevators ? Mr. Jaquith. Well, there was a time that we did not, owing to pressure being brought to bear by the Nebraska Grain Dealers' Asso- ciation; and in the course of our business I wrote to several scoop- shovel men to discontinue shipments to us, although they came unsolicited, on account of so much annoyance being made by the grain dealers' association. But since then we have made up our minds that we would handle grain coming from the farmer, from the scoop-shovel man ; from the shovel man or the regular elevator dealer. It is im- material to us. If one farmer has not got enough to make a carload and ten farmers will put their grain together and make a carload I will handle it. Mr. Marble. You feel differently about that now than when you were managing a line of elevators? Mr. Jaquith. Yes, sir. If I was managing a line of elevators I would probably take a different course. Mr. Marble. In your experience with farmers and shovel men, do you think it is safe to do business with them? Mr. Jaquith. We never lost a dollar by receiving a shipment from any such source. Mr. Marble. You found them Mr. Jaquith. But we have from some regular dealers. Mr. Marble. You were for a number of years the manager of the Omaha Elevator Company, were you not ? Mr. Jaquith. Yes, sir. Mr. Marble. And fully in charge of its affairs? Mr. Jaquith. Yes, sir. Mr. Marble. For how long? 600 GRAIN ELEVATOR INVESTIGATION. Mr. Jaquith. For about thirteen years. Mr. Marble. Why did you leave that service ? Mr. Jaquith. My health was rather poor, and I left and took a vacation ; went to Europe and was gone something like four months ; came back, and I was not as well as when I left. For that reason, although solicited by the owners of the business to take a year, if necessary, on full pay, I declined, stating that I did not care to further continue when I could not do the work. Hence I sold out all my interests in that company, and entered business later on for myself. At that time I did not expect to enter business again In Omaha; I expected to leave here. But upon the formation of the grain ex- change, although I was not very well at the time, they requested that T be one of the directors, knowing something of the business ; hence I became interested in grain again when I thought I had quit the busi- ness for good. Mr. Marble. You did not leave the Omaha Elevator Company be- cause of any trouble with them? Mr. Jaquith. No, sir. Mr. Marble. Or with any hard feelings ? Mr. Jaquith. No, sir. I understand that there have been various rumors of something of that nature in the air. I will simply say this, that I was solicited by Mr. Heffelfinger, Mr. Wells, and George Peavey, who controlled that company, to remain upon my return, and it was probably two months before they would accept my resignation, which did not take effect until the end of the year following. To show on their part that there was no enmity, they presented me with an engrossed resolution as to my character, etc., and also with a check for $2,600, calculated, I suppose, to pay the expense of my trip to Europe. Mr. Marble. You were friendly with Mr. F. H. Peavey up until the time of his death ? Mr. Jaquith. Yes, sir. I was with' him about twenty years or a little over, before his death, and I think that I was as close to Mr. Peavey as any man that was ever in his employ or had one of his properties to operate. Mr. Marble. Your present attitude in the grain business is not at all because of any animosity to any company or to any grain business? Mr. Jaquith. The primary reason of my entering the grain busi- ness again in Omaha was practically the interests of the Omaha Grain Exchange, and to see Omaha become a market which I think she is entitled to. Later on we have had more or less trading, and I be- came interested in the game in a financial way, and expect to continue in that line of business. Mr. Marble. Now, in your present business do you find that you have to pay car demurrage and other switch charges to railroads ? Mr. Jaquith. Yes, sir. There are a number of things that I would like to take up and make a few statements about without any partic- ular questions — with your permission. We have done, I suppose, as much receiving business, pure consignments, as most any house in Omaha. Those shipments are sent in here. When we sell grain on track, the switch charges are from $2 to $7 per car, reconsigning charges, on account of change of ownership, which I understand from the testimony here is rebated to the elevator. That kind of business in my estimation, is all bosh. It simply works against Omaha as a receiving market and against any man who desires to consign grain GRAIN ELEVATOR INVESTIGATION. 601 to Omaha otherwise than to the elevator interests here. On various cars that we have sold and shipped, sold here, there have been these charges. A party in the country does not care to wait three months before he gets full returns, and it is often necessary for us to wait three or six months before 'We get back these switching charges, and sometimes not at all. Hence, I think you can readily see the annoy- ance that these matters cause to the general business, outside of the elevators, which have some understanding with the railroad compa- nies of putting on $2 or $5 a car and then refunding that much or more. I think demurrage is assessed on every car here the moment that it goes beyond the time-demurrage limit that comes consigned to a grain man. In my opinion that same demurrage is not charged to some of the elevators. Further than that, the railroads now, especially the Northwestern, have inaugurated a system that if a car of grain comes in, last night, for instance, they will notify us by telephone that car so and so from Wayne is in here, containing oats, and to give disposition on it before 4 o'clock that afternoon, or they will charge $2 switching for moving it from where it stands at that time. We have no oppor- tunity as commission men to have that car sampled and inspected, or submitted for sale, hence that is an embargo against any commission man or against any of his patrons who may desire to receive the benefit of the market outside of the elevator interests. I think those are about all, except a car I got in the other day from the North- western. I was advised that this switching would be charged after 4 o'clock, and was four minutes to 4 then. I told them, although it was not sold or inspected, to deliver it to the Burlington. In a little while they called up and said the Burlington refused to receive it for the reason that they didn't have a car to which to transfer it. T said : " You are common carriers, are you not ? " They claimed that they were, but they couldn't receive it. They wanted to know what to do. I told them I was up against it, and let it stand pat. Finally they switched the car over. Those are some of the annoyances, some of the embargoes, that are against our market here, and so placed by the railroad companies. To what extent the elevator interests are interested in that, I thought none until I heard the testimony, and when I heard about this payment of a dollar in and getting five when it is put out, or something like that, I thought possibly there may be some money consideration in it for the elevators. I will say that on our exchange there has been a committee appointed to investigate and endeavor to take some action to correct it. I would also state that the elevator people here indorsed our resolution at their last meeting. Commissioner Claek. Have you any evidence of these things which you suspect ? Mr. Jaquith. To what do you refer? Commissioner Clakk. In the way of proving these things that you intimate. Mr. Jaqtjith. I can prove that they do pay these charges. Commissioner Ci-ark. You stated a moment ago that you thought there was some money in it for the elevators when you heard about these switch charges in and out. Mr. Jaquith. I stated that I thought possibly, after hearing the evidence, that there might be something in it. Commissioner Clakk. But you have no proof of that ? 602 GRAIN ELEVATOR INVESTIGATION. Mr. Jaquith. No, sir. I simply made the statement as to why I thought that. Mr. Marble. Do you know whether or not the railway companies regard track buyers and farmers' shipments as disturbers to the rail- ways as well as to the grain dealers ? Mr. Jaquith. I think in the past that has been — that they have been antagonistic to such buyers, but I think conditions are slowly changing for the better. Mr. Marble. What was the reason that they regarded them with disfavor ? Mr. Jaquith. I think a disturbance at any point in the market perhaps caused the revenue of their road to decrease a little- — ^that is, they lost some business when there was a scrap at a competitive point, and line companies not having them, I think very naturally the rail- roads favored line companies. Mr. Marble. I will ask you if you have been engaged in efforts to get freight rates reduced on grain ? Mr. Jaquith. I have several times ; yes, sir. Mr. Marble. You find the elevator men working with you in that effort? Mr. Jaquith. Now, the elevator men would like to see just and equitable rates in Nebraska, especially from these points that are nearer at hand, at our door. We have a more favorable rate to Chicago and Minneapolis, although the distance is greater. They would be glad to join us, but some of them have intimated, in fact have said, that owing to their relations with the railroads they did not care to be leaders in any movement to reduce the rates. Mr. Marble. Your company is known as the Exchange Grain Company ? Mr. Jaquith. Yes, sir. Mr. Marble. Have you ever at any time found yourself boycotted with the exporters? Mr. Jaquith. Well, no. I happened to be in Chicago when there were two gentlemen came from Omaha and made the request to the various elevator companies to boycott everyone except three or four elevators in Omaha,, Mr. Marble. How do you know ? Mr. Jaquith. Because the exporter told me, and he stated it was the intention to include our company in that list. Mr. Marble. Who was the exporter ? Mr. Jaquith. J. Rosenbaum. Mr. Marble. And who were the gentlemen, if you recall ? Mr. Jaquith. Mr. Cowgill and Mr. Updike. Mr. Marble. You don't know of your own knowledge whether or not they had seen Mr. Rosenbaum ? Mr. Jaquith. I do not know. I happened to see them in Chicago at the same time. Mr. Marble. You have only Mr. Rosenbaum's statement as to their speaking to him ? Mr. Jaquith. I know that they ceased bidding almost everyone in Omaha at that time. Mr. Marble. You concur, without calling it out at any length, in the testimony that the line elevator men do not like the scoop shov- elers? You know that of your own experience as a line elevator man? GRAIN ELEVATOR INVESTIGATION. 603 Mr, Jaquith. Yes, sir. Mr. Marble. But you can remember elevator men who started as scoop shovelers? Mr. Jaquith. Yes, sir; I think that all the — practically all the leading dealers of to-day started within twenty years with flat scoop- shovel houses. Mr. Marble. I will ask you if, when you were receiving as manager of a terminal elevator, an allowance of a cent and a quarter, did the railroad expect you to protect its tonnage all along the line and bid a little higher than you otherwise would for grain, in consideration of that allowance? Mr. Jaquith. I think that at the date when I had anything to do with elevation there were certain amounts paid by all roads, and that all roads expected certain protection out on the line. Mr. Marble. That amount was, a large part of the time, a cent and a quarter,. was it not? I do not mean to ask you again if you have answered it. Mr. Jaquith. I do not recall what the amount was ; I think so. Mr. Marble. What is your opinion of the state of the country market in Nebraska at the present time? Do you think the price is competitive that the farmers receive, or that it is fixed, or at least regulated by agreement or otherwise ? Mr. Jaquith. I think that there must be some gentleman's agree- ment to-day, for the reason that I have known of my own knowledge of several points at which they were buying corn and oats on 3 and 4 cents margin and wheat on 6 cents margin; and in my experience in operating an elevator business, I will state that it is practically impossible for the elevators to pay the same price as" they do to-day without some understanding and not have them violated ; that is, not have trouble. Mr. Marble. Do you care to say who, in your opinion, is controlling prices in the country in Nebraska at the present time ? Mr. Jaquith. Well, I would not care to say, owing to the testi- mony that has developed before the Commission to-day. Mr. Marble. With reference to this charge for transferring, I will ask you whether or not grain has been transferred without an allow- ance from market to market? Mr. Jaquith. Relative to this matter of transfer, I would like to make this statement: it has been intimated that elevators will be locked up if they do not receive a cent and a quarter for elevation, or some allowance. I want to say that for twenty-five years — for sixteen years that I know of — that grain has been transferred free at Omaha and Council Bluffs during all that period. I can not see as it makes any difference to the shipper whether the Great Western or the Rock Island or any other road runs that through an elevator and transfers it free of charge or whether they transfer it with a scoop shovel and pay the expense, which they have done, the receiving line or the out line, for the p^st twenty-five years. Commissioner Lane. Sixteen out of twenty-five years, you stated ? Mr. Jaquith. Yes, sir; for sixteen years I know that was abso- lutely the case, and it has not changed one particle only that the Great Western and the Rock Island have built transfer houses. On the Missouri Pacific there has been a little transfer dump built that worked one winter and it is ready to do business yet. The Missouri 604 GRAIN ELEVATOR INVESTIGATION. Pacific made a contract to transfer grain, instead of doing it with a shovel, so that I think all this talk of elevation being necessary — that is, it being necessary to pay an elevation to the grain men is all fool- ishness. A man can have his grain transferred, whether it is the Omaha Elevator Company, the Trans-Mississippi, or the Updike Grain Company, free of cost; and in the payment of any elevator transfer they certainly should not receive anything unless it is on the direct transfer. When they want grain mixed, stored, etc., for their own benefit they ought to pay for it and not have the railroad com- pany pay for it. I also heard in the testimony that the Great Western road would transfer, clean, and store grain free. Now, our company has had a considerable grain transfer to the Great Western and a great deal Ijy shovel transfer. But through the Great Western we found it neces- sary to clean some grain, and for that cleaning in every instance we paid a half cent a bushel. For the mixing and cleaning we pay them a little greater rate. But they simply have performed for our company the transfer free of charge if it went out over their line. For any additional work we had to pay them for such service. Commissioner Clark. How recently have you paid that railroad for cleaning, clipping, or mixing grain ? Mr. Jaquith. I think within two weeks; certainly within four. I heard last night that they put in a tariff — whether it is true or not I don't know — to mix and clean it free. I do not know, however. T haven't seen any such tariff. Commissioner Lane. Supposing all elevator allowances wero cut off, what would be the effect ujjon the Omaha market and upon the railroads ? Mr. Jaquith. I think that, in the main, it would be beneficial to the Omaha market, because it would put every one on an equality. Our best buyers on the floor are not the people who receive the benefit of the allowance. The best buyers all consign grain. I think it would be beneficial when you put every man on an equality. Commissioner Lane. Could the railroads get back their cars and handle grain out in the country unless they had the elevators to do it for them ? Mr. Jaquith. Well, I think they could have an interchange of cars that would answer every purpose. I doubt their ability to get them back into the country inside of a month. Commisioner Lane. You mean to say that it is a mere pretense — that claim that the railroads make ? Mr. Jaquith. No. I think they are short of cars, for if it takes seven days to get a car of wheat from Omaha to Council Bluffs, as it took a little while ago for me, they can't move very much grain. 1 think they are short of motive power, or else they have bad service. Commissioner Lane. That shows the necessity for getting cars back into the country. Mr. Jaquith. That may be true; but they can not get a car back unless they move it where it can be unloaded. I think we need more motive power to move the present crop, and more cars rather than more elevators. Commissioner Clark. Would you say that it would be possible to move a grain crop without the large storage capacity elevators ? GEAIN ELEVATOR INVESTIGATION. 605 Mr. Jaquith. Yes, sir; it might be done. The biggest crops Nebraska ever grew — they had a storage capacity in Omaha and Council Bluffs of probably 3,000,000 bushels. Now their storage capacity is perhaps four or five times that much. With the crop which we have grown this year and with the storage that is already here and will remain here and is built here for that purpose — not for the purpose of receiving elevation — that the grain crop could be handled. Commissioner Clartc. I asked you if you wanted to be understood as saying that it could be handled without the large storage elevators ? Mr. Jaquith. I say that on probably a third of the storage capacity a bigger crop than we have this year was moved. Commissioner Clark. Was the major portion of that crop wheat or corn? Mr. Jaquith. Corn. Commissioner Clark. There is quite a difference in handling a wheat crop and a corn crop, with regard to the necessity for housing it, isn't there? Mr. Jaquith. Practically none, for the reason that the corn crop, very little of it in Nebraska, is marketed in here. Commissioner Clark. Would it be possible to leave a wheat crop exposed to the weather, as you could a corn crop ? Mr. Jaquith. You are speaking of farmers now? Commissioner Clark. It doesn't make any difference whether it is the farmers or yourself. If it lays out doors it will spoil? Mr. Jaquith. Certainly. I did not understand your question. They don't thrash it until they have a place to put it. Mr. Marble. Just one minute. This time when wheat was trans- ferred free, as you say, were the elevators getting a rebate that would be equivalent to an elevator allowance? Mr. Jaquith. Please repeat the question. Mr. Marble. You were speaking of the time when wheat was trans- ferred free at these elevators; was there any other consideration given, do you know? Mr. Jaquith. You mean during those sixteen years that it was transferred for nothing? Mr. Marble. Yes, sir. Mr. Jaquith. It has always been the case, and there was no other consideration given. Well, there were times that the eastern lines were so anxious to do it that they cut the rate, in addition to assuming the cost of elevation. Mr. Marble. But it was cut to the entire public and not to the elevator men alone ? Mr. Jaquith. Ordinarily. In times of rebate I suppose there were some secret cuts. Witness excused. T. D. WoRKALL, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. Where do you live? Mr. Wokeall. Lincoln, Nebr. Mr. Maeble. What is your business ? Mr. WoEEALL. I am engaged in the land business and farming. 606 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Are you in the grain business? Mr. WoRRALL. Not now; I hope to be in a short time. Mr. Marble. You hope to be ? Mr. WoRRALL. Yes. Mr. Marble. Have you been ia the grain business in times past ? Mr. WoRRALL. I have. Mr. Marble. How long since you left the grain business ? Mr. WoRRALL. February of this year, I think it was. Either Feb- ruary or March. Mr. Marble. Why did you leave the grain business ? Mr. WoRRALL. Well, it was not a very profitable business just at that time for me. Mr. Marble. Why not? Mr. WoRRALL. On account of some trouble that we had here among ourselves. Mr. Marble. It had been profitable for you before that ? Mr. WoRRALL. Yes, sir; I started in business in 1896, and I started as a scoop shoVeler. Mr. Marble. But you also afterwards became an elevator man ? Mr. WoRRALL. Yes, sir. Mr. Marble. Did you operate lines of elevators? Mr. WoRRALL. Well, I was a minority stockholder in a corporation that operated a line of elevators. Mr. Marble. And had to do with their management ? Mr. WoRRALL. Yes, sir. Mr. Marble. What was this trouble which made your business unprofitable ? Mr. WoRRALL. Well, it was on account of a combination that was built up in this State, and I helped to build it up. Mr. Marble. Then it got after you ? Mr. WoRRALL. And then it turned around and smote me. Mr. Marble. What was that combination ? Mr. WoRRALL. The Nebraska Grain Dealers' Association. Mr. Marble. Did you help to form that association ? Mr. WoRRALL. No ; I was not one of the original organizers, but I became a member shortly afterwards. Mr. Marble. About when did you become a member ? Mr. WoRRALL. I think it was in 1898; either the fall of 1897 or early in 1898 — I have forgotten which. Mr. Marble. Did you hold any office in that organization ? Mr. WoRRALL. Well, yes and no; I was a member of what was called the governing committee. Yes, that committee was elected by the association. Mr. Marble. What were the duties of that committee ? Mr. WoRRALL. Oh, it had general supervision of the affairs of the association and consulted with the others, and you might say it was an advisory board. Mr. Marble. You have written a book about your experience in that association, haven't you? Mr. WoRRALL. Yes, sir. Mr. Marble. What is. the title of that book? Mr. WoRRALL. "Tom Worrall's Book: The Grain Trust Exposed." Mr. Marble. Are the statements in that book true ? Mr. Woreall. The statements in regard to the operations of the GBAIN -ELEVATOE INVESTIGATION. 607 Nebrask \ Grain Dealers' Association are true. There are some side lemarks in that book that is not the whole truth, although it borders onto the truth, but it isn't absolutely the truth. Mr. Maeble. How did you come to make those errors, Mr. Wor- rall? Mr. WoRRALL. Well, sir, I can't explain that to you. I can not explain how I happened to write it. I just got the idea into my head, and while I was thinking about it got some paper and a pencil and went to work and wrote it. Mr. Marble. The statements made there regarding the coming together of the elevators are substantially similar, are they not, to the testimony that has been given here to-day ? Mr. WoRRALL. Yes, sir. Mr. Maeble. In your book you give a great many instances and circumstances ? Mr. WoRRALL. Yes, sir. Mr. Marble. Giving names and dates and places ? Mr. Woreall. Yes, sir; and those names and dates are accurate. Mr. Marble. Those are all accurate, are they? Mr. Worrall. Yes, sir. Mr. Marble. What was the result to the farmer of the success of the Nebraska Grain Dealers' Association during the time it was suc- cessful and had its way? Mr. Worrall. ,How is that? Mr. Marble. I say, how did your grain dealers' association affect the farmer when you accomplished what you were trying to accomplish? Mr. Worrall. My experience has been that I do not thiak the farmer has been as badly misused as what the papers have said he was and a great many people have tried to make out that he was. Now, as I stated to you when we had a talk, the organization of the Nebraska Grain Dealers' Association was brought about for the pur- pose of getting better weights, better inspections, and to bring about a different condition in the grain trade rather than what were the existing rates at that particular time, and they accomplished a great deal of good, and that was beneficial to the farmer. Now, then, in regard to the making of prices and the prices that have been paid, some gentlemen have sat in this chair and swore that the profits they were getting were 2 cents on corn and 2 cents on oats and 4 cents on wheat. 1 think, with a few exceptions, that that is as much margin, take it as a general rule — now, there are exceptions in all cases— but take it as a general rule, I think that is about as much margin as the dealers took, as a whole; of course there may be exceptions. There might be places where they paid more money, and there might be places where they would have an opportunity to sell that grain to — well, in what we might call the peddlmg trade, in carload lots; it might be sold out West in the mountains m some way or other, or to some feeder in Kansas, or some might be sold in Arkansas or Georgia or Tennessee, where they could make more profit than 2 or 3 cents a bushel; but upon the basis of what the took to figure on I think at the time the price was made it was no more than those have stated who have sat in this chair during these two days of the investigation here. Mr. Marble. Would you say or not that the association encouraged an agreement among dealers, among buyers, as to prices to be paid ? 608 GRAIN ELEVATOE INVESTIGATION. Mr. WoEEALL. How is that ? Mr. Marble. Did or did not the association encourage dealers to combine at country stations and agree upon prices to be paid ? JVIr. WoRRALL. Oh, yes. Mr. Maeble. You practically forced that upon the dealer, didn't you? Mr. WoREALL. In some cases we had to force it; yes, sir. Mr. Maeble. Ijid when you had to, you did? Mr. WoEEALL. Yes, sir. M". Marble. And pooling — was that a policy of the association ? Mr. WoERALL. It was. Mr. Marble. And that also you would force when necessary? Mr. WoRRALL. Yes, sir. Mr. Marble. By "force" you mean of course you did not use physical force upon the man? Mr. WoRRALL. Oh, no. Mr. Marble. But you paid more in the country, and made the man in the market do business at a loss? Mr. Woeeall. Yes, sir. Mr. Marble. And he actually did business at a loss? Mr. Woeeall. Either at a loss, or, if not, he was up against a hard proposition and sold out and retired. Mr. Marble. You were generally successful in this ? Mr. Worrall. Almost always. I will tell yow, a fellow can't stand it forever. Mr. Marble. How did you get into trouble with this association? Mr. Worrall. Well, as I stated, I was the active manager and a minority stockholder in the company which I managed, and I wanted to get iato a business where the large part of the profits, if any, would belong to me instead of to some one else. I thought I knew enough about the business, and I thought that I could do that. So I came here and bought a membership and commenced and organized a little com- pany. I commenced doing business, relying on my own capital, my own intellect, and my own ability for a success or failure, whichever it might be. And as soon as I commenced I took the stand that every farmers' organization that owned and operated an elevator was entitled to just the same treatment that line houses were, or any- body else that was in the business. I took that stand, and I stood there, and it didn't make any difference if it was an organization of farmers — that so long as they had an elevator and had equal facilities for handling grain with others that they were entitled to the same con- sideration as dealers; and that is what brought on my taking this stand, and what brought on these xmpleasant relations between myself and those with whom I was associated for many years. Mr. Marble. That was not the policy that you had taught therm Mr. Worrall. No. But as I said, in politics I am a Democat,? and in religion I am a Congregationalist. Those two time-honored institutions are heartily in favor of the majority ruling. I had cast mj lot with them, and I was willing to let the majority rule, and go with the crowd, whichever way it went. Mr. Marble. Was there anything that occurred in Kansas which helped to persuade you to get out of the business? Mr. Woeeall. Yes; there was, GRAIN ELEVATOR INVESTIGATION. 609 Mr. Marble. What was that? Mr.WoRRALL. The Secretaiy of the Kansas Grain Dealers Asso- ciation got tangled up in fixing up some station accounts down there. He thought he had the pool &ed up, and they had all put up their forfeit to maintain prices and divide grain. They got to thinlcing it over, and two of the parties were well acquainted with the county attorney. They got their heads together one day, and so they went up to his oflice and made a cjean breast of it, and told him what they had done, and the county attorney went to work and had Mr. Smiley arrested. He was bound over to the district court. The district court afiirmed the decision of the attorney, and from there he appealed to the supreme court of the State of Kansas, and the supreme court of Kansas aifii-med the decision of the lower court, and from there he appealed it to the Supreme Court of the United States, and the Supreme Court of the United States affirmed the decision of the Kansas com-t, and Mr. Smiley had to pay his fine and go to jail. Mr. Marble. He went to jail for six months? Mr. Worrall. I don't know whether it was six months or ninety days. Mr. Marble. Three months — I tliink that is right. Mr. Worrall. Well, I thought right at that time that I knew that if they had been violating the law in Kansas that we had been violat- ing it here, and the time to close the doors of the penitentiary would be when we were on the outside, and not wait until we got on the inside; and I wiH confess to you that that was one thing that worried me considerably. Mr. Marble. Well, after you changed and started this company what was the trouble that you had ? You have told us why you had the trouble; now tell us what was the trouble? ilr. Worrall. It originated at Elgin, Nebr. There were some farmers up there that had been seeking a site on the Northwestern road for quite a while and they were not able to get it, and they kept on renewmg their demands for a site, and they were either refused or ignored, I do not know which. A couple of them came down here to close up a contract with the Nye-Snyder-Fowler Company. They told me themselves that they had agreed upon a price for an elevator; that they had had their application in, I tnink, tor a year, or may be more than a year, and that tney could not get any site and they went to work and bought some eroimd adjacent to the right of way and had bought the rock and had shipped in, I think, 6 carloads of stone, and they were going to build the elevator. And when they got the stone there and commenced to tmload them that they got a message from the general manager for, the officers of that farmers' organization — while it was called a farmers' organization, yet the bankers had stock in it, and the merchants had stock in it, and the blacksmith had stock in it, and the diy-goods men had stock in it, and I think two or three school marms had stock in it, and the rest was held by farmers. When they got the rock there then they got a wire from it. Beall to come to Omaha, that he wanted to see them. They came down and he says: "I want you to stay and meet Mr. Fowler, of the Nye- Snyder-Fowler Company, and I think we can fix it up." One of them told me that Fowler came down next day, and he suggested buying S. Doc. 278. 59-2 39 610 GRAIN ELEVATOE INVESTIGATION. their house. He told me how much they paid for t ; I have forgotten, $5,000, $6,000, or $7,000. They were going back in the grain business in a short time, and they wanted to know if I would do business with them, because they said that Mr. Beall told them that they had trouble to dispose of their grain. They were asked why they were going back into the business, and they said because they had a right to. No one could deny that. For one reason — and another one was, they were not getting as much for their grain that they sold there as what they were shipping out to surrounding points, which I knew was a fact, because I knew about the contest that was raging out' there at Albion. And I asked him if they were endeavoring or going to try to run their competitors out, and they said they were not; they were going in business because they had a right to. After we had talked it over for some time, I told them all right, I would do business with them. They went home, and just as soon as Mr. Fowler got the elevator cleaned out and his grain loaded out and turned over to them, they commenced buying, and the first carload of grain — I think it was a carload of oats — that they shipped out they shipped to me; and from that time on I had the disposition and the handling of their grain as long as I was in business, and that is what brought on the row. Mr. Maeble. To get at it briefly, what was done to you? Mr. WoEEALL. I was boycotted. Mr. Maeble. By whom? Mr. WoREALL. By members of the Nebraska Grain Dealers' Associ- ation — not all of them, but some of them. Mr. Marble. By a number? Mr. WoERALL. Yes, sir. Mr. Marble. By "boycotted" you mean what? Mr. WoEEALL. They wouldn't buy the grain that I had to sell at the prices it was worth. They bid me 2 or 3 or 4 cents a. bushel less than it was worth. Mr. Marble. "Would they bid you less than what they were bidding others ? Mr. WoRRALL. I don't know in regard to that. Yes, they would, too. They would bid me less than they would others. Mr. Marble. Did it have any effect on the consignments to you? Mr. WoREALL. Well, I don't think it did right then, right on the start, but it did later on. Mr. Marble. So that you were boycotted in selling and also in your receiving end of your business ? Mr. WoREALL. Yes, sir. Mr. Marble. To sum it up, what effect did that have upon your business ? Mr. Worrall. It was a great loss to us. Mr. Marble. Did it not ruin your business ? Mr. Worrall. Yes, sir; practically it did. Mr. Marble. What did you do about that? Did you bring a suit« Mr. Woeeall. Yes, sir. Mr. Marble. Against whom? Mr. WoERALL. Forty-five or forty-six different elevator institu- tions and the Nebraska Grain Dealers' Association. Mr. Maeble. When was that suit brought? Mr. Woerall. Oh the 17th day of June, 1905. That was the date it was filed. GRAIN ELEVATOR INVESTIGATION. 611 Mr. Marble. Is it now pending? Mr. WoRRALL. It is not. Well, yes, it is, too. Come to think about it, I guess it is pending, but it has been settled but never been dismissed. Mr. Marble. Have you signed a stipulation for its dismissal? Mr. WoRRALL. Yes, sir. Mr. Marble. To whom did you give that stipulation? Mr. WoRRALL. That was given to Mr. Hill, who was attorney for several of the companies. Mr. Marble. "Wny did you sign the stipulation for its dismissal? Mr. WoRRALL. Because we settled the case. Mr. Marble. Did you receive compensation for disnaissing it? Mr. WoRRALL. Yes, sir. Mr. Marble. How much did you receive? Mr. WoRRALL. Well, now, Mr. Marble, I don't know — I will answer it if you want me to. I was asked not to say what it was. Commissioner Lane. We won't insist upon the answer. ;Mr. WoRRALL. And I want to act fairly. I have never told any- one. I want to tote fair. Mr. Marble. I want to say that I received news of the settlement from a gentleman in Chicago, who was, I think, engaged in the settle- ment, and he told me this story, and I didn't get it from Mr. Worrall, and I simply say these things to tote fair in that respect; but the compensation was substantial — I will ask you that? Mr. Worrall. Well, partially so. There were two reasons why I settled. One was it was a bitter contest, and the other was if I had continued it along for a year or two I would have been broke flatter than a pancake ; and I had sense enough to know when I was well off. Mr. Marble. You spoke about going into the grain business again? Mr. Worrall. Yes, sir. Mr. Marble. Do you regard the conditions as such now that you will have a fair field? Mr. Worrall. There is a whole lot of evils I hope will be remedied in the near future. Mr. Marble. But you think you can survive, of course? Mr. Worrall. Yes, sir; all I want is an equal footing and a fair show with the other fellow. There has been a great deal said about terminal charges and other charges. I want to see them all cut off; put every man on the same conamon level. Mr. Marble. I will ask you if you ever owned an elevator and did elevation of grain for the Union Pacific Railroad? Mr. Worrall. We owned a little flat over in Council Bluffs. Mr. Marble. When was that ? Mr Worrall. We operated that right along up until — let me see. We sold that along some time in last December or January, I have forgotten which. Mr. Marble. Did you receive compensation for — an elevator allowance from the Union Pacific ? Mr. Worrall. No, sir. Mr. Marble. Did you attempt to collect it ? Mr. Worrall. Well, we have presented our claims to the Union Pacific Railroad Company, but they won't pay them. I took the stand that as long as we rendered the same service that the Omaha 612 GEAIlir ELEVATOR INVESTIGATION. Elevator Company and the Trans-Mississippi Elevator Company did, that we were entitled to the same compensation, which was a cent and a quarter a hundred, but they refused to pay it. Mr. Makble. That was before this tariff which they have published, extending it to others, was issued? Mr. WoERALL. Yes, sir. Mr. Marble. That is all. (Witness excused.) J. G. Goings, called as a witness, having been duly sworn, testified as follows: Mr. Marble. Where do you reside? Mr. Goings. Minden, Nebr. Mr. Marble. You are interested in the elevator business? Mr. Goings. Yes, sir. Mr. Marble. In what elevator business ? Mr. Goings. The Farmers' Cooperative Shipping Association; two local elevators at Minden and Norman. Mr. Marble. Does that associaton have other elevators other than those two? Mr. Goings. Those two that I have mentioned do not belong to that association. The Farmers' Cooperative Shipping Association has 38 elevators. Mr. Marble. Where are they situated ? Mr. Goings. They are situated — ^well, I couldn't give you each point. Mr. Marble. I mean generally. Mr. Goings. In Kansas, but reaching south to Billings, Okla., and north to Rising City, Nebr. Mr. Marble. And their office is in Kansas City, Mo. ? Mr. Goings. Yes, sir. The head office. Mr. Marble. Mr. Fritz Inglehart is their manager now? Mr. Goings. Yes, sir. Mr. Marble. Are you familiar with the Kansas end of that busi- ness? Mr. Goings. Fairly so; yes, sir. Mr. Marble. Do you know whether those elevators — those farmers' elevators have entered into a pooling arrangement with their competitors, or any of them? Mr. Goings. They have not. Mr. Marble. Are you sure of that? Mr. Goings. I think I am. Mr. Marble. Are you sure that you think you are sure? Mr. Goings. As I understand the pooling, you mean agreeing on the prices — pooling the market? Mr. Marble. I will ask you if they concede a certain portion of the grain to their competitors and do not attempt to buy that portion ? ]V&. Goings. No, sir. Mr. Marble. Do they concede that they are entitled only to a certain pro rata, and stop active competition when they get that pro rata? Mr. Goings. Yes, sir. Mr. Marble. They do? Mr. Goings. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 613 Mr. Marble. And if the competitor should raise his price a little to get more grain, they would not raise to meet him ? Mr. Goings. They would not. Mr. Marble. But they haven't entered into any formal agreement to do that sort of thing? Mr. Goings. No, sir. That is, they haven't entered into any pool. We realize that it is a business where each one should buy his pro rata, and when we try to buy more than that, we, of course, always create a fight, which is a loss to ourselves, the farmers' company, and the other parties. Mr. Marble. Are not farmers' companies generally organized espe- cially to provoke just such fights and keep them constantly going? Mr. Goings. Yes, sir. Mr. Marble. That is the object of farmers' companies? Mr. Goings. Yes, sir. Mr. Marble. But you have a different policy? Mr. Goings, Yes, sir. Mr. Marble. Will you tell us why? Mr. Goings. Yes. Mr. Marble. In your own way? Mr. Goings. We have 38 elevators, which the stock now sold amounts to about $130,000. We have money borrowed, secured by the farmers and the directors, to the amount of about $125,000. The expense of operating elevators, approximately — I ought to have the figures Mr. Marble. Speak generally. Mr. Goings. They are so large that I can not speak exactly. It would run in the neighborhood of $175 a day, and with our years of experience, and the loss that the company has incurred right along, showed the management that to buy gram as a strictly competitive business simply meant to wreck the company and lose the property and the stockholders' money that they put out. Mr. Marble. Did you have what was called a penalty clause? Mr. Goings. No, sir. Mr. Marble. And you considered putting that in? Mr. Goings. I think it was talked of. Mr. Marble. Tell us why you didn't put that in? Mr. Goings. Because it was contrary to the Sherman anti-trust law, Mr. Marble. Would you state that if you had not considered it unlawful that it would have been a device to meet this condition? Mr. Goings. I think, possibly, that it would have gone in if we had not considered it illegal. Mr. Marble. This condition that you describe is the reason for putting that clause in the by-laws of farmers' elevators associations? Mr. Goings. Yes, sir. Mr. Marble. Who was the manager of your company the first year? Mr. Goings. C. B. Hoffman. Mr. Marble. And who after that? Mr. Goings. Fritz Inglehard. Mr. Marble. And this first manager — ^he operated at a loss ? Mr. Goings. Yes, sir. Mr. Marble. I thought he made a very good profit the first year. Am I misinformed? 614 GRAIN ELEVATOR INVESTIGATION. Mr. Goings. No, sir. But he operated at a loss during the time he operated the company. The first year he made money; the second year he lost money. Mr. Marble. Did he operate competitively the first year? Mr. Goings. Why, practically so ; yes, sir. Mr. Marble. How do you explain the fact that he, operating com- petitively, made a profit and aftenvards lost money? Mr. Goings. For the simple reason that the first year the company was running the people or the sellers of grain at different points would sell to the company in many instances for 2 or .3 or 4 cents a bushel less than the competitors would pay for the grain, or, in other words, they didn't pay any particular attention to the competitor who was buying against them. A certain number who had stock in the elevator would sell regardless of the competitors' prices, and he was able to buy grain much cheaper than they were. Mr. Marble. It was a sort of devotion to the new elevator? Mr. Goings. Yes, sir. Whatever you might call it. j\Ir. Marble. What do you say about the farmers' elevators — have they been an advantage to the farmers generally? I do not mean just the stockholders only, but the marketing farmers ? ]\Ir. Goings. Yes, sir; I think the fanners have possibly got back more money in the way of price than they have lost in operating the elevators. Mr. Marble. You are speaking of the stockholders only? Mr. Goings. Taking them generally. All classes of fanners' ele- vators. But yet that is very hard to figure, in my judgment, because when you come to count the days and the weeks that the fanners would lose in organizing and selling stock and building elevators and J)utting up the elevators — if you figure that as time spent and charge or it, it is very questionable whether they have gained a cent by the movement in the three years, in my judgment. Mr. Marble. Those are items that the regular elevator man would have to pay for ? Mr. Goings. Yes, sir. Mr. Marble. Perhaps they are willingly given by those who per- form this service? Mr. Goings. My experience has been in the farmers' elevator busi- ness, both locally and in the Farmers' Co-operative Shipping Associa- tion, that five or six men of each station will probably stand all the burden — that is, they do all the canvassing and all the work, and, if necessary, put up usually all the money to operate it, and stand all the loss, if one occurs. Mr. Marble. About what do you say it costs to operate a country elevator, of, say, 20,000 bushels capacity — that is a normal size ele- vator, isn't it? Mr. Goings. The capacity doesn't cut so much difference with the expense. The condition of the location of the elevator and the amount of grain bought and handled represent the expense at an elevator. Mr. Marble. Take these twenty-five or thirty elevators of your company. What is the average cost of operation, would you say? Mr. Goings. About $125 a month. Mr. Marble. Each? Mr. Goings. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 615 Mr. Marble. Wtat do you consider a fair profit for elevators to make — country elevators — from your experience in. the business ? Mr. Goings. Take the four years we have operated the elevators — we have figured, as close as we could, how close we would dare to go to the market and still not lose money; and, as close as we can figure, that the ordinary elevator, where they will buy about 150 cars in a sea- son, we can buy that grain for about 1 cent a bushel. Now, our state- ment showed on the amount of grain handled — the difference between what we bought and paid for it, and what we sold and got for it, was eighty-six one-hundredths of 1 per cent. We figured that it costs about 1 cent a bushel to s6ll the grain; and whenever we are com- {)elled to go closer than 2 J cents to 2f cents and 3 cents we do it at a oss; and some of our stations show that it has actually cost us this year 2 cents a bushel to buy the grain, to say nothing about anything further. These are extreme cases, where there are more elevators in a town than there is grain to support. Mr. Marble. Does what you say apply to wheat, corn, and oats, or simply to wheat? Mr. Goings. Yes, sir; to wheat. Mr. Marble. Simply to wheat ? Mr. Goings. Yes, sir. Mr. Marble. Now, as to corn? Mr. Goings. As to com, we can not handle com at a cent without a loss, or a cent and a half. Mr. "Marble. And oats? Mr. Goings. Oats about the same as com. Mr. Marble. Do coxmtry merchants welcome farmers' elevators? Mr. Goings. How is that? Mr. Marble. Do country merchants welcome farmers' elevators, or is there a prejudice against them there? Mr. Goings. No; I would say not. Mr. Marble. You say that there isn't a prejudice? Mr. Goings. Yes, sir. Mr. Marble. Do you have any trouble marketing your grain? Mr. Goings. No, sir. Mr. Marble. Speaking of all these elevators? Mr. Goings. No, sir. Mr. Marble. Do you think they get as good prices as the other line elevators? Mr. Goings. No, sir. Mr. Marble. Why not ? Mr. Goings. Simply because we haven't the facilities to handle the grain as a line elevator. We have just as good facilities up to a broker's standpoint. We could get all it is worth on the market; but, of course, we sell it to millers and to buyers in Kansas City or Omaha, or wherever we are on the market, and after it goes into the terminal elevators, mixing houses, in large quantities, I know nothing about that. There is no discrimination, so far as selling on the fioor is concerned, to buyers in carload lots. Mr. Marble. Why don't you build a terminal elevator? Mr. Goings. Lack of finances. Mr. Marble. Do you think it would be a profitable addition to your plants? Mr. Goings. I think so; yes, sir. 616 GRAIN ELEVATOE INVESTIGATION. Mr. Marble. Do the farmers' elevators have a quarrel with the scoop shovelers? Mr. Goings. We will quarrel with them if we get mixed up against them. Mr. Marble. Do the scoop shovelers come in at those stations where you have these line elevators ? Mr. Goings. I don't believe where we continue to do business. We have ceased doing business at some stations where we had some stock, and they have started scoop-shovel houses afterwards. Mr. Marble. That is all. Commissioner Clark. You imagine, from your experience, that in some cases the farmers build elevators where they necessarily run at a loss, because of there being more elevators than there is grain to justify? Mr. Goings. Yes, sir. My experience is that there are more elevators at many places than necessary, that only handle 100 to 150 cars of grain eacn, and it costs to buy the grain from 1 cent to IJ cents a bushel, while if there were less elevators there, they could handle the grain just as well and just as satisfactorily to the farmer and for less expense to themselves, and be able to make more money and pay more money for the grain. Commissioner Lane. Doesn't the presence of the farmers' eleva- tors raise the price of grain ? Mr. Goings. Not always. Commissioner Lane. Generally? Mr. Goings. No, sir; I think not — only in this way: the farmers, as a rule, do not pay as much for grain as the other fellows pay at the station where they are located. Commissioner Lane. The testimony has been — it has been stated by farmers' elevator men or men who were running farmers' elevators that it did increase the price. Mr. Goings. Yes; that is true. Maybe I misunderstood your question. They forced the other people to pay more than they would ii they weren't there; (but you asked me if the farmers didn't pay more. Commissioner Lane. No. I meant was not the price raised by the presence of the farmers' elevators. Mr. Goings. Then I misunderstood your question. Commissioner Lane. That is all. (Witness excused.) Mr. Marble. I think we can close. I have other witnesses. Commissioner Lane. But they are along the same general lines. Mr. Marble. Yes. Mr. Fowler is here. , Commissioner Clark. Does Mr. Fowler want to make any state- ment? Commissioner Lane. Any complaint that he has to make against the railroads? Mr. Marble. Is there any testimony that you desire to give or any statement, Mr. Fowler ? Mr. Fowler. Why, I thought I did, but if I did it would be rather exhaustive, and I do not thmk you want to take that much time now. It would be generally in line with the testimony that has GEAIN ELEVATOB INVESTIGATION. 617 been given here and perhaps a denial of several things in which the Nye-Snyder Company has been mentioned; but I do not think it is material. Probably it would be of a general nature, and you would not want to take the time to hear it. Commissioner Lane. All right. This hearing will stand adjourned. (At 5 o'clock p. m, the Commission adjourned.) Des Moines, Iowa, October 26, 1906^10 a. m. Present: Commissioners Lane and Clark. Commissioner Lane. Gentlemen, you are familiar with our pur- pose here. The Senate of the United States on June 25 last adopted the following resolution: Resolved by the Senate, That the Interstate Commerce Commission is hereby (iirected to make a thorough investigation of the elevator and grain buying and forwarding business of this country to determine to what extent special favors have been granted to them by railroad companies; the influence which the alleged monopolizing of this branch of business has had upon the market; the injury it has worked to the grain producers; the extent to which the railroads, their officers, directors, stockholders, and employees own or control the grain-buying and grain-forwarding companies, and the manner in which these railroads, their officers, directors, stockholders, and employees secured holdings, if any, in these grain buying, storing, and forwarding companies, and to report the same to the Congress at its next session. Pursuant to this resolution, the Commission has been holding ses- sions in various parts of the country and at the request of various residents of Iowa has come here to continue its investigations. Mr. John H. Marble acts as attorney for the Commission. You may call yoin- first witness, Mr. Marble. Mr. Marble. I will call Mr. Hiland. J. H. HiiiAND, called as a. witness, being duly sworn, testified as follows : Mr. Marble. You are an official of the Chicago, Milwaukee and St. Paul JKailway Company, are you? Mr. Hiland. I am. Ml . Marble. What office do you hold ? Mr. Hiland. Third vice-president in charge of traffic. Mr. Marble. Are you familiar with the relationship of your road to the Simonds-Shields Grain Company at Kansas City and to Mr. Shields of that company? Mr. Hiland. Yes, sir. Mr. Marble. Mr. Shields' employment was made by you for that company? Mr. Hiland. Yes, sir. Mr. Marble. And the leasing of certain tanks connected with your elevator at Kansas City was made by you ? Mr. Hiland'. Yes, sir. ' Mr. Marble. And you are entirely familiar with all of that trans- action? Mr. Hiland. I am. Mr. Marble. What is Mr. Shields' employment? What are his duties ? 618 GRAIN ELEVATOR INVESTIGATION. Mr. HiLAND. His duties are the general supervision and manage- ment of the elevator at Kansas City in the conduct of the business; the handling of it and the general executive duties that are required in the management of — the same as any elevator built for that pur- pose and used for the purposes for which the Kansas City elevator was built. I could not go into details and explain just what he should do. He is an elevator man and is familiar with the requirements of the general duties that are performed by an elevator owner or manager. Mr. Marble. Did you have any written contract of employment with him? Mr. HiLAND. For employment? Mr. Marble. Yes. Mr. HiLAND. No. Mr. Marble. Were his duties set forth at all in writing? Mr. HiLAND. No, sir. Mr. Marble. Were they any more specifically understood between Mr. Shields and yourself than you have stated here? Mr. HiLAND. No, sir. Mr. Marble. Simply stated in that general way? Mr. HiLAND. Yes. Mr. Marble. When was that contract of employment entered into ? Mr. HiLAND. Well, speaking from memory now, I think it was understood from the 1st day of July; but the records of the company will indicate quite clearly and will be furnished so as to make the answer positive and complete. Mr. Marble. Mr. Shields is to receive $250 per month, is he not? Mr. HiLAND. He is. Mr. Marble. Does that compensation in any way depend upon the amount of the business done through the elevator. Mr. HiLAND. It has no relation whatever. Mr. Marble. Or the amount of business secured by Mr. Shields ? Mr. HiLAND. No relation whatever. Mr. Marble. Are there any circumstances or conditions whatever that can vary that compensation according to your contract ? Mr. HiLAND. None whatever. Mr. Marble. It is a flat compensation ? Mr. HiLAND. Absolutely. Mr. Marble. Prior to that employment Mr. Shields's company was the lessee of that elevator, was it not ? Mr. HiLAND. He was — not Mr. Shields ? Mr. Marble. No ; the company, I say. Mr. HiLAND. Yes, sir. Mr. Marble. The Simonds-Shields Company? Mr. HiLAND. Yes, sir. Mr. Marble. And your railroad paid them an elevation allowance of a cent and a quarter per hundred pounds up to the time of this employment. Is that right ? Mr. HiLAND. That is right. Mr. Marble. Is it or not true that on or about July 1 you abol- ished that allowance, and in order to make Mr. Shields good on pur- chases of grain which he had made, expecting that allowance to con- tinue, that you entered into this contract ? Mr. HiLAND. No; that was not the reason. The reason the con- GEAIN ELEVATOE INVESTIGATION. 619 tract was entered into ia because the methods formerly adopted were changed by all the railroads and it was thought inadvisable to have a firm or individual operate the elevator, and all of the companies in Kansas City decided, as I understand it, that they would run their own elevators, we among the others. There was no arrangement, how- ever, nor any compact in any way among the different railroads or elevators, as between the elevators and the railroads; but the law department of the Milwaukee and St. Paul Eailroad thought it would be better to make that change to conform with the requirements of the law than to have the elevator run as it had been run previously. ]\Ir. Marble. But what I am getting at is this: having deter- mined that the old arrangement was inadvisable, is it or is it not true that you considered that your road was under an obligation to Mr. Shields and his company because of their having bought grain, expect- ing to make the elevation allowance upon it, and that this contract of employment and the lease made in connection with it was made as a substitute for that old engagement, and a protection for Mr. Shields in the purchases he had made ? Mr. HiLAND. Not in the slightest, ^he change was made without any regard whatever for the past or for the future. It was made because the Milwaukee and St. Paul Railroad was advised by its law department that that method of conducting the business would come nearer a compliance with the law — closer compliance — and would be more satisfactory than the old arrangement. There was no lap over in any way whatever — nothing previous or in the future that was contemplated in the lease of that elevator to the Simonds-Shields Grain Company. Mr. Marble. And you would 'say that if Mr. Shields testified in Kansas City that his firm had bought a large quantity of grain expect- ing to earn the elevation allowance upon it, and that this change came suddenly and unexpectedly and caught him with that grain, and if the testimony shows that he further said that of course he had to be taken care of in that respect, or words equivalent to that, that you had no such understanding? Mr. HiLAND. I had no such understanding whatever. Mr. Marble. And Mr. Shields understanding, if he so testified — and it is my memory that he did so testify — is at variance with your understanding of the situation and the contract from your side ? You so testify now? Mr. Hiland. Yes, sir. Mr. Marble. Mr. Shields is now engaged in the grain business? Mr. Hiland. He is — pardon me, 1V&. Shields is a member of the Simonds-Shields Grain Company, and the Simonds-Shields Grain Company are engaged in the grain business. Mr. Marble. And Mr. Shields is the active manager of that com- pany, is he not? Mr. Hiland. Well, so far as I know, he is; yes, sir. Mr. Marble. And carries on this employment for your railroad coincidentally with his conduct of the business of that company? Mr. Hiland. Yes, sir. Mr. Marble. Do you know what proportion of the grain passing through that elevator since this new employment belongs to the Simonds-Shields Company? Mr. Hiland. No, I do not. 620 GRAIN ELEVATOB INVESTIGATION". Mr. Marble. Have you informed yourself on that point? Mr. HiLAND. I have not informed myself, but I can give you a very fair estimate. Mr. Marble. I wish you would do so, please. Mr. HiLAND. Oh, 75 to 90 per cent, I should say. Perhaps it exceeds that. • _ Mr. Marble. A very great proportion is theirs? Mr. HiLAND. Oh, yes. Mr. Marble. Mr. Shields has a pass on your railroad as an em- ployee ? Mr. HiLAND. He has. Mr. Marble. Do you know whether or not he uses that pass in the conduct of the business of the Simonds-Shields Grain Company? Mr. HiLAND. I do not. Mr. Marble. Have you inquired into that? Mr. HiLAND. I have not. Commissioner Lane. Where is the office of Mr. Shields as the ele- vator agent of your company ? Mr. HiLAND. I beg your pardon? Commissioner Lane. Where is the office of the elevator agent of your company? Mr. HiLAND. The office of the elevator agent is in the Board of Trade Building at Kansas City. I never have been there myself, but I authorized the lease of the rooms that are occupied in the Board of Trade Building. Commissioner Lane. Mr. Shields's testimony was that his office as elevator agent for your railroad was in the same room as his office for the Simonds-Shields Company. Mr. HiLAND. Well, that may be true. There is a lease, however. Whether it has been executed or not yet, I am not quite certain, but the instructions were given to lease a room in the Board of Trade Building at Kansas City. , The location of that office I am not famil- iar with, but the rental has been agreed to. It. is to be entirely sepa- rate and distinct from Mr. Shields s office, but it is possible that the change has not been made as yet. Mr. Marble. Who pays the employees of the elevators for their services ? Mr. HiLAND. The Chicago, Milwaukee and St. Paul Railway. Mr. Marble. Are they paid by the Simoiids-Shields Company, and then the amount made good by the Chicago, Milwaukee and St. Paul Railwaj^, or are they paid directly by your road ? Mr. HiLAND. The first month, I think, or two, possibly, the Simonds- Shields Grain Company paid the employees and were reimbursed, or at least we agreed to reimburse them; but before they were reim- bursed the books of the Simonds-Shields Grain Company were exam- ined and the employees who they alleged had been in their employ in the conduct of the elevator business and for which we were responsible were checked over, and so far as they could be obtained the receipts paid those employees and the names given. As soon as the records could be made they were registered on our books just the same as any other employee,, and the usual form of receipts are taken and the usual form of payments are or will be made; whether they have as yet gone on the regular pay roll I am unable to state. 6EAIN ELEVATOE INVESTIGATION. 621 Mr. Maeble. Are those employees at all joint employees of your railroad and of the Simonds-Shields Company? Mr. HiLAND. There may be some of the clerks, possibly, who are employed. Mr. Marble. They working in this common office? Mr. HiLAND. No; there is no common office. The office of the Milwaukee and St. Paul Railroad is separate and distinct. Now, when they are performing their duties for the Milwaukee and St. Paul Railroad, I presume they are employed where the books are kept in the separate office. They may, however, at times, when they are not busy be employed by the Simonds-Shields Grain Company, and whether th^ perform those duties in the Simonds-Shields Grain Company office or in our office I am not posted. Mr. Marble. Do you know whether or, as a matter of fact, the number given for Mr. Shields, the grain agent's office, is exactly the same room of the same building, without any distinction whatever, as the number given for the office of the Simonds-Shields Grain Com- pany? Mr. HiLAND. As a matter of fact, I do not. Mr. Marble. You do not know? Mr. HiLAND. I do not. Mr. Marble. You do not know that there is a separate office, then ? Mr. HiLAND. I know we have a lease of a separate room. Now, as to whether we have got the possession of the office or not I do not know. Mr. Marble. Do you know whether or not a Mr. Winton is employed both by your railroad and by the Simonds-Shields Grain Company and works practically as Mr. Shields does, not working at one time for your company and at another time for the Simonds- Shields Company, but carrying on the two employments contempora- neously from day to day and not going to a different place to exercise those emplojnnents ? Mr. HiLAND. Well, now, I will answer that directly, and if you will permit me I would like to qualify it. I do not know whether Mr. Winton is employed by the Milwaukee and St. Paul Railroad or by the Simonds-Shields Grain Company. Now, let me explain to you the installation of the agency oi the Milwaukee and St. Paul Rail- road at Kansas City. Mr. Shields is employed as its manager. The number of clerks was figured out as to the requirements, and the sala- ries of the clerks was fixed by myself. Mr. Shields submitted a list of clerks, and I believe Mr. Winton was among that list. I would not swear to it. I. would not want to say it positively; but' the salaries that Mr. Shields had fixed for the various duties that were to be per- formed were in excess of the salaries that I would permit, and I said, "If you desire to retain these employees, so far as our company is con- cerned, we will not exceed the salaries that we pay for similar service in other localities," and each employee in the office was fixed upon a certain salary. Now, as to the names of the individuals, it does not concern me whatever. I do not know whether they are joint em- ployees or whether they are not. We certainly should not object if they were paid by Mr. Shields for work that they could perform when not engaged in our service, if they had sufficient time. Mr. Marble. The employees of the elevator and the clerks relating 622 GRAIN ELEVATOR INVESTIGATION. thereto were continued — the same persons — after this arrangement as had been employed before. Is that right, so far as you know? Mr. HiLAND. Well, now, I think — if you have followed my expla- nation — that the employees under Mr. Shields is a matter that I certainly could not and would not be concerned in. Mr. Marble. You did not concern yourself about that ? Mr. HiLAND. Why, certainly not. I concerned myself with the appropriation that was necessary for the conduct of that elevator. The individuals who are employed under Mr. Shields do not concern the third vice-president of the Milwaukee and St. Paul "Railroad so long as they are honest and faithful in the performance of their duties. That is a matter Mr. Shields is held responsible for. Mr. Marble. What I am trying to find out is whether the third vice-president of the Milwaukee and St. Paul Railroad knows whether they are honest and faithful in the discharge of their duties. I will ask you this: is it or not a fact that when Mr. Shields brought his pay roll to you — I may be summing up just what you have said — you said the wages paid are too high and we will only pay a certain amount, and if your firm wants these people to continue at the wages they have had, you can pay the excess? Mr. HiLAND. I may or may not have said that. I do not remem- ber, but it is likely I would say it if asked. Mr. Marble. And is not that the arrangement? Mr. HiLAND. There is no arrangement about it other than that we have allowed Mr. Shields to pay certain salaries for certain duties. Now, there is no arrangement with Mr. Shields for any individual beyond what I have stated. There is no objection, as I have stated, to Mr. Shields paying any excess, and I may have said that to Mr. Shields. I probably did say it to him; but that was not a matter that was regarded as of any importance whatever, and therefore it need not be wondered that I did not charge my memory with a trivial matter of that kind. Mr. Marble. Now, then, did you stipulate that these employees should devote their first attention exclusively to the business of the Chicago, Milwaukee and St. Paul Railroad, paying attention to the business of the Simonds-Shields Company only after your business had been attended to? Mr. HiLAND. I did not, and I presume- or did presume Mr. Shields is employed for that purpose. I am not running the Kansas City elevator in details of that kind any more than I am running the local freight office at any point on the Milwaukee and St. Paul Railroad, or any other local office. Mr. Marble. Have you at any other point on your system an arrangement by which you pay a portion of the salaries of the employ- ees of a shipper and without a stipulation directly by yourself as to your command over them? Mr. HiLAND. I do not remember any. Mr. Marble. You have no such arrangement elsewhere? Mr. HiLAND. I do not recall any; no, sir. Mr. Marbli;. Take the employees at the elevator. Do the employ- ees of the Chicago, Milwaukee and St. Paul Railroad take any care of these tile tanks? Mr. HiLAND. Well, now, I could not answer that, because I do not know there is any care necessary to be taken. GRAIN ELEVATOR INVESTIGATIOlir. 623 Mr. Marble. Do you loiow, as a matter of fact, whether or not these leased tanks and all the work connected with them are in charge of employees of the Chicago, Milwaukee and St. Paul Railroad ? Mr. HiLAND. The leased tanks ? Mr. Marble. The leased tanks; the tanks you lease to the Simonds- Shields Company. Mr. HiLAND. Now, I do not know that. Mr. Marble. You have not inquired ? Mr. Hlland. No, sir. Mr. Marble. Nor stipulated ? Mr. HiLAND. No, sir. Mr. Marble. Do you know the rental value of those tanks? Mr. HiLAND, The rental value ? Mr. Marble. The rental value. Not what you are getting. Do you know what you should get ? Mr. HiLAND. Yes, I know what we ought to get — no, not what we ought to get; we get all we can. Perhaps that is the best .way way to put the answer to that. Mr. Marble. Will you swear that you get aU you can ? Mr. HiLAND. Well, I do not know. That would cover a pretty wide range. Mr. Marble. Well, wiU you swear that you made an effort by consulting others than Mr. Shields or the Simonds-Shields Company to see whether or not others wotdd pay you more rental than that company pays ? Mr. HiLAND. No. Now, if you want to know the basis on which I really did arrive at that rental, I would be very glad to answer it that way. Mr. Marble. I would be very glad to have you explain that in your own way. Mr. HiLAND. When it came to a question of renting the elevator or the tanks to the Simonds-Shields Grain Company, the rental was fixed on the unit of the elevators leased last year, takmg the maximum capacity as the unit of rental. The maximum price that we are getting now for elevators in other markets is $5,000 per amium. The maximum capacity is one million some hundred thousand bushek. Therefore, in round numbers, we fixed the price or rental value of the Kansas City elevator on that basis, throwmg off fractions, making it approximately on that percentage or ratio, and that is the way that I arrived at that rental. The rental, however, and the price fixed was demurred at as being excessive and to a large extent prob- lematical on the part of the lessee at the time the lease was made. Mr. Marble. At what other points — do you mean by leases at other points — do you mean similar leases made by your company? Mr. HiLAND. Yes, sir. Mr. Marble. At what other points does your company lease elevators ? Mr. HiLAND. We lease elevators at Milwaukee. Mr. Marble. To whom ? Mr. HiLAND. We lease one elevator to the Milwaukee Elevator Company; I think that is the corporate title. We lease another elevator to Fagg & Taylor. Mr. Marble. You do not lease any elevators at Chicago to the Armour Grain Company ? 624 GRAIN ELEVATOR INVESTIGATION. Mr. HiLAND. We have none. Mr. Marble. Do you know about the prices paid by the Armour Grain Company for elevators at Chicago to the roads they lease from? Mr. Hiland. I do not. Let me correct my other testimony there by adding what I recall now as elevators at other places. We lease an elevator at Prairie du Chien, Wis., to the Hunting Elevator Com- pany — I think that is the name. We lease an elevator at La Crosse, Wis., to the S. Y. Hyde Elevator Company. I may not get the cor- porate titles exactly right. That is all I recall now. We may have some other leases. However, all our leases are on file with the Inter- state Commerce Commission in Washington, so that if there are any others they are accessible. Mr. Marble. You say you do not know about the prices paid by the Armour Grain Company to railroads for elevators in the city of Chicago? Mr. Hiland. I do not. Mr. Marble. Nor what the capacity of those elevators is com- pared with yours at Kansas City? Mr. Hiland. I do not. Mr. Marble. You do not know that the Armour Grain Company pays $14,000 for elevators at Chicago? Mr. Hiland. I do not. Mr. Marble. I will ask you how the prices of these other elevators were fixed. Were they fixed by competitive bidding on the part of lessees? Mr. Hiland. Well, I inherited the lease on those elevators and I have been connected with the company a good while. Mr. Marble. Those leases were made a good while ago? Mr. Hiland. They were made a good while ago and since I have had anything to do with the leases or renewals there has been no change. There have been two renewals of those leases, one recently to the Hunting Elevator Company, at the same compensation that was paid prior to the expiration, and about three years ago to the S. Y. Hyde Elevator Company, and my recollection is that that too was leased for the same compensation previously paid. Mr. Marble. How long nave you oeen acquainted with these leases ? Mr. Hiland. Well, I have been acquainted with the leases — I have had knowledge of the leases for a great many years, but I have not been in direct charge. Mr. Marble. I will ask you how many years, to your knowledge, these leases have been in existence at these present prices ? Mr. Hiland. Oh, four or five years; I will say that — six or five years. IVIr. Marble. Any longer than that? Mr. Hiland, Well, I guess they have been, but I do not know how much longer. To be definite with you, I will give you a five-year period that I can absolutely testify to. Mr. Marble. I will ask you this question: do you know whether or not. these leases, or any of them, date back to the bad old days when railroad companies gave rebates to elevator men and special favors and considerations? Mr. Hiland. The bad old days? GBAIN ELEVATOR INVESTIGATION. 625 Mr. Marble. I am simply using a phrase used by railroad men to me. Mr. HiLAND. Well, those leases, without being held down to the strict wording, were in existence prior to the passage of any Federal law regarding the sujiervision of railroad transportation. Mr. Marble. I thmk that is a sufficient answer to my question, is it not? 'Mr. HiLAND. Well, I want to answer you. I want to give you all that you need and all that you require of me. I have nothing to conceal. Mr. Marble. I was not intimating that you had concealed any- thing in that answer. I took it as being complete. Mr. HiLAND. I want to give you all the information as concisely and comprehensively as I am capable of doing. Mr. Marble. I will ask you this: have you, as to any of these leases, instituted any inquiries or had any competitive bidding to determine whether or not the rental paid is equal to the rental value of the properties ? Mr. HiLAND. No. Mr. Marble. And the lease at Kansas City had only these leases for a standard — that is all ? Mr. HiLAND. Yes; that is all. Mr. Marble. Did you consider that sufficient? Mr. HiLAND. Well, I considered that was all we could get. That is all there was about it. I would like to have obtained more if I could have obtained it. Mr. Mabble. What efforts did you make to determine whether or not you could get more? Mr. HiLAND. Well, I did not make any, to tell you the truth. Mr. Marble. If you had been leasing your own private property to a stranger, would you have taken such a standard as that and let your property go in on such a basis? Mr. HiLAND. Well, I would have to know more about the elevator business to answer that. Mr. Marble. That is equivalent to saying, is it not, that you would not have leased your own property the same way as you did ■ the railroad property, because you leased it with your present knowl- edge of the elevator business ? Mr. HiLAND. I did what ? Mr. Marble. You leased this elevator with your present knowledge of the elevator business. Now, you have told me you would not lease your own elevator on such knowledge, have you not ? Mr. HiLAND. I can not conceive how it would be possible for me to own property of that kind unless I owned a railroad; and there- fore, in order to answer you definitely on that, I should have to take the value of the railroad and the necessities for which that particular part of the railroad or its facilities were used. I could not distinguish, because when the elevator at Kansas City was built it was not built for storage purposes. Mr. Marble. Let me ask you — did I interrupt you? Mr. HiLAND. No. Mr. Marble. Just one more question on this line. If you owned the Chicago, Milwaukee and St. Paul Railroad, absolutely in your S. Doc. 278, 59-2 40 626 GRAIN ELEVATOR INVESTIGATION. own right, all of it, the railroad owning the elevators, and the rail- road owning other property, would you allow your employee, with such knowledge as you have testified that you had when you made this lease, to lease valuable property belonging to you, taking as a basis old leases at other places under different conditions made years before — to lease the valuable property, with no other standard to determine the rental value and without any competitive bidding ? Would you permit that ? Mr. HiLAND. I should have permitted the lease of property used for the purpose that these properties are to be used and with the general knowledge and conduct of the business to be leased precisely as these leases were made. Mr. Marble. Now, can you explain why^ — what relationship — what is the explanation of this inadvertence as to the amount of the rental for the property? Mr. HiLAND. There is no inadvertence about it. The people who are occupying these properties have been engaged for years in the ,, purchase of grain that has been shipped over the Chicago, Mil- waukee and St. Paul Railroad. They are familiar with the points of purchase; they are familiar with the points of consumption and the dealers who consume the various products passing through the elevator; and the mere fact of this long experience and knowledge in the conduct of the business, in itself, is a compen- sation if we gave them the elevators for nothing, rather than to advertise or to put on the auction block in any way these prop- erties to people who did not have the same knowledge and experience for securmg business to the Milwaukee and St. Paul Railway that the lessees did. There is a value in that knowledge that can not be offset or obtained by a mere increase in a rental of an elevator located as the elevators that are leased by the Milwaukee and St. Paul Railway. Mr. Marble. Their connections on the road with customers would be included in what you have said ? Mr. HiLAND. Yes, sir. Mr. Marble. And the large tonnage they were shipping over your road? Mr. HiLAND. Necessarily. Mr. Marble. And you had those in view when you entered into this lease ? Mr. HiLAND. Yes, sir. Mr. Marble. Do you understand that you have any right under the law to give a large shipper any consideration you do not give a small shipper ? Mr. HiLAND. I do not. Mr. Marble. Do you understand under the law that you have any right to lease property for any less than its rental value to a large snipper because he is a large shipper ? Mr. HiLAND. Well, I understand under the law it is my duty as an officer of the railroad to secure for it the maximum amount of busi- ness at the minimum cost, and I must necessarily, in arriving at i that, obtain patrons that will be the most valuable to the Chicago, | Milwaukee and St. Paul Railway. Therefore, under like conditions ^ and circumstances, the individual or the firm does not concern me whatever. If there were a number of firms or individuals that I * GRAIN ELEVATOR INVESTIGATION. 027 could obtain competitive bids from, I think then it would be my duty to endeavor to lease the property to the highest bidder; but I can not go out and advertise to the highest bidder; and then I do not feel that I am violating the law if somebody comes along who is irresponsible — I know nothing about him — and he says he is a big shipper — I have no knowledge of that. I do have knowledge of the patrons of the road who are engaged in shipping at the present time and who have shipped in times past a large amount of business, and any one of which will be treated, or all of them, in precisely the same way that we treat one individual. That is, no preference is given under like conditions and circumstances, but I would not take an irresponsible party. He might offer $10,000 a year for that elevator and I would not lease it to him. Mr. Marble. Suppose he would put up a good and sufficient bond to pay his rent, would you still consider him irresponsible? Mr. HiLAND. Well, the bond would not carry with it, I think, an obligation that he would ship a certain amount of business. That would have to be left to my judgment. Mr. Marble. So the lease is partly to be explained by the fact that • the Simonds-Shields Company is a large shipper over your line ? Mr. Hiland. Well, yes; I should say, in putting it in the broad sense you have, necessarily. He is a large shipper, and that was taken most assuredly into account. Mr. Marble. And you would say now that if a small shipper, a man without connections on your road — perhaps a man expecting to estab- lish connections, just as wealthy as this company, but a small ship- per — were to offer you more for the tanks, stdl you wotdd prefer this arrangement with the Simonds-Shields Company? Mr. Hiland. I would, and I would decline to lease it to him, because the consideration is not given. Mr. Marble. Do you own any stock in the Simonds-Shields Com- pany? Mr. Hiland. I do not. Mr. Marble. Have you ever? Mr. Hiland. Never. Mr. Marble. Has any portion of the profits of that company or the dividends on the stock ever been paid to anyone for you, or paid to you for anyone, or in any way treated as your property ? Mr. Hiland. Not one cent, directly or indirectly. Mr. Marble. Such is the testimony we have from Mr. Shields also. Will you say that what you now testify concerning yourself is true, so far as you know, of all other officials, stockholders, or employees of your railroad ? Mr. Hiland. I do. Mr. Marble. Either directly or indirectly, through third persons, or in any way? Mr. Hiland. Mr. Marble. rates on gram ? Mr. Hiland. Mr. Marble. rates on grain? Mr. Hiland. I do. Dp you consult with Mr. Shields before changing Do we consult? Do you consult with Mr. Shields before changing I have consulted with him, but that consultation is not necessarily obligatory on his part or mine. Ther^ i§ no under- 628 GRAIN ELEVATOR INVESTIGATION. standing that he has anything to do with making the rates. I consult with Mr. Shields in regard to — should have consulted with him the same as I do with numerous others, manufacturers and shippers of aU kinds, and distributers. I consult with people about making rates every day of my life when I am making rates. Mr. Marble. Did you ever telegraph to Mr. Shields withdrawing a reduced rate on grain, either before or at the same time that you telegraphed to your agent at Kansas City? Mr. HiLAND. I presume I have. Mr. Marble. Aiid that was before this employment of Mr. Shields, was it not ? Mr. HiLAND. That may be true. Mr. Marble. Did you telegraph to other shippers that you were going to withdraw it ? Mr. HiLAND. No — I may or may not have done so. Mr. Marble. You did not telegraph to all of them, ia any event, did you? M-. HiLAND. Oh, no. Mr. Marble. Did you not consider that that was giving Mr. Shields an advantage in the market over other shippers not so notified? Mr. HiLAND. No, I did not. Mr. Marble. WeU, why not? Mr. HiLAND. Because there was nobody else shipping over our road, to any great extent, or perhaps — well, now, I do not know exactly how to answer that. Commissioner Lane. Will you speak a little louder, Mr. Hiland. Mr. Marble. You considered that in notifying Mr. Shields you were notifyingaU the shippers over your line, because he was the only shipper from Kansas City, practically? Mr. Hiland. No; I do not consider that in advising Mr. Shields or any other shipper of the change of rates it is any particular preference. Mr.' Marble. Freight rates determine the price of gram, do they not? Mr. Hiland. Yes, they do. Mr. Marble. The shipper that gets advance notice of the change in rates has advance notice of the change in the price of grain, does he not? Mr. Hiland. A notice of a change in rates is usually published in the newspapers just as quick as the information gets to an individual shipper, and it is not possible for any railroad company to notify all its shippers of grain; the people who are doing large volumes of busi- ness, in the natural conduct of the business, are advised if there is any material change in the rates. The manufacturers are advised when the rates on the raw products moving in large volumes of business — the large shippers on every railroad are advised. Now, to undertake to advise the smaller shippers, it is not done. It is not withheld, how- ever, because of any preference or any desire to discriminate in any way. Mr. Marble. But you mean that you advise the large shippers by telegrams, sent directly to them, and you leave the small shippers to find it out from the newspapers ? Mr. Hiland. I do not mean any such thing. Mr. Marble. Well, tell us just what you do mean. Mr. Hiland. I mean that it may or may not happen that we advise GRAIN ELEVATOR INVESTIGATION. 629 the large shippers. There is no obligation on the part of advising. It is sinxply a matter of courtesy if a shipper is advised in that way, not a matter of obligation or for the purpose of securing any advan- tage. Mr. Marble. Why did you not leave Mr.^ Shields to get the infor- mation from the newspapers, if that is an available and practicable source of information for aU. ? Mr. HiLAND. Oh, I do not know. I could not answer that sort of a question. I do not know. Mr. Marble. Do you know whether or not, as a fact, information so given by you to Mr. Shields has enabled him to buy large quantities of grain before the sellers of grain knew that a change of rates was coming? Mr. HiLAND. Well, now, during what period are you asking? Mr. Marble. Say last fall, when you reduced the export rate on com? Mr. HiLAND. The export rate on corn ? Will you permit me to tell you just how the rate on that export com was made ? Mr. Marble. Are you asking a question? Mr. HiLAND. Yes, sir. WiU you just let me explain in my way how the export rate on com was made ? Mr. Marble. Stxre. First, will you answer my question: Do you know whether or not advance information of that change in rate given by you to Mr. Shields enabled him to buy — no, enabled him to sell a great deal of corn in the Chicago market, freight paid to Chicago, before the buyers knew that the rate was to be reduced? Mr. HiLAND. Enabled Mr. Shields to buy Mr. Marble. To sell? Mr. HiLAND. To sell com in competition with other sellers and buyers over other railroads ? Mr. Marble. I did not put that in the question. I say, did you know that the information given by you to Mr. Shields of that reduc- tion in the export rate on corn enabled him to sell a large quantity of com, freight paid by him to Chicago, before the buyers knew that the rate was to be reduced ? Mr. HiLAND. Before the buyers knew? Mr. Marble. Exactly. Do you know? Mr. HiLAND. I am trying to figure that out in my own mind. I want to answer that question so that it will conform to just what you want to get at, and at the same time disclose the actual facts in the case, and perhaps the best way to do it is to answer the ques- tion directly, "yes," and then make the explanation that I want to make in regard to the corn rate. Mr. Marble. I think that would be very proper. Let your answer stand "yes," then. Mr. HiLAND. Yes, sir. When the reduction in the export rate on com was made it was after a period of demoraUzation in the export com rates, and there were certain contracts that were made by other lines that had to be moved. The rates were advanced, taking effect on a certain date — I do not want to be specific as to dates — with the understanding that when that com was moved out, it having no influence or effect whatever on shipments made, purchased on the then-going tariff, that the railroad having a reduced rate in effect, upon which it felt obligated to continue until that corn was moved 630 GRAIN ELEVATOR INVESTIGATION. out, then the rates by all the roads would be advanced to a, certain basis, and with that assurance the railroads left their tariffs in effect and did not make the advance that the one railroad had, except one railroad. That reduced rate was continued. It came to the knowledge of not merely Simonds-Shields Grain Company, but to exporters at tidewater that corn was being sold for December and January sailing ia foreign markets. That information came — I think it was the latter part of August or the first of September — before the corn crop had even matured. The understanding was that the rates on gram should be adhered to and would not be changed at least before January 1. Commissioner Lane. Who was that understanding between? Mr. Hiland. That rate, however, was not the rate in itself, but it was the relation of rates that had been established as between the Gulf of Mexico and the Atlantic ports. Commissioner Lane. I say, who was that understanding had between ? Mr. Hiland. That understanding was between the various rail- roads as to the relation of rates that should exist. Specific rates were adopted, and the relation of those rates was fixed so that it would enable the lines through the Atlantic seaboard to compete with lines through the Gulf of Mexico. There had been more or less contention in regard to what was a proper relation of rates in order to place the lines running to the Atlantic ports and the Gulf on a parity in making a delivery to foreign markets, and therefore, we will assume, that the " difference in the rates was 4^ cents per hundred pounds. That was fixed on a specific basis — would necessarily have to be — ^so that the rate was understood- It was understood that there should be no change in the relation of rates on the basis of 4^ cents. I think that was the difference decided as being fair and equitable as between Kansas City and Baltimore or New York and the GuK of Mexico. It was disclosed that sales were being made for the latter part of Decem- ber and January sailing, and it also disclosed that sales could not be made with the purchase price in any of the markets that would enable an adherence to the fixed relation that had been established. So that an exporter from Baltimore demonstrated to me that in order to move during the same period that the movement was being made and contracted for through the Gulf of Mexico that none whatever could be moved through the Atlantic ports. I asked him what rate would be necessary to make from Kansas City to Baltimore, and it was figured out that the necessary rate to move that corn would be 15 cents per hundred pounds. I do not know, now, from memory, what the exact rate was at that time, but to add 4 J cents per 100 to the rate that prevailed would not enable the movement of corn, so that I fixed a rate from Kansas City to Baltimore of 15 cents per 100 pounds to apply on export corn to be moved during the same period that our information gave us it was to be moved through the Gulf of Mexico. The tariff was not published at that time. The corn was not matured at that time. The purchase was arranged for between this exporter and Mr. Shields of Kansas City, and the manner in which the corn was purchased and sold was the prevailing custom among the grain dealers, to buy the near-by option and sell for the future sailings, depending, when the corn came into the market, on removing tne hedges and thereby insuring against a loss. It enabled Mr. ShieWs at GEAIN ELEVATOE INVESTIGATION. 631 that time to, in that way, accumulate in advance, at least, I think, about five hundred thousand bushels of corn, the understanding being with me that when the corn was ready to move, the tariffs would be established under the law and the corn moved under a tariff, and that arrangement was carried out. It was carried out in what we believed was a perfectly lawful manner at that time. Commissioner Lane. Do I understand you as expressing the belief that you can give notice to a grain buyer that at a certain time, if he gets a certain amount of gram, the rate will be reduced to enable him to handle it ? Mr. HiLAND. I would not want to say that what I believe in now would or did govern the transaction that I refer to. I refer to a transaction that dealt entirely with export corn and that at that time an arrangement for the movement in advance of a specific tonnage to be covered by an open tariff and for export was considered by the freight department of the Milwaukee road as lawful at that time. Now, as to answering your question, I should say that at the present time we could not and would not engage to carry a specific amount of freight of any kind without giving a thirty-day notice of such change. Commissioner Lane. Is there any difference in the law now and the law as it was at that time, a year ago, excepting as to the number of days' notice that is required? Mr. HiLAND. Well, the law at that time — an^ I do not know that it has been fully established now, in regard to export rates — the law at that time was regarded by the large majority of carriers as not applying to export business, and that it was not necessary to give, or even to publish, the rates on export business. Commissioner Lane. But they were pubHshed to the seaboard, were they not ? Mr. HiLAND. They were published. . Commissioner Lane. You published this rate yourself? Mr. HiLAND. I did publish it, and I might add that prior to a certain date, before the Interstate Commerce Commission, in a cer- tain hearing in Chicago — I do not recall it — that the whole question of export rates was gone over, and each railroad was asked specifically at that time — the Milwaukee and St. Paul among the number — that if it was understood that hereafter the inland proportion of the rate, or of the through rate, would be the subject or a publication on any business taken in the future, and I responded for the Milwaukee and St. Paul Railway that such rates hereafter would be published, and they were published in the instance I have mentioned. Commissioner Lane. That is all. Mr. Marble. Who was this exporter with whom you advised about this reduction in rate ? Mr. HiLAND. He was of the firm of Muller & Co., of Baltimore, and his name is John M. Dennis. Mr. Maeble. Of Muller & Co.? Mr. HiLAND. M-u-e-1-l-e-r. Mr. Marble. Was he the buyer from Mr. Shields? Mr. HiLAND. He was the exporter; yes, sir. Mr. Marble. He bought from Mr. Shields. Did Mr. Shields bring him to you? Mr. HiLAND. No, I think not; I am not certain about that. My 632 GEAIN ELEVATOB INVESTIGATION. recollection is that Mr. Dennis came to me first and disclosed to me information that he had in regard to the sale of these shipments in foreign ports. Glasgow, I think, was one, and some Irish port was the other. I do not know whether it was Queenstown or Dublin, or where it was, but they were two ports in Great Britain. Mr. Marble. Then, did you make an appointment with him to meet him another time? Mr. Heland. Why, Mr. Shields was called into consultation and I asked them both to figure out — I think I asked Mr. Dennis what it would take — that is it — that is my recollection now — I am speaking from memory; my recollection is that I asked Mr. Dennis to figure out the price of corn at Kansas City on that day's market and what he could fix a price in competition with the corn moving through the Gulf gateway, what price it would figure, and he figured it out at 15 cents. Then I immediately started to figure what that would yield to the Milwaukee Road, and after consultation with our connections east of Chicago the rate of 15 cents was made by me. Mr. Marble. Who sent for Mr. Shields ? Mr. HiLAND. Well, I do not know that there was any sending about it now. I have forgotten whether Mr. Shields was sent for by the exporter Commissioner Lane. Who told Mr. Shields the rate to be made? Mr. HiLAND. I do not recall it. Commissioner Lane. You do not know who told Mr. Shields as to when the new rate would go into effect? Mr. HiLAND. Who disclosed that? Commissioner Lane. To Mr. Shields. Mr. HiLAND. I did. Mr. Marble. What I want to get at is, Mr. Shields was there. Where is that office — on Michigan avenue, Chicago ? Mr. HiLAND. Yes, sir. Mr. Marble. Mr. Shields was there at the ofl&ce when the decision was made to reduce the rate, or was near. by? Mr. HiLAND. I think he was right there. Mr. Marble. Who sent for Mr. Shields to come there at that time? Mr. HiLAND. I do not know. I may have sent for him. I do not know who sent for him. I know this. I know that, the information was disclosed to me as to the rate necessary to be made on tlae basis of the agreed differential as between the Gulf of Mexico and the Atlantic ports. Now, as to who sent for Mr. Shields or whether he came there by Mr. Dennis's invitation or mine, I do not recall. Mr. Marble. If he came by Mr. Dennis's invitation, did he come by your suggestion to Mr. Dermis ? Mr. HiLAND. No, sir. Mr. Marble. Did you put Mr. Dennis into communication with Mr. Shields as a man that could sell him corn ? Mr. HiLAND._ No, sir; my recollection is that that was the first business interview I ever had with Mr. Dennis and really, to the best of my recollection, it was the first time I ever saw him. Mr. Marble. Were Mr. Dennis and Mr. Shields in communication when Mr. Dennis came to your office ? Mr. HiLAND. I do not know. Mr. Marble. You do not know how it was Mr. Shields got up GBAIX ELEVATOR IXVESTIGATION. 633 there from Kansas City at the very time this matter was under dis- cussion for decision ? Mr. Hn.AVD. I can not recall that. I may have known at the time. Commissioner Laxe. Will you hurry along, Mr. Marble. Mr. Markle. All right. I think this is an important matter. Do you know how much grain Mr. Shields sold on the board of trade munediately after lea rning that this rate was to be reduced '< Mr. TTtt.axd. I do not mow. Mr. [ Ma rble. Xor to whom he sold it ? Mr. Hn. A VD. Let me answer that other question. I know the number oi caxs that I agreed to carry for bim on the 15-cent rate to start with, and it was a maximum of 500 cars. Xow, as to what he did on the board of trade I do not know. I don't know what my obligation was. Mr. Marble. TVe have the testimony of Mr. Shields that he sold a lai^e amount of com, knowing that rate was to be reduced. He named his purchasers, and one of them came to us at Omaha and said he didn't Imow the rate was to be reduced. Now, there is one other matter regarding this lease that I want to go into. What do you give the Simonds-Shields Company besides the use of the tanks I Mr. Hn.AM). We give the Simonds-Shields Company the same use of the elevator that we give other people. I do not recall what the lease says; I haven't read it, although I have a copy of the lease. Mr. Marble. Do you remember that the lease provides that your elevator will cUp, clean, scour, and mix grain if requested without making any chaige for so doing; that is one of the considerations in this lease? Mr. Hn .A VD. Does the lease so state? Mr. Marble. So I read it, and so Mr. Shields testified. Mr. Hrr.Av n Then the lease speaks for itself. Mr. Marble. Is that jomi memory ? Do you remember that item in the consideration of this question? 2ilr. Htt.av d- I do not. I can not say that I recollect it specifically. Mr. Mabble. This 'isn't the original lease, but is a copy of the lease furnished us in Kansas City. I sunply directed your attention to this paragraph here in that respect — "and the railroad company," etc. Mr. HiLAND. Yes, sir; that is right. Mr. Marble. Unlimited cleaning without charge. Without limit to the amount of grain for which they received no comj)ensation 1 Mr. Htt.av t) Yes, sir. Mr. Makble. Do you know whether, as a matter of fact, the lease of the tile tanks with that privilege is worth in excess of $20,000 per year? Mr. Hiland. I do not. Mr. Marble. We have such testimony. Xow, when you started this new arrangement, on what terms was the use of this elevator opened to the public, beginning with July 1 ? Mr. HiLAifD. What I think are the t«rms? Mr. Marble. No. I say on what terms was grain cleaned, clipped, and scoured and treated for the pubUc ? Mr. Hiland. As I remember it, there hasn't been any charge made at Kansas City by any elevator for any terminal service there. 634 GEAIN ELEVATOE INVESTIGATION. Mr. Marble. Do you know whether or not any tariffs have been published showing that the charge would be made? Mr. HiLAND. I Know that we published a tariff on the 1st day of September giving certain charges. Mr. Marble. Did you enforce that tariff? Mr. HiLAND. I, personally ? Mr. Marble. No; has your road done so? Have you seen to it that the tariff was observed? Mr. HiLAND. I presume I did. Mr. Marble. Do you know? Mr. HiLAND. Well, I don't know, positively. Mr. Marble. Is it your opinion that it has been? Mr. HiLAND. The enforcement of the tariffs is left entirely to the employees who are to perform the service Mr. Marble. That is, to Mr. Shields? Mr. HiLAND. And collect the charges. To Mr. Shields. Mr. Marble. Do you know whether or not Mr. Shields has enforced that tariff as against himself? Mr. HiLAND. I do not. Mr. Marble. Have you inquired? Mr. HiLAND. I have. Mr. Marble. What is your information? Mr. HiLAND. My information is that the money has not been paid, but there has been an explanation givpn for that. The tariff is in effect and Mr. Shields is supposed to enforce it on his own business the same as anybody else's. Mr. Marble. Well, do you know whether or not he has enforced it on any business whatever ? Mr. HiLAND. As a matter of fact, of my personal knowledge I do not know. Mr. Marble. As an official of the road, do you know? Mr. HiLAND. I do not know as an official of the road. Mr. Marble. la, there any supervision of Mr. Shields in that respect ? Mr. HiLAND. Is there any supervision ? Mr. Marble. Yes. Mr. HiLAND. Oh, the auditor is charged with the duty of keeping accounts and seeing that the proper collections are made. That is not my business. Mr. Marble. Who is charged with the duty of seeing that the auditorperforms his duty? Mr. HiLAND. That who ? Mr. Marble. The auditor, as I understand it, is charged with the duty of seeing that Mr. Shields performs his duty in that respect. Is that right? Mr. HiLAND. That is right. Mr. Marble. Well, who is charged with the duty of seeing that the auditor performs his duty? Mr. HiLAND. Well, the board of directors. Mr. Marble. And who is charged with the duty of seeing that the board of directors perform their duty? Mr. HiLAND. You wiU have to ask somebody else for that infor- mation; I don't know. Mr. Marble. So that, as a matter of fact, if Mr. Shields is not enforcing these charges, who is responsible finally? GRAIN ELEVATOE INVESTIGATION. 635 Mr. HiLAND. That is too hard for me to answer; I give it up. Mr. Marble. And you are the third vice-president of the Chicago, Milwaukee and St. Paul Kailroad? Mr. HiLAND. Yes, sir; I am. Mr. Marble. Now, then, what were the charges during July? Mr. HiLAND. What were the charges ? Mr. Marble. Yes; at this elevator. Mr. HiLAND. I don't know. Mr. Marble. You don't know? Mr. HiLAND. No, sir. Mr. Marble. Was any change made in that tariflf published on September 1 ? Has any change since been made ? Mr. HiLAND. Yes. There was one made on the 8th of October. Mr. Marble. Do you know what that change was? Mr. HiLAND. I do not recall it. It was done for the purpose of advertising an additional free service. Mr. Marble. To all grain going out over the Chicago, Milwaukee and St. Paul Railroad ? Mr. HiLAND. Yes, sir. Mr. Marble. The change is dated October 8, isn't it? Mr. HiLAND. Yes, sir. Mr. Marble. Do you know when it was issued ? Mr. HiLAND. It was issued on the 8th or 9th; it was issued taking effect on the 8th; I authorized it to take effect. Mr. Marble. Do you know when it was made public at Kansas City? Mr. HiLAND. What do you mean by "public?" Mr. Marble. So that people desiring to ship over your line would know. When was it published and posted and sent to the board of trade? Mr. HiLAND. Our agents were notified in Kansas City just as quick as I could get to a telegraph office in Washington and notify them, which was about a quarter to 1 on the 8th day of October, and our general freight agent was notified by telegraph on the same date to publish the change or amendment at once. It was only a question of telegraphing, good service; that is all; the question was about how quick the message got there. Mr. Marble. Mr. Shields was notified by telegraph, was he? Mr. HiLAND. By me, no. I do not recollect that Mr. French was notified — our agent. I do not recall having sent a telegram to Mr. Shields, but I would have been perfectly justified in senmng one if it had been sent. Mr. Marble. Because he is the grain agent? Mr. HiLAND. Because he is our agent at Kansas City. Mr. Marble. And because he is a large shipper? Mr. HiLAND. Oh, no. You can not put that answer into my mouth. Mr. Marble. I do not want to put any answer into your mouth. Mr. HiLAND. Well, that won't do. Mr. Marble. Do you know whether or not that tariff of August was withheld from the general public until about October 22 ? Mr. HiLAND. It was not withheld until October 22. Mr. Marble. I will simply say that the complaint at Kansas City 636 GEAIN ELEVATOE INVESTIGATION. was that it was not sent to the board of trade or made known to other intending shippers until some time afterwards. Mr. HiLAND. Are we obliged to send it to the board of trade ? Mr. Maeble. No, sir. But I am trying to see how far this matter of courtesy goes, and who it reaches, and I just wanted to know if you knew about that fact. Mr. HiLAND. I do not know anything about it. I am a little sur- prised that you should ask a question of that kind. Mr. Marble. You are perfectly free to give your own answers to every question I ask you. Did you give Mr. Shields advance notice of the withdrawal of a reduced grain rate that prevailed from October 1 to October 10 this year? Commissioner Claek. It was in August. Mr. Maeble. Yes. August 1 to August 10 of this year. You had a reduced grain rate this year from Kansas City to Chicago for ten days in August, and you withdrew that rate rather unexpectedly. It didn't last as long as you expected it to, and you withdrew it rather unexpectedly, and setting the date for withdrawal as August 10 — a rate from Missouri River points to Chicago on grain. Are not those the facts? Mr. HiLAND. It is pretty hard, really, for me to draw on my mem- ory for the various changes in rates, and if you could just give me some intiniation of what you want I might be able to answer specifically. Mr. Maeble. Let me ask you — perhaps we can get at it — do you recollect that there was for about ten days this fall, and I think the ten days were from August 1 to August 10, a reduced rate on grain from Missouri River points to Chicago ? Mr. HiLAND. The only controversy of change in rates that is im- pressed upon my mind is a rate on wheat that wits made to meet a reduced rate on flour. | Mr. Maeble. That is the rate. i Mr. HiLAND. On flour which had been contractejd originally by the Chicago Great Western Railway for a specific number of sacks — 30,000, 1 think, or 50,000; some number of that kind. Mr. Maeble. Pardon me. There was suqh a reduced rate on wheat then for about that ten days ? Mr. HiLAND. We reduced the rate to conform to the rate on the finishedproduct. Mr. Marble. And you withdrew that rate rather unexpectedly? There was a decision reached that had not been- foreseen, which with- drew the rate about ten days after it had been put in? Mr. HiLAND. The rate was not withdrawn unexpectedly. It was put in and maintained up to the time the Chicago, Milwaukee and St. Paul thought it was proper to its interests to advance. There wasn't anything unexpected about it whatever^ either in its reduction or its advance. Mr. Maeble. I will ask you if you telegraphed to Mr. Shields at the same time, or before you telegraphed to Mr. French, the date when that rate was to be withdrawn? Mr. HiLAND. I did not telegraph to either of them. Mr. Marble. I think they both testified that you did, if my mem- ory is correct. Mr. HiLAND. I did not see any necessity for me telegraphing Mr. GEAIN ELEVATOR INVESTIGATION. 637 French, because he sat right alongside of me in the meeting, or at the meeting that the rates were discussed, and which I announced for the Milwaukee and St. Paul Railroad that we were to reduce the rate or to advance it — I am not certain about that. Mr. Makble. I may be mistaken about Mr. French — what you tele- graphed to him is of no concern to us — that the rate should be with- drawn. You telegraphed to Mr. Shields the news of that decision? Mr. HiLAND. I did not. Mr. Marble. And his testimony to the contrary would not revive your memory in that respect ? Mr. HiLAND. What did you say? Mr. Marble. His testimony to the contrary, if it has been given, would not revive your memory and make you change your answer ? Mr. HiLAND. I do not recollect it. Mr. Marble. You do not recollect it? Mr. HiLAND. No. Mr. Vroman. I think the witness and the attorney are in some con- fusion in regard to the time of the increase of the rate and the reduc- tion of the rate. Mr. Marble. I am talking of the withdrawal of the rate. A reduced rate was to -prevail, and a decision was reached that the old rate should be withdrawn. Now, then, when that decision was reached that the old rate was to be withdrawn, did you notify Mr. Shields by telegram? Mr. HiLAND. I did not. Commissioner Lane. At which time was the notification given; was it at the time the rate was put in or at the time the rate was taken out? Mr. French. I think it appears in the testimony that Mr. Shields had information of the increase at the time when the rate was in- creased. Commissioner Lane. In this ten days' period, either in the begin- ning or at the end, Mr. Shields was notified ? Mr. HiLAND. Mr. Shields had no advance information in regard to that rate, or the withdrawal of that rate. He had no advance infor- mation. Commissioner Lane. I thought from the remark Mr. HiLAND. In neither case had he advanced information that enabled him in any way, shape, "or form to take advantage- of that information. Commissioner Lane. Pardon me a moment. I thought the sug- gestion of counsel must have been based upon the theory that the noti- cation was given to Mr. Shields either when the rate went into effect or went out, because he said there was some confusion between your- self and Mr. Marble in regard to it. Mr. HiLAND. I did not nave any occasion to telegraph Mr. Shields because he was in the city of Chicago on one of the occasions, and my recollection is that it was when the rate was reduced. Mr. French. You are talking of the rate on corn — the export rate ? Mr. HiLAND. I mean the rate on the finished product being lower than the rate on the raw material. Mr. French. Mr. Shields has testified that he received a telegram from you at Kansas City of the withdrawal of that rate ; he also said that he did not know of its withdrawal more than one hour before 638 GRAIN ELEVATOB INVESTIGATION. other shippers in Kansas City, and has testified that he took no advan- tage of it. Mr. HiLAND. I do not know what Mr. Shields's testimony was in regard to that; but my recollection is that you and Shields were both in Chicago at the time. Mr. French. At the time that rate was withdrawn I was away in Canada and knew nothing whatever about it. Commissioner Clark. Did not Mr. Shields testify to this — that he was in Chicago and learned there of this reduced rate on wheat to meet a competitive rate on floiu-? Mr. HiLAND. Yes; that is right. Commissioner Clark. And that he went out and sold 700,000 bushels of wheat, and that, unexpectedly to him, he received notifica- tion in some way from you that the rate would be advanced on August 10, and he hustled around then and tried to hedge his sales so as to prevent a loss, but was unable to do so. That is what Mr. Shields testified to. Mr. HiLAND. I would like to withdraw my statement in regard to that. You have refreshed my memory now in regard to that trans- action. The rate was reduced in consequence of the export rate on flour, and when it was reduced the tariff was issued providing that on August 28th of whatever month it was — it was the 28th of the month — that it was issued for the period, unless sooner withdrawn. Now, before the rate went into effect demoralized conditions were presented that were going to flow from this reduction and the influ- ence that it would have on the revenue of the various railroads. We had at that time a large amount of business going over our road which I knew, as I know of many other things, had been sold on the basis of, I will say, ten and three-quarter cents, which was the local rate as I recollect it at that time. Now, a reduction in the rate would necessarily apply on a large amount that I knew had been sold on the ten and three-quarter cent rate, and if I had given Mr. Shields any advantage he would necessarily take advantage of that reduction and thereby yield us very much less money. Now, Mr. Shields was not advised one minute before all the other railroads had agreed or had made a similar reduction, and there was nobody, Mr. Shields or anybody else, that was advised in suflacient time to take any advant- age whatever to his benefit in the change of that rate. Commissioner Lane. But Mr. Shields said he did take advantage of it. He said that he felt, in direct answer to a question from myself, that you had given him this advance information as a gentleman because you had given him previous information upon which he had bought it. Mr. HiLAND. That reduced rate — I do not recall of any. Mr. French. Mr. Shields said, in regard to Mr. Hiland's notifying him, not of the reduced rate upon which he took advantage, but or the withdrawal of the reduced rate and of the advanced rate. Mr. HiLAND. Oh, yes; that is right. Commissioner Lane. That is a part of the same transaction. Mr. French. Mr. Hiland did not understand you. Mr. Marble. I would like to examine you a little along the line of certain testimony taken at Omaha yesterday as to the relations of the Neola Elevator Company to the Milwaukee road. What arrange- ment or contract is th^ere between the Neola Elevator Company and GRAIN ELEVATOK INVESTIGATION. 639 your railroad regarding tonnage or shipping over your road by the elevator company? Mr. HiLAND. None whatever. Mr. Marble. Are they under any obligation to ship over your road rather than over any other railroad ? Mr. HiLAND. Their obligation to ship over our railroad — I do not know where they are located. They are at intermediate points between Council Bluffs and Omaha and where they have elevator sites or leases from the Milwaukee and St. Paul Eailroad, and it naturally carries with it that, at the same rate, they will ship over the Milwaukee and St. Paul road. There is no special arrangement with the Neola Elevator Company that varies or is in any manner different from the arrangement with other shippers located at various points on the Milwaukee and St. Paul Railroad. Mr. Marble. To get exactly what I am trying to find out. It was testified in Omaha yesterday that the Neola owned country elevators at two towns — I can not recall the names — or they were leased by your railroad to the Neola Elevator Company last year or in the recent past, and that the Neola Elevator Company found itself unable to use those elevators profitably because it had to ship over your road. Therefore it re-leased thena to other grain buyers who were not under that obligation and who could ship to markets not reached by your road. Do you recognize that sort of a transaction or know what caused such a transaction ? Mr. HiLAND. I do not know. Mr. Marble. You say that the Neola Elevator Company has no special arrangement of any sort and is under no obhgation to furnish any amount of tonnage ? Mr. HiLAND. No, SU-. Mr. Marble. Nor under obligation to furnish such tonnage to the Milwaukee road that it may have ? Mr. HiLAND. Not that I recall. The lease, however, is on file. I can not carry all of those leases in my head. There is no specific arrangement. They are all of the stereotyped form. As to just how they read, I do not remember. Every lease for every elevator or elevator ground on the line of the Chicago, Milwaukee and St. Paul Railroad is on file with the Interstate Commerce Commission in Washington. Mr. Marble. Well, do you know of any arrangement or under- standing or obligation relating to the furnishing of tonnage to your road by this elevator company which is not contained in the lease ? Mr. HiLAND. No, sir; I do not. Mr. Marble. Or do you know there is any such arrangement or obligation or understanding contained in the lease ? IkU". HiLAND. My recollection is that there is none, and there is no arrangement whatever, directly or indirectly expressed or implied, of such shipments. Mr. Marble. You do not know how such a state of affairs could come about? Mr. HiLAND. No, sir. Mr. Marble. Mr.. J. Ogden Armour is a director of the Milwaukee and St. Paul Railroad Company? Mr. HiLAND. Yes, sir. Mr. Marble, He is a stockholder in that railroad? 64:0 GRAIN ELEVATOR INVESTIGATION. Mr. HiLAND. I do not know whether he is a stockholder or not. I presume he must be, in order to be a director. The by-laws of the road will determine that. Mr. Marble. Do you know he is a director? Mr. HiLAND. Yes; I know that. Mr. Marble. And the extent of his holdings you are acquainted with, if he has any? Mr. HiLAND. I do not know anything about that. He may have one share and be a director. Mr. Marble. That is all. Commissioner Clark. Mr. Hiland, I would like to see if we can get this Kansas City situation down here concisely and correctly. I understand that prior to July 1 of this year the Simonds-Shields Grain Company were lessees of your company's elevators at Kansas City? Mr. Hiland. They were. Commissioner Clark. And at that time that lease was, by mutual consent, abrogated, and the railroad company took up the- operation of the elevator itself and employed Mr.. Shields at a salary of $3,000 a year to act as manager of that elevator? Mr. Hiland. Yes, sir. Commissioner Clark. At the same time it leased to. the Simonds- Shields Grain Company the storage tanks with a capacity of a half million bushels for $2,500 a year, that lease carrying with it the privi- lege of cleaning, storing, clipping, and mixing grain in the elevator to an unlimited extent ? Mr. Hiland. Yes, sir. Commissioner Clark. That from July 1 to September 1 no charge was made by that elevator to users of the elevator for cleaning, clip- ping, and mixing and treating grain. Mr. Hiland. Yes, sir. Commissioner Clark. That on September 1 a tariff was issued pro- viding certain specified rates per bushel for these different services ? Mr. Hiland. Yes, sir. Commissioner Clark. And that on October 8 another tariff was issued providing that these charges would not apply to grain, shipped out over the Ohicago, Milwaiikee and St. Paul Railroad — these charges for cleaning, clipping, and mixing grain? Mr. Hiland. Didn't the first issue show Commissioner Clark. On October 8 you issued another tariff pro- viding that charges for cleaning, clipping, and mixing grain would not apply to any grain shipped out over your road ? Mr. Hiland. That was the amendment then that was made ? Commissioner Clark. Yes. Mr. Hiland. Yes, sir. Commissioner Clark. So that, as a matter of fact, from July 1 down to the present time no charge has been made in your ele-vator for cleaning, clipping, or mixing grain? Mr. Hiland. Well, no charge— yes; a charge has been made or should have been made between September 1 and Oc«tober 8. The tariff was out, and that tariff was put in there for the purpose of enforcing and collecting the charges. Now as to whether these charges nave been enforced and collected is a matter that I could GBAIN ELEVATOR INVESTIGATION. 641 not answer for. I do not know. The tariflf, however, speaks for itself, and it should have been enforced. Commissioner Clabk. That is, between the dates of July 1 and Octobers? Mr. HiLAND. Yes, sir. That is right — ^no, not July 1. Commissioner Clark. Or September 1 ; I misspoke. Mr. HiLAND. Yes, sir. Commissioner Clark. September 1 and October 8 ? Mr. HiLAND. Yes, sir. Commissioner Clark. I will say in that connection that the testi- mony at Kansas City shows that no such collections were made from anybody. I want to get your idea of what should have been done or what was done. Do you understand that that tariff in effect from September 1 to October 8 applied to all grain passing through that elevator ? Mr. HiLAND. Yes, sir; and it should have been enforced. Commissioner Clark. At the time that tariff of September 1 was issued, or immediately prior thereto, was any notice served by you or anybody rbpresenting your company^ upon the Simonds-Shields Grain Company of the abrogation of then- lease of your elevator and the storage tanks and the privileges connected therewith?. Mr. HiLAND. There was not. But the tariff in itself would abro- E;ate anything that was unlawful, if I remember the terms of the ease. It was drawn with special reference to its being a lawful con- tract. Now, the publication of the tariff would necessarily carry with it a nullification of anything unlawful. Commissioner Clark. That is largely the very point I am trying to get at. Let me read you a little from a copy of this lease. It specifies the time during which the lease shall run, and then says: Provided that if at any time the railroad company desires, or it is required by any law of the United States or of the State of Missouri, the use of said premises for rail- road purposes, or to discontinue the use herein granted, it may terminate this in- denture upon giving to the lessee thirty days' written notice thereof. That is why I asked you if, prior to this issue of the tariff of Sep- tember 1, you served any notice upon the Simonds-Shields Gram Compamr of the cancellation of this indenture. Mr. liiLAND. No, sir; we did not. Commissioner Clark. Then, as a matter of fact, you had a tariff providing for a charge for these services in that elevator, and a con- tract that no such charges should be made ? Mr. HiLAND. Well, unless the contract can be or is construed — the way we understand it, the mere publication of a tariff would be of itself sufficient to nullify that part of the contract in which it is specifioelly stated that cleaning, clipping, etc., is included. Commissioner Clark. But the con-tract says that if this is required by any law of the United States the railroad may terminate the con- tract by giving thirty days' written notice — was not that done in this instance? Mr. HiLAND. That is a matter that I have overlooked. I didn't give them notice. Commissioner Clark. I would like to ask Mr. Hiland why, in view of the facts as testified by your elevator agent in Kansas City and by others who are supposed to know anytmng about it in the S. Doc. 278, 59-2 41 642 GRAIN ELEVATOE INVESTIGATION. employ of your company, if no charge was made to any person, user of the elevator, for cleaning, clipping, or mixing of grain between July 1 and the present time, you found it necessary to ask the Interstate Commerce Commission to authorize you to put in on short notice a tariiOf stating that such charges would not be made ? Mr. HiLAND. Well, there was no charge made between July 1 and September 1, but there was a tariff in effect from September 1. Now, when the application was made by the Milwaukee and St. Paul Eail- road on October 8 for a modification of that tariff, it was under the assumption that that tariff was in effect and that the charges would be collected in accordance with that tariff. Now, if they were not collected — the officers making application for the relief certainly are not chargeable with the duty of^ collecting and enforcing the tariff — we certainly would not have asked for relief if we had any knowledge that the tariff that was in effect had not been enforced. I do hot understand now that the charges from September 1 to October 8 have been waived. I do not understand that there is any agreement with any shipper, including the Simonds-Shields Grain Company, except as provided in that tariff — we did not give the thirty days' notice — but Mr. Shields, as an agent of the Milwaukee and St. Paul Railroad Company, is obliged to collect those charges from the firm of the Simonds-Shields Grain Company just as much as he is against any individual shipper. Unfortunately Mr. Shields is not, and never has been, a railroad employee of any kind, and I am willing to admit that perhaps he did not realize the dual capacity which he occupied at that time. But certainly the Milwaukee and St. Paul Railroad is not going to violate a national law, even if they have to go to the extent of repudiating that contract and take the conse- quences of a suit for damages. We do not want to put ourselves in that position. Commissioner Clark. Is it not easily possible that numerous con- signments of grain passed through that elevator between September 1 and October 8 upon which it would now be impossible for you to collect charges? Mr. HiLAND. Well, I hardly think that is so; that would be only like a hundred other places all over the system where similar con- ditions exist; and the failure to collect would be because of a man taking his goods away from us. The shippers of grain in Kansas City are all responsible, and, as a rule, they are reputable men, and they will pay their bills. It isn't an unusual occurrence for imder- charge to be collected from the shipper. Now, there are some shippers who are wilhng to recognize an obligation of that kind and make pay- ment without obliging us to force it through the court, and I do not believe there is any doubt but what every shipper that has put grain through that elevator during the period from September 1 to October 8 — that every dollar of it will be recovered into the treasury of the Milwaukee road without any question or any controversy. Commissioner Claek. You would not advance the theory, would Eou, Mr. Hiland, that if agents and employees of railroads have abitually, for a considerable period of time, violated the provisions of the law by failure to collect the tariff charges from shippers, that the individuals guilty of that negligence and the corporation that they represent can be completely exonerated by their going out and collecting those charges after their attention has been called to it? GBAIN ELEVATOR INVESTIGATION. 643 Mr. HiLAND. No, sir; assuredly not. Commissioner Claek. The testimony given in Kansas City is to the effect that nobody expected to collect, or made any effort ito collect, or intended to collect any charges under this tariff of September 1. Mr. Hiland. Now, if it pleases the honorable commissioner, I want to state that there have oeen no methods introduced, no railroad methods introduced, in the manner of keeping books at this Kansas City elevator or the forms upon which collections were made; and while it is not chargeable to me as vice-president to see that that was instituted, I made th6 inquiry ten days or two weeks ago, if our methods had been installed in the collection of charges and in the methods of bookkeeping, and, very mUch to my surprise, I found that nobody had attended to that. I immediately sent for the auditor and said to him that he must install our methods and prac- tices, and I went further than that, and sent for the elevator clerk in Milwaukee, who is familiar with the methods, and had him come to Chicago, so that if it was necessary, to get his knowledge in the prepa- ration of any forms that could be done. And, as I understand it, within a week or ten days past the auditor has been sent there. Whether the books have been placed and the ' forms have been installed or not, I do not personally know; but I do know that there has been no authority given to any employee of the Milwaukee road to waive in any way the charges that are to be collected under that tariff from September 1 to Odtober 8, and it would be absurd and ridiculous for me to have gone to Washington and asked for relief against something that we were already doing. Commissioner Clark. Of course, your company is responsible for the acts of Mr. Shields, its elevator agent, in the handling of Mr. Shields' own grain? Mr. Hiland. Well, I presume that is so. Mr. Veoman. Mr. Hiland, was it your attitude and the attitude of the company that Mr. Shields' grain pay on these same rates from September 1 to October 8 ? Mr. Hiland. Yes, sir. Mr. Veoman. It is your position that this feature of the contract, being a violation of tnat rate, is void, and that would not have any bearing on the case ? Mr. Hiland. It would not. The unfortunate position of the Mil- waukee road in this matter is that they have not complied with the terms of their contract in serving the thirty days' notice. Commissioner Lane. I should say, rather, that the unfortunate feature was that you had employed an elevator agent who also was doing business through the elevator. Mr. Hiland. Well, now, in regard to that, it was the best make- shift we could get, and I had to work pretty hard to get Mr. Shields to accept that at the compensation we offered him, because we were paying him about one-half of what other people are paying; and he demanded twice that amount; and I finally did agree on that, but before I did that I consulted other people as to what they paid, and very much to my surprise I found what they were paying; and until we can find some one who is familiar with the handling of the ele- vator, we did the best we could. Commissioner Lane. He has to be notified of every car of grain that goes into that elevator? 644 GRAIN ELEVATOR INVESTIGATION. Mr. HiLAND. As agent of the Milwaukee road. Commissioner Lane. As elevator agent he has to be notified of every car that goes into the elevator that belongs to someone else ? Mr. HiLAND. Yes, sir; as agent for the Milwaukee Eailroad. Commissioner Lane. Now, do you suppose that as elevator agent he does not confide that information to himself as a member of the Simonds-Shields Grain Company? Mr. HiLAND. I can not understand what particular advantage the knowledge of the advice of a car going into the elevator is; I can not conceive of any particular advantage. Commissioner Lane. It would enable him to keep tab on all the grain that goes into the elevator over your road? Mr. HiLAND. He would know the volume . of business, but he doesn't necessarily know who handles it or where the grain came from or who it is going to or anything of that kind. Commissioner Lane. The testimony there was that he could learn it. Mr. HiLAND. Well, I presume he could; yes, sir. Commissioner Lane. Any further questions, Mr. Marble? Mr. Marble. No more. Commissioner Lane. Do you want to ask any more questions? Mr. Veoman. No. Mr. Marble. It is now a little past 12, and I would suggest that we cut the lunch hour a little short at this end rather than the other. Commissioner Lane. Do you want to adjourn pow? Mr. Marble. Yes; and take no more time for lunch than is neces- sary. Commissioner Lane. The Commission will adjourn until 1 o'clock. (At 12.05 p. m. the Commission adjourned until 1 p. m.) AFTER recess. 1 o'clock p. m. Commissioner Lane. Call your first witness, Mr. Marble. Mr. Marble. I will call Mr. Messerole. C. G. Messerole, called as a witness, being duly sworn, testified as follows : ' Mr. Marble. Mr. Messerole, you reside at Gowrie, Iowa ? Mr. Messerole. Yes, sir. Mr. Marble. And are connected with the farmers' elevator at that point ? Mr. Messerole. I am. Mr. Marble. You have been largely identified with the establish- ment of farmers' elevators in this State ? Mr. Messerole. Yes, sir. Mr. Marble. Do you hold any position in the State association? Mr. Messerole. Secretary of the Farmers and Grain Dealers' Association of Iowa. Mr. Marble. Does that association also own elevators ? Mr. Messerole. No, sir; it is an organization of the local branches or members of the local branches. GBAIN ELEVATOR INVESTIGATION. 645 Mr. Marble. Will you tell us briefly why farmers' elevators were established in this State and how you came to be identified with that movement ? Ml-. Messekole. Well, the way I came to be identified with it was that I had tried as an independent dealer to do business, both in the States of Iowa and Illinois, without being controlled by the organiza- tion of the regular dealers known as the regular grain dealers' associ- ation. Mr. ^Marble. When was that you tried that ? Mr. Messerole. In Iowa from 1894 to the fall of 1897, in Webster and Harkwood. I then went to Illinois, and for about one year I was in the employ of a grain company there and afterwards leased their property and undertook to do business as an independent grain dealer, and found the same troubles existing there. Mr. Marble. What were those troubles? Mr. Messerole. With the association. They asked that I join the association to fix prices. Mr. Marble. Take it in Iowa; who asked you to join the associa- tion? Mr. Messerole. In Iowa I was never solicited, except by one per- son, to join the association and fix prices, and that was a man by the name of Lindquist — ^A. Lindquist — ^who was the agent of Lindblad & Gustofson. Mr. Marble. You declined in both States to join the association? Mr. Messerole. I did. Mr. Marble. Was it stated to you by officers of the association or members that if you joined you would be expected to agree on prices and pool the business? Mr. Messerole. By members of the association? Mr. Marble. Yes. Mr. Messerole. In both States. Mr. Marble. Was it at that time, and is it still your understand- ing, that that was a condition of membership — a consequence of membership ? Mr. Messerole. I so understood it in Iowa and particularly so in Ilhnois. In fact, I know the fight was made on me in Ilhnois because I refused to join the association and agree upon prices. Jklr. Marble. What was the effect of your refusal ? What kind of fight was made? Was it by increasing tne price at the station where you bought? Mr. Messerole. Yes, sir. Mr. Marble. Did they cut you off from the market? Mr. Messerole. No, sir; not at that time. Mr. Marble. Did they later? Mr. Messerqle. Not in my individual experience as a grain man, no; but in connection with the farmers' elevator company, after I became the agent of the farmers' elevator company, they did in Iowa. Mr. Marble. In Iowa? Mr. Messerole. Yes, sir. Mr. Marble. Who cut you off from the market when you were doing business in Iowa, and when? Mr. Messerole. The Iowa Grain Dealers' Association, through their secretary, Mr. Wells. 646 GKAIN ELEVATOR INVESTIGATION. Mr. Marble. How do you know it was the Iowa Grain Dealers' Association, through their secretary? Mr. Messeeole. Because I have letters, documentary evidence, which I have already placed in the hands or was instrumental in plac- ing them in the hands of the Commission's attorney, showing that they were the ones that filed the complaint and forced a boycott upon the commission houses who were handling my business, or, rather, hand- ling the business of the farmers' elevator conipany, and also these let- ters show the connection of the Iowa Grain Dealers' Association and the Illinois association. A boycott not being effective with one par- ticular commission company in Iowa, for the reason that their trade was not heavy in Iowa, Mr. Wells took the matter up with Harry Knight, president of the Grain Dealers' Association of Illinois, and had the boycott enforced there. This commission company at first refused, according to their letters, to pay any attention to this, but their trade was so much afl'ected in Illinois they were finally com- pelled, as they said, to refuse our business. Mr. Marble. This boycott, as you term it — that took the form of a notification — did it or not, that the regular dealers would not sell to conunission houses receiving consignments from you? Mr. Messerole. Yes, sir. Mr. Marble. That was the nature of it ? Mr. Messerole. Yes, sir. Mr. Marble. You did not understand that thpy were imder any legal obligation to sell ifiiless they chose ? Mr. Messerole. No. Mr. Marble. But the effect was to deprive you of a market? Mr. Messerole. Yes, sir. Mr. Marble. Did it completely deprive you of a market? Mr. Messerole. I can not say that it did, although we were abso- lutely refused by four commission firms on this account, and it kept us in hot water continually, but before they had completed their arrangement, or before we had got to a point where we had no one to handle our grain, we were notified by certain commission houses in Chicago that they were going to make the price for the independent cooperative grain houses and handle their grain. From that time we nave had no trouble. Mr. Marble. Those houses were Lowell, Hoit & Co., and Eschen- burg & Dalton? Im-. Messerole. Yes, sir. Mr. Marble. No others? Mr. Messerole. No others at that time. Mr. Marble. So, of all receivers in Chicago, you found yourself reduced to two firms? Mr. Messerole. Yes, at that time. Mr. Marble. What time was that? Mr. Messerole. Four years ago this coming December. Mr. Marble. You now have a market? Mr. Messerole. Yes, sir. Mr. Marble. Have conditions been growing better from that time? Mr. Messerole. Yes, sir. Mr. Marble. Is that boycott still on, as you understand? GKATN ELEVATOR INVESTIGATION, 647 Mr. Messeeole. Yes, sir; I think it is with certain bidders and receivers and with certain elevator companies. I think some of the elevator companies have been released from that boycott from the fact that they have agreed to the conditions exacted by the Iowa Grain Dealers' Association. Mr. Makble. What are those conditions. I will ask you first if you have been offered release from the boycott on conditons ? Mr. Messebole. I was four years ago in December. Mr. Makble. What was that condition? Mr. Messerole. That we change our by-laws and strike out what they termed "a penalty clause." Mr. Makble. The penalty clause was the obnoxious feature of your by-laws? Mr. Messeeole. Yes, sir. Mr. Makble. You refused ? Mr. Messekole. Yes, sir. Mr. Makble. You understand that some farmers' elevator com- panies have stricken it out ? Mr. Messekole. Yes, sir. Mr. Makble. I will ask if those farmer companies that have stricken that clause out and had the boycott removed — ^have they agreed on prices at the local points? Mr. Messekole. I think there are instances where they have — I am informed. Mr. Makble. Do you understand whether or not they pool the business ? M. Messekole. I understand some of them have. Mr. Makble. You do not know of your own knowledge? Mr. Messeeole. I could not say, positively, of my own knowledge. Mr. Makble. How many farmers' elevators are there in Iowa? Mr. Messekole. As near as I can tell there are in the neighbor- hood of 110 or 116 actually engaged in the buying and shipping of grain. There are some organizations that are organized but have not completed their elevators or their plans. Some of them are organized and are awaiting the action of' the commission for sites on the railroads of the States now. They have the money raised. Mr. Makble. How many of the elevators have the penalty clause? Mr. Messekole. As. to that I could not say, but I believe it is a fair statement to say that 75 per cent of them have the penalty clause. Mr' Makble. Do you find prices generally higher where farmers' elevators are located than at towns with similar freight rates where they are not ? Mr. Messeeole. Yes, sir. Mr. Marble. Are they generally successful, or how many have failed up to this "time? Mr. Messeeole. There have been no failures that I know of within the last two years. Up to the time they adopted this half a cent arrangement, or penalty clause, as it is termed, there were quite a number of failures, I understand. Mr. Maeble. The penalty clause you regard as the valuable feature? 648 GRAIN ELEVATOR INVESTIGATION. Mr. Messerole. I do. I regard it as the one thing that enables them to maintain their business. Mr. Marble. Are there scoop shovelers — scoopers — in this State? Mr. Messerole. I do not know of any at this time. Mr. Marble. What is the attitude of the farmers' elevators toward the scoopers ? Mr. Messerole. We never have trouble with the scoopers where we have elevators, because we handle grain too close for scoopers. I have never known of a scooper attempting to do business where there is an elevator. Mr. Marble. You do not know what would be done if one appeared ? Mr. Messerole. I do not know. I have not had that to contend with. Mr. Marble. How have the railroads treated farmers' elevators, so far as furnishing cars is concerned ? Mr. Messerole. I am informed — I have no positive means of knowing, only through reports that come to me through members of the association — but I am informed that they are, in certain instances, discriminated against, for this reason: that the cooperative grain company usually handles a very large percentage of the grain in the market where they operate. The railroad companies — some of them — ^have taken the stand that they will divide the cars equally among the dealers — an equal number of cars. Others of the rail- roads, I am told, have taken the stand that the cars will be divided in the same proportion that the grain was handled among the dealers prior to the time when the shortage of cars appeared. Mr. Marble. What railroads make that latter rule? Commissioner Lane. Can you mention them briefly? Mr. Messerole. I will just mention the Chicago and North- western and the Milwaukee. Commissioner Lane. They hold the dealers to the pro rata they were doing before the shortage began ? Mr. Messerole. That is my understanding. Commissioner Lane. And the others divide equally among the elevators ? Mr. Messerole. The Rock Island, particularly, as I am told, divide equally among the elevators, regardless of the percentage of grain handled when cars are plenty. Commissioner Lane. Which road do you regard as unfair? Mr. Messerole. I regard the Rock Island and the Illinois Central as being the most unfair in a general way to the cooperative elevator interests. Mr. Marble. Are the farmers' elevators generally situated on rights of way of railroads ? Mr. Messerole. Usually; yes, sir; generally. Mr. Marble. Have they difficulty m getting sites, as a rule? Mr. Messerole. Yes, sir. Mr. Marble. More difficulty than line elevators have? Mr. Messerole. Yes, sir. Mr. Marble. That is your general knowledge? Mr. Messerole. That is my general observation and knowledge. Mr. Marble. You are the secretary of this association you have spoken of? GRAIN ELEVATOR INVESTIGATION. 649 Mr. Messerole. Yes, sir. Mr. Marble. That extends over the State? Mr. Messerole. Yes, sir. Mr. Marble. It is your business, as secretary, to receive reports? Mr. Messerole. Yes, sir. Mr. Marble. And travel over the State? Mr. Messerole. Yes, sir. Mr. Marble. It is from such acquaintanceship that you are testi- fying now? Mr. Messerole. Yes, sir; and also to help new organizations to secure sites. Mr. Marble. Have you found any forces trying to prevent farm- ers' elevators from securing sites ? Mr. Messerole. Yes, sir; I think I have. Mr. Marble. Can you say you have or have not, positively; or are you uncertain ? Mr. Messerole. All I can testify to is from reports. I have not attended any of the meetings where these forces have appeared; but I do not think it will be denied. Mr. Marble. I understand that there is some one here that can testify to that directly, and I will not ask you. In your opinion is the price fixed by agreement and the business pooled at any station in Iowa now ? Mr. Messerole. Yes, sir. Mr. Marble. At many stations in Iowa? Mr. Messerole. At a considerable number; less than it was before the establishment of so many cooperative elevator companies, however. Mr. Marble. You regard the cooperative elevator companies as the element that prevents that pooling? Mr. Messerole. Yes, sir. Mr. Marble. And you consider it is stopped to the extent of their presence and influence, except where they also have pooled? Mr. Messerole. Yes, sir. Mr. Marble. Are any railroads interested in any of these farmers' elevators in any way? Mr. Messerole. No, sir; except I may qualify that statement by saying that there are some roads who regard the cooperative move- ment as being the right thing and encourage the orgamzation of coop- erative elevator companies. Mr. Marble. What roads are those? Mr. Messerole. The Newton and Northwestern and the Des Moines, Iowa Falls and Northern and recently the Chicago and Milwaukee. Mr. Marble. Have you in your work as secretary had passes to do their business at all? Mr. Messerole. No, sir; I wish to qualify that statement also by saying that there have been in two instances transportation sent to me, but it was returned. Mr. Marble. Why did you return it. Mr. Messerole. I wish also to add that I do not think that trans- portation was sent with a view to influencing me or the farmers and grain dealers in any maimer that is detrimental to the best interest 650 GBAIN ELEVATOR INVESTIGATION. of the people, but it was done, I think, as a matter of courtesy and friendship. Mr. Maeble. I will ask you who fixes the price you are to pay at your farmers' elevator for grain? Mr. Messeeole. The local manager. Mr. Maeble. Does he get instructions from anyone? Mr. Messeeole. No, sir; he is governed by the markets. Mr. Maeble. The local markets ? Mr. Messeeole. By the terminal markets. Mr. Maeble. He is not governed by the local markets? Mr. Messeeole. No, sir. Mr. Maeble. He does not buy as low as he can ? Mr. Messeeole. No, sir. Mr. Maeble. Then, the farmers' elevator is properly not an elevator proposition. It is a device to put up the price ? Mr. Messeeole. Well, it is a device whereby the producers may get the full measure of benefit from the products of the soil, allowing a reasonable percentage for the maintenance of the business and an income sufficient to maintain the business. Mr. Maeble. But it is not run to make all it can under the circum- stances it finds? Mr. Messeeole. No, sir. Mr. Maeble. Do any farmers' elevators so far as you know get cards from Mr. Case? Mr. Messeeole. I think there are some getting them, yes, sir; but I could not testify to that positively. Mr. Maeble. Does your elevator get cards from Mr. Case ? Mr. Messeeole. No, sir. Mr. Maeble. Do you know what those cards from Mr. Case are? Mr. Messeeole. I think so. Mr. Maeble. Have you good reason to think? Mr. Messeeole. Yes, sir. Mr. Maeble. Tell us what you think and why you think it. Mr. Messeeole. I think this card arrangement that Mr. Case is put- ting out in this district is an arrangement that was formerly arranged by the regular grain dealers' association to provide a means whereby all dealers would be in line over the State. Mr. Maeble. You regard it as a successor of the price-fixing machinery that formerly existed ? Mr. Messeeole. Yes, sir. Mr. Maeble. It is practically a price-fixing proposition?. Mr. Messeeole. Yes, sir. Mr. Maeble. Why do you think that? Mr. Messeeole. Froni the fact that this card emanates from men that are interested in the association. They are association men. Mr. Maeble. Do they generally go. to association men, or do you know? Mr. Messeeole. Yes; they go to association men. Mr. Maeble. Now, I understand that you have a statement there. I will ask you to give us your views regarding "this penalty clause briefly. Mr. Messeeole [Producing statement]. I wish to say that GRAIN ELEVATOR INVESTIGATION. 651 Commissioner Lane. Can you give them orally and file that state- ment as part of the record ? Mr. Marble. You will leave that statement with us. Mr. Messerole. I can do that. Anticipating that something of this sort would be asked, I prepared a statement so that it would take less time. Commissioner Lane. Well, read it if it is short. Mr. Messerole (reading statement) : It has been said by certain parties that cooperative grain companies are not a neces- sity. If the honest individual effort of twenty years ago was in vogue to-day there would be no farmers' elevator companies. During the last fifteen years what is known as the line-house system secured control of the grain raised by the Iowa farmer and no single individual dared dispute the authority of this powerful combine. A few years ago the Iowa Grain Dealers' Association was born, evidently with the expressed pur- pose of setting the price on every bushel of com on an Iowa farm. George A. Wells, then auditor of one of the largest line elevator companies in the middle west, was made secretary and it was then that the dummy bid came into existence to fool the farmer. Pooling of prices and dividing receipts became the order of the day placing Wells and his coterie of line-house magnates in complete control. As a result we have the cooperative elevator company, which are not a fad, but an evolution, and are both a political and commercial factor in the State of Iowa. No sooner did this farmer elevator come into existence than efforts were made by this powerful combina- tion to disrupt these companies and rid themselves of this competition by paying a higher price to the members than the market would afford. As a result of this we have the "penalty clause." The "penalty clause," which has been so viciously attacked by the grain combine and their agents, is absolutely necessary to the existence of the cooperative grain companies. The day of independent individualism in honorable and open compe- tition is passed and the struggle is now between a corporate few and a cooperative many. We shall be able to show by competent witnesses that the independent dealer in grain, no matter how honorable or how honest, has gradually but certainly been forced to surrender to the privilege fed monopolies, known as the line-house elevator companies and has as a general rule either been forced into the combination or out of business. The combine after controlling the grain business both in the coun- try and in the terminal markets for several years .have met their first serious obstacle in the "penalty clause." As a representative of the Farmers Grain Dealers' Associa- tion of Iowa and of every grain grower in Iowa, I am here to defend that clause as being good in both law and morals. The cooperative grain company is in no sense a public corporation, nor is it impressed with the public use, but a private corporation. It is not in restraint of trade, because it has not been against public interest. A competitor is a middle man and not the pub- lic. This is the openly expressed opinion of Judge Cochran of the circuit court of Monticello, 111. The "penalty clause" is so far removed from being unfair, unjust, and un-American that in reality it guarantees, not only the stockholder who is responsible, but to every grain grower within reach, a free and open market. In the payment of this assessment the stockholders simply take the wise precaution of guaranteeing the perpetuation of these conditions. As the dog's tail was pinched in Iowa by the "penalty clause" we have heard the bark in Chicago. Reverse the dog, pincl^ his tail with the "call " rule in Chicago, and you hear his bark in Iowa Mr. Marble. Pardon me a moment. By the "call rule," you mean the rule of the Chicago Board of Trade that provides that the closing price shall be the price until the board opens the next morning? Mr. Messerole. Yes, sir. Mr. Marble. That has been already testified to ? Mr. Messerole. Yes, sir. (Continuing reading of statement :) It is charged by the combine and their agents that the "call" rule is illegal and in restraint of trade. Why is it illegal? Because it limits the time of trading in a certain branch of the business. When the hour for the "call" approaches these men who are 652 GEAIN ELEVATOE INVESTIOATION, impressed with the importance of paying high prices on card bids are at liberty to go into the call chamber and bid as high as they please for any of the grains, but when the bell taps, the price is fixed that they shall bid for grain of these grades until the open- ing of the session the following day and the rule as applied is in no respect different from the rule governing the time for option trading.. The effect of the "call" ruie is to open up the channels of trade that every shipper may have an opportunity to help these high bidders, develop their philanthropic ten- dencies by selling to them through their commission firm whatever grain they may want at just as high a price as they may wish to pay. Thus it will be seen that it tends to accomplish the greatest good for the greatest number, but another and more important effect of the rule is that it will check such practices as testified to by Mr. Shields, of Kansas City, that of the grain magnate so closely blended with the railway iftagnate that we are scarcely able to distinguish between the two visiting the railway offices, helping to frame a tariff and then go home to their ofiice and buy at a very slight advance a million or two bushels of grain before other shippers are made cognizant of the changed rate, and thus reap the entire profits for themselves. The objection to that part of the rule providing that these bids shall be made less the commission is silly in the extreme for the transactions are cleared through this one exchange, of which they are all members, and to the great body of these commission men who favor this rule are we indebted for the integrity of that exchange, and not to the few who seek to abolish the rule that they may through their special privileges practice discrimination against any class of shipper. Mr. Marble. So, to sum up, you, as secretary of this organization and representative of the farmers' elevators of Iowa and your own elevator, consider the call rule beneficial to the grain growers of Iowa? Mr. Messeeole. I do; yes, sir. Mr. Maeble. Is this pamphlet which I show you a copy of "The Constitution and By-laws of the Farmers Grain Dealers' Association of Iowa, 1904?" Mr. Messeeole. Yes, sir. Mr. Maeble. I will offer that as an exhibit. (The same is hereto annexed and marked "Exhibit No. 1 to Mr. Messerole's testimony.") Mr. Maeble. I think that is all, unless Mr. Messerole wants to suggest something. Mr. Messeeole. I have not any suggestions. Commissioner Claek. I would like to ask just why you consider this call rule a benefit to the grain growers? Is it not a fact that that rule prohibits any member of the Chicago Board of Trade from bidding any more than the price fixed in that call until the market opens the next day? Mr. Messeeole. I think that is true. Commissioner Claek. He is prohibited from buying, except under that price, is he not ? Mr. Messeeole. I understand that he is; yes, sir. I understand the price is fixed and no change can be made. I may be wrong in that. Commissioner Claek. The understanding I got of it from the testi- mony at Chicago was that they had been paying more than that that price, and the reason it was adopted was because the commission men objected to the elevator men going out after the market closed and paying higher prices, thereby preventing the commission men getting a commission on the grain that the elevator men thus bought. Mr. Messeeole. That was partly the objection, but I think the greatest objection to this rule from certain interests was that it GRAIN ELEVATOR INVESTIGATION. 653 prevented them from taking advantage of members of that exchange who were not in the track bidding business. Another benefit that I think this rule is responsible for is that when these men bid thejr go into the call room and bid; there is no restriction on that bidding, and the market is practically closed for the time being. The com- mission firm who handles the farmers' business or any independent shipper's business is at liberty to go into the caU chamber and offer for sale to the highest bidder, if farmer elevator companies or inde- pendent shippers, grain, and my experience as a grain shipper for over twenty years is that it pays to have a commission man look after yoiu" interests for the commission. Every man is worthy of his hire, and the commissions I have never regarded as unreasonable, and have made a practice for a number of years trying both methods of track selling and of consigning. I will state briefly that for ten years I have not sold a car of grain to any track bidder unless he was an actual consumer of the grain. Commissioner Clabk. Then we understand you to say that you beUeve, as a rule, it prohibits a member of the board of trade from paying you more than the price fixed by that rule in the closing call and that it is a good rule for the grower. Mr. !Messerole. You may understand me as saying that I think it is better for the greatest number. It may not be better for a certain class of shippers who may be benefited by certain privileges, who, as I stated in that article, would receive bids from certain terminal ele- vator interests where the grain grower and the farmer would not in the least be benefited by it. Commissioner Clark. Does not that get dangerously close to the idea of stifling competition? Mr. Messerole. It may appear so to some. Ccmmissioner Clark. It depends on where you sit, does it not? Mr. Messerole. Yes. If you had witnessed the struggle of the farmers' elevators in Iowa attempting to do business against line ele- vators without the protection of the penalty clause — I merely regard this rule as a protection to the commission man, who is the friend of the independent, regardless of the elevator interests, whom we regard as being dangerously connected with the carriers of the country. Commissioner Clark. We will not take time to go into any of the diflBculties of the situation any further. I would like to ask if you know who ^Ir. Case is that we have heard so much about the last few days? Mr. Messerole. I do not know him. It has been reported to me that he was the agent of a certain line elevator company. All I know is from report. I have never met the gentleman. Commissioner Clark. You do not know what his business is aside from sending out these cards? Mr. Messerole. No, sir. Mr. Marble. I understand that Mr. Case will speak for himself this afternoon. Mr. Carr. May I ask the witness a question or two? Commissioner Lane. What is your name? Mr. Cabr. Carr; I am attorney for the Iowa Grain Dealers' Associa- tion. Commissioner Lane. Go ahead. Mr. Carr [addressing witness]. You say that somebody told you 654 GBAIN ELEVATOB INVESTIGATION. the Iowa Grain Dealers' Association had an agreement to fix prices, and that that was one of the objects of the association? Mr. Messeeole. Yes, sir. Mr. Care. Who was that person? Mr. Messeeole. Well, a half dozen persons, members of the association. Mr. Care. Will you name them, please ? Mr. Messeeole. I will name one of them : Mr. Lindquist, of Hark- wood. Mr. Caee. That is the man you already mentioned ? Mr. Messeeole. Yes, sir. Mr. Caee. What did he tell you? Mr. Messeeole. He said to be a member of the association required the agreement on prices — the fixing of prices. Mr. Caee. Is that all the investigation into that subject you have ever made? Mr. Messeeole. Yes; I did not make that investigation; that was volunteered. Mr. Care. So, as I understand, now, your statement that you under- stand that there is an arrangement in this association for fixing prices comes from what Mr. Lindquist told you? Mr. Messeeole. Yes, sir. Mr. Caee. Now, in your association, have you any arrangement of that kind? Mr. Messeeole. No, sir. Mr. Caee. What is the object of yom* association? , Mr. MJesseeole. The object of oiu- association is to get the value of our grain or for the farmers to get the value of their grain. Mr. Care. In what way, Mr. Messerole, briefly? Mr. Messeeole. Well, in ridding themselves of conditions that prevailed before the organization of these cooperative companies. Mr. Carr. What linutations do you place on your members, if any? Mr. Messerole. In what respect? Mr. Carr. In any respect in reference to the grain business. Mr. Messerole. The limitations put on the members are simply this, that they take stock in the cooperative grain company and they sell their grain to that cooperative grain company, with the under- standing that if they are bid more than what the manager of the cooperative grain company thinks that grain is worth, or more than he IS willing to take it at, that they pay into the treasury of that cooperative company a half a cent a bushel, or whatever is agreed on, which is not always uniform, and the association has nothing to do with the fixing of that clause. Mr. Carr. That is fixed by the local company? Mr. Messerole. By the local company; yes, sir. Mr. Carr. You are speaking now of the penalty clause? Mr. Messerole. Yes, sir. Mr. Care. What I meant to inquire as to was your State organiza- tion. What is the purpose of your State organization and what restrictions, if any — or what are the conditions of membership? What restriction have you on your members ? Mr. Messerole. The conditions of membership are that they are a cooperative company and not a member of the Iowa Grain Dealers' Association; that is all the restriction there is on them. GBAIN ELEVATOR INVESTIGATION. 655 Mr. Caeb. Is there any arrangement in your association for fixing prices or governing prices in any way ? Mr. Messeeglb. None whatever. Mr. Carb. No agreement of that kind ? Mr. Messerole. No, sir. Mr. Caeb. You are running a newspaper, as well as in the grain business, are you not ? Mr. Messeeole. I am editing the American Cooperative Joiu-nal. It is not a newspaper. Mr. Caee. By whom is that published ? Commissioner Lane. We will not go into that question. I do not think that is material. Mr. Caee. Very well. Now, as to these Case cards. You have no personal knowledge, have you, as to their purpose ? Mr. Messeeole. They have never been sent me. Mr. Caee. You have not any personal knowledge of any agree- ment among the members of the Iowa Grain Dealers' Association to be governed by those prices, have you? Mr. Messeeole. All the personal knowledge I have of this matter is that fom" years ago the coming December, when Mr. Wells called on me at Gowrie, that he told me of this arrangement and set forth the benefits of this carding arrangement. Mr. Caeb. Did he say to you there was an agreement among dealers to be bound by those card prices ? Mr. Messeeole. I think not. Mr. Caee. Have you any information from any source that the members of the Iowa Grain Dealers' Association have any agreement among themselves to be bound by the Case card prices? Mr. Messeeole. Only from hearsay. Mr. Caee. You have no personal Imowledge ? Mr. Messeeole. What is reported to me by other people. Mr. Caee. That is all. The witness was excused. Gboege a. Wells, called as a witness, being duly sworn, testified as follows : Mr. Maeble. You are the secretary of the Iowa Grain Dealers' Association? Mr. Wells. Yes, sir. Mr. Maeble. How long have you been in that position? Mr. Wells. About seven years — going on seven years. Mr. Maeble. Prior to that you were manager of a country eleva- tor, I believe ? Mr. Wells. No, sir; I was employed by the Northern Grain Compairf. Mr. Mjveble. Where? Mr. Wells. I was auditor of elevators. Mr. Maeble. Auditor of the Northern Grain Company. Were you the first secretary of this State association? Mr. Wells. Yes, sir. Iilr. Maeble. Did you have to do with the organization of the State association? Mr. Wells. No; I did not. 656 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. At its inception? Mr. Wells. No, sir. Mr. Marble. Why was the association organized ? Mr. Wells. For the general benefit of the trade. Mr. Marble. What were the conditions that prompted the organi- zation? I want to get that just in your own way. Mr. Wells. Well, I have anticipated that question and I have it typewritten here. Mr. Marble. I suppose it is brief. Mr. Wells. Yes, sir; we will make it as brief as possible. The object of the association — I take this from the by-laws: The object of the association shall be the protection of its members from unfair treat- ment, the establishment of uniform lawful rules to be observed by the members, and the promotion of friendly relations between the legitimate grain dealers of the State. The association shall not have the power to buy or sell grain or any other property, nor to act as a commission merchant or broker, and no member shall be authorized to act for the association nor shall it take such action except in the manner provided in the constitution and by-laws. MEMBERSHIP. The membership of the Iowa Grain Dealers' Association includes the different classes of grain dealers who operate facilities for handling and storing grain and who keep an open and continuous market at all times for the convenience of the farmers and the pub- lic, and who conduct their business in a reputable and businesslike manner. The majority of oiu' members are local, or what are known as independent grain dealers, although line elevator companies and also farmers' elevator companies are included. The scope of the work of the Iowa Grain Dealers' Association is as follows, to wit: (1) To make investigations and exercise influence to secure improved methods and correct abuses in terminal markets, transportation, and the grain trade in general to the end that the distribution of grain may be done most economically and with the least possible loss and waste. (2) To promote general information and discussion regarding grain-trade questions, the following of which is a partial list, to wit: Relating to local conditions. — Use and necessity of written contracts; uniformity of storage rules and charges; advancing money on stored grain; insurance; coopering, loading, sampling, sealing, and billing of cars; perishable shipments of grain, billing. Relating to transportation conditions. — Car shortage; car equipment and motive power supply; delays in transit; delays in terminal yards; leakage and stealage en route; car-sealing systems; reseating and inspection; public record of seals and repau-s en route; shrinkage allowance in settlement of shortage claims; use of written applica- tion for cars; caj-door lumber; bills of lading, conditions of, etc. Relating to terminal trade conditions. — Commission merchants and their relations and obligations to the shipper; bunching cars in making sales on board o"f trade; sell- ing consignments to themselves; neglect to return documentary papers to shippers; track bidders, their terms; discounts because of missing grades; disposition of refected shipments; defaulted coi^tracts, settlement of. Relating to terminal market conditions. — Inspection of grain; weights; carload dock- age; extra charges against the shipper; delayed inspections; rejections; police protec- tion; record of physical condition of cars. (3) To disseminate information pertinent to the grain trade. We send our members two general lettera monthly, one going out about the 25th and the next about the second of the following month. In the first we inclose any circular letters of inquiry, such as information to use in compiling crop or other reports, and the compiled reports go out in the second letter mentioned. Circular letters relating to subjects of general interest to grain dealers are also inclosed in these regular mails. (4) Arbitration and the settlement of differences as between buyers and sellers is an importaiit work of this association. We have on file continually a number of such cases of which we undertake to secure amicable settlements as between the parties- failing in this, such cases are turned over to the arbitration committee, and their decisions are enforced and used as precedents in the settlement of future cases. Our members are required to submit to arbitration according to contract, form of which is attached herewith. (Exhibit A.) (5) Legislation is given such attention as is consistent to the best interests of our members; in fact, we have never taken any part in legislative matters for th^ direct GRAIN ELEVATOR INVESTIGATION. 657 interest of this association, except in secunng the enactment of a bill relating to the landlord's lien, copy of which I attach herewith. (Exhibit B.) We have always used our influence more or less to assist the Iowa State Agricultural Collie in obtain- ing necessary appropriations to carry on its work aloi^ agricultural lines. (6) Cpcips reports are a special feature of the work of this association. Such reports bemg corapUM and published monthly giving estimates on acreage, growing condi- tions, final yields, t«mpeiatures, precipitation, percentage of grain marketed, and any other general information relating to crops, as shown by copy of crop report attached hereto. (Exhibit C.) We also compQe a monthly estimate of the stocks of grain in country elevators, to show the tendency on the part of the dealers to store or ship during the crop year and also as compared with previous years. (Exhibit D.) (8) We make a special work of collecting freight claims for our members. We do not, however, care to have the members place all freight claims with us, but rather the refused claims, so that we may examine and determine as to whether such claims have merit or not. If we differ with the claim agent on any claim, or it we find that a claim has merit and papers are not complete in evidence, we mxike irp complete papers and present the daim for consideration. (9) We constantly employ a scale expert and systematicsdly offer opportunity to our members to have their scales inspected and repaired annually at a miniinum cost. We solicit the patronage of all scale owners, however, on same basis of charges, which are explained in the attached circular letter (Exhibit E), and I also inclose copy of the report used by the inspector (Exhibit F), also copy of annual report of the work done last year, showing that we inspected and repaired over 800 scales (Exhibit G). (10) We have given much time and contributed some money to the encouragement and improvement of the grain crops. We organized the first general "Seed Corn- Special Train'- propaganda. In December, 1905, 1 arranged with the officials of the different Chicago-Iowa railroads to provide at their own expense the equipment, sleeping-car and dining-ear service to enable Professor Holden and his assistants to give lectures at all stations on their respective lines in Iowa, and I was allowed by these roads to make up the list of stations to be scheduled, dividing up the junction points between the different roads so as to avoid duplicating stations stops. These trains traveled about 10,0(X) miles within this State, and made upwards of 7(X) station stops. About 1,200 lectures were given with a total attendance of about loO,0(X) farmers, all of which was done without one cent of expense to the State or the farmers. This association contributed some money toward Professor Holden's salary, besides inci- dental expense incurred by the assistants on the seed com special trains, also gave practically the full use of my own time for three months in Tnah-JTig arrangements and in managing the pn^rammes and trains, the use of office facilities and postage, ete., without any compensation whatever to myself personally or to the association. I take thiis opportunity to make this public statement for the reason that it is con- tended by some that the "seed com specials" were conducted at the expense of the State which is absolutely untiue. (11) We have recently taken up the question of car shortage with the idea of com- piling evidence during this year as to what portion of the year such shortage exists and also to ascertain the length of time taken hy the railroad companies to provide c^s in individual cases, and we are placing blank forms in the hands of the grain dealers for the purpose (copy of which is attached hereto. Exhibit H). We beueve that such evidence will be valuable in determining as to whether or not railroad com- panies own and operate a reasonable car equipment supply. {12/) This association by its influence and continuous efforts has been largely instru- mental in the establishment of pubUc supervision of weights at Kansas City, St. Louis, Memphis, Cairo, and Peoria, and also die establishment of a systematic method of TTiaViTig record of the physical condition of cars on arrival at terminal elevators in order tbat the shipper may have official e\-idence of loss because of leakage and steal- age en route. These records show that upward of 40 per cent of the care of grain arrive at terminals in bad order. I attach hereto copy of the weight certificate with bad order blank on back of same that is now being used by the weighing departments of the markets mentioned, in response to the request of the diJS««nt gram dealers' associations. (Exhibitl.) (13) In response to the demands of different rasun dealers' associations in which this association h^ acted a prominent part, carload dockage has been abolished or reduced in the different western terminal markets. Previous to the existence of grain dealers' associations, carload dockage depended mxmlj on the buyer' s disposition without any official r^ulation. 'Ae TfaiiHaH City Board of Trade still authorize a carload dockage of 100 pounds per car. The Baflroad and W^ehouse Commission of the State of Ulinois authorize a car- S. Doa 27a 59-2 42 658 GRAIN ELEVATOR INVESTIGATION. load dockage of 100 pounds per car at public elevators at East St. Louis. Chicago Board of Trade authorize a carload dockage of 40 pounds and Minneapolis 30 pounds per car. (14) I submit herewith a copy of the executive proceedings of our laet annual meet- ing (Exhibit J), and would cmI your attention to the different resolutions as adopted, regarding which we are giving special attention and have already secured certain favorable results. These resolutions relate to carload dockage; car seals; shrinkage allowance required by railroad companies; delays in transit and at terminals; delayed inspections; resealing cars at terminals; liability of railroads for delay in transit; increased rental charges for elevator sites; leaking cars repaired en route; supervision of weights at terminals . (15) I also submit herewith a list of grain dealers as published annually. This list includes all grain dealers, whether members of this association or not, who operate facilities for handling grain, except those grain dealers who refuse to< arbitrate differ- ences as between buyers and sellers, and farmers' elevator companies who conduct their business according to the penalty clause plan, which plan according to the best legal advice we can obtain is illegal. I submit herewith a copy of the penalty clause referred to (Exhibit K) with such legal opinion in connection. We furnish this list with amendments as published from time to time to terminal dealers at their request and for their convenience. This same booklet also contains constitution and by-laws, arbitration and trade rules of this association. Mr. Marble. Mr. Wells, I understood you to read that persons hav- ing proper facilities for handling grain may be admitted to member- ship in this association. Is that right ? Mr. Wells. Yes, sir. Mr. Marble (referring to by-laws of Iowa Grain Dealers' Associa- tion). The by-laws read that persons having elevators for the han- dling of grain may be admitted to membership in this association. Is that right ? Mr. Wells. We accept anyone who has any kind of facilities for handling grain. Mr. Marble. Then you do not enforce this section 1 ? Mr. Wells. Not technically. Mr. Marble. May I read the section? Commissioner Lane. Yes. Mr. Marble (reading section 1 from by-laws of Iowa Grain Dealers' Association) : Section 1. Any person, firm, or corporation conducting a reputable, regular, and continuous business of buying and selling grain in the State of Iowa, and having proper elevator facilities for handling same, may be admitted to membership in this asso- ciation. Mr. Wells. I put it the other way because we have members operating warehouses. Mr. Marble. Has there been a time you enforced that section as it reads? Mr. Wells. No, sir; I never recognized that difference before. Mr. Marble. You have described a great many beneficial and en- tirely laudable objects and activities of your association. I am not going to question you concerning those. I am going to ask you if it has at any time been the policy of your association to bring the competmg buyers of grain at country points into an agreement as to the price to be paid. Mr. Wells. During the first years of the association it was done to some extent. Mr. Marble. What years would that be? Mr Wells. I might say the first three or four years— somethine like that. * Mr. Marble. That would be what year? What year was the first year ? ; . GRAIN ELEVATOK INVESTIGATION. 659 Mr.WELLS. Well, 1900 and 1901 — somewhere along there. Mr. Marble. And 19021 Mr. Wells. To get them into positive agreement? That is some- thing I do not know about. Mr. Marble. Well, to get them into agreements the result of which would be that they would be reachmg a common price by agreement; to get them so that the results would be in the market that they would be agreeing and would be paying a common price not reached by competition, but by agreement. What years was that the policy of your association? Mr. Wells. There was no time we attempted to get positive agree- ments. Mr. Marble. I say when you attempted to get such understand- ings or agreements that the result in the market would be that they would be paying a common price that would be reached by agreement and not by competition. Mr. Wells. You say reached by agreement? Mr. Marble. Reached by advising each other what they were foing to bid — reached by community in this association. I want to now what years in your association it was the policy of your associ- ation and practice of bringing about that result, to have a price agreed upon rather than reached by competition. Mr. Wells. The association has never had such a policy. Mr. Marble. Have its ofl&cers ever had such a policy ? Mr. Wells. No, sir. Mr. Marble. Have you ever had such a policy ? Mr. Wells. I may have done some work in getting grain dealers to be friendly and having them discontinue fights that would result in ruinous competition. Mr. Marble. In what years have you as secretary tried to get grain dealers to be friendly, so they would not ruin thelhselves oy conipetition ? Mr. Wells. Well, it is such an indefinite matter, I could not say. There has been nothing done the last two or three years of that kind. Mr. Marble. Well, when was it ? Mr. Wells. We will say the first three or four years. Mr. Marble. Beginning in 1900? Mr. Wells. Yes, sir. Mr. Marble. During that time did you and certain other parties meet at stated intervals in this territory and take dinner together and reach by vote an agreement as to the prices to be paid in the different districts in the State ? Mr. Wells. There was a time when the members of the Cereal Club here at Des Moines met, but it was entirely outside of our grain dealers' association. Mr. Marble. Were they members of the grain dealers' association or not ? Mr. Wells. Not all of them. Mr. Marble. Some of them were ? Mr. Wells. Yes, sir. Mr. Marble. You were secretary at that time? Mr. Wells. I was secretary of the association. Mr. Marble. And you presided at the meetings ? Mr. Wells. Yes, I think so 660 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. You paid the bills for the room? Mr. Wells. Yes, sir. Mr. Marble. Paid them out of your own pocket or the treasury of the Iowa Grain Dealers' Association? Mr. Wells. Out of the treasury of the Iowa Grain Dealers' Asso- ciation. Mr. Marble. Did these members of this Cereal Club — what portion of the country buying of the State did they represent in their own right? Mr. Wells. A very small portion. Mr. Marble. What portion of the State was affected by that agree- ment about prices ? Mr. Wells. There was no agreement on prices. Mr. Marble. You would put a motion, would you not, that it would be the sense of the meeting that a certain price should be paid ? Mr. Wells. No, sir. Mr. Marble. What did you do ? Did you reach a common conclu- sion in any way before parting ? Mr. Wells. No, sir. Mr. Marble. What was the object of the meetiug ? Mr. Wells. The Cereal Club was a social club, but market condi- tions were discussed. Mr. Marble. Did the meetings result in reaching an agreement at any poiftt in Iowa as to the price to be paid ? Mr. Wells. No, sir. Mr. Marble. Did the meetings result in a common price being paid at any point? Mr. Wells. Not by agreement. Mr. Marble. Well, did they so result? Mr. Wells. I can not answer. Mr. Marble. What interest had the Iowa Grain Dealers' Association in these matters that it paid the bill for the room ? Mr. Wells. It was a social meeting for the discussion of general subjects. Commissioner Clark. I suggest that you ask him whether there was any understanding instead of agreement. It might mean the same thing. Mr. Marble. Well, did any understanding as to a common price to be paid at any point in Iowa result from these meetings ? Mr. Wells. Not that I know of. Mr. Marble. Was not that the purpose of the meetings? Mr. Wells. No, sir. Mr. Marble. Then, why did the grain dealers' association pay for the room ? Mr. Wells. Because we wanted to discuss general market condi- tions and other conditions. Mr. Marble. The grain dealers' association? Mr. Wells. Yes; and we took part in the discussions along the lines I have just read you. Mr. Marble. What was Mr. Case's connection with those meet- ings? Mr. Wells. It covered information regarding market conditions. Mr. Marble. In whose employ was he at that time? Mr. Wells. I think of no one except himself. GEAIN ELEVATOR INVESTIGATION. 661 Mr. Marble. Was not he one of yoiir clerks? Mr. Wells. No, sir. Mr. Maeble. Those meetmgs resulted, did they not, in some way in cards being sent out by Mr. Case ? Mr. Wells. I do not think so. Mr. Marble. Don't you know they did? Mr. Wells. No, sir. Mr. Marble. So you would say those meetings were just ordinary social gatherings of those present, having no connection with any scheme for an understanding or reaching a result as to prices to be paid at country stations? Mr. Wells. I can not say what was the result. Mr. Marble. What was the intended result? Mr. Wells. The intended result might be said to be to discuss the general market conditions. Now, if you understand the grain business Mr. Marble. I am not sure that I do. Mr. Wells. There is a great deal to be taken into consideration as to market conditions — spread between grades, grading of the grain, the condition of it, and a great deal of that sort of information that might be discussed. Mr. Case might gather from that discussion whatever he chose. Mr. Marble. Was Mr. Case present? Mr. Wells. Yes, sir. Mr. Marble. Always ? Mr. Wells. Not always. Mr. Marble. When Mr. Case was not present, what report was made to him ? Mr. Wells. None that I know of. Mr. Marble. Mr. Case sent out price cards after these meetings usually, did he not ? Mr. Wells. The price cards go out regularly in the afternoon. Mr. Marble. At that time did the price card go out after the meeting? Mr. Wells. Yes, sir. Mr. Maeble. When Mr. Case was not present at the meetings, who sent out the price cards? Mr. Wells. I suppose he did. Mr. Marble. Did he get any report of the meetings through you? Mr. Wells. Not that I know of. Mr. Maeble. The Iowa Grain Dealers' Association had many members besides those present a,t those meetings, did it not ? Mr. Wells. Yes, sir. Mr. Maeble. Who authorized you to take the money out of its treasxuy to pay for these meetings ? Mr. Wells. I have liberally used the funds along those lines, for the promotion of acquaintance and social matters. Mr. Maeble. Is there a fund placed in your hands that way ? Mr. Wells. It goes into the expense account that way. Mr. Marble. And you considered that these meetings were for the benefit of the Iowa Grain Dealers' Association ? Mr. Wells. We participated in them; yes, sir. Mr. Marble. You regarded it as a Grain Dealers' Association expense and not your personal expense ? 662 GEAIN ELEVATOR INVESTIGATION. Mr. Wells. Yes, sir; I am using opportunities of that kind to get information always. Commissioner Claek. How many members were there of this Cereal Club? Mr. Wells. I think there were 25 or 30. Commissioner Claek. All located here in Des Moines ? Mr. Wells. I think so— yes, sir; all Des Moines people. Commissioner Clark. liow many members of the Iowa Grain Dealers' Association? Mr. Wells. There are something like 700 to 800 elevators operated by about 400 or 500 individual dealers — between 400 and 500. Commissioner Claek. You have about 500 members of the asso- ciation ? Mr. Wells. Individual dealers — not that many now. I think about 400 individual members. Commissioner Clark. They are scattered all over the State ? Mr. Wells. Yes, sir. Commissioner Clark. Does any report go to the members around the State of the Cereal Club meetings ? Mr. Wells. Not that I am aware of. Commissioner Clark. In what way did the Iowa Grain Dealers' Association benefit from a weekly meeting of a few members who were regularly located here in Des Moines, when the other four hun- dred and odd members of the association knew nothing of the meet- ings, heard nothing of their results, and nothing of the discussions, and had no participation in them except the privilege of paying the bills ? Mr. Wells. I do not know that they did. Commissioner Clark. But that is in line with your idea of one of the benefits growing out of this Iowa Grain Dealers' Association? Mr. Wells. Yes, sir. Commissioner Lane. Who were the members of the Cereal Club who were not members of the Iowa Grain Dealers' Association?? Mr. Wells. Well, I think I could mention Mr. Harper. Commissioner Lane. What is his business ? Mr. Wells. He is a grain broker. Commissioner Lane. And who else? Mr. Wells. Mr. Hamlin. Commissioner Lane. What does he do? Mr. Wells. He is a grain dealer. Commissioner Lane. And who else ? Mr. Caee. I suggest Mr. Case. Was he a member? Mr. Wells. No. Commissioner Lane. Were any farmers' elevator men in that club? Mr. Wells. No. Commissioner Lane. They were just as much interested in those questions, of course, as the others, were they not? Mr. Wells. The farmers' elevators ? Commissioner Lane. Yes. Mr. Wells. Yes, sir. Commissioner Lane. Nobody outside of grain dealers or elevator men were members of that club ? Mr. Wells. I think not. Mr. Marble. Was Mr. Case a grain dealer? Mr. Wells. He is a grain broker. GBAIX ELEVATOB INVESTIGATION. 663 Mr. ^Iaeble. You mean a commission man ? Mr. Wells. A man who buAs grain for other people on a brokerage basis. 3ilr. ilAEBLE. Was Mr. Logan present at those meetings? Mr. Wells. I do not remember such a man. Mr. Marble. Who else was present at those meetings ? AYho else was present? Mr. Wells. They would be present at different times. Of course, I coidd not say — you do not mean one particular meeting ? ]VIr. Maeble. Xo. Mr. Wells. Who generally attended ? ^Ir. Makble. Yes, sir. Mr. Wells. Well, I might say Mr. McFarlin, ^Ir. Hodson of the Des Moines Elevator Company Mr. ^tlARBLE. What are Mr. Hodson's initials? Mr. Wells. X. ]Mr. Miller ilr. Marble. What are Mr. ]Miller's initials? ilr. Wells. H. C. ^It. Bowen, Mr. Regur, Mr. Hamlin. ilr. Marble. You mentioned him. ilr. Wells. Mr. McDougal, Mr. Harper. iJr. Marbt-w. You mentioned him. You mentioned ilr. McFarlin, Mr. Hodson, Mr. Miller, Mr. Case, and Mr. Logan. Mr. Wells. I did not mention Mr. Logan. Mr. Tower is a member ; P. R. Lockwood, and Lee Lockwood, and L. Mott. Mr. Marble. About how many all told were there ? ilr. Wells. I imagine the average attendance would be 15 or around that number. Mr. ilARBLE. Now, how many of these meetings were held, would you say, all told? Mr. Wells. I could not say. They were regular Saturday meel^ ings. ifr. Marble. Were they held for a year? Mr. Wells. I should think that long anyway. Mr. ilARBLE. For two years. ilr. Wells. Well, I would be wiUing to say from one to two years, but would hardly say more than two years. ilr. ilARBLE. I understood you to testify that one interest of the Iowa Grain Dealers' Association in these meetings was that it made the gentlemen acquainted. It did not take a weekly meeting every weekior two years to make them friendly, did it ? Mr. Wells. I did not make that observation. Mr. ilARBLE. What was the object of the meeting that the grain dealers' association was interested in that required its continuance so long a time at this expense ? Mr. Wells. I make it my personal business to meet grain dealers wherever I can and discuss the general conditions, and this was held in that kind of a way. The association figured that we were receiving benefits along those lines as well as the Cereal Club. iJx. Marble. Is there any other group of men that met that num- ber of times at the expense of the grain dealers' association? Mr. Wells. No, sir. Mr. Marble. Only this one? Mr. Wells. Yes, sir. Mr. ilARBLE. ilr. Case was present, you say ? 664 GRAIN ELEVATOR INVESTIGATION-. Mr. Wells. Yes, sir. Mr. Marble. Was he at that time a member of the Iowa Grain Dealers' Association? Mr. Wells. He never has been. Mr. Marble. Why was he present? To advise the rest or to be advised ? Mr. Wells. To get general information regarding market condi- tions. He took part in the discussion for his own personal benefit. Mr. Marble. Were these cards he sent out supervised by you ? Mr. Wells. No, sir. Mr. Marble. Did you keep familiar with the contents of them ? Mr. Wells. Not at all. Mr. Marble. Do you know whether or not Mr. Wells sent out any cards after those meetings? Mr. Wells. Mr. Case? Mr. Marble. Mr. Case, I mean? Mr. Wells. Yes, sir. Mr. Marble. You know that? Mi*. Wells. I know that. I know it in a general way. Mr. Marble. Now, to go to another matter; has the association made it any part of its business to prevent irregular dealers from find- ing a market for their grain? Mr. Wells. Indirectly; yes, sir. Mr. Marble. Now, what do you mean by "indirectly?" Mr. Wells. By giving information as to the disposition of firms who solicit business from scoopers and penalty-clause elevators. Mr. Marble. Giving that information to whom? Mr. Wells. Our members. Mr. Marble. It being the understanding or not that the members will refuse to deal with such? Mr. Wells. No understanding. Mr. Marble. No agreement, you mean? Mr. Wells. No agreement. Mr. Marble. But it was your understanding that they would ? Did not you so urge them? Mr. Wells. No, sir. Mr. Marble. Did you at all intimate to dealers receiving consign- ments from irregular dealers that regular dealers would not deal with them if they so continued ? Mr. Wells. No sir. What do you mean by " intimated ?' ' Mr. Marble. Well, I mean "intimated." I mean give them to understand, either directly or indirectly. Mr. Wells. No, sir. Mr. Marble. You never wrote any such letters? Mr. Wells. Indirectly, so far as some were concerned, I might have suggested that it was the sentiment among the grain dealers' association that they would not do business — mat that sentiment prevailed. Mr. Marble. Was it the policy of the grain dealers' association to have that sentiment prevail, or to allay it and remove it? Mr. Wells. Well, how would you expect to determine the policy? Mr. Marble. I would expect you to know, as the secretary, what line of action you had in view in your activities, whether you were GRAIN ELEVATOE INVESTIGATION. 665 trying to produce that sentiment or trying to get rid of it, or simply indifferent whether it existed or not. Mr. Wells. I think we were trying to produce it. Mr. Marble. That is what I thought. This letter which I have shown you — ^is that a letter sent out by you ? Mr. Wells. Yes, sir. Mr. Marble. And it is dated Des Moines, Iowa, August 15, 1904 — that is correct, is it? Mr. Wells. Yes, sir. Mr. Marble. May I read the letter? Commissioner Lane. Yes, sir. Mr. Marble. It is written on the letter head of the Iowa Grain Dealers' Association. (Reading:) Des Moines, Iowa, August 15, 1904- EscHBNBERG & Dalton, Chicogo, III. Gentlemen: I wish to advise you that the Mauley Grain Company, of Manley, lowai, and the Farmers' Cooperative Society, of Dougherty, Iowa, are not recognized as dealers by this association. It was openly stated in a meeting of grain dealers recently held at Mason City that you were receiving this business. If it is not true I would be glad to have you write me a letter to that efiect and I will place a copy of that letter in the hands of every dealer that attended that meeting, in order that there may be no misunderstanding ill regard to the matter that will be to your detriment. Awaiting your reply. I am, yours truly, Geo.' a. Wells, Secretary. (The same is hereto annexed and marked "Exhibit No. 2 to Mr. Wells's testimony.") Mr. Marble. Will you tell us what you meant by that letter? Mr. Wells. I meant just what I have already given evidence of — that the dealers would have an opportunity to know their disposi- tion. Mr. Marble. And was it your understanding or did you mean to intimate to them that if they did not answer that letter to the effect that they had not received those shipments that they would be injured in their business if continued — I do not want to misrepresent you — that the regular dealers would refuse further to deal with them? Was that the impression you meant to convey in this letter to Eschenberg & Dalton? Mr. Wells. That was the sentiment among the dealers. Mr. Marble. And you wanted to give them notice of that fact ? Mr. Wells. Yes, sir. Mr. Marble. Did you hope to persuade them, by giving that notice, not to receive the shipments from the cooperative society? Mr. Wells. Not altogether. Mr. Marble. Was that your purpose in writing the letter ? Mr. Wells. Yes, sir. Mr. Marble. In part? Mr. Wells. Yes, sir. Mr. Marble. But you were inclined to think that they would not accede to it; was that what you meant? Mr. Wells. I should like to make a little further explanation along this line. Mr. Marble. Yes. 666 GEAIN ELEVATOE investigaiiok. Mr. Wells. The commission houses sometimes — and I think Es- chenberg & Dalton were one of them — wrote and asked me with ref- erence to the farmers' elevators operating under a penalty clause and scoopers, and I gave them the information. You can readily imder- stand that there is sentiment established among the grain dealers, and it is established against farmers' elevator companies operating under a penalty clause. Mr. Marble. Exactly; and this letter Mr. Wells (interrupting) . And they realize and the commission houses realize if they take business from the dealers, from the penalty- clause houses, these dealers, especially those in competition with them, will not be likely to do business with them. So that to a large extent I have taken this matter up with commission houses at their request. Mr. Marble. You would not say this letter was written in response to a request from Eschenberg & Dalton ? Mr. Wells. Not directly, but I think there was correspondence previous to that that would show that they made such a request upon me. Mr. Marble. Have you that correspondence now ? Mr. Wells. No, I have not. Mr. Marble. You did not restrict yourselves, in writing such letters as this, to commission houses that had written letters to you ? Mr. Wells. No.- Mr. Marble. You wrote to where you knew the business was going ? Mr. Wells. Yes, sir. Mr. Marble. I will ask you if that is a letter or copy of a letter sent out by you to yoiu" members ? Mr. Wells. Yes, sir. Mr. Marble. And this also ? Some ©f the letters which you have been asked about, as to signature, are also in typewriting, and with- out a heading, and some of them bear no signature. Now, Mr. Wells, I have shown you three typewritten sheets. Are those sheets sent out by you ? Mr. Wells. Yes, sir. Mr. Marble. This one commenced, "To members" — that is, to members of the grain dealers' association ? Mr. Wells. Yes, sir. Mr. Marble. That one relating to the farmers' cooperative compa- nies — to whom was that sent? Mr. Wells. The commission men. Mr. Marble. At the terminal markets ? Mr. Wells. Yes, sir. Mr. Marble. And this one, "To bidders and receivers" — to whom was that sent ? Mr. Wells. The same thing. Mr. Marble. A great number of copies of each of these went out to these different classes of persons, or quite a number ? Mr. Wells. Yes, sir. They went out to terminal bidders; it was a circular letter to terminal bidders and receivers. Mr. Marble. The first one is marked "Confidential" Mr. Wells. Excuse me. I want to correct that. I didn't say that this went to members. GEAIN ELEVATOR INVESTIGATION. 667 Mr. Marble. This is the one which went to members: (Reading.) To members: Will you please correspond with Lowell, Hoit & Co., Chicago, 111., with a view to giving them some shipments. They are taking business from farmers' elevator companies not recognized by this association, and I find that they are not getting any business from the regular dealers. My purpose is to thus place them under sufficient obligation to the members of this association, so that they wiU consider it for their best interest to confine their dealings in the future to the firms that are recognized. Do not raise the question about the farmers' elevator companies in your first letter, but take that up with them later, after having given them some business. Please keep the matter confidential, and advise me of your action and results. Please answer questions in blank foim given below, detach, and return same to me at once. Yours, truly, > Geo. A. Wells, Secretary. Have you done any business with firms named below during the past year, to wit: Hately Brothers, Chicago, 111.? — Answer. O. G. Kellogg & Co., Chicago, 111.? — Answer. Eschenberg & Dalton, Chicago, 111.? — Answer. Lowell, Hoit & Co., Chicago, 111.? — Answer. F. D. Hamlin, Des Moines, Iowa? — Answer. (The same is hereto annexed and marked "Exhibit No. 3 to Mr. Wells's testimony.") Mr. Makble. Mr. Hamlin was one of the men present at the Cereal Club? Mr. Wells. Yes, sir. Mr. Marble. Why didn't you find out from him there whether he had done business with them? Mr. Wells. I do not know what the date of that letter is. Mr. Marble. August 31, 1904. Was there any trouble with Mr. Hamlin after he had been a member of this Cereal Club ? Mr. Wells. There was some personal difference with Mr. Hamlin. Mr. Marble. Purely personal between you and Mr. Hamlin? Mr. Wells. I would say so, perhaps; I can not say altogether. Mr. Marble. Did that relate to the prices to be bid for grain? Mr. Wells. No, sir. Mr. Marble. Nor to pooling business at any point? Mr. Wells. No, sir. Mr. Marble. Nor to the conduct of the grain dealers' associ- ation? Mr. Wells. He was opposed to the letter which you read; it was that letter. Mr. Marble. He didn't want you to send out such a letter? Mr. Wells. Yes, sir. Mr. Marble. And you immediately tried to find out what busi- ness he had been doing, by asking your members to report to you whether or not they had done any business with him? Mr. Wells. Yes, sir. Mr. Marble. Why did you want to know? Mr. Wells. Simply as a matter of information to give to our members. Commissioner Clark. Did the personal difference arise after that letter was sent out? Mr. Wells. I can not speak positively, but I would imagine about the same time. 668 GEAIN ELEVATOE INVESTIGATI' -NT, Mr. Marble. Over the framing of this letter? Mr. Wells. I would think so. Mr. Mabblp. You wanted to help his business, but you were get- ting information as to where his customers were? Mr. Wells. Yes, sir. Mr Maeble. You swear to that ? Mr. Wells. To help his business? Mr. Marble. Yes; you wanted to help his business; that was the reason you were asking for this information? Mr. Wells. I do not just understand your question. Mr. Marble. I am trying to get at why you asked for this informa- tion ; what bearing that could nave on any personal difference with you? Mr. Wells. The personal difference grew from this letter. Mr. Marble. Why did you add his name to the list of houses here? Mr. Wells. In order to give information to the members that he was receiving business from penalty-clause houses. Mr. Marble. The next letter identified is dated Des Moines, Iowa, August 17, 1904. farmers' cooperative elevator companies not recognized by the IOWA GRAIN dealers' ASSOCIATION. Farmers' Exchange Society, Kensett, Iowa Central Railway. Farmers' Elevator Company, Freeman, Iowa Central Railway. Manley Grain Company, Manley, Chicago and Great Western Railway. D. M. Smith, manager, Manley, Chicago and Great Western Railway. Farmers' Cooperative Association, Rockwell, Iowa Central Railway. Farmers' Supply Company, Cartersville, Chic^o and Northwestern Railway. Farmers' Cooperative Society, Dougherty, Chicago and Northwestern Railway. Farmers' Elevator and Live Stock Company, Stanhope, Chicago and Northwestern Railway. Galva Union Elevator Company, Galva, Chicago and Northwestern Railway. Lawler Grain and Live Stock Association, Lawler, Chicago, Milwaukee and St. Paul Railway. Farmers' Elevator Company, Ridgeway, Chicago, Milwaukee and St. Paul Railway. Dunbar Grain and Live Stock Company, Dunbar, Chicago, Milwaukee and St. Paul Railway. Farmers' Incorporated Society, Ruthven, Chicago, Milwaukee and St. Paul Railway. Farmers' Elevator Company, Gowrie, Newton and Gowrie Railway. Farmers' Elevator Company, Badger, Minneapolis and St. Louis Railway. Farmers' Elevator Company, Garden City, D. M. I. F. and N. Railway. The above-named farmers' elevator companies are not recognized by the Iowa Grain Dealers' Association, for the reason that they are organized on the Rockwell plan of making assessments, etc. As secretary of the Iowa Grain Dealers' Association, I am required to give our mem- bers all information regarding shipments made by them, and my object in placing this list in your hands is that you may intelligently act in deciding your policy, etc. Yours, truly, Geo. a. Wells, Secretary. (The same is hereto annexed and marked "Exhibit No. 4 to Mr. Wells's testimony.") , Mr. Marble. That, you say, was sent to the dealers of the ter- minal markets? Mr. Wells. Yes, sir. Mr. Marble. With the intention of having them conclude it was to their better interest to keep to one class of business rather than to the other? Mr. Wells. Yes, sir. GKAIN EJJEVATOB IXVESTIGATION. 669 Commissioner Lane. What one of the specific objects that you said the otganization was created for does that letter subserve? Mr. Wells. Strictly speaking, it does not subserve any. Mr. Mahble. That was one of your chief activities for a long time — to send out such letters ? Mr. Wells. It has not been — not a chief activity. Mr. Marble. How active, then? You did it in pursuance of your employment as secretary, did you not? Mr. Wells. I do not Know what you mean. Mr. Marble. I say, you did that as secretary of the association — in pursuance of your employment as secretary ? Mr. Weli^. Yes, sir. Mr. ilARBLE. This is another letter identified by you? Mr. Wells. Yes, sir. Mr. ^Iabbue (reading) : Des Moines, Iowa, August 17, 1904. To Bidders and Receivers: We desire to call your attention to the fact that the Iowa Grain Dealers' Association does not recognize scoop^shovel shippers, farmers' cooperative elevator companies on the assessment plan, nor grain dealers — shippers, bidders, or receivers — ^who refuse to ■ arbitrate differences as between buyers and seUers. As a matter of courtesy to bidders and receivers, we always give them notice when we find shipments have gone forward from shippers not recognized by the association in order that they may, if they desire to do so, discourage such shipments and thus maintain friendly relations with the members of this association. Conditions in Iowa are such that it is almost impossible for shipments to be made by scoopers and farmers' elevator companies without the general knowledge of the dealers, because of the fact that local meetings are being held continually and such matters freely discussed in the meeting. " If you receive shipments from parties not included in our directory or correction lists and will write me, I wiU promptly inform you concerning them. YouiB, truly, Geo. a. Wells, Secretary. (The same is hereto annexed and marked "Exhibit Xo. 5 to Mr. Wells's testimony.") ilr. Marble. Do we understand from this that the members of the association kept track of shipments made by irregular dealers? Mr. Wells. They obtained the information at times. Mr. Marble. To the extent of their abihty they obtain the information ? Mr. Weli£. Yes, sir. Mr. Marble. And notified you? Mr. Wells. Yes, sir. Mr. Marble. And you, if possible, notified the consignee before he should receive the shipment? Mr. Wells. Xot specially before he would receive the shipment. Mr. Marble. As quickly as possible ? Mr. Wells. I would probably notify him. Mr. Marble. And if you got your notice to him before he received the shipment, you would consider yourself that much more successful in your enterprise ? Mr. Wells. I never thought of it that way. Commissioner Lane. In some cases you would get that information from the railroad agents? Mr. Wells. Not personally, myself. Commissioner Lane. No; but I mean Mr. Wells. I do not know how they got it. 670 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. These are all yours? [Indicating a number of letters.] Mr. Wells. Yes, sir. Commissioner Lane. You did not have any man whose regular business it was to go around and sep to whom these shipments went ? Mr. Wells. No, sir. Mr. Marble. I have here a copy of a letter, and I will ask you if this is a true copy of a circular letter sent by you to your members in this State ? Mr. Wells. Yes, sir. Mr. Marble (reading) : Dbs Moines, Iowa, September 15, 1904. Dear Sir: It is reported that the Farmers' Elevator Company, of Dougherty, Iowa, are making shipments to Eschenberg & Dalton, of Chicago. These reports have been coming to this office continuously for the past thirty days. The Farmers' Elevator Company at Dougherty are organized on the Rockwell plan, that provides for the assessment of its members to meet the expenses of conducting the business, thus enabling them to offer to the farmer the full shipping value for his grain. I would suggest that you correspond with Eschenberg & Dalton in regard to this matter if you feel that you do not care to do business with terminal dealers that are taking business from such farmers' elevator companies. Will you kindly favor me with the reply that you receive from Eschenberg & Dalton, and oblige. Yours, truly, Geo. A. Wells, Secretary. (The same is hereto annexed and marked "Exhibit No. 6 to Mr. Wells's testimony.") Mr. Marble. Now, you have identified this as sent out by you, and this is, without stopping to read it, a list of the farmers' elevator companies not having the penalty clause, and therefore recommended to the terminal dealers? Mr. Wells. Yes, sir. (The same is hereto annexed and marked "Exhibit No. 7 to Mr. Wells's testimony.") Mr. Marble. And you still further distinguish between farmers having penalty clauses and those not having them; and this list shows, does it not, corrections in your directory? Mr. Wells. Changes in the firms. Mr. Marble. And at the bottom — The firms named below refuse to arbitrate the differences with terminal dealers and are therefore not now members of the Iowa Grain Dealers' Association: C. M. Gowdy, Britt, Iowa; Moore Bros., Hampton, Iowa; W. B. Cartwright, Wyman, Iowa; C. 0. Feil, Charles City, Iowa. (The same is hereto annexed and marked "Exhibit No. 8 to Mr. Wells's testimony.") Mr. Marble. Now, these letters here are already in evidence before the Commission, put in by Mr. Dalton, of Chicago, as a part of his tes- timony, and I sunply want to draw Mr. Wells's attention to a few statements made in them to see if the statements made are justified. This is a letter from Easmussen Brothers, of Milford, Iowa, dated September 17, 1904 (reading) : Messrs. Eschenberg & Dalton, ^ Chicago, III. Gentlemen: It is reported that you are handling shipments from fairmers' elevators that are working on the Rockwell plan, and especially for the Farmers' Elevator Com- pany at Dougherty, Iowa, where they intend to pay the farmer all the grain wiU. bring GRAIN ELEVATOB INVESTIGATION. 671 in market and assess the cost of running expense to the stockholders; that, you know, is a detriment to the grain dealers and should not be encouraged by the Grain Dealers' Association. Please let us hear from you regarding this matter, and oblige. Yours, truly, Basmussen Bbothees. (The same is hereto annexed and marked "Exhibit No. 9 to Mr. Wells's testimony.") Mr. Marble. Do you know whether or not such letters as that letter were written in response to this one of yours that we have read ? Mr. Wells. I haven't any definite knowledge. Mr. Marble. Would you say that at that tune you did get copies of such letters sent out in response to your request ? Mr. Wells. Yes; I did receive such letters. Mr. Marble. Here is one from Skewis-Moen Company, Minneapolis Minn., October 17, 1904: EscHENBEBG & Dalton, Chicugo, III. Gentlemex: In view of the reports that we have been getting from competitors in Iowa, regarding your accepting shipments from farmers' elevator companies, we have felt that our interests could be best served by asking our agents not to ship any more g^ain to you. We are very sorry to do this, indeed, as you have always handled what little grain we have given you as well as anyone could. At any time that this matter has been adjusted and you have concluded that yoiu- interests can best be served by accepting shipments from regular dealers only we will be pleased to continue shipping to you. Yom-s, truly, Skewis-Moen Co. (The same is hereto annexed and marked "Exhibit No. 10 to Mr. Wells's testimony.") Mr. Marble. Do you know whether or not that is in response to any apphcation of yours or your association ? Mr. Wells. I couldn't say. Commissioner Lane. I would suggest that you read the names of the firms that did ask him. Mr. Marble. There was one that I was looking for which mentions Mr. Wells's name. Do you know about a letter from E. Mann, of Calumet, Iowa, to Eschenberg & Dalton, dated September 20, 1904? Mr. Wells. I have no positive evidence. (The same is hereto annexed and marked "Exhibit No. 11 to Mr. Wells's testimony.") Mr. Marble. Here is a letter from Kennedy & McGonagle to Eschenberg & Dalton. Mr. Wells. I have no information about it. (The same is hereto annexed and marked "Exhibit No. 12 to Mr. Wells's testimony.") Mr. Marble. Here is one from E. L. Ballou, Larrabee, Iowa, to Eschenberg & Dalton. Were they at that time members of the association? Mr. Wells. The first is. Mr. Marble. E. Mann? Mr. Wells. Yes, sir. Mr. Marble. How about Kennedy & McGonagle? Mr. Wells. Yes, sir. Mr. Marble. E. L. Ballou? Mr. Wells. Yes, sir. (The letter from E. L. Ballou is hereto annexed and marked "Exhibit No. 13 to Mr. Wells's testimony.") 672 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. How about Woodford, Wheeler & Tompkins? Mr. Wells. Yes, sir. (A letter from that firm is hereto annexed and marked "Exhibit No. 14 to Mr. Wells's testimony.") Mr. Marble. Nelson Bros. & Rich? This letter is dated Septem- ber 5, 1904. Mr. Wells. I wouldn't be positive about that firm. (The same is hereto annexed and marked "Exhibit No. 15 to Mr. Wells's testimony.") Mr. Marble. Adam Schneider, Garner, Iowa, September 17, 1904? Mr. Wells. Yes, sir. (The same is hereto annexed and marked "Exhibit No. 16 to Mr. Wells's testimony.") Mr. Marble. Schoeneman Brothers, George, Iowa, September 16, 1904? Mr. Wells. I couldn't say whether they were members or not. (The same is hereto annexed and marked "Exhibit No. 17 to Mr. Wells's testimony.") Mr. Marble. Here is a letter from Brown & Dodd, of Gladbrook, Iowa, dated September 16, 1904? Mr. Wells. Yes, sir. (The same is hereto annexed and marked "Exhibit No. 18 to Mr. WeUs's testimony.") Mr. Marble. Here is another letter from Mr. E. Mann. (The same is hereto annexed and marked "Exhibit No. 19 to Mr. WeUs's testimony.") Mr. Marble. Here is one from E. A. Crall, of Biu-chinal, Iowa, dated August 25, 1904. Mr. Wells. I couldn't say positively. (The same is hereto aimexed and marked "Exhibit No. 20 to Mr. Wells's testimony.") Mr. Marble. I will read this letter and see if you can tell whether or not it is in response to yours. It is from the Iowa Elevator Company and dated August 24, 1904, (reading) : EscHBNBURG & Dalton, Chicogo, III. Gentlemen: We have your favor of the 23d. We did not know that there was regular dealer by the name of W. R. Bloom at Klemme, Iowa. We thought the man's name was Aug. Bloom. It may be possible that these oats belong to this dealer. We expect to investigate further and will let you know. We sold our elevator at Burchinal to the farmers. We were virtually forced to sell them, as they would have built another elevator at that town. Mr. Wells, the secre- tary of the Iowa Grain Dealers, does not recognize a company of this kind and we are working through him to discourage this class of business. If all the commission houses refuse to handle their business will soon get rid of them in that territory. Trust you will give us your support. Treat our letter as confidential and do not use our name in connection with any correspondence you may have with the farmers. Yours, truly, ItiwA Elevator Co. (The same is hereto annexed and marked "Exhibit No. 21 to Mr. Wells's testimony.") Mr. Marble. Do you know about that letter? Mr. Wells. No, sir. Mr. Marble. Do you know about that transaction? Did the Iowa Elevator Company sell an elevator to the farmers and then attempt to keep them from getting any use of the elevator by cutting them off from the terminal market? GRAIN ELEVATOB INVESTIGATION, 673 Mr. Wells. I know there is a farmers elevator at that point, but I don't know that they bought the house from them. Mr. Marble. You don't know, then, that they, after selling them a house, tried to prevent their use of it ? Mr. Wells. No, sir. Mr. Marble. Do you pay raihoad fare when you travel? Mr. Wells. Yes, sir. Mr. Marble. Have you done so ever since you were secretary? Mr. Wells. Yes, sir. Mr. Marble. Haven't you been favored with a pass? Mr. Wells. No, sir; except on the seed-corn special. Mr. Marble. Excepting th^t, your testimony would be the same as Mr. Messerole's, that you do not travel on a pass ? Mr. Wells. Yes, sir. Mr. Marble. Does Mr. Marcy, of the Armour Grain Company — I will ask you this first: Do the elevators of the Neola Elevator Com- pany belong to the Grain Dealers' Association? Mi. Wells. Not now. Mr. Marble. They did? Mr. Wells. Yes, sir. Mr. Marble. But they have ceased ? Mr. Wells. Yes, sir. Mr. Marble. When they did ; do you know about their relationship to Mr. Case? Mr. Wells. No, sir. Mr. Marble. I will ask you if, when they were members, they paid to the association the sum of 50 cents a month, and in return got Mr. Case's price cards ? Mr. Wells. No, sir. /• Mr. Marble. I can not remember Mr. Marcy's testimony so closely as to be justified in asking that question. Is Mr. McDougal a mem- ber of the Graia Dealers' Association? • Mr. Wells. No, sir; not now. Mr. Marble. Did you mention his name among those present at the Cereal Club? Mr. Wells. Yes, sir. Mr. Marble. Was he a member at that time ? Mr. Wells. I think he was, but I couldn't say positively. Mr. Marble. Now I will ask you if such letters as these were sent out at that time in the ordinary course of business — a great many of them? Mr. Wells. Yes, sir. Mr. Marble. Are you sending out such letters now? Mr. Wells. The cu-cular form of letters, and the other — there has been none of those put out since two years ago September, when the members of the Chicago Board of Trade had a meeting and voted that they would receive business from all shippers, and 1 ceased to give them information by circular letter after that. Mr. Marble. Have you given information to any St. Louis firm since then? Mr. Wells. I have given — I have written personal letters. Mr. Marble. Have you written a personal letter to Ballard, Mess- more & Co. ? Mr. Wells. I presume I have. 674 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. About handling the business of Lowell, Hoit & Co.? Mr. Wells. Yes, sir. Mr. Marble. Do you know whether or not on your writing them, Ballard, Messmore & Co. were cut oflF from their regular gram busi- ness in the State ? Mr. Wells. I am not sure that I wrote our members in regard to them. Mr. Marble. Do you know whether or not because Mr. Ballard began to represent Lowell, Hoit & Co. — as a result of that, however, the information was scattered — his firm did lose the business of regu- lar dealers in the State ? Mr. Wells. I do not know anything about it. Mr. Marble. It is 1906 I am asking you about? Mr. Wells. I did not know anything about it; but I do not think there was any letter put out in regard to Ballard, Messmore & Co. Mr. Marble. But you think you wrote to them protesting against their handling the business of Lowell, Hoit & Co.? Mr. Wells. I wrote to them asking them if they were handling the" business. Mr. Marble. It is the same thing, isn't it? Mr. Wells. No. I simply asked them if they were handling the business, Mr. Marble. Was there any intimation that you were going to notify the dealers'? Mr. Wells. No, sir. Mr. Marble. Are you quite sure? Mr. Wells. I am not quite stire as to the tenor of that letter, but I am quite sure that it is not in the same tenor. Mr. Marble. Have you been writing letters to people in Milwaukee of this same general nature this simomer ? Mr. Wells. Personal letters? Mr. Marble. Such letters as these, whether personal or as secre- tary? Mr. Wells. I do not think there is any — no circular letter. Mr. Marble. Have you written letters inquiring whether they have been receiving grain from irregular dealers to dealers there — receivers ? Mr. Wells. Well, I do not call to mind any. Mr. Marble. To E. P. Bacon? Mr. Wells. Yes, sir. I Mr. Marble. You have this summer? Mr. Wells. I would be inclined to think that I had not, but I can not say for sure. Mr. Marble. You have written to them recently? Mr. Wells. In years gone by. Mr. Marble. Perhaps last year or perhaps this year? Mr. Wells. I know I have had very little correspondence with them. Mr. Marble. You can not fix the time when the last letter went forward ? Mr. Wells. I can not. Mr. Marble. Was the Iowa Grain Dealers' Association organized through the efforts of the large line companies or through the efforts GBAIN ELEVATOR IITVBSTIGATION. 675 of the independent small lines; who were the moving factors at the start? Mr. Wells. I could not answer that question. Mr. Marble. Was Mr. Martin, of the Northern Grain Company, a member when you became a memiber ? Mr. Wells. No, sir. Mr. Marble. Is your connection with the association due to Mr. Martin? Mr. Wells. No, sir; absolutely no. Mr. Martin. You were in the employ of his company at the time ? Mr. Wells. Yes, sir. Mr. Marble. Did you get this position through other channels? Mr. Wells. Yes, sir; I would be willing to explain that. Mr. Marble. You have answered the question fully, but you may explain if you desire to. You say it was not due to him, and the answer goes in in that way. Mr. Wells. Of course, I could take up your time explaining it. Mr. Marble. I don't believe there is anything to explain. I just asked the question to get your answer. That is all. Commissioner Clark. I would like to ask Mr. Wells, what, from the standpoint of the Iowa Grain Dealers' Association, is meant by the term "regular dealer?" Mr. Wells. Well, it is a term that the association does not use as a rule, although we understand that a regular dealer is one who oper- ates some kind of facilities for handling grain, and he keeps an open market at all times. Commissioner Clark. But the term, you say, is not ordinarily used by the association? Mr. Wells. In correspondence we are not using it, because it is rather indefinite. Commissioner Clark. You use it a good deal in your constitution and by-laws? Mr. Wells. It is an old term that was used in the beginning and has always stayed on the books there. Commissioner Clark. What did it mean in the beginning? Mr. Wells. Just what I have told you. Commissioner Clark. What do you mean by "facilities for hand- ling grain?" Mr. Wells. Warehouse or elevator facilities located adjacent to a railroad track and convenient for loading. Commissioner Clark. Then, you say this word "elevator," in sec- tion 1 of article 2 of your constitution does not mean anything? Mr. Wells. I do not know how that reads. ' Commissioner Clark. Well, it says that any person having proper elevator facilities in the handling of grain may be admitted to mem- bership in the association. Mr. Wells. As I explained previously, there has never been a line drawn in that respect, as between what we call a warehouse and an elevator. Commissioner Clark. What does this language in section 2 of article 2 mean: "Any regular grain receiver, grain broker, operator of a terminal elevator, or commission grain merchant who conducts a reputable business and confines his order business to the regular ele- 676 GRAIN ELEVATOR INVESTIGATION. vator operator, may be eligible to associate membership in the Iowa Grain Dealers' Association?" Mr. Wells. With regard to the word "regular," do you mean? Commissioner Clark. Yes. Mr. Wells. It would be taken in the same sense as any one operat- ing facilities. Commissioner Clark. A regular grain receiver should confine his business to regular elevator operators ? Mr. Wells. When he does a continuous business. Commissioner Clark. Then we are to understand that by custom and practice these by-laws, which very clearly confine your business to elevator operators and those who deal with elevator operators, have been extended to include those who operate warehouses. Mr. Wells. Yes, sir. The distinction has never been made as between warehouses and elevators. Commissioner Clark. Who is an "irregular dealer?" Mr. Wells. That would be a term that might be applied to a scooper or a penalty clause elevator. Commissioner Clark. Then the purpose, or at least one of the pur- poses of the association, all along has been to prevent the man who undertook to ship grain with only a scoop shovel, on a scoop-shovel basis, from getting any foothold or transacting any business? Mr. Wells. I would reply to that by an explanation. Commissioner Clark. Is that or is that not one of the purposes to which the association has bent its energies ? Mr. Wells. The idea is to confine the business to that class of deal- ers and the soliciting of that class of business. Farmers penalty- clause elevators business is not a business that is done simply on a competitive basis, and there are certain commission houses in mar- kets who make a specialty of soliciting that business. Commissioner Clark. Now, please tell me why. Mr. Wells. We have exercised influence to keep those lines drawn. Commissioner Clark. Why do you object to the farmers' elevator companies which operate under a penalty clause ? Mr. Wells. Because it places the dealer in position where it is impossible for him to earn any margin of profit. In fact, it drives him out of business, if they succeed according to their plan. Commissioner Clark. And therefore, if the grain grower sees fit to undertake to market his product without letting it pass through the hands of a member of this association, and thereby giving him a profit himself, the purpose of your association is to prevent him from marketing his grain? Mr. Wells. I do not think so; no, sir. Commissioner Clark. Isn't that the effect of your efforts? Mr. Wells. There is no competition. Commissioner Clark. He would be prevented if you succeeded in the efforts which you have made to prevent his consignments being received, wouldn't he? Mr. Wells. If it was absolutely carried out. Commissioner Clark: Then that was your purpose though not perfectly attained? Mr. Wells. Possibly. Commissioner Clark. Your opposition to the farmers' elevator, on GBAIN ELEVATOK INVESTIGATION. 677 account of the penalty clause is due to the fact that they thereby combine to further their own interests, ^^^thout in any way contribut- ing to the profits or welfare of the grain dealers, isn't it? Mr. Wells." I, think it is a question whether they contribute to their own interests by doing that. Commissioner Clark. I am not sajnng anything about their own interests. I say they combine in an effort to further their own inter- ests, without contributing to the revenues of the Grain Dealers' Asso- ciation or its members? Mr. Wells. We believe that a grain dealer who establishes an elevator and invests his money has a right to live ; and we know that farmers' elevator companies have been organized and they engage in business with the express idea of monopolizing all the business at the station, thus making the investment of the grain dealer worthless and depriving him of his livelihood. Commissioner Clark. Do the grain dealers at that station attempt to do anything more than to sell that which they themselves have raised ? Mr. Wells. I think not. Conunissioner Clark. What? Mr. Wells. I should say not. Commissioner Clark. Doesn't it resolve itself into this, that the Grain Dealers' Association, by combination, undertakes to defeat the Eurposes which the farmers undertake to carry through by com- ination? Mr. Wells. I think the farmers started the first proposition along that line. Commissioner Clark. Wliich was existent m Iowa first, the Iowa Grain Dealers' Association or the CooperatiTe Farmers' Elevators ? Mr. Wells. The Cooperative Farmers' Companies. Commissioner Clark. Before the organization of the Grain Deal- ers' Association? Mr. Wells. Yes, sir. Commissioner Clark. I guess that is all. Commissioner Lane. Would it be correct to say that one purpose of your organization was to lower the price that the farmer in Iowa would get for his grain ? Mr. Wells. Xo, sir. Commissioner Laxe. If that was not your purpose, what is the explanation of the language in these letters in whicn you say that the purpose of these elevators is to get the full shipping value of the grain ? Mr. Wells. I will have to answer that by explanation, if I be per- mitted, by explaining the practical working of the penalty clause. Commissioner Lane. Well, now, the penalty clause, as I imder- stand it, is an agreement between theiuselves by which the man who is a member of a farmers' elevator, who does not turn in his grain to that elevator, pays so much per bushel for the grain that he does not turn in. Mr. Wells. May I be pemiitteei to explain? Commissioner IJaxe. Is that so or not ? Mr. Wells. Just how is that ? Commissioner Lane. It is a penalty which a farmer, who belongs to an elevator company, pays to the elevator company when he does not turn in his grain to the elevator. 678 GRAIN ELEVATOR INVESTIGATION. Mr. Wells. Yes, sir. Commissioner Lane. Well, now, what is the difference between that and this sort of an arrangement made between jqu and myself : You agree to sell me all your grain for this season, and if you do not you agree to pay me a certain amount as liquidated damages. That agreement could be made between us, couldn't it, and made between a lot of men ? These agreements are made every day, aren't they ? Mr. Wells. I. can not say from a legal standpoint whether it •could be or not. Conmaissioner Lane. It is simply an agreement by which the farmers who stand together agree to sell to this company, and if they do not sell to this company, then they pay something because the elevator will be at a loss; they make something good. Then there is a differ- ent system; there is the Rockwell system, which, as I understand it, is purely cooperative, by which they pass grain through the elevator and then assess themselves for the proportional cost. Mr. Wells. That is not my understanding of it. Commissioner Lane. I judge that from some of your letters. Mr. Wells. The fact of the matter is that the Rockwell Society was organized quite a nunaber of years ago before — well, I don't know when — before 1900 sometime, at a time when railroads were not plenty in that country. It is quite commonly understood that they were the recipients of railroad rebates in most cases, and were encour- aged by the railroad companies, and they secured a large member- ship, extending all over that territory, something like 800 or 1,000 farmers. Later other railroads built lines on either side of them and instead of being, perhaps, 4 or 5 elevators, there were 25 elevators established in the country. Commissioner Lane. Can't you just answer one definite question as to whether the Rockwell system does not vary materially — whether it is not upon the plan I have suggested — an assessment by the farmer who puts grain through an elevator? Mr. Wells. The point I am making is this, that the Rockwell Society collect penalties or assessments, whichever you may call them, from a large number of farmers who do not sell grain to their elevators, and who are not in that territory, and that these small assessments, even small as they are, maintain the expense of operating the Rock- well Society business. The consequence is that there is no margin of f)rofit maintained by which to pay expenses, and the price is estab- ished with which the grain dealer must compete, and, in fact, he must pay more, because he is placed at a disadvantage, and the con- sequence is he can not secure profits to pay his expenses. Commissioner Lane. Supposing somebody, Mr. Andrew Carnegie, for instance, should contribute to pay all the expenses of that elevator and let the farmers' grain go through free of any expense. Then your complaint would be against these men for putting that wheat through the elevator and taking advantage of that thing? Mr. Wells. I would say this, that the farmers cooperative penalty- clause elevator does not confine itself to its members. They buy grain from nonanembers on the same basis as they do of members, and it is often spoken of that they pay nonmembers more than they do their own members. Commissioner Lane. They haven't a penalty clause as to the non- members ? GKAIK ELEVATOR INVESTIGATION. 679 Mr. Wells. But it is outside of the power of the cooperative idea? Commissioner Lane. That is a question for the man who is in the cooperative company to decide. Do you wish to ask any more questions, Mr. Marble ? Mr. Marble. Mr. Wells has spoken in this letter to Eschenberg & Dalton. I will read only the first paragraph (reading) : Dbs Moines, Iowa, February 17, 190S. Eschenberg & Dalton, Chicago, III. Gentlemen: We desire to advise you that the Iowa Grain Dealers' Association does not recognize fanners' elevator companies organized for the purpose of agitating local markets or that work on the assessment plan. (The same is hereto annexed and marked "Exhibit No. 22 to Mr. Wells's testimony.") I will read this letter and ask you if you can describe the matter referred to? Chicago, III., October 10, 190S. Mr. C. G. Messerole: Your favor of the 6th instant received and carefully noted. If your firm is a member of the Iowa Grain Dealers' Association or the National Grain Dealers' Association, we shall be glad to quote you prices, but we presume you are not members. Under our agreement with the association as members, we can not bid non- members. Yours, truly, Alton Grain Company, Per F. M. Hotchkiss. (The same is hereto annexed and marked "Exhibit No. 23 to Mr. Wells's testimony.") Mr. Wells. I can safely say that we have never had any agree- ment. Mr. Marble. Does that fairly represent the obligation of member- ship — "under our agreement with the association as members we can not bid nonmembers?" Mr. Wells. He has written a letter on his own personal account. Mr. Marble. That is not fair to the association? Mr. Wells. It was not. Mr. Marble. I am going to ask Mr. Wells, while other witnesses are examined, to identify these other letters. Is the regular grain dealers' association of southwestern Iowa and Missouri an organiza- tion with which you are connected ? Mr. Wells. No, sir. Mr. Marble. Are you affiliated with the National Grain Dealers' Association? Mr. Wells. We are not members of the National. Mr. Carr. This cereal club you have spoken of. You say at some of its meetings there would be those present who were not members of the Iowa Grain Dealers' Association? Did you have occasional visitors at your club ? Mr. Wells. Yes, sir. Mr. Carr. Who were they — I mean, what class of people? Mr. Wells. There might be anyone that the grain dealers wanted to entertain. Mr. Carr. I think you have left the impression with the Commis- sioners, perhaps, that the expenses of these meetings and dinners were paid out of the funds of the Iowa Grain Dealers' Association. What is the fact with regard to that; who paid for the dinner? Mr. Wells. No. The dinners were not paid forj no. 680 GBAIN ELEVATOR INVESTIGATION. Mr. Caee. I believe you left the impression with the Commissioners that the dinners were paid for out of the funds of the Iowa Grain Dealers' Association. Mr. Maeble. Pardon me. I asked as to the room and the answer was given as to that. Mr. Wells. There was a charge of 50 cents for the room, which I paid. It was a small amount, and rather than to undertake to assess everybody I paid it. Mr. Care. All the expense of the meetings that was paid by the Iowa Grain Dealers' Association was the 50 cents for the room ? Mr. Wells. Yes, sir. Mr. Caee. Now, you stated that after these meetings, as you understood it, Mr. Case sent out cards; you put it in that way. Do you mean to say that the meetings of the Cereal Club and the sending out of the cards bore any relation to each other? Mr. Wells. No, sir; i would not think so. Mr. Caee. Do you know anything about the practice of Mr. Case in sending out these cards; how frequently, that is done? Mr. Wells. He sends them out daily, and after the close of the market. Mr. Caee. Then you do not mean to be understood as saying that he sent out cards based on anything that was done at or any informa- tion obtained at this Cereal Club's meetings ? Mr. Wells. Not definitely; no, sir. Mr. Caee. Have you farmers' elevator companies among your membership ? Mr. Wells. Yes, sir. Mr. Caee. Do you exclude -farmers' elevator companies from your membership ? Mr. Wells. No, sir. Mr. Caee. Do you recall how many members you have at present of the farmers' elevator companies ? Mr. Wells. Three or four. I think there are three or four — some- thing like that. Mr. Caee. You do exclude, as I understood you, however, farm- ers' elevator companies who adopt this penalty clause that you have told us about ? Mr. Wells. Who enforce the penalty clause. Mr. Caee. Have you in your association any agreement or under- standing among your members fixing the price of grain or the prices to be paid for grain in any place in Iowa ? Mr. Wells. No, sir. " Mr. Caee. Have you at any time ever had such an arrangement ? Mr. Wells. No, sir. Mr. Care. Have you any arrangement or agreement or under- standing that prices are to be paid for grain in accordance with the Case cards, or based upon the Case cards ? Mr. Wells. I do not understand what you mean " based upon the Case cards." Mr. Care. I mean whether there is any agreement among your members to be governed by the Case cards in fixing the price that they will pay for gram. Mr. Wells. Not that I know of. GRAIN ELEVATOR INVESTIGATION. 681 Mr. Carr. And do j'^ou know of any agreement of any kind or understanding among the members of your association by which the price to be paid for grain is fixed in any way or at any time ? Mr. Wells. No, sir. Mr. Carr. Or in any place? Mr. Wells. No, sir. Mr. Carr. Do you know how many farmers' elevators there are in Iowa that are what you term "regular?" Mr. Wells. I think there are about — I do not know that we have definite knowledge as to all the farmers' elevators who have discon- tinued or who do not enforce the penaltj' clause. I know about twenty-five who positively are not using the penalty clause. Mr. Carr. I will simply ask 30U this question, whether it is your opinion that the penalty clause results in oreaking down competition in the matter of bujdng grain, the practical workings of the penalty clause — whether it has that effect ? Mr. Wells. I know a good many places where farmers are selling their grain at a lower price to penalty-clause elevators than they can obtain from the grain dealers. Mr. Carr. That is all. Mr. Marble. Just one question. It is suggested by the cross- examination. You have heard of the Trans-Iilississippi Grain Company ? Mr. Wells. Yes, sir. Mr. Marble. Have you ever heard of Mr. C. E. Huntley? Mr. Wells. Yes, sir. Mr. Marble. They both did business at Salix ? Mr. Wells. Yes, sir. Mr. Marble. Do you know the relation existing between them? Mr. Wells. No, sir. Mr. Marble. It was testified by Mr. Huntley in Omaha, yesterday, that they had a pool; that they paid a penalty to each other if either got more than his share, and that he had paid and many times received such payments from the Trans-Mississippi Grain Company. Do you know anything about that? Mx. Wells. No, sir. Mr. Marble. Do you know of such conditions existing at any other point in Iowa now? Mr. Wells. No; not at present. Mr. Marble. How long since you have known of such conditions ? Mr. Wells. Well, I can not speak positively on that, but 1 have known very little for several years of anj'thing of that kind. As I said a while ago, the first year there were agreements of that kind. Mr. Marble. Did you or did you not say it was the policy of the association to encourage such agreements during these first years ? Mr. Wells. Yes, sir. Mr. iLiRBLE. But it is no longer the policy? Mr. Wells. No, sir. Mr. Marble. That is all. Commissioner Lane. That is all. Witness excused. 682 GEAIN ELEVATOR INVESTIGATION. Mr. McFaelin, called as a witness, being duly sworn, testified as follows : Mr. Makble. You are the manager of the elevator here in this city? Mr. McFaelin. I am. Mr. Maeble. And you are the Mr. McFarlin referred to by Mr. Wells in his testimony as a member of the Cereal Club ? Mr. McFaelin. I think so. Mr. Maeble. You were present at those meetings? Mr. McFaelin. A good many of them. Mr. Maeble. What was the purpose of those meetings? Mr. McFaelin. Mr. Wells explained clearly that it was partly social, and the general conditions of the trade. Mr. Maeble. And isn't it a fact that at those meetings Mr. Wells or some one would make a motion or in some way get the consensus of opinion as to the price to be paid for grain for the following week ? Mr. McFaelin. Not that I can recall. Mr. Maeble. Are you certain there was no such proceeding? Mr. McFaelin. I do not recall there was, and I think I would if there had been. Mr. Maeble. Did you simply discuss prices, and part with varying views, or did you reach an agreement in some way ? Mr. McFaelin. I do not remember, Mr. Marble, of ever having a uniform agreement or understanding as to what should be paid for grain at those meetings. I did not understand that that was the object of the meeting. Mr. Maeble. Do you remember reaching an agreement which was not uniform because of different freight rates at different portions of the State? Mr. McFaelin. What is the question? Mr. Maeble. Do you remember reaching an agreement which was not tmiform because of different freight rates at different portions of the State — because you took them into consideration ? Mr. McFaelin. I can say that I do not recollect of ever reaching an agreement on prices — that is, uniform prices, at stations taking the same rate. Mr. Maeble. But you won't say that that was not done? Mr. McFaelin. I do not remember of its being done. Mr. Maeble. That is all. Commissioner Claek. Do you say, Mr. McFarlin, that no under- standing, actual or implied, as to prices to be paid for grain, was had at those meetings? Mr. McFaelin. As a meeting or as a whole, Mr. Clark, I think it was very likely that certain members, during the meeting or after the meeting, discussed the prices in certain localities; but as a meeting or governing a territory, I do not believe it was ever done — the price was ever established. Commissioner Claek. Do you say it was not ? Mr. McFaelin. Well, I would not say it was not done at a cereal meeting, because I was not at all of them; but I do not remember that that was ever done. Mr. Maeble. Do you think that certain members as to particular districts did? Mr. McFaelin. They may have. GKAIN ELEVAIOK INVESTIGATION. 683 Mr. Marble. Did they, to your knowledge? Mr. MoFarlin. Not that I recall particularly. Mr. Marble. That is all. Commissioner Lane. That is all. Witness excused. E. L. Bowen, called as a witness, having been duly sworn, testified as follows: Mr. Marble. You are in the grain business ? Mr. Bowen. Grain merchant. Mr. Marble. Your name was mentioned by Mr. Wells as one of those attending the meetings of the Cereal Club. As a matter of fact, did you attend those meetings? Mr. BowEX. Many of them. Mr. Marble. Do you know of any meeting resulting fully or in part of the members entering into an agreement as to the prices to be paid for the ensuing week? Mr. Bowen. No, sir. Mr. Marble. Your testimony on that point will agree with that of Mr. McFarhn and Mr. Wells? Mr. Bowen. Yes, sir. Mr. Marble. Do you want to modify it in any way? Mr. Bowen. No; except to say that the meetings were simply, as has been said, for exchange of views and ideas about the markets and the condition of the crops, and all information that was to be gained from visitors from out of town and different sections of the country as they might have opportunity to present them. There was nothing there for the purpose, as has been intimated, of making prices for the week following, or anything like that. Prices have undoubtedly been spoken of there, just as any item of interest bearing on it would be spoken of. Mr. Marble. Was it your intention to make prices for a day? Mr. Bowen. No, sir. Mr. ilARBLE. Nor at all ? Did you inform each other of the prices you were paying; compare the prices you were paying? Mr. BowEX. If asked; if we were asked what our opmion was about what such a grade was worth in such a market, in St. Louis or Kansas City, or any other place, as compared with Chicago or Minneapolis, or what the state of the crops was; anything that pertains to the trade might be mentioned. Mr. Marble. To sum it all up, would you say it was or it was not the purpose of the meetings to hne up the prices so that you would all be together? Mr. BowEN. No, sir. Mr. Marble. That is all. Mr. Bowen. May I say a word ? Mr. Marble. Surely. Mr. Bowen. There were expressions of opinion there as to how individuals would feel about buying new com, for instance, or how they felt about taking old com at different seasons of the year. Was that included in your question? Mr. Marble. That was all understood. That wasn't just the point. 684 GBAIN ELEVATOR INVESTIGATION. Commissioner Lane. You had nothing to do with the cards that Mr. Case sent out? Mr. BowEN. Nothing, except to buy them. Commissioner Lane. You bought them and paid for them? Mr. BowEN. Yes, sir. Commissioner Lane. What was the value of the cards ? Mr. Bowen. I think that we paid 50 cents a month. Commissioner Lane. I do not mean that. I do not mean what price you paid. I mean what value to you were the cards ? Mr. Bowen. Simply this, that Mr. Case makes it his business, gives all his time to the study of fluctuations of the different markets. He also pays special attention to the changes in railroad rates. If he has any other business it is of minor importance that requires only, perhaps, an hour or two a day. But his full time and attention, as I understand it, is given for the purpose of collecting variations in the market, and also the relations of the freight rates, as they may change, and they have changed recently, changed frequently, and then he bases the value of grain at the different places on those things. He can do that for me cheaper than I can do it myself. As I understand it, his business is similar to that done in the Bennett risk of insurance. There is a man by the name of Bennett in the State that gives time and attention to preparing a risk on every house in Des Moines and every other town, and the policies that are issued throughout the State of Iowa are written on the risk or the hazard that that man Bennett makes. To me, that card of Mr. Case occupies the same relation. I can pay him his price, where he does it for so many, cheaper than I can take the time to do it myself. Another thing, Mr. Case has representatives in some parts of the State whereby with one telegram he can reach that representative and give him the closing market, and he can put a letter on a train or at the post-ofRce at that point and reach the man at my station the same day or the same night, whereas, if I were to undertake to do it, it would take until noon the next day to do it. It is a matter of convenience. Mr. Marble. Were those meetings known as meetings of the card committee, to your knowledge? Mr. Bowen. I think not. My recollection is Mr. Marble (interrupting). You do not remember hearing that phrase before? Mr. Bowen. It was the cereal meetings, I think. Mr. Marble. Do you remember hearmg that phrase before — card committee? Mr. Bowen. I haven't heard that. Mr. Marble. Would you say that you did not determine by a vote upon a price for the following week or day — by a vote of the majority of those present at those meetings? Mr. Bowen. I think not. There may have been instances when, as an expression of the members present, what they thought about commencing to buy new corn or oats after harvest, or something of that kind ; they may have been asked for an expression of opimon. Mr. Marble. Would you take a vote; would you count noses? Mr. Bowen. Possibly. Put up our hands. There was discus- sion about it. I know lots of times I wouldn't want to handle new corn as quick as other people wanted to handle it. GRAIN ELEVATOR INVESTIGATION. 685 Mr. Marble. Was Mr. Case an employee of that committee at that time ? Mr. BowEN. What committee? Mr. Marble. Well, the Cereal Club, you call it. I use the other phrase. Mr. BowEN. No; I don't think he was ever a member. You mean of the Cereal Club? Mr. Marble. I understand that the Cereal Club was composed of members of the brokers or card bidders, representatives of line houses and also some of the State Grain Dealers' Association members. The Cereal Club was a separate and distinct thing? Mr. BowEN. As I remember it, the Cereal Club was organized here at one time for the purpose of entertainment. The National Grain Dealers' Association, I think at one time met here, and it was thought by the people here that the citizens of Des Moines, and especially by tne gram interests represented here, ought to do some- thmg to entertain them when they came to Des Moines. As I remem- ber it that was the reason. Mr. Marble. Tell us why the meetings were discontinued. Mr. BowEN. The Cereal Club? I do not know, unless it was the president failed to call the organization to order. It has been some time since we have had a meeting. I can only say it was probably lack of interest. Mr. Marble. Wasn't it because Mr. Hamlin started a fight and the matter was broken up by that disturbance ? , Mr. BowEN. I think there were meetings after that. Mr. Carr. In buying grain are you governed by those Case cards; and if you are, to what extent? Mr. BowEN. No; I use them sometimes. I use a circular issued by Howard Bartels, and a circular issued by Conner, of St. Louis, and other things to base my price on. Sometimes I pay above that card, and sometimes 1 pay below it. Mr. Carr. It is only advisory? Mr. BowEN. Yes, sir ; that is the only way I regard it. Mr Carr. I would like to ask Mr. McFarlin the same question. Commissioner Lane. The same answer can stand for Mr. McFarlin. Mr. Carr. Mr. McFarlin, what would you say in answer to that question? Mr. McFarlin. I duplicate Mr. Bowen's reply, as a whole. Mr. BowEN. Another thing, I would say, so far as I know there is no penalty because I do not obey that card. I have never been assessed any penalty. Commissioner Clark. Nobody understands that you are bound by that card or that there is any penalty attached to your failure to observe its terms. Witness excused. R. W. Harper, called as a witness, having been duly sworn, testified as follows: Mr. Marble. Are you the Mr. Harper whose name was mentioned here by Mr. Wells as attending those Cereal Club meetings ? Mr. Harper. I am. Mr. Marble. Did you ever hear it referred to as a card committee? 686 GRAIN ELEVATOR INVESTIGATION. Mr. Haepek. They had the meetings at the Grant Club once a week — Saturdays — after the close of the market. Conmiissioner Lane. That isn't the question he asked you. Did you ever hear it called the card committee? Mr. Harper. I did not hear Mr. Wells's testimony. Mr. Marble. But did you ever hear this club referred to as the card committee? Mr. Harper. Yes ; I did. Mr. Marble. Did you know it as the card committee or not ? Mr. Harper. Well, I knew there was to be a meeting of the grain dealers, and it was considered the card committee to fix the prices. Mr. Marble. To fix prices for how long? Mr. Harper. Well, it was to govern Mr. Case in making his prices. We generally had that meeting once a week. If the prices fluctuated, I suppose they changed their basis of prices. Mj. Marble. And you understood that these meetings were held for the purpose of giving information to Mr. Case? Mr. Harper. They would have a meeting and discuss the difl'erent prices to be paid. Mr. Marble. And then what would you do after discussing? Mr. Harper. As a rule they would take a vote on the price, on what margin Mr. Case was to work on. Mr. Marble. Who presided at those meetings? Mr. Harper. Mr. Wells. Mr. Marble. Would he submit a question to the meeting like a chairman ? How did you manage to take a vote — how was that done ? Mr. Harper. Generally by raising the hand. Those in favor of a certain basis for Mr. Case to work on would hold up their hands, and those opposed would not vote. Mr. Marble. Would you say that that was done at all the meetings you attended? Mr. Harper. Not all of them; no. Mr. Marble. And when it wasn't done, why not? Mr. Harper. The markets would probably be steady, and there would be no reason to change their basis. Mr. Marble. You would discuss and determine if any change was needed? Mr. Harper. There would be meetings at which there would be nothing discussed more than just meeting there and having a dinner and a social time. Mr Marble. What do you mean by "basis?" Mr. Harper. Mr. Case would work on a certain margin of profits. It depended as to how the market fluctuated as to what margin of profit that he was to put his cards out on. Mr. Marble. About what margin of profit prevailed as to those cards ? Mr. Harper. They varied according to the conditions of the market. Mr. Marble. How would they vary? How much? Mr. Harper. At times that the market was considered high, the market looked top-heavy; why, they would work on a larger margin of profits. Mr. Marble. And how large a margin of profit did you work on? GEAIN ELEVATOB INVESTIGATION. 687 Mr. Harper. I had nothing to do with the making of prices or voting. I simply attended on the invitation of their members. Mr. Marble. Did you take part in the discussion? Mr. Harper. Very seldom. Mr. Marble. Sometimes? Mr. Harper. Not unless I was asked. Mr. Marble. Did this committee embrace all the grain dealers of Des Moines? Mr. Harper. Why, I think there were a few that did not attend. Mr. Marble. Did it embrace all the regular dealers in Des Moines? Mr. Harper. No; there were a few houses that were not regular attendants. Some days there would be a larger attendance than others. Mr. Marble. All of them knew of the meetings, however? Mr. Harper. They seemed to. Mr. Marble. And from time to time would you say that all of them attended? Some at one time and some at another? Mr. Harper. I think there were two or three, probably, who only attended a very few of the meetings. Mr. Marble. But practically all of them did attend from time to time? Mr. Harper. From timb to tune. Mr. Marble. Did the larger ones — larger buyers — attend pretty regularly? Mr. Harper. At that time Mr. J. M. Brown was here representing Charles Counselman & Co., and he, I do not think, attended more than a very few of its meetings. Mr. McDougal, representing the Neola people, attended very few of them. Mr. Marble. Did you understand that the cards sent out by Mr. Case were merely advisory, or were they final and obligatory? Mr. Harper. They were just advisory as to the prices to be paid in the different territories. Mr. Marble. There was no penalty for nonobservance? Mr. Harper. No penalty attached. - It was optional with the different companies to pay the Case price. Mr. Marble. Do you know, as a matter of fact, whether or not they were pretty generally observed? Mr. Harper. I couldn't say as to that, because I had no country elevators. Mr. Marble. Do you know why those meetings ceased? Mr. Harper. I couldn't say. Mr. Marble. Is Mr. Case still sending out cards ? Mr. Harper. I understand he is. Mr. Marble. Do you know if they have the same effect and are for the same purpose as the cards sent out before? Mr. Harper. I can not say as to that. Mr. Marble. You are not advised ? Mr. Harper. I am not advised. Mr. Marble. You were subpoenaed to come here? Mr. Harper. Yes, sir. Mr. Marble. And you did not come willingly? Mr. Harper. I should say not. Mr. Marble. Did you state to an employee of the Commission that 688 GRAIN ELBVATOK INVESTIGATION. you preferred not to testify in this case, because you feared the results to your business ? Mr. Harper. I believe Mr. McKenzie was there, and I said I pre- ferred not to testify. Mr. Marble. Did you give him that reason, that if you testified it might injure your business ? Mr. Harper. I told him that I had to do business with all the people, and I was a track buyer, and in the brokerage business here, and I preferred not to testify. Mr. Marble. Well, if any injury to your business results from your giving this information, will you inform the Intestate Commerce Commission ? Mr. Harper. I will take my medicine. Mr. Marble. Don't do it. Inform the Interstate Commerce Com- mission. I don't think any injury will result. That i? all. Commissioner Lane, In view of what this witness has testified, do you, Mr. Wells, or do you, Mr. McFarlin, wish to change your testi- mony ? Mr. McFarlin. I do not; but I would like to ask Mr. Harper some questions. Commissioner Lane. Do you, Mr. Wells ? Mr. Wells. So far as the testimony of this witness is concerned Commissioner Lane. Just let this witness step down, and we will let you, Mr. Wells, take the witness stand. Witness excused. George A. Wells resumed the stand. Commissioner Lane. Now you can make your statement. Mr. Wells. In regard to putting motions at each one of those meetings to fix prices to govern Mr. Case I do not wish to change my testmony. Commissioner Lane. Did you try to mislead the Commission in that matter? Mr. Wells. No, sir. Commissioner Lane. Why, then, did you testify as you did ? Did not you try to create the impression in our minds that there was no fixing of prices, and nothing done in connection with the fixing of prices in those meetings? Mr. Wells. I did not Commissioner Lane (interrupting). Did not you do that? Mr. Wells. No, sir. Cormnissioner Lane. Was not that your distinct effort in answer to the questions of Mr. Marble ? Mr. Wells. No, sir. Commissioner Lane. Did not you in every way try to evade and avoid answering directly the questions when Mr. Marble put them to you as to whether rates were not fixed and information given to Mr. Case on which he could fix prices ? Mr. Wells. General information was given to Mr. Case from the discussion. He could gather it himself. Commissioner Lane. Step down. The witness was excused. GRAIN ELEVATOR INVESTIGATION. 689 R. W. Harper recalled. Mr. McFajilin. I would like to ask Mr. Harper if in this expressio * or vote he talks about, it was as to the margin on contract grade or the difference between grades — ^for instance, 3 white oats and 4 white oats. Mr. Harper. There were different grades established. Commissioner Lane. The questions put were broad enough. We entirely understand them. Mr. Cakr. May I ask the witness a question ? Commissioner Lane. Yes, sir. Mr. Carr. How long ago was it, Mr. Harper, that you referred to in speaking of these meetings ? Mr. Harper. Two or three years ago, when they had the meetings at the Grant Club, in 1894. Mr. Carr. You mean 1904? Mr. Harper. Yes; 1904. Mr. Carr. At those meetings, were you a frequent attendant ? Mr. Harper. I was a frequent attendant. Mr. Carr. That is all. The mtness was excused. W. G. Case, called as a witness, being duly sworn, testified as fol- lows: ilr. Marble. You are the same Mr. Case referred to in the testi- mony taken? Mr. Case. I presume I am. Mr. Marble. Did you attend those meetings of the Cereal Club ? Mr. Case. I attended meetings of the Cereal Club; yes, sir. Mr. Marble. Did you know them also as meetings of the card committee? Mr. Case. Not in that sense. Mr. Marble. Have you heard that phrase ? Mr. Case. I have heard that phrase, but not there. Mr. Marble. You heard that phrase used about that time, refer- ring to those meetings ? Mr. Case. No; not exactly that. Mr. Marble. I am not trying to fix the sense or meaning of the phrase. I am asking if about that time you did hear that phrase used in regard to those meetii^ ? Mr. Case. Yes, sir; I think I did. Mr. Marble. How did you know those meetings most frequently — as meetings of the Card Committe or meetings of the Cereal Club ? Mr. Case. The Cereal Club. Mr. Marble. But at times you might refer to them as meetings of the Card Committee ? Mr. Case. I did not refer to them that way. Mr. Marble. Who did you hear say that? Mr. Case. Persons outside, generally. Mr. Marble. Not those who attended ? Mr. Case. I do not believe I did. Mr. Marble. You are certain you never did ? Mr. Case. Yes, sir. S. Doc. 278, 59-2 U 690 GRAIN ELEVATOR INVESTIGATION. Mr. Makble. Were these people outside members of the Grain Pealers Association or persons antagonistic to the Grain Dealers Association? Mr. Case. I do not know who are the persons antagonistic to the Grain Dealers Association. Mr. Marble. I will ask you if at those meetings agreements were reached as to grades and prices for the ensuing day and ensuing week and margins of profit for you to fix by these cards ? Mr. Case. If you will allow me, I will answer that my way. You understand the grain dealers of Des Moines do not fix that card price and never have. When I want information on the market I will go to a dealer now as I did to those meetings and get their opinions of the price of the different grades in the different parts of the State — the different values. Their prices that they gave me were no more obligatory on me than any statement they make to me now: S&. Marble. Did you know of any vote being taken? Mr. Case. Not on confining me to those prices. Mr. Marble. Did you know of any vote being taken as to what the maiority thought should be the margins the next day? Mr. Case. I think they did at times do that in a way. Mr. Marble. I will ask you if you knew of a vote being taken ? Mr. Case. I think they did. Mr. Marble. Do you know ? Mr. Case. As near as I can remember now, I think there was. Mr. Marble. Your memory is not certain on that? Mr. Case. It is a good while ago. ' I do not remember exactly what transpired. Mr. Marble. It was two years, and the meetings were held for about two years, and taking all those meetings together you can not say whether or not a vote was taken? Mr. Case. As to what the grain was worth, I think they did at times get a vote or expression. Mr. Marble. But you can not say positively. You say "you think." Mr. Case. I say there were at times. Mr. Marble. Those times were times when there was a change in the market ? Mr. Case. As far as their opinion went; their opinion did not bind me. Mr. Marble. As a matter of fact, did you follow their opinion? Mr. Case. Not always. Mr. Marble. Generally? Mr. Case. Not generally. Mr. Marble. Whose opinion did you take ? Mr. Case. The combined opinion of all dealers I could get, and fol- lowed the markiet. Mr. Marble. To whom did you send these cards ? Mr. Case. Anybody who would subscribe for them. Mr. Marble. Who did subscribe for them ? Mr. Case. Different dealers. Mr. Marble. Members of the Iowa Grain Dealers Association? Mr. Case. Yes, sir; some were members and some not. I can not tell you who were members. I do not know. Mr. Marble. How many people subscribed for them? GRAIN ELEVATOR INVESTIGATION. 691 Mr. Case. At different times? Mr. Mabble. Well, at the time of these meetings ? Mr. Case. I could not tell now. We have now 350 people on the list, I think. Mr. Marble. You have that many now ? Mr. Case. About that. Mr. Marble. Are these prices advisory ? Mr. Case. As I understood it. Mr. Marble. Did anybody go over the cards besides yourself ? Mr. Case. After they were made ? Mr. Marble. After the vote was taken? Mr. Case. No, sir. Mr. Maeb^le. Did anybody else examine the cards before they were sent out? Mr. Case. No, sir. Mr. Marble. Did anybody else examine the copy for the cards ? Mr. Case. No, sir; never. Mr. Marble. You say those prices were advisory simply? Mr. Case. Yes, sir; as I understood it. I do not know what they did with them afterwards. Mr. Marble. At stations did different buyers get the cards ? Mr. Case. I do not know. Mr. Marble. Did not you go over the State and check up the patronage? Mr. Case. Not always. Mr. Marble. Did you find in any case that all dealers at any sta- tion were getting the cards ? Mr. Case. Yes, I found they had. Mr. Marble. Did you find that out at many stations ? Mr. Case. I could not say exactly. • Mr. Marble. Well, about? Mr. Case. Well, I could not state as to that. Mr. Marble. You can estimate, can you not ? Mr. Case. I suppose 15 or 20, perhaps. Mr. Marble. Did you ever direct dealers to discontinue paying premiums for grain over and above the card prices ? Mr. Case. Well, I did once, as a matter of accommodation to a firm that was mixed up in a deal. I think that was at Norway. Mr. Marble. What accommodation was it ? Mr. Case. Well, it was merely a matter of request, as I remember. I do not remember even who wrote the letter. Mr. Marble. Did you mean this person wanted the price lowered at the station ? Mr. Case. That is the only letter I ever wrote of the kind. I think I said, in the future card prices will govern at your station. Mr. Marble. Did you say anything about premiums in the letter? Mr. Case. I do not. remember whether I did or not. Mr. Marble. To whom did you write that letter ? Mr. Case. I think the Farmers Elevator at Norway. Mr. Marble. Did you mean that they should reduce their price to the card price ? Mr. Case. I do not know. Mr. Marble. In what way was it an accommodation to anybody? 692 GRAIN ELEVATOK INVESTIGATION. Mr. Case. I do not know. Mr. Marble. Somebody asked you to write a letter about the price of grain and you wrote it because you were asked ? Mr. Case. Yes, sir. Mr. Maeble. How many of these card prices were made up be- cause you were asked to make them at that figure ? Mr. Case. This card price was not based on the letter. Mr. Marble. But the letter was based on the card price? Mr. Case. It might be in a sense. Mr. Marble. You told them to discontinue paying premiums? Mr. Case. I might. Mr. Marble. Why did you state that? Mr. Case. Because they asked me. Mr. Marble. How many other things in fixing the price of grain have you done because you were asked to ? Did you think you were f ulfillin g your duty as the man making up the card prices ? Mr. Case. I never thought anything about it. Mr. Marble. How many other things have you done that you did not think about? Mr. Case. I could not state. Mr. Marble. Do you, as a matter of fact, in making up these card prices, do many things you do not think about ? Mr. Case. I presume so. Mr. Marble. You think they are reliable prices for the farmers of the State? Mr. Case. I have never said they were. Mr. Marble. You put them out and charge for them ? Mr. Case. If I can get my money for them. Mr. Marble [producing letter]. Is this the letter you referred to? [Handing letter to witness.] Mr. Case [after examining letter]. Yes, sir, Mr. Marble. You wrote it becouse you were asked to? Mr. Case. I think so. I do not renaember the circumstances that caused me to write that letter. Mr, Marble, I wiU read it and offer it in evidence (reading) : " Des Moines, Iowa, June 26, 1906. Gentlemen: For your information will state that hereafter card prices will be main- tained at your station and vicinity, and that the dealers will discontinue paying pre- miums over card for grain. Yours very truly, W. G. Case. (The above letter is hereto annexed and marked " Exhibit No. 1 to Mr. Case's testimony.") Mr. Marble. Now, during the time this club was meeting, these cards of yours represented the views of the club largely, did they not ? Mr. CasE. Well, sometimes; sometimes they might not. Mr. Marble, Has that club ceased to meet? Mr. Case. I have not known of its meeting for some time. Mr. Marble. How long? Mr. Case. I could not state exactly as to that. Mr. Marble. Well, estimate it, Mr. Case. About a year and a half or two years. Mr. Marble. Would you say it met at all in 1905? It is pretty nearly two years ago, back to January,1905. Mr. Case. I would not say it did. GRAIN ELEVATOR INVESTIGATION. 693 Mr. Maeble. But close to that time? Mr. Case. About that time. Mr. Maeble. Since that ceased, what besides reports from terminal markets have you taken into account in making up your cards ? Mr. Case. What do you mean? Mr. Marble. What other elements have figured in making the cards? Mr. Case. What information I can get. Mr. Marble. From whom? Mr. Case. From different parties interested in the business. Mr. Marble. I wish you would tell us a little about that without having to be questioned so closely about it. Mr. Case. What do you mean? Mr. Marble. I want to know what elements you take into consid- eration in making up these cards. Who helps you ? Mr. Case. Nobody. Mr. Marble, Who do you ask for advice besides dealers in terminal markets? Mr. Case. I talk it over with dealers in the market. Mr. Marble. This market? Mr. Case. Yes, sir; and if there is anything I want to know in any territory I write the dealers. Mr. Marble. Do you ask them about the state of competition in the territory? Mr. Case. No, sir. Mr. Marble. Do you ask them about the state of competition in the territory? Mr. Case. No, sir. Mr. Marble. Do you ask these dealers about the state of competi- tion in the territory? Mr. Case. No^ir. Mr. Marble. Who asked you to write that letter to the Norway Company? Mr. Case. I do not remember. Mr. Marble. Of June 26, 1906? Mr. Case. I do not remember. Mr. Marble. You do not remember? Mr. Case. No, sir. Mr. Marble. You do not remember writing any other such letter ? Mr. Case. No, sir; I never have. I thought at the time I wrote it I was exceeding my business. Commissioner Clark. What is that ? Mr. Case. I thought then they were asking me to do something I had nothing to do with. Mr. Marble. But you did it? Mr. Case. Yes, sir. Commissioner Clark. It left a sufficient impression on your mind that you remember now you thought you were doing something you ought not to do, but you do not reinember who you did it for? Mr. Case. No, sir; I do not remember. I have quite a correspond- ence from different people. Commissioner Clark. Yet you were able to tell before the letter was shown you that you had written such a letter to Norway. Mr. Case. It was tne only letter of the kind 1 had written. 694 GRAIN ELEVATOR INVESTIGATION. Commissioner Clark, ^'ou do not know why you wrote it'(! Mr. Case. Only as the letter states. Commissioner Clark. The letter does not state why you wrote it. You had some purpose in writing it, did you not? Mr. Case. The purpose I stated there. That is all there is to it. Commissioner Clark. Did you know the person that asked you to write the letter at the time? Mr. Case. I presume I knew the firm, not the person. Commissioner Clark. You do not know what firm it was ? Mr. Gase. No, sir; I would be glad to tell you if I could. Commissioner Clark. Do you know? Mr. Case. No, sir; I do not. Mr. Marble. You remembered you had written a letter to Nor- way before you were shown the letter? Mr. Case. Before I read the letter? Mr. Marble. No; before I showed it to you. Mr. Case. Why, when you asked me about that letter I remem- bered that was a letter I wrote. Mr. Marble. Is it necessary to refer to the stenographer's notes to show you mentioned the word "Norway" before I showed you that letter? Mr. Case. No, sir; it is not. Mr. Marble. You used the word "Norway?" Mr. Case. Yes, sir. Mr. Marble. But you do not remember the person that asked you to write it ? Mr. Case. No, sir; I remember that I wrote a letter of that kind to Norway, and that is all I remember. Mr. Marble. How many sections do you divide the State into in sending out these cards ? Mr. Case. That depends. Mr. Marble. Depends on what ? Mr. Case. What they want. Mr. Marble. What who wants? Mr. Case. The dealers in certain territory — the basis. Mr. Marble. In making up these cards, do you ask the dealers what. they want Mr. Case. The idea is this, if you are nmning a grain station and you want to have a card showing a margin of 2 cents a bushel on your grain, you will use a basis of that kind. If you want to work on a track basis, I will give it to you. Mr. Marble. The State is divided into different districts, the price card showing a different margin of profit. Is not that right? Mr. Case. Usually in regard to freight rates. Mr. Marble. There is sometimes a diflferent margin of profit shown in different districts ? Mr. Case. Oh, yes; once in a while. Some districts will show a little difference iriprice on some kinds of grain. Mr. Marble. What section of the State now is working on 2 cents ? Is that 2 cents on corn ? Mr. Case Yes, sir. Mr. Marble. What section is working on a margin of 2 cents? Mr. Case. I imagine pretty near all that I have anything to do with. GRAIN ELEVATOR INVESTIGATION. 695 Mr. Makble. What poi'tion is working on a margin diflferent from 2 cents? Mr. Case. There are some spots working on a little different margin. Mr. Marble. Tell me some spot and what the different margin is. Mr. Case. I think around Norway they are working on a basis, the track price, of about a cent a bushel. . Mr. Marble. On a price of about 1 cent? Mr. Case. I think so. Mr. Marble. Why 1 cent at Norway and 2 elsewhere? All the dealers at Norway get the same card ? Mr. Case. All that take it. Mr. Marble. Did they join in telling you to send a card on a basis of 1 cent? Mr. Case. I think so. Mr. Marble. When you sent a card on the basis of 2 cents, did your customers join in asking for that? Mr. Case. No; that is the usual basis. Mr. Marble. Did they join in asking that? Mr. Case. No. Mr. Marble. Have you any other basis besides 2 cents at some places and 1 cent at Norway? Mr. Case. I do not think so. ' Mr. Marble. Are you sure? You made out cards to-day? Mr. Case. I would have to go to that territory. Mr. Marble. Name me some place that has a higher margin than 2 cents. Can you? Mr. Case. No; I do not think I can. I think they all work as near as they can. Sometimes the margin will run a little over 2 cents. Mr. Marble. Tell some place where it is a little over 2 cents. Mr. Case. It may be a little over 2 most places. Air. Marble. Tell me some place besides Norway that is different from all the rest of the State. Is Norway on one price and all the rest of the State on a different price ? Mr. Case. No; we take into consideration the freight rates. Mr. Marble. I mean so far as margin of profit is concerned. Is Norway the only variation from 2 cents ? Mr. Case. I think around Lake City and places like that they are working on a cent margin. Mr. Marble. Do all the dealers that take cards from you there unite in asking you to make it 1 cent ? Mr. Case. I might take-it up with others. Mr. Marble. And reach an agreement with others ? Mr. Case. I said, I think, if there was no objection, we would apply that. Mr. Marble. What is the disturbing condition at Norway that makes it 1 cent ? Mr. IDase. I do not know. Mr. Marble. Simply that those that get the cards from you said to make it 1 cent ? Mr. Case. That is all. Mr. Marble. Is more than one dealer at Norway taking those cards ? 696 GRAIN ELEVATOR INVESTIGATION. Mr. Case. I think the farmers' people there take a card and a man named Christensen. Commissioner Lane. What is the use of these cards? Are these cards shown to the farmer when he comes in to sell wheat ? Mr. Case. I do not know. Commissioner Lane. You do not know whether they are or not? Mr. Case. No, sir; I am never away from my office. Commissioner Lane. They are supposed to be quoted to the farmec as the ruling price for grain that day ? Mr. Case. I do not know what the supposition is. Commissioner Lane. Do you know the fact? Mr. Case. No, I do not know what they do with them. I know I am basing that card on a certain basis. Outside of that I do not know what they do with them. Commissioner Lane. You are putting a margin above the actual value of the grain at the order of the grain dealer? Mr. Case. No, the grain dealer does not order me to do that. I make this card and make the price on my own responsibility. Conunissioner Lane. But if he says give him a margin or 2 cents, you do it ? Mr. Case. Not necessarily so. Commissioner Lane. I thought that was your testimony to Mr. Marble. Mr. Case. A district might want to work on a track price, and if it was all right in the district, I would not care what pnce I put in. Commissioner Lane. You would not care whether those people got less for their wheat than they were entitled to ? Mr. Case. That is nothing to me. I have nothing to do with that. Mr. Maeble. How are you reimbursed for these cards ? Mr. Case. I am paid by the month. Mr. Marble. It is now 60 cents a month since the 1st of October? Mr. Case. Yes, sir. Mr. Makble. Before that it was 50 cents per month? Mr. Case. Yes, sir. Mr. Marble. For elevators receiving the cards? Mr. Case. Yes, sir. Mr. Marble. You send them a card each business day? Mr. Case. Yes, sir. Mr. Marble. Have you been reimbursed in that same way ever since you began to send out the cards? Mr. Case. Yes, sir. Mr. Marble. Who procured you to send out these cards? Mr. Case. I do not know that there was any procuring about it. I was not doing anything very much; in fact, I was doing nothing. Mr. Marble. Who suggested to you that you begin the business? Mr. Case. I could not say who did suggest that. Mr. Marble. You can not remember? Mr. Case. I do not remember; no, sir. Mr. Marble. Did Mr. Wells? Mr. Case. No, sir. Mr. Marble. Did the grain dealers' association? Mr. Case. No, sir. Mr. Marble. You are very sure of that? Mr. Case. I will swear to that. GKAIN ELEVATOR INVESTIGATION. 697 Mr. Marble. I am glad you are sure of something. You are also very sure you can not remember who did ? Mr. Case. That was taken from a line firm that was putting its Erice every day to its own agents. From that I worked up the usiness. Mr. Marble. What line firm was that? Mr. Case. I think it was the old McFarlin Grain Company. Mr. Marble. You are not sure about that? Mr. Case. I think that is true. Mr. Marble. You say you have been reimbursed this same way ever since you began? Mr. Case. Y^es, sir. Mr. Marble. How long since you have made out these cards show- ing a larger profit than 2 cents in some places? Mr. Case. I do not know as to that. I could not say that. Mr. Marble. Can you not form some estimate at all ? Mr. Case. No, I can not. Mr. Marble. How long since you made a card showing as large a profit as 5 cents? Mr. Case. It might happen any time. Mr. Marble. Does it happen frequently? Mr. Case. It might under certain conditions of the market. Mr. Marble. Do you know what margin you allowed at Norway, Iowa, October 3 ? Mr. Case. I could not tell you now; no, sir. Mr. Marble. Do you know whether or not you worked on as high a margin as 12 cents a bushel at Norway since October 3 ? Mr. Case. No, I would not think so. Mr. Marble. Do you know you did not ? Mr. Case. I do not think I did, no. I do not remember all the prices I put in that territory, but I do not believe I have. Mr. Marble. Now, can you tell me whether or not, positively, since October 1, at Norway, Iowa, you have worked on as large a margin as 12 cents a bushel? Mr. Case. If I have it was not intentional. Commissioner Lane. What real value are those cards of yours? Mr. Case. Well, as a matter of reference; that is all I know about it. Commissioner Clark. They would not be of much value for that, unless the people that got them know more about them than you do. Mr. Case. I am trying to give my information the best I can. In regard to the 12-cent margin, I could not state that exactly. There is a chance of a mistake on a card any time. It is not my intention to show such a margin. Mr. Marble. You were not instructed by anybody to send cards on any such basis? Mr. Case. No, sir. Mr. Marble. I will show you this card [handing card to witness] and ask if it is one of your cards? Mr. Case. Yes, sir. Mr. Marble. What margin of profit does that show on No. 2 rye ? Mr. Case. That naight show a pretty fair margin on rye. Mr. Marble. What does it show? Mr. Case. October 4 ? Mr. Marble. That card [referring to card just handed witness]. 698 GRAIN ELEVATOR INVESTIGATION. Mr. Case. I can not tell what the market was October 4. Mr. Marble. You do not remember? Mr. Case. No, I can not tell what the market is each day. Mr. Marble. You know the general average for October. Has the price of rye varied much in October? Mr. Case. As to rye, there is not much rye bought in this State. I think there is a wide margin on rye. Mr. Marble. Has the market fluctuated violently on rye in October? Mr. Case. I do not thinlc so. Mr. Marble. Do you know what the price is to-day ? Mr. Case. About 60 cents, I think, in Chicago — 62 or 63. I have not checked it up to-day. I know we do not pay any attention to that rye market, because there is nobody in the country that buys rye where I am interested. Mr. Makble [presenting paper to witness]. I will ask you what is the date of this? Mr. Case. October 3. Mr. Marble. I will ask you to refresh your memory from that if you can, and tell what rye was worth that day ? Mr. Case. About 61^ cents, track, Chicago, for No. 2. Mr. Marble. What did your card fix? Mr. Case. It would be 45 less the freight. Mr. Marble. What is the freight from Norway to Chicago ? Mr. Case. Now I think it is about 11 cents a hundred. Mr. Marble. How much a bushel would that be on rye ? Mr. Case. About 6^ cents. Mr. Marble. Would it not be 5^ cents? Mr. Case. On an 11-cent point? Mr. Marble. Yes, sir. Mr. Case. No, sir. Mr. Marble. You say it would be 51 ? Mr. Case. About 6.16. The commission would be 1 cent. That would be 7.16. Mr. Marble. The rate on rye is 6.16, and the commission would be a cent; that would be 7.16? Mr. Case. About. Mr. Marble. Then they pay 45, according to your card? Mr. Case. They do not buy carloads at Norway. They have to work that on local rates. Mr. Marble. What is the local rate? Mr. Case. I have not any idea without looking it up. We try to allow enough there for a man that handles a few bushefe of rye to get out and take in the fluctuation in the market in the meantime. Mr. Marble. This card [referring to card already produced] has been identified, and being one of the cards referred to so many times, I will ask to put it in without reading. [Addressing witness.] You identify it as one of your cards ? Mr. Case. Yes, sir. (The same is hereto annexed and marked "Exhibit No. 2 to Mr. Case's testimony.") Commissioner Lane. Mr. Carr, do you desire to ask the witness any questions ? Mr. Caer. No, sir. The witness was excused. GEAIN ELEVATOR INVESTIGATION. 699 W. F. Morgan, called as a witness, being duly sworn, testified as follows : Mr. Marble. Do you know how these cards of Mr. Case are made up? Mr. Morgan. I do not. Mr. Marble. Does he consult you about them? Mr. Morgan. I know nothing about them. It is out of my line of business. Mr. Marble. I am inclined to thinlt I have been misinformed con- cerning this witness. You are excused. S. B. Williams, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Williams, you operate a country elevator ? Mr. Williams. I do. Mr. Marble. At what point? Mr. Williams. Madrid, Iowa. Mr. Marble. How long have you operated that elevator ? Mr. Williams. Since the 1st day or August, 1900. Mr. Marble. Have you since you began the operation of that eleva- tor pooled business or been obliged to pool business with any of your coinpetitors ? Mr. Williams. I think so. Mr. Marble. And when? Mr. Williams. On about and from the 1st of November, 1903. Mr. Marble. Up to what time? Mr. Williams. About the 11th of September last. Mr. Marble. The 11th of September, 1906 ? Mr. Williams. Yes, sir. Mr. Marble. What caused you to enter into that pool ? Mr. Williams. The fact of the line elevators forcing prices beyond a point of margin with me. Mr. Marble. Did you ask them to go into the pool, or did they ask you to go into the pool ? Mr. Williams. I was invited to Chicago to be investigated on ap- plication. ' Mr. Marble. Invited to Chicago by whom ? Mr. Williams. Mr. Keely. Mr. Marble. Who is Mr. Keely? Mr. Williams. He was general freight agent at that time of the Chicago, Milwaukee and St. Paul, as I understood. Mr. Marble. For what purpose did Mr. Keely invite you to Chi- cago? Mr. Williams. To ascertain the condition of the grain business at Madrid. Mr. Marble. Did you go to his office ? Mr. Williams. Yes, sir. Mr. Marble. Who else was present? Mr. Williams. Nobody. Mr. Marble. What did Mr. Keely say to you ? Mr. Williams. He asked me to tell my story of the condition of affairs at Madrid and why the disturbance there m prices. 700 GEAIN ELEVATOE INVESTIGATION. Mr. Marble. By "disturbance" he meant why you were fighting on prices ? Mr. Williams. Yes, sir. Mr. Marble. What did you tell him ? Mr. Williams. I told mm, as near as I remember, that I had no story of woe to tell him except that my life had been spent in Madrid and the people in the community felt disposed to trade with me instead of the Neola Company to a large extent, and for that reason prices were advanced to an extent I could not reach. Mr. Marble. Had you complained to him and asked him to inter- vene? Mr. Williams. I think not, at that time; possibly I did. I think I wrote before or afterwards, I do not remember wmch, for relief. Mr. Marble. For relief from him? What relief did you under- stand he could give you ? Mr. Williams. I took it for granted that the same power existed at that time as it did prior to that time, about a year and a half or something of that kind, when the McFarlin Grain Company was my coinpetitor. Mr. Marble. We will have to have that incident first, to get this fully. Tell us about that, briefly. Mr. Williams. I bought out their competitor at that time and it went on until the fall of 1901, when prices were advanced at that Eoint considerably and I applied to the Milwaukee freight agent at >es Moines for relief, and I obtained it within twenty-four hours. Mr. Marble. Who was that agent? Mr. Williams. His name was Caswell, 1 believe. Mr. Marble. What relief did you obtain ? Mr. Williams. The relief came that they came back to the original card price, as it was called, and never molested me afterwards. Mr. Marble. You were bidding the card price ? Mr. Williams. Yes, sir. Mr. Marble. You understood that to be an agreed price between you and your competitors at that joint? Mr. Williams. Yes, sir. Mr. Marble. They were violating it? Mr. Williams. Yes, sir. ^ Mr. Marble. And you appealed to the railroad agent? Mr. Williams. Yes, sir. Mr. Marble. Do you Icnow how they got them back to the price ? Mr. Williams. I sat by his desk when he asked Mr. Lee Lockwood why the disturbance in prices at Madrid. Mr. Lockwood wanted to know where he got the information. He said, I got the information and I am under direction from Chicago to have you give no trouble at Madrid. After that date I never had occasion to ask for relief. Mr. Marble. Who was Mr. Lockwood? Mr. Williams. Secretary of the McFarlin Grain Company. Mr. Marble. Do you know what would have happened to Mr. Lockwood if he had not acceded to the agent's request ? Mr. Williams. No, sir. III. Marble. Do you know of any such request being made by this agent that was not acceded to by the one it was addressed to ? I am trying to get at what penalty was behind this from the railroad company. GBAIN ELEVATOR INVESTIGATION. 701 Mr. Williams. I do not know. -Mr. Marble. You do know you goi. relief that way? Mr. Williams. Yes, sir. Mr. Marble. So, on the later occasion, you applied to Mr. Keely? Mr. Williams. Yes, sir. Mr. Marble. You went to his office and he wanted to know the trouble and you told him? Mr. Williams. Yes, sir. Mr. Marble. And asked him for relief? Mr. Williams. Yes, sir. Mr. Marble. What did he say? Mr. Williams. He said he was very sorry this state of affairs existed, but he was rniable to dictate what I should do or what the Neola people should do, and recommended that we get together and fix the matter up. Mr. Marble. Then what did you do ? Mr. Williams. I went to the Armour Company's office, where I met Mr. Marcy and Mr. Dillon, and sat alongside a table, and they said that they thought they were entitled to half the grain shipped from Madrid ; that they expected that and were going to have it. Mr. Marble. What did you say? Mr. Williams. I asked them on what basis they wanted it or had to have it. They said, on an equal basis; that if I got more grain than they did I must underbid the market and otherwise make some excuse to the farmers until they got up to the amount of tonnage they were to have. Mr. Marble. Did you accede to that? Mr. Williams. I did not wholly. Mr. Marble. Tell what arrangement you made as the result of this consultation? Mr. Williams. The result of that meeting was they agreed to give me a half a cent a bushel for the excess over 50 per cent of grain shipped from that station, and I was to load it into the cars for them — a half cent more than the cards showed. Mr. Marble. They loaded the grain into the cars? Mr. Williams. No, sir; into their elevator. Mr. Marble. You loaded it into the cars from their elevator? Mir. Williams. No; from my elevator, and it was shipped to their elevator. Mr. Marble. The excess bought by you you turned over to them and th^ paid you a half a cent a bushel over what you paid ? Mr. Williams. Yes, sir. Mr. Marble. Did they ever get an excess ? Mr. Williams. They have two or three times since that. Mr. Marble. Is there any provision in this arrangement for that state of affairs? Mr. Williams. That was to be loaded out to me. Mr. Marble.* And you were to pay them half a cent a bushel for handling? Mr. Williams. Yes, sir. Mr. Marble. Who did you say this arrangement was made with ? Mr. Williams. It was verbaUy made with Mr. Dillon and Mr. Marcy. Mr. Marble. And when? 702 GBAIN ELEVATOR IKVESTIGATI03Sf. Mr. Williams. On about the 6th of November, 1903. Mr. Marble. 1903? Mr. Williams. Yes, sir. Mr. Marble. And that arrangement continued until September of this year ? Mr. Williams. Twice during that time it was annulled, but only for a short time. Mr. Marble. With whom did you make "the arrangement by which you resumed the arrangement 1 Mr. Williams. Mr. McDougal. Mr. Marble. Did you see Mr. Marcy any more.^ Mr. Williams. No, sir. Mr. Marble. Have you your books and accounts showing these exchanges ? Mr. Williams. With me? Mr. Marble. Yes, sir. Mr. Williams. Well, I have some papers; yes, sir. Mr. Marble. May I see those.? (Papers handed to Mr. Marble.) Mr, Marble. These papers which you show me, what are they? Mr. Williams. Those are supposed to be copies made by the Neola elevator agent by which he gives me one and keeps one and sends one to his company. Mr. Marble. You understand you got these from the elevator agent ? Mr. Williams. Yes, sir. Mr. Marble. And his statement was that these were copies of the receipts exchanged by you each week, showing the surplus in either elevator, and keeping track of it ? Mr. Williams. Yes, sir. Mr. Marble. We will not stop to read them. I will simply put them in. Commissioner Clark. Read one or two. Mr. Marble. I will read the first and the last : Madrid, Iowa, February 25, 190-^. Statement of receipts, from February 4 to February 25, inclusive. Neola Elevator Co. S. B. Williams. Com. Oats. Corn. Oats. 5,218 29,223 22 2,121 678 10 »50 7,672 4,296 28 am 1,359 435 22 ■ oio » Pounds. Pounds. Amount of tonnage 833, 250 Equal tonnage 416^ 625 S. B. Williams, Dr 56, 545 February 4, S. B. Williams, Dr 116, 867 Total amount 173 412 GRAIN ELEVATOR INVESTIGATION. 703 I want it to appear that the first column refers to bushels. and the second to pounds, under "corn." Mr. Williams. Yes, sir. Mr. Marble. And oats the same way ? Mr. Williams. Yes, sir. (The bunch of papers above referred to are annexed hereto and marked "Exhibit No. 1 to Mr. Williams's testimony.") Mr. Marble. Does that (referring to paper above quoted) state the amoimt of surplus you received during that time ? Mr. Williams. Yes, sir. Mr. Marble. And on that last total you received a half a cent a bushel? Mr. Williams. Yes, sir. Mr. Marble. And turned that amount over to the Neola Elevator Company ? Mr. Williams Yes, sir. Mr. Marble. And all these are similar in form (referring to balance of papers in Exhibit No. 1) ? Mr. Williams. Yes, sir. Mr. Marble. I will ask, Mr. Williams, why this was discontinued in September? Mr. Williams. September 10th, I believe it was, I wrote Mr. McDougal a few lines, as near as I can remember, stating this : Prior to that day there was no new corn price on our card, but their agent was promiscuously bidding for the com a week before. The custom is for the farmer to come to the other man. That is the way I knew he was bidding. I think it was on the 10th of September that I wrote Mr. McDougal, saying, if it is your wish to have a new arrangement on this com, notify me in the morningj or consider me out of the deal altogether. He comes back at me with a reply. Do you wish me to read it? Commissioner Lane. Yes, sir. Mr. Williams (reading letter) : September 12. Dear Sir: Your personal of the 11th noted. The arrangements referred to were altogether of your own choosing and were agreed to only upon your urgent personal request. It wiU be entirely agreeable to discontinue same from date. Meantime 1 remain, with best wishes, Very truly, yours, W. G. McDougal. S. B. WiLUAMS, Madrid, Iowa. May I say this: I would like to have you read the last statement, showing the balance they claimed of me. Mr. Marble (referring to last sheet of Exhibit No. 1, Mr. Wil- liams). This statement of Septembers, 1906? Mr. Williams. Yes, sir. Mr. Marble. Is this the total ? Mr. Williams. That is the total. Mr. Marble. What do you want read? Mr. Williams. The balance. Mr. Marble (reading from statement of September 8). "To bal- ance, 348,495." Commissioner Clark. That represented the amount of grain that, under the agreement, you turned over to them? Mr. Williams. Yes, sir. 704 GEAIN ELEVATOE INVESTIGATION. Commissioner Clark. And you received a half a cent a bushel ? Mr. Williams. Yes, sir. Commissioner Clark. Which was, I take it, less than the profit you could have had if you shipped that grain direct to some market ? Mr. Williams. Yes, about a cent and a half. Commissioner Lane. Since that time, what has been the effect? Have you been able to get one-half of the grain ? Mr. Williams. I think so. They have had no house to do business there since they burned down. I only say it offhand, but I think a larger portion than half has gone through my elevator. Commissioner Lane. The Mr. Marcy you referred to is the manager of the Armour elevator ? Mr. Williams. Yes, I understood so. Commissioner Lane. That is all. Mr. Marble. The Neola Elevator, at Madrid, was recently burned ? Mr. Williams. Yes, sir. Mr. Marble. And you have something of an advantage in the buy- ing on that account ? Mr. Williams. Yes, sir; at present. Their new house is almost conipleted. Mr. Care. I would like to inquire if among grain dealers there is a well-recognized margin at which grain should be bought — what is con- sidered a reasonable profit among dealers — and if there is such, and you know, I would ask you to state it. Mr. Williams. I would state that the majority of the times the margin has rarely exceeded 2 cents and sometimes it is a little under 2 cents. Mr. Carr. It runs from about a cent and a half to 2 cents ? Mr. Williams. Yes, sir. Mr. Carr. That is well recognized ? Mr. Williams. Yes, sir, it is, so far as my knowledge goes. Mr. Carr. That is all. Commissioner Clark. We are much obliged for your frankness, Mr. Williams. The witness was excused. Peter Ide, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Ide, you are the manager of the Farmers' Grain Company, of Story City, Iowa? Mr. Ide. Yes, sir. Mr. Marble. You have an elevator there? Mr. Ide. Yes, sir. Mr. Marble. Do you know anythmg about a contract entered into between the manager of the Gilbert Grain Company and the line house at your point? Mr. Ide. The Gilbert Company and a line house? Mr. Marble. A pooling contract, or contract to maintain prices? Mr. Ide. No, there was no contract. Mr. Marble. Well, an agreement, then? Mr. Ide. No, there was no agreement between the Gilbert people and ourselves. Mr. Marble. Do you know anything about an agreement between the Gilbert Company and another line house at that point? GRAIN ELEVATOR INVESTIGATION. 705 Ml". Ide. Well, there was an agreement, or partly — I do not know whether it was lived up to — there was an agreement read to me in Mr. Wells's office. Mr. Marble. By whom? Mr. Ide. Mr. Wells. Ml-. Marble. When? Mr. Ide. Last June. Mr. Marble. June, 1906? Mr. Ide. Yes, sir. Mr. Marble. What was that agseement ? Mr. Ide. The agreement was, when I took charge of the Farmers' Elevator, at Story City, they wanted us to join the association. Mr. Marble. Who wanted you to join the association? Mr. Ide. Mr. Wells. I was called in and he asked me how the directors for the Farmers' Grain Company at that place would take with the association. I told him I could not tell, and he told me that the Gilbert Grain Company had joined, and he told me that they had gone into an agreement, or he took an agreement and read it to me that they were to divide the grain equally at that place. Mr. Marble. Any- agreement as to tne price to be paid for the grain? Mr. Ide. No agreement as to price. Mr. Marble. Any agreement as to how they were to divide the grain equally? Mr. Ide. No, not that I know of. Mr. Marble. You do not know how they were to bring that end about ? Mr. Ide. No. Mr. Marble. What did he want you to do ? Mr. Ide. To make the same agreement with our competitor at Story City. Mr. Marble. Did he ask you to ? Mr. Ide. Yes, sir. Mr. Marble. Who was your competitor at Story City? Mr. Ide. Mr. Erricson. Mr. Marble. Did he tell you you could make more money? Mr. Ide. He said the terminal points would be better if we joined the association. Mr. Marble. What did you understand by that? Mr. Ide. The markets we shipped to; we would have more places to ship grain to. Mr. Marble. Did he hold out any other inducement to you to join the association? ♦■ Mr. Ide. Yes, sir; there would not be any fighting. Mr. Marble. What did you understand by that? Mr. Ide. That the price would not be advanced up on us higher than we could pay for it ? Mr. Marble. Did he tell you there would be fighting if you did not join? Mr. Ide. Yes, sir. Mr. Marble. What did you understand by that? That the price was going to be advanced? Mr. Ide. Yes, sir. Mr. Marble. Did you join? S. Doc. 278, 59-2 45 706 GEAIN ELEVATOR INVESTIGATION. Mr. Ide. No, sir. Mr. Marble. Did he ask you to agree to anything else besides join- ing and agreeing to divide ? Mr. Ide. No, sir. Mr. Marble. Did he ask you to take Mr. Case's card prices? Mr. Ide I aheady took them. Mr. Marble. Did he know it? Mr. Ide. I do not know. Mr. Marble. You say you did not join. What was the result? Mr. Ide. There was no result -for quite a little while, until Mr. Wells came up there personally, himself, and asked me how I was getting along. I told him, "Keal well." He said: "I should think so; Mr. Erricson tells me you are getting nine-tenths of the grain." I told him I did not doubt it, and he says: "They naturally would not stand for it and if he had anything to do with it prices would go up," and from that day on prices went up a cent and a half. Mr. Marble. Mr. Wells said: "If I had anything to do with it the prices would go up?" INfi-. Ide. Yes, sir. Mr. Marble. And since then the price has been up? Mr. Ide. Yes, sir. Mr. Marble. Ever since? Mr. Ide. Yes, sir. Mr. Marble. What margin of profit were you making before the price was put up? Mr. Ide. A cent and a half. Mr. Marble. If it has gone up a cent and a half, what are you getting now? Mr. Ide. I do not adhere to the card — about a cent a bushel I am getting now. They are still over me. Mr. Marble. They are paying more than you do ? Mr. Ide. Yes, sir. Mr. Marble. Who is getting the grain? Mr. Ide. I am getting the grain. Mr. Marble. How can you get the grain? Mr. Ide. Because the farmers are staying to their own institution, where they bought. Mr. Marble. Have you the penalty clause ? Mr. Ide. No, sir. Mr. Marble. The farmers thiak you are responsible for the increase and sell to you any way. Is that it ? Mr. Ide. Yes, sir. Mr. Marble. Did you have any other dealings with Mr. Wells? Mr. Ide. No, sir. Mr. Marble. You had all these dealings with Mr. Wells and not with your competitor? IVIr. Ide. I have not had any dealings with my competitor as to pooling prices. Mr. Marble. Have you had any trouble at terminal markets ? Mr. Ide. No, sir. Mr. Marble. You ship where — to Chicago ? Mr. Ide. Yes, and St. Louis. Commissioner Clark. Do you get yom- fair share of cars to load out? GRAIN ELEVATOR INVESTIGATION. 707 Mr. Ide. Yes, sir. Commissioner Clark. That is all. The witness was excused. Mr. Marble. I will ask Mr. Williams to take the stand again for a moment. S. B. Williams recalled. Mr. Marble. Have you a copy of that contract you entered into? Mr. Williams. No, sir; not with me. Mi. Marble. Do you remember it? I will ask you if this is a copy of that" contract? (Handing papers to witness.) Read this and identify it as a true copy of the contract. Mr. Williams. (After examining contract.) I think that is it. Mr. Marble. Will you identify that as a true copy of that contract ? Mr. Williams. I think so, to the best of my recollection. Mr. Marble. Who signed that contract? Mr. Williams. Nobody. Mr. Marble. It was not signed? Mr. Williams. No, sir. Mr. Marble. Shall' I read it ? Commissioner Lane. Could you not put into the record without reading it? Mr. Marble. The W. G. Case card is referred to here, I see. Commissioner Lane. You may read it. Mr. Marble (reading contract) : It is conceded that the purchases of grain shall be equally divided. That the party receiving more than an equal share shall load out of his house the excess, for which he shall receive one-half cent per bushel, on the basis of card price prevailing on day of delivery. Receipts of grain for the previous week shall be compared on Monday. Whenever the excess shall amount to 24,000 pounds or more the party to whom this excess is due may demand delivery of the grain, and the price shown by the W. G. Case card shall govern in settlement as stated above. The grades taken under con- sideration as shown by such cards. It is agreed that should the railroad company make a switching charge that the expense will be divided equally. This agreement to go into effect February 15, 1904, and to continue until such time as either party becomes dissatisfied and gives the other party ten days notice and settle- ment to be made in the proper manner as outlined above, at the expiration of this agreement. Commissioner Lane. No parties named ? Mr. Marble. No parties named? Mj. Williams. No, sir. Mr. Marble. And no signatures ? Mr. Williams. No, sir. Commissioner Lane. Who were the parties ? Mr. Williams. W. G. McFarlin and S. B. McDougal. Mr Marble. Mr. McFarlin for the Neola Elevator Company? Mr. Williams. Yes, sir. (The papers containing contract quoted above are hereto annexed and marised "Exhibit No. 2 to Mr. Williams's testimony.") The witness was excused. 708 GBAIN ELEVATOR INVESTIGATION. N. 0. Keen, called as a witness, having been duly sworn, testified as follows: Mr. Marble. You are manager of a farmers' elevator company at Dunbar, Iowa? Mr. Keen. Yes, sir. Mr. Marble. Do you come in competition there with the Neola Elevator Company? Mr. Keen. Yes, sir. Mr. Marble. How long have you been in business there ? Mr. Keen. Five years, next December. Mr. Marble. What sort of arrangements have you had with the Neola Elevator-Company? Mr. Keen. We have never had any. Mr. Marble. What sort of relations have you had? Mr. Keen. Of course, they sometimes pay more than we, but then that doesn't make any difference to us. We pay what the stuff is worth, and we expect our members to patronize us, which they do. Mr. Marble. Did they raise the price 1 cent a hundred when they went into business ? Mr. Keen. Yes, sir. Mr. Marble. The price was raised as soon as that elevator com- pany went in? Mr. Keen. The Neola company agreed to buy the two elevators about the same time; they wanted both elevators. There always had been competition there, and the farmers wanted competition; and a member of our company owned one of the elevators, and there was $50 difference between the price the Neola Elevator Company wanted to give him and what they wanted to give him, and he notified the farmers that if they chose to get up a company they could have the elevator, and they subscribed in twenty-four hours enough money to buy the elevator. The Neola Elevator Company only wanted to buy it if they could get both, because they didn't want one unless they could get both. Mr. Marble. You found the price raised on you so that you would have to pay as much on the gram as you could get out of it ? Mr. Keen. Yes, sir; sometimes. Mr. Marble. About how much of the time ? Mr. Keen. Of course, if we got in considerable grain then we might boost the price up. This fall I had one man come in and work with me a whole day; ne wanted me to raise the price on oats a half cent a bushel. He said if I raised the price a half cent, the other company would give him a half cent, and that would make 1 cent. Mr. Marble. He wanted you to bid him more so that he could go to the Neola company and get still more ? Mr. Keen. Yes, sir; he knew he could get it by telling the Neola company that we would give him a half cent more than they were paying. Mr. Marble. Have you had very much of that experience — whatever you bid they would pay a little more ? Mr. Keen. Some, but then not so much. Of com-se there are times when we get in considerable grain and they do not get any, and they get discouraged and put the price up. Mr. Marble, f wish to say, if the Commission please, that Mr. GRAIN BLEVATOK INVESTIGATION. 709 Marcy, in his testimony at Chicago, stated that they had never raised the price against the farmers" elevator. Mr. Keen. I would say this, that this is only hearsay. They say that the elevators at other points paid from 1 to 3 cents a bushel less than they do at Dunbar. Witness excused. W. G. McDouGAL, called as a witness, having been duly sworn, testified as follows : Mr. Marble. Mr. McDougal, did you hear the testimony of Mr. Wmiams? Mr. McDougal. Yes, sir. Mr. Marble. Do you remember making that contract with him? Mr. McDougal. I did not make any contract with him. The contract Mr. Williams states was made at Chicago. Mr. Marble. Did you continue an agreement made at Chicago, made with Mr. WOliams ? Mr. McDougal. Yes, sir; resumed it. Mr. Marble. Twice? Mr. McDougal. I think probably. Mr. Marble. Then, so far as Mr. Williams referred to you, would you say it was true? Mr. McDougal. I would consider it so. Mr. Marble. Is there anything you want to state in that regard ? Mr. McDougal. I do not recall anything, thank you. Mr. Marble. Do you have charge of making prices for the Neola Grain Company? Mr. McDougal. No, sir; they are made at Chicago. Mr. Marble. Do you know how they are made? Mr. McDougal. I do not. Mr. Marble. What relationship have you to that elevator com- pany? Mr. McDougal. I am employed as superintendent of their sta- tions in Iowa. Mr. Marble. But you do not have to do with the making of prices ? Mr. McDougal. No, sir. Mr. Marble. I will ask you if you know whether or not the Neola company at any point in Iowa is pooled with its competitors, or any of them, so far as the amount of grain is concerned, other than this arrangement with Mr. WiUiams ? Mr. McDougal. Not that I know of. Mr. Marble. That is the only case of the sort that you know of ? Mr. McDougal. There is nothing of the kind that you referred to excepting that we expect om- share of the business at each point where we are doing business, and we try to get it. Mr. Marble. At how many points have you an arrangement such as this with Mr. Williams? Mr. McDougal. I think that is the only one. Mr. Marble. At how many points do your competitors recognize your right to a portion of the market, and when you bid up a little to get in line, they refuse to bid up ? Mr. McDougal. That I do not know. 710 GEAIN ELEVATOR INVESTIGATION. Mr. Marble. There are some such places ? Mr. McDouGAL. Not that I recollect. Mr. Marble. Are there any places where, when you have your pro- portion and your competitor bids up a little to get his proportion, you fail to bid up to meet his competition ? Mr. McDougal. We do not hear of his bidding up until probably that is balanced. Mr. Marble. Or attempt to hear? Would you say you do not attempt to hear? Mr. McDougal. No; I did not use that word Mr. Marble. I will ask you whether you keep track of the bidding pretty closely ? Mr. McDougal. Yes. Mr. Marble. When you find a competitor paying a little more than you pay, and you know you have your proportion and he has not, what is your practice ? Do you meet his competition, as a practice ? Mr. McDougal. I did not catch your question. Mr. Marble. I say, if you should find a competitor bidding more than you, say, a half a cent a bushel more, and you know you have your proportion of the grain at that point, and he has not do you bid up your price to meet ms competition ? Mr. McDougal. We generally follow him. Mr. Marble. How do you keep from getting more than your pro- portion, and so getting into a fight with him ? Mr. McDougal. That is the way that I even up, and I presume that is the way they even up. Mr. Marble. The way I have described ? Mr. McDougal. Yes. Mr. Marble. We have such testimony from other line elevator men in Omaha as to the way in which they regulate the amount. Commissioner Lane. You recognize the right of the farmers' ele- vator to get its proportion, too ? Mr. McDougal. It is pretty hard competition. We recognize the rights of everybody that we come in contact with, with due regard to our own interests. Commissioner Lane. What I mean to ask is this: Supposing that there are three elevators at a station; yours is one of them, there is another private competitor, and then there is a farmers' elevator. Do you recognize that you are entitled to 33 J per cent of that grain, or do you claim 50 per cent? Mr. McDougal. We have no claim. We just get what we can. Commissioner Lane. Do you insist on getting what you call your share ? Mr. McDougal. No. Commissioner Lane. I thought that was your testimony? Mr. McDougal. Not under those conditions. Commissioner Lane. What are the conditions upon which you insist upon getting your own share ? Mr. McDougal. With equal facilities, with an equal relative investment, we consider that we are entitled to our share of the busi- ness that originates at that point. As I understood your question, there was a farmers' elevator, a second house, and ours. The farm- ers' elevator is very hard competition, for the reason that its mem- GEAIN ELEVATOR INVESTIGATION. 711 bership includes virtually all of the farmers that ship regularly through that station, and they naturally patronize their own firm. Commissioner Lane. Then you do not recognize that they are entitled to anything, but you just get what you can get away from them? Mr. McDouGAL. Do not put it that way. We are fair with them. ^ Just as fair as we can be, confronted by a business emergency of that ' kind. It is a very difficult problem to handle. I would like to say to you in this connection that we handle the business of the farmers; that is, that we solicit business from farmers. We permit, in fact invite, business through our house from the farmers. We handle it- for them, if they desire, for half a cent a bushel. I think that is reasonable. It would cost them, from my experience, a quarter of a cent a bushel to scoop it or shovel it, so that it is a very difiicult thing, and I would like to have you keep that in mind. It is an extremely difl&cult competition, an honest competition, and it is an honestly hard position for me to be placed in. And I want to add there that whenever we have known of farmers desiring to go into business we have placed our elevator at their disposal for sale. It is understood that any elevator we have got in the State is for sale if the farmers want it. Commissioner Lane. That is the settled policy of your company ? Mr. McDouGAL. Distinctly so, and we have sold our houses to them. There have been fom- houses built since I have had charge of this business; four farmers' organizations it our station and three of them we have sold our houses to; one we were not able to. The farmers used good judgment in, buying. It was an old-fashioned affair. I think if we had had a modern house we could have sold it to them'. That is our position with the farmers, as far as I can make it clear to you. Mr. Marble. Is there a stipulation in this handling of grain for the farmer for half a cent that it shall go to jovn house in Chicago ? Mr. MoDotjgal. No, sir. Mr. Marble. No such stipulation? Mr. McDouGAL. No, sir. By the way, Mr. Marble, I showed the card which we have posted in our house to Mr. Taylor, and I think he will tell you that there is no such stipulation there. We charge a halt a cent for stuff, if consigned to us at Chicago ; that is, we charge a half a cent for com and oats, and the usual commission for wheat, which is a larger commission. Mr. Marble. And sell it on the markets? Mr. McDouGAL. Yes, sir. Mr. Marble. That is the usual consignment business in Chicago ? Mr. McDouGAL. It is. Mr. Marble. That is to say, the Armour Grain Company is in that kind of business? Mr. McDotjgal. Or the Neola Grain Company; we solicit that class of business. Mr. Marble. And a great many other commission merchants in Chicago also? Mr. McDotjgal. It is optional. The point is, we place no restraint against farmers shipping ftom the stations where we are doing business ; rather, we invite it through our house, if they see fit to pay us a half a cent for our facilities. 712 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. I think that is all. Commissioner Lane. That is all. Witness excused. N. J. MiNNis, called as a witness, having been duly sworn, testified as follows : Mr. Marble. Mr. Minnis, you are manager of a farmers' elevator, at Dayton, are you? Mr. MiNNis. Yes, sir. Mr. Marble. You have been going about one year there ? Mr. MiNNis. We commenced a year ago the first of last August. Mr. Marble. And previous to that you were in the employ of the Peavey Elevator Company, weren't you? Mr. Minnis. Yes, sir. Mr. Marble. Do you. mean by that the Peavey Elevator or the Omaha Elevator Company ? Mr. Minnis. The Peavey Elevator Company, of Minneapolis. Mr. Marble. Where did you work when you were employed by that company? Mr. Minnis. Dayton, Iowa. Mr. Marble. And the Great Western Railroad Company also have an elevator there? Mr. Minnis. Yes, sir. The Great Western sold out while I was in their employ. They sold out to the Iowa and Minnesota Cereal Company. Mr. Marble. Since, you have been running a farmers' elevator there, have you had the business of that firm pooled with anyone ? Mr. Minnis. No, sir. Mr. Marble. Or any agreement on the prices? Mr. Minnis. No, sir. Mr. Marble. Was the business of that town pooled before the farmers' elevator started? Mr. Minnis. Yes, sir. Mr. Marble. Do you know that ? Mr. Minnis. Yes, sir. Mr. Marble. Pooled by whom? Mr. Minnis. Well, by Mr. Marble (interrupting). Was the Peavey Company in it? Mr. Minnis, Yes, sir. Mr. Marble. Anyone else? Mr. Minnis. And the local buyers. Mr. Marble. How many ? Mr. Minnis. We have two roads running into our town, the North- western and the Minneapolis and St. Louis. The two line houses are on the Minneapolis and St. Louis, and one local buyer on the Chi- cago and Northwestern. The elevators are about three-quarters of a mile apart — the line elevators from the local biiyers. I do not know what year it was in, nor when the Iowa Grain Dealers' Associa- tion originated, but we got an invitation to go to a grain dealers' meeting at Gowrie. Mr. Marble. From whom did that invitp-tion come ? Mr. Minnis. From the representative of the Great Western Ele- vator. I was working for the Great Western then. It came through them, and I went over to that meeting. Before that meeting we GKAIK ELEVATOR INVESTIGATION. 7 13 were getting our prices from Mumeapolis, direct from the Great Western Elevator Company. They were sending me my prices that I should pay for grain from day to day, and after that meeting in Gowrie I was informed I would get prices from another source, and that I would strictly adhere to them; that they did not want any balking or overbidding for this grain unless I was informed from their office, out if any of my competitors paid more than I did to inform them first. Mr. Marble. Inform who firet? Mr. MiNNis. The people I was working for, the Great Western Elevator Company. Mr. Marble. From whom did you get the cards ? Mr. MiNNis. I got the cards — -they were issued at Humboldt, Iowa. Mr. Marble. Do you know who issued them ? Mr. MiNNis. No, sir. Mr. Marble. Would they come signed by anyone? Mr. MiNNis. They came first — I don't loiow the initials. It was what we called a Brownell card. Afterwards it was changed to A. L. Buyers, and the last card I worked on was the Case card. Mr. Marble. Did the Case card follow those other cards as a part of that agreement? Mr. MiNNis. Yes, sir; we got notice to use the A. L. Buyers cards when the Brownell cdrd quit. Mr. Marble. You understand the A. L. Buyers to be a fictitious name for "all buyers?" Mr. Minnis. That was our understanding. Commissioner Clark. What did the "A. L." mean? Mr. Minnis. "All buyers," they informed us. Mr. Marble. Then the Case card followed the all-buyers card? Mr. Minnis. Yes, sir. Mr. Marble. And you understood it to be of identically the same nature and the same purpose ? Mr. Minnis. Yes, sir. Mr. Marble. And you bid that price, regardless of the conse- quence? Mr. Minnis. Yes, sir. Mr. Marble. And notified your home office if anyone else vio- lated it? Mr. Minnis. Yes, sir. Mr. Marble. Did your competitors get the same cards? Mr. Minnis. Yes, sir. Mr. Marble. Did they operate under the same cards you did ? Mr. Minnis. Yes, sir. Mr. Marble. Did you discuss it with them? Mr. Minnis. Yes, sir. Mr.. Marble. And it was your understanding and their understand- ing — you talked about it — that this was a combination Mr. Minnis (interrupting). It was a price set that we should pay for grain at that point. Mr. Marble. Was Mr. Wells at this meeting ? Mr. Minnis. He was at the meeting at Gowrie. That was the only meeting I attended. Mr. Marble. How long did you use those cards? 714 GKAIN ELBVATOE INVESTIGATION. Mr. MiNNis. We used them all the time I was working for the ele- vator company. Mr. Marble. Did the business of that town remain pooled under that agreement up until the time you started this agreement ? Mr. MiNNis. Yes, sir. Mr. Marble. A little over a year ago ? Mr. MiNNis. Yes, sir. Mr. Marble. That is all. Commissioner Lane. That is all. Witness excused. S. NoRDSCHOw, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. Mr. Nordschow, are you managing a farmers' ele- vator? Mr. Nordschow. Yes, sir. Mr. Marble. At Badger, Iowa? Mr. Nordschow. Yes, sir. Mr. Marble. Do you know about the pooling of business at that point, or any other in this State ? Mr. Nordschow. Yes, sir. Mr. Marble. Is your elevator in a pool now ?• Mr. Nordschow. No, sir. Mr. Marble. Has your farmers' elevator ever been? Mr. Nordschow. No, sir. Mr. Marble. Have you the penalty clause ? Mr. Nordschow. We have, but we don't use it. Mr. Marble. Have you had occasion to use it ? Mr. Nordschow. Yes, sir; we could have used it, but we don't enforce it. Mr. Marble. What was this pooling that you know about — at what point? Mr. Nordschow. Humboldt. Mr. Marble. At Humboldt? Mr. Nordschow. Yes, sir; and at Dakota Gity. Mr. Marble. Dakota Gity? Mr. Nordschow. Yes, sir. Mr. Marble. When? Mr. Nordschow. At the time I was buying grain at Humboldt for the Peavey Elevator Gompany. Mr. Marble. When was that ? Mr. Nordschow. From 1894 to 1901. Mr. Marble. What was that arrangement; did they agree that each should have a certain percentage at that market ? Mr. Nordschow. Yes, sir. Mr. Marble. And they paid each other on the excess? Mr. Nordschow. Yes, sir. Mr. Marble. And if one man purchased in excess he should pay a Mr. Nordschow. Yes, sir; a penalty of 2 cents a bushel. Mr. Marble. Who else was in that pool ? Mr. Nordschow. The Peavey Elevator Gompany, the Great West- ern Elevator, and Jensen & Taylor. GRAIN ELEVATOR INVESTIGATION. 715 Mr. Marble. Was that pool broken up ? Mr. NoRDSCHOw. Not unless it was broken up after I left. Mr. Marble. It was still in existence when you left? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. That was in 1901 ? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. And at this other point — what pool was that? Mr. NoRDSCHOW. The other point was at Badger — that is, I mean that .the two elevators there quote the same price. Mr. Marble. When? Mr. NoRDSCHOw. Now. Mr. Marble. Both the other elevators, besides the farmers' eleva- tors, have the same price ? Mr. NoRDscHOW. Yes, sir; outside of the farmers' elevator. Mr. Marble. Do you know what price it is, then? Mr. NoRDSCHOW. I do ; that is lots of times, but not at the present time. Mr. Marble. Have they Mr. Case's cards, do you know? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. Both of them? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. Do they follow them in the bidding? Mr. NoRDSCHOw. No. Mr. Marble. Do they pay more than the cards ? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. Why? Mr. NoRDSOHOW. On account of me. Mr. Marble. Do you have the cards ? Mr. NoRDSCHOw. No, sir. Mr. Marble. How do you determine what you will pay? Mr. NoRDSCHOw. I have a little story to tell before I can tell you that. Mr. Marble., Can you tell it briefly? Mr. NoRDSCHOW. Yes, sir. The- first two years they nearly ruined us by paying so much that we could not get anything, so we quit buy- ing entirely. At the end of two years we called the president of our company and told him to call the board of directors together and ar- range for some other way of doing business. I suggested at the meeting that we should handle the grain on 1 cent commission. The stockholders and everybody else thought that would be a better plan, and we began right • then and there to handle on 1 cent commission corn and oats; and grain came streaming into us pretty good. And then the other elevators were at a loss what to bid, because I did not put a bid on anything. I just took it in and weighed it and gave them a receipt for so much. If they had part of a carload, I put two or three shipments in a car and kept track of them as the grain went in. And when we sold it on the market we gave them all there was in it except 1 cent. Mr. Marble. You found that way of doing business satisfactory? Mr. NoRDSCHOW. Yes, sir; and we are doing that to-day. Mr. Marble. You found it satisfactory to your customers all around ? Mr. NoRDSCHOW. All around; everybody is satisfied. 716 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. So that your elevator is purely a cooperative institu- tion? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. Just for marketing grain? Mr. NoRDSCHOw. Yes, sir. Mr. Marble. And your competitors have the same price and bid the same price? Mr. NoRDSCHOw. No ; they bid more than at other places where they have no farmers' elevators, because they have to, because I am bidding on a 1-cent margin and do not lose anything. I am handling on a 1-cent commission and don't run any risk of losing. If they get the grain, they must bid as much as I do. Mr. Marble. I think that is all. Witness excused. Mr. Marble. I have a number of letters Commissioner Lane. Just one minute. Before it goes any further, I want to say that we will have a session to-night at 7 o'clock here in this room, so as to notify all the witnesses, and that will close this session here. Mr. Marble. I have a number of letters purporting to be from the Iowa Grain Dealers' Association, also a number of circulars, and I have submitted those to Mr. Wells and he has gone over the list. I will ask Mr. Wells if these are issued by his association ? Mr. Wells. Yes, sir. Mr.. Marble. I will ask Mr. Wells if he has any other letters or cir- culars that he would hke to add to these ? Mr. Wells. No, sir. (The same are hereto annexed and marked "Exhibit No. 24 to Mr. Wells's testimony.") D. J. JenkS, called as a witness, having been duly sworn, testified as follows : Mr. Marble. Mr. Jenks, what is your business ? Mr. Jenks. Well, principally handling grain, and farmer, and some other business. Mr. Marble. Have you had anything to do with the pooling of grain ? Mr. Jenks. We did have years ago. Mr. Marble. How long smce? Mr. Jenks. Probably me first pool we had was ten or twelve years ago. Mr. Marble. How long since the last one ? Mr. Jenks. Probably a year. Mr. Marble. What place was the one a year ago ? ^ Mr. Jenks. At Coon Rapids, Iowa. It was probably a year and a half ago. Mr. Marble. Since it was dissolved ? Mr. Jenks. Yes, sir. ' Mr. Marble. It was dissolved ? Mr. Jenks. Yes, sir. Mr. Marble. Why was it dissolved ? Mr. Jenks. Well, I don't know hardly. The parties wanted to call it ofi; that is all. GKAIN ELEVATOB INVESTIGATION. 7l7 Mr. Marble. Do you know why ? Mr. Jenks. No, sir. Mr. Marble. How many elevators were in that pool? Mr. Jenks. Three; two, in fact. At that time there were three — the Atlas and the Neola, and I OAvned the other. Mr. Marble. And afterwards the Neola bought the Atlas house ? Mr. JeNKS. Yes, sir; but that has not been running for the last two • years. Mr. Marble. So that when three houses were running three were in it, and when two were running, only two were in it ? Mr. Jenks. Yes, sir. Mr. Marble. Who called that off ? The Neola Elevator Company ? Mr. Jenks. I think it was; yes, sir. Mr. Marble. It was not you ? Mr. Jenks. No,, sir. Mr. Marble. What were the terms of that pool ? That each house took one-third ? Mr. Jenks. Yes, sir. Mr. Marble. And when there were two houses, each house took half? Mr. Jenks. Yes, sir. Mr. Marble. How did you succeed in getting half? Did you have a penalty on the excess purchased ? Mr. Jenks. Yes, sir. Mr. Marble. What penalty ? Mr. Jenks. Well, we did pay as high as, I think — the old Kansas City Grain Company — we did pay as high as 3 cents a bushel. Mr. Marble. And how high did you — at the time you stopped the pool — how high were you bidding? Mr. Jenks. Two cents for corn and oats. Mr. Marble. How much for wheat? Mr. Jenks. Four. Mr. Marble. Did you stop pajnnent on some check you gave under this pool ? Mr. Jenks. No, sir. Mr. Marble. Did the trouble come about a payment of anything like that? Mr. Jenks. No, sir; not under that pool. Mr. Marble. Everything was satisfactory back and forth so long as the pool existed ? Mr. Jenks. Yes, sir. Mr. Marble. WTiat is the condition there now? Mr. Jenks. I don't know what it is. Mr. Marble. You are not in busiuess there at the present time? Mr. Jenks. Yes, sir; I am. Mr. Marble. Do jou agree as to prices ? Mr. Jenks. No, sir. Mr. Marble. Are you of one mind as to the margin of profit you should make ? Mr. Jenks. No, sir. Mr. Marble. Are you fighting about prices ? Mr. Jenks. Each man pays what he has a mind to. Mr. Marble. How much profit do you make there now ? Mr. Jenks. Sometimes nothing; sometimes as high as 2 cents. 718 GKAIN ELEVATOE INVESTIGATION. Mr. Marble. What will you average on the business of a crop year ? Mr. Jenks. We calculate a cent and a half a good margin. Mr. Maeble. For corn and oats ? Mr. Jenks. Yes, sir. Mr. Maeble. And how much for wheat? * Mr. Jenks. That is pretty hard to guess on. We calculate to get 2 or 3 cents. Mr. Maeble. Do you have much wheat at that point? Mr. Jenks. Yes, sir. Mr. Maeble. How much did you make when you had the pool ? Mr. Jenks. That is pretty hard; I couldn't answer that. Mr. Maeble. Did you make more than you make without it? You made more than you make without it ? Mr. Jenks. Well, no. I didn't make more because I generally had to pay a penalty. Mr. Maeble. Well, now, what was this about stopping a payment on a check? Mr. Jenks. It was in regard to rental of the elevator that we were miming. 'Mr. Maeble. In regard to the rental of the elevator you were running? Mr. Jenks. Yes, sir. Mr. Maeble. Did you, who were running, imite to pay rental on the elevator that was not running ? Mr. Jenks. Yes, sir. Mr. Maeble. And kept it closed up? Mr. Jenks. We didn't want to run it. Mr. Maeble. Why didn't you lease it to somebody and get a por- tion of that rental back? Mr. Jenks. I had it leased, half of it. I didn't own it. Mr. Maeble. What was the arrangement between you and the Neola Company about the rental of that elevator? Mr. Jenks. Each was to pay half. Mr. Maeble. What was to be done with the house? Mr. Jenks. As long as the Atlas Grain Company didn't run it, we were to pay the rental on it. Mr. Maeble. You were to pay this to the Atlas Company not to nm the elevator? Mr. Jenks. Yes, sir. Mr. Maeble. And guarantee them that much profit on the house? Mr. Jenks. That is it exactly. Mr. Marble. That was simply to keep one competitor out of the market ? Mr. Jenks. Yes, sir; that is it exactly. Mr. Marble : I think that is all. Commissioner Clark: How much rental did you pay for that elevator. Mr. Jenks. A cent and a half a bushel. Commissioner Clark. On all the grain you handled ? Mr. Jenks. No, sir; on a third. There isn't business enough at that point for three houses; there is scarcely enough for two. Commissioner Claek. That is all. Witness excused. GBAIN ELEVATOR INVESTIGATION. 719 Mr. Marble. Does the Commission desire to adjourn now? Commissioner Lane. We can, if you have no more witnesses ready. Mr. Marble. I have, but I think the next witness will take con- siderable time. Commissioner Lane. This session will be adjourned until 7 o'clock this evening in this room. (At 5 p. m. the Commission adjourned until 7 p. m.) Des Moines, Iowa, October 26, 1906 — 7 f. m. S. NoRDSCHOw, recalled. Mr. Marble. I want to ask you, Mr. Nordschow, if at the town of Humboldt, Iowa, you for a time were charged with the duty of issuing what were called the Brownell cards referred to here ? Mr. Nordschow. Yes, sir; I was. Mr. Marble. From about the year 1896 to 1899? Mr. Nordschow. Yes, about three years. Mr. Marble. And about that time? Mr. Nordschow. Yes, sir. Mr. Marble. To whom did you send those cards? Mr. Nordschow. I can not recollect all of them, but it was every station from Norman, Iowa, to Berkley, Iowa, on the Minneapolis and St. Louis road. Mr. Marble. Who procured you to issue those cards? Mr. Nordschow. The traveling superintendent for the Peavey Elevator Company. Mr. Marble. Did you understand those were cards of the Iowa Grain Association ? Mr. Nordschow. Yes, I did. Mr. Marble. Did you send them to all the elevator men in the towns ? Mr. Nordschow. As far as I know I did. Mr. Marble. Did you understand they fixed the price to be paid in those towns ? Mr. Nordschow. Yes, sir. Mr. Marble. Did they fix the price for you where you were located ? Mr. Nordschow. Yes, sir. Mr. Marble. And they did not go to just one man in a town, but to all the dealers in the town ? Mr. Nordschow. Yes, sir Mr. Marble. I will ask if you ever saw any money paid to the Peavey Company in that town ? Mr. Nordschow. Yes, sir. Mr. Marble. How many times ? Mr. Nordschow. I remember once. Mr. Marble. You know the money was paid on a pooling contract, such as was described here ? Mr. Nordschow. Yes, sir. Mr. Marble. How much was paid ? Mr. Nordschow. Something over a hundred dollars. I can not recollect the exact amount. 720 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. That was within the last three years ? Mr. NoRDSCHOw. The Brownell cards were succeeded by the Buyers, and they by the Case cards. Mr. Cake. You say you sent out these cards up until what time? When did you cease sending out Brownell cards ? Mr. NoRDSCHOw. I think it was from 1896 to 1899— nearly three years. Mr. Cake. Now, you said you understood these were sent out by or under the direction or auspices of the Iowa Grain Dealers' Association? Mr. NoEDSCHOw. Yes, sir. Mr. Carr. How did you undertand that ? Mr. NoEDSCHOW. Because that was understood, according to my instructions — the people I was working for. Mr. Carr. Do you know when the Iowa Grain Dealers' Association was organized ? Mr. NoEDSCHOw No. Mr. Carr. I would like to say to the Commissioners that Mr. Wells informs me that it was organized in 1900. Mr. Marble. Did it have any predecessor by way of organization? Mr. Caer. I do not know. Mr. Maeble. I will ask you, Mr. Nordschow, what organization you refer to ? Mr. NoEDSOHOW. I refer to the Iowa Grain Dealers' Association as organized before that time. The cards were not BrowneU first. They were some sent to me from Minneapolis, divided up into squares, with the price of grain in each sq^uare. There were a number of squares — 24 to 36 or 30, or somethmg. As far as I remember there were no names signed to those cards. Commissioner Claek. Who did you get these cards from? Mr. NoEDSCHOw. They were divided into squares, and the prices I got from Minneapolis. After that, when I commenced with the Brownell cards, I made a kick on signing them. I did not have time to do it. Then, they sent for a machine that a postal card would fit in, and they told me to buy the cards at the post-ofiice, a thousand at a time. Then the machine was fixed, stating all kinds of grain, and the prices were loose, with rubber figures to fit in, and w;hen I fixed that plate I could stamp the cards. Commissioner Claek. Where did you get the prices from that you put on these cards? Mr. NoEDSCHOW. From the Peavey Elevator Company, Minne- apolis, by wire. Commissioner Claek. They quoted these prices to you and you sent them out? Mr. NoEDSCHOw. Yes, sir. Commissioner Claek. That is all. Commissioner Lane. Anything more, Mr. Marble ? Mr. Marble. No. (The witness was excused.) C. H. Pierce, called as a witness, being duly sworn, testified as follows : Mr. Marble. You own an elevator at Barnum, Iowa? Mr. Pierce. Partly. GKAIN ELEVATOR INVESTIGATION. 721 Mr. Maeble. You have partners in that ownership? Mr. Pierce. I have an amount of stock. Mr. Marble. It is a fanners' elevator? Mr. Pierce. Yes, sir. Mr. Marble. You bought that elevator from the Great Western Elevator Company, did you not? Mr. Pierce. I bought an old scoop elevator, a lot of corn cribs from the Great Western Elevator Company, in order to get the site. Mr. Marble. Then, did you put up a new elevator? Mr. Pierce. Yes, sir. Mr. Marble. I want to ask you if any communication has been given you regarding putting up prices, and what would happen to you if you did put them up ? Mr. Pierce. I bought this of Mr. Morrill, the general superin- tendent of the Western Grain Company. After completing the deal, he said to me, "Now, if you boys go down there and attempt to put up prices — we have competing elevators close by you — we shall run you out." Mr. Marble. That was after you bought the elevator? Mr. Pierce. Yes, sir. Mr. Marble. You bought the elevator in order to put up prices, did you not? Mv. Pierce. Yes, sir; we put them up. Mr. Marble. How are you getting along? Mr. Pierce. Well, we are not run out, but are pretty badly hurt. Mr. Marble. Did they put up prices more than you could? Mr. Pierce. No, sir. Mr. Marble. How are you hurt ? Mr. Pierce. In the shipment of grain. In shipping corn — we lost a good deal of money shipping com. It was ten to seventeen days in transit. Mr. Marble. On what road? Mr. Pierce. The Illinois Central. Mr. Marble. To what market? Mr. Pierce. Chicago. Mr. Marble. How far are you from Chicago? Mr. Pierce. Three hundred miles. Mr. Marble. Did you complain about it? Mr. Pierce. Complain? Yes, sir. At one time, we found two cars we shipped fifteen days after we shipped them sidetracked. Ml*: Marble. Do you know whether your competitors had such experiences as that? Mr. Pierce. I do not think they had. Mr. Marble. Do you have trouble getting cars? Mr. Pierce. Yes, sir. Mr. Marble. Do you have more trouble than your competitors have in getting cars ? Mr. Pierce. No, sir; as far as the cars come there, although we are buying two-thirds of the grain, they divide the cars even. Mr. Marble. Though you nave the more tonnage, you get the same number of cars ? Mr. Pierce. Yes, sir. Mr. Marble. Your complaint is that your grain is not hauled to market? S r>n<- 97« SO-'? a« 722 GRAIN ELEVATOR INVESTIGATION. Mr. Pierce. Yes, sir. Mr. Marble. Do you have difficulty in finding a market? Mr. Pierce. No. We only commenced a year ago, and they are hunting us now to ship to. Mr. Marble. What is that? Mr. Pierce. I say the commission men are hunting us to ship to. Mr. Marble. Has any railroad man told you why your cars were delayed ? Mr. Pierce. No, sir. Mr. Marble. No explanation? Mr. Pierce. No explanation. I could not get any from the station agents at two different places. Mr. Marble. That is all. (The witness was excused.) W. E. Messerole, called as a witness, being duly sworn, testified as follows: Mr. Marble. Mr. Messerole, where do you live? Mr. Messerole. My headquarters are in Chicago. Mr. Marble. Have you noted these Case cards recently, and pair" attention to the profits they allowed on grain ? Mr. Messerole. Yes, sir. Mr. Marble. At what point? Mr. Messerole. Well, at nearly all points in the northern and eastern part of the State, more particularly in the eastern part of the State and in the vicinity of Marshalltown and Nevada. Mr. Marble. Is that a section of the State which has many farmers' elevators? Mr. Messerole. Well, in the section around Nevada there are quite a number, and there are three or four in the eastern part of the State, east of Tama. Mr. Marble. And considerable portions where there are none? Mr. Messerole. Yes, in the southern part of the State there are very few. Mr. Marble. I will ask what sort of margin those cards allow on grain? Mr. Messerole. Well, as the margin usually figured on those cards, on oats about 3 to 4 cents — that is, if they would adhere to the grading Eroperly; on corn, about the same; on wheat about 5 cents; on arley from 6 to 8 cents, and on rye — in particular I noted a wide variance in rye from other grains, and I went over the cards and took circulars from both Cliicago and St. Louis for at least two weeks, and I found the lowest margin which was calculated by those cards to be 9 cents, and from that up to 13 and 13^. Mr. Marble. On rye? Mr. Messerole. On rye. Mr. Marble. Is rye a substantial crop in this part of the State? Mr. Messerole. It is not a substantial crop. Still, there are car- loads shipped from this portion of the State. Mr. Marble. Is that a substantial profit? Mr. Messerole. I should say it was. Mr. Marble. Would you say it was more than a fair profit? Mr. Messerole. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 723 Mr. Mabble. Where there is real competition, what do the buyers make on rye with such a volume of crop as there is at this place ? Mr. Messerole. I should say 4 to 5 cents. It being a crop that it takes a considerable time to accumulate a car I should say 4 or 5 cents would be a considerable profit on rye at points where there is rye shipped. Mr. Marble. That is all. Commissioner Clark. What business are you engaged in in Chicago ? Mr. Messerole. I am a solicitor for a commission house. Commissioner Clakk. A grain commission house ? Mr. Messerole. Grain commission. Commissioner Clark. Then you are actively and regularly — I will not say regularly — but actively and usually m close touch with the grain markets? Mr. Messerole. Yes, I claim to understand the business thor- oughly. Mr. Marble. How long have you been in the grain business? Mr. Messerole. My fust experience in the grain business ■ dates back to 1883, and more or less smce that I have bought about twenty- three years. Mr. Marble. That is all. The witness was excused. E. M. Richards, called as a witness, being duly sworn, testified as follows: Mr. Marble. Mr. Richards, you are the manager of the Farmers' Co-operative Elevator and Grain Company, of Manson, Iowa, are you? Mr. Richards. Yes, sir. Mr. Marble. How long have you been manager? Mr. Richards. Since October 1. Mr. Marble. Previously you were employed by whom? Mr. Richards. The Wheeler Grain and Coal Company for a year. Mr. Marble. The year immediately preceding last October 1 ? Mr. Richards. Yes, sir. Mr. Marble. How many regular grain companies doing business at Manson? Mr. Richards. Before this change there were three. The Farmers' Elevator bought out the Wheeler Grain and Coal Conipany. Mr. Marble. You were employed by the Wheeler Grain and Coal Company? Mr. Richards. Yes, sir. Mr. Marble. In what capacity? Mr. Richards. Manager — buyer. Mr. Marble. I will ask if the three regular dealers had the business pooled ? Mr. Richards. Yes, sir. Mr. Marble. What was the arrangement ? Describe it. Mr. Richards. Well, we all received our cards. I was fortunate enough to receive my card in the afternoon, and we were to pay not to exceed a half a cent above the card. Once in a great while we would go 1 cent above the card. But we were to compare our receipts each Monday morning. 724 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. What did you do after you had compared receipts? Mr. EiOHARDS. Well, our understanding was when one man got behind the other parties were to lay still and let him bid a half a cent above until he got up. Mr. Marble. The understanding was, if one got behind, the others were to lay still and let him bid a little higher ? Mr. Richards. Yes, sir. Mr. Marble. And they were not to compete with him? Mr. Richards. They were not to compete. Mr. Marble. Did you actually carry out that agreement? Mr. Richards. Once in a while I got a little above. I bid a cent and a half and they went a half a cent above me. Mr. Marble. You did fight a little? Mr. Richards. Yes, sir. Mr. Marble. But you carried out the agreement a large part of the time? Mr. Richards. Yes, sir; up to June 23, 1906. Mr. Marble. What were the cards you received? Mr. Richards. What I would call the association cards. Mr. Marble. The Grain Dealers' Association cards? Mr. Richards. Yes, sir. Mr. Marble. Why would you call them that? Mr. Richards. I always understood they were association cards. Mr. Marble. Were you a member of the association? Mr. Richards. No, sir. Mr. Marble. Were any of your competitors members? Mr. Richards. The man I worked for was a member of the asso- ciation and so were my competitors. The other elevators were all members of the association. Mr. Marble. Did you ever hear the man you worked for or mem- bers of this association call the card the association card ? Mr. Richards. I do not know as I can say they called it an asso- ciation card, but they said I was to buy on the cards. Mr. Marble. Were they the Case cards? Mr. Richards. Yes, sir. Mr. Marble. What kind of margin did they allow? Mr. Richards. It varied — sometimes as low as 2 cents. Mr. Marble. Sometimes as high as what? Mr. Richards. Four cents. Mr. Marble. On corn and oats ? Mr. Richards. Yes, sir. Mr. Marble. What on wheat? Mr. Richards. We do not handle wheat. Mr. Marble. You said you bid a half a cent above the card some- times. Who made that arrangement? Mr. Richards. I suppose the elevator companies did that and directed us agents to do as they said. Mr. Marble. Do you know who formed that pool down there ? Mr. Richards. No, sir. That was something I was not interested in. All I know is my employer told me to compare receipts every Monday morning. Mr. Marble. To your knowledge, how long did that continue ? Mr. Richards. From August 1, 1905, to June 23, 1906. Mr. Marble. Then was the pool dissolved? GRAIN ELEVATOR INVESTIGATION. 725 Mr. Richards. Yes, sir; we had instructions not to compare receipts any longer. Mr. Marble. From your employer? Mr. Richards. I did not have it from my employer, no, but Mr. Hicks, the agent of the Western Elevator Company, told me we would compare no further. Mr. Marble. Did you all still receive the cards? Mr. Richards. Yes, sir. Mr. Marble. And based prices on them? Mr. Richards. Yes, sir. Mr. Marble. Did you receive the cards up until you quit that employment ? Mr. Richards. Yes, sir. Mr. Marble. And based prices on them until you stopped? Mr. Richards. Yes, sir. Mr. Marble. Do you now receive cards ? Mr. Richards. No, sir. Mr. Marble. How do you base your prices now? Mr. Richards. I base my price on the Chicago market. Mr. Marble. Now, what was the effect on the market there of the organization of the farmers' company? Mr. Richards. Well, the effect has been as soon as I commenced the other fellows commenced bidding above me, and they bid from a half a cent to a cent and a half above me. Mr. Marble. How is the market now compared with the time you were pooling as to margin of profits? Of course the value of the grain would vary. Mr. Richards. The margin of profit is less, of course. Mr. Marble. How much? Mr. Richards. I should judge 1 cent a bushel, anyhow. It would be reduced that much, because I aim to base my margin so I can just make a little money and get the business. Mr. Marble. Did you have a settlement when you dissolved the pool ? Mr. Richards. Well, I did not know, but my understanding was that the low man at stated periods in the year — but I do not Know when those periods were — the man that was behind — was to receive a cent and a half over the man that was ahead. Mr. Marble. How did you get that understanding ? Mr. Richards. I received iny information from Mr. Hicks, the agent of the Western Elevator Company. Mr. Marble. He was a competitor? Mr. Richards. Yes, sir; and Mr. Brown told me. He said, rather than pay the prices we pay and handle off-grade corn, I would rather take my cent and a half margin. Mr. Marble. Do you suppose that referred to the pooling margin? Mr. Richards. On, yes. Mr. Marble. You understood it so? Mr. Richards. I understood it so. Mr. Marble. That is all. Mr. Carr. Can you add anything to what you have already told us as to how you got the impression that these Case cards were sent out by the Iowa Grain Dealers' Association or the association there ? Mr. Richards. Perhaps I could tell you something more. 726 GEAIN ELEVATOR INVESTIGATION. Mr. Cakr. Let me ask this: Have you any personal kiiowledge on the subject or anything you know of your own knowledge in regard to the matter ? Mr. Richards. Do I have any personal knowledge that Mr. Case sent out those cards? Mr. Care. No; we assume that he sent them out. I suppose there is no dispute about that. Have you any personal knowledge that Mr. Case, in sending out those cards, acted under instructions from the association or had any connection with the association ? Mr. Richards. No; only as generally understood. Mr. Caer. That is simply rumor? Mr. RiCHAEDS. Yes, sir; it is generally understood among grain men. Mr. Caee. Among grain men, you say? Mr. Richards. Yes, sir; all I talked with. Mr. Marble. Were those you talked with members of this asso- ciation? Mr. Richards. Yes; I have been associated with them quite a bit. Mr. Carr. Have you ever talked with any member of the asso- ciation who said he knew those cards were sent out by the association, or that the association had anything to do with it ? Mr. Richards. Yes, sir; I have. Mr. Care. Who was it? Mr. RiCHAEDS. Representatives of the Chicago Elevator Company. Mr. Caer. What is his name? Mr. RiCHAEDS. Do you know C. G. Sturtevant? Mr. Care. Was that his name ? Mr. Richards. Do you know B. L. Coon? Mr. Carr. Those were the men that told you? Mr. Richards. Yes, sir. Mr. Carr. Where do they live ? Mr. Richards. Mr. Coon, I understood, lives in Chicago, and I understand Mr. Sturtevant lives in Omaha. Mr. Carr. That is all you know about it, is it, except from these rumors you speak of? Mr. Richards. Yes, sir. Mr. Caee. That is all. The witness was excused. E. D. Hamlin, called as a witness, being duly sworn, testified as follows: Mr. Maeble. Mr. Hamlin, you reside in this city, do you ? Mr. Hamlin. Yes, sir. Mr. Maeble. And you have your own line elevators? Mr. Hamlin. I do not know that it is called "line." I only have two stations of my own. I have an interest in what they call the Marshall elevator. Commissioner Lane. A little louder, please. Mr. Hamlin. I say I only have two of my own. I have an interest at Marshall. Mr. Maeble. You are interested in six altogether? Mr. Hamlin. Yes; it would be six. Mr. Marble. How long have you been engaged in that business ? Mr. Hamlin. The grain business? GBAIN ELEVATOR INVESTIGATION. 727 Mr. Mabble. Yes; and the elevator business? Mr. Hamlin. Since about 1876. Mr. Mabble. That would be about thirty-one years? Mr. Hamlin. Thirty-one years. Mr. Marble. I will ask you what you consider a fair profit for a country elevator buying from fanners to make on corn and oats ? Mr. Hamlin. Prom thirty years' experience and operating a coun- try elevator, if I had my choice, rather than take 2 J cents a bushel prospective profit I would ^o to farming — as an average profit, I mean — ^because if you figure it up, mathematics will prove it. Take an average of six stations. As the competition is in Iowa, they will not average over 75 cars a station, and you can not hire a man to operate it short of $50 a month that is any good at all. Take your repairs, your shortages, your off inspections, your losses by not placing it promptly, and you have nothing left under 2^ cents. Mr. Mabble. I will ask you if you are familiar with these Case cards? Mr. Hamlin. Yes, sir; I am. I know when they were put on. Mr. Mabble. Do you know why they were put on? Mr. Hamlin. I do not know. I always considered them a matter of convenience myself. I am not a member of the association and have not been for sometime, but still employ Mr. Case to put them out. It is a matter of convenience and a guide to my men. I fail to write them every day, but we do not adhere to the Case card any more than if it was not there. In fact, I do not think there has been two of my stations on the Case card a week in two years. Mr. Mabble. Why is that ? Mr. Hamlin. If the card is out of the way, I tell them what to bid. They call me up. I consider it only as a guide to the agent. I watch the card and govern it entirely by competition and other conditions. Mr. Mabble. Do you know what those Case cards allow dealers on the north side of the State ? Mr. Hamlen. No. Mr. Mabble. Do you know what dealers on the north side of the State are making? Mr. Hamlin. No; I only know my own territory. They average small. In fact, I turn down ^ain at the price they put out. I will not let my men pay it; that is, at certain times of the year, when there is a weak market and danger of corn and oats going off grade. The trouble is, the margin on wie Case cards is only a prospective margin. You do not know what the margin is. Nobody can figure it out. That is simply misleading. The Case card might show 4 J cents to-day, or 5 cents margin on com, and you buy the com on that basis from the farmer and you lose 3 or 4 cents a bushel — ^that is, times of year the market is liable to go off, and dealers won't take it. I often do not take it and let other dealers take it if they want it. ■ Then, there are times the Case card would get too low, and in case it was, if it showed any excess margin at all to tempt other dealers to overbid, we simply bid up to the market. I inform my own agents what to pay. Mr. Mabble. Did you have some trouble with Mr. Wells about the marein dealers should make at country stations? Mr. Hamlin. No, sir; I never had any trouble with Mr. Wells about the margin. My trouble originated with some meetings up 728 GHAIN ELEVATOR INVESTIGATION. there at the Cereal Club. Some dealers wanted to put on new corn on the card, and the principal trouble of Mr. Wells was he butted in and wanted to act as a deciding vote. We had an even vote — the Counselman Company and Mr. Brown and some of us. Part of us wanted it on and part of us did not. I did not want to buy it, be- cause I do not consider it a safe proposition contracting com of farm- ers thirty, sixty, and ninety days ahead, before we know what the corn is. The first trouble we had was, we were about divided, and Mr. Wells wanted to have something to say about it. He said he. would decide it to put it on. I asked him what business he had to vote; what he had to do with it. I wanted to know if he had any interest in the matter, and if he did, what it was. Our trouble originated there. It was a minor thing. Mr. Marble. A Case card, then, was of some importance in the market ? Mr. Hamlin. Well, it had this importance, if you put it out to my men there and the country dealers they would walk out and go to contracting that corn. That- would rob me of it or turn it over to them. Mr. Marble. I will ask if you ever had any experience trying to ship oats east of Chicago — trying to market them? Mr. Hamlin. Yes, I have had some. Mr. Marble. Did you find you could do so ? Mr. Hamlin. Not while navigation was open. Mr. Marble. Was there someone who could beat you in price? Mr. Hamlin. Yes, sir; always. Mr. Marble. Who was that? Mr. Hamlin. Chicago houses. Mr. Marble. Do you know why that was ? Mr. Hamlin. Yes, sir. Mr. Marble. Why was it ? Mr. Hamlin. It would probably go out on an all lake and rail route and skin me out. Mr. Marble. You could not use that route? Mr. Hamlin. Not conveniently. You have a bunch of grain and ship it out in boat loads, and I was not fixed to do it. Mr. Marble. It was a case of the small business against the large ? Mr. Hamlin. The small against the large ; yes, sir. Mr. Marble. That is aU. The witness was excused. A. Brutsche, called as a witness, being duly sworn, testified as follows : Mr. Marble. You live at Coon Eapids, Iowa, do you? Mr. Brutsche. I do. Mr. Marble. You have lived there a good many years? Mr. Brutsche." Yes, sir. Mr. Marble. How many ? Mr. Brutsche. I have been in that neighborhood about fifty years. Mr. Marble. You own land there? Mr. Brutsche. I do. Mr. Marble. And farm it yourself? Mr. Brutsche. My sons do. GKAIN ELEVATOR INVESTIGATION. 729 Mr. Mabble. You did farm it? Mr. Beutsche. Yes; I did. Mr. Marble. How long did you farm it? Mr. Bkutsche. Twenty-five or thirty years. Mr. Marble. You have been handling grain a good while? Mr. Brxjtsche. Yes, sir. Mr. Marble. How long? Mr. Beutsche. About thirty-two years since I first commenced. Mr. Marble. Have you got an elevator ? Mr. Brxjtsche. I have not. Mr. Marble. How do you handle it ? Mr. Brutsche. We have been shovehng some. I did have an elevator, but I sold out to the farmers, and they ran it a little over a year, and then sold to the Neola Grain Company. They are occupying it now. They are running it. I was trying to build another right across the street, but 1 have not been able to get a side track in, and consequently have not been in shape to handle it. Mr. Marble. How long have you been trying to get a side track? Mr. Brutsche. I have been at it pretty near two years. - Mr. Marble. It takes a long time to get a side track. Mr. Brutsche. They will not give me the price it will cost per rod. I would like to Imow what it will cost before I build it. flow- ever, the freight and passenger ^ent was out there a short time ago and tried to rent me the Atlas Elevator. I could not use that. Mr. Marble. The freight and passenger agent of what road ? Mr. Brutsche. The Milwaukee. Mr. Marble. Tried to rent you the Atlas Elevator? Mr. Brutsche. Yes, sir; or sell it to me. He said I was dealing directly with the railroad company, not the elevator people. Mr. MARBLE. Do you know who owns that elevator? Mr, Beutsche. No, sir; I corresponded with a man in Chicago by the name of Miner. Mr. Marble. Is there a Neola Elevator at that place — Coon Rapids ? Mr. Brutsche. Yes, sir. Mr. Marble. How many elevators are there there ? Mr. Brutsche. Three; the Jenks, the Neola, and the Atlas. The Atlas has been closed about two years. Mr. Marble. Do you know whether that is one of the Atlas ele- vators that the Neola Company bought about a year ago ? Mr. Brutsche. I think so, from what I can learn. Mr. Marble. Who was the man that tried to sell it to you? Mr. Brutsche. Mr. Wilson, the freight and passenger agent of the Milwaukee. Mr. Marble. How much did he ask you? Mr. Brutsche. He wanted that I shotdd make him an oiler. I told him I wanted to look it over, but there are no track facilities. I could not handle anything but a little grain. That is not what I want. I wanted to handle coal and lumber too. I have a lot of groimd there — half a block. I used to own the ground where the new elevator is. I sold it to the farmers. We organized a farmers' ele- vator company, and they ran the elevator about a year and a half, and then we ha!d to pay prices that it would not justify. Of course we had competition. 730 GEAIN ELEVATOR INVESTIGATION. Mr. Marble. Did they have to pay bigger prices than were paid in that town before they started ? Mr. Beutsche. Yes, sir. Mr. Maeble. The price was put up, was it? Mr. Betjtschb. Oh, yes; I really organized the company. Mr. Maeble. And the price went up when the company started business? Mr. Beutsche. Yes, sir. Mr. Maeble. How long did you run a shovel house? Mr. Beutsche. Well, quite a while. Every now and then, when we could not sell our gram — ^we had a big farm right east of town, about 1,500 acres — and I do not mind giving 2 cents commission per bushel, but when it comes to 5 cents, that is pretty high. This sum- mer I sold com in April and May that netted me $50 a car more than I could get then in Coon Rapids. Mr. Maeble. Where did you send that com? Mr. Beutsche. To Chicago. Mr. Maeble. To be sold? Mr. Bkutsche. Yes, sir. Mr. Maeble. And it netted you $50 ? Mr. Beutsche. Yes, sir. The last car I shipped netted me $52 more than I could get of the Neola Company at Coon Rapids. Mr. Harley, who was running the elevator, doing the buying, is running the elevator for me now. Mr. Maeble. Do you know whether those elevators pool? Mr. Beutsche. I do not. Mr. Maeble. Did you ever pool business? Mr. Beutsche. No, sir; I would not, either. Mr. Maeble. Did you ever agree with competitors on what prices should be paid ? Mr. Beutsche. Never; I would not, either. Mr. Maeble. I will ask you if you had trouble selling your grain that you shipped out? Mr. Beutsche. I have not had a great deal of trouble. I shipped to E. P. Bacon & Co. They treated me nicely, but they refuse now to handle my grain. They wrote me that they belonged to the Grain Dealers' Association. I have a letter to show to that effect if you would like to see it. Mr. Maeble. I would like to see it. (Letter handed to Mr. Marble by witness.) Mr. Maeble. May I read this to the Commission? Mr. Beutsche. Yes, sir. Mr. Maeble. You received this in the ordinary course of business? Mr. Beutsche. Oh, yes. Mr. Maeble. It is on the lithographed letterhead of E. P. Bacon & Co. I will read it: Milwaukee, October 12, 1906. A. Brutsche, Coon Rapids, Iowa. Deab Sie: We learn that you are not occupying an elevator or warehouse, and as you probably know that members of the grain dealers' associations object to receivers like ourselves handling consignments from those who are not so equipped, we feel obliged to recommend that you dispose of your grain through the local elevator pro- prietors at your place. You will, no doubt, appreciate our position, and when you own or rent an elevator or warehouse we shall be glad to arrange with you for a renewal of our business relations. GBAIN ELEVATOK INVESTIGATION. 731 In the meantime, as we prefer not to advance on grain consigned to us excepting from those who are shipping continuously, we will ask you to await the receipt of our remit- tances for the consignments now made. Yours, truly, E. P. Bacon & Co. Mr. Brutsche. I had then shipped him 5 cars. I had not asked him for any money. The retams were delayed awhile. They, how- ever, treated me pretty well. Mr. Marble. You got another letter from Mr. Bacon about this time, did you not? Mr. Brutsche. Yes, sir. Mr. Marble. Of this same general nature? Mr. Brutsche. No, sir. Mr. Marble. Have you got that with you? Mr. Brutsche. No, I did not know whether I would need it or not. Mr. Marble (producing copy of letter). Can you read this and see whether it is a copy of a letter to you from E. P. Bacon & Co. ? Mr. Brutsche. I have not my glasses. Mr. Marble. I will read it, and you can tell me whether this is a copy of a letter from E. P. Bacon & Co. A. Brutsche, Coon Rapids, Iowa. Dear Sir: Your two letters of the 27th instant have been forwarded to us here by our Chicago office. The two cars of com which you report having shipped will be handled to the best advantage on arrival at Chicago. We note your request to send our Chicago daily market reports, but before complying we will ask you to please advise us if you occupy an elevator or warehouse, and are regularly engaged in buying and shipping grain. If so, we shall be glad to keep you posted and to have the handling of your business. If you are not so equipped we will suggest that you dispose of your grain through the local dealers at your station, as, owing to the opposition of the Grain Dealers' Association to receivers like ourselves handling consignments from any but regular grain dealers, we are obliged to refrain from soliciting or handling shipments from any but those who are buying and shipping grain continuously. Awaiting your reply, we are. Yours truly, E. P. Bacon & Co. Mr. Brutsche. I think that is correct. I think that is a copy of the letter they wrote me. Mr. Marble. When did you receive that letter? Mr. Brutsche. I do not remember the date. Mr. Marble. About when? Mr. Brutsche. It is not over a month ago, I think. Mr. Marble. Now, how much have you got invested in the grain business, Mr. Brutsche, all told, including the land on which you raise the grain? Mr. Brutsche. Including the land, I suppose I have $75,000 or $80,000 invested. Mr. Marble. You have got quite as much invested in the grain business as the average country elevator, have you not? Mr. Brutsche. I do not know. Mr. Marble. How much does a country elevator cost? Mr. Brutsche. Well, -fre built the farmers' elevator for $3,500. Mr. Marble. You consider that you are a reliable man and safe to deal with, do you not? Mr. Brutsche. I think so. I have never had any trouble getting anything I wanted, whether I had money or not. liffr. Marble. That is all. 732 GEAIN ELEVATOE INVESTIGATION. (The two letters above read in Mr. Brutsche's testimony are hereto annexed and marked "Exhibits Nos. 1 and 2.") The witness was excused. George White, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. White, you are president and manager of the Farmers' Elevator Company of Nevaaa, Iowa, are you? Mr. White. I have been until about a week ago. Mr. Marble. How long were you ? Mr. White. For one year. Mr. Marble. During that time do you know anything about efforts made by the president of the Iowa Grain Dealers' Association to interfere with your business there in any way? Mr. White. The president of the Iowa Grain Dealers' Association was our competitor, and the effort was made to make us pay so much for the grain that we would lose money, and our report of the 8th of September showed that we had lost a little more than $400, and he reported to another party that he believed in another year, by follow- ing the methods they had followed, they would put us out of business, and they would not incriminate themselves in doing so. Mr. Marble. How do you know he reported that? Mr. White. The man that heard him tell it over the telephone in his office told me. Mr. Marble. You did not hear it ? Mr. White. Not myself; no, sir. Mr. Marble. Who is this president ? Mr. White. J. A. King, ex-president of the association. He was president until June of this year, I believe. Mr. Marble. Now, the situation is substantially similar to what has been described, of putting up the price so that if you bought you could not make any money? Mr. White. Yes, sir; since we started the past year the prices have averaged 3 or 4 cents nearer the Chicago market than they were the previous years, and sometimes 6 and 7 cents on corn and oats. Mr. Marble. Six or 7 cents would be equal to the profit on corn and oats, would it not ? Mr. White. Yes, sir. Mr. Marble. Have you had any other troubles than that ? Mr. White. We have had trouble in buying coal. The mine from which we bought at Winona, 111., refused to ship to us because some of the grain men and some other dealers were members of the North- western Retail Coal Dealers' Association, and they claimed that we were not a legitimate company, and that we were a company of farmers banded together to get our coal at cost, and they should not sell us coal. Commissioner Lane. It was a sort of sympathetic boycott ? Mr. White. I think so. Mr. Marble. You are an officer of the Farmers' Grain Dealers Association of Iowa ? Mr. White. A director. Mr. Marble. Did you have some trouble at St. Louis ? Mr. White. A firm at St. Louis has bought a good many oats of us this summer, and their representative told me a short time ago that GBAIN ELEVATOR INVESTIGATION. 733 it had been reported to the Grain Dealers' Association that they were dealing with us and they tried to prevent them from buying of us. Mr. Marble. That was reported to you by letter from the Wagner Company ? Mr. White. No, their traveling man. Mr. Marble. You did not get any letters about it? Mr. White. No, sir. Mr. Marble. How many farmer stockholders have you ? Mr. White. Eighty-seven. Mr. Marble. And they all own farms about there ? Mr. White. They are either farm owners or renters. A good many are renters of farms. Mr. Marble. Can you make any estimate of the amount your stockholders have invested in the grain business, including the raising of the grain? Mr. White. More than a million dollars, I think. Commissioner Clark. What is the Northwestern Retail Coal Dealers'. Association of which you spoke? Do you know where it is located ? Mr. White. Their headquarters is at Minneapolis. The mine, writing us, advised us that most of the members were members of this association, and that we had better not antagonize this dealers' association and it would be to our advantage to join them. Commissioner Clark. What mining company was it ? Mr. White. The Winona Mining Company, of Winona, 111. ; E. S. Mansur, secretary of the association. Commissioner Clark. Do you know who the officers of this Minne- apolis association are? Mr. White. I do not.' Commissioner Clark. That is all. The witness was excused. George Larson, called as a witness, being duly sworn, testified as follows: Mr. Marble. You are president of the Story City Grain Com- pany, of Story City, Iowa? Mr. Larson. Yes, sir. Mr. Marble. That is a farmers' company? Mr. Larson. Yes, sir. Mr. Marble. Has your company got the so-called penalty clause ? Mr. Larson. No, sir. Mr. Marble. Not at all? Mr. Larson. No. Mr. Marble. In no form? Mr. Larson. No, sir. Mr. Marble. What kind of competition do you meet in Story City? Mr. Larson. What is that ? Mr. Marble. What kind of competition do you have at Story City? Do you agree on prices with your competitors? Mr. Larson. No, sir. Mr. Marble. Do you pool the grain at that market ? Mr. Larson. No, sir. 734 GRAIN ELEVATOR INVESTIGATION. Mr. Maeble. When did you start into business? Mr. Larson. The 1st of June. Mr. Marble. Of ithis year? Mr. Larson. Yes, sir. Mr. Marble. How is the margin of profit in that town compared with what it was before you started in business ? Mr. Larson. I think it is better. Mr. Marble. Better now? Mr. Larson. I think it is. Mr. Marble. You are making a profit on your grain ? Mr. Larson. Yes, sir. Mr. Marble. About what profit do you find you can make? Mr. Larson. Well, I can not say for certain. My manager could tell you more about that. Mr. Marble. You can not estimate that? Mr. Larson. No, I can not. Mr. Marble. Do you think you can run without the penalty clause ? Mr. Larson. I think I can. Mr. Marble. You do not regard that as necessary to you? Mr. Larson. No, not as far as the patrons have treated us yet. They have been loyal to the company. IVu-. Marble. Well, how about that, do you pay less than your competitor? Mx. Larson. Yes, sir. Mr. Marble. You do? Mr. Larson. Yes, sir. Mr. Marble. How much less ? Mr. Larson. It is running from a cent to a cent and a half. Mr. Marble. You are paying 1 to IJ cents less than he does? Mr. Larson. Yes, sir. Mr. Marble. Why don't you pay as much as he does? Mr. Larson. Because the market can not afford it. Mr. Marble. Is he paying more for the grain than you can get out of it? Mr. Larson. Yes, sir; at least that is what our manager says. Mr. Marble. But your patrons are selling to you because they are loyal to the company. Mr. Larson. Yes, sir. Mr. Marble. Do you know why he is paying so much? Mr. Larson. No, sir. Mr. Marble. Has he told you? Mr. Larson. No, sir. Commissioner Clark. You say the margin of profit is larger than it was before. Do you mean that the profit to the dealer is larger or the price of grain is better? wc. Larson. I think we are getting a better price. Commissioner Clark. The market is better ? Mx. Larson. Yes, sir. Mr. Marble. You do not mean that the elevators are making more money? Mr. Larson. No. Mr. Marble. Is your elevator making money? Mr. Larson. Well, we have not lost any. GRAIN ELEVATOK INVESTIGATION. 735 Mr. Marble. If you would pay this cent or cent and a half more, would you lose any? Mr. Larson. I do not think we would make any. Mi. Marble. Have you been told by anybody that if you did not get in and did not pool you could not do any business ? Mr. Larson. Yes, sir; I was asked by the president of the Gilbert Farmers' Association to join the association. He said we would do better business that way. Mr. Marble. Did he tell you how you would do better? Mr. Larson. He thought we would get the grain at cheaper rates and at a uniform price. Mr. Marble. Is he a member of the associatibn? Mr. Larson. I understand they are. Mr. Marble. Did he tell you he was? Mr. Larson. Yes, sir. Mr. Marble. And he told you if you joined the association you could get the grain at a better price, a uniform price ? Mr. Larson. Yes, sir; he said he thought we could do better; he thought we could not get along unless we joined the association. Mr. Marble. You say he is president of the Gilbert Farmers' Association ? Mr. Larson. Yes, sir; his name is Jacob H. Jacobsen. Mr. Marble. Did he tell you he had a uniform price with his com- petitors? Mr. Larson. No; he did not. Mr. Marble. But he told you you could have that if you joined the association? Mr. Larson. He told me we could do better by joining the associa- tion. Mr. Marble. Did he say you could have a uniform price? Mr. Larson. He did not say exactly that. Mr. Marble. But he made you think that? Mr. Larson. Yes, sir. Mr. Marble. That is all. The witness was excused. Mr. Marble. If the Commission please, I^ do not care to call any other witnesses. Commissioner Lane. Is there anybody here who des'res to make any statement in this matter, or continue this testimony, or alter it in any part ? (No response.) Commissioner Lane. This session is adjourned. At 7.55 o'clock p. m. the Commission adjourned. Milwaukee, Wis., November 20, 1906—10 o'clock, a. m. Present : Commissioners Prouty and Lane. Commissioner Proutt. The Commission is here this morning to continue its investigation of the relation of common carriers, subject to the act to regulate commerce, to the transportation and handling of grain. 736 GHAIN teLEVATOE INVESTIGATION. Mr. John H. Marble will represent the Commission. Have you some witness, Mr. Marble ? Mr. Marble. I will call A. K. Taylor. A. K. Taylor, called as a witness, being duly sworn, testified as f oUows : Mr. Marble. Mr. Taylor, you reside in Milwaukee? Mr. Taylor. I do. Mr. Marble. And are engaged in the grain business ? Mr. Taylor. Yes, sir. Mr. Marble. You are a member of a firm? Mr. Taylor. Yes, sir. Mr. Marble. The firm is Fagg & Taylor? Mr. Taylor. Yes, sir. _ ■ Mr. Marble. What business is that firm engaged in? Mr. Taylor. Operating elevator "B" in the grain business — the general grain trade. Mr. Ik^RBLE. Are you a commission firm at all? Mr. Taylor. No, sir; we are not. Mr. Marble. You buy grain and sell it ? Mr. Taylor. Yes, sir; buy and seU it. Mr. Marble. Do you buy all your grain in Milwaukee? Mr. Taylor. Yes, sir; almost aU of it. We occasionally buy a car outside, but almost all of our grain is bought here on the floor. Mr. Marble. Of the cash graia market of your chamber of com- merce ? Mr. Taylor. Yes, sir. Mr. Marble. In buying grain do you at all discriminate in your purchases because of the origin of the grain? Mr. Taylor. No, sir; we do not. Mr. Marble. If you know that grain comes from a farmers' eleva- tor, do you discriminate against it on that account ? Mr. Taylor. No, sir. Mr. Marble. Suppose it comes from a man running a scoop-shovel house ? Mr. Taylor. We do not know anything about it. Mr. Marble. You buy the grain on its merits ? Mr. Taylor. For whatever the actual grain is worth. Mr. Marble. The fact that the country buyer of that grain has paid more for the grain than the competitors think right, would that force you to discriminate against them? Mr. Taylor. No, sir. Mr. Marble. Have you received any letters protesting against your failure to discriminate? Mr. Taylor. No, sir. Mr. Marble. The grain dealers of the different States have not communicated with you in that regard ? Mr. Taylor. No, sir — oh, they have at times, but we have never paid attention to them. Mr. Marble. How long since they so communicated with you ? Mr. Taylor. About a year, I guess. Mr. Marble. From what State did those communications come? Mr. Taylor. From Iowa, I think, principally. Mr. Marble. From Mr. Wells, of Des Moines? GBAIN ELEVATOB INVESTIGATION. 737 Mr. Taylor. I believe so. Mr. Maeble. How about the Wisconsin Grain Dealers' Association. Mr. Taylor. We have never had any complaint from them. Mr. Marble. Or the Tri-State Association, with headquarters at Minneapolis ? Mr. Taylor. No, sir. Mr. Marble. They have never attempted to interfere with your purchases ? Mr. Taylor. No, sir. Mr. Marble. This is a recently organized firm of which you are a member, is it not ? Mr. Taylor. Yes, sir. Mr. Marble. How long have you been in the grain business? Mr. Taylor. I have been in the grain business since 1891, I think. Mr. Marble. And previous to going into the firm of which you are now a member, you were manager of the Milwaukee Elevator at this place? Mr. Taylor. Yes, sir. Mr. Marble. That, I believe is an Armour Company? Mr. Taylor. Yes, sir. Mr. Marble. Do you own the elevator you now operate? Mr. Taylor. No, sir. Mr. Marble. Do you rent it? Mr. Taylor. Yes, sir. Mr. Marble. Rent from a railway? Mr. Taylor. Yes, sir. Mr. Marble. From what railway? Mr. Taylor. The Chicago, Milwaukee and St. Paul. Mr. Marble. On what terms is that elevator leased by you? Mr. Taylor. An annual yearly rental. Mr. Marble. You have a written lease? Mr. Taylor. Yes, sir. Mr. Marble. How much rent do you pay ? Mr. Taylor. We pay $3,000 a year. Mr. Marble. Does that carry with it any privileges in the way of switching? Mr. Taylor. None whatever. Mr. Marble. Any elevator allowance? Mr. Taylor. No, sir. Mr. Marble. You get simply the use of the elevator? Mr. Taylor. Simply the use of the elevator. Mr. Marble. What is the capacity of the elevator you rent ? Mr. Taylor. From 600,000 to 800,000 bushels. It is called a 600,000 bushel house. Mr. Marble. Is it a modern elevator? Mr. Taylor. No, sir. Mr. Marble. I believe the elevators generally at Milwaukee are not modern? Mr. Taylor. They are all old elevators, built years ago. Mr. Marble. Do you consider that you are paying a fair rent? Mr. Taylor. We do ; yes, sir. Mr. Marble. And that other elevator operators would not be glad to pay more? S. Doc. 278, 59-2: 47 738 GRAIN ELEVATOR INVESTIGATION. Mr. Taylor. That I do not know. Mr. Marble. You do not know whether it was let by any sort of competition? Mr. Taylor. I do not know that. We made a bid for the elevator and the St. Paul road leased to us. Mr. Marble. Is Fagg & Taylor a corporation? Mr. Taylor. No, sir; a firm. Mr. Marble. Do you or your partners own any stock in the Mil- waukee road ? Mr. Taylor. No, sir. Mr. Marble. Or any road? Mr. Taylor. No, sir. Mr. Marble. And no officer, stockholder, or employee of the Mil- waukee road or anyone of them, directly or indirectly, has any share in the profits of your business ? Mr. Taylor. No, sir; there are only two of us in the business. Mr. Marble. You have some complaint to make, have you not, regarding railroad rates into Milwaukee, as compared with rates into Minneapolis on through business ? Mr. Taylor. Well, I believe I have at times expressed myself — expressed myself along those lines. Mr. Marble. Can you tell us what that complaint is? First, is it an existing grievance now? Mr. Taylor. It is. Mr. Marble. Will you tell us what it is? Mr. Taylor. Yes, sir; the Minneapolis basis — the Minneapolis rate to eastern points, say, for instance, to Boston, is 244 cents. The local rate from here to Boston is IQJ cents. The local rate from Minneapolis here is 7^ cents, which makes a total of the two rates of 27 cents, as against a through rate from Minneapolis of 24^. There- fore Minneapolis has 2J cents the best of us. Mr. Marble. On through business to Boston? Mr. Taylor. Yes, sir. Mr. Marble. Suppose you buy grain in the country back of Min- neapolis in North and South Dakota. Does that still hold good ? Mr. Taylor. Yes, sir; the differential there in rates from the western country to Minneapolis or to Milwaukee is about 6^ cents on coarse grains — I am talking about corn and oats — which brings the actual differential down in favor of Minneapolis to about IJ cents per hundred pounds. Mr. Marble. How about the rates from Minneapohs to Buffalo over the Soo road, as compared with your rates to Buffalo? Mr. Taylor. The lake and rail rates figure — the Soo road puts in a rate there, lake and rail via its own elevator at Gladstone, which figures about a 5 cents a hundred rate from Minneapolis to the lake port, as against an all-rail rate here of 7J cents. In other words, it figures 2 4 to 3 cents a hundred under the all-rail rate. Mr. Marble. On grain bought in the Minneapolis market or in the country back of Minneapolis and shipped to Chicago by way of Mil- waukee; the Minneapolis dealers have a privilege of trying this mar- ket, have they not ? Mr. Taylor. Yes, sir. Mr. Marble. And if they sell the grain here they pay as much freight as though the grain went to Chicago ? GBAIN ELEVATOR INVESTIGATION. 739 Mr. Tatloe. Yes, sir. Mr. Marble. And if they conclude to send it to Chicago they send it there without pajring anything extra ? Mr. Taylor. Yes, sir. Mr. Marble. Now Manitowoc enjoys that privilege as to both Milwaukee and Chicago at times? Mr. Taylor. I believe it does, although I could not say positively. Mr. Marble. Do you regard the possession of that privilege by Manitowoc as a discrimination in any way against Milwaukee? Mr. Taylor. Yes, I do. Mr. Marble. In what way? Mr. Taylor. Well, 1 do not know as that rate is, but every other point — say, for instance, Manitowoc — can come in here and buy grain and forward it east via Manitowoc and get the flat local rate, which is 174 cents to New York. The crowd at Chicago can come into this market and buy grain and forward it east via Chicago at 17^ cents, but the roads at Chicago will not forward grain this way and let us bUl it east at 17^ cents. They charge us the full local flat rate into Milwaukee, which is 3 cents a hundred. Mr. Marble. The fact being, you would say, that the Milwaukee grain is taken both ways to the other markets ? Mr. Taylor. Yes, sir. Mr. ]^£arble. And you have not a compensating privilege? Mr. Taylor. No, sir. Mr. ilARBLE. These through rates to Boston you have spoken of, they are usually used only by elevators, are they? Mr. Taylor. Oh, no. Mr. Marble. They are open to everybody and published? Mr. Taylor. They are published; yes, sir. Mr. Marble. Well, to come back to joui lease of this elevator. What switching rate do you pay to those elevators you now have leased? Mr. Taylor. What switching rates on any grain that comes in off the road? Mr. Marble. Yes, sir. Mr. Taylor. We do not pay any switching. The tariffs here pro- vide for all grain delivered to the elevators free. Mr. Marble. From any road? Mr. Taylor. Well, the Northwestern tariff now provides that their grain will be delivered to our elevator free. Up to November 13, I oeUeve it was, they charged $2 a car on grain coming off the Northwestern and dehvered to the St. Paul road or our elevator. Our elevator is located on the St. Paul road. Mr. Marble. Besides their freight to Milwaukee they charged you $2 for dehvering to your elevator? Mr. Taylor. Yes, sir. Mr. Marble. But now they do not ? Mr. Taylor. No, sir. Mr. ilARBLE. The ililwaukee never made any charge? Mr. Taylor. No, sir; not on grain off their road. Mr. Marble. How about the other roads coming in here? Mr. Taylor. There was no charge. Mr. ^NLlrble. The charges to you in that respect do not depend on any contract but on the published tariff? 740 GRAIN ELEVATOR INVESTIGATION, Mr. Taylor. It is a published tariff. Mr. Marble. You have really severed relations with the Milwaukee Elevator Compaiw, have you? Mr. Taylor. Yes, sir. Mr. Marble. You are not in any sense their representative now? Mr. Taylor. No, sir. Mr. Marble. You are not conducting the business for .them under the name of Fagg & Taylor? Mr. Taylor. No, sir. Mr. Marble. You are absolutely independent? Mr. Taylor. Absolutely. Mr. Marble. They do not share in your profits? Mr. Taylor. No, sir; absolutely. Mr. Marble. Is the market here a competitive market, would you say? Mr. Taylor. I would. Mr. Marble. You do not know of any combination of buyers here to fix prices ? Mr. Taylor. I do not. Mr. Marble. Have you ever known of such? Mr. Taylor. No, sir. Mr. Marble. So far as you know the grain that comes in here, the prices are fixed by competition and not at all by agreement of the buyers ? Mr. Taylor. Yes, sir; they are entirely. Mr. Marble. That is all. Commissioner Prouty. What is the elevator capacity of Mil- waukee ? Mr. Taylor. I should say it was about 4,800,000. Commissioner Prouty. Has that increased in the last ten years ? Mr. Taylor. No, sir; it has not. Commissioner Prouty. Is Milwaukee as a grain market increasing or diminishing? Mr. Taylor. It is holding about the same. I do not think it has lost or gained the last ten years to my knowledge. Commissioner Prouty. Where does Milwaukee buy most of the grain handled here ? Mr. Taylor. It buys in its own local territory here — Wisconsin, northern Iowa, southern Minnesota, and South Dakota. That is the regular natural market — I mean the natural territory tributary to this market. Commissioner Prouty. Does Minneapolis bid in that same terri- tory? Mr. Taylor. Yes, sir. Commissioner Prouty. That is all. The witness was excused. H. F. Franke, called as a witness, being duly sworn, testified as follows: Mr. Marble. Mr. Franke, you are engaged in the grain business? Mr. Franke. Yes, sir. Mr. Marble. In Milwaukee ? Mr. Franke. In Milwaukee, GBAIN ELEVATOK INVESTIGATION. 741 Mr. Marble. You are a member of the Franke Grain Company? Mr. Franke. Yes, sir. Mr. Marble. Is that a corporation ? Mr. Franke. No, sir. Mr. Marble. A co-partnership? Mr. Franke. Just for convenience's sake — no corporation. I am the sole proprietor. Mr. Marble. Are you interested in any railroad company? Mr. Franke. No, sir. Mr. Marble. And the profits of your grain business are not shared with anyone but yourself? Mr. Franke. Nobody but myself. Mr. Marble. You get it all? Mr. Franke. Yes, sir; and it does not amount to much. Mr. Marble. How long have you been in the grain business here? Mr. Franke. Abojit twenty-five years. Mr. Marble. Where do you buy the grain you handle ? Mr. Franke. In Wisconsin, Iowa, the Dakotas, and southern Min- nesota, and some on the exchange. Mr. Marble. Have you country elevators? Mr. Franke. No. Mr. Marble. Do you do a commission business? Mr. Franke. WeU, very little — practically all buying and selling. Mr. Marble. You bid the country buyers? Mr. Franke. Bid the country buyers and pay the differential, which is equal to a commission when you buy it here on the floor. Mr. Marble. In your bidding the country, do you at all discrimi- nate against any country buyers because of their facilities? Mr. Franke. No, outside of — we look at the financial part of it and try to do business with such people as have a rating. Mr. Marble. Where do you look for that rating? To mercantile agencies. You do not look to the lists of the grain dealers' Mr. Franke. Mr. Marble. associations? Mr. Franke. Mr. Marble. No, sir; I mean the financial rating. Take the case of a country merchant operating a shovel house, who is solid financially, but who is irregular, would you bid him? Mr. Franke. Well, it has been invariably the custom that the scoop shoveler does not have much financial backing. We have always found it that way. Mr. Marble. You have not had such a case to deal with? Mr. Franke. No; not of recent years. I know in the course of time we have come across cases where we have had a good reliable dealer at a certain station and some party would start up to do busi- ness — scoop it into a car. We certamly give the regular dealer pref- erence. Mr. Marble. In your twenty-five years of experience, have jou found a scoop shoveler solid and reliable and safe to do business Avith ? Mr. Franke. Not that I know of at the moment — ^not that I can recollect. Mr. Marble. You found a great many that were not ? Mr. Franke. Generally classed them in that category. Mr. Marble. Is it or not a fact that grain dealers generally find 742 GRAIN ELEVATOR INVESTIGATION. themselves under a boycott in this market if they do not confine their trade to regular dealers ? Mr. Feanke. WeU, it is a sort of accepted fact to give them the preference — the regular dealers. Mr. Marble. For fear you wUl lose the trade of the regular dealer if you take the trade of the irregular ? Mr. Franks. Yes, sir; we accept reciprocation on the part of the regular dealer in giving us a chance to eke out a little profit, and we reciprocate. Mr. Marble. How about farmers shipping direct into the market and not seUing their grain? Do you recognize them as unfair com- petition to the regular dealers ? Mr. Franke. Why, I have not come across any experience of that kind. We have never catered to it. Mr. Marble. Never catered to that business ? Mr. Franke. No, sir. Mr. Marble. You prefer to do business with men having elevators and who are regular ? * Mr. Franke. Yes, sir. Mr. Marble. And actually confine your business to that class ? Mr. Franke. We prefer to always give theiri the preference. Mr. Marble. As a matter of fact, your business is confined to that class closely? Mr. Franke. I judge so. Mr. Marble. Do you get letters from the secretaries of the grain dealers' associations if shipments are made to you by irregular deal- ers, notifying you of that fact ? Mr. Franke. I did have some communications years ago. I have not had one of late. Mr. Marble. When would you say? Mr. Franke. I shoiild judge it was three or four years ago since I had any. I do not remember the definite facts in the case at all. Mr. Marble. Were those letters from Iowa? Mr. Franke. I think they were from the Iowa Grain Dealers' Association. Mr. Marble. How about the Wisconsin Grain Dealers' Association ? Has it had the same methods ? Mr. Franke. About on the plan I have outlined. Mr. Marble. That is the general understanding ? Mr. Franke. It is my idea of it. Mr. Marble. That is your understanding of the way in which the Wisconsin Grain Dealers' Association is organized and operated ? Mr. Franke. Yes,sir; that is just the way. Mr. Marble. How about the tri-State ? Mr. Franke. I do not know anything about them at aU. Mr. Marble. You have had some trouble locally with switching have you not — the f aUure to have cars switched ? Mr. Franke. You mean in the service performed ? Mr. Marble. Yes, sir. Mr. Franke. Or the charges ? Mr. Marble. No; no service at all. Mr. Franke. Well, the Northwestern road, as a rule, has been somewhat lax in the switching performed at Milwaukee, which thev GRAIN ELEVATOB INVESTIGATION. 743 explain through their yard facilities. We have had serious conges- tion there a great many times. Mr. Marble. It was not a refusal to switch? Mr. Franke. Oh, no. Mr. Marble. As to switching charges, have you any special agreement ? Mr. Franke. No; we have to abide by the published tariff rates. Mr. Marble. So far as you know you pay the same rates as your competitors? Mr. Franke. So far as I know. Mr. Marble. Have you had any trouble with the Chicago, Mil- waukee and St. Paul about switchiiig? Mr. Franke. Not in the service performed. It has been remark- ably good. Mr. Marble. Have you had any trouble about switching rates? Mr. Franke. Why, they make it a rule, which works a little hard- ship to the smaller dealer, and that is to charge an excessive rate for switching from a public house onto a team track, which of covu-se is not apt to occur very often^ust isolated cases; but the case I par- ticularly had in view, I had some grain in elevator "A" and sold it to the feed trade at Milwaukee and had the stuff loaded out, and to switch at the team track they charged $5 a car. The team track was next to the elevator. Mr. Marble. You had some trouble about some corn with the Milwaukee that you wanted to treat, did you not? Mr. Franke. To reconsign? Mr. Marble. Yes. Mr. Franke. Yes, sir; they avoided a privilege that they had been giving before — not allowing any reconsigning on grain that went to an elevator here — the same reconsigning which you spoke of before. If you order a car to the elevator and transfer it, the reconsigning is avoided south biit not north. Why they have done that is inexplicable. Commissioner Protjtt. What do you mean by the "reconsigning privilege?" Mr. Franke. Any grain that can be forwarded on a direct route has the privilege of a stop-over. Commissioner Pbouty. On what line is your elevator ? Mr. Franke. I have not any. I am working through the public houses. Commissioner Prouty. If you bring in grain by the Milwaukee you can send it on by the Milwaukee and tney would allow you a stop-over here? Mr. Franke. Yes, sir. Commissioner Prouty. If you bring it in by the Milwaukee, can can you send it on by the Chicago and Northwestern? Mr. Franke. No, sir; the same road. Commissioner Prouty. Suppose you send it by the Chicago and Northwestern to Chicago, would you pay the local rate to Chicago? Mr. Franke. I would have to pay the local rate on it. Commissioner Lane. Was the five-dollar charge you spoke of a published rate ? Mr. Franke. I have never seen the tariff, but I guess it was sup- posed to be a published tariff rate, switching from elevator to team 744 GRAIN ELEVATOR INVESTIGATION. track or from one elevator to another elevator. For the latter I think they exacted even $10. Commissioner Lane. You do not know whether that is in existence now or not ? Mr. Franke. I think so. I am quite sure that is in existence. Commissioner Lane. Can you get a copy of the tariff? Mr. Franke. I do not believe I have seen it. I could go to the St. Paul and ask them for it. Commissioner Lane. You have not got it ? Mr. Franke. No, sir. Commissioner Prouty. Do you pay what is called a reconsigning. charge, for example Mr. Franke (interrupting). Two dollars per car on anything going north, and up to a short time ago we had the reconsigning privilege free to go south, but now they charge $2. Commissioner Prouty. Does that apply to shipments shipped out over the same road ? Mr. Feanke. Over the same road. Commissioner Prouty. ^ou have to pay that charge now ? Mr. Franke. Two dollars. Commissioner Prouty. Suppose a carload of grain is shipped in here billed to some elevator; it would be taken to that elevator, I suppose, upon the payment of a switching charge if the elevator was not located on the line over which the grain came. If you were the owner of the grain and sent it to the public elevator, you would pay the switching charge ? Mr. Franke. Two dollars, if from an elevator. Commissioner Prouty. Suppose that car were placed on a team track of the Northwestern road, the elevator being situated on the Milwaukee, and you afterwards bought a carload of grain and ordered it to this elevator, would they charge you an additional sum ? Mr. Franke. After it had been placed on the team track, yes, sir. Commissioner Prouty. What would that additional sum be? Mr. Franke. From team track to elevator, $2. Commissioner Prouty. You do not call that a reconsigning charge? Mr. Franke. No, a local switching. Commissioner Prouty. You call it a local-switching charge ? Mr. Franke. Yes, sir. Mr. Marble. Did jou last year enjoy the same reconsigning priv- ileges here as were enjoyed by the elevators? Mr. Franke. Why, yes, on business actually reconsigned. I do not think there is any diflferential unless you should allude to what you would call transit billing. Of course, the smaller dealer is some- what handicapped when it comes to transit privileges. Mr. Marble. How is he handicapped? Mr. Franke. Why, grain is switched to an elevator and they get credit for the tonnage to be used at some future date; just what time limitation I really do not know, because I never had a transit account. Mr. Marble. That is, if the elevator pays the local into Milwaukee, it gets credit for that so it can enjoy the proportional out of Milwaukee! Mr. Franke. Whatever that rate would cover? Mr. Marble. Have you that privilege ? Mr. Franke. We have no transit privilege. Mr. Marble. Why not? GRAIN ELEVATOR INVESTIGATION. 745 Mr. Franke. Well, the ruling is you must have an elevator, a private elevator, or an elevator that belongs to one of the railroads rented, but independent buyers do not enjoy the transit privilege through a regular house. Mr. Marble. You, putting your grain through a railroad house, do not have that privilege, but if you owned the elevator, you would have that privilege ? Mr. Franke. Yes, sir. Mr. Marble. What effect does that have on your business ? Mr. Franke. It seems to curtail it very much. Mr. Marble. Can you engage in the export business on equal terms with the elevators from this market ? Mr. Franke. No, I am not very well versed with the export busi- ness, because we never got any further than the domestic trade. We find we can not very well do that business, working through public houses. There are too many handicaps somewhere. I do not know where they come in, but we find we can not make prices that will do business. Mr. Marble. Tell us about the trouble you had with some poor com about a year ago that was damaged, that you wanted to take out and dry and then reship in transit to Chicago. Do you recognize that? Mr. Franke. I think that is just what I was alluding to. I took the matter up with one of the officials in Mr. Dodsworth's office at that time and tried to see if there was any possibility of getting the transit privilege. I had the stuff in the elevator, and it was in poor condition and not such as you could ship to the smaller dealer; and I endeavored to put it to Chicago, to the sugar refineries, to get rid of it. I thought I might be able to get some transit billing. That was the time he advised me to the effect I have told you — that you would have to have an elevator of your own to get a transit account. Mr. Makble. Who was it that advised you of this ? Mr. Franke. Mr. McCowan, in Mr. Dodsworth's office. Mr. Marble. Mr. Dodsworth's position is what? Mr. Franke. Chief clerk. Mr. Marble. Of what road ? Mr. Feanke. The St. Paid road. Mr. Marble. And Mr. McCowan, what is his position ? Mr. Franke. Mr. Dodsworth is general agent and Mr. McCowan is chief clerk. Mr. Dodsworth is general agent at Milwaukee of the road. Mr. Marble. Did you understand at that time that all elevators were enjoving that privilege? Mr. Franke. Oh, yes; all regularly leased houses were enjoying that privilege, certainly. Mr. Marble. Do they enjoy it now? Mr. Franke. Yes, sir; to the best of my knowledge. Mr. Marble. You enjoy it now, do you? Mr. Franke. No. Mr. Marble. You do not? Mr. Franke. No, sir. Mr. Marble. It has not been extended to you ? Mr. Franke. No, sir. Mr. Marble. That is all. 746 GRAIN ELEVATOR INVESTIGATION. Commissioner Prouty. You have here in Milwaukee pubHc elevators ? Mr. Franke. Yes, sir. Commissioner Prouty. Is the same elevator both a public and private elevator? Mr. Franke. Not at the present day. Commissioner Prouty. Can the operator of a public elevator store his own grain in that elevator? Mr. Franke. I did not quite get that. Commissioner Prouty. Can the operator of a public elevator store his own grain in that elevator? Mr. Franke. Anybody has the privilege of storing grain in a public elevator. Commissioner Prouty. And you understand that the owner of an elevator can store his grain there ? Mr. Franke. The St. Paul road owns the public elevators here — that is, on their line — and the Northwestern on the Chicago and North- western. Commissioner Prouty. So there is no public elevator operated and owned by private individuals? Mr. Franke. No, sir. Commissioner Prouty. How are the charges of those elevators fixed — by statute or by the railroads ? Mr. Franke. By the railroads. Commissioner Prouty. They have no statute regulating those charges ? Mr. Franke. Not that I know of. Commissioner Prouty. What are the charges for passing grain through the elevators ? Mr. Franke. Two dollars for immediate transfer and half a cent for ten-day transfer. Commissioner Prouty. Half a cent a hundred or a bushel ? Mr. Franke. Half a cent a bushel — half a cent a bushel for ten days' transfer and I think on grain to be kept in store — I think it is three-quarters of a cent for the first ten days and one-fiftieth of a cent for every day afterwards. Commissioner Prouty. Do they do anything in those elevators besides store the grain? Do they clean and mix it? Mr. Franke. Not in the public houses. They might run it over if it was getting out of condition. Commissioner Prouty. That is done only in private houses? Mr. Franke. Yes, sir. Commissioner Prouty. Could you hire that done here? Are there others that can have it done besides owners of the houses? Mr. Franke. It might be possible. I could not say. Commissioner Prouty. You never do hire it done ? Mr. Franke. No, sir. Commissioner Prouty. As you buy your grain in the country how do you make your bids ? Mr. Franke. Net, track, Milwaukee. Commissioner Prouty. How do you get your offer to the owner of the grain ? Do you mail it or telegraph it ? Mr. Franke. Mostly by postal cards and the trades are confirmed by wire. GBAIN ELEVATOR INVESTIGATION. 747 Commissioner Proutt. How many concerns are there in Milwaukee that do business the same way that you do ? Mr. Franke. I do not think there are over four or five. Commissioner Prouty. Are the prices sent out by these grain dealers the same day usually the same? Mr. Franke. They usually aim to be as much under the market price as what the regular handling charges would be — the commis- sion would amount to. Commissioner Prouty. By "the market price" you mean the mar- ket price at Milwaukee? Mr. Franke. The market price at Milwaukee. Commissioner Prouty. Do you have a public board here on which grain is sold ? Mr. Franke. We have a call board that establishes values. Commissioner Prouty. Do you agree or have any understanding with the other grain dealers in Milwaukee as to the prices to be sent into the country? Do they know your prices and do you know theirs ? Mr. Franke. No, sir; except in so far as the values established by the call board. They generally run very close. Commissioner Prouty. What time is your last call here in Mil- waukee on the board — what time of day? Mr. Franke. One fifteen o'clock. The call where the trade is gen- erally done is about 12 o'clock. Commissioner Prouty. How much below that price, deducting the transportation charges, do you make your country price ? Mr. Franke. By the established rates of commission. Commissioner Prouty. WTiat are the rates of conunission? Mr. Franke. A half a cent a bushel on corn and it is one cent on rye, wheat, and barley. Commissioner Prouty. You take the call price, subtract from that the transportation price and the commission, and that makes the price you offer in the country? Mr. Franke. Yes, sir. Commissioner Prouty. And you understand that your competi- tors establish their prices in the same way? Mr. Franke. That is my inference. Commissioner Prouty. Do owners of private elevators here bid the country the same way? Mr. Franke. Why, I should judge so. Not so much as they used to. Commissioner Prouty. Do you know whether they establish their prices in that manner? Mr. Franke. It is my idea that they govern themselves in the same manner. Commissioner Prouty. Where do the private elevators buy most of their grain? Do they buy it in Milwaukee or the country? Mr. Franke. In Milwaukee; the bulk of it. Commissioner Prouty. Do they buy it of you? Mr. Franke. At times. Commissioner Prouty. When you bring a carload of grain here what do you do with it ? Mr. Franke. Why, I place it on the market — sample market. 748 GRAIN ELEVATOR INVESTIGATION. Commissioner Pkouty. Do you know before the car gets here what disposition you will make of that carload ? Mr. Franke. Not as a rule. Commissioner Prouty. Do you ever send the same carload through without putting it into an elevator ? Mr. Franke. We ship a little across the lake, if it is in foreign cars; otherwise you can not allow it to go if it is in local line cars. Commissioner Prouty. Suppose a carload of grain comes in here in a Milwaukee car ; could you not send that to Chicago ? Mr. Franke. Yes, but not east; not by lake. Commissioner Prouty. Suppose you sent that carload on to Chicago, would they make a reconsignment charge for that? Mr. Franke. Two dollars. Conunissioner Prouty. Suppose you put it into the elevator, and it is afterwards loaded out oi the elevator, is there a reconsignment charge for that? Mr. Franke. That avoids the reconsigning privilege south. Commissioner Prouty. When you put it mto the elevator the transaction is ended ? Mr. Franke. You have the privilege of reconsigning it north if there is a chance of placing it. Commissioner Prouty. If you bring in a carload of grain over the Milwaukee road and put it into the Milwaukee elevator, you can not ship that carload south without paying the local rate ? Mr. Franke. Yes, sir. Commissioner Prouty. How long since that has been so? Mr. Franke. All last fall, to the best of my knowledge. Commissioner Prouty. What it the local rate from here to Chicago ? Mr. Franks. Three cents; 2^ cents or 3 cents. I am not in posi- tion to say positively. It has varied some. CoDomissioner Prouty. It does not vary any now, does it? Mr. Franke. No; it was 4 cents, and 3 J. It is either one of the two. I never use it, and that is why I am not conversant with it. Commissioner Prouty. You say you never use it? Why do you never use it? Mr. Franke. Because when you can not reconsign grain, it practi- cally necessitates marketing it here. You can not overcome that local rate. Commissioner Prouty. You have to sell it here for the purpose of a final eastern destination? Mr. Franke. Yes, sir. Commissioner Prouty. And it is shipped from here to the East? Mr. Franke. Yes, sir. Mr. Marble. It is your understanding that the people to whom you sell the grain do not have to pay that local rate. They have the privilege on that grain if they have a private elevator ? Mr. Franke. Yes, sir. Mr. Marble. As long as the billing has not been destroyed, they would get the billing privilege. That is your information ? Mr. Franke. Yes, sir. Commissioner Prouty. You understand that the owner of a private elevator could buy that grain of you, put it into his elevator and afterwards ship it to Chicago ? Mr. Franke. On transit account. GBAIN ELBVATOB INVESTIGATION. 749 Commissioner Prouty. And shipping that way he would get the benefit of the rate that way from the pomt of origm to Chicago ? Mr. Frankb. Yes, sir; he would get the billing free. Commissioner Proutt. It would not necessarily be free, because the rate is not always the same. Mr. Franke. Where there are any transit privileges, the rate has to be the same to Chicago and Milwaukee. Commissioner Prouty. There is no such thing, then, as billing at the balance of the through rate or a proportional rate? You only enjoy the transit privilege where the rate to Milwaukee and the rate to Chicago are identical to start with? Mr. Franke. Yes, sir. Commissioner Prouty. As it is from Minneapolis? Mr. Franke. That is the way I understand it. Commissioner Prouty. In most of the territory you buy grain in the rate is not the same to Chicago and Milwaukee, is it ? Mr. Franke. Yes, sir. The rates have been reduced in Wiscon- sin territory. While there was quite a large 125-cent territory that we would endeavor to buy in, where the rates were lower we only figured on a local market, but Iowa, Minnesota, and the Dakotas all have the same rates to both markets. Commissioner Prouty. That is all. The witness was excused. D. G. Owen, called as a witness, being duly sworn, testified as follows: Mr. Marble. Mr. Owen, you are in the grain business at Mil- waukee ? Mr. Owen. Grain commission; yes, sir. Mr. Marble. A member of the firm of Owen & Company? Mr. Owen. Yes, sir. Mr. Marble. From what territory do you receive grain? Mr. Owen. From Wisconsin, Minnesota, Iowa, Illinois, and the Dakotas. Mr. Marble. Have you recently had communications from the Iowa Grain Dealers' Association asking you not to handle grain of certain irregular dealers? Mr. Owen. Not from the Iowa Dealers' Association — not within the last year. Mr. Marble. How recently have you had any such communica- tion from any other grain dealers' association? Mr. Owen. Well, during the last year from the Minnesota — Mr. Quinn, of the Tri-State Association. Mr. Marble. What was the purport of those letters? Mr. Owen. The purport was notiiying us that certain parties who were shipping to us had no elevators — no warehouses. Mr. Marble. And notifying you not to receive their consignments? Mr. Owen. That was the understanding. The letter was written at Fairport. Mr. Marble. It carried that meaning to your mind ? Mr. Owen. Yes, sir. Mr. Marble. Did it carry the meaning that if you did that you would lose the business of the regular dealers? Mr Owen. Yes, sir. 750 GBAIN ELEVATOR INVESTIGATION. Mr. Marble. Did it say that ? Mr. Owen. That was the inference. Mr. Marble. How many such letters did you receive from Mr. Quion? Mr. Owen. Three or four, I think. Mr. Marble. Have you those letters? Mr. Owen. I do not know whether I have or not. Mr. Marble. Would you let us have those? Mr. Owen. If I can mid them. Mr. Marble. Have you had letters from any other association of the same purport? Mr. Owen. Not that I can remember. Mr. Marble. Any from the Wisconsin Grain Dealers' Association? Mr. Owen. Not any. Mr. Marble. You do not do IlUnois business? Mr. Owen. No, sir. Mr. Marble. You do not get into that territory? Mr. Owen. No, sir. Mr. Marble. Do you own an elevator here ? Mr. Owen. No, sir. Mr. Marble. Do you do business, as Mr. Franke testified he did, through the public elevators ? Mr. Owen. When we have occasion to do anything through the public elevators. Mr. Marble. You sell grain to private elevators, do you? Mr. Owen. Yes, sir. Mr. Marble. And to local consumers, as well ? Mr. Owen. Yes, sir! Mr. Marble. Do you do any export business from here? Mr. Owen. Not any. Mr. Marble. Have you attempted to ? Mr. Owen. I have not. Mr. Marble. Do jou know whether or not you have this transit privilege on your grain, you not having an elevator? Mr. Owen. I do not understand we have. Mr. Marble. Do you understand you have not ? Mr. Owen. I understand we have not. Mr. Marble. How do you get that understanding? Mr. Owen. The understanding has been — the understanding is that in order to get this transit you must own an elevator here in me city, or use the public elevator. Mr. Marble. When you get grain in and sell it to a local consumer, do you yourself pay the freight on the grain to the railroads? Mr. Owen. Not always. Mr. Marble. Usually? Mr. Owen. In most cases we do ; in many cases we do not. Mr. Marble. If you sell to a local elevator, do you yourself pay the freight on the grain? Mr. Owen. In most cases we do. Mr. Marble. What are the cases where you do not ? Mr. Owen. The cases where we do not are cases where the grain comes from west of the Mississippi River, and when we sell grain to one of the private elevators, they will pay the freight on such a car and bring the expense bill in to us with their bill. GBAI3IT ELEVATOB INVESTIGATION. 751 Mr. Marble. Bring the railroad expense bill to you?. Mr. OwEX. Yes, sir. Mr. Makble. You receive from the railroads when the graui comes in, a ticket, a deUveiy ticket, or something of that sort, do you? ^Ir. OwEX. Yes, sir; a bulletin or notice of arrival. ^Ir. Marble. When you sell the grain to the elevator, you turn that over with the confirmation of the sale? Mr. Owex. No, that is not turned over. Mr. ilARBLE. They go and get the grain from the raUroad company ? !Mr. OwEX. They get that mformation from the railroad company. Mr. ilABBLE. And they pay the freight bill and receive the Mr. Owen (interrupting). They pay the freight bill and receive the biU. Mr. ^Iaeble. Now, why don't you pay the freight bill yourself? Mr. Owex. Because the understanmng is that they enjoy a transit privilege or forwarding privilege, so that it necessitates them having the bill. ilr. ^Iaeble. You understand that you can not pay the bill and have the same privilege ? Mr. Owen. Yes, sir. Mr. !Maeble. You understand you can not ? iJr. Owen. I understand we can not; no. Mr. Marble. Does this arrangement result in making known the name of your consignor to the buyer? !Mr. OwEX. Yes, sir. Mr. ^Iarble. Do you object to it on that account? Mr. OwEx. Yes, su*. Mr. Maeble. This is carried on through an agency here, is it not — a weighing bureau, as it is called? 'Six. Owen. Yes, sir. Mr. Marble. But you do not directly deal with that bureau yom-- self? ilr. Owen. It is necessary for us to take the expense bills up there and readjust the bills with this agency. It is known as a freight bureau. Mr. Marble. Before you make your sale? Mr. OwEX. No, after the sale is made. ;Mr. Marble. You readjust it for the benefit of your buyer? Mr. OwEX. Yes, sir. Mr. ilAKBLE. Not for your own benefit? ilr. Owen. Not for our own benefit. Mr. ilARBLE. Do you know how much freight is paid on this grain by the buyer? Mr. Owen. We do not know until he presents the expense bill. Mr. Marble. But the grievance you particularly complain of is making known the name of the consignor? Mr. Owen. The name of the consignor and the place where the grain originates. Mr. Marble. And you also have complaints that you can not enjoy the reconsigning privilege ? Mr. Owen. We can enjoy the reconsigningprivilege on grain that comes from the West. We can forward it to Cnicago with an expense of S2 a car. Commissioner PBOtrrY. Forward it in the same car? 752 GBAIN ELEVATOR INVESTIGATION. Mr. Owen. Forward it in the same car. Commissioner Prouty. Could you put it into a public elevator and afterwards ship it out? Mr. Owen. No, sir; not without paying the local freight. Mr. Maeble. The private elevator cani Mr. Owen. My understanding is they can. Mr. Maeble. Do they pay the $2 ? Mr. Owen. I do not know that they do. Mr. Maeble. How do you find the service given by these elevators operated by the railroads ? Mr. Owen. The service is satisfactory. Mr. Marble. They are able to handle all the business you offer them? Mr. Owen. Yes, sir. Mr. Maeble. Properly? Mr: Owen. Yes, sir. Mr. Marble. You have no complaint on that? Mr. Owen. No complaint. I would like to make a correction, please, that the payment of these expense bills on the Chicago, Mil- waukee and St. Paul Railroad and not the Northwestern road — where grain has come on the Northwestern system the buyers of that grain have not paid the expense bills there and brought them to us after they have paid them. Mr. Maeble. You pay them yourself? Mr. Owen. On the Northwestern road. Mr. Maeble. But on the Milwaukee road you do not pay them yourself ? Mr. Owen. No, sir. I understand, though, that last Saturday they have changed that and hereafter all the bifls will be paid by us. Mr. Marble. Last Saturday? Mr. Owen. Yes, sir; last Saturday. Mr. Marble. Is this a kind of delivery ticket such as you receive [producing ticket] ? The name of the firm to whom that was given does not appear. Is that the form you are familiar with? Mr. Owen. That is the form. Mr. Marble. That is the notice you receive from the railroad com- pany? Mr._ Owen. That is the form of expense bill. That is not the notice of arrival, but the freight bill. Mr. Maeble. The freight bill? Mr. Owen. Yes, sir. Mr. Maeble. What does this here mean [referring to bill] : " Chicago cleaning account — ^Milwaukee elevator, Chicago cleaning account." Do you know what that means ? Mr. Owen. My understanding is that they have an account with the railroad company whereby they are permitted to clean grain in transit for Chicago, grain that originates in the Northwest. Mr. Marble. Have you that privilege? Mr. Owen. No, sir. Mr. Marble. You have not ? Mr. Owen. No, sir. Mr. Marble. There are two of these expense bills of the same sort? Mr. Owen. Of the same sort. Mr. Marble. I will ask that they be filed. Commissioner Lane. How recent are they? GRAIN ELEVATOR INVESTIGATION. 753 Mr. Mabble (reading from tickets). 9, 19, 1906, and 9, 21, 1906. (The two tickets are hereto annexed and marked ''Exhibits Nos. 1 and 2 to Mr. Owen's testimony.") Mr. Marble. This is a statement such as you have received from the Milwaukee Elevator Company of freight paid [handing another paper to witness] ? Mr. Owen. Yes, sir. Mr. Marble. You are familiar with that form? Mr. Owen. Yes, sir. Mr. Marble. It means that if you got such a statement as this, they paid the freight and billed the freight back to you, the elevator company ? Mr. Owen. That is right. Mr. Marble (referring to last statement produced). This is 9, 24, 1906. I will have it filed. (The same is hereto annexed and marked "Exhibit No. 3 to Mr. Owen's testimony.") Commissioner PROtJXY. Is there any elevator in Milwaukee where you coidd hire grain cleaned? Mr. Owen. Yes, sir; Elevator A. We can send grain to Elevator A and have it cleaned at an expense of half a cent a bushel. Commissioner Proxjtt. By "Elevator A," you mean a Milwaukee elevator ? Mr. Owen. It is a pubUc elevator — the Chicago, Milwaukee and St. Paul Kailway. Commissioner Prouty. You say the Milwaukee road would not suffer you to send that on to Chicago if you had it cleaned if the grain was destined to Chicago ? Mr. Owen. Would not permit us to send that to Chicago after it was cleaned without an additional freight charge of 3 cents a hun- dred. Commissioner Prouty. That is, they would not clean it at a public elevator, even if billed to Chicago^to start with, at Milwaukee? Mr. Owen. No; not by us. Mr. Marble. When you get a bill, such as I have shown you, for freight from an elevator company, do you also get the railroad bill for that amount, so that you can see what was paid the railroad yourself? Mr. Owen. Yes, sir; the freight bill accompanies that bill or invoice. Mr. Marble. That is all. The witness was excused. Harry M. Stratton, called as a witness, being duly sworn, testi- fied as follows : Mr. Marble. Mr. Stratton, you are in the grain business at Mil- waukee ? Mr. Stratton. Yes, sir. Mr. Marble. You are with the C. R. Lull concern? Mr. Stratton. Yes, sir. Mr. Marble. Is that a corporation ? Mr. Stratton. No, sir. Mr. Marble. A partnership? S. Doc. 278, 59-2 48 754 GKAIN ELEVATOR INVESTIGATION. Mr. Stratton. Not exactly; no. Mr. Lull is independent in the train business; and I handle two departments there, the coarse grain epartment and the mill feed department, in partnership. Mr. Marble. You are in charge of those two departments? Mr. Stratton. Yes, sir. Mr. Marble: Have you any elevators? Mr. Stratton. Not exactly. We did own the McGregor elevator, and we have sold it now. We have made a deal with the Reliance Ele- vator Company; sold the elevator but still have half of it for the hand- ling of our grain there. They own the elevator and have the title, but we have an agreement with them to handle our grain through half of it. Part of the payment on the elevator was niade under that agree- ment. Mr. Marble. No railroad company is concerned in that deal at all? Mr. Stratton. No, sir. Mr. Marble. Doyouknowabout the profits of your concern; what becomes of them? Mr. Stratton. Yes, sir. Mr. Marble. Does any railroad stockholder, employee, or officer share in them ? Mr. Stratton. No, sir. Mr. Marbte. That is equivalent to saying that neither you nor Mr. Lull own any railroad stock, is it ? Mr. Stratton. Yes, sir. Mr. Marble. All the profits belong to the two of you? Mr. Stratton. Yes, sir. Mr. Marble. Do you get any elevator allowance? Mr. Stratton. No, sir. Mr. Marble. Did you when you operated all of this elevator? Mr. Stratton. No, sir. It is not considered in the territory that would allow it. It is at McGregor, Iowa, on the Mississippi River. Mr. Marble. You have no elevator at Milwaukee ? Mr. Stratton. No, sir. Mr. Marble. Where do you receive grain from ? Mr. Stratton. Territory that is tributary to the Milwaukee market — from Wisconsin, northern Iowa, South Dakota, and southern Minnesota. Mr. Marble. Do you receive from independent shippers — irregular dealers. Mr. Stratton. No, sir. Mr. Marble. From scoop shovelers? Mr. Stratton. No, sir. Mr. Marble. Why not ? Mr. Stratton. I would not buy from a scoop shoveler. Mr. Marble. Why? Mr. Stratton. Because I do not believe a scoop shoveler — I do not consider him a responsible party to do business with. Mr. Marble. Suppose he owned a farm and was worth five times what an elevator would cost? Mr. Stratton. I do not know of any such. Mr. Marble. Do you know of any such operating shovel houses ? Mr. Stratton. Not that I know of. Mr. Marble. If you did would you deal with him ? GBAIN ELEVATOR INVESTIGATION. 755 Mr. Stratton. Not unless he could make a market the year around and had an elevator. Mr. Marble. Then there are two thiiigs that you consider — that is, that he has not an elevator — ■— Mr. Stratton. He does not provide facilities and enable the man to market his grain. Mr. Marble. Suppose he operated a shovel house and stayed in the market all the year around? Mr. Stratton. I do not know what you term a shovel house. I have not come in contact with such. Mr. Marble. We have found such in Nebraska, where grain was shoveled into the house from the wagon and afterwards shoveled from the house into the car, and it was denounced as unfair. Mr. Stratton. I should not consider that unfair; if he provides a market the year around, I would not discriminate against such a buyer. Mr. Marble. Is grain marketed the year around not practically all sold within a limited time ? Mr. Stratton. Yes, sir; but a nian in the grain business that owns and operates an elevator is supposed to maintain a market the year around so a farmer can market whenever he thinks the market favor- able. Mr. Marble. Is your attitude in that respect at all due to the fact that you fear you would lose the business of regular dealers if you did, business with irregulars? Mr. Stratton. No; I do not think it is. Mr. Marble. Yoahave none of those letters? Mr. Stratton. Yes, sir; I received one letter, I recollect, from Mr. George Wells three or four years ago. I found afterwards that the party I attempted to do business with was an irresponsible scoop shoveler and no doubt if I continued to do business with him I would be stuck. Mr. Marble. And you were grateful to Mr. Wells? Mr. Stratton. Yes, sir; I was. Mr. Marble. Do you know whether or not, as a matter of fact, dealers that do receive from irregular dealers, from farmer shippers, from farmer elevators having the penalty clause, are boycotted ? Mr. Stratton. I do not know. I have no positive knowledge of such a thing, but I should certainly think that dealers who were reg- ular and provided facilities for the regular marketing of grain would discriminate against such a receiver. I certainly would if they were in the business that way. Mr. Marble. And you would regard the farmers' elevator with a penalty clause as unfair? Mr. Stratton. Yes, sir. Mr. Marble. And the farmers' elevator without a penalty clause? Mr. Stratton. That is a different thing. We have any number of them from whom we buy and they are as good as any on the list. Mr. Marble. Suppose a man with an elevator pays more for grain than affords a fair profit, but which still enabled him to live along, would you discriminate against his grain? Mr. Stratton. No, I do not think so. We do not usually interest ourselves with what they pay. 756 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Suppose he was denounced by his competitor as an unfair competitor? Mr. Stbatton. I think we would use our own judgment in such a case. I do not know. We have never had such a case. I do not know what we would do. Mr. Marble. We have found such cases. That is why I asked the question. Mr. Stratton. We have never had such a case. Mr. Marble. Do you know whether or not the feeling you have about this matter is the general feeling of commission men in this market? x Mr. Stratton. No ; I do not know. I do not know that I have talked with any number of them. It seems to me it is a feeling they ought to have. Mr. Marble. You do not know whether it is the feehng? Mr. Stratton. No, sir; I could not say. Mr. Marble. To whom do you sell grain, as to the classes? Mr. Stratton. Our business is largely in Wisconsin, northern Ilhnois, and the Peninsula of Michigan. We, having an elevator at McGregor, distribute from there to Wisconsin and northern Ilhnois. We occasionally sell east, but not to an extent. Mr. Marble. Do you distribute any from Milwaukee? Mr. Stratton. A Uttle. We are not a receiving house. Occa- sionally we sell, if we have grain to sell. Mr. Marble. You do not receive consignments in Milwaukee ? * Mr. Stratton. No, sir. Mr. Marble. What is your business here? Mr. Stratton. We are buyers in Milwaukee, and ship to points north and south of Milwaukee, and occasionally east, and we buy west directly from shippers. Mr.. Marble. Do you enjoy this reconsigning privilege? Mr. Stratton. Yes, sir. Mr. Marble. Without an elevator? Mr. Stratton. We can operate through the Chicago, Milwaukee and St. Paul elevators. Mr. Marble. And enjoy reconsignment ? Mr. Stratton. Yes, sir. Mr. Marble. The Minneapolis grain comes here, and you can take it off and put it through that elevator and send it on without paying. Mr. Stratton. I am not sure about the Minneapohs grain. I think Mr. Franke is mistaken as to reconsigning south of Milwaukee. I know the Chicago, Milwaukee and St. Paul refuse to receive grain ordered to Chicago through the elevator, for the reason that the official weights can be obtained in Chicago. The transfer is largely done because official weights are necessary. If a settlement is to be made, the shipper that sends his grain through this market wants board of trade weights, and if grain is sent to country stations between here and Chicago, hke Racine, or to Chilton, north of Milwaukee, there are no facihties at those small stations for weighing the grain, and the object of transferring it at Milwaukee is to get the board of trade weights, and I suppose they figure that there is no object in transferring at Milwaukee grain going to Chicago that will be ultimately weighed over board of trade scales. I think Mr. Franke GRAIN ELEVVTOR TXVESTIGATION. 757 is mistaken about a charge of $2 being made on grain to Chicago proper, although I may be mistaken. Mr. Marble. Do you pay that ? Mr. Stratton, I do not know. We have not consigned any grain there recently. If it is in, I suppose we would have to pay it. Mr. Marble. And you do not know whether or not the private ele- vators here can unload ^ain and then send it to Chicago, there to be weighed and receive official weights ? Mr. Stratton. No; not on reconsignment privilege. Mr. Marble. You do not understand that they have a privilege that you do not ? Mr. Stratton. No, sir; except they have a cleaning in transit privilege if the grain originates m a territory that will take the same rates to Chicago, and can ship it out when ready, but to offset that they have to operate their own elevators. They are put to an addi- tional expense over the transfer charge that is made by the Milwaukee road for straight transfers, two dollars a car. I do not beheve — I do not know much about it — ^but I do not believe any private elevators can handle their own grain for two dollars a car. Mr. Marble. Let us get this entirely plain. If you bring grain in here from transfer territory on the way to Chicago, and put it into the Chicago, Milwaukee and St. Paul elevator to be cleaned and handled, to have it cleaned there, you have to pay them for the cleaning ? Mr. Stratton. Yes, sn. Mr. Marble. Do you understand that you pay them less than that service costs? Mr. Stratton. I do not presume we do on the cleaning rate. The cleaning rate is half a cent a bushel, and I guess it could be done profit- ably at that price; but the transfer — ^I doubt very much if there is any money transferring grp,in at $2 a car, except as they do it in direct transfer; but private elevators, as a rule, do not handle grain that way. Mr. Marble. If you do put that grain in there and have it cleaned and pay them the charge for cleaning, then can you send it to Chicago without paying the local rate on it ? Mr. Stratton. You could if you engaged in the shipping business and leased bins in their elevator and had them handle your cleaning for you. The Milwaukee road have in the past leased portions of the St. Paul Elevator A, and they handle and clean at the regular rates, and if a man does enough business the year around, I suppose — enough to justify him in leasing bins and keeping them reserved for his use — then he could ship on transit the same as the private elevators. Mr. Marble. Otherwise you understand he could not? Mr. Stratton. If itwasmerely a straight transfer, merely a man put- ting in a car and having it loaded out, he could not. Mr. Marble. They charge you $2 a car for transferring? Mr. Stratton. Yes, sir. Mr. Marble. Kegardless of the weight of the car? Mr. Stratton. Regardless of the weight. Mr. Marble. That is all. Mr. Stratton. Pardon me. I believe Mr. Franke testified that it was impossible to have cleaning done through the public elevators in Milwaukee. I think he is mistaken. I tmnk any of the so-called public elevators in Milwaukee will clean for anybody that wants the 758 GKAIN ELEVATOR INVESTIGATION, work done. They have the facihties and will clean or handle in any way that it is wanted. Commissioner Peouty. There are no public elevators here, except those operated by the railroads ? Mr. Stbatton. No, sir; there is really only one public elevator in Milwaukee — that is the Chicago, Milwaukee and St Paul Elevator A, and I do not think that is what is called a regular house like they have in Chicago. Commissioner Peouty. That is all. The witness was excused. J. RosENBAUM recalled. Mr. Maeble. I believe, Mr. Rosenbaum, that you wish to make a statement to the.Conunission. Mr. Rosenbaum. Yes, sir. Mr. Maeble. It would be better for you simply to make that state- ment than for me to question you regarding it. ' Mr. Rosenbaum. It came to my knowledge that a certain Mr. Beal, of Kansas City, dtiring this investigation testified about as follows: That he had a great deal of trouble at New Orleans with my firm regarding getting a lot of grain handled, and which my firm, or the manager of our firm at New Orleans, finally asked 5J cents, and the Illiiiois Central agreed to do it for a half a cent a bushel. Further, he testified that the grain shipped to our elevator fell short from one to three thousand pounds per car. As his testimony was pretty well ventilated, and his character, I merely wish to state that I have all the correspondence that passed between the Chicago National Grain Dealers. Mr. Meyee. National Grain Dealers' Association ? Mr. Rosenbaum. I have the whole thing with me and would like the privilege of having it read to the Commission. Mr. Meyer. I should like to ask Mr. Rosenbaum a further question, if I may. Commissioner Peouty. Certainly. Mr. Meyer. Does this correspondence show all the transactions between your company and this National Grain Elevator Company with reference to any dealings at New Orleans ? Mr. Rosenbaum. Positively. Mr. Meyer. Did you have your agent at New Orleans — Mr. Fox is his name, isn't it? Mr. Rosenbaum. Yes, sir. Mr. Meyer. Did you have Mr. Fox look Up all this business that was done with this Mr. Beal's concern at New Orleans ? Mr. Rosenbaum. To answer that would be best by reading his letter in answer to my telegram. Mr. Meyer. But what I want to cover, Mr. Rosenbaum, is whether what is contained in these letters covers all the transactions you had with Mr. Beal. Mr. Rosenbaum. Absolutely. Mr. Meyer. I would just like to read these two letters. Mr. Rosenbaum. The letters would be the best evidence. GEAIN ELEVATOR INVESTIGATION. 759 Mr. Meyer. This is a letter dated September 13, 1906. New Orleans, September IS, 1906. Mr. C. B. Fox, Manager, Orleans Elevator Company, City. Dear Sir: Complying with a request from your Mr. Mieze, I herewith hand you number of cars of no-grade wheat you have handled for our account: Car 11674 Penn.; 12853 C. O. & G.; 92217 Q.; 57385 R. I.; 52164 R. 1.; 23947 1. C; 97328 N. Y. C, and 9519 I. M. Those are the cars that were not very badly damaged that you told me you thought that you could handle at one-half cent per bushel. And cars 34156 C. M. and 31106 M. P. were the bad cars that you were to handle at a charge to be made later. I also furnish you herewith the numbers of four other cars that I mentioned to you would have to be handled. Car 7827 L. E. & W. and 16094 C. St. P. Those were fairly good cars, and 35225 Q. was a car of weevily wheat which I called your attention to and asked you to put through the drier. Please handle these last four cars to your best advantage and let your charges follow in the usual way, and oblige, Yours, very truly, National Grain and Elevator Co., Per S. P. Brouqhton. (Same hereto annexed and marked "Exhibit No. 1 to Mr. Rosen- baum's testimony.") Then the other letter is dated September 7 to Mr. Fox, in which he said: New Orleans, September 7, 1906. Mr. C. B. Fox, Orleans Elevator Company, City. Dear Sir: I beg to confirm our conversation of this morning regarding our off-grade wheat. You will please handle this grain to the best possible advantage at the speci- fied charge of one-half cent per bushel on 8 cars, and a charge to-be made later on the two cars, owing to the amount of handling to be done on them. Your charges to follow in the usual way. Yours, very truly. National Grain and Elevator Co., Per S. P. Brouqhton. (The same is hereto annexed and marked "Exhibit No. 2 to Mr. Rosenbaum's testimony.") We have made up and furnished to Mr. Marble a correct statement of all the charges that were made, and the figure is exactly one-half cent on all the cars, excepting the four which were so bad and three cars on which 1 cent was charged; and that is the whole transac- tion. And then Mr. Fox, in looking up the transaction, wrote this letter, which I would like also to make a part of the record, addressed to the firm of J. Rosenbaum Grain Company. New Orleans, La., October U, 1906. Messrs. J. Rosenbaum Grain Company, Chicago, III. Gentlemen: Your wire received relative to Beall's testimony before the Interstate Commission. I read the account in this morning's paper, but there is, of course, not a word of truth in his statement. These people were treated most leniently, and there was not a car on which the charge for handling exceeded 1 cent per bushel. They shipped down here a lot of no-grade wheat, which I presume they expected to load out as No. 2 without charge for handling. Ten cars of no grade contained fairly good wheat, and did not require much handling to bring up the grade, so I agreed, with Broughton, of the National Grain and Elevator Company, to handle them at one-half cent. We charged him 1 cent per bushel on 3 cars which were badly burnt. This was merely in accordance with the tariff of the Central Elevator and Warehouse Com- pany. Furthermore, we made no charge for loss in weight through handling, as we should have done. I inclose a list of cars handled for account of the National Grain and Elevator Com- pany, giving the grade of each car, the weight, and the charge, I inclose two letters 760 GRAIN ELEVATOR INVESTIGATION. from Broughton relative to this wheat. We handled together 10 cars, at a charge of one-half cent and on 3 cars 1 cent. You will notice that he refers also to car Q. 35225 which contained weevily wheat, and which was not handled by us at all, but by Fears through Elevator C. „ Yours, truly, C. B. Fox. (The same is hereto annexed and marked "Exhibit No. 3 to Mr. Rosenbaum's testimony.") Mr. Meyer. I have furnished to the Commission copies of all these documents. Now, Mr. Rosenbaum, I will ask you whether you have heard any complaint or had any talk about any shortage in weights on any of these cars from Mr. Beal. or anybody connected with his concern? . Mr. Rosenbaum. No. Mr. Meyee. At the hearing at Omaha a Mr. Jacquith testified that he had a conversation with you, mentioned you as an exporter, in which he had stated that Mr. Cowgill and Mr. Updike had requested you to boycott certain firms out in the west with reference to export wheat. Did you ever have any such conversation with Mr. Jacquith of any kind at ari/ time? Mr. Rosenbaum. No. Mr. Meyer. Just state whether or not your concern does much business with either of these two gentlemen, Mr. Cowgill or Mr. Updike — ^just in a general way. Mr. Rosenbaum. The fact is that we have done less business with Mr. Updike and Mr. Cowgill than any dealers in Omaha. Mr. Marble. Who is Mr. Fears ? Has he any connection with your business ? Mr. Rosenbaum. Fears was the general superintendent of the Illinois Central Railway at New Orleans — of the elevators there. Mr. Marble. Your elevators — were they leased from the lUinois Central Railroad Company? Mr. Rosenbaum. They were. Mr. Marble. Did he have to do with elevator charges to customers or meet customers and advise with them? Mr. Rosenbaum. I do not know. Commissioner Prouty. The Illinois Central has elevators of its own there ? Mr. Rosenbaum. Yes, sir. Commissioner Prouty. Which it operates besides ? Mr. Rosenbaum. Yes, sir. In fact they own all of them there but one. Commissioner Prouty. What he means is that the Illinois Cen- tral at its elevator operated by it handled this grain. Mr. Rosenbaum. Handled one car. Then there was elevator D, operated by Harris, Scotten & Co. And when Mr. Beal testified that he could only do it through us, as we had the elevator leased, he was badly misinformed. Mr. Marble. Mr. Beal in his testimony stated that he did not pay more than the price which your agent here says that he paid, but he stated that there was an attempt at first to charge him 5| cents; and my information, if I may be permitted to say it for the sake of clear ness, is, according to his statement, that the negotiations regarding them, after the charge was made known to him, were carried on by Mr. Broughton orally with Mr. Fears in New Orleans, and by Mr. GKAIX ELEVATOR INVESTIGATION. 761 Beal orally with the agent of the Illinois Central at Kansas City, and that they, as a result of his protest, had the charge reduced to the amount which your agent says was actually paid by them. Do you know whether there was that sort of a controversy? • Mr. RosENBATJM. I can not answer anything about any corre- spondence or controversy had with anyone excepting our own representatives. Mr. Mabble. You do not know whether your representative at first charged 5^ ? Mr. RosENBAUM. I know positively that he did not. Mr. Marble. That is the point exactly. Commissioner Pkouty. This correspondence would seem to show that the price waS agreed upon before the wheat was received ? Mr. RosENBAUM. Certainly. Commissioner Pboutt. Of course, there might have been negotia- tions before they agreed to receive the wheat. Mr. RosENBAUM. None whatever; and had I known what I know now of Mr. Beal, as alleged — what he is charged with — I would not have handled his grain at all. I have issued instructions since to positively refuse to deal with him in any shape, manner, or form. Mr. Mabble. Just one word about the Jaquith matter. As I remember it, Mr. Jaquith's testimony — in his statement to me since he testified — he does not claim that your firm did engage in any boy- cott upon him, but rather that you did not; but that your firm or some representative of it was solicited by Mr. Cowgill and Mr. Updike to not trade with the Exchange Grain Company at Omaha, and that either you or some other member or representative of your firm so stated to Mr. Jaquith in Chicago in your office. Mr. RosENBATJM. I Only know what the copy of the testunony gave up. Mr. Mabble. Do you know whether or not Mr. Cowgill or Mr. Up- dike did requ^t you to deal with certain dealers ? Mr. RosENBAiiM. No. I have never met Mr. Cowgill to my knowl- edge, and Mr. Updike only a few times. Mr. Mabble. Do you Imow whether or not any of your firm later, in bidding against the Exchange Grain Company, had them — your firm had them bill certain grain shipped from Omaha to Kansas City to the terminal elevators instead of to J. Rosenbaum, in order to hide from these gentlemen the fact that you were dealiag with Mr. Jaquith ? Mr. RosENBATJM. No. Everybody knows that the terminal is operated by our firm. Mr. Mabble. That would not hide anything? Mr. Rosenbaum. It is not intended to hide anything. Mr. Mabble. Have you recently been advised by that agent at New Orleans that he had boxight certain grain coming from flie Na- tional Grain Elevator Company at Kansas City, some 50,000 bushels, and you informed him that you did not care to handle grain that comes from that concern because you considered Mr. Beal unreliable. Mr. Rosenbaum, I remember something of that kind. That, I think, did not come to my knowledge, except in a general way, that they refused to deal with Beal, for the reasons mentioned above, that he IS not a straight man to deal with. Mr. Mabble. And for that reason you did not want to buy it? 762 GRAIN ELEVATOR INVESTIGATION. Mr. RosENBAUM. That is the only reason. We might, to accom- modate him, have given him some other excuse. Mr. Marble. It was not following out any boycott of the Kansas City Board of Trade? Mr. Eosenbaum. Positively no. Mr. Marble. I think that is all. Mr. Meyer. That is all. Commissioner Prouty. That is all. The witness may be excused. Witness excused. • Max Hottelet, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. You are in the grain business in Milwaukee? Mr. Hottelet. I*'' o. I am not a commission dealer. Mr. Marble. In what way are you in the grain business? Mr. Hottelet. I am a buyer and exporter and shipper. Mr. Marble. Where do you buy your grain? Mr. Hottelet. Here in Milwaukee. Mr. Marble. On the cash market? Mr. Hottelet. Yes, sir. Mr. Marble. Do you at all discriminate against any grain offered there because of its origin? Mr. Hottelet. No, sir. Mr. Marble. If you found a commission merchant receiving ship- ments from irregular dealers or scoopers or farmers' elevators with the penalty clause Mr. Hottelet (interrupting). It don't make any difference. Mr. Marble. You would buy his grain ? Mr. Hottelet. I would buy his grain. Mr. Marble. Supposing too much had been paid to the farmer for his grain, so that the country dealer did not make a profit, would you buy his grain ? Mr. Hottelet. I would buy it. I do not inquire at all. Mr. Marble. You do not care about those tmngs? Mr. Hottelet. I do not care about those things. Mr. Marble. You deal in rye, do you not ? Mr. Hottelet. 1 deal — I used to deal in rye some. Mr. Marble. Have you had trouble in selling rye to the Louisville, Ky., market from this point? Mr. Hottelet. Yes, sir. Mr. Marble. What was that trouble ? Mr. Hottelet. They wrote me that they could buy rye cheaper of other people here in Milwaukee than I could sell them by 3i cents a bushel, and then I offered them that I would buy of them and bid them 1§ cents more than they said was offered to them, and then they said the other people in Milwaukee wrote them and said they wouldn't sell their rye m Milwaukee, but only deliver it at Louisville at that price. Mr. Marble. The rye was going from Milwaukee to Louisville? Mr. Hottelet. Yes, sir. Mr. Marble. But they wouldn't sell it in Milwaukee? Mr. Hottelet. No, sir. Commissioner Prouty. How long ago was that? Mr. Marble. When was this? GRAIN ELEVATOR INVESTIGATION. 763 Mr. HoTTELET. Just about a year ago. On November 1, 1 think it was. Ml-. Marble. November 1, 1905? Mr. HoTTELET. 1905. Mr. Marble. What was the name of your firm ? Mr. Hottelet. S. Zorn & Co. Mr. Marble. Of Louisville, Ky. '. Mr. Hottelet. Yes, sir. Mr. Marble. Have you correspondence of this firm relative to this matter? Mr. Hottelet. Yes, sir. Mr. Marble. I will ask you to examine this and see if they are correct copies of that correspondence, in order that we may put them into the record. Those are copies of certain letters given by you to Mr. McKenzie? You know that they are correct? Mr. Hottelet. Yes, sir; they are. Mr. Marble. Those are correct copies of the correspondence relating to this matter? Mr. Hottelet. Yes, sir. , Mr. Marble. I will not take time to read them. They tell the story, and I will put them into the record. (The same are hereto annexed and marked "Exhibit No. 1 to Mr. Hottelet's testimony.") Mr. Marble. Did you have any explanation of this? Mr. Hottelet. No, sir. Mr. Marble. You knew the price of rye in the Milwaukee market ? Mr. Hottelet. Yes, sir. Mr. Marble. And you buy it as cheaply as anyone here? Mr. Hottelet. Yes, sir. Mr. Marble. And you knew the published rates of the railroad ? Mr. Hottelet. Yes, sir. Mr. Marble. The published tariff? Mr. Hottelet. Yes, sir. Mr. Marble. If you had bought on the Milwaukee market at the cash price and had shipped at the published tariff rate, you would have lost money on the deal if you had accepted this other price? Mr. Hottelet. Yes, sir. Mr. Marble. And you could not buy the same grain in Milwaukee at a cent and a half more than these Kentucky people paid, assuming that the grain paid the full freight tariff? Mr. Hottelet. No, sir. Mr. Marble. A cent and a half would be a profit? Mr. Hottelet. A good profit. Mr. Marble. Have you had any trouble with the Milwaukee road about switching? Mr. Hottelet. No. How do you mean? Mr. Marble. Switching from Twentieth street, or something of that sort? Ml". Hottelet. Oh, I asked them to switch grain from the foot of Twenty-seventh street, from the National Distilling Company to the boat line, and they refused to do it. Ml. Marble. Why? Mr. Hottelet. They said they were not in the switching business. 7^4: GRAIN ELEVATOE INVESTIGATION. Mr. Marble. Do you know why they did that — did you have any explanation ? Mr. Hof^TELET. Of them? Mr. Marble. Yes, sir. Mr. HoTTELET. Yes; because they wanted me to ship by rail to Chicago. This was intended for export to Germany, and they wanted me to ship by their road to Chicago, so that they could get the revenue out of it. Mr. Marble. What was the result of this course — what did you do with them finally ? Mr. HoTTELBT. I jdelded to them, as they told me to. Mr. Marble. Gave them the rail haul? Mr. HoTTELET. Yes; gave them the rail haul. Mr. Marble. Do you have any trouble in getting cars for your shipments ? Mr. HoTTELET. Yes, sir; I ordered some cars in Columbus, Wis., to be loaded for Washington, D. C, and they did hot give me a car for three weeks; then my customer canceled the order. Mr. Marble. Do you have more trouble in that respect than others have — line shippers on your road ? Mr. Hottelet. That I can not say; I do not know; I couldn't prove it; I have heard so. Mr. Marble. Your information is that you did have more trouble? Mr. HoTTELET. That other people who had elevators got more prompt service than ourselves. Mr. Marble. You left the grain business and have gone into the feed business ? Mr. Hottelet. Yes, sir; I have gone more into the feed business. Mr. Marble. Why is that? Mr. Hottelet. On account of the fact that I saw these complica- tions — that other people could do better for some reason in other lines. Mr. Marble. This rye business- Mr. Hottelet (interrupting). Rye business, for instance. Mr. Marble. So that you changed your business on that account? Mr. Hottelet. Yes, sir. Mr. Marble. Do you have trouble in collecting claims against the railroad company? Do you know whether you have had more trouble than your competitors have had ? Mr. Hottelet. I do not. know whether they have any or not Mr. Marble. You know that you have a great deal? Mr. Hottelet. I have lots of it. Mr. Marble. You have studied the inspection business and have views on the subject of Federal inspection of grain, have you not? Mr Hottelet. No. Mr. Marble. Haven't you gone into that matter? Mr. Hottelet. No, sir. About switching, I had some trouble with them. They charged me — I had some grain bought in the Rialto Elevator Company, that is on the Northwestern, and then I sold it to a party that had room in the Chicago, Milwaukee and St. Paul Elevator A — that is 1 mile away — and they made me pay $10, $5 on each road. Mr. Marble. $5? Mr. Hottelet. $5 from the Rialto Elevator Company to the St. GRAIN ELEVATOE INVESTIGATION. 765 Paul road, and then I had to pay again $5 from there to the St. Paul elevator, so that the total was $10 on one car, and the distance is less than a mile. Mr. Marble. Do you know whether that is a published tariff of that road? Mr. HoTTELET. I never saw a published tariff as to switching. They simply tell me that is what I have to pay. Mr. Marble. Do yon know whether others have to pay mo^e or less than that? Mr. Hotjelet. I don't know. Somebody told me they only paid $2. Mr. Marble. Who told you that? Mr. HoTTELET. The commission firm here told me that for switching from one road to the other they paid $2 — the Mohr-Holstein Commis- sion Company. Mr. Marble. In your exporting of wheat do you have trouble with shortage of cargoes, and with the inspection at the frontier of this country? Mr. HoTTELET. You mean here in this country? Mr. Marble. Yes. Mr. Hottelet. It is not inspected. Mr. Marble. It is not inspected ? Mr. Hottelet. I have shortages. Mr. Marble. Would you like to have some way of having weights officially determined at the ports? Do you regard that as a necessity? Mr. Hottelet. Yes, sir. You see the rai&oads do not weigh the stuff here at all, nor do they on the seaboard, and when it arrives in Europe nobody weighs it there. The steamship people do not weigh it either, and then when we have much overcharges in freight they refuse to pay it, although admitting that they did not weigh anything. And we have it weighed there and then there is less weight than the bill of lading calls for, and then the people do not want to pay that. Mr. Marble. On your export grain you receive bills for the freight, and the bills specify the weight of grain and the carriers admit to you that they haven't weighed it? Mr. Hottelet. Yes, sir. Mr. Marble. Do they tell you how they reach- the figures they put in the bill ? Mr. Hottelet. They say we have the privilege of electing either to collect the charges on the landed weight or on the bill of lading weight, and we elect to take the bill of lading weight. Mr. Marble. How is the bill of lading weight reached? Mr. Hottelet. The bill of lading weight is made out to the shipper. Mr. Marble. So that they let you fix your own weight ? Mr. Hottelet. Yes, sir. But I am a jobber. I buy, for instance, from brewers or distillers, and they give me a receipt, and I have to pay by that. I practically have no knowledge then of what it weighs. I pay by the papers they give me, and then it turns out very often there are 5,000 or 6,000 or 7,000 or 10,000 pounds less than they gave me. Then when we want to collect the overcharge on the freight, they simply tell us that they can not do anything; they won't listen to it. Mr. Marble. So that what you want would be something requir- ing the carriers to weigh the stuff ? 766 GKAIN ELEVATOK INVESTIGATION. Mr. HoTTELET. Yes, sir. Commissioner Proxjty. On what basis do you finally settle with the distillery? Mr. HoTTELET. We have to pay the distillers here on their weights, and we have to settle in Europe on the outturn there. Commissioner Peouty. If you pay the aistilling company 7,000 pounds too much, you lose it? Mr. HoTTELET. Certainly. Comihissioner Proutt. I suppose you make efforts to find out whether you are paying too much or not? Mr. HoTTELET. We can not do it. It would not pay to have in each distillery and brewery a man to weigh the stuff. It wouldn't pay. It would eat up the profit. We can not do it. Mr. Marble. That is all. Witness excused. J. O. Armour, called as a witness, having been duly sworn, testified as follows: Mr. Marble. You are a stockholder in certain railroads, are you? Mr. Armour. I am. Mr. Marble. In what companies? Mr. Armour. In the St. Paul. Mr. Marble. In the Chicago, Milwaukee and St. Paul? Mr. Armour. Yes, sir. Mr. Marble. Any others? Mr. Armour. Yes, sir; I think I own some stock in the Pennsyl- vania. Mr. Marble. Any others ? Mr. Armour. I don't think so; not that I recall; not that I remem- ber of. Mr. Marble. And this question goes, of course, to any stock that is held for you by anyone else, as well as that which is in your own name ? Mr. Armour. No; I own some Union Pacific stock. Mr. Marble. You are an officer of the St. Paul railroad, I believe? Mr. Armour. I am a director. Mr. Marble. You are a stockholder in the Armour Grain Com- pany also? Mr. Armour. Yes, sir. Mr. Marble. Are you a stockholder in the Neola Eleyator Com- pany? Mr. Armour. I am as far as the Armour Grain Company are stock- holders in it. Mr. Marble. 'The Armour Grain Company owns the Neola Ele- vator ? Mr. Armour. Yes, sir. Mr. Marble. And the Armour Grain Company owns the Milwau- kee Elevator Company? Mr. Armour. Yes, sir. Mr. Marble. Do you own any stock in the Southwestern Elevators, at Kansas City? Mr. Armour. I do not believe I do. I do not unless it is owned by the Armour Elevator Company — by the Armour Grain Company. GRAIN ELEVATOR INVESTIGATIOIS^. 767 Mr. Marble. The Atlas Grain Company — do you know about that; are you interested in that? Mr. Armour. I am not, unless it is owned by the Armour Grain Company. Mr. Marble. Your grain interests are held through the grain com- pany altogether? Mr. Armour. Entirely. Mr. Marble. Have you a controlling interest in the Armour Grain Company ? Mr. Armour. Yes, sir. Mr. Marble. You have? Mr. Armour. Yes, sir. Mr. Marble. What is the extent of your holding in the Milwaukee Company — I mean the Milwaukee Railroad Company — the St. Paul ? Mr. Armour. Well, you mean you want my holdings ? Mr. Marble. Yes, sir. Mr. Armour. You want me to tell you how much I own? Mr. Marble. Yes; if you will. Mr. Armour. W«11, I should think I own somewhere between 30,000 and 50,000 shares. Mr. Marble. Do you know how many shares there are alto- gether? Mr. Armour. No; I do not. Mr. Marble. To conform to the terms of this resolution, I will ask you — this stock came to you by inheritance, did it ? Mr. Armour. Not all of it. Mr. Marble. You bought some of it since ? Mr. Armour. Yes, sir. Mr. Marble. Your acquisition . of it has never been in any way connected with your grain business ? Mr. Armour. No, sir. Mr. Marble. Has your acquisition of the grain interests which you have been in any way connected with your railroad holdings ? Mr. Armour. I beg your pardon? Mr. Marble. I mean to say, has your ownership of stock in the Milwaukee, for instance, helped you or been a factor in your securing your grain interests ? Mr. Armour. No, sir. Mr. Marble. No grain stock has been given to you because of your connection with the Milwaukee, or anything of that sort ? Mr. Armour. No, sir. Mr. Marble. That is what we are getting at. Mr. Armour. No, sir. Mr. Marble. Do you know at how many stations on the Milwaukee road the Neola Elevator Company, which your company owns, is with- out competition? Mr. Armour. No, sir; I do not. Mr. Marble. Or why that is? Mr. Armour. No, I do not. Mr. Marble. Are you familiar with the business of the Neola Ele- vator Company at all ? Mr. Armour. No, sir. Mr. Marble. Not at all? Mr. Armoue. No, sir. 768 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. That is handled'by Mr. Marcy? Mr. Armour. Yes, sir. Mr. Marble. Are you familiar with the attitude of the Milwaukee road to the grain business — the St. Paul road, I mean? Mr. Armour. No, sir. Mr. Marble. You are not familiar with that? Mr. Armour. No, sir. Mr. Marble. You do not know whether or not your companies have been favored or discriminated against by that railroad? Mr. Armour. I do not know. Mr. Marble. You don't know about that at all? Mr. Armour. No, sir. Mr. Marble. Are you familiar at all with the business of the Mil- waukee Elevator Company at this place ? Mr. Armour. No, sir. Mr. Marble. And their leases or contracts? Mr. Armour. No, sir. Mr. Marble. You don't know about this at all? Mr. Armour. No, sir. Mr. Marble. Mr. P. A. Valentine, if I have the initials right — do you know him? .Mr. Armour. Yes, sir. Mr. Marble. Is he a director of Armour & Co. ? Mr. Armour. No, sir. . Mr. Marble. Is he a director of the Armour Grain Company? Mr. Armour. No, sir. Mr. Marble. Has he been recently? Mr. Armour. The Armour Grain Company ? Mr. Marble. Yes. Mr. Armour.. No, sir. Oh, wait; yes, I believe he was. Yes, I should say that I believe he has been up to within the last year. Mr. Marble. Do Armour & Co., through the Chicago Junction Railroad, control the Union Stock Yards Company, or in any way ? Mr. Armour. No, sir. Mr. Marble. Do you control the Union Stock Yards Company? Mr. Armour. No, sir. Mr. Marble. Are you interested in it as a shareholder? Mr. Armour. No, sir. Mr. Marble. Nor in the Chicago Junction Railroad? Mr. Armour. No, sir. Mr. Marble. Nor anyone for you? Mr. Abmour. No, sir. Mr. Marble. Mr. Valentine — do you loiow whether or not he owns stock in the Chicago Junction Railroad or the Union Stock Yards Company? Mr. Armour. I do not think he does. Mr. Marble. Not for you or any of your people? Mr. Armour. Not for any of our people. Mr. Marble. So far as you know none of these railroads in which you are interested have in any way favored your grain business or discriminated against it? Mr. Armour. Not that I know of; no, sir. Mr. Marble. As to all of this stock the replies that you made regarding the St. Paul stock would stand — that the acquisition of the GRAIN ELEVATOR INVESTIGATION. 769 stock was not in any way connected with the grain business, nor the result of any favoritism between railroads and grain-dealing com- panies ? Mr. Armour. No, sir. Mr. Marble. That is all. Commissioner Lane. How many elevators have the Arniour Grain Company? Mr. Armour. Well, we have some on the St. Paul Railroad and also some on the Burlington road; I think probably 4 or 5. Commissioner Lane. Is that all the elevators that your grain com- pany has ? Mr. Armour. No; we own some country elevators — the Neola Elevator Company. We also own an elevator here, at least we run one here. Commissioner Lane. Do you know what the total number of ele- vators is that you have? Mr. Armour. No, sir; I could not tell you. Commissioner Lane. Do you know whether the Armour Grain Company owns any stock in any railroad ? Mr. Armour. They do not. Commissioner Lane. They do not ? Mr. Armour. They do not; no, sir. Commissioner Lane. Where are your elevators placed? On the right of way of railroads ? Mr. Armour. You mean on land owned by the railroads? Commissioner Lane. Yes. Mr. Armour. In some cases they are, and in other cases we own the land; in some cases the elevator company owns the land. Commissioner Lane. Can you tell what proportion of your eleva- tors are on railroad right of way? Mr. Armour. I do not know that I could; no, sir. Commissioner Lane. Have you ever made application for the priv- ilege of putting an elevator on the right of way and had it denied ? Sir. Armour. Not that I know of. I don't know that we have made any application. Commissioner Lane. You do not have the elevator placed there without making an application, do you? Mr. Armour. I presume not. But if that was done, it was done before my time. All those elevators have been built since I became interested in the business. Commissioner Lane. They have all been built since you became interested ? Mr. Armour. Before I became interested, I mean. Commissioner Lane. You have built no new elevators lately ? Mr. Armour. No, sir; none that I know of. Mr. Marble. Have you acquired any elevators lately? Mr. Armour. None that I know of; no, sir. Commissioner Lane. That is all. Mr. Marble. You don't know that the Neola Company, has recently bought the elevators of the Atlas Coijipany ? Mr. Armour. I do not know; no, sir. Mr. Marble. That is all. Commissioner Prouty. That is all, Mr. Armour. Witness excused. S. Doe. 278, 59-2 -49 770 GBAIN ELBVATOB INVESTIGATION. A. E. Halderman, called as a witness, having been duly sworn, testified as follows: Mr. Marble. You reside in Milwaukee, Mr. Halderman? Mr. Halderman. Yes, sir. Mr. Marble. What is your business ? Mr. Halderman. I am representative of the Joint Rate Inspection Bureau and the Western Eailway Weighing Association. Mr. Marble. What is the Joint Rate Inspection Bureau and the Western Railway Weighing Association? Mr. Halderman. They are associations that are organized by the railroads. Mr. Marble. There are two associations? Mr. Halderman. Yes, sir. Mr. Marble. One is the Joint Rate Inspection Bureau? Mr. Halderman. Yes, sir; one is the Jomt Rate Inspection Bureau. Mr. Marble. Now, tell us what that is — what railroads ? Mr. Halderman. The eastern and western railroads. Mr. Marble. Coming into Milwaukee? Mr. Halderman. Yes, sir. Mr. Marble. What roads — can you name them ? Mr. Halderman. All the roads that enter Milwaukee. Mr. Marble. How many — how many from the east? Mr. Halderman. All the roads that come in from the east — the Grand Trunk, the Pere Marquette; that is all. Mr. Marble. And from the west ? Mr. Halderman. The Chicago, Milwaukee and St. Paul, the Chi- cago and Northwestern, and the Wisconsin Central. Mr. Marble. No one belongs to the Joint Rate Inspection Bureau except these five railroads ? Mr. Halderman. That is all I know of — that is, I mean here. Mr. Marble. And it also has headquarters at Chicago, I believe? Mr. Halderman. Yes, sir. Mr. Marble. And there the eastern and western roads also belong? Mr. Halderman. Yes, sir. Mr. Marble. What is the business of that inspection bureau; what is it organized for ? Mr. Halderman. We look after the weights and inspection of freight that is shipped over the road. Mr. Marble. By "inspection" you mean simply to determine that the goods in the car are such as are called for by the bills? IVfr. Halderman. Yes, sir. Mr. Marble. And not at all the inspection of grain to determine its quality or anything of that sort? Mr. Halderman. No, sir. Mr. Marble. What do you do in respect to weights? Determine that the weights on the bills are correct? Mr. Halderman. Yes, sir. We weigh the freight on the railroad track scales. Mr. Marble. And what was the name of the other association? Mr. Halderman. The Western Railway Weighing Association. Mr. Marble. Has this first association any other function than you have stated ? Mr. Halderman. We look after the transit privileges of the grain. Mr, Marble. The first association does? GKAIN ELEVATOE INVESTIGATION. 771 Mr. Haldebman. Yes, sir. Mr. Mabble. What is the transit privilege? Mr. Haldebman, They are rules that are promulgated by the rail- roads for the protection of the through rate from point or origin to final destination, with a stop-off privilege. Mr. Mabble. Those rules are published, I believe. Mr. Haldebman. Yes, sir. Mr. Mabble. Are those privileges and the rules and the publica- tion open to all alike? Mr. Haldebman. Yes, sir. Mr. Mabble. They are open to commission firms not having elevators? Mr. Haldebman. Yes, sir. Mr. Mabble. Well, now, as a matter of actual practice, by whom are th^used? Mr. Haldebman. They are used by elevators and also by some commission men who desire to take advantage of them. Commissioner Pboutt. Could you file a copy of these rules in this case? Mr. Haldebman. Could I? Commissioner Pbouty. Could you file a copy of these rules ? Mr. Haldebman. Yes. I have a copy of tnese rules here. Mr. Mabble. May I see it please? Mr. Haldebman. Yes, sir. (Witness hands counsel rules.) (The same are hereto annexed and marked "Exhibit No. 1 to Mr. Halderman's testimony.") Mr. Mabble. You have heard the testimony given here this morn- ing regarding this transit privilege ? Mr. Haldebman. Yes, sir. Mr. Mabble. Now, is it true that commission men putting grain through the Milwaukee elevator- — taking grain in there and cleaning it, for instance — can not enjoy transit on that grain to Chicago? Mr. Haldebman. They can enjoy the privileges that are called for in these rules. Mr. Mabble. Is that privilege called for in these rules? Mr. Haldebman. No. The privilege we have referred to is the cleaning account of the road; that is not included in there. Mr. Mabble. What is the cleaning account ? Mr. Haldebman. That is, the roads have rules which provide, for the cleaning of grain in transit. Mr. Mabble. And those rules are not in this publication which you gave me? Mr. Haldebman. No, sir. Mr. Mabble. Are those rules printed ? Mr. Haldebman. That I do not know. Mr. Mabble. How do you get your understanding of them? Mr. Haldebman. Simply because they have — you mean whether the cleaning in transit rules are published ? Mr. Mabble. Yes. Mr. Haldebman. They are published. Mr. Mabble. Have you a copy of those ? Mr. Haldebman. No, sir. Mr. Mabble. What privilege is that which is not published? 772 GRAIN ELEVATOE INVESTIGATION. Mr. Halderman. I do not know. Mr. Marble. Who told you — I thought you referrea to something just now that was not published ? Mr. Halderman. No, sir. Mr. Marble. Well, the owner of a private elevator or the lessee of a private elevator in Milwaukee can bring grain in and put it into the elevator, clean it in transit, and send it on to Chicago, without paying additional freight. Is that true? Mr. Halderman. If it comes from certain territory. Mr. Marble. From certain territory? Mr. Halderman. Yes, sir. Mr. Marble. Now, if a commission firm doing business in a Mil- waukee elevator puts grain in there from the same territory and cleans it, has that firm the same privilege ? Mr. Halderman. That I couldn't say. Mr. Marble. Don't you have occasion to pass upon that as the head of this association? Mr. Halderman. No, sir. Mr. Marble. Who does? Mr. Halderman. The railroads pass upon that. Mr. Marble. Don't you have to pass upon it as the head of this association? Supposing a man comes to you; you say you would give him a transit privilege ? Mr. Halderman. We do under these rules, but not under the clean- ing rules. Mr. Marble. Who has charge of the cleaning privileges? Mr. Halderman. The roads themselves. Mr. Marble. That is a part of the transit business, isn't it, the cleaning? Mr. Halderman. That is a part of the transit business. Mr. Marble. But it is not confided to your association? Mr. Halderman. It does not come within these rules here. Mr. Marble. And these rules here are all you have to do with? Mr. Halderman. That is all we have supervision of. Mr. Marble. As a matter of fact, your office — does it have dealings with any except elevators? Mr. Halderman. Yes, sir. Mr. Marble. Does it have dealings except for the benefit of ele- vators ? Mr. Halderman. Yes, sir. Mr. Marble. The transit privilege is taken advantage of by com- mission men? Mr. Halderman. Yes, sir. Mr. Marble. What is the proportion of the transit privilege through your office? Mr. Halderman. That would* be pretty hard to say. The com- mission man who asks to forward* grain under these rules takes advan- tage of them the same as the elevator companies. Mr. Marble. Can you tell us some commission men who actually do take advantage of these rules through your bureau ? Mr. Halderman. Why, I could not remember; no. Mr. Marble. You could name some elevators, could you not, from memory^ ? Mr. Halderman. All of the elevators use the transit rules. GRAIN ELEVATOB INVESTIGATION. 773 Mr. Marble. All the elevators? Mr. Halderman. Yes. Mr. Marble. But you can not recall any commission man now? Mr. Halderman. I can; yes. C. R. Lull has used the rules. Mr. Marble. How recently, do you know? Mr. Halderman. That I couldn't say. Mr. Marble. And who else? Mr. Halderman. And the Franke Grain Company. Mr. Marble. Did you hear Mr. Franke's testimony this morning? Mr. Halderman. I did. Mr. Marble. Would you make a diflferent statement? Mr. Halderman. What's that ? Mr. Marble. Would you make a different statement concerning the facts that he testified to ? Mr. Halderman. In his testimony I do not think he referred to the transit privileges that we have been speaking about. Mr. Marble. You think he referred to other transit privileges? Mr. Halderman. Yes, sir. Mr. Marble. Do you know why the cleaning in transit privilege is not handled by you the same as the other? Mr. Halderman. I do not. Mr. Marble. The transit privilege is enjoyed through your asso- ciation. Who pays the freight to the railroad? Who actually deals with the railroad company? The shipper of the grain, the receiver of the grain, or the buyer of the grain? Mr. Halderman. That we do not pay any attention to. They bring their bills to us; sometimes the commission men and sometimes the elevator men. Mr. Marble. And you credit transit to the one that brings the bill to you? ' Mr. Halderman. We credit the transit to the party who has actually put the grain into the elevator, who is the owner of the grain when it goes into the elevator. Mr. Marble. Why don't you give the transit to the one who actually pays the bill, regardless of what he does with the grain ? Mr. Halderman. He assigns the freight bill over to the party who actually receives the grain. Mr. Marble. Do you require that ? Mr. Halderman. Yes, sir. Mr. Marble. That the freight bill should accompany the grain? Mr. Halderman. Yes, sir. Mr. Marble. That is, you keep up the form, at least, of a through shipment ? Mr. Halderman. Yes, sir; that is right. Mr. Marble. Well, that requires, then, that the name of the con- signor of the grain to this market should be made known to the one that buys it on the market. It can not be kept secret by the com- mission firm? Mr. Halderman. I say that there are very few cases where the full name of the shipper is shown on the freight bill. Mr. Marble. But so far as it is shown on the freight bill it passes along to the buyer of the grain under your arrangement ? Mr. Halderman. Yes, sir. 774 GRAIN ELEVATOR INVESTIGATION. Mr. Makblb. Do you think that is in any way undesirable to any interests? Mr. Halderman. I do not; no. Mr. Marble. You did not have to do with the framing of these rules? Mr. Halderman. No, sir. Mr. Marble. You simply apply them as furnished to you ? Mr. Halderman. Yes, sir. Mr. MAEi^LE. Who furnished them to you ? Mr. Halderman. They were furnished by our general office in Chicago. Mr. Marble. The inspection bureau? Mr. Halderman. Yes, sir. Mr. Marble. They have an office on the fifth floor of the Board of Trade Building in Chicago, I believe ? Mr. Halderman. Yes, sir. Mr. Marble. Do you make any different settlement or arrange- ment with any elevator company from what you do with any other shipper? Do you treat all alike? Mr. Halderman. Yes, sir; all ahke. Mr. Marble. The Milwaukee Elevator Company does not get bet- ter arrangements through your a&sociation than anybody else? Mr. Halderman. No, sir; not at all. Mr. Marble. Just the same? Mr. Halderman. Just the same. Mr. Marble. How long does this transit privilege last on grain that is brought in here? Mr. Halderman. The privilege is for six months ? Mr. Marble. Now, is it j)ossible to renew that, or extend it for any reason? Mr. Halderman. No. Mr. Marble. You don't extend it for any reason? Mr. Halderman. We do not extend the six months. At the expi- ration of six months, if the bills have not been used they are can- celed. Mr. Marble. There is no arrangement or practice in any way at all of extending this privelege, on the payment of a fee, or because of any excuse that may be offered ? Mr. Halderman. No, sir. Mr. Marble. That is an inflexible rule, is it? Mr. Halderman. I do not know whether there has been any excep- tions made to that rule in any instance or not. There have been none made by me. There is one rule that provides for it, I think. If you will turn to the rules — may I have the rules just a minute ? (Counsel hands rules to witness.) ■ Commissioner Proutt. Just read the rule. Mr. Halderman. (Reading.) Rule 19. Enforcement of rules. The rules herein promulgated are to be strictly enforced, with the proviso that in case emergency exists for any deviation the facts must be first presented to the chief inspector, and his decision be allowed as to any departure. Commissioner Prouty. Does that mean in practice that you, in your discretion, can allow a departure from the rule ? Mr. Halderman. No, sir; I am not the chief inspector. GEAIN ELEVATOR INVESTIGATION. 775 Commissioner Prouty. Oh, the chief inspector is at Chicago ? Mr. Halderman. Yes, sir. Commissioner Prouty. But the chi.ef inspector might do that? Mr. Halberman. Yes, sir. Commissioner Prox^'y. Does he do it ? Mr. Halderman. Sir? Commissioner Prouty. Does he in fact do so ? Mr. Halderman. I beheve there have been one or two cases that have been brought up where he has used that discretion. Mr. Marble. Do you know what the emergency is that would move the chief inspector to make an exception? Mr. Halderman. That I could not say. Mr. Marble. Have you known of any case so that you could describe any case to us now ? Mr. Halderman. I couldn't now; no, sir. Mr. Marble. You do not recall of any case? Mr. Halderman. No, sir. Mr. Marble. It is your impression that some have occurred ? Mr. Halderman. Yes, sir. Mr. Marble. That is as far as you can go? Mr. Halderman. Yes, sir. Mr. Marble. I want to find out just exactly what this inspection bureau does, and the weighing association. When do you first hear of grain coming into the niarket and from whom; who brings the notice to you? Mr. Halderman. As I say, the elevator company or the commission man brings the bill for recording. Mr. Marble. What bills does he bring to you? Mr. Halderman. Freight bUls. Mr. Marble. They don't bring you a delivery ticket? Mr. Halderman. No, sir. Mr. Marble. He brings you the freight bill ? Mr. Halderman. Yes, sir; the paid freight bill. Mr. Marble. Do you know what the railroad company furnishes to the consignee when the grain arrives in this market? Mr. Halderman. I do not know. Mr. Marble. Whether they furnish the freight bill or simply a delivery ticket? Mr. Halderman. No, sir. Mr. Marble. Supposing grain comes in here this morning for the Franke Commission Company, how do they know that the grain is here ? Do you know what they receive from the railroads ? Mr. Halderman. I presume the railroad company notifies them that the cars are here. Mr. Marble. In what way? Mr. Halderman. I don't know. Mr. Marble. The first you know of it is when they bring the bills to you to be registered ? Mr. Halderman. Yes, sir. Mr. Marble. Is this such a freight bUl as is brought in to you [counsel hands witness freight bUl] ? Mr. Halderman. Well, they bring in the original, duplicate, and triplicate. Mr. Marble. And those are the duplicates? 776 , GRAIN ELEVATOR INVESTIGATION. Mr. Halderman. Yes, sir. Mr. Marble. Those are two duplicates? Mr. Halderman. Yes, sir. Mr. Marble. And that is a form that you recognize ? Mr. Halderman. Yes, sir. Mr. Marble. And that is the form that the business is done on on the Milwaukee road ? Mr. Halderman. Yes, sir. Mr. Marble. It is marked "Delivery Ticket" on the top — that is what you mean ? Mr. Halderman. They bring those bills in original, dupUcate, or triplicate. Mr. Marble. Take this stamp— evidently made by a rubber stamp here in this column — "Milwaukee Elevator Company. Chicago Cleaning Account." Is that put on in your office? Mr. Halderman. No, sir. Mr. Marble. Is that on the bill when it is brought to you? Mr. Halderman. We do not record those bills with that stamp. Mr. Marble. Then these bills have not been through your office ? Mr. Halderman. No, sir. Mr. Marble. Such bills as these without the stamp would be the ones that go through your office ? Mr. Halderman. Yes, sir. Mr. Marble. But the forms would be different in that respect from this ? Mr. Halderman. Yes, sir. Mr. Marble. If they were brought in with these words on them you would send them somewhere else? Mr. Halderman. We do not take the bills. Mr. Marble You would send the one offering them to some other place ? Mr. Halderman. They know that these bills do not go to our office. Mr. Marble. But if anyone should come into your office and ask if your place was the place to bring them, what would you tell him ? Mr. Halderman. We would say that the bills have been already recorded with the Milwaukee and were in the cleaning accoimt. Mr. Marble. Is it yoiu- understanding that that stamp is put on by the Milwaukee road or the Milwaukee Elevator ? Mr. Halderman. I should say by the railroad company. Mr. Marble. That is your imderstanding ? Mr. Halderman. Yes, sir. Mr. Marble. As a matter of fact you say these bills have not been through your Bureau at all, because of those words appearing on them. Mr. Halderman. Yes, sir Mr. Marble. Where have those bills come from — from the office of the railroad company? Mr. Halderman. Those bills [indicating] ? Mr. ]VIarble. Yes; where does that grain get its reconsigning privilege ? Mr. Halderman. Its cleaning privilege ? Mr. Marble. Yes. Mr. Halderman. I should say from the railroad. GEAIN ELEVATOR INVESTIGATION. 777 Mr. Marble. From the office of the railroad? Mr. Halderman. Yes, sir. Mr. Marble. You are certain it does not get it from your bureau? Mr. Halderman. Not to my knowledge. IMr. Marble. Would it be possible? Mr. Halderman. We couldn't give them any such privilege. Mr. Marble. If they did not contain these words ? Mr. Halderman. Then we would record the bills. Mr. Marble. It is just simply that there is too much here to get the privilege from you ? ^Ir. Halderman. It says that it has had one privilege now. Mr. Marble. It shows that it has had one privilege now? Mr. Halderman. Yes. Mr. Marble. And it is not entitled to another ? Mr. Halderman. Yes, sir; that is right. Mr. ilARBLE. Did you bring some books over? Mr. Halderman. x es, sir; I brought one of our recording books. Mr. AIarble. Will you let us have that for a few minutes to exam- ine it ? Mr. Halderman. Yes, sir. Mr. Marble. In the meantime you can be excused. Commissioner Peouty. Mr. Halderman, those rules that you pre- sent here are simply the rules governing stop-over privileges of grain in Chicago, this being a Chicago point, are they not ? Mc Halderman. Chicago district stop-over point. Commissioner Prouty. And the rules applicable here are the same as those applicable at Chicago? Mr. Halderman. Yes, sir. Commissioner Peoutt. But you say this privilege applies to assigned grain? Mr. Halderman. Yes, sir. Commissioner Prouty. It only applies to assigned grain when it goes through an elevator? Mr. Haldeeman* Yes, sir. Commissioner Peouty. It doesn't apply to track grain? Mr. Haldeeman. No, sir. Commissioner Peouty. That is all. Witness excused. OscAE MoHE, called as a witness, having been duly sworn, testified as follows : Mr. Maeble. You are a member of Mohr-Holstein Commision Compairy? Mr. MoHE. Yes, sir. Mr. Maeble. Is that a corporation? Mr. Mohe. Yes, sir. Mr. Maeble. Who owns the stock of that corporation? Mr. Mohe. Mr. Holstein and myself and Mr. McCabe. Mr. Maeble. Do you or Mr. Holstein or any of your stockholders, so far as you know, own any railroad stock? Mr. Mohe. We do not. Mr. Maeble. Does any railroad officer or stockholder or employee receive any profits of your company? 778 GftAiN ELEVATOR INVESTIGATION. Mr. MoHR. No, sir. Mr. Marble. Or own any stock? Mr. MoHR. No, sir. Mr. Marble. Not at all? Mr. MoHE. No, sir. Mr. Marble. You do a commission business exclusively? Mr. MoHE. Exclusively. Mr. Marble. And receive from the general country which is tribu- tary to Milwaukee, Iowa, South Dakota, Minnesota, and Wisconsin? Mr. MoHR. Yes, sir. . Mr. Marble. Do you discrinunate against any graiu sent to this market because of its origin? Mr. MoHR. Because of what ? Mr. Marble. Because of its origin. Do you receive grain from the scoop shoveler or the farmer's elevator with a penalty clause ? Mr. MoHR. If it is shipped to us it is our duty to take care of it. Mr. Marble. And you do take care of it ? Mr. MoHR. Yes, sir. Mr. Marble. Do you attempt to keep it from being shipped to you? Mr. Mohr. We do not solicit any consignments of that kind. Mr. Marble. If you find it coming, you notify them that you do not solicit these consignments and ask them not to send them further ? Mr. Mohr. No; I do not think that we have directly told, the parties. Mr. Marble. You do not discourage it? Mr. Mohr. Well, in some way, perhaps, but we certainly do not encourage it. Mr. Marble. In what way do you discourage it; would you say? Mr. Mohr. Well, we do not — for instance, we do not accept a draft with the bill of lading. Mr. Marble. From an irregular dealer? Mr. Mohr. From an irregular dealer. Mr. Marble. Why do you treat them differently from what you do the regular dealers ? Mr. Mohr. Because we do not know them. Mr. Marble. You feel that you do know those who are regular and who belong to the association? Mr. Mohr. Yes, sir. Mr. Marble. That is a sort of guarantee to you of reUabihty ? Mr. Mohr. Well, it is not always a guarantee, but we use proper precaution not to accept drafts which we might Mr. Marble. Were you ever threatened with a boycott if you did receive this business, by the regular dealers ? Mr. Mohr. No ; we have not been threatened with a boycott. Mr. Marble. Have you been informed that you might lose the business of the regular dealers if you took the other business ? Mr. Mohr. We have received letters from the secretary, drawing our attention to having received shipments from a farmer, requesting us to explain how that happened. Well, we answered that the ship- ment came to us unsolicited, and we had, of course, to take care of it; that we did not solicit consignments from farmers or scoop shovelers. Mr. Marble. And after receiving a letter of that sort concerning a GBAIN ELEVATOB INVESTIGATION. 779 consignor would you notify him that you would rather he would not send you any more ? Mr. MoHE. I really don't remember whether we have written such letters or not. Mr. Marble. But, as a matter of fact, you would prefer not to receive those shipments? Mr. MoHE. We would prefer not to receive those shipments. Mr. Marble. You say you received those letters from the secre- tary; from what secretary? Mr. MoHE. We received several letters from the secretary of the Tri-State Grain Dealers Association. Mr. Marble. Mr. Quinn? Mr. MoHR. Yes, sir. Mr. Marble. Aiid from whom else? Mr. MoHR. I don't know. Mr. Marble. Did you receive any from Mr. Wells, of Iowa? Mr. MoHE. No. Mr. Marble. Did you receive any from the Secretary of the Wis- consin Grain Dealers' Association? Mr. MoHE. I think there was one case of that kind, but it is long ago and I don't remember the particulars. Mr. Maeble. You heard Mr. Halderman's testimony a few" minutes ago, have you used this bureau of his to get transit privilege on grain? Mr. MoHR. No. We have given our orders to forward grain to Chicago just as fast as our cars come. We do not ship any farther. We have given the orders directly at the freight office. Mr. Marble. Direct to the freight office? Mr. MoHR. Yes, sir. Mr. Marble. Do you have an elevator? Mr. MoHR. No, sir. Mr. Marble. Do you unload these cars here and clean the grain here? Mr. MoHR. No, sir. These cars that we forward from here are cars that we get from the west, and not finding a good market here on a certain day we forward them to Chicago. Mr. Marble. Without unloading? Mr. MoHR. Without unloading; yes, sir. And we have paid $2 reconsigning. Mr. Marble. For that? Mr. MoHE. Yes, sir. Mr. Maeble. Have you at all enjoyed the privilege of unloading and cleaning grain in here and then reconsigning it without further payment ? Mr. MoHR. No, sir. Mr. Marble. Do you understand that that privilege is open to you? Mr. Mohr. No ; I do not understand that that privilege is open to us. Mr. Marble. Do you understand it to be open to you if you had an elevator? Mr. Mohe. Well, I understand that elevator proprietors have such an arrangement, but I haven't any proof of it. Mr. Maeble. You haven't looked into that? Mr. Mohe. No, sir. Mr. Marble. You have prepared a list of rates from points on the Iowa and Dakota division of the Milwaukee road in South Dakota 780 GRAIN ELEVATOR INVESTIGATION. and Iowa comparing the rates to Milwaukee and to Minneapolis on wheat and on coarse grain, have you not ? Mr. MoiiB. Yes, sir. Mr. Marble. And this is that — that was prepared by you? Mr. MoHR. Yes, sir; it was. Mr. Marble. Showing that this market was discriminated against by these rates ? Mr. MoHR. Yes, sir. Mr. Marble. Could you state briefly just what, not going into the thing in detail, but what that statement Commissioner Prouty (interrupting). Well, now, Mr. Marble, let him file that statement. This whole question has been examined by the Commission at a previous case. We held that there was a dis- crimination against Milwaukee, but at that time we had no power to stop it. Mr. Marble. We will make that additional to what the Commission has before it. I will file it. (The same is hereto annexed and marked "Exhibit No. 1 to Mr. Mohr's testimony.") Mr. Marble. This was prepared by you, and shows the same condition? Mr. MoHB. Yes, sir. Mr. Marble. That is all, I believe. Commissioner Prouty. That is all, Mr. Mohr. Witness excused. George A. Schroeder, called as a witness, having been duly sworn, testified as follows: Mr. Marble. Mr. Schroeder, you are connected with the Manegold Milling Company? Mr. Schroeder. Yes, sir. Mr. Marble. In what capacity? Mr. Schroeder. Manager. Mr. Marble. You are a member of the transportation committee of the chamber of commerce ? Mr. Schroeder. Yes, sir. Mr. Marble. As a member of that transportation committee and from your knowledge as a shipper into this market, you have pre- pared a list of rates showing- a discrimination against Milwaukee ? Mr. Schroeder. I have. Mr. Marble. And this is the list prepared by you [indicating] ? Mr. Schroeder. That is the list, and covers the general territory west of the Mississippi. Mr. Marble. And this letter attached is a copy of a letter written by you to Mr. Hiland ? Mr. Schroeder. Yes, sir. Mr. Marble. Calling attention to the rates herein and the dis- crepancy? Mr. Schroeder. Yes, sir. Mr. Marble. And is signed by you for the transportation commit- tee of the chamber of commerce ? Mr. Schroeder. Yes, sir. Mr. Marble. I will put that in the same way. (The same is hereto annexed and majked "Exhibit No. 1 to Mr. Schroeder's testimony.") GRAIN ELEVATOR INVESTIGATION. 781 Mr. ScHROEDEE. I should like to ask if I might file a copy of Mr. Hiland's reply. Mr. Marble. Siirely; have you it here? Mr. ScHROEDER. I think so. Conunissioner Proutt. You may read the letter, if it is not too long. Mr. Marble. The first letter simply calls attention to this in a way the Commission is acquainted with. Mr. Hiland's reply is as follows : Chicago, September 28, 1906. Mr. Geo. A. Schroeder, Secretary Transportation Committee, Chamber of Commerce, Milwaukee, Wis. Dear Sir: Referring to your letter of the 25th inst., addressed to me, regarding the present rates on grain on the Iowa and Dakota and Sioux City and Dakota divi- sions to Milwaukee and Minneapolis, which were made effective September 1. I beg to acknowledge receipt thereof and to assure you that there was no intention whatever in adopting these rates to in any way discriminate or cause any unjust change in the co-relation of rates between Minneapolis, Milwaukee, and Chicago. For your information I will state that there were some rates made arbitrarily by the Great Northern and Northern Pacific roads which produced a change in the co- relation which heretofore existed, but this company has not as yet had a sufiicient opportunity to examine the matter and see just what changes should be made to Lake Michigan ports in order to equitably take care of all the markets referred to herein. I beg to assure you that the matter will be taken up in conjunction with the Chicago and Northwestern and the other interested lines, with a view of reaching as early a conclusion as possible. Yours, truly, J. H. Hiland, Third V%ce-President. m (The same is hereto annexed and marked "Exhibit No. 2 to Mr. Schroeder's testimony.") Commissioner Procty. This refers to some recent change, does it, ]SIr. Schroeder? Mr. Schroeder. It does. Commissioner Proutt. That is a matter, of course, which the Com- mission has never examined. Mr. Marble. So far as it relates to the graiu business, do you desire to hear the explanation of Mr. Schroeder ? Commissioner Peotjty. I do not think so. If Milwaukee has any complaint to make it shoidd make that complaint as such. This investigation refers not to relative rates, but to elevators in connec- tion with the transportation and handling of grain. Now, if there is any discrimination against Milwaukee, the proper thing for Milwau- kee to do is to file some complaint with the Conomission and ask them to investigate that matter. I might say that we did, at a former time, entertain such a complaint and sustain it; but in the state of the law at that time it was mapossible to put our decision into effect, for the most part. Mr. Marble. If I understand it, these rates have resvdted in center- ing the grain business at Minneapolis, which, if there was no dis- crimination against this market, would come to this point % Mr. Schroeder. We think more grain wotild come to Milwaukee. Mr. Marble. And that relates particularly to coarse grains % Mr. Schroeder. Wheat and coarse grains, both; all grains; all grains tributary to Milwaukee. Mr. Marble. You have yourself had experience as a rate man on railroads ? Mr. Schroeder. Yes, sir. Mr. Marble. What experience ? 782 GKAIH- ELEVATOR INVESTIGATION. Mr. ScHROEDER. I was in charge of the traffic department of the Milwaukee Road for a good many years and of the Great Northern for about four years. Mr. Marble. Now, this statement in the letter of Mr. Hiland relative to reductions made into Minneapolis arbitrarily — that is a condition of affairs that has existed from time to time ? Mr. Schroeder. It has; yes, sir. Mr. Marble. The Great Northern, Mr. Hill's road, reduced the rates into Minneapolis ? Mr. Schroeder. He seems to be the disturbing element. Mr. Marble. Is he a disturbing element in raising rates ? Mr. Schroeder. No, sir; in reducing rates. Mr. Marble. Because the other roads coming down here are slow in meeting him, and that leaves you under a disadvantage because of his reducing? Mr. Schroeder. They are not slow, but they do not meet the cut fully. In other words, they hold up the rates to Milwaukee as high as they can hold them, without regard to what the previous differential might have been. Mr. Marble. Do you understand why Mr. HiU takes a different attitude toward Minneapolis than those other roads take toward Minneapolis ? Mr. Schroeder. I could not answer that. Mx. Marble. In the milling business here, where do you buy your wheat ? Mr. Schroeder. Well, the bulk of it is bought right here on the floor of the exchange. A part of it is bought in Minneapolis, and occasionally some in the Southwest. Mr. Marble. Do you discriminate against sellers of wheat because of their facilities or the amount they pay for the wheat, or the fact that they are irregular dealers ? Mr. Schroeder. No, sir; the millers practically buy only direct from the commission houses or through certain commission houses. Mr. Marble. Without inquiring further where they get their wheat ? Mr. Schroeder. Yes, sir. Mr. Marble. Do you buy from the elevators? Mr. Schroeder. No, sir. Mr. Marble. Why don't you buy from the elevators ? Mr. Schroeder. We only buy from the elevators when we buy option wheat and the certificate is delivered to us. That amounts to practically the same thing. That is done quite often. Mr. Marble. 'That is done quite often? Mr. Schroeder. Yes, sir. Mr. Marble. What do the millers generally think about elevator wheat that is treated in elevators — what is your experience with that? Mr. Schroeder. We always regard that we buy option wheat; I mean that the quality that they deliver is much interior to what it is presumed to be. Mr. Marble. Is that so, as a rule? Mr. Schroeder. As a rule. Mr. Marble. The treatment which wheat receives in elevators — does that improve it— add to its value for the milhng business? Mr. Schroeder. No, sir; it depreciates the value. GEAIN ELBVATOK INVESTIGATION. 783 Mr. Mabble. It is not mixed with a view to the requirements of a milling business at all? Mr. ScHBOEDEE. No, sir. Mr. Maeble. But with the view simply to passing inspection? Mr. Schboedee. That is, the wheat that passed out as No. 1 Northern would not be of as good quality as that which passed in as No. 1 Northern. Mr. Maeble. Isn't its quality in going out the same as the quality coming in? Mr. Schboedee. It is supposed to be the same when it goes out as when it came in, but it is different. Mr. Maeble. In what way is it different ? Mr. Schboedee. Much poorer. They mix in poorer grades with No. 1 Northern, and in some way they have it inspected out as No. 1 Northern. Mr. Maeble. What you say relates to what market ? Mr. Schboedee. To Minneapolis. Mr. Maeble. And the Minneapolis and Minnesota State inspection? Mr. Schboedee. Yes, sir. Mr. Maeble. How about the Illinois inspection — have you had experience with it ? Mr. Schboedee. No; not in the last few years. Commissioner Peoutt. Do you have an inspection here ? Mr. Schboedee. We have a chamber of commerce inspection. Commissioner Pbouty. Are you willing to accept that inspection? Mr. Schboedee. Well, there is no grain brought here that goes through the elevator. Commissioner Pbouty. That is, you do not buy grain from the elevators here? Mr. Schboedee. No. It is not handled in Milwaukee the same as in Chicago or Minneapolis. We have what we call " official receipts," in Milwaukee. Mr. Maeble. Your mill has an elevator, hasn't it? Mr. Schboedee. Not at the present time. Mr. Maeble. Do you buy grain from the same parties that the elevators here would buy grain from ? Mr. Schboedee. Practically; yes, sir. Mr. Maeble. So that there would be no occasion for you to go to the elevators to buy grain? You could go where they buy the grain? Mr. Schboedee. Precisely. Mr. Maeble. What do the elevators do with their grain? The millers discriminate against it; what becomes of it? Mr. Schboedee. Our understanding is that all the wheat or other grain that the elevators buy is all shipped out of Milwaukee and then disposed of locally. Mr. Maeble. Shipped where — abroad? Mr. Schboedee. Not necessarily. All markets in the United States. Mr. Maeble. And this elevator wheat at Chicago and Minne- apolis — what becomes of the bulk of that, if the millers discriminate against it ? Mr. Schboedee. Well, it is distributed there; we are caught once in a while on Minneapolis wheat and so is every other miller in the country. 784 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. When you get it you consider yourself "caught?" Mr. ScHEOEDER. We have to have it at times when suppHes are short and we take our medicine. Mr. Marble. Are you famihar with the growth of the Mimieapolis market and the milling industry up there, and the causes of it ? Mr. Schroeder. No; I do not think I could explain that. Mr. Marble. You could not explain why Minneapolis has grown so, rather than Milwaukee ? Mr. Schroeder. No; my experience in the milling business has only been in a few years. Formerly being in the railroad business my experience is naturally limited. Mr. Marble. I thiak that is all. Commissioner Prouty. That is all, Mr. Schroeder. Witness excused. Commissioner Prouty. We will take a recess now until half past 1. (At 12.25 the Commission took a recess until 1.30 p. m.) after recess. 1.30 o'clock p. m. W. L. HousER, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Houser, you are now secretary of state of the State of Wisconsin, are you? Mr. HousER. Yes, sir. Mr. Marble. With headquarters at Madison ? Mr. HousEE. Yes, sir. Mr. Marble. Can you tell us about an association known as the Mondovi Advancement Association, why it was organized, and what it did ? Just make a statement in your own way. Mr. Houser. Yes, sir. The little city of Mondovi is located at the terminus of a branch of the Omaha Railroad. When the railroad was built there, as a consequence the grain trade sprung up and elevators were built and ran along for some time. There were three elevators in operation at the time. The business men felt that the market was being depressed and held at a low price, and they learned that there was a combination between the buyers by which prices were fixed and there was no competition. Each paid the same price and practically divided the grain. The business men got together one evening and agreed upon the organization of an association composed of nearly all the business men of the place for the purpose of buying grain and Saving the highest possible market price for it. That was done to elp the town — to help the business interests of the town — and to pro- vide a good market for the farmers surrounding it. It is a farming town exclusively. The three grain warehouses then in operation were owned respectively by the Northern Grain Company, Cargill & Com- Sany, and a local firm. We proposed to the local mm that we would uy their warehouse, or, if they would not sell to us, that we would build ; and rather than, as they said themselves, take the competition that would follow our purpose they sold to us and we began the buy- ing of grain, paying for it, under the plan by which we were organized, the highest possible market price, less only the expense of operation. We agreed to run that warehouse for the purpose of buying gram without profit to the owners, and, of course, we met a great competi- GRAIN ELEVA.TOK INVESTIGATION. 785 tion, and we met all sorts of propositions for a combination, such as was had before, and threats were made and offers wisre made. The business men who composed' the organization were threatened and at one time after a visit of one of the general managers of one of the other elevators to the town, in which he visited many of the business men and told them that if that warehouse was not either sold or operated upon a different basis and an agreement with them as to the manner of handling the grain, that they would put in a large department store and run in competition with the various business interests there. I was absent at the time. I was president of the association and had been for a number of years. I was telephoned — by the way, I am anticipating my story a little. The members of this association, many of them, were impressed with these threats and had a meeting of the association and voted to sell the warehouse upon an offer which was made at this time, which was quite a little in advance of the cost of the warehouse originally. I was telephoned by some of the busi- ness men that thought we were making a mistake and hurried home and reassembled the men, and we voted to rescind it. That has been the history of our association there ever since. Another time, as an illustration of the obstacles put in our way because we were running an independent institution and would not combine and agree with the others as to the price of grain, they withdrew from the market when the market was very flush with grain and when it was impossible, as they supposed, for our little warehouse to handle it. They threatened and said we could not handle it and they would show the farmers, and they shut down the warehouses, but tne railroad company came to our relief and offered us cars, so we loaded directly into the cars, but we could not load into our warehouse, and we were able to meet that emergency, which did not last very long. We discovered in the oper- ation of that business some peculiar things. As I stated, we agreed to operate that warehouse on the basis of just paying expenses; that is, paying the interest on the money we borrowed from the bank to handle the grain and the wages of the operators, and we ran it that way a very great many years. We discovered, however, that the Northern Grain Company and the Cargill Company — either of them — could pay us more for our grain on track and did pay us more for our train on track than we could get for it in the general market, and we id not imderstand it and could not understand it until within a, recent period of time. Then we thought we had found the solution of the problem. An investigation was made through the railroad commis- sioners' office of this State of the rebate question. We found, for instance, that the Northern Grain Company that had been doing bus- iness in competition with us during those years had received a very large sum of money from the railroad company in rebates, a sum of money in the aggregate, as will appear, or does appear, that repre- sented a very good fortune for any concern to make in the time which it covered, and it appeared to us to explain in a very large measure how this company could pay more than we could get in the market for our grain. They used that as an influence with the farmers, tell- ing them that this Mondovi Advancement Association, which pro- fessed to be running their business there on the plan of meeting expenses and paying all they could possibly pay for the grain, was not doing so, and they would cite the fact that they were paying us more for our grain on track than we gave for it, therefore, trying to impress S. Doc. 278, 59-2 50 786 GEAIN ELEVATOE INVESTIGATION. them and arguing with them that if they had the market they could pay the farmers that much more. That is, in brief, perhaps, the most important feature of it. Commissioner Peouty. About when was that association formed ? Mr. HousEE. I think about 1893—1 should think about that time. Commissioner Peouty. Do you think as the result of it that the farmer did obtain a better price for his grain; that is, as the result of the association? Mr. HotrsEE. Decidedly. Commissioner Peouty. How much better ? Mr. HousEE. I should say, on oats, as an average, 2 cents a bushel. Commissioner Peouty. How much on wheat ? Mr. HousEE. Our wheat market there was not of much importance. Barley and oats was the bulk of the trade, but perhaps on wheat the same amount; but we watched oats more particularly, because it was the bulk of our market. Mr. Maeble. You spoke of threats to the merchants. What were they? Mr. HousEE. Such as I instanced ; and they carried threats into actual operation. Three members of the association were merchants that handled salt. These concerns would ship in salt and sell it below the market price — below what these men could sell at — and told them so. These men represented in our meetings plainly what it was done for — as a retaliation for the presumption or running a busi- ness there in competition with theirs. Mr. Maeble. That association is still in business? Mr. HousEE. It is. Mr. Maeble. It has not gone out of business any time? Mr. HousEE. No, sir. Mr. Maeble. It is still pursuing the same policy? Mr. HousEE. Yes, sir. Mr. Maeble. This amount you discovered that was paid in rebates was $300,000 in six years, was it not ? Mr. Houses. I would not attempt to state the amount It has escaped my memory. I would say about $250,000,but I am not cer- tain of that. It was a very large amount of money. Mr. Maeble. Do you know who the original incorporators of the Northern Grain Company were ? Mr. HousEE. I do not. Mr. Maeble. Have you any further statement you desire to make? Mr. Housee. Nothing further. Mr. Maeble. That is all. The witness was excused. T. H. Bevan, called as a witness, being duly sworn, testified as follows : Mr. Maeble. What is your business? Mr. Bevan. Superintendent of the Oxford elevator. Mr. Maeble. Where is that located? Mr. Bevan. At South Chicago. Mr. Maeble. How long have you been in the elevator business? Mr. Bevan. About eight years. Mr. Maeble. In what capacity? . GBAIN ELBVATOB INVESTIGATION. 787 Mr. Bevan. Well, what do you mean by that? Mr. Marble. In what way have you been connected with the ele- vator ? Mr. Bevan. In weighing — weighing most of the time. Mr. Marble. Can you testify as to the way in which grain is treated and the grades raised, and that sort of thing, as a general prac- tice in elevators 1 Mr. Bevan. Yes, sir. Mr. Marble. What is the purpose of that treatment and how is it done? Mr. Bevan. Well, it is done to better the grain. Mr. Marble. That is, to make it pass a higher inspection? Mr. Bevan. To make it pass higher inspection; yes, sir. Mr Marble. Is your end in view to make it better milling grain? Mr. Bevan. That part of it does not concern me. That is their idea ? Mr. Marble. Whose idea? Mr. Bevan. The company's idea. Mr. Marble. To make better milling grain, or better inspection? Mr. Bevan. To make it better inspection. Commissioner Prouty. How do you manage to raise the grade of grain ? Mr. Bevan. How is that ? Commissioner Prouty. I say, how do you manage to raise the grade of grain ? Take wheat, for instance ? Mr. Bevan. They mix better grades with it. Commissioner Prouty. Take a poor lot of wheat. What is the trouble with that wheat ? Why does it not grade No. 1 to begin with ? Mr. Bevan. Because it is too poor to be No. 1. Commissioner Prouty. In what respect ? Mr. Bevan. Lots of respects. Commissioner Prouty. What respects ? Mr. Bevan. It may be warm, or musty, or dirty. Commissioner Prouty. Well, then, you clean it or cool it off, but that is not mixing it. That is taking the dirt out of it or cooling it off. I am talking about mixing. In what way do you mix: it to raise the grade? Mr. Bevan. Mix a better grade with it. Commissioner Prouty. Is the wheat too light ? Mr. Bevan. If they wanted a certain wei^t they would have to mix a heavier lot with it to make it heavy. It depends on how heavy they want it. If they want a better quality they have to mix better stuff with it. Commissioner Prouty. What determines the grade of wheat ? Mr. Bevan. The quality of it. Commissioner Prouty. What determines the quality? Is it the looks of the wheat, the weight of the wheat, or what? Mr. Bevan. The looks and the weight. Commissioner Prouty. What is the difference in looks between No. 1 and No. 2, if those are the grades? Mr. Bevan. Well, I could not tell you. Commissioner Prouty. What is the difference in weight between No. 1 and No. 2? Mr. Bevan. I could not tell you that. 788 GBAIN ELEVATOR INVESTIGATION. , Commissioner Peouty. How do you know what mixture to make ? How do you know what to put into a poor wheat ? Mr. Bbvan. I do not mix wheat. Commissioner Proxjtt. You do not mix wheat ? Mr. Bevan. No, sir. Commissioner Pkouty. What do you mix — corn ? Mr. Bevan. Oats only. Commissioner Proutt. When you mix oats what is your purpose in mixing the oats? You want to take a poor grade and make it better. What is the trouble with the poor grade ? Is it too light ? Mr. Bevan. Too light and bad color. Commissioner Prouty. What do you do — take good oats and mix with the poor? Mr. Bevan. Exactly. Commissioner Prouty. And you try to get enough good in to bring up the quality ? , Mr. Bevan. Exactly. Commissioner Prouty. To what extent is it possible to do that ? Take a thousand bushels of what you call poor oats. You want to bring those up to what grade ? Mr. Bevan. You can mix in about 25 per cent of poor oats with 75 per cent good oats. Commissioner Prouty. And produce the same grade that the good oats were at the start ? Mr. Bevan. Yes, sir. Mr. Marble. That really lowers the market value of the oats, but keeps them within the limits of the grade ? Mr. Bevan. Within the limits. Mr. Marble. And skins the grade? Mr. Bevan. I do not know aoout "skinning." Commissioner Prouty. Don't oats sell by grade ? Mr. Bevan. Some do, and some by sample. We sell all of ours by sample. Commissioner Prouty. After you have mixed_ those oats, if you take a sample, will that sample sell for as much as a sample of the good oats before they were mixed? Mr. Bevan. That is up to the buyer. Commissioner Prouty. Well, as a general proposition? Mr. Bevan. Yes, sir. Commissioner Prouty. They do sell for as much? Mr. Bevan. Yes, sir. Commissioner Prouty. Bo you gain the difference between the dif- ference in the market price ? Mr. Bevan. You must make something or there is no use being in the elevator business. Commissioner Prouty. Is that the main thing in the elevator busi- ness, bringing up grades ? Mr. Bevan. I think so. Mr. Marble. What is the practice of plugging cars ? Mr. Bevan. That is putting a poor grade on the bottom and cover- ing it with good stuff, so the inspector can not get it. They have what is called a ' 'trier" to push into the car. If it does not go deep enough he does not know the poor stuff is there. Mr. Marble. Is that done much? GBAIN ELEVATOB INVESTIGATION. 789 Mr. Bevan. By some houses it is generally done. Mr. Marble. Have you known or its being done by the Irondale house ? Mr. Bevan. Yes, sir. Mr. Marble. Did you know of a transaction there, I think last year, by which a lot of chicken feed and screenings were plugged into cars sent to the Rock Island house ? Mr. Bevan. Yes, sir. Mr. Marble. You were there when that was done? Mr. Bevan. Yes, sir. Mr. Marble. How much poor stuff was put in? Mr. Bevan. One hundred to two hundred bushels to each car. Mr. Marble. How many cars were so plugged ? Mr. Bevan. One hundred and fifty to 200 cars. Mr. Marble. How long ago was that ? Mr. Bevan. Last August. Mr. Marble. Now, the same firm own the private house from which that grain went and the public house to which it was sent ? Mr. Bevan. Yes, sir. Mr. Marble. Both houses were owned by J. Rosenbaum ? Mr. Bevan. Yes, sir; they are operated by J. Rosenbaum. Mr. Marble. One is leased? Mr. Bevan. Yes, sir. Mr. Marble. The idea is that if the plugged stuff got into the public elevator it would be all mixed together and delivered out as contract grade? Mr. Bevan. I could not say. I suppose that is the idea. Mr. Marble. That was taken up by the inspectors and sent back to the Irondale people, was it not ? Mr. Bevan. About 100 cars came back. Mr. Marble. How many such affairs have you known of in the eight years you have been in the business ? Mr. Bevan. I did it all the time I was at the Irondale. I was there about two years. Mr. Marble. They did a lot of that ? Mr. Bevan. They did it all the time I was there. Mr. Marble. What is the practical way of doing that, and the way it can be done without an inspector standing at the car seeing it ? Mr. Bevan. The inspectors do not watch the loading. How it is done, they have two scales. Each scale leads to one loading spout. They fill up one scale. The scales hold about 84,000 pounds — hold about 190,000 pounds weight. They will fill one scale with poor stuff — screenings, for instance — and fill the other scale with good No. 2 red wheat. When you go to load the car you drop 200 bushels of screenings on one scale and go to the other scale and drop the balance, covering the screenings and leaving the good stuff on top and the screenings on the bottom. Mr. MARBLE. During the time that you were at the Irondale ele- vator that was a constant practice ? Mr. Bevan. Yes, sir; as to boats and cars. Mr. Marble. The inspectors watch the loading of boats, do they not? Mr. Bevan. They do. Mr. Marble. Do they have enough inspectors to watch all spouts? 790 GBAIN ELEVATOB INVESTIGATION. Mr. Bevan. That is the trouble. They have four spouts and eight scales. You fill four scales with bum stuff, screenings or an inferior grade, and four with good stuff. An inspector walks from one place to the other. They have a man looking out the window. When he sees the inspector walking to the spout where the poor stuff is coming he gives the weigh man a signal. He shuts off the poor stuff and is getting the good stuff when the inspector gets there. Mr. Marble. You are describing the operations of the Irondale Company at Chicago ? Mr. Bevan. Yes, sir. Mr. Marble. Have you seen such operations at other elevators? Mr. Bevan. I never saw it before. Mr. Marble. I think that is all. The witness was excused. L. J. FoRSAFTH, called as a witness, being duly sworn, testified as follows: Mr. Marble. What is your business ? Mr.FoBSAiTH. I am a switchman at present. Mr. Marble. Previous to being a switchman, where were you employed? Mr. FoRSAiTH. By the J. Rosenbaum Grain Company. Mr. Marble. At the Irondale Grain Elevator ? Mr. FoRSAiTH. Yes, sir. Mr. Marble. Do you know about the transaction of plugging wheat going to the public elevators ? Mr. FoRSAiTH. Yes, sir; I did it. Mr. Marble. Tell us what you did? Mr. Forsaith. They would run up tailings, bin-burned wheat, stumpy wheat — all inferior grades of wheat they had in the house in one spout and run contract wheat in the others. They would get a string of cars in and give me the capacities and tell me how much to drop, as they call it, of the "dope." I would drop it, and, when I got that dropped, I would drop contract on top of it. Commissioner Lane. Who would you get the instructions from? Mr. Forsaith. The siiperintendent. Commissioner Lane. What was his name? Mr. Forsaith. J. D. Sayre. He is out of business now. He is worse off than I am. He is not working at all. Commissioner Prouty. Do you think he would be willing to testify now? Mr. Forsaith. I do not think he got money enough but what you could get him now. . You coidd not get him last August. Mr. Marble.. Where is he now? Mr. Forsaith. In Chicago. I understand he is going into the coal business. Mr. Marble. Do you know where he got his orders ? Mr. Forsaith. I do, but could not swear to it. Mr. Marble. You mean you surmise it? Mr. Forsaith. I really know, so far as that goes. I was told where he got his orders by the man that knew. Mr. Marble. He got orders? Mr, Forsaith. Yes, sir. QBAIN ELEVATOR INVESTIGATION. 791 Mr. Maeble. Did not do it of his own motion? Mr. FpBSAiTH. No. No man would take a chance hke that. Mr. Marble. Have you ever loaded any boats that way? Mr. FoESAiTH. I never loaded any wheat but once that we plugged. The reason we did not plug the other boat was because it was shipped by sample and was loaded at one spout and the man that bought it had a man at the spout and did not have to leave it. Mr. Marble. He would not allow them to put four spouts down? Mr. FoRSAiTH. No; they never told me to it let go. Mr. Marble. Did you ever plug any cars but these ? Mr. FoRSAiTH. I never loaded a car that I did not plug of contract grade. Mr. Marble. How long were you there ? Mr. FoESAiTH. From the 27th of July until the 11th of August. I was grain inspector five years previous to that. Mr. Marble. For the board of trade? Mr. FoRSAiTH. For. the State. Mr. Marble. The State of IlUnois? Mr. FoRSAiTH. Yes, sir. Mr. Marble. As grain inspector, did you find that going on? Mr. FoRSAiTH. The "trier" was never long enough. Mr. Marble. Why did you not apply for a longer "trier?" Mr. FoRSAiTH. I could not use it on account of the ceiling of the car. It would be impossible for a man to use a trier, loaded to capacity, that would reach the bottom of the car. If you reached to the bottom of the car, you could not withdraw the plunger. Mr. Marble. As a matter of fact, this plugging is comparatively safe, the cars being bmlt as they are? Mr. Forsaith. It is to an extent, but they got too raw — ^got put- ting 300 bushels in. I never weighed it, but I judge it would weigh — well, it would not weigh more than 43 to 45 pounds to the bushel, and, of course, it took up a great deal of space. That is how they got them. Mr. Marble. They got too high in the car, and it got within the reach of the inspector's trier? Mr. Forsaith. The foreman made the remark that he was making so much money for the Rosenbaums, and a fellow— I forget his name — ^heard it and naturally took a little more pains and got one car. He could not get the rest of them. Some one held them all. That is, all that were loaded that day. He finally got all that were loaded that day and stopped, I think, a number. I can not swear to that. I did not pay attention to it. Mr. Marble. You heard the testimony regarding this spouting into boats. Are you familiar to that ? Mr. Forsaith. Yes, sir. It. Marble. You have seen that as an inspector? Mr. Forsaith. Yes, sir. Mr. Marble. Have you inspected grain into boats? Mr. Forsaith. Yes, sir; and got it many times, and made them unload boats. I made them unload two boats at the Merritt elevator. They did the same thing. How I detected that was from the smell I got, from the wind blowing. I went back; before I went back I had them shut off the spout. Before they shut off I went into the hold and took a trier and found it. I never got them at the Irondale when I was 792 GEAIlir ELEVATOE INVESTIGATION. an inspector. I got them, but never as barefaced as I knew they were doing it. It is hard to tell with a trier whether it is a plug or where a bin goes off. A bin of wheat maybe contract wheat; nothing the matter with it when it goes in. A weevil might start in it and lots of times a lump might come out where the weevil worked, and naturally moisture will get the wheat to act just like moss. It will get altogether, and running it through the elevatorwill break it up. I never thought they did it until I was put in charge of the upstairs. Mr. Marble. You know more about the elevator business when working for the elevator than you did as an inspector ? Mr. Forsaith. Yes, sir; I found out more about how to be crooked. I never knew that before. Gommissioner Peoutt. How did it happen that the Rosenbaums did not retain a man of your capacity? Mr. Forsaith. The reason they discharged me was to make a showing. I had been a State grain inspector. They wanted it to look as though I was trying to give the inspection department, the worst of it on account of their discharging me. I was discharged from the inspection department. They told me when they discharged me they would give me a house in Kansas City as a superintendent. I did not intend to work for them any longer. I told them I would not go out of Chicago. I said, if I go out of Chicago they will natur- ally put it on me. Mr. Rosenbaum, the president of the firm, said, "What if they do; I will give you a better job than you can get in Chicago." I said 1 would not think of it. I was discharged and they gave me my month's pay. I was discharged the 11th of August and they gave me my month's pay. . Commissioner Prouty. On what ground did they discharge you? Mr. Forsaith. They said because the grain was plugged they had . to discharge some one. Commissioner Prouty. How did you happen to leave the inspec- tion service? Mr. Forsaith. On account of politics. I was not "right" in pohtics. That was all. There was nothing against me. Commissioner Lane. In this conversation, did you have it with Mannie Rosenbaum? Mr. Forsaith. Mannie — I think it is E. F. Rosenbaum. That is the man that runs it. Commissioner Lane. What did he say? Mr. Forsaith. He said he would give me an elevator at Kansas City and make it an object for me to go there. I told him I would not leave Chicago. We got into a heated argument. Commissioner Lane. What did he say indicating his knowledge that the grain was plugged and that that was the custom of the elevator? Mr. Forsaith. He was simply smoothing it over. His idea was if he discharged me, they would naturally think I was trying to give the inspection department the worst of it. It would be impossible for me to do that, as the weigh man — I had nothing to do with sending the grain up there. You know the grain is drawn from what we caU the ground floor. It is drawn from down there and sent up through legs. Mr. Marble. As a matter of fact, the Board of Trade of Chicago investigated this matter, did it not ? Mr. Forsaith. I was exonerated; yes, sir. GRAIN ELEVATOR INVESTIGATION. 793 Mr. Marble. The Board of Trade had an investigation? Mr. FoRSAiTH. Yes, sir. Mr. Marble. And if I understand the matter rightly, did not suc- ceed in getting any 'further than the superintendent of the elevator for the responsibility of this. Is that true? Mr. FoRSAiTH. I understand — at least he told me he did it on his own accord. Mr. Marble. The superintendent ? Mr. FoRSAiTH. Yes, sir. He did not say — on his first statement he said he had not given me orders, but afterwards contradicted him- self the second or third time they had him there and said he did tell me. Mr. Marble. Your understanding is you were discharged to satisfy the board of trade that the guilty man be punished ? Mr. FoKSAiTH. Yes, sir; they wanted to save the foreman. They had the best mixer there was— the foreman. Mr. Marble. There was a trial before the committee of the board of trade, was there? Mr. FoRSAiTH. Yes, sir. Mr. Marble. And witnesses heard? Mr. FoRSAiTH. Yes, sir; and after the second time I was there, there was a man came and offered me fifteen hundred dollars if I would not appear again. Mr. Marble. You say this board of trade committee exonerated you? Mr. Foesaith. Yes, sir. Mr. Marble. Well, Mr. Kosenbaum discharged you? Mr. Forsaith. They had discharged me. Mr. Marble. Before that? Mr. Forsaith. Yes, sir. Mr. Marble. You were exonerated after you were discharged? Mr. Forsaith. Yes, sir. They are still keeping me out of the grain business. Mr. Marble. I .think that is all. The witness was excused. O. W. MosHER, called as a witness, being duly sworn, testified as follows: Mr. Marble. You reside at New Kichmond, Wis. ? Mr. Moshek. Yes, sir. Mr. Marble. And are interested in the grain business ? Mr. MosHER. Yes, sir. Mr. Marble. In the Northern Grain Company ? Mr. MosHER. Yes, sir. Mr. Marble. You are an official of that company, are you ? Mr. Mosher. Yes, sir. Mr. Marble. What oflfice? Mr. Mosher. JPresident of the company. Mr. Marble. Do you know who the stockholders of the company are ? Mr. Mosher. Yes, sir. • Mr. Marble. Will you tell us? Mr. Mosher. Mr. Weyerhauser has possibly 20 per cent of the stock; in that neighborhood. 794 GRAIN ELEVATOR INVESTIGATIOK. Mr. Marble. What is Mr. Weyerhauser's first name ? Mr. MoSHER. F. Weyerhauser. Mr. Marble. Yes, sir. Mr. Mosher. Mr. McCormick between 25 and 30 per cent. Mr. Marble. R. L. McCormick? Mr. Mosher. Yes, sir. Mr. Martin has something less than 20 per cent. I do not know that you care to know the exact amount. Mr. Marble. Well, approximately. Mr. Mosher. Mr. Bardon about 4. Mr. Marble. Which Mr. Bardon is that — James Bardon? Mr. Mosher. Thomas Bardon, of Ashland. There are four or five small stockholders with 1 or 2 per cent. I have somewhere between 25 and 30 per cent. I am not accurate absolutely with regard to that. Those are rough. Mr. Marble. That accounts for -94 per cent, counting that you have 30. Do you own any railroad stock? Mr. Mosher. No, sir. Mr. Marble. None at all? Mr. Mosher. No, sir. Mr. Marble. Mr. Weyerhauser is interested in railroads, is he not? Mr. Mosher. I think he is a director in the Great Northern Road and, I think, also the Great Western. Mr. Marble. The Chicago Great Western? Mr. Mosher. Yes, sir; I have so understood. Mr. Marble. How about the Northwestern? Is he interested in that, do you know ? Mr. Mosher. I do not think so. I never knew of it. Mr. Marble. Is Mr. McCormick' an employee of Mr. Weyerhauser ? Mr. Mosher. Mr. McCormick is a stockholder and officer in the Weyerhauser Timber Company in Tacoma. He is not an employee of Mr. Weyerhauser. He is a copartner and officer in the company. Mr. Marble. Do you know whether or not the holding of Mr. Mc- Cormick is his own property or held by him for Mr. Weyerhauser? Mr. Mosher. I did not testify that he held railroad stock. Mr. Marble. I mean the gram company stock. ' Mr. Mosher. It is his own. Mr. Marble. Are any of these people besides Mr. Weyerhauser, so far as you know, stockholders in tne railroads ? Mr. Mosher. Possibly Mr. McCormick, in the Weyerhauser Timber Company, may own some railroads in the West. I think they do. They are interested in those logging roads. It^. Marble. But wholly disconnected with the grain? Mr. Mosher. Yes, sir. Mr. Marble. And as to Mr. Bardon and these smaller stockholders? Mr. Mosher. I do not think any of them have any interest in rail- roads. I do not know. Mr. Marble. You are famihar with the operations of this grain company? Mr. Mosher. I have not been active in the management of that grain company the last eight years. Mr. Marble. Can you say whether or not any of the profits are treated as belonging to any railroad official, stockholder, or em- ployee ? Mr. Mosher. Yes, I can say that. GRAIN ELEVATOR INVESTIGATION. 795 Mr. Marble. What would you say? Mr. MosHER. They are not. Mr. Marble. And no raiboad official or employee or stockholder owns any portion of this? Mr. MosHER. No, sir. Mr. Marble. What dividend does the Northern Grain Company pay? Mr. MosHER. They have paid, I think, during their life three divi- dends of 10 per cent. Mr. Marble. In how long a time ? Mr. MosHER. I think they were organized in 1891. Mr. Marble. Fifteen years ago ? Mr. MosHER. I think so. Mr. Marble. In fifteen years they made 30 per cent? Mr. MosHER. That is right — well, that is not exactly correct. There was a time we increased our capital stock and part, of the increase was a dividend, but as far as any cash dividend is con- cerned — and at that time the amount of the dividend was 20 per cent. Mr. Marble. When the dividend was 20 per cent you increased the capital stock? Mr. MosHER. Yes, sir. Mr. Marble. What did you do, double it ? Mr. MosHER. I think we multiplied it by two and a half. Mr. Marble. But you have not paid dividends every year? Mr. MosHER. No, sir. Mr. Marble. Is the business unprofitable ? Mr. MosHER. Some years. Mr. Marble. It has only been profitable three years? Mr. Mosher. Oh, no. Mr. Marble. What has been the case the other years ? Mr. Mosher. We increased our plant and our working capital and investment. Mr. Marble. How much has your plant and working capital and investment been increased out of profits these fifteen years? Mr. Mosher. As I remember, something like $400,000. Mr. Marble. What was your original capital? Mr. Mosher. We were first organized, as I remember, for $110,000. Commissioner Prouty. The question is not what you were organ- ized for, but how much money you paid in. Mr. Mosher. My recollection is a little slow. I think of our first capital $110,000, and they increased to $275,000, and of the increase all except $20,000 was paid in in cash. Mr. Marble. Was the $110,000 paid in cash? Mr. Mosher. Yes, sir — well, nearly all. Mr. Marble. HoV near? Mr. Mosher. One hundred thousand dollars, I think, and at the reorganization and the increased capitalization, as -I remember it now — it is something I had not thought of for a good while — my recollection is that about $145,000 was paid in cash. Mr. Marbi-b. So really there has been about $245,000 cash paid in? Mr. Mosher. Yes; I think so. Mr. Marble. And the company has actually got working capital and property now worth $400,000 ? Mr. Mosher. Yes, sir; I think more than that; something like $500,000, 796 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. And you paid how much dividends? Mr. MosHER. $75,000. Mr. Marble. Paid .f 75,000? Mr. MosHER. Yes, sir. Mr. Marble. Your company owns line elevators, does it not; ele- vators in the country? Mr. Mosher. Yes, sir; we own a number of elevators, mostly situated on the Northwestern — entirely situated on the Northwestern and the Wisconsin Central roads. Mr. Marble. How many, do you know? Mr. Mosher. I think about eighty. Mr. Marble. Do you know who makes the prices paid by those elevators to the farmers ? Mr. Mosher. No, sir; I can not say. Mr. Marble. You do not know whether or not, at stations where you have competitors, you have combined with your competitors or agreed with them as to prices to be paid? Mr. Mosher. I do not think — I am quite positive there have not been any combinations. I suppose, so far as I have known, we have sent prices to our agents to pay, instructing them what prices to pay, and they have been instructed, if there was somebody bidding more than they, to increase their prices so as to get a fair share of the grain, unless the price was put to a point where there was absolute loss in it, and in that case we instructed our men to drop out of the market. Mr. Marble. If there were two elevators at a town and you had got approximately 50 per cent of the grain to be marketed there for the week or month, and the other man would increase his price a little to. get his 50 per cent, or fair share, would* you follow that or allow him to get that, recognizing his right to a portion of the market ? Mr. Mosher. I do not tnow now we would know he had got 50 per cent. Mr. Marble. You would know whether you got more than he. Suppose you bought ten thousand or twenty thousand bushels more than he and he was paying more than you, do you compete with him or recognize his right to a share of the grain by allowing him to buy it ? Mr. Mosher. It all depends on the disposition of the two men. If our man is a man who is popular and gets more than half the grain and the other man does not object, he keeps on taking it. Mr. Marble. And if the other man does object? Mr. Mosher. If the other man does object, rather than have the business made unprofitable, we sit back and let him overbid us. Mr. Marble. It all depends on the disposition of the competitor? Mr. Mosher. A great deal depends on that. Mr. Marble. But a competitor who asserts his right to a portion of the grain is allowed to get it ?, Mr. Mosher. I do not know of any particular instances, but I sup- {)ose our men "are, as a rule, willing to take all their competitors will et them. Mr. Marble. But if the competitor shows a disposition to fight, they would stop ? Mr. Mosher. They would stop short of losing money. Mr. Marble. Or of cutting into profits too severely? Mr. Mosher. Yes, sir. Mr. Marble. You have a terminal elevator at Manitowoc? GRAIN ELEVATOR INVESTIGATION. 797 Mr. Mqsher. Yes, sir. Before you leave that matter — you ques- tioned me with reference to Mr. Weyerhauser's interests. I would like to say in regard to Mr. Weyerhauser that he is absolutely ignorant of the grain business, has never taken any part in it whatever, and we never have done any shipping business over the roads in which Mr. Weyerhauser is interested. - Mr. Marble. His railroad holdings are not a source of profit to yoTir company? Mr. MosHER. They do not enter into our business relations. The only transaction I know of that we haye ever had with any of Mr. Weyerhauser's railroads was to lease an elevator in Minneapolis belong- ing to the Great Northern Road, which was something Mr. Weyer- hauser had nothing whatever to do with. Mr. Marble. You do lease an elevator at Minneapolis belonging to the Great Northern Road ? Mr. MosHER. Yes, sir. Mr. Marble. Is that lease now in existence ? Mr. MosHER. Yes, sir. Mr. Marble. What are the terms of the lease ? Do you know ? Mr. MosHER. As I remember it, we pay approximately $10,000 a year and taxes and insurance, and make some improvements in the house as well. Mr. Marble. Do you know whether you pay the full switching charge up there at that house; that is, the published charge, the same as paid by your competitors for like service ? Mr. Mosher. I think we do. Mr. Marble. You are not immediately in charge? Mr. Mosher. No, sir; I can not testify positively as to that. I never heard that we did not pay the same as everybody else. Mr. Marble. What other elevators do you lease from railroads ? Mr. Mosher. I do not know of any others. Mr. Marble. You lease one at Manitowoc, do you not? Mr. Mosher. No, sir. Mr. Marble. You did lease one at Manitowoc, did you not? Mr. Mosher. Not that I know of. We own elevators at Manitowoc. Mr. Marble. And lease the ground on which the elevators are located? Mr. Mosher. We lease the ground on which one elevator is located. Mr. Marble. I have here what purports to be a copy of a lease which was furnished by the railroad company of ground there which seems to have been signed by you for the Great Northern Grain Company [producing copy of lease]. It seems to be the Wisconsin Central Railroad. Mr. Mosher. Yes, sir. Mr. Marble. One made with the receivers ? Mr. Mosher. Yes, sir. I said we leased grourd on which one elevator was situated, I think. Mr. Marble. Under what arrangement was that elevator built — the one on this. ground? Mr. Mosher. The lease itself, of course, shows Mr. Marble. The lease has b6en carried out according to its terms? - Mr. Mosher. As I understand it ? 798 GBAIN ELEVATOR INVESTIGATION, Mr. Marble. I will direct your attention to paragraph 12 of this lease : In consideration of the premises, said lessors agree, without cost to said lessee, to seasonably construct and thereafter maintain a suitable and convenient track or tracks to and from, and primarily for service to and from, said elevator, and sufficient at all times to meet requirements of the business in and out of said elevator, and thereafter to switch free of charge to and from, said elevator all cars loaded with traffic transported from or destined to points other than Manitowoc and consigned to or from Manitowoc, on or over any line of railway owned by the Milwaukee and Lake Winnebago Railroad Company, its successors or assigns, or by any other corporation operated in connection therewith as part of the Wisconsin Central system of railway. It is further agreed that cars consigned from the Chicago and Northwestern Railroad and delivered to the lessors at Manitowoc shall be switched to said elevator and the car when emptied returned for $1 per car, and that loaded cars from said elevator, destined to points reached by said Chicago and Northwestern Road, or by its con- necting lines, but not reached- by the Wisconsin Central Lines and its connections, shall be switched to the Chicago and Northwestern Railway for such price as shall be fixed imder a reciprocal switching arrangement between railways doing business at Manitowoc. Do you understand that the charges for switching provided in that paragraph 12 are regular published rates, such as are charged your competitors? Mr. MosHER. That lease was made some ten years ago, I think. Mr. Marble (referring to copy of lease). 1896 — ten years ago. Mr. MosHER. As far as I know, we have always paid the same rate of switching charge as anybody else at Manitowoc. Mr. Marble. Have you always paid the rate specified in this contract ? Mr. MosHER. I can not say about that. I have not looked into that matter. I never looked at the matter of the Manitowoc switch- ing. As I say, I have not been active in the details of the business the last eight years. Mr. Marble. Why was that put into a contract ? Was it with the idea that if the rate changed, this rate should be guaranteed to you ? Mr. Mosher. I do not remember the circumstances embodying it at the present time. I suppose it was to make sure that the charge for switching would be reasonable. Mr. Marble. Paragraph 13 (referring to copy of lease) provides that the railroad company shall, at its own expense, provide a channel 30 feet in width in the bed of the river lying immediately west of the demised premises, of depth sufficient to float any vessels which use the harbor or the city of Manitowoc, etc. Do you know how much it cost the railroad company to provide that channel ? Mr. Mosher. I do not. Mr. Marble. That increased very much the value of this holding of land, did it not ? Mr. Mosher. My recollection is that the Government dredged that channel. Mr. Marble. And that the railroad company was not to that expense ? Mr. Mosher. No, sir; there was an improvement to Manitowoc. Mr. Marble. You are still working under this contract? Mr. Mosher. Yes, sir; so far as I know, unless it has been abrogated in some way. I have not heard of it. Mr. Marble. Do you know anything about any rebates being received by your company? Mr. Mosher. Well, we have had money refunded to us. GBAIN ELEVATOR INVESTIGATION, 799 Mr. Maeble. How recently? Mr. MosHER. I do not know myself of any money refunded to us. I have not received any nor seen any paid. Mr. Marble. It is your impression that some has been? Mr. MosHEE. I heard Mr. Houser's testimony here. It is a hearsay matter; and I heard similar statements made in political campaigns, but I suppose that money was legitimately due us and that it was not any preference in rates. Mr. Marble. Have you looked the matter up as president, after hearing these reports, to find out? Mr. MosHER. No, sir; it was an old matter alleged to be more than four years old, as I remember it. I also heard Mr. Houser's surmise •that we were able to buy grain from his Advancement Association because of rebates, but ^. Houser probably did not tell you we were selling grain in the East and we were in a position to buy the grain at all that he could get, or a little more, and still make a profit ourselves in a perfectly legitimate way and pay the regular tariff of freights. Mr. Marble. Having a better market than he could get? Mr. MosHEE. We own these terminal elevators at Manitowoc and had an office in the East, and we would as soon buy from his concern as from other people. Mr. Marble. Can you explain to us what the geographical necessity is, or the geographical occasion, for a grain-shipping point at Manitowoc ? Mr. MosHEE. They have a good harbor and can ship by boat, and we have quite a large territory that is nearer to Manitowoc than it is to Milwaukee or Chicago or other shipping points. We are nearer to Lake Michigan from Minneapolis and the Northwest than either Mil- waukee or Chicago. That is a shorter railway haul to Manitowoc. Mr. Marble. Do you get a smaller rate from Minneapolis than the rate to Milwaukee? Mr. Mosher. I do not think so. Mr. Maeble. The railroads have given the Manitowoc market this privilege, have they not: That grain sent to Manitowoc from the Northwestern territory may be forwarded from there under this con- signment or reconsignment privilege to Milwaukee and try the market here and then go on to Chicago without paying extra freight. Is that true? Mr. MosHEE. That is true of only'such grain as is naturally routed via Manitowoc. Mr. Marble. From reconsignment territory? Mr. MosHEE. There is certam territory beyond Manitowoc in which Manitowoc is in the direct line of the movement to Chicago, and if we pay the through rate to Chicago we can send the grain through to Chicago the same as Milwaukee. Mr. Maeble. You can also send it to Milwaukee? Mr. MosHEE. Yes, sir; Milwaukee is intermediate between Mani- • towoc and Chicago. I do not understand that we can stop it at Mil- waukee and then send it to Chicago. Mr. Maeble." You have only one reconsigning privilege? Mr. Mosher. I think we must elect whether we will send it to Mil- waukee or Manitowoc. Mr. Marble. Is there any other point north of Milwaukee that has that privilege ? 800 GEAIN ELEVATOR INVESTIGATION. Mr. MosHER. I think they have the privilege if they have the ele- vators to handle the business. Mr. Marble. It is your understanding that the other lake ports would be given it ? Mr. MosHER. It is my understanding of the tariffs that they are the same at all points on the lines that have facilities for doing the business. Mr. Marble. Grain is ferried across from Manitowoc to Ludington, Mich., is it not? Mr. MosHER. Yes, sir. Mr. Marble. And goes on the Pere Marquette ? Mr. MosHEK. That is one way. We ship by lake to Buffalo and other points. Mr. Marble. Do you get an elevator allowance from the railroad for putting grain into the boat from the cars ? Mr. Mosher. I could not tell you at the present time. Mr. Marble. Do you know whether or not the Pere Marquette road makes you any allowance for shipping grain to Ludington? Mr. MosHER. I think the Pere Marquette road did have a contract with us to pay us a half a cent for transferring grain from cars — from western cars — into their cars — through-billed stuff. Mr. Marble. The cars being ferried across? Mr. MosHER. Yes, sir. Commissioner Proutt. Where was the transfer made? Mr. Mosher. In the elevator. . Commissioner Prouty. At Manitowoc? Mr. Mosher. Yes, sir. Mr. Marble. Is that arrangement obtaining now, do you know? Mr. Mosher. I can not tell you. They went into the hands of a receiver and my impression is that the receiver abrogated the con- tract. Mr. Marble. I think that is all. The witness was excused. W. W. Cargill, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Cargill, where do you reside? Mr. Cargill. At La Crosse, Wis. Mr. Marble. You are interested in the W. W. Cargill Grain Com- pany? Mr. Cargill. I am. Mr. Marble. Are you interested in any other grain company ? Mr. Cargill. I am. Mr. Marble. What other? Mr. Cargill. The Cargill Elevator Company, the Superior Ter- minal Elevator Company, the Thorpe Elevator Company; I believe that is all. Mr. Marble. What railway interests have you? Mr. Cargill. Well, I have a little — we have got a little road down at La Crosse. Mr. Marble. What is the name of that? Mr. Cargill. The La Crosse and Southeastern. Mr. Marble. Do you own that yourself? • Mr. Cargill. I own the bonds. Mr. Marble. And the stock? GKAIN ELEVATOR INVESTIGATION. 801 Mr. Cargill. No. Mr. Marble. Do the bonds have any voting power? Is the road under your control? Mr. Caegill. I suppose it would be if I wished it. My son and his associates own the stock. Mr. Marble. Does your son, or interests harmonious with him, own all the stock? Mr. Cargill. Yes, sir. Mr. Marble. What other road? Mr. Cargill. The Kewaunee, Green Bay and Western. Mr. Marble. How much of that do you own? Mr. Cargill. Very little. I sold my interest with the exception of a few shares. Mr. Marble. How long ago did you sell your interest ? Mr. Cargill. Eight or ten years ago. Mr. Marble. You did control that road, did you not? Mr. Cargill. No; not exactly controlled it. I was about a third or nearly a half owner in it. Mr. Marble. What other roads are you interested in? Mr. Cargill. I think a road down in Arkansas. Mr. Marble. What is the name of that? Mr. Cargill. The Pine Bluff and Western. I have sold that also. I retain only a few shares. Mr. Marble. Is that a grain-carrying road ? Mr. Cargill. No, sir. Mr. Marble. Now, these roads that you have testified about — the Kewaunee, Green Bay and Western— there is one called the Green Bay and Western, is there not ? Mr. Cargill. That is another road. Mr. Marble. Are you interested in that road? Mr. Cargill. No. Mr. Marble. Not at all? Mr. Cargill. Not at all. Mr. Marble. Do you control the grain business on the La Crosse and Southeastern road? Mr. Cargill. Partially. Mr. Marble. To what extent would you say? Mr. Cargill. Well, there are three stations in which we are alone. Mr. Marble. There are four stations, are there not — Chaseburg, Coon Valley, Viroqua, and Westby? You are alone at all those, are you not? Mr. Cargill. No, not at Westby. Mr. Marble. At Westby you have competition ? Mr. Cargill. Yes, sir; and we have some competition at Chase- burg and Coon Valley. Mr. Marble. What is your competition at Chaseburg? Mr. Cargill. The Kewaunee Grain Company. Mr. Marble. And at Coon Valley? Mr. Cargill. Thfe farmers and brewers. Mr. IMarble. So you are really alone only at two? Mr. Cargill. Yes, sir. Mr. Marble. On the Green Bay and Western you are alone at a number of stations, are you not ? S. Doc. 278, 59-3 51 802 GRAIN ELEVATOB INVESTIGATION. Mr. Cakgill. No. Mr. Marble. At Black Creek? Mr. Cargill. There may be a few small ones. Mr. Marble. And Dodge and Tola? Mr. Cargill. It would not pay the expense of one buyer at those little dinky towns. Mr. Marble. Manawa, Ogdensburg, Royalton, Seymour, Scan- danavia, Shiocton, Sturgeon Bay, and Taylor? Mr. Cargill. Those are not grain stations. Mr. Marble. You have elevators there? Mr. Cargill. No. Mr. Marble. You are a buyer at all of those points? Mr. Cargill. Not all of them. Mr. Marble (referring to pamphlet from which the above names were read). This is the Second Annual Directory of the Regular Grain Dealers, of Wisconsin, and lists you as being alone so far as regular dealers are concerned. Mr. Cargill. Well, I may not know. I have not been in the detail of the business since 1898. Mr. Marble. Do you know how prices are made for your elevators, how the prices to be paid the farmers are determined? Mr. Cargill. I do not. , Mr. Marble. Do you know whether or not the prices are fixed by combination or agreement? Mr. Cargill. No. Mr. Marble. You do not know? Mr. Cargill. I know they are not. Mr. Marble. Do you know whether the business at any point is pooled ? Mr. Cargill. Not that I know of. Mr. Marble. Would you know if it were not? Mr. Cargill. Well, I would not be so definite about that. Mr. Marble. Then, in the same way, do you know whether or not, even though there should not be a pool, you recognize the right of a competitor to a percentage of the market and keep out? Mr. Cargill. If he has equal facilities. Mr. Marble. If he has equal faciHties you would recognize his right to a certain proportion of the grain at that point ? Mr. Cargill. Yes, sir. Mr. Marble. And you would not undertake to take that away? Mr. Cargill. Everything being equal. Mr. Marble. If he were a farmer with the penalty clause, you would not regard him so kindly? Mr. Cargill. Well, we hava a number of those fellows. Mr. Marble. You have an objection to those fellows, have vou not? Mr. Cargill. Yes, sir. Mr. Marble. I suppose your sentiments are the same as Mr. Pettit's in regard to it? Mr. Cargill. Yes, sir. Mr. Marble. As to the scoop shoveler; do you regard that as fair conipetition? Mj, Cargill. Not if the rest have elevators. GRAIN ELEVATOR INVESTIGATION. 803 Mr. Marble. Do you try to keep them from finding a market for their grain? Mr. Cargill. No ; that can not be done. Mr. Marble. You have not any business in Iowa, have you? Mr. Cabqjll. Yes, sir. Mr. Marble. Do you belong to the Iowa Grain Dealers' Associ- ation? Mr. Cargill. No ; I think not. Mr. Marble. They have tried to do it there, I believe. , Mr. Cargill. I do not know anything about the Grain Dealers' Association of that State. Mr. Marble. Of Wisconsin — I see you are listed as belonging to it? Mr. Cargill. I do not know a thing about it. Mr. Marble. It is someone else for your company, then? Mr. Cargill. It must be. Mr. Marble. You have an elevator at Green Bay, have you not ? Mr. Cargill. Yes, sir. Mr. Marble. Do you get the reconsigning privilege there which is had by the people at Manitowo(!? Mr. Cargill. Not that I know of. Mr. Marble. You do not know whether or not you have? Mr. Cargill. I am sure we do not. Mr. Marble. Has it been a grievance with you that you did not? Mr. Cargill. No, sir. Mr. Marble. You do not care? Mr. Cargill. No, sir. Mr. Marble. Where do you ship your grain? Mr. Cargill. To Buffalo. Mr. Marble. It goes East? Mr. Cargill. Yes, sir. Mr. Marble. Are you familiar with a contract between the Chicago and Northwestern Railroad Company, the Green Bay and Western Eailroad Company, W. W. Cargill, and the W. W. Cargill Company? Mr. Cargill. Yes, sir; I made that. Mr. Marble. Do you remember its terms pretty well ? Mr. Cargill. Not very distinctly. It is fourteen years ago. Mr. Marble (referring to contract). This contract recites that you are building an elevator at Green Bay and the Northwestern Company agrees to contribute to the cost cf the elevator the sum of $15,000; the Green Bay Company — which is the Green Bay aiic Western Rail- way Company — agrees to contribute $20,000, and you agree to con- tribute $25,000 and to build an elevator for the sum of $60,000, with the further agreement that if it costs less, the contributions shall be in that proportion. Do you remember that? Mr. CTargill. Yes, sir. Mr. Marble (referring to contract). It is further agreed that the cost of construction shall include all the necessary machinery, tools, and fixtures for the proper equipment of a first-class grain elevator? Mr. Cargill. Yes, sir. Mr. Marble. This elevator is built on land of the Northwestern Company, and the Northwestern Company leases to W. W. Cargill and the Green Bay Company a three-quarter interest, so as to divide the land in the same proportion as the contributions to the elevator, describing the land, with the agreement that you shall run a public 804 GRAIN ELEVATOE INVESTIGATION. elevator and treat all alike, and then various agreements to protect the company from damage suits. Then, W. W. Cargill, the Green Bay and Western Railway Company and the Northwestern Company lease this land to the W. W. Cargill Grain Company. Who owns the stock of the W. W. Cargill Grain Company? Mr. Cargill. I do. Mr. Marble. All of it? Mr. Cargill. All but three or foiu- shares. Mr. Marble. That is simply directors' shares? Mr. Cargill. Yes, sir. Mr. Marble. Under this agreement do you get free switching? Mr. Cargill. I think so. Mr. Marble. And do you understand that that is what is charged others in like situation at that point — that every one gets free switch- ing? Mr. Cargill. Yes, sir. Mr. Marble. That the contract merely expresses the published tariff of the railroad ? Mr. Cargill. Yes, sir. Mr. Marble (referring to contract). This contract is signed for the Chicago and Northwestern Eailroad Company by Marvin Hughitt, president, J. B. Redfield, assistant secretary; for the Green Bay and Western by S. S. Palmer, president, and Mark T. Cox, secretary; by W. W. Cargill for the Cargill Company, and for the Kewaunee, Green Bay and Western by W. J. Abrams, president, and W. W. Cargill, secretary. Now, the terms upon which this elevator is leased by the North- western Company, the Green Bay and Western, and W. W. Cargill to the W. W. Cargill Company are that you pay a rent of $1 for twenty-five years. Is that right ? Mr. Cargill. That is right. Mr. Marble. The company assumes all the taxes? Mi. Cargill. Yes, sir. Mr. Marble. Now, as a matter of fact, that elevator is used solely for the business of the W. W. Cargill Company, is it not ? Mr. Cargill. Yes, sir. Mr. Marble. So this agreement in this lease that it shall be kept open as a public house and serve all alike does not result in anybody but the W. W. Cargill Company using the house. Is that right? Mr. Cargill. Iguess that is right. Mr. Marble. Why is that? Nobody else wants it to do business through it ? Mr. Cargill. I do not believe anybody else does. Mr. Marble. Why did the Northwestern Company and the Green Bay and Western Company enter into such a contract as this to con- tribute to this elevator and lease it to you for nothing? Mr. Cargill. To have an elevator operated by a reliable party. Mr. Marble. Have they done as much for any competitor at Green Bay? Mr. Cargill. There are no competitors. Mr. Marble. Have they done as much for a competitor at a nearby point? Mr. Carglll. I do not know. Mr. Marble. You do not know whether a thoroughly reliable man GRAIN ELEVATOR INVESTIGATION. 805 could get such a contract to go into competition with you at that point ? Mr. Cargill. I do not know. Mr. Marble. Have you any other agreements? Do you get any elevation allowance? Mr. Cargill. No. ' Mr. Marble. Any agreement regarding it? Mr. Cargill. No. Mr. Marble. And free switching — is there any contract other than this regarding that ? Mr. Cargill. No. Mr. Marble. Do you ship any grain except by water from Green Bay? Mr. Cargill. We might ship some up north, but nothing east — oh, something going in a different direction that could not go by water might go by rail Some might go possibly to Milwaukee or Chicago. Mr. Marble. Is there any elevation received on that? Mr. Cargill. No. Mr. Marble. Any loading allowance? Mr. Cargill. No. Mr. Marble. Do you get any allowance from the boat line — do you own your boats ? Mr. Cargill. We are interested in a navigation company. Mr. Marble. Do you have a through rate? Mr. Cargill. No. Mr. Marble. Pay the local into Green Bay? Mr. Cargill. And the local out. Mr. Marble. You have not a through rate, with a division between the boat line and railroad? Mr. Cargill. No, sir. Mr. Marble. What boat line is that? Mr. Cargill. The. Wisconsin Navigation Company; I believe that is the name of it. Mr. Marble. That runs from Green Bay to Buffalo ? Mr. Cargill. Yes, sir. Mr. Marble. How many boats has that line ? Mr. Cargill. One. Mr. Marble. That one boat does not carry all your grain? Mr. Cargill. No. Mr. Marble. That is the only line in which you are interested? Mr. Cargill. Yes, sir. Mr. Marble. W. S. Cargill, president, of the La Crosse and South- eastern Railway Company, is your son ? Mr. Cargill. Yes, sir. Mr. Marble. Then you have another lease from the Northwestern Railroad Company for other land at Green Bay, have you not, in addition to this, near the depot — on the depot grounds ? Mr. Cargill. Well, we have the use of some land — of an old dock. I want to say that we have built two elevators since we built this first one — two annexes — and the last lease is the ground for No. 2 annex. Mr. Marble. This lease prescribes that you shall pay $5 a year for the land. Is that especially valuable land ? Mr. Cargill. No. 806 GKAIN ELEVATOR INVESTIGATION. Mr. Maeble. Good only for elevator purposes ? Mr. Cargill. That is all. You could use it for anything that you could use it for, but there is a lot that is not used. Mr. Marble. You do not consider that you get any valuable special privilege for the $5 1 Mr. Cargill. No, sir. Mr. Marble. And anyboay else could get that same consideration? Mr. Cargill. Sure. Mr. Marble. That is all, unless the Commission have something. Commissioner Prouty. That is all. The witness was excused. W. B. GuiNGius, called as a witness, being duly sworn, testified as follows: Mr. Marble. Mr. Guingius, you are connected with the Cargill Grain Company, are you not ? Mr. Guingius. At Green Bay. Mr. Marble. You have to do with the practical managei»ent of that company? Mr. Guingius. Yes, sir. Mr. Marble. And with its line elevators ? Mr. Guingius. Yes, sir. Mr. Marble. I will ask you how the prices are made which are paid to the farmers by the line elevators under your control? Mr. Guingius. We take the Chicago and Milwaukee values and the freight, and a nominal profit for the nandling of the grain at country stations. Mr. Marble. Do you agree with your competitors at any point as to the price to be paid ? Mr. Guingius. Not particularly. Mr. Marble. Do you consult with them? Mr. Guingius. Not necessarily. Mr. Marble. Do you in practice? Mr. Guingius. When our buyers are taking grain on the market, sometimes one of our competitors might pay a little more than we would and we would ask where he gets his judgment. Mr. Marble. The idea being to keep prices in line ? Mr. Guingius. To the relative margin — the handling. Mr. Marble. You and jrour competitors generally have about the same idea as to what margin should be made ? Mr. Guingius. That depends at times on supply and demand. Mr. Marble. Have jou any farmers' elevators m your territory? Mr. Guingius. No, sir. Mr. Marble. About what margin do you consider a fair margin for the elevator to make, taking the crop year through on wheat ? Mr. Guingius. We handle very little wheat. Mr. Marble. Oats and barley? Mr. Guingius. Oats, barley, and rye. Mr. Marble. On barley, what do you consider fair? Mr. Guingius. A couple of cents. Mr. Marble. And oats? Mr. Guingius. A cent and a half. Mr. Marble. And rye? Mr. Guingius. Two cents. GRAIN ELEVATOR INVESTIGATION. 80? Mr. Marble. Are those the profits j ou make through the crop year, as a rule ? Mr. GtrxNGius. If the market is steady and there is no advance or decUne, it will average about that. Mr. IIaeble. Do you have any pooling arrangement with any com- • petitors at any stations by which you divide the grain at the station? Mr. GuiNGius. No, sir. Mr. Marble. Keeping track each of what the other gets and mak- ing accounts to each other? Mr. GuiNGius. No, sir; not any more than if there is some buyer on the same market — some little grain town — and there would be two buyers, and he had an elevator and we had one, we would not take it all and would not want him to take it all — enough to do a fair business. Mr. Marble. Do you, at any such points, each keep an accoimt and state to each other what you have ? Mr. GuiNGuis. Not that I know of. Mr. Marble. How do you know whether or not you are getting your fair share ? Mr. GuiNGUis. A country buyer would determine that pretty much. If we would write and ask him now his receipts are, he might tell us he is getting about so much. Mr. Marble. It is your country buyer's business to know what everybody is getting? Mr. GuiNGius. Yes, sir. Mr. Marble. Do you know whether your buyers get that from com- petitors by agreement? Mr. GuiNGius. I do not know. Mr. Marble. You recognize, where you have a competitor that is fair as to margin of profit, and he has an elevator, that he is entitled to a pro rata of the grain? Mr. GuiNGius. We would look upon that that way; we would not take it all and woiild not want our competitor to take it aU. Mr. Marble. If you had your share and your competitor was short, and he put up his price, you would let him take it? Mr. GuiNGius. If he wanted the grain more anxiously than we and wanted to handle it for nothing Mr. Marble. You woifld not make him take it for nothing, would you? Mr. GuiNGius. That would depend. If there was a fair demand for stuff at times, we would perhaps have to do so. That would depend on conditions. Mr. Marble. I want to find out how far this respect for each other's rights goes. Mr. GuiNGius. I do not know that I could answer that. At a sta- tion where we are handling grain our man is instructed to take his share aU the time. If there is any loss, we stop him. Mr. Marble. He is not instructed to get all the grain he can buy and compete all through? Mr. GuiNGius. You can not do that. Mr. Marble. It would demoralize the market? Mr. GuiNGius. I mean your competitor would not let you take all. Mr . Marble. He would bid up ? Mr. GuiNGius. Yes, sir. 808 CfEAiN ELEVATOE INVESTIGATION. , Mr. Marble. It is no use to try? Mr. GuiNGius. Oh, yes. It would depend on the conditions at the time. If the competitor bid up' and took the grain for nothing, we Tyould not feel that we would have to follow him. Mr. Marble. Have you had any trouble with scoop shovelers ? Mr. GuiNGius. No, sir. Mr. Marble. Have you been troubled with competitors that bid up and took the grain for nothing ? Mr. GuiNGiTJS. I do not just recall. Perhaps sometime at a station a buyer might go in and make a sale of a few cars and be a little over- grasping. We might let him take it awhile. Mr. Marble. Have you had any experience with a competitor who was uniformly grasping all the time ? Mr. GuiNGius. I do not know that I recall any conipetitor of that kind. Mr. Marble. Pretty generally your competitors have recognized your right to a share of the gram? Mr. GuiNGius. We get our share. Mr. Marble.- By consent of the competitors? Mr. GuiNGius. No, not exactly. It is not a usual thing for two grain buyers at one station to fight all the time and see how close they can get the grain and come out eyen — just work on a little margin.. Mr. Marble. Have you this reconsigning privilege from Green Bay to Milwaukee and Chicago such as is enjoyed by Manitowoc? Mr. GuiNGius. No, sir. Mr. Marble. Do you regard the lack of it as a disadvantage ? Mr. GuiNGius. I heard the gentlemen discussing that in your ques- tions to-day. We do not ship grain to Milwaukee and Chicago unless we do from the country points. We ship to Green Bay and via the water route from Green Bay. Mr. Marble. So that the reconsigning to Milwaukee and Chicago does not matter to you? Mr. GuiNGius. Not particularly. Mr. Marble. This arrangement, transferring from the cars, you pay the local in and local out ? Mr. GuiNGius. Yes, sir. We do not use any local out, because we seldom ship a car from the Green Bay terjninal to the Chicago or Milwaukee market. If we start the car from the country point, we would ship directly to Milwaukee or Chicago. If it comes to Green Bay, we do not have a reconsigning privilege to Chicago or Milwaukee. Mr. Marble. You ship by car from Green Bay north? Mr. GuiNGius. Yes, su-. Mr. Marble. Do you have a proportional out on that ? Mr. GuiNGius. No, sir; we ship from our station through to the north. If a car should come in in a hurry for northern Michigan, we might load it locally and pay the local from Green Bay north, but we usually ship from our Wisconsin points. Mr. Marble. Is it true that you do not get an elevation allowance ? Mr. GuiNGius. Not a cent. Mr. Marble. You do get switching? Mr. GuiNGius. The Northwestern and the Green Bay and Western have their own tracks to the elevator. Any grain the respective roads bring in they have to switch to the elevator. GRAIN ELEVATOR INVESTIGATION. 809 Mr. Marble. Have you no competitors at Green Bay? Mr. GuiNGius. That is the only terminal there. Mr. Marble. That is all. The witness was excused. H. R. McCuLLOTTGH, called as a witness, being duly sworn, testified as follows: Mr. Marble. You are vice-president of the Northwestern Railway Company? Mr. McCuLLOUGH. Yes, sir. Mr. Marble. In charge of traffic ? Mr. McCuLLOUGH. Yes, sir. Mr. Marble. Are you interested in any grain company? Mr. McCuLLOTJGH. I am not. Mr. Marb^^e. You do not own any stock in the Northern Grain Company? Mr. McCulloxjgh. No, sir. Mr. Marble. Have you any share, directly or indirectly, m the profits of any grain company ? Mr. McCuLLOTJGH. Not a cent. Mr. Marble. Nor any one else in your railway so far as you know ? Mr. McCuLLOUGH. Not so far as I know. Mr. Marble. Mr. McCullough, can you tell us why Manitowoc exists, why it is a grain shipping point; what the geographical strength of Manitowoc is that makes it a grain center ? Mr. McCullough. No, sir; I no not beueve I can. Mr. Marble. Is it not due to railroad favoritism some way? Is it not a railroad created point ? Mr. McCullough. No, I do not think so. I do not know of any advantage that Manitowoc has over Green Bay or Milwaukee. Mr. Marble. Well, has it the same advantages as Sheboygan? Is hot Sheboygan similarly situated ? Mr. McCullough. About the same. Mr. Marble. Has Sheboygan all advantages the same as Mani- towoc, so far as the railways are concerned ? Mr. McCullough. I think it has the same rates. Mr. Marble. Does it have the same reconsigning? Mr. McCullough. Yes, sir. The reconsigning you are discussing, we have a circular that says a car of grain may be moved from one station on the Northwestern to another station on the Northwestern and stopped and cleaned. That is good on the entire system, between any two stations on the Northwestern road. That is the only arrangement that I know of that we have for grain cleaned in transit. Mr. Marble. Does the Pere Marquette Road make any allowance to your road on grain coming that way on condition of your taking the shorter haul ? , Mr. McCxjllough. No; any grain we take to Manitowoc, we take the tariff of the Flint and Pere Marquette. Mr. Marble. You do not share in their tariflf in any way? Mr. McCullough. I think not. Mr. Marble. Do you know? Mr. McCullough. At one time we did have through tariffs with them, but I think they are canceled. 810 (JfiAlN ELteVAtOK INVESTIGATICN. Mr. Marble. Does your road favor sending grain out of the State ■via Manitowoc or Ludington rather than bringing it to Milwaukee?, Mr. McCuLLOTJGH. In Wisconsin? Mr. Marble. Yes, sir. Is it the desire of your road that grain should go that way? Do you favor grain going that way? Mr. McCuLLOUGH. No. We have tanffs from Wisconsin points to Green Bay, Manitowoc, Milwaukee, and Chicago. A shipper can ship to any point he thinks best. There is no question raised ,by the railroad.' Mr. Marble. You regard it as an advantage for the grain to go via Manitowoc rather than any other way? Mr. McCtillough. I do not think so. Mr. Marble. As a railroad manager, you do not prefer the grain to go that way? Mr. McCtJLLOUGH. It does not make any difference whether it goes to Green Bay, Manitowoc, Milwaukee, or Chicago. Mr. Marble. You get a longer haul? Mr. McCxjLLOUGH. Yes; and a higher rate. Mr. Marble. You prefer that ? Mr. McCuLLOUGH. Yes, sir. Mr. Marble. That would be to Milwaukee or .Chicago? Mr. McCuLLOUGH. We are perfectly wilhng that the grain should move to any of those ports the shipper wishes to move it to, and we furnish cars promptly for all ports. Mr. Marble. Does the Pere Marquette absorb any switching charge for placing cars by your company at Manitowoc ? Mr. MoCuLLOUGH. I could not say. Mr. Marble. Do you know whether they absorb any elevation charge there? Mr. McCuLLOUGH. I do not know. Mr. Marble. Who owns the ferry from Manitowoc to Ludington? Mr. McCuLLOUGH. It is not owned by the Chicago and Northwest- em Railroad. It has no interest in it. Mr. Marble. You do not/share in their profits? Mr. McCxJLLOUGH. None whatever. Mr. Marble. Nor any member of your company, so far as you know? Mr. McCuLLOUGH. No. Mr. Marble. And what you testified to regarding an interest in grain companies will apply to this ferry company, so far as you know. Mr. McCuLLOUGH. It will. Mr. Marble. What relation has the Rialto Elevator Company of Milwaukee to the Northwestern Railway? Mr McCuLLOUGH. During the past sixty days the Chicago and Northwestern purchased the two elevators on the river known as the Ange Smith elevators. Those elevators are leased to the Rialto Ele- vator Company; the lease runs until some time next year. Mr. Marble. For $20,000 a year? Mr. McCuLLOUGH. I do not know. Mr. Marble. That lease came with the purchase of the elevators by your road? Mr. McCuLLOUGH. Yes, sir. Mr. Marble. You have no special arrangement with them as to switching? GRAtN ELEVATOR INVESTIGATION. 8] 1 Mr. McChllough. Nothing whatever. Mr. Marble. Do you pay them any elevation allowance ? Mr. McCuLLorrGH. No. Mr. Marble. Absorb any switching? Mr. McCullough. None whatever. Mr. Marble. Do you know about the rental agreement of the Chi- cago, St. Paul, Mumeapohs and Omaha Railroad Company with the Peavey Elevator Company? Mr. McCullough. I do not know an3rthing about that. Mr. Marble. You are not concerned with that part of the business of the Northwestern Road'? Mr. McCullough. I have nothing to do with the management of the Omaha Road. Mr. Makble. Anything I ask you about that contract you would not be able to answer? • Mr. McCtH^LOUGH. No, sir. Mr. Marble. This Cargill contract at Green Bay, you heard Mr. Cargill's testimony and the terms of the contract. You were fa- miliar with those before, I presume ? Mr. McCullough. That was the first knowledge I had of that. S. A. Lynde (representing the Chicago and Northwestern Railway Company). What is the date of that contract, Mr. Marble ? Mr. Maeblb. August, 1896. Mr. Lynde. The other, I think, was ten years ago. Mr. Marble. The one with the Kewaunee, Green Bay and Western was September, 1896, according to this copy. (Addressing witness.) Dp you know why the Northwestern Railway Company contributed to the erection of that elevator and gave the land for it and leased it to Mr. Cargill for nothing? ]Mr. McCdllough. I could not say. Mr. Marble. Have you any other such contract, so far as you know? Mr. McCullough. I do not remember any. A contract of that kind would not come to me and would not be in my department. Mr. Marble. And you do not know of any other? Mr. McCullough. No, sir. Mr. Ltnde. May I ask Mr. McCullough a question there ? Mr. Marble. Surely. Mr. Ltnde. Mr. McCullough, there are a great many cases, are there not, where the Northwestern has leased faciUties at its stations on a merely nominal rental, giving the use of ground at its stations ? Mr. McCullough. Country elevators? Mr. Lynde. Yes, sir. Mr. McCullough. We have those at nearly every station. Mr. Ltnde. I wanted to call your attention to that so that there would be no confusion in Mr. Marble's mind. MJr. McCullough. I did not understand Mr. Marble's question, perhaps. Mr. Ltnde. I do not know that he referred to that. Mr. Marble. What I was asking was whether you knew of any other cases where you contributed to the erection of an elevator or erected it yourself, and then leased it for a nominal rental ? Mr. McCullough. We have some elevators belonging to our com- pany at country stations, bmlt at our expense and rented, too. 812 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. How do you determine the rental? There is one at Blue Mounds, one at Cottage Grove, and one at Dodgeville, Wis. Mr. McCuLLOUGH. The rental is fixed by the Land Department. I think the customary charge is $5 a year. Commissioner Pkouty. Is that for the elevator or for the land on which the elevator stands? Mr. McCuLLOUGH. For both, where we own the elevator. Mr. Marble. Do you know how you determine who shall be given those elevators at that rental ? Mr. McCuLLOUGH. No, I could not say. Mr. Marble. That is not in your departrnent? Mr. McCuixouGH. Yes, it is in the general freight department. Mr. Marble. Do you determine that rental of $5 a year. Mr. McCuLLOUGH. No, that is determined by the land commis- sioner. Mr. Marble. One of your subordinates ? Mr. McCuLLOUGH. No, a separate department. Mr. Marble. Do you know what privileges go with these contracts whether there is anything other than the rental of the elevator for the $5? Mr. McCuLLOGH. I think not. Mr. Marble. Do you know whether or not giving such contracts enables the party getting them to monopolize the market at the point or outbid his competitors ? Mr. McCuLLOUGH. I do not think it has that effect. I never heard of it. Mr. Marble. You have no complaints? Mr. McCuLLOUGH. No. Commissioner Proutt. Are there other elevators located at the same points where your elevators are ? Mr. McCuLLOUGH. In some cases, I think; yes, sir. I do not know how many. Mr. Marble. Do these elevators get free switching at country points ? Mr. McCullough. You mean empty cars placed at the elevators and loaded out? Mr. Marble. Yes, sir. Mr. McCullough. Yes, sir. Mr. Marble. That is a matter, of course, in switching out of these country places on any kind of merchandise ? Mr. McCullough. In carloads, yes, sir. Mr. Marble. Who would be the official who would know about these contracts and the terms on which they are made and the inci- dents accompanying them ? Mr. McCullough. You mean the lease of an elevator ? Mr. Marble. I mean these leases of country elevators. Take Blue Mounds, Cottage Grove, and Dodgeville. Mr. McCullough. The land commissioner. Mr. Marble. What is his name ? Mr. McCullough. J. F. Cleveland. Mr. Marble. Where is he located? Mr. McCullough. In Chicago. Mr. Marble. At your general office ? Mr. McCullough. Yes, sir. GRAIN ELEVATOR INVESTIGATION. 818 Mr. Marble. That is all. Mr. Lynde. Mr. McCullough, now is it not a fact that in all these cases where the Northwestern Company owns and leases an elevator at a country station that the elevator was built for the purpose of originally inducing somebody to take hold of the grain business at that station and that it has always preceded any other elevator at that station? Mr. McCullough. At any station on our road where there is an elevator constructed by our company it is at a station where we could not get anybody to put up a grain house or elevator to go into the grain business. As an inducement to get some one there in the grain business and get our share of the grain our company went to- the expense of building the elevator. At some of those stations there are elevators belonging to other parties, generally built after ours. Mr. Lynde. At those stations would it not commonly be the case if there were other railroads at the station, that there were such other elevators on other lines and you might have to build an elevator on your line to bring the business to the Northwestern Company? Mr. McCullough. That might be all right. Mr. Lynde. Has it ever been done with the purpose of favoring any individual as against any competitor at any such point ? Mr. McCullough. Not to my knowledge. Mr. Lynde. The location given to these country stations are largely given pursuant to the laws of the State? Mr. McCullough. Generally that is the case. Mr. Lynde. I suppose the Commission is familiar with the fact that the laws of Iowa, Nebraska, and North and South Dakota require the railroad companies to furnish locations of this kind on their right of way. Commissioner Pkouty. They require them to furnish them to all business firms alike ? Mr. Lynde. Yes, sir. Mr. McCullough, has there been in any case to your knowledge any discrincdnation shown by the Northwestern Company in furnishing locations at its country stations ? Mr. McCullough. Not to my knowledge. Mr. Lynde. Have you ever had any complaint made to you of such discrimination at any point ? Mr. McCullough. I never did. Commissioner Lane. Would the complaint come to you? Would it not go to the land commissioner? Mr. McCullough. No, sir; to the trafl&c department. Commissioner Lane. Would the request come to you for the use of the land ? Mr. McCullough. Usually, yes, sir. Commissioner Lane. Would you state what the figure was that the man could have the land for? Mr. McCullough. At present, if we had a piece of land and a shipper wished it for an elevator or building, the appUcation is made through the local agent where the land is located. The application comes from the agent to the traffic department. It goes from the traffic department to the operating department, and if it is agreed to let the party have the land the papers then go to the land department and the land department draws up the necessary lease and papers and fixes the rental due the Northwestern Company for the land. 814 GRAIN ELEVATOR INVESTIGATION. Commissioner Lane. It is the operating department that decides whether the man shall have the land or not ? Mr. McCuLLOUGH. It goes to the traffic department and land department iointly. The traffic department decides whether the business would justify us and the land department decides whether to put in a side track and operate it. Commissioner Lane. Have you put all your elevators out of your hands and into the hands of lessees, or do you still own and operate some elevators? Mr. MoCuLLOUGH. No, we never have. Our company never has. Commissioner Lane. Never have operated any? Mr. McCtjllough. Never have operated any. Any elevator belonging to our company is leased to other parties and run by other parties. Commissioner Lane. Do you call for bids on these leases, or have you ever done that ? Mr. McCuLLOUGH. I never knew the company to do that; no, sir. Commissioner Lane. Is it upon the company's initiative that a man at one of these points takes up the elevator and rents it? Mr. McCuLLOUGH. Usually; yes, sir. Commissioner Lane. You select a man and ask him if he does not want to go into the elevator business at that point and offer him the elevator? Mr. McCuLLOUGH. As a rule, it is given to a reliable man who has elevators in that vicinity at other stations. Commissioner Lane. Are you familiar with these rules governing transit privileges ? Mr. McCuLLOUGH. Not as familiar as I should be; no, sir. Commissioner Lane. You have seen that tariff have you not? Mr. McCuLLOUGH. Yes, sir. Commissioner Lane. Are you operating under that tariff now? Mr. McCuLLOUGH. As far as my knowledge goes, yes, sir. Commissioner Lane. That tariff is in effect at the present time? Mr. McCuLLOUGH. As far as I am advised; yes, sir. Mr. Lynde: I think, Mr. Commissioner, there is some question as to that. I have a notion that there has been some change made in that. Commissioner Lane. I should hope that is so, because this tariff on its face does not ever appear to have been filed with us and it appears to be illegal. Mr. Lynde. I am quite confident there is a regular tariff on file with the Commission and I think there has been a change, but I am speaking without the closest information. , Mr. McCuLLOUGH. Several weeks ago the question arose as to rule 19 of this tariff. At that time the roads thought it would be wise to leave that out and reprint this tariff and make a new deal, but so far it has not been done. Commissioner Lane. So that is now the ruling tariff? Mr. McCuLLOUGH. So far as I know; yes, sir. Mr. Marble. Mr. McCullough, you heard the testimony this morn- ing of commission men who said they could not get this reconsigning ? Mr. McCullough. Yes, sir. Commissioner Prouty. That is a transit tariff and says it does not GRAIN ELEVATOR INVESTIGATION. 815 apply to track arrangements. There is another tariff that applies to track arrangements. Mr. Marble. Do you know whether or not the cleaning privilege is confined to elevators and can not be taken advantage of by those putting grain through public houses ? Conamissioner Proutt. I do not understand that the testimony was all that way. One or two men testified that it could not be done and others testified" that it could be. That (referring to tariff) seems to provide that it can be done through any elevator, but in the nattire of things there can not be such a thing as transit grain as long as it goes into an elevator. Mr. Marble. There seems, however, to be some privilege that allows grain to be cleaned here and go on without paying freight. So far as some of the testimony this morning goes, that is confined to elevators only. Commissioner Pbouty. You mean confined to people that own elevators ? Mr. Marble. That own or lease elevators. Commissioner Protitt. So that a man has no right to put it into a public elevator and clean it ? Mr. Marble. Yes, sir. Commissioner PKOtrrT. One man testified to that, but I understand that others testified to the contrary. How do you understand that to be, Mr. McCuUough? Mr. McCuLLOUGH. As I say, we have a circular that says grain can be moved from one station on the Northwestern to another and cleaned in transit. That does not say whether it shall go through a regular or irregular elevator, or how it shall be cleaned. That allows a car of grain to come to Milwaukee, if Milwaukee is intermediate between the forwarding station and Chicago — allows it to be cleaned at Milwaukee and go on to Chicago. Mr. Marble. You understand that is open to all alike ? Mr. McCuLLOUGH. Yes, sir; it is a published circular. Mr. Marble. That is all. The witness was excused. C. W. Schneider, called as a witness, having been duly sworn, tes- tified as follows: Mr. Marble. You are the manager at the Rialto Elevator Company ? Mr. ScHNEiDEE. Treasurer of the Rialto Elevator Company. Mr. Marble. Are you the manager of its business? Mr. Schneider. I am the treasurer of the company. We have no manager. Mr. Marble. The business is imder a general manager? Mr. Schneider. Yes, sir. Mr. Marble. You are acquainted with it ? Mr. Schneider. Yes, sir. Mr. Marble. Do you get any elevation allowance at your elevator from any railroad? Mr. Schneider. From the railroad? Mr. Marble. Yes. Mr. Schneider. We get a quarter of a cent elevation for grain ghipped east — ^not via Chicago. 816 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. If grain goes out and does not come to Chicago, then the out road pays you a quarter of a cent ? ^ii. ScHNEiDEE. Yes, sir. Mr. Marble. Per hundred or per bushel? Mr. Schneider. Per bushel. Mr. Marble. Is that paid to all elevators here, do you know? Mr. Schneider. I presume so; yes, sir. Mr. Marble. Is it m piu-suance of a published tariff? Mr. Schneider. I don't know that it is a public tariff. It is just simply an agreement that everybody knows of. Mr. Marble. What roads pay that to you? Mr. Schneider. The P.ere Marquette and the Grand Trunk. That is car ferry; where it is shipped car ferry. Mr. Marble. Nothing paid by the boat which takes it? Mr. Schneider. Not via Chicago, but where it is shipped east via Chicago there is no elevation charge. Mr. Marble. No one pays you when it goes by way of Chicago? Mr. Schneider. No, sit. Mr. Marble. Do you know whether or not these roads pay this same allowance at Manitowoc? •Mr. Schneider. I do not know. Mr. Marble. You don't know whether it is in pxirsuance of a pub- lished tariff that it is paid ? Mr. Schneider. No, sir. Mr. Marble. You have never seen any such tariff? Mr. Schneider. No, sir. Mr. Marble. Do you get any allowance on any grain that does not go through the elevator? Mr. ScHNEiDEn. How is that? Mr. Marble. Do you get any allowance on any grain that does not go through the elevator? Suppose a car comes in and passes around the elevator and goes on through? Mr. Schneider. No, sir. Mr. Marble. Does it all go through the elevator? Mr. Schneider. We haven't anything to do with anything except what goes through the elevator. Mr. Marble. The in road does not pay you anything? Mr. Schneider. No, sir. Mr. Marble. What proportion of the grain brought in by the Northwestern and the Omaha road do you handle ? Mr. Schneider. That would be a difficult matter to tell. Mr. Marble. Would you say practically all ? Mr. Schneider. No. Mr. Marble. Do you get any allowance except on the grain which you actually imloaded into your elevator ? Mr. Schneider. This quarter of a cent you are referring to now? Mr. Marble. Yes. Mr. Schneider. We only get that on whatever grain is shipped through via the Grand Trunk or the Pere Marquette car ferry. Mr. Marble. It must go through your elevator? Mr. Schneider. Yes, sir; and must be shipped by ourselves in order to get it, so far as I loiow. Mr. Marble, Do you get any other allowance or payment than, that? GRAIN ELEVATOR INVESTIGATION. 817 Mr. Schneider. No, sir. Mr. Marble. From any road at all? Mr. Schneider. No, sir. Mr. Marble. That quarter of a cent that you have testified to is all? Mr. Schneider. That is all. Commissioner Proutt. Do you handle any grain except your own through that elevator ? Mr. Schneider. Three-quarters of the grain that we handle through our elevator is for the public. Commissioner ProuTT. Does the public get the quarter of a cent a bushel? Mr. Schneider. If they have any bin room leased in the elevator, I understand they do. That is something, of course, I don't know about. Commissioner Prouty. All you know about is the quarter of a cent that is paid to your company with respect to your own grain. ? Mr. Schneider. Yes, sir; for grain shipped East via the lines mentioned. Mr. Marble. If you ship grain of others, for the public, do you get the quarter of a cent? Mr. Schneider. No, sir. Mr. Marble. This grain you get the allowance on you are the owners of? Mr. Schneider. Yes, sir. Commissioner Lane. Are you shipping that way now? Mr. Schneider. Are we shipping it ? Commissioner Lane. Yes. Mr. Schneider. Why, yes. Commissioner Lane. Have you, within the last sixty days, received that quarter of a cent? Mr. Schneider. No, sir. Commissioner Lane. How long since it ceased? Mr. Schneider. Well, do you mean that we would be entitled to in case we have shipped, whether we have received the money or put in a claim? We have shipped a few cars within the past sixty days, within the past six months, I should say, that we feel we are entitled to a quarter of a cent on, and we have put in our claim for it, or will at the end of the month. Commissioner Lane. Based on your contract? Mr. Schneider. There is no contract. Commissioner Lane. Just an oral agreement? Mr. Schneider. Yes, sir. Comniissioner Lane. It is not based on any tariff? Mr. Schneider. None that I know of. Mr. Marble. What switching do you pay at that elevator? Mr. Schneider. The regular published tariff. Mr. Marble. Is there a regular published tariff there? Mj. Schneider. Yes, sir. Mr. Marble. That is what — do you have any ten-dollars-a-car switching to pay to any point? Mr. Schneider. If we load a car of grain from our elevator and switch it to an elevator on the St. Paul road it costs either us or the party buying $10 a car, just owing to the conditions under which we S. Doc. 278, 59-2 52 818 GKAIN ELEVATOR INVESTIGATION. sold it. If we sold it F. 0. B. our elevator, the other party would pay it. Mr. Marble. The lease of your elevator has been testified to by Mr. McCullough — that was correct, was it ? Mr. Schneider. Yes, sir. Mr. Marble. As to the terms? Mr. Schneider. Yes, sir. Mr. Marble. And situation? Mr. Schneider. Yes, sir. Mr. Marble. Where do you buy grain that you handle ? Mr. Schneider. In Milwaukee on Board. Mr. Marble. Do you bid the country at all ? Mr. Schneider. No, sir. Mr. Marble. In buying on the board do you discriminate against grain coming from farmers elevators, for instance, or scoop shovelers ? Mr. Schneider. We do not know where it comes from. Mr. Marble. You don't pay any attention to that? Mr. Schneider. No, sir. Mr. Marble. You are not carrying on any boycotts then ? Mr. Schneider. No, sir. Mr. Marble. Have you ever been threatened with any boycotts by anyone ? Mr. Schneider. I haven't heard of any. Mr. Marble. Were any letters written to you ? Mr. Schneider. I don't remember of any letters that we have. I shouldn't pay any attention to it because we do not bid the country. Mr. Marble. Is there any price fixing by agreement between buyers on this Board, that you know of? Mr. Schneider. No, sir. Mr. Marble. You buy competitively ? Mr. Schneider. At least nothing that I know of. Mr. Marble. They do not advise as to the prices to be paid, or agree as to prices ? Mr. Schneider. We all pay the lowest price we can buy for. Mr. Marble. You do not make that price by agreement with others to bid less than the grain is actually worth, or anything of that sort? Mr. Schneider. No, sir. Mr. Marble. That is all. Commissioner Lane. With whom did you have this contract or understanding in regard to the quarter of a cent ? Mr. Schneider. Sir? Commissioner Lane. With whom did you have the understanding that they shall repay to you the quarter of a cent ? ' Mr. Schneider. Well", the Pere Marquette and the Grand Trunk Railway, where it goes car ferry— that is, across the lake, car ferry. Commissioner Prouty. Where do you sell your grain? Mr. Schneider. Sir? Commissioner Prouty. Where do you sell your grain? Mr. Schneider. Most of it locally; sell it here. Commissioner Prouty. That seems to be all. Witness excused. GRAIN ELEVATOR INVESTIGATION. " 819 Robert Eliot, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. You reside in Milwaukee? Mr. Eliot. Yes, sir. Mr. Marble. Are you in the grain business now? Mr. Eliot. No, sir; I retired in August, 1900, a little over six years ago. Mr. Marble. When did you enter the grain business in Milwaukee? Mr. Eliot. In 1855. Mr. Marble. And were you continuously in the grain business in Milwaukee from 1865 to 1900? Mr. Eliot. Yes, sir. Mr. Marble. Did you about the year 1858 have part in organizing a grain inspection? Mr. Eliot. Yes, sir. Mr. Marble. Of this city? Mr. Eliot. Yes, sir. Mr. Marble. That isn't under any State law, is it? Mr. Eliot. No, sir. Mr. Marble. Under what body is it ? Mr. Eliot. It was under the cnamber of commerce. The chamber of commerce elected the inspector, and a committee of three — Mr. Sanderson, a miller, Mr. Young, a shipper, and Mr. Eliot, a receiving commission merchant — was appointed to initiate the system. Mr. Marble. How many cnief inspectors has this market had from that time to this? Mr. Eliot. Three. Mr. Marble. And I believe you consider that on& of the advan- L of grain inspecton? - tages of your system of grain inspectc Mr. Eliot. Yes, sir. Mr. Marble. The length of the term? Mr. Eliot. Yes, sir. Mr. Marble. Have you any statement you want to make, Mr. Eliot? Mr. Eliot. Well, nothing except to correct the impression, perhaps, that there is some iniq_uity in mixing grain. I have read in the news- papers that the Commission — the Interstate Commerce Commission- — inclined to the belief that there is something wrong in grain mixing. Now, it is impossible to handle gtain without mixing. The country buyer, be he independent operator, line buyer, or farmers' elevator company — they have to mix the different farmers' grain together, according to their judgment, and then ship it as fast as they can get cars ; they could not keep it separate. They could not monkey with it and bother to keep a great many different grades separate to wait for cars. They have to empty their houses and make room for that busi- ness, and when it arrives at the Chicago market the miller or the maltster or the brewer or the elevator man buys it as a commodity according to its merit; that is, in the Milwaukee market. The miller can select his wheat to suit his purposes, and the maltster and the brewer can select what suits them, and the elevator man can buy his grain with reference to making his grades. Now, there is no wrong done in our market in that respect. The elevator man has no advantage over the country shipper or his representative, the receiv- ing commission man, as to grading. There is, I believe — I have 820 GRAIN ELEVATOR INVESTIGATION. watched it many years — in Chicago hardly anything that will OTade contract grade. I do not suppose there is a half a dozen cars of No. 1 wheat, but the elevator man mixes it with poorer stuff, and they seem to be favored by the State inspectors there, and turn it out, and run it into regular houses. It is inspected, and most any kind of bum stuff will inspect No. 1 Northern wheat, No. 2, or rye, or whatever it is, but that is not the case in Milwaukee. Here we elect our inspector, and if there was any such discrimination, he never would be reelected. It is an annual election, and we have had only three inspectors in a period of forty-eight years. So that there has been equity as between the different branches of trade — the buyers and the sellers. Our inspection is not compulsory. Our legal adviser, when we estab- lished our rule, advised us that to compel the inspection would be in' restraint of trade, and not .to risk it, so that our rules are made so that only those who desire inspection are obliged to have it. Mr. Marble. You have had much to do with the barley trade? Mr. Eliot. Yes; quite a large barley trade in former times. Mr. Marble. I will ask you if the buyers of barley — the dealers in it — hedge their cash purchases with the futures, as is done in the wheat trade ? Mr. Eliot. Not in recent years; they used to. But from year to year the grading of the contract grade, No. 2 barley became more strict as to color and plumpness, so that there didn't any of it grade, and the man would not dare to hedge any purchases with sales of No. 2 barley. He would be cornered. He would be unable to fill his sales, either in Milwaukee or St; Paul. Mir. Marble. So that, as a matter of fact, the cash trade in barley is carried on TO|;hout,the protection of any future trading? Mr. Eliot, r think so. It is a pure mercantile business. Mr. Marble. Is that practicable? Mr. Eliot. Oh, yes. Mr. Marble. Has it given satisfaction? Mr. Eliot. Yes, sir. Mr. Marble. Would it be practicable to carry on the wheat trade in the same way ? Mr. Eliot. Well, there are some who think it would and some who think differently. I think that the inspection of that commoditj^ wheat, is somewhat in aid of the farming interests. It is not so extremely rigid as it is to the country dealer in Chicago, and it is not so rigid to the man who puts it out. He gets I'ust about the same change as the receiving shipping merchant, so far as the inspection is concerned. Mr. Marble. Does he deal in futures, though? Mr. Eliot. I don't think that for some few years there has been any contract in grade wheat in store here available, or it is to such a small extent that it is not of any commercial importance or status. Mr. Marble. I think that is all. Commissioner Prouty. That is all, Mr. Eliot. Witness excused. E. P. Bacon, called as a witness, having been duly sworn, testified as follows : Mr. Marble. You are in the grain business in this city? Mr. Bacon. I am, as a commission merchant. GRAIN ELEVATOR INVESTIGATION. 821 Mr. Marble. You receive shipments from Iowa? Mr. Bacon. Among other States. Mr. Marble. Have you been communicated with by the secretary of the Iowa Grain Dealers' Association, asking you to discriminate against certain shippers of grain? Mr. Bacon. We nave within the past two or three years; I could not say how recently. That correspondence" passes through the hands of my partner, Mr. Johnson, who is here and can give you more definite information. Mr. Marble. I will ask Mr. Johnson about that. Is there anything you desire to say, Mr. Bacon, regarding the general purposes of this investigation? Mr. Bacon. I haven't anything special to offer. I have been lis- tening to the testimony that has been given with a good deal of interest, but there is nothing that occurs to me that will add to what has been offered. Mr. Marble. I have no other question to ask. Commissioner Prouty. That seems to be all, Mr. Bacon. Witness excused. Commissioner Prouty. We will ask Mr. Johnson to be sworn. GrEORGE H. D. JoHNSON, called as a witness, having been duly sworn, testified as follows : Mr. Marble. You are a partner in the Bacon Commission Company. Mr. Johnson. E. P. Bacon & Co. Mr. Marble. Can you tell us about these letters from the Iowa Grain Dealers' Association? Mr. Johnson. We haven't had any of them, I should think, for more than a year. Prior to that we used to receive notice from Mr. George A. Wells, the secretary, that shipments had been made to us by certain farmers companies who are not recognized by the asso- ciation and by farmers. Mr. Marble. Asking you to discriminate against those shippers ? Mr. Johnson. Notifying us that the shipments had been made by those companies, or by those farmers, and asking us as to our policy with regard to such shipments. Mr. Marble. What reply would you make as to those letters? Mr. Johnson. I would say that the consignments came to us with- out our solicitation, and that we were morally and legally bound to handle them properly, but that we did not solicit such consignments. Mr. Marble. Have you ever received any communication from Iowa asking you to discriminate against those men in the sale of it — to sell it under the market ? Mr. Johnson. We received letters from individual shippers — I would not say positively that they were in Iowa, but from some north- western points — asking us to discriminate against such shipments by reporting fictitious sales, or making fictitious account sales, or by pay- ing over a difference to the regular shipper? Mr. Marble. Did you ever get such communications as that from any grain dealers' association ? Mr. Johnson. Not from any grain dealers' association. Mr. Marble. You niean the individual was to pay a portion of the money received for this grain to the competitor of the persons shipping grain to you ? &2'i GRAIN ELEVATOE INVESTIGATION. • Mr. Johnson. Yes, sir. Mr. Marble. So that the competitor would make the profit on the grain ? Mr. Johnson. Yes, sir. Mr. Marble. Were they in any way connected with any grain dealers' association? Mr. Johnson. No, sir. • Individual shippers only. Mr. Marble. They did not refer to the grain dealers' association in the communications? Mr. Johnson. No, sir. Mr. Marble. Mr. Wells never wrote you in that way? Mr. Johnson. No, sir. Mr. Marble. You were to make up an accounting, accounting for less money than you actually received? Mr. Johnson. That is the idea. Mr. Marble. Reporting a false price. Mr. Johnson. Yes, sir. Mr. Marble. The Wisconsin Grain Dealers' Association — has that addressed any such communications to you? Mr. Johnson. I think we never received anjr such communications from the Wisconsin Grain Dealers' Association along the line of objecting to shipmints of any individual. Mr. Marble. Have you received any from the Tri-State Grain Dealers' Association at Minneapolis? Mr. Johnson. We have had correspondence with them; I think no formal complaints. The complaints that we have had have been altogether, if not entirely, from Mr. Wells's Iowa Association. Mr. Marble. As a matter of fact, as a result of these letters from Mr. Wells, you have asked these people not to send their consignments to you, have you not ? Mr. Johnson. Yes, sir. Mr. Marble. But such as have been sent, you have handled? Mr. Johnson. We have handled properly. Where Mr. Wells or the individual shipper'have written about it, we have told them that we felt that we were in the position of trustee and we were obliged to handle the grain properly and account for it fully; but we recog- nized the objections that were made by the association and by the individual snippers, and requested such shippers to market their grain through the local buyers. Mr. Marble. Why did you do that? Mr. Johnson. Partly through the desire to avoid oar name being brought up unfavorably in the meetings of the grain dealers' asso- ciation and partly to recognize the rights of certain regular buyers who have money mvested in their elevator property and make a mar- ket continuously throughout the year. Witness excused. A. E. Halderman, recalled. Mr. Marble. Mr. Halderman, you have brought in certain blanks? Mr. Halderman. Yes, sir. Mr. Marble. I wish you would explain them. Just take them in. which they are used in the process of putting grain through your bureau. Mr. Halderman. This is the original paid freight bill. GRAIN ELEVATOR INVESTIGATION. 823 Mr. Marble. The original paid freight bill? Mr. Halderman. Yes, sir. It comes with the duplicate. And then we put our recording number on that bill, whatever the number is; you will notice it is stamped. Mr. Marble. One of these I see is marked "Milwaukee Elevator; Chicago cleaning account, "and then a pen is drawn through it and "Origmal" added. What does that mean? Mr. Halderman. That the bill was taken out of that account. Mr. Marble. This indorsement on the back is made by you — "Reconsigned to?" Mr. Halderman. Made by the clerk in our office? Mr. Marble. The indorsement on the front is made by the rail- road company? Mr. Halderman. Which is that? Mr. Marble. This. It shows that the bill is paid. Mr. Halderman. Yes, sir. Mr. Marble. Then you made this [Indicating] ? Mr. Halderman. Yes, sir. Mr. Marble. This bill comes to you as a bill that has been paid the railroad company? Mr. Halderman. Yes, sir. Mr. Marble. With the receipt of the railroad company appearing on the face of the bill, with the stamp? Mr. Halderman. Yes sir. Mr. Marble. And you stamp it on the front to show the time received by you — is that right? Mr. Halderman. No; there is no time on it. We simply show the number. Mr.MARBLE. The number of the bill ? Mr. Halderman. Yes, sir. Mr. Marble. And then you make an indorsement on the back of the bill? Take this bill No. 31290; this indorsement appears upon the back: Reconsigned to with the name of the person to whom it is reconsigned written in. Reconsigning privileges canceled and approved for refund. 47620 c; Rate, ?2.50; 10 West of — south of — 14.5 East of — Stop-over point. Total 24.5 Through Joint Rate Inspection Bureau, Paul P. Rainer, Chief Inspector. What does all that mean? Mr. Halderman. That is after a shipment has gone forward from Milwaukee to the East. I can not tell you unless I look at the bill. Commissioner Lane. Would it not be better to identify each of these by the exhibit mark ? Mr. Marble. Yes. I will call the number and hand them in and have them marked. Mr. Halderman. This shipment originated at Eau Claire, Wis., where the' local rate to Milwaukee is 12§ cents. There is also a pro- portional rate when the grain is destined east of Lake Michigan of 10 cents. We take that bill into account and when it is forwarded east we refund down to the 10 cent basis, the property having actually crossed Lake Michigan. Mr. Marble. The rate is less from Eau Claire east of Lake Michigan than it is when destined simply to Milwaukee — 4^ cents? Mr. Halderman. Two and one-half cents. 824 GEAIK ELEVATOR INVESTIGATION. Mr. Marble. And by registering with you they get a refund of that amount ? Mr. Halderman. After the grain is forwarded. Mr. Marble. This is dated June 22, 1906? Mr. Halderman. Yes, sir. Mr. Marble. I will ask that this be marked — the_ one concerning which the gentleman has testified. , (The same is hereto annexed and marked "Exhibit No. 2 to Mr. Halderman's testimony.") Commissioner Lane. Put the number in the record so that you will be able to identify it. Mr. Marble. This is marked in the corner "Pro. No. 31290," and I will ask that it be marked "Exhibit No. 2 to Mr. Halderman's testimony." Mr. Halderman. This would be the Joint Rate Inspection Bureau's record on that car; that is, 13758. You see you can turn to this book (indicating) . Mr. Marble. Turn to the record of that car. (Witness turns to record.) Mr. Marble. Now, this record which you have shown me in this book of the Joint Rate Inspection Bureau is the record made by you of the transaction referred to by this exhibit which has been made. This page of the book is marked "Record 10,000 to 19,999; C. M. & St. Paul R. R.; pagel3750; date received for recording 7- .15; record No. 13758; date of freight bill 6-22. Above the date of the freight bill and including the next three headings — western billing references; then Pro. No. 31290; Car No. 65496; Car Initials M; point of origin, Eau Claire; kind of grain, oats; weight in pounds, 47,620; road, C. M. & St. P.; elevator or warehouse, elevator; for account, M. E. Co. Then on the Opposite page, page 13750 still, "Recon- signed, date 10-30-06." That means that that reconsigning privi- lege was not used up until the 30th day of the tentji month of this year? Mr. Halderman. Yes, sir. Mr. Marble. So that the benefit of this was taken on the 30th day of the tenth month? Mr. Halderman. Yes, sir. Mr. Marble. "Via rail, reconsigned by M. E. C6. to Altoona, Pa.; road, P. M.; waybill dated, 10-30; No. 8-1583; car No. 59501; initial. New York Central; weight, 48,000 pounds; credit in weight, nothing; rate charged to stopover points, 12 J cents; corrected to west, 10 cents; east, 14.5; difference for refund, 2.5 cents; date of approval for refund, 11-14-06; reconsigning privilege expires 12-22." "Remarks," blank. Commissioner Lane. Does that show that that refund has been paid ? Mr. Halderman. No; just authorized. Commissioner Lane. Authorized by whom ? Mr. Halderman. By the Joint Rate Inspection Bureau. Commissioner Lane. By the Joint Rate Inspection Bureau? Mr. Halderman. Yes, sir. Commissioner Prouty. How do you notify either the shipper or the railroad of the authorization? GRAIN ELEVATOR INVESTIGATION. 825 Mr. Haldeeman. We turn this original expense bill back to the shipper ; he makes his claim agamst the carrier for that difference. Commissioner Prouty. You stamp that in some way ? Mr. Haldeeman. Yes, sir; it is authorized right on the back. Mr. Maeble. Now, these other bills are the same as this first one in character ? Mr. Haldeeman. Yes, sir. Mr. Marble. And in the indorsements ? Mr. HA.LDERMAN. Ycs, sir. Mr. Marble. And the same meaning to the indorsements? Mr. Haldeeman. The same way. Mr. Marble. I will ask that they be marked respectively 3, 4, and 5, and go in. (The same are hereto annexed and marked "Exhibits No. 3, 4, and 5 to Mr. Halderman's testimony.") Mr. Marble. You are actually carrying on from day to day, and have been every day this year, this sort of work for this bureau ? Mr. Halderman. Yes, sir. Mr. Marble. And it is all of the same general character ? Mr. Halderman. All of the same nature. • Mr. Marble. Has it been discontinued at any time ? Mr. Halderman. No, sir. Mr. Marble. You have treated all alike in the matter? Mr. Halderman. 'Everybody has the same privilege if they see fit to take advantage of it. Mr. Marble. What is the next blank, in order of time, which you have? Mr. Halderman. Nothing. This is the copy of shipping directions that are furnished by the shipper when the shipment is ready to be forwarded. Mr. Marble. The indorsements on this bill are all the receipt you give — all the paper you give ? Mr. Halderman. That is all we give. Mr. Marble. This is a shipping direction? This is what comes to you when the refund is claimed? Mr. Halderman. When the shipment is ready to be forwarded, together with the original paid expense bill. We detach that, and we attach it to the original directions, which go to the carrier with a copy of that expense bill. Mr. Marble. Now, these are freight bills which you have shown — these shipping directions' cover all of those? Mr. Haldeeman. Yes, sir; that is a copy of the original directions. Mr. Marble. The original directions covering these four freight bills? Mr. Halderman. Yes, sir. Mr. Marble. And this indorsement on the face of this, "Recon- signment authorized as indicated herein, Paul P.Rainer " — the con- sequence of that is that this authorizes the railroad to take this for- ward? Mr. Halderman. No, that we authorize the reconsigning privilege under these rules and insert that rate. Mr. Marble. And insert the rate at 14 J cents? Mr. Halderman. Yes, sir. Mr. Marble. Which means what? The 14 J cents? 826 GRAIN ELEVATOR INVESTIGATION. Mr. Haldbeman. That that is the rate east of Milwaukee to the destination of the grain. Mr. Mjveble. I Avill ask that this be marked "Exhibit No. 6 to this testimony." It continues these transactions. (The same is hereto annexed and marked "Exhibit No. 6 to Mr. Halderman's testimony.") Mr. Maeble. What further? Mr. Haldeeman. That is all. This is just similar; in the same form. Mr. Maeble. Now, this bundle here is the inbound freight bills and the authorization for the reconsigning, is it ? Mr. Haldeeman. Yes, sir. Mr. Maeble. I will ask that this be marked, the inbound freight bill. Exhibit No. 7. (The same is hereto annexed and marked "Exhibit No. 7 to Mr. Halderman's testimony.") Mr. Maeble. And the shipping directions for that marked Exhibit No. 8. (The same is hereto aimexed and marked "Exhibit No. 8 to Mr. Halderman's testimony.") Mr. Maeble. And these are of the same nature? [Indicating.] Mr. Haldeeman. Yes, sir. Mr. Maeble. These are three independent freight b^lls, which I ask be marked consecutively Exhibits Nos. 9, 10, and 11. (The same are hereto annexed and marked "Exhibits Nos. 9, 10, and 11 to Mr. Halderman's testimony.") Mr. Maeble. And these are the shipping directions for that lot of grain? Mr. Haldeeman. Yes, sir. Mr. Maeble. These shipping directions are dated September 8; no, this can't be right.. This is dated September 8, and these are dated Mr. Haldeeman (interrupting). August 31. Mr. Maeble. Oh, yes; that is right. Mr. Maeble. I will ask that these all be marked in order. Now, these blanks, such as you have shown with this entry of the book, that covers the physical process of getting this reconsigning? Mr. Haldeeman. Yes, sir. Mr. Marble. And it is done according to these rules which you have handed us ? Mr. Haldeeman. Yes, sir. Mr. Maeble. And is actually being done now, and has been done through the year without discrimination to anybody? Mr. Haldeeman. Yes, sir. Mr. Maeble. It is simply the rules carried out? Mr. Haldeeman. Yes, sir. Mr. Maeble. Do you know whether grain on the Milwaukee market which enjoys this reconsigning privilege enjoys a higher price than grain which does not carry it ? Mr. Haldeeman. Not that I know of. I do not know anything about that. Mr. Marble. Could you give us your opinion as to whether or not this ought to be allowed to the shipper instead of to the buyer of the grain? GRAIN ELEVATOR INVESTIGATION. 827 Mr. Haldebman. That is a matter I could not answer. Mr. Marble. You have no Mr. Haldebman (interrupting). I have no knowledge. I do not know how the grain is bought. Mr. Marble. You have not concerned yourself with that question at all? Mr. Haldebman. No, sir. Mr. Maeble. That is all. Mr. Haldebman. I would like to amend one statement that I made this morning. If you will permit me to have one of those bills, the one that you had this morning, that cleaning account bill. I stated that we would not take a bill carrying that stamp into our account. Now, we will take any bills for grain that originates west of the Mis- sissippi RiTer, if the receiver desires to place the bill in our account, for the reason that on export grain originating west of the Mississippi River, it takes a half cent less than the local grain. For that reason we will take these bills into our account, and when the shipper gets ready to ship east we will authorize the export rate, which is a half cent less than the local rate. Commissioner Peouty. You mean you will authorize the repay- ment of the half a cent to him? Mr. Haldebman. No, sir. He gets a half a cent less on the out- bound shipment. Commissioner Peouty. By reason of the fact that this grain origi- nates beyond the Mississippi River? Mr. Haldebman. Yes, sir. Mr. Maeble. I understood you to say this morning that that showed that it had already enjoyed the reconsignment ? Mr. Haldebman. That is all right. He doesn't receive any privi- lege. That would carry his grain to Chicago free, and we authorize the export rate east of Chicago which that shipment would be entitled to if it traveled direct to Chicago. Mr. Maeble. And by getting that stamp on, he can send grain to Chicago free ? Mr. Haldebman. Yes, sir. Mr. Maeble. Could he send grain from here east on that? Is there any possibility of a duplication of the privilege, so far as the haul from here to Chicago is concerned? Mr. Haldebman. No, sir. Mr. Maeble. You do guard against that? Mr. Haldebman. Yes, sir; because we have the original bill. Mr. Marble. That is all. Commissioner Peouty. That is all, Mr. Halderman. Witness excused. D. G. Owen, recalled. Mr. Maeble. I will ask you, Mr. Owen, as to the price paid on the chamber of commerce cash market here for grain — does the grain carrjdng the reeonsigning privilege command any different price from grain \raich does not carry it ? Mr. Owen. No. It commands the same price. The question is never asked here on the part of the buyer or mentioned by the seller as to whether or not it is through-billed grain or not. 828 GE.'i.IN ELEVATOE INVESTIGATION. Mr. Marble. It was testified in Chicago that there is separate bidding for reconsigned grain. Mr. Owen. I understand that to be the case in Chicago. Mr. Marble. They make a separate quotation ? Mr. Owen. Yes, sir. Mr. Marble. Do you know whether that is higher or lower than for grain which has not been reconsigned ? Mr. Owen. Generally higher. Mr. Marble. Because it can be shipped at the lower freight rate? Mr. Owen. Lower proportional rate. Mr. Marble. Why isn t there a different price in Milwaukee? Mr. Owen. Probably because there isn't so much of that business that comes here. Mr. Marble. The price is the same here? Mr. Owen. Practically the same. Mr. Marble. Does the fact that you have the same price, whether it be reconsigned grain or not, operate to deprive the farmer of the benefit of this reconsignment privilege, so as to prevent its value reaching him at all ? Mr. Owen. When grain is sold from a proportional rate point — for instance, if the rate in Nebraska, the flat rate is 1 1 cents a hundred and the proportional rate, the through-billed rate is 10 cents a hundred, we can sell that grain to the elevator man and arrange ■ with him to get a proportion of that refunded. Keally he gets the whole of the refund, but we go to him and make a bargain to divide that 1 cent a hundred refund, which would come back to us through the freight bureau, from this elevator proprietor. Mr. Marble. Do you ever do that sort of thing? Mr. Owen. Yes, sir; in order to get something for the shipper back. Mr. Marble. How frequently do you do that? IVIr. Owen. Very often. Mr. Marble. How recently have you done that? Mr. Owen. During the last six months. Mr. Marble. That in effect is getting a higher price for the reconsigned grain. Mr. Owen. Higher price in this way, that we get a part — no, I won't say that, because sometimes the elevator price is not quite as good as the local dealers are paying; they may be paying a half cent less, and possibly the local dealer can not use that kind of grain or E articular kind of. oats or grain, or whatever kind of grain it may e that the party may be shipping. Mr. Marble. But if sold to the elevator, the elevator will give a little more and make a division ? Mj. Owen. They do not give any more for the grain, but they get a part of the refund on account of getting the elevation. Mr. Marble. And pay that to the commission house? Mr. Owen. They pay half of it. Commissioner Prouty. If you left that grain in the car and reconsigned that same car, you would get the whole of the refund? Mr. Owen. Well, if we had arrangements with the freight bureau to do that and let that grain intact in the car and forward it East, and we have proper arrangements with the freight bureau, we would probably get that. GRAIN ELEVATOK INVESTIGATION. 829 Commissioner Prouty. If there is such a tariff providing that grain for beyond bears a rate of 10 cents up to Milwaukee and you bring your grain to Milwaukee and ship it beyond, you are entitled to the refund ? Mr. Owen. Yes, sir. Commissioner Prouty. As a matter of course, would you be able to get it in some way ? Mr. Owen. Yes, sir. Commissioner Prouty. Couldn't you put that grain into a public eleva.tor and pay the regular published elevator charge and get the whole of the refund ? Mr. Owen. Not and compete against the private elevator. Commissioner Prouty. What do you mean by "not and complete against the private elevator?" Mr. Owen. You would have to pay a transfer charge here, and that is a half cent a bushel, I think, although I am not quite sure. ■ Commissioner Prouty. So that it costs you so much to put it through and pay the public elevator that you could not afford to do it in that way? Mr. Owen. That is right. Commissioner Prouty. So that the real reason you never do that is that in practice it would cost you too much? Mr. Owen. Yes, sir. Mr. Marble. Is not it a fact that this grain which carries recon- signment that it carries a less price; that they bid a little less in view of the fact that they divide the reconsignment with you ? Mr. Owen. There is nothing said. When the car comes in — when we make the sale we have an understanding with them that we are to have half of the refund on the car, but he does not bid any less on that account. He pays the market price; but the elevator people are not always bujang or paying as much as some local feed dealer, not buying as good a class of oats or grain. Mr. Marble. That is all. Commissioner Prouty. That is all. Witness excused. W. P. Bishop, called as a witness, having been duly sworn, testi- fied as follows: Mr. Marble. Mr. Bishop, you are connected with the E. P. Bacon Company? Mr. Bishop. Yes, sir. Mr. Marble. In what capacity? Mr. Bishop. Salesman. Mr. Marble. And you also buy grain for them? Mr. Bishop. No. We do no buying. It is all selling. Mr. Marble. In selling grain do you have .occasion to sell grain which carries .this reconsignment privilege, and also grain which does not carry it ? Mr. Bishop. Yes, sir; both kinds. Mr. Marble. Is there any difference in the price received for grain by you, whether or not it carries the privilege ? Mr. Bishop. Well, it depends somewhat upon who the purchaser is, and the purposes for which he buys it. If we sell it to a maltster he will sometimes pay a little more for a car of grain or a car of barley 830 GEAIN BLEVATOE INVESTIGATION. on which he can get a transit rate than he will for another car of the same quality. Mr. Marble. Do you also have this arrangement of selling at the same price and dividing the refund ? IVIr. Bishop. Not with the maltster or the local, what we term the maltster or local consumer, but with the shipper, the private elevator man, who buys for shipment, we have that arrangement with him. Mr. Marble. What is the arrangement? Mr. Bishop. Well, they insist upon the division of the difference in the rate. Previously — well, a year ago, possibly — there was one ele- vator firm here that paid all that diiferential, but through an arrange- ment, an agreement with another elevator concern tkey cut us down to one-half, and insisted ^ upon having one-half of it; that only left one-half of the differential to refund to the shipper, or to give to the shipper, you imderstand. Mr. Marble. That in fact makes the country shipper pay a little more freight than the railroad company actually receives for the carriage ? Mr. Bishop. Yes, sir ; simply for the reason that the private elevator man insists upon a division of that difference. Mr. Marble. Why can't you get all of that yourself directly without it passing through the elevator man's hands? Mr. Bishop. Because we are receivers and the railroad company refunds that difference to the buyer. Mr. Marble. To the buyer, but not to the receiver? Mr. Bishop. Not to the receiver. Commissioner Prouty. When do they refund it, when it is shipped out? Mr. Bishop. When it is shipped out. Commissioner Prouty. They only refund it — no man can get it except the man who ships it out? Mr. Bishop. That is the only man who can get it, and he refunds as receiver or agent for the country grain dealer. Mr. Marble. You actually are the one who has paid the excess freight, however, at the beginning? Mr. Bishop. Yes, sir. Mr. Marble. But the refund is made to the man who buys from you, who isn't the one who is entitled to it? Mr. Bishop. The refund by the railroad is made to the man that buys of us and he refunds to us. That is always the basis of which through-billed stuff is shipped. Mr. Marble. But you are the one who has paid the freight, all the extra which has to be refunded ? Mr. Bishop. Yes, sir. Mr. Marble. That is all. Commissioner Lane. Does that run into a very large amount in the course of a year? Mr. Bishop. Not so very much. There are only a comparatively small number of points at the present time, in the State of Wisconsin principally, where that rule prevails. Previous to this year there was a good deal of little shipments originating west of the Mississippi River, but that has been practically wiped out by the revision of the local rates. Commissioner Proxjt?y. That is all. Mr. Bacon. I should like to bring out one point as to the under- GRAIN ELEVATOR INVESTIGATION. 831 standing between shippers in order to get what proportion of this refund they return to the receiver. Mr. Bishop. On the points in Wisconsin where the rate is — where there is a differential of that kind — they pay us one-half; they refund one-half. For instance, at a point where the difference is a cent a hun- dred, they will refund one-half of that amount. Mr. Bacon. Was there not at one time an understanding or a com- bination between the shipping buyers that they would not refund any portion of that ? Mr. Bishop. There was but one firm who objected to paying any of it, and it was only through a great deal of maneuvering on the part of the receivers that they finally prevailed on them to pay one-half. Mr. Marble. Did all tne firms ]oin in that combination not to pay anything? Mr. Bishop. No, sir; there was one firm that paid all. Mr. Marble. Wliatfirm? Mr. Bishop. The Milwaukee Elevator Company. Mr. Marble. They returned all ? Mr. Bishop. Yes, sir. Eventually they agreed with the F. Kraus Company to pay only one-half. Mr. Marble. Has there been any time when they or any of them did not pay any ? Mr. Bishop. No, not that I know of. Commissioner Prouty. That is all. Witness excused. O. G. Kinney, called as a -witness, having been duly sworn, testified as follows : Mr. Marble; You reside at Colfax, Wis. ? Mr. Kinney. I do. Mr. Marble. What is your business ? Mr. Kinney. General mercantile business, and buying, and ship- ping of grain and produce, and live stock; principally produce and potatoes. . Mr. Marble. Have you an elevator? Mr. Kinney. We have a flat house. Mr. Marble. Do you shovel the grain into the house ? Mr. Kinney. No; we empty it from sacks, grain sacks, and run it out in cars. Mr. Marble. You are on the Soo Road ? Mr. Kinney. On the Wisconsin Central. Mr. Marble. Have you competitors at that point in the buying and selling of grain ? Mr. Kinney. We have the Northern Grain Company. Mr. Marble. And other competitors ? Mr. Kinney. No, sir. Mr. Marble. Have you been fairly treated by the railroad? Mr. Kinney. We do not think we have. Mr. Marble. In what respect ? Mr. Kinney. Well, we sought to get into Milwaukee, because we thought that Milwaukee was the open competitive market of the State. If we go to Manitowoc, we are subject to the Northern grain because they own the terminal and the one elevator there, and i pre- sume the same thing exists at Green Bay, although we cannot reach 832 GKAIN ELEVATOR INVESTIGATION. that. We sought to get into Milwaukee, where there are several buyers and there is competition, but the rate was 12i cents to Mil- waukee, the local rate, and for the Lake and rail, 10 cents. And we used to bill at Lake and rail to New York, to hold at Milwaukee for inspection, and rebill it, and it would go at 10 cents; but about less than two years ago they changed that. It seems after this revolution in Wisconsin of the railroad matters it was changed, and we had trouble in getting the 10-cent rate. However, Mr. Owen has repre- sented us in some deals with the elevators here where we get part of that refunded. At that time it was a difference of 2 J cents a hundred. So last June, or in May, I think it was, I entered a complaint with the railroad commission, the State Railroad Commission, about the rate to Milwaukee, not knowing that another party had entered a com- plaint at the time, but I found out that Secretary of State Houser had. We had a hearing on the 10th of July, and I presented the case as well as I knew how, and they put the flat rate at 1 1 cents. I think, how- ever, now it is only a difference of 1 cent between the export and the flat rate. It is 10 cents for lake and rail or the proportional rate, I mean. So it only makes a difference of 1 cent. The reason we wanted it was that we wanted to get into Milwaukee to get to an open market. Now, in our section of the country when we get to about the second station west of us it has a 7^-cent rate to Manitowoc, from there on to St. Paul or to the Twin Cities. Well, there was a time that the Wisconsin Central stated that if we would build our own elevator at Manitowoc they would make us a rate of 7^ or 8 cents — I am not positive; it was one or the other — for export business. But recently they have raised it to 10 cents to Manitowoc, in our section; right around our section, while west of us it is 74 cents. Now, this is very material to us. However, there are buyers o:^ grain from the East that sell sometimes to Toledo parties that take it to Manitowoc over the Ann Arbor Railroad. If we can get a 7J cents rate into there it would benefit us. The local agent told me yesterday that they had advanced the rate to Manitowoc recently to 11 cents over the Wisconsin Central. I only have his word for it. Mr. Marble. All of those rates you have testified to are entirely in the State of Wisconsin, are they not? Mr. Kinney, Yes, sir. Mr. Marble. Unless the proportional be regarded as a part of the through rate ? Mr. Kinney. That would be regarded as a part, of the through rate. Mr. Marble. You mean the people farther away from Manitowoc than you get a lower rate to Manitowoc than you ? Mr. Kinney. Yes, sir; they have. Commissioner Prouty. That is because they are nearer to Minne- apolis. They get the MinneapoHs rate, don't they? Mr. Kinney. I presume so. Mr. Marble. Have you any agreement with the Northern Supply Company, your competitor, as to the prices to be paid by your company? Mr. Kinney. We never could agree. Mr. Marble. Have they made efforts to agree? Mr. Kinney. No, sir; we sometimes have talked of it. We may have mentioned it, but we have always paid all the market would stand. GBAIN ELEVATOR INVESTIGATION. 83^3 Mr. Marble. There has been some discussion toward reaching an agreement, but no agreement has been reached ? Mr. Kinney. No agreement. Mr. Marble. But there has been some discussion looking to it? Mr. Kinney. In a way. Mr. Marble. Was the grain pooled at that point ? Did you agree as to what amount each shall buy ? Mr. Kinney. No; we do not know how much each receives. Mr. Marble. You buy without regard to what your competitors buy? Mr. Kinney. Yes, sir. Mr. Marble. Do you all have the same practice ? Mr. Kinney. We do not know. Mr. Marble. Are you absolutely competitive in your relationship to yoiu- competitor, the Northern Supply Company? Mr. Kinney. I think we are. Sometimes we do not know how much they are paying until we find it out from others. I presume it is the same case with us. Mr. Marble. That is all. Commissioner Prouty. That is all. Witness excused. John W. Thomas, called as a witness, having been duly sworn, tes- tified as follows: Mr. Marble. You are railroad conmaissioner of the State of Wisconsin ? Mr. Thomas. Yes, sir. Mr. Marble. With headquarters at Madison ? Mr. Thomas. Yes, sir. Mr. Marble. How long have you been railroad commissioner? Mr. Thomas. Going on four years. Mr. Marble. And your duties, a portion of them, have been to investigate rebating and railroad charges ? Mr. Thomas. Yes, sir. Mr. Marble. You have investigated in this State ? Mr. Thomas. Yes, sir. We have conducted investigations as to rebates and refunds. Mr. Marble. I beheve you have to do — you discovered a large amount of rebating, did you not ? Mr. Thomas. Yes, sir. Mr. Marble. About how much? Mr. Thomas. In the aggregate, it is somewhere about $12,000,000. Mr. Marble. Your purpose in investigating it was to collect taxes? Mr. Thomas. Back taxes. Mr. Marble. And within the period of the statute of limitation you discovered $12,000,000 which had not appeared in the gross income of railroads, and on which they had not paid taxes ? Mr. Thomas; According to our view of what gross earnings are, yes, sir. Mr. Marble. The railroads acceded to your views? Mr. Thomas. There are some things they do not accede to. They contend, until the court decides it differently, that they are in tho right. S. Doc. 278, 59-2 53 834 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. The taxes have been paid in large part? Mr. Thomas. No; not on the big roads. The smaller roads have all paid. Mr. Marble. How recently did you find evidence of rebates — that is, how recent were the rebates ? Mr. Thomas. 1903. Mr. Marble. Have you investigated since that time? Mr. Thomas. No; there was a change in the Wisconsin system of taxation at that time. Mr. Marble. And now they tax specific property of railroads and not gross earnings? Mr. Thomas. Yes, sir. Mr. Marble. So that whether the rebates continued since that time has not been of interest to you as a taxing matter? Mr. Thomas. No. Mr. Marble. Did you investigate as to the ownership of stock of the Northern Supply Company? Mr. Thomas. Yes, sir. Mr. Marble. In 1904? Mr. Thomas. In 1904 I made that investigation. Mr. Marble. Have you made any investigation since then of that ? Mr. Thomas. No, sir. Mi\ Marble. What did you find as to the ownership of stock of that company at that time ? Mr. Thomas. I found that company was organized under the laws of the State of Wisconsin, and I think the capital stock was $40,000; they had a paid-up capital of $20,000 during the time I made the inves- tigation; there had been changes in the company, so that evidence of the orcanizers had been what they called ' ' frozen out." During the time 1 made the investigation I found that the stock was practically owned by four men. A little over a fourth of the stock was owned by a gentleman who was generally claimed to be the agent of the road over which they shipped and assistant solicitor. Mr. Marble. What was his name ? Mr. Thomas. Henry B. Dyke. I couldn't say that he occupies these positions to-day, but at that time he did. Mr. Marble. Was any other stock owned by any other railroad official, so far as you know ? Mr. Thomas. Yes, sir; another young gentleman that was owning stock was the son of the second vice-president and general manager or the road. His name was S. Pennington. Mr. Marble. Did any relative of Mr. Pennington own stock? Mr. Thomas. Yes, sir; the father-in-law of the son, a Mr. Taylor, I think, owned several shares. Mr. Marble. And any other railroad official did you find interested ? Mr. Thomas. No; I did not. There were a couple of employees who had the balance of the stock. Mr. MJi.RBLE. Did this constitute a control of the grain company ? Mr. Thomas. Oh, yes. Mr. Marble. And this Northern Supply Company is a grain pur- chasing and shipping company? Mr. Thomas. Yes, sir. Mr. Marble. Operates a line of elevators ? Mr. Thomas. I guess they operate about 30. QEAIN ELEVATOR INVESTIGATION. 835 Mr. Marble. And these officials are officials of the Minneapolis, St. Paul and Sault Ste. Marie Railway? Mr. Thomas. They were at that time. Mr. Marble. And the Northern Supply Company buys on the line of that road ? Mr. Thomas. Yes, sir. Mr. Marble. Did you discover that the Northern Grain Company had received a large amount of rebates ? Mr. Thomas. Yes; sir. Mr. Marble. How much? Mr. Thomas. I couldn't tell you in the aggregate, but it was a very large amount. It went up to several hundred thousand dollars. Mr. Marble. I have heard it reported that you have stated that they received $300,000 rebates in six years ? Mr. Thomas. No, I do not think I made that report; but a couple of my accountants are present that made that examination, and they can testify concerning it. Mr. Marble. Can they testify better than you as to the form in which these payments were made ? Mr. Thomas. Yes; more in detail. Mr. Marble. Can you tell us what form they were ? Mr. Thomas. Yes. The manipulation probably that lead up to them they are a little more familiar with. They have made their reports, but they do not enter into detail. Mr. Marble. What you know you got from their reports ? Mr. Thomas. Yes, sir. Mr. Marble. Is there anything else concerning which I haven't questioned you of this same general sort, or any sort that you can make a statement for the benefit of the Interstate Commerce Com- mission? Mr. Thomas. I don't think there is anything only what appears in our annual report relative to this matter which you have already asked me on. I see you have a copy there. Mr. Marble. Have you made any investigation up until 1906 of rebates in the State ? Mr. Thomas. I started to make them for the year 1905, but a com- pUcation arose so that we guit. Mr. Marble. How far did you pursue that investigation? Mr. Thomas. Oh, we went back for six months. Mr. Marble. Were you finding evidences of rebates in that time? Mr. Thomas. On a small scale, but nothing hke we had been find- ing previous to that time. lilr. Marble. In the grain business were there rebates ? Mr. Thomas. I couldn't say as to that. Mr. Marble. Did you find that the Northern Grain Company or any of these grain companies received passes or mileage books? Mr. Thomas. Yes, sir. Mr. Marble. Did the Northern Grain Company have those ? Mr. Thomas. Well, they bought them, but I guess there were rebates made on them. Mr. Marble. Do you know about that? Mr. Thomas. It was reported by my accountant ; that is part of the report. Mr. Marble. Is there anything you wish to put in? 836 GEAIN ELEVATOK INVESTIGATION. Mr. Thomas. No. That is simply to verify the figures that you were going to ask me about. . Mr. Marble. What are your accountants names that are here ? Mr. Thomas. Mr. S. W. Oilman and Mr. E. C. Mason. Mr. Marble. We will excuse you unless you want to make a state- ment. Commissioner Prouty. You say you found that large rebates had been paid the Northern Supply Company. Did you find that rebates had been paid to other grain companies ? Mr. Thomas. Yes, sir. Commissioner Proutt. Do you think the rebates paid the Northern Supply Company were larger, in proportion to the amount of business done, than tnose paid to other grain companies ? Mr. Thomas. I could not answer as to that, because I never inves- tigated as to the amount of business that any of these companies did. Commissioner Prouty. That is all. Witness excused. S. W. GiLMAN, called as a witness, having been duly sworn, testified as follows : Mr. Marble. You are an assistant of Mr. Thomas, who iust testi- fied? Mr. GiLMAN. I was. Mr. Marble. For how long a time? Mr. GiLMAN. From January, 1904, to October, 1905, a year and a half. Mr. Marble. You are an expert accountant? Mr. Oilman. I am an accountant and have been more or less all my life; yes, sir. ' Mr. Marble. That is yoiir business? Mr. Oilman. I am an attorney at law, but I have practiced account- ing for many years, and do yet. Mr. Marble. You have heard the questions asked of Mr. Thomas ? Mr. Oilman. Yes, sir. ' Mr. Marble. With regard to the rebates made the Northern Orain Company he tells us, as you have heard, that you have more accurate knowledge as to those. Can you tell us about those; the amount discovered, and the form in which they were paid ? » Mr. Oilman. I can tell you the form in which they were paid, and in a general way the amount discovered. Let me say that the reports that I made were in a series, and Mr. Thomas has in his office at Madison, doubtless, all the reports that I made. I made reports of what I discovered during a certain period and sent them up further reports for further periods, so that I am not prepared to say the total amount. The form in which they were paid was by voucher. The voucher was prepared on a voucher order signed by the officials of the railway company. The vice-president in charge of traffic and the general freight agent and assistant freight agent would place their inifials on the voucher order, and based upon that voucher order it was the instruction to the freight auditor of the road that a voucher would be made out. The voucher would be either in the name of the com- pany who received the refund or of J. H. Cole, an employee of the company. Those vouchers were very large, refunding on account of GRAIN ELEVATOR INVESTIGATION. 837 shipments originating either in Wisconsin. — many of them in Wiscon- sin and many of them in States west of Wisconsin — on shipments largely, almost entirely, into Manitowoc. I am referring now to the last series of questions you asked Mr. Thomas about the Northern Grain Company. I want to say that we were looking not primarily for rebates, so called, but for improper deductions in gross earnings aflFecting the taxation of Wisconsm, and many things we found were not neces- sarily rebates, but were, from our standpoint, improper deductions from the gross earnings, which should have been reported to the State of Wisconsin. Now, as to the amomit, I have a memorandum here which I feel is incomplete so far as the total is concerned, but a memorandum of the amount of the refunds during certain periods to the Northern Grain Company. These papers — I haven't seen them fof some time — yes, I have here the amomit paid out by the Chicago and Northwestern Railway during the six years 1897 to 1903, except the year 1902, which I did not examine, which was examined by some other accotintant, on accotmt of the Northern Grain Company, and from our standpoint improperly deducted from the gross freight earnings was $151,444.47. Of this amount the Wisconsin proportion, based on mileage in Wis- consin, according to the proportion to the total mileage of the trans- portation service, was $97,277.72. I want to say further that, if you will let me conduct my own examination in this way, not all of these vouchers would represent what you would embrace in the term of rebates necessarily, but from my standpoint they were improperly deducted from gross earnings because the railroads in Wisconsin adopted the Manitowoc gateway instead of the Chicago gateway — I Won't say when, but back of the period of this investigation — in order that they could iavoid the charges of reconsignment in Chicago and the surveillance of Paul P. Rainer, inspector of the destiaation of shipments beyond Chicago, and they adopted the Manitowoc gateway without putting in their tariff the fact that Manitowoc took the same rates as Chicago. Dur- ing the period referred to they did not, and the charges were adjusted to Manitowoc based on the rates to Chicago, based on the various through rates via Chicago into the eastern markets, and the tariffs providing for certain through rates if destined to points east of a certain point in the middle eastern States and certain other rates if to New York, and so on, and by routing via Manitowoc, among other things, they avoided the necessity of Mr. Raiher determining just where those shipments went and made their refund from Manitowoc — from our standpoint unjustly refunded to the shippers and to the fraud of Wisconsin, because no tariffs were provided for a reduction via Manitowoc. Whereas it might have been a rebate from the standpoint of the Commission, from our standpoint it was an improper deduction; and much of the item referred to was improperly deducted from our standpoint. Included in that amoimt — ^it may not neces- sarily have been a discrimination JVfr. Marble (interrupting) . And a deduction was made as to all shipping that way? Mr. GiLMAN. The deduction was made to the Northern Grain 838 GBAIN ELEVATOR INVESTIGATION. Company. I found no other vouchers in the same class in magnitude for any other shipment. Commissioner Peotjtt. Do those vouchers show on their face what they were ? Mr. GiLMAN. Yes, sir; largely: Commissioner Prouty. The basis of the refund ? Mr. GiLMAN. The voucher order would be worded somewhat like this, addressed to the freight auditor: "Please make voucher in favor of Northern Grain Company for J. H. Cole, as the case might be, for refund of so many cents on grain from points, naming them, to Manitowoc;" and sometimes there would be a group of shipments included in the first paragraph of the voucher, and still further groups in the second, and so on, and the vouchers aggregating, in some cases, many thousands of dollars. I don't know but what that is a little too strong — thousands of dollars for an individual voucher. The method that we adopted was to reduce that to a Wisconsin proportion, to determine the amount that had been improperly sub- tracted from the gross earning to affect Wisconsin revenue, which was 4 per cent of the gross earnings. From our standpoint all of that should have been reported to Wisconsia as gross earnings, and 4 per cent paid on it. Commissioner Pkouty. If the railroad had published the tariff showing the rate finally applied, in your judgment, would that have been Mr. GiLMAN (interrupting). From our standpoint, for this Mani- towoc business, very much of it. If there had been a tariff accessible to the public, duly published, we should have considered it would have cured a great many of these transactions. Conmaissioner Prouty. Take the rate that has been referred to here, 12^ cents, local to Milwaukee, with a proportional rate of 10 cents beyond. The local rate is actually paid, and a refund of 2^ cents is made subsequently if the traffic goes east. Would you regard that as an improper refund ? Mr. GiLMAN. I think I can answer that by saying that all the cases of routing via Chicago on certificates from Paul P. Rainer, we regard, from a Wisconsin standpoint, as innocent and include nothing, although very large shipments are made that way — very many thousand dollars per month. From our standpoint, we consider it innocent, for the reason that there was an inspection bureau, and the nature of the Western Railway Weighing Association, which was to determine as to the character of shipment and its actual destination; whereas via the Manitowoc gateway for these very large shipments during the period of years there was no such governing bureau. There was no such standard to apply to those shipments to determine their ultimate destination, whether they were stopped in Michigan, whether they went into Indiana, or whether they went into Ohio, or actually went east, and got the reduced rate. Commissioner Proltty. Is there any other shipper through Mani- towoc except the Northern Grain Company? Mr. GiLMAN. I am not sure, but I remember none that received any. Commissioner Protjty. Do you know whether other shippers actu- ally moved grain through Manitowoc over the same route f Mr. GiLMAN. If they did, I didn't know of it. GRAIN ELEV^ATOB INVESTIGATION. 839 Commissioner Peouty. Is that all, Mr. Marble? Mr. Marble. Just a minute. How about the Wisconsin Central Railroad ? Mr. Oilman. I did not examine the Wisconsin Central road with reference to the Northern Grain Company. At that time during the whole scope of this investigation that is referred to, my work was with other roads, and other examiners for the commissioner examined the accounts of the Wisconsin Central. Mr. Marble. Did you examine the accounts of the Chicago & Northwestern? Mr. Oilman. Yes, sir. Mr. Marble. Did you find such payments being made to other shippers at other points by the Chicago & Northwestern ? How about Mr. Cargill, at Oreen Bay? Mr. Oilman. That name is very familiar on the records, the official records of the railroad conunission. Just to what extent or in just what relation those vouchers were, I am not able to tell. The ship- ments were made, adjustments wqpe made on the basis of less than the tariff rates for W. W. Cargill, from our standpoint improperly deducted from gross earnings; and I want to emphasize that, because we were not primarily looking for what you may be looking for now. Inci- dentally, these things were embraced; and we would take items that were innocent enough, aiid business transactions that violated no law except perhaps the law that provided that they shall report their full gross earnings and pay 4 per cent thereon. Mr. Marble. And if a railroad company did not publish a tariff open to all the public, that it was going to make certain allowances, and then made the allowances to those whom it chose, or as a result of private agreement; that would come pretty near describing the greater portion. Mr. Oilman. It would. And that was the test that we appUed to these transactions. If there was a tariff duly published — I mean by that a tariff that bore evidence of due publication primarily, rather than a makeshift tariff or agreed upon sheets — sheets that bore evi- dence of being for limited publication, or use — we regarded that as the test whether or not the repayment was a proper deduction from earnings. Mr. Marble. I imagine that would be a pretty fair test of a rebate. Mr. Oilman. Another test was that if there was such a tariff, no voucher order was necessary, because the officials of the road have the authority to do it, and it was a matter of record in various offices. But where a voucher order was necessary to instruct the official to make a voucher, that was deemed primarily to be evidence of an improper payment and all the voucher papers were then examined. Mr. Marble. Did you find evidence of such payments being made to the Milwaukee Elevator here ? Mr. Oilman. There wasn't by the Northwestern Road. Mr. Marble. You say you did not examine the Chicago, Milwaukee and St. Paul? Mr. Oilman. Nor the Wisconsin Central. Payments were made to the Milwaukee elevator that were regarded from our standpoint as improper, and reported to the railroad commissioner, included in these veiy voluminous reports that were made to the railroad commissioner and filed in his office. 840 GRAIN ELEVATOK INVESTIGATION. Mr. Maeble. To what amount were such payments made? Mr. GiLMAN. I am unable to say. Commissioner Prouty. Did you examine the accounts of the Soo Road? Mr. GiLMAN. Not for the railroad commissioner who has just testi- fied. Within a few weeks I have made a special trip to examine the accounts of the Soo Road for the present railroad commissioner of Wisconsin. There is a different board, but not in this connection, and having nothing to do with this matter. Mr. Marble. Are you free to tell us what were the results of that investigation ? Mr. GiLMAN. It would embarrass me. If you ask the question, of course I will answer it. Commissioner Prouty. No; we won't do it. Mr. Marble. I asked you that preliminary question just to determine whether another question would be proper. Commissioner Prouty. My question had reference to this : Did you detect rebates paid to the Northefti Supply Company, which is said to have operated on the Soo Line ? Mr. GiLMAN. I did not.' Mr. Marble. Did you find payments made to the Rialto Elevator Company by the Northwestern Road ? Mr. GiLMAN. I almost said yes. I am not sure. If you wiU pardon me saying so, I came down here as a result of a telephone request of the marshal, without having made preparation. Mr. Marble. You can not recall, relative to Nye-Schneider-Fowler, whether such payments were made ? Mr. GiLMAN. As to the Nye-Schneider-Fowler Company I would say that so-called elevation charges were made in large amounts. Whether that has been in the scope of this particular period or not, I can not say. Mr. Marble. You can not tell us just what time those were? Mr. GiLMAN. I couldn't tell you; no, sir. Mr. Marble. Can you, from your investigations, and from your experience here, tell us further than you have why Manitowoc was established as a transfer and shipping point? Mr. GiLMAN. The findings, as reported to the commissioner, were these : That to enable the railroad companies to transfer their eastern grain business free from the expense incident to the Chicago gateway, and to enable them to escape the penalties that were necessamy involved in shipping via Chicago, its congested conditions, and the delay and the expenses of switching, large operating expenses at Chicago, they established the Manitowoc gateway, and they conducted it as a gateway, the rates being the same via Manitowoc as via Chi- cago, to save them that additional expense, and in order also to save themselves from the police regulations, so called, of the inspection bureau which had charge of the business in Chicago. No refund could be made via Chicago except upon the certification of Paul P. Rainer, chief of the inspection bureau, whereas at the Manitowoc gateway no such inspection was insisted upon and there was no such inspection under the existing conditions, it being practically all in the hands of the railroad companies and the large shippers. Mr. Marble. It left them free to malse such reductions as they might choose from time to time? Is that what you mean? GRAIN ELEVATOR IHVESTIGATIOK. 841 Mr. Oilman. Yes, sir. Commissioner Proutt. Why could not that inspection system be extended to Manitowoc as well as to Milwaukee ? Mr. Oilman. I think it could. Commissioner Prouty. It simply had not been ? Mr. Oilman. It had not been. The new departure in the grain- shipping business, and what other motives might have actuated the railroads in keeping it out, I don't know. Commissioner Lane. Manitowoc, then, was created as a grain- shipping point for rebate purposes ? Mr. Oilman. I would hesitate to say that. Incidentally, it seems to me, that it resulted in that. Mr. Marble. There is nothing else that I have not questioned you about that you want to tell us ? Mr. Oilman. Not in connection with the subject in hand. You have asked me about the Northwestern road and the Northern Orain Company. Mr. Marble. Now, any other road or any other grain company along the same line ? Mr. Oilman. No; there isn't. On the Milwaukee and St. Paul road we had this question, which may not be within the scope of this inquiry. We round that the State of Wisconsin was being charged up with a proportion of the refunds made to the Armour Grain Company in Chicago, whereas Wisconsin had never participated in the transportation service in any way. It is a technical question, and if you will bear with me just a minute I will try to make it clear. The Milwaukee and St. Paul handle their accounts by division. Any refund that is charged to the Chicago and Milwaukee division of that road is divided back between the States over which that division runs; whereas it may not have, the transportation service may not have been performed in Wisconsin at all, but may have been per- formed between Western Avenue and some station on the Milwau- kee and St. Paul Road in the" city of Chicago; and refunds to very- large amounts were paid to the Armour Orain Company — ^immense sums — through a series of yaer^, that we considered as improper deductions, without the necessity of going into the merits of the refunds at aU, but because the proportion of those refunds were charged to Wisconsin, whereas Wisconsin never got any original credit for the transportation service, not having been performed in the State of Wisconsin. So we made a statement involving very- large sums, of claims against the Milwaukee and St. Paul Railroad on account of these refunds charged back to Wisconsin under thpse cir- cumstances. Whether or not those refunds would or would not have been deenied improper by themselves was not gone into, because unnecessary under the cu-cumstances. Mr. Marble. How recently were those ? Mr. Oilman. Those refunds were in 1903, and "1902, and back to 1897. Commissioner Lane. Have you any knowledge of it since these refunds of 1903? Mr. Oilman. I have done some work for the present raUroad commission of Wisconsin since 1904. The railroad commissioner, John W. Thomas, who testified just before I took the stand, his scope of authority was supposed to be limited to the year ending 842 GRAIN ELEVATOB INVESTIGATION. December 31, 1903, as the system of taxation changed during that time and the railroads were taxed on a different basis. I have, how- ever, actiag for the railroad commission of Wisconsin, made certain investigations with respect to the transactions since that time, but only since June 15, 1905, as that commission was born at that time, the law being approved on June 13, 1905. Commissioner Lane. Did you find the same condition of things to any extent ? Mr. Oilman. The scope of the inquiry was entirely different from that made before, and, as I have said, has no bearing upon this. I mean that we were not looking^on the question of taxation. We were examining into other accounts. I haven't the memorandum here, but there were payments during that period, some payments — I am totally unable to keep that period distinct from the other, to deter- mine to what extent — ^but some payments were made to the Armour Grain Company, called refunds and adjustments of rates between various st.ations in Chicago, on consignments to the Armour Grain Company, and principally to stations on the north side of Chicago; to what extent I am unable to state. Commissioner Lane. Were those all within Illinois ? Mr. Gilman. Those would all be in Illinois. Wisconsin would not be interested from any standpoint, except, possibly the scope of the law which would provide for interstate shipments that would affect the shipments of Wisconsin. Commissioner Lane. In that examination did you find any inter- state shipments in which there were refunds given since June, last year ? Mr. Gilman. I did; yes sir. Commissioner Lane. On what roads ? Mr. Oilman. I couldn't tell you to what amount. I made my reports every week, and the commission have. tabulated and arranged them. I haven't copies of them. I have furnished to the railroad commission various statements, as I have stated, entirely from a dif- ferent standpoint and with a different object in view, not connected with the investigation as to gross/ earnings whatever. Commissioner Lane. Can you identify now by memory the reports in which there were such reports tabulated or certified by you f Mr. Oilman. I can only say that my reports were made by weeks, from October, 1905, up to October, 1906, and fragmentary and fugi- tive reports on various subjects on various roads and dealing with cer- tain specific duties; on particular wqeks sometimes having to do with one road and sometimes with another. Commissioner Lane. Do you remember any specific roads on which reports were made? ) Mr. Oilman. On the Milwaukee and St. Paul, and the Chicago and Northwestern; on the Northwestern particularly with reference to so-called elevation charges, the Milwaukee and St. Paul having to do with the same subject, elevation charges and trackage charges; and if the same vouchers had come within the same scope of the other investigation they would have been deemed to be improper. Commissioner Peoutt. That is all. Witness excused. GKAIN ELEVATOR INVESTIGATION. 843 E. C. Mason, called as a witness, having been duly s,wom, testified as follows : Mr. Marble. What are your initials ? Mr. Mason. E. C. Mr. Marble. You have also been in the employ or associated with Mr. Thomas, the railroad commissioner? Mr. Mason. Yes, sir. Mr. Marble. You are an expert accountant? Mr. Mason. I have been an accountant many years. Mr. Marble. And you have heard the testimony of Mr. Thomas and Mr. Gilman? Mr. Mason. Yes, sir. Mr. Marble. What proportion of these duties were performed by you? Mr. Mason. Well, I was largely with Mr. Gilman in compiling and tabulating the results that we found from this investigation of repay- ments which we deemed deducted erroneously from the gross earn- ings. Mr. Marble. So that your testimony would be similar — ^his testi- mony over again? Mr. Mason, Yes, sir; his testimony over again. Mr. Marble. Have you made any investigations as to matters con- cerning which he has not testified ? Mr. TVEason. Since Mr. Gilman has left Mr. Thomas I have kept right on in the same line of investigation. Mr. Marble. Have you found rebates such as he has named ? Mr. Mason. Since then I have been associated with Mr. Cleary, another of Mr. Thomas's accountants, and with him we have found some deductions from earnings all the way through. Mr. Marble. Relating to what period of time ? Mr. Mason. Since Mr. Gilman has left; it was within the year 1897 and previous to 1897; 1896, 1895, and 1894. - Mr. Marble. You went back to the time previous to that ? Mr. Mason. Yes, sir. Mr. Marble. You found the same general state of affairs existed ? Mr. Mason. Yes, sir. Mr. Marble. Have you made any investigation of the time more recent ? Mr. Mason. A little investigg-tion in 1905; the first half of 1905 — not with relation to unpaid taxes, but as to discrimination — and we got pretty well along in 1905, and I found similar conditions, but not nearly to as great an extent. Mr. Marble. Relating to discrimination in the year 1905 ? Mr. Mason. Yes, sir. Mr. Marble. Of the same general nature ? Mr. Mason. Yes, sir; not, however, with regard to the grain business. Mr. Marble. Relating to other things than grain ? Mr. Mason. Yes, sir. Mr. Marble. Did you find any relating to the grain business ? Mr. Mason. I don't remember that I did. Of course I would have to refresh my memory. Mr. Marble. You have not the material here to refresh your memory? 844 GEAIN ELEVATOR INVESTIGATION. Mr. Mason. No. Mr. Marble. So far as Mr. Gilman has testified, do you want to correct his testimony in any way, or indorse it as correct ? Mr. Mason. It is precisely as I would say. Mr. Marble. His testimony will be taken as your testimony in regard to these matters ? Mr. Mason. Yes, sir; that is just the way I regard them. Commissioner Lane. Did you, in your examination of the books in 1905, find any evidence of rebates as to interstate roads or shipments? Mr. Mason. There were repayments to various shippers, as in the other years, but not to such a great extent. Commissioner Lane. "What road ? Mr. Mason. The St. Paul and the Northwestern. No, only the St. Paul, excuse me. Commissioner Lane. Do you remember any of the shippers ? Mr, Mason. I could be certain that Armour & Company would be one. Commissioner Peouty. What was the ground of repayment, so far as you know ? Mr. Mason. Sometimes there would be refund of switching charges ; sometimes to make a rate to a certain figure which would be under a tariff, just exactly the same sort of things that the other years showed, but evidently reduced. Commissioner Lane. In whose books would you find these entries ? Mr. Mason. We found those on the St. Paul; that is the only road we looked at for this year — 1905, I mean. Mr. Marble. Do you remember such payments to the Milwaukee Elevator? Mr. Mason. No, sir. Mr. Marble. Or to the Rialto Company? Mr. Mason. No, sir. Mr. Marble. Or the Milwaukee or the Northwestern? Mr. Mason. I only looked at the St. Paul for 1905. Commissioner Protjty. Did you find vouchers showing these repajrments ? Mr. Mason. Oh, yes. Commissioner Lane. In what book would the first entry appear ? Mr. Mason. Why, we always looked for the repayment in a record called "overcharges to shippers." Commissioner Lane. Overcharges 'to shippers ? Mr. Mason. Overcharges to shippers. And sometimes they would call it "Deductions from freight earnings." But usually they would call all these things "overcharges to shippers." Commissioner Lane. And then where would it appear next ? Mr. Mason. We would take from those lists — we would take the ones that looked to us as if they were not properly made according to our standpoint, for the purposes of taxation, and ask for the vouchers relating to them; then we would take those vouchers and make our tabulation and mark them according to our judgment. That would be as far as we would go in the books for that purpose. Mr. Marble. When you testified that these were very much reduced, did you mean that they were for smaller amounts ? Mr. Mason. Fewer people, fewer persons got them. Mr. Marble. Were they for smaller amounts, on the average? GRAIN ELEVATOR INVESTIGATION. 845 Mr. Mason. My recollection would be- Mr. Marble (interrupting). Fewer persons and smaller amounts? Mr. Mason. Fewer persons and smaller amounts, both. It would seem as if the railroads were cleaning up things ; doing what they had to do and nothing else. Mr. Marble. Was it the larger shippers who got it? Mr Mason. My recollection would be that in 1905 it would be for the larger shippers and the smaller ones were left out. Commissioner Lane. But those rebates would run up into the thousands of dollars ? Mr. Mason. In some cases. Commissioner Lane. I mean the aggregate would be many thou- sands of dollars? Mr. Mason. Yes, sir; many thousands of dollars. Commissioner LanIe. Could you approximate for the time that you made the examination in 1905 what the total amount of such reduc- tions would be? Mr. Mason. No, sir; I really could not. Commissioner Lane. ^Vould it be in excess of $100,000? Mr. Mason. I should judge it would. Mr. Marble. That is all. Conunissioner Pkotjty. That is all. Mr. Marble. I have nothing further to offer, if the Commission please. Commissioner Prouty. If there is nothing else'to be said, the hear- ing will stand adjourned until 10 o'clock to-morrow morning in Mmneapolis. At 5.10 p. m. the Commission adjourned until 10 a. m. Wednesday morning at Minneapolis, Minn., November 21, 1906. Minneapolis, Minn., November 21, 1906, — 10 o'clock a. m. Present, Commissioners Prouty and Lane. Commissioner Prouty. The Commission will resunae this morning its investigation of the relations of common carriers subject to the act to regulate commerce to the transportation and handling of grain. Mr. John H. Marble will represent the Commission. Mr. Marble, are you ready to proceed ? Mr. Marble. I am. I will call Mr. Hill. James J. Hill, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Hill, you are president of the Great Northern Railroad? Mr. Hill. Yes, sir. Mr. Marble. And of any other railways? Mr. Hill. I think not. Mr. Marble. And actively concerned in the management of other railways; familar with their operations? Mr. Hill. Well, I am familiar with the operation of railways. Mr. Marble. Aiid have had long experience in that regard ? Mr. Hill. I have been in the transportation business thirty or forty years. 846 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. It is a matter of some complaint — I will ask you what the policy of your road is in handling freight, and explain that question in this way: Is it to hold the train until the tonnage is the capacity of the engine, even though the movement of the freight be delayed? Mr. Hill. I will answer that in a word. There would be no greater offense that an employee could commit than to hold freight under any conditions. Mr. Marble. Even though he sent out an engine pulling less than its capacity? Mr. Hill. Frequently he does. Mr. Marble. So the answer is,^ that it is not your policy nor the policy of the roads which are under your control ? \ Mr. Hill. Well, there is only one road that is under my control. I am an officer or director in the Burlington, but I know what you are getting at, and I have sieen it published a great many times, and it is sometunes published by iatelngent men — men who ought to be intel- ligent — but there is not a word of truth in it — that we would hold freight for the sake of making a load. A man who would do that would be discharged in a moment. Mr. Marble. Or for the sake of making a record for the road of the number of tons hauled per train mile. Mr. Hill. The whole thing is simple. In the first place, you have got to render the service. The service must be good and prompt. I think our service thd%verage. A year ago between here and the coast on time freight was less than seven days; on all freight, about eight and one-half days. It might have been eight and three-fourths. I have not got the figures in my mind, but those are substantially cor- rect. On time freight, or take all freight, if you made it nine days with four and one-half from Chicago to New York — and they do not make the time — we make between here and the coast about half the average time made between Chicago and New York for the same relative dis- tance; that is, our distance being twice as great, our time consumed is about the same as for the 900-mile run. Commissioner Prouty. Mr. Hill, are you at the present time able, or is the Great Northern at the present time able, to furnish cars for all commodities offered? Mr. Hill. If we could move our cars, we would be. Commissioner Prouty. The shortage, then, is in power? Mr. Hill. No sir; no shortage in power. Our cars — box cars — in less than four round trips would move all the grain we move in a year. Commissioner Prouty. What answers the question. Are you able to furnish cars? You say you would be if you could move the cars. If you are not able to furnish the cars at the present time, what is the reason ? Mr. Hill. The reason is this: In the business of the country there is a blockade. There is more business moving than the terminals and the facilities will accommodate. We bring flour here, for instance, going to New York from some mill upon our line, and ask for a car. We can not get it. Then, we might let our car go to Chicago and get a promise of a car there, and when we get to Cmcago we can not get it. The next thing would be to store the man's flour in Chicago or let our car go east or south, and we might not get it back for six months. GRAIN ELEVATOR INVESTIGATION. 847 Conunissioner Proutt. Does it come to this: That you have cars enough on your line, and power enough on your line, but your con- necting lines can not move the freight quick enough to return your cars promptly? Mr. HitL. There are cars enough in this country to move the business if it were moved promptly. We used to get when grain moved, 45 to 60 miles a day out of the cars. Now, we get less than 30 miles a day out of our cars. Commissioner Prouty. On the average? Mr. Hill. Yes, sir; and the average of the country is less than 24, and the trains, moving as they do, slow trains will make about 12 miles. For several hours the cars stand still. Commissioner Proutt. Do they stand still at the terminals awaiting disposition, or do they stand on the main line? Mr. Hill. Nothing stands still on the main line, if it can get in. Commissioner Prouty. Would you say that the difficulty is lack of sufficient terminal f aciUties ? Mr. Hill. A lack of terminal facilities, and — I may explain: The business of the New York Central in seven or eight years has increased, it has doubled. Their facilities for handling it, that is, the additional facihties are not 15 per cent more than they were. Commissioner Prouty. That is not true on the Pennsylvania? Mr. Hell. I came over the road the day before yesterday and I was glad to see that they are putting down a great many double tracks and in some places beyond double, maybe third and fourth tracks, but the Pennsylvania can not move the stuff in Pittsburg. A Pittsburg gentleman told me that they had over 200,000 tons of finished stuff there and could not get a car to move it. Commissioner Prouty. When goods come from the east to your line and are delivered at St. Paul, can you handle them promptly? Mr. Hill. Yes, sir; because our prevailing business is from the west. Commissioner Lan£. Mr. Hill, do you find it necessary to h'ave ele- vators at your terminals in order to release your equipment ? Mr. Hill. Well, we have had a good deal of experience in elevators. If elevators could be handled so as to facilitate, or if they could be run so as to facilitate the business of handling grain, they would be a great advantage, but if they are to be run for the business of manipulating the grain, then they are no advantage to the railroads. Commissioner Lane. Is it necessary, in order that you may have full use of your own equipment, to have elevators ? ^Ir. Hill. The grain must be unloaded into elevators and it is neces- sary to have elevators. We have built elevators at terminal points. We built some years ago, because the people of the Northwest were being overchai^d in Buffalo about a million and a half dollars a year — we built an elevator in Buffalo. Commissioner Lane. Does your railroad make an elevator allow- ance for the taking of grain out of your cars ? Mr. Hill. I do not know of any allowance. I may not quite under- stand the question. Commissioner Lane. Does your railroad company make an allow- ance to a terminal elevator for transferring the grain from the car to the elevator? Mr. Hill. No, sir. From the car to the elevator? 848 GRAIN ELEVATOR INVESTIGATION. Commissioner Lane. Yes, sir. Mr. Hill. The grain would carry that. Our rate is a net rate. Commissioner Lane. Your rate is a net rate ? Mr. Hill. Yes, sir. Commissioner Lane. You have no contract with any elevator com- pany by which you make an allowance to them of so much for transfer. Mr. Hill. We never allow such a thing on the road. Commissioner Lane. Is it necessary to a railroad company for the proper use of its equipment that it should make any allowance of that kind to an elevator ? Mr. Hill. I should say it would be a question if there were no public elevators there. It might be necessary to build one. Commissioner Lane. But that might be an elevator that would be simply used in transferring the gram and not for mixing, cleaning, etc. Mr. Hill. That would be purely a transfer elevator and the rate would be a transfer rate. I should say that for transferring, if the business was large the cost of doing the work would be about a quarter of a cent. Commissioner Lane. For pure transfer business ? Mr. Hill. Pure transfer. It might include a few days' storage. I know that at the large steel elevator we built in Buffalo it did not cost a quarter of a cent. When we went there the charge was a cent and a quarter, and a quarter of a cent for shoveling. We put the rate to a half a cent and saved a cent a bushel the first year on 215,000,000 bushels. Over $2,000,000 was saved. The elevator and the ground it was built on cost about $1,200,000, so that it more than saved the public all it cost the first year. Commissioner Lane. You have no line of elevators along your line owned by your railroad, have you ? Mr. Hill. No, sir. Commissioner Lane. Do you allow any of your shippers the right to put up an elevator on your right of way ? Mr. Hill. That is the rule. Sometimes we find people who would make an application for a site — if there was a new extension and there were some locations on a street crossing where they were more acces- sible than others — we have found men that would make these appli- cations and then go and sell the right; so we make the contract not transferrable. We have had a lot of experience with the elevator business the last twenty-five years and it has been one of the most troublesome things we have had to deal with. Commissioner Lane. You do not know of any case where a man in good faith has made application for the privilege of putting up an elevator on your right of way that it has Been denied ? Mr. Hill. Oh, no. We have a great deal of trouble keeping ele- vators from combining to make the price. I have built myself at sta- tions where they were combined and would get as much for passing the grain through the elevator as we got for hauling it 75 or 80 miles. We would build an elevator and get some local man to take it. Then they would try to run him out; in other words. put the price at that station so high that if he paid the full rate of freight he would lose money, and it was distributed over a hundred other stations in every case. In that case they could not crowd him out. I remem- GRAIN ELEVATOR INVESTIGATION. 849 ber one of the largest buyers in Minneapolis coming to me and saying, Mr. Hill, there is a man at Litchfield and he is paying more for grain than it is possibly worth, and we have kept nght Song after nim. I built the elevator and they could not crowd him out, and we told him that as long as we had one cent for carrying it, they could not crowd him out. 'That was before the passage of the Interstate Com- merce law and we are put out of that business, and the enforcement of the law would take that responsibility away from us. It ought not to be that I would have to build an elevator, and then the com- Eany would have to stand behind a man in the market to prevent im frona being driven out because he would not enter a combine. Gominissioner Lane. In other words, you do not believe in a rail- road being in the elevator business and m the railroad business too ? Mr. Hill. Not at all. If the elevator business as such can be made an elevator business, it will facilitate the handling of grain. If it is incidental to mixing and dabbling and docking for shortage and everything else, then it is an injury, and it is an injury to the elevator. The railroad's interest is that the man should raise the grain. If the Commission will pardon me, itjs a subject I have been interested in for nearly thirty years in every phase. Commissioner Peouty. The Great Northern is a grain road, is it not? It carries large quantities of grain? Mr. Hill. I think the Great Northern carries more wheat than any road in the United States. I think we carry on our road twice as much as all roads carry to Chicago in a year. Commissioner Peouty. Your road terminates at Duluth and also at Minneapolis ? Mr. Hill. Yes, sir. Commissioner Peouty. And carries grain to both those points? Mr. Hill. Yes, sir. Commissioner Peouty. Those are the terminal points of your road? Mr. Hill. Yes, sir. Commissioner Peouty. The grain is taken out of your cars at those points ? Mr. Hill. Yes, sir. Commissioner Peouty. In the operation of your road I understand you to say that it is necessary to have elevators at these terminal points ? Mr. Hill. Yes, sir. Commissioner Peouty. So that the grain can be taken out of your cars. That grain in the case of Duluth is stored, is it not, awaiting the opening of navigation in the spring? Mr. Hill. After the close of navigation, it is. Commissioner Peouty. And in the spring it is waiting a certain time for cars ? Mr. Hill. Yes, sir. Commissioner Peouty. So that the proper operation of your road and the handling of that grain would require extensive elevator facilities at Duluth? Mr. Hill. We have three elevators there and two here. Commissioner Peouty. You say the Great Northern has con- structed three elevators at Duluth? Mr. Hill. Yes, sir. Commissioner Peouty. And two at Minneapolis? 850 GKAIN ELEVATOR INVESTIGATION. Mr. Hill. We bought one and built another. Commissioner Prouty. What is the capacity of the elevators at Duluth? Mr. Hill. The steel one is three and a quarter million. Commissioner Prouty. Does the Great Northern itself operate those elevators? Mr. Hill. It did, but it does not now. Commissioner Prouty. What disposition does it make of the ele- vators now? Mr. Hill. After there was a dispute between a lot of conimission men, grain men, in Superior and Duluth, the State of Wisconsin passed a law, to protect Superior, that all the grain there should be mspected in Superior. There was not a bushel of it raised in the State of Wisconsin. It was on its way to the open navigable waters of the United States, raised in Dakota and Minnesota and throughout the Northwest. They undertook to require by law that it should be inspected in Superior. Commissioner Prouty. Are your elevators in the State of Wis- consin? Mr. Hill. Yes, sir; and being in the State of Wisconsin, under that law, and for a single carload we had to furnish a special bin. A large elevator with a capacity of three and a quarter million bushels would be filled with 500,000 or 600,000 bushels by special binning. That elevator has more bins than any elevator in the world and I think as as many as any two ; but even then you could not get a capacity for special binning, that is, furnishing a bin for each carload. The result was, we said to them, we will lease these elevators. We can not run them and it is a gieat detriment and drawback to the business. But then, there are a great many elevators. We can not control the unloading as well as if we had our own elevators. I have sometimes thought that the best thing would be for the railroad to own a ter- minal elevator and unload every bushel of grain right in as fast as it arrived, if the destination was not given — put it right into the eleva- tor and include the charge in the rate, just the same as you deliver freight in a depot or freight warehouse. Conmiissioner Prouty. I was about to ask you what your policy was in reference to those elevators when you ran the elevators your- self. Were they treated as public elevators ? Mr. Hill. Entirely. I will tell you briefly. I think the old ele- vator charge was a cent a bushel. Commissioner Prouty. That included what ? Mr. Hill. That included five or ten days' storage. We put it at half a cent. Commissioner Prouty. That is, you charged a man half a cent for taking the grain out of the car, putting it into the elevator, and putting it into another car or into the boat ? Mr. Hill. Yes, sir. Commissioner Prouty. That included a period of storage ? Mr. Hill. Yes, sir; and we kept that as long as we ran them as public elevators or as long as we ran them at all. Commissioner Prouty. What was the charge for additional storage ? Mr. Hill. I do not remember — Mr. Campbell, do you remember? Mr. Campbell. One-eighth of a cent for ten days. Mr. Hill. One-eighth of a cent for ten days. GRAIN ELEVATOR INVESTIGATION. 851 Commissioner Peouty. Did you cle?i,n and mix grain in those elevators ? Mr. Hill. No mixing. We cleaned it, because the State inspection allows so much for dockage; that is, to clean No. 1 northern, a pound to the bushel for docking. It takes a good deal of skill and experience to clean a carload of wheat, 1 ,000 or 1 ,200 bushels, and take out a pound to the bushel. You might easily blow out more or less and the tendency of the elevator man is to blow out less. Commissioner Pkoutt. What charge was made for cleaning? Mr. Hill. No charge. Commissioner Pboutt. So your charge of half a cent would include cleanii^l Mr. Hill. Yes, sir; but the elevator gets in the cleaning all the screenings, and I think those screenings sell for $5 or $6 a ton. Commissioner Prouty. We learned at Milwaukee yesterday that the screenings were quite valuable. Mr. Hill. I am very glad the Commission is investigating this question, because I think it is one that will afford a great deal of information. Commissioner Peouty. At the present time, Mr. Hill, you lease those elevators? Mr. Hill. Yes, sir. Commissioner Peouty. To whom are the elevators leased ? Mr. Hill. I do not remember — somebody up at the head of the lakes, and there is an elevator here. I do not know to whom it is leased. Commissioner Peouty. Now, you have two elevators here at Minneapolis? Mr. Hill. One we pulled down. The other is leased. Commissioner Peouty. What is the capacity of the one you have here now? Mr. Hill. I think a million and a half. Commissioner Peouty. Suppose at the present time you had ele- vators here with the same capacity as at Duluth, would it not enable you to handle all your grain promptly ? Mr. Hill. No, sir. We now have this year — it is a little step for- ward — we have got the State grain and. warehouse commission to inspect 100 miles out and we put the lists in here by passenger trains and try and get earlier destination of the cars, but a car comes in, and a man wants reinspection. He really wants time to sell it to better advantage, but he calls for reinspection and he will get it and our car will stay here to-morrow. If we had the destination to-day, it would add another twenty-four hours. Then, if it wanted to go to some mixing house Commissioner Peouty (interrupting). That is, a car load of grain comes in here on your line before its final destination is known, and the final destination of that car load is determined after it gets here. It is sold after it gets here. Mr. Hill. Well, we get the grade of the grain here. The grain is graded, if you please, at Willmar, 100 miles out. We forward the number of cars and grade. Now, we can get the destination of some of those cars. Cominissioner Peouty. Does any considerable quantity of that grain pass through here without going into an elevator for any pur- 852 GRAIN ELEVATOR INVESTIGATION. pose other than transfer? That is, if you allowed your car to so straight on, would any considerable amount go to Chicago straight along or would it stop here? Mr. Hill. Well, I am not so f amihar with that. For a year or a year and a half I have been away a good deal, but I know the large portion of the grain is stopped here. There is a large portion milled here. There is a great deal of grain comes in and it is a question whether it is No. 1 or No. 2, or No. 2 or No. 3. It is a question of judgment — very close to the line — a man gets three cars of No. 2 ; that is, of high grade No. 2; it is almost No. 1, and he will take one car of No. 1, well cleaned, mix it with the three cars of No. 2, and he has four cars of No. 1. Now, that is a business by itself and nobody can find fault with the man who does it. It is a legal business at present. Commissioner Peoutt. How long ago did you build your elevators at Minneapolis ? Mr. Hill. Oh, I should say seven or eight years. Commissioner Pkouty. Why did you build those elevators? Mr. Hill. To get quicker movement on our cars. Commissioner Feotjty. You have elevators at almost all the sta- tions along the line of your road where grain is received? Mr. Hill. No, sir. Commissioner Peoutt. You have not ? Mr. Hill No, sir; none. We have not got one. Commissioner Peoutt. I should not say "you have;" I should have said "there are elevators." Mr. Hill. Oh, yes ; elevators where grain is received ; at some sta^ tions as high as six or seven. Commissioner Peoutt. It is necessary that there should be ele- vators where grain is received, is it not ? Mr. Hill. Yes, sir. Commissioner Peoutt. Have you ever found it incumbent on you to provide such elevators in order to have them, or has somebody always been ready to do it? Mr. Hill. Somebody was ready to build, and especially if we would agree to keep other people out, they would think the privilege worth much more. Commissioner Peoutt. You never agreed to do that ? Mr. Hill. No, sir; we have not. There have been places where, for instance, we would have applications made for locations to build elevators, and when we would come to trace them back we would find one interest covering two or three, so as to keep the other fellow out. Then we would not give it to them. The State then passed a law that they would condemn our station ground for an elevator. That is the law to-day. Now, we are ready to give it to anybody, and always have been. Commissioner Peoutt. If elevators indulge in all these practices, which seem to rather impede the movement of grain than to facilitate it, if they raise the prices on the farmers . Mr. Hill. Lower prices. ' Commissioner Peoutt (continuing). What is the reasonit would not be well if the railroad itself owned every elevator and fixed the price that everybody should pay for the elevation of grain and the storage of grain? Mr. Hill. The only way, in my judgment, that the railway could GRAIN ELEVATOR INVESTIGATION. 853 run the elevator would be to run a terminal elevator and give ten days or six days free storage and make no charge at all. Commissioner Prouty. Let that' be part of the transportation? Mr. Hill. Part of the transportation. I think a great many men will disagree with me, but I do not think they have given half the hours I nave to it, for we have handled so much gram and I have tried all the time to get it on such lines that the man that raised it is going to get his fair share ; and at times it is handled very well — very well — and at other times it is not. Commissioner Prouty. Do you think at the present time the farmer is getting a pretty fair price for his grain? Mr. Hill. I do not tmnk he is getting for some classes what it is worth. , Commissioner Prouty. Who is responsible for that? Mr. Hill. I do not know that anybody is. The farmers lately in this country are raising a good deal of durum wheat, and the spread, I understand, is 8 or 10 cents a bushel, and, even running the risk of what the foreign market will be, because there is only a limited amount of that wheat that can be used in this country, it would seem that 8 or 10 pents is a tremendous spread. Mr. Marble. Has your road, or have you adopted any other means than those you have described of building elevators to restrain the taking of excessive profits on grain? Mr. Hill. Well, the road never did anything. What was done on the line of the road has been done by myself individually. Mr. Marble. That was by building so as to bring in new compe- tition? Mr. Hill. Where there was a combination, or where things were not being handled as they should, I at times built an elevator or grain house and got some local man to take it and make conditions so we would get our share of the business. Mr. Marble. Have you had any other method? Mr. Hill. We have got to watch them all the time. Mr. Marble. Some official of your road has the duty, has he not, of keeping track of prices paid for grain and margins made along the line or your road ? Mr. Hill. The traffic department is supposed to watch that. They are pretty powerless. There is not any thing they can do but keep after them. Mr. Marble. Is there a record kept in one of your offices sho'^ving the margins made along your road? Mr. Hill. I do not know. I do not know of any such record, but I think an officer of the traffic department is familiar with that. I think Mr. Campbell can answer that question. I brought him along because I am not as familiar with traffic questions as he is. Now, I want to clear up this matter. We have built terminal elevators. We built a terminal elevator in Buffalo. Commissioner Prouty. Why did you build that ? Your road does not run to Buffalo. Mr. Hill. No ; but we had ships on the lake, and we had our own steel ship and the grain- weighed out of our own elevator at the head of the lake into our own steel ship by our own weighmaster and by the weigh- master of the State of Minnesota, and when it got to Buffalo and was unloaded it was 2,500 bushels short. I recall one trip. When you 854 GRAIN ELEVATOR IKVESTIGATION. ask me why I was so impressed — we knew there could not be half a bushel lost by that ship and our own crew. The whole thingwas in our own hands. We built an elevator in Buffalo. At the time we built the stock of the elevator pool in Buffalo sold at 600. I think they offered us ^\ at par if we would leave the price they charged where it was. The charge was a cent and a quarter and a quarter of a cent for shoveling, they owning the patent shovel. It made the charge a cent and a half. We put the rate — and included insurance, because there was nothing to bum in our elevator — at half a cent. I remember that the State warehouse commission went down there and went through it and went through a number of elevators elsewhere, and they thought it was a great benefit to the State. I tried to get the State legislature to put its elevator laws on some sensible, reason- able line and gave that as an illustration. If we sent 100,000,000 bushels to Buffalo — and there are over 200,000,000 handled a year — it saved $1,000,000, a cent a bushel on 100,000,000 bushels. It saved $1,000,000 a year. But after a while they got it. The public are always thankful for something they are going to receive — not what they have, but something they expect in the future. They got that and got all the advantages and we got all the abuse. We told the gentlemen down there who offered us $300,000 more than the elevator cost that they could have it. I do not know what the charge at Buffalo is to-day. Commissioner Peouty. Half a cent. Mr. Hill. I am glad it is. Commissioner Pbotjtt. The statutory charge is a cent and a quarter. Mr. Hill. We made it half a cent. Mr. Marble. Did the evil of shortage disappear when you put up your elevator? Mr. Hill. Yes; it did in that elevator. I will show you how they weighed. The rule was, they would weigh down draft for every 100 bushels. They would not take a scale that weighed more than 100 bushels and they wanted down draft. If you had 5,000 bushels and weighed it in hundred-bushel drafts and let it come down 4, 5, or 6 pounds on every 100 bushels, it amounted to something. They would not weigh it any other way, but we made them, I think. Mr. Marble. We had a complaint of you, Mr. Hill, at Milwaukee, that you very frequently reduce grain rates into Minneapohs and upset the situation, and that the roads to Milwaukee are slow in meeting the competition, and those markets are at a disadvantage for that reason. I do not understand that you are to blame for that, but they make that complaint. Mr. Hill. That is an old complaint. They could make it a good many years. I remember being called before the Warehouse Com- mission of the State many years ago, when they wanted to know if it was not time we made another reduction. It was about the time the Iowa commission made a tariff, and the Federal court had enjoined them from putting it in force. I took the tariff the Federal court enjoined in Iowa and asked if they would compare it with ours. Our rate at that time was 15 per cent lower. We have always made a lower rate on grain than exists on any road in the same meridian between Manitoba and Mexico. We have led in the reduction of rates, and Milwaukee might find fault, but inasmuch as we have no GRAIN ELEVATOE IKVESTIGATION. 855 railroad there, and we are interested in the country up here, I suppose we will have to go on and make that rate. Mr. Mabble. Do you regard the growth of Minneapolis as a grain center as due to that policy ? Mr. Hill. No, sir. Mr. Maeble. What is the economic factor that makes Minneapolis a great grain center? Mr. Hill. They started making a quahty of flour — maybe I might be pardoned for giving an opinion — but I cut the first stencil that branded the first barrel of flour that left Minneapolis. Mr. Maeble. You not consider that the Minneapolis market has grown up through any railroad favoritism? Mr. Hill. Not at all. They have a water power here, cheap power. They made flour under an adaptation of the Hungarian process and improved it, and in this section a quality of wheat is grown, hard wheat, that carries a large amount of gluten, and it IS such wheat that makes the patent process flour. Mr. Maeble. As to the lease of these elevator facilities at Superior to A. D. Thompson, I have what purports to be a copy of the lease. Are you familiar with that ? Mr. Hill. Not at all; not a bit. All I could testify to is what Mr. Campbell would tell me. Mr. Maeble. Do you at the present time own any elevator stock yourself? Mr. Hill. No, sir; I never have — yes, I believe I did once when Loren Fletcher and others up here — when the first elevator was built they wanted to build a 100,000 bushel elevator. I said they needed one of 1,000,000 bushels capacity, and I said I would take gart of the stock and after you get it running you can take it back ■om me if you want it. I believe I did own some of that. It was paying so well that they came and claimed it and took it back. Mr. Maeble. You do not own stock in the St. Anthony and Dakota Elevator? Mr. Hill. No, sir. Mr. Maeble. Or anyone for you? Mr. Hill. No, sir; 1 do not own the value of a penny in any elevator and never have, except the one I spoke of, which was twenty- five years ago, and I held it about six months — ^long enough for a few gentlemen here who were interested with me — it was paying better than they thought it would and they relieved me from further responsibility. Mr. Maeble. Do you know whether any member of your family owns any stock in that elevator ? Mr. Hill. I know they do not. I want to say that no man on the Great Northern can own stock or be interested m anything along the road. If he does, he has to leave the service of the company, even if he were my own son. Mr. Maeble. Do you know whether or not your daughter owns stock in that elevator? Mr. Hill. I do not. Mr. Maeble. Not to your knowledge? Mr. Hill. Not to my knowledge. Mr. Maeble. At any rate, it is not held by any one for you? 856 GRAIN ELEVATOR INVESTIGATION. Mr. Hill. No, sir; neither directly nor indirectly and never has been to the value of a copper cent. Mr. Makble. I believe that is all. Mr. KooN. If the Comnussion will permit, I would like to ask Mr. Hill a few questions. Commissioner Peouty. Proceed. Mr. KooN. I did not understand you to answer the Commissioner's question when he asked would it be better for the railway to own all the warehouses along the liae of its road. Mr. Hill. In the country ? Mr. KooN. Yes; and do that business itself and furnish the storage. Mr. Hill. I have thought about that and I have a very well matured plan on that subject, but the law would have to permit it, in the first place, and it is not necessary for the railroads to own them. Mr. KooN. Does not the law permit you to own elevators if you merely receive the grain and store it? Mr. Hill. Our charter would, but the charter would be at variance with the statute. Mr. KooN. You think the statute will not allow you to do it ? Mr. Hill. No, sir; and we got out of the State of Minnesota and our charter would not apply. Mr. KooN. It would be impracticable, would it not, as a practical operation? Mr. Hill. I think entirely so. If the, country elevator would inspect grain and give a receipt for it, so that the man who took the grain to the elevator — if they segregate the elevator business from the buying, handling, and selling of grain, so far as the law could do it — and if that man delivered his grain to a country elevator and got a receipt for it — so many bushels or so many pounds of No. 1 or No. 2 wheat, for instance — he could sell that receipt to the merchant, or the banker, or the doctor, or the lawyer — he is not compelled to sell it to the man who gave it— and that would give him a free market. If he wanted to ship it, he could ship it with a postage stamp. I would go further. I would make the elevator in the country establish relations with the terminal elevators, just as I would make that warehouse or elevator receipt the same as a draft, if you bought a draft on New York. If he deposited his grain and took a receipt, it would make it good in Duluth or Minneapolis, he paying the charges, whatever the charges were, a half a cent in the country, or a cent—a cent would be too much — or maybe a cent and a half. Pay him liberally for han- dling the business, but do not let him get two pays — 1^ cents and then 2 cents — for manipulating the business. Commissioner Prouty. That is to say, you would have the railroad business one thing, the elevator business another thing and the buying and selling of grain still another thing ? Mr. Hill. Yes, sir. Commissioner Peouty. Do you think that capital could be induced to build elevators at country points so long as private parties could build there? Suppose there was such a tfing as a public elevator; could capitalists be induced to build elevators of that sort as long as Peavey & Company or the Northern Grain Company had the right to build an elevator at the same station ? Mr. Hill. It would be very difficult. GBAIN ELEVATOR INVESTIGATION. 857 Commissioner Proutt. You would have to prohibit the building of a private elevator Mr. Hnx. You have got to make them all pubhc elevators under the law and store everybody's grain imder the law. Mr. KooN. Is not that the law now ? Mr. Hill. How much is it observed ? I think it is the law. ^Ir. Koox. A pubhc elevator is a pubhc elevator in North Dakota and South Dakota that takes grain, is it not ? Jtlr. Hnx. I am not siu-e. If they are, do they take grain from everybody on the same conditions ? Mr. Koox. Yes, sir. Mr. Hill. I am glad to know it. It is the first time. Commissioner Peouty. In Illinois the evils of that were so great that they provided that no pubhc elevator man should store his own grain. Mr. Hill. We thought that up and down for twenty-five years. Mr .KooN. Cannot every farmer now, if he chooses to leave his grain at a country elevator, do it and get a receipt that is negotiable, a receipt that he can sell if he chooses to, instead of selling to the elevator man? Mr. Hnx. Ostensibly. Mr. KooN. Is it not a fact ? Mr. Hjll. No, sir; it is not a fact and it is a crying evil that it is not. It ought to be. Mr. KooN. Why is it not a fact ? Mr. Hell. Because the agent of the elevator will tell him this or that — that they are crowded or something. Mr. KooN. They are all crowded to-day, are they not ? ;Mr. Hill. We can not begin to move the grain. !Mr. KooN. There is not elevator capacity enough in the country to take care of the wheat, is there? Mr. Hill. I think we have 60 elevators that are closed up. Mr. KooN. Overflowing? Mr. Hill. Yes, sir. Still we have moved to the terminals between seven milhon and eight million bushels more than we did last year up to this time. Mr. KooN. It is true, is it not, that the country elevator is abso- lutely essential to the grain business ? Mr. Hill. There must be an elevator, or there should be one, or elevator capacity — ^it might take five or six — at every station where a party dehvers a bushel of grain. Mr. KooN. That is a necessity of the business ? Mr. Hill. Always. Mr. KooN. It could not be conducted without it? Mr. Hill. No. Mr. KooN. You could not run the railroad and handle the wheat traffic if the elevators were not existing ? Mr.. Hill. If nobody else built them we would have to. ;Mr. KooN. You have encouraged the building of them on your line, have you not ? Mr. Hill. Always. Mr. KooN. And at some stations there are more than are necessary? Mr. Hill. Well, not so far as we are concerned. Mr. KooN. Well, at some stations? 858 GRAIN ELEVATOE INVESTIGATION. Mr. Hill. Not so far as we are concerned. So far as the ele- vator men are concerned there may be more than are necessary. Mr. KooN. You have stations on your road where you have six or seven elevators, have you not? Mr. Hill. Yes, sir. Mr. KooN. Where the business could be reasonably well handled by two or three ? Mr. Hill. I won't pass judgment on that, because the elevator men might say Mr. KooN. But it is a fact that elevators in the country are essen- tial and necessary to the railroad and the farmer, is it not ? Mr. Hill. They are, absolutely, because if you take a modern car of a thousand or 1,200 bushels capacity and ask the farmer to load it he can not load it in ten days. The probabilities are he has not enough grain to load it. Three small farmers could not load it. Mr. KooN. If a farmer does want to load his grain directly into one of your cars you try to furnish him a car, don't you? Mr. Hill. We do. Mr. KooN. You rather give him the preference, don't you? Mr. Hill. Well, if there was any doubt about it. Mr. KooN. You would give him the preference ? Mr. Hill. I think we would lean toward him. We think our busi- ness stands or falls with his prosperity, and if he does not raise the wheat we have a bad investment. Mr. KooN. The elevator company and the elevator along your road is just as essential to his interest as to the railroad's, is it not ? Mr. Hill. It is an absolute necessity. Mr. KooN. Now, Mr. Hill, you know the men who have built up the elevator business in the Northwest. You know every one of them, don't you? Mr. Hill. I think I do. Mr. KooN. You know their personal character? Mr. Hill. I think I do. Mr. KooN. And their business character? Mr. Hill. A great many of them. Mr. KooN. Have not they conducted that business along your road in the Northwest just as well as any set of men could conduct it ? Mr. Hill. Some have and some have not. Mr. KooN. Take them as a whole. Mr. Hill. I have seen a man, for instance, who was a manager, and I think, an owner — maybe he is alive to-day — pass over the Tine of our road and there was not a bushel of No. 1 hard and before that at least half of it was No. 1 hard. We got at his principal. His principal is dead. Mr. KooN. I know who you mean. Mr. Hill. We got at him and said, "that won't do." The prin- cipal — I want to do the dead man justice — said: "It shall not be done again," and conditions were restored. Mr. KooN. That is, when the attention of the owner, the head man in that elevator company, was called to the fact that one of his men was doing wrong, he stopped it? Mr. Hill. Yes, sir. Mr. KooN. Don't you know that the elevator men in this State 6EAIN ELEVATOR INVESTIGATION. 859 who own and control the elevators throughout the country, the men who are the heads of the busmess, are that class of men? Mr. Hill. There is no better class in the community. The elevator men here, or the men largely interested in the elevator business are, most of them, my personal friends. Mr. KooN. They furnish the farmer a better market than he could get in any other way, do they not? Mr. Hill. They can. Mr. KooN. Is it not a fact that they have ? Mr. Hill. There are times when I would differ with you on that. I think they make the spread too wide. Mr. KooN. And some people think that you charge too much freight. Mr. Hill. But we keep reducing it, and I never heard of their doing that. Mr. KooN. Do you mean to say that under oath that the elevator men have not reduced the spread? Mr. Hill. I have not heard of their doing it. Mr. KooN. Don't you know that such business is done on a less margin than in the old days when Charlie Pillsbury was at the head of it? Is it not on a lower basis to-day than it was at that time? Mr. Hill. I do not know what the basis is to-day. For a year and a half I have not been in a position to give it much time, but before that I gave it a lot of time and attention. I do not imagine that conditions have changed very much. I inquired this morning as to durum wheat. Mr. KooN. That is a new proposition. Mr. Hill. Yes, sir. Mr. KooN. It is all to be exported. We have very little use for it in this country. Mr. Hill. A man has got to buy it on the basis of finding a market for it at a time that he does not know what that market is l&ely to be. Eight or 10 cents is a pretty wide margin. Mr. KooN. If conditions are such that cash wheat is worth a cer- tain price and can not be got for a number of days, a man has to figure on that? Mr. Hill. He has. I was in Chicago a few days ago and took the pains to send out and try to find a line in Chicago that would contract to deliver 100 or 500 carloads of flour or wheat in New York before Christmas — any time up to Christmas. I could not get one that would undertake it. They all said they would fall down; that it would be impossible. Mr. KooN. What is true of countiy elevators as a necessity is equally true of terminal elevators, both at Minneapolis and Duluth, is it not ? They are absolutely, essential ? Mr. Hill. Unqualifiedly essential as an elevator adjunct or appli- ance for handling the business. Mr. KooN. A Targe portion of the wheat brought to Minneapolis is brought for use here, is it not ? Mr. Hill. For milling. Mr. KooN. And has to be stored until it is used ? Mr. Hill. Yes, sir. Mr. KooN. If it were not for the elevators here you could not do business here at all, could you ? 860 GKAIK ELEVATOR INVESTIGATION. Mr. Hill. We did build one. Mr. KooN. But there are others here? Mr. Hill. Yes, sir. Mr. KooN. What is true in your case is true in other cases ? Mr. Hill. Yes, sir. Mr. KooN. If there are any mistakes or wrongs in the operation of elevators, that has nothing to do with their necessity in the business ? Mr. Hill. Not at all. Mr. KooN. And that ought to be corrected? Mr. Hill. They are subject to correction and investigation. Mr. KooN. But the elevator business as a business is as legitimate and proper a business and entitled to the same protection as your railroad ? Mr. Hill. Just as necessary as the car that carries the grain. Mr. KooN. If there are any abuses they ought to be corrected on the same principle as abuses are corrected in your railroad operation. Mr. Hill. Certainly. But I want to draw the line there again, that the handling of grain and the elevator business and the warehous- ing of grain — that is, the buying and selling and mixing of grain — ought not to go under the public elevator system. Mr. KooN. Can you separate it? Is it possible? Mr. Hill. I think it is. Commissioner Prouty. If you have a private elevator at the terminal or in the country, can you have a public elevator also which amounts to anything and which is in fact a public elevator ? Mr. Hill. We ran a public elevator in the city of Buffalo and it did us some good and the public also. Commissioner Peouty. But Buffalo is not a grain market and grain is not bought and sold to any extent there. Those elevators are purely transfer propositions. They sell some grain there for mill- ing purposes, it is true. But taking a point like Mmneapolis, Chicago, or Duluth, do you think a public elevator can live beside a private elevator that has the right to mix, clean, and manipulate in various ways? Mr. Hill. It could not. It could not, unquestionably; but it could be provided that all the elevation would be done by public elevators. Commissioner Prouty. Every elevator should be a public elevator. Mr. Hill. Yes, sir; and every mixing house should be a mixing house by itself. Mr. Marble. Do you know, Mr. Hill, as a matter of fact, whether that is the policy of the law of the State of Illinois ? Mr. Hill. I do not know. Mr. Marble. Do you know whether or not, as a matter of fact, in Chicago there were really public elevators run by proprietors not engaged in the grain busmess through those elevators from 1871 to 1887? Mr. Hill. I do not know. Mr. Marble. You are not familiar with that? Mr. Hill. No, sir. Mr. Marble. One other reference you made. I think it is worth the time. It is a matter of great interest here. Certain roads in their replies and certain railroad officials on the stand, notably Mr. Phillippi of the Missouri Pacific, stated the railroad policy of their roads to be that they discourage the building of elevators at stations GRAIN ELEVATOR INVESTIGATION. 861 where there was already capacity enough to handle the business of the stations. Do I understand that your road has no such poUcy ? Mr. Hill. We are willing that they should build all the elevators they want. Our industry track is usually 3,000 feet long and any- thing that will go on that track we are glad to have. Mr. Maeble. As a railroad proposition, is there any reason why a railroad manager should discourage the building of a useless eleva- tor if it will introduce additional competition; I mean, if it adds capacity that is not needed to handle the business? Mr. Hill. Who should be the judge? Mr. Marble. I am asking you as a railroad man. Mr. Hill. I do not think he should judge against the man that raises the wheat in the field. If it is going to give him a half a cent more, let him have it. The railroad is interested in the man that culti- vates the land, because if he can not make money, he will cease, and if he ceases our investment is a bad one, and the elevator man would have a small loss. He would lose the value of his buildings, but our investment, as a railway, must depend on what the country produces. Mr. Marble. Up to the time that you ceased keeping track of the situation along your line, which you say was about a year and a half ago, was this evil of pooling and combming appearing and reappear- ing? Did you find it from time to time? Mr. Hill. I do not think I used the word "pooling." I do not know that I ever had any definite knowledge that led me to believe that there was a pool. Mr. Marble. Combining on prices? Mr. Hill. Sometimes these line elevators, country elevators, have not always been profitable. If they failed, and men have been able to buy the stock and then have come to us and wanted us to transfer the lease, in some cases we have agreed to do it and in some cases we have refused to, because we found they were interested somewhere else and had a greater interest. When a man has a line of elevators somewhere else at every station and then has an occasional one here on our line, I should not say that that man would work as hard to bring us the grain as he would to take it to a place where he had a great many elevators and larger interests. We have found that they never did. We like single interests better. Our road is a big gram road. It carries about 40 per cent of the grain in the Northwest. Mr. KooN. Your road has a good deal to do with fixing the prices of grain in the country, has it not ? Mr. Hill. I tried to and failed sometimes. Mr. KooN. And sometimes succeeded? Mr. Hill. Sometimes. Mr. KooN. For instance, you have a station on your road, and six or seven miles away is a station on the Soo, and the fellow at the station on the Soo is paying a little more than the. men on your line and get- ting the grain; what would you do to him? Mr. Hill. We would get some sandpaper for him. Mr. KooN. You would use something harsher than sandpaper, would you not? Mr. Hill. That is harsh enough if you use it hard. Fortunately for us, most of our country elevator interests are larger on our road than they are elsewhere. In 1879 we hauled 2,130,000 bushels of grain. I think this year we will haul 115,000,000 bushels of grain, so 862 GRAIN ELEVATOR INVESTIGATION. you see the growth has been steady. It could not be steady and continuous unless the people could make it profitable. Commissioner Pkotjty. Anything more, Mr. Marble? Mr. Marble. No, sir. Mr. Hill. I would like to say to the Commission that when they go to the head of the lake there is a State question there. Commissioner Prouty. We are informed of that. Mr. Hill. I hope the Commission will go into the whole question, because the grain there coming from North and South Dakota or Minnesota, passing over a little strip of Wisconsin, Wisconsin wants to take possession of it. Commissioner Prouty. Do you vmderstand that the attitude of the people at Superior is thought by the people in Dakota to be inimical to their interests, or do the people in Dakota want that and ask for it ? Mr. Hill. The people in Dakota have been to see us lately and want us to help them. We say, we can not help you. Commissioner Prouty. That is they are opposed to inspection by the State of Wisconsin? Mr. Hill. No ; they would like to get the inspection by the State of Wisconsin. They like all the inspection they can get, but they want the Great Northern, to help them. Commissioner Prouty. Help them to what? Mr. Hill. To get the inspection of the State of Wisconsin. If we do, we have got to comply with the law of Wisconsin. That will make us provide a special bin for every carload. Commissioner Prouty. What do you think ought to be done? Mr. Hill. If they will make the law so that it is optional with the owner of the grain and he will say whether he wants Wisconsin or Minnesota inspection — if he will do that and take away that feature that we must furnish a separate bin for every carload and keep it so — because that is impossible — now, we said to those people in North Dakota quite recently, we will furnish you an elevator at Superior at what anybody will say is below a fair return on the cost of the ele- vator^and you take it and rim it yourself and you can give it up any time you are ready, and you can take it on any time you are ready; try it. Well, they said, that would work all right if you would run the elevator. But we can not run the elevator under that law. We can not run the elevator imder a law where a man says, I do not want my grain inspected. The law says every bushel shall be inspected there by the local inspector. He says, I do not want the price of my grain affected by that. Commissioner Prouty. That is to say, it is to be inspected under the Wisconsin law, whether it is billed through or is going to stop there ? Mr. Hill. Yes, and I told our people that if we are going to fight it — it is not our fight — but if we are going to fight it, it would be on the ground that they are trying to obstruct us in taking property across Wisconsin on the way to navigable waters of the "United States, and that they are interfering with interstate commerce, which they have no right to do. That is a burning question with the people of Dakota. They are asking for Federal inspection. Federal inspec- tion has many things to commend it. GRAIJST ELEVATOR INVESTIGATION. 863 CommiGsioner Proutt. Suppose there were Federal inspection, that ought to be available here. Mr. Hill. Everywhere, and then you would have uniformity. That is the advantage of Federal inspection. Commissioner Peouty. Do you on the whole, favor Federal inspection? Mr. Hill. Decidedly. Commissioner Peouty. Could you operate your road more con- veniently with Federal inspection? Mr. Hill. It would not affect the operation of the road. Commissioner Peouty. Nor the handling of the grain ? Mr. Hill. No, we would handle it, except that the grain business would be done — a number of conditions that may be used adversely would be removed if there was one inspection everywhere. Commissioner Peouty. Unless you have something further, Mr. Hill, you may be excused. The witness was excused. B. Campbell, called as a witness, having been duly sworn, testi- fied as follows: Mr. Maeble. What position do you hold with the Great Northern? Mr. Campbell. Fourth vice-president, in charge of traffic . Mr. Maeble. You are the gentleman referred to by Mr. Hill in his testimony? Mr. Campbell. Yes, sir. Mr. Maeble. It is a part of your duty to keep a record showing the margin made by the elevators along the Great Northern Road ? Mr. Campbell. No, sir. Mr. Maeble. Or to keep track of the prices paid by elevators to farmers ? Mr. Campbell. No, sir. Mr. Maeble. Has it been the duty of any one on the road, so far as you know? Mr. Campbell. I think, in a general way, that that information is kept track of in the general freight office. Mr. Maeble. What would be the name of the official acquainted with that ? Mr. Campbell. I think Mr. Costello, who is subpoenaed to appear before this Commission. Mr. Maeble. Mr. Costello ? Mr. Campbell. Yes, sir. Mr. Maeble. Just one other matter. Are you acquainted with this contract between the Great Northern Railroad and Mr. Thomp- son, at Superior? Mr. Campbell. In a general way. Mr. Maeble. I have what purports to be a copy of that contract covering three elevators, at a rental of $100,000 per year — that is correct is it ? Mr. Campbell. Yes, sir. Mr. Maeble. And it provides for elevator A at a rate of $20,000 a year, for elevator S at a rate of $68,000 per year, and for elevator X at a rate of $12,000 per year? Mr. Campbell. I do not recall the division. 864 GRAIN ELEVATOR INVESTIGATION Mr. Marble. Nor the capacity of the elevators ? Mr. Campbell. In a general way the capacity is upwards of 6,000,000 bushels. Mr. Marble. Each one of the elevators ? Mr. Campbell. No, the total; of the three. I think a copy of the lease has been filed with the Commission. Mr. Marble. Yes; I have what purports to be a copy. I do not find it describes the capacity. I don't find in this lease that there is an agreehient covering any elevation allowance. Is any elevation allowance paid to the owner or the operator of these elevators? Mr. Campbell. No. Mr. Marble. Any switching charges absorbed — any special arrange- ments ? Mr. Campbell. No, sir. Mr. Marble. Any special arrangement of any sort by which this rental of $100,000 per annum is reduced? Mr. Campbell. No. Mr. Marble. Remitted or refunded ? Mr. Campbell. No. Mr. Marble. Has there ever been? Mr. Campbell. Not that I know of. Mr. Marble. You would know if there were any? Mr. Campbell. I think so. Mr. Marble. These three elevators — is that a fair rental for them, $100,000 a year? Mr. Campbell. I think so. Mr. Marble. You don't regard it as too low or too much? Mr. Campbell. No ; I regard it as fair. Mr. Marble. And this lease fully describes all the terms of the con- tract between the road and the elevator ? Mr. Campbell. I think it does. Mr. Marble. There is no side agreement ? Mr. Campbell. None that I know of. Mr. Marble. None in writing? Mr. Campbell. None. Mr. Marble. Nor any oral agreement? Mr. Campbell. None that I know of. Mr. Marble. And there is no elevation allowance ? Mr. Campbell. I think not. Mr. Hill. You would know if there was any, wouldn't you? Mr. Campbell. Yes. Mr. Marble. Have you any special arrangements of any sort with the CargOl people? Mr. Campbell. None that I know of. Mr. Marble. Do you pay any elevation allowance anywhere now? Mr. Campbell. No. Mr. Marble. None at aU? Mr. Campbell. No. Mr. Marble. You lease an elevator in this city to the Northern Gram Company— the Great Northern Elevator No. 1 ? Mr. Campbell. Yes. Mr. Marble. And the price of that is $5,000 per year — the rental — with an agreement that the lessee shall make certain improvements GKAIN KLtVATOE INVESTIGATION. 865 to the amount of $20,000, etc. Is there any other agreement regard- ing the leasing of that elevator than the one lease ? ^Ir. Campbell. I think not; none that I know of. Mr. Marble. You pay them no elevation allowance ? Mr. Campbell. No, su-. Mr. ^Iarble. How about their switching charges; is there any special arrangement with them regarding switching charges ? Mr. Campbell. I think not; none that I know of. Mr. Marble. You would know if there were any? Mr. Campbell. I think so. ilr. Marble. You have a regular published rate for switching in the city of Minneapolis ? Mr. Campbell. Yes, sir. Mr. Marble. And that appUes to aU alike? Mr. Campbell. It does. Mr. Marble. And there is no special arrangement with anyone by which there is an absorption in one case and not in another? Mr. Campbell. I do not think there is. Mr. Marble. And you would know if there was? Mr. Campbell. I should think so. Mr. Marble. That is aU. Commissioner Prouty. Who is Mr. Thompson ? Mr. Campbell. He is engaged in the grain business at the head of the lakes. Commissioner Prouty. That is, he is a grain dealer? Mr. Campbell. Grain dealer and banker. Commissioner Prouty. Does he lease other elevators besides yours ? Mr. Campbell. I do not know. Commissioner Prouty. Does he own elevators besides yours? Mr. Campbell. I do not know. Commissioner Prouty. That is all. Witness excused. M. J. Costello, called as a witness, having been duly sworn, testi- fied as follows: Mr. Marble. You are an ofiicial of the Great Northern Railway? Mr. Costello. Yes, sir. Mr. Marble. What office do you hold ? Mr. Costello. Industrial agent. Mr. Marble. Is it a portion of your duty to keep track of the prices paid for grain along the hne of your road ? Mr. Costello. No, sir; not in that way. In a general way we do, through our traveling freight agents, who are devoting their entire time m the grain district during the movement of grain. If there is any discrepancy or complaint as to the market, the traveling freight agent visits the ground and gets the facts and reports. Then we take them up with the elevator companies operating at that point. Mr. Marble. They do not report unless there is complaint? Mr. Costello. Unless the complaint is from the agents. We may get a report from the station agent, and in that case we take it up with the traveling freight agent, and have him investigate the trouble. Mr. Marble. Have your station agents instructions to keep track of the prices paid ? Mr. Costello. Yes, sir. S. Doc. 278, 59-2 55 866 GRAIN ELEVAXOK INVESTIGATION. Mr. Marble. And keep a record of those prices ? Mr. CosTELLO. As a rule, yes, sir. They have blanks, but they are not always kept. We can not always get them to keep a record. Mr. Marble. The railroad does furnish blanks for returns as to prices paid for grain ? Mr. CosTELLO. They have blanks for use. Mr. Marble. Where do those blanks go finally? Mr.^^CosTELLO. They go to the division freight agent in the grain territory, or into the general freight agent's office at St. Paul. Mr. Marble. Do you attempt at all to keep elevators from paying too little for grain? Mr. CosTELLO. Yes, sir-; if we find they are paying too little, we take the matter up and explain the situation to them, and find out ■whether the fault is with the local agent or in the quotations given them from the Minneapolis ofiice. Mr. Marble. Do you attempt at all to keep them from paying too much? Mr. CosTELLO. No, sir. Mr. Marble. You have no grievance because an operator of an elevator is making less than a fair profit ? Mr. CosTELLO. No, sir; we do not consider that any of our business. Mr. Marble. Do you know as a matter of fact about what the line elevators along your road are making at the present time, the country elevators ? Mr. CosTELLO. No; I couldn't say exactly at this time. It varies from 3 cents per bushel up. Commissioner Prouty. What do you mean by " making ? ' ' Mr. CosTELLO. I mean the price they pay plus the freight charges would give them a margin of about 3 to 4 cents. Mr. Marble. Out of which must come the expense of running an elevator and any shrinkage in the grain? Mr. Costello. Yes, sir. Mr. Marble. Three to four cents, you say? Mr. Costello. As a rule, it runs that way,.as far as I can find out. Mr. Marble. Have you a man in your office called the "grain man?" Mr. Costello. Yes, sir. Mr. Marble. Who is he? Mr. Costello. He is Mr. Ryan, acting under my supervision. Mr. Marble. And his initials? Mr. Costello. George J. Mr. Marble. What are his duties? Mr. Costello. Paying minute attention to the distribution of cars; that is, car supply at the points, and to complaints as they come in, following up item for item as they appear. Mr. Marble. Are there any scoop shovel men on your line? Mr. Costello. There are but very few in North Dakota. There are some in Minnesota, where the old time flat houses were in opera- tion. Mr. Marble. Has your road any policy as to them; discouraging them from doing business? Mr. Costello. No, sir. Mr. Marble. If a man with a scoop shovel house, scooping grain GRAIN ELEVATOR INVESTIGATION. 867 out of the wagon into his house and out of the house into cars, apphes for care or rates, do you treat him just as j^ou would an elevator man ? Mr. C!osTELLO. Just the same. Mr. Marble. You do not try to discourage his competition as against the elevator? Mr. CosTELLO. No, sir. ^Ir. Marble. And you do not at all try to discourage the payment of too large prices to farmere? . Mr. CosTELLO. No, sir. ilr. Marble. But you do make it a matter of railroad policy to prevent combinations for the pa^inent of too small prices? Mr. CosTELLO. Yes, sir. Mr. Marble. Do you know what the present situation is and has been during the last year, say, with regard to combination on prices ? Mr. CosTELLO. I do not know as I could answer that Yery clearly. At North Dakota points where there are line houses, the prices are made and sent to one agent; he gives the prices to the other agents as a rule. That is done by the elevator companies, the elevator com- panies claiming that it lessens their telegraphic expenses. At times there is certain harmony among agents that might in a way be con- sidered a combination, but it would be pretty hard to figure that out. Mr. ^Marble. You mean each line elevator company has its owa elevator agent, and that dififerent elevators have a common agent? Mr. Costello. No." What I mean to say is that each line elevator companv have their agent at each station. One of the agents gets the market price and he furnishes it to the agents of the other lines. Mr. ^Iarble. For all ? Mr. Costello. Yes, sir. Mr. Marble. That is the situation at how many stations? Mr. Costello. At most points. Mr. Marble. How does that work out ? Do all pay the same price to the farmer? Mr. Costello. Practically so, imless there is an independent man there that won't accept their prices. Mr. Marble. They are agreed as to the margin that should be made, in addition to this market price which they Mr. Costello (interrupting). Whatever the market is given them. They are sent a card or wired what prices are to be paid at that sta- tion, and the agent himself has nothmg to say about the margin. ilr. ilARBLE. The margin is the dictated policy of the company? Mr. Costello. That is figured at headquarters. Mr. Marble. You find at a great many stations that market prices are sent to some agent of one line of elevators and he furnishes them to the agents of the other hues ? Mr. Costello. Yes, sir. ^Ir. Marble. Does that apply to the Cargill Compan}-, which has elevators along your line? Mr. Costello. I think it does at some of the stations. Mr. Marble. And to what other lines ? Mr. Costello. Practically all of them. Mr. Marble. Could you name them? Mr. Costello. At some stations one line company will furnish the 868 GRAIN ELEVATOR INVESTIGATION. prices for certain stations, and others at others — I would not say what companies give the prices at different stations. Mr. Marble. What are the chief Hne companies on the Great Northern' Railway ? Mr. CosTELLO. The St. Anthony and Dakota, the Cargill Elevator Company, the Northwestern Elevator Company, the Imperial Ele- vator Company, and the Peavey Elevator Company. Mr. Marble. You have stated as to the method of distributing Mr. Hill (interrupting). Isn't the Minnesota and Dakota? Mr. CosTELLO. Yes; the Minnesota and Dakota, and the Hawkeye Elevator Company. Mr. Marble. You have stated regarding the method of distrib- uting prices; would you except any of those companies that you have named from this statement now? Mr. CosTELLO. I would say that that is the general practice, unless it has been changed this season. Yes, sir. Mr. Marble. Have you found that that practice of figuring has resulted in the payment of too small prices to the farmers ? Mr. CosTELLO. I do not think that it itself has anything to do with that. If all elevator companies sent the prices, it would be all on the same basis. Mr. Marble. They would send the same prices anyway? Mr. CosTELLO. Yes, sir. Mr. Marble. Does the instructions as to the margin to be made — that governs finally the price to be paid? Mr. CosTELLO. It is the list price made them. That, of course, governs the margin they will get on the different grades. Mr. Marble. Did you find in your investigation these line com- panies pretty well agreed as to the margin they should make ? Mr. CosTELLO. I don't think I can answer that. Mr. ^^Iarble. They generally make about the same margin and pay about the same prices? Mr. Costello. That is what they claim to make, about 3 cents a bushel on wheat. Of course, the price varies on the different grades of grain. Mr. Marble. Have you any farmers' cooperative companies along your line ? Mr. Costello; Yes, sir. Mr. Marble. Do you know whether or not those companies have what is called the penalty clause in their by-laws? Mr. Costello. No, I do not. Mr. Marble. How do they conduct their business — do you find them competing actively ? Mr. Costello. They compete actively. At some places there is a fight and at other places they are all buying at about the same price. Mr. Marble. Where there is a fight the farmer gets more for the grain ? Mr. Costello. Yes, sir; he necessarily does. Mr. Marble. At the place where there is a fight about what margin is made ? Mr. Costello. That varies from 3 cents down to 1 cent. Mr. Marble. And where there is no fight it runs from 3 to 4 cents ? Mr. Costello. From 3 cents up to 5 and 6 and 7 cents, sometimes. GRAIN ELEVATOR INVESTIGATION. 869 Mr. Marble. At what point do you regard it as your duty to inter- fere and protest^-at what naargin of profit ? Mr. CosTELLO. Well, when we find that the margin gets above 3 cents we take it up with the elevatcg: companies to nave the matter adjusted. Mr. Marble. When it gets above 3 cents? Mr. Costello. Yes, sir. Mr. Marble. How frequently in the last year have you had to inter- fere — is it the practice constantly that you have to interfere ? Mr. Costello. Yes. At some points. We find that they have allowed the spread, the diflFerence in the price to spread too great and attention is brought to the elevators and in some cases it is cor- rected. Mr. Marble. Corrected simply on your request? Mr. Costello. When their attention is brought to it. Sometimes they claim that the agent does not follow their prices. Mr. Marble. And then they correct it on your request? Mr. Costello. As a rule, yes. Mr. Marble. When" they do not correct the price on beingrequested, what do you do? Mr. Costello. There isn't much that we can do. We use every effort we can to get the prices down to a reasonable margin. Mr. Marble. What efforts? Mr. Costello. We take it up with all the different line companies, and, as a rule, one or the other will agree; if they won't do it and there is an independent house — we have very little trouble where there is an independent farmers' cooperative company, because the margin they figure on keeps the other houses in line. Mr. Marble. At stations where there is no independent or farmers' house, there the spread frequently gets too large? Mr. Costello. les, sir; at times. Mr. Marble. In any case, have you failed to reduce the spread with your efforts ? Mr. Costello. I would not say now. Mr. Marble. You wouldn't say whether you have or not? Mr. Costello. No, sir. Mr. Marble. What method have you used beyond conference and request to reduce that spread? Mr. Costello. Where there is an independent buyer there, we use our efforts with them, even if it is a track buyer, to handle the grain and give him fair price to keep the markets m line so as to give the farmers the price they are entitled to. Mr. Marble. You go to him and ask him to get in and buy? Mr. Costello. We nave; yes, sir. Mr. Marble. Do you offer him any inducement? Mr. Costello. No, sir. Mr. Marble. No special rates? Mr. Costello. No, sir. Mr. Marble. Nor salary or payment of any kind? Mr. Costello. Nothing of any kind. Mr. Marble. You give him his share of cars in any event? Mr. Costello. Yes, sir. Mr. Marble. It is rather more — it is again persuasion and solici- tation? 870 GRAIN ELEVATOR INVESTIGATION. Mr. CosTELLO. Yes, sir. Mr. Marble. Have you any other method beyond this of conferring and asking people to pay less ? Mr. CosTELLO. No, sir. Mr. Marble. Have you recently built any elevators as described by Mr. Hill? Mr. CosTELLO. No, sir. Mr. Marble. How recently? Mr. CosTELLO. Not since my time. Mr. Marble. How long is that? Mr. CosTELLO. About twelve years. Mr. Marble. At how many places along your road is the spread now in excess of 3 cents? Mr. CosTELLO. I couldn't say. Mr. Marble. Could you tell me what proportion of the places? Mr. CosTELLO. No, sir. Mr. Marble. Could you tell at how many stations it is as much as •6 cents? Mr. CosTELLO. If we got reports at the same time there would probably be quite a few. Mr. Marble. At those points you would regard it that the farmers are not getting what they should for their grain? Mr. CosTELLO. Yes, sir. Mr. Marble. Do you know whether or not elevator men, because of lack of cars and inability to get their grain carried,find themselves under the necessity of increasing the spread? Mr. CosTELLO. I do not think so. Mr. Marble. Not on your road ? Mr. Costello. No, sir. Mr. Marble. Who do you find to be the principal offender or principal offenders in this springing of the prices, so as to increase the spread ? Mr. Costello. I would not attempt- to answer that question. Mr. Marble. Are there any principal offenders ? Mr. Costello. I do not thmk so. Mr. Marble. Human nature is pretty much the same down the line, if the opportunity appears. Would that be fair to say? Mr. Costello. I should think that would be a fair proposition. Mr. Marble. That is all. Mr. KooN. Conditions may exist at times that make a spread of 5 cents as reasonable a business proposition as 3 cents would be at other times, might they not? Mr. Costello. There might be a few isolated cases at the close of navigation. Mr. KooN. Just now are they not such as to justify a greater spread; are the conditions not different now from what they were when cars could be freely obtained and there was a certainty of get- ting cars to market within a certain time? Mr. Costello. That might be so at certain times. Mr. KooN. That is the situation at present on the main roads? Mr. Costello. I understand it to be so. Mr. KooN. A man can not sell wheat to arrive in Minneapolis any time in December, say before the first of December, with any cer- tainty that it will get here. GRAIN ELEVATOR INVESTIGATION. 871 Mr. CosTELLO. Not late in the month of November. Mr. KooN. Well, there never has been any tune in November, very much time, that a man can sell wheat to arrive in Minneapolis by the 1st of December, with a certainty that he will get it here? Mr. CosTELLO. Of course, if he undertook to market the entire capacity of the country elevators it could not be done. Mr. K^ooN. That tends to bring the cash price of wheat closer to the future, does it not ? Mr. CosTELLQ. Yes, sir. Mi\ KooN. And therefore he has got to figure on that in m.aking his profit ? Mr. CosTELLO. He does the latter part of November. Mr. KooN. It is a fact, is it not, that where there are five or six or seven buyers at a station buying wheat they practically, whether they have agreed to do it or not, have to pay the same price ? Mr. CosTELLO. Yes, sir; that is practically the situation. Mr. KooN. If one man pays a Bttle more he gets all the grain? Mr. CosTELLO. As a rule. Mr. KooN. Isn't it a fact that if one man pays a farmer a little less, and he finds out another m.an is getting a little more, that he goes to the man and makes him pay up to what he has paid the other man? It regulates itself automatically? Mr. CosTELLO. There have been cases where there have been dif- ferent prices paid; where a man paying the smallest amovmt got his share of the grain. Mr. KooN. I am speaking now of the farmer who brings in his grain and sells it, perhaps, to the Minneapolis and Northern Elevator Com- pany for a half cent less than another man in the same town has got- ten; doesn't he go to the Northern and teU them of it and get that half cent ? ■ ' Mr. CosTELLO. I presume he would. Most farmers would do that. Mr. KooN. So*that, as a matter of fact, they have practically all go^ to pay the same price ? Mr. CosTELLO. But they don't always pay the same. Mr. KooN. But practically they have got to, if they get the same proportion of the grain? Mr. CosTELLO. Yes, sir. Mr. KooN. Now, in addition, in the measure of regulating prices, as you do, you also have supervision over the scales, if you choose to exercise it, or if there is complaint in regard to weighing? Mr. CosTELLO. Yes, sir. Mr. KooN. Your lease gives you that right ? Mr. CosTELLO. Yes, sir. Mr. KooN. Every one of them? You have a right, if there is any complaint as to the weighing, to go into that elevator and have those scales tested any time you want to, at the expense of the elevator man; isn't that right? Mr. CosTELLO. That is the practice, at least. Mr. KooN. That is all. Commissioner Protjty. Anything more to be asked this witness? That is all, Mr. CosteUo. Witness excused. 872 GRAIN ELEVATOE INVESTIGATION. P. B. Smith, called as a witness, having been duly sworn, testified as follows : Mr. Maeble. You are the president of the Minneapolis Chamber of Commerce ? Mr. Smith. Yes, sir. Mr. Maeble. And engaged in the grain business? Mr. Smith. Yes, sir. Mr. Maeble. In what way are you engaged in the grain business ? Mr. Smith. I am manager of the St. Anthony and Dakota Elevator Company. Mr. Maeble. What is the business of the St. Anthony and Dakota Elevator Company ? Mr. Smith. We have a line of country houses on the Great Northern road where we buy and handle grain and sort grain. Mr. Maeble. Are you interested in the Washburn-Crosby Milling Company as well ? Mr. Smith. Yes, sir. Mr. Maeble. YouThave a terminal house in this city? Mr. Smith. No, sir. Mr. Maeble. Where is your terminal house ? Mr. Smith. We have none. Mr. Maeble. It is just one corporation that owns all the line ele- vators which you speak of? Mr. Smith. Yes, sir. Mr. Maeble. Not more than one corporation ? Mr. Smith. Just one corporation. Mr. Maeble. Do you know who the stockholders of that company are? Mr. Smith. I know most of them. Mr. Maeble. So far as you know, do any of your stockholders own any railroad stock? • Mr. Smith. Well, only from general knowledge, but I do not know it personally. Mr. Maeble. Do you own any? Mr. Smith. No, sir; I do not. Mr. Maeble. Do you think some of them do, or are you pretty sure none do? Mr. Smith. I am inclined to think that one of our stockholders owns stock in Mr. Hill's road. Mr. Maeble. Who is that ? Mr. Smith. Mr. Dunwoody. Mr. Maeble. Is any portion of of the profits made by your company treated as the property of any railroad official, or stockholder, or employee, or any one other than the stockholders? Mr. Smith. None but the stockholders. Mr. Maeble. So far as you know, none of your stockholders hold stock for the benefit of any railroad official, or stoclcholder, or employee ? Mr. Smith. I absolutely know that they do not. Mr. Maeble. Does any member of Mr. Hill's family own stock in your company? Mr. Smith. No, sir. Mr. Maeble. You know it? Mr. Smith. I know it. GRAIN ELEVATOR INVESTIGATION. 873 Mr. Marble. How is the price made which you pay at your country stations for grain ? Where is it made ? Mr.. Smith. Made by the market, either here or at Duluth, and we figure on the freight and on the charges, expenses, and the profit we would hke to make. Mr. Marble. Just one other matter before I go into that. You are not in any way in the employ of any railroad ofiicial in the grain business? Mr. Smith. No, sir. Mr. Marble. Do you have charge of making these prices to be sent out? Mr. Smith. Yes, sir; in the sense that I have entire charge of the business. Mr. Marble. Are those prices at all determined by agreement with any of your competitors ? Mr. Smith. Indirectly; yes. We all figure on the same basis. Mr. Marble. All agree as to what basis you shall figure on? Mr. Smith. Yes; to a certain extent. Mr. Marble. To what extent ? Mr. Smith. Well, in that we all realize that it requires about so much margin of profit in order to five and make a reasonable return on the investment. Mr. Marble. Taking the average of your stations, about what margin of profit do you think you make during a crop year? Mr. Smith. If we could get cars to get our grain into — to dehver it on the same market on which we sell it, we are always satisfied with a reasonable margin; but we frequently can not get wheat in to sell on the same market on which we are obliged to buy it. I want to illus- trate that by the condition of the market to-day. We will take it on durum wheat to illustrate. Durum wheat for November delivery to-day is approximately 71 cents; for dehvery after the last day of November it is worth 64 centfe — a difference of 7 cents. Now, it would be impos- sible for me or any other elevator man to buy durum wheat in the country to-day based upon the present price without losing a large amount of money. We are therefore forced by the conditions and necessities to base our price upon December, wluch you see is 7 cents below the cash price. Mr. Marble. So that that makes you make a margin of about how much? Mr. Smith. We try to make a net margin of 3 cents per bushel on the December basis. But if you or Mr. Hill or Mr. Costello or any- one figures on the basis of the present cash price that makes it out that we are buying at a very large margin. Mr. Marble. What margin would it appear that you are bujring on? Mr. Smith. Ten cents; but, as a matter of fact, we are lucky if we get 3 cents out of it. Mr. Marble. That is to say, you are speculating on what December will be? Mr. Smith. No, we are not. Mr. Marble. Do you hedge with a future? Mr. Smith. We hedge for a future. Mr. Marble. So that you know you are going to make about 3 cents ? Mr. Smith. Yes, sir, barring the fact that is costs something to carry it to December. 874 GRAIN ELEVATOR INVESTIOATION. Mr. Marble. Thes© prices — are they made in your office for your buyer ? Mr. Smith. We have a general bureau which collects information and supplies it to us and others. Mr. Marble. Who is in charge of that bureau? Mr. Smith. A. J. Hoskins. Mr. Marble. Is that bureau simply an information bureau? Mr. Smith. It amounts to that. It is a clerical position to dissemi- nate the information to various offices instead of each man watching it for himself. Mr. Marble. Who maintains that bureau? Mr. Smith. It is maintained by all those who get benefits from it, prorating on the number of houses of each one. Commissioner Prouty. Is it maintained by some association or some number of firms ? Mr. Smith. It is no association, except having one common interest; we get together and discuss these matters and arrange with this bureau. Commissioner Prouty. ,That is to say, a certain number of firms do that? Mr. Smith. Yes, sir. Commissioner Prouty. Can you give a list of those firms ? Mr. Smith. It would be impossible for me to do that. I can give you a few of thera. Commissioner Prouty. Who do you say the gentleman is ? Mr. Smith. A. J. Hoskins. Mr. Marble. Would you recognize a list if you should see it? Mr. Smith. I would probably know most of them. Mr. Marble. Would you say whether or not that is a list ? (Counsel hands list to witness.) Commissioner Prouty. The easiest way to get at this is to call the gentleman himself. Mr. Marble. If he doesn't know at a glance, I will pass that by. Mr. Smith. I recognize some of them, sir. Mr. Marble. But you could not identify the rest ? Mr. Smith. No, sir; because I don't know. Mr. Marble. How often do these people meet ? Mr. Smith. They have no regular time for meeting. Mr. Marble. Well, about how often have they met in practice in the last year ? Mr. Smith. Well, I don't know, perhaps four or five times, but they haven't all met under any circumstances. Mr. Marble. But there would be a meeting, and all would be noti- fied and all would go who saw fit ? Mr. Smith. Not necessarily; they wouldn't all be notified. Mr. Marble. Do you have an executive committee which meets? Mr. Smith. No, sir. Mr. Marble. Or a committee of any sort? Mr. Smith. We have none, except there are three or four gentlemen who make it their business to watch the closing prices and confer with Mr. Hoskins in regard to the sending out of changes. Mr. Marble. Who were those persons usually? Mr. Smith. I don't know who tney are now. Mr. Marble. Mr. Andrews? Mr. Smith. I think he is one of them. GRAIK ELEVATOR INVESTIGATION. 875 Mr. Maeble. Mr. Manhusson? Mr. Smith. Yes, sir. Mr. Marble. Mr. L. J. Smith? Mr. Smith. I couldn't say. Mr. Marble. Mr. Wenzel? Mr. Smith. I don't know as to that. Mr. Marble. Mr. Marfield? Mr. Smith. I don't know. Mr. Marble. What is the agreement of those contributing to the maintenance of this bureau — will you explain it just exactly in your own way ? Mr. Smith. There is no agreement that I know of. Mr. Marble. Is there an agreement to contribute? Mr. Smith. I don't know as that even amounts to an agreement. By common consent each one is assessed his proportion of expense, depending on the number of houses that he operates. There is no agreement that I know of. It is something that has been in force, was in force before my time here. I couldn't tell you any more than that there is no agreement. Mr. Marble. Just an understanding or gentleman's agreement to pay these assessments and keep the office going — would you say that ? Mr. Smith. That would be about as near as Icould answer it: Mr. Marble. That would be a fair statement? Mr. Smith. I think so. Mr. Marble. Does this agreement reach any further than to pay the expenses? Mr. Smith. No, sir. Mr. Marble. Does it reach to the making of a certain profit on the buying of grain? Mr. Smith. No; any more than if you say that we all buy on the same basis it must necessarily result about the same. Mr. Marble. Do you agree to buy on the same basis? Mr. Smith. The fact that we send out those__ prices uniformly would have that effect. Mr. Marble. Do those prices include profits or do they simply state the prices at which any one can sell grain on the Minneapolis or Duluth market ? Mr. Smith. I don't think I quite grasp that. Mr. Marble. I mean to say is any profit for your company included in these prices sent out, or do you add your margin to the prices ? Mr. Smith. We deduct the freight and margin from the prices that we give our agent to- pay at the country stations 5 freight and margin. Mr. Marble. And those prices are sent out by this bureau with the freight and margin deducted? Mr. Smith. Yes, sir. I understand the bureau furnishes informa- tion to me or my office. I send out the prices myself or at least they are sent out under my supervision. Air. Marble. You deduct the freight and margin? Mr. Smith. Yes, sir. Mr. Marble. What they furnish you are the Minneapolis market prices ? Mr. Smith. Basing price. Mr. Marble. And then you deduct the freight and margin from that and send those prices to all the gentlemen in this association? 876 GRAIN ELEVATOR INVESTIGATION. Mr. Smith. No, sir. I send them to my own agents. Mr. Marble. And each manager of an elevator hne sends to his own agents ? Mr. Smith. I presume so. Mr. Marble. Do you at all send them by telegram? Mr. Smith. Yes, sir. Mr. Marble. Axe you familiar with the situation described by, r believe, Mr. Costello or Mr. Campbell, of simply one line elevator in a country town getting the price ? Mr. Smith. Yes, sir. Mr. Marble. And that one giving it to the others ? Mr. Smith. Yes, sir. I want to say the reason we do that is to expedite the information primarily; secondly, to save expenses. Mr. Marble. Save telegraph bills? Mr. Smith. Yes, sir. There are some 3,000 elevators doing busi- ness in Minneapolis whose centers are here. If we want to send each one a telegram it would sometimes be 24 hours, and possibly 48 hours before the telegram would get to the station. The wires could not handle the business. It was primarily with the object of gaining time and getting information to the stations that this arrangement was made; secondarily, to avoid expenses, reduce the expense of doing business. Mr. Marble. These prices that are sent by telegram in this way are made up in the same way as the postal^card prices that you described previously? Mr. Smith. I did not describe any postal-card prices. Mr. Marble. What you say about fixing prices applies to telegraph prices ? Mr. Smith. Yes, sir. Mr. Marble. You use the terminal prices, less freight and profit? Mr. Smith. Yes, sir; profit, expense and freight. Mr. Marble. Do you send those prices in some cases to your agents at any towns to be given to the agents of other lines ? Mr. Smith. I do. Mr. Marble. Name us a typical town at which you do that. Mr. Smith. I couldn't do that. Mr. Marble. Couldn't you name one town? Mr. Smith. No, I could not. This is purely clerical work, and without asking the clerk who actually does the work I couldn't tell you. I would just as leave name any town and assume that we do it. Mr. Marble. Could you name any town where you get the price from the agent of some other line? Mr. Smith. No, sir. If you want to make any point about it, I will admit it. Mr. Marble. I do not want to make any point. Mr. Smith. If there is anything to be made by it I will still admit or assume that I send the prices to Wilmar, where I do not. Mr. Marble. Then, we do not want it. What we want are the facts. It would not be fair to you or to the investigation. Who is the clerk who sends out these prices in your office ? Mr. Smith. I couldn't tell you his name. Mr. Marble. Will you find out and send him over here at two or three o'clock this afternoon; sometime this afternoon that is not his busiest time? GRAIN ELEVATOR INVESTIGATION. 877 Mr. Smith. Yes, sir. Mr. Marble. And have him make himself known to me? Mr. Smith. Yes, sir; I will come up with him, perhaps. Mr. Marble. Very well. Is there now, or has there been in the last two or three years what is known as a call rule on your chamber of commerce? Mr. Smith. No, sir. Mr. Marble. A rule by which. the members of the chamber of com- merce are not permitted to bid over a certain closing price, a price made about the closing of the market, and the members must bid not beyond that price, not over that price, until the opening of the markets next morning ? Mr. Smith. There is a rule which says in effect that a member must not do so with the purpose of evading the commission rule; with the "intent," I believe the word is. Mr. Marble. I presume that means with the effect? Mr. Smith. No; it means with the intent. Just what it says. Mr. Marble. Is that rule enforced? Mr. Smith. It is on the books. I do not recall any effort to enforce it. There is no necessity for it. Mr. Marble. Does that rule provide that a member who is a trader, and not a commission man, must make an allowance below the closing price to cover the commission? Mr. Smith. Yes, sir; it would if he bought his grain — wired his price to the country — based upon the closing price. But it does not prevent him if he can make a sale after the closing price. Mr. Marble. Will you bring us a copy of the rule this afternoon when you come, or send it ? Mr. Smith. I have no objection to furnishing that rule. Mr. Marble. Is this similar in purpose and effect to the call rule which has recently been adopted by the Chicago Board of Trade ? Mr. Smith. I am not familiar with that; I couldn't say. Mr. Marble. Do you think that certain mills east, say New Ulm, or some other point that buys grain, entered into this agreement and make a deduction to cover the commission if they are members of the exchange ? Mr. Smith. I do not know about that. Mr. Marble. Who would know about that? Mr. Smith. Well, I don't know. I haven't any idea, unless it would be the millers themselves. Mr. Marble. It is not a part of the rules or discipline? Mr. Smith. No, sir. Mr. Marble. If you will ask the clerk to whom you have referred to come here and bring a copy of the rules, I believe that will be all now. Commissioner Proutt. You may be excused for the present, Mr. Smith. Return this afternoon at 2 o'clock. Witness excused. Mr. Marble. It is now five minutes past twelve, and if the Com- mission is willing I prefer that the lunch hour be shortened on the other end instead of this. Commissioner Prouty. Well, we will adjourn at this time until half past one. At 12.05 p. m. the Commission adjourned until 1.30 p. m. 878 grain elevator investigation. after recess. 1.30 o'clock p. M. Commissioner Prouty. Mr. Marble, you may call a witness. Mr. Marble. We will resume with Mr. Smitn. P. B. Smith resumed the stand. Mr. Marble (referring to printed paper). Mr. Smith, this printed paper you have handed me is a copy of the rule of the chamber of commerce of Minneapolis to which reference was made this morning ? Mr. Smith. It is. Mr. Marble. You are president of that chamber of commerce? Mr. Smith. I am. Mr. l^ARBLE. You know this is a true copy? Mr. Smith. Yes, sir. Mr. Marble. I will read it : Every member of the association and every person, firm, and corporation admitted to trade or to do business therein who shall charge less than the regular rates of com- mission established by the rules of the association", or shall assume or rebate any portion of the same; or shall, with intent to evade in any way, directly or indirectly, the regular rates of commission established by the rules of the association, purchaBe, or offer to purchase any grain or seed consigned to him, them, or it for sale; or shall, with intent to cut or to evade in any way, directly or indirectly, the regular rates of commission established by the rules of the association, purchase or oner to pur- chase any grain or seed on track at any railway station outside of and for delivery at the city of Minneapolis; or shall make or report any false or fictitious sales or pur- chases; or shall resort to any method of accounting, directly or indirectly, in viola- tion of or contrary in purpose and effect to a strict adherence to the regular estab- lished rates of commission of the association; or shall, with intent to evade the regular rates of commission established by the rules of the association, directly or indirectly, pay, or give, or offer so to do, any money or other consideration of whatsoever nature to any person to procure or influence shipments or consignments of grain or seed in any form; or shall, with intent to cut or to evade in any way, directly or indirectly, the regular rates of commission established by the rules of the association, make use of any shift or device whatsoever, shall be deemed guilty of violating the rules of the association establishing rates of commission, and on conviction thereof shall be fined by the association not less than $250 nor more than $1,000, as the board of directors may determine, such sum to be paid into the general fund of the association. The balance of the nile provides as to the method in which com- plaints are to be made and trials shall be had. Is that correct? Mr. Smith. I think it is correct. Mr. Marble. I will read it all. Any charge of violation of the foregoing provision or any part thereof shall be by complaint in writing, filed with the secretary of the association. The party charged shall be summoned by written notice from the secretary and shall appear before the board of directors of the association, who shall investigate and try the charge. The enforcement of the provisions of this section o£ this rule shall not in any man- ner prevent the enforcement of additional penalty for the violation of any rule as provided for in section 7 of Rule IV of these rules and by-laws. Have you with you, Mr. Smith, or can you tell us what these estab- lished rates of commission are in amount ? Mr. Smith. Approximately the rate of commission on cash wheat is one cent per bushel ; on cash corn it is half a cent per bushel, and half a cent per bushel on oats and barley. I believe I am correct in that. Mr. Marble. Is it a cent a bushel on corn? Are you sure? Mr. Smith. I think it is a half a cent; one cent on barley. Mr. Marble. You say it is one cent on barley? Mr. Smith. I think it is. GKAIN ELEVATOR INVESTiaATION. 879 Mr. Marble. What is this additional penalty provided? That is a general blanket penalty? Mr. Smith. I think ^o. Mr. Marble. Section 7 of Rule IV? Mr. Smith. I suppose — I do not recall the matter now — but we have provisions for disciplining members who persistently violate rules. Mr. Marble. Now, since the morning recess, do you know whether or not it is true that certain mills east of New Ulm or a like point make a deduction to cover the commission if they are members of this exchange? Mr. Smith. I do not know. . Mr. Marble. Any shipper in North Dakota or South Dakota into the Minneapohs market consigning his grain to a commission mer- chant here would meet necessarily that as the price fixed as compen- sation to the commission merchant? Mr. Smith. Yes, sir; he would have to pay the commission pro- vided by the rules of the association. Mr. Marble. That is the purpose and effect of it? Mr. Smith. Yes, sir. Mr. Marble. And it is enforced? Mr. Smith. Yes, sir. Mr. Marble. Suppose that shipper was also a member of the chamber of commerce? Mr. Smith. Then he would pay half. Mr. Marble. And if he actually did the work, he would be out whatever it cost to do the work? Mr. Smith. Yes, sir. Mr. Marble. So, if he were represented on the floor by an em- ployee — might that be? Mr. Smith. Yes, sir; a man might be a member of the board of trade and be an employee of his. We would not necessarily know that. , Mr. Marble. That would be rather an infringement of the rules ? Mr. Smith. No, sir. Mr. Marble. But the compensation to him from his employer, would you regulate that? Mr. Smith. No, sir. Mr. Marble. Then a broker or commission merchant on your floor may sell all of his time to one customer and .you' do not concern your- self with the compensation? Mr. Smith. That is right. Mr. Marble. As a matter of fact, in your business, the grain bought by you, do you yourself sell that grain, or have some one hired to do it? Mr. Smith. We have men employed for that purpose by the year. Mr. Marble. Does the compensation you pay them amount to more or less than the rates fixed — the cent a bushel and half a cent a bushel fixed by these rules? Mr. Smith. Undoubtedly a great deal less; because we do business in a very large volume. Mr. Marble. That is an advantage you would have over a country shipper who was .not a member of the exchange here and had no oiie hired specially to represent him? 880 GRAIN ELEVATOE INVESTIGATION. Mr. Smith. I suppose you might say that is an advantage. I think that would be a fact. Perhaps the result is that I get my business done for less than the man that ships only a dozen cars. Mr. Marble. As a matter of fact, are the large line elevators terminating in this city generally represented on the chamber of commerce in this same way? Mr. Smith. I think so. Mr. Marble. So, as a matter of fact, most of them, if not all of them, do succeed in marketing their grain for less than this price charged under the rules of the cnamber of commerce ? Mr. Smith. Yes, sir. On the other hand, they also have a great many other expenses that a single house does not have. They have to have expensive employees conducting the business. The stockholders, for instance, pay me, perhaps, more salary than one of those country elevator men could earn in a year and there are various things to consider when you go into that. Mr. Marble. I am trying to see as to the expense of marketing the grain. Of course, you would not charge all the burden against this item of selling on the exchange? Mr. Smith. No. Mr. Marble. And you do succeed in reducing the cost of that item? Mr. Smith. Undoubtedly. Mr. Marble. And if you had at one of your country stations a farmers' elevator or independent elevator, it, under this rule, would have to pay a cent on wheat or barley, whereas with your arrange- ment you get it for less? Mr. Smith. Yes, sir. Mr. Marble. And as to the bidding, if it is an advantage to do business at a lesser expense for any item, you are at that advantage ? Mr. Smith. I think so, if I understand your question. Mr. Marble. For instance, you save, say, a half a cent in this item and you might use that in the bidding if you chose. Mr. Smith. If I saw fit to cut my profits. Mr. Marble. And still make as much profit as he could? Mr. Smith. If that were the only item, but there are other items. Mr. Marble. So far as selling is concerned, that is all there is to it, is it not ? Mr. Smith. Yes, sir. Mr. Marble. Is there a farmers' association having headquarters in this city represented by Mr. Case ? Mr. Smith. Not to my knowledge. I do not Imow. Mr. Marble. Do you know the Minnesota Farmers' Exchange owning country elevators? Mr. Smith. I have heard of such a concern. I do not know what they own. Mr. Marble. Do you know whether or not they have tried to secure representation in the chamber of commerce, so as to be situated as you are ? Mr. Smith. Yes, sir; such an organization did come before us. Mr. Marble.. Attempting to get the selling end of their business the same as yours by having a representative on the chamber of com- merce ? Mr. Smith. Yes, sir. GEAIN ELEVATOR INVESTIGATION. 881 Mr. Makble. Did they succeed in seciiring that ? Ml-. Smith. Not up to date. Mr. Marble. They have been refused? IMr. Smith. No, sir; they have never made formal application. Mr. Marble. Could you say whether or not they will be accorded that privilege? Mr. Smith. Certainly not. ilr. ^Iarble. You mean you could not say? ilr. Smith. No man can say that. Every man who wants to become a member of the chamber of commerce has to comply with certain conditions. In the first place, he has got to be a man of good moral character. Beyond that, he has to have a certain amoimt of financial ability and integrity. A thousand men might come to us and ask admission to our chamber of commerce and not one could come in, except under the general rules. They would have to make good to the directors. ilr. Marble. Is it not a fact that they having made application, you did bring this matter up for consideration ? ^Ir. Smith. We accorded them a privilege we have never accorded anybody else. The directors were called together and met a half dozen of these people and heard what they had to say. We went further. We asked them what they owned. We asked them to make a statement to us as to their financial rdteponsibility. They could not do it, or would not do it. We gave them time. We told them, if they would bring in a statement that was satisfactory, we would consider their case. They never brought it in. Mr. Marble. Then they did make an application? Mr. Smith. In an informal way. Mi. Marble. Is it true they asked you how much money you expected them to have in the treasiu-y? Air. SMrrfe. We told them it was not so much a question of volume as of character and integrity back of it. ilr. ilARBLE. Rather a question of personal integrity in the stock- holders and the company, or the management? Mr. Smith. Well, largely the management. Mr. Marble. Did you have any quarrel with the person proposed by them for membership ? ilr. Smith. My impression is we did have a good reason for not favorably considering the man they proposed. Mr. ilARBLE. Did you state that to them? ]Mr. Smith. I think we did. Understand, now, I am not making a positive statement, because my recollection is not very clear. Mr. Marble. It is your impression that they were given to under- stand that they must make a certain statement as to financial resources and must propose some other man than the one they proposed ? Mr. Smith. I think that is correct. Mr. Marble. Since that they have not prosecuted the matter? Mr. Smith. No, sir. Mr. Marble. Is that a fair statement ? Mr. Smith. It is to the best of my knowledge and belief. Mr. Marble. This slip you show me — you have refreshed your memory since the morning session as to the stations where you sent prices for all the people there ? S. Dop- 278. .59-2 56 882 GKAIN ELEVATOR INVESTIGATION. Mr. Smith. Yes, sir. Mr. Marble. Will you tell us some place where you do send prices ? Mr. Smith. We send prices to Mayville, North Dakota. Mr. Marble. Who are your competitors at Mayville? Mr. Smith. The Great Western Elevator Company, the Federal Elevator Company, and the Farmers' Elevator Company. Mr. Marble. Does this price go to all of them? Mr. Smith. Yes, sir. Mr. Marble. To the Farmers' Elevator Company also? Mr. Smith. Yes, sir. Mr. Marble. And it is pretty generally observed, is it ? Mr. Smith. I am sorry to say it is not, as a rule. Mr. Marble. Is there any particular one that breaks away from it more frequently than the others? Mr. Smith. No, I do not know that that is so. You understand as to these prices we send out that no one is under obligation to stand to them. It is a basis and we would be glad if every one would buy at that basis, but we can not always control those things. Mr. Marble. There is no penalty? Mr. Smith. No penalty whatever. Furthermore, the price is only one means of determining what we pay for grain. The question of trade and dockage is the worst thing we have. I rn^ht ostensibly uy wheat at Mayville on a 3-cent margin and get nothing. I often do that. Mr- Marble. By grading higher than it should be? Mr. Smith. Yes, su-; and docking it less than it should be. Mr. Marble. Now, at Northwood, North Dakota? Mr. Smith. The Cargill Company perform the same service there that I do at Mayville. Mr. Marble. You operate also there? Mr. Smith. Yes, sir. Mr. Marble. What others? Mr. Smith. The Cargill Elevator Company, the Heising Elevator Company, the Farmers' Elevator Company, and a man by the name of Burgess — the Burgess Elevator Company. Mr. Marble. The Farmers' there receive this price? Mr. Smith. Yes, sir. Mr. Marble. Do 'you find the Farmers' Elevator making a fight for the grain, attempting to raise the price? Mr. Smith. No, I do not. Mr. Marble. Some farmers' elevators do that, do they not ? Mr. Smith. No, I thinlc the contrary is the fact, for the reason — the reason, it seems to me is obvious. They have their own clientage. Their stockholders they naturally look on as their own clientage, and it is easier for them to buy their proportion than it is for a man that has not that clientage. Mr. Marble. Are farmers' elevators generally established with the motive of raising the price of grain at the station? Mr. Smith. I do not know their motive. Mr. Marble. As expressed to you ? Mr. Smith. No ; I tliink they consider the business profitable. Mr. Marble. More as an elevator proposition? Mr. Smith. I think so. GBAIW ELEVATOR INVESTIGATION. 883 Mr. Marht.tj: Do you know whether these farmers' elevators have the penalty clause? Mi. Smith. I think most of them do. Mr. Marw t.t!! Does that have any effect on your business ? Mr. Smith. Naturally. Mr. Marwt.t?! - What is that effect? Mr. Smith. Naturally they would sell to the farmers' elevator com- pany for a cent or fraction of a cent less than to us. If they sold to us they would have to pay their stockholders a cent a bushel. ilr. Mabble. Is your firm a commission firm ? Mr. Smith. No; we have a commission department ia our firm. We handle our own business. Mr. ^LvRBLE. The bulk of your busings is handling your own business? Mr. Smith. Yes, sir. Mr. Makble. Where do you sell the biilk of your graia ? Here in Minneapolis ? Mr. Smith. I think more in Duluth than in Minneapolis. This time of year we are shipping practically everything to Duluth. Mr. Marwt.h! - Is that sold at Minneapolis practically all sold to one concern? Mr. Smith. No, sir; it is sold to whoever pays the price. Mr. Mabble. You are not a sort of purchasing agency for the Washburn-Crosby Company? Mr. Smith. Not in any sense. Mr. ;Maeble. How many companies are controlled by you? Mr. Smith. Onty one. Mr. ^Iaeble. Tnat is what ? Mr. Smith. The St. Anthony and Dakota Elevator Company. Mr. ilARBLE. This rule that provides that grain handled through this market shall pay the rate of commission fixed by the Exchange, do you regard that as good for the market ? ilr. Smith. Well, it seems a fair provision among the members. This is a voluntary association of ours. No man is obliged to become a member of our association. We go into it voluntarily and agree to abide by the rules, and all have a voice in making the rules. Mr. Marble. What would be the objection to not having this scale of charges for commissions, but leaving it to competition? Mr. Smith. The result, in my opinion, would be that a large num- ber of people who were not responsible would get into the business and the result in the long nm woidd be a great mam- losses to a great many people that look upon this as their market iot selling the grain. Mr. Maeble. You mean would get into the commission business ? Mr. Smith. Yes, sir. Mr. ^Jaeblb. You would not admit irresponsible people, woidd you? Mr. Smith. No. Sometimes people get in that are unworthy without our knowing it. Mr. Marble. Do you mean to say that having a scale of prices aids you in k&eping irr^ponsible people from having membership? Mr. Smith. Yes, sir. Mr. Maeble. In what way does that have any relationship ? Mr. Smith. Well, I do not know as I can answer that question. 884 QBAIK ELEVATOR INVESTIGATION. Mr. Marble. What would be the objection— you determine whether or not a man is responsible before you admit him — what would be the objection to allowing your members to compete m price as well as in service? Mr. Smith. It would result in demoralization. If the commis- sion man, who is really the servant of the farmer or whoever ships the grain, is recklesfe and loses money, that he would be bound to if he got into an open fight, the result m the end would be detrimental to the shipper. Mr. Maeble. It would result in lowering the price of marketing Mr. Smith. Yes,, sir; and it would result in a number of failures ultimately, whereby people who consigned grain to commission men in Minneapolis would lose. Mr. Marble. .Don't you think it would result in making an equality of charge so that the independent in the country could market grain as cheaply as your company? Mr. Smith. No, sir; it would not affect that at all. Mr. Marble. Why? Mr. Smith. Because he would have to become a member and put himself in the same position. Mr. Marble. If these other members could cut the one cent? I am not saying it should be done. Mr. Smith. I have already answered that the best I know how. Commissioner Peouty. Mr. Marble, I was otherwise engaged when that rule was read. I wish you would read it once more. Mr. Marble. Read it at length ? Commissioner Prouty. Or state it. Mr. Marble (referring to rule). It provides that every member admitted to trade or to do business there who shall charge less than the regular rates of commission established by the rules of the asso- ciation, or shall assume or rebate any portion of the same; or shall offer to buy in the country in a way that will not yield the commis- sion rates Mr. Smith (interrupting). With the intention to evade. Mr. Marble. With the intent to evade these rules; or shall, with intent to cut or to evade in any way, directly or indirectly, the reg- ular rates of commission established by the rules of the association, purchase or offer to purchase any grain or seed on tr.ack " at any railway station outside of and for delivery at the city of Minneapolis; or shall make or report any false or fictitious sales or purchases, or shall resort to any method of accounting, directly or indirectly, in violation of, or contrary in purpose and effect to, a strict adherence to the regular established rates of commission of the association; or shall, with intent to evade the regular rates of commission established by the rules of the association, directly or indirectly pay, or give, or offer so to do, any money, or other consideration of whatsoever nature to any person, to procure or influence shipments or consignments of grain or seed in any form; or shall, with intent to cut or to evade in any way, directly or indirectly, the regular rates of commission estab- lished by the rules of the association, make use of any shift or device whatsoever, shall be deemed guilty of violating the rules of the asso- ciation establishing rates of commission, and, on conviction thereof, shall be fined by the association not less than $250 nor more than GRAIN ELEVATOR INVESTIGATION. 885 $1,000 as the board of directors may determine, such sum to be paid into the general fund of the association." Commissioner Prouty. Well, that would in effect provide or pre- vent a member of the chamber of commerce from paying the price in the country which would cut out this commission; but would that prevent you, or would that prevent a commission man, from handling the grain of an independent shipper in the country irrespective of the price you paid for the grain ? Mr. Smith. The commission man would have to charge the regular stipulated price of commission adopted by the chamber of commerce. Commissioner Pkouty. We will suppose the commission is 1 cent a bushel and a farmers' elevator in the country buys wheat and pays less than it is worth — actually pays 1 cent less than it is worth — and sends it to Minneapolis to be sold, the commission man could sell that wheat for him by charging him 1 cent commission. Mr. Smith. Yes, sir. Commissioner Prouty. In other words, he does not attepipt to regulate the price anyone shall pay in the country? Mr. Smith. No, sir. Commissioner Prouty. He is buying wheat to be consigned to a commission man for sale here ? Mr. Smith. In no sense. Commissioner Prouty. You only attempt to prevent the com- mission man buying wheat in the country Mr. Smith. We only attempt to control the action of our own members during our own business hours. That is all we attempt to do. Commissioner Prouty. What you really attempt to do is to fix the commission at which this grain shall be handled ? Mr. Smith. Yes, sir. Commissioner Prouty. And make such rules as will prevent the members of your body avoiding the effect of the rule itself? Mr. Smith. That is right. Commissioner Prouty. Do you understand that it goes any further than that, Mr. Marble? Mr. Marble. I understand there are a set of exceptions to the rules, by which, if a shipper of grain is a member of this chamber of commerce, his sales are made for half the usual rates of commission; also, if the shipper has means enough to maintain a salaried broker, the chamber of commerce does not concern itself with that. That is correct, is it? Mr. Smith. Absolutely correct. Mr. Marble. That results in larger companies having a . repre- sentative and marketing grain cheaper than the other man. Commissioner Prouty. That would result in this, if a grain buyer was a member of the chamber of commerce, he could sell his grain on the board for half a cent less than the man who was not a member. Mr. Smith. In order to become a member he has got to buy a membership to begin with, which would mean an investment of $5,000, an4 has to pay $100 a year dues. Counting money worth 6 per cent, it is $400 that it costs a man a year to own a membership. Mr. Marble. Has any interpretation been given this rule that is at all different from its language ? Can you tell us about it in practice ? Mr. Smith. No; I do not recall anything now. The directors are 886 GRAIN ELEVATOR INVESTIGATION. often called upon to interpret rules. I would not say now whether they had been called on to interpret this. Mr. Marble. You do not know as to the interpretation given it in practice ? Mr. Smith. No.thing more than the rule itself says. Commissioner Prouty. Is it possible for a man to send grain to Minneapolis and sell it anywhere except on the board? Mr. Smith. It is possible. Commissioner Prouty. But not practicable ? Mr. Smith. Not practicable; no, sir. Mr. KooN. It is done, is it not, frequently? You are speaking of wheat ? Mr. Smith. Yes, sir; of wheat. I suppose there is more or less of it done, but, as a matter of fact, everyone considers that the place to sell the wheat is where the buyers and sellers get together, and as a matter of practice it is safe to say that almost all of it goes through there. Of course, it is possible for a miller or elevator man to go over the country and buy it and not pass it through the elevator. Mr. KooN. A private elevator man might buy it and consign it to his elevator ? Mr. Smith. Yes, sir. Mr. KooN. Have not the millers bought large quantities of wheat and had it shipped directly to them ? Mr. Smith. Yes; that is true. You are right about that. I had overlooked it. Commissioner Prouty. Barley is consumed here ? Mr. KooN. Yes, sir; and so is wheat. Mr. McGeb. There is no limit to the quantity that can be marketed that way ? Mr. Smith. I do not know of any. Commissioner Prouty. As a practical matter, how much is mar- keted here anyway but through the chamber of commerce ? Mr. Smith. Since Judge Koon asked that question, I recall the fact that last year and two years ago a very large quantity of grain came in here from Kansas that was brought direct by the millers and did not pass through the chamber of commerce at all. I had for the moment overlooked that. Mr. Koon. How about Canadian wheat? Mr. Smith. Yes; they imported a lot of wheat from Canada the same way. Mr. Marble. That was not wheat that was sent to this market to be sold ? Mr. Smith. To be ground. Mr. Marble. It was wheat in other markets that the millers bought. Mr. Smith. Bought it in the country and shipped here for their own use? Mr. Marble. When they buy in this city they buy through the chamber of commerce ? Mr. Smith. Yes, sir. Mr. Marble. You have testified that you did not know whether or not any interpretation had been given this rule by your board of directors. Mr. Smith. I do not recall any. GEAIN ELEVA'^OR INVESTIGATION. 887 Mr. Marble. Have you a rule like the call rule of the board of trade of the city of Chicago ? Mr. Smith. No, sir; we have not. Mr. Marble. Have you had it ? Mr. Smith. No, sir; we never had it. Mr. Marble. I think that is all. Mr. KooN. Mr. Smith, in regard to this commission you referred to. Mr. Marble spoke about your employing a broker to sell your wheat. The rules of the chamber of commerce provide that any corporation or copartnership, anyone of whose members is a member of the chamber of commerce may be represented on the board ? Mr. Smith. Yes, sir. Mr. KooN. You have a representative on that board ? Mr. Smith. He is a member of the chamber of commerce. Mr. KooN. He is in your employ ? Mr. Smith. Yes, sir. Mr. KooN. He is not a broker or commission man ? Mr. Smith. No, sir. Mr. KooN. He is an employee of yours to sell your own grain on the board? Mr. Smith. That is right. Mr. KooN. If you employ a commission man in this city to sell your grain you would have to pay him the same commission anybody else would, would you not ? Mr. Smith. Provided he was a member of the chamber of commerce. This is part of our organization. Mr. KooN. He is the only man that could sell on the chamber of commerce ? Mr. Smith. Yes, sir. Mr. KooN. Every farmer or independent dealer in the country has the same right to become a member of the chamber of commerce that you have, if he can make a satisfactory showing, except that the number of members is limited to 500 ? Mr. Smith. Five hundred and fifty; yes, sir. Mr. KooN. Beyond that, of course, if you were not a member you could not get in ? * Mr. Smith. No, sir. Mr. KooN. And whenever an application is made, no matter whether by a farmers' organization or dealer in Minneapolis, it has to go through precisely the same routine, has it not ? Mr. Smith. Yes, sir; and I want to impress that, that no organiza- tion can come into our association. It is individual. You may be backed by a thousand men, but you have to stand on your own merits. Mr. KooN. I understand you only admit individuals and those individuals you scrutinize as carefully as you can to maintain the high standing for moral and business integrity in your association? Mr. Smith. We do. Mr. KooN. You have been connected with this chamber ever since it organized, have you not? Mr. Smith. No, sir; I was one of the original members, but I sold my membership years ago. I have been an active member nineteen years. _ _ . Mr. KooN. And are familiar with similar organizations in other places ? 888 GRAIN ELEVATOR INVESTIGATrON. Mr. Smith. Yes, sir. Mr. KooN. Has it been found from practical operation that a rule similar or very much like your commission rule — that is what you call this? Mr. Smith. Yes, sir. Mr. KooN. (Continuing.) Is necessary to the existence and business of any chamber of commerce? Mr. Smith. Yes, sir. Mr. KooN. That does the same business that you do? Mr. Smith. Absolutely. Chaos would rule if we did not have a rule of that kind. Mr. K90N. Now, Mr. Smith, you were interrogated in regard to this arrangement you have testified to as to sending out these cards. I understood you to say that one of the objects of doing that was economy, and another was speed in getting the information. Mr. Smith. Right. Mr. KooN. And that system has been in vogue in different phases for a great many years, has it not? Mr. Smith. Longer than I have been in business. Mr. KooN. And it has been found to be essential practically to the operation of the business? Mr. Smith. I could show, if we had the time, from my own corre- spondence and that of others — I presume it would not be a difficult matter to show a thousand letters we have received, stating I sold a load of wheat' to your agent yesterday at 61 cents, when I found the National Elevator was paying 62, and we demand the additional cent. The man that pays the highest price is the man that makes the market at a station. Mr. KooN. Is there any agreement among the men that send out or receive this information that they shall pay the prices indicated on those cards? Mr. Smith. No, sir. Mr. KooN. And as a matter of fact, do they pay it? Mr. Smith. No, not often, I am sorry to say. Mr. KooN. Have you paid it? Mr. Smith. I often find my agent is bigger than I am, and I have to pay more to get my share of the trade. Mr. KooN. And he does it? Mr. Smith. Yes, sir. Mr. KooN. Have you figured up at any station at any time whether the price you have paid has been greater or less than the price indi- cated by conditions? Mr. Smith. It is never less; often more. Mr. KooN. Mr. Smith. Is that true of other operators to your knowledge? I think it must be. ' Mr. KooN. Is this information which is sent out confined to the ' line elevators? Mr. Smith. No, sir. Mr. KooN. "Who gets it? Mr. Smith. Everybody who is buying grain at the station. Mr. KooN. And is willing to pay their pro rata? Mr. Smith. We do not even ask them often whether they will pay their share or not. Mr. KooN. Is it not a fact that the buyers throughout the country, GEAIN ELEVATOR INVESTIGATION. 889 many of them, who are not hne operators and have nothing to do with the business here, receive these reports and pay for them? Mr. Smith. Yes, sir; they frequently request that they be sent to them. Mr. KooN. Are they posted at the stations ? Mr. Smith. Yes, sir. Mr. KooN. Everybody knows? Mr. Smith. Everybody knows. Mr. KooN. Do you know whether the farmer is anxious that infor- mation should be sent to the country ? Mr. Smith. It is the first thing he looks for when he comes to town. 1 would like to say something here, if I may be allowed to. Commissioner Protjty. Proceed. Mr. Smith. Mr. Hill in his testimony this morning said he would like to see a system of public elevators, where a man could put his grain into the elevator and sell the receipt to the merchant or the saloon keeper or whoever wanted to buy it. I want to say that that system is in vogue at every station on Mr. Hill's road absolutely and to-day we have our certificates outstanding that the farmers hold for grain they put into our elevator to the extent of five hundred thous- and bushels. The farmers own the certificates to-day. They do not need to sell them to us. They can order a car and we load it. They can ship to Duluth, Minneapolis, or Chicago. Mr. KooN. Every elevator in the States of North Dakota, South Dakota, and Minnesota and upon the right of way of any railroad outside of Minneapolis, St. Paul, and Duluth is to-day a public elevator, is it not ? Mr. Smith. Absolutely by law. Mr. KooN. And is bound to take the wheat or grain of any farmer' that he takes to that elevator in proper condition ? Mr. Smith. Yes, sir. Mr. KooN. And give him a form of receipt specified by statute ? Mr. Smith. Yes, sir. Mr. KooN. And the fees for taking care of it are specified by statute ? Mr. Smith. Yes, sir. Mr. KooN. That receipt is transferable ? Mr. Smith. Yes, sir. Mr. KooN. You have to deliver that wheat to him not only at the station, but at a terminal point if he desires it ? Mr. Smith. Absolutely, and we are under bond to North Dakota, South Dakota, and Minnesota to do it. Mr. KooN. You have to give a bond for every house ? Mr. Smith. Yes, sir. Mr. KooN. Mr. McGee has a copy of that statute. Commissioner Peouty. Hsnd a copy to the stenographer. Mr. KooN. Here are the Minnesota and North Dakota statutes [Handing same to stenographer]. (The same are hereto annexed and marked "Exhibits Nos. 1 and 2 to the testimony of Mr. P. B. Smith.") Mr. McGee. I will get the South Dakota one to-morrow morning. Mr. Smith. I would like to say something more. Mr. Hill in his testimony this morning and I think the other man that testified Commissioner Peouty. Mr. Costello ? 890 GRAIN ELEVATOR INVESTIGATION. Mr. Smith. Mr. Costello. I think he was a verj fair witness and tried to tell the facts as he understood them. Neither of them have explained the difl&culty under which a farmer would labor if there were public elevators and elevators did not buy grain — the difficulty he would labor under in disposing of the tail end of his crop. A man may have 10,000 bushels of wheat. He can ship eight or ten cars of that. Then he keeps the balance until after seeding time and has a remnant, which is not enough for a carload or half a carload. Now, were it not for the fact that the country elevators maintain a market the year around he would have to retain that wheat until he could make a carload.. Commissioner Peouty. I suppose there are a great many that do not raise a carload ? Mr. Smith. A great many. Mr. KooN. And most of them want to sell it? Mr. Smith. Yes, sir; they want to get the money to pay the thresh- ing bills. Mr. KooN. The elements that enter into inaking your price, I understand, are the freight and a certain margin between the price here and what you pay in the country? Mr. Smith. That is right. Mr. KooN. That has to be taken into consideration? Mr. Smith. Always. • Mr. KooN. You make the difference, what is called the "spread," for your profit a fair amount, as you think, to cover the expense of your operation and a fair return on your capital ? Mr. Smith. We have demonstrated by careful figuring for fifteen years that it costs us to exceed 2 cents a bushel to do the business. Mr. KooN. Actual cost? Mr. Smith. Actual cost. Mr. KooN. That does not take into account interest or anything of that kind? Mr. Smith. No, sir; that, of course, would vary with the volume of business you could do. Mr. KooN. Would it not be affected by another circumstance — if you could keep your house open only a certain period of the year when there was a certain volume of business ? Mr. Smith. Certainly. I would be perfectly willing, if I could have a contract, to handle all the grain on the Great Northern — I would be satisfied with a margin of 1 cent a bushel. I would be satisfied to do it. I would have the volume to do it. But scattering it, as we have to, over a year, and maintaining an agent and all the necessary expenses, we find that our expenses exceed 2 cents a bushel. Mr. KooN. The general margin you try to get is about 3 cents, unless there are conditions that change i^? Mr. Smith. Yes, sir; it is a very essential part of it that we should be able to get cars to get our wheat in and save insurance and interest and many other things. Mr. KooN. Mr. Hill seemed to think that your profits might be a little too large in some instances, and the thing that enters directly into the price the farmers get is the freight, is it not ? Mr. Smith. Yes, sir. Mr. KooN. And if that freight were reduced a couple of cents the farmer would get the direct benefit ? GRAIN ELEVATOR INVESTIGATION. 891 Mr. Smith. We sit up nights to change our rate when the freight is reduced. Mr. KooN. The easiest way to help the farmer would be to reduce the freight, would it not? Mr. Smith. Yes, sir. Mr. KooN. What, in fact, has been the condition with the country elevators and the raihoad facilities since the commencement of this crop? Mr. Smith. During the last eight weeks we have had 50 elevators, that is, one-third of our system has been out of commission from lack of cars. Mr. KooN. They are full? Mr. Smith. Yes, sir; and we could only operate them when we could get a car to make room. Mr. KooN. On what road are they? Mr. Smith. The Great Northern. Mr. KooN. Are you on the Great Northern exclusively? Mr. Smith. Exclusively. Mr. KooN. That prevails on other roads too ? Mr. Smith. I think my friends on other roads have the same trouble. Mr. KooN. Now, as a general thing, I want to ask you, so far as you know, if, as a general proposition, the margin that the elevator man takes exceeds 3 cents as an average unless there is some condition which you think as a business proposition justifies it or demands it? Mr. Smith. No, we are perfectly satisfied with a 3-cent margin when we can get our grain in and. market it on the same market on which we buy it. Of course it is impossible to have it all the same at all times. There are changes in the market and in the freight. We never aim to buy at a smaller fraction than a half a cent in the country. Commissioner Prouty. Did I understand you to say that you are paying 7 cents less on Durum wheat to-day than you would pay if you could ship it directly into Minneapolis? Mr. Smith. Into Duluth. That is the market condition to-day. I spoke rather of last evening's close. Durum wheat for November delivery costs us 71 cents, and December was at 64. Commissioner Prouty. You pay such a price as you can hedge against it? Mr. Smith. Yes, sir. Mr. KooN. If you did not, you could not borrow any money at the banks, could you ? Mr. Smith. Well, they would look upon us with suspicion anyhow. Mr. KooN. They would do more than that. Mr. Marble. Do you do business at Aberdeen, S. Dak. ? Mr. Smith. No, sir. Mr. Marble. At any of the stations where j'ou have elevators, have you any agreement with j^our competitors as to the amount of grain to be bought by each one? Mr. Smith. No, sir. Mr. Marble. Or any pooling agreement of any sort ? Mr. Smith. No, sir. Mr. Marble. Do you recognize the right of your competitors to a share of the market? Mr. Smith. Well, I do not unless I have to. 892 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Well, if you find that you have gotten a pro rata of the market, say one-third, if there be three elevators, and your com- petitors bid up to get their third, do you follow them and still fight for the balance of the grain? Mr. Smith. Yes, sir; I might not fight as aggressively if I am ahead as I would if behind. Mr. Marble. Because you might precipitate a general fight all along the fine if you did? Would that be the reason? Mr. Smith. No, I do not think I would consider that, but I have found — and I have been in business a good many years — I have found when I once drive a man away from my house for any reason, it costs a good deal to get him back, and I never do it. " Mr. KooN. You mean a farmer? Mr. Smith. Yes, sir. He might be a good friend of mine and operat- ing the house next to me. If he thought he was not getting his share he might try to take a good customer from me. If it were a matter of only losing the customer for that time, I might be willing to let him take him, but I have generally found that I have lost the man forever. Mr. Marble. You have no agreements with penalties attached? Mr. Smith. No, sir; absolutely none. Mr. Marble. Have you ever had ? Mr. Smith. Yes, sir; there have been such things in the past. Mr. Marble. How long ago ? Mr. Smith. I think two years since I have had such an arrangement. Mr. Marble. Is that the most recent? Mr. Smith. Yes, I think so. Mr. Marble. An agreement was reached as to the proportion of the market each should pay, with accountings to each other, or some third party, and a penalty paid on the excess? Mr. "Smith. Something like that ; yes, sir. Mr. Marble. You did have such agreements two years ago? Mr. Smith. I say I think about two years ago we discontinued those things. Mr. Marble. Are there any that you know of now in the country where you operate ? Mr. Smith. No, sir; not that I know of. Mr. Marble. Why did you discontinue? Mr. Smith. Well, we have found that those things were looked upon with suspicion, and we find a good many people have changed their methods from what they used to do in the past. We do not want to be behind the rest in being up to date. Mr. Marble. You have not changed any of those arrangements as recently as January of this year? Mr. Smith. No, sir; I am quite sure I have not. Mr. Maeble. Your employees are bonded, are they not, as. to weights and grades? Mr. Smith. No, sir; as to weights only. Mr. Marble. You take the risk as to their judgment as to grades? Mr. Smith. Yes, sir. Mr. Marble. Suppose an employee gets too much weight. Instead of its not weighing out Mr. Smith. That is a very improbable thing. Of course, it is im- possible — it is an impossibility for a man to run an elevator and run GRAIN ELEVATOR INVESTIGATION. 893 through a hundred thousand bushels of grain and have it come out exactly even. We try to come out on the right side. Mr. Marble. If you find an employee taking more from a farmer than he should, would you discipline him? Mr. Smith. We certainly would discharge him immediately. We find that if he will cheat another he will cheat his employer. Mr. KooN. Is not that just what they do do? Mr. Smith. Yes, sir. Mr. Marble. Have you seen that letter [handing letter to witness] ? Mr. Smith. No ; I have not. I never saw that before. Mr. Marble. Are you familiar with the action that resulted from that letter? Mr. Smith. No; I do not recall it. I do not recall that action at all. I was not president of the chamber at that time, I think. I am not sure I attended the meeting. Mr. Marble. That is all. Mr. KooN. Mr. Smith, how many elevators have you? Mr. Smith. About 150. Mr. KoON. Those elevators are run by 150 different employees of yours ? Mr. Smith. Yes, sir. Mr. KooN. You have to trust the grading of that wheat and the weight of that wheat to those men entirely ? Mr. Smith. Absolutely. Mr. KooN. Is not that an element of risk in your business that you would be glad to be insured against if you could do so? Mr. Smith. Yes, sir ; very glad. Mr. KooN. I have heard you make the statement before now that you would be willing to pay $25,000 a year to be guaranteed the weights and grades taken by your employees in the country, Mr. Smith. The oifer is open to-day to any responsible concern. Mr. KooN. To guarantee you the weights and grades? You will give $25,000 a year to have them guaranteed ? Mr. Smith. Yes, sir. Commissioner Proutt. Did you say that all your elevators are on the Great Northern ? Mr. Smith. Yes, sir. Commissioner Peouty. Do you know how many elevators in all are located on the Great Northern that ship grain to the East? Mr. Smith. No, I do not know ; but I should say there were prob- ably 3,000. Commissioner Prouty. You have no terminal elevator ? Mr. Smith. No, sir. Commissioner Prouty. You find you can do business without a terminal elevator? Mr. Smith. We sell all our wheat either as it arrives in the markets or to arrive as fast as we can get cars. Mr. KooN. Your wheat is largely bought here by the terminal elevators that handle grain? Mr. Smith. Very largely. Mr. KooN. They buy it here and do not collect ifin the country ? Commissioner Prouty. You do not sell grain at Mmneapolis and Duluth, do you? I mean, you do not own it here — keep it in store here? 894 GEAIN ELEVATOK INVESTIGATION. Mr. Smith. No, sir. Commissioner Peotttt. Do you sell grain for export ? Mr. Smith. No, sir; that is, it may be bought from us by an ex- porter ; but we have nothing to do with that. Commissioner Peouty. Your connection with the grain stops at Duluth and Minneapolis? Mr. Smith. Absolutely. Commissioner Peouty. You do not put it on store at those markets ? Mr. Smith. Never. Commissioner Peouty. Do you find that you can compete in the countryin buying wheat with people that have terminal elevators? Mr. Smith. Yes, sir ; we do it. I do not think it makes any dif- ference. My impression is that the people that have terminal ele- vators make them stand, as we say, on their own bottoms. They do not consider their terminal elevators in connection with- their country elevators at all. I say that is my opinion. Commissioner Peouty. You do not regard a terminal elevator as essential to the operation of a line of country elevators ? Mr. Smith. No, sir ; we have operated this line of country elevators now 19 years without a terminal elevator, which ought to be sufficient evidence that it can be done. Mr. KooN. Mr. Smith, you have, you say, about 150 houses? Mr. Smith. Yes, sir. Mr. Koon: Have you a house at any one place on the Great North- ern where your house is the only one ? Mr. Smith. Yes ; one place. Mr. KooN. That is a very small station, I suppose ? Mr. Smith. It is a side track between two other towns. Mr. KooN. How much do jou market there ? Mr. Smith. Perhaps 50,000 a year. Mr. KooN. A small amount? Mr. Smith. Yes, sir. Mr. KooN. At most stations where you have a house there are from one to how many other houses? Mr. Smith. Well, I should say from one to nine, or, rather, from two to nine. Mr. KooN. As a general proposition, where you have a house there are not less than three houses ? Mr. Smith. Yes, sir. Mr. Koon. And from that up to nine ? Mr. Smith. Yes, sir. Mr. KooN. Is there any community of interest now or ownership in those different houses ? Mr. Smith. Absolutely none, so far as I know. Mr. KooN. They are all independent of each other ? Mr. Smith. Yes, sir. Mr. KooN. And are they all more or less friendly in a business- way, and you recognize their right to ha^-e a part of the crop if they can get it fairly ? There is active competition at those places? Mr. Smith. There certainly is. Commissioner Peouty. How many bushels of grain do you handle a year? Mr. Smith. We have handled as high as 12,000,000. I think our average is about 10,000,000. GRAIN ELEVATOR INVESTIGATION. 895 Commissioner Peouty. You probably average one-eighth part of the grain that comes off the Great Northern road ? Mr. Smith. Mr. Hill this morning placed their business at 115,000,000. Commissioner Prouty. Yes; this year, I believe, but it has not been that before. Mr. Smith. Well, I should think somewhere from one-eighth to one-tenth. I think one-tenth would be nearer right. Commissioner Pkouty. If there are no further questions Mr. KooN. One other question. So far as you know, are there any of your stockholders who own stock in any of those other elevators running along with you ? Mr. Smith. No. Mr. KooN. Or any of those people that own stock in your company ? Mr. Smith. I can swear positively to that. Mr. KooN. Your company has very few stockholders ? Mr. Smith. Our company is composed of very few stockholders. Mr. KooN. That is all. Commissioner Peouty. That is all. The witness was excused. Ed. Cheistensen, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Christensen, you reside in Kasota, Minn., do you not? Mr. Christensen. Yes, sir. Mr. Marble. You are manager of an elevator there? Mr. Christensen. I am superintendent of the Peavey elevator there. Commissioner Prouty. On what line of road, Mr. Marble ? Mr. Marble. I will ask the witness. Mr. Christensen. On the Omaha Railroad. Commissioner Prouty. That is, the Northwestern ? Mr. Christensen. Northwestern. Mr. Marble. You have a cleaning-in-transit privilege at that point, have you not ? Mr. Christensen. Yes, sir. Mr. Marble. And by cleaning a car of grain, about how much do you reduce the weight in the ordinary run of business ? Mr. Christensen. It varies very much. Mr. Marble. How does it vary ? Mr. Christensen. I should say from 1 to 2 pounds. Mr. Marble. One to 2 pounds per bushel ? Mr. Christensen. On some grain. Mr. Marble. That would be 1,000 to 2,000 pounds on a car. Mr. Christensen. Something like that, I judge. Mr. Marble. When you send the car forward after cleaning in transit, do you send it forward that much lighter, or do you buy grain to make up the weight ? Mr. Christensen. We buy a little grain at that point. Mr. Marble. Buy grain at that point to make up the volume? Mr. Christensen. Not anywhere near enough -to make it up. Mr. Marble. Do you buy as much as you can for that purpose ? 896 GRAIlSr ELEVATOR INVESTIGATION Mr. Ci-iRiSTENSEN. We buy about 10,000 bushels a year. Mr. Marble. Has there been some complaint of the price you pay there to get that grain ? Mr. Christensen. I know of none. Mr. Marble. You have not had any trouble with millers there ? Mr. Christensen. No, sir ; none. Mr. Marble. I thought they made complaint that you were paying too much because you had cleaning in transit ? Mr. Christensen. Not to my knowledge. Mr. Marble. Was Mr. Ladue in to see you about that ? Mr. Christensen. No, sir. Mr. Marble. And to make arrangements that you should not pay so much for wheat ? Mr. Christensen. He was never to see me about grain in any respect. Mr. Marble. In buying grain, have you any agreement with com- petitors as to what shall be paid ? Mr. Christensen. No, sir. Mr. Marble. Have you any combination with the millers, Hubbard & Harmon ? Mr. Christensen. No, sir. Mr. Marble. You do not consult them ? Mr. Christensen. No, sir. Mr. Marble. That is all. The witness was excused. F. T. Heefeleinger, called as a witness, being duly sworn, testified as follows : Mr. Marble. Mr. Heffelfinger, you are the president of the Peavey Elevator Company? Mr. Hefeeleinger. No, sir ; I am not. Mr. Marble. Will you tell us what your relation to it is ? Mr. Heffelfinger. The firm of F. H. Peavey & Co. is a partner- ship, and various members in the partnership occupy offices in the different corporations they control. In the Peavey Elevator Com- pany I am only a director. Of others I am president and of some vice-president, and director in all of them. Mr. Marble. You are a member of the firm of Peavey & Co. ? Mr. Heffelfinger. Yes, sir. Mr. Marble. How many country elevators have you in all, your companies ? Mr. Heffelfinger. I think about 450. That is approximate. Mr. Marble. You have a terminal elevator at this point ? Mr. Heffelfinger. We have three. Mr. Marble. And one at Kansas City and one at Omaha? Mr. Heffelfinger. And two at Chicago and three at Duluth; that is, three at Duluth ; the Globe comprises three elevators, but we con- sider it one plant— Duluth and Superior. One is at Old Superior, the other at West Superior, and the other at Duluth. Mr. Marble. I think you told me this morning that you had made a special examination of this price-making arrangement? Mr, Heffelfinger. I have. I was not informed as to the details of GRAIN ELEVATOR INVESTIGATION. 897 it and looked it up and have gone into it to find exactly what it was composed of, and if you like, I will tell you. Mr. Marble. Just in your own way. _Mr. Heffelfingee. There is no association whatever in connection with this matter at Minneapolis — no organization, no officers, no one to call them together. I might just as well at sometime during the beginning of the season suggest to various of our competitors who are social friends that we get together and see what we shall do about the question of price. I assume that that was done at sometime during the past summer. So far as Mr. Hoskins's office is concerned, he has been handed down in history. When I came into the grain business he was there and has continued. I can not learn of any special meeting called in this connection, but there must have been a meeting called or general meeting — but there is no particular pur- pose — at which this committee was appointed. I assume they did not appoint themselves. Therefore, they must have been appointed. The committee consists of five. One of them did not know he was a member of the committee. I talked with him yesterday. The com- mittee are solely for the purpose of following the markets tributary to northern points ; that is, largely Minneapolis and Duluth, as to, which is the highest for each kind of grain. There are various kinds. There are several grades of flax, quite a number of grades of wheat — as to spring wheat, durum wheat— and oats and barley, although barley is largely a sample type. Those men do not consult at all. Neither of our managers of the northern lines are on that committee ; have nothing to do with it, and do not consult with those men. Those men use their judgment as to what price basis should be put out at the country point, taking into consideration the conditions — a reasonable margin and the freight at that point — taking the market each night for the basis. Mr. Hoskins confers with that committee, I think, particularly with one or two men — I think largely with Mr. Andrews, and he gives him to the best of his ability what the basis should be in the country. Mr. Hoskins's office, in turn, sends to our Minneapolis office — speaking now of our own case — sends to our Monarch and Duluth offices a basis sheet that shows the price of 1 northern to be paid at certain groups, taking into consideration their relation to the Minneapolis market and the freight. You under- stand that from part of what we call northern territory the freight is greater to Duluth than to Minneapolis, but from practically all northern points the freight is the same to Minneapolis from Duluth points. So they group those and the prices of the various grades are turned over to our office. Our Minneapolis office, taking all our stations on the Northern Pacific and Great Northern between here and Fargo, or close to Fargo,, can send out their prices as easily from Minneapolis as they could from there. In the busy time of year they wire those prices. They wire some one agent. We, by common consent, have agreed that we will wire one station, for instance. Some other company will wire another station, and another another, and so on in order that there may not be a number of telegrams and in order to save expense. Those telegrams are sent, we will say, to our agent, and he simply gives that bulletin basis to everybody. It is open. That covers the Minneapolis territory. Mr. Hoskins has in his employ a man at Fargo who has an office. Mr. Hoskins wires him this same basis and this party, by common consent and agreement, S. Doc. 278, 59-2 57 898 GRAIN ELEVATOK INVESTIGATION. sends to our different stations exactly the same way. For instance, at one station he will send to our agent and to another to another agent. In sending to our station he will say, " Monarch Elevator ;" in sending to another he will send it to the Great "Western Elevator. Whoever gets it circulates it among all the wheat buyers. It is public property. The expense of those two offices are rendered to our office by Mr. Hoskins, and the only information I can obtain concerning it was that Mr. Hoskins came around and asked if we would be willing to contribute our proportion in proportion to our houses. We gladly dp so. He sends the Monarch Elevator Company, every month, a bill for their proportion of the expense for the Minneapolis office and for their proportion of the expense of the Fargo office. The expense at the Minneapolis office, of course, does not cover any telegrams, because he delivers to our office here those basis sheets. At Fargo he charges us in accordance with the telegrams sent to our agents. In looking up the Minneapolis bill for the last month it amounted to 30 cents per house per month, a very nominal charge. There' is abso- lutely no agreement in any shape or form, so far as our companies are concerned, to abide by those prices, and in connection with that fact I have looked up the places this year where, for instance, the Monarch Elevator Company, which has 108 houses, largely on the Northern Pacific, have paid over that market basis. I would like to give it to the Commission in a general way as to just what that con- dition is. The total number of Monarch houses is 108. The inde- pendent houses along the line at our stations are 67; that is, inde- pendent of any line companies who are just as competitive with us as the independent people. There are five track buyers at present who have no houses. There are 39 farmers' houses at those points. Now, at our 108 houses during this year we have been over that market basis from 1 to 5 cents per bushel at 76 of those houses. At the present time we are over list from 1 to 5 cents a bushel at 25 stations. Why. are we only over at 25 now as against 76 for the whole year? Because at over 40 of those stations we are at present filled and we are not looking to give the farmer anything additional because we can take in a little grain here and there.' I do not know whether there is anything further I can give you. If so I will be very glad to do so. I think that states it pretty clearly. Commissioner Prouty. How many people in Minneapolis does Mr. Hoskins deal with? Mr. HEFrELFiNGER. I am not informed. I have never talked with him; have never been in his office. I know nothing about the detail. He will undoubtedly be able to furnish that. I understand he sends a great many cards to independents in the country. I am also assuming that he charges them for it and puts it in as a credit to his expense. Commissioner Phouty. Do you always assume the figure he gives you as a basis? Mr. Heffelfinger. It is sent to our agents. It is very hard, as you must realize, to control 108 men buying each under different conditions. You could not lay down an absolute- rule for all. The manager of the station makes those prices absolutely. He tells his agent to pay as much as anybody, no matter what it is ; we want our share of the grain. They get into competition. One man puts it up. Our man follows. We have customers. We can not let them GRAIN ELEVATOR INVESTIGATION. . 899 get away. The customer says, what are you going to do? He is probably only bringing in 50 bushels, but he may have 3,000 or 4,000 or 10,000 bushels on his farm, and if we want to keep his trade we have to pay for that what every other man at the station will pay unless we are blocked and can not take his grain. Then we are indif- ferent. We have an excuse and reason. We try and maintain those margins as per that basis, because we think they are reasonable at present under present conditions. I would not let our firm sell durum wheat to arrive in December. We can not get the stuff in. Mr. Hill made all sorts of statements here, but they are absolutely not facts. We have on our Monarch line over 870,000 odd bushels of grain. "\^'^e have got every bushel sold to come in, to arrive in November, that we possibly could get. Yesterday we got 7 cars to Duluth on one line and on the Great Northern 2 cars. Commissioner Peouty. What do you understand the difficulty is, a shortage of cars or inability to unload at terminal points? Mr. Heffelfingee. I am glad you brought up that question. Mr. Hill said it was inability at the terminals, and the inference was that it was the terminal elevators. I want to absolutely contradict that, and I know. It is not because of terminal facilities as far as eleva- tors go. We could handle twice as much and three times as much, and at Minneapolis, with six and a half million bushels of room, we have not handled any this year. Commissioner Prouty. Are your elevators full now? Mr. Heffelfingee. No, sir; we have 7,000,000 bushels of room at Duluth and probably 2,500,000 bushels in it. When we had our Peavey plant that was burned, we had 5,000,000 additional. In Minneapolis we have 6,500,000 bushels of room and have not anything in it. He said, furthermore, if they were not mixing houses — I do not say that Mr. Hill meant to mislead this Commission, but the mix- ing has nothing to do with taking into the house. Furthermore, the houses at Duluth are not all private houses. There are some public houses. Commissioner Peotjty. If you could get your cars of grain here, you could release those cars ? Mr. Heffelfingee. Immediately. We had it figured up and took it down to the manager of the Northern Pacific last week — a state- ment showing that if he could give us cars to get our stuff into Min- neapolis and Duluth at the present market price we would get $24,000 more than we would by December prices, and every other house is in the same condition. I have nothing against the railroads. The railroad facilities are not adequate for the enormous increase of busi- ness in this great Northwest. Commissioner Peoitty. Then, the price you pay to the farmer to-day is materially less than it would be if the railroads could move the wheat ? Mr. Heffelfingee. As conditions exist; but to be absolutely fair, if the stuff could move in we would not have this condition. If we had all our stuff in here, we would not be buying on that basis ; we would be trying to maintain our reasonable margin. Mr. KooN. What is that? Mr. Heffelfingee. Our margins vary under different conditions. We think we ought to get 3 to SJ cents on wheat ; 4 to 4^ on flax, and 2i on oats, and on barley 2| to 3. I am here representing our inter- 900 . GRAIN ELEVATOR 'INVESTIGATION. ests and trying to give the exact facts, and I am willing to go a little farther in that connection and give the Commission private business. It may not be wise to give these things to our competitors, because every lineman is one of our strongest competitors, and we fight as much as with independents. "We are having " scraps " all the time as to" overgrading and overdocking. Our Monarch line handles from 4,000,000 to 6,000,000 bushels of grain a year, and in the last four years their gross margin on wheat, which is a large percentage, was 3.8 cents per bushel. That included everything. That is the final figure. We lose $15,000 to $30,000 a year on grades, the agent's grades compared with the terminal's — 3.8 cents per bushel. That included in all those years whatever gross carrying charges there may have been on any of the wheat. For instance, if we carried 1,000,000 bushels last year from December to May, and got 4| cents a bushel gross carrying charge, that is in that profit, but against that on the other side the interest and insurance would be in the expense, and there would be a small profit, but the gross is 3.8. The expense for the same four years, taking everything into consideration except interest on the plant and any depreciation whatsoever, was 3.3 cents per bushel, giving us a margin of a half a cent a bushel net. Now, I can not take the expense as against the wheat alone, because the ex- pense is against all the grain, but taking the total number of bushels of all kinds of grain handled as to the total expense, it is 3.3 cents per bushel. On flax we get slightly over 3.8. It might average a little over 4, but on oats and barley, which is a larger amount, we would have perhaps 2^ cents a bushel. On our Peavey line in the South, our manager looked up and gave the figures for one year. I will be very glad to furnish them for any number of years, because I know the farther back you go the worse it would be. The Peavey elevators' gross profit on all bushels of grain — they handle more oats and corn and coarse grain ; they are in the southwest of here — they were 3.13 cents per bushel gross ; a total expense of 2.74 cents, or about three- eighths of a cent a bushel, and they handled la-st year 4,500,000 bushels of grain. These are under oath from our books, and the Commission can look at them if they want to. I say this: Peavey & Co. have stood for everything that is honorable. We are ready for this examination. We have been maligned by the general public right along. We think we have reached the limit. We want to give you all there is in it. Mr. Marble. As a matter of fact, Mr. Heffelfinger, this shortage of cars is making what difference, would you say, in price to the farmers at the present time ? Mr. Heffelfinger. I want to be absolutely honest. I might an- swer you that it makes 4 or 5 cents a bushel difference. It does not make any such thing. It would make that on a little stuff, but if all of that could move forward it would not amount to but very little, and it would depress the premiums. On durum wheat the situation is different, and on flax it is different. They are based on Duluth. Navigation closes the 5th of December. Therefore, any- thing that goes to Duluth after December 5 has to be carried until the 1st of May. But here in the spring wheat markets, the mills are grinders all the year. There is not the premium existing on spring wheat. GBAIN ELEVATOR INVESTIGATION. 901 Mr. Marble. You say that the loss to the farmer is in having the elevators blocked so that they can not buy his wheat? Mr. Heffelfingek. Yes, sir. Mr. Marble. And the loss that you are enduring is that part of your plant is out of business ? Mr. Heffelfinger. We are out a great deal more than that. We are carrying the bag between the farmer. He has sold us stuff sixty days ago that is not in — sold it on the November basis. Mr. Marble. It is your idea of the railroad situation, as you stated it, that the trouble is due to lack of equipment ? Mr. Heffelfinger. It may be lack or terminal facilities for their railroads. They have left the inference that it is lack of elevator facilities. Mr. Marble. What is the lack? Mr. Heffelfinger. I could not say. I know we have cars at Staples and Brainerd and all along, and have sent a man up there to see if we could not get them in. They say, first, we have got a lot of iron to unload at Duluth and there is a penalty if we can not get it out. They say, I understand, you can not unload at the eleva- tors. That is an absolute falsehood. That is not the worst of it. We have most of it back in our houses. We can not get cars. The way they are shipping cars we will not get the grain out inside of three months^-I say four months. Mr. Marble. Do you know whether or not itis the railroad policy to divert the cars to other sorts of business so as to extend the time in which they will get grain to haul and not have so much all at once ? Mr. Heffelfinger. You can get a difference of opinion from as many different men as can be asked for. an opinion. Mr. Marble. You do not know as to that ? Mr. Heffelfinger. I do not know. I am not a railroad man. But the lumber business has been enormous from the coast. The cattle that are being raised in the Northwest are a very large volume and the shipment of cattle to market — they have to come in before cold weather. It all benefits the farmer, and we are standing in between. Commissioner Pkouty. We have the same complaint on lumber. Mr. Heffelfinger. They are not able to get lumber, but they have moved an enormous amount. I do not think the railroads are to blame at present. I do not think there is anything in their power that could wholly remove the situation. I do not think they have done all they could for the elevator men. Of course, we are looking out for our own interest. Commissioner Protttt. From your examination of these cards, did you reach a conclusion as to the amount of profits they allowed the elevators ? Mr. Heffelfinger. Taking to-day's basis — I made inquiry at noon — we do not send out any cards. Those are in South Dakota. I do not know anything about them. I answer wholly for our own line. We do not bid the country at all. We are not commission men. But from our own basis to-day wheat is slightly under 4 cents a bushel on the close for Duluth basis for December delivery; slightly under 5 cents a bushel on flax ; slightly under 5 cents on durum wheat, and slightly under 3 cents on oats and barley. That is, for December delivery. I will make anyone a wager of any amount of money that any grain we will buy in our northern territory to-day we will not 902 GBAiif elevatok investigation. get in for ninety days. We have interest and insurance besides the question of premiums. Commissioner Protjty. What you are speaking of relates to prices you are sending out ? Mr. HEFFELriNGEE. According to this basis. We are paying over- list lots of places. I speak of the price basis. Mr. Marble. At how many points, do you know, covering all your country elevator territory, do you own or control subsidiary or com- peting elevators, so that you control the operation in a way ? Mr. Heffelfinger. We have about 200 elevators in the North. I do not know positively that there are any — I do not know that there may not be one or two. But the fact remains that the Monarch lines handle the Northern Pacific, and at no point of the Northern Pacific have they two elevators. The Duluth Elevator Company are largely interested on the Great Northern, and at no point have they two ele- vators ; there might be one or two ; there were a number of years ago, but within the last two years where we bought out — for instance, the Minnesota and Dakota is out of existence — ^we bought it five or six years ago. And on the Northern Pacific they had a few houses. There were some houses on the Great Northern. We bought the whole line, and at a few points there may have been. If there are any at all they are very few. There is just as much competition between our managers, if you please, as between our terminal and line houses. You would not say that they were all tied up in a community of interests. Mr. Marble. We had some .testimony at Omaha from a Mr. McMurray that at some point out in Nebraska for a time the Omaha Elevator Company owned two elevators. Mr. Heffelfinger. We owned one and Mr. Jaquith owned another. They were formed into a company and that company was sold a couple of years ago. There were a few places on the Union Pacific where we had double houses. We had double houses wherever we thought we could do so, and handled them to advantage, and we did it, and we made good profits in so doing. In every case we have sold them, and the man that has made us sell them has been the Union Pacific. Mr. Monroe made us sell to a farmer at a thousand dollars less than we could have gotten from other people. Mr. Marble. I understood for a time that those houses were sub- sidiary competing houses and it was not known that they were under your control. Mr. Heffelfinger. They were. Commissioner Lane. Tell me how the Union Pacific made you sell these elevators. Mr. Heffelfinger. Mr. Monroe came up here with this banker — I can furnish the name, but I can not remember it now. I think that we were offered about a thousand dollars more by the Westbrook Grain Company. It may seem strange that we should be philanthropic, but, as a matter of fact, there had been so much talk about it that the farmers were going to build anyway if we didn't. They had made a demand for a site, and the Union Pacific did not think there was room at that point for more elevators. So they said : " It is not right for you to have two elevators, and we think you ought to sell one;" and we simply conceded and sold the plant to that man. I think Mr. Monroe will tell you that ; if you see him he will tell you exactly the same situation. We are a big concern, your honor. We. GBAIN ELEVATOR INVESTIGATION. 903 try to deal with things in a broad light. We simply took the broader view of that, just as we would in any other kind or business, It was in a way to our benefit, because there would have been another eleva- tor; it gave us a chance for more grain, which we could handle cheaper. Commissioner Lane. Is it the custom of the Union Pacific or of any other railroad to supervise elevator interests along its line ? Mr. Heffelfingeh. No; but they try very hard to do so. They do here. They are mixing into our business all the time. For in- stance, we wish to handle coal on a certain basis, and they demanded that we put in certain fire appliances. Commissioner Lane. Just what methods would Mr. Monroe, of the Union Pacific, or any other gentleman connected with a railroad, bring to bear upon as large a concern as yours, by which they could effectively remove you from a district ? Mr. Heffelfinger. They did not remove us. Commissioner Lane. Or compel you to give up an elevator which had been profitable ? Mr. Heffelfinger. We had to. It is a question of policy whether it was the- best thing to have two elevators; whether it would be considered fair. It was a sinall matter to us, as to whether we had two or not ; a very small matter. Now, Mr. Monroe — you asked the question — I will tell you that Mr. Monroe had no reason except that we know him well personally; we have worked closely in every way. You have to be in close touch with the railroad officials in con- nection with car situations and everything of that character. We have known him personally for years closely. He came up here and he said he had talked with our man down there, Mr. Peck, manager, and he refused to do it; so he brought the question up here to our head office,: and we consulted as to whether it was not the best and wisest thing to do, and we conceded the point. Commissioner Lane. Do you find that if you do not accede to the demands made by. the railroad that, as to car facilities, you are some- what handicapped ? Mr. Heffelfinger. No, sir ; I do not think they would dare to take such a position. Commissioner Lane. There is no pressure brought to bear except policy pressure? Mr. Heffelfinger. Yes, sir ; and the policy of owning two stations on the Union Pacific. Commissioner Lane. That was your own personal affair ? Mr. Heffelfinger. Yes, sir. We had done nothing wrong in con- nection with them ; it was a question of policy. We have to consider that. There are before us- all the time many serious questions; that is one of them. Commissioner Lane. Supposing you had not acceded to them ? Mr. Heffelfinger. They couldn't have done anything. They would simply have said — they could have said : " We will grant the farmers' elevator a site," and we would have had another competitor. Commissioner Prouty. Are your elevators on the Union Pacific right of .way ? Mr. Heffelfinger. Yes, sir ; I think they are, all of them ; I don't know ; that is the custom. There may be a few houses off the right of way where we found some difficulty 904 GRAIN ELEVATOR INVESTIGATION. Commissioner Prouty. Somebody stated this morning that Mr. Hill of the Great Northern, in granting leave to erect an elevator on the right of way, reserved the right of dictating in certain respects. He had the right to test the scales, for instance. Mr. Heffelfingee. The State has the right to test the scales. That is i^rovided in the lease ; because Mr. Hill has always been very dicta- torial in what he would and what he would not do with everybody. He put into his leases all sorts of things. Some one — I do not recall the items, but Judge Koon will recall possibly what I refer to. About two years ago we were making new leases, and he put in some ab- surdly unreasonable thing ; and when Mr. Hill came home we took it up with him. He said that was wrong, but some of his lieutenants had tried to enforce it. I do not know whether he is right or not. But we feel we have to work harmoniously with the railroad ; we feel that it is absolutely essential. You can hear just as much kicking from the chamber of commerce about getting cars, etc., as you can here in the country ; I don't know but what you can hear more. When it comes to our head office we generally do not feel that the railroads are try- ing to do anybody up. If they are in favor of anybody possibly they are in favor of the farmer ; but they are not adverse to our interests, except in these things that I have complained of. Mr. Marble. At any of the country stations, now, Mr. Heffelfinger, have you the grain pooled with your competitors, so that each will get a certain percentage? Mr. Heffelfinger. I think that if you will refer back that I testi- fied — but I will do it again, and say that there is absolutely no arrangement; no arrangement of any shape, form, or description, above or under. Mr. Marble. And that refers to Iowa territory now ? Mr. Heffelfinger. Every point that Peavy has a country house. Mr. Marble. How long since has that been true ? Mr. Heffelfinger. I couldn't tell you exactly. I don't even know the details of what the old arrangements were. I do not handle the details, but I have taken the trouble to inquire into it, and there is absolutely no place where that is done. Now, I think from inquiry, that that was done away with something over a year ago; I think before the movement of the last crop^I mean in the division of the stuff. Mr. Marble. Would you testify as to agreements on the prices with your competitors at country stations? Mr. Heffelfinger. There are absolutely none. Mr. Marble. There are none such ? Mr. Heffelfinger. No prices; no division; anything you want to put in. Mr. Marble. When the agreement as to pooling existed Mr. Heffelfinger (interrupting). I do not like that word ■' pooling." Mr. Marble. Well, agreement as to division of the market, it naturally carried with it an agreement as to the price to be bid ? Mr. Heffelfinger. No; it was a division of the stuff, and if a man wanted to pay more for his grain than we thought it was worth, we sometimes would let him take it and get the division penalty. Mr. Marble. Get a penalty on the division ? Mr. Heffelfinger. Yes. GRAIN ELEVATOR INVESTIGATION. 905 Mr. Makble. You say that was all done away with more than a year ago? Mr. HJEFFELFiNGEE. Yes, sir ; I think it is considerably more than a year. I do not recall, but in a general way I think so. Mr. Maeble. Why has it been done away with ? Mr. Hepfelfingee. Well, the general impression, the public opin- ion on these things, the law, the question of right to control those things in Nebraska, the general policy. The same reason that the judges of the courts have given up their Pullman passes; anything else you want. And doubt as to whether it is right. We are buying on just as good a margin to-day as we were then. I do not know, but as I recall it, the margins since that time have been even better. I think people want to do business and make money ; I know we do. A^'^len we can't we would rather sell our elevators. Mr. Maeble. You are familiar with the public elevation situation in Chicago? Mr. Heffelfingee. In a general way. Mr. Maeble. Do you know of the contract which they had there? Mr. Hepfelfingee. I knew of it. Mr. Maeble. Is there any successor to that contract in the way of arrangement or understanding? Mr. Heppelpingee. Absolutely not — ^not unless Mr. Pettit is lying to me, but I don't think he would. Mr. Maeble. I am quite certain he would not. That is all. Mr. KooN. Mr. Heffelfinger, you have been in the grain business for a number of years? Mr. Heppelpingee. I have been in business for about nine years. Mr. KooN. And your interests in the grain business extend over a considerable section of the country both in the North and West, and in the South? Mr. Heppelpingee. Yes, sir. Mr. KooN. You are also familiar with the terminal business ? Mr. Heppelpingee. Yes, sir. Mr. KooN. In Duluth and Minneapolis ? Mr. Heppelpingee. In a very general way. Mr. KooN. Now, the resolution under which this investigation is being had speaks of the alleged monopolizing of this branch of the business, meaning the elevator and grain buying business. Do you know whether there is any monopolization of that business by any com- bination of men or by any individuals or corporations or anything else — whether there is any monopoly in the grain business ? Mr. Heppelpingee. I do know, so far as our interests are con- cerned, and they are the largest interests in both places, that there is absolutely nothing. We are not interested in the terminal in Minne- apolis and Duluth, except the ones that bear our corporate seal. Mr. KooN. You have no agreement as to division of profits ? Mr. Heppelpingee. No, sir. Mr. KooN. Is there any such thing as an elevator trust ? Mr. Hepfelfingee. There is absolutely no trust. Absolutely no agreement on prices. Absolutely no pooling interests in any way, shape, or form, so far as our interests are concerned. Mr. KooN. The papers throughout the country and some politicians have talked a good deal the last few years about an elevator trust. I want to know from you if there is or ever has been ? 906 GRAlisr eleVatoe investigatioi}. Mr. Heffelfingee. Absolutely nothing. Mr. KooN. Nor is there anything approaching a monopoly of the grain or elevator business at all ? Mr. Heffelfinger. Absolutely nothing. Commissioner Lane. There was an elevator trust in Chicago, wasn't there ? Mr. Heffelfingee. I do not consider it so. Commissioner Lane. That is a question of definition, isn't it ? Mr. Heffelfingee. There is nothing of that character here any- way. If you define it that way, well and good; but I do not con- sider it so. I knew all the conditions in connection with the latter part of it, and the Commission are fully informed as to every detail of it. Mr. KooN. There might be here, if the elevators combined and en- tered into an agreement. What I want to know is if they ever did ? Mr. Heffelfingee. Absolutely no. In the first place, we are not public elevators in Minneapolis ; they are private houses. They don't have a license from the State ; they don't handle grain for other peo- ple except by personal arrangement. No man has a right to order grain into any particular house here ; he must make private arrange- ments. If there were public houses, such as our Peavy elevator was at Duluth, they would have that right. We are under the State laws. We have absolutely no right to mix grain of different grades. We must turn out exactly the same grade. Mr. KooN. Your country houses, however, are public houses, are they not ? Mr. Heffelfingee. They have been declared public by the law. Mr. KooN. In those" houses you are obliged to take the grain of any farmer or any dealer or any other man who brings it there, if you ha'^e the room to take it in? Mr. Heffelfingee. We do. Mr. KooN. You have to do it ? Mr. Heffelfingee. We have to do it. Mr. KooN. Under the law ? Mr. Heffelfingee. Under the law. Mr. KooN. You have to give him a receipt" for that grain? Mr. Heffelfingee. We do. We give him a storage receipt show- ing the number of bushels gross, dockage, and the net bushels, and the grade ; and he has a right to order that out into a car. Mr. KooN. But, as a general proposition, does the farmer want to do that, or sell his grain? Mr. Heffelfingee. I should say that 90 per cent of them sell their grain, although at least 30 per cent of them store it first. We have now on hand in the Monarch house, as I said, over 800,000 bushels, and of that 200,000 bushels belong to the farmers outright. Mr. KooN. The farmer has the option of selling his grain to you or depositing it with you ? Mr. Heffelfingee. Absolutely. If we should ship the grain out of the Minnesota houses where we do farmers' storage, the farmer has the right to demand it at either Minneapolis or Duluth terminal elevators. Mr. KooN. Do you understand that these card prices are given to GRAIN ELEVATOR INVESTIGATION. 907 independent dealers and to farmers' elevator men at those stations, or some certain line of elevators? Mr. Heffelfingek. I so understand, that they are commoji to any- body — anybody buying grain, except the track man, but we do not consider him a legitimate dealer. Mr. KooN. If you post them up he could get them ? Mr. Heffelfingek. Yes. What I mean is, the fact that we put this basis of prices out has nothing to do with the men at these stations. They know every night what is being paid at Minneapolis, for instance. In fact, the farmers have telephones all over the country to-day, and they know. There isn't any question of doubt in their mind as to what it is worth, and they know the freight rate. Mr. KooN. In the present condition of things, in regard to car shortage, is there any discrimination in favor of the farmer or the independent elevator as to his getting cars, or the farmer especially, I mean, who hasn't an elevator? Mr. Heffelfingee. I stated a few moments ago I would not con- sider that there was any discrimination whatsoever. You can hear it from either and every interest. The farmer would say that the elevator man who receives cars was favored and the elevator man would say the farmer was favored. Mr. Hill admitted this morning that if he favored anybody he would favor the farmer. Mr. KooN. He gave the reason that you can put your grain into the elevator. Mr. Heffelfingek. Mr. Hill has always advocated big capacity and line houses. Why? Farmers can move their grain forward. They stand ready to bid at any time and give them cash, so that they can liquidate their indebtedness. It is one of the greatest banking systems in the world. Any responsible house — their cash ticket is recognized as good as a United States bank note. We have had a payer at every station — we used to in the old days, during the agent's day, but now we find a bank and if there isn't a bank we find a store- keeper, and he can go with that check, and it really is a check, and get his money. Mr. Marble. You have just used a phrase — " not a legitimate dealer " — which recalls a conversation I had with you in Chicago. I wish you would tell us your attitude toward the shoveler and the kind of competition you are meeting, and why ? Mr. Heffelfingek. I assume our men would do just as I would do if I had a line of elevators and a scoop shovel man would come along and would establish there for thirty days ; I would fight him tooth and nail under the American flag, and I have a right to. He comes into the business; he has no investment; he doesn't furnish the market; he doesn't keep a house open ; he has no expense ; nothing whatever. He comes to-day and leaves to-morrow, and whenever he pleases. He uses the platform of the Great Northern Railway to shovel the grain into the car, and keeps the cars standing on the track. Why shouldn't we fight him ? Mr. M^vkble. Why should you fight him ? Mr. Heffelfingek. To keep him from getting any grain. Mr. Marble. Do you mean coming in for thirty days ? You mean that he goes into the country Mr. Heffelfingek. He comes into a station and stays perhaps thirty or sixty days and leaves. If we could close our house on the 908 GEAIK ELEVATOR INVESTIGATION. 1st dav of January we could handle wheat for half the amount. We handle by the 1st of November every year about half of the crop. From that— I know that from figuring— we probably handle between 60 and 75 per cent of the crop from the 1st day of September or the middle of August to the middle of January, and then the rest of the time we are simply running at an expense, furnishing the market, cutting down whatever profits we have made up to that time. Mr. Maeble. Have you had any experience with country mer- chants ? Mr. Heffelfinger. We have. Mr. Marble. You regard them in the same way? Mr. Heffelfinger. Not if they are in the line elevator business. _ . Mr. Marble. If they haven't elevator capacity you class them in with scoop shovel men ? Mr. Heffelfinger. You would have to take into consideration each individual case. If a man was simply in the grain business and will- ing to live and let live ; he has his money invested, and he has some profit from his store; he has customers and they are furnishing him a little. He has a little spare time, and it may be because he wants to draw trade from other stations. He can do business at a loss actually. If I was a farmer or a store man I could do business at a loss if I could bring the trade from another town to my town to spend money. That is the way we consider him. We do not con- sider as a general proposition any store man that goes into the grain business. If there is a space for an elevator and he can fill his shovel house or elevator and give us a chance to live we let him live. Mr. Marble. If there is a man in the business making less than what you consider a fair profit, would yOu' fight him? Mr. Heffelfinger. We think our right is to fight him as long as we can. Of course, where there is an elevator it is a different propo- sition. We try to stick to our line of business; try to make it a specialty and do the business we can. Mr. Marble. Taking the founders of grain houses to-day, how many of them started as scoop shovel men ? Mr. Heffelfinger. Well, you are going pretty well back into his- tory, and I am rather young. Mr. Marble. You are acquainted with that? Mr. Updike was a scoop shovel man, wasn't he? Mr. Heffelfinger. Yes ; and not so many years ago either. Mr. Marble. Was Mr. Cargill ? Mr. Heffelfinger. I don't think so. Mr. Marble. Was Mr. Peavey ? Mr. Heffelfinger. He was not. Mr. Marble. He started with an elevator ? Mr. Heffelfinger. He was in the implement business when he went into the elevator business, and then he had a connection with a milling association in Minneapolis to buy grain and ship it up here, and then from that he got into the elevator business on the Omaha road. I think we have some of those old shacks which we are trying to sell to the Omaha road. We have as much money in them as they have. I think we have three houses still belonging to the Omaha Railroad. The taxes and insurance and repairs are more than they are worth. GKAIN ELEVATOR INVESTIGATION. 909 Mr. Marble. You have a number of houses leased from the North- western road ? Mr. Heffelfingee. We haven't absolutely. The only house we have Commissioner Peouty. The Omaha road ? Mr. Heefeleinger. That is the Chicago, St. Paul, Minneapolis and Omaha; it is practically the same as the Northwestern. We have disposed of a number of them already. Mr. Marble. Other than those, have you any elevators leased from the railroads ? Mr. Heffelfingee. This Commission is informed of the elevators we have. Mr. Marble. The northern terminals are all owned by you, abso- lutely? Mr. Heffelfingee. Yes, sir; every other elevator that I know of, except the three I have mentioned. Mr. KooN. What do you mean by " an independent dealer ? " Mr. EfeFFELFiNGER. A man at, say, one station or possibly two stations. Mr. KooN. And the people who have a number you call a line? Mr. Heffelfingee. Yes, sir. Mr. KooN. By whom are the independent dealers largely financed ? Mr. Heffelfingee. By the commission men. In connection with Mr. Smith's explanation I wish to state, and I speak impartially, because we are not in the commission business at all ; we do not enter into it in any way, shape, or form. The commission men on the chamber of commerce are really the ones that are protected by that rule. The elevators are not interested, but the commission man who has no other business than to solicit business in the country from independents, from farmers, from track buyers, finances their busi- ness. There are firms here that have out anywhere from two him- dred thousand to a million dollars individually a year. Mr. KooN. That is, they advance money to these independent dealers? Mr. Heffelfingee. Yes, sir ; here is an independent in the country to-day ; he has a 40,000-bushel house ; he is not in position for borrow- ing the amount of money to put that stuff in store unless somebody finances him ; and these commission men furnish that money. They take bills of lading and they draw against the bills of lading whenever they ship, and they have men out over the country soliciting that busi- ness. I am not arguing their case, but I want the Commission to have the facts. Mr. KooN. And it is to protect the commission men that this rule is made ? Mr. Heffelfingee. Absolutely. Mr. KooN. It is called the commission rule? Mr. Heffelfingee. Yes, sir. Mr. Maeble. You have a representative on the floor, the same as Mr. Smith? Mr. Heffelfjngee. Certainly. We have half a dozen representa- tives. Mr. Marble. Your sales do not actually cost you the full amount of that commission then ? Mr. Heffelfingee. Oh, no. 910 GRAIN ELEVATOR INVESTIGATION. Mr. KooN. What prices do those independents get here as compared with others. Mr. HEFFELriNGER. Just exactlj the same as anybody else. We buy any quantity of stuff for our terminals that independents have shipped in here through commission men or track buyers. We do not know the identity of the grain. Reputable firms have samples on their tables. It might as well go into the record, if the Commis- sioners do not object, as to the operation of our Monarch line. We handled last year 6,000,000 bushels of grain, and they own the ter- minal here in Minneapolis — that is, the Monarch line owns the terminal. Mr. KooN. What is the capacity of the house ? Mr. Heffelfingee. About a million and a quaiter. Of those 6,000,000 bushels there was- only 1,000,000 bushels that went into their house, and another million went into the Duluth house, our house. The balance was free stuff, and it was sold to mills and anybody who would buy it; put on the table and sold to anybody who would buy it. Commissioner Proutt. That is, sold here in Minneapolis ? Mr. HEFFELriNGEH. Minneapolis and Duluth. Mr. Marble. I think that is all. Mr. Heffelfinger. If the Commissioners will give me just one minute. I have listened to Mr. Hill's statement this morning, and I have nothing to say against some of his statements, but I can not agree with Mr. Hill in everything. We have interests of value and we are dealing for the general interest of ourselves and the public, and his statement relative to these terminal facilities, etc. He said that if the stuff was not mixed in the houses there would be no difficulty in tak- ing care of it. I want, under oath, to absolutely contradict Mr. HfU's statement. I do not think he realized' exactly what he was saying; at any rate, he didn't know. And furthermore, to call attention to the fact that he stated that grain could be transferred for a quarter of a cent a bushel. I want to simply state the fact that he admits that his terminal in Buffalo cost him $1,250,000; with 5 per cent on that would be the equivalent of over 24,000,000 bushels of grain through that house, not considering the cost at all. He doesn't have, at the . Buffalo house, the expense that we do. He doesn't have to have from fifteen or twenty men in unloading the grain into cars at the head of the lake. We have 15 men when we are busy that he doesn't have at all down there. I want to put these facts into the record. I do not dispute what Mr. Hill says at all, but let the figures speak for them- selves. -It takes about sixty men to run one of our terminals at the head of the Lake. Mr. KooN. What would you say is the cost of transfer ? Mr. Heffelfinger. I say that no man could transfer, even with the yolume we get at the Lakes and at Buffalo, for a half a cent a bushel and make any money. Mr. KooN. What is your experience as to the actual cost of operat- ing a country elevator, per bushel ? Mr. Heffelfinger. I should say that our country elevators could not run — we can not get a man that is capable of buying wheat and judging it short of $75 a month; that is $900 a year. You may add to that the taxes and insurance on the plant, gasoline, repairs, and GRAIN ELEVATOR INVESTIGATION. 911 it would run not less than $1,200. Now, at 2 cents a bushel, which we handle the stuff for the farmers, you can see that we would have to handle at least 60,000 to 75,000 bushels of grain before we could pay our expenses. Well, I do not believe there is any line company in Minneapolis that handles to exceed 65,000 bushels per house. Mr. KooN. That is the average ? Mr. H^FFELFiNGEE. The average. That does not consider the ex- pense, the 'interest on the investment, etc. The independent man draws for his money the minute he loads his car. We carry it to market and unload it. Then we have all the other expenses, such as telegraph expenses, etc. Those things are big items. There is one other question that I want to bring up as to Mr. Hill's statements. Mr. Hill made the statement that he built his elevators in Buffalo because he could not get proper weights at Duluth. I would like very much to have this honorable body inquire at Duluth of the weighmaster, the State weighmaster. We have absolutely no interest in nim or any control ; he is entirely outside of our manage- ment. Commissioner Prouty. I think Mr. Hill's real complaint was that it is at Buffalo — not at Duluth. Mr. Heffelfingee. Oh, your Honor, there are other houses in Buffalo now, and we do not get complaints and we do not get claims which we would get against our stuff if there was differences in weight. They have an established weighing system down there. I do not dispute that he had such a claim, but it is an isolated case. It may be correct. There might be a reason somewhere. Our scales might get out of order sometimes, and we might make a mistake, but the weighmaster would see that instantly and make it correct, and there would be a charge against us. I think that we have had to pay one claim in the last eight or nine years. As to the farmer's storage he stated that the farmers could not store. I want this Commission to understand that the figures show that the farmers store 30 per cent of all stuff we handle — oats, barley, corn, flax, and wheat. Commissioner Pkoutt. To whom do they finally sell that ? , Mr. Heffelfinger. To us, within probably 10 per cent. I do not suppose there is over 10 per cent loaded out. At present they will store their grain, and they will carry it until the spring, when our stuff is being loaded out, and dump it on us. Let us put up our price 2 or 3 cents and see how quickly the farmer will load us up with this stuff. As to the question of elevators at different stations, you can not handle a given quantity of grain through eight houses as cheaply as you can through four ; and this question of additional facilities to anybody that wants them at country points simply makes an added fixed cost to every bushel of grain that goes through there, which the farmer has to pay. We endeavor to make a reasonable profit, a rea- sonable margin, and if there is a fixed charge through there you have an extra buyer and you have an extra investment and an extra expense. Now, this question of mixing. There has been a gi-eat deal said in regard to mixing. I want to give the Commission all there is from our side. I do not know about the other fellow's side. I have noth- ing against anybody. You eliminate the possibility of mixing grain in these markets and see how quickly your off grades will go at a big « 912 GRAIN ELEVATOR INVESTIGATION. discount, and who will pay it ? The farmer. There have been condi- tions just such as this in the last two or three years where no terminal men could buy off-grade wheat and hedge it with safety. What is the result? The result was that there were no buyers for the off grade, and the price would naturally go lower relative to the general market. Within the last three years No. 2 wheat has gone 8 cents a bushel under No. 1, because there was no one who could take it and safely hedge, where it ordinarily sells for from 2 to 3 cents per bushel under No. 1 northern. Only 30 per cent of the stuff that comes to this market is No. 1 northern wheat; the balance is 2, 3, rejected, and no grade wheat. Commissioner Peouty. That is to say, your idea is that the price of the grain to the farmer is finally regulated by what it is worth to the elevator man for any purpose ? Mr. Heffelfingee. Absolutely. Commissioner Peotjty. And if it is worth more for mixing than it would be to sell it under that particular grade of grain, then the farmer in the end gets it ? Mr. Heffelfinger. Absolutely. We can take two cars of wheat, one car No. 1 Northern, and a car of inferior grade, and mix them together and sell them on the basis of 1 northern price. Who gets the benefit ? We do not. Commissioner Peotjty. You might not do it at first — the first man whoever made that mixture might not do it at first — ^but competitive conditions would probably in the end compel you to do it. Mr. Heffelfinger. The first man does, as far as this market is concerned. We are not the only people. There are 20 terminal ele- vator people in this market, and they bid the country all the time. They take it right at the limit. Half the crop moves by November 1 from the farmers. This year it has been absolutely the reverse for some reason or other. But if this stuff comes in here, 600 cars of wheat to-day, and the mills want 400 there is 200 surplus. If you can tell me where it is going unless somebody can see some profit in it, I would like to know. Who takes it ? The terminal elevators. They are the buyers only when there is a surplus. Commissioner Prouty. Do you mix this wheat before you sell it to the mills here in Minneapolis ? 'Mr. Heffelfinger. We do.' The mills get at least 66 per cent of all the stuff that comes from the country in its original condition. The balance of the stuff is surplus stuff which goes into our store, and we carry it along a,nd finally sell it to them some time when they need it. Commissioner Peouty. The stuff that goes to them in its original condition is not, of course, mixed ? Mr. Heffelfingee. It is not. There is very little mixing in the country. I know our elevators are not fixed for it, and I would say the 95 per cent of the stuff that comes in here comes here in its original condition. Of course, where we have a cleaning house we do our mix- ing there. Mr. KooN. Those low grades, some of them are occasioned by damp- ness, are they not? Mr. Heffelfingee. Very often. If the grain is damp or likely to get out of condition, it is not graded by the department, but it graded no-grade, and it must be put in condition, GBAIN ELEVATOK INVESTIGATION. 913 Mr. KooN. That is not fit for milling? Mr. HErrELFiNGEE. It is fit for milling if it can be used right away. Mr. KooN. It goes into your house and you dry and clean it and raise the grade of it and then sell it ? Mr. HEFFELriNGER. Yes, sir. But there isn't so much of that as there is taking two cars of wheat, one of them very good 2 northern and another very good 1 northern, and putting them together — absolutely nothing done to them, except putting them into the elevator, and when they come out they will be 1 northern. I say that 90 per cent of the mixing that is done at Minneapolis is just of that character. Mr. KooN. Because one was a very excellent No. 1 ? Mr. Hefeelfinger. Certainly. Any commission man on the floor will tell you that there are such good judges of the grain on the table that they will buy a car of wheat and then sneak around and sell it to somebody else at 3 cents a bushel more. That is the differ- ence; a difference of judgment. Commissioner Lane. Do you know of any elevators in this part of the country — the Northwest — that are receiving any elevation allow- ances from railroads? Mr. Heffelfingee. Absolutely no. Commissioner Lane. There is absolutely nothing of that kind ? Mr. Heffelfingek. Nothing at all. It is entirely unnecessary. The facilities are not here and have not been here. The conditions allow of a man making a reasonable profit if the conditions were right, but unfortunately they have not been right in the last few years. I am speaking now of terminals. I would like to have some- body take our terminals at a very good discount from what they cost. Commissioner Peouty. Is there anything more to be asked of Mr. Heffelfinger ? Mr. Maeble. Nothing more. Commissioner Peouty. Do you desire to make any further state- ment? Mr. Heffelfingee. I just had one or two notes; I do not know that they were of any moment. I just want to see. I think not, unless Mr. Marble wants to ask about the Kasota House. Commissioner Peoxtty. Mr. Marble, do you desire to ask any fur- ther questions? Mr. Maeble. Pardon me just a minute until I look at these con- tracts. That is all. Commissioner Peotjty. That is all, Mr. Heffelfinger. Witness excused. John Steen, called as a witness, having been duly sworn, testified as follows: Mr. Marble. You are manager of a Farmers' Elevator Company, are you ? Mr. Steen. Yes, sir. Mr. Marble. At Monterey, Minn. ? Mr. Steen. Yes, sir. Mr. Marble. Has that elevator what is called a penalty clause in its by-laws? -Mr. Steen. It has. S. Doc. 278, 59-2 58 914 GKAIN ELEVATOR INVESTIGATION. Mr. Marble. How many competitors have you ? Mr. Steen. Buyers, you mean ? Mr. Marble. How many competing elevators ? Mr. Steen. One in Monterey, and practically two in Triumph. Mr. Marble. When was that elevator built ? Mr. Steen. It was built about five years ago or six, but we bought it last year. Mr. Marble. Do you know why it was bought? Mr. Steen. Why ? Mr. Marble. WTiy ? Mr. Steen. I suppose it was necessary for the handling of grain there, and bidding, etc. Mr. Marble. To make competition ? Mr. Steen. Yes, sir. Mr. Marble. You bought it — another farmers' association bought it ? Mr. Steen. The farmers at the station bought it from J. H. Reese &Co. Mr. Marble. Your Farmers' Elevator Company bought it last year? Mr. Steen. Yes, sir. Mr. Marble. Did the farmers consider that the prices were not high enough at that point? Mr. Steen. Yes, sir. Mr. Marble. And so they bought an elevator ? Mr. Steen. They organized for the purpose of handling their own grain. Mr. Marble. Have there been any changes in the margin of profit at that point since you bought that elevator ? Mr. Steen. It seems so. Mr. Marble. What change would you say there is ? Mr. Steen. It raised the price of grain from 2 to 3 cents, I should judge, in the case of the farmers in that vicinity. Mr. Marble. Are you doing business at a loss? Mr. Steen. We haven't so far. . Mr. Marble. Are you making any money? Mr. Steen. We did make some money last year — a little. Mr. Marble. Are you making some this year ? Mr. Steen. We haven't any balance or account from our profit or loss up to the present date. Mr. Marble. How much a bushel did you make last year? Mr. Steen. Well, on the whole year's business we made close to $700 net, including some loss that we figured that we had ; we had to buy certain stuff like feed stuff and oil meal and such, and coal in order to get and close the deal with the company whom we bought of. There was practically a hundred dollars loss. If it hadn't been for that it would make nearly $800. Mr. Marble. You paid a man for running the elevator ? Mr. Steen. Yes, sir. Mr. Marble. How many bushels of grain did you handle last year ? Mr. Steen. Two hundred and thirty-three and some hundreds. Mr. Marble. You mean 233 thousands ? Mr. Steen. Yes, sir. Mr. Marble. Do you get cards from Mr, Hoskins or from Mr, Durant — price cards ? GRAIN ELEVATOR INVESTIGATION. 915 Mr. Steen. No, sir. Mr. Maeble. How do you determine what to pay for grain ? Mr. Steen. We buy mostly from such a margin from the Minne- apolis market. Mr. Marble. From the Minneapolis market? Mr. Steen. Yes, sir; and figuring on a certain small margin for handling expenses. Our rule is about a half a cent to a cent. Mr. Marble. For handling? Mr. Steen. Yes, sir. Mr. Marble. Do you have any agreement with your competitors as to how much he shall pay for grain ? Mr. Steen. No, sir. Mr. Marble. Do you have any division of the market, any division of the grain with him ? Mr. Steen. No, sir. Mr. Marble. None at all ? Mr. Steen. No, sir. Mr. Marble. That is all. Mr. KooN. Who is your competitor there ? Mr. Steen. The Great Western Elevator Company. . Mr. KooN. You made then about 3^ cents per bushel net on the grain you handled, did you? Mr. Steen. I can not see how we made any such large amount. Mr. KooN. How much did you make? Mr. Steen. In the neighborhood of $700 on a total of about 233,000 bushels. Mr. KooN. How much would that be a bushel ? Mr. Steen. I didn't figure it out ; it is pretty small ; it is less than half a cent. Mr. KooN. What is your capital ? Mr. Steen. Four thousand dollars. Mr. KooN. What did you pay for the house ? Mr. Steen. We paid $2,800. Mr. KooN. How long do you keep the house open ? Mr. Steen. The year round. Mr. KooN. You do business the year round ? Mr. Steen. Yes, sir. Mr. KooN. How much do you pay your superintendent ? Mr. Steen. Seventy -five dollars a month. Mr. KooN. For the year? Mr. Steen. Yes, sir. Mr. KooN. You organized, you say, to raise the price of grain down there? Mr. Steen. The farmers organized the company in order to better take care of the business. Mr. KooN. Your object was to raise the price of grain? Mr. Steen. Yes, sir. Mr. KooN. The price of wheat ? Mr. Steen. Yes, sir. Mr. KooN. It is a combination, then, to raise the price of wheat? Mr. Steen. Of the grain. Wheat we don't consider much of a crop our way, as we are mostly in the corn and oats and cattle business. 916 GEAIN ELEVATOE INVESTIGATIOK. Mr. KooN. Your purpose was to raise the price of grain — not wheat, but grain? Mr. Steen. That is true. Mr. KooN. That is a commodity? Mr. Steen. Yes, sir. Mr. KooN. What is the penalty — a cent a bushel? Mr. Steen. Yes, sir. Mr. KooN. That is, your by-laws provide that every man who is a stockholder in your company shall sell his grain to your company ? Mr. Steen. Yes, sir. Mr. KooN. And no one else? Mr. Steen. Yes, sir. Mr. KooN. And if he does sell to anybody else he must pay into the treasury a cent a bushel ? Mr. Steen. That was the idea of the by-laws in the beginning, but as we had more business than we had room or cars last year, we didn't enforce it ; we intended to enforce it, but I don't think we will ever try to. Mr. KooN. You have had no trouble with the Great Western? Mr. Steen. We have had certainly no benefit from them. Mr. KooN. They didn't organize for your benefit? Mr. Steen. If our house is full they will gobble up the cars if possible, and if cars are telegraphed for and sent into our house, they will take them in spite or us. Mr. KooN. In spite of all of that, you got all the business you could do? Mr. Steen. Sometimes. Mr. KooN. So much you did not have to enforce your penalty ? Mr. Steen. We didn't intend to, because we considered it better not to. Mr. Heffelfingee. Did you handle 230,000 bushels through one elevator ? Mr. Steen. Yes, sir. Mr. Heffelfingee. Do you know how much the Great Western got? Mr. Steen. No; I should judge in the neighborhood Of 60,000 or 75,000. Mr. Marble. You beat them out, then ? Mr. Steen. Oh, yes. Mr. KooN. Do you sell your grain outright, or do you hedge it? Mr. Steen. No ; when we thought the market would be dangerous we sold on option. Mr. KooN. You speculated? Mr. Steen. No ; no, we played it so the other people would not get ahead of us. Mr. KooN. You took your chance on the market ? I guess you will take care of yourself. Mr. Steen. We certainly intend to. Mr. KooN. What are you — the president of the company ? Mr. Steen. No ; I am the secretary and manager. Mr. KooN. You are the fellow — you get the $900 a year ? Mr. Steen. Oh, no ; that is the man that does the work. Mr. KooN. What did the manager get ? Mr. Steen ; He gets $10 a monui. GEAIN ELEVATOR INVESTIGATION. 917 Mr. KooN. Do you carry insurance on your wheat? Mr. Steen. We do. Mr. KooN. You keep it fully insured ? Mr. Steen. At the worst time of the year we insure it for $3,000, and ordinarily $1,000. Mr. KooN. That includes your building and the wheat ? ' Mr. Steen. That is separate; that is on the grain, and $2,000 on the elevator. Commisssioner Peouty. That seems to be all, Mr. Steen. Witness excused. C. C. Enestvedt, called as a witness, having been duly sworn, testi- fied as follows : Mr. Marble. Mr. Enestvedt, you are the manager of a farmers' elevator, are you not ? Mr. Enestvedt. Yes, sir. Mr. Marble. At what point? Mr. Enestvedt. At Belview, Minn. Commissioner Prouty. On what line of road ? Mr. Enestvedt, The Minneapolis and St. Louis. Mr. Marble. How long have you been the manager of that ele- vator ? Mr. Enestvedt. Well, this is the sixth year, I think. Mr. Marble. Have you been the manager ever since the farmers began to operate it ? Mr. Enestvedt. Yes, sir. Mr. Marble. Did they build the elevator ? Mr. Enestvedt. No. They bought out an independent man. Mr. Marbel. Did the farmers entering into the business result in increasing the price of grain at that point? Mr. Enestvedt. Yes, sir. Mr. Marble. You have a penalty clause ? Mr. Enestvedt. No, sir. Mr. Marble. You have no penalty clause? Mr. Enestvedt. No, sir. Mr. Marble. Did the farmers establish that elevator to make money out of the elevator business or to create competition and increase the price of grain ? Mr. Enestvedt. I think it was principally to create competition. Mr. Marble. And have they actually done so ? Mr. Enestvedt. They partly have. Mr. Marbi^e. How many competitors have you ? Mr. Enestvedt. We have at present three. Mr. Marble. How much do you consider that you have raised the price of grain at that point ? Mr. .Enestvedt. One to 2 cents a bushel. Mr. Marble. Wheat there mostly ? Mr. Enestvedt. Principally wheat ; some flax, some oats, and some barley, and a sprinkling of rye. Mr. Marble. Have you any agreement with your competitors as to the prices you shall pay ? Mr. Enestvedt. No, sir. Mr. Marble. Have you ever had ? 918 GRAIN ELEVATOE INVESTIGATION. Mr. Enestvedt. No, sir. Mr. Marble. Do you pool the business? Mr. Enestvedt. No, sir. Mr. Marble. Divide the grain going into the market ? Mr. Enestvedt. No, sir. Mr. Marble. Do you recognize the right of your competitors to get their share or to cease buying ? Mr. Enestvedt. We have been getting the largest receipts there. Mr. Marble. You have been getting the largest receipts ? Mr. Enestvedt. Yes, sir. Mr. Marble. Have you- been accounting to the others for that, or making them any payments ? Mr. Enestvedt. No, sir. Mr. Marble. Or ceasing to bid because you were getting the largest receipts ? Mr. Enestvedt. No, sir. Mr. Marble. And you are absolutely competitive in the market? Mr. Enestvedt. Yes, sir. Mr. Marble. How do you determine what you will pay ? Mr. Enestvedt. Well, we have to have about 2 cents a bushel profit in order to pay the expense of the house. Mr. Marble. Do you get these cards from Mr. Hoskins or from Mr. Durant? Mr. Enestvedt. We get the Durant cards. Mr. Marble. You pay him for them ? Mr. Enestvedt. Yes, sir; 90 cents a month. Mr. Marble. What value do you find in them ? Mr. Enestvedt. We find it of value. We know what our com- petitors base their price of grain at Belview on. Mr. Marble. The value to you, then, is in telling you what your competitors are going to pay? Mr. Enestvedt. Yes, sir; and to a certain extent we are guided ourselves by it. We find it of great value. Mr. Marble. How much profit do you find that they figure for you to make at that point on these cards ? Mr. Enestvedt. I don't understand. Mr. Marble. If you pay what the cards showed, how much profit would you make? Mr. Enestvedt. At present about 4 cents a bushel. Mr. Marble. You do not pay as much as the card or you pay more than the card shows? Mr. Enestvedt. As a rule we do. Mr. Marble. At what times do you not pay more ? Mr. Enestvedt. Whenever we should happen to be overcrowded. If we are sure of cars we would pay a little more than the cards, but not much more. Mr. Marble. When you are sure of cars you are governed by the cards ? Mr. Enestvedt. Yes, sir. Mr. Marble. Are you operating at a loss or at a profit ? Mr. Enestvedt. We have inrariably made a good showing at the end of the year. Mr. Marble. Do you pay for the labor done in the elevator — do you pay a salary? GEAIN ELEVATOR INVESTIGATION. 919 Mr. Enestvedt. Yes, sir. Mr. Makble. What salary do you pay ? Mr. Enestvedt. I, as manager, am getting $75 a month. Mr. Marble. You are actively engaged in the elevator yourself ? Mr. Enestvedt. Yes, sir ; I. do all the work. Mr. Marble. And how much a bushel did you make last year ? Mr. Enestvedt. Well, we made a net profit last year of about $1,200. Mr. Marble. On how many bushels of grain ? Mr. Enestvedt. On about 86,000 or 87,000 bushels. Mr. Marble. You cleared about 1 J cents, something like that ? Mr. Enestvedt. Possibly; I did not figure it up. Mr. McGee. From whom did you buy the house ? Mr. Enestvedt. From John Mr. MoGee. Did he fail? Mr. Enestvedt. No, sir. Mr. McGee. What is your paid-up capital ? Mr, Enestvedt. $4,000. Mr. McGee. What did you pay for the house ? Mr. Enestvedt. $3,500. > Mr. McGee. And you passed through it last year 86,000 ? Mr.- Enestvedt. Yes, sir. Commissioner Prouty. How much did you have on store at any one time ? How much does your house hold ? Mr. Enestvedt. It is supposed to have a capacity of 25,000 bushels. Mr. Marble. How many stockholders have you? Mr. Enestvedt. Well, I should think it is in the neighborhood of 100. Mr. Marble. Are they farmers around about you ? Mr. Enestvedt. Yes, sir; practically all are farmers, with the ex- ception of a few business men in town. Mr. Marble. How much would ,you say that your stockholders have invested in the grain business, counting the plant they have, in producing the grain as well as handling it through the elevator ? Mr. Enestvedt. You mean how much each one is worth? Mr. Marble. In the farms and apparatus for running the farms, as well as in this elevator? Mr. Enestvedt. That is a pretty hard question to answer. Mr. Marble. Can't you approximate it? Mr. Enestvedt. Probably $3,000 a piece. Mr. Marble. If you have a hundred stockholders that would be about $300,000. Mr. Enestvedt. Possibly. Mr. Marble. $300,000? Mr. Enestvedt. $300,000, 1 guess. Mr. Marble. Has your capital been paid in, so that you are respon- sible ? You find no trouble as to that in the market ? Mr. Enestvedt. No trouble. Mr. McGee. You say you have $4,000 paid up capital and $3,500 invested in the house ? Mr. Enestvedt. $4,000 invested now, because we have added Mr. McGee. What do you draw upon for resources to buy wheat and corn, etc. 920 GRAIN ELEVATOR INVESTIGATION. Mr. Enestvedt. Sometimes we get the money from local parties, and at times from Minneapolis commission men. Mr. McGee. And isn't the bulk of the money that you do business with money that is furnished by members of the chamber of com- merce here? Mr. Enestvedt. I think it is. Mr. McGee. You get these Durant cards? Mr. Enestvedt. Yes, sir. Mr. McGee. You are guided by them, are you not? Mr. Enestvedt. To a certan extent we are. Mr, McGee. And you act on them? Mr. Enestvedt. Sir? Mr. McGee. You use them in making your purchases? Mr. Enestvedt. Yes, sir. Mr. McGee. They are public there, aren't they; you have no trouble in getting them ? Mr. Enestvedt. Not at all. Mr. McGee. And any person engaged in the grain business at your station who wants them can get them, can't he ? Mr. Enestvedt. Yes, sir. Mr. McGee. They are posted up at the station there? Mr. Enestvedt. I don't think they are posted, but we generally hang them on the wall in the office. ■ Mr. McGee. And the farmers know they are there ? Mr. Enestvedt. Yes, sir. Mr. McGee. And consult them, don't they? Mr. Enestvedt. Yes, sir. Mr. McGee. And they know just about what the prevailing price of grain is, just as well as you do ? Mr. Enesvedt. Yes, sir. Mr. McGee. Do you sell as against your purchases — do you hedge your purchases? Mr. Enestvedt. "We aim only to hedge our purchases. Mr. McGee. And you attempt to do it ? Mr. Enestvedt. Yes, sir. Mr. McGee. You made about $1,200 last year? Mr. Enestvedt. Yes, sir. Mr. McGee. In handling about 86,000 bushels of grain? Mr. Enestvedt. Yes, sir. Mr. McGee. What are your expenses? What were your expenses last year aside from the $900 a year you receive ? Mr. Enestvedt. Including the $900 ? Mr. McGee. Including that ; yes. Mr. Enestvedt. I couldn't remember the exact figures, but I should think it was about $1,800. Mr. McGee. $1,800 including that? Mr. Enestvedt. Yes, sir. Mr. McGee. Do you have a second man there? Mr. Enestvedt. Well, we have a man occasionally, but very seldom. Mr. McGee. Are you the superintendent? Mr. Enestvedt. Yes, sir. Mr. McGee. You have a manager ? Mr. Enestvedt. Well, I am manager and buyer. GRAIN ELEVATOB INVESTIGATION. 921 Mr. McGee. And superintendent ? Mr. Enestvedt. Yes, sir. Mr. Marble. Did I ask you if propositions had been made to you that you should pool the grain at you station by your competitors ? Mr. Enestvedt. Well, I don't know as we can say pool, but at timcK they have asked me if I would be satisfied with a certain percentage of the receipts. Mr. Marble. How recently have they asked you? Mr. Enestvedt. That is a couple of years ago. Mr. Marble. Since then they haven't done so? Mr. Enestvedt. No, sir. Mr. Marble. You didn't agree to that at that time ? Mr. Enestvedt. No, sir. Mr. McGee. How much did your competitor get there at your sta- tion last year? You said that you got about 86,000 bushels; how much did your competitors get ? Mr. Enestvedt. I don't know. Mr. McGee. What elevator did you say that was? Mr. Enestvedt. Our competitors' ? Mr. McGee. Yes. Mr. Enestvedt. The Northern Grain, the Great Western, and the Pacific. Mr. McGee. There are three houses there? Mr. Enestvedt. Yes, sir; besides us. Mr. McGee. That is all. Mr. KooN. Do you handle coal ? Mr. Enestvedt. Yes, sir. Mr. KooN. How much of your profit came from coal ? Mr. Enestvedt. Very little. I expect a little. Mr. Koon' Quite a little ? Mr. Enestvedt. Possibly $300 ; two or three hundred dollars. Mr. Marble. Do you handle anything else besides coal ? Mr. Enestvedt. We handle coal and wood. Mr. McGee. Building material? Mr. Enestvedt. No, sir. Mr., Koon. How much of a profit came from those two items? Mr. Enestvedt. Between $200 and $300. Commissioner Prouty. That is all. Mr. KooN. Is Mr. Steen's place near yours ? Mr. Enestvedt. No, sir. Mr. McGee. What margin did you say you aimed to buy on ? Mr. Enestvedt. About a 2-cent margin. Mr. McGee. That is the highest margin you have bid on there ? Mr. Enestvedt. No ; at' times it has been a little higher. Mr. McGee. What is the highest you have bid on ? Mr. Enestvedt. Possibly 3 cents. Mr. McGee. Possibly some more? Mr. Enestvedt. Well, I couldn't say. Mr. McGee. If your house was full and you couldn't get cars, you would.be apt to bid on a larger margin than if you had cars ? Mr. Enestvedt. I don't know as to that. Mr. McGee. Have you plenty of cars now? Mr. Enestvedt. Well, no ; we are not cramped for room, but still we have grain in the house, and we would like to ship it to market. 922 GEAIN ELEVATOR HTVESTIGATION. Mr. McGee. But you can not get it to market ? Mr. Enestvedt. No, sir. Mr. McGee. You don't know when you can get it to market? Mr. Enestvedt. No, sir. Mr. McGee. How much have you in store now ? Mr. Enestvedt. Only three or four or five thousand, all told. Mr. BLeffelfingee. Have you a cleaner in your elevator ? Do you clean and mix some ? Mr. Enestvedt. Well, very little. Commissioner Peouty. That is all. Witness excused. F. L. Stone, called as a witness, having been duly sworn, testified as follows: Mr. Maeble. You are the manager of a farmers' elevator at Marietta ? Mr. Stone. Yes, sir. Mr. Maeble. How long have you been manager of that elevator ? Mr. Stone. Well, for about a year and a half. Mr. Maeble. Did you organize the association of farmers there ? Mr. Stone. Yes, sir. .There isn't very many farmers in it ; just a few. Mr. Maeble. And have you other stockholders than farmers in it ? Mr. Stone. Yes, sir. Mr. Maeble. How many stockholders have you ? Mr. Stone. There are, I think, about ten. Mr. Maeble. How many of them are farmers? Mr. Stone. About four, I think. Mr. Maeble. Have you what is called the penalty clause ? Mr. Stone. No, sir. We never have got up any by-laws; we haven't any by-laws at all. Mr. Maeble. You have just a partnership ; not a corporation ? Mr. Stone. It is a corporation. Mr. Maeble. Without any by-laws ? Mr. Stone. Yes, sir. Mr. Maeble. Why was your association formed ? Mr. Stone. It was formed for an investment. Mr. Maeble. You have run it as an elevator proposition ? Mr. Stone. Yes, sir. Mr. M.a!EBLE. Not to attempt to raise the price of grain at that point ? Mr. Stone. No, sir. Mr. Maeble. Have you farmers' elevators at that point? Mr. Stone. No, sir. Mr. Maisble. How many competitors have you ? Mr. Stone. Four. Mr. Maeble. They are line elevators ? Mr. Stone. Line elevators ; yes, sir. Mr. Maeble. But you are independent ? You have other elevators than the one at that point ? Mr. Stone. There are three line elevators and one other independ- ent house. Mr. Maeble. Do you have an agreement with your competitors as to the price you shaU pay, or an understanding? GRAIN ELEVATOR INVESTIGATION. 923 Mr. Stone. No, sir. Mr. Marble. How do you determine as to what price you shall pay for grain at that point ? Mr. Stone. I try to buy on the regular list. Mr. Makble. By that you mean the cards from Mr. Hoskins ? Mr. Stone. Yes, sir ; we get them from Minneapolis. I guess they are the Durant cards. Mr. Marble. From whom do you get the cards? Mr. Stone. I order them from the commission firm. Mr. Marble. What profit do you find those cards allow you at your point on wheat generally ? Mr. Stone. From 3 to 4 cents. Mr. Marble. What profit are those cards now allowing you on wheat — 3 to 4 cents ? Mr. Stone. Yes, sir. Mr. Marble. And on durum, what are they allowing you ? Mr. Stone. I don't know. I haven't bought a bushel Mr. Marble (interrupting). And barley? Mr. Stone. About 2 cents. Mr. Marble. What is your chief crop there ? Mr. Stone. I think wheat ; I guess a good many oats, considerable barley, and a little flax. Mr. Marble. Have you any understanding with your competitors that you shall use those cards ? Mr. Stone. T. think it is generally understood that we will use these cards as a basis of price to buy on. No particular understanding. Mr. Marble. General agreement that that affords a fair margin of profit ? Mr. Stone. Yes, sir. We buy on the list. Mr. Marble. There is no penalty attachfed if anyone pays more than the cards show ? Mr. Stone. No. Mr. Marble. As a matter of fact, do any of your competitors, or do you, pay more than the cards show ? Mr. Stone. I think sometimes we do; yes, sir. Perhaps one sta- tion north of us — either north or west — are fighting a little; of course, if they are, we raise the price. Mr. Marble. All of your elevators at that town ? Mr. Stone. Yes, sir. Of course, if we raise it the others will. Mr. Marble. Do you get up these fights against each other ? Mr. Stone. We never had any fights. Mr. Marble. On the basis of these cards you find that you run your elevator at a profit? Mr. Stone. Yes, sir. Mr. Marble. How much grain did you handle last year ? Mr. Stone. I think about 80,000 bushels. Mr. Marble. Did you handle building material and coal also ? Mr. Stone. Yes, sir. Mr. Marble. Can you tell how much ? Mr. Stone. That is, no building material. We handled coal, T think. Mr. Marble. Can you tell how much you made on your grain ? Mr. Stone. No; I can not. We burned out in March and the books were burned up. 924 GBAIN ELEVATOE INVESTIGATION. Mr. Maeble. And you actually have no elevator at the present time ? Mr. Stone. We have. We built a new one; just completed it about the last of September. Mr. Marble. That is all. Commissioner Peouty. Do you desire to ask any questions ? (No response.) Commissioner Peouty. You organized your elevator company as a business proposition ? Mr. Stone. Yes, sir. Commissioner Peouty. And you took the name of " Farmers' Com- pany " as a business investment ? Mr. Stone. Yes, sir. We intended to get in more farmers, but were unable to do so. We have a good many farms — that is, the principal stockholders have, and we thought we needed an elevator. Mr. KooN. You are financed by some commission house in Minne- apolis ? Mr. Stone. To a certain extent, occasionally. Mr. KooN. That is, they furnish you money or pay your drafts ? Mr. Stone. Yes, sir. Mr. KooN. Do they loan you money outright ? Mr. Stone. They have done such a thing. Mr. KooN. And it was at their suggestion that you took these cards, the Durant cards ? Mr. Stone. No, sir ; they never suggested it. Mr. KooN. I thought you said your commission house suggested it ? Mr. Stone. No. I ordered them through the commission house. You know there was a regular card gotten up that gave the list price, and all the other houses are getting the list, and, of course, we had to bid on the list. Mr. KooN. You bought this for your own information ? Mr. Stone. For my own information. Mr. KooN. Just as you would buy the newspaper market reports ? Mr. Stone. Yes, sir. Mr. KooN. You find, as a matter of fact, at your place that you have to pay about the same that the other people pay, without any agreement ? Mr. Stone. Yes, sir. Mr. KooN. It regulates itself ? Mr. Stone. Yes, sir. Mr. KooN. This commission house that would furnish you money is a member of the Minneapolis Board of Trade or the Chamber of Commerce ? Mr. Stone. I presume so. Mr. Maeble. Has any attempt been made to get you to pool grain at your station ? . Mr. Stone. Not this year. Mr. Maeble. Last year ? Mr. Stone. Yes, sir. Mr. Maeble. Did you make an agreement ? Mr. Stone. Yes, sir ; I agreed to take part of the grain. Mr. Maeble. What kind of an agreement did you have ? Mr. Stone. It was an agreement to let them, the other house, get GRAIN ELEVATOR INVESTI&ATIOW. 935 as much as I was getting. They thought I was getting a little too much. Mr. Marble. How did you keep track of it? Mr. Stone. Why, kept track or it on the books. Mr. Marble. And you made an accounting to each other, the dif- ferent elevators ? Mr. Stone. Yes, sir. Mr. Marble. If one got too much did you pay a penalty ? Mr. Stone. Yes, sir. Mr Marble. How much of a penalty ? Mr. Stone. Two and one-half cents on wheat. Mr. Marble. What was the value of that sort of an agreement to you? Mr. Stone. I don't think it was of any value. Mr. Marble. Why did you enter into it ? Mr. Stone. Well, the prices were so high that we were losing money. We couldn't buy grain. The line houses put the grain up. They thought I was getting too much. Mr. Marble. TKey made a special competition against you ? Mr. Stone. Yes, sir. Mr. Marble. And then offered to cease that competition if you would enter into that agreement? Mr. Stone. Yes, sir. Mr. Marble. What line houses are those there ? Mr. Stone. The Pacific and the Great Western and the Security. Mr.. Marble. And the other independent elevator, was that in this agreement also? Mr. Stone. Yes, sir. Mr. Marble. That agreement is not in existence now ? Mr. Stone. No, sir. Mr. Marble. Did it expire by limitation, or did you declare it off? Mr. Stone. There was no limit when it would expire. It just ran out. I never heard anything of it since. It was before the elevator burned. It lasted about two months. Mr. Marble. You did not consider it advantageous to you? ' Mr. Stone. No. Mr. Marble. Except that it put a stop to that excessive competi- tion? Mr. Stone. That is all. Mr. KooN. It didn't seem advantageous to anybody, so they let it die? Mr. Stone. I guess that is it. Mr. Marble. Did you pay a penalty under that agreement? Mr. Stone. Yes, sir. Mr. Marble. How much of a penalty did you pay in this two months ? Mr. Stone. I don't remember. Mr. Marble. Approximately? Mr. Stone. It was not very large ; probably about $150. Mr. Marble. In two months? Mr. Stone. Something like that. Mr. Marble. That is all. Commissioner PROtrTY. That seems to be all, Mr. Stone. Witness excused. 926 GRAIN ELEVATOR INVESTIGATIOJST. William Steele, called as a witness, having been duly sworn, tes- tified as follows: Mr. Marble. You are in the elevator business at what point? Mr. Steele. Delhi, Minn. Mr. Marble. Manager of an elevator? Mr. Steele. Yes, sir. Mr. Marble. Who owns the elevator ? Mr. Steele. The farmers. Mr. Marble. A farmers' cooperative company ? Mr. Steele. Yes, sir Mr. Marble. Have you a penalty clause in your by-laws ? Mr. Steele. I think so; it has not been enforced. We took our by-laws from a copy of some other firm. It is in there. Mr. Marble. What penalty did it provide ? Mr. Steele. A half cent a bushel. Mr. Marble. How long have you been the manager of that ele- vator? . Mr. Steele. Starting on the fifth year. Mr. Marble. Have you been manager ever since it was built? Mr. Steele. All except six weeks. Mr. Marble. Did you build the elevator or buy it ? , Mr. Steele. We bought it. Mr. Marble. Why did the farmers go into the elevator business at that point ? Mr. Steele. Well, they thought they were not getting enough for their grain. They couldn't compete with the towns on each side of them — Belview and Eedville Falls, especially — and the grain was going there. Mr. Marble. And they went into the elevator business to maJce competition in the market ? Mr. Steele. Yes, sir; to hold our trade. Mr. Marble. What has been the result upon the market ? Mr. Steele. Well, it has raised the price from 1 to 2 cents ; some- times as high as 4 cents. Mr. Marble. That covers four years, what you say ? Mr. Steele. Yes, sir. Mr. Marble. What kind of competition did it bring about — from the line elevators at that point? Mr. Steele. Yes, sir. Mr. Marble. What has been their competition ? Mr. Steele. It has been pretty strong, mostly. Mr. Marble. Have you had any agreement with tnem as to the price to be paid ? Mr. Steele. No, sir. Mr. Marble. Have you had the grain at that point pooled with them at any time ? Mr. Steele. Not at all. Mr. Marble. No agreement as to division ? Mr. Steele. No, sir. Mr. Marble. Any attempt to have you enter any such agreement ? Mr. Steele. No, sir. Mr. Marble. You pay wages to the people who do the work in the elevator ? GRAIN ELEVATOR INVESTIGATION. 927 Mr. Steele. Yes, sir. Mr, Marble. What salary do you pay ? Mr. Steele. $75 a month. Mr. Marble. That is your salary ? Mr. Steele. Yes, sir. Mr. Marble. You do all the work ? Mr. Steele. All the work. Mr. Marble. How do you determine how much to pay for grain ? Mr. Steele. Well, I go more by the list price. Of course, on the lower grades here I use my own judgment. Mr. Marble. What list price do you have ? Mr. Steele. I can. not tell you. I get it from a commission firm- Mr. Marble. What profit does that list price allow you to make ? Mr. Steele. Well, from 2 to 3 cents. Mr. Marble. If you pay what the price list shows you make from 2 to 3 cents? Mr. Steele. Yes, sir. Mr. Marble. That is the price you actually do pay ? Mr. Steele. Yes, sir. Mr. Marble. You do not pay more than the list price ? Mr. Steele. Not unless we are forced to by competition. Mr. Marble. How many bushels did you handle last year ? Mr. Steele. About 75,000. Mr. Marble. Do you know how much you made on that grain ? Mr. Steele. No ; I couldn't say. We made — of course, we had coal and wood and salt and twine. Mr. Marble. And you could only give your gross profits ? Mr. Steele. Yes, sir. Mr. Marble. That is all. Mr. KooN. What were your profits? Mr. Steele. About $1,000. Mr. KooN. What is your capital? Mr. Steele. $4,150. Mr. KooN. How many elevators are there there? Mr. Steele. There are three besides our own. Mr. KooN. Foiir? Mr. Steele. Yes, sir. Mr. KooN. And they were there before you built your house — ^the other three? Mr. Steele. Yes, sir. Mr. KooN. Do you divide the trade about equal — do you get more than your share, or less? Mr. Steele. I think I get my share. Mr. KooN. As a result, do you get more than one-fourth of the grain ? Mr. Steele. Yes, sir. Mr. KooN. You get more than one-fourth of the grain that is marketed there? 'Mr. Steele. Yes, sir. Mr. KooN. By reason of your connection with the farmers? Mr. Steele. Yes, sir. Mr. KooN. While you have no penalty clause, you expect the farm- ers — all of them who belong to your organization — or if you have a penalty clause you expect them to sell their grain to you? 928 GRAIN ELEVATOR INVESTIGATION, Mr. Steele. Sure. Mr. KooN. And the moral effect of that penalty clause in the by-laws compels them to do it pretty generally ; they do sell to you ? Mr. Steele. They do, unless they get something better than I can give them. Mr. KooN. Somebody else offers them something better; if it is enough better to overcome their interest in your company, they change ? Mr. Steele. Yes, sir. Mr. KooN. Other things being equal, you would get the grain ? Mr. Steele. Yes, sir. Mr. KooN. That which you call the " list " is something you get here from Minneapolis? Mr. Steele. Yes, sir. Mr. KooN. Is it the Durant list ? Mr. Steele. I don't know which it is. Mr. KooN. It is a list which is sent to all the operators there? Mr. Steele. Yes, sir. Mr. KooN. You pay for it ? Mr. Steele. Yes, sir. Mr. KooN. It is of value to you, isn't it ? Mr. Steele. Yes, sir. Mr. KooN. Or else you wouldn't pay for it ? Mr. Steele. Yes, sir. Mr. KooK. It gives you information that you want in your busi- ness? Mr. Steele. Yes, sir. Mr. KooN. And upon that information you base the price that you will give for wheat or grain of any kind ? Mr. Steele. Yes, sir. Mr. KooN. Without that information, furnished in that way, you would have to get it in some other way, or do business in the dark ? Mr. Steele. Yes, sir ; that is right. Mr. KooN. Now, you say that you raised the price of wheat; I do not quite understand how you can say that. How do you know what the price would have been in your market if your elevator company had not been there, say, this last summer ? Mr. Steele. Well, I couldn't say. I am only judging from what we did after it started. Mr. KooN. The price varies according to the markets of the world, doesn't it? The price to be paid in your town varies as the market in Minneapolis and Duluth and Chicago, and ultimately in Liver- pool varies? Mr. Steele. Certainly. Mr. KooN. That is what regulates the price finally ? Mr. Steele. But the margin between Delhi and Minneapolis ought to be the same as it was before our elevator started. It is closer to-day than what it was. Mr. KooN. Hasn't there been a reduction in freight rates there ? Mr. Steele. There has ; this year. Mr. KooN. How much did that affect the price ? Mr. Steele. That was 1 cent 100. Mr. KooN. That affected the price then over a half cent a bushel? Mr. Steele. Any reduction in freight rates affects the price. Missing Page 930 GRAIN ELEVATOR INVESTIGATION. Mr. KooN. They were very scarce ? Mr. Steele. They were. Mr. KooN. That grain, if you could have it sent out, you would have had it into market long before now ? Mr. Steele. Not what I have now. I had a little damaged flax. I couldn't get cars and it heated on me, and I lost from 3 to 6 cents a bushel on it. Mr. Heffelfinger. After your cars arrive at the terminal market you don't have difficulty in getting money returns ? Mr. Steele. Yes, sir ; I do ; sometimes it is two weeks. Mr. Heffelfinger. After they arrive here ? Mr. Steele. .Yes, sir. Mr. Heffelfinger. From the mills or the elevators ? Mr. Steele. From the commission firms. Commissioner Prouty. We will stop here and take a recess until 9.30 to-morrow morning. We will come in a half hour earlier. At 4.30 o'clock p. m. the Commission adjourned until 9.30 o'clock a. m., Thursday morning, November 22, 1906. Minneapolis, Minn., November ^^, 1906 — 10 o'clock a. m. Commissioner Proutt. Mr. Marble, you may call a witness. Mr. Marble. I will call Mr. Hoskins. A. J. HosKiNS, called as a witness, being duly sworn, testified as follows : Mr. Marble. You reside in this city ? Mr. Hoskins. Yes, sir. Mr. Marble. What is your business ? Mr. Hoskins. I handle prices for the elevator companies in the northern country. Mr. Marble. What do you mean by " handle prices?" Mr. Hoskins. Well, I put out changes of price every day. They occur nearly every day, and I have a basis, as we call it, printed off on a sheet and the changes that are to be made, and send^them around to the different elevator offices. Mr. Marble. Have you an association ? Mr. Hoskins. No, sir. Mr. Marble. Do you transact the business under your own name ? Mr. Hoskins. Yes, sir. Mr. Marble. What do you call- this? Is it a sort of newspaper in shape that you get out ? Do you call it a bulletin ? Mr. Hoskins. No ; it is a daily change notice, perhaps. Mr. Marble. Have you a copy with you of the prices you send oat? Mr. Hoskins. No ; I have not. Mr. Marbls. I will ask you if that is a list of the elevator compa- nies employing you [presenting list to witness] ? Mr. Hoskins. Yes, sir. Mr. Marble. Was this prepared by you ? Mr. Hoskins. Yes, sir. Mr. Marble. Does the Commission desire to hear this read ? Commissioner Prouty. Oh, no. GBAIN ELEVATOR INVESTIGATION. 931 Mr. Mabble. I will offer it and have it marked " Exhibit No. 1 to Mr. Hoskins's testimony." (The same is hereto annexed and marked " Exhibit No. 1 to Mr. Hoskins's testimony.") Mr. Marble. How long have you been sending out prices under this arrangement ? Mr. HosKiNS. About eleven years and four months. Mr. Marble. Has it always been in the form it is now ? Mr. HosKiNS. Yes, sir. Mr. Marble. Have you as much machinery now as you ever had? I mean, do you do the same things now that you have always done in this regard ? Mr. HosKiNS. Yes, sir. Mr. Marble. All of them ? Mr. HosKiNS. Well, sometimes I do things, and then they are dis- continued. Mr. Marble. Have you at the present time charge of any arrange- ment for pooling the grain or dividing the business at country stations ? Mr. HosKiNS. No, sir . Mr. Marble. You have had in years past, have you not ? Mr. HosKiNS. Yes, sir. Mr. Marble. How long since you have had such arrangements ? Mr. HosKiNS. I think there was some at the beginning of the last crop before this. The crop begins August 1. Mr. Marble. You think there was some August, 1905 ? Mr. HosKiNS. Yes, sir. Mr. Marble. How many points were affected August, 1905 ? Mr. HosKiNS. I do not know. I made a good many statements for comparison only that were made and put out and compared and thrown in the waste basket, I suppos6. Mr. Marble. Whether there was any agreement back of that you do not know, as to some of those — any agreement to pay a penalty or cease buying ? Mr. HosKiNS. No. Mr. Marble. But as to some of these arrangements in August, 1905, were there agreements to pay penalties on excess grain purchased ? Mr. HosKiNS. Yes ; I think so. Mr. Marble. How many such agreements would you say there were in August, 1905? Mr. HosKiNS. Do you call each station an agreement ? Mr. Marble. Yes; how many points? Mr. HosKiNS. I do not know. Perhaps a couple of hundred. Mr. Marble. In what States were those stations located ? Mr. HosKiNS. Well, Minnesota, South Dakota, and North Dakota. Mr. Marble. Any in Iowa-, or would that be tributary to this market ? Mr. HosKiNS. No. Mr. Marble. Any in Nebraska ? Mr. HosKiNS. No. Mr. Marble. Your territory is the northern anyway, is it ? Mr. HosKiNS. Yes, sir. Commissioner Lane. For whom were those comparisons made ? Mr. HosKiNS. At the request of different elevator companies. 932 GRAIN ELEVATOR INVESTIGATION. Commissioner Lane. Located here in Minneapolis? Mr. HosKiNS. Yes, sir. Commissioner Lane. What were those companies? Mr. HosKiNS. "Well, the list shows. Commissioner Lane. The elevator companies named on that list? (Referring to Exhibit No. 1.) Mr. HosKiNS. Well, a good many of them, I think — yes, most of them. Mr. Marble. Perhaps we better find out which ones? Commissioner Lane. Yes, sir. Mr. Marble. I will ask you first, were these agreements of the same general nature and form at these two hundred points? Mr. HosKiNS. Yes, sir ; I think so. Mr. Marble. What was the form and nature of that agreement ? Mr. HosKiNS. Well, it was to figure a penalty on — of course, first it was decided what percentage each company was entitled to, and then those that got more than their share, there was a penalty figured and those that got less than their share received the penalty. Mr. Marble. What was that penalty generally ? Mr. HosKiNS. Two and a half cents on wheat, and in some cases 2 cents on barley and rye, and flax was 3f and oats were 2 cents. Mr. Marble. Each of the buying elevator companies rendered a statement to you ? Mr. HosKiNS. Of their receipts ; yes, sir. Mr. Marble. You figured who had the excess and the amount due from the ones getting the excess? Mr. HosKiNS. Yes, sir. Mr. Marble. And also to whom that money was to go? Mr. HosKiNS. Yes, sir. Mr. Marble. You had the clearing house, as it were, for this busi- ness ? Mr. HosKiNS. Yes, sir. Mr. Marble. Who paid you for that service ? Mr. HosKiNS. Why, I do not know that anybody did. I made an assessment to cover the expense of my office, based on the number of elevators that each company had, and I sort of did this other service for nothing. Mr. Marble. Carried on as part of the business of the office ? Mr. HosKiNS. Yes, sir. Mr. Marble. Without special compensation for it? Mr. HosKiNS. Yes, sir. Mr. Marble. Now, taking this list, I will read it to you, and I will ask you to indicate, name by name, whether or not the firm named was in such agreements as you have described. (Reading from list.) Andrews & Gage ? Mr. HosKiNS. Yes, sir. Mr. Marble. They were? Mr. HosKiNS. Yes, sir. Mr. Marble. At how many stations? Mr. HosKiNS. Oh, I can not tell. I should think 40 or 50. Mr. Marble. Could you indicate generally where those stations were? Mr. HosKiNS. On the Northern Pacific road. GRAIN ELEVATOR INVESTIGATION. 933 Mr. Maeble. And did it include all the elevators of Andrews & Gage on the Northern Pacific? Mr. HosKiNS. No. Mr. Marble. Only a portion ? Mr. HosKiNS. Only part. Mr. Marble. Why did it not include all? Mr. HosKiNS. I do not know. Mr. Marble. Do you know whether or not it was because there were independent buyers at some points who would no,t enter into such an arrangement? Mr. HosKiNS. It might have been that; I do not know. Mr. Marble. Would it be possible for you to tell us the names of the stations at which Andrews & Gage were in such contracts? Mr. HosKiNS. No, sir. Mr. Marble. Could you furnish us a list showing those stations this afternoon? Mr. HosKiNS. Yes, sir. Mr. Marble (reading from list). E. W. Sumner? Mr. HosKiNS. No. Mr. Marble. The Great Western Elevator Company? Mr. HosKiNS. Yes, sir. Mr. Marble. At how many points were they in such arrangements ? Mr. HosKiNS. About the same as Andrews & Gage. They are on the Northern Pacific also. Mr. Marble. Probably at the same points with Andrews & Gage? Mr. HosKiNS. In a good many cases. Mr. Marble. About 40 or 50? Mr. HosKiNS. Yes ; I should think so. Mr. Marble. Did they have other elevators on the Northern Pacific? Mr. HosKiNS. No ; they have five or six on the Great Northern, I think. Mr. Marble. That were not in this arrangement ? Mr. HosKiNS. They might have been in, but they were on the Great Northern. Mr. Marble. Were all their elevators on the Northern Pacific in this arrangement? Mr. HosKiNS. No. Mr. Marble. Why were any omitted ? Do you know ? Mr. HosKiNs. I do not. Mr. Marble. In your list can you tell us the names of the towns at which the Great Western had such arrangements ? Mr. HosKiNS. I think I can. Mr. Marble (referring to list). The Exchange Grain Company? Mr. HosKiNS. They had a few. Mr. Marble. How many? Mr. HosKiNS. Oh, half a dozen or eight, nine or ten, I think. Mr. Marble. Situated where? Mr. HosKiNS. On the Milwaukee road. Commissioner Lane. Did these people furnish you with the list of places where they wanted to make the combination ? Mr. HosKiNS. Yes, sir. Commissioner Lane. They furnished that to you? Mr. HosKiNS. Yes, sir. 934 GRAIN ELEVATOR INVESTIGATION. Mr. Marble. Did you have to do with getting up these combina- tions ? Mr. HosKiNS. No. Mr. Marble. You were simply notified that they had been arranged and would then keep the books for them ? Mr. HosKiNS. Yes, sir. Mr. Marble. Did this include all elevators of the Exchange Grain Company ? Mr. HosKiNS. No; I do not think so. Mr. Marble. And if it did not include all, you could not tell why ? Generally, without stopping to ask that question as to all of these, where it did not include all the elevators of the company named, do you know why it did not include all in any case ? Mr. HosKiNS. I do not. Mr. Marble. Did you in any instance arrange such combinations as this ? Mr. HosKiNS. I may have helped. I may have gone and seen a single company at the request of some other company. Mr. Marble. Can you tell us of such an instance ? Mr. HosKiNS. I can not recall one now. Mr. Marble. But you think you might have done so ? Mr. HosKiNS. Yes, sir. Mr. Marble (referring to list). The Pacific Elevator Company? Mr. HosKiNS. They were in too, I guess. Mr. Marble. What places and on what roads? Mr. HosKiNS. On the Milwaukee road, I think. Mr. Marble. With all their elevators, do you know ? Mr. HosKiNS. They had only a few. They were not all in, I do not think. Mr. Marble. How many did you say were in ? Mr. HoSKiNS. The Pacific? I guess they are on the St. Louis road. Mr. Marble. How many did you say they had in such arrange- ments ? Mr. HosKiNS. Oh, half or two-thirds of their houses. I think they had somewhere between 15 and 25 stations. Mr. Marble (referring to list). A. O. Cornwell?i Mr. HosKiNS. Yes, sir. Mr. Marble. How many houses? Mr. HosKiNS. He has ten or twelve, but only a few were in the arrangement. Mr. Marble. How many were in the arrangement? Mr. HosKiNS. I should think a half dozen. Mr. Marble. On what road? Mr. HosKiNS. The Great Northern. Mr. Marble. E. L. Welch & Co.? Mr. HosKiNS. That is really a commission firm. They go under the name of the Security Grain Company, I think — their elevator line. Mr. Marble. The Security Elevator Company ? Mr. HosKiNs. Yes, sir. Mr. Marble. So the answer as to one of those lines would answer as io both ? Mr. HosKiNS. Yes, sir. GBAIN ELEVATOR INVESTIGATION. 935 Mr. Marble (referring to list). The Security Elevator Company? Mr. HosKiNS. They are on the St. Louis road, and have 20 to 25 stations. Part of them were in ; I guess not all. I am sure not all. Mr. Marble. How many were in? Mr. HosKiNS. Oh, twelve or fifteen, perhaps. Mr. Marble (referring to list). Winter & Ames Company? Mr. HosKiNS. Yes, sir. They are on the Great Northern, and I do not know — they have 20 to 30 houses altogether. Mr. Marble. How many were in? Mr. HosKiNS. Oh, half of them, perhaps. Mr. Marble. The State Elevator Company? Mr. HosKiNS. Yes, sir. They are on the Great Northern road, and I should think had 20 houses or thereabouts. Mr. Marble. How many were in ? Mr. HosKiNS. Oh, perhaps half of them. Mr. Marble. The Federal Elevator Company ? Mr. HosKiNS. Yes ; they are on the Great Northern and Northern Pacific both. I do not know — I guess they have 30 or 40 houses. Mr. Marble. With how many did they have such arrangements ? Mr. HosKiNS. Perhaps half of them. Mr. Marble. The McCauU-Webster Elevator Company? Mr. HosKiNS. Yes; they are on the Milwaukee road and Great Northern ; a few on each. They have not many bouses in my terri- tory — I should not think over a dozen at the outside; perhaps not that many. Mr. Marble. How many did they have in the combination? Mr. HosKiNS. Oh, perhaps half of them. Mr. Marble. The Hawkeye Elevator Company? Mr. HosKiNS. That is in the same office and the same answer would apply to them. I do not think they had over three or four houses — or five that I know of. Mr. Marble. And all of them in the combination ? Mr. HosKiNS. No. Mr. Marble. Where were their houses located ? Mr. HosiciNS. I do not know that I can say offhand. Mr. Marbi Mr. McGee. What is the largest margin you ever bought on? Mr. BoRNEMAN. Our instructions — the directors gave me instruc- tions to buy on 12 cents under Duluth or Minneapolis. Mr. MoGee. What is the freight? Mr. BoRNEMAN. Thirteen cents per 100. Mr. McGee. That is how much a bushel? Mr. BoRNEMAN. About 8 cents; say 9 cents altogether, commission and all. Mr. McGee. What is the smallest margin you ever bought on ? Mr. BoRNEMAN. I have bought on a cent. Mr. McGee. At the beginning of the season how do you determine what margin you are going to buy on ? Mr. BoRNEMAN. The directors in this case give me the instructions; they gave m.e instructions this year to buy at 12 cents under. Mr. McGee. At the beginning of the crop season the directors of your association determined — did they have a meeting? Mr. BoRNEMAN. Yes, sir. Mr. McGee. And in that meeting they decided what margin you should buy on for that crop season? Mr. BoRNEMAN. Yes, sir. Mr. McGee. What number of directors are there in your associa- tion? Mr. BoRNEMAN. I think there are seven. Mr. McGee. They got together? Mr. BoRNEMAN. Yes, sir. Mr. McGee. And for the purpose of determining the price that should be paid ? Mr. BoRNEMAN. Yes, sir. Mr. McGee. What did they do — did they vote on that? Mr. BoRNEMAN. They all voted on it. Mr. McGee. They took a vote on what that farmers' elevator will pay during that crop year for grain, and the margin it should be bought on ? Mv. BoRNEMAN. Yes, sir. Mr. McGee. They gave you instructions to carry out the conclu- sions that their vote announced, didn't they? Mr. BoRNEMAN. Yes, sir. They all talked the matter over. Mr. McGee. But finally voted on it? Mr. BoRNEMAN. Finally voted on it. Mr. McGee. How many directors are there in your association? Mr. BoRNEMAN. Seven, I think. Mr. McGee. How many members? GBAIN ELEVATOR INVESTIGATION. 1093 Mr. BoRNEMAN. I think there are 64. ' Mr. McGee. And you say there is a penalty there ? Mr. BoRNEMAN. Yes, sir. Mr. McGee. a penalty of a cent a bushel ? Mr. BoRNEMAN. I doij't know that I will agree that it is a penalty clause in there or not. Mr. McGee. Who-finances your company ? Mr.- Borneman. McCarthy Brothers. Mr. McGee. They are members of the Duluth Board of Trade and the Minneapolis Chamber of Commerce ? Mr. Borneman. Yes, sir. Mr. McGee. And they furnish you farmers out there the means which would enable you to conduct your business ? Mr. Borneman. Yes, sir. Mr. McGee. What is the capacity of your house? Mr. Borneman. Fifty thousand. Mr. McGee. What is your paid up capital? Mr. Borneman. I think it is $8,000. Mr. McGee. What capital have you to buy wheat with? Mr. Borneman. Well, we have — we started in last year with, I think it was, in the neighborhood of $18,000. Mr. McGee. You had $18,000 on hand? Mr. Borneman. Yes, sir. Mr. McGee. To handle the crops? Mr. Borneman. Yes, sir. We had that in grain in the house at the time, and then the value of the elevator. We called that 17,000. Mr. McGee. How much grain did you handle there last year? Mr. Borneman. We handled 155,000 bushels last year. Mr. McGee. What salary do you get ? Mr. Borneman. $1,500 now, for ten months. Mr. McGee. What are your profits? • . Mr. Borneman. Last year they were $3,300. Commissioner Prouty. I guess we won't spend any more. time on that. Mr. Marble. Do your competitors meet and advise with you about the price ? Mr. Borneman. No, sir. Mr. Marble. Simply the stockholders or directors of the one cor- poration ? Mr. Borneman. Yes, sir. Mr. McGee. I should like to ask one question in regard to this list. Do you hedge your purchases daily? Mr. Borneman. Yes, sir. Mr. McGee. You get this list from Minneapolis, the Hoskins, do you? Mr. Borneman. I don't know what list it is. Mr. McGee. Who does it come from? Mr. Borneman. Well, I get it from McCarthy Brothers, and they charge us $1 a month. Mr. McGee. That is what you base your price on — ^you work from that? Mr. Borneman. Yes, sir. Mr. McGee. You could hardly do business without it — without something of that kind indicating the changes in the market ? 1094 GBAIN ELEVATOK INVESTIGATION. Mr. BoENEMAN. We get the C. and D. four times a day. Mr. McGee. You know perfectly what it is from time to time during the day? Mr. BoRNEMAN. Yes, sir. Mr. McGee. That is all. Witness excused. J. M. O'GoRMAN, called as a witness, having been duly sworn, testified as follows: Mr. Marble. What is your business, Mr. O' Gorman? Mr. 0' Gorman. Elevator agent for the Great Northern Elevators. Mr. Marble. Located where? Mr. O' Gorman. Over in Superior. Mr. Marble. What are your duties? Mr. O'GoRMAN. My duties are the overseeing and receiving and the shipping of grain. Mr. Marble. For what purpose? Mr. O' Gorman. For the purpose of receiving and shipping it. Mr. Marble. As a part of the railway transportation? Mr. O' Gorman. No, sir. Mr. Marble. Is it a part of the elevator business ? Mr. O'Gorman. Yes, sir; it is a part of the elevator business. Mr. Marble. Who owns the elevators that you oversee ? Mr. O'Gorman. The Great Northern Eailway Company, I under- stand, owns them. Mr. Marble. Who operates them? Mr. O'Gorman. Mr. Thomson — ^A. D. Thomson & Co. Mr. Marble. Whose grain goes through these elevators? Mr. O'Gorman. Thomson & Co.'s. Mr. Marble. Anyone's else? Mr. O'Gorman. I don't think so. Mr. Marble. What do you have to do with Mr. Thomson's grain? Mr. O'Gorman. Well, I don't know. I receive it and ship it. Commissioner Prouty. Who do you work for? Mr. O'Gorman. Mr. Thomson. Mr. Marble. Didn't you say you had something to do with the Great Northern Railway? Mr. O'Gorman. No, sir. Commissioner Proutt. He said he was the Great Northern Railway elevator agent. Mr. Marble. Then, you are simply an employee of Mr. Thomson? Mr. O'Gorman. Yes, sir. Mr. Marble. That is all. We were misinformed. Witness excused. M. L. Jenks, called as a witness, having been duly sworn, testified as follows : Mr. Marble. What is your business? Mr. Jenks. Secretary and manager of the Itasca Elevator'Company Mr. Marble. You have a terminal elevator at Itasca, Wis. ? Mr. Jenks. Yes, sir. Mr. Marble. From whom is that leased ? Mr. Jenks. The Omaha road. GEAIN ELEVATOE INVESTIGATION. lUyfi Mr. Maeble. Do you get an elevator allowance at that point? Mr. Jenks. No, sir. . Mr. Marble. From the Omaha road? Mr. Jenks. No, sir. Mr. Maeble. How long since you did? Mr. Jenks. Never did. Mr. Maeble. Do you have to do with the elevator at Washburn docks ? Mr. Jenks. No, sir — not the Itasca Elevator Company. Mr. Marble. Or Nye-Jenks & Co. ? Mr. Jenks.' They have. Mr. Marble. Do you have anything to do with them? Mr. Jenks. No, sir. Mr. Marble. Do you know whether they get an allowance ? Mr. Jenks. No, sir. Mr. Marble. You say you get no allowance at Itasca and nevei have ? * Mr. Jenks. Never have. Mr. Marble. Do you have any switching charges to pay? Mr. Jenks. We pay switching charges over the Great Northera and the Northern Pacific railroads^ Mr. Maeble. Are those charges absorbed in any way by anyone for you ? Mr. Jenks. No, sir. Mr. Maeble. By any outgoing road? Mr. Jenks. No, sir. Mr. Marble. You get no elevator allowance at that point? Mr. Jenks. No, sir. Mr. Marble. How much rental do you pay? Mr. Jenks. Nothing. Mr. Marble. What is the capacity of that elevator? Mr. Jenks. 1,300,000. Mr. Marble. What is its value ? Mr. Jenks. I don't know. I suppose Commissioner PEOtrrY. Is it a modem elevator? Mr. Jenks. Built about seven years ago. Mr. Marble. What would you say its Value is ? Mr. Jenks. $350,000, probably. Mr.MAEBLE. Do you own any railroad stock? Mr. Jenks. No, sir. Mr. Marble. Do you know whether any member of your' firm oi corporation owns any railroad stock? Mr. Jenks. Not that I know of. Mr. Marble. Why do you get that elevator for nothing? Mr. Jenks. I don't know. All I know about it is that I heard one of the officials of the Omaha road say that he didn't think he coiild get anyone else to operate it on the same terms. Mr. Marble. Do you know anything about the Washburn elevatoi arrangements ? Mr. Jenks. No, sir. Mr. Maeble. That is all. Mr. Jenks. I wish to state that in regard to these dust collectors, it is reported that they are taking dust from the legs. That is not a fact at the Itasca elevator. We have the machinery there. It was 1096 GKAIN ELEVATOR INVESTIGATION. built to do that, but the State weighing department caused us to dis- connect it, and it has been disconnected ever sineo the &st year we operated. Commissioner Peouty. That is all. Witness excused. Mr. Marble. If the Commission please, I believe it would be pref- erable to have the attorneys here representing the people of Duluth Board of Trade call such witnesses as they desire. This testimony has been pretty much on the other side, although I have called some of the people, but I prefer they designate what witnesses they want. Mr. Whelan. We will call Mr. Staples. Commissioner Prouty. Mr. Staples, I said to you in Minneapolis yesterday that if any testimony was introduced which would require it we would hear from you either there or here as to the inspection by the Minneapolis commission. I do not think any testimony has been introduced which would justify this Cordmission in criticising the inspection of the Minnesota commission; but if you desire, in view of what you have heard, to introduce any testimony or to say anything you can have that opportunity now. There has been something said here as to the Minnesota inspection being unsatisfactory to the millers in the East, but it has been so indefinite that upon the present state of this record I do not think this Commission would be justified in criticising your commission at all. It is stated that there are some letters to be put in here, and those letters might possibly lay the foundation for some criticism. C. F. Staples, called as a witness, having been duly sworn, testi- fied as follows: Mr. Staples. I think that, Mr. Commissioner- Commissioner Prouty. Before you begin, Mr. Staples, I want to say that at thepresent time there has not been any testimony given in this case which refers definitely enough to the inspection of the Minne- sota commission to lay the foundation for any criticism at all. Mr. Staples. Mr. Commissioner, if that is the view of the Com- mission, I feel that it would not be proper for me to make a statement at all in connection with the subject. If the Commission indicates, however, that anything has been introduced here which would in any way reflect upon our department, or which calls for answer or expla- nation, I desire very much to go into the subject, and go into it fully enough to satisfy the Commission from our standpoint. Commissioner Prouty. Mr. Marble, what do you claim has been shown in the course of this investigation which requires any answer on the part of the Minnesota commission ? Mr. Marble. I should say that the only thing I have in mind at the E resent time would be that the record in this case [indicating] has een introduced and the opinion of Judge Sanborn, as I remember it there, does criticise the Minnesota commission. Commissioner Prouty. That record I haven't read. Mr. Marble. I think it is in this record now. _ Mr. Staples. In that connection I desire to say that the only reflec- tion on the Minnesota commission in the record in that case is based upon the testimony or statement by, I believe, a Mr. Crumpton, before Judge Sanborn. There was no opportunity for our commis- GRAIN ELEVATOR INVESTIGATION. 1097 sion or anybody interested in our commission to be heard upon the question, so that we had no knowledge that the subject would be brought to the attention of the court in any way whatever. Mr. Crumpton's figures were made upon a wrong basis entirely. He made them under a misapprehension ; I do not mean intentionally. Commissioner Prouty. Mr. Hudnall has already stated why that mistake occurred; and if I have a correct idea of it it seems that your •figures give the weights of all grain coming into elevators and then also give the weights of all grain going out of the elevator, but they do not give the weights of grain manufactured into flour by the ele- vators; consequently there would be an apparent discrepancy between them. Mr. Staples. In that connection I desire to say that I have had prepared, and they are in my pocket, an official statement made by our department which will explain everything fully, and, I am sure, to the satisfaction of the Commission, covering the period mentioned. Commissioner Prouty. You had better put that in, in view of the record. Mr. Marble. In view of the fact that it is in the record and has not been referred to yet, I would like to draw attention to this portion of Judge Sanborn's opinion. After giving a r6sum6 of the Wisconsin law he says: "However justified or necessary these emphatic provisions may have seemed to the Wisconsin 'legislature, in order to destroy what appears from the evidence to be a fraudulent system, upheld by the combination of great interests, including buyer, seller, warehouse- man, and carrier, they undoubtedly not only operate as a serious obstruction to commerce as now carried on, under what should be one uniform system, but there is also disclosed a commercial conflict of considerable proportions between two States. Wisconsin is attempt- ing to build up her trade at the expense of Miiinesota, and the people most interested have taken and are now employing radical, if not unlawful, measures to thwart this attempt and keep this commerce in its acciistomed channels. With a view of preventmg fraud and pro- tecting the public the Wisconsin legislature. enacted that all sales of this large product shall be made only in Superior, and delivery, storage, and resale only under her inspection laws." Commissioner Prouty. I do not see that it refers to the inspection. Mr. Whelan. Will you read, Mr. Marble, what he said in supple- ment td that ? Commissioner Prouty. You need not take time to read it. In all probability, Mr. Staples, in view of the fact that this record is in the case, you had better put in the figures, explaining the apparent dis- crepancy shown by this record. Mr. Staples. I will be very glad to do it. We will make it in the form of an affidavit. Commissioner Prouty. You are already under oath, and you may submit it as correct and as a part of your testimony. Mr. Staples. While on the stand I wish to state that I felt this morning that when Mr. Fowler was on the stand that he made some statements which reflected on the Minnesota inspection. Commissioner Prouty. What I said, Mr. Staples, was that I did not think that we had listened to any testimony which would justify us in criticising the Minnesota commission. While he might have made 1098 GEAIN ELEVATOR INVESTIGATION. some statements which reflected upon the commission, they were hot, as a rule, made from his own knowledge. Mr. Staples. May I read the headings to these statements? Commissioner Pkouty. Yes. Mr. Staples. The first is a "statement shoAvlng the number of cars inspected and appealed, and the results of such reinspection and appeal, from September 1, 1899, to September 1, 1906. (Figures taken from the Annual Report of the Chief Inspector of Grain of the State of Minnesota.)" The second statement is a "statement show- ing the number of cars of grain inspected, reinspected, and appealed; also disposition of same from September 1, 1905, to August 31, 1906." The third is a "statement of the receipts and shipments of wheat for the past ten years, taken from chief inspector's reports; taken from September 1, 1892, to September 1, 1902. Flour manufactured during same time ^barrels." Fourth. "Ofl&cial statement of the chief inspector of grain for the State of Minnesota, showing the amount of wheat 'weighed in' and 'weighed out' of elevators and mills of Duluth and Superior from Sep- tember 1, 1892, to August 31, 1902, inclusive." The fifth is a "statement showing the average amount of dockage per bushel for each year from 1893 to 1902, inclusive." I also wish to introduce some statements which go to refute the claims made that certain high grades of wheat are never inspected in. The seventh is a "statement of 'in' inspection of spring wheat in carloads by grades at the terminal markets of Minnesota for each crop year from Septpmber 1, 1885, to September 1, 1906. (Figures taken from Annual Ileports of the Chief Inspector of Grain of Minnesota.)" The eighth is "Amount of wheat by grades, 'weighed into' and 'weighed out' of Elevator 'A- from September 3, 1903, to December 3, 1903, inclusive, as shown by the official records in the office of the State weighmaster of grain, at Duluth, Minn." This should be Elevator A, I think. I will ask my clerk. (A VOICE. Yes, sir.) Mr. Whelan. In Duluth? Mr. Staples. Yes, sir. This we desire to submit. Commissioner Proutt. You may put this in the case as part of your testimony. Those are the correct figures as shown by your files ? Mr. Staples. They have been compiled from our reports in 'the office at St. Paul. (The same is hereto annexed and marked "Exhibit No 1 to Mr. Staples' s" testimony.) Mr. MoGee. Isn't it a fact that when Mr. Crumpton discovered his mistake he corrected it under oath ? Mr. Staples. Yes, sir. And that corresponds with our figures. Commissioner Prouty. Is there anything more vou desire to sav Mr. Staples? & J J, Mr. Staples. Not in connection with the inspection department. Commissioner Prouty. I don't think it is necessary. Mr. Whelan. These papers probably tell on their face, but will you state what period they cover? Commissioner Prouty. I think they all state the period they cover; they are not all the same. Mr. Staples. But they cover every period in which we understand there is any controversy regarding the figures. GRAIN ELEVATOR INVESTIGATION. 1099 Mr. Heffelfingeb. Mr. Staples, you are familiar with the arrange- ments at elevators in regard to dust-collector system's. Will you please state to the Commission whether it is possible under the present system to take any grain out of a car through this dust-collecting system? Mr. Staples. I would say in answering that question that this whole system of inspection and weighing of grain at the terminals is under the immediate charge of our commission and that we employ the best experts we can secure, and that the question of loss of grain through this system of dust collectors is a thing that is very carefully scrutinized, and in several cases where we have reports from our experts, giving the impression that there is a possibility of any loss, we have ordered them to discontinue their use and they have always observed the orders of our commission. Commissioner Peouty. That seems to be all, Mr. Staples. Mr. HuDNALL. Have you any report as to Elevator A showing the amount of grain taken in and shipped out of that elevator ? Mr. Staples. We can compile it. Mr. HuDNALL. Have you anything in your statement there ? Mr. Staples. Only on one, and that I would like to explain why that was made. It was made in answer to testimony of some witness given at Minneapolis. Mr. HuDNALL. Your figures, Mr. Staples, do not take into account anything for screenings or dust that is taken out of the car. You know nothing about the weights? Mr. Staples. That is determined by taking the average of all that we do inspect and determining it — that is, we average that up. Mr. HiiDNALL. Do you inspect screenings out or weigh screenings out? Mr. Staples. We weigh out everything. Mr. HuDNALL. Does your report show all the grain that is taken into the elevators and all the grain and the screenings and the dust that is shipped out of the elevators ? Mr. Staples. Well, we do not show anything shipped as dust. Mr. HuDNALL. Do you weigh it and does your report show it? Mr. Staples. We weigh out everything. Mr. HuDNALL. What does your reports show — dust weighed out? Mr. Staples. Nothing, except what may be called screenings. Mr. HuDNALL. Mr. Smith testified, I think, and Mr. McFadden veri- fied it, that there was dust that was collected in some of these eleva- tors, whether before or after inspection is immaterial, that was shipped out and sold at $3 or $4 a ton. Doyou weigh that out? Mr, Staples. No, sir; we couldn't give any information on that subject. Mr. McGee. The statement was that that was screenings. Mr. HuDNALL. No; it was not. Mr. Hefpelfinger. I can explain that. I have recently gone to considerable expense at our new plant to install a house and a packing plant, whereby the dust, which is very fine dust and is not the screen- ings which are collected through the dust collectors, which ordinarily under the old system used to go into the fire box and was burned, goes into the dust-collecting house and is then packed into bags and sold. It amounts to very little, but, whatever it is, it is a saying. It is used . by some people. Always heretofore that had been burned. 1100 GRAIN ELEVATOR INVESTIGATION. Commissioner Prouty. Is that weighed out ? Mr. Heffelfinger. No, sir; because it isn't screenings. It is only dust that we used to burn. It clogs up pur furnace boxes, for one thing. I was obliged to do that to prevent any possibility of fire under fire risks. We now take that and sell it; it is a source of small revenue. We furthermore take — and I think that every elevator will admit that they do it — that whatever dockage that comes in and is cleaned out as screenings is our property, and is sold. Mr. HuDNALL. Are the screenmgs weighed out by the State depart- ment? Mr. Staples. They are weighed out by the State Department as screenings and shown as screenings. Mr. HuDNALL. Does it show on your report, Mr. Staples, as grain going out, which you have submitted here in evidence ? Mr. Staples. I do not like to answer that question without asking the clerk for information. Mr. HuDNALL. Do you know anything about those figures that you have introduced there? Mr. Staples. Yes, I do. Mr. HuDNALL. Do you know whether they are true or not ? Mr. Staples. They are. Mr. I-IuDNALL. You can not tell us, without asking your clerk, whether they include screenings that is weighed out as grain ? Mr. Staples. We weigh no screenings as grain. Mr. HuDNALL. Have you anything in there that shows what is weighed out as screenings? Mr. Staples. I would not like to answer that. Mr. HuDNALL. Tell me whether there is anything in there that shows as being weighed out as screenings. Mr. Staples. If I took the time Commissioner Prouty. We won't take time to do that. Who is your clerk? Mr. Staples. Mr. Shutey. I wish to make one statement which will take me a few minutes, with reference to our inspection depart- ment. Considerable has been said here with reference to the preju- dice of the Minnesota inspection department by North Dakota people. Now, our commission is elected. They supervise the grain busmess of the State. They appoint a chief inspector, who appoints deputies, and he is always at liberty to discharge them. Every deputy is appointed after a Avritten examination under the civil plan, "rhere is no inspector who ever inspects in or out any grain with any knowledge as to who the owner is or where it might have come from. He has no means in the world of knowing. That statement applies equally to the weighing system. They haven't the slightest knowledge whose grain they are weighing nor where it came from. Then we have in our State a board of appeals, which is entirely in- dependent and separate from the commission, has no relation to it, and is appointed by the governor of the State. Anyone who has any complaint with reference to inspection first calls for reinspection. If then they are dissatisfied, they take the case to the board of appeals; and, as I say, as they haven't any relation nor anything to do witli our commission and are entirely independent, it seems to me there is hardly room for any collusion or any sympathy. In fact, there isn't any sympathy between the two departments — none whatever. GBAIN ELEVATOR INVESTIGATION. 1101 Another point I wish to make is this: We find no complaint with reference to the system at Minneapohs ; nobody has ever heard of it ; and this whole complaiat at the head of the Lakes, so far as I know, is entirely due to friction between Superior and Duluth. Our commis- sion has absolutely no interest in that matter, no concern in it, no sympathy with it. We operated our inspection and weighing system in Wisconsin for a term of years upon a written agreement, and upon a written request of the grain men in Superior, always giving notice, written notice, that we were ready to withdraw the Minnesota service at any moment we mi^ht be requested to do so; and the moment we received a written notice that they wished us to withdraw the service it was immediately withdrawn. Another point it, seems to me, is very, material is this : There is no complaint upon anjrthing except the question of wheat. Now, there was, I think, three times the amount of wheat received at Minneapolis during the crop year of 1905 that there was received at Duluth. No complaint ever comes from Minneapolis. Furthermore, we hear abso- lutely no complaint from South Dakota. No complaint from the shippers of gram in Minnesota. One more point : The Minnesota commission has absolutely no inter- est in nor any sympathy with what are called — I say that plainly — no sympathy with what are called the line elevator systems in the State. We do all we can to encourage the independent and the farm- ers' elevators. We do more than that. Wherever there is a petition in the State of Minnesota for a loading platform in order that farmers may not have to go to the expense of building an elevator and they don't care to deal with the local elevators, we always, without question, order the railway companies to build a loading platform for the con- venience of the farmers at that point. We encourage the farmers to build these elevators and keep them open always ready to do business; but feel that if they would patronize the line elevators just as long as they get all they think they are entitled to they would be better off than to undertake to do the business themselves. We have watched another feature of the grain business — that is, whether these independent shippers, when their grain reaches the ter- minal, get all that it is worth. That question has been raised here, and I can say without question that they are just as well treated. They have men here who are anxious to get their business who are receivers ofgrain, and who are soliciting their business. We have special com- mission men at St. Paul and Mnneapolis who solicit the business from these independent buyers, who come before our commission and assist in getting sites for them upon which to build elevators or platforms on which to load; and I think a good deal of this cry, if it is looked into carefully, will be found to be a matter of prejudice and bias, rather than of having any foundation whatever. Mr. Marble. It is suggested that I ask you this question: Does your inspection make any difference or distinction in its work between the wheat from North Dakota and the wheat from your own State of Minnesota ? Mr. Staples. I should think that statement just made ought to cover that. Mr. Marble. I think it does. Mr. Staples. We have no knowledge where the wheat comes from. No inspector, chief inspector, nor any individual inspector nor the board 1102 GEAIN ELEVATOR INVESTIGATION. of appeals has the slightest knowledge where this wheat comes from. It is absolutely impossible for them to know. Commissioner Peouty. Is there any further statement that you desire to make ? Mr. Staples. I think not. Mr. McGee. I would like to ask Mr. Staples a question, and I think Mr. Staples ought to be very thoroughly qualified to answer, and I know he is, as bearing on this subject of car shortage — that is, the tes- timony at Minneapolis was, and there is no question about it, that the line elevators are practically fiill in the country, while the terminal ele- vators, with a capacity at the head of the Lakes of 34,550,000 bushels, have only 9,878,000 bushels in them,while at Minneapolis,with a capac- ity of 38,010,000 bushels, the grain stored at the present time amounts to only 5,657,000 bushels. In other words, there is a capacity not occu- pied in both places of about 57,000,000 bushels. I think he ccJE. 722 Minnis, N. J 712 Morgan, W; F 699 Noi-dschotf, S :..... 714,719 Pierce, C. H 720 Richards, E.M...: ;. 723 Wells, George A 655,688 White, George i 732 Williams, S. B...: 699,707 1128 INDEX. WITNESSES AT MILWAUKEE, Wia Page. Armour, J. O 766 Bacon, E. P 820 Bevan, T. H 786 Bishop, W. P «29 Cargill.W. W 800 Eliot, Robert.: 819 Forsaith, L.J 790 Franke,H.F 740 Gilman, S. W 836 Guingius, W. B 806 Halderman, A. E 770,822 Hottelet, Max 762 Houser, W. L 784 Fage. Johnson, George H. B. 821 Kinney, O. G 831 McCullough, H. R 809 Mason; E.C 843 Mohr, Oscar 777 Mosher, O. W 793 Owen, D. G 749,827 Rosenbaum, J 758 Schneider, C. W 815 Schroeder, George A 780 Stratton, Harry M 753 Taylor, A. K 736 Thomas, John W 833 WITNESSES AT MINNEAPOLIS, MINN. Page. Campbell, B 863 Case, George E 991 Chambers, C.B 985 Christensen, Ed 895 Costello, M.J 865 Durant, F. R '.... 965 Enestvedt,C. C 917 Hardenbergh, F. E 964 Heffelflngef, F. T 896, 964 Page. Hill, James J t 845- ' Hoskins, A. J gsd- Jamme, L. T 99» Jumper, S. H 981 Smith, P. B 872 Steele, William 92fl- Steen, John 913 Stone, F. L 922 VanDusen, F. C 98ff WITNESSES AT DULUTH, MINN. Page. Bamum, G. G 1034 Borneman, H. B 1091 Crumpton, S 1081 Dight, John H 1075 Falk, W.O 1051 Fowler, H. T 1004 Guptill, 0. M 1086 Hudnall, George B 1030,1046 Jenks, M. L 1094 Kimball, Byron 1059 Leech, W. F 1089 Page. McCarthy, J. F 1070 McFadden, W. C 1060,1077 Major, O. G 1087 Moore, H. B - . .- 1Q30,.I048, 1058 O'Gorman, J. M .;.. 1094 Owen, Charles M ^ 1078 Schwedler, E „. 1024 Smith, Roderick 1104 Spencer, George 1104 Staples, C. F 1096 Thomson, A. D 1083 O